Oct222013
Lenders unwilling to loan to wealthy strategic defaulters, hoocoodanode?
Actions have consequences — which is not to say that many bailout advocates want everyone to avoid these consequences — but in the real world, the decisions we make impact our lives. When rational people make good decisions, they carefully consider the potential consequences of their actions. Bailouts that soften these consequences invariably leads to more high-risk behavior, poor decision making, and an increased sense of entitlement.
I was an early advocate of strategic default, and as it turned out borrowers who strategically defaulted early on made the best choice. These early strategic defaulters recognized their shortest path to future home equity was to quit paying, wait the necessary penalty period, then buy again when prices were lower. Those that defaulted from 2007-2009 waited two years, then repurchased in 2010 to 2012. It worked out very well for them. The key point here is that those who strategically defaulted knew they were going to have to wait until they could buy again, so by defaulting early, they started their waiting clock at the earliest possible time. Those that default later risked missing the recovery rally, which came earlier than most expected.
When I first read today’s featured article, I was shocked at the sense of entitlement displayed by the whiners profiled in the article. The main protagonists are a couple who strategically defaulted, but now they are complaining that they have to wait. Perhaps common sense is too much to ask of these people.
Foreclosure Haunts Next Home Purchase
Affluent home buyers attempting to get back into real estate after defaulting on their home loan are finding that few lenders are willing to work with them.
AnnaMaria Andriotis — Oct. 17, 2013 4:42 p.m. ET
Jumbo borrowers who went into foreclosure a few years ago are learning the hard way: You can’t go home again.
Affluent home buyers attempting to get back into real estate after defaulting on their home loan are finding that few lenders are willing to work with them. Those that do often impose long waiting periods, higher down payments and higher interest rates.
Since these borrowers have proven they will bail out and leave the lender with enormous losses, shouldn’t lenders be more cautious and charge them higher rates? It’s no different than auto insurance companies charging higher rates to drivers who’ve been in several accidents.
Since spring, lenders say they have increasingly been hearing from would-be buyers who went through foreclosure. “We get the calls routinely,” says Al Engel, executive vice president at Valley National Bank, based in Wayne, N.J.
Callers include self-employed borrowers whose income dropped during the recession, causing them to fall behind on their mortgages, but who have since financially recovered. Also affected are borrowers who walked away from their homes after their values plummeted and owed more on their mortgage than the house was worth. Now that home values have stopped falling in most housing markets, they want back in.
Rising house prices are also the best cure for strategic default. Very few borrowers strategically defaulted over the last 18 months because rapidly rising prices gives them hope of equity again. This is also what motivated many long-term delinquent borrowers to accept a loan modification and start paying again. Don’t underestimate the psychological impact of rising house prices.
Terri Conrad and her husband saw their 4,500-square-foot, five-bedroom home in Carbondale, Colo., foreclosed on last year. They purchased the home for $1.25 million in 2007, but its value had dropped to roughly $700,000 by 2012. Ms. Conrad, who manages finances of affluent families, says the couple tried refinancing but was denied. Although they could afford the payments, they decided to walk away because they didn’t want to keep paying for a home that was worth significantly less than the loan. They are now renting in Houston and plan to wait at least a couple of years before applying for a home loan again. “I’m worried about who’s going to give me a mortgage,” she says.
This couple is quite a piece of work. First, as a financial adviser, shouldn’t she have known there would be consequences for her actions? Based on her behavior and her ignorance toward the consequences, what affluent family would trust her advice on financial matters? Being quoted in this article this way can’t be good for business.
Most lenders who offer private jumbo mortgages, which start after $417,000 in most parts of the country and at $625,501 in pricier housing markets, remain very selective and limit themselves to borrowers with the strongest credit profiles.
As they should be. This is private capital assuming all the risks. These loans are not backed by the US taxpayer who now guarantees all future bailouts of housing.
Foreclosures stay on credit reports for seven years from the time homeowners default on their mortgage. What’s more, a foreclosure can lower a borrower’s credit score by 100 points, says John Ulzheimer, a former manager at FICO, the credit score used by most lenders. Borrowers who were previously always on time with payments would see a bigger drop. For instance, someone with an 820 FICO score (FICO scores range from 300 to 850) could drop to 580 following foreclosure, he says. That borrower could need more time to work his or her way back to a top score before getting a mortgage.
Nobody is enduring 240 point FICO score drops. That is bullshit scare tactics to prevent future strategic defaults. Polls of clients from youwalkaway.com noted ” Credit-scoring firm FICO estimates that someone with a 680 score would see that number sink between 85-100 points after a strategic default, and someone with 780 could crater 140-160 points.” The difference between the 580 reported in the article and 640 of reality is the difference between meeting an FHA loan threshold or not. Plus, during the waiting period, borrowers who don’t miss payments see their FICO scores quickly recover.
Separately, many affluent borrowers went into foreclosure later largely because they were able to tap their savings to pay their mortgage. Foreclosures on homes worth over $1 million peaked in 2011, while foreclosures on homes worth less than $1 million peaked in 2009, according to RealtyTrac, which tracks real-estate data. By delaying foreclosure, they will likely have to wait—possibly until after housing has fully rebounded—to get a home loan.
This is something I argued from the start, and it’s why borrowers who strategically defaulted early on made the best choice.
Borrowers who intentionally default—the ones who walked away from their homes—are less likely to be approved for another mortgage soon after. Lenders that originate private jumbos often follow guidelines set by Fannie Mae and Freddie Mac, which require strategic defaulters to have re-established their credit profile for at least seven years after foreclosure in order to get a mortgage.
This is factually incorrect, but lenders won’t complain about the bad information. Back in 2010, the GSEs changed their waiting period to only two years. In 2012, FHA waived its 3-year waiting period. Many private lenders have more stringent waiting periods, but the GSEs and FHA do not.
But experts say more flexibility among lenders could emerge in the next year. A recent change allows certain borrowers to become eligible for mortgages backed by the Federal Housing Administration in as little as one year after their foreclosure. Previously the waiting period was at least three years. “This may be an influence on the private lenders to loosen a little bit on their waiting period,” says Daren Blomquist vice president at RealtyTrac.
It won’t influence private lenders at all. It was a stupid move on the part of politicians and bureaucrats who are failing to protect the US taxpayer.
Borrowers who overcame a financial hardship that was out of their control and improved their credit profile and are shopping for a mortgage should consider smaller lenders. Valley National Bank and Fremont Bank, which is based in the San Francisco Bay area, say they are open to working with some private jumbo applicants in as little as 2½ to three years, respectively, after the date of foreclosure.
More issues to consider in seeking a mortgage:
• Cash reserves. The banks willing to work with these borrowers require large down payments, ranging from at least 25% to 50%, and savings that equal at least three months of mortgage payments.
• Detailed screening. Lenders will often require a lengthy conversation with applicants to figure out the circumstances that led to their foreclosure.
• Higher interest rates. Some lenders say if they do approve these applicants, they are likely to charge higher interest rates to compensate for the extra risk they are taking on.
The people who strategically defaulted and squatted for years got to enjoy a substantial benefit at the bank’s expense. These people should have to endure some consequences for this action. The waiting period is a small price to pay for the good times they had while they enjoyed their free ride.
[raw_html_snippet id=”newsletter”]
[idx-listing mlsnumber=”OC13210996″ showpricehistory=”true”]
3217 South SALTA St Santa Ana, CA 92704
$439,900 …….. Asking Price
$177,000 ………. Purchase Price
3/31/1995 ………. Purchase Date
$262,900 ………. Gross Gain (Loss)
($35,192) ………… Commissions and Costs at 8%
============================================
$227,708 ………. Net Gain (Loss)
============================================
148.5% ………. Gross Percent Change
128.6% ………. Net Percent Change
4.9% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$439,900 …….. Asking Price
$15,397 ………… 3.5% Down FHA Financing
4.24% …………. Mortgage Interest Rate
30 ……………… Number of Years
$424,504 …….. Mortgage
$117,533 ………. Income Requirement
$2,086 ………… Monthly Mortgage Payment
$381 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$92 ………… Homeowners Insurance at 0.25%
$478 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$3,036 ………. Monthly Cash Outlays
($495) ………. Tax Savings
($586) ………. Principal Amortization
$23 ………….. Opportunity Cost of Down Payment
$130 ………….. Maintenance and Replacement Reserves
============================================
$2,108 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,899 ………… Furnishing and Move-In Costs at 1% + $1,500
$5,899 ………… Closing Costs at 1% + $1,500
$4,245 ………… Interest Points at 1%
$15,397 ………… Down Payment
============================================
$31,440 ………. Total Cash Costs
$32,300 ………. Emergency Cash Reserves
============================================
$63,740 ………. Total Savings Needed
[raw_html_snippet id=”property”]
FHA single-family mortgage guarantee program squeezes taxpayers, hoocoodanode?
The Federal Housing Administration’s single-family mortgage guarantee program moved dramatically from having a net savings to costing taxpayers money as higher-than-expected borrower defaults hit the firm.
The FHA single-family mortgage guarantees made between 1992 and 2012 now have an expected federal budgetary cost of about $15 billion even though initial cost estimates for those loans estimate $45 billion in savings.
This represents a taxpayer cost of $60 billion since the firm is also expecting lower-than-expected recoveries on the houses of defaulted borrowers that have been sold – especially for loans made during the 2004-2009 period, the Congressional Budget Office said in a new report.
The federal budgetary impact of the FHA’s single-family mortgage guarantee business varies greatly when compared to past years.
For instance, the change from having an expected savings to a cost mostly stems from guarantees made over the 2001 to 2009 period, with those made in those years now estimated to come with greater costs rather than small savings, CBO analysts Chad Chirico and Susanne Mehlman said.
Sales of Existing U.S. Homes Plummets as Affordability Drops, hoocoodanode?
Sales of existing U.S. homes fell in September for the first time in three months as higher prices and mortgage rates curbed demand in an industry that helped boost the expansion last year.
Purchases dropped 1.9 percent to a 5.29 million annual rate from a revised 5.39 million pace in August that was the strongest since 2009, the National Association of Realtors reported today in Washington. The median price of a house climbed 11.7 percent from 2012, pushing affordability to an almost five-year low, the group said.
The median forecast of 67 economists in a Bloomberg survey called for the pace to slow to 5.3 million. Estimates ranged from 5.1 million to 5.5 million.
Data for August was revised down from a previously reported 5.48 million, a bigger adjustment than usual because the figures were released last month before additional information was available, NAR Chief Economist Lawrence Yun said at a news conference as the figures were released.
“Affordability is getting hit quite sharply,” he said. “Lower affordability will hamper home sales going forward.” The group’s affordability index fell to 156.1 in August, the lowest since November 2008, from 160.7 the prior month. It reached a record 213.6 in January in data going back to 1989. A reading of 100 means a household making the median income can afford the median-priced house at current mortgage rates.
The average rate on 30-year home loans reached 4.58 percent in late August, a two-year high, according to McLean, Virginia-based Freddie Mac, as Fed policy makers signaled they may begin to curb bond purchases. The rate averaged 4.28 percent in the week ended Oct. 17 amid concern that the fiscal gridlock in Washington would hurt the economy.
“We expect mortgage rates to be 80 to 100 basis points higher next year” as the Fed begins to trim bond purchases, said Yun. A basis point is 0.01 percentage point.
Qualified Mortgage Standards May Reduce Lending by 20%
One in five loans originated in today’s mortgage market will not meet the requirements of the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) rule that goes into effect in January, according to California-based ComplianceEase.
ComplianceEase reviewed the loans audited through its ComplianceAnalyzer, a loan auditing software, to determine what percentage of current loans would meet the new QM criteria.
Of the 20 percent of loans that would not qualify, ComplianceEase determined fee levels would be the
disqualifier for about half. The QM rule allows for points and fees of up to 3 percent.
Loans that exceed the 3 percent maximum typically do so by about $1,500, according to ComplianceEase.
The other source of loan disqualification is annual percentage rates (APRs) that exceed what is allowed through the QM rule, according to the company.
Fannie Mae and Freddie Mac will not guarantee loans that do not meet QM standards in the new year.
“Moreover, due to lack of marketability, lenders generally try to avoid originating loans known as ‘high-cost’ loans, which are subject to restrictions in the Home Ownership and Equity Protection Act (HOEPA),” ComlianceEase stated.
About three percent of loans in today’s market will be considered “high cost,” under the new regulations, according to ComplianceAnalyzer’s data. These loans generally carry fees exceeding the new cutoff by more than $1,000.
“Banking and mortgage executives need to evaluate their technology providers very carefully because the QM rule can create legal liability for the life of a loan,” warned John Vong, president of ComplianceEase.
Ctrl-P Ctrl-P.
10 year US Treasury Note yield dropping again
Product Interest Rate APR
Conforming 1and FHA Loans
30-Year Fixed 4.250% 4.421%
30-Year Fixed FHA 4.125% 5.640%
15-Year Fixed 3.375% 3.669%
5-Year ARM 3.000% 3.076%
5-Year ARM FHA 3.250% 3.902%
Larger Loan Amounts in Eligible Areas – Conforming and FHA.1
30-Year Fixed 4.250% 4.377%
30-Year Fixed FHA 4.250% 5.719%
5-Year ARM 3.250% 3.124%
Jumbo1 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 4.000% 4.112%
5-Year ARM 2.375% 2.808%
Something just occured to me. Did Congress remove the debt ceiling entirely? As opposed to just raising it? If I am reading correctly, they removed the debt ceiling entirely until February. Is there a new debt ceiling in February, or did they just make February a date on which they must decide on the budget and new debt ceiling? It also occurs to me that if there is no new debt ceiling now, and if there is no debt ceiling spelled out for February, then there is for practical purposes, no debt ceiling, now or in the foreseeable future. I think the Treasury just got an ‘all ahead full steam’, mandate.
If they’ve agreed there is no debt ceiling until they come to an agreement, then I agree with you, there is no debt ceiling. The Democrats will never agree to anything that ties their hands again in the future.
Now the rate is at 2.5120% Almost a 4% drop in the yield.
Look at the prices versus rent in Santa Ana and then compared that to Irvine that was profiled yesterday. This bubble is highly localized, you can’t even say Orange County. The bubble is in specific areas within Orange County.
With mortgage rates dropping again will it fuel another sales run? Or was that rally over?
Cordray: Vendors Not Ready for QM Face ‘Huge Disadvantage’
Most vendors should be able to comply with the Consumer Financial Protection Bureau’s qualified-mortgage rule by January, director Richard Cordray said Monday.
“We’ve been in close contact with vendors, and they are telling us they’re going to be ready,” Cordray said during a question-and-answer session at the American Bankers Association’s annual conference. “Those that are not ready will be at a huge competitive disadvantage.”
His comments appeared directed at bankers who have complained in recent months that vendor delays could interfere with their ability to comply with QM rules set to go into effect in January. Other bankers have expressed concerns that vendor issues are making it difficult to train employees.
To those bankers, Cordray reiterated his position that examiners will be flexible with banks that make “good faith” efforts to comply with the bureau’s rules. “In the early months, if you are…working aggressively with your vendor, we are not expecting perfection,” he said.
“We are all in this together, and so we appreciate the urgency that is being felt and the resources that are being mobilized to prepare for the approaching effective dates,” Cordray said during his prepared remarks.
Cordray also took time to reemphasize efforts made by the CFPB to exempt smaller banks from certain aspects of the QM rule, notably those with less than $2 billion of assets and those that make 500 or fewer mortgages annually. “We made this change in our rules to reflect our deeply held view that community banks did not engage in the kinds of irresponsible practices that gave rise to the financial crisis,” he said.
Mellow Ruse says:
June 28, 2013 at 12:43 pm
el numeraire is toast. My prediction: Gold will bottom at $500 and stay there.
Mellow Ruse says:
June 28, 2013 at 12:43 pm
What has changed is that we’ve entered the acceleration phase of the decline.
Mellow Ruse says:
October 21, 2013 at 12:21 pm
Even gold’s mythical status as a store of value has been debunked with the recent price collapse.
————————————————————————————–
ORLY??
*Gold close price Jun 28 2013: $1190
*Gold close price Oct 21 2013: $1313
*Gold current price Oct 22 2013: $1343
Wow, that’s a very impressive acceration phase of decline, debunking and toasting indeed not.
Estancia sed mi amigo 😉
Whatever helps you sleep at night.
Gold is 22% lower than one year ago and 5.5% lower than the August high.
Therefore, your technical analysis is spot on..
el O says:
October 16, 2013 at 6:53 am
There are still price up-ticks within a declining trend but each rally has failed to make new highs. Thus, the downtrend remains intact.
For someone who says that they have no investment in gold, emotional or physical, you sure do seem to spend a lot of energy on the subject.
And it seems like you are almost always the one to bring up the subject of gold. Odd behavior for one claiming not to care.
I’m normally responding to the posts of others…either you, el O, or matt138… but sometimes I post mainstream financial articles to show that the euphoria surrounding gold has ended (i.e. the bubble is deflating).
Your criticisms could be launched at anybody with a bearish viewpoint. Why does Larry run a blog about OC real estate if he’s not invested in it? It doesn’t mean he can’t be interested in it, or doesn’t have something insightful to say about it. I don’t recall saying that I don’t care what happens to gold, just that I no longer have a financial stake in what happens. It’s still a subject of interest to me.
Also, I’m trying to help others make sense of the market and to act accordingly, which is why I encouraged people to buy real estate from 2009-2011, to buy stocks in mid-2009, and to sell gold last year. I sincerely think you and the pro-gold people of this blog would be better off selling before it declines in value any further. There are also many readers that never comment but take what they read here into consideration. I’m the only voice of dissent in this debate.
Larry never said he was not invested in it; emotionally or physically. Straw man.
Actually, you are not normally responding, but are rather initiating. I rarely initiate a conversation about gold and mostly respond to correct your misinformation.
“Also, I’m trying to help others make sense of the market and to act accordingly, which is why I encouraged people to buy real estate from 2009-2011, to buy stocks in mid-2009, and to sell gold last year. I sincerely think you and the pro-gold people of this blog would be better off selling before it declines in value any further.”
How altruistic of you, which I do not have the capability to understand, as I would not think that I know enough to know what other people should do with their hard earned money; except for family.
Why do I comment, you are about to ask? I get a kinda sadistic pleasure in constanly correcting your misinformation about gold. And most of my other comments are either direct questions asking for information or intended to draw out information. All the above being selfish reasons and non-altruistic. I would not have the audacity or arrogance to suppose that my spurious writings are of any benefit to mankind.
I think even small things can be of benefit to other people. How you treat them matters. This is a blog dealing with finance & economics, so it makes sense that we would discuss those topics. People read because they want to learn & understand, not be sidetracked by personal attacks. You’re free to correct me about gold but you can’t escape the fact that I called this.
It pisses you off that I was right. Your attacks are transparent.
” You’re free to correct me about gold but you can’t escape the fact that I called this.
It pisses you off that I was right. Your attacks are transparent.”
May be hard to believe, but I do not have the slightest idea what you were right about. I do know that most of what you write about factors affecting the pog are drivel.
I do remember that you said that the median prices of SFRs in OC would not fall below $500k again, and you were wrong. Other than that, I don’t remember what specifically you have been right or wrong about, but I do know that generally speaking you are clueless on what effects the long term price of gold.
I also know that you have the ability to remember or search for a post as a example of what someone said. I have neither the ability to remember, nor the energy, desire, or ability to search for such proclamations.
Still buying with both hands. The printing will never stop. POG is in a healthy correction. Some will be right some will be wrong. I prefer that which cannot be printed=)
I’m going with MR on this one. I like that he stimulates conversation on this topic, and I like his reasoning for doing so even more. If he believes strongly that gold is a bubble, and he provides thoughtful reasons why he thinks so, I strongly encourage him to share his point of view.
A reason can be thoughtful and be just as wrong as any other.
A silly economic model called ‘supply and demand’:
http://www.sprott.com/media/270174/open-letter-table1.gif
Why is Cordray bending over backwards for the banks?
It’s ridiculous. The CFPB’s rules are already as wishy-washy as they can be, and this clown is trying to cut these chiselers more slack. Why?
Look: If the mortgage originators don’t want gov financing, they can issue their own private label loans themselves. No one is stopping them.
But if they want gov money, then follow the rules and shut the hell up.
And this stuff about “One in five mortgages market would not meet the requirements of the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage ” is pure baloney.
Sure, the banks have been using their own standards, but they’re pretty good at getting back their own money when they have to. The only time they issue crappy loans, is when Uncle Sam is on the hook.
You can bet your bippy on that!
A real conversation yesterday:
B: Can you tell me about FHA financing?
SGIP: What draws you to FHA lending?
B: I chose an Option ARM in 2005.
SGIP: What happened to that loan and property?
B: I had a 2.5 year long loan modification negotiation. The bank wouldn’t negotiate or reduce my principle. We got involved in a lawsuit, BK’d then Foreclosed 12 months ago.
SGIP (under my breath… TAA DAAAAA! Dude, that’s a Hat Trick!) So…. there is the FHA Back To Work program, but you can only qualify if you had extraordinary circumstances for the short sale/foreclosure/BK.
B: The Option ARM was a bad loan….
SGIP: Do you have any funds for a down payment?
B: About 3%, more if I get a gift.
SGIP: To be clear, that’s going to be a tough fight to win, but let’s….
B: You’re just like all the other banks, not giving the “little guy” a break. DIE IN A FIRE.
Click.
The entitlement, “I must buy NOW”, and it’s all your fault thinking is rampant now. Sad to watch. Even tougher to listen to patiently IMHO.
My .02c
Housing entitlements is the middle class EBT. It happened so slowly I never noticed.
+1 Great post.
You must feel like the woman in the first cartoon listening to idiots all day.
The sense of entitlement is repulsive. And the lack of accountability. All the foolish decisions that lead to these consequences were somehow not his fault. You’re part of a corrupt system out to keep him down, right?
LPS earnings plummet as default servicing dries up, hoocoodanode?
Lender Processing Services (LPS), known for providing data, analytics and services to the mortgage industry, felt the sting of a 40% drop in earnings-per-share in the third quarter as the company adjusted to a decline in overall transactions within the origination and default services segments.
Origination services revenue within the transactions segment fell 21.5% to $120.9 million from last year, as falling refinance volumes led to lower revenue from title, escrow and appraisal services.
Default services revenue hit $114.6 million in 3Q, a 25.8% drop from last year, and a decline attributed to lower foreclosure activity and falling delinquencies. Both factors show the housing market improving, but as it shifts, firms in the servicing space have found themselves looking for new ways to consolidate, cut costs and compete.
Uh… “banks are doing what they’re told” 😉 so it comes as no surprise that foreclosure activity and delinquencies are falling = the housing market is only improving cosmetically. Too bad.
ZIRP cosmetics.
Improving my ass.
LPS didn’t figure out a way to get in on the loan modification servicing, or they could have made a fortune.
30-Year Fixed Mortgage Rates Fall Below 4% for First Time Since June
The mortgage rate for 30-year fixed mortgages fell this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 3.98 percent, down from 4.16 percent at this same time last week.
The 30-year fixed mortgage rate steadily declined early last week, leveling off near 4.04 percent on Friday before dropping to the current rate this morning.
“Last week, rates dipped after the debt-ceiling deal was reached, then slumped further after this morning’s disappointing jobs report,” said Erin Lantz, director of mortgages at Zillow. “This week, we expect rates to stabilize at this lower level as markets react to news that the Federal Reserve will maintain its stimulus program into 2014.”
Additionally, the 15-year fixed mortgage rate this morning was 3.02 percent and for 5/1 ARMs, the rate was 2.75 percent.
What are the interest rates right now? Check Zillow Mortgage Marketplace for mortgage rate trends and up-to-the-minute mortgage rates for your state.
As was mentioned before… ..problem is, RE is a fixed target.
———————————————————-
The International Monetary Fund Lays The Groundwork For Global Wealth Confiscation
The International Monetary Fund (IMF) quietly dropped a bomb in its October Fiscal Monitor Report. Titled “Taxing Times,” the report paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.” It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases culminating in the direct confiscation of assets.
First, IMF economists know there are not enough rich people to fund today’s governments even if 100 percent of the assets of the 1 percent were expropriated. That means that all households with positive net wealth—everyone with retirement savings or home equity—would have their assets plundered under the IMF’s formulation.
Second, such a repudiation of private property will not pay off Western governments’ debts or fund budgets going forward. It will merely “restore debt sustainability,” allowing free-spending sovereigns to keep tapping the bond markets until the next crisis comes along—for which stronger measures will be required, of course.
Third, should politicians fail to muster the courage to engage in this kind of wholesale robbery, the only alternative scenario the IMF posits is public debt repudiation and hyperinflation. Structural reform proposals for the Ponzi-scheme entitlement programs that are bankrupting us are nowhere to be seen.
http://www.forbes.com/sites/billfrezza/2013/10/15/the-international-monetary-fund-lays-the-groundwork-for-global-wealth-confiscation/
from el O article dated 10/15 IMF:
“… Substantial progress likely requires enhanced international cooperation to make it harder for the very well-off to evade taxation by placing funds elsewhere.”
The next article http://www.forbes.com/sites/halahtouryalai/2013/10/17/no-jpm-isnt-banning-international-wire-transfers-no-limits-on-withdrawals-either/ dated 10/17/2013 by Chase.
Yesterday, I noticed a sign at a local credit union bank that states that they will not perform outgoing international wire transfers as of 10/18/2013. Ask them for details.
Has any of you astute readers seen this at your bank, BofA, Wells Fargo,… anyone?
The new $100 bill is very formidable.
There must be some new regulations. I made a wire transfer at Chase a few days ago (domestic), and I saw something about changes to policy about international wires.
http://www.forbes.com/sites/halahtouryalai/2013/10/17/no-jpm-isnt-banning-international-wire-transfers-no-limits-on-withdrawals-either/
More on Chase & wire transfers. I don’t trust Zero Hedge as a reliable source of information…
I heard an interesting presentation by an economist from a firm called ITR Economics today. He’s somewhat of an optimist over the near term, though he thinks a mild recession will take place second half of 2014 into Q1 of 2015. He says that for anyone over 40 or so an interest rate on a home loan of 6-7% (fixed) is pretty good. We’re used to higher rates, have seen lower rates, but know that 6-7% from a historical standpoint is pretty good. For people under 40 or especially under 30 their whole experience has been of interest rates in the 4% range. When rates go up to historically normal or typical rates they will freak out and think the end of the world is at hand.
[…] Lenders unwilling to loan to wealthy strategic defaulters – OC Housing News The people who strategically defaulted and squatted for years got to enjoy a substantial benefit at the bank's expense. These people should have to endure some consequences for this action. The waiting period is a small price to pay for the good times they had while they enjoyed their free ride. […]