Jan282014
Another way the NAr manipulates sales figures for positive spin
The NAr wants to overstate the current month’s readings and downward revise the previous month’s readings because it always makes the current month look like it’s increasing.
The National Association of realtors lies about market data; it doesn’t just exagerate or consistently repeat honest mistakes — it lies — knowingly and purposefully. Back in early 2011, I reported the National Association of realtors caught lying about home sales. Later, Reuter’s reported Existing home sales to be revised down from 2007, and ZeroHedge noted US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports. The NAr would like everyone to believe these were “honest” mistakes and that this corrupt trade organization intended to provide accurate data, but they merely made a small mistake; however, that characterization misses a deeply pathological flaw in the organization itself that renders it incapable of telling the truth. I exposed that problem in The real reason the NAr affordability index is completely worthless.
realtors want to pass themselves off as experts on real estate whose advice can be relied upon by market participants. However, realtors have no interest in whether or not it truly is a good time to buy or sell because for them, it’s always a good time to generate a commission. This conflict of interest causes realtors to be self-serving liars who line their own pockets at the expense of the people they ostensibly serve.
I detailed this phenomenon in the 2010 post Urgency Versus Reality: realtors Win, Buyers Lose.
realtor Mind ®™
I recently attended a realtor marketing seminar, and it was fascinating to watch the realtor mind at work. The presentation included many “reasons to buy” realtors could use in their own
consultationsmanipulations with customers. There was little or no regard for the veracity of the claims, it only mattered that realtors have something, anything to create urgency in buyers.Many realtors see their job as presenting buyers with reasons to buy, any reason, and hope the buyer is gullible enough to believe them. They feel no responsibility for buyer outcomes; whocouldanode, right? What other explanation is there?
realtor Mind is Everywhere
How widespread is realtor mind? Am I unfairly labeling a large group based on a few isolated incidents among unscrupulous practitioners?
Back at the peak of the housing bubble, the National Association of realtors produced the “Suzanne Researched This” commercial. The scene is set with a couple discussing a home purchase in their kitchen with a realtor voyeuristically listening on the phone. In stereotypical fashion the commercial shows women how to browbeat their spineless husbands into submission, and it shows men how to acquiesce gracefully and pretend you got something out of the deal.
In their defense, the NAR did not say prices are going to the moon, but it does show that manipulating people to buy — even in 2006 when it was disastrous to do so — it the primary goal of NAR advertising. It is easy to see this couple, and anyone who fell victim to the Suzannes of the NAR, going through the foreclosure process today. Is the NARs culpability for that? Are the Suzannes?
If there is a doubt that some realtors are simply clueless shills who will use the appreciation angle to their advantage, watch the video below:
realtors will say whatever they believe they need to say in order to generate a commission and make money. It is what it is.
This self-serving need bleeds into decisions both big and small at every level of their organization. Today, I want to expose a trend in their reporting data, and I’ll let you judge for yourself why this goes on.
Where are home sales headed?
Realtors: Strength hinges on job market
Brena Swanson, January 23, 2014 10:47AM
Existing-home sales experienced a slight increase, growing 1% to a seasonally adjusted rate of 4.87 million in December from a downwardly revised 4.82 million in November, according to the National Association of Realtors latest housing report.
Notice how they managed to report the national numbers increased? Did they really?
The NAr frequently downwardly revises the last month’s numbers
Why do they do that? Any real data analyst trying to ensure accuracy would notice their methodology repeatedly overstates the current month’s estimates and requires a downward revision later, and a good analyst would change the methodology so later revisions were both up and down, making the current month’s estimate more accurate and reliable; however, that isn’t what the NAr does, and it’s not what they want to do. The NAr wants to overstate the current month’s readings and downward revise the previous month’s readings because it always makes the current month look like it’s increasing.
Imagine if sales or prices were completely flat and unchanging month-to-month. If the NAr desired accuracy, they would report the market was stagnant, which it is if neither prices or sales are changing; however, if they overstate the current month and downwardly revise the previous month, the NAr could report each month was increasing over the last, the market would appear to have life and strength, buyers might act on this false signal and help generate a commission; thus realtors manipulate the numbers and knowingly lie — over and over again.
Rates, tight inventory dampen California home sales
Home prices could eventually stabilize sparking new demand
Brena Swanson, January 20, 2014 10:52AM
California home sales dipped 5.9% from 2012 to 2013 as the market felt the pinch of tighter inventory levels and higher prices, the California Association of Realtors reported this past month. …
In December, sales were down 6.7% from a revised 387,860 in November and down 18.6% from 444,770 units a year prior.
Home prices finally reversed a three-month decline and edged higher in December.
The worst nightmare of the NAr, or CAr for that matter, is when market conditions are so bad that their downward revisions can’t make the current numbers positive. That’s when they start really grasping at straws and find plausible but bogus excuses for the market’s poor performance.
“However, the supply of foreclosures and short sales is the lowest it’s been since well before the financial crisis, greatly constraining the number of these transactions,” said Kevin Brown, C.A.R president.
“In addition, housing prices are improving across the board, even reaching pre-2007 levels in parts of the Bay Area. Higher prices and rising rates as the Fed slowly tapers are additional factors in the sales slowdown evidenced in the December numbers,” Brown explained.
But the transition period from December to the New Year is usually somewhat slow, according to market observers.
“This is something we encounter every year from around Thanksgiving and mid-January, which is not hugely significant by itself,” said Sophia Delacotte, a Realtor in Silicon Valley, Calif.
Yeah, right….
The NAr isn’t going to change its ways. They don’t question the ethics of what they do, and they benefit from the activity generated from the gullible people who believe these experts charlatans. Although I don’t believe I can change them, I can expose them, and whenever I see an example of their duplicity, I feel duty-bound to point it out to help protect you.
[dfads params=’groups=164&limit=1′]
$200,000 HELOC booty in 7 months, 15 months squatting
The former owners of today’s featured property lived the high life of an OC Ponzi. They purchased this property with no money down, and after owning it for only seven months, some dipshit lender refinanced them and allowed them to cash out with about $200,000. It’s not clear when they quit paying, but they were finally served an NOD in late 2011. The lender took the property back in early 2013, then sat on it for a full year while prices increased. They are bringing it to market know in hopes of recovering some portion of the huge second mortgage wiped out during the foreclosure.
[idx-listing mlsnumber=”OC14013817″]
10 BOWER Ln Ladera Ranch, CA 92694
$659,900 …….. Asking Price
$732,500 ………. Purchase Price
12/17/2004 ………. Purchase Date
($72,600) ………. Gross Gain (Loss)
($52,792) ………… Commissions and Costs at 8%
============================================
($125,392) ………. Net Gain (Loss)
============================================
-9.9% ………. Gross Percent Change
-17.1% ………. Net Percent Change
-1.1% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$659,900 …….. Asking Price
$131,980 ………… 20% Down Conventional
4.41% …………. Mortgage Interest Rate
30 ……………… Number of Years
$527,920 …….. Mortgage
$142,495 ………. Income Requirement
$2,647 ………… Monthly Mortgage Payment
$572 ………… Property Tax at 1.04%
$100 ………… Mello Roos & Special Taxes
$137 ………… Homeowners Insurance at 0.25%
$0 ………… Private Mortgage Insurance
$225 ………… Homeowners Association Fees
============================================
$3,681 ………. Monthly Cash Outlays
($548) ………. Tax Savings
($707) ………. Principal Amortization
$213 ………….. Opportunity Cost of Down Payment
$102 ………….. Maintenance and Replacement Reserves
============================================
$2,742 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$8,099 ………… Furnishing and Move-In Costs at 1% + $1,500
$8,099 ………… Closing Costs at 1% + $1,500
$5,279 ………… Interest Points at 1%
$131,980 ………… Down Payment
============================================
$153,457 ………. Total Cash Costs
$42,000 ………. Emergency Cash Reserves
============================================
$195,457 ………. Total Savings Needed
[raw_html_snippet id=”property”]
3,243,000 loans at least 30 days past due (but not in foreclosure)
Delinquencies picked up slightly in December, according to early data released by Black Knight Financial Services (BKFS)—but overall trends indicate 2013 was a year of improvement.
As of month-end, BKFS puts the total U.S. loan delinquency rate at 6.47 percent, an increase of 0.26 percent from November. The figure includes loans that are 30 or more days overdue but not in foreclosure.
On an annual basis, however, delinquency was down 9.85 percent in 2013.
BKFS’ data also reveals that 3,243,000 properties were at least 30 days past due (but not in foreclosure) at the end of the year, while 1,280,000 were at least 90 days past due. A total of 4,488,000 properties were at least a month delinquent or in foreclosure.
The total U.S. foreclosure pre-sale inventory rate as of December 31 was 2.48 percent, according to the company—down 0.74 percent on a monthly basis and 27.90 percent yearly. The total number of properties in foreclosure pre-sale inventory was 1,244,000.
Mississippi, New Jersey, Florida, New York, and Louisiana topped the list of states with the highest number of overdue loans, while Montana, Colorado, Alaska, South Dakota, and North Dakota had the lowest percentage.
Tuesday’s release from BKFS represents a “first look” at its monthly Mortgage Monitor report, which is scheduled for release February 3. The data is derived from the company’s loan-level database, which represents about 70 percent of the market.
1,280,000 properties 90 or more days delinquent, but not in foreclosure
Black Knight Financial Services says December was a good month for foreclosures in its latest report.
Stil, some states are leading the way in delinquent loans, while others are forging ahead as regions where a strong majority of homeowners are still current.
First by state: The states with the highest percentage of delinquent loans include Mississippi, New Jersey, Florida, New York and Louisiana.
The states with the best record for staying current are Montana, Colorado, Alaska, South Dakota and North Dakota.
Overall, the inventory of loans in foreclosure declined nearly 30% by the end of 2013. Granted, delinquencies were up slightly (+0.26%), but the overall trend for 2013 was one of improvement.
Really good news: In December, foreclosure and seriously delinquent (90+ days) inventories reached their lowest levels since 2008. Also, foreclosure starts were down 23% for the entire year. The total U.S. foreclosure pre-sale inventory rate hovered at 2.48%.
By volume, the number of properties 30 days or more past due, but not in foreclosure, came to 3.24 million.
In addition, there were 1.28 million properties 90 or more days delinquent, but not in foreclosure.
The number of properties in the foreclosure pre-sale inventory ran to 1.25 million, while the number of properties that were 30 or more days delinquent or in foreclosure hit 4.48 million.
Jeff Gundlach, ( never heard of the guy), says,
… about 8 million borrowers still owing more on their mortgages than their homes are worth.
I have no idea how many homes remain in shadow inventory and I have long since given up projecting how they will affect the housing market, but I do know that the statements about how long some folks have gone without paying their mortgage is not exagerated. I know someone who has not made a mortgage payment in over 4 years. By my estimation, he and his wife have saved over $144,000 by not making any mortgage payments for the last 4 years. Personally, I think he is building up a heck of a retirement package; better than our 410k’s.
As long as he can hide those assets, he will probably get away with it. Many people in his circumstances are putting cash in coffee cans or hiding it under their mattress.
High prices causing new home sales to wane
New home sales softened for the second straight month in December, falling well short of expectations as harsh weather and declining affordability turned potential buyers off.
According to a joint report from the Census Bureau and HUD, sales of new single-family homes ran at an estimated seasonally adjusted rate of 414,000 in December, a decline of 7.0 percent from November’s downwardly revised rate of 445,000.
Year-over-year, new home sales in December were up 4.5 percent, the agencies estimate.
Despite the decline, new sales are said to have improved over the course of 2013. The government estimates a total of 428,000 new homes were sold last year, a 16.4 percent increase over 2012’s 368,000 sales.
December’s downslide may have been due partly to the icy weather, which is thought to have kept would-be homebuyers from making their move.
However, a more likely factor is the rise in median sales prices, which Census and HUD say rose to $270,200. The average new home sales price was $311,400, down more than $20,000.
Also figuring into the equation was a drop in new home stock, which was estimated at 171,000 at the end of the month—the third straight decline. (Even though supply was down, the drop in sales numbers pushed months’ supply up to 5.0 months at the current rate.)
The Midwest was the only Census region to experience a monthly increase in new home sales. According to the government report, sales in the region grew 17.6 percent to a rate of 60,000.
In the South, new sales fell 7.3 percent month-over-month to a pace of 230,000, while they were down 8.8 percent in the West to 103,000. The Northeast posted the most precipitous drop: Sales there fell 36.4 percent to a rate of 21,000.
Buyers go into hibernation for the winter
According to Redfin’s most recent Real-Time Bidding Wars report, 52.0 percent of offers made by the company’s agents faced competition last month, down from 52.8 percent in November and 62.4 percent a year earlier.
Market-by-market data paints a revealing picture of the factors that influenced buyer competitiveness over the month.
“Between November and December, half of the markets highlighted in this reported experienced an uptick in bidding wars while the other half saw competition fall,” explained Redfin analyst Ellen Haberle. “The contrasting bidding war trends likely reflect regional and seasonal factors that impacted the U.S. markets in December, including holidays, snow storms, and the limited number of homes for sale.”
Competition plummeted in the Northeast, which experienced “[p]articularly frosty weather” in the year’s final month. Instances of competing offers dropped most in Boston and Baltimore, falling 19.7 and 13.5 percentage points, respectively.
According to Redfin agent Adam Welling: “Boston had multiple snowstorms during December, which fully shut down home tours at times. For the adventurous homebuyers who braved the arctic-like conditions, the reward was a bit of space in a market that had otherwise been congested and claustrophobic.”
Though competition in the market is expected to return as December’s chill thaws and the new season starts up, Haberle says “the rebound is likely to be muted somewhat by continued snowy weather across the Midwest and the East Coast during January, which probably will lead many buyers to put their home shopping plans on hold.”
If all else fails, blame the weather! I see some truth to this as the cold has been extreme. But there’s a bigger un-natural disaster involved here: our rigged financial system that’s shutting out “natural” buyers. This entity doesn’t care about the tempurature. I think IR is right, low RE volume dominated by investors will be 2014’s new normal.
I’m glad someone commented on the bad weather nonsense.
For once, I would like to see a report state that sales were up because the weather was unseasonably warm.
Unemployment Rate May Not Be Fed’s Only Trigger
In December 2012, the Federal Reserve said it would consider raising interest rates when the unemployment rate fell to 6.5 percent. That could happen when the January jobs report is released on Feb. 7 — a week after the new chairwoman, Janet Yellen, takes office. But Ms. Yellen has pointed to other labor market indicators as being important, including the proportion of the work force with part-time jobs that would prefer to be working full time, and the long-term unemployment rate — the proportion of the labor force that has been out of work for at least 15 weeks. Those indicators are still well above where they have been in the past.
The only trigger for the Fed is member bank profits. Statistics will be manipulated and pointed to as required.
The FED is consumed with propping up real estate more than anything. Mainly to protect banking equity.
The real question is how much longer can the Fed do this?
Theoretically, as long as the Fed can print money.
I figured the fed would backpeddle on its statements regarding unemployment. They will start to look at the labor participation rate next and declare that it needs to rise before they quit printing money.
I think awgee’s comment is right; they will keep printing money until the member banks are profitable without accounting gimmicks to prop up their solvency.
Economic mobility hasn’t changed in a half-century in America
Children growing up in America today are just as likely — no more, no less — to climb the economic ladder as children born more than a half-century ago, a team of economists reported Thursday.
Even though social movements have delivered better career opportunities for women and minorities and government grants have made college more accessible, one thing has stayed constant: If you are growing up poor today, you appear to have the same odds of staying poor in adulthood that your grandparents did.
The landmark new study, from a group led by Harvard’s Raj Chetty, suggests that any advances in opportunity provided by expanded social programs have been offset by other changes in economic conditions. Increased trade and advanced technology, for instance, have closed off traditional sources of middle-income jobs.
The findings also suggest that who your parents are and how much they earn is more consequential for American youths today than ever before. That’s because the difference between the bottom and the top of the economic ladder has grown much more stark, but climbing the ladder hasn’t gotten any easier.
Those findings add up to a surprising take on the status of the iconic American Dream, and they cast Washington’s roiling debate about the consequences of economic inequality in a new light.
This is an important topic. I just wish the media (and bloggers) would define the issues better and define prospective solutions better, rather than just bitchin’ and moanin’ about “inequality.”
There’s a difference between wage income, investment income, and wealth, but these three things just get jumbled together when discussing “inequality.” The inequality in wealth is far greater than the inequality in “income,” but for some reason the media focuses mostly on what is really “income inequality.”
It’s rare to read/hear defined “solutions” to the “inequality problem,” but when I do, they’re mostly ideas that exacerbate the current terrible income tax code. This system dramatically and disproportionately taxes dual high wage earning couples while allowing wealthy people with investment income and estates to pay a much lower tax rate, if any at all.
Oh well, that’s my soap box for the day…
I agree. The inequality problem should parse the difference between income inequality and wealth inequality. Income inequality should exist because some people provide more valuable services than others, and those who provide valuable services should be compensated accordingly. Wealth inequality is something else entirely. We could probably have a good debate on whether or not this needs to be addressed and how it can be done, but the two issues should be separated because the causes and the solutions are very different between the two.
In my daily reading I came accross the HSBC large cash withdrawl limits fiasco. It seems that depositors are upset that HSBC will not let them make large cash withdrawls without documentation for the purpose of the cash. And some folks are upset that they can not seem to get money out of their Lloyds ATMs. The resounding cry seems to be, “It’s my money, not theirs!” I don’t know what they are so upset about, because actually it is the banks money, both in the UK and in the states. When you deposit money in an American bank savings account, you have lent your money to the bank and are then a creditor, just another creditor on a list of creditors.
Federal law also requires depository institutions complete Suspicious Activity Reports on any withdrawal or deposit of cash exceeding $10k.
Most people are easily duped, so manipulation can be used as a
means to an endprofitable investment tool; like marketing. The depth of ignorance is ineffable.More deflation talk. Is that how Empires die?
Fed tapering will lead to LOWER, not higher, rates: Dan Alpert
This week’s Federal Reserve meeting is significant not just because it’s Ben Bernanke’s last as chairman. In addition, the two-day confab will indicate the Fed’s commitment to the plan it initiated in December: to taper its quantitative easing program by $10 billon per month.
“If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation is moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings,” the Federal Open Market Committee declared in its December statement. “However, asset purchases are not on a preset course…”
Related: What to expect from Ben Bernanke’s last meeting as Fed chair
Given recent upheaval in the financial markets — most notably in emerging markets — as well as the disappointing U.S. jobs report for December the Fed “could skip this meeting,” says Daniel Alpert, managing partner at Westwood Capital. “But I don’t think they will — the reason is they realize QE has no beneficial returns to the economy as a whole.”
Related: Stocks will fall as long as the Fed continues to taper: TrimTabs’ Biderman
Quantitative easing help stabilize the financial markets — “that was good….and scared everyone into equities, which worked for the benefit of some,” Alpert says. Now, “the benefits of quantitative easing “has passed its sell-by date and it’s time to get rid of it.”
Criticizing the efficacy of QE is wildly popular these days. But Alpert’s view on what happens as the Fed continues to reduce and eventually ends its purchases is contrary to popular wisdom: He believes interest rates will fall, not rise, when QE runs its course.
In the aftermath of QE, the global interest rate market will “re-animate to the low growth, lack of demand, oversupply kind of market we’ve had in the macro world for a long time,” he says, referring to the theme of his latest book: The Age of Oversupply.
Citing the upheaval in emerging markets and the related issue of China’s recent manufacturing slowdown, Alpert believes the forces of deflation are beginning to reassert themselves; these trends will become more evident in interest rates once the Fed has exited the QE scene, he says.
Related: The Road to Prosperity: How to Fix the Stubborn Slump in Advanced Economies
While still up significantly from last year’s lows, the yield on the benchmark 10-year Treasury has retreated more than 25 basis points since hitting 3% earlier this month.
Here we go….
Obama To Unveil Treasury IRA Plans, Or Planning For A Post-Monetization World
Wondering who will take over the mantle of Treasury bond buyer now that the Fed is stepping away? Curious of the government’s next steps towards repression and control of wealth? Wait no longer. As the AP reports, President Obama will unveil a new retirement savings plan tonight that allows first-time savers to buy US Treasury bonds tax-deferred for retirement.
http://www.zerohedge.com/news/2014-01-28/obama-unveil-treasury-ira-plans-or-planning-post-monetization-world
But, not to worry. When the federal government makes it’s retirement plan mandatory, it will promise you that you won’t lose your present retirement plan.
Yeah, the Constituition is a living, breathing document. Just remember that. And of course, that you will get EXACTLY what you voted for. The prez is now authorized to decree legislation.
I don’t have a problem with this plan. If people want to invest in treasuries this way, this should be a relatively safe investment. The government isn’t as desperate as Poland, so it won’t directly confiscate the assets of investors; it won’t need to because it can indirectly confiscate the assets through inflation. Investing in Treasuries is potentially less harmful than the other assets people will invest in if left to their own devices, particularly those who buy out on the long end of the yield curve to pick up a few nickels in front of a bulldozer.
This is not a mandate, unlike social security, so people can chose to invest in this or not. Further, since it will undoubtedly be capped, people won’t be able to put too much in this fund. It is another way to diversify holdings and obtain a small tax break.
Huh? Unless I am mistaken, just about anybody with taxable compensation may establish an IRA and invest in treasuries. What possible reason would the government need to get involved unless it was a stepping stone to asset confiscation? Relatively safe investment? Are you serious? Unless the holder purchases TIPS, they are 100% guaranteed to have less wealth in the future buying treasuries. Have you noticed what the federal debt is lately? Or the Fed’s balance sheet? Safe? Dude, this government’s economic status is at the 30th floor while falling off a 40 story building. Everything is fine. Diversify holdings? diversify from questionable or risky to sure loss? It is not a mandate, like social security? Are you friggin’ serious? Have you studied the history of Social Security and what it was PROMISED not to be? Obama promised many times that you would be able to keep your health insurance if you wanted to? The government is not as desperate as Poland, so it won’t directly confiscate the assets of whomever? WAKE THE ____ UP!
It occurs to me that you see the lies perpetuated by the NAr, but what is this thing that you just give the government the benefit of the doubt? Think. Who or what lies more than anyone or anything else that you know of? Do you really think for half a second that this is being done to benefit retirees, or anybody else? If you do, I can only shake my head in disbelief.
Not to speak of the Constitutionality of a president just making whatever laws he feels like by executive order. If the plan seems alright, just forget about the Constitution? If the president can do this, why in the world do we have Congress? Like I said, this is what you get when enough of the sheep think that the Constitution is a living, breathing document.
This is almost enough to make me give up. What in the world happened?
By the way, I have been telling my dad for a couple of years that the first thing the federal government was going to do in order to confiscate retirement wealth would be to require pension plans to have a certain percentage in treasuries. I was wrong, but only partially. Right idea, wrong implementation.
It’s possible we have reached a credit saturation point and so inflation by issuing debt is no longer possible. Don’t worry about the US dying by deflation they would physically print the debt away by actual money printing (as opposed to debt issuance) long before that point.
CFPB Director Richard Cordray just told off the House Financial Services Committee
Consumer Financial Protection Bureau Director Richard Cordray appeared before the House Financial Services Committee this morning for his Semi-Annual Grilling (I mean Report) before Congress.
Those of you who remember controversial CFPB hearings from the past are in for a real treat.
So bring out the popcorn, folks, Congressional battles with the CFPB are always heated and centered around the most controversial subjects, such as the CFPB’s crappy headquarters, the bureau’s expensive renovations — and whether or not Richard Cordray really has friends living in manufactured homes. Yes, this came up.
For the record, Cordray does have friends living in manufactured homes, and the Bureau director was not amused with some of the panel’s line of questioning. The discussion lingered on manufactured housing for a bit too long, angering the CFPB chief.
At one point, the normally cool and confident Cordray grew upset over a round of questioning over the alleged impact CFPB rules are having on manufactured housing.
Apparently the director mentioned the rules are not an attack on manufactured housing, and that he’s sensitive to individuals in manufactured housing since he has friends and family living in such arrangements.
But that didn’t stop members of the Congressional panel from suggesting that the director and his “one-size-fits-all” approach to lending rules and his comments are condescending to the manufactured housing community. And that’s where it all began.
Cordray fired back, telling the House Panel, “These are some of the most offensive questions I have ever heard coming from this Committee.” (Cordray may want to look back at some of the hearings various Congressional panels held with Elizabeth Warren a few years ago). But I digress.
Bloomberg on Non performing loans. “Hedge Funds See Cheap Homes With Soured Loans: Mortgages”
How are these guys like Blackrock going to make money on this?
I mean, if a borrower is delinquent, he’s not necessarily going to pay up because the principal is lowered, is he?
It does seem weird, though, that the same financial crooks who created the crisis get to make out on the loans they issued.
http://www.bloomberg.com/news/2014-01-28/delinquent-debt-seized-by-lehman-alum-seeing-recovery-mortgages.html
This is a housing play. They are buying the delinquent loans for 60% to 80% the value of the underlying collateral. If the borrower doesn’t get current, they can merely boot them out and rent the place or sell it for a profit.