Fri 2010-10-08 21:57 EDT

A Mammoth One in Five Borrowers Will Default <<; Real Estate Prices & Mortgages on HousingStory.net

Michael David White

A leading mortgage analyst predicts over 11 million homeowners will default and lose their home if the government fails to take more radical intervention. Amherst Securities Group LP, one of the most respected names in mortgage research, has trumpeted an ambitious call-to-government arms in its October mortgage report. ``The death spiral of lower home prices, more borrowers underwater, higher transition rates (to default), more distressed sales and lower home prices must be arrested.''...

borrowing; default; HousingStory; mammoth; mortgage; net; real estate prices.

Minyanville Sat 2010-08-21 10:33 EDT

How Pimco Is Holding American Homeowners Hostage

David Stockman

...According to Bill Gross ...the American economy can be saved only through ``full nationalization'' of the mortgage finance system and a massive ``jubilee'' of debt forgiveness for millions of underwater homeowners...As overlord of the fixed-income finance market [Pacific Investment Management Co. (Pimco)] generates billions annually in effort-free profits from its trove of essentially riskless US Treasury securities and federally guaranteed housing paper. Now Pimco wants to swell Uncle Sam's supply of this no-brainer paper even further -- adding upward of $2 trillion per year of what would be ``government-issue'' mortgages...This final transformation of American taxpayers into indentured servants of HIDC (the Housing Investment & Debt Complex) has been underway for a long time, and is now unstoppable because all principled political opposition to Pimco-style crony capitalism has been extinguished...At the heart of the matter is the statist Big Lie trumpeting the alleged public welfare benefits of the home-ownership society and subsidized real estate finance...the congregates of the HIDC lobby -- homebuilders, mortgage bankers, real estate brokers, Wall Street securitizers, property appraisers and lawyers, landscapers and land speculators, home improvement retailers and the rest -- have gotten their fill at the Federal trough. But the most senseless gift -- the extra-fat risk-free spread on Freddie and Fannie paper -- went to the great enablers of the mortgage debt boom, that is, the mega-funds like Pimco...there isn't a shred of evidence that all of this largese serves any legitimate public purpose whatsoever, and plenty of evidence that the HIDC boom has been deeply destructive...there are upward of 15-20 million American households that can't afford their current mortgages or will be strongly disinclined to service them once housing prices take their next -- and unpreventable -- leg down. But Pimco's gold-coast socialism is exactly the wrong answer. Rather than having their mortgages modified or forgiven, these households should be foreclosed upon, and the sooner the better...

Holding American Homeowners Hostage; Minyanville; PIMCO.

zero hedge - on a long enough timeline, the survival rate for everyone drops to zero Thu 2010-08-19 16:25 EDT

Commercial Real Estate Lobby Ask For Taxpayer Aid To Help Recapitalize Banks Saddled With Billions In Underwater CRE Loans

The problem that nobody is talking about, yet everyone continues keeping a close eye on, namely the trillions in commercial real estate under water, is quietly starting to reemerge. In the attached letter from the Commercial Real Estate lobby, it reminds politicians that the hundreds of billions in loans that mature in the next several years won't roll on their own, and we see the first inkling of the lobby asking congress for much more taxpayer aid, in this case in the form of Shelley Berkley's proposed legislation...

billions; Commercial Real Estate Lobby Ask; dropped; Help Recapitalize Banks Saddled; long; survival rate; taxpayer aid; Timeline; Underwater CRE Loans; zero; Zero Hedge.

Bruce Krasting Tue 2010-03-09 17:10 EST

Some Thoughts on Fannie's Horrible Year

Bruce Krasting

Fannie Mae released it's annual and 4th Q numbers after the close on Friday and during one hell of a messy snowstorm. FNM posted a loss of $16.3b for the quarter and $74.4b for the year. An unmitigated disaster. The timing of the release suggests that they were hoping that no one would notice how bad the last twelve months were. There was nothing particularly new in the most recent quarter, just more bad news. What is happening at Fannie is also happening at Freddie Mac and to a different extent at FHA. There are some trends that I think are worth noting...they have moved to restrict lending to better borrowers...all three of the D.C. mortgage lenders are pulling on the credit reins...It will be harder to get a mortgage in one month from today and even harder to get one six moths from today. For me the implications of this are very obvious. Broad RE values will have to go lower, high-end homes will suffer the most in percentage drops...the biggest seller of RE over the past 24 months in America has been the federal government...The vast majority of defaults come because borrowers are underwater. Falling RE prices are the number one contributor to the default cycle...

Bruce Krasting; Fannie's Horrible Year; thought.

zero hedge Sat 2009-10-10 13:09 EDT

Former Fannie Chief Credit Officer Says FHA Is $54 Billion Underwater

In keeping with the warnings presented by Kyle Bass warned that the entire housing bubble is now being ported over to the taxpayer's balance sheet, Edward Pinto, a former chief credit officer for Fannie Mae claims that the Federal Housing Administration will likely require a major taxpayer bailout "in the next 24 to 36 months" as it is likely to incur $56 billion more in losses than it can withstand.

54; Fannie Chief Credit Officer Says FHA; underwater; Zero Hedge.

Tue 2009-09-29 11:33 EDT

How Bad Will It Get?

Mike Whitney, CounterPunch

In the two years since the crisis began, neither the Fed nor policymakers at the Treasury have taken steps to remove toxic assets from banks balance sheets. The main arteries for credit still remain clogged despite the fact that the Bernanke has added nearly $900 billion in excess reserves to the banking system. Consumers continue to reduce their borrowing despite historically low interest rates and the banks are still hoarding capital to pay off losses from non performing loans and bad assets. Changes in the Financial Accounting Standards Board (FASB) rules for mark-to-market accounting of assets have made it easier for underwater banks to hide their red ink, but, eventually, the losses have to be reported. The wave of banks failures is just now beginning to accelerate. It should persist into 2011. The system is gravely under-capitalized and at risk...The economy cannot recover without a strong consumer. But consumers and households have suffered massive losses and are deeply in debt. Credit lines have been reduced and, for many, the only source of revenue is the weekly paycheck...The current recession has exposed the fault-lines dividing the classes in the US. Neither party represents working people. Both the Democrats and the Republicans are supportive of "social engineering for the rich"; regressive taxation and economic policies which shift a greater portion of the wealth to the richest Americans. The question of inequality, which has grown to levels not seen since the Gilded Age, will dominate the national conversation as the recession deepens and more people slip from the ranks of the middle class...After Obama's stimulus runs out, consumer spending will again sputter and the economy will slide back into recession.

bad.

Mish's Global Economic Trend Analysis Mon 2009-09-21 14:57 EDT

Strategic Default Data Suggests Foreclosure Prevention Tactics Useless

Michael Shedlock

An interesting report in the Los Angeles Times shows that a person with super-prime credit scores is more likely to walk away from an underwater mortgage than a person with a subprime credit rating.

Mish's Global Economic Trend Analysis; Strategic Default Data Suggests Foreclosure Prevention Tactics Useless.

Tue 2007-12-04 00:00 EST

Mish's Global Economic Trend Analysis: Paulson's Plan Is Nothing But Lip Service

anonymous industry insider: "how are rate cuts going to help anything when what the system needs is "more balance sheet," and there's none to be found, and in fact credit continues to contract?"; plan will because underwater buyers should and will walk away

lip services; Mish's Global Economic Trend Analysis; Paulson's Plan.