Posts Tagged ‘cramdowns’

Obama’s Housing Shell Game; Short Sales and Relocation Assistance

Obama’s Housing Shell Game; Short Sales and Relocation Assistance

Courtesy of Mish 

Toy house and car on pile of invoices

We’ve now come full circle. Instead of trying to get people to stay in their homes, Obama is willing to pay them to leave. Please consider Program Will Pay Homeowners to Sell at a Loss.

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.

Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

Big Shell Game

Hand lifting up small pot to reveal red ball

Diana Olick describes the situation perfectly in Mortgage Principal Writedown Won’t Save Housing.

 

And so it begins. Big gun lawmakers are making the move toward principal writedowns as the last resort to save the housing market.

The problem is prices. Home prices have fallen so far in the hardest hit areas, the areas where the bulk of the troubled loans are, that banks would have to write down principal 30 to 50 percent to put borrowers back in the green. Accounting rules require that banks write down the value of those loans on their books, and experts tell me that if banks really accounted for all the losses in the home loan market, they’d all be insolvent.

That’s why the Obama Administration has created this kind of shell game in the first place.

I stole that shell game idea from


continue reading


Tags: , , , , , , ,




THE STOCK MARKET IS DISLOCATED FROM REALITY

THE STOCK MARKET IS DISLOCATED FROM REALITY

Quicksand Trouble

Courtesy of The Pragmatic Capitalist

David Rosenberg is still unwavering in his belief that the rally is built on quicksand:

There are some very serious headwinds facing the U.S. economy, and one of them is access to credit for people who are at the lower end of the income spectrum (and who also represent the greatest default risk). A great article on this can be found on the front page of the weekend WSJ (The ‘Democratization of Credit’ Is Over – Now It’s Payback Time). Families at the lower end of the income spectrum spend nearly all of their income, so this is a vital part of the economy and it is going to be very difficult for lower-income families to secure credit going forward. The ratio of credit card debt outstanding to income is 50% higher for the bottom 40% of the income strata than is the case for the upper 40%. The highest default rates are the folks at the bottom of the pay scale. In 2007, fully 35% of poor families had a balance owing on their credit card compared with 21% in 1989. This is the byproduct of government policy inducing lenders to make credit cards available to high-risk, low-income individuals — a reckless policy drive that started in the late 1970s (the policy did help drive homeownership rates up and crime rates down).

Now that lenders have started to respond to their record-high delinquency rates by rationing credit, a mad scramble for cash is occurring to replace the loans — food stamp usage is up 22% year-over-year, pawn shop business is up nearly 40%, and there is a tidal wave of applications for Social Security disability benefits that are not explained alone by workplace mishaps.

In any event, so much effort is being expended by the government to keep the credit cycle going that it isn’t even funny, nor is it useful, anymore. Allowing households to still finance almost 100% of a new house purchase has meant that the FHA default rate for loans made in the last year has surged to 20%; and to 24% for loans made since 2007. Private lenders are now requiring a 20% downpayment, and the credit officers at the FHA only need a 3.5% downpayment. The U.S. taxpayer could be facing up to…
continue reading


Tags: , , , , , ,




 
 
 

Phil's Favorites

The Next Trillion Dollar Stocks: What Are Your Thoughts?

 

The Next Trillion Dollar Stocks: What Are Your Thoughts?

Courtesy of 

In this edition of What Are Your Thoughts, Michael Batnick and Josh Brown discuss:

* Gold vs Bitcoin, let the trolling begin!
* Google joins the Trillion Dollar Club, who’s next?
* Can Bill Simmons sell The Ringer podcast network for $200 million?
* Actively managed US stock mutual funds had a great year in 2019, but most still couldn’t catch the S&P 500. So what?
* Will direct indexing disrupt the ETF business?
* Warren Buffett’s preferred metric to gauge how exp...



more from Ilene

Zero Hedge

CVS, Walgreens Shares Slide As Amazon Files International Trademarks For Pharmacy Business

Courtesy of ZeroHedge

Amazon has just taken another step in its assault of the pharmacy industry. Since the company acquired PillPack, a disruptive online pharmacy, back in 2018, pharmacy mainstays like CVS and Walgreens Boots Alliance have been rattled by the e-commerce and cloud-computing giant's move into their territory. Their shares dipped on Tuesday as CNBC reported that Amazon had just filed trademarks for its 'Amazon Pharmacy' brand in several foreign markets, including Australia, Canada and the UK.

Amazon unveiled its plans to rebrand PillPack as 'Amazon Pharmacy' late last year, signaling to the market that it intended to pursue its pharmacy aims despite a high bar set by regulators in the US.

The problem with selling pharmaceutic...



more from Tyler

Kimble Charting Solutions

Hang Seng Index Double Topping At 2007 Highs?

Courtesy of Chris Kimble

Could the Hang Seng Index be “Double Topping” at its 2007 highs? Possible, yet not proven!

The Hang Seng Index attempted to break above its 2007 highs at (1), only to see a key reversal pattern take place the following month.

After the reversal pattern, the index has created a series of lower highs, just below falling resistance.

So far this month, the index is attempting to break above falling resistance, where it could be created a bearish reversal monthly pattern at (2).

What would it take to prove that a double top was i...



more from Kimble C.S.

Insider Scoop

Earnings Scheduled For January 21, 2020

Courtesy of Benzinga

Companies Reporting Before The Bell
  • Halliburton Company (NYSE: HAL) is projected to report quarterly earnings at $0.29 per share on revenue of $5.11 billion.
  • TAL Education Group (NYSE: TAL) is estimated to report quarterly earnings at $0.09 per share on revenue of $839.96 million.
  • Signature Bank (NASDAQ: ...


http://www.insidercow.com/ more from Insider

The Technical Traders

Using the copy-paste formula in the Forex market

Courtesy of Technical Traders

In Forex there are many techniques available to boost up the profit factors. However, as there are millions of people trying to make a profit it is not easy to get the right tricks. There are many brokers offering high leverage trading account to the interested traders. They also provide useful insight into the market so that the traders can make a decent profit. In fact, some brokers often sell signals to their clients so that they can start earning money in the early stage of their careers.

At present, this method has earned a huge following as many investors don’t like to spend time staring at the chart. In this article, we are going to try to bust the myth about this infamous technique...



more from Tech. Traders

Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



more from Our Members

Chart School

SP500 Kitchin Cycle Review

Courtesy of Read the Ticker

The biggest known news date in the next 18 months is the US Election. The biggest unknown news date is when the US believes it is in a economic recession.

The Kitchin Cycle is still working.

We must conclude the major 900 period low is now in, and we are now in a up swing, which may top out ate 2020 or late 2021. Any future top out may only generate a 10% to 20% correction, of course this can be deemed very mild. This is expected, but the expected does always play out. 

Rolling the dice to get '7' does not always work. Post US elections seasonal's aligned with a poor start of the decade seasonal trends, add on high global recession risk, add on a stock market slump tends to occur in the years ending 9,1,2,3,4 (like 1973, 1...



more from Chart School

Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



more from Lee

Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



more from Bitcoin

Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



more from Biotech

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>