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


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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…
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Zero Hedge

Hedge Funds Have Never Been More Concentrated Into The Same Handful Of Stocks

Courtesy of ZeroHedge View original post here.


Sun, 05/24/2020 - 15:25

Six years ago, back in 2013, we presented what we then viewed (and still view) as the best trading strategy of the New Abnormal period, when we said that buying the most shorted names while shorting the names that have the highest hedge fund concentration and institutional ownership is the surest way to generate alpha, to wit:

... in a world in which nothing ...



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Phil's Favorites

A doctor shares 7 steps he'll review to decide when and where it's safe to go out and about

 

A doctor shares 7 steps he'll review to decide when and where it's safe to go out and about

The Inn at Little Washington in Washington, Virginia, shown May 20, 2020, plans to use mannequins in its dining room to enforce social distancing when it reopens at the end of the month. Olivier Douliery/AFP via Getty Images

Courtesy of William Petri, University of Virginia

As we return to some degree of normalcy after weeks of social distancing, we all need a plan. As an immunologist, I’ve given this a lot of ...



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Biotech/COVID-19

A doctor shares 7 steps he'll review to decide when and where it's safe to go out and about

 

A doctor shares 7 steps he'll review to decide when and where it's safe to go out and about

The Inn at Little Washington in Washington, Virginia, shown May 20, 2020, plans to use mannequins in its dining room to enforce social distancing when it reopens at the end of the month. Olivier Douliery/AFP via Getty Images

Courtesy of William Petri, University of Virginia

As we return to some degree of normalcy after weeks of social distancing, we all need a plan. As an immunologist, I’ve given this a lot of ...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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ValueWalk

Hazelton Capital Partners 1Q20 Commentary: Long Renewable Energy Group

By Jacob Wolinsky. Originally published at ValueWalk.

Hazelton Capital Partners commentary for the first quarter ended April 30, 2020, discussing their current portfolio holdings Renewable Energy Group, Apple and Berkshire Hathaway.

Q1 2020 hedge fund letters, conferences and more

Dear Partner,

Hazelton Capital Partners, LLC (the “Fund”) returned -23.8% from January 1, 2020 through March 31, 2020. By comparison, the S&P 500 returned -19.4% during the same quarter.

Before reviewing the 1st quarter of 2020 and Hazelton Capital Partners’ portfolio, my sincere hope is that everyone, their family, friends, a...



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The Technical Traders

Gold Stocks Are Overbought. You Don't Want Prices to Go Straight Up

Courtesy of Technical Traders

Bill Powers of MiningStockEducation.com talks with a professional trader and market commentator Chris Vermeulen says gold stocks are overbought and need a breather which would be good for the overall upward trend.

Chris shares how he has and is trading the junior gold sector. He called the recent February 24th top in the gold stocks before the March crash. And now he is warning to a top in some gold-stock positions during an expected pullback.

Chris also addresses whether a lot of the gap-up’s in many gold...



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Kimble Charting Solutions

Doc Copper Counter-Trend Rally Could Peak Here, Says Joe Friday

Courtesy of Chris Kimble

Could ole Doc Copper be sending an important message about the overall health of the global economy and the stock market in the next couple of weeks? It appears it could!

This chart looks at Copper futures on a weekly basis over the past 7-years. Doc Copper looks to have double topped in late 2017 and early 2018. After the double top, Copper has continued to create a series of lower highs, which sends a bearish divergence message to stocks.

Numerous highs and lows have taken place along the line (1) over the past 5-years. The rally off the March lows ...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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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 ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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...

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