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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Kimble Charting Solutions

Bank Breakout Of Financial Crisis Highs or Double Topping Again?

Courtesy of Chris Kimble

If the saying “So Goes The Banks, So Goes The Broad Market” is true, banks are facing a critical breakout/resistance test in my opinion.

This chart looks at Financials ETF (XLF) over the past 12-years. This chart reflects that a double top took place prior to the financial crisis getting started.

XLF has remained inside of rising channel (1) since the lows in 2012. It hit double resistance at (2), then it declined nearly 25%.

The decline then tested rising support at (3) and a strong rally has followed. The rally now has XL...



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Zero Hedge

"Panic, Pure Panic" - Chilean Peso Collapses To 800/USD, Blowing Through Record Lows

Courtesy of ZeroHedge View original post here.

The Chilean peso extended a four-day losing streak on Tuesday, sinking by the most in eight years, to a new record low at 800/USD.

Source: Bloomberg

Bearish market sentiment, political chaos, and a national strike intended to ratchet up pressure on the government and its plans to change the constitution...

...



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Insider Scoop

10 Stocks To Watch For November 12, 2019

Courtesy of Benzinga

Some of the stocks that may grab investor focus today are:

  • Wall Street expects D. R. Horton Inc (NYSE: DHI) to report quarterly earnings at $1.25 per share on revenue of $4.86 billion before the opening bell. D.R. Horton shares rose 1.3% to $53.31 in after-hours trading.
  • Analysts expect Skyworks Solutions, Inc. (NASDAQ: SWKS...


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Phil's Favorites

How To Spend $45,000 On A $27,000 Car

Courtesy of Mike Shedlock, MishTalk

As cars become more expensive, and trade-ins worth less and less, buyers go deeper in debt on new cars.

Please consider taking a $45,000 Loan for a $27,000 Ride.

Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value. This phenomenon—referred t...



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The Technical Traders

Daily Gold, Oil, and SPX Cycles and Forecasts

Courtesy of Technical Traders

CLICK HERE TO GET REAL TIME TRADE ALERTS!

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Digital Currencies

3 Reasons Why One Trader Didn't "Manipulate" Bitcoin Price To $20K

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin price highs in 2017 were not the result of a single trader on an exchange, the CEO of payment company Circle claims. In a series of tweets on Nov. 4, Jeremy Allaire disputed ...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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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:

 

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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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