(MSNBC) — Four years after a wave of rogue mortgage lending sent the U.S. housing market into the worst collapse since the Great Depression, the devastating flood of resulting foreclosures shows no sign of abating. In some ways, the problem is getting worse.
House prices are falling again, forcing more homeowners “underwater” — owing more than their house is worth. Lenders’ shoddy document practices have brought widespread court challenges, slowing the process and leaving millions of homeowners in limbo.
And the foreclosure crisis continues to weigh heavily on the fragile economy.
“Right now, it’s the second-biggest drag on the economy after the surge in oil prices,” said Moody’s Analytics chief economist Mark Zandi.
2011-04-29 – SFgate.com
Nicolas Cage, the Oscar-winning star of “Leaving Las Vegas,” bought a seven-bedroom home with a panoramic view of the city’s casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.
The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million – an “unrealistic” price, according to Zar Zanganeh, the broker handling the listing.
“It’s sad,” Zanganeh said, his high-heeled boots clacking on the marble floor as he gave a tour of the 14,000-square-foot mansion featuring a six-person steam shower and a closet the size of a small apartment. “There’s a lot of inventory, a lot of homes like this waiting for an owner.”
A growing number of high-end homes are selling at a loss or facing repossession by lenders in Las Vegas, which already has the highest rate of foreclosure filings among large U.S. cities. The wave of defaults that began with subprime borrowers and the unemployed has spread to upscale homeowners who see no point of staying even if they can afford to.
The Federal Reserve, under orders from Congress, today named the counterparties of about 21,000 transactions from $3.3 trillion in aid provided to stem the worst financial panic since the Great Depression.
Bank of America Corp. and Wells Fargo & Co. were among the biggest borrowers from one program, the Term Auction Facility, with as much as $45 billion apiece. Some aid went to U.S. units of foreign institutions, including Switzerland’s UBS AG, France’s Societe Generale and Germany’s Dresdner Bank AG. The Fed posted the data on its website to comply with a provision in July’s Dodd-Frank law overhauling financial regulation.
“We owe an accounting to the American people of who we have lent money to,” Richmond Fed President Jeffrey Lacker said today in an interview on Bloomberg Radio’s “The Hays Advantage,” with Kathleen Hays. “It is a good step toward broader transparency.”
As if the fact that the world economy has once again taken a turn for the worse (rising inflation in China, sinking everything in Europe, endless QE in the US) wasn’t enough, that pesky problem of robosigning and fraudclosure just refuses to go away. And even though the major banks are doing their best to remove any reference of this problem, which will eventually be the final nail in the coffin sealing the first truly global great depression, from the mainstream media, here is a sampling of some of the choicest admissions by robosigners, which will continue to serve as the basis for thousands of lawsuits (both RICO and otherwise) to come. While we know that BofA’s Reps & Warrantees reserve is woefully underfunded (with everyone and their grandmother now seeking to putback RMBS to BofA, anything less than ‘infinity’ is underfunded), we hope Bank of America has set up a sufficiently large legal expenses reserve. It will need it.
1. ‘Just Sign The Documents
Video deposition of alleged robosigner Crystal Moore of Nationwide Title Clearing. Deposition taken by attorney Christopher Forrest of The Forrest Law Firm in Pinellas County, Florida, Nov. 4, 2010
2. A Vice President At More Than 20 Companies
Part 2: Video deposition of alleged robosigner Bryan Bly taken by attorney Christopher Forrest in Pinellas County, FL on Nov. 4, 2010.
3. “Just Look For My Name, And Then Sign”
“Do you have any understanding as to what that term means, ‘for good and valuable consideration’?”
“I don’t usually read the docs when I sign.”
“So it’s not part of your job to review the document. Your job is just to sign it.”
“Just look for my name, and then sign.”
4. No Experience Necessary
“What did you study [in the one year of college]?”
“Nothin’. It was just the basic.”
“Do you have any other additional training or education in banking or finance?”
5. Signing 5,000 Documents Per Day At Less Than A Minute Each
“Can you tell me on any given day how many assignments or other documents you sign?”
“Are you looking for a ballpark average?”
“Ballpark. I certainly don’t expect you to remember exactly.”
“I’d say 5,000.”
“Would that be an average day for you?”
“That would be average.”
“Would it be fair to say that during your tenure at NTC you’ve probably signed an excess of 50 or 60 thousand documents?”
“Could be higher than that?”
“With signing so many on any given day, can you estimate for me the amount of time you spend on any given document?”
“Less than a minute.”
“When you’re presented with a document to sign or notarize, do you take any steps to verify any of the information contained in the document?”
“Not in the body.”
“When you say ‘not in the body’ are there any other steps that you take?”
“I’m just looking to make sure it’s been fully signed.”
“Would it be accurate to say that you are presented with a stack of documents to sign, and your practice is to look at the document, see if it’s been signed, affix your signature to it and then move on to the next document?”
6. A Disturbing Lack Of Experience
“When you say ‘financial’ are you referring to matters relating to banking?”
“No. We don’t do mortgages in my country. … I don’t have any idea about mortgages when I started here.”
7. A Strange Definition Of A Mortgage
“Did you take any steps to verify any of the information contained in this assignment before you signed it?”
“Do you ever take any steps to verify any of the information in the documents you sign at NTC?”
“What is your understanding of what exactly is a mortgage?”
“When somebody goes to buy a house, they take a loan. And then the mortgage is their paying the banks bank.”
“Can you tell me what your understanding is of the term ‘promissory note’?”
“That’s just the note. Like it says the interest rate and stuff like that on it.”
8. Management May Have Electronically Signed Documents For One Employee
“Do you play any role in the creation of the documents to which your signature is electronically affixed?”
“Do you have any idea what documents or how many documents your signature has been electronically affixed to?”
“Do you ever review those electronic documents after your signature has been affixed?”
“So would it be accurate to say that entire process takes place outside of your presence and knowledge?”
“That would be fair.”
“You play no role in the determination as to whether or not you should be signing the document physically, or whether your electronic signature should be inserted?”
“Who makes that decision?”
“That would be someone in management.”
“So someone else in management is making a decision as to whether or not to use your signature to affix it electronically to a document?”
“And you have no role in that process?”
9. Signing More Than 50,000 Documents
“Have you signed assignments or other documents as vice president of any other companies?”
“What companies have you signed as vice president?”
“I don’t know.”
“You can’t recall any?”
“Can you estimate for me the number of different companies that you’ve signed assignments as vice president?”
“I don’t know.”
“Can you estimate for me how many assignments or other documents in total during your tenure at NTC you signed as an officer or a vice president of a company?”
“I don’t know.”
“Is it more than 10?”
“More than 500?”
“More than 5,000?”
“More than 20,000?”
“More than 50,000?”
“And out of those 50,000, the only company that you can recall signing as a vice president or an officer is City Residential Lending?”
The Federal Reserve’s quantitative easing programs, QE for short, is not inflationary, said Chairman Bernanke to Jacksonville University students on November 5th, 2 days after Bernanke and company launched QE II. These asset purchase programs, he said, are not inflating the money supply.
Not so says THE CONTRARIAN TAKE to those same students. Says THE CONTRARIAN TAKE to Chairman Bernanke, it may be time for Money Mechanics 101, for it appears you do not understand the money creation process. If you did we don’t think you would have said this:
What the purchases do… is… if you think of the Fed’s balance sheet, when we buy securities, on the asset side of the balance sheet, we get the Treasury securities, or in the previous episode, mortgage-backed securities. On the liability side of the balance sheet, to balance that, we create reserves in the banking system. Now, what these reserves are is essentially deposits that commercial banks hold with the Fed, so sometimes you hear the Fed is printing money, that’s not really happening, the amount of cash in circulation is not changing. What’s happening is that banks are holding more and more reserves with the Fed…
Growing criticism of U.S. Federal Reserve policy is fueling global tensions as leaders of the world’s largest economies prepare to meet in South Korea Wednesday.
Last week the Fed announced it would pump another $600 billion into the U.S. economy through the purchase of long-term Treasuries, a move known as quantitative easing, or “QE2,” since it is the second round of such purchases.
The move sparked fears that it could reignite inflation pressures, cause a new global asset bubble or spark a so-called “currency war” in which nations devalue their own currencies to keep their own exports competitive.
President Obama will hear those complaints later this week when he arrives at the G-20 meeting in South Korea, a summit of heads of state of the world’s leading economies.
The harshest criticism came Friday from German Finance Minister Wolfgang Schäuble, who told reporters at a conference that, “With all due respect, U.S. policy is clueless.”
“It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.”
Goldman Sachs anticipates that the real cost of the second round of quantitative easing will be in excess of $2 trillion and will continue well into 2012, while other prominent economists have denounced the Fed’s actions.
The Fed announced yesterday that it would purchase $600 billion in Treasury securities in a statement that left open the possibility of the real cost rising much higher.
“The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.” the statement read.
As pointed out by Tyler Durden at the Zero Hedge blog, Goldman Sachs has predicted that the real cost of the Fed’s plan will sky rocket.
“We believe that the program will grow significantly beyond the initial $600 billion” remarks Goldman’s Jan Hatzius.
With the world on the verge of a currency war as the Federal Reserve follows through on its dollar-killing quantitative easing program, rumors are once again swirling of a “bank holiday,” during which US citizens will be prevented from withdrawing money or at least limited in the amount of the withdrawal they can make.
The bank holiday is rumored to be set for next week, with Thursday November 11 pinpointed as the likeliest date.
According to radio host Steve Quayle, a pastor was told by one of the managers of a prominent east coast bank that banks would close for an undetermined amount of time, and that when they reopened, “all withdrawals
Financial upheaval has been matched by political upheaval, and we can only hope that Congressman Ron Paul and his son, Senator in waiting Rand Paul, can build momentum to finally cut out the cancer that is destroying America – by ending the Fed for good.
Foreclosure timelines continue to increase, thanks in part of the recent robosigning allegations and related moratoria, according to the September Mortgage Monitor report released byLender Processing Services.
The average number of days mortgages are delinquent in five judicial states (New York, Florida, New Jersey, Hawaii and Maine) now exceeds 500 days.
Judicial foreclosures generally take longer to process because they are handled through the courts, and we all know how that goes…
For Bank of America, Countrywide Financial is turning into a fixer-upper home that keeps needing one more budget-busting repair.
In January 2008, then-chief executive Ken Lewis called the Charlotte bank’s $4billion deal to buy the troubled lender a “compelling value.” But nearly three years later, the mortgage unit created by the acquisition is a major headache for Lewis’ successor, Brian Moynihan, and the bank’s shareholders.
Law Expert: MERS Mess Could Have “a Massive Effect on the Economy”
2010-10-18 – Fire Dog Lake news desk
“So I had a pretty incredible conversation last night with Christopher Peterson, the law professor and Associate Dean for Academic Affairs at the University of Utah, who wrote two illuminating Law Review articles about MERS, the shell entity that created an electronic database for the trading of mortgages. I’m going to do my best to summarize the findings of the interview, but I want to stress two things that I learned – 1) this is very heady stuff, tied up in contract law and all sorts of associated legal issues, 2) absolutely nobody in this country knows with any certainty how this is going to play out.
With that as a base, here’s the gist of the conversation.”
PIMCO, Blackrock, NY Fed Seek to Force BofA to Repurchase $47 Billion in Soured Mortgages; Viral Nonsense on “Show Me the Note” and “ForeclosureGate”
“Creative” Wall Street and Money-Laundering
2010-07-06 — firedoglake.com
“I don’t want to get too tinfoil about this. But it strikes me that the efforts to keep Wall Street and all its celebrated creativity intact serves to make it easier for banks like Wachovia to engage in widespread money-laundering. That is, it’s not just shadow banking as it is politely understood, but banking for entire shadow networks, both our own and our enemies.”
More Evidence That Eurobank Stress Tests Are a Garbage-In, Garbage-Out Exercise
2010-07-03 — nakedcapitalism.com
“The stress tests conducted on 19 large American banks by the US Treasury in 2009 were an amazingly effective exercise in salesmanship and sleight of hand. Banking industry experts, including Bill Black, Chris Whalen, and Josh Rosner, dismissed the process as mere theatrics: too little staffing and not enough “stress” in the economic forecasts and loss assumptions (particularly on second mortgage). My pet peeve was that the banks ran the tests on their trading books using their own risk models, the very ones that had performed so well in preparing them for them in the runup to the crisis.”
On The New York Fed’s Editorial Influence Over The WSJ
2010-07-05 — zerohedge.com
“Yet going through some of the recently made public e-mails produced on behalf of Stephen Friedman, we had a few questions as to the full independence of the WSJ when it comes to “editorial” suggestions from the Federal Reserve Board Of New York. As the below email from Fed EVP of the Communications Group, ala media liaison, Calvin Mitchell to the WSJ’s Kate Kelly demonstrates, and as the final product confirms, the Fed was quite instrumental in what quotes, tangents, implications, and story lines the WSJ was allowed and not allowed to use and pursue in framing the problem of not only Friedman’s conflict of interest, but that of the FRBNY board of directors itself.”
Who Would Finance Mortgages If Fannie, Freddie Disbanded?
2010-07-02 — cnbc.com
“Earlier this year, Treasury Secretary Tim Geithner laid out a general outline for how the Obama Administration would reform Freddie and Fannie, including insuring that shareholders don’t reap gains while the public pays for the losses.”
Fed Made Taxpayers Junk-Bond Buyers Without Congress Knowing
2010-07-01 — bloomberg.com
“By using its balance sheet to protect an investment bank against failure, the Fed took on the most credit risk in its 96- year history and increased the chance that Americans would be on the hook for billions of dollars as the central bank began insuring Wall Street firms against collapse. The Fed’s secrecy spurred legislation that will require government audits of the Fed bailouts and force the central bank to reveal recipients of emergency credit.”
Banks Face $5 Trillion Rollover by 2012
2010-06-30 — nakedcapitalism.com
“This Sydney Morning Herald story (hat tip reader Gordon) highlights a Bank of England report that not only points out the magnitude of the financing needs of major banks over the next few years, a daunting $5 trillion, but also indicates that US and European bank refinancings are falling short of their rollover calendar. This suggests that we may witness a combination of balance sheet shrinkage and more covert and overt funding support.”
2010-06-30 — worldmag.com
“Despite the happy talk coming out of the White House, there is overwhelming and terrifying evidence that we’re heading for an economic cliff next year. It’s going to happen. Make your plans accordingly.”
Bloodbath tomorrow in the stock market?
The correction, soon to be crash, is here: the market had a bigger relative open to close move today than it did on May 6. We closed at the day’s lows on massive volume, despite definitive central bank intervention, regardless whether it was the SNB, the ECB, or the Fed. The central planners have lost control of the market, and all thanks to the inevitable collapse of hyper capitalist Keynesianism coming out of the formerly most communist country in the world. A day of ironies. And it’s not over. Futures are already down another 4 handles. The correction is coming, and it will be a bloodbath. The Fed can not push rates lower. It will print. It is inevitable. It is our destiny.
Update: Futures now 7 handles lower. 46 point move in ES: that is almost a 5% move in the S&P for now.
2010-05-14 Mish’s Global Economic Blog
Record 40 Million, 1 in 8 on Food Stamps
from Mish’s Global Economic Trend Analysis by firstname.lastname@example.org (Michael Shedlock)
Hello recovery, where art thou? Month after month, the number of food stamp recipients hits news records.
Please consider Food-stamp tally nears 40 million, sets record.
Nearly 40 million Americans received food stamps — the latest in an ever-higher string of record enrollment that dates from December 2008 and the U.S. recession, according to a government update.
Enrollment has set a record each month since reaching 31.78 million in December 2008. USDA estimates enrollment will average 40.5 million people this fiscal year, which ends Sept 30, at a cost of up to $59 billion. For fiscal 2011, average enrollment is forecast for 43.3 million people.
Snap, Crackle, Pop
It’s no longer supposed to be called “food stamp” program but rather SNAP, Supplemental Nutrition Assistance Program.
No matter what you call it, another 260,000 are on it than last month. However, data is way lagging. A quick check of my calendar says it’s May. The SNAP data reported Friday, May 7 is from February.
Excuse me for asking, but how hard is it to count the number of people in a program getting free benefits? Is it really so difficult that it takes months to count?
Here is an interesting tidbit from the article, “Research suggests that one in three eligible people are not receiving benefits.”
My quick math suggests approximately 53 million people could be receiving SNAPs but only 40 million are.
Note: 53 million was arrived at by taking 1/3 of 40 million and adding it 40 million. Another possible intrepretation, perhaps more likely, is 40 million is 2/3 of 60 million.
The Fed “Owns Credit-Default Swaps … On Debt Owed by California and Nevada. So the Fed Would Profit If One of Those States Defaulted on its Debt.”
What about this one folks…….. “The Fed also owns credit-default swaps — basically, insurance policies that pay off if a borrower defaults on a loan. It holds swaps on the debt of Florida schools, and on debt owed by California and Nevada. So the Fed would profit if one of those states defaulted on its debt.”
As Europe is bailed out to the tune of nearly $1 trillion dollars, Congressman Ron Paul warns that the constant monetization of debt, allied with taxpayer-funded bailouts, will inevitably lead to runaway inflation and the collapse of paper currencies.
Under the terms of the Federal Reserve’s credit swap deal with the EU – in addition to an additional IMF bailout of which U.S. taxpayers will be picking up 20 per cent ($57 billion dollars) of the tab, Paul pointed out that not just taxpayers but “anybody that buys anything” will be funding the European bailout because of the attendant inflationary consequences.
“The prices are going up already, producer prices are going up, the cost of living will go up so everyone in American will suffer and eventually the whole world will suffer because we cannot carry the whole world with our dollar,” Paul told Fox Business, adding that eventually people will lose confidence in the dollar.
The Congressman agreed with the host that the bailouts would lead to the crash of paper currencies, noting that last week’s stock market turmoil was accompanied by gold acting as a currency rather than just reacting to the value of the dollar.
2010-04-29 Daniel Amerman.com
Have the Federal Reserve’s unprecedented market and banking interventions fundamentally weakened America’s banks? In this article, we will illustrate how the Federal Reserve has been hollowing out the US banking system. We will show how the Fed has been creating a banking industry shell that looks strong on the surface, but is increasingly empty beneath that facade, with less and less economic strength, and an ever greater reliance on the Federal Reserve’s monetary creation ability.
Using a single loan as an example, we will explore in step by step detail how almost 10 percent of US bank assets have been hollowed out, with former investments in the economy being replaced by excess reserve balances at the Federal Reserve. On paper, these balances are the highest quality assets which a bank can own, yet in economic reality, they represent an investment in nothing at all.
Few articles explained the dangerous process of creating an almost entirely artificial mortgage market in 2009, and almost none have explored how participating in this process has transformed US banks in 2010. When you finish, you may find yourself looking at the new US banking system in a very different way, as well as understanding the powerful economic and personal investment implications.
BEIJING — China is expected to impose a moratorium on share issues by real estate companies in mainland markets as part of a broader campaign to rein in rising property prices, state media said Wednesday, potentially blocking $16.1 billion in capital-raising.
The move could delay plans by 45 Chinese companies to raise about 110 billion renminbi, China Daily said, citing unidentified people close to the China Securities Regulatory Commission.
A commission official told Reuters a formal suspension was not in place but confirmed that before approving any share issues in mainland markets, the regulator and the Land Resources Ministry were examining whether property companies had illegally manipulated land prices. The official asked not to be identified because he was not authorized to speak to the media.
Willem Buiter Issues His Most Dire Prediction Yet: Sees “Unprecedented” Fiscal Crises, US Debt Inflation And Fed Monetization
Doomsday scenarios from the establishment periphery always come fast and furious, especially in our day and age when bankrupt sovereigns are the norm, not the exception. And the “faster and furiouser” these come, the more steadfast the core is in refuting that the reality is much, much worse than portrayed on the mainstream media. Which is why we were very surprised when we read Willem Buiter’s latest Global Economic View (recall that he works for Citi now). In it the strategist for the firm that defines the core of the establishment could not be more bearish. In fact, at first we thought that David Rosenberg had ghost written this. Once the apocryphal truthsayers such as Buiter become mainstream within the mainstream, it is only a matter of time before the marginal opinion shifts to match that of those who have been prognosticating doom all along (for all the right reasons). In the below piece, Buiter presents a game theory type analysis, which concludes that the US and other sovereigns will soon be forced into fiscal austerity. Among his critical observations (we recommend a careful read of the entire 68 pages), are that the US is highly polarized, and that the Fed, which is “the least independent of leading central banks” would be willing to implement “inflationary monetisation of public debt and deficits than other central banks.” The next step of course would be hyperinflation. And Buiter sees America as the one country the most likely to follow this route. Most troublingly, Buiter predicts that a massive crisis is the only thing that can break the political gridlock in the US in order to fix the broken US fiscal situation. Must read.
2010-04-21 – Ritzhold.com
” We have known for decades that these are frauds. We have known for a decade how to stop them. All of the major regulatory agencies were complicit in that statement, in destroying it. We have a self-fulfilling policy of regulatory failure because of the leadership in this era.
We have the Fed, the Federal Reserve Bank of New York, finding that this is three card monty. Well what would you do, as a regulator, if you knew that one of the largest enterprises in the world, when the nation is on the brink of economic collapse, is engaged in fraud, three card monty? Would you continue business as usual?
That’s what was done. Oh they met a lot — they say “we only had a nuclear stick.” Sounds like a pretty good stick to use, if you’re on the brink of collapse of the system. But that’s not what the Fed has to do. The Fed is a central bank. Central banks for centuries have gotten rid of the heads of financial institutions. The Bank of England does it with a luncheon. The board of directors are invited. They don’t say “no.” They are sat down.
Instead, every day that Lehman remained under its leadership, the exposure of the American people to loss grew by hundreds of millions of dollars on average. Auroroa was pumping out up to 300 billion dollars a month in liars’ loans. Losses on those are running roughly 50% to 85 cents on the dollar. It is critical not to do business as usual, to change.”
2010-04-19 – Calculated Risk
Several articles tonight …
From Gretchen Morgenson and Landon Thomas Jr. at the NY Timmes: A Glare on Goldman, From U.S. and Beyond
“We request that S.E.C., with all due haste, pursue investigations into the remaining 24 Abacus transactions for securities fraud, evaluate the extent of any receipt, by Goldman Sachs, of fraudulently generated A.I.G.-issued credit default swap payments, and vigorously pursue the recovery of such payments on behalf of the U.S. taxpayer,” the [Representatives Elijah E. Cummings and Peter DeFazio] wrote to Mary L. Schapiro, the head of the [S.E.C.], in a letter dated April 19. Mr. Cummings and Mr. DeFazio are still gathering signatures from other members of Congress to add to their letter, so it has not yet been sent.
From Trish Regan at CNBC: Pursuing Banking Fraud is ‘Top Priority’: SEC’S Khuzami
In the Securities and Exchange Commission’s first public statement since its press conference announcing charges against Goldman Sachs on Friday, S.E.C. Enforcement Director Robert Khuzami told CNBC, “We have brought and will continue to pursue cases involving the products and practices related to the financial crisis.” … a wide range of cases are currently being investigated.
From Carrick Mollenkamp, Serena Ng, Scott Patterson, and Gergory Zuckerman the WSJ: SEC Investigating Other Soured Deals
The Securities and Exchange Commission … is investigating whether other mortgage deals arranged by some of Wall Street’s biggest firms may have crossed the line into misleading investors.
From Edward Wyatt at the NY Times: S.E.C. Puts Wall St. on Notice
In the last few years, the Securities and Exchange Commission seemed like the cop in the doughnut shop, sitting idly by while the likes of Lehman Brothers and Bernard L. Madoff ran amok.
In interviews this weekend, Mary L. Schapiro, the commission’s chairwoman, and Robert Khuzami, its new director of enforcement, said the agency was stepping up both its rule-making and its investigations in the wake of the financial crisis.
And from John Emshwiller at the WSJ: Countrywide Probe Shows Signs of Life
Federal criminal investigators looking into the collapse of Countrywide Financial Corp. have been calling witnesses before a grand jury, say people familiar with the matter. Such a step suggests that the investigation of the one-time mortgage giant, which has been continuing for about two years, could be moving closer to a resolution.
Wow. What a crazy read.
“….There was so much money to be made bilking these dizzy Southerners that banks like JP Morgan spent millions paying middlemen who bribed — yes, that’s right, bribed, criminally bribed — the county commissioners and their buddies just to keep their business. Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the fuck off, so they could have the rubes of Jefferson County to fleece all for themselves…..”
Our Country is currently doing 50,287 loans a month per article above. These include all types of home loans, purchases, refinances, construction loans, HELOC’s, etc. This does not mean 50,287 homes have been sold or taken off of the market.
Our same Country is losing 290,631 homes a month to foreclosure. These numbers do not include the hidden inventory nor does it include all the mortgages that will adjust in 2010, 2011, 2012 causing the foreclosure number to go up and removing even more potential buyers. I always go back to the fact we were at an all time high of homeownership in our country’s history before the bust. Where do we plan to find more buyers? We have lost close to 5 million buyers because they lost their homes to foreclosure. Minimum lending requirements require you to be 3 years removed from a foreclosure discharge date before they will be able to buy again.
A LOT OF INVENTORY WITH VERY FEW BUYERS!
SUPPLY AND DEMAND. IT’S A VERY SIMPLE NUMBERS GAME.
HOME PRICES WILL CONTINUE TO FALL WAY BELOW WHERE THEY CURRENTLY ARE FOR THE SIMPLE FACT THERE ARE NO BUYERS TO REMOVE THE SUPPLY.
2010-04-09 – newobservations.net
” The average of four major nationwide indexes measuring prices also continues to suggest we hover right around a middle point of the total loss expected. Our current loss by the average of four indexes from the peak in 2006/2007 is 20 percent. The total loss forecast by the blend of indexes is 33 percent.”
2010-04-08 – businessinsider.com
“In this morning’s Breakfast With Dave note, David Rosenberg of Gluskin-Sheff hits on a theme we discussed the other day, about the impact of Obama’s “Extend & Pretend” mortgage policy. As originally argued by Paul Jackson at HousingWire, it’s the fact that millions of families are essentially living mortgage-free which explains the seeming disconnect between sagging housing and rebounding consumer spending.”
2010-04-08 – irvinehousingblog.com
“Lenders are trying to figure out how their massive Ponzi Scheme collapsed. They are relearning lending again because everything they thought they knew was wrong. When you get down to the heart of the matter, borrowers are carrying too much debt which is killing them financially and emotionally”
I attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.
I apologize to everyone about the lack of updates. Work has been…. well…. work. It seems transactions take 3 – 4x as long and nearly 9 of 10 are either Short Sales or Bank Owned real estate. It seems that the banks are controlling the market, the interest rates and now, most of the real estate for sale. We have tax credits expiring, we have the FED’s backing out of buying Mortgage Backed Securities, we have hundreds of billions $$$ in loans left to adjust and we have an ENORMOUS pool of Commercial Rela Estate scheduled for default in the next 4 years. Things are about to get really interesting, so I’ll get back on my horse and keep you all up-to-date.
Happy Navigating, Jason Pickle
“Overall, many participants viewed the risks to their inflation outlooks over the next few quarters as being roughly balanced. Some saw the risks as tilted to the downside in the near term, reflecting the quite elevated level of economic slack and the possibility that inflation expectations could begin to decline in response to the low level of actual inflation. But others felt that risks were tilted to the upside over a longer horizon, because of the possibility that inflation expectations could rise as a result of the public’s concerns about extraordinary monetary policy stimulus and large federal budget deficits. Moreover, these participants noted that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation. To keep inflation expectations anchored, all participants agreed that it was important for policy to be responsive to changes in the economic outlook and for the Federal Reserve to continue to clearly communicate its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and pace.”
Nov. 27 (Bloomberg) — The worldwide decline in equities spurred by Dubai’s efforts to reschedule its debt is a sign that government spending alone won’t be enough to protect financial markets, according to Arnab Das of Roubini Global Economics.
Shares slumped from Shanghai to Brazil and European shares fell the most in seven months yesterday after Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayment on much of its debt. Governments have spent, lent or guaranteed $11.6 trillion and central banks held interest rates near zero percent to end the first global recession since World War II.
“We’re bound to see a rise in risk aversion,” Das, who is based in London, said in an interview. “The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they can’t make all the excesses simply disappear. We still have to work out those balance sheet stresses. The recovery is proceeding, but significant challenges still lie ahead.”
2009-11-28 Mish’s Global Economic Blog
“If there is no clear, easy way out for housing, then there is no clear, easy way out for Wells Fargo. Wells is sitting in a huge pile of Pay Option Arms in bubble states like California, where prices still have a long way to correct.”
“The following analysis by Bob Prechter is excerpted from the free Club EWI report, Discover the Top 100 Safest U.S. Banks. With 130 bank failures expected by the end of this year, we hope you’ll find this information more valuable than ever”
“Banks and savings institutions insured by the Federal Deposit Insurance Corp. (FDIC) posted aggregate net income of $2.8bn in Q309 despite net quarterly losses reported by more than 26% of all insured institutions, according to the FDIC’s quarterly report on insured institutions.”
2009-11-16 — bloomberg.com
“The options market shows investors are growing increasingly wary that U.S. debt sales may push yields higher even as inflation remains in check.”
2009-11-16 — heraldtribune.com
“The FBI recently added short sale flipping, dubbed “flopping” by some mortgage fraud experts, to its list of recognized real estate fraud.”
2009-11-16 — reuters.com
“Investors who reaped robust gains in U.S. mortgage-backed securities by piggy-backing on the Federal Reserve’s $1.25 trillion buying program are bracing for the end to the central bank’s support — and positioning themselves for a new round of profits as prices cheapen.”
Ambac Financial Group Inc.’s bond- insurance unit faces a 99 percent chance of default, credit derivatives show, as financial institutions brace for the second-largest bond insurer to file a capital update with regulators later today. ”
The market for commercial mortgage-backed securities (CMBS) experienced a rally last week following the issuance of new guidelines regarding acceptable loan modifications within real estate mortgage investment conduits (REMICs).
The total reach of the new rules may not go so deep, however, as to help some underwater borrowers, according to one research firm.
“Next year, many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures – and home-loan data show that the risky loans were heavily used in the Bay Area.”
2009-09-21 — blogspot.com
” At least another decade will pass before housing prices return to peak 2006 levels, according to an analyst at Moody’s Economy.com.”
While Regions may be an extreme example of inflated loan values, it’s not unique. Bank of America Corp. said its loans as of June 30 were worth $64.4 billion less than its balance sheet said. The difference represented 58 percent of the company’s Tier 1 common equity, a measure of capital used by regulators that excludes preferred stock and many intangible assets, such as goodwill accumulated through acquisitions of other companies.Wells Fargo & Co. said the fair value of its loans was $34.3 billion less than their book value as of June 30. The bank’s Tier 1 common equity, by comparison, was $47.1 billion.
2009-08-12 — housingwire.com
” ING Group posted a EUR 71m ($100.9m) profit in Q209 after three consecutive quarters of losses, despite a decrease in the value and performance of its residential mortgage-backed securities (RMBS) portfolio. ”
2009-08-11 — wsj.com
2009-08-11 — blownmortgage.com
“Two reports out say if you’re thinking of buying, wait. The prices are going to continue to drop. The reason they offer are the same: Continuing increases in the number of homes worth less than their current mortgages.”
2009-08-11 — minyanville.com
“My vacation back to the US surprised and confounded many of my old friends: they know I moved back to park my wealth in dollars. Incredulously they asked how I could possibly not believe the US government, along with their crony partner the Federal Reserve, will not devalue the dollar to “settle” our debt with foreign lenders. A normal default (since we all know there is no way to possibly pay this debt back, nor is their enough capital in the world to buy our newly needed “financings”) isn’t palatable, they say, so the only direction for the dollar is down. I agree, but only in the long run. “
2009-08-10 — lewrockwell.com
2009-08-10 — nakedcapitalism.com
Today’s Financial Times highlights a possible target of regulatory action: bank overdraft fees. And those fees are not distributed the proverbial 80/20 pattern, with 20% of the accounts contributing 80% of the activity, but 90/10. And that 10%, not surprisingly, is in consumers with the lowest credit scores.
And not surprisingly, the biggest banks are the ones with the most aggressive fees.
“Readers may recall that during the heat of bailout battle, the Federal Reserve got into the fancy finance business, relying on the sort of deal structuring sometimes used to try to turn toxic odd pork scraps into barely-digestible sausage, the procedure used for pigs so dead that merely putting lipstick on them just won’t do.
The items in question are Maiden Lane, the vehicle used to backstop JP Morgan’s purchase Bear Stearns, and two sons of Maiden Lane created for dodgy AIG exposures. The bank was permitted to move some particularly fragrant collateral from Bear over to the Fed for a loan of $30 billion. The arrangement got reworked on the fly, and in the end, the Fed loan was reduced to roughly $29 billion as JP Morgan agreed to assume $1.15 billion of risk. The assets were placed in a holding company to be managed by BlackRock.”
It’s about time that people start asking the tough questions.
THIS IS NOT A MISPRINT.
“U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.
“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.
Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.
“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”
“More than one-third of all Option-ARMs (called Pick-A-Pay loans below) are in default and most of these are likely to make it to the foreclosure stage eventually.”
“After a review of 13 US residential mortgage-backed securities (RMBS) transactions, Standard and Poor’s lowered its ratings on 120 of the securities’ classes last week. The collateral backing the vintage 2005-2007 securities are primarily Alt-A, first-lien residential mortgages.”
“Often, the troubled home owner assumes the loss will be eaten by the lender. But Bank of America and Chase have quietly added language in their short-sale agreements that require the borrower to sign a promissory note for the shortfall.”
“Congressman Ron Paul has vowed that he will not be stopped in his effort to audit the Federal Reserve, as he slammed Senate authorities for blocking the bill earlier this week.
Appearing on Fox News’ Freedom Watch with Judge Napolitano Paul referred to Senate authorities blocking Jim DeMint’s attempt to attach the legislation, which already has 250 co-sponsors in the House, as a provision to a spending bill as a “facade”.
“Home prices will be lower in two years compared to Q109 for much of the country’s metropolitan statistical areas, (MSAs) according to an economic trends report released by PMI Mortgage Insurance Co.”
“Reporting from Washington — Just as the nation’s housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy.
Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration’s home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments….”
“Declines of more than 20 percent in regional banks and homebuilders and the failure of transportation companies to erase their annual loss may be signs the rally in the Standard & Poor’s 500 Index is about to fizzle.”
“Delinquency rates on the least risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure.”
175 California Hotels In Default; Sheraton Keahou Bay Resort in Hawaii Defaults; More Defaults Coming
2009-06-28 Mishs Global Economic Blog
In California, 175 hotels are in default — the first stage in the foreclosure process — according to a report from Atlas Hospitality Group, an Irvine-based brokerage firm. Another 31 have been foreclosed, nearly one third of them in the Inland region.
Of those in default or foreclosure, about 75 percent obtained new loans between 2005 and 2007 for construction financing, re-financing or to buy the hotel, according to the firm. Atlas Hospitality estimates that 2,500 hotels — about 25 percent of the state’s entire hotel population — refinanced or obtained new loans in that time meaning more defaults and foreclosures could be on the horizon.
“Mad props once again to Zerohedge who shone the bright light on Freddie’s latest screed. I’m not going to take from their discussion of The Fed buying up paper at what will (almost certainly) lead to ruinous losses – you can find that there. Rather, I am going to look at some of the internals from the document published that they didn’t focus on.”
China’s central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar’s global domination, which it said had worsened the financial crisis. In its annual financial stability report, the central bank did not mention the dollar by name but said it was a serious defect that one currency should tower over all others. “An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis,” the People’s Bank of China said.
In this Bloomberg segment Dr. Nouriel Roubini shares his thoughts on why pundits proclaiming the stabilization of the housing market are wrong and why the current policy path is unsustainable and likely to have a messy exit. My favorite part? The idea of our debt ballooning from 40% GDP to 80%. Lovely. Can you say bust?
2009-06-10 Dr Housing Bubble.com
If you want further proof how horrific these products are, take a look at how many of the Alt-A and pay Option ARM products originated with a second lien. That is, low down or nothing down fantasy buyers. In California, there are currently floating around 186,917 Alt-A mortgages with a second lien on them. You can rest assured that 90 to 99 percent of these loans will implode in the upcoming months. This is where your piggy back loans and 80-10-10 crap came about. I remember when zero down was a crazy way to suck in unknowing investors to thousand dollar seminars but it actually became a mainstream way to buy a home.
Before you even wonder how safe these loans are 41.6 percent of California Alt-A mortgage holders already have one late in the last 12 months! Keep in mind that most of this junk hasn’t even hit recast points and nearly half are already late with one payment:
May 6, 2009
Presented by Mike “Mish” Shedlock.
Mike “Mish” Shedlock is author of one of the most read economics blogs on the Internet: Mish’s Global Economic Trend Analysis http://globaleconomicanalysis.blogspot.com.
Mish gave an @Google talk, sharing his perspective on the state of the global economy (housing, the stock market, commodities, etc.) He also provides his interesting story about how he started blogging, and the impact that it has had on his life personally and professionally.
In January, Time.com ranked his site the #1 based on a rounded set of criteria http://www.time.com/time/business/article/0,8599,1873144-3,00.html. From the article:
“Although Mish is not an economist by training, he adroitly gets into the thick of economic data. Mish uses observations made by those in major media, so-called experts and government officials and serves up analysis based on his impression of their relevance and validity. The author is not afraid to attack conventional wisdom.”
A 27-year bull market in bonds is over and a brutal bear market is under way, says Tom Atteberry, co-manager of FPA New Income. That’s bad news for bond investors, particularly those holding Treasurys and municipal IOUs.
Atteberry, who spoke with us at the annual Morningstar Investment Conference in Chicago, says there is good reason to believe that the run-up in Treasury yields that began late last year will continue. Atteberry says he’s seeing anecdotal evidence that Chinese investors, huge holders of Treasurys, are beginning to sell their government-bond stakes. “They are very, very nervous” about the Federal Reserve purchasing Treasury debt because of the move’s potential for stoking inflation, one of the prime enemies of bond holders.
2009-05-31 Mish’s Global Economic Blog
Yale University economist Robert Shiller has often dazzled audiences with a chart showing home prices from 1890 to present. Someone even used Mr. Shiller’s chart to make a YouTube video that puts its viewer on a roller-coaster ride over peaks and valleys in home pricing. It’s a bumpy ride.
Now another economist, Thomas Lawler, says Prof. Shiller’s chart is “bogus.” Mr. Lawler says Mr. Shiller cobbled together data that are inconsistent and sometimes unreliable. Mr. Shiller defends his work and accuses Mr. Lawler of making “wild allegations.”
In the 1980s, Bolivia and much of Latin America went through a painful period of hyperinflation that brought the country to the brink of collapse.
2009-06-01 Wall Street Journal
“A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation. The firm, Universa Investments L.P., is known for its ties to gloomy investor Nassim Nicholas Taleb, author of the 2007 bestseller “The Black Swan,” which describes the impact of extreme events on the world and financial markets. ”
3 Fascinating articles. Woooooaah Nelly, it seems as things were not as rosy as we thought for the last month.
Mortgage Delinquencies, Foreclosures, Rates Increase
“Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March this week as the government’s effort to fix the housing slump lost momentum.”
Mortgage Marekt Seizes Up
Mish’s Global Economic Blog: http://globaleconomicanalysis.blogsp…-locks-up.html
“With respect to yesterday’s episode in the mortgage market — yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.”
THE CURTAINS ARE ON FIRE!!!
“To put this in a bit more simple form, this means that while the banks are claiming to be increasing loss provisions, loans are going bad faster than their provisioning is increasing – which means they’re reporting “profits” that are false, as provisions for bad loans hit earnings. So we can take some more off those “reported earnings”, as much as another $6-10 billion dollars.”
” Searching for the housing bottom, with Barry Ritholtz, FusionIQ CEO and the Fast Money traders.”
“JP Morgan Chase & Co., Citigroup, Wells Fargo & Co., Goldman Sachs Group, GMAC LLC, SunTrust Banks, Inc., and Fifth Third Bancorp — are at risk of failure and may have to cut back lending dramatically to stay alive.”
The homeless include a startling number of first-time homeless, she says. We asked them what industries they were involved in. The majority were talking about construction, the housing industry, real estate. There was a direct correlation to the housing market crash.
2009-05-06 Greenspan mess Blog
“One of the many “green shoots” that has popped up recently for the U.S. economy is the possible peaking of weekly jobless claims, what has been increasingly referred to as a “reliable” indicator for the end of recessions since 1967 when this data was first collected. The chart below, similar to the one published by CR in this item from a couple weeks ago shows the correlation.”
Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.
Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.
In 2006 and early 2007, the official housing statistics were still showing that house prices were holding up. But that was largely because so many sellers were refusing to sell. The auctions, made up mostly of foreclosed homes, showed the truth: house values were starting to plummet in many places.
So a few weeks ago, I decided to go to an auction at a hotel ballroom in Washington — and to study the results of several others elsewhere — with an eye to figuring out whether prices may now be close to bottoming out.
That’s clearly a huge economic question. Last week, JPMorgan’s chief financial officer told Eric Dash of The New York Times that JPMorgan, and presumably other banks, would be under pressure “until home prices stabilize and unemployment peaks.”
It seems we are off to the races with the gov’t being the primary shareholder of bank interests. Good Lord, what’s next?
Is That Recovery We See?
By John Mauldin
- Is That Recovery We See?
- Those Wild and Crazy Analysts
- The Shadow Inventory of Homes
- Commercial Real Estate Starts a Long, Slow Slide
- P/E Ratios Go Negative!
- The Effect of Earnings Surprises
- Corporate Earnings and Recovery in Recessions
- The Implosion in Social Security
The market, we keep hearing and reading, is telling us that there is recovery around the corner. And pundits point to data that seems to suggest the worst is behind us. The leading economic indicators, while still down significantly, seem to be in the process of bottoming. There is a large amount of stimulus in the pipeline. Mark-to-market has been modified. Housing seems to be finding a bottom, if you look at the rise in sales from January. And so on.”
JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo and More Than 1,800 Other Institutions Believed to Be at Risk of Failure Based on Fourth Quarter 2008 Data
JUPITER, Fla.–(BUSINESS WIRE)–Several of the nation’s largest banks, including JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, plus more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts, according to Martin D. Weiss, Ph.D., president of Weiss Research, Inc., an independent research firm.
The analysis is based on Fourth Quarter 2008 data from TheStreet.Com and the Comptroller of the Currency (OCC). Several large institutions received significant ratings downgrades from the prior quarter, including Citibank, downgraded from C- to D; Wells Fargo, downgraded from C- to D+; and SunTrust Bank, downgraded from C- to D+.
2009-04-09 ZeroHedge Blog
The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it.
CA foreclosure background – in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.
Bill Moyers Journal
Sharing the Blame for the Economic Crisis?…
William K. Black, former senior bank regulator