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"principle forbearance."

I think you mean "principal".

There are many ways we could of solved this situation for a lot less money. I dont think cost effectiveness was on the governments or the banksters agenda, I think it was all about saving peoples asses.

You could of let all the houses go into foreclosure and auction them all off and let the market decide what the houses are worth. But why do that when you can have the government give the banks full value for them. I mean in a free market doesnt the market set the price? Yeah there would of been failure of banks but there have been thousands of companies fail because of this mess why shouldnt some big Wall Street banks be allowed to take the fall?

As I stated on another thread there is an article out there laying all the numbers out and the approximate value of all the real estate in the USA is around $13 trillion dollars. If the delinquent value is 10% then that is $1.3 trillion dollars in mortgages that are behind. Hell the tarp bailouts could of just PAID for those houses in full instead of playing all the games. Hell the $23 trillion we have put up could pay off everyones mortgage in this country and we will still have come out cheaper.

Now Im not advocating for paying off anyone's mortgage (Because I know some will assume that) I am just making the point that it seems there were much cheaper ways to handle this. Its almost as if the problem was much deeper than just a housing crisis. That could of been solved in no time with much less money than we have laid out or put up.

Im still trying to find the article laying it all out its a good one.

Wasn't there a moratorium on foreclosures over the holidays? Seems to me I recall something about that a while back.

I was just thinking that 20 years ago it was considered a little iffy to give a man in his 50s a 30 year mortgage - because he was not going to be at the same income level for the term of the mortgage.

Most of the unemployed men I know are in their 50s. I think due to costs of health insurance, that the incentives are to shed workers this age and older. So, a man's earning power is falling off even faster than traditionally.

Anyway, I know a couple of those delinquent mortgages and that - a mortgage given to an older worker whose earning power has diminished - is the reason.

" it is recognition of the loss, with the loss absorbed as it should be by both the lender (who loses money) and the borrower (who has his or her credit trashed.)"

Why do you want the American public to get shafted AGAIN? I mean, yes there was some fraud out there (and a lot of it), but we are in a FINANCIAL COLLAPSE of historic dimensions. The public is already getting shafted by .gov who has stacked the cards in favor of default. Why is a lender going to talk to a borrower if he knows that default will allow him to get reimbursed by .gov (either through the AIG cahnnel, other CDS, or FDIC guarantees). We are f'd by .gov, f'd by the banks, and now you want to see us get f'd some more?

Karl, this is not business as normal. Whose side are you on?

It seems that some people are reaching a breaking point. This article and the incident in Texas yesterday seem to provide proof that the "public" is not going to take much more. These two incidents are shocking enough on their own but the comments following the bulldozer are very telling!

http://www.infowars.com/man-bulldozes-ho....

Comments like this?

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No man! on’t bulldozes your home; bulldoze the fuk-ken bank!

And its Obama to the rescue from drudge, 1.5 billion housing help, and please vote for Reid


http://apnews.myway.com/article/20100219....

Isn't this just another one of the many reasons Mr. Stark directed his airplane into an IRS building?

Different rules for different classes of people...

Sorry Gen: I need an ass kicking this morning.....fire away. I posted this on another thread, but figured it could go here and you could have fun at my expense.


I want to make something clear to this administration. You can take every alphabet plan out there, whether it is TARP or PPIP or anything….NOTHING will address the housing issue the way it should be addressed. HOMES WERE and STILL ARE OVER-VALUED. I hate to say it, but the only way to save housing is to go through principal reduction. I am not saying a hair cut on prices, as we do have contracts….. What I am recommending is the changing of the contracts to suit both the home owner and the banks. What I think we should do is set a target date. I would pick one of two dates. I recommend starting either at January 1, 2001 or January 1, 2005 and clawing back all mortgage payments (for everyone, not just those under water) and directly re-applying them to the principal portion of the mortgage and beginning the mortgage anew as of January 1, 2010. By doing this you would greatly reduce the debt burden on individuals going forward, which would also help jump start the economy as people might be a little more willing to spend again. You would also immediately put a floor in the housing market when it comes to pricing (without such, I believe we have another 20-30% downside risk). This would also make a lot of people who are currently underwater, back in the black and able to pay, who are currently considering strategic default on their under water investments. This would allow many people who think they are being swallowed by a giant debt tsunami the ability to pay down that debt and get on with their lives. THIS WOULD GIVE PEOPLE THE POSITIVE FEELING we need right now. I am even willing to make this optional for the banks and here is how that would work. The banks would choose to enter this program. If they chose not to enter it, this is what they need to do. Go out and foreclose on all properties where delinquencies exceed 60 days. Take the property over, pay all taxes on the property and bring them up to date. Maintain that property with the intent to resell it. They must also MARK EVERY LOAN TO MARKET. That’s right, honest accounting will be forced upon them. If we bankrupted Arthur Anderson for allowing Enron to fudge the numbers, why shouldn’t we force the banks that fudge the numbers too???? For that matter, lets also go after the enablers…the debt ratings agencies (again..another time and another discussion)

I don't see how this mess can improve. Aside from the millions of homes already foreclosed, another 2 1/2 - 4 million foreclosures are expected in the next few years. This does not include tanking commercial real estate, thanks to all those businesses going under. The banking elites have imploded the entire economy of Main Street and I don't see how anything can stop the downward spiral. It all depends on people getting decent jobs, except the government spent the last 30 years encouraging businesses to leave the country or outsource.

I'm 80% underwater. I think it may be time to walk.

I say give every man, woman and child $500 grand and let the chips fall where they may.

Give people/banks taxpayer money? Write off principal? Aren't both of these classes of ass clown already getting low interest loans at taxpayer expense? Aren't most "homeowners" already getting mortgage interest deductions? Who do you think picks up the slack for all the deductions that are taken?

The ACTORS need to take THEIR *******n lumps and losses, not me.

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Give people/banks taxpayer money? Write off principal? Aren't both of these classes of ass clown already getting low interest loans at taxpayer expense? Aren't most "homeowners" already getting mortgage interest deductions? Who do you think picks up the slack for all the deductions that are taken?

The ACTORS need to take THEIR *******n lumps and losses, not me.

EXACTLY

Look, the risk for a person is PERSONAL BANKRUPTCY.

So, you go through it. That sucks. But that's the price of imprudence.

The corporation takes the loss. If they take too many losses, they go through bankruptcy. That's the price of imprudence.

It's that simple.

"10.5% of all all homes"

Absolutely amazing numbers.

Isn't their failing to foreclose just another kind of fraud? Isn't putting off foreclosure just adding to the bank's losses in the long run? Isn't that cause for bank shareholders to sue?

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We've tried it the bank's way for three years. It has failed. It is time to tell the banks to cut the crap and either clear these homes or the examiners and regulators will simply mark the paper to the market less resale expenses and be done with it.

No man, that would just be the beginning - the new dawn. Once their assets were properly valued, then bank examiners would have to ascertain whether each bank had sufficient reserves to continue to function as a bank. If not - and there would be a bunch of banks that would not - then Sheila would arrive with accountants and padlocks. Then perhaps the FBI. Not until the U.S. aggressively follows the financial fraud rabbit hole as far as it goes will we "be done with it." Oh yeah, after the criminal fraud prosecutions, the injured investors should sue to clean out the personal wealth of each and every bank executive who contenanced such fraud in their organization. Then we'd have a huge TF party at Gen's place.

Dear Curbyourrisk, Your basic idea is not meritless but as suggested it would constitute a takings under the 5th Amendment to the U.S. Constitution unless conducted by a court under bankruptcy proceedings. I believe such loan principal reductions through bankruptcy are termed 'cramdowns'. Principal reductions outside of bankruptcy would likely be extremely tough as the original note has been sold if not bundled into another security with myriad investors holding an interest. Finding each of these interested parties and negotiating a principal reduction with them would be amazingly tough - and there are millions of properties in this situation. Still, cramdowns make much more sense in the long-run than foreclosure - and infinitely more sense than the 'hide the salami' process currently in place. Systematic cramdowns could limit price declines in a manner that protected local property values and thereby protected the revenues of local units of government dependent on property taxes. These are not minor concerns. Local units of government keep the streelights on, provide schools, police, fire protection..... The problem with the pure market solutions often touted here is that markets can become irrationally pessimistic, causing a downward spiral in wages and prices. In fact, one could argue that preventing such a deflationary spiral is the observable policy of the U.S. government and the FED (e.g. explicitly guaranteeing GSE paper). TFers tend to disagree with this policy because current prices are unsustainable and trying to prop them up is moving risk (losses) that should be borne by the risk-takers onto the public. A reasonable concern, but market purist tend to ignore the potential for a deflationary spiral, which would unnecessarily destroy wealth.

Given Gen's response above it is clear that like many others, he opposes the use of public funds to facilitate such transactions (this was the caus beli of Santelli's famous rant). Some of us are less offended by such use of public funds to facilitate cramdowns but even I am concerned that the darn banksters would game any effort to subsidize cramdowns and would once again take us to the cleaners. I note that the current HAMP program was gamed by the banksters and damn few mortgages have been modified. Still, it is my view that subsidizing cramdowns would be a much better use of public funds than purchasing or guaranteeing the junk bonds of delinquent or underwater mortgages or offering tax credits to home buyers. Facilitating cramdowns would help both lenders and borrowers. Guaranteeing junk helps only the bankster and investor classes - the poor underwater mortgagee gets nothing. Santelli was wrong.

Steelhead...I am not recommending cram down's per se. I am recommending paying the principal up front, reducing the debt and the interest level still owed on the back end. Mortgages are inherently back end loaded. Why not make them fornt loaded for 5 years.....bring everyone up todate and return to the norm. I am also not backing using public funds, but your funds that you paid into your mortgage. No gaurantees....no subsidies. I am talking about Monies already paid to the banks and just moving them to a different portion of the loans. It reduces the debt load, and the eventual interest payments. i don't know if its really feasable. One person told me, but what about the banks...What about them having to restate earnings over the 5 year period. I asked him if he really believed any of the earnings anyway and he had no comment. As far as I see it, as long as they have FDIC backed debts on their books, that is debt gauranteed by the tax payers, we still own the banksters.

It doesn't work Curb, because the banks don't hold the paper. The money paid in through interest has been distributed to the coupon holders - the bank no longer has it.

If you flip the amortization schedule then you create a horrible problem in that the back end of the loan has you paying an effective infinite interest rate. This will cause an instantaneous dislocation through prepayments which will further ass**** the MBS holders.

That sort of thing would utterly destroy the MBS market - worse than forcing the defaulted paper out into the open.

My bad Gen, but I needed someone to explain it to me. It seemed to simple, I knew it would be too good to be true.

Thanks

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10.5% of all all homes

And the ARM recasts haven't even peaked yet. That begins this September.

if they file a note of default on the homeowner, don't they have to produce the note if the homeowner fights back?

You got it right the first time KD, "hosing".

On this subject, I found something this week that has me stumped. I found a bank-owned foreclosure for $90K. The original sale AND loan amount was $306K, and with the unpaid interest, et al, the total foreclosure amounted to $346K. The loan was made by Aurura Loan Services, but now it is owned by Fannie. Does this mean that Fannie paid Auruara the full amount, and now they are selling it for $90K. Did the taxpayers get hosed, or did Aurora?