Archive for 2010

Most of the policy decisions coming out of the Federal Reserve appear as if they are making it up as they go. During 2008 and 2009, some of the emergency lending windows opened at the Fed likely saved the economy from total collapse; however, many of the policy decisions have not been as successful, and the attempt to re-inflate the housing bubble to save bank balance sheets is failing as house prices roll over despite historically low interest rates.Ben-Bernanke-Las_Vegas

Are the Fed's Honchos Simpletons, Or Are They Just Taking Orders?

(November 1, 2010) -- Charles Hugh Smith
Without exception the Fed's policies are pernicious failures; either they are exceptionally thickheaded, or they are just taking orders. [READ MORE]

Mortgage Mess: Shredding the Dream

The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses

October 21, 2010 -- Peter Coy, Paul M. Barrett and Chad Terhunesquatting_until_foreclosure
In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage. The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents' promissory note, so the state circuit court for Palm Beach County dismissed[READ MORE]

Last week I profiled a neighborhood in Irvine that inexplicably dropped about 20% in value since the tax credit expired. As it turns out, widespread price declines are beginning to show up in the aggregate statistics. The leg down we have been expecting this fall and winter is happening now.dead_housing_market

Clear Capital: Home price drop sudden and dramatic

by KERRY CURRY -- Friday, October 22nd, 2010, 12:25 pm
Clear Capital said a 6%, two-month decline in home prices represents a magnitude and speed not seen since March 2009. “Clear Capital’s latest data through Oct. 22 shows even more pronounced price declines than our most recent (Home Data Index) market report released two weeks ago,” said Alex Villacorta, senior statistician with data analytics firm. “At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all[READ MORE]

If I had to narrow my list down to the people most responsible for the housing bubble, Anthony Mozilo would be near the top of the list.mozilojail The Option ARM loan was the primary loan product that inflated the housing bubble. Using negative amortization and teaser interest rates, people were able to borrow more than twice the amount than they could afford with a conventional 30-year fixed-rate amortizing mortgage. Once the Option ARM imploded and lending retreated to conventional mortgages, prices needed to fall significantly to rebalance affordability. The Option ARM was the Ponzi virus that caused the debilitating financial disease that inflated the housing bubble and created the current economic morass still plaguing the country. The only person perhaps more responsible for the housing bubble is Alan Greenspan. If he hadn't let the Ponzi virus out of its vial, and if he[READ MORE]

The mortgage industry was kissed by a witch in the night. Looking for their own selfish gain they came up with a cunning system to transfer mortgages and shortcut the public recording system. Washed clean by the market crash, mortgage holders insisted their title claims were true, and the system is nursing its pain.MERS_monkeys

Bubble, Bubble, Toil and Trouble in the Foreclosure Market

By: Stan Humphries, -- October 11th, 2010
Well, what initially looked to be a technical road bump in the foreclosure process is now certainly blossoming into something with a more material impact on the housing market. Initially, this situation had the appearance of a sloppy record-keeping scandal, one that was important to resolve but that involved supporting documents that could ultimately be located and where correct procedures could be put into place. On the other hand, there are hints now[READ MORE]

Last week when I wrote about Private Property Rights: A Casualty of the Housing Bubble, I didn't fully grasp the seriousness of the problem facing our system of property rights.danielle-earlsmaller We live in a nation of laws. Our laws of ownership of property are the basis of our economic system. These laws are being threatened. Barry Ritholtz quoted Hernando de Soto, The Mystery of Capital:

“In the West, this formal property system begins to process assets into capital by describing and organizing the most economically and socially useful aspects about assets, preserving this information in a recording system—as insertions in a written ledger or a blip on a computer disk—and then embodying it in a title. A set of detailed and precise legal rules governs this entire process. Formal property records and titles thus represent our shared concept of what[READ MORE]

Are foreign cash buyers savvy investors who are taking advantage of low prices to snap up bargains, or are they the fools who purchase overprices assets that natives won't touch? Often its a little of both. I always enjoy reading Rich Toscano's writing, and back in 2006, he wrote a brief post on what generally happens when foreign investment becomes prevalent in a market.need_an_fcb

The Dumb Money

RICH TOSCANO -- December 20, 2006
One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future. Unfortunately, this argument puts the cart squarely in front of the horse. Investors from other countries are well known to be the very last participants to arrive at the scene of a financial bubble. They are the[READ MORE]

What do you do when the people who are supposed to protect you and serve your interests steal from you? Protest? To whom? What do you do when the government that is supposed to look out for us steals our money and gives it to greedy and corrupt corporations and bankers? It's happening to you right now.give_it_back

The greatest heist in our country’s history

by PAUL JACKSON -- Tuesday, October 5th, 2010, 5:29 pm
Our economy is being stolen from us, and our nation’s real estate crisis is providing cover for what will — if it goes unchallenged — go down as one of the greatest heists in our country’s history. Yes, a mortgage crisis of historic proportions has now suddenly become a foreclosure crisis of historic proportions. And it’s front page news, too, bringing the market pundits out of the woodwork to [READ MORE]

In housing markets where a significant number of properties are being converted from owner-occupied to rental status, there is no government program or help for this transition to occur. Without government help, prices fall far below fundamental valuations as the imbalance of supply and demand becomes extreme. The only solution is to reduce supply and increase demand. To accomplish this, I propose that the GSEs promote investor programs that reduce the cost of ownership to small investors and encourage them to keep the supply off the resale market.small_investors I am about to argue for something that would benefit me personally, so take everything which follows with a dose of skepticism. I would like to think I can set my personal biases aside and propose a solution better than those coming out of Washington. Feel free to disagree.

Should Treasury Help Investors Become Landlords?


I recently wrote that squatting is becoming a way of life for many delinquent borrowers.ramdy_quaid

Of course, this doesn't meet the technical definition of squatting which is possession of real estate without the owner's permission. In this instance, the squatters are technically still the owners of property, so there is nothing illegal going on, but these owners are generally hopelessly underwater and failing to make their mortgage payments. They are in possession of real estate that can be called to auction at the discretion of their lender at any time. Ultimately, they will lose their homes.
Today, we are going to look at other forms of squatting from the traditional adverse possession to the return of former owners who couldn't leave their entitlements behind.

Squatters moving into upscale neighborhoods

With thousands of mansions vacant, some see easy pickings

By Bill Briggs contributor updated 9/23/2010
On the big screen, actor[READ MORE]

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