Let the bloodbath begin!

The vast majority of Toxic Assets, aka Legacy Assets, aka Non-performing Assets, are in fact loans on 1-4 unit residential real estate currently in one stage or another of default and foreclosure.

Read the Housing and Economic Reform (oxymoron) Act and you will find that it authorizes the Secretary of the Treasury to a) acquire these assets and b) dispose of them as he sees fit... As it did when it enabled this crisis years ago, congress has written a law with zero provision for CONGRESSIONAL OVERSIGHT.

Further, without exception, every housing loan modification program in place today is doomed to fail. The very conditions attached to all of them guaranty this fact. i.e. it is now virtually impossible for the tens of millions of self-employed Americans to qualify for ANY real estate loan modification or new purchase loan.

Should these assets be PROPERLY modified... ofttimes the current formula's in place are prescriptions for a second default... they will become performing assets, with no further losses for the lending institutions.

HOWEVER, should they be bundled (as did the RTC) and sold to these private investors at pennies on the dollar, there most like will be a "bloodbath" of new foreclosures. These are delinquent loans, the investor becomes the new note holder, bank if you will, free to accelerate the foreclosure process, and acquire what could amount to over a trillion dollars in residential real estate "on the cheap."

Congress can, and must immediately amend the HERA to prevent this potential debacle.

Residential real estate "lead the way" into this depression (and it is)... it must lead the way back out... I ask you the question, will you set foot in an auto showroom when you don't know if you will own a garage to park it in next week? Ours is a consumer based economy... only a fool would believe that "we the people" will consider spending on anything that isn't a requirement for survival again until the housing crisis has been addressed.

Without loan modification to stem it, we are about to enter another phase of defaults and foreclosures that will last no less than another 18 months to complete... and then an additional 1-2 years, if only that, to clear the inventory... all the while decimating the lives of Americans...

When consumers don't consume store close... the last time that I checked, a vacant retail space pays no rent... enough empty stores in a shopping center and... well why not check in with the bankruptcy courts to see what happens!

As Polonius said to Laertes when he was preparing to leave on a journey, "...to thine own self be true..." Well this is one hell of a journey that congress and Wall Street have taken us on...

it's the foreclosures stupid... it's the foreclosures...

Beware the sale of "Toxic"... "Legacy" assets

The Treasury and FDIC have laid out the plans to acquire bank assets with private investors is fraught with danger for the homeowner's of America. This published plan is set to "encourage" (finance would be a better description) the acquisition of these "legacy"... "toxic"... in reality these are non-performing real estate loans and a far more accurate description, into the purchase of these assets (item of economic value).

The issue here is that virtually 100% of these assets are secured by 1-4 residential real estate. Once these mortgage loans are sold to the investors (Wall Street?) they become the new "bank"; and are free to move rapidly forward with the foreclosure process. Thus, they are "buying" these loans, thanks to the generosity of "we the people", with only 6% down, leveraged with government guarantees ... not a bad deal... buy a $100,000 loan for $6,000... then foreclose on the note... next turn around and resell the underlying asset... the house... for, say $50,000 in a fast sale... now think in terms of hundreds of billions of dollars, several million homes included in this next fiasco... if you think that real estate values have gone down... wait for this blood bath...

I warned of this 18 months ago... that UNLESS these loans are modified prior to any sale to these private investors, the bloodbath of foreclosures will make what has already passed seem like a family picnic in the park... Go back and read the Housing & Economic Reform Act and EESA; that provide the Secretary of the Treasury with unlimited authority to acquire these assets and sell them as he sees fit...

We are sitting on the precipice of a real estate Armageddon... should congress refuse to amend these grossly flawed laws and exercise its responsibilities, it will be complicit in the further rape of the American homeowner...