The Greatest Generation

I watched "A Band of Brother's" again today... as I often due, I reflected on the 16,000,000 men and women who, through their sacrifices, their shedding of blood, the death of almost 500,000 of that number have made our lives possible... These brave souls all now their 80's and 90-s... protected this engine of democracy, this bread basket to the world and built our economy and America into the envy of the planet, the magnet of freedom... who had earned a right to spend the sunset of their lives in rest and retirement... a retirement now ripped from them by the insatiable greed of those thieves of Wall Street... now they have absolutely zero time to recapture anything... just imagine being forced to go back to the work force in your 80's and 90's... many will end their lives in complete destitution... this is the real crime committed by those bastards...

But only the abject gross negligence of Congress could have made it all possible…

The A.I.G. Bonuses ..Get Over It...

I note with great interest that the people screaming for the most blood are the very same members of congress who could not take the time to read and understand just what they were voting for... They admitted that they were surprised that this issue of executive compensation and bonuses was not covered in the bill that they just voted for! I note too, that the silence from Speaker Pelosi and Senator Reid is quite deafening... could it be that they know that in forcing the vote on what is most probably the single most important piece of economic legislation in our history, in less than the promised five days, they are directly responsible for yet another screw up...

Get over it, the damage has been done, the bonuses, that is if they are in fact bonuses and not commissions, have been legally paid; and, if enacted, this latest waste of our time and money by congress will most likely be proven unconstitutional... Hopefully the president will have the will power to use his veto powers, saving us the cost of taking it to the Supreme Court... Let's see now, "you" work for XYZ Widget Company, have done a great job, "you" have an employment contract calling for incentive pay whenever you meet or exceed your quotas and the company paid you a handsome bonus... but then the company files for bankruptcy... the creditor's ask the bankruptcy judge to invalidate your contract and order that you return the bonus... do you believe that you ought to be compelled to return it?... I didn't think so, you have a valid contract, right...

I note too that the public, which in 60% of the case is too damned lazy... too taken up with American Idol and Survivor... too busy Twittering and “Facebooking” to put down the remote or cell phone and vote... even too damned lazy and disengaged to pick up a pencil and fill in an absentee ballot... to damned lazy to write to their members of congress (it's OK folks, Word has spell check)... and then, when the media tells them too, they wake up and start screaming... please, either start paying attention... get involved... see to it that this sort of gross negligence on the part of congress doesn't happen again... or else do as YOUR member of congress fully expects you to do... sit down, shut up, go back to your reality television programs and enjoy this "E Ticket" ride that they have placed us on...

A dolt is a person who consistently screws things up... now, think of congress... but in continually returning these mostly inept people to their seats in the capitol, without any real scrutiny on our part, are we not doing the same thing, screwing up!... In failing to participate in the electoral process... in failing to do our jobs as citizens and provide oversight of our elected officials (at every level) we are getting just what “we the people” asked for... the finest government that the Sierra Club, NRA, Oil, Farm, Wall Street, Banking, Insurance, Union, "Widget" or any other special interest lobby can buy… even a three year old learns not to put its hand in the fire twice...

Ex-Leaders of Countrywide Profit From Bad Loans

I wrote on February 18, 2008... warning that this would occur...from the NY Times...
"Ex-Leaders of Countrywide Profit From Bad Loans"
http://www.nytimes.com/2009/03/04/business/04penny.html?_r=1&emc=eta1

The Housing and Economic Reform Act as well as EESA gave the Treasury
Secretary UNLIMITED, UNFETTERED authority to do with as he saw fit with the asset being purchase by the government... didn't anyone in congress read and, heaven forbid remotely understand what they were voting for... what they were giving away... this can and ought to be, but so long as there are lobbyist and campaign contributions will never be corrected...

Without proper loan modification, prior to any sale of the assets,... there will be a surge of foreclosures that may just make what we have already gone through seem like a day at the beach...

Many government official, and all of their "experts" have stated that real estate prices are still over valued and need to come down even further... but for whose benefit? I wonder which members of congress and government officials are invested in partnerships and blind funds, following in the footsteps of Stanford L. Kurland... this reeks of the RTC all over again...

The real number of problem loans is...

The Case Shiller and First American Core Logic are understated by several million... They both draw their data from the recorded deed information and then use a general "guestimate" (thank you Paul Harvey) as to the current value in a manner that is very similar to what one might glean at www.zillow.com. And that one has no relationship to reality! Zillow reports only history… does not provide an accurate estimate of current value.

Problem... they have zero way of determining the current balance due on an Option ARM, with negative amortization. The ONLY number recorded is the original amount recorded. In order to accomplish this feat, one would need to know not just the opening balance, but also: 1) the entry rate, 2) date of recordation, 3)original minimum payment, 4) the payment history, 5) the term, 6) index, 7) margin 8) the historical data for the index from that date of funding, and 9) and then go about running the numbers for each of the millions of loans in the portfolio’s for every lender or thrift that made these loans… Once this is completed, a Broker Price Opinion (BPO) of the estimated value would be required...not happening…

There never was a secondary market for these loan products... none in MBS pools. Further, very few of these loans have are in default. As the ENTIRE loan portfolio's of Downey, WaMu and Wachovia, plus any other thrift that offered Option ARM's IS COMPRISED SOLEY OF THIS PRODUCT, you may wish to research the dollar amount their respective portfolio's... and you will be closer to the true number of problem loans...

Further... as, with the exception of Wachovia, all of those loans carry a maximum 10-15% negative accrual, you will then get a better handle of the number of additional (not previously included in the default data) loans that may go into default... AND the dollar amount of additional TARP funding that may be required to cover these losses... You will find that the Treasury indemnified US Bank, Chase and Wells Fargo from any loan losses as part of the (forced?) purchase of those banks...

My research indicates that the true number of problem and potentially problem loans to be closer to 25 million...

Another reason to offer immediate modification of the CURRENT LOAN BALANCE, every ARM loan; and every fixed loan more than 3% over the 10 tear Treasury bond into: a 50 year amortized. 5 year reset loan at 4%. With NO QUALIFYING. Loans already in default carry a forbearance agreement as part of the modification...

Further, in order to correct the lack of oversight from all of the previous laws...HERA, EESA and the new ARRA (love those acronym's) and any future act; require every lender, thrift, loan servicier, brokerage, insurance company or any other entity that owns any beneficial interest, either directly or indirectly, in any loan secured by 104 unite residential real estate, and has received any federal funds, either directly or indirectly be required to make the above offer of loan modification.

These loan modifications are to made without... without... any qualifying... my proposal will reduce the average mortgage payment by about 55% for these 25 million homeowners... we all gain by keeping them in the home; and thereby stabilizing the real estate market... the mortgage payment savings will, no doubt, go back into the economy through the purchase of good and services... my proposal will inject some $150 million (compounded)... for no less than the first 5 years of the loan modification or about $2.4 trillion... at "tad better" than what Mr. Obama is proposing... and $100 in true hard costs per loan, my proposal is as close to cost free as we will ever get!

This too shall fail...

And from the latest soon to fail government "program" on loan modification...

"They must also fully document income and prove occupancy..."

In my more than 28 years in the mortgage business I don't believe that
I have seen more than a couple of dozen self employed 1040's that would
qualify the client for anything more than food stamps! The tax code is
about to bite these people in the ass... If you want a real estate loan
you must not take legitimate business deductions... thereby paying far
higher income tax... but we aren't raising your taxes!! If we keep or somewhat
lower the tax rates... severely limit or reduce deductions, resulting
in a higher tax bill, have we raised your taxes??!!

If, as the president states there are millions of small business owners...
most of whom files as "Sole Proprietor's... or S-Chapter Corporations (in
effect self employed)... then he has determined that these millions of
Americans are not worthy of any assistance...

What am I Missing...

A number of years ago the defense department went through budget cuts... to save
from its budget, The Navy closed down Moffett Field in Sunnyvale, CA... and turned it over to other federal agencies... and NASA... some budget savings... some savings to "we the people"!!!....

In moving Marine and Army combat and support personnel from Iraq, where combat has been winding down (reduced operational cost)to Afghanistan where combat is ratcheting up (higher operational cost)... will save us how much???!!! A key point in where will the money come from in the new budget is the savings from the Iraq war... What am I missing...

Insofar as we are going through another Abraham Lincoln revival... "you can fool all of the people some of the time; and some of the people all of the time; but you cannot fool all of the people all of the time..."

I'd suggest that if Mr.Obama intends to continue along these lines he replace Mr.Orzag with Penn & Teller as director's Office of Management and Budget...

A dolt is a person who cannot keep from bungling.... now, think congress...

What am I missing...

It's the Foreclosures Stupid... It's the Foreclosures

Sunday, February 22, 2009

Congress failed to require real, true, viable loan modification in the Housing & Economic Recovery Act as well as EESA and again in the ARRA. "We the People" have now spent or committed to spent some $2 Trillion, with trillions more to come, all without ever having addressed the root cause of this crisis.... the real estate defaults and foreclosures. In addition, proper loan modification WILL eliminate the vast majority of loan defaults that have brought about the massive increase in bankruptcy filings. Should our bankruptcy judges have the authority to modify real estate loans… most probably the answer is yes, however this is and ought to be a separate issue apart from the current economic crisis.

It has been stated that some 58% of loans that have been modified to date are back in default and foreclosure. A review of these loans will reveal that the cause for these failures has been the method of modification... the rate and terms applied in these instances have been a prescription for failure. Therefore, I suggest that congress require that any lender, brokerage, insurance company, or and any other firm that has received TARP or other federal funds, either directly or indirectly; and holds a beneficial interest in an any loan secured by 1-4 unit real estate, either directly or indirectly, be required to offer to modify all real estate loans with less than 3 years remaining to the next rate adjustment along the following lines:

WITHOUT the time consuming, meaningless process of (effectively) re-qualifying for a new loan, the existing loan balance is to be modified into a 50 year amortized loan, with a 5 year reset and an initial rate of 4%. The maximum rate change each 5 years would be +/- 2%; with a 9% lifetime cap. Loans already in default would carry a forbearance agreement added as part of the process.

This method of modification will reduce the loan payment by some 55%; while at the same time preserving the amount due to the lender. The aggregated annual savings of in excess of $150 Billion realized would, most likely, go into savings, pay down revolving debt or be spent fueling the economy through the purchase of goods and services (cars?). All of these options are positive and necessary for a cure to this crisis.

In most instances, this process would eliminate the urge to simply walk away from a property in which the homeowner has no equity. They require a home for their family; and what is better than the one that they already have. This proposal will stabilize not only the real estate and financial markets... but also the lives of these millions of Americans... while at the same time providing the knowledge and hope that, given time, they will regain the lost equity in their homes... the hope and positive attitude that my proposal brings to the table cannot be overlooked.

It is quite easy to verify that the number of families currently effected by this crisis is not, as reported 13 million, but more likely over 25 million real estate loans are in jeopardy... we cannot continue to ignore these people... as to stay on the present course, impacts every American family negatively.

Every time a homes sells as an REO or "Short Sale" the real estate tax base is reduced... the states and local governments are all reeling from these loses. This plan will put an end to this hemorrhage in tax revenue too.