HAMP will miss its numbers

The simple facts are: 1) lenders are still DEMANDING homeowners first be no less than 60 days delinquent (a 180 point credit hit). 2) The process takes at least 7 months. 3) even when successful, the modifications put in place are not conducive to long term compliance… just the opposite. 4)IRS code makes it more profitable for lenders NOT to cooperate, and foreclose on homes…

There are no less than another 3-4 million Option ARMS (100% of the WaMU, Wachovia and Downey portfolio’s) that are underwater… cannot remotely be refinanced. with modification being the ONLY answer… Case Shiller, RealtyTrac and the rest of the “experts” are off by a factor approaching 100%… by the time that this bloodbath ends, in no less that 3-5 years, 23-25 million homeowners will have been devastated…

More Media and Government Lies

The media does the Wall Street bidding.... roots on a weaker dollar.... higher crude oil and commodity prices... all of which translate to higher retail pricing... then turns around and has the temerity to go along with the exclusion of those higher prices from the inflation numbers... more slight of hand...you paid more, but you really didn't more!! Yet further proof that congress has been bought off, yet again... what is good for Wall Street, is rarely, if ever good for the real world west of the Hudson...

Go back and check the time line of the housing crisis… at the exact same time that the first rate adjustment hit the sub-prime loans, pump prices leapt to the $4 range… People simply could not afford to get out of bed and commute to work… and there they were, and still are, the Cavuto's, Cramer's, Burnett's, Kudlow's, Wall Street Journal's, CNBC's, FBN's, CNN's all doing Wall Streets bidding... the truth be damned, have to keep those advertising dollars flowing...

This crisis will not end until there is rapid, make sense (for both lender and borrower) loan modification is in place… at present millions of the self employed are being denied any form of relief… Loan modification still demands that the homeowner be no less than sixty days past due, and takes five to seven months. Even when completed, the modification provided is very often a prescription for failure, causing the high recurrence of default figures. The residential crisis IS the root cause of the impending commercial real estate crash… consumers are not shopping in anywhere near the numbers required to provide the stimulus for businesses to recreate jobs… stores and businesses (many financed by CIT) close there doors… vacant retail and office space brings in how much rent???….

The “Great Depression” started on Wall Street, and ended fourteen years later on the deck of the USS Missouri… This crisis, caused by the actions of Wall Street, encouraged and enabled by congress, and rooted on by the media has its roots in the residential neighborhoods of Stockton, Riverside, Las Vegas, Detroit and countless cities across the county… and MUST end first where it began...The cures that have been employed to date, The Stimulus, TARP, EESA are all akin to going to the hospital with a heart attack, and being treated for an ingrown toenail… IT’S THE FORECLOSURES STUPID…. IT’S THE FORECLOSURES…

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...

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.