$40 Billion Foreclosure Assistance Not Even Close

Posted on October 23rd, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

The Treasury just released some news that they were pumping $40 billion into the foreclosure/loan modification/refi market. The details are ambiguous as best.

$40 billion is nothing. Below are real-time foreclosure stats for CA. Remember, CA is 35% of all defaults and foreclosures by count and 45% by dollar volume. While its nice to see this topic addressed $40 billion is not much considering int he state of CA, total Notice-of-Defaults and actual Foreclosures are averaging about $28 to $30 billion per month. This means on a national level, roughly $70 billion. Given this $40 billion makes for a nice headline but in the grand scheme of things, means very little. -Best Mr Mortgage

Below is actual CA Foreclosures that went bank to the banks as REO monthly.  This is the last stage of foreclosure. CA has been averaging over $10bb actual foreclosures per month over the past 6-months. The image to the left by dollar volume and the right by count.  The Sept drop is an anomaly in that SB 1137 brought down numbers and they will rebound once lenders get back in full compliance.

Below is real-time CA Notice-of-Defaults that went bank to the banks as REO monthly. This is the first stage of foreclosure after a borrower has missed three to four payments. CA has been averaging nearly $19bb in mortgage defaults per month over the past 6-months. The image to the left by dollar volume and the right by count.  The Sept drop is an anomaly in that SB 1137 brought down numbers and they will rebound once lenders get back in full compliance.

When analyzing the data below and seeing that Notice-of-Defaults have dropped slightly, don’t get too giddy. What you see up until the peak is essentially the ‘Subprime Implosion’ only. However, in the past 6-months Subprime defaults are off about 35% because the 2/28 reset peak has passed.  Why aren’t defaults off more? Exactly…higher paper grades, although just starting their ‘implosion’, have already filled the Subprime default void because each universe is so much larger than Subprime. At Field Check Group, I can track all defaults and foreclosures by bank and a variety of other factors and it is amazing to see how the subprime train has jumped the tracks and now headed full speed into disaster.

Real-time foreclosure data courtesy Field Check Group, Real Estate & Finance.

Treasuries Fall on Sale Plans, Stock Futures Rise

By Lukanyo Mnyanda and Wes Goodman

(Corrects direction of yield in fourth paragraph.)

Oct. 23 (Bloomberg) — Treasuries fell, pushing two-year yields up from near the highest level since March, on speculation the government will announce two record auctions for next week to help fund its $700 billion bailout of banks.

Notes also dropped as U.S. stock market futures rose and cash injections by central banks showed signs of thawing the freeze in money markets, reducing the allure of the safest government assets. The U.S. may say today it will sell a record amount of notes next week to meet “unprecedented financing needs,” Wrightson ICAP LLC, an economic advisory firm, said.

“The market is focusing on supply and this is something that’s going to keep yields higher than they would be otherwise,” said Niels From, chief analyst in Copenhagen at Nordea Bank AB, Scandinavia’s biggest lender. “We’ve already seen a sharp rally in Treasuries and the market is taking a bit of a pause.”

Continued in link above…

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13 Responses to “$40 Billion Foreclosure Assistance Not Even Close”

  1. Be nice if they could be a little more specific as to what the $40B is actually supposed to do? Details. Always a sticking point. So pesky. But I’m glad to see the banksters on wall street will still have a good xmas party. Wish I could say the same for the rest of america.

  2. Some scary numbers came out today on foreclosures. The data was scary because the largest foreclosure state in the nation is CA and they passed a law to stem foreclosures (fell by 51%). Also other states passed similar laws as well so what we are witnessing is far greater numbers of foreclosures everywhere else but those states that stalled them. The real scary part of this is those stalled foreclosures are still going to take place for the most part so with that in mind we can now expect to see more records broken as we move forward. By delaying the inevitable we have just increased the sheer number of defaults in the ensuing months ahead. That may not have been so bad if we didn’t have such dire numbers come out today in spite of these efforts. Now it is apparent that we are in for huge increases moving forward in these numbers.


    September 2008 saw 265,968 troubled borrowers receive foreclosures filings which is an INCREASE of 21% YOY

    September 2008 actual foreclosures totaled 81,312

    Q3 2008 saw 765,558 foreclosure filings made on properties which is an INCREASE of 71% YOY

    All of these increases are after a horrible 2007 which clearly show us that the situation is now getting far worse as we move along. Now we are fast approaching the winter months, or seasonal downward time for home sales. This should only serve to exacerbate the situation further as we will see more and more people simply walk away due to not being able to sell and get out from under. Many others will simply be left with no other choice than to walk away because they owe more on their homes than they are worth and they can’t sell their homes for what they need too. Still many others were hanging on and awaiting a possible turn around that never came. These folks will simply give up and leave as well. Many of these people are speculators and don’t want to get bailed out, but rather really wanted to sell the properties for profit. In fact many just want to move on with their lives and do not want to be bailed out. They want it over and done with…

    FDIC chief Sheila Bair has stepped up with yet another new BAIL OUT plan of her own. This one is for homeowners facing foreclosure and as she puts it “Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “Specifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards.”

    I get it, so the TAX PAYERS are now going to back stop home loans to people who cannot afford them and if they fail as a result the TAX PAYERS will foot the bill. Now we already know from the last attempt at doing this that many, many of these loans eventually fail anyway (last time 30% failed within 5-6 months). So precedent has been set that this simply will not work, but we are going to do it anyway.

    What really bothers me is that this is an additional bank BAIL OUT plan at TAX PAYERS expense yet again. It is way beyond me why the Government must BAIL OUT banks that rewrite their own mortgages that they wrote. They don’t need us to do that as they can do it all by themselves. They are their loans written to their homeowners and don’t concern the TAX PAYER at all. Well actually there is one very good reason to do this for the FED and Treasury and their banking buddies on Wall Street. If we know that many of these loans will fail anyway (which we do) and the TAX PAYERS via the FDIC don’t back stop them, then the bank takes the hit. This way the TAX PAYER takes the hit and the banks walk away… BRILLIANT!!! Such a beautiful thing being an American TAX PAYER these days…

    Too funny…”Now that the administration has taken strong measures to stabilize financial institutions, it is imperative that we apply the same sharp and urgent focus to help the individual homeowners whose plight is at the root cause of this crisis,” said Senate Banking Committee Chairman Christopher Dodd, D-Conn. Are you kidding me? Look at these words being used “imperative” and “urgent” and “plight” We have not heard a thing from Dodd for weeks on this publically an now it is all of a sudden imperative and urgent all at the same time… what an absolute joke he is!!! He didn’t give a care about the homeowner a few weeks ago, and was only concerned like the rest of them, about taking care of their campaign contributor banking friends on Wall Street. In fact it never even came up in any of his conversations in the media that I can recall. Now he comes out with this (right before the election) statement and looks to swoop in as the Sheeple hero!!! How utterly absurd and what a joke this is… and on the TAX PAYERS back yet again which he claims to be assisting. Then Bair says that 3,500 people have already accepted their offer. Well they better get moving because we average nearly 3,000 foreclosures PER DAY!!! This is going nowhere and is just more rhetoric from the politicians to further their movements to get re-elected. If they really cared about the people, the TAX PAYERS in this country then they would STOP PLACING US IN MORE FINANCIAL RISK!!! UGH!!!

  3. One Day – One Vote!!!

  4. Stu,

    So much for rating agencies!

    You are going to love this:

  5. ? what happened to the link?

  6. here it is:


  7. I’ll post the question here so that the rest of the MM readers have a chance at it.

    Any chance you could speak of risk analysis methods? With the ratings agencies lack of objectivity in the news, I keep asking how does one compute risk on a falling asset value? Auto loans are on assets that fall in value as soon as they leave the dealer’s lot. Sail boats and yachts fall in value yet financed with some sort of risk assessment. Furniture sales advertised with interest free, blah, blah. True, these assets are small $ as compared to RE, but the risk to lend is still present.

    So how is it that real estate, a fixed permanent asset, not clearly assessed and financed with risk adjusted?


  8. So the subprime shtuff has already hit the fan & we are just seeing the beginning of the Alt-A shtuff.

    The gov’t (us taxpayers) is bailing out the imprudent banksta’s with about $trillion, give or take a few hundred billion. $40b is peanuts – peanuts in the big cowpie we’re all going to be forced to take a big bite out of… (I know, my participle is dangling)

    Have I assessed the situation incorrectly?

  9. 40 billion? that’s 30 billion less than the bonuses the banksters are getting in their post fail out bonuses.

  10. Dems/Repubs – fraudulent two party system…Who owns who?

    The media/gov./wall street is owned by controlling interests – the super wealthy who rule the universe. They started their assent to wealth 400 years ago. They invented money out of thin air! They still rule the world today. They use Democrats and Republicans alike to do their bidding. They don’t care who is in power but still sway elections to fit their causes. This is why we have depressions and wars. It starts during our own Revolutionary war to break from the central Bank of England – the same power elite as today. They got a strong foothold in 1913 at Jekyll Island. They finally consolidated their power in 2008. The next Depression and World War III – already started – will make them even wealthier. All Presidents have been political slaves since 1913 and perhaps before, but one thing is true… If you are a Republican or a Democrat, you are a fool! They divide and conquer you through the fraudulent two party system. They cozy up with Capitalists, Fascists, Socialists and Communists, alike. Capitalists, Fascists, Socialists and Communists take their money to expand their political ideologies and POWER through war. WE, as a GOVERNMENT cozy up with Capitalists, Fascists, Socialists and Communists alike because we make MONEY with them. My father and all our forefathers believed in freedom so they risked their lives for such a vague term. So what is freedom? Shouldn’t we be fighting Communism?

    Are we really free today? Does the media always tell the truth? Do our Republican/Democrat leaders do what is in the best interest of Americans? Wake up and understand that we are all (credit) slaves made to play the games of the Super Wealthy whose playground (credit) planet we live on. If we as Americans truly believed in freedom, than why do we owe so much money to Communist China or Dictatorial Saudi Arabia.

    Sorry to burst your bubble that your whole life was a LIE! YOU WERE LIED TO! Now you are about ready to lose a lifetime of savings to the Wall Street/Government backed thieves who you risked your lives for in WWII, Korea, Vietnam, etc., etc., . BOTH DEMOCRATS AND REPUBLICANS are to blame because they are all bought and paid for by the lobbyists and corporations who are owned and directed by the super wealthy.

    Subprime loans will account for a very small percentage of the toxic waste of mortgage backed securities for the next 3 years. The subprime $100,000 loans made Wall Street a lot of money. The million dollar homes were not subprime loans. They too made a lot of money in origination, closing and servicing fees. But wait till you see what 300,000 half a million to million dollar loans that go into default looks like. No subprime there, is there?

    So pull your head out of you Republican/Democrat @$$ and smell the $%!#. Only idiots believe that one party ruined our country because in reality, it was both parties acting in cyclical concert as puppets to the ruling class for the last 100 (or 400) years. THE SAME BANKS, CORPORATIONS, AND MEDIA ARE OWNED BY THE SAME FAMILIES OF PEOPLE WHO STARTED BANKING 400 YEARS AGO.


    Thomas Jefferson quotes:
    I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.

    Thomas Jefferson quotes:
    The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first.

    This is happening today! Your dollar(s) did not disappear, it was illegally transferred somewhere else by securitization of loans to ALL who were never underwritten, and lack of government Banking oversight. Who received your dollar(s)? God bless you sheeple!

  11. listen and think….


  12. Rocket Rob summed it up quite nicely, thank you. Welcome to the New World Order everyone. Good luck in the Greater Depression.

  13. Just because the FED released this 40B into the system ,that is supposed to help those that require forclosure assistance, doesn’t necessarily mean that is where the monies will end up. The larger percentage of banks are in trouble on the balance sheet side, and the money may not be used as intended. Who will regulate the use of these funds?? The SEC? Given the stand up job the regulators have been doing thus far, I see this as basically money being thrown away. Sorry, I just don’t trust these bastards, as they have lied about everything.

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