210 Responses to “Citi to Follow Chase out of Wholesale – The ‘Rest’ Are Next”

1. peterb Said:
   January 22nd, 2009 6:52 pm

   And we keep on heading down the hill. Funny how non of the govt intervention shinnanigans seem to have helped?
   Thanks MM. As usual, great work.

2. Michael Blomquist Said:
   January 22nd, 2009 9:03 pm

   Don’t worry folks nothing to see here as long as we have 2-3 banks it won’t be a monopoly.

   Before long the banks will be able to sell insurance and financial services…Oooops that’s how we got into this mess.

   The only possible solution to this mess is to help banks cut their costs; perhaps Congress should let the banks lease and sell their REO properties.

   Even better yet the banks should be allowed to sell wireless phone, internet and cable services. They could charge similar to Comcast and AT&T, but offer special neg am financing. This way they book in the $150 per month as income and the customer would only be required to pay $50 per month. Genius.

   Imagine the same could be done for grocery stores, autos; everything we consume. After massive M&A activity they could boycott those who previously worked in the industry and looked out for the consumers’ best interests.

   Don’t worry if there are any problems they will be even bigger – way too BIG to fail.

3. Javagold Said:
   January 22nd, 2009 9:39 pm

   dont worry im sure either ken lewis or john thain or tim geithner will have the answer to the puzzle …….NOT !

4. get real Said:
   January 22nd, 2009 11:36 pm

   “Big Announcement” … on a weekend?

   How about the gov’t wises up and says no more taxpayer money to finance executive bonuses and junkets, let’s cut out the middle man, let the banks fail where they may, and we’ll have Fannie and Freddie lend directly to the public from Bank of the USA at 1% interest for 30 year fixed…. After all, isn’t the gov’t printing, I mean, lending money to the banks at less than that anyway?

   What do you think, would that “fix” the housing market problem?

5. GloomBoom Said:
   January 23rd, 2009 12:05 am

   “There are not enough loan officers to physically take the loan applications or robust enough processing centers to underwrite and fund the loans.”

   Isn’t that something? Not enough loan officers. Think of how many unemployed loan officers there are looking for a job. And the banks/brokers won’t hire enough people to deal with all the applications. Sounds like the government is running things even before it nationalizes these institutions!

6. Dick Said:
   January 23rd, 2009 12:10 am

   The most logical solution is for Obama to pour more TARP money into the system and keep the banks private. Many of the banks contributed to Obama’s campain and therfore Obama will not let them becoem nationalized wiping out shareholders.

   Ken Lewis ousted Thain by design. This type of set up was done to eveyr CEO of all the acquired banks over the past 20 years. Strategy is to make it look like a scew up and therfore fire them. He did the same thing when NationsBank bought the old BofA and ousted then CEO David Coulter. Story then was exposure to Emerging Markets and the Russian blow up.

   All done by design……

7. Innocent Bystander Said:
   January 23rd, 2009 1:44 am

   ‘Bad Bank’ more like ‘Hide Bank’

   No way are the true values causing defaults going to be revealed, TARP 1 proved that.

   GSE loans at 1% still doesn’t contain the carnage of sliding home values let alone causing animosity among existing mortgage owners. Not to mention the OTC derivatives lost in space looking for a landing site.

   If they nationalize all banks then you’d better put some peanut butter in your pockets because the dollar will be toast.

   As it is now, at least the insolvent banks can still be allowed to fold and maybe the taxpayers wouldn’t be on the hook.

8. upthecreek Said:
   January 23rd, 2009 2:07 am

   last one out turn out the lights…..

9. BertDilbert Said:
   January 23rd, 2009 5:19 am

   California Burning Report

   Here are the container shipping stats from ports of LA and Long Beach. From what I have been hearing, January will be worse. This falloff in trade is going to seriously impact foreclosures in LA and surrounding counties. As you can see, exports have been hit a lot heavier than imports so far. These stats should be used not only for CA jobs and economic activity, but also national since CA is the gateway.

   Inbound loaded
   LA -12.83%
   Long Beach -26.9%

   Outbound loaded (export)
   LA -25.94%
   Long Beach -34.2%

   Now here are the combined stats. I have noticed a lot of the gloomers like to just quote Long Beach which gives a worse picture.

   Combined Stats
   Import -19%
   Export -30%

   These numbers suggest that retailers are going to be dropping like flies. It also suggest that manufacturing will be laying off. This means that people will likely not be able to make their mortgage payment regardless of what kind of loan they have. January will be worse than these numbers, far worse. More regular longshoremen have been fired and returned to the union hall. I was told that “things are getting strange” without elaboration as to what that was… It also likely means that the CA budget shortfall is currently understated regardless of how bad you think the numbers are now. Folks, these are depression numbers, not recession.

10. 12yr_mtgpro Said:
    January 23rd, 2009 12:53 pm

    Brokers have always existed because they serve small markets, reaching more borrowers with better service than the big banks. Brokers are done for, since 2000 banks have been building more brick and mortar in localities to replace the mortgage broker. What the banks can’t handle via a vast branch network the internet will as mortgages have become commodities with no real difference between lender to lender of what you can get other than price. As the younger generation grows older they think nothing of doing business online. The big exiting of wholesale has more to do with their long term vision of domination then costs although costs are a big problem currently. The new regulation with regards to appraisals, lower YSP being paid out and the new laws we have not yet seen are all going to run the small mortgage broker out of business. Plus the Obama administration cares not about the small entrepreneur in terms of tax treatment. Take it from a 13 yr veteran if your not a medium size banker your done for. It too expensive to operate, and who wants to be in business with the government bent on limiting compensation.

11. C.C. Said:
    January 23rd, 2009 1:03 pm

    Bert -

    By the time Spring rolls around…

    That is when everyone will figure out what their minds-eye has been telling them for years, but the euphoria of a consumer-based, phony economy blinded them from seeing clearly. Spring is the time they will come to grips with the fact that we’re in for slightly more than a bump in the road, followed by a swift recovery into yet another borrow & spend bubble…

    Numbers like yours from the ‘front lines’ will filter in during or certainly by the end of the coronation cum-honeymoon of Obama.

    I wonder if there as an index we can invest in that tracks Crime? Because that is going to be an upcoming trend one surely won’t want to miss a ground floor opportunity on.

    Argghh…

    C.C.

12. od Said:
    January 23rd, 2009 1:07 pm

    So correct me if I’m wrong but is this the plan? :

    Gov’t nationalizes the banks, making interest rates extremely low. This in turn will make money flow like it’s never flowed in this country before. While Americans are swimming in practically free loans, housing will start to see a bottom. But as all this money is floating around inflation will kick in..and hard. This high inflation will raise prices again making our trillion dollar debt look less.

    I just hope this time it will trickle down to salaries too.
    Get ready to see new looking bills soon.

13. Christopher Cruise Said:
    January 23rd, 2009 1:19 pm

    This is advice I am giving my clients:

    This is the sixth or seventh refi boom I have worked through since I entered this business over twenty years ago, but this refi boom is different from the others in a number of ways, and I am concerned about the level of customer service that you may receive and the possibility that you may be locked out of the market simply because brokers and lenders do not have enough staff to handle the business.

    First, a word about process.

    I would advise you, if you are considering refinancing or purchasing, to select a broker or lender and begin the paperwork post-haste. Now, I realize that the problem with that advice is it sounds suspicious – it sounds like I am just trying to get you locked in with us. Mortgage brokers are not trusted, and for good reason, but now, when they do give good advice, it is not listened to.

    What I am saying is that whether you apply with us or with someone else, you need to get all of your ducks in a row – a complete application and supporting documents should be provided as soon as possible once you have determined who you want to do business with. Those documents include: 30 days worth of paystubs, 2007 W2, 2008 W2 when you get it, two years of federal tax returns if self-employed (and be sure to provide all pages, and all schedules – if not, the underwriter will kick it back and it could be another week or two before the file is reviewed again), and two months bank or asset statements (again, with all pages provided, even if a page is blank or just has advertising).

    There are two components to a file: credit and collateral. The credit package consists of your application, credit report, income and employment, debt ratios, loan-to-value ratios, and supporting documents. The collateral package consists of your appraisal. And both components must be separately underwritten. Before the refi boom began, this might take a few days. Now, each package can take two weeks to be underwritten. And rates haven’t even hit their predicted lows yet. We are on the verge of a tsunami of applications, and the industry is simply not set up to handle it.

    The underwriter requires that we collect a complete application and supporting documents and then run it through our automated underwriting system (AUS) before an appraisal can be ordered and a rate can be locked. Whereas before we had hundreds of underwriters to place a loan with, now we have just a few dozen, and they are increasingly strict, both because there are fewer of them and because they are extremely busy, and understaffed. They insist that borrowers demonstrate that they are serious about the loan and not just shopping around. This is different from previous refi booms, when we could order and appraisal and lock a rate without an application or supporting documents.

    At this point, most brokers and lenders have fired well over half of their staff, and now along comes a refi boom. It was completely unexpected, catching the industry absolutely flatfooted. And the industry doesn’t trust the situation to last long, so they are declining to staff up. Furthermore, many people who left the industry and are being asked to come back are saying “no way,” because they don’t trust the industry to keep them employed on a regular basis. They have found steady work elsewhere and are reluctant to come back to an industry that so quickly cut them loose when things slowed down.

    So, where it took two weeks to close a loan a month or so ago, the large, national, reputable lenders who we place our loans with are telling us it will take two weeks to underwrite the credit package and another two weeks to underwrite the collateral package/appraisal. To repeat, they are requiring that we get a complete application in, along with all of the supporting documents, before they will even order the appraisal and run the application through the computerized underwriting system (which must then be reviewed by a human underwriter, and they are in short supply now), and they want a complete application with supporting documents before they will lock a rate.

    So, basically, customer service is gonna really stink for the next few months. My experience has been that the mortgage industry is either overstaffed or understaffed; we can never seem to get it right. The other complicating factor here, which has never entered into the equation before in refi booms, is that loan officer licensing is much tougher than it has ever been. In some cases it could take two months to get a loan officer license in those states that require it. (Maryland is the strictest state in the nation when it comes to loan officer licensing.) So, even if the industry wanted to staff up quickly, it couldn’t, because there aren’t enough qualified, licensed people out there, and those who are available are reluctant to return.

    As you know, rates have climbed a quarter point – from 4.625% last week to 4.875% today. That is probably attributable less to the financials than to the fact that lenders are swamped and have artificially boosted rates simply to slow down the application flow. If rates trend down, we will be overwhelmed with inquiries and applications.

    Bottom line: Talk to some lenders and brokers, get a feel for their professionalism and accessibility, and ask them for a rate quote, along with a list of their closing costs. Then, once you have chosen a mortgage loan provider, submit a complete application and supporting documents so the file can be underwritten and the appraisal ordered. Once the credit and collateral packages are underwritten and approved we can just sit and wait until the rate gets to where you want it to be, then lock it in and close in a few days. If you wait to apply until the rates drop, you may not be able to reach anyone; if rates drop back down to 4.5% most brokers and lenders will be completely swamped (many already are), and will not be able to answer their phones, let alone quote you rates and closing costs and take an application and get the file underwritten and order an appraisal and lock the rate. Some of our lenders are already advising us not to lock a rate for less than 45 days because that is how long it is taking to get a loan through the system and ready for closing.

    I hope this has helped. I’m not trying to pressure you, but I feel that I have an obligation to give you my perspective on what is happening in this never-before-seen market.

14. od Said:
    January 23rd, 2009 1:43 pm

    Good post Chris. My broker told me the exact same thing. Now we are just “waiting”. BTW, if the big banks are nationalized, won’t this drop rates to all time lows?

15. Stu Said:
    January 23rd, 2009 2:06 pm

    Ah, socialism is alive and well in the USA I see… nationalize the big banks that were just recently too big to fail but truly insolvent. Seems to me that Obama wants to redistribute wealth through the financial industry, which I guess makes sense seeing as how it actually controls the wealth to begin with. This way he can just tell himself to make loans to people and companies everywhere for low interest rates and 100% backing from the tax payers of this country. Remember the plan was to privatize gains while socializing the losses. The gains are all taken pretty much other than a few CEO’s left like Ken Lewis for example. He as well as others will get theirs in this deal if it happens I am certain. The losses however have not even begun to get socialized and putting things like this possibly into place makes me wonder no more that is exactly where we are heading if this happens. Fannie and Freddie are not long for this world in my opinion and FHA is now officially the new lender of last resort… for now anyway.

    TARP 2 is the other side of the plan I suppose with the infrastructure work through which to create jobs. This is just socializing the work of many companies that have been available all along to do, but were never asked by anyone to do so. Now the Government will take those jobs away from the private sector further damaging the economy and its businesses that still may exist. More unemployment will ensue as job losses mount in the private sector. Unless off course you really are naïve enough to think that the new jobs will be non union private job creations. I see some jobs filled by the private sector, but most of these jobs are handled by unions. How many financial industry guys and girls do you know that can pave road, repair bridges, build wings on libraries, build convention centers, etc. I don’t know a one (counting myself) and I deal in the industry. Putting money in people’s pockets like Bush did will do nothing to stimulate the economy either so that would be a total waste of tax payer money.

    Bad Bank is the wild card to me seeing as how it is such a stupid silly idea to begin with, but worked before when it was done. Heck, the Government even made money in the deal. Off course that was a different time and I am certain that it will produce a different outcome if tried this time around. Besides if Obama nationalizes then the bad bank idea is null and void isn’t it? Just close them down and socialize the losses to the tax payers. No need for a bad bank and besides don’t we have plenty of them around anyway.

    Od,

    If interest rates become extremely low it will not help matters because it is borrowers that we need now and those have become scarce it would appear to me. You can give loans away for next to nothing (see auto and retail industries) but without borrowers it means nothing. The money is not there and even if you nationalize to allow yourself to then force these lenders to loan, you can’t nationalize humanity and force people to borrow can you? Housing prices will be purely market driven all the way down and past a bottom due to an over correction and distressed sales pulling prices artificially low. Inflation is so far from kicking in right now that the Fed can print to their hearts content and it will do nothing right now to stop deflation. In the long run however inflation will result at some point (my guess 2-3 years away). No Government in history has been able to inflate away their debt that I am aware of. Salaries are at the mercy of deflation for quite sometime too, so I wouldn’t get your hopes up their either.

    I still see principal write downs in the mix one way or another at some point very soon. It meets all the needs of what Obama is trying to do. It will slow foreclosures down, keep people in their home’s, place a temporary floor to home prices of non distressed sales, stem job losses, and allow the banks to divest themselves of L3 paper by writing new loans that are performing and using the tarp to help absorb the losses written down (for now), allow banks to sell this good paper to raise needed capital and with savings given time to increase in the country, more capital will be added to these banks balance sheets. It will be a slow process to be sure, but one that will work. Whether the people in those homes are deserving of it or not is another question all together.

16. CompaJD Said:
    January 23rd, 2009 4:41 pm

    Does anybody know when dataquick will release L.A. county’s zipcode sales data?

17. Stu Said:
    January 23rd, 2009 5:26 pm

    CompaJD,

    http://www.dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx

18. CompaJD Said:
    January 23rd, 2009 6:12 pm

    Thanks Stu

19. Joan Jett Said:
    January 23rd, 2009 10:30 pm

    Stu Said:
    “I still see principal write downs in the mix one way or another at some point very soon. It meets all the needs of what Obama is trying to do.”

    Joan Said:
    Couldn’t help yourself huh Stu. Had to bring the topic back to pricipal reduction gifts. Wow, just how underwater are you?

    Riddle me this Stu, what would be better for this country right now, a country full of very angry people watching as all the reckless perpetrators of economic doom are being rewared…..should we:

    1) Give Stu a $200k tax payer funded Muligan on his flip-gone-bad? Let’s say a $450k loan gifted down to $250k (is that close Stu?).

    Or

    2) Give a $151k assistance benefit to a deserving, responsible renter who would gladly sign on to buy Stu’s house for $299k ($148k after the $151k “first time buyer stimulus deposit assistance”.)

    In option two the bank gets $299k for their gambler loan gone bad to Stu (versus just $250k if Stu gets a Muligan). The bank gets substantially more so the bank’s balance sheet looks better and maybe more banks can survive the mess that Stu and his ilk built.

    What about the tax payer? Well, we still pay the same either way, $200k. Yet we get to avoid moral hazard by NEVER, EVER altering a contract to the housing gambler which results in a burdens to the tax payer. And I bet we get lots of instances where we get to feel all warm inside by seeing struggling families get that big break!~

    Get it? Option one costs us tax payers $200k with all of it going to the reckless housing gambler. Option two cost us $200k as well, with $49k going to the banks and $151k going to the first time buyer Anyone who was priced out by the Mr Gambler’s Wild Bubble Ride would be considered a First Time Buyer; lets say anyone who has not bought a house in 5 years would qualify as a first time buyer.

    Folks there could be nothing less American than giving tax payers gifts to people who gambled up the price of homes to the point of what a sharp 7th grader could easily see had become a huge buldging bubble. Such an action would unwind what little is left of the fabric of responsability still remaining in this country and touch off riots and gnashing of teeth.

    , and the tax payer only gets saddled with a $100k burden.

    Wouldn’t that be more fair Stu?

    DOn’t look to Obama to gift home gamblers en asse; to me he seems like someone who get’s it, and I think he is angry at the greedy Stucco-gamblers, greedy banks, greedy Wall street fat cats and dishonest Gov. representatives. No, I think gifteing Stu is way down on his list. Now a $100k down-payment assistance to some responsible inner-city couple looking for a safe place to raise their kids (like Stu’s nieghborhood) sounds like O’s style.

20. BertDilbert Said:
    January 23rd, 2009 10:51 pm

    Joan Jett, Maybe the house gambeler can get his money back via class action lawsuit if the bailout does not come through.

21. Joan Jett Said:
    January 23rd, 2009 11:34 pm

    Sorry for the mistakes in that last post, it’s been a long day. Today I found out a Short Sale I’ve been working on for months was a fraud.

    After my realtor was told by the seller’s realtor that there would be no sale, she called me, I was not happy and let her know. So, she calls the bank that was part of the short-sale and someone there tells her that the owner (still living in the short sale house) never had any intention of leaving.

    They were only looking for people to submit offers on their house so they could show documentation of the current market value of the home, in order to obtain A PRINCIPAL WRITEDOWN! So folks if you see a price that seems fair in Realtor.Com chances are its some sort of Short-sale scam. Don’t waste your time, don’t be used.

    PS: The guy at the bank said the housing gambler used people for nothing because there would be no principal reduction either.

22. Joan Jett Said:
    January 23rd, 2009 11:39 pm

    BertDilbert Said:
    January 23rd, 2009 10:51 pm
    Joan Jett, Maybe the house gambeler can get his money back via class action lawsuit if the bailout does not come through.

    Joan Said:
    Nope, that’s just silly. Can I get the money I’ve lost at the Indian casino back? All you black-jack players out there….Class Action Anyone?

    However, you can bet like h@ll that the class action lawsuits will fly so fast and furious that the court system will clog up like a beef-eater’s bowels if one guy in the neighborhood gets a Principal reduction and everyone else does not:)

23. Joan Jett Said:
    January 24th, 2009 12:11 am

    Hey I just read an article about Obama’s first work program and it won’t cost the tax payers a penny!! In fact it is thought the program will actually employ lots of folks AND turn a profit for the tax payer. Here it is in brief:

    Obama will set up a fraud recovery agency, putting people to work researching fraudulent purchases by people who have walked away from their cash-out refi-ed and HELOC to h@ll and back, stucco-palaces. The program’s called the Fraudulent Re-fi and Heloc Asset Recovery (FRHAR) agency. This is how it will work:

    FHHAR Representative: Hello, Mr Brown (hereafter referred to as Mr. Bubble)?

    Mr. Bubble: Yes.

    FHHAR Representative: How’s the weather on the river in Arizona today?

    Mr. Bubble: Good thanks.

    FHHAR Representative: I see here that you stopped paying the mortgage on a $550k house in Orange County Ca, two weeks after you closed on the river-front home in AZ, is that correct?

    Mr. Bubble: Well, yes.

    FHHAR Representative: I also see the during the 7 years you lived in the home in Orange Co. you cash out re-fied 4 times and took out two HELOCs, is that correct?

    Mr. Bubble: Yeah, sure I did.

    FHHAR Representative: I also see registration docs showing you bought a 35’ luxury yacht two years ago, is that correct.

    Mr. Bubble: Yeah I’m looking at it right now; it’s in my private dock here on the river.

    FHHAR Representative: I also see that you bought two jet skis.

    Mr. Bubble: Yep they are on the dock too.

    FHHAR Representative: The $15k sand buggy?

    Mr. Bubble: Oh that’s in the back yard, I got an acre here ya know.

    FHHAR Representative: And the $52k classic 1969 Dodge Charger?

    Mr. Bubble: That’s in the 6 car garage next to the speed boat, my 4 motorcycles, Escalade and Jaguar.

    FHHAR Representative: I see, when would be a good time for us to come get those?

24. Javagold Said:
    January 24th, 2009 12:13 am

    Joan Jett im glad you were used, couldnt happen to a better person than you, could you tell me who the short seller was thta used you, i would like to send them a bottle of my finest wine

25. Joan Jett Said:
    January 24th, 2009 12:17 am

    Javagold. It was your Mom, tell her I said hi!

26. Javagold Said:
    January 24th, 2009 12:18 am

    i will do that , my mom has always been good at picking out the biggest sucker in the room

27. Joan Jett Said:
    January 24th, 2009 12:20 am

    Touche!

28. PN Said:
    January 24th, 2009 1:05 am

    Oh Joan Jett,

    How surprising it is that all your previous anger about the possibility of principal reductions, throwing the irresponsible borrowers out, etc. was all self serving on your part, just ’cause you didn’t want any of those potential short sale deals you were looking at to dry up or actually have options. You wanted those owners and those lenders to desperately need you. Laughable and quite sad to be honest.

    A lot of people, like Stu for example, and others, come here to learn from Mr. M and share their own ideas for how to deal with this issue in a way that benefits the society and economy as a whole.

    You were apparently only coming here out of fear. Trying to keep tabs on the possibility of principal reductions actually occurring before you could make a deal on a short sale. And on that subject…have you learned NOTHING during your time here? Not only is this a bad time to buy, as the market is still dropping everywhere, but why in the hell would you go through all the hassle of a short sale purchase when there are plenty of empty foreclosures EVERYWHERE?

    Maybe you just wanted to see those “irresponsible borrowers” squirming at your feet so you could feel oh so superior?

    Well, now who’s the one squirming?

    Too funny.

    PN

29. Mark Said:
    January 24th, 2009 1:11 am

    I have 60,000 in positive real equity in a rental house and have tried to REfi it to no avail….The banks do not want to touch non owner occupied with a ten foot pole. If I can’t get a refi with a fico of 820 and 60k in equity then we are truely screwed. Buy gold and silver…take advantage of every possible loophole these bastards will create to secure their own fortunes and ride the wave….It will be a really big wave.

30. Mark F Said:
    January 24th, 2009 2:24 am

    Mark – you say you have 60,000 in positive equity in your rental house, but you dont say what the value of the house is. If its worth 700,000 then you have less than 10% equity and you will not be getting a loan. but if its worth 300,000 and you have 20% equity – every single lender I work with will do that loan given you can document your income and you qualify.

31. get real Said:
    January 24th, 2009 5:03 am

    Joan,

    I agree with you that writedowns and large scale loan modifications are a bad idea, but for different reasons. First, slowing down or stopping foreclosures will NOT put a bottom on home prices.

    People need to understand the REASON people buy homes and how they determine how much they will pay. First, a buyer/family looks at neighborhoods they want to be in. What is the cost of owning in that neighborhood? OK, then compare that to cost of renting in that neighborhood. Hmmm, is it cheaper to rent, or buy? Yes, it really is that simple.

    Sure, there is the psychological satisfaction much touted by realtors of being a homeowner vs. renter, but it is only worth it if the price of that ownership satisfaction is an amount you can afford to pay, over and above current RENT. For this reason, rents and mortgage payments have ALWAYS historically been tied. A potential buyer who is purchasing to live in a home may pay a bit more to own vs. rent, but not by too much, expecially in an environment in which values will continue to fall.

    Currently in most parts of higher end California, the cost of ownership with traditional financing vs. renting runs at TWO TO FOUR TIMES THE COST TO RENT PER MONTH, and that multiplier is much more if you consider maintenance, repairs, insurance, property taxes, and all the other costs of owning and maintaining a home.

    While there was the promise of annual APPRECIATION in value, a buyer might make that much higher payment in the short term for the appreciation. Currently, there is no appreciation, only further price drops to come. No matter how many foreclosures you think you can prevent with these writedown methods, there will not be enough BUYERS to sustain even current prices. Remember, market prices in a buyer’s market is set by… buyers. The drop to reality pricing with traditional financing may be slower if there is less foreclosure inventory, but the drop will not be stopped. The agony that is the housing market today will only continue, because buyers on the sidelines today will only buy if the rent vs. own payment numbers make sense.

    By the same token, as an investor buying a property, the rent has to cover the mortgage and costs and leave a little cash flow left over, hence the word “investment.” Again, there is a direct relationship between what an investor will pay and what a property will bring in RENTS. Investors are no longer buying for the flip.

    There are some starter homes and low end homes in which the numbers work, but investors buying now in those areas are in for some shock as rents are starting to stagnate or DROP in many parts of California. This drop will likely continue until the economy and unemployment numbers improve. And guess what else has ALWAYS been historically tied to rents? Yup, incomes in the neighborhood…

    In nutshell, if you give a homeowner a writedown today, that does not mean that prices will stay at today’s or even later in 2009 levels because of the rent vs. own calculation that every buyer does. Add in the stricter underwriting standards for a mortgage today and getting stricter as more banks fail and fewer are left standing. Add in the requirement for saving a real down payment. In 2011 or 2012, or 2013… or God forbid sometime after that, whenever prices float down to their natural level in line with rents, incomes in a given neighborhood, etc., (These factors used to be called FUNDAMENTALS) these homeowners who got a writedown or modification today will be underwater AGAIN. What will you do then? Write them down some more? How many times? How long can this process continue? How many more writedowns will people expect year after year, and who will pay for them?

    A writedown is basically giving SOME people money back that they lost in a bad investment/gamble, (don’t kid yourself, that’s what a writedown is, its giving them back their losses) why should only those who dabbled with real estate be rescued? What about all the people who bought blue chip stocks or bonds or whatever and lost their retirement money or life savings because of the collapse of the HELOC bubble? What will you do when all of them start wanting their piece of the giant bailout of bad investments you all are proposing? And on what basis will you turn some of them down, when you’ve supported the biggest housing mistake ever? Look at Wall Street, it started with bailing out banks because “America Needs to BORROW so we MUST save the banks at all costs!” Then it was auto makers, and now all sorts of businesses are coming out of the woodwork hat in hand. AS yourself, will homeowners who got a bailout today be willing or able to bail out these others with THEIR taxes?

    Principal writedowns will not “save” the housing market. It may temporarily slow the drop but who really wants to stretch out this painful process over a longer period of time?? The longer this goes on, the worse the economy gets. Writedowns will only result in more banks going under, loading up taxpayers with more debt that can never be repaid. Housing prices will fall because they were (and still are in many areas of California) UNSUSTAINABLE in a normal financing and income environment. and had no basis in reality. Rent=reality. Period.

    What WILL save the housing market is simply MORE PEOPLE BUYING, who can afford what they are buying. People buying today with traditional financing and 20%+ downpayments are a better bet to at least continue to make payments. Let’s get back to reality, and fast.

32. get real Said:
    January 24th, 2009 5:12 am

    Ironic that its only people like Joan Jett (BUYERS/knife catchers) who in the end can save some of the underwater folk and get the housing market to eventually turn around, yet the very people who need her most seem intent on pissing her off …

33. Benzy Said:
    January 24th, 2009 10:25 am

    Ironic that its only people like Joan Jett (BUYERS/knife catchers) who in the end can save some of the underwater folk and get the housing market to eventually turn around, yet the very people who need her most seem intent on pissing her off …?

    Get Real – There are not enough Joans to buy these properties at any price. She needs this market more they it needs her.

    Joan – you better pray for more carnage. It is more than obvious that you have had trouble seeing success and this may be your only chance to right the resentment you have for your own failures. I sure hope you get that short sale, for at least your mental health.

34. Joan Jett Said:
    January 24th, 2009 1:16 pm

    PN Said:
    January 24th, 2009 1:05 am
    Oh Joan Jett,

    How surprising it is that all your previous anger about the possibility of principal reductions, throwing the irresponsible borrowers out, etc. was all self serving on your part, just ’cause you didn’t want any of those potential short sale deals you were looking at to dry up or actually have options.

    Joan Said:
    Are you seriuos? Only a house gambler turned begger could take my story of a short sale scamster who uses people to achieve a greedy tax payer principal reduction gift and turn it around to make the short seller seem like the victim. You people ruined our economy single handidly with your outragious greed. And you still are not done, now you think its OK to waste people’s time and use them. No matter how sh@tty your actions, no matter how harmful to others, you find a way to justify it to yourselves.

    PN said:
    A lot of people, like Stu for example, and others, come here to learn from Mr. M and share their own ideas for how to deal with this issue in a way that benefits the society and economy as a whole.

    Joan Said:
    Nice try! Housing gamblers looking for tax payer gifts come here because they think its safe, because MM has said a few positive words about principal reductions. This site is one of the few where they think they can find a sympathetic ear. I’m here to show them the door.

    The rest of what you said is to drivel like to respond to.

    List your house as a bogus short sale much?

35. Joan Jett Said:
    January 24th, 2009 1:22 pm

    Get Real, BRAVO. Very well said, a nice read. You probably reached some people with your common sense explanation of the issue.

    I know I am a knife catcher if I buy now. I’ve waited so long that I don’t care if I lose $50k in equity short term. If I can find a house I plan to stay long term. I’m not looking for an investment, I’m looking for an affordable home. I know that must sound odd to a few people on this forum.

36. Joan Jett Said:
    January 24th, 2009 1:51 pm

    Benzy Said:
    January 24th, 2009 10:25 am

    Get Real – There are not enough Joans to buy these properties at any price. She needs this market more they it needs her.

    Joan Said:
    Benzy, benzy, benzy. Are you back for more? Haven’t you at least learned to not bring a knife to a gun fight? For the last time, go to a foreclosure auction, any auction and you will see there are plenty of people ready and willing to buy these forclosures at prices that make sense. Throw in the millions who’s incomes will finally allow them to buy a home at the more sensible prices (that are coming in the next few years) and there will absolutely be no shortage of buyers.

    Don’t you think its odd that so many like you found a way to pay 3, 4 or 5 times more than a house is actually worth all during the bubble years and yet the idea that people will be able to find a way to buy up the flood of AFFORDABLE houses coming is lost on you?

    Benzy said:
    Joan – you better pray for more carnage. It is more than obvious that you have had trouble seeing success .

    Joan said:
    ???,,,,??? Benzy, if I am right about you, you are living in a stucco-palace that you won in a bidding contest. Now that victory is seeming a little hollow and you’d really like to see a big fat tax payer gift to get you back to the success you once saw in your phantom equity.

    I can afford a home at historical levels of affordability, like the prices Get Real speaks of. If the Gov. does not muck things up then I will be able to buy a home, and guess what Benzy? I’ll stay and I’ll keep paying even if it goes down in value. And also, I have restrained myself and the price I pay will be such that if I am out of work for even a whole year I will not lose the home.

    Call me crazy but people “used” to call that success.

    Benzy said:
    and this may be your only chance to right the resentment you have for your own failures.

    Joan Said:
    Benzy are you implying that my refusal to participate in your bubble (the one that has brought our economy to its knees because the gamblers decided to stop paying their debts) is a failure on my part or somehow makes me a failure?

    WOW you bubble people are STILL living in opposite world. The truth is you are the failure and you failed so spectacularly that you brought an entire country down with you. Generations will pay for your failure.

37. Susan Day Minerly Said:
    January 24th, 2009 2:07 pm

    Hello all:

    Numbers again- 70% of the population are homeowners versus 30% of the population are renters. Truthfully its 67%/30%/and a new group of 3% that have already been foreclosed on.

    Out of that 30% take 13% away as having incomes near or below poverty levels, leaving a possible pool of 17% of the population available to purchase ALL the potential and available foreclosures. The 17% equal 19 million households who could POSSIBILY purchase subject to income, assets and credit history/score. (note-there are already over 4.5 million homes on the market for sale)

    Logically-currently there are ALREADY approximately 25% of all outstanding mortgaged homeowners have negative equity. The 25% of homeowners equal 13 million homes. The fear of Wall Street and our government is why should they stay?

    Personal responsibility, you state. But take into account,that 3% of the population has already been foreclosured on, and just that 3% has lowered property values nationwide over 25%.

    These homeowners had nothing to do with the banks policy in underwriting the former homeowners who were foreclosed nor did they have anything to do with the banks policy of UNDER selling the market value(other homeowners who were trying to sell).

    I am not blaming the purchasers who purchased these REO’S since it is common and good financial sense to buy the lower priced item (home). The banks were aware that by underselling the homes,the surrounding areas values would be lowered. Harming the homeowners, especially higher mortgaged homeowners. The banks actions have affected all homeowners, but the most important ones are the mortgaged homeowners. The group in question and discussed represent 52 million mortgaged homeowners.

    I would imagine that taking into account the above percentages with the stricker underwriting criteria, the fear of Wall Street and our government is that allowing home prices to resort to “historic” 2/3 times the income could translate into a depression worst than the “great depression”. There are not enough renters to purchase the supply of homes that would be available at the over-corrected values.

    Not even taking into consideration,the overall change in mentality about borrowing versus savings, the loss of jobs due to massive foreclosures and restricted spending. Again the group in discussion here are homeowners with mortgages not renters.

    There are only three questions:

    How can we entice/correct the homeowner who owes $500,000 paying his mortgage payment to stay when his/her house is worth $300,000. today as a direct result of the banks actions?

    Second question, how can we ensure that the deflationary cycle stops before affecting more homeowners and possibily requiring another correctment to the existing “corrected” homeowners?

    The third question is currently the only question being asked, what can we do for the deliquent homeowners to avoid foreclosures that are lowering the values affecting all homeowners and not invite moral hazard since we are only going to address the deliquent homeowners affecting the monthly income of Wall Street?

38. od Said:
    January 24th, 2009 2:28 pm

    I’m seeing alot of anger, frustration, and schadenfreude. Lets stop for a second and look at the bigger picture…both sides. Look at us. WE ALL got screwed and now we are attacking eachother. It’s the SYSTEM that did this. Everyone is in agreement that the system in fundementally broken and flawed. Greenspan, and Bernake even agree.
    But nobody wants to change it! The whole financial system is looking (and always has looked to me) like a HUGE PONZI SCHEME. WTF? The banks run the show people.

    The banks are the drug dealers.
    The gov’t is the well-intention,but incompetent therapist.
    And the PEOPLE are the dependent addicts
    Our economy is going through another rehab right now. And we are only just beginning to feel the pain of withdrawal.

39. Benzy Said:
    January 24th, 2009 2:49 pm

    so many like you found a way to pay 3, 4 or 5 times..

    Home values are dropping 80%!!!

    No Joan, you are a failure because you cant even secure a home in short sale market, let alone a normal one.

    I am looking forward to your next delusional rambling.

40. Joan Jett Said:
    January 24th, 2009 3:04 pm

    Susan, you numbers are greatly flawed and misleading. First off, the wealthiest 5% of our economy could buy all the coming foreclosures by themselves. I would never want that, but it should illustrate to you that there are potential buyers out there no matter how great a number you imagine.

    Secondly the millions of people in Ohio, Iowa, Indiana, etc. etc. who are underwater $5k, $10k, $15k on their sensible, easily affordable $70k mortgage make up the vast, vast majority of the under water mortgage holder figures you read about. They do not need a principal reduction, they are not begging for one and they have been there done that, with RE values going up and down. No emergency there, just normal RE value fluctuations in the non-bubble areas. As a matter of fact these people have always viewed homes as just a place to live and are never shocked to see an old house lose a little value as it gets older.

    So what we are dealing with is CA, NV, FL, AZ and maybe one or two more super gross, mega gambler offenders. These are the ones who have wreaked carnage on our economy by refusing to pay thier mortgages because their equity wealth vanished.

    I’ve seen figure putting the gross offenders at 7% of the population. Each gambler houshold is counted as two people, husband and wife, so that 7% is actually probably more likely just 5%.

    So that leaves 93% of the population to pay for the gross, gross reckless greed of 5-7%. And that leaves 93% of us out here as potential buyers. And Susan, you cannot leave current home owners out of the potential buyer pool just to pad your bogus figures. Many people own more than one home and many own rentals, look it up, its not a new phenomenon. So give it a rest, there are PLENTY of buyers ready and waiting.

    Susan Day Minerly Said:
    There are only three questions:

    How can we entice/correct the homeowner who owes $500,000 paying his mortgage payment to stay when his/her house is worth $300,000. today as a direct result of the banks actions?

    Joan said:
    In what sort of Bizzaro world would we ever want to entice the housing gambler to stay? What do you have in mind? Thousands and thousands are already living in wonderful stucco-palaces for FREE, on the tax payer’s dime. What more would you suggest? Fanning them with palm fronds and hand feeding them grapes?

    Hey I know, why don’t we all take shifts cleaning their houses and washing their cars. We can all pitch in to do our part to entice them to “stay” in the flip gone bad. I hate house work, I guess I’ll have to take a car washing shift. Can I get their drycleaning instead?

    Susan Said:
    today as a direct result of the banks actions?

    Joan Said:
    I have to agree with you there. Certainly the results of housing gamblers who willingly paid 5 times earnings and 4 times local rents where impossible to foresee. Who could have known that would end badly?

    Susan Said:
    Second question, how can we ensure that the deflationary cycle stops before affecting more homeowners and possibily requiring another correctment to the existing “corrected” homeowners?

    Joan Said:
    We can’t, and just like Get Real said, that is the single biggest reason to let free market forces bring prices to levels that can be supported by the free market as quickly as possible. A communistic gift of my money to you so you can right your upside down mortgage is not a sustainable plan.

    Susan Said:
    The third question is currently the only question being asked, what can we do for the deliquent homeowners to avoid foreclosures that are lowering the values affecting all homeowners and not invite moral hazard since we are only going to address the deliquent homeowners affecting the monthly income of Wall Street?

    Joan said:
    1) Again why do we need to do ANYTHING for delinquent homedebtors comrade Susan?

    2) Values NEED to go lower. Susan our fake living on borrowed time and money society is dead and gone. The only things that will be sustainable going forward is affordable housing. Any fake housing values pulled from bubble blowers tushes is meaningless.

    3) The only way to avoid moral hazard and the world’s largest sh@tstorm of class action law suits is to not break contracts and not change the rules for some while screwing others. Foreclosures for foreclosure circumstances is the only way.

41. ex_owner_now_renter Said:
    January 24th, 2009 3:20 pm

    yawn

42. ex_owner_now_renter Said:
    January 24th, 2009 3:21 pm

    MM, the site is still up! today only?

43. Joan Jett Said:
    January 24th, 2009 3:22 pm

    I heard you can entice an upside down housing gambler to stay in much the same way you can entice a mouse into a trap.

    The prefered bait for housing gambler enticement is appearantly an Escalade with spinning rims or a Ford F-350 turbo-diesel jacked way up into the sky. A trailer with two jet skis on it has also been shown effective.

    Simply put the enticement in the 4 car garage, the housing gambler cannot resist and stays in the stucco-palace. Its like cryptonite or something.

44. Stevo Said:
    January 24th, 2009 3:55 pm

    I heard a toy hauler packed with all the goodies is the best bait, LOL.

    Benzy said:
    “No Joan, you are a failure because you cant even secure a home in short sale market, let alone a normal one.”

    Benzy, I believe Joan said the short sell house never was actually for sale. It was scam to collect bids. How can she secure a home that was never actually intended to be sold? Fact is, nothing comes of most short sale situations, they usually just waste people’s time and end up in a long forclosure process anyway.

    I’ll be sad to see this site move. It may not be the same and I’ve enjoyed reading it. A lot of you people pile on Joan, but I’ve not seen many flaws in her logic. She is over-the-top sometimes in her posts but I for one find them entertaining and even enlitening sometimes.

    Thanks Mr. Mortgage!

45. BertDilbert Said:
    January 24th, 2009 4:08 pm

    Joan, those walking will prevail, those were toxiXXX mortgages. The US will have to nationalize banks, that is all there is to it. There will be no posse chasing people who were given toxic koolaid by banks. The lawyers will be chasing banks more aggressively than a tobacco settlement.

46. Susan Day Minerly Said:
    January 24th, 2009 4:08 pm

    Hello all:

    Money dicates that housing values can not be allowed to correct to historic levels from the banks point of view. THEY ISSUED THOSE 52 MILLION MORTGAGES.

    There are 52 million homeowners that have a mortgage, if property values continue to fall to what 1990 or 1995 or 1998 levels? Lets estimate that half of all mortgaged homeowners will be underwater if they continue to fall another 25%, that is most of the economist predictions.

    That is 26 million homeowners paying a monthly mortgage payment on the average sales price of “$263,000.”.( The average mentioned is from NAR for 2005) There has already been a 25% national decrease of $65,750. from the average, with another 25% expected from that balance would make the average value $147,938 or $148,000.

    Money makes the world go round.

    A home with a mortgage of $263,000. at the interest rate of 6% (good rate for the time) with a monthly payment of $1,576.82 just for principal and interest is being PAID to the banks NOW.

    A home purchased at the reduced price of $197,250.(today) at the interest rate of 5% with the monthly payment of $1,058.88 just for principal and interest will be paid to the banks.

    A home purchased at the estimated reduced price of $148,000. at the interest rate of 5% with a monthly payment of $794.50 for principal and interest to be paid to the banks. (almost half the current mortgage payment equals less money in interest for the banks)

    I know most of you would like to see the average sales price be reduced to $148,000. but do you think the banks would?

    Now without “intervention” why would the homeowner who is underwater stay paying the “over” payment to the bank? As housing values come down so do rentals, it would make more sense for them to walk away after living and “banking” the unpaid mortgage payments of $1,576.82 without taxes and insurance added to it for the year, it takes to foreclose.(That is a $18,912 savings to the homeowner, without taxes and insurance included)

    The problem is twofold:

    From the homeowners point of view:

    Especially when they fiqure out to break even they would have to pay the full mortgage payment for 19 year and 5 months to arrive at owing the $148,000 that is the new estimated current value, they still couldn’t sell or refinance but would have paid the banks over the 19.5 years the sum of $384,744.08 as pure profit (interest plus the loss principal balance equity the bank collected without any loss to the bank,just to the homeowner) They also would have over paid for the area’s rental price by at least double with absolutely no benefit to them every single month.

    For those of you that think of real estate as an investment, when you lose money in your “stock” do you continue to purchase the same “stock” monthly with no hope of return? That is not responsibility but stupidity.

    From the banks point of view:

    It is in their best interest to retain a homeowner who is paying on the higher principal mortgage payment of $263,000. The total monthly mortgage payment is PROFIT for them, until or unless a default occurs.(right now the only loss is be paid for by the homeowner)

    The current way of addressing the problem is by modifying only the deliquent(defaulted) homeowners by changing their payments to be more affordable.(this is the group who is affecting their monthly income NOW)

    The proposed cram downs will definately be a bonus ( or gift if you prefer) for the deliquent homeowners who actually “fibbed” on their applications to be approved and even for those who were approved with the higher qualifying ratios, the principal and interest is to be reduced to a standard pre determined qualifying ratios based on income not value.

    Modifications and cram downs will reduce some foreclosures which will slow down the process of falling prices but do not correct the real problem of negative equity. NUMBER ONE REASON FOR THE INCREASED VOLUME OF FORECLOSURES.

    While Mr.M and I disagree on the “process” , he believes in re-underwriting to 28/36% ratio’s based on income reqardless of where the homeowner purchased, while I believe reduce the principal balance to the LOCATION”S current value regardless of income for current paying homeowners, but make the homeowners who are deliquent prove their right to own a home with proveable income under 33/41% ratios. This eliminates specualtors, liars, and people who over-bought based on their own income.

    It comes down to MONEY, would it be in the banks best interest to receive monthly interest payments on 13 million homeowners currently underwater at reduced principal balance of $197,250. with a monetary loss of 25% versus gambling that the same 13 million homeowners will continue to pay the full payment on the principal balance of $263,000. earning them TOTAL PURE PROFITS FROM THE MONTHLY PAYMENT until the government (TAXPAYER) has nationalize all the losses from the banks?

    Unless principal reductions are mandated by the government on all underwater homeowners to be absorbed by the banks now, you and me, as the taxpayer will be taking all the losses which will be higher in dollar amounts as more time goes by.

    Your greedy and selfish people was Wall Street, not Main Street.

47. C.C. Said:
    January 24th, 2009 4:12 pm

    “I would imagine that taking into account the above percentages with the stricker underwriting criteria, the fear of Wall Street and our government is that allowing home prices to resort to “historic” 2/3 times the income could translate into a depression worst than the “great depression”. There are not enough renters to purchase the supply of homes that would be available at the over-corrected values.”

    We are in a depression. All of the pertinent economic data are there, including previously untouched economic records being knocked over with little resistance. Indeed, it will be a Greater Depression for the simple reason that government, at every level refuses to cut spending – instead, choosing to ‘re-inflate’ by way of myriad spending programs. This cycle would have been a very uncomfortable 2 – 3 year severe recession. Unfortunately, now we’re looking at the very real possibility of the worst of both worlds – a hyper inflationary Depression as a result of actions currently planned and already underway by the government. Not looking forward to it…

    “Not even taking into consideration,the overall change in mentality about borrowing versus savings, the loss of jobs due to massive foreclosures and restricted spending. Again the group in discussion here are homeowners with mortgages not renters.”

    The jobs – and economy for that matter – with the attendant borrowing & spending that was created by the housing bubble, are never coming back. It’s a deadly spiral that would have a bottom and reasonably swift recovery, but will not due to the aforementioned reasons.

    “There are only three questions:

    How can we entice/correct the homeowner who owes $500,000 paying his mortgage payment to stay when his/her house is worth $300,000. today as a direct result of the banks actions?”

    We can’t. Whether it’s the banks actions, or the borrowers actions, etc., it won’t matter. They can choose to stay and hope for intervention or they can walk. The train has jumped the tracks and what’s left will take time to clean up. Hopefully those still in their homes will be able to weather it through.

    “Second question, how can we ensure that the deflationary cycle stops before affecting more homeowners and possibily requiring another correctment to the existing “corrected” homeowners?”

    We can’t. Asset values are in the process of real price discovery. Combined with the fact that there (currently) is no sector of the economy right now to ‘inflate’ as a backstop for the 25 years of job off-shoring and lack of domestic manufacturing/exports to employ the legions of recently unemployed from the faux economy created in part, by the housing bubble.

    “The third question is currently the only question being asked, what can we do for the deliquent homeowners to avoid foreclosures that are lowering the values affecting all homeowners and not invite moral hazard since we are only going to address the deliquent homeowners affecting the monthly income of Wall Street?”

    We can’t. You’re talking about two diametrically opposed philosophical viewpoints. As many on the forum have stated – including myself, a ’solution’ or set of ’solutions’ from the government is likely forthcoming that will attempt to underpin or floor the market. It may even work – in the short run, but it will fail in the long term. And yes, like GM and BofA, there will be reoccurring “correctments” as you state. ‘Bailouts’ however, do not choose which sector to start or stop in. Once the ball gets rolling with a bailout mentality it becomes at once, everywhere and omnipresent.

    od:

    There are many who did (and still do) want to change the system. Unfortunately – at least for the immediate future, the majority of the electorate still prefer form over substance, oratory skills and the rhetoric of a corrupt two-party oligarchy over sound Constitutional principle. This may not sound germane to the ‘mortgage crisis’ as discussed here, but in fact, it has everything to do with why we’re at where we’re at. We keep pressing on though. Economic shakeout may be the only vehicle for real ‘hope & change’.

48. Susan Day Minerly Said:
    January 24th, 2009 4:25 pm

    JoanJet:

    My numbers of 112 million households come from the US Census Bureau (2006). It shows a 70% homeowner ratio and the 13% poverty level.

    There has been over 3.3 million foreclosures already.

    9% of the population as individuals earn over $200,000.

    And why on earth, would the top 5% of the population purchase all the houses in questions, what would they benefit be? not profit?

49. Sharon Said:
    January 24th, 2009 4:27 pm

    I bought my home in 2000 or at least that is what I thought I was doing. I got a deferred interest loan through World Savings. I owned a business and had A-1 credit. I had owned the business for 30 years, but did a low doc loan because I was self employed. After 9/11, my business died…I hung on for too long and refinanced my house when the gettin was good, but it was all in vain, and I lost my business in 2005…I refinanced again so that I could pay some of my debts, but no one would settle with me and one even got judgement. Ha ha ha….I have no money so let em come. Dirt bags. I think it was either Chase or B of A. World Savings got sold to Wachovia, and now to Wells Fargo…no one wants to know me, and they treat me like a step-child, and there is no modification or anything else for me because now I have a “fair” credit rating. I want to pay into the principle, but it will be expensive…I have never paid a dime on the principle since 2000….should I walk?

50. johnnymortgage Said:
    January 24th, 2009 4:30 pm

    OK – this was an article from MM about big lenders leaving wholesale; any chance people can comment on what they are doing moving forward to continue to do business.

    SERIOUSLY – CAN WE LET THE FUCKING “PRINCIPAL REDUCTION” PREMISE TAKE A FUCKING NAP!!!! GODDAMN, WE GET IT!

51. benzy Said:
    January 24th, 2009 4:32 pm

    nothing comes of most short sale situations, they usually just waste people’s time and end up in a long forclosure process anyway.

    It makes you wonder then how bright Joan is to have been baited so easily (especially when there was no jet ski involved).

52. ex_owner_now_renter Said:
    January 24th, 2009 4:34 pm

    Susan, you said:

    “Money dicates that housing values can not be allowed to correct to historic levels from the banks point of view”

    that’s right.. from a bank’s point a view.. but that’s not reality! IT’S SUPLY AND DEMAND… they went up, when you have 40pp biding on 1 stuco! and they’ll go down when there’s 40 homes, and 1 buyer available.

    IT’S SIMPLE! LET THE MARKET CORRECT, SO THE DEMAND GOES UP!!! (WHEN IS AFORDABLE)

    and for those that are rich (and greedy too), they only fall HARDER! (more to loose)

    WELCOME TO THE GREATEST DEPRESSION!!

53. Susan Day Minerly Said:
    January 24th, 2009 4:36 pm

    CC:

    Hello, I am glad to see your glass is still half empty, you haven’t changed.

    And I do agree with you on many points,but I am one of those people who insist that the glass is still half full and something can be done.

    Take care, and as you say, cash is king.

54. Joan Jett Said:
    January 24th, 2009 4:38 pm

    Wow C.C. way to bring the party down.

    Couldn’t you throw in just one “enticement bait” joke?

    In all seriousness I fear you a very accurate in your post no matter how depressing it sounds and it is very nicely written, thanks for taking the time!

    I especially found this comment of yours telling:

    “Combined with the fact that there (currently) is no sector of the economy right now to ‘inflate’ as a backstop for the 25 years of job off-shoring and lack of domestic manufacturing/exports to employ the legions of recently unemployed from the faux economy created in part, by the housing bubble.”

    Unlike Japan which had tremendous personal saving levels and a giant manufacturing base going into their lost decades, we are in the unfortunate dire position that you explain so well. It does look bad.

55. benzy Said:
    January 24th, 2009 4:46 pm

    Couldn’t you throw in just one “enticement bait” joke?

    I’ll bite. How do you bait a “prudent” vulture from their ghetto-plex.

    Short Sale.

56. ex_owner_now_renter Said:
    January 24th, 2009 4:47 pm

    ponzi, fraud, greed! Add to it consumer awareness, unemployment, and low confidence… no bail out is geting us out of this…

    IT’S GOING TO BE YOU:
    - get educated
    - get informed
    - save
    - work harder
    - analyze
    - stop being greedy
    - stop asking for a bailout
    - let some time pass
    - leave within your means
    - understand owning a home, it’s a priviledge, not a right
    - educate your kids
    - participate with good intentions (not pretend)
    - the sooner we admit colectively that will all made this happen, and we all want to fix it in an way that helps all, we may get there.. otherwise it’s just time! and posibly screwing our currency, our future..

57. ex_owner_now_renter Said:
    January 24th, 2009 5:02 pm

    sorry, I’ve mispelled again.. oops

    privilege   
    Pronunciation [priv-uh-lij, priv-lij] Show IPA Pronunciation
    noun, verb, -leged, -leg⋅ing.
    –noun 1. a right, immunity, or benefit enjoyed only by a person beyond the advantages of most: the privileges of the very rich.
    2. a special right, immunity, or exemption granted to persons in authority or office to free them from certain obligations or liabilities: the privilege of a senator to speak in Congress without danger of a libel suit.
    3. a grant to an individual, corporation, etc., of a special right or immunity, under certain conditions.
    4. the principle or condition of enjoying special rights or immunities.
    5. any of the rights common to all citizens under a modern constitutional government: We enjoy the privileges of a free people.
    6. an advantage or source of pleasure granted to a person: It’s my privilege to be here.
    7. Stock Exchange. an option to buy or sell stock at a stipulated price for a limited period of time, including puts, calls, spreads, and straddles.
    –verb (used with object) 8. to grant a privilege to.
    9. to exempt (usually fol. by from).
    10. to authorize or license (something otherwise forbidden).

    ——————————————————————————–

    If you have too many tickets.. you get your license taken.. doesn’t mean you can’t get another one later.. and drive again.. just be more carefull next time!!

    same with pp that lost their homes in the past.. many have returned and bought again… and yes, many that are loosing now.. will come back and buy again!!

    It’s going to be TIME and AFORDABILITY to this mortgage mess! (caused by greed,fraud,ponzi.. since most solutions do not help all people right now!)

58. Stevo Said:
    January 24th, 2009 5:08 pm

    There are not many sites that a web surfer can visit and enjoy posts that people obviously put time into articulating their thoughts. You usually just see a lot of snide one liners and drive-bys.

    C.C., I concur with Joan, good post and sadly probably accurate. Thanks.

    Benzy you really are equiped with a dull knife in a gun fight. Give it up.

    johnnymortgage, I don’t think anyone is really steering this, its just taking a natural flow from what people want to talk about. Perhaps you’d like to add something? Or maybe just complain about other people’s choice of topic? Your choice, whatever, its cool.

    Susan, your posts make my head hurt and your logic does not add up, sorry, just my humble oppinion.

    ex_owner_now_renter, your last post is like a good sermon at church. It makes sense, tells us how to make things better and offers values that the bible might teach.

    Except for that last sentence:
    Did we all make this happen? Whether you use Joan’s or Susan’s numbers or whoevers, there is certainly a definable number or group in our society who caused this problem, right? Speaking just for myself, I share no blame in any of this housing bubble madness.

    All in all good post, ex-renter!

59. Susan Day Minerly Said:
    January 24th, 2009 5:08 pm

    Your right, Johnnymortgage.

    It is my opinion, that all the modifications, deleting of this program or that program, returning to stricker guidelines, deleting wholesale from the mix is all just a ploy or delaying tactic to postpone the SEMI nationalization of banks.

    Allowing them to earn the profits but not taking the losses. After we(the government) invested over 7 TRILLION DOLLARS in the financial system, how can we(the government) not try to get back some of the taxpayers money.

    I believe the majority of this post is more concerned about housing values, whether they be allowed to fall to historic levels or not, without regard to the general economy.

    When I stated the general economy, I am including all the real estate agents/brokers and mortgage agents/brokers who are not included in the recent unemployment quote but are technically considered under employed.

    This latest business decision of the banks, is another way to help them in not giving out loans to the public in a risky enviroment. They know prices/values will continue to decline without intervention, why would they want to continue to lend in today’s market?

    The only correction, I can see is to admit as a nation, that we made a mistake and allowed the greed of Wall Street to bankrupt this Nation with Main Street following blindly.

    We need jobs and the ability to live (agreed it needs to contract/decline), the only way we can accomplish either is if our government wakes up.

    This site has been a source of information that is helpful to the majority. There are of course, different opinions about the information.

    I will be sorry to see it go, and yes I already subscribe to the new site hopefully.

    Thank you for providing this site with your update and sometimes prior knowledge of information about the housing industry.

60. benzy Said:
    January 24th, 2009 5:14 pm

    Interesting you consider this a “fight”, stevo. It feels like target practice to me.

    But, sure. I’ll step aside so you can reinforce your internet arguing mojo as you feel compelled to respond to every fucking thing someone writes.

61. ex_owner_now_renter Said:
    January 24th, 2009 5:26 pm

    Stevo,

    Maybe it should be preached then! ( I don’t go to church often, on the contrary.., but I believe in god )

    I also understand the life is not fair. Some loose, some win. Our system is complex and NOT perfect! People have taken advange of it .. we can see that.. the greed,fraud, and ponzi still exists today…

    That’s why I’m convinced that the only solution is the market to dictate and time!

    We as a society are no where close, to colectively participate in the good for all at this time.

    the CHANGE we want, but at someone else’s expense

    ________

    You may not have particpate in the mortgage mess, but what did you do to stop it? DID YOU KNOW IT WAS COMING or did you just get lucky?

    If you knew:

    - did you call your extended family? to advise
    - did you take any kind of action to stop it/comunicate
    - did you get involved in politics? did your write to your congress man?
    - did you save enought to go buy now, and help the demand?
    - have you ever owned (and sold? left somone else holding the bag, or plan to ever buy?)
    - are you participating in the economy other than for your survival?

    All good intended..
    ex_owner

62. Joan Jett Said:
    January 24th, 2009 5:52 pm

    It would be interesting to see where people live and how it correlates to their opinion on the housing bubble and bail-outs.

    If you live in Ohio, Idaho, Kansas or any of the 44 states that did not participate in the bubble then you might feel FL and CA are full of innocent victims. In reality the innocent people chose not to play and rented it out. I’m not kidding when I say that any sharp 7th grader could have told you houses were overpriced in the bubble areas 4, 5, 7 years ago.

    Go to Dr Housing Bubble’s site and review some of his “Real homes of Genius” posts and educate yourself as to just how crazy thing got. You will clearly see that this monster reached a level that shows no sensible person could have not seen warning signs flashing of the bad ending that was coming.

    People in those innocent states have no idea the greed and lavish lifestyles their taxes and their children’s taxes will have funded. No idea.

    They probably think I’m joking about the people who cash-out refied and serial HELOCed and then bought cheaper houses, fled in the night with their ill-gotten toy armada and stopped paying on the HELOCed to the hilt albatross. If you are one of those people then you have not even come close to feeling the heat you will be getting.

    If you live in one of the bubble areas like me, then you have witness a period of gluttony so perverse it makes you spit up a little anytime you think of it. Again no exaggeration here. If you witnessed the smug, holier-than-thou attitudes of the fancy party going, mojito swilling RE thousandair wanna-bes you would not hesitate to call for some justice to be served. Not violence or anything crazy, but an admission of guilt and acceptance of blame and consequences would be nice.

63. ex_owner_now_renter Said:
    January 24th, 2009 6:00 pm

    CC – nice post and true!

64. Susan Day Minerly Said:
    January 24th, 2009 6:11 pm

    Sorry Stevo if my post make your head hurt, but they are logical. You of course,are entitled to your opinion.

    Ex renter- supply and demand theory is totally correct.

    Now if the government removes (purchases) the “toxic mortgages” from the banks balance sheets to the taxpayers “bad bank”, the supply goes down. (note,you and I, the taxpayers are leaving the 93% of currently paying mortgaged homeowners on the banks balance sheet for them to continue to earn income)

    In reality, the demand should be there but the government is also aware that the majority of the population is already homeowners. The demand side has a “we will wait and see” what happens attitude about not just about home prices still dropping(bottoming) but about their own security of employment as the economy contracts.

    The taxpayers bank can afford to reduce or modify any and all terms of the mortgage or even forgive the deliquent homeowners principal mortgage balance to affordability levels, all to avoid another foreclosure. We, as taxpayers are taking the total loss with a “bad bank” and you will have no say in who gets a reduction or not, as long as they were deliquent to start.

    Again, I will state the market will not be allow to correct to historic levels as desired, there is just to much money involved.

65. johnnymortgage Said:
    January 24th, 2009 6:13 pm

    Stevo – you are right; I have to jump and get ready for a wedding in a bit, but lets take a look at the bigger picture of what the bigger lenders are doing to, what I believe, wipe out any independent competition. I think some of these moves will deliver an end result that will negatively impact the consumer.

    Take a look at what is going on regarding appraisals/appraisers/ HVCC. don’t have much time, but they are slowly wiping out the independent appraiser (small business owner)by forcing them to either come “to the dark side of the force” or be blackballed.

    http://www.euroinvestor.co.uk/News/ShowNewsstory.aspx?StoryID=10115686&BW=20090116005841

    Oh yeah, some of my appraisers who are working with these management companies are getting paid 150-200 per appraisal, while the lender/mgmt co. collects 500 from the consumer. Niiiiiice. I am sure the appraisers are ecstatic in their 70% paycut.
    There has also been some chatter regarding the independent broker contacting his or her client base after any transaction. There is, or was, (I don’t know where we stand currently) a push to make it illegal for brokers to contact a client for 12 months after closing their transaction. Who do you think would benefit from that? The borrower?

66. Stevo Said:
    January 24th, 2009 6:17 pm

    ex_owner_now_renter Said:
    January 24th, 2009 5:26 pm
    Stevo,

    You may not have particpate in the mortgage mess, but what did you do to stop it? DID YOU KNOW IT WAS COMING or did you just get lucky?

    If you knew:

    - did you call your extended family? to advise
    - did you take any kind of action to stop it/comunicate
    - did you get involved in politics? did your write to your congress man?
    - did you save enought to go buy now, and help the demand?
    - have you ever owned (and sold? left somone else holding the bag, or plan to ever buy?)
    - are you participating in the economy other than for your survival?

    All good intended..
    ex_owner

    Stevo:

    Good questions Ex-owner. A good litmus test for the topic.

    My answers? Here goes:

    1) God yes I knew it was coming, not to be rude but it was very, very easy to spot and being in CA I have seen housing bubbles before and they allways pop. That’s not secret information either. Anyone could have checked to see if this house bubble thing had happened before and what became of it (in CA anyway).

    Q- did you call your extended family? to advise.
    A- Yes I told anyone who would listen as early as 2002 that prices were in a bubble.

    Q- did you take any kind of action to stop it/comunicate
    A- Aside form telling any who would listen, I guess not. Oh wait, yes, I did not particpate so I did not play a part in blowing the bubble or making it bigger.

    Q- – did you get involved in politics? did your write to your congress man?
    A- Regretably no. I only started doing that when I learned of the bailouts. I never saw it coming that people would blame others and expect others to pay for their investment gambles.

    Q- – did you save enought to go buy now, and help the demand?
    A- No need. I have an old mortgage on a smallish house. The circle I run in did not participate in this mess, to us it seemed like a really bad idea. I may buy another house and rent it to family who needs a place (not everyone heeded my warnings).

    Q- – have you ever owned (and sold? left somone else holding the bag, or plan to ever buy?)
    A- Nope, houses have never entered into my investment or retirement plan. only ever one house, one mortgage, I may never move.

    Q- are you participating in the economy other than for your survival?
    A- Thats a great question, one that I have heard no one else ask. I guess I’d have to say no on that one. I’m not a big consumer or luxury needs kinda person. Then again my spending patterns have not changed much so I’m not hunkering down or anything (knock on wood).

    Hope you don’t think the sermon thing was a slam. I meant it in a good way.

67. ex_owner_now_renter Said:
    January 24th, 2009 6:36 pm

    Susan,

    If we (further) mess with the (housing) market (in the present model) we’ll get (even more) unintended consequences…

    While suply and demand is the main model… the demand is scared because NOBODY WANTS TO:
    - buy and loose (no bottom yet)
    - credit ratings
    - job losses

    if we want to fix it now, we must change to a NEW MODEL!
    (but no more gains like in the past, no more banks involved, and posibly price controls.. the government will take over the housing industry.. not going to happen)

    The focus of the need today is clear: JOBS JOBS JOBS

    In the present (housing) model, housing needs to be afordable in line with incomes.. we’re still not there.. 1998 prices are coming back..

    ex_owner

68. BertDilbert Said:
    January 24th, 2009 6:40 pm

    For those wishing for a strong currency, why? The only way we are going to compete is with a weaker currency or tariffs. If we are not going to have a manufactured ponzi economy, then the jobs will have to be real. You can have a strong currency and no jobs other than ones granted by government, but without the private base, the government will wear out. Strong currency or jobs?

69. Stevo Said:
    January 24th, 2009 6:46 pm

    Joan Said:
    If you live in one of the bubble areas like me, then you have witness a period of gluttony so perverse it makes you spit up a little anytime you think of it.”

    Thanks, I spit coke out of my nose on that one and the toy armada heading down the I15 at two in the morning visual.

    Went to some of those parties and although your adjectives are a little strong there was some pretty in your face greed going on.
    I too would be very interested to know if anyone participating on this forum is from one of the NON-Bubble states?

    Anyone?

70. Dee Said:
    January 24th, 2009 6:50 pm

    “They probably think I’m joking about the people who cash-out refied and serial HELOCed and then bought cheaper houses and blah blah blah blah blah……..
    Maybe.. start your own forum for the wayward “bubble-heads” to come and confess, ask for absolution and get the tongue lashing they deserve. I’m sure many are so full of guilt and remorse(as they should be) and looking for an opportunity to make things right with themselves, family and others in their communities. Just think of the great service you could provide, and at the same time allowing this forum as a source for information to help people make decisions based on relevant data and trends.

71. Joan Jett Said:
    January 24th, 2009 6:57 pm

    DEE, are you saying my points are not relevant?

    Are you suggesting this forum should only be for you and those who agree with you?

    It would be kinda boring wouldn’t it? I mean you aren’t exactly contributing any pulitzer material are you now DEE. You do have the whole blah, blah, blah thing working for you though, thanks for that.

72. Dee Said:
    January 24th, 2009 7:01 pm

    No offense Jett. Just getting a little repetitive is all.

73. Joan Jett Said:
    January 24th, 2009 7:10 pm

    BertDilbert I never envisioned myself saying this but, I agree with you.

    Currency and trade tarrifs must be addressed if we are to do anything at all about the bleak picture C.C. warns of. Our country can no longer afford the “trade charity” that has cost us so much of our manufacturing infrastructure.

    Japan and China have stolen so many of our jobs by artificially manipulating thier currency.

    Foriegn countries who routinely take adavantage of our giving nature towards free trade must be dealt with.

    If any of you have plans of purchasing new car please consider an American make At least we still make cars right?

74. Stu Said:
    January 24th, 2009 7:10 pm

    BIG announcement coming soon on saving the home owner… principal write downs / cram downs part of the plan? I feel it… something is coming and it is coming fast!!!

75. ex_owner_now_renter Said:
    January 24th, 2009 7:12 pm

    Bert,

    You’re touching on some good point…of currency

    What’s the fix to our economy (housing segment would follow soon after..)

    We all know the housing is NOT the root problem but a symptom..

    WE’RE IN DEBT AND WE DON’T PRODUCE, WE IMPORT MORE THAN WE EXPORT… YES WE’RE GOING TO INFLATE (WE ALWAYS DO OVER TIME) … BUT HOW QUICK AND HOW DANGEROUS DEPENDS ON THE SPEED AT WHICH WE INFLATE.. AND DO HYPERINFLATE?

    and in what environment.. stagflate?

    - we need jobs, and we need them created by corporations, not just government (I aggree gov created jobs are needed for now)
    - we need people to have more money? (remove the tax system/change to tax on consumption only?)

76. ex_owner_now_renter Said:
    January 24th, 2009 7:16 pm

    STU,

    Am I also getting a 100K bailout so I can go buy a home? I would be helping the “demand” part of our housing model..

77. Susan Day Minerly Said:
    January 24th, 2009 7:16 pm

    JoanJett:

    I live in (long Island) New York, where in my opinion, we also had too much appreciation during the last few years. The 25% National decrease is what New York has experienced so far. (Our prices are back down to late 2003/early 2004 now)

    I already own my house with no mortgage. My daughter and her husband (both teachers with Masters) purchased a home in 2003 and her “value” now is the same as her purchase price. Her mortgage payment is twice what a rental would cost her, but according to most on this site, she is a gambler who deserves to be punished for purchasing a home and paying the mortgage on it.

    You stated a few states:

    Ohio (Cleveland lost 80% of market peak value YTD) but overall they have decreased in value with another 10-15% expected for 2009 due to massive foreclosures

    Indiana, has decrease and still decreasing but never really increased in appreciation in the housing bubble, foreclosures are increasing.

    Kansas- extremely slow market which consist mostly of foreclosures being sold, property values are decreasing.

    Iowa- decreased values, foreclosures rising.

    The above information was obtained from HousingPredictor. com, feel free to check it out yourself.

    Now according to HUD’s website, the following is a list of the top 10 states for foreclosures:

    California
    Arizona
    Florida
    Alaska
    Conn.
    Idaho
    North Carolina
    Texas
    Utah
    Washington

    With these states following:

    Nevada
    Michagan
    Rhode Island
    Ill.
    Indiana
    Ohio
    Georgia
    Oregon
    Tennesse
    Arkansas
    Massachusetts
    Colorado

    Suffice to say, I don’t think this is only the bubble states problem. Notice New York didn’t even make the list and we experienced the National Average decrease of 25% already.

    Thank you for asking others opinion.

78. Stu Said:
    January 24th, 2009 7:18 pm

    Ex Owner, I don’t like it anymore than you do, but it is the best option we have. It won’t help me any and in fact will cost me in the end in higher taxes, but it is the best approach unfortunately…

79. Stevo Said:
    January 24th, 2009 7:29 pm

    DEE, who’s DEE and why the shot across Joan’s bow?

    DEE if this is to become and all DEE, all day forum, you best get to posting so we have something to get us to come back for.

    What is Joan being repetative about? If anything its others that keep repeating the line about not enough buyers out there to buy the foreclosures. I’m no expert but I spend a lot of time surfing and I read a lot of news sites and forums and this is the first place I have ever heard anyone bring up the notion that there are not enough buyers waiting for affordable prices.

    Joan just respondes to it everytime someone re-posts that oppinion. At least she puts effort into the responses and love it hate it, its fun to read and certainly always relevant.

80. ex_owner_now_renter Said:
    January 24th, 2009 7:31 pm

    Stu,

    I’m afraid is not a fix..to the housing segment (nor the economy) for quite a few reasons:

    - all owners will stop making payments, to get their cut, which will drive to more forclosures, more price drops, more tax payer debt, we won’t be able to save all owners

    - will not help demand, prices have got out of control, and we want to keep them still 1/2 way high..still not afordable in many places

    - potential political suicide, unintended consequences (like: high interests affecting home prices down again, which will have more OWNERS stop payments again A VICIOUS CIRCLE, loss of investors for gov bonds, hyperinflation.. etc)

    BAD IDEA.. if was good, it was already hapening..
    my .02 cents..

81. ex_owner_now_renter Said:
    January 24th, 2009 7:35 pm

    We’ve had a shot at it with Hope for Homeowner program already, even with the gov garantee.. it didn’t work…

82. ex_owner_now_renter Said:
    January 24th, 2009 7:36 pm

    a new MODEL is the only way out, or let time take its course with the present model. Any changes to the existing model (without changing the model completely) would cause more harm than good..

83. Stu Said:
    January 24th, 2009 7:38 pm

    It is good but it had to wait for the proper timing to be announced. Owners won’t stop making payments due to strict guidelines to qualify. Demand is not an issue due to the economic fact that supply far outpaces demand at this point. They just got elected / appointed so time is also not an issue. Interest rates due to deflation will stay low for a bit longer, and hyperinflation is nowhere in the picture right now and never was. In fact at this moment in time it would be impossible.

84. Stu Said:
    January 24th, 2009 7:40 pm

    Hope for homeowner program is the biggest JOKE yet offered up as a solution to anything!!!

85. ex_owner_now_renter Said:
    January 24th, 2009 7:53 pm

    What’s next? Cramdowns on companies to hire??

    This is the funiest thing I’ve heard (no offence Stu,)

    1.) Owners won’t stop making payments due to strict guidelines to qualify

    Answer: so they stop anyway/walk away
    also is umployement a qualifiying/or disqualifying factor?

    2.) Demand is not an issue due to the economic fact that supply far outpaces demand at this point

    Answer: Where are the ex owners of all these homes?? We’re here.. we just can’t buy yet

86. ex_owner_now_renter Said:
    January 24th, 2009 7:56 pm

    Stu, hyperinflate not yet (we’ve not reached bottom)

    stagflation, well we’re in it now!

87. Dee Said:
    January 24th, 2009 7:57 pm

    DEE, who’s DEE and why the shot across Joan’s bow?
    I must be mistaken Stevo, maybe I misunderstood what the rules of engagement are, but I’m sure Joan is more than capable of handling anything anyone throws at her. I don’t think I’m alone in wishing posting would stay on point. That’s all..

88. Joan Jett Said:
    January 24th, 2009 8:18 pm

    Susan Day Minerly Said:
    I already own my house with no mortgage. My daughter and her husband (both teachers with Masters) purchased a home in 2003 and her “value” now is the same as her purchase price. Her mortgage payment is twice what a rental would cost her, but according to most on this site, she is a gambler who deserves to be punished for purchasing a home and paying the mortgage on it.

    Joan said:
    ConGrats on owning your house outright! I would never consider your daughter/husband gamblers, they are not even underwater so they obviously are not part of the pricipal mark down crowd. She was fine with buying at twice the rental rate and there is nothing wrong with that if you can pay.

    Why would anyone consider her deserving of a being called a gambler or deserving punishment? That would be odd and non-sensical. Truthfully I think I safely speak for everyone when I say she should be commended for paying her mortgage in this climate. OK?

    As far as a 25% drop in value on houses in Kansas, Iowa, etc. a 25% drop on a $70k mortgage while not fun is really no disaster. In Texas a 25% drop on $100k house is nothing they are not familiar with. I am just saying the big crumbling of the pyramid comes from the bubble areas like mine were people paid $450k-$550k for stucco mansions that are finding their true value of $150-$250k.

    Depreciation of $15k in kansas and $25k in Texas or $35k in Oregon is not the type of event that splits an economy asunder. Its the bubbly areas with their $200k, $250k and $300k losses by the thousands and thousands that caused the implosion.

    The grossly huge total losses in the bubble areas are not the only issue with the bubble areas. Affordability is just as big a bumble. In Kansas a $70k mortgage is still an affordable mortgage, even if its under water, people can still afford thier payments.

    In the bubble areas the mortgages NEVER were even close to affordable, so they could not stand the test of any depreciation at all. Really for those gamblers it was either my value goes up or I walk. It never was a question of “can I afford it?” long term.

    I agree there are other bubble states, maybe New York is one? Maybe there are 10 gross bubble states and not the 5-6 I could recall.

89. Joan Jett Said:
    January 24th, 2009 8:30 pm

    Dee Said:
    January 24th, 2009 7:57 pm
    DEE, who’s DEE and why the shot across Joan’s bow?
    I must be mistaken Stevo, maybe I misunderstood what the rules of engagement are, but I’m sure Joan is more than capable of handling anything anyone throws at her. I don’t think I’m alone in wishing posting would stay on point. That’s all..

    Joan Said:
    Can you be more clear DEE? Are you engaging? You seemed to just appear from nowhere and lob a bomb without actually contributing anything yourself.

    Please tell us what you consider “the point” so we can all stay on it.

    Still waiting for your contribution so I can slink away from the forum having been banished by the brilliant glow of your awesome writing skills and cleaver “always on topic” contributions.

90. od Said:
    January 24th, 2009 8:34 pm

    Stu,

    I know you are a supporter for cramdowns and principle adjustments, but as we all know..economic manipulations never last. In fact they could even backfire. Just look at the intentions behind ANY socialist program. The foundation to this economic mess is the ponzi scheme called fractional lending.

91. od Said:
    January 24th, 2009 8:38 pm

    I can understand why there are so many conspiracy theorists out on this issue. It happens like clock work. These “business cycles” are always brought about when the banks over-lend. It makes you wonder, “what were they thinking??” I guess that is the big question. Is it out of human weakness, ignorance or calculating greed for power?

92. od Said:
    January 24th, 2009 8:45 pm

    Stu..my point being, that a well intentioned “bandaid” for the monority who drank the most Kool Aid in this crisis won’t do much more than another bailout, stimulus package, or any other smokey mirror we concoct. This housing bubble was a symptom to a bigger problem in this country. The bigger bubble ( the American economy ) is going to be a much more painful pop-back to reality.

93. Stu Said:
    January 24th, 2009 8:50 pm

    Agreed od, but let us assume for a moment that the manipulation doesn’t need to last. These deals between the borrowers and lenders are short lived. Do the writedowns and tighten the policies at the same time.

94. Dee Said:
    January 24th, 2009 8:58 pm

    “You seemed to just appear from nowhere and lob a bomb without actually contributing anything yourself.” I’d hardly call it a bomb, merely an expression of frustration at generalizations and blanket statements when discussing so many people in so many different situations used in a condescending and ridiculing fashion. There’s a lot of hurt out here and and maybe there are many that need a serious lifestyle alteration, but that will happen in due course. I don’t have the answers, I wish I did, but one thing I know is it doesn’t do me or anyone any good to demean or vilify to make a point.

95. ex_owner_now_renter Said:
    January 24th, 2009 9:04 pm

    I want to correct myself, we’re not in stagflation but just switched from recession to depression

96. Stu Said:
    January 24th, 2009 9:10 pm

    We are in a massive deflation era that won’t be leaving anytime soon.

97. ex_owner_now_renter Said:
    January 24th, 2009 9:20 pm

    I’ll get it right once.. I hope!

    “stag-deflation”: a toxic combination of economic stagnation, recession and falling prices

98. Joan Jett Said:
    January 24th, 2009 9:25 pm

    DEE, Thanks, at least you offered up something I can respond to.

    Dee, of course there are people lumped in with gamblers that are not so much to blame. Such as people who are maybe just ignorant, but not intentionally greedy. Maybe there are even some who deserve no blame at all? But that goes without saying though, doesn’t it?

    I’ll conseed “they” may deserve our compassion. But clearly I am speaking of a different group of people, the blatantly greedy gamblers of which there are thousands and thousands.

    Most people would automatically understand that my saying “scr@w the evil gamblers” does not include innocent bystanders without my having to say so, ala “Scr@w the evil gambler (but not the few innocent or partially innocent people amongst them).”

    The people I refer to should consider being “vilified” as merely a social handslap for creating an epic disaster, don’t you think?

99. od Said:
    January 24th, 2009 9:39 pm

    “stag-deflation”: a toxic combination of economic stagnation, recession and falling prices”
    one more correction:
    LOL! That’s a Depression.

100. ex_owner_now_renter Said:
     January 24th, 2009 9:45 pm

     od.. yes, that was my thought too.. I’ve said it before, I guess Roubini wants to call it that..

101. DeeP Said:
     January 24th, 2009 11:09 pm

     Just got the assesssment on my house; dropped $91,000 from last year. The second year in a row it has dropped by almost $100,000. How much lower can they go? I don’t live in a bubble state. I live in Virginia.

102. Susan Day Minerly Said:
     January 25th, 2009 4:53 am

     DeeP:

     Thank you for responding to JoanJett’s request.

103. get real Said:
     January 25th, 2009 6:49 am

     I have an illustration I’d like to share with all the “principal writedowns NOW” crowd here to see what your reaction is to this:

     I live in Southern California and in my particular area, a very very nice 3000 square foot house in a gated community near the ocean with all the bells and whistles can currently be rented for around $4000-$5000 per month. Smaller homes go for less, etc..

     The same homes which can be rented for $4-5000, are listed for sale in the $1.4-$1.7 Million range … down from the $2 million ranges during the bubble. Currently, there is a minimum estimated 2+ years of inventory of such houses for sale on the market, so these homes are clearly not selling at current “discounted” prices.

     A 20% down payment on such a house is a quarter mill to half a mill, and still the monthly mortgage payment (IF you can get approved, at 7% 30yr) is $6000-$8000 per month. Add in $1200-$1500 per month for property taxes. You haven’t even paid the pool boy, the gardener, the HOA for the gated entrance… etc. etc. Oh yeah, and the opportunity cost, i.e. loss of the income you could have made from the quarter or half mill that is now stuck in your house. This house costs anywhere from $10,000-$13,000/month to buy. Even with tax deductions, this is an insane amount of money and makes no sense. Median incomes in this area are in the $100K/year range. To carry this house with normal financing guidelines, you would have to make at least $300-400K, 3-4X the median income.

     Many of these homes were purchased during the bubble years and have mortgages in the million/s range, many with teaser rates, option arms, etc.. They say there are always people with money in California, but who is going to buy these homes now when you can live in the very same home for less than 1/3 to half of what you’d have to pay monthly to “own” it??

     The drops in these “immune” and “rich” areas, (and there are many all over California, as well as Florida, NY, Hawaii, you name the bubble state) have only recently become obvious as sellers in denial are forced to cut their asking prices a hundred thousand here, and a hundred thousand there, and months go by and inventory just sits.

     Based on rents, the prices of these homes still have a VERY LONG way to correct before sane buyers will be willing or able to touch them. If principal writedowns are being handed out, what makes you think these currently underwater homeowners won’t get in line with everyone else?

     If you think the financial institutions have seen some pain, you haven’t seen anything yet. It’s one thing when the losses are in the tens or even hundreds of thousands per home. Wait until its in the million/s per home range.

     Now, for all of you in the gimme-my-principal-writedown group, when these homes lose a million, two million+ in value, WHO IS GOING TO BAIL THEM OUT? WHO is going to pick up these huge losses? Effectively, what I hear you saying is, that you will get your $100K, $200K, $300K, $400K, $500K etc. writedowns… and in exchange, you and your children for many generations (through your tax dollars at work) will pick up the tab for writedowns for the losses of MILLIONS of dollars for these other homeowners. Because that is what will happen, whether you like it or not.

     The most horrible part of it is, that even if they GET a principal writedown, the price drop for their houses (AND YOURS) will NOT be stopped at 2009 price levels. They will continue until the price and rent are more in line with each other. They will STILL be underwater again in a year, and maybe again the year after that… until prices reach a level that can be sustained by buyers at current financing terms.

     If you live in one of the 40+ states where home values were not so insane, and you think this has nothing to do with you, think again, because you absolutely do not want to finance principal writedowns for those in bubble states with your tax dollars. Ditto if you live in a bubble state in a starter home or less expensive area.

     I for one, am not that um, altruistic. I’d rather eat my own losses than have to eat everyone else’s. I know how much my own losses will be, and that I can survive them, with or without getting in line for my own writedown. I don’t know how much everyone else’s losses will be, and I’m pretty sure it will be much more painful than just carrying my own. At some point, we are going to have the living %^#$%@^ taxed out of us to pay for this. Not to mention what your paycheck or savings will be able to buy when all the money we print catches up with us.

     With TARP and its progeny and all the other “programs” that will be put into place, we and our children are all to some degree going to carry other people’s losses for many many many years. But do you really want to add to it? Why?

     You may have noticed that every bank that got bailed out, keeps coming back to ask for more.. and more… and more. Because guess what? These losses cannot be contained. In 2009 and going forward, I shudder to see how much MORE the banks, Fannie, Freddie are going to demand, and I don’t see how they will be saved. I think just letting them fail to begin with would have been cheaper and less painful in the long run.

     I don’t pretend to know how this will all end. With cram down legislation, principal writedowns in BK for primary residence may become a reality soon, and perhaps with it may come other writedowns on a large scale as well. But I do know that it’s never a good idea to make everyone drown just because the boat is sinking. The good swimmers should be allowed to survive. The question is, how many good swimmers are going to be dragged down and how far, and if everyone is forced underwater to try to save the non-swimmers, who is going to be left to stage the recovery/rescue of the economy?

     We need to stop thinking just about this from a micro perspective, which is limited to “I want MY principal written down” type thinking. We need to think about the big picture and what it means when you start down this path.

104. Susan Day Minerly Said:
     January 25th, 2009 7:18 am

     Hello all:

     How exactly does having the government mandate a recall of all defective mortgages with negative equity to be corrected to the current appraised value harm anyone outside of the homeowner and the bank, the only two parties involved? Especially if the bank/investor is made to take the loss.

     (when any product is recalled such as beef,car parts,toys for safety/defective issues does anyone outside of the involved parties get upset. The purchaser is returning the defective item for replacement and the company has to paid for the reimbursement of said product.)

     Mortgages are the product, and they should be recalled when the direct actions of the banks and servicers harmed the homeowners causing negative equity.

     The homeowner in question has owned and paid a mortgage payment for 3,4 or 5 years based on the original purchase price. They didn’t received the EXPECTED benefit from paying down a mortgage, the mortgage payments was for the banks benefit not theirs. They did receive a tax deduction but that doesn’t equal paying a mortgage payment over a paying a rental payment for the past few yrs though.(intentional financial harm)

     The governmental mandate needed of ruling that banks must give a principal mortgage reduction to all homeowners with negative equity as a direct result of their actions. The mandate is for a fixed rate refinance to be given that corrects all negative equity (number one reason for defaults) and eliminates the banks outstanding problem of the future re-setting of outstanding adjustable mortgages (which is the next wave of foreclosures per this site and it’s been right so far)

     The homeowner loses not only their down payment but the difference of what a rental would have cost versus paying their mortgage payment with taxes and insurance for the past few years.

     There is no free ride given to them, they paid x amount of dollars for the past x years and with a refinance at the reduced principal amount, the count down (in mortgage amorization, mostly interest is paid first) starts over again.

     There is no automatic profit, if the house sells within the next 7 years(current homeowners 7 yrs, delinquent homeowners 10 years), all profits go to the government.(toward repayment of what the taxpayers already lost on the banks bail outs given)

     Since you are more interested in the bubble states:

     A $500,000. principal mortgage with a POA of 1.75%=$1786.22, 3.5% ARM=$2245.22 and 6.5%=$3160.34.

     Take the monthly payment and multiply it by the number of months owning the property, then minus the estimated “rental” payment and you come up with the amount the homeowner lost for owning, as well as his down payment. Plus remember every month, they also had to pay the taxes and insurance reqardless of whether or not they received a tax deduction for it.

     A mandated refinanced principal reduction to a $250,000. mortgage at 6% (rates went up and there is .5% penalty added to the rate for “reduction”) with the added payment of FHA insurance gives the homeowner a $1,602.81 P&I payment, then add his taxes and insurance.
     (FYI-first time homebuyers wouldn’t be paying the half point penalty in the rate)

     If they were current, they would only have to prove owner occupied, citizenship or resident alien, and the mortgage payment would be equal or lower than paying now. They have proven themselves to be a good credit risk.

     If they were deliquent,they would have to prove the above 3 conditions with proof of sufficent income to qualify at 33/41% ratio’s. ( this would eliminate speculators,liars,gamblers, and people who just expect a bailout because they overbought for their income) There is also another half point penalty added to the rate for being delinquent, they would be paying 1% over what a first time buyer would pay)

     There would be foreclosures, but the foreclosures would be offered for sale at the same price of the reduced principal balances given.

     If after 6 months,the property could be auctioned off at the reduced price to the most qualified borrower, with a government subsidy for the difference.

     The benefit to the banks are:

     *stopping the deflationary cycle from further destroying their income
     *eliminatation of all negative equity
     *elimination of all adjustable mortgages
     *having qualified borrowers
     *erases the moral hazard, it is beneficial to the homeowner in rate and penalties to remain current until their refinance occurs
     *a stable market environment
     *a guarantee of receiving more principal than what they would receive now if they had to foreclose
     *the ability to make money on the refinances
     *the allowance of writing down the loss up to 3x
     the actual dollar amount at time of refinance
     *movement of a tier3 asset to a tier1 on their balance books,reducing the capital reserve requirement.
     *with a government mandate for recall for underwater homeowners, there is no reason for law suits

     There is 12.1 Trillion Dollars of outstanding mortgages, of which approximately 25% are underwater, if every underwater mortgage was reduced at the averaged of 40% (some areas are 15%,25%,35% and bubble states are 50%), it would be roughly $1.21 Trillion Dollars to correct all homeowners.

     Taking it one step further, if half of the 12.1 Trillion Dollars of outstanding mortgages were issued within the last 5 years and the reduction was still 40% average, the lost to the banks would be $2.42 Trillion Dollars.

     If the financial sector was able to pay in bonuses to 600 executives the sum of 1.3 Trillion Dollars in 2007 (NYTimes and WSJ both reported this information),they can certainly afford to take the losses themselves and NOT ON THE TAXPAYERS DIME.

     As some of you say, that is my 2 cents worth. Enjoy your day,

     Susan

105. Susan Day Minerly Said:
     January 25th, 2009 7:25 am

     Stu:

     I re-read your post, what exactly are you referring to with “stricker guidelines” to qualify?

     Thank you in advance for your response.

106. Michael Blomquist Said:
     January 25th, 2009 12:11 pm

     Susan,

     Normally I am always aligned in principle with your posts, but BANKS do NOT have the money to pay for anything. 2007 Executive bonuses was a completely different time and this brings up the MOST important issue facing our Nation….Rule of law.

     We MUST disgorge these SOBs. If we don’t we will continue to slide down this slippery slope of lawlessness. Again, look at home many agents and borrowers decided to commit felonies; loan fraud in order just to buy a home they did not need. Once these people no longer have jobs, savings or credit lines they will most likely become involved in criminal activity. Survival mode will kick in a completely different thought process than greed of money or desire to keep up with the Jones, Singhs and Chins.

     Demand disgorgement, indictments and convictions of the kingpins who perpetrated this epic and unconscionable conspiracy. Remove all execs CEOs, CFOs, etc who were in office while this was going on.

     Thain is hot in the news so he could be targeted along with Fuld. Undoubtedly, Fuld is feeling alienated so he would be willing to roll on others. Their convictions could unite America.

     GetReal has made some very valid points. The loan loss severity in CA, FLA, NV, could dwarf that of every other state combined. The losses seen at banks thus far is maybe 5% of what will be lost in the long run.

     In reality if all future losses were erased from this point forward the continued losses in the banks once they sold their existing REOs and properly accounted for reality in level III the losses would be 4-5x of what they have addressed to date.

     There are many intelligent people who post on Mr. M’s site, but what are we accomplishing??? Nothing!!! What we should do is lobby our reps and the media to wake up. We could provide phone logs for the conversations we had with the employees at our rep’s offices. on this blog.

     Venting our frustrations and presenting remedies do very little good if they are not heard by those who can make a difference.

     There are NO financial solutions to this crisis other than bankruptcy, especially for our government.

     Even if all mortgages were erased today people still need jobs and the government needs income to pay its own debts. We have allowed Congress and Wall Street to destroy our Nation and blogging will do very little.

     The time to push on Congress and Obama is NOW!

107. Stu Said:
     January 25th, 2009 12:44 pm

     Hi Susan, another excellent post and if Government is not in charge of your bailout plan I would be on board in an instant. I just can’t have the Government involved in any of this other than perhaps a temporary cram down legislation passing with strict rules / guidelines to what and how the judges can administer the cram downs. With that being said I meant strict guidelines to qualify for a write down. In other words people cannot stop paying for no reason just to fall behind to qualify. People must show hardship via job loss etc. or the reset rate placed them in trouble. You can’t create the need for help.

108. Kevin Said:
     January 25th, 2009 1:15 pm

     “Hope for homeowner program is the biggest JOKE yet offered up as a solution to anything!!!”

     Not nearly as big of a joke as “cramdowns”, or principal reductions. That’s just cruel and not funny.

109. Benzy Said:
     January 25th, 2009 1:24 pm

     Get Real, You just wasted 1000 words on a straw man argument.

     Time and time again the proponents of principal write downs on this board have said that multimillion dollar homes at levels >3x the area average are an entirely different animal.

     I think it’s been clear that our (or at least my) target recipient of aid would be the average Joe/Jane who is otherwise qualified (income, credit, etc) and has shown that they take their obligations seriously, but is locked out of the economy because of a bad home loan or the repercussions of walking.

     The big picture is being considered – the majority of earners (60%+) in my state are potential foreclosure risks. This is going to get dire when they walk, for them and the state.

     I think at this point there are few that are 100% adamant about principal reductions. But considering that trillions ARE going to be spent, we are 100% adamant about a solution directed OUR way.

     The solution can me a a mix of bank to lender principal reductions, Gov sponsored “foreclosure forgiveness” program, central bank lending, or doing nothing. There’s no shame in vying for the solution that offers your household the most benefit.

110. Joan Jett Said:
     January 25th, 2009 2:45 pm

     GetReal, Very well put. I thought you explained it better than me yet as you can see, the cram-down junkies are out in force trying to debunk your clearly rational logic.

     Would all of you on this forum like to see were principal write downs are going to lead?

     Go read Susan’s post:

     Susan Day Minerly Said:
     January 24th, 2009 7:16 pm
     JoanJett:

     I live in (long Island) New York, where in my opinion, we also had too much appreciation during the last few years. The 25% National decrease is what New York has experienced so far. (Our prices are back down to late 2003/early 2004 now)

     I already own my house with no mortgage. My daughter and her husband (both teachers with Masters) purchased a home in 2003 and her “value” now is the same as her purchase price. Her mortgage payment is twice what a rental would cost her, but according to most on this site, she is a gambler who deserves to be punished for purchasing a home and paying the mortgage on it.”

     Joan said:

     As people reading this forum know Susan has put lots of time and effort into building a case FOR principal reductions (lets call them PRs).

     We must ask ourselves….WHY? Why would Susan do this when clearly her own situation does not call for it. Even her daughter/husband don’t need it, YET. Susan sees the writing on the wall. Her daughter’s 2003 mortgage that is “even” now, will very soon be underwater. Susan is launching a preemptive strike to figuratively get in line for a tax payer gift to cover the $50k her daughter WILL soon be underwater.

     So for all of those who think this PR thing won’t get taken advantaged of and explode to every house on the block just look at the effort comrade Susan is already putting out. Heck I bet the paperwork to qualify for a PR will be less than Susan has already written on this forum.

     What do you want to bet that the 2003 mortgage that Susan’s daughter has been paying for 5 plus years will all of a sudden become unbearable when the value of her home turns decidedly south.

111. Susan Day Minerly Said:
     January 25th, 2009 4:19 pm

     JosnJett:

     Thank you for calling me comrade, and may I extend the same term to you.

     In reply to the amount of effort, research and paper I have put into my proposal. The proposal was written to S.T. Paulson in September 2008 as a response of my disgust and rage that taxpayer funds would be used to support and continue the greed of Wall Street.

     The proposal started as a letter (argument) against bailouts of any form and changed into a 46 page proposal to correct the underlying problems of housing.

     You may not agreed with me, which is your right, but the alternative is to continue to bail out banks with your money.

     Why would you not like to see principal reductions at the cost of banks/investors first before taxpayers?

     The proposal eliminates your “evil Gamblers” from remaining homeowners.

     And for your information, my daughter’s home was purchased 8/2003 for $265,000. with a mortgage of $232,000., in my earlier post I stated the value is equal to her purchase price, I should have stated its equal to the mortgage amount.(she already lost the equity from the down payment and my proposal does not return it)

     The proposal was written with the majority of the population in mind, not just my daughter or myself.

112. Susan Day Minerly Said:
     January 25th, 2009 4:43 pm

     Stu:

     Thank you for responding, let me explain one more thing.

     There is no more government involvement with my proposal than “cram downs” except it corrects the housing industry, itself not just for the delinquent homeowners.

     Creation and passing of mandate = approval of cram down law

     Capital to start= already approved TARP funds

     creation of separate agency with public employees not governmental to over-see (regulate) compliance with strict rules/guidelines = court system with judges(the immediate problem is our court system is already stressed with work, this cram down approach will clog it more)

     Basically until we addressed equally and fairly the underlying problems of the housing industry, caused as a direct result of Wall Streets business decisions, the problems Main Street is experiencing will continue.

     Modifications and crams down does not correct the problem, it invites moral hazard to be included ( and CC’c civil unrest for the homeowners who are responsible being left to “hang/burn” any term you like) Nor does it stop the deflationary cycle. Both governmental solutions are another way of prolonging the banks ability to stay afloat on taxpayers money.

113. Susan Day Minerly Said:
     January 25th, 2009 5:21 pm

     Michael Blomquist:

     Hello, and thank you for responding.

     My proposal does address drastic reduction of any and all compensation of ALL executives and directors (not just CEO’s) of ANY financial entity, being assisted by the government recall mandate. This includes cash and stock options.

     My proposal suggested a cap of 10 x the amount of the lowest earner of the companys yearly salary, not to exceed the Presidents salary for CEO’s, while involved with any aspect of the recall including taxpayer assisted funds that have been made available to the industry in various markets.

     The proposal is also for ALL owner occupied homeowners who are underwater.There is one exception to that rule, is it also includes investors who purchased the home legally as an investment.(stated and approved as an investment property not owner occupied on the original application)

     Maybe I did not explain myself well, the proposal is for all homeowners who have negative equity, making the banks pay for their business decisions (capitalism).

     Homeowners who are paying their mortgages are entitled to a principal reduction to an APPRAISED value based on 3 conditions, owner occupied, citizen or resident alien, and the new mortgage payment is equal to or less than currently paying.

     Delinquent homeowners have the same above corrections and requirements with one additional one, proven sufficent INCOME to support the new payment at 33/41%. If they can not qualify, they never should have become homeowners.( I apologize in advance for the homeowners that did qualify but lost their jobs and are in foreclosure,my proposal does not help you)

     The mandated reduction takes place in the form of a new mortgage being issued based on the above two groups.

     The loss is taken at time of the individual refinance and replace with a new qualified loan at a much lower principal. The asset is being replaced with a “AAA” or level 1 asset, lower capital reserves requirement. The monetary loss is offset by the mandates allowance of being able to deduct up to 3x the loss on their balance sheets.

     There is an immediate requirement of approximately 500,000 jobs created with the mandate. The jobs are temporary to accomplish the refinance of over 13 million mortgages, but not only does it give the banks a clean slate but it gives the taxpayers a way to earn back our funds already given to them.

     As far as blogging versus contacting our representatives, I have already sent my proposal to all 100 Senators back in September 2008.

     I am shortening it to send again to every senator, representative and President Obama.

     I have stated before, it will take the majority to “agreed and tell” our government what we want.
     But as you can see, just on this one site there are many disagreements.

114. Susan Day Minerly Said:
     January 25th, 2009 5:47 pm

     JoanJett:

     My daugther would have to decide whether she would “opt” for principal correction on her own.

     Right now, she is paying 5% interest on a $232,000 mortgage with the approx. balance of $210,000. She is not underwater YET. Let’s see if there was another 15% decline in prices for 2009 as predicted, would it still be worth it to “opt in”.

     $235,000 current value x 15%= $35,250 or a future value of $199,750.

     The monthly payment to opt in, would be $1198 versus her current payment of $1242.

     The penalty of remaining 7 years before any profit could be received, the balance at the end of 7 years for opting in would be $182,567 versus $180,612.

     Now lets say, she does opt in, her mortgage payments start over at 30 years and she losses the past 5.6 years she already paid (remaining mortgage payments of 294 versus 360).

     No, the way I see it, my proposal hurts her doesn’t help her UNLESS nothing is done for another 2,3 or 4 years and prices decline in New York over 50% more, then YES, I will insist she gets on line for whatever assistance will be offered.

115. Javagold Said:
     January 25th, 2009 6:18 pm

     enough with the back and forth, i have got a headache from reading all those words, NO MORE DEBATING , LETS GET PRINCIPAL REDUCTIONS FOR ALL 25% PASSED NOW , NO MORE EXCUSES FROM DC!!!!

116. Joan Jett Said:
     January 25th, 2009 6:52 pm

     From the very wise Peter Schiff:

     What should the government do about the foreclosure epidemic?

     Peter: We should allow the foreclosure process to go through. We should allow lenders to foreclose if that’s their choice. We should allow them to work out deals with the tenants if that’s what the parties agree to. In many cases, foreclosure is a good thing because it takes somebody out of a property that they couldn’t afford and puts it into the hands of somebody who can afford it. There can be somebody who is living in a house that bought it with nothing down—they are not going to make the payments, so why even modify the loan? They don’t have any equity. When people own houses without any of their own money at stake, they don’t maintain them. It would be better for the bank to foreclose and sell the property to somebody who actually has money, somebody who is a viable homeowner and not some speculator.

117. Joan Jett Said:
     January 25th, 2009 6:54 pm

     More from Peter Schiff:

     So, what would you advise policy makers to do?

     Peter: They should do nothing. They’ve done enough damage. Why don’t they just let the market work? Why can’t we just let housing prices go down? In California, housing prices got to like five or 10 times median household incomes—it was insane. Even though prices have dropped 20 percent, housing is still ridiculously priced. Prices need to come down. It’s interesting: Initially, Fannie and Freddie’s mission was to help houses be affordable. Now, their mission is to keep housing prices expensive. They are trying to prop up prices and not let them come down. That’s the kind of stuff that the government did in the Great Depression. The government tried to stop food prices from coming down; they were destroying cattle and plowing under fields because they didn’t want food prices to go down. In bad economic times, they were trying to maintain high food prices so that people who are unemployed have to spend more money to eat. So, now they are trying to maintain high home prices. It’s stupid. Why not let home prices fall so that people can buy houses cheaper?

118. Joan Jett Said:
     January 25th, 2009 7:33 pm

     Susan Said:
     As far as blogging versus contacting our representatives, I have already sent my proposal to all 100 Senators back in September 2008.

     I am shortening it to send again to every senator, representative and President Obama.

     Joan Said:
     Susan, send a copy to this Representative, I have a feeling she’ll be all ears:

     The tale of Rep. Laura Richardson’s (D) personal housing crisis got even more captivating Tuesday as her office said the freshman lawmaker defaulted on loans she took out for not just one, but three, California homes.

     The news of one of Richardson’s properties recently being sold at auction captured widespread attention last week in the wake of the nation’s housing crisis. But that was only part of the story.

     Richardson’s office said Tuesday she has caught up on her payments and renegotiated the terms of loans she took out to purchase homes in San Pedro and Long Beach, Calif. Her office confirmed that the lawmaker defaulted on both of these homes and was risking foreclosure when she went months without making payments.

     A third home that Richardson borrowed heavily to move into in Sacramento was sold at auction earlier this month — at a $150,000 loss to the bank that issued her the $535,000 loan.

     So she defaulted on three homes, one was sold at auction. In the meantime:

     Federal Election Commission (FEC) reports show that Richardson loaned her campaign a total of $77,500 — in three installments — between June and July of 2007.

     $77,500?

     As well as her $535,000 home in Sacramento, a home that Richardson owned in San Pedro — which she borrowed $359,000 to obtain — went into default in September 2007 when she became more than $12,000 behind in her payments.

     In addition, Richardson’s primary residence in Long Beach went into default just two months ago after she failed to make a payment for four months and owed nearly $20,000 on the property.

     So she had $77,500 to loan herself to run for Congress but didn’t have $32,000 to pay her bills?

     Her reaction to all of this? – oh, you’ll love this:

     Richardson last week told reporters in California that her experience makes her particularly well-suited to help Congress legislate a solution to the nation’s housing crisis, saying she hoped to testify before congressional committees on the issue.

119. get real Said:
     January 25th, 2009 8:11 pm

     “Benzy Said:
     January 25th, 2009 1:24 pm

     Get Real, You just wasted 1000 words on a straw man argument.

     Time and time again the proponents of principal write downs on this board have said that multimillion dollar homes at levels >3x the area average are an entirely different animal.”

     Well, all righty then… The median home price in my County at the high was around $680K I believe. 3X that amount is around $2million. These homes NEVER had any business being priced over $800K. The current median is around $400K. 3X that is around $1.2million…

     But I guess you made my point, which is that the strongest pro-ponents of a bailout don’t really want a writedown universally, they actually only want one for themselves, and the *&*& with everyone else.

     My point was that these people (with a median income of $100K) ARE considered “average Joe’s” here, and not many people make the $300-$400K a year required to buy these homes at current prices.

     And I don’t think anyone has addressed what will happen next year and the year after that when prices keep dropping and these people are repeatedly underwater.

120. ex_owner_now_renter Said:
     January 25th, 2009 11:52 pm

     Hey Javagold,

     There is no difference between the owner that can’t pay anymore (and could be underwater) or the ex owner that lost the home already (and could have been underwater)

     When the government decides to lower the principal balance on the present owner (and with out a ding to the credit where ex onwers got dinged already)… you better believe that we (ex owners) are going to get a bailout too! to help both sides of supply and demand!!!

     I still believe the best option is to let the market work it out, as it would:
     - allow others that didn’t participate to get in
     - would lower prices for everyone ( more sustainable in the long run(better for the econmoy in the long run)
     - would not put us in debt for future generations
     - and teaches all a lesson, we can’t repeat this crap every few years
     - we need to drop quick, so the turnaound can start sooner than straching it out like Japan..

121. ex_owner_now_renter Said:
     January 25th, 2009 11:57 pm

     JAVAGOLD,

     what ever reduction in $$ you get, I want the same for my downpayment on the next house! get it??? you punk.. try:
     - stoping payments and leave within 30 days (if you have a moral problem)
     - try paying everything else off
     - try saving for a change
     - try adming you screwed up
     - try telling everyone else you screwed up
     - teach yourself and your kids the real responsability
     - don’t ask for bailout at everyone else’s expense
     - try fixing your credit
     - think about furture generations AND STOP BEING GREEDY!

122. Javagold Said:
     January 26th, 2009 12:10 am

     ex owner,
     guess you are living proof that idiots like you will never learn their lesson thus this punk will get his principal reduction and there isnt a damn thing you can do about it, i will make sure i get mine this time and if you were too much of a clown to understand your rights and left your house in 30 days, then you need to look into the mirror and see who is the biggest loser …..if you dont want principal reductions, fine, just dont think anyone is going to listen to a person who doesnt even know how best to protect himself and his family….this was a ponzi scheme and fraud, you take your morals, contracts and laws and shove them up your ass, while my punk ass will sit in this house for many many years , as i am not losing $1 of equity because what anyone else thinks

123. ex_owner_now_renter Said:
     January 26th, 2009 12:24 am

     JAVAGOLD..

     You’re a moran and a punk like I said, and have no regards for anyone else.

     I may have dranked the koolaid before, that there is no more land, housing goes up for ever…and bought at the peak.. but I’m joining the rest in the fight against saving GREEDY morans like you.. and doing the right thing.. at last, and at least I can live with myself.. no moral problem..

     This mess needs to get fixed, and it will not be by bailing you out!

     IT’S ABOUT JOBS, NOT ABOUT JOKERS LIKE YOU .. YOU FUCKFACE

124. Javagold Said:
     January 26th, 2009 12:35 am

     its funny how the anti principal reduction crowd is so angry and into name calling and they really dont even have any skin in the game….very strange indeed

     as for me i can afford my house and so i will stay but i believe principal reductions are the best solution for all and why i will say again , if/when they happen, they should make them for everyone because if you dont take care of the people in good standing, thats when i will take care of myself , i will not sit and watch other be rewarded for bad behavior while i watch my $100,000 cash deposit disappear…

     if ex owner wasnt such a dolt, he would realize me and him have alot in common in our thoughts/reasoning the only difference i see is he must be a real pussy to walk away and not even put up a fight and stand up for himself when he has been ripped off….

125. ex_owner_now_renter Said:
     January 26th, 2009 12:48 am

     javagold,

     while ponzi/fraud/greed still taking place, I repeat: it’s not a good idea to save fuckfaces like you

     - I’ve already lost 80K, and paid 7.5 fixed interest for 2 years, I’m not asking for a bailout, because I understand what it would mean to all of us, I think the goverment understands that too…

     Yes, take care of your eelf, be a man for a change!

     PP like me are pissed off, and more will join… we will not participate in this model anymore, if the bailouts for fuckfaces like you.. take place, you will need a lot of fucking bailouts to just break even.. within the next 20 years

     If goverment doesn’t inflate/bailouts everybody, it’s a lost casue – I reapeat that this should not take place, not matter how bad the deflation seems to be..

126. ex_owner_now_renter Said:
     January 26th, 2009 12:52 am

     and let me be clear, when I say:

     If goverment doesn’t inflate/bailouts everybody

     it’s really all citizens of US

127. ex_owner_now_renter Said:
     January 26th, 2009 1:54 am

     Sorry all about the vulgarity, I apologize.. but I’m just amazed about pp that can’t take a loss, and rebuilt.. they rather ask for a bailout…at other pp’s expense

     susan, you said:

     The proposal is also for ALL owner occupied homeowners who are underwater.There is one exception to that rule, is it also includes investors who purchased the home legally as an investment.(stated and approved as an investment property not owner occupied on the original application)

     - first of all how many homes can you live in at once?
     - reduce balances on investors homes too?? how many do they have 2? 5? 10? 20? 40?
     - they’ve invested! now they losed!

     Is there a limit to this insanity??

     I would advise your daughter to walk.. but apppears that either she can make the payment (just like Javagold) or waiting for a bailout..pushing the greed.. if not? she will continue making the payment, right? at what point do you people that treat to walk .. will you actually walk?? 80% loss??

128. ex_owner_now_renter Said:
     January 26th, 2009 1:56 am

     you talk the talk, but can you walk?

129. Susan Day Minerly Said:
     January 26th, 2009 3:17 am

     Get Real:

     I would like to know the following:

     1- what was the prices at the market peak?

     2- what is the current price?

     3- Being that the sales price of 2 million would have been considered super jumbo (where I live) what was the down payment requirement?

     I assume you live in a bubble state? Just for your information though, a $100,000 income would not have qualified even with a POA of 1% for a 2 million dollar home. The monthly payment of a POA at 1% would be $6432. without taxes and insurance.

     You are correct though in my proposal, I only addressed homes that were purchased up to $750,000.

     The majority of the population earns
     under $100,000. and with a 50% qualifying ratio, home prices were able to be inflated to that price by the former mortgage guidelines.

130. Susan Day Minerly Said:
     January 26th, 2009 3:32 am

     Ex renter:

     Thank you for apologizing, your mother raised a nice person.

     Investment home is one that is bought with the direct and known intention of renting it out, usually involves a down payment of 20% and a slightly higher interest rate to combat the risk factor.

     During the past few years especially, speculators not investors purchased “flips” or “rentals” stating they would be owner occupied to obtain the better rate and lower down payment,the proposal does not aid them.

     Truthfully, judges already have leverage in changing the terms of investment,vacation or second homes mortgages.

131. Susan Day Minerly Said:
     January 26th, 2009 4:31 am

     Javagold:

     You should apologize too, there is no reason for name calling, everyone is entitled to their opinion.

     And you will lose more than $1 in equity,(real or anticipated) almost every single homeowner already has with the national decrease in prices.

     Even though, my proposal will bring your principal mortgage down to the current appraised value, there are drawbacks.

     The mandate required is a recall and replacement of a defective product,”mortgages”, that caused financial harm to some consumers giving them negative equity.

     The financial harm caused is a direct result of the banks actions of oversupplying and underselling their REO’s with full working professional knowledge of the consequences of their actions on their consumers. Their knowledge of how values are obtained can not be questioned, it is their business. Their direct action of selling their massive REO’s ( both in bulk selling and certained high density areas), lowered property values and will continue to do so, unless the problem is resolved.

     A new mortgage at a fixed 30 year prevailing rate will be issued to the homeowner at the appraised reduced principal balance, as part of the recall.

     That means, if you made a down payment it is lost. The difference in monthly mortgage payments minus what a rental would have cost is lost. The lenght of time you have been making payments is lost.

     You, as the homeowner agreed to a purchase price and mortgage terms. What you did not expect was for the bank to intentionally financially harm your status of having a self amortizating mortgage payment, which would allow you to sell or refinance before the terms of the mortgage was completed.

     You had no reasonable expectation or right, that a protection of your down payment,if paid,was in your mortgage terms. ( you hoped, or as some would say you gambled based on past housing history.)

     You had no reasonable expectation or right to receive a profit from either a sale or refinance based on the agreed upon mortgage terms.

     You, as a homeowner had a reasonable right and expectation that after 7-10-12 years, you would be able to sell or refinance your home without having to pay additonal cash money for the priviledge, with or without a profit involved.

     You, as a homeowner had a reasonable right and expection that you would be able to sell your home equal to the mortgage balance within a reasonable amount of time.

     As I stated in earlier post, there is no free ride for either side of the transaction. There are benefits and penalties for both sides, but it is the fairest proposal I heard or read so far.

     Sorry for correcting you, but once a mother
     (and grandmother) always a mother.

132. get real Said:
     January 26th, 2009 4:46 am

     “Only Homes up to $750K are included…” Would that be $750K at bubble values?

     You guys need to wake up and take a look at the income of, and the neighborhoods, most of our senators and our “representatives” live in…

     Does anyone ACTUALLY believe, that if given popular backing for cramdown/principal reduction mandates, that the folks in Washington who make these laws will actually sit down and say the following:

     “Hmmm, Susan Day Minerly and Benzy say that $750K is a fair cap, so I guess that means MY home equity losses won’t be covered, MY children’s home equity losses won’t be covered, and none of my friends’, relatives, campaign contributors, etc. will have their housing market/speculation losses covered, but what the heck, let’s do it, because it sounds great to me too! I’m all for paying my taxes to bail out Susan, her kid/s, Javagold, and Benzy!”??

     Who believes that will happen? Do you? Rilly?? Because if you believe that, then WOW. Just. Wow.

     Most of these lawmakers are the same people who voted to cut taxes on the rich, tax dividends at a lower rate than regular income, handed $350B+ in money out to banks with no strings (anyone still think this was an accident?) and even now when THEY KNOW that the banks used that money for commodes, buying more banks, bonusing themselves, etc., said, “So what???” I could go on and on … but I won’t.

     If this gathers steam, it will be just another opportunity to fleece the taxpayer. Like you, They are in it to GET THEIRS.

     Susan Said: ” I assume you live in a bubble state? Just for your information though, a $100,000 income would not have qualified even with a POA of 1% for a 2 million dollar home. The monthly payment of a POA at 1% would be $6432. without taxes and insurance.”

     Do you mean to say that in your state, they actually made you “qualify” for your loans??

     Yes Susan, as I mentioned I live in California, in a bubble area of this bubble state where with a 680+ FICO score and a decent job title, you could get 100% financing also known as 80/10/10, and go stated income (that means no proof of income). I know for a fact that as recently as 2006, with a 680+ FICO, you could borrow over $4Million with no income verification and stated assets (that means no proof of assets either) if you had 20% down, and if you didn’t have 20% you could even get a bank or a couple banks willing to lend you that 20%. Don’t ask me how I know this. So “qualifying” was not a problem. Which is part of what I was trying to explain about this crash. Now, those same homes can only be bought by people who ACTUALLY qualify. THAT’s the problem.

133. Javagold Said:
     January 26th, 2009 9:36 am

     i must not be making myself clear….

     i bought a $500,000 house put down 20% and took out a 30 year fixed….i did things the correct way

     i am not looking for a bailout !!!

     HOWEVER if principal reductions are coming, and i think they are, i am making sure i get mine, that can be the easy way (PR for everyone) or it can be the hard way (i will screw everyone in my way ) but i am not going to sit by and make monthly payments while others live mortgage free for 12 months AND get a principal reduction as well wjile because i am paying on time, i get nothing….not happening, my days of being the good citizen/sucker are over !!

     thats why i am not sure how/why i became the poster boy for ex owner, kevin, joan jett to rail against….i believe like them , things better be fair for everyone or it will be trouble HOWEVER i do believe that principal reductions are coming AND i also believe they probably at this point are the best solution….

     i thought i made myself clear when i first starting posting on MM blog but i guess i did not ….as for apologies, none coming from me, i never ever call people names FIRST, after the first punch is thrown then gloves are off …. as it looks to me just from the anger in this small little blog , they better come to a smart and quick resolution or the top is going to blow off this powder keg soon….good luck everyone

134. Kevin Said:
     January 26th, 2009 10:41 am

     So what do I get out of it then? I don’t own a house, so I wouldn’t be part of the cramdown. If Javagold did the right thing and doesn’t want to see his neighbors get principal reductions without his reduction too, shouldn’t I be demanding something? How about a big yultide log made out of $100 bills?

     Of course, I’m kidding, and I don’t want one red cent from anybody. Some of you folks really sound like Karl Marx.

135. Dee Said:
     January 26th, 2009 12:22 pm

     Question for all of you out there: Who stands to benefit most from the discord and dissension that is happening amongst us and the general population on this issue? Think of it, the banking industry is spending millions on lobbying to get public opinion to be sympathetic to them being bailed out and given all the money they need to stay in business. The divide and conquer strategy is working well for them based on current observations. I’m convinced that all manner of dissemination and available venues would be advantageous to this end. We need to get past this divisiveness if we’re going to come to a solution that works for us all. A loud voice of reason not influenced by corporate interests and greed is what is needed at this time. We can’t move in a common direction if we can’t agree on the direction we need to go. I implore all of you to consider what is at stake here and make a decision.
     D

136. benzy Said:
     January 26th, 2009 12:25 pm

     I support Javagold’s sentiments. And I think in a way, Kevin, C.C., Joan Jett, et al. do as well.

     Simply put, we’re all tired of being an aberration.

     We live within our means, own/rent homes we should be able to afford. Outside forces have wreaked havoc on our financial system and we are all paying big time.

137. Michael Blomquist Said:
     January 26th, 2009 12:45 pm

     Javagold,

     When did you buy?
     Where did you buy?
     Why did you buy?

     Should just owner occupied homes that were purchased during a certain time frame be eligible for reductions? If no who else is included?

     What about the homeowner who has owned for decades, but used the false equity to maintain a certain lifestyle they cannot afford?

     What about Joan Jett or millions who have owned for years and not cashed out to buy new cars, flat screens, etc.

     Shouldn’t borrowers/buyers go after their agents if they feel deceived?

     Similar to low rates reaping the reverse of intended results; more costs to help out those who can afford their homes; principal reductions will dramatically increase costs for society. People like you and many others will quit their jobs, rack up credit card debt, etc. to show need that did not previously exist.

     This is a slippery slope that will lead to much more heart ache than necessary if the government continues to bail out the crooks and fraudsters who got us here in the first place.

     I am all for the government allowing defaulting homeowners to keep people in their homes until they can be placed in more affordable housing, but mass principal reductions will be the demise of our Nation.

     First and foremost the government must disgorge and indict Thain, Fuld, Mozilo, Sandler, Killinger, Paulson and all the other crooks involved in this criminal conspiracy.

     Capitalize new banks and let the others fail in an orderly fashion. All existing management and board members should be replaced.

138. Susan Day Minerly Said:
     January 26th, 2009 1:04 pm

     Hello all:

     Obviously I am not making myself clear. Our government is thinking about nationalizing banks to profit the “shadow banking market”, not housing on taxpayers money. Is that what you want?

     Get real, you are absolutely right about our “elected” officials with one slight difference. Obama ran for office on the two main principles of:

     Change is what we need and will occur

     Share the Wealth

     He won based on those two principles. It is time to “come together” and demand that those two promises are enforced. How?

     In a mandate, similiar to mine. It doesn’t have to be mine but it can not protect the homeowners who did truly gamble on housing giving them a profit. There was no guarantee given.

     The mortgage the homeowners has, regardless of terms or sales price they paid, is what they agreed to, regardless of whatever mortgage product they used. It was their decision to take the mortgage out, without having a gun to their heads.(as most on this post like to point out)

     Accountability and responsibility applies to homeowners, as well as businesses. I believe Michael Bloomquest calls it Rule of Law.

     My plan corrects the homeowners from the results of the banks actions that harmed them, NEGATIVE EQUITY that is the only purpose of the mandate.

     You agreed to the mortgage terms including the monthly payment, stating or proving that you could in fact afford the payment. If you can not afford the payments you agreed to, then the bank has the right to foreclose, modify or accept less in principal to aid a sale.

     Yes, it will also correct the banks from all the outstanding adjustable mortgage still issued, that is a big problem still to come for the banks and us the taxpayers.

     Not everyone will receive a principal reduction, They will be entitled to it only if they recieved negative equity due to the banks actions of which they had no control of.

     Yes, a benefit of the mandate does lower the monthly mortgage payment for these homeowners.

     For those of you that argue, that housing prices got out of control, you are totally right. But it wasn’t just the banks actions and greed that increase prices, it was also all of us.(being the seller, buyer, financial employee or any employee of a company of a firm that benefitted from the housing and credit boom including retail etc..)

     It comes down to two choices, do we as a group want the capitalism or nationalism to prevail?

139. Kevin Said:
     January 26th, 2009 1:08 pm

     Susan,

     “Not everyone will receive a principal reduction, They will be entitled to it only if they recieved negative equity due to the banks actions of which they had no control of.”

     Nobody forced them to buy. If you bought a house in 2005 at double the price you would have paid in 2001, that is just plain dumb. That’s not the bank’s fault, that is your fault. You’re entitled to nothing other than: continuing your payments for the loan you opted for, or mail the keys back and walk away.

140. Joan Jett Said:
     January 26th, 2009 1:15 pm

     Javagold Said:
     you take your morals, contracts and laws and shove them up your ass, while my punk ass will sit in this house for many many years , as i am not losing $1 of equity because what anyone else thinks

     And Javagold Said:
     as for me i can afford my house and so i will stay but i believe principal reductions are the best solution

     And Javagold Said:

     HOWEVER if principal reductions are coming, and i think they are, i am making sure i get mine, that can be the easy way (PR for everyone) or it can be the hard way (i will screw everyone in my way ) but i am not going to sit by and make monthly payments while others live mortgage free for 12 months AND get a principal reduction as well wjile because i am paying on time, i get nothing….not happening, my days of being the good citizen/sucker are over !!

     Joan Said:
     Wow, The truth will set you free! I guess we are sitting on opposite sides of the fence fighting to get ours?

     This proves everything I was saying. If you give a Principal Reduction (PR) to one person then everyone else is going to want one too. Here’s the kicker people…are you listening Susan… the kicker is everyone will deserve it!

     In a Democratic, free society you cannot call one person more deserving than another and bestow a huge tax payer gift upon them and refuse the same to his nieghbor.

     So how do we determine who gets the gift? Income? Who would not convieniently get fired or demoted from a $40k job to get a $200k gift? The DINKs will have a field day and 100% will become SINKs in order to qualify for the windfall gifts. The self-employed will all strangely see a marked drop in income.

     What about the home debtors we determin do not qualify, lets call them the “others”. You have to understand that Javogold is not the minority, he is 99% of the “others”. This is the class action lawsuit sh@tstorm I have been talking about.

     Javagold, if I were in your position I would also want a gift IF, and only IF my nieghbor got a gift. If someone told me my nieghbor gets $200k because his wife got “laid off” and I get ZERO becuase I can still afford to pay, I’d go ballistic, drop everything and head strait to the closest attorney’s office. SO will EVERYONE else. Get it Susan? So will EVERYONE else.

     And Ex-owner, you are right too. Why on earth should the guy living FREE in the comfortable house get a gift and you who had the courage to face the facts and leave the comfortable house, get nothing? Double standard moral hazard if I every saw one. IF, we go down this crazy road you should get a tax payer funded gift sum equal to the 12 months the squatter dodged his $2500 per month payment. 12 x $2500 comes to a cool $30k the deadbeat has stolen from society, right? Why are only they allowed such a generious public gift of monies?

     What of us renters? Surely we too should get that $30k payment holiday gift, if the deadbeat house gambler got it??? Why not? Fair is fair! And when Susan’s daughter gets $100k PR (even though she can pay) and Javagold gets $200k PR (even though he can pay) and if Stu gets $200k PR (because he cannot pay) and Ex-owner gets $200k PPR (post principal reduction) because he had the courage to join us renters. Why wouldn’t renters get $200k?

     Susan, why wouldn’t renters get $200k too? Please write a hard to read dissertation on that.

141. Javagold Said:
     January 26th, 2009 1:17 pm

     well then just make 3% the FIXED RATE for all mortgages (not refis) from 2001-2007 and retroactive to when the houses were bought…..that way people are still responsible for the purchase price they agreed to (although no one will change my mind , this was done as a pyramid scheme and fraud and ALL bets/contracts should be off) but the banks are not MAKING EXTRA PROFITS ON THE HIGHER FRAUDULENT HOME PRICE/MORTGAGE (do not forget someone paying 6% interest at $500000 is more money for banks than 3% AND THIS IS NOT FAIR that banks are profiting from the fraud!!!)

142. Javagold Said:
     January 26th, 2009 1:20 pm

     that should be…6% interest at $500000 is more money for banks than $300,000

143. Susan Day Minerly Said:
     January 26th, 2009 1:27 pm

     JoanJett:

     Why would renters be entitled to a principal reduction as part of capitalism?

     Unless you want to call the decrease housing has been experiencing their share of principal reductions availability?

     Dee stated it best, stop and think, not about whether you can recieve a principal reduction or not.

     Do you want capitalism or nationalism?

144. Kevin Said:
     January 26th, 2009 1:33 pm

     Way to dodge the question, Susan.

145. Joan Jett Said:
     January 26th, 2009 1:43 pm

     Susan Day Minerly Said:
     January 26th, 2009 1:27 pm
     JoanJett:

     Why would renters be entitled to a principal reduction as part of capitalism?

     Joan said:
     Are you seriously asking that? How the hell can I get principal reduction if I don’t have a mortgage?

     Try to keep up here. If a house gambler gets a PR of $200k. Its $200k that will be transfered to the public tax burden. PR is not Monopoly money Susan, its a real cost some one has to pay.

     You get $200k PR, I get $200k for a downpayment, capiche?

     Susan Said:
     Do you want capitalism or nationalism?

     Joan Said:
     Comrade Susan, this is the funniest thing about you, like Willy Wonka said “strike that, reverse it”.

     Please understand that it is in no way capitalism if we allow PR gifts. That would be communism. I can’t tolerate reading your posts all the way thru, but I get a distinct “From each according to his ability, to each according to his need” flavor to your particular PR bailout beg line.

146. Javagold Said:
     January 26th, 2009 1:47 pm

     someone check with Kevin amd make sure he is still breathing , as after to just listening to Senator Kerry on CNBC, Principal Reductions are coming SOOOOOOOOOON

147. Stu Said:
     January 26th, 2009 1:52 pm

     Obama, and his team are ALL for “Cram Down” legislation. They have the support and the votes now to pass this (missed by 10 a year ago under Bush) and it is already drafted up and being sent around for viewing. This is going to happen. As a result of this the lenders will start doing principal write downs. It is either they do them or the judges do it for them. That is what the new administration wants from these lenders, but they are not listening. Now they will be forced to listen. It is what it is like it or not…

     MSNBC reported this yesterday: http://www.msnbc.msn.com/id/28846944/

     Excerpts:

     WASHINGTON – Most congressional Democrats say the quickest way to save homeowners like Troy Butler of Saginaw, Mich., is to let them declare bankruptcy and allow judges to dictate new mortgage terms.
     Easy, except the lenders that would absorb the pain — and lose control of any deals to ease the terms — do not want to get dragged into bankruptcy court by millions of overextended borrowers.

     A bill to give judges authority to alter loan terms for primary residences may be the quickest way to arrest the housing market’s collapse. Most Democrats in the House and Senate support that plan. President Barack Obama told Democratic leaders Friday he also backs it, according to a Senate aide who was not authorized to be quoted by name.

     The bankruptcy solution would not cost taxpayers money, as would mortgage modification programs that could become part of the government’s huge economic bailout package. But it certainly would harm the bottom line for lenders and investors holding mortgages.

     The key to passage of the bankruptcy bill is the Senate, where Democrats need 60 votes to stop a possible filibuster. Ten Democrats — all still in the Senate — would not back the plan in a vote a year ago.

148. Kevin Said:
     January 26th, 2009 1:58 pm

     “someone check with Kevin amd make sure he is still breathing , as after to just listening to Senator Kerry on CNBC, Principal Reductions are coming SOOOOOOOOOON”

     I laugh at you folks that think something is inevitable, even though you’re the only people in the world that think it’s going to happen. PR’s are coming? Well not like you would want, no. In very rare circumstances, banks or judges will reward the dumbass homeowner with a reduction. Been happening for a while now. But in most circumstances, that was not the case. I’ve heard nothing outside of this pro-PR circle-jerk site to suggest otherwise. And good luck undoing the massive flood of REOs about to hit the market:

     http://www.inman.com/news/2009/01/26/banks-unleash-flood-reos

149. BertDilbert Said:
     January 26th, 2009 1:59 pm

     Stu

     Wow, that is the world’s biggest lie…

     “The bankruptcy solution would not cost taxpayers money, as would mortgage modification programs that could become part of the government’s huge economic bailout package.”

     Either way, the taxpayers foot the bill.

150. Stu Said:
     January 26th, 2009 2:00 pm

     Javagold, I am surprised we are not seeing them already. Obama wants this too and he will get what he wants for the first 90 days or so I would guess. People can debate this all they want but it doesn’t mean it isn’t going to happen. Everything is on the table and the lenders screwed themselves by stealing the $200 Billion or so already. The Fed tried to get the lenders to loan and they thumbed their noses at the Fed. Now they are going to lend to homeowners via principal reductions. The tax payer is at least protected for now until some of these lenders start folding in which case we will have to pick up part of the tab. It will not cost us nearly as much as we would have if they kept doing what they were doing in giving our money away to everybody but us. At least some of the tax payer money will go to actual tax payers this way.

151. Joan Jett Said:
     January 26th, 2009 2:14 pm

     What of us renters? Surely we too should get that $30k payment holiday gift, if the deadbeat house gambler got it??? Why not? Fair is fair! And when Susan’s daughter gets $100k PR (even though she can pay) and Javagold gets $200k PR (even though he can pay) and if Stu gets $200k PR (because he cannot pay) and Ex-owner gets $200k PPR (post principal reduction) because he had the courage to join us renters. Why wouldn’t renters get $200k?

     You get a $200k PR tax payer gift, Renters get a $200k tax payer gift for a downpayment. Why not?

     Stu, Javagold, maybe you would like to join Susan in not answering this question?

152. Stu Said:
     January 26th, 2009 2:21 pm

     Bert Dilbert, no what they said in that statement is not a lie. The only way it cost tax payers any money at all is if some banks go under due to too many losses. Even at that the banks are not totally worthless, so we will only be on the hook for what the bill is after the FDIC gets done with them. That won’t be nearly as costly as what the Government is costing us tax payers right now with what they are doing. It is probably not a bad thing that some of these lenders go under anyway. I think it is no different than throwing money at the auto manufacturers when our Government keeps tossing money at these banks. Your correct in stating the tax payer is going to foot the bill, but how much of it are we destined to foot is the question I am more concerned about. The less we end up paying for the better as far as I am concerned. Call me silly.

153. Kevin Said:
     January 26th, 2009 2:24 pm

     “Stu, Javagold, maybe you would like to join Susan in not answering this question?”

     Joan, you know they aren’t going to answer it. We know the answer would have to be “I get mine, you don’t get yours”.

154. Javagold Said:
     January 26th, 2009 2:27 pm

     Joan Jett, you want a $200,000 gift down payment and LOWER home Prices, what a little piggy you are

     me i put down over $100,000 of my OWN HARD EARNED MONEY and that is what i am fighting for and protecting….nothing else

155. Stu Said:
     January 26th, 2009 2:28 pm

     Joan, renters will get the same thing I am going to get… nothing. I am ok with that if it makes sense for the country which I happen to think it does. It sucks, yeah I agree but I am so sick of watching our Government give away my grandchildren’s money that anything is better than watching it continue. Obama’s $1 Trillion money bomb is sure to cost us all even more. At least some actual tax payers and their families will get some of this money. Beats the hell out of giving it away to AIG for junkets, bank boardroom bonuses, CEO pay and auto manufacturing corporate jets etc..

156. Joan Jett Said:
     January 26th, 2009 2:33 pm

     Javagold Said:
     January 26th, 2009 2:27 pm
     Joan Jett, you want a $200,000 gift down payment and LOWER home Prices, what a little piggy you are

     me i put down over $100,000 of my OWN HARD EARNED MONEY and that is what i am fighting for and protecting….nothing else

     Joan Said:
     I’m not really putting an exact figure on what I should get, IF you get something. So how much do you want JavaGold? Just the $100k you put down?

     Then fair is fair, I only get a $100k for my downpayment.

     I certainly do not want to look greedy. Me I say no gifts for anyone, but if you get one, I get one, OK?

157. Kevin Said:
     January 26th, 2009 2:34 pm

     Javagold: “me i put down over $100,000 of my OWN HARD EARNED MONEY and that is what i am fighting for and protecting….nothing else”

     If you lost that money because you bought a house during the housing bubble, that’s a lesson you’d be best off learning from rather than demanding somebody else pay for it.

158. Joan Jett Said:
     January 26th, 2009 2:48 pm

     Stu Said:
     January 26th, 2009 2:28 pm
     Joan, renters will get the same thing I am going to get… nothing.

     Joan said:
     STu, I thought you said PR was imminent? Which is it? I am totally cool with nothing for either of us, and nothing for greedy CEOs, but that is not the question.

     The question is:
     You get the $200k (or whatever number you choose) PR tax payer gift you have been fighting so hard for, then we Renters get a $200k tax payer gift for a downpayment.

     Why not?

159. benzy Said:
     January 26th, 2009 2:49 pm

     Can’t you see the end result is going to be the same, PRs or not?

     The banks are not getting their principal back. The only difference from mass foreclosures and widespread PRs is:

     A. A temporarily dismal FICO score and a moving truck, or

     B. A static FICO score and the benefit of staying in your current home.

     Pick one. Who cares which scenario plays out? Current renters will pay substantially less for a home in both scenarios, as will current homeowners who walk. Because foreclosures will have to be forgiven – there are not enough Joans to occupy these homes at ANY price – current homeowners will be able to purchase soon enough.

     There is every reason to be content.

160. Javagold Said:
     January 26th, 2009 2:54 pm

     they should just lower all the fixed rates to 3% , that way i never have to listen to kevin or joan jett again

161. benzy Said:
     January 26th, 2009 3:03 pm

     they should just lower all the fixed rates to 3% , that way i never have to listen to kevin or joan jett again

     Java-

     Would you not rather pay 5% on a 250K house through the Gov’s new “Foreclosure Forgiveness” loan program then pay 3% on your 500k loan while the short sale piggies move in at half of what you paid?

     It’s a FICO score. That’s it. I can leave my home, no sweat. If you were approved for 500k on a standard 30-year you are in the same situation as I: A high mother f*cking earner with otherwise stellar FICO.

     Take solace, Java. Joan will be surrounded by the toy hauling piggies soon enough. And since she’s so motivated by oblivion to buy now now now! (sound familiar), she’s likely to pay 20% more than you will for your new luxury home that comes with a payment of around half of what your about to send to your lender tomorrow.

     Win, f*cking win brother.

162. Joan Jett Said:
     January 26th, 2009 3:11 pm

     Hey Javagold I just realized that our gifts will be the exact same thing:

     Javagold said:
     i put down over $100,000 of my OWN HARD EARNED MONEY

     Javagold wants his $100k downpayment.

     Joan gets:
     A $100k downpayment

     Again, why is this not fair? JavaGold???

     Benzy, welcome back!

     What do you think? Should current home owners and hope- to-be home owners get the same gift, if any gift is to be given? Or…. is the current home owner more deserving of help/aid? If so, why does the housing gambler deserve a tax payer gift and the responsible renter not? Why?

163. Javagold Said:
     January 26th, 2009 3:26 pm

     because i have been paying a higher monthly payment, then i should have had to, because of the ponzi scheme higher price AND because i have lost most of my CASH DOWN payment equity because of the same ponzi scheme fraud…..THAT IS WHY !!!!

164. Kevin Said:
     January 26th, 2009 3:36 pm

     In other words, Java made a bad investment and his loss should be paid for by someone else. I’d normally say that I am sorry for the loss of your hard-earned money (or was it a gift from mommy and daddy?), but your selfishness and sense of entitlement erases any sympathy to the point that I think you really did deserve to lose your shirt on a bubble purchase. You’re probably like the many people I met during the bubble, bragging about how their houses will make them rich.

165. Javagold Said:
     January 26th, 2009 3:39 pm

     kevin, go away , you are worthless and useless

166. Joan Jett Said:
     January 26th, 2009 3:40 pm

     JavaGold, Would that be the “same ponzi scheme fraud” that priced me out of housing and forced me to rent?

     The “same ponzi scheme fraud” that you willingly participated in and I responsibly stayed out of? You made a choice, I made a choice, we both got screwed, lets both get paid? Why not?

     Or are you saying that because you helped cause the mess you are the only one who should benefit from FREE money to fix the mess?

     I guess you could prove that it cost you more to cause the mess, than it cost me to have not caused it, but is that really any case for you getting FREE money and not me, when we will BOTH pay for the fix?

     Right?

167. benzy Said:
     January 26th, 2009 3:48 pm

     Joan, the homeowner is not getting a 100K gift. The bank is agreeing not to collect 100k from the note as a means of continuing to receive payments from the borrower as well as keeping the asset positive.

     If foreclosure makes more sense, then so be it.

     I don’t understand why you should receive a gift? Your benefit is embedded in the low home prices available to you. Should we all get a check every time the FDIC covers a loss?

     Are you even sane anymore, Joan? Or has the house buying imperative got you by the balls now too? Your ideas have evolved from judgemental, bigoted and out right nasty to delusional.

     I guess greed spares no victims.

168. Kevin Said:
     January 26th, 2009 3:50 pm

     Javagold is a selfish bubble buyer. Wants others to pay for his overpriced McMansion so he can buy more widescreen TVs and SUVs with his newly restored “equity”. Pretty hard to have anything other than extreme contempt for that kind of selfishness and abdication of responsibility.

169. Stevo Said:
     January 26th, 2009 3:51 pm

     LOL, more interesting stuff from this forum!

     Kevin your contributions are every bit as important as Javagold’s.

     Javagold, Stu, and Susan as an attorney I advise you to not answer Joan’s question as it will likely incriminate you and show your motives to be purely self-serving.

     You have done a good job of dodging a direct answer so far, keep it up, I see no out for you.

     It would be entertaining to see you try though.

     C.C. where are you, more stunning economic news out today, what’s your take?

170. Javagold Said:
     January 26th, 2009 3:53 pm

     joan jett and kevin have now become comical in their postings and i will no longer be part of it as they add nothig to the debate except for a lowlife ability to call people names

171. Kevin Said:
     January 26th, 2009 3:56 pm

     No, java, it’s cool. You want other people to pay for your house. You get a $100k gift because you made a poor investment. That’s how the game works, right? Surely if houses doubled in value again, any profit you made you would have gladly given to taxpayers or the bank. Don’t run away, I am starting to enjoy your self-serving rationale for taxpayers to pay for your house.

172. Stevo Said:
     January 26th, 2009 4:01 pm

     benzy Said:
     January 26th, 2009 3:48 pm
     Joan, the homeowner is not getting a 100K gift. The bank is agreeing not to collect 100k from the note as a means of continuing to receive payments from the borrower as well as keeping the asset positive.

     Stevo:
     Nice try, that’s ultra-lame though. Like someone else said, its not Monopoly money Benzy. Your $100k gift is real money that will be paid for by real people (us tax payers). Excuse me but…Duh!

     Benzy said:
     I don’t understand why you should receive a gift? Your benefit is embedded in the low home prices available to you.

     Stevo:
     Your gift is to lower your house debt, Joan’s gift would be to lower her house debt. Why is your house debt load more deserving of a gift than Joan’s is?

     Should we all get a debt every time the Benzy creates a loss?

173. benzy Said:
     January 26th, 2009 4:05 pm

     that’s ultra-lame though

     Stop lawyering me, stevo!

     I admire your chivalry, as does Joan.

     Otherwise, I completely disagree.

174. benzy Said:
     January 26th, 2009 4:08 pm

     You want other people to pay for your house

     Everyone is going to pay for my house when I bounce. That’s the beauty, Kevin.

     I go, I still make lots of money, and you pick up the tab.

175. benzy Said:
     January 26th, 2009 4:11 pm

     I am just amazed that some think the “deadbeat” homeowners are going to absorb the massive losses. It’s the banks, stupid. PRs or not!

     And since the Gov will surly have a majority stake in our banks by 2011, the losses are ours to share, regardless.

     Cheers!

176. Joan Jett Said:
     January 26th, 2009 4:13 pm

     Welcome back Stevo!
     I get it:

     Should we all get a check every time the FDIC covers a loss?
     Should we all get a debt every time the Benzy creates a loss?

     Benzy:
     You get a $100k tax payers gift which goes to the bank you are currently or contemplating shafting.

     I get a $100k tax payers gift which goes to the bank to cover my down payment.

     Each gift benefits us the same way, lower housing costs.

     Each gift is real money, each will be paid for by our kids.

     Why is your gift OK but an equal gift for the very same reasons and benefits going to me, not OK?

     Why?

177. Stevo Said:
     January 26th, 2009 4:20 pm

     benzy Said:

     Everyone is going to pay for my house when I bounce. That’s the beauty, Kevin.

     I go, I still make lots of money, and you pick up the tab.

     Stevo:
     Wow, talk about incriminating! Dude you just destroyed half the hard work people on this forum have put into defending cram-downs. Who’s side are you on?

178. Joan Jett Said:
     January 26th, 2009 4:32 pm

     The question is:
     You get the $200k (or whatever number you choose) PR tax payer gift you have been fighting so hard for, then we Renters get a equal tax payer gift for a downpayment.

     Why not?

     Stu, Java, Susan, BertDilbert, DEE??? Anyone?

     Chirp, chirp.

179. benzy Said:
     January 26th, 2009 4:36 pm

     Dude you just destroyed half the hard work people on this forum have put into defending cram-downs

     Hard work? Were you on the cusp of coming around to PRs there, stevo?

180. C.C. Said:
     January 26th, 2009 5:02 pm

     Greetings Stevo -

     What’s unsettling right now is the situation in the U.K. and how it may reflect a similar circumstance here at home. Take a peek at this:

     http://www.jsmineset.com/wp-content/uploads/2009/01/bwam012609.pdf

     Now the author may be correct, in that their situation is more critical than ours at the present. However, this short quote should remind us of what is directly down the road for us.

     “Furthermore, while the US banking problem can be resolved in part by printing dollars, the UK’s
     losses are global and, more often than not, are in currencies other than sterling.”

     Some mistakenly believe that the current period of asset de-valuation is going to last for years, but one should be reminded of how fast inflationary pressures can take hold once the yields begin to reverse. Keep in mind, that although asset prices are tumbling, money supply is not.

     The ‘crash’ as it were, was stunning in its speed and strength. It is my contention that as fast as the collapse took place, so shall the speed at which stifling inflation, by way of $$ easing will also take place. The delta is of course, when.

     We could very well have continuing asset devaluation, while at the same time have price inflation in areas not related to housing and other big-ticket items – such as food, fuel and other necessary every-day consumables.

     I know this isn’t ‘directly’ related to the mortgage problem discussed here, but hopefully it will help some to get a jump and do a bit of ‘house cleaning’.

     Never hurts to stay frosty and prepared -

     C.C.

181. BertDilbert Said:
     January 26th, 2009 5:39 pm

     CC

     I have to agree with Mish on this inflation thing.
     http://globaleconomicanalysis.blogspot.com/2009/01/is-big-inflation-coming.html

     I have known Adam for years and respect his work. However I have to see money being created faster than it is disappearing, and wage inflation to boot. Right now the dollar is about the best there is out there, even though it sucks.

     You show me what is going to create higher prices. I say demand and there is currently no demand for anything, people are tight fisted. There may be a point down the road, but we are going to have to bottom out here first. Even if Obama prints gobs of dollars, everything is behind the curve and they are playing catchup to a falling knife.

     Now if the currency were to take a dive, you might get higher prices from that, but inflation via higher wage demands will still be non existent. Until wage demands have the ability to increase, higher prices will not have momentum.

     The US is still way behind Japan on debt to GDP, therefore the yen will likely bite the dust first before the USD.

182. C.C. Said:
     January 26th, 2009 6:10 pm

     Bert -

     I know…

     The inflation/deflation argument is huge in the wonk-O-sphere. However… Refer to my comment about food and consumables vs. big-iron purchases. Then, take a look at this little piece:

     http://www.yumsugar.com/2727272

     Catch this little tidbit?:

     “According to the organization, the cost of flour rose by 30 percent, assorted cooking oils by 40 percent, and cocoa by at least 20 percent. The company felt this was the best method of dealing with increasing raw material prices. Alternatively, Girl Scouts could have used cheaper ingredients, or raised cookie prices from their current price of $3.50 per box.”

     How can this be? I thought there was ‘Demand Destruction’ everywhere and omnipresent?

     - Flour
     - Cooking Oils
     - Cocoa

     Those might be consumables that a nation needs to survive, no? Core CPI is BULLSH!T. And anybody who travels regularly to the grocery store knows it. When you insert little manipulations into the Core CPI numbers like Hedonics, Geometric weighting and Substitutions – much like Greenspan did with his Steak vs. Hamburger comparison, anything is possible with the numbers.

     I don’t see a whole lot of demand destruction in the grocery store of late.

     And long about the next geopolitical spat in – oh, close your eyes and pick a spot on the globe, we’ll see just how much demand destruction there is at the gas pump…

     Leased off-shore tankers full of oil in lieu of the ‘paper’ version? I can’t imagine why…

     We’ll see though Bert. Unfortunately, we could both be right. Either way, the thermometer for this economy reads:

     Well-Done.

     Talk at ya soon -

     C.C.

183. BertDilbert Said:
     January 26th, 2009 6:29 pm

     CC

     Yeah, so the doughnut shop complained as well, However we still need to see wages move to the rising cost, and there is no pricing power out there right now.

     Employee: I need higher wages. Employer, sorry can’t do that right now… BTW, we are cutting across the board, are you staying or going? See, there is nothing to give wages momentum to higher prices so you stagnate and suck it in. This is the real story. Until wages can move, you are just stuck with higher prices.

184. Stu Said:
     January 26th, 2009 6:34 pm

     Joan, I already told you that you get the exact same thing that I get… NOTHING!!!

     The difference between us however is that I am OK with that.

     I want this:

     1. I want Something done that will help famlies and help to stabalize the economy.

     2. I want lenders reducing principal as a tool to do that.

     I don’t want this:

     1. I don’t want any future tax payer bailouts of any kind.

     2. I don’t want a BS fake stimulus plan from our Government to pass.

     3. I don’t want to witness another 3-5 million foreclosures in this country.

     The way I see it you can have what I suggest or what the Government is doing today. I see my suggestion as a much better solution than just doing a money grab of future tax payer money and shoving into the pockets of wealthy CEO’s. I really didn’t like hearing today that Citi is buying a $50 Million plane for their board members with part of our tax payers dollars. I don’t like the fact that their are lobbyist being paid by these companies we have bailed out working against what is in the best interest of tax payers. Call me crazy but having tax payers pay for parties and junkets by AIG was a tad in your face don’t you think?

     You may like the road we are on, but I want to stop it now and try a new approach where if your going to benifit someone with future tax payer money, maybe it should be the actual tax payer that benifits for a change!!

     I would rather see a check for $10K sent to every single household over what we have witnessed to date!!!

185. benzy Said:
     January 26th, 2009 6:54 pm

     Stu, stop projecting levity, compassion and cogency and in place delve down to their level. Hurl insults. Act like a callous and arrogant ass. It’s the only to play with them.

     I’ll show you how it’s done:

     Q. What’s benzy’s favorite RE term?

     A. Non-resource.

186. benzy Said:
     January 26th, 2009 6:55 pm

     Whoops – Non-recourse. Jokes on me!

187. Joan Jett Said:
     January 26th, 2009 7:39 pm

     Stu:

     We have found common ground. $10k to the people, Zero PRs, Zero down payment aid, Zero CEO bonuses, Zero planes.

     I can live with that, and I bet it would give a good healthy thrust to the ecomony’s kick starter as well.

     We should re-aquire all the Wall Street bonuses and re-distribute them as well. If we do not punish those guys then all the productivity we create going forward will be stolen by them all over again.

     Stu votes no PR for him and no down payment for Joan. Joan agrees.

     Now for Javagold, Susan, DEE and BertDilbert to answer the question……

188. Susan Day Minerly Said:
     January 26th, 2009 7:41 pm

     Thank you all for missing me.

     I did answer your question, about where is your bailout. There is none.

     If you read my post, you would understand that banks/servicers/investors of mortgages are intentionally harming the financial stablity of homeowners placing them underwater to obtain their own “principal” back.

     If you read my post, without jealously,you would also understand that the “recall” I speak of is between the bank and the homeowner. Those are the only two parties involved and the only two parties that will benefit and lose from the principal reduction required.

     This letter/proposal was sent in September 2008 to all senators and the FDIC BEFORE they spent my grandchildrens money to continue Wall Streets greed.

     The fact that some banks will fail,is their own fault, but it should not cost the taxpayer anything.

189. ex_owner_now_renter Said:
     January 26th, 2009 7:56 pm

     Someone please tell me when in the past… has the mort balance has EVER been reduced?

     90’s?
     80’s?
     30’s?

     I’ve tried to find out.. and nothing.. WHY CHANGE IT NOW?? r we changin the MODEL??

     reduction for some and not (inflating) every citizen.. we’ll have bad consequences… take your situation ouf your mind for a moment pls..

     CONSIDER THIS:
     - reduction after reduction (more in debt for generation) no end to it
     - high interest coming
     - high food prics coming (salaries won’t be able to catch up)
     - people will BUY EVEN LESS! that’s right..companies they’re going to layoff even more
     - people will be starving, and dollar loosing POWER
     - can’t import can’t produce
     HOUSING WILL REMAIN LAST THING ON EVERYONE ELSE’S MIND while survival becomes first…

     with inflation out of control (very soon) and no jobs
     CAN’T BUY ANYTHING, CAN’T IMPORT – investors loose faith in our market..

     WE’RE GOING DOWN…… stop! and THINK!

     IT’S NOT AMERICAN TO ASK FOR A BAILOUT! We need JOBS now, we need LEADERSHIP we need more money for consumers, we need confidence WE DON’T NEED THIS CRAP… it’s just money.. take the hit LEARN SOMETHING, AND move on america!

190. ex_owner_now_renter Said:
     January 26th, 2009 7:58 pm

     If you lost your home.. .save and soon buy another!
     If you lost $ in a home that you have now.. well go buy that second home!
     If you’re a renter, you probably save.. go buy a home!

     If you guys all buys homes right now, I may be left behind.. that’s ok – i’m not greedy I’M SAVING FOR MY NEXT.. but stop asking for bailout and let the market WORK!

191. ex_owner_now_renter Said:
     January 26th, 2009 8:01 pm

     depresion is simply leveling out the field.. more pp can buy at cheaper prices (more pp can buy a second home).. .eventually it will turn around.. it always has, DON’T MESS WITH THE MODEL, participate!

     or let the gov take completely over the model! like I said no more gain no more bank lending, control pricing etc… do you want that??

     or do you want unintended conesquences? keep asking for bailouts

192. benzy Said:
     January 26th, 2009 8:13 pm

     Someone please tell me when in the past… has the mort balance has EVER been reduced?

     http://www.answers.com/topic/home-owners-loan-corporation

     “In June 1933, the Home Owners’ Loan Act, following the president’s lead, sailed through Congress. The law authorized $200 million to set up the Home Owners’ Loan Corporation (HOLC) with authority to issue $2 billion in tax-exempt bonds. The money raised would enable the HOLC to rescue imperiled mortgages by offering financing up to 80 percent of assessed value“

193. Average Jane Said:
     January 26th, 2009 11:04 pm

     Absolutely astonishing front-page story in my local newspaper today.

     Spotlight on an elderly couple who bought their townhome 27 years ago. Now they want to both go into assisted living. Claim they cannot “afford” to sell their townhome now; they should have sold it a couple of years ago when prices were higher. Their retirement savings devastated in the recent market upheavals.

     I just don’t know where to start. Questions that apparently were not asked and answered in this story of the Troubles on Main Street America.

     Would you not think that if they bought their townhome 27 years ago it would have been paid off by now or close to it? Gee, maybe a couple of thousand left? The price could not have been much more than oh, I don’t know, maaaybe $30,000 back then?

     And somehow these folks banked their retirement on the assumption that the “value” of their townhome would simply keep rising? Whom did they think was going to be able to afford to buy it when the price got too high for anyone to afford? Did this not occur to them?

     And finally they “regret” not selling their TH to some poor dumb sap for some outrageous price a couple of years ago? Huh?

     The worst thing is, they quite literally banked their golden years on the assumption, nay, certainty to them, that home prices would just continue to go up and up and up. Did they not live through the RE crash of the late 1980s and early 1990s?

     How many of our elderly folks thought the same way? How many of all of us did?

     I am simply astounded. And immensely grieved.

     The moral of the story, of course, is there are many, many folks out there like this. And many of them can’t afford to sell their homes now, at least not until prices “come back to where they were a couple of years ago.”

     Oh. My. Gawd.

194. ex_owner_now_renter Said:
     January 27th, 2009 2:13 am

     benzi,

     It wasn’t for all mortgages and it was during 1933-1936. If anything will have to see how bad it gets, and it will be sometimes around 2012-2013. The price bottom was reached in 1936.. and interest rates went way up, income way down.. the high interest stayed for good 20 years, and the umployement was 14%+ for many, many years… the crazy inflation will start and stay for a long time, while incomes will drop… it has droped 40% during last depression..

     Keep asking for it.. the greatest depresion is here!

195. ex_owner_now_renter Said:
     January 27th, 2009 2:15 am

     if you consider loss of income, and high interest for years, with high unemployment, and roaring inflation to start within few years.. the loss in home prices will continue for years… 20!

196. Kevin Said:
     January 27th, 2009 10:24 am

     Average Jane: “Would you not think that if they bought their townhome 27 years ago it would have been paid off by now or close to it?”

     Goes to show that it’s not just bubble buyers that are drooling in their own stupidity and greed. Sure, there are a lot of Javagolds out there that feel entitled to a reimbursement for poor investments (while keeping all profits, of course!), but there are also people that just HAD to tap the home ATM. The old couple probably blew the money at the casinos. They should owe close to nothing on their house. Considering that we’re still at 2004 level prices in many areas, they could still sell now for a bubbled price. But they are stupid and greedy, and deserve to fail.

197. Average Jane Said:
     January 27th, 2009 9:10 pm

     Kevin, there’s obviously more to this story. One detail I forgot was that the couple stated if they sold today they’d lose $45,000. I mean, I just cannot comprehend this. How many HELOCs can one mortgage support? It’s a townhome, for pete’s sake, not a McMansion.

     The other horrifying thing (at least to me) is that there are so many homeowners out there who actually do expect home prices to come roaring back to where they were at the top of the bubble. They simply must come back, they simply must. Right? Any day now. Right?

198. Joan Jett Said:
     January 27th, 2009 9:38 pm

     benzy Said:
     January 26th, 2009 8:13 pm
     Someone please tell me when in the past… has the mort balance has EVER been reduced?

     http://www.answers.com/topic/home-owners-loan-corporation

     “In June 1933, the Home Owners’ Loan Act, following the president’s lead, sailed through Congress. The law authorized $200 million to set up the Home Owners’ Loan Corporation (HOLC) with authority to issue $2 billion in tax-exempt bonds. The money raised would enable the HOLC to rescue imperiled mortgages by offering financing up to 80 percent of assessed value“

     Joan said:
     Benzy you old scalliwag! What a hoot you are. The questions Ex-owner put forth was:
     “Someone please tell me when in the past… has the mort balance has EVER been reduced?”

     That link you provide says nothing about PR because there were none, and the article was not about PRs. HOLC was an acronim for “Home Owners’ Loan Corporation”, NOT “Help Our Losses Corp”.

     Are your a proffesor of Goofalogy or do you hold a full blown Doctorate?

     Just to humor you and spend a little time in Benzy-land, lets say we play along and pretend it is about PR. There are more mortgages now so lets take that $200 million and and make it $2 billion, OK?

     That will just about cover Corona…..LOL!!!

199. Joan Jett Said:
     January 27th, 2009 9:44 pm

     That’s Corona California, not the beer. $2 billion in beer is too much beer.

     Average Jane I will help you with your dilemma concerning the old people. Stop blowing forehead veins, they rode the Re-fi train and the HELOC Harley into next week and beyond.

     Kevin is probably spot on about the casino being the major beneficiary.

200. Michael Blomquist Said:
     January 27th, 2009 11:06 pm

     Somebody get this data to the talking heads on CNBC.

     Buyers still need to be warned, especially those in the bubble markets. Today’s buyers will be whining for more bail outs once the Option ARM implosion hits and all this inorganic inventory hits the market.

     This data from MM, the following chart

     http://www.michaelblomquist.com/images/RateResets.png

     The ONLY people who should be bailed out are the pension, mutual, insurance funds, etc. who were duped by inept/corrupt money managers and regulators.

     We are still in the discovery stage. Today’s loan mod could be tomorrow’s bank bail out or TARP XX

     Let the banks fail and start anew.

     First and foremost…Ken Lewis and anyone else who is still in a high position at the big institutions should be removed from office immediately. They will be too concerned with concealing their crimes than implementing viable solutions. Those who have Made-Off like bandits should be treated accordingly – indicted and disgorged.

     1) If you have owned your home for 5+ years and believe foreclosures are hurting your equity… The equity you acquired over the last few years in the bubble markets was based on fraud; you could have sold. We can’t bail you out anymore than dot.com investors received bail outs.

     Yes our government should have maintained safe, sound and stable markets, but our government is a reflection of our own laziness. Get off your A$$ and demand disgorgement and rule of law. Hopefully you still have your home and it will always be affordable.

     2) If you committed fraud to purchase your home you deserve NOTHING! You should be thankful you have not been indicted on felony loan fraud charges. If you feel you were duped by your agent(s) send me an email and I will help you find a class action attorney. Perhaps you will be entitled to the settlement with Countrywide.

     3) If you could afford your home and were “deceived” to believe that home prices were predicated on realistic lending practices and sustainable you were reckless at best. Fear, greed and a bad agent got the better of you; if you feel you have been cheated go after your agent…that is why they are paid to act as your fiduciary; to be well informed of industry and market guidelines/conditions.

     If your loan or real estate agent worked with a big company you are luckier than others. If you need help finding representation once we collect enough names I can help you find class representation.

     email: michaelsblomquist@gmail.com

     4) Banks should be forced to account for current market values of their REOs; todays values will be inflated, but necessary to reflect the gravity of our situation and this will support the need for new banks with clean balance sheets. Give unemployed real estate agents the opportunity to do $75 BPOs and witness the destruction they promoted. The pools where all of this toxic waste is residing are evaporating. Before long there will be no liquid left.

     5) Make all executives at the lenders serve 2000 community hours at the soup lines in addition to disgorgement and whatever happens in court.

     This was NOTHING less than a criminal conspiracy. If the Executive and Legislative (reps) are not going to uphold rule of law let’s do it through the media and judicial branch.

     The banks are insolvent. Please stop with the fantasy that the lenders will eat the costs of cram downs.

201. Joan Jett Said:
     January 27th, 2009 11:21 pm

     Michael Blomquist said:

     “The ONLY people who should be bailed out are the pension, mutual, insurance funds, etc. who were duped by inept/corrupt money managers and regulators”

     Joan Said:
     Good post, well said. I could not agree more. I think it is so laughable that the MSM threw the public raw meat in the form of the poor UAW worker with that fabricated $70 an hour BS. The MSM has actually convinced most Americans that the other guy’s pension is frivolious or greedy. They got us chewing on each other while the Wall Street crooks skulk away with billions.

     And the part about punishing Realtors, thats good too, full support here! Man oh man, does it take a genius to figure out that most people will say or do just about anything to make $29,000.00 for two hours worth of lieing (oops I mean two hours worth of work, it was work they did, deffinately work, sorry Realtors).

202. Joan Jett Said:
     January 27th, 2009 11:23 pm

     Hey STu and Susan I think that last line of Michael Blomquist’s wonderful post was directed at you?

203. benzy Said:
     January 28th, 2009 12:51 am

     Joan-

     It’s interesting you mention the UAW union, because I consider your opinion as about as obtuse, callous and judgemental as one who’d applaud the suffering of a worker for picking the wrong industry to work in between 2003-07.

     One can argue that the UAW worker had the same indicators of a fledgeling status quo as did the bubble buyer. They after all, earn well above the national and regional average in income despite their major skill being limited to bolting seats and shit to a chassis.

     You know, they could have gone to night school and learned how to process soy or install or solar panels.

     Re: HOLC – I must give you a hand noticing that the words “principal reduction” were not explicitly stated in the link. You are certainly sharp for a renter.

     What is implied is that the loans were rewritten based on the current assessed value at the time when assets values were deflating (keep with me). An assumption has to be made that the new assessed value was (here’s the kicker) LESS in 1933 than it was in, let’s say 1930.

     Here’s your homework, Joan:

     Did the Gov buy HOLC mortgages for more, the same or less than the underwritten value?

     Feel free to contemplate the answer while pacing in your car port.

204. Susan Day Minerly Said:
     January 28th, 2009 1:11 am

     Banks have assets, pay ridiculous salaries and bonuses,still pay for lobbying, still pay divendends, they are not insolvent yet. Let them pay for their business decisions before asking taxpayers to.

205. Susan Day Minerly Said:
     January 28th, 2009 1:49 am

     You write well Michael, but I don’t see any relief or recovery for the housing market with your plan.

     How does revenge against “CEO’s” correct the downward cycle of housing? How does it help correct our economy?

     I am not an attorney, but common sense tells me that “CEO’s” are going to point the blame for creating the exotic/special programs to our government, stating they were complying with their directions and regulations, no judicial relief.

     They operated within our banking department rules/laws, again no judicial relief.

     While dumb and greedy, the credit default swaps are the main reason our financial system is falling apart, of which there was no criminal intent nor regulatory oversight for, just greed.
     This is the only gambling that was really being done in housing by Wall Street.

     Since you seem to be better informed than I, would you happen to know exactly how much in mortgage assets the “banks” own versus the private investors of the MBS?

     According to the Federal Reserve web site the total amount of mortgages outstanding is 12.1 Trillion Dollars.

     If the banks owned all 12.1 Trillion Dollars of outstanding mortgages and the entire total was issued within the last five years and had to be reduced by 40% to conform to the present value, the total “loss” would be 4.84 Trillion Dollars.

     Since we know the above is no where near true, why the following:

     Taxpayers funds have been spent, outlaid, guaranteed to Wall Street to the tune of over 7 Trillion Dollars.

206. ex_owner_now_renter Said:
     January 28th, 2009 1:51 am

     Benzi Benzi Benzi.. good one.. You had me going for a while, which got me to do a full 4 hour research into the issue..

     We are not close to the problems in ’30s.. similar but not there yet…so far just a bad recession.. past results do no garantee the present.. It’s going to be a long time before balance reduction if any! (and not for all)

     With the next tsunami coming that’s going to last few years, why would the government help someone like Javagold now.. rather than see the full impact first..

     Not to mention that FORCLOSURES are the way the market heals itself .. it’s NORMAL! and within the AMERICAN MODEL!

207. ex_owner_now_renter Said:
     January 28th, 2009 1:59 am

     iT would make more sense to help buyers to get in, help with a downpayment or SOMETHING! remember supply and demand?? lots of supply and no demand..

     Why do you think the $7500 credit toward buying a home passed?.. the problem is that is too little and in this information age… lots of potential buyers are still waiting.. I SAY RAISE THE HELP to get in.. if anything! lower FHA’s requirements from 2 year wait to 1 year!

     The person loosing today .. would have a 1 year of saving.. (staying in a home without paying).. and another 1 year to rent and THINK!.. then buy again.. PROBLEM SOLVED!

208. benzy Said:
     January 28th, 2009 2:18 am

     Thanks for doing the leg work, ex-renter. No protest from me.

     Perhaps we should call Joan in from the carport?

209. ex_owner_now_renter Said:
     January 28th, 2009 3:15 am

     Anything for you Benzi!

210. Mr. Mortgage’s Guide to the TRUTH! » Citi to Follow Chase out of … | Mortgage Info blog Said:
     January 29th, 2009 6:23 am

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