Clipmarks | Subprime mortgages Clips

Goldman Sucks’ new role: Taking Your Homes

Tue, 03 Nov 2009 01:12:35 GMT

clipped by: sahara
clipper's remarks: The couple alleges that Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender, even after they wrote to Goldman’s then-Chief Executive Henry Paulson — later U.S. Treasury secretary — in 2003.

Unable to identify a lender, the couple could neither capitalize on a mortgage hardship provision that would allow them to defer some payments, nor on a state law enabling them to offset their debt against separate, investment-related claims against Goldman.

In July, the Beckers won a David-and-Goliath struggle when Goldman subsidiary MTGLQ Investors dropped its bid to seize their house. By then, the college-educated couple had been reduced to shopping for canned goods at flea markets and selling used ceramic glass.
Theirs is an infrequent happy ending among the hundreds of cases...

Clip Source: blog.puppetgov.com

When California wildfires ruined their jewelry business, Tony Becker and his wife fell months behind on their mortgage payments and experienced firsthand the perils of subprime mortgages.

The couple wound up in a desperate, six-year fight to keep their modest, 1,500-square-foot San Jose home, a struggle that pushed them into bankruptcy.

The lender with whom they sparred, however, wasn’t the one that had written their loans. It was an obscure subsidiary of Wall Street colossus Goldman Sachs Group.

Goldman spent years buying hundreds of thousands of subprime mortgages, many of them from some of the more unsavory lenders in the business, and packaging them into high-yield bonds. Now that the bottom has fallen out of that market, Goldman finds itself in a different role: as the big banker that takes homes away from folks such as the Beckers.

Goldman spokesman Michael DuVally declined to comment on individual cases or on the firm’s new role in bankruptcy courts.

The Real Culprit in the Housing Crisis

Sun, 01 Nov 2009 22:43:43 GMT

clipped by: mklosinski
clipper's remarks: If the financial crisis was caused by subprime mortgages and predatory lending, the government’s own policies made it happen.

Clip Source: www2.timesdispatch.com

This idea underlies the Obama administration’s proposal for a Consumer Financial Protection Agency. The link to the financial crisis—recently emphasized by President Obama—is that these mortgages would not have been made if regulators had been watching those fly-by-night mortgage brokers.

There was always a problem with this theory. Mortgage brokers had to be able to sell their mortgages to someone. They could only produce what those above them in the distribution chain wanted to buy. In other words, they could only respond to demand, not create it themselves.

Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations.

The left cannot have it both ways, blaming the private sector for subprime lending while absolving the government policies that created the demand for subprime loans.

Tags: housing, government

Barney Frank: Predatory Lender

Sun, 25 Oct 2009 21:12:18 GMT

clipped by: crmestler
clipper's remarks: Why is Barney Frank still in charge of the Financial Services Committee? Last years FNMA, FHA (GSE) loans are this years foreclosures. How is that working out for taxpayers. And in addition, lets keep non-paying borrowers in homes for 2 - 3 years without paying. How much is that costing taxpayers. Maybe cheaper to give those borrowers a big Cash for Keys check rather than continue to have a non-paying asset and cost of continuous litigation for a barrage of new federal mandates and state legislation that fuels plaintiff attorneys.

Clip Source: online.wsj.com

Recent reports that the Federal Housing Administration (FHA) will suffer default rates of more than 20% on the 2007 and 2008 loans it guaranteed has raised questions once again about the government's role in the financial crisis and its efforts to achieve social purposes by distorting the financial system.

The answer, of course, is that it was government policy for these poor quality loans to be made. Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market.

The left cannot have it both ways, blaming the private sector for subprime lending while absolving the government policies that created the demand for subprime loans. If the financial crisis was caused by subprime mortgages and predatory lending, the government's own policies made it happen.

Tags: foreclosures, legislation

ACORN foresaw the foreclosure crisis in 2001

Fri, 23 Oct 2009 19:18:53 GMT

clipped by: Lexica
clipper's remarks: More:

Moreover, Oakland's law would have gone much farther than requiring that borrowers could afford loans. In 2001, ACORN officials already recognized that the driving force behind the subprime lending was the ability of brokers to chop up risky mortgages, repackage them with good loans as "securities," and sell them to other banks on a largely unregulated market. When homeowners who couldn't afford their loans later defaulted on them, these securities became widely known as "toxic assets" and were the primary cause of the world financial crisis…

But if Oakland's law had been widely adopted, the bailout likely would have been unnecessary and the worst economic downturn since the Great Depression probably averted. Why? Because the city's ordinance not only would have held mortgage brokers liable for making bad loans, but also every other bank that later bought pieces of those bad loans after they were securitized. In short, the market for subprime loans would have dried up.
Clip Source: www.eastbayexpress.com
The grassroots group helped Oakland pass a tough anti-predatory lending law that would have halted the housing crisis before it started. Then subprime lenders started making campaign contributions in Sacramento.
Back in the late 1990s, ACORN was acutely aware of the grave dangers posed by subprime mortgage lending because of the group's close work with low-income property owners. ACORN officials were witnessing first-hand how unscrupulous lenders were enticing people to buy homes they couldn't afford and advising long-time homeowners to strip out all of the equity in their homes. The group then saw those very same people lose everything when their subprime mortgages kicked in and low-income neighborhoods were devastated.
in 2001, ACORN helped sponsor anti-predatory lending laws in Oakland and a few other cities around the nation that would have greatly curtailed the subprime market
would have prohibited subprime mortgage lenders from making a loan unless the borrower could afford it

Tags: acorn, oakland, mortgages, housing, econopocalypse

the giant hole

Sat, 10 Oct 2009 05:52:42 GMT

clipped by: reinhmr
clipper's remarks: What this argument leaves out is Fannie and Freddie. The evil and greedy bankers (curiously intent on making loans that could not be repaid) were able to sell these loans to Fannie and Freddie. If there had not been these quasi-governmental corporations backing them they would not have been making loans and they would never have been capitalized. It may be true that there was a "giant hole" in the safety net, but the truck that drove through it was financed by the government's own creatures.

Clip Source: www.huffingtonpost.com

University of Michigan Law Professor Michael Barr, a specialist in banking and finance law, flatly rejected claims that the CRA was "a significant factor in the current crisis. CRA was enacted more than 30 years ago. It would be quite odd if this 30-year old law suddenly caused an explosion in bad subprime loans from 2002-2007....Subprime mortgages were mostly made by mortgage brokers and lenders and securitized by investment banks -- institutions not covered by CRA," he told the Huffington Post, adding, "CRA only covers banks and thrifts, and these institutions mostly have not suffered to the same extent or kind from bad lending as the non-CRA-covered institutions at the core of the current crisis. The problem here is not CRA. It is what the late former Fed Governor Ned Gramlich called 'the giant hole in the supervisory safety net' -- bad lending by firms outside the banking sector's rules for prudential supervision, capital requirements, consumer protection and yes, the CRA."

Do The Maths...the US Banking System is INSOLVENT !

Tue, 29 Sep 2009 23:37:47 GMT

clipped by: leevardi
clipper's remarks: .......read the full article for the maths analysis

Clip Source: market-ticker.org

The Banking System Is Insolvent

Following up on the quick mention now that I have a story to cite from Amherst:

Cure rates for these distressed loans remain low. Amherst noted a near 0% cure rate of all loans in foreclosure, 0.8% for 90 plus days delinquent, 4.4% for 60 days delinquent and 26.5% for 30-day delinquencies. All told, Amherst expects 12.42% of units (from the 13.54% of properties delinquent and in foreclosure) to eventually liquidate.

Let's put some numbers on this.

There are roughly 125 million single-family homes in the US.

Of those, roughly 30% have no mortgage on them at all. This leaves 87.5 million single-family homes with mortgages.

Let us assume the average outstanding balance is $200,000 across the entire set and will take a 40% loss severity. This is less than S&P has estimated for subprime loans and only assumes a roughly 20% market deficiency in the home price (the rest is from legal, rehabilitation and marketing expenses.)

620

Mon, 21 Sep 2009 15:52:51 GMT

clipped by: bgronlund

Clip Source: www.tnr.com

Soon forthcoming in the top-ranked Quarterly Journal of Economics is a very well- received paper by four economists with convincing evidence of what many believe was the primary cause of the subprime boom and bust: That securitization took away the incentive for lenders to properly vet borrowers.

But there's some new evidence questioning the paper's findings. To understand the how and why, we have to get into the nitty-gritty of the empirics.

If you plot FICO (i.e., credit) scores against the number of mortgages outstanding, you'll notice a peculiar pattern:

In the 1990's, Fannie and Freddie released research showing that about 50% of defaults are associated with borrowers who have FICO scores below 620. That happens to be where the biggest jump in the graph above takes place, suggesting that the industry looks far more kindly on a borrower with a score of 621 than a borrower with a nearly identical score of 619.

Breaking: ACORN Bombshell #4 Due From BigGovernment Tomorrow

Tue, 15 Sep 2009 03:10:29 GMT

clipped by: merrie
clipper's remarks: ACORN and Obama at the Heart of the Mortgage Meltdown

Starting in the nineties, a young attorney named Barack Obama began working with ACORN to promote mortgages for those who could not afford them.

At the time, ACORN consisted of community agitators, who falsely accused banks of "redlining" (failing to offer mortgages to the urban poor). These groups would pack bank lobbies and harass customers in order to intimidate the institutions and force the government to lower underwriting standards.

A former community agitator and ACORN attorney named Barack Obama sued Citibank in 1994, just one of hundreds of nuisance lawsuits filed by ACORN and its affiliates to loosen mortgage underwriting standards.

The inevitable result is still unfolding. But this much is clear: ACORN, its attorneys and its sycophants in Congress unleashed a catastrophic meltdown on America. It used government power to to force financial institutions to underwrite completely unqualified applicants . .

Clip Source: directorblue.blogspot.com

Tonight on Fox News, Andrew Breitbart unleashed a salvo heard round the criminal-sphere. He promised the video release of another blockbuster sting operation tomorrow -- which would be number four, for those counting -- involving ACORN on his new BigGovernment website.

Obama campaign scrubbed its website to hide ACORN lies

Here's the Google cache's copy of Barack Obama's official "Fight the Smears" website regarding the candidate's involvement with the vote-fraud specialists known as ACORN

Well, that was the website before Audacity of Hypocrisy located a vintage ACORN article online.

Moments after this revelation, Obama's "Fight the Smears" was hastily -er- repaired.

Obama in 2007: ACORN will shape my presidential agenda

Deepak Bhargava is a director of the Center for Community Change.

Translated: Bhargava and ACORN helped set the stage for the subprime mortgage fiasco.

we'll be calling all of you [community organizers] in to help us shape the agenda."

Yes we can!

Tags: crime, democrats, economy, obama, andrew breithbart’s, http://biggovernment.com/

New FHA Foreclosures Jump

Tue, 25 Aug 2009 16:42:12 GMT

clipped by: crmestler
clipper's remarks: As FHA continues to offer loans with little money down, and as home prices continued to decline from last year, its no surprise that delinquencies and foreclosures from newly originated FHA loans (last 12 months) are increasing.

Clip Source: www.mortgagedaily.com

The share of U.S. mortgages that were either delinquent or in foreclosure surpassed 13 percent and reached an all-time record, according to a new trade group report. Foreclosures on loans insured by the Federal Housing Administration "saw a major jump," but new subprime foreclosures fell as VA performance improved.

The Mortgage Bankers Association reported today that seasonally adjusted delinquency of at least 30 days, excluding foreclosures, was a record 9.24 percent in the second quarter. The findings were based on 44.7 million outstanding residential mortgages.

Prime delinquency increased from the first quarter's 6.06 percent to 6.41 percent, while subprime late payments crept up to 25.35 percent in the second quarter from 24.95 percent. FHA delinquency, meanwhile, rose to 14.42 percent from 13.84 percent, but VA late payments eased to 8.06 percent from 8.21 percent.

Tags: fha, foreclosures, delinquencies

Sub-prime No2 is in the making RIGHT NOW

Tue, 11 Aug 2009 11:40:01 GMT

clipped by: leevardi

Clip Source: market-ticker.org

DAMNIT, STOP THE LOOTING NOW!

Put the kids away before reading.

If this does not make your blood boil.....

Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.

The article goes on to note that as of the end of this year FHA and Ginnie will have issued and hold one trillion dollars of mortgages, that the current default rate is now 7%, and the delinquent rate is running some 13%.

Why?

Because the same crooks, swindlers and thieves that infested the housing market in 2003, 2004, 2005, 2006 and 2007 in "subprime" and "ALT-A" have now moved into the FHA product.

There is only ONE way to guarantee safety and soundness in mortgage lending. ONE!

The destruction of the black middle class

Tue, 04 Aug 2009 18:41:30 GMT

clipped by: Lexica
clipper's remarks: More:

Yet in the depths of this African American depression, some commentators, black as well as white, are still obsessing about the supposed cultural deficiencies of the black community. In a December op-ed in the Washington Post, Kay Hymowitz blamed black economic woes on the fact that 70 percent of black children are born to single mothers, not noticing that the white two-parent family has actually declined at a faster rate than the black two-parent family. The share of black children living in a single parent home increased by 155 percent between 1960 to 2006, while the share of white children living in single parent homes increased by a staggering 229 percent.

Just last month on NPR, commentator Juan Williams dismissed the NAACP…The fact that there is an ongoing recession disproportionately affecting the African American middle class – and brought on by Wall Street greed rather than "ghetto" values – seems to have eluded him.

Clip Source: ehrenreich.blogs.com

To judge from most of the commentary on the Gates-Crowley affair, you would think that a "black elite" has gotten dangerously out of hand.

Left out of the ensuing tangle of commentary on race and class has been the increasing impoverishment—or, we should say, re-impoverishment--of African Americans as a group.

the most salient and lasting effect of the current recession may turn out to be the decimation of the black middle class

The longstanding racial "wealth gap" makes African Americans particularly vulnerable to poverty when job loss strikes.

when an African American breadwinner loses a job, there are usually no savings to fall back on, no well-heeled parents to hit up, no retirement accounts to raid.

All this comes on top of the highly racially skewed subprime mortgage calamity. After decades of being denied mortgages on racial grounds, African Americans made a tempting market for bubble-crazed lenders

Tags: race, bias, structural-racism, economics

Alt-A, Option-ARM, Prime...the Ticking Nuclear Time-bomb LOANS

Mon, 13 Jul 2009 02:15:47 GMT

clipped by: leevardi

Clip Source: market-ticker.org

Banks: Here Come The OptionARM Blowups!

From my 2009 Prediction Ticker:

Mortgages are not done. The story last year was "Subprime." This year's will be "ALT-A", "Option ARMs" and so-called "Prime". The Fed and Treasury know this, which is why they are playing games with "agency" debt in a desperate attempt to clear this market before the ticking nuclear devices go off. The amount of debt involved in these "bad deals" is vastly higher than that in the "subprime" space and if they fail to contain it (a near certainty) Round #2 of severe bank instability gets served up on us in the second half of 2009.

NEW YORK (Dow Jones)--For the third straight month, option adjustable-rate mortgages are generating proportionally more delinquencies and foreclosures than subprime mortgages, the scourge of the housing crisis.

No really?

Prime is new subprime

Wed, 08 Jul 2009 06:27:15 GMT

clipped by: goyalsunil

Clip Source: www.fool.com

But over the past year, prime mortgage foreclosures have been growing faster than any other mortgage segment. Have a look:

Mortgage Type	Y-O-Y Change in Newly Initiated Foreclosures	Newly Initiated Foreclosures (March 31, 2009)
Prime	25.6%	132,730
Alt-A	(6.9%)	56,948
Subprime	(16.7%)	64,628
Other	2.5%	36,614
Total	3.8%	290,920

Source: Comptroller of the Currency, Office of Thrift Supervision, June 2009.

Even though the default rate is significantly higher with subprime, the total amount of prime mortgages makes it one of -- if not the -- biggest areas of trouble. One year ago, there were around one-third more seriously delinquent subprime mortgages than prime mortgages. Today, that number has flipped, with seriously delinquent prime mortgages running roughly 38% higher than subprime.

What will cause the next US financial crisis!

Tue, 30 Jun 2009 19:13:46 GMT

clipped by: redbourn
clipper's remarks: Repos and not subprime mortgages caused the present financial crisis.

The top three banks in the world by market capitalization are now;

1) Industrial and Commercial Bank of China
2) China Construction Bank
3) Bank of China

Citibank and Bank of America are not even on the list of the top twenty.

Clip Source: get-financial-help.org

Will China Cause America’s Next Financial Crisis?

Clip Source: get-financial-help.org

The present world-wide economic crisis, which was caused by the United States wasn’t simply a result of unexpectedly large losses in subprime mortgages or because many of those loans were securitized in complex bonds.

In retrospect, it would seem that the major contributor to the collapse, was what are known as repurchase agreements, which are commonly known as repos.

The size of the repo market continually varies so it’s impossible to state its actual size, but it’s generally thought to hover around the $10 trillion mark at any given time.

The top three banks in the world by market capitalization are;

1) Industrial and Commercial Bank of China
2) China Construction Bank

If China decides to pull the plug, which is increasingly likely, we will soon understand what caused America’s upcoming financial collapse, but many will say that they didn’t see it coming.

By 2019, the U.S. federal debt is expected to be $11 trillion

Tags: crisis, subprime mortgages, repos, china, usa, investors, government securities, bank of china, china construction banks

Madoff’s conviction is no example of American justice

Tue, 30 Jun 2009 13:33:42 GMT

clipped by: tabsey
clipper's remarks: More.
Bernie should really become is a pin up criminal for incompetence, who was allowed to escape for decades by incompetent regulation: both of the traditional black letter legal type and self-regulation. Bernie fooled all the checks and balances and became head of NADAQ. His auditing firm was a small one and a half person operation in suburban New York: the auditing groups and other regulators let that one go

Clip Source: www.crikey.com.au

Yes Bernie Madoff was bent, yes he was a crook, but let’s not kid ourselves that Bernie’s conviction and jailing somehow is testimony to speedy and swift American justice.

Far from it; Bernie dobbed himself in and pleaded guilty in March and saved the US regulators a long and tedious case of tracking down what he did and getting him to confess.

Despite facing 150 years in jail, which he got overnight, Bernie has refused to help investigators unravel his fraud.

Bernie will now become the pin up criminal for the credit crunch and recession. But that’s rewriting history to protect the truly guilty.

Madoff, like Allco, ABC Learning, subprime mortgages and Babcock and Brown, are all testimony to slack and poor regulation of the markets, just like Alan Bond was 19 years and more ago. He is also testimony to the incompetent regulators, bankers, industry figures and others who allowed him to flourish (especially those in Congress who received tens of thousands of dollars in donations).

Tags: corruption