Short Sale transparency Act (news release)
The Short Sale Transparency Act, introduced by Congresswoman
Susan Davis (D-San Diego), will (if enacted) require Fannie Mae
and Freddie Mac to disclose the minimum asking price they are
willing to accept for a short sale if the first offer is
rejected. “People deserve a real chance to avoid foreclosure.
It is unfair to expect someone to complete a short sale instead
of abandoning their home to foreclosure, if the banks don’t
meet them half way,” said Davis. “So many homeowners are
willing, even eager, to work with banks to get out from under the
mortgage and protect their credit rating. But far too often, they
find themselves in a guessing game as to what dollar amount will
complete the sale.” For many Americans a short sale, the sale
of a home below its value, is a last chance to avoid foreclosure.
Click Here!
However, when the asking price is unknown, short sales become
less viable because homeowners are essentially shooting in the
dark when submitting bids to a bank. As a result, loan servicers
can repeatedly deny short sale offers without giving homeowners
guidance on the price the bank is asking. Ultimately, this back
and forth ends in foreclosure. On the other hand, if an offer
is, for example, $2,000 short and the homeowner knows this, they
could find a way to make up the difference in order to complete
the short sale. Disclosure is essential to ensuring fair
transactions between investors and borrowers. Fairness to
consumers is critical to boosting the economy and ending the
cycle of foreclosures.
Regional bank earnings up
Regional banks reported better-than-expected third-quarter profit
Wednesday, boosted by fewer bad loans and higher fees. US
Bancorp's third-quarter profit increased 40%, topping Wall Street
forecasts, as the regional bank made more money from its core
banking business and had fewer problem loans. Net income was
$1.27 billion, or 64 cents per share, up from $908 million, or 45
cents per share, a year ago. Analysts on average expected 62
cents per share, according to Thomson Reuters I/B/E/S. Net
revenues rose 4.5% to $4.8 billion, while noninterest expenses
increased 3.8% to $2.48 billion. Net interest income —
interest earned from loans against what is paid for deposits —
accounted for much of the revenue growth, increasing 5.9% to
$2.62 billion.
PNC Financial Services Group third-quarter profit beat analyst
estimates, despite falling as the regional bank earned less loan
interest income. Pittsburgh-based PNC Financial posted net
income of $834 million, or $1.55 per share, down from $1.1
billion, or $2.07 per share, a year earlier. Last year's results
included a $328 million after-tax gain from the sale of PNC
Global Investment Servicing. Excluding the gain, the bank earned
$772 million in third quarter 2010. Analysts estimated the bank
would earn $1.49 per share, according to Thomson Reuters I/B/E/S.
Total revenues declined 2.7% to $3.5 billion from $3.6 billion.
Net interest income — or what the bank earns in loan interest
against what it pays for deposits — declined $40 million to
$2.2 billion from a year ago.
Bank of New York Mellon said its third-quarter net income rose 5%
on stronger investment services fees and a surge in revenue from
its controversial foreign exchange business. Net income
increased to $651 million, or 53 cents a share, from $622
million, or 51 cents a share, a year earlier. Analysts on average
had expected 52 cents a share, according to Thomson Reuters
I/B/E/S, but it was not immediately clear whether that was
comparable with the net income figure. Assets under custody and
administration rose to $25.9 trillion from $24.4 trillion a year
earlier. The company said it had won new business in the quarter,
lifting asset servicing fees nearly 7% to $928 million from
year-earlier levels.
Northern Trust's quarterly profit rose 8%, as the US custody bank
earned more fees from its trust and investment services business.
July-September net income rose to $170 million, or 70 cents a
share, from $155.6 million, or 64 cents, a year ago. Trust,
investment, and other servicing fees rose 7% to $555.3 million in
the quarter for Northern Trust.
MBA - mortgage apps down
Mortgage applications decreased 14.9% from one week earlier,
according to data from the Mortgage Bankers Association’s (MBA)
Weekly Mortgage Applications Survey for the week ending October
14, 2011, which included the Columbus Day holiday. The Market
Composite Index, a measure of mortgage loan application volume,
decreased 14.9% on a seasonally adjusted basis from one week
earlier. On an unadjusted basis, the Index decreased 14.9%
compared with the previous week. The Refinance Index decreased
16.6% from the previous week. The seasonally adjusted Purchase
Index decreased 8.8% from one week earlier and is at the lowest
level in the survey since December 1996. Both conventional and
government purchase activity declined last week, with the
Conventional Purchase Index decreasing 11.0% and the Government
Purchase Index decreasing 5.9% from the previous week. The
unadjusted Purchase Index decreased 8.6% compared with the
previous week and was 5.1% lower than the same week one year
ago.
Click Here!
While all the other indices fell year over year, the Government
Purchase Index increased 3.3% on an unadjusted basis, the second
straight increase. The government share of purchase activity has
increased three consecutive weeks to 43.5, the highest level
since April 2011. The four week moving average for the
seasonally adjusted Market Index is down 2.36%. The four week
moving average is down 1.53% for the seasonally adjusted Purchase
Index, while this average is down 2.58% for the Refinance Index.
The refinance share of mortgage activity decreased to 77.6% of
total applications from 79.1% the previous week. The
adjustable-rate mortgage (ARM) share of activity decreased to
5.8% from 6.0% of total applications from the previous week. The
share of purchase applications in the Pacific region increased in
September to 19.6% from 18.9% in August while the share in the
New England, East North Central and South Atlantic regions fell.
The share of refinance applications in the Pacific decreased from
last month but increased in the Mid-Atlantic, East North Central
and New England regions. Wyoming had the largest increase in
purchase applications while Vermont had the largest increase in
refinance applications.
Stamps go up one cent
The cash-strapped US Postal Service announced on Tuesday a
one-cent increase in the cost of mailing a letter, starting in
January. The new prices lift the cost of a first-class stamp to
45 cents starting on Jan. 22, 2012, the first increase in more
than two years. The Postal Service said the cost to mail a
postcard will go up three cents to 32 cents, letters to Canada or
Mexico will increase five cents to 85 cents, and letters to other
international locations will increase seven cents to $1.05. The
agency, which is allowed to raise prices in line with the rate of
inflation, said it filed the new prices with the Postal
Regulatory Commission on Tuesday. The regulator has 45 days to
approve the changes. Until the price changes take effect,
consumers can still purchase 44-cent Forever stamps, which do not
require additional postage after prices go up. The Postal
Service has asked Congress for permission to drastically overhaul
its business, including cutting Saturday mail delivery and
eliminating a massive annual payment to prefund retiree health
benefits. The agency also is studying thousands of post offices
and processing facilities for possible closure.
Housing starts up 15%, inflation mixed
Another report on Wednesday showed groundbreaking on new homes
rose at the fastest rate in 1-1/2 years, though most of the gains
came from the often volatile multi-family construction. The
Labor Department said its core Consumer Price Index edged up
0.1%, also held back by flat prices for new cars and a modest
rise in rental-related costs. Economists had expected core CPI
to rise 0.2% last month. The index increased 0.2% in August.
Overall consumer prices increased 0.3% last month, as expected,
after advancing 0.4% in August. The moderate rise in consumer
prices offered assurance that inflation pressures remained in
check despite a sharp rise in wholesale prices last month. "The
housing data combined with CPI data shows that the economy, while
it still is muddling along, is showing a little forward momentum
that has not generally been anticipated by most analysts," said
Fred Dickson, chief market strategist at D.A. Davidson & Co. in
Lake Oswego, Oregon. The reports also suggested the Federal
Reserve had some wiggle room for further monetary policy easing,
should the economic recovery falter, even though the year-on-year
change in core inflation has already reached 2%. Prices for used
cars and trucks fell 0.6% after months of gains. Apparel prices
dropped 1.1%, the largest decline since September 1998. Shelter
costs edged up 0.1%, the smallest rise since April, as owners'
equivalent rent edged up 0.1% after rising 0.2% in August. The
Bureau of Labor Statistics uses owners equivalent rent to measure
the amount homeowners would pay to rent or would earn from
renting their property. A 2.9% increase in the price of gasoline
pushed overall consumer prices last month. Gasoline had risen
1.9% in August. Food prices gained 0.4% after increasing 0.5% in
August.
Visa boosts dividend
Visa said today that it's increasing its quarterly dividend by
47%. The payment processing network operator said Wednesday it
will pay shareholders of its Class A common stock a dividend of
22 cents, up from 15 cents. Visa has increased its dividend for
three straight years now. The dividend is payable Dec. 6 to
shareholders of record as of Nov. 18. Visa, based in San
Francisco, says it is also increasing dividends for its Class B
and Class C shareholders. Class A shares closed Tuesday trading
at $93.91, up 33% for the year. "Visa has a long-standing
commitment to deliver value to its shareholders," said Joseph
Saunders, Chairman and Chief Executive Officer of Visa. "By
authorizing a significant dividend increase for the third
consecutive year, the board of directors is delivering on that
commitment and demonstrating their ongoing confidence in the
strength of the business."
Housing behind the gloom?
Click Here!
The United States has a confidence problem: a nation long defined
by irrational exuberance has turned gloomy about tomorrow.
Consumers are holding back, businesses are suffering and the
economy is barely growing. There are good reasons for gloom —
incomes have declined, many people cannot find jobs, few trust
the government to make things better — but as Federal Reserve
chairman, Ben Bernanke, noted earlier this year, those problems
are not sufficient to explain the depth of the funk. That has
led a growing number of economists to argue that the collapse of
housing prices, a defining feature of this downturn, is also a
critical and underappreciated impediment to recovery. Americans
have lost a vast amount of wealth, and they have lost faith in
housing as an investment. They lack money, and they lack the
confidence that they will have more money tomorrow.
Click Here!
Economists have only recently devoted serious study to how a
decline in housing prices affects consumer spending, not least
because this is the first decline in the average price of an
American home since the Great Depression. A 2007 review of
existing research by the Congressional Budget Office reported
that people reduce spending by $20 to $70 a year for every $1,000
decline in the value of their home. This “wealth effect” is
significantly larger for changes in home equity than in the value
of other investments, such as stocks, apparently because people
regard changes in housing prices as more likely to endure. A
recent paper by Karl Case, an economics professor at Wellesley
College, and two co-authors estimated the decline in home prices
from 2005 to 2009 caused consumer spending to be $240 billion
lower in 2010 than it otherwise would have been.
That figure is equal to about 1.7% of annual economic activity,
enough to be the difference between the mediocre recent growth
and healthy growth. And it does not include all the other effects
of the housing crash, including the low level of new home
construction, that are also weighing on the economy. It remains
the prevailing view of economic policy makers that economic
activity will eventually return to the same trajectory as before
the recession. Bernanke and others have said that they see no
evidence of any permanent change in the economy. Previous bouts
of economic pessimism, as in the early 1980s and early 1990s,
went away once growth picked up.
Olick - refis not worth it
"It is now almost exactly a year since news headlines screamed of
a scandal at the big banks involving faulty foreclosure paperwork
and fraud. Stories of one lowly bank clerk sitting in a room
signing hundreds of foreclosure documents added a new word to our
daily financial nomenclature: 'Robo-signing.' It managed to
eclipse 'subprime' as the favorite villain of the housing crisis.
But despite the furor, the threats, and the big bank blame game,
there is still no settlement between the 'robo-signers' (i.e. the
big banks) and the fifty state attorneys general who promised
payback for borrowers. Now, as talks are allegedly in their
final phase, according to a source very close to the process, the
AG's have thrown in another wrench, or perhaps they're throwing a
bone.
Click Here!
As first reported by the Wall Street Journal, the AG's are
proposing a refinance plan for underwater borrowers, trying to
get banks to bring down interest rates on mortgages for those who
owe far more than their homes are presently worth; that's around
10.9 million borrowers, according to CoreLogic, but sources say
it wouldn't be all of them. It would, 'target a finite number of
borrowers who are current on their mortgages,' according to my
source. My source then went on to explain that this is a plan
previously pushed by the California state attorney general, who
has dropped out of the negotiations over issues surrounding
banks' release from future liability (the California AG did not
comment in the WSJ article but claimed they had not seen said
proposal). New York and Massachusetts have done the same.
Apparently this could, 'bring California back to the table,' says
my source, because the California AG finds it, 'intriguing.'
Click Here!
Well I don't find it intriguing at all. It's the same plan the
Obama administration is 'pursuing' with the regulator of Fannie
Mae and Freddie Mac. They also want an underwater refi plan, but
so far the idea has been rife with difficult details that
threaten to scuttle its ultimate impact. The AG proposal would be
just for bank-owned loans not backed by Fannie or Freddie, so it
would apply to about 20% of the market. My source says the talks
are getting closer to a deal, even without some of the AG's
signing on. It will include some principal write down on loans,
but the future legal liability language is still in play, release
from securitization issues is not clear, and the banks aren't
exactly thrilled with any of it. So now, at the last minute, they
throw in a refi proposal, which maybe the banks will like, likely
they won't.
Click Here!
While it may help some borrowers by putting a little extra cash
in their pockets, as I've written on this blog before, it doesn't
change the fact that these folks still have no hope of seeing
their home equity again anytime soon, and it doesn't address the
greater ills of today's housing market that are keeping true
recovery at bay. It's not the borrowers who are current on their
payments that need help, it's the 4 million or so seriously
delinquent loans that are heading toward foreclosure, it's the
glut of distressed properties now streaming out onto the housing
market at ever greater speed, and it's the complete lack of
consumer confidence in housing right now that has turned home
prices down yet again and kept home sales at historically and
unsustainably low levels for recovery. What do we do about
that?"
Click Here!
See you at the top!
Martin Crawfotd
The Short Sale Transparency Act, introduced by Congresswoman
Susan Davis (D-San Diego), will (if enacted) require Fannie Mae
and Freddie Mac to disclose the minimum asking price they are
willing to accept for a short sale if the first offer is
rejected. “People deserve a real chance to avoid foreclosure.
It is unfair to expect someone to complete a short sale instead
of abandoning their home to foreclosure, if the banks don’t
meet them half way,” said Davis. “So many homeowners are
willing, even eager, to work with banks to get out from under the
mortgage and protect their credit rating. But far too often, they
find themselves in a guessing game as to what dollar amount will
complete the sale.” For many Americans a short sale, the sale
of a home below its value, is a last chance to avoid foreclosure.
Click Here!
However, when the asking price is unknown, short sales become
less viable because homeowners are essentially shooting in the
dark when submitting bids to a bank. As a result, loan servicers
can repeatedly deny short sale offers without giving homeowners
guidance on the price the bank is asking. Ultimately, this back
and forth ends in foreclosure. On the other hand, if an offer
is, for example, $2,000 short and the homeowner knows this, they
could find a way to make up the difference in order to complete
the short sale. Disclosure is essential to ensuring fair
transactions between investors and borrowers. Fairness to
consumers is critical to boosting the economy and ending the
cycle of foreclosures.
Regional bank earnings up
Regional banks reported better-than-expected third-quarter profit
Wednesday, boosted by fewer bad loans and higher fees. US
Bancorp's third-quarter profit increased 40%, topping Wall Street
forecasts, as the regional bank made more money from its core
banking business and had fewer problem loans. Net income was
$1.27 billion, or 64 cents per share, up from $908 million, or 45
cents per share, a year ago. Analysts on average expected 62
cents per share, according to Thomson Reuters I/B/E/S. Net
revenues rose 4.5% to $4.8 billion, while noninterest expenses
increased 3.8% to $2.48 billion. Net interest income —
interest earned from loans against what is paid for deposits —
accounted for much of the revenue growth, increasing 5.9% to
$2.62 billion.
PNC Financial Services Group third-quarter profit beat analyst
estimates, despite falling as the regional bank earned less loan
interest income. Pittsburgh-based PNC Financial posted net
income of $834 million, or $1.55 per share, down from $1.1
billion, or $2.07 per share, a year earlier. Last year's results
included a $328 million after-tax gain from the sale of PNC
Global Investment Servicing. Excluding the gain, the bank earned
$772 million in third quarter 2010. Analysts estimated the bank
would earn $1.49 per share, according to Thomson Reuters I/B/E/S.
Total revenues declined 2.7% to $3.5 billion from $3.6 billion.
Net interest income — or what the bank earns in loan interest
against what it pays for deposits — declined $40 million to
$2.2 billion from a year ago.
Bank of New York Mellon said its third-quarter net income rose 5%
on stronger investment services fees and a surge in revenue from
its controversial foreign exchange business. Net income
increased to $651 million, or 53 cents a share, from $622
million, or 51 cents a share, a year earlier. Analysts on average
had expected 52 cents a share, according to Thomson Reuters
I/B/E/S, but it was not immediately clear whether that was
comparable with the net income figure. Assets under custody and
administration rose to $25.9 trillion from $24.4 trillion a year
earlier. The company said it had won new business in the quarter,
lifting asset servicing fees nearly 7% to $928 million from
year-earlier levels.
Northern Trust's quarterly profit rose 8%, as the US custody bank
earned more fees from its trust and investment services business.
July-September net income rose to $170 million, or 70 cents a
share, from $155.6 million, or 64 cents, a year ago. Trust,
investment, and other servicing fees rose 7% to $555.3 million in
the quarter for Northern Trust.
MBA - mortgage apps down
Mortgage applications decreased 14.9% from one week earlier,
according to data from the Mortgage Bankers Association’s (MBA)
Weekly Mortgage Applications Survey for the week ending October
14, 2011, which included the Columbus Day holiday. The Market
Composite Index, a measure of mortgage loan application volume,
decreased 14.9% on a seasonally adjusted basis from one week
earlier. On an unadjusted basis, the Index decreased 14.9%
compared with the previous week. The Refinance Index decreased
16.6% from the previous week. The seasonally adjusted Purchase
Index decreased 8.8% from one week earlier and is at the lowest
level in the survey since December 1996. Both conventional and
government purchase activity declined last week, with the
Conventional Purchase Index decreasing 11.0% and the Government
Purchase Index decreasing 5.9% from the previous week. The
unadjusted Purchase Index decreased 8.6% compared with the
previous week and was 5.1% lower than the same week one year
ago.
Click Here!
While all the other indices fell year over year, the Government
Purchase Index increased 3.3% on an unadjusted basis, the second
straight increase. The government share of purchase activity has
increased three consecutive weeks to 43.5, the highest level
since April 2011. The four week moving average for the
seasonally adjusted Market Index is down 2.36%. The four week
moving average is down 1.53% for the seasonally adjusted Purchase
Index, while this average is down 2.58% for the Refinance Index.
The refinance share of mortgage activity decreased to 77.6% of
total applications from 79.1% the previous week. The
adjustable-rate mortgage (ARM) share of activity decreased to
5.8% from 6.0% of total applications from the previous week. The
share of purchase applications in the Pacific region increased in
September to 19.6% from 18.9% in August while the share in the
New England, East North Central and South Atlantic regions fell.
The share of refinance applications in the Pacific decreased from
last month but increased in the Mid-Atlantic, East North Central
and New England regions. Wyoming had the largest increase in
purchase applications while Vermont had the largest increase in
refinance applications.
Stamps go up one cent
The cash-strapped US Postal Service announced on Tuesday a
one-cent increase in the cost of mailing a letter, starting in
January. The new prices lift the cost of a first-class stamp to
45 cents starting on Jan. 22, 2012, the first increase in more
than two years. The Postal Service said the cost to mail a
postcard will go up three cents to 32 cents, letters to Canada or
Mexico will increase five cents to 85 cents, and letters to other
international locations will increase seven cents to $1.05. The
agency, which is allowed to raise prices in line with the rate of
inflation, said it filed the new prices with the Postal
Regulatory Commission on Tuesday. The regulator has 45 days to
approve the changes. Until the price changes take effect,
consumers can still purchase 44-cent Forever stamps, which do not
require additional postage after prices go up. The Postal
Service has asked Congress for permission to drastically overhaul
its business, including cutting Saturday mail delivery and
eliminating a massive annual payment to prefund retiree health
benefits. The agency also is studying thousands of post offices
and processing facilities for possible closure.
Housing starts up 15%, inflation mixed
Another report on Wednesday showed groundbreaking on new homes
rose at the fastest rate in 1-1/2 years, though most of the gains
came from the often volatile multi-family construction. The
Labor Department said its core Consumer Price Index edged up
0.1%, also held back by flat prices for new cars and a modest
rise in rental-related costs. Economists had expected core CPI
to rise 0.2% last month. The index increased 0.2% in August.
Overall consumer prices increased 0.3% last month, as expected,
after advancing 0.4% in August. The moderate rise in consumer
prices offered assurance that inflation pressures remained in
check despite a sharp rise in wholesale prices last month. "The
housing data combined with CPI data shows that the economy, while
it still is muddling along, is showing a little forward momentum
that has not generally been anticipated by most analysts," said
Fred Dickson, chief market strategist at D.A. Davidson & Co. in
Lake Oswego, Oregon. The reports also suggested the Federal
Reserve had some wiggle room for further monetary policy easing,
should the economic recovery falter, even though the year-on-year
change in core inflation has already reached 2%. Prices for used
cars and trucks fell 0.6% after months of gains. Apparel prices
dropped 1.1%, the largest decline since September 1998. Shelter
costs edged up 0.1%, the smallest rise since April, as owners'
equivalent rent edged up 0.1% after rising 0.2% in August. The
Bureau of Labor Statistics uses owners equivalent rent to measure
the amount homeowners would pay to rent or would earn from
renting their property. A 2.9% increase in the price of gasoline
pushed overall consumer prices last month. Gasoline had risen
1.9% in August. Food prices gained 0.4% after increasing 0.5% in
August.
Visa boosts dividend
Visa said today that it's increasing its quarterly dividend by
47%. The payment processing network operator said Wednesday it
will pay shareholders of its Class A common stock a dividend of
22 cents, up from 15 cents. Visa has increased its dividend for
three straight years now. The dividend is payable Dec. 6 to
shareholders of record as of Nov. 18. Visa, based in San
Francisco, says it is also increasing dividends for its Class B
and Class C shareholders. Class A shares closed Tuesday trading
at $93.91, up 33% for the year. "Visa has a long-standing
commitment to deliver value to its shareholders," said Joseph
Saunders, Chairman and Chief Executive Officer of Visa. "By
authorizing a significant dividend increase for the third
consecutive year, the board of directors is delivering on that
commitment and demonstrating their ongoing confidence in the
strength of the business."
Housing behind the gloom?
Click Here!
The United States has a confidence problem: a nation long defined
by irrational exuberance has turned gloomy about tomorrow.
Consumers are holding back, businesses are suffering and the
economy is barely growing. There are good reasons for gloom —
incomes have declined, many people cannot find jobs, few trust
the government to make things better — but as Federal Reserve
chairman, Ben Bernanke, noted earlier this year, those problems
are not sufficient to explain the depth of the funk. That has
led a growing number of economists to argue that the collapse of
housing prices, a defining feature of this downturn, is also a
critical and underappreciated impediment to recovery. Americans
have lost a vast amount of wealth, and they have lost faith in
housing as an investment. They lack money, and they lack the
confidence that they will have more money tomorrow.
Click Here!
Economists have only recently devoted serious study to how a
decline in housing prices affects consumer spending, not least
because this is the first decline in the average price of an
American home since the Great Depression. A 2007 review of
existing research by the Congressional Budget Office reported
that people reduce spending by $20 to $70 a year for every $1,000
decline in the value of their home. This “wealth effect” is
significantly larger for changes in home equity than in the value
of other investments, such as stocks, apparently because people
regard changes in housing prices as more likely to endure. A
recent paper by Karl Case, an economics professor at Wellesley
College, and two co-authors estimated the decline in home prices
from 2005 to 2009 caused consumer spending to be $240 billion
lower in 2010 than it otherwise would have been.
That figure is equal to about 1.7% of annual economic activity,
enough to be the difference between the mediocre recent growth
and healthy growth. And it does not include all the other effects
of the housing crash, including the low level of new home
construction, that are also weighing on the economy. It remains
the prevailing view of economic policy makers that economic
activity will eventually return to the same trajectory as before
the recession. Bernanke and others have said that they see no
evidence of any permanent change in the economy. Previous bouts
of economic pessimism, as in the early 1980s and early 1990s,
went away once growth picked up.
Olick - refis not worth it
"It is now almost exactly a year since news headlines screamed of
a scandal at the big banks involving faulty foreclosure paperwork
and fraud. Stories of one lowly bank clerk sitting in a room
signing hundreds of foreclosure documents added a new word to our
daily financial nomenclature: 'Robo-signing.' It managed to
eclipse 'subprime' as the favorite villain of the housing crisis.
But despite the furor, the threats, and the big bank blame game,
there is still no settlement between the 'robo-signers' (i.e. the
big banks) and the fifty state attorneys general who promised
payback for borrowers. Now, as talks are allegedly in their
final phase, according to a source very close to the process, the
AG's have thrown in another wrench, or perhaps they're throwing a
bone.
Click Here!
As first reported by the Wall Street Journal, the AG's are
proposing a refinance plan for underwater borrowers, trying to
get banks to bring down interest rates on mortgages for those who
owe far more than their homes are presently worth; that's around
10.9 million borrowers, according to CoreLogic, but sources say
it wouldn't be all of them. It would, 'target a finite number of
borrowers who are current on their mortgages,' according to my
source. My source then went on to explain that this is a plan
previously pushed by the California state attorney general, who
has dropped out of the negotiations over issues surrounding
banks' release from future liability (the California AG did not
comment in the WSJ article but claimed they had not seen said
proposal). New York and Massachusetts have done the same.
Apparently this could, 'bring California back to the table,' says
my source, because the California AG finds it, 'intriguing.'
Click Here!
Well I don't find it intriguing at all. It's the same plan the
Obama administration is 'pursuing' with the regulator of Fannie
Mae and Freddie Mac. They also want an underwater refi plan, but
so far the idea has been rife with difficult details that
threaten to scuttle its ultimate impact. The AG proposal would be
just for bank-owned loans not backed by Fannie or Freddie, so it
would apply to about 20% of the market. My source says the talks
are getting closer to a deal, even without some of the AG's
signing on. It will include some principal write down on loans,
but the future legal liability language is still in play, release
from securitization issues is not clear, and the banks aren't
exactly thrilled with any of it. So now, at the last minute, they
throw in a refi proposal, which maybe the banks will like, likely
they won't.
Click Here!
While it may help some borrowers by putting a little extra cash
in their pockets, as I've written on this blog before, it doesn't
change the fact that these folks still have no hope of seeing
their home equity again anytime soon, and it doesn't address the
greater ills of today's housing market that are keeping true
recovery at bay. It's not the borrowers who are current on their
payments that need help, it's the 4 million or so seriously
delinquent loans that are heading toward foreclosure, it's the
glut of distressed properties now streaming out onto the housing
market at ever greater speed, and it's the complete lack of
consumer confidence in housing right now that has turned home
prices down yet again and kept home sales at historically and
unsustainably low levels for recovery. What do we do about
that?"
Click Here!
See you at the top!
Martin Crawfotd
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