1 in 7 home loans are in forecloser or default

[Mega]

http://www.reuters.com/article/ousiv...5AI38320091119

Schiff said this would happen, he also said the States would stop forclosers..........which they are..........he also said at that point EVERYONE would stop paying....which they are.

I say its got 12 months max before total colaspe.
Mike

[jbm3996]

Re: 1 in 7 home loans are in forecloser or default

http://www.reuters.com/article/ousiv...5AI38320091119

Schiff said this would happen, he also said the States would stop forclosers..........which they are..........he also said at that point EVERYONE would stop paying....which they are.

I say its got 12 months max before total colaspe.
Mike

I make my living buying defaulting mortgages and reselling the underlying properties. This information is not new to me and my partners. The only difference is that we expect imminent collapse sooner than you, and we see on a daily basis how the banks are continuing to qualify seriously sub-prime borrowers for mortgages. No one is learning a thing, and the buy-now pay-later financial philosophy propogated by the corrupt liberal administrations (including the liberal administrations of the Bush years) continues to spin the mass media and deceive the vast majority of the uneducated public. If I was not seriously busy being concerned about the future of the US, let alone the world economy, I would be totally disgusted with the seeming current total lack of fiscal responsibility and lazy attitude of pundits regarding fiscal responsibility. I highlite Rush Limbaugh in particular. He said he would not get involved with solving the mess by running for public office because he would have to take a salary cut. How can anyone take Rush seriously when he criticizes Al Gore for eating meat and claiming to be an environmentalist, but then Rush won't even get off his fat a$$ and sacrifice a few dollars to help save the US from certain imminent collapse proclaimed on his radio show. The problem is that I know too much from my degrees and experience to dismiss the imminent collapse proponents, otherwise I would just assume these commentators were simply espousing doomsdayer theories to bolster ratings and, thus, their compensation. Unlike Rush, I am putting feelers out throughout the internet to find out if there are any venues in which I can lend my energies to constructively help avert the impending financial conflagration. Maybe I can sit on the trubunal that will eventually be convened to try Goldman Sachs, BofA, and the other "bailed out criminals" for high treason against the US! And don't even get me started on Joe Cassano who is now living the high life in a tony downtown London neighborhood with the $380M he absconded with from AIG for his totally illegal activities heading up their Financial Products division. btw, I make sure the buyers of my properties are prime borrowers ... I will not sell to sub prime period.

[ASH]

Re: 1 in 7 home loans are in forecloser or default

I make my living buying defaulting mortgages and reselling the underlying properties. This information is not new to me and my partners. The only difference is that we expect imminent collapse sooner than you, and we see on a daily basis how the banks are continuing to qualify seriously sub-prime borrowers for mortgages.

This is a dumb question, but when you say 'collapse', what do you mean? In the context of the mortgage default rate, 'collapse' means to me a large and relatively abrupt increase in the number of families who walk away from homes or are evicted, and a corresponding increase in the number of properties on the market and decrease in price. Of course, it also means a large and abrupt increase in losses on non-performing loans for banks and holders of mortgage-backed securities (like the Fed's balance sheet). And that would mean a fresh capitalization crisis for banks... and therefore likely another market panic.

What, in your opinion, controls the pacing? You have an opinion about timing (sooner than 12 months?). Can you explain from where your sense of timing originates?

Thanks!

[vanvaley1]

Re: 1 in 7 home loans are in forecloser or default

Would be 'nice' and interesting to see if treason could be expanded to include participants in collapsing a nation's economy. Has it happened before in other democracies/republics? Is the definition of 'terrorists' broad enough to be incorporated into a failed economic policy that results in an economic collapse? My guess is that the answer is 'no'.

[thunderdownunder]

Re: 1 in 7 home loans are in forecloser or default

So lets see if I understand these and other figures.
9.64 % of outstanding loans are not giving cashflows to the banks - Check
The Banks "assets" are deteriorating as the house prices fall - Check
Banks are marking these impaired assets to fantasy -Check
10.6% fall in New housing starts in October -Check
Liquidity at Banks (for a Buffer) is at all time Highs -Check
Banks reluctant to write new loans - Check
Borrowers reluctant to take on "new debt" - Check
Credit Cards are being removed from circulation at alarming pace- Check
C/C interest rates @ 10x prime cost- Check
The Government is the only buyer of Mortgages -Check
Delinquency rate does not include those undergoing F/closure -Check
Fannie Mae is losing dollars at an alarming rate - Check
New Unemployed of 500,000 Americans each week is acceptable - Check
S&P at PE ratios never seen before - Check
Canary in the coal mine - Gold - has flown away - Check
US $ depreciating to Bum paper - Check
T- Bills for Jan & Feb 2010 now Negative - Check
FIDC wants to borrow 3 years of your money from banks to Boost its ammo for Zombies -Check
No one is talking Green shoots - Check
Giant Squid births 272 new squidets and feeds them well - Check
A healthy economy has a strong Cur....... Oh never mind :rolleyes:
If the above was your yearly work review they would hand you Saturdays Paper with your DCM

Yup - Nothing to see here - Your devaluing your way to penury.

[jbm3996]

Re: 1 in 7 home loans are in forecloser or default

This is a dumb question, but when you say 'collapse', what do you mean? In the context of the mortgage default rate, 'collapse' means to me a large and relatively abrupt increase in the number of families who walk away from homes or are evicted, and a corresponding increase in the number of properties on the market and decrease in price. Of course, it also means a large and abrupt increase in losses on non-performing loans for banks and holders of mortgage-backed securities (like the Fed's balance sheet). And that would mean a fresh capitalization crisis for banks... and therefore likely another market panic.

What, in your opinion, controls the pacing? You have an opinion about timing (sooner than 12 months?). Can you explain from where your sense of timing originates?

Thanks!

No questions are dumb, and your question is a great and multifaceted one. First, it is important to know that the banks are intentionally holding back the vast majority of non-conforming (defaulting) mortgages from investors due to bailout monies that are allowing them to deny a liquidity crisis exists. If the banks sold this inventory at current market bids, they would have to revalue their holdings to market (mark to market GAAP) and there would not be a bank left standing as none of them would be able to meet their Tier One capital requirements, ... and the US government is broke ... any further bailout would simply cause other much more severe consequences. Where do I get this info, college connections to the rescue, a SVP at BofA and another at what used to be WAMU. Keeping in mind that this is the current state of things ... From a macro view, unless the Obamanomics can continue to manipulate the US economy in an unprecedented manner (unlikely, btw), EJ's predictions on this site are spot on. Which brings me to what I do with my investment partners .... In the investment partnership I belong to, we are predicting a large wave of R/E defaults early in 2010, which will lead to a serious deterioration of our partnership's ability to be profitable flipping properties after the first quarter of 2010. Actual unemployement is much higher (nearly 29.9% in my state) and it is getting worse ... I see it just on my street alone, here in Seal Beach CA. The country-wide economy is not recovering inspite of the spin put on it by the "corrupt" liberal media (do your homework and you will be shocked at how much the media is lying to the public about actual statistics and what a scam the stock markets rise has been!)
I am legally bound to not give away the specific evaluation methods that are contractually protected in the investment partnership I belong to, but we evaluate the numbers of defaults currently, the pace of change and the major economic factors that are present before/during/and after the change in the number and rate of change in defaults. We add to this physically verifying first hand what the economic circumstances are that are being experienced by residents/businesses of our target areas. We do this by offering free counseling to homeowners/businesses concerned about or already headed into default/bancruptcy as well as free counseling to local religious gatherings, yachts clubs, social groups and anyone we can talk with and listen to (and yes I don't get much sleep ). This gives us a first hand view of what is happening at the ground level. We mate this information to macro economic statistical information and arrive at a picture of what has happened, is happening, and is projected to happen. Obviously, nothing is full proof, but so far we have been 100% correct on our predictions. I subscribe to this and many other sites which add to the level of current data and information we use to form our metrics. If this sounds like a quagmire of technical gibberish, I appologize, but what can you expect from a partnership consisting of an economics professor, a 40 year R/E professional, ground through my BS in Investments and a Masters in Business with a triple minor in Advanced Financial Analysis, Marketing, and Entrepreneurship. Currently we are experiencing actual bidding wars on the properties we are reselling, but this is going to fade away early in 2010 as the pent-up housing demand is mitigated by concern regarding the fast decaying economy (Xmas could not be coming at a worse time, btw) ... and the over riding issue to it all ... whether there can be an increase in the number of meaningful good paying jobs. On this front all of my partners agree that we just do not see good jobs being produced anytime soon (and we agree it will be years before anything meaningful MIGHT happen!) I am sure this will never hit the news, but we are seeing 600 to 800 mortgage defaults A DAY and that is just in the county we are targeting ... there are other counties much worse such as Kern that is plastered across the news. I am in contact with friends and business contacts in Chambers of Commerce from Florida to California, who tell me about the increasing numbers of business failures and closures ... some are even currrently profitable businesses, but the owners do not see a bright future and are preserviing capital by shuttering now. Add to this the continuing overspending of the US government as well as State Governments, and the result is implosion ... flooding the markets with defaults, resultant collapse of housing prices (no $8,000 stimulus is going to mitigate this) and of commercial real estate. Of course, no one is perfect at predicting the future and run from those who say they are, but everything I and my partners see is very scary. If the FIRE economy had not relied so heavily on leverage, there might have been a longer window of time. In summary, I am glad I put profits from selling R/E into gold .... thanks EJ.
God bless America and I sincerely hope I am wrong!

[jbm3996]

Re: 1 in 7 home loans are in forecloser or default

Yup - Nothing to see here - Your devaluing your way to penury.

Although the way you present this is amusing, the content is all too familiar and disconcerting. In response ...

God,
You made me smart enough to be ethical.
... smart enough to have a profitable venture in this terrible economy.
... smart enough to have saved enough to help out friends and relatives who are hurting during this depression.
... smart enough to know we are in a state of crisis that is not being turned around by the "experts" in charge.
... why, God, oh why haven't you made me smart enough to be able to figure out a solution to this financial and economic holocaust.

[ASH]

Re: 1 in 7 home loans are in forecloser or default

First, it is important to know that the banks are intentionally holding back the vast majority of non-conforming (defaulting) mortgages from investors due to bailout monies that are allowing them to deny a liquidity crisis exists. If the banks sold this inventory at current market bids, they would have to revalue their holdings to market (mark to market GAAP) and there would not be a bank left standing as none of them would be able to meet their Tier One capital requirements, ... and the US government is broke ... any further bailout would simply cause other much more severe consequences.

Thanks for the detailed response, jbm. I really appreciate hearing from a knowledgeable professional.

It is widely understood by those who aren't drinking the Kool-aid that the stress tests run earlier this year are for a much too optimistic recovery scenario, and that the relaxation of mark-to-market rules is the only thing keeping the lights on. I think we're all pretty much expecting more captalization problems for the banks down the road, as more loans of every variety go south -- mortgage loans in particular. Your post provides good corroborating evidence.

My theory has been that the response to a fresh bank capitalization crisis is going to come from the Fed rather than the Treasury, for precisely the reason you state -- the government (Treasury) is broke. The only possible policy response would be further monetization of securitized loans by the Fed. The Fed is well able to solve a capitalization crisis by creating reserves and exchanging them for toxic debt, as long as the toxic debt is sold at the fictional price necessary to keep the banks alive. Any entity which requires income to generate money to buy loans would be foolhardy to overpay for junk, but the Fed can just create the reserves, and directly solve the capitalization problem that the banks have. To the Fed, it's not an investment -- it is a policy tool, and there need be no expectation of realizing returns or avoiding losses. Further, having bought things like MBS, the Fed would own the loan contracts and therefore be in a legal position to modify terms or even forgive principal. Rather than transferring private debt to public shoulders (e.g. intervention by the Treasury), intervention by the Fed can theoretically extinguish debt. I don't think this must necessarily be inflationary, if the Fed only creates enough reserves to keep the banks solvent (i.e. buys enough junk at a high enough price so that the banks can recognize the losses on the rest of their portfolio without going bust), then no excess reserves means no inflation via an explosion of lending against the reserves. If I understand the mechanics correctly, the main objection to 'printing' money to buy junk securities is that later, when the Fed needs to drain reserves from the banking system to control the money supply, it won't be able to get the junk off its books for what it paid originally. However, if this type of extraordinary intervention is adopted to save the banking system (would require changes to law), I suspect that the Fed is perfectly capable of negotiating the right to sell the junk back to the banks at a future date, for the price that was paid, if necessary for policy reasons. In short, my view is that once you allow the rules to become fluid, anything is possible with fiat money.

If this sounds like a quagmire of technical gibberish, I appologize, but what can you expect from a partnership consisting of an economics professor, a 40 year R/E professional, ground through my BS in Investments and a Masters in Business with a triple minor in Advanced Financial Analysis, Marketing, and Entrepreneurship.

Not at all -- written with clarity. Thank you again.

[ASH]

Re: 1 in 7 home loans are in forecloser or default

I am seeing something different in our market.

Thanks, also, for your report on conditions.

[santafe2]

Re: 1 in 7 home loans are in forecloser or default

First, it is important to know that the banks are intentionally holding back the vast majority of non-conforming (defaulting) mortgages from investors due to bailout monies that are allowing them to deny a liquidity crisis exists. If the banks sold this inventory at current market bids, they would have to revalue their holdings to market (mark to market GAAP) and there would not be a bank left standing as none of them would be able to meet their Tier One capital requirements

I can't make observations about any of the large banks because I don't know any executives I can talk to. But, our local banks have too many foreclosed properties as well. Mostly specs from a few of the most aggressive, and now bankrupt, builders who never slowed down in 2006. They don't put all of their properties on the market at once and they don't take the fire-sale offers they get. If they did, it would devalue all the other properties they own and make new lending more difficult. To me, it's just business people making the best of a bad situation. I don't see a bigger story here.

In summary, I am glad I put profits from selling R/E into gold ....

I found this interesting since I am selling metals and again buying property. I'm not saying I'm correct and you're incorrect, just observing that we're moving in opposite directions.

[ThePythonicCow]

Re: 1 in 7 home loans are in forecloser or default

we evaluate the numbers of defaults currently, the pace of change and the major economic factors that are present before/during/and after the change in the number and rate of change in defaults.

Thanks, jbm, for that very fine post.

My current expectation (based on < 1 % of the real world data you have ;)) is that the U.S. stock market stutters along ok through Christmas, then gets slammed down in 1Q2010, jerking the dollar up. What you set forth is consistent with my (far less informed) expectations.

But gold is decoupling from being a simple dollar-inverse and getting a strong world wide tailwind regardless. I expect to exit the junior gold mining stocks I've been in recently sometime late December 2009, as they decouple from physical gold and prepare to go cliff diving with other U.S. stocks sometime early 2010. The boost of the dollar early next year (in response to collapsing U.S. stocks, U.S. economy and the dollar carry trade) will be the dollar's death rattle.

The next downdraft of the dollar sometime in 2010 seriously risks some sort of Zbigniew Brzezinski orchestrated Middle East event, reminiscent of the oil panics and the fall of the Shah in Iran in the 1970's, another Z.B. special.

This time however, the U.S. will not once again renew its lease as the world's superpower for another thirty decades. This time a new world order with IMF meta-currency and a permanent reduction in the value of the dollar and the dominance of the U.S. will follow.

Those of us Americans who were fortunate enough to be dirt poor at sometime in our lives will have an inherent advantage; we'll have experience useful to adapting to our new circumstances.

The resolution of peak cheap oil over the next decade will continue to be a horse race, with the other horse being peak cheap financial dollar bubbles. A glue factor (glue used to come from the hooves of dead horses) sits astride the finish line of this race track. Economic problems will continue to depress demand for oil, even as oil becomes more difficult to get, leading to volatility, hunger, depression and war.

I don't think (he said with horrific hubris ) that EJ will be able to set a course through this storm unless he extends his analysis to world political struggles.

This is no longer just a matter of financials, economics and the cost of energy. With the decline of the enormous gusher of cheap and easy energy that fueled the American empire this last century comes the decline of that empire itself and a re-ordering of the world's power, banking, and political structure. Almost surely, America will not leave center stage gracefully. Essentially American institutions, such as its military, industrial, intelligence complex, will go kicking and screaming into the night. The world's most powerful and wealthy have already been decoupling their destiny from America's destiny for at least the last decade or two. If they have to bitch slap American around a bit to get it to accept it's new role in the world, they are prepared to do that (with say oil price spikes, bank closings, flu pandemics, martial law, middle east wars, ...)

[thunderdownunder]

Re: 1 in 7 home loans are in forecloser or default

Although the way you present this is amusing, the content is all too familiar and disconcerting. In response ...

God,
You made me smart enough to be ethical.
... smart enough to have a profitable venture in this terrible economy.
... smart enough to have saved enough to help out friends and relatives who are hurting during this depression.
... smart enough to know we are in a state of crisis that is not being turned around by the "experts" in charge.
... why, God, oh why haven't you made me smart enough to be able to figure out a solution to this financial and economic holocaust.

4 out of 5 is a pass

PS: God worked a miracle for me today - 175 applicants - one opening. Start 2 weeks.
Its 2/3 what I made but I had enough of private industry and reporting to CEO's & Directors who panic. I can live like a human being again

[jiimbergin]

Re: 1 in 7 home loans are in forecloser or default

Amen nice prayer

yes nice prayer, Amen!

[jiimbergin]

Re: 1 in 7 home loans are in forecloser or default

4 out of 5 is a pass

PS: God worked a miracle for me today - 175 applicants - one opening. Start 2 weeks.
Its 2/3 what I made but I had enough of private industry and reporting to CEO's & Directors who panic. I can live like a human being again

God does answer prayer. Not always with the answer we want, but always with an answer.

Congradulations

[Billwhc]

Re: 1 in 7 home loans are in forecloser or default

The only comment I can make at this time about your comment about Rush is that our "democratic" system is not working and no party, either Democrats, Republicans, or Independents, can make a difference. Our corrupt and inept system is like an oil tanker that cannot turn around and is heading to the rocky shore. We are headed for the shore and a great mess as the oil will leak out like the Exxon Valdez! I am not saying noone should not make an effort to make a difference; it is that I am rather pessimistic that we are not heading for an even greater depression and much heartache... much more than there is now. I wish you the best.