Lawmakers Look for Home Foreclosure "Quick Fix"

[Ben]

Well this just torques me off to no end. It was the "Lawmaker fix" of Fannie May, Freddie Mac, and telling banks that they had better lend to unqualified individuals that got us in this mess. Now we have to "stop the foreclosures". How about letting the market naturally stabilize instead, jackwagons?

I'm willing to bet that a very large number of all foreclosures are connected to individuals who should have never been homeowners in the first place, or are in way too much home for their income. Not to mention that any scheme that is being foisted upon banks by La Raza and NAACP is going to be pretty much the opposite of fair.

http://www.foxnews.com/politics/2010/10/10/lawmakers-struggle-address-foreclosure-fiasco/

[TommyGunn]

If you really think the buzzheads in Washington DC are ever going to learn from their mistakes  -- or change -- then I think you are not giving them the credit they deserve.

Need I elaborate? 

[Ben]

Oh, I'm giving them that credit, believe me. :)

What's most maddening is that this is basically happening for November votes by the masses. Even many of the Lawmakers who know this is a terrible idea will go for it for some lousy votes, and idiots will vote for them, then 6 months from now wonder why the housing situation has gotten even worse.

I feel sorry for the buyers of these properties that will now be out of luck, and probably out some ducats since the freeze means they can't make their in-process purchases.

[cassandra and sara's daddy]

some of the paperwork shenanigans that have gone on are way over the top    need to stop

[Ben]

I don't disagree that there are some people out there taking advantage of the situation, just like some took advantage of the liberal lending policies before the housing crash. Yet once again, the govt solution is the broad brush stroke that hurts more people than it helps.

Bank of America and other banks seem to be looking at things internally right now. The best govt solution is to let the market handle it for now, not immediately step in and take the whole process over. That's just way too Hugo for me.

[HeroHog]

As long as those living off the government have the right to vote and outnumber voting workers, this will continue.

[cassandra and sara's daddy]

the problems were no accident and the banks weren't "surprised " by them.  just surprised they got caught. i have zero confidence that they would act if not compelled.  the circus i am going through with pnc give me no confidence  they are so backed up they are telling me 5 maybe 6 months from when they got my notarized paperwork on a refi to get it properly recorded and up to date.  meanwhile it louses me up on trying to buy a car at a good rate till they get their paperwork in order

[MechAg94]

Don't worry, this bill will only be 1995 pages long, well short of 2000.  We'll know everything that is in it except for the stuff we don't.

[Perd Hapley]

Don't worry, this bill will only be 1995 pages long, well short of 2000.  We'll know everything that is in it except for the stuff we don't, after the bill passes.

Fixed.

As long as those living off the government have the right to vote and outnumber voting workers, this will continue.

We've had that conversation about a million times before. It always gets very nasty. Can we stay on topic with this one? Or move that talk to another thread?

[De Selby]

Does anyone have any statistics at all showing the rate of defaults on Government-instigated loans, ie, loans for minority neighborhoods, loans for the poor?

Everything I've seen places most of the blame on Brokers and Banks screwing investors by bundling junk loans into securities and passing them off as good debt; that was a market incentive, not a government program.

[roo_ster]

Does anyone have any statistics at all showing the rate of defaults on Government-instigated loans, ie, loans for minority neighborhoods, loans for the poor?

Everything I've seen places most of the blame on Brokers and Banks screwing investors by bundling junk loans into securities and passing them off as good debt; that was a market incentive, not a government program.

There are several very inconvenient maps out there detailing the counties and neighborhoods and distinguishing them by foreclosure rates.  The vast, vast majority are concentrated in minority neighborhoods in a few states.

Here's a blog post from 2007 that runs through the history and links to articles from way back, some with really, really inconvenient headlines like, "Fannie Mae to invest $700 billion in minority housing."  What could possibly go wrong?
http://isteve.blogspot.com/2007/08/trillion-here-trillion-there-pretty.html
From a 1999 article:

"Banks are under a great deal of pressure to lend in these communities," she says. "It is very political. But I still have reservations about whether you're really doing anyone a favor by letting them borrow 100 percent of the cost of a home. It makes it so easy for them to get in over their heads." If the economy turns sour and unemployment rises, minorities will be the first laid off -- paving the way for a wave of defaults.

Federal laws on fair lending and community reinvestment require bankers to reach out to minorities, notes David Lereah, chief economist with the Mortgage Bankers Association. The record rates of homeownership among minorities as well as the rest of the population shows that these reach-out programs are working.

Another article from 1999:

The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership in underserved groups.
...
"'We need to push into these underserved markets as much as we can,' said David Glenn, president and chief operating officer of Freddie Mac.
...
"Freddie Mac, like its sister agency Fannie Mae, is a government-chartered corporation that buys mortgages from banks and packages them into securities for investors.

"In September, Freddie Mac launched a new lending program, based on research done in collaboration with five black colleges, to bring more African-Americans into the market.
...
"The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories.

"Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low-and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets."

Heres some commentary on a wapo article that falls into the "World Ends: Women & Minorities Hurt Disproportionately" category:
http://isteve.blogspot.com/2010/06/world-ends.html
The wapo article actually asks, "Are foreclosures racist?"  I'm not making that up.

Here's a confession from a low-income homeownership advocate:
http://www.ft.com/cms/s/2/f64a9e36-9da3-11de-9f4a-00144feabdc0,dwp_uuid=a712eb94-dc2b-11da-890d-0000779e2340.html
A fascinating look into the ground-level goo-goo mindset and practice.

Mapping foreclosures in NYC metro:
http://www.nytimes.com/interactive/2009/05/15/nyregion/0515-foreclose.html

Here's one by metro area:
http://money.cnn.com/2010/04/29/real_estate/foreclosure_map/index.htm

Here's another by county:
http://www.foreclosurepulse.com/blogs/mainblog/archive/2010/09/01/july-2010-u-s-foreclosure-heat-map.aspx

DIY Foreclosure Mapping:
http://prof77.wordpress.com/2010/01/13/googles-foreclosure-maps-portrays-the-end-of-the-world-as-we-know-it/





Couple of NYT articles on how sub-prime lenders lent to poorer minority areas after having hte whip cracked.  I
http://www.nytimes.com/2007/10/15/nyregion/15subprime.html?_r=1&oref=slogin&pagewanted=print
http://www.nytimes.com/2007/11/04/weekinreview/04bajaj.html?_r=1&pagewanted=print

[TommyGunn]

Does anyone have any statistics at all showing the rate of defaults on Government-instigated loans, ie, loans for minority neighborhoods, loans for the poor?

Everything I've seen places most of the blame on Brokers and Banks screwing investors by bundling junk loans into securities and passing them off as good debt; that was a market incentive, not a government program.

Yeah... For the same reason people get "rid" of counterfeit money -- it's worthless.
There's an old bromide in the study of economics; "The bad money drives the good money out of circulation."
If you create hollow debt instruments no one is going to keep it.  They're going to bury it and get rid of it (ie., sell it).  Who created that bad debt instrument?
Our beloved politicians did  via the Community Reinvestment Act.

I won't say there wasn't greed involved, but then again, the brokers, the bankers, the wall street traders, they didn't invent greed.  And politicians are not immune from it either. 

But if you think (as a politician) you're  going to jigger with a free interprise system without downside consequences you're a blind @ssh*l#.

[cassandra and sara's daddy]

the folks in the industry made billions outa gaming that system  and only a few raised a fuss   they were ignored

[TommyGunn]

Wish kongress would quit "gaming" us all.......   

[longeyes]

Look for a plenary mortgage forgiveness, by hook or by crook, in our future.

[roo_ster]

Look for a plenary mortgage forgiveness, by hook or by crook, in our future.

Tell me again why I bought less house than the bank would loan me money to buy?  Why the heck ought I be prudent when the gov't rewards imprudence?

[eyebrows]

Tell me again why I bought less house than the bank would loan me money to buy?  Why the heck ought I be prudent when the gov't rewards imprudence?

Its called responsibility. This card house is coming down and folks like you and I, with our ducks in a row, are going to be in a better position than the irresponsible. Not cause we will be rewarded but because we have fewer of the FedGov's talons buried in our flesh and it will be easier to shake off the carcass when it starts to rot.

[Ben]

the folksA subset of lenders in the industry made billions outa gaming that system  and only a few raised a fuss   they were ignored

FTFY :)

Why must we penalize everyone in the financial industry (as well as homebuyers trying to buy within their means) with another "government rescue" for the crimes of a small percentage (who were given the means by the government)?

If we do that, lets ban all guns because of the guy at Virginia Tech.

[HeroHog]

I bought a house I could afford. The State/County appraised it 50k higher than I paid for it raising my taxes (this on a 113k home that I put some 15k in). I get disabled, go bankrupt, default on the loan and they sell my house for 135,303 on a 159,740 assessment. I was told by my neighbor it had been sold for less than 100k and looked it up while typing this so I feel better now. At least Countrywide didn't take a bath at my expense. We had taken out a loan against it's accrued value of 124k JUST before the market fell to replace ALL the 1956 plumbing from the city water at the curb to the city sewer at the back fence!

[lee n. field]

Googling on "Foreclosure map" got me to realtytrac, which maps down to county, then gives a listing of sheriff's sales.

In my little city, they do not appear to be concentrated in the poor side.  More into the lower middle class neighborhoods.  But, with only 59 foreclosures for the whole county, concentrations might not show up.

[De Selby]

Okay, headlines are great - but where are the stats showing that it was government-sponsored or government-backed loans that defaulted at the high rate, causing the crisis?

That I do not see in any of the myriad of links.  The data are out there, so if it's clearly the case that government programs caused this, why not show us the default rates to prove it?

[cassandra and sara's daddy]

in my hood its the high end houses that are going up for short sale and foreclosure  the poor hood?  those folks so far are keeping theirs  . lot easier to swing 1000 a month than 4000. the houses i see going are the ones folks are way upside down in and they are middle class or better for the most part

[De Selby]

in my hood its the high end houses that are going up for short sale and foreclosure  the poor hood?  those folks so far are keeping theirs  . lot easier to swing 1000 a month than 4000. the houses i see going are the ones folks are way upside down in and they are middle class or better for the most part

Here are some stats on it http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

[cassandra and sara's daddy]

thats gonna leave a mark. sadly for two reasons one is that it mirrors what i am observing.  the folks who got caught were playing the game with arms and trying to play property ladder in an unrealistic manner or just pulling out all the equity they could to finance lifestyle. and sadly also cause it puts me in the awkward spot of agreeing with you....   i'm of a mind to say loudly get thee behind me satan and retreat.


i live adjacent to a great example of the mortgage meltdown


builder built 32 homes on 5-9 acre lots  650 to 900 k  with his own home on a 13 acre lot at 1,295,000.00
when the bottom dropped out all but 11 of them went to the bank as he couldn't sell em and his notes were called in. the bank got 750 k plus average at that point in 07-08. 10 of those house have gone under again since folks moved in  another 5 or 6 are in trouble. the folks who bought em were not middle class  heck the one lowlife was a bigshot with dhs  was on the phone with cheney when i was over a real well paid schmuck.  he walked away  "made better financial sense for him"  bank just sold that house for 289 at a short sale  5000 sq foot house on 5 acres  was originally 700 plus

the builders home?  went from almost a mill .3 to 700 k.

[De Selby]

Don't worry CS&D, agreeing with me is fine as long as there're the numbers to back it. 

Yeah, the ironic thing is seeing bankers crying "moral obligation" about those financial walk-aways....like the banks don't break contracts as soon as the dollars fail to add up.