Note to Federal Housing Finance Agency:
1. If, as an organization responsible for several trillion dollars in assets, you put an individual who can barely say his own name without a stutter behind the podium during your CNBC covered press conference, you are likely to extinguish what little confidence might have existed in your group’s ability to manage a suburban middle-school bake sale, much less a massive foreclosure relief program.
2. Putting the power for participants to qualify themselves for the program by merely ceasing to pay their mortgage payments for three months, making any due diligence on your part impossible by “fast tracking” decisions, especially where the program’s benefits include:
A. Lengthening the loan term;
B. Reducing the interest rate, and;
C. Deferring payments until the loan is 38% or so of gross household income,
will expand the programs size to roughly every mortgage in the United States.
3. Any hope of securitizing mortgages cost-effectively after this program is doomed to failure.
4. You may think #3 above is a good thingTM but there is simply no way that even a fraction of the capital formerly in the mortgage market will return if this comes to pass, and, accordingly, any hope of a recovery of any note in the market is utterly doomed.
Just sayin’ is all.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
“will expand the programs size to roughly every mortgage in the United States”
i like your style, ep
Hells Yeah! Even if you have equity in your house, no need to make those pesky mortgage payments.
IP trademarks and all!
“Hello, I’m from the government and I’m here to help.”
Serves Cramer right
How’s bear looking now, Jim?
Say Hi to Bella
Sweet!
I’ll just manipulate my circumstances to take advantage of this sweetheart deal!
- Change my job (mickie D’s)
- Draw my HELOC to make my LTV 90%
- Miss next three mortgage payments
- PROFIT!
6,
Ruthless, yet plausible.
Woof.
http://www.ofheo.gov/media/statements/newFHFASTATEMENT111108.pdf
Lol @ paragraph 7.
Note to private label MBS servicers: bankrupt yourselves.
What makes you think the government cares about whether securitization survives as a business or if there is any recovery on preexisting notes?
Agency debt is the original mortgage backed, to the extent competing products are forced out of the market why should we care?
Stuttering is a disability. Real cool picking on the handicapped, EP. Push any wheelchairs into traffic lately?
Some awesome spelling errors in the Q&A too; specifically missing the name of the primary program.
Listen folks. If you are going to make up rumors about the heart attacks of quasi-famous TV personalities, don’t do so 5 minutes before air time. Your lie will be debunked quickly. At least don’t insult us with an entirely implausible rumor. Next time, pick someone who has just left on vacation to the Amazon rain forests.
Further, that was a particularly scum-bagish comment. We cannot tolerate it if that kind of behavior threatens to become harmful.
Please keep in mind that we log IP addresses here.
As for the rest of you partaking of lecherous, nasty, underhanded and snide comment practices, thank you and please continue.
Not much of a kool-aid drinker EP.
Kool-Aid= Economic recovery
@12 – what? More detailed background, please?
Having a stutterer hold a press conference is like asking stevie wonder to play point guard…
Well said EP… if we take your comments one step farther, we have a situation where it appears that the “powers that be”, are attempting to make every single major mistake possible in the middle of this disaster.
We, as a nation, appear to have pushed the big button with the label Ludicrous above it.
Whats next? a moratorium on mortgage payments so everyone can go shopping? Unleash the housewives with US Treasury backed, US FED issued ATM cards?
I can see the slogan now… Get Out The US Prosperity Card and Shop for America’s future…
~SEG
EP, agree – Not a good thing. Whatever -we’ll all be living in grass huts in a year anyway, and the Amazon Rain Forest sounds like a good place to move and start over. Will consider this for the next 4 years.
“Fannie Mae and Freddie Mac own or guarantee almost 31 million mortgages, about 58% of all single family mortgages. Although these mortgages only represent 20% of serious delinquencies, I believe their leadership role combined with the many partners of HOPE NOW should spread this approach throughout the whole mortgage loan servicing business.” – presumably they are hoping everyone comes aboard so the entire industry is floating at the same low level……otherwise they will remain at rock bottom and other lenders’ paper will be attractive…relatively speaking
Cripes, 10:
If stuttering and other verbal malaprops are handicaps we can’t make fun of, does that mean we have to stop making fun of Bush?
I thought they said for borrowers already behind by 90 days on their mortgage, not everyone. That’s what the news story on one of the x/NBC website said.
Would you like fries with that? Hell ya. Go ahead and Biggie size em too. Spend, spend spend. An den, no an den, an den, no an den!!!!
DOODIE!
@20..
Nothing’s stopping you from getting behind in your mortgage anyway.
Since you know the details, might as well go through with the steps above. Sure, your credit will be crap, but you’ll probably save a couple hundred grand on the mortgage!
- Dude from @6
FYI: http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
so they want everyone on a level playing field of rock bottom – come join us in this program so we’re all together in holding crap paper….
Going delinquent.
EP – you go Girl! Star putting these infantile, racist posts in the bin. Funny, cynical, snide and snarky ones can stay. Suggestion box: why don’t you post an obligatory “Obama Newsflash Of The Day” every morning, and direct all the squealing racist piggies there so they stay off of the other banter on legitimate topics? Threaten said piggies with IP outings, or better yet, can you find a way to filter piggies IP’s or banish them from the kingdom for good?
The Executive Assistant Director of the Finance Ministry of Burkina Faso says he has a plan to solve all my financial troubles…
Who wants to pool assets?
@27…fuck off.
wasn’t the lack of diligence how we got to this point in the first place? who’s making this stuff up – a bunch of capital hill interns? perhaps we would be better served if the gov’t took over the properties and charged rent. even if the market can stay irrational longer than we can stay liquid, the government can out last us all…or can it?
did I miss something? what’s this about racist piggies?
@9: Really?
one more suggestion: we should all convert into commercial banks and just tap the government’s credit lines ourselves. who needs amex and visa?
I told Sheila 25% of NET income AND to record a “soft second” for the remainder of the balance to prevent a moral hazard.
I’m trying to create little feudal societies with people tied to there home like back in the day…
She didn’t listen though…
I told Sheila 25% of NET income AND to record a “soft second” for the remainder of the balance to prevent a moral hazard.
I’m trying to create little feudal societies with people tied to their home like back in the day…
She didn’t listen though…
@32 Then what happens to Wall St and more importantly, DB?
27,
Didn’t catch any sarcasm from EP’s satirical comment? The OG post (which was removed) pertained to one JC from MM having an HA, and being rushed to an NJ ER.
-Acronym Man
Who are you called quasi-famous? Expect a defamation lawsuit soon.
-JC
@32 – db would have to merge with gawker…on second thought, let’s stay the course.
@ 36 OMG NFW!!!!
funny, but i get a HA every time i see that clown on tv…
@ 36 OMG NFW!!!!
“EP – you go Girl! Star putting these infantile, racist posts in the bin.”
Actually, I always picture an obese white couple, straight back from obtaining the largest bulk containers of Cheetos (original, not crunchy) sitting down in front of their 6 month old flat screen TV suddenly overjoyed that their mortgage is going to be paid. Really, these are the consumers we could all do with a little bit less lending to. But then, since my focus doesn’t fit your “white girl is racist” agenda, I suppose you needed to transform me into something else much more race-based. What, exactly, do you think that says about you, oh race-card flopper?
All your accountability are belong to us now.
EP, OK, OK
I picture that same overjoyed couple too who break out the Bud when they get news like this. Especially on the days when I feel like a Chump because I still pay bills and never went the sub-prime mortgage route. Not feeling the Messiah. Only flopped when I really start reading really stupid shit and nothing clever.
@44-
You must not be too familiar with DB…you were searching for “clever” and then flipped when you didn’t find it?!
Go back to Jezebel, you sound like you belong over there!
-CandiCane
@44-
You must not be too familiar with DB…you were searching for “clever” and then flipped when you didn’t find it?! There is no room for PC mongering here.
Go back to Jezebel, you sound like you belong over there!
-CandiCane
How is this program a bad thing? This is EXACTLY what we needed to do. Home prices were inflated because of free money and exotic loans. Now that home prices are falling to appropriate levels we can rework the mortgages to appropriate levels.
This will prevent a ton of defaults and foreclosures, which is great for both main street and Wall street. Banks are going to benefit from this. All of the securities backed by bad mortgages will now return something decent as opposed to something terrible. The write-downs aren’t over, but a standardization of loan terms is going to help determine just how to PRICE these assets, which has been a huge problem.
The private sector banks will follow suit and some already have, at least to the extent they can do so without destroying their balance sheets (which means they’ll do it gradually).
Some people might try to take advantage of the program unfairly, but I’d like to think that most people who can afford their mortgage won’t just stop paying it and deal with the hassle of a renegotiation. And there is a vetting process, however expedited.
As to securitization, OF COURSE people won’t be throwing money into the mortgage market like they did in the past. It was a bubble. Banks will be much more careful when buying up loans and investors will be far more wary in funding mortgage-backed products. I doubt that we’ll see even half of the issuances that we saw at the securitization peak (probably more like 25%).
Why not create new EPM/SAM-type notes and have the gov’t buy out the originals. Slap a lien on the property for a fair share of the first 10% appreciation over the high water mark so the original note holder participates no matter what.
Why not?
@ 47: GTFO, back to yahoo with you.
Any servicer who commits to the terms of this program are committing suicide … for $800 a pop. Someone run the math on just the cuts to servicing strips based on principal reductions. Guarantee that works out to some exponential factor for $800/loan.
As committed as Big Brother is this is just going to turn into a classic Hobson’s choice anyway. So messy.
yes of course @42 there are no obese black couples in the new order of Obamaphoria, just like Keillor’s above average kids in Lake Woebegone, every afram is slim, trim, highly successful and possessed of a 200+ IQ like all of them are. And of course 85% of the prison population is composed of slum dwelling whites.
@ 49: The servicers and the people buying the strips are all financial institutions who are fucked more without the package than they are holding on to mortgages that will never get paid off.
Want to know where the country is headed now? Look at Africa, mother fucker. Tell me what you see. What have the US and Western Europe, economic leaders of the free world and bearers of the enlightenment had in common?
@47
The problem is that this is a grossly inefficient use of taxpayer’s money. Bailing out idiots who bought houses obviously beyond their means with no real consequences for doing so, will simply piss off the rest of the populace and encourage migration to jobs/locations where they do not not have to stand by and watch their taxes wasted in this manner. With no incentive to not take advantage of the new program, expect high subscription rates to this new free money from the govt. scheme.
Longer term, if you were a corporation, with productive assets, wouldn’t you rather cut your losses, tell investors (i.e. Treasury/agency holders) that we fucked up and apply that money to more productive projects – such as infrastructure, education and research and use the proceeds from that to pay down debt? Most of the losses from mortgages have probably alreay been baked into the assumptions that are used to price MBS today.
All the program will do is prepay a bunch of MBS holders, bail out idiot home buyers and fuck every taxpayer and dollar-holder out there. Thanks but no thanks.
@47
The problem is that this is a grossly inefficient use of taxpayer’s money. Bailing out idiots who bought houses obviously beyond their means with no real consequences for doing so, will simply piss off the rest of the populace and encourage migration to jobs/locations where they do not not have to stand by and watch their taxes wasted in this manner. With no incentive to not take advantage of the new program, expect high subscription rates to this new free money from the govt. scheme.
Longer term, if you were a corporation, with productive assets, wouldn’t you rather cut your losses, tell investors (i.e. Treasury/agency holders) that we fucked up and apply that money to more productive projects – such as infrastructure, education and research and use the proceeds from that to pay down debt? Most of the losses from mortgages have probably alreay been baked into the assumptions that are used to price MBS today.
All the program will do is prepay a bunch of MBS holders, bail out idiot home buyers and fuck every taxpayer and dollar-holder out there. Thanks but no thanks.
There already is a process for people who can’t pay their creditors. It’s called bankruptcy.
This government keeps reinventing the wheel, with square wheels.
@52 should be removed
@53 Obviously, plenty of idiots bought houses that were way beyond their means, but it’s hardly going to help the national economy to throw them all out on the streets. The problem is not just that these houses were bought, but that they were built. There were never nearly enough people in the country who could afford the number of expensive homes being built, and there are certainly fewer now. The homes are worth a lot more if they’re occupied and at least marginally maintained, than if they’re sitting empty and being vandalized between foreclosure and resale.
Of course, the houses can be foreclosed and sold at current market value — often less than half of the original sale price — but there is no advantage to the mortgage holders to replacing the resident/”owners” with different people who can also only afford a mortgage based on the current market value. In fact, the likelihood of homes getting trashed by “owners” who are being foreclosed on is quite high, and I could hardly blame the “owners” when they know that the foreclosing lender is simply going to resell the house at a price that the “owner” could comfortably afford.
@57 – couldn’t they switch to renting? How about a bailout where the government lends money to new investors to purchase the houses at “market value” and at “market interest rates”. Existing homeowners are switched to a 3-5 year lease. That keeps them in their homes until conditions and job mobility improve. They pay the price for buying out of their reach, but don’t wind up on the street.
Losses in the mortgage pool are then realized – if insitutions haven’t already marked their mortgage holdings to close to these levels, they go under, as they should, for poor risk controls. Those that have marked down or hedged, and thus demonstrated good management, will survive and probably get liquidity that may eventually find its way back to the lending markets.
@53
The inefficient use of taxpayer money is the main argument I hear against HOPE NOW. Basically, people who can still afford to pay their mortgages are pissed that the government is bailing out “idiots” who took on mortgages they couldn’t pay.
But these “idiots” aren’t the only ones to blame. You think that loan originators weren’t in the ears of borrowers telling them they could afford that more expensive or 2nd house? On top of that, you think that the bosses of these originators weren’t pushing them to make any and every kind of loan when they knew they could just sell it off to an investment bank or Freddie/Fannie for securitization?
And once they were securitized, the ratings agencies were complicit in giving ridiculously high ratings to securities that are now worth not just very little, but absolutely NOTHING.
So let’s see, there were a TON of people to blame here, and that can’t be disputed. If we’re bailing out the banks, why can’t we bailout the borrowers, they were all at fault?
Even more importantly, however, the parties at fault are beside the point now. If you weren’t at fault for any part of this financial crisis, good for you, but it’s water under the bridge. You think that not bailing out homeowners and banks will somehow “teach them a lesson.” HA, what’s going to happen to your job when unemployment tops Great Depression levels (25%, and it would)? The dire consequences of not acting are FAR greater than the good that would come from some sort of vengeance-inspired “fuck you, you caused it so you’re not getting anything.”
People don’t seem to understand the severity of this crisis. The economy is teetering on the brink of complete collapse. If another big bank or corporation fails (see GM), then we all fall, hard.
The taxpayer money is being doled out for EXACTLY the right purpose, to save the country from a MASSIVE depression. There’s nothing inefficient about it. Or maybe we should go upgrade our roads, schools and healthcare while tens of millions enter unemployment and the tax base dwindles down to pennies and no one buys Treasury bills and the entire country is bankrupt. At least then we’ll have a couple of shiny new interstates and a couple hundred schools that we can’t maintain for lack of funds.
Give me a break. Yeah there are a lot of people out there who don’t deserve this, but destroying those at fault is not the answer for anyone. Like it or not, we’re all in this together.