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CoreLogic: 1 in 4 Borrowers Are Underwater | The Big Picture
by Decius at 6:56 pm EST, Nov 24, 2009 |
23% of all mortgage borrowers in the US are underwater.
Imagine if they all walked. |
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RE: CoreLogic: 1 in 4 Borrowers Are Underwater | The Big Picture
by Hijexx at 11:40 pm EST, Nov 24, 2009 |
Decius wrote:
23% of all mortgage borrowers in the US are underwater.
Imagine if they all walked.
Also: Housing: Yes, That Was And Is A Train Wreck The gross injustice in our nation today is that over the last twenty years we have increasingly forced borrowers who take out bad loans to not only go bankrupt but be unable to discharge their debt, so long as they are individuals. The corporate bankrupt, however, maintain their "corporate veil" and thus can file Chapter 11 - or 7 - with impunity. This is the root of the problems in our economy. It is the root cause of the credit bubble. It is the root cause of the housing bubble and the ridiculously-pumped pulled-forward demand curve that is now inexorably collapsing, despite the protests of The Fed, Treasury and The Administration. We will not return to a balanced economy capable of organic growth so long as this imbalance exists. ... Recent analysis has shown that the FHA's "AUS TOTAL" decision-making program (computer-based underwriting) has been intentionally calibrated to produce unsustainable loans. Indeed, as I have documented FHA will provide an "approve" return on DTIs (when one includes the FHA "fudge factors") as high as 49% of gross income. This is clearly an unaffordable loan and is reflected in the current FHA delinquency and foreclosure rate which stands, at this point at more than one in five loans. The true ugliness here is that these stats are far worse than they first appear. Why? Because more than half of the FHA total loan portfolio has been originated in the last two years. Consider what this default ratio means given the portfolio composition, as there are only two possibilities - either the FHA is intentionally making loans that are defaulting quickly, within the first 24 months, or the older FHA loans are defaulting at an astronomical rate. FHA is less-than-forthcoming when it comes to testimony before Congress on this point, and apparently, Congress has buried its head in the sand as well. Indeed, we have Congresspeople making statements that making dangerously-unsustainable loans is a "policy" intended to head off housing price declines. But does and will it? Does giving someone a loan that will foreclose in a year or two actually head off housing declines? Or does it simply bankrupt more Americans and defer the inevitable house price decline by a short period of time - a year or two at most, perhaps as little as a few months?
News that the FDIC fund is negative ~$8 billion does not reassure me that everything's okay. Seen those yields on 3 and 6 month treasuries lately? Effectively zero with speculation of heading into negative territory by year's end. |
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RE: CoreLogic: 1 in 4 Borrowers Are Underwater | The Big Picture
by flynn23 at 1:32 am EST, Nov 25, 2009 |
Hijexx wrote: This is the root of the problems in our economy. It is the root cause of the credit bubble. It is the root cause of the housing bubble and the ridiculously-pumped pulled-forward demand curve that is now inexorably collapsing, despite the protests of The Fed, Treasury and The Administration.
I dunno if you can classify this as the root, but certainly a systemic problem is that the engineers of these policies, instruments, and tactics are using Other People's Money. When all the major brokerages and investment banks (Goldman, Merril, Lehman, etc) went public, that meant that risk became externalized. It wasn't the partner's money they were playing with anymore. It was the publics. And after that happened, they learned that they could privatize gains and publicize losses. That's what's been going on for the last 10+ years and that's what's caused most of this pain. The American Consumer(tm) is at fault for wanting what normal individuals in the west typically want. A lot of stuff without a lot of work to get it. But feeding that desire is a machine that effectively can't lose if you are pushing the button. It is quite simply, the hacking of capitalism and it will crash in glorious fashion. |
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Cliff Diving
by noteworthy at 10:47 am EST, Nov 25, 2009 |
Ruth Simon And James R. Hagerty: 23% of all mortgage borrowers in the US are underwater.
Decius: Imagine if they all walked.
Rory Stewart: "It's like they're coming in and saying to you, 'I'm going to drive my car off a cliff. Should I or should I not wear a seatbelt?' And you say, 'I don't think you should drive your car off the cliff.' And they say, 'No, no, that bit's already been decided - the question is whether to wear a seatbelt.' And you say, 'Well, you might as well wear a seatbelt.' And then they say, 'We've consulted with policy expert Rory Stewart and he says ...'"
Decius: Sometimes the market drives off a cliff.
John Lanchester: The average British household owes 160 per cent of its annual income. That makes us, individually and collectively, a lot like the cartoon character who's run off the end of a cliff and hasn't realized it yet. We in Britain are, to use a technical economic term, screwed. The German economy is fucked off a cliff. The consequences for Britain are going to be horrific.
Judith Warner: We're all losers now. There's no pleasure to it.
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1 in 4 Borrowers Are Underwater
by noteworthy at 11:17 pm EST, Nov 24, 2009 |
Ginia Bellafante: There used to be a time if you didn't have money to buy something, you just didn't buy it.
Pascal Bruckner: A revolution comes when what was taboo becomes mainstream.
Ruth Simon And James R. Hagerty: 23% of all mortgage borrowers in the US are underwater.
David Foster Wallace: There are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, "Morning, boys, how's the water?" And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, "What the hell is water?"
Steven Pinker: In every age, taboo questions raise our blood pressure and threaten moral panic. But we cannot be afraid to answer them.
Simon And Hagerty: Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," the study said.
John Bird and John Fortune: They thought that if they had a bigger mortgage they could get a bigger house. They thought if they had a bigger house, they would be happy. It's pathetic. I've got four houses and I'm not happy.
Decius: I've gotten old enough that I now understand why adults seek to escape reality. Paradoxically, I think I was better at escaping reality when I was younger.
Richard Brody: On the island where he encounters the Wild Things, Max talks of his desire to do away with the "sadness and loneliness" -- something that has less to do with their needs and desires than with his own -- or, rather, with the screenwriters' notion that so much of experience can be summed up under those two signifiers, and that there's some implicit happiness awaiting those who can suppress them.
John Lanchester: It's becoming traditional at this point to argue that perhaps the financial crisis will be good for us, because it will cause people to rediscover other sources of value. I suspect this is wishful thinking, or thinking about something which is quite a long way away, because it doesn't consider just how angry people are going to get when they realize the extent of the costs we are going to carry for the next few decades.
The Economist's Washington correspondent: By some measures, America already has a lost decade in its rearview mirror. A couple more would mean a lost generation. Worst of all, it would mean my generation. I thought I was unlucky graduating into the tech bust. I had no idea.
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