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ML
2698 Posts |
 Posted - 05/16/2008 : 12:07:05 PM
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Summary: FDIC Chairman Sheila Bair proposes gov't loan to pay down upside down mortgage loans, combined with lenders restructuring loans and paying cost to restructure...zero cost to taxpayers.
WALL STREET JOURNAL
May 16, 2008, 10:29 am
FDIC’s Bair Warns of Greater Housing, Credit Woes
Michael R. Crittenden reports on the housing market.
Federal policy makers need to “come to grips” with the reality of the housing market and embrace broader, more aggressive proposals to prevent the growing number of foreclosures, a top banking regulator said Friday.
“Frankly, things may get worse before they get better. As regulators, we continue to see a lot of distress out there,” Sheila Bair, chairman of the Federal Deposit Insurance Corp., said in the text of a speech to the Brookings Institution.
The vast majority of federal proposals, particularly those from the Bush administration, have focused on encouraging banks and lenders to voluntarily work with cash-strapped borrowers to avert foreclosure. But those efforts are “just not happening fast enough,” Bair said; a loan-by-loan approach will not work.
“Too many unaffordable mortgages are causing a never-ending cycle — a whirlpool of falling house prices and limited refinancing options that contribute to more defaults, foreclosures and the ballooning of the housing stock,” Bair said.
Instead, she pushed an FDIC proposal to provide homeowners federal loans to pay down as much as 20% of the principal on their loan. The $50 billion program would be run through the Treasury Department and would rely on mortgage investors and servicers being willing to restructure troubled loans, as well as to pay the financing costs of making the loans.
“We need to take a systematic approach that pays down enough of these mortgages to make them affordable,” Bair said. “And it can be done at zero cost to taxpayers.” Bair acknowledged that doubts have been raised about particular aspects of her proposal, but said the key is that policy makers do something to address the continuing deterioration of the housing market. She warned that data suggest there could be a second wave of credit problems, with delinquencies for commercial loans and consumer debt on the rise.
“Another empty house on the market. Another blight on a neighborhood. Another hit to surrounding property values. More erosion of local tax bases,” Bair said. “These foreclosures are hurting us all.”
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VVance
2282 Posts |
Posted - 05/16/2008 : 12:53:30 PM
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At least someone is recognizing the truth.
I'm just not thrilled with the proposed solution.
The least painful way out of this mess is to encourage new borrowing through lower mortgage rates, not the current way of bumps and adds creating higher rates and fees.
With the proposed solution, I fear an even further increase in the cost of mortgages. |
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ML
2698 Posts |
Posted - 05/16/2008 : 5:26:08 PM
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quote:
Originally posted by VVance
At least someone is recognizing the truth.
I'm just not thrilled with the proposed solution.
The least painful way out of this mess is to encourage new borrowing through lower mortgage rates, not the current way of bumps and adds creating higher rates and fees.
With the proposed solution, I fear an even further increase in the cost of mortgages.
Agreed,
Lower rates
Flexible LTV's (up to 120% streamline refi's w/MI)
Bonifide lender workouts
All those other BS workout programs, FHA Secure and the like are just that...BS! |
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wsmb1
22 Posts |
Posted - 05/16/2008 : 5:44:03 PM
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Don't shoot the messenger, but as a lender (hard money) - you guys need to get a grasp on what is happening. Every new loan is a potential problem for banks. FHA or no. It doesn't matter. We are dealing with so many problems that new business is the last thing on our minds. Property management, short sales, evictions, etc, this is new to a lot of folks in the lending business. We are micro managing problems. I've been turning away business for months....months.
You are fighting for commissions, we are fighting for equity and capital...remember that. Look at IndyMac down under 2 bucks, Impac under 2 bucks, Thornburg under a buck. Nothing happens until the lenders have their foreclosure situation at bay, have increased their capital and are moving from scared to greedy. We have a while to go. Thankfully, most people who shouldn't own are now gone. And the clever lenders have rented their properties waiting (what may be years) to recoup.
Best to all
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benjamin
1815 Posts |
Posted - 05/16/2008 : 7:34:13 PM
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How about taxing some of the obscene oil profits, leave them a few billion, use the rest to buy down rates?
Lower rates on existing balances could keep people in homes, slow or stop depreciating values.
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Scrooge McDuck
7972 Posts |
Posted - 05/16/2008 : 7:39:50 PM
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the worst part is how many banks/lenders are sand bagging and just holding foreclosed properties. they are just sitting on them, turnong them into level 3 assets on their books and pretanding like nothing is happening.
wall st doesnt take a loss til the asset is sold. wall st is playing the game not to lose, instead of playing it to win, and thats why hedge funds are eating their food fast. |
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1003s.com
3209 Posts |
Posted - 05/16/2008 : 7:52:11 PM
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My only regret about huge oil profits is not sharing in them now.
I went through years where my oil stocks got the living crap
kicked out of them. And the government, was not giving oil
companies massive hand outs during those hard times. And
they should not be overly taxing them now.
It is a business, that is not for the faint
of heart, oil companies make long term investments,
that often take many years to pay off. I started using
Mobil One oil in 1986, it was fairly unknown back than,
now it is really considered the gold standard of oil by many folks. |
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Scrooge McDuck
7972 Posts |
Posted - 05/16/2008 : 7:59:14 PM
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mobile one is synthetic. its not real oil.
and if you change your oil every 3000 miles, youre watsing your money. |
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1003s.com
3209 Posts |
Posted - 05/16/2008 : 8:04:23 PM
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quote:
Originally posted by Scrooge McDuck
mobile one is synthetic. its not real oil.
and if you change your oil every 3000 miles, youre watsing your money.
I agree, I change it around every 4500-5000, I could go even longer it ussually
looks fairly clean at 5K. Before switching over I changed oil every 2300-2500 miles. |
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ML
2698 Posts |
Posted - 05/16/2008 : 8:09:09 PM
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quote:
Originally posted by wsmb1
Don't shoot the messenger, but as a lender (hard money) - you guys need to get a grasp on what is happening. Every new loan is a potential problem for banks. FHA or no. It doesn't matter. We are dealing with so many problems that new business is the last thing on our minds. Property management, short sales, evictions, etc, this is new to a lot of folks in the lending business. We are micro managing problems. I've been turning away business for months....months.
You are fighting for commissions, we are fighting for equity and capital...remember that. Look at IndyMac down under 2 bucks, Impac under 2 bucks, Thornburg under a buck. Nothing happens until the lenders have their foreclosure situation at bay, have increased their capital and are moving from scared to greedy. We have a while to go. Thankfully, most people who shouldn't own are now gone. And the clever lenders have rented their properties waiting (what may be years) to recoup.
Best to all
Thorny has the lowest delinquency rates in the industry, and the tightest lending guidelines. They're in trouble because they can't sell their PERFORMING loans!
This new banking model is: money in, money out, take a cut, on to the next deal. When the cash stops flowing (like now) you're dead! |
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