Story out today from CNBC via Yahoo! here.
There currently are about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are coming.
The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started.
Late-stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one and "the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted," according to LPS.
Knowing this all too well, the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA) at the helm, are engaged in a collaborative effort to face this new wave of foreclosures head on and figure out a way to keep these properties from sitting on the books of the government and sitting empty in the nation's neighborhoods.
A number of institutional investors have shown appetite and interest in bulk REO deals, according to officials, but the plan has to incorporate ways to help facilitate financing. That has been one of the biggest roadblocks to deals already in the works between hedge funds and the major banks. Sources close to these private bank negotiations say there is plenty of cash to buy properties, but building out a management structure for the rentals is pricey, and some investors are finding the math doesn't add up to make it worth their while.
My hunch is that these homes will NOT sell unless they are deeply discounted to the Hedge Funds that are allegedly interested in foreclosed homes. And you can see from the above excerpt that the homes will ultimately be financed to the Hedge Funds anyway. This will take some creative accounting to make all of this work. They call this a "roadblock". What the Hedge Funds want is for banks to mark the homes down probably by at least 50%, and then provide low interest 100% financing, non-recourse, so that the Funds can start a revenue stream by putting some people into these homes via rental agreements, when the government could probably do the same thing themselves with the existing occupants similar to Warren's housing proposal for rental to existing occupants with a right of first refusal on a subsequent sale.
And no where in any of this is any mention that the reason homes are built is to provide shelter to people and families. The whole article has the context that homes exist and are built only to support their own financing schemes.
5 comments:
Instead of figuring out how to keep people in their homes by financing them at a rate affordable for them. the homes will be foreclosed upon and sold in bulk at a discount to large institutions who will demand to be well compensated for the risk they are assuming. The sure makes sense to me. This is a capitalist economy after all.
What a bunch of idiots.
Those that "borrowed more than they could manage" have been stigmatized as reckless and ignorant to how home ownership works. There's a definite "they got what they deserved" atmosphere out there.
With this news, I feel like it pulls the curtain back as a complete conspiracy to screw the middle class. Institutional investors have leverage to further drive down the values of these properties so they can scoop them up, while in many instances the original home owner may have needed only a modest adjustment... and the government is a party to it.
This is just sickening.
Those that "borrowed more than they could manage" have been stigmatized as reckless and ignorant to how home ownership works. There's a definite "they got what they deserved" atmosphere out there.
Even worse than that, Broll. Bill Black has document how a great many of those loans that couldn't be repaid were predatory loans and many even outright lender fraud engineered from the top ("control fraud").
Remember that the liar loans were only a $300 to $450 billion dollar fiasco
That means Resolution Trust Corporation part II should have taken care of that with standard bi-partisan elastic currency theory which is now via Norman, Mosler and Hickey a subcorrallary to MMT.
Instead however we have derivative formula models in financial engineering where lawyers, quants of math and physics, finance majors, and so on all googoo gaga over the complexity -
I guarantee if you ellminate the derivatives then you ellminate the amplification of the foresclosures where old fashion banks ( as described by Krugman ) hold on to the debt rather than shipping it around the world in UPS parcels.
OCCUPY MUST BE READY FOR THIS SO AS TO USE SOCIAL MEDIA TO GATHER THESE PEOPLE TOGETHER EN MASSE FOR THE OCCUPY PART II PHASE
IF WE CONSOLIDATE THESE FOLKS' ANGST TOGETHER, THEN A SINGLE FIGURE SHOULD ARISE AND LEAD THE CHARGE AGAINST BERNANKE AND THE FORECLOSURES.
THIS IS A GREAT OPPORTUNITY FOR OCCUPY AND MMT.
THEY WILL TRY TO COVER IT UP WITH SMOKE MIRRORS AND PIXIE DUST SUCH AS "GREAT ECONOMY" "GREEN SHOOTS" AND ALL THAT BLARNEY USING BACK DOOR MMT
WHILE LEADING PEOPLE INTO THE STREETS TO FEND FOR THEMSELVES.
IF MMT IS THE THING IT THINKS IT IS, THEN IT WILL BE THERE READY TO TAKE CARE OF THESE PEOPLE AND TO LEAD THE REVOLUTION !
Since Foreclosures are tend to become a trend this 2012, not only a revolution will occur but also a major shift in most families into just renting than buying properties for them to avoid having foreclosures. Even real estate schools are going to be affected with this as more foreclosures and lesser buyers are in the market. It is like too much supply on lesser demands.
Post a Comment