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Mortgage Debacle

Nouriel Roubini has an opinion.

Submitted by Roanman on Sun, 07/08/2012 - 19:13

 

Nouriel Roubini predicted the "Economic Crisis" of 2008 and meltdown of the morgage markets in 2005.

Here he is with a 9 minute interview during which time he offers his opinion on banks, bankers, the European debt crisis and the state of the world economy in general.

If you're looking for some cheerful little bit of entertainment this evening, just keep on moving, it ain't here.

If you think you want to know what the immediate future might hold, here's a guy with an opinion and a track record.

From Boomberg.

 

Banks and government ..... it goes on and on and on and ...

Submitted by Roanman on Thu, 07/05/2012 - 19:51

 

This story is everywhere and has been for the past 18 hours.

Of the reporting/analysis out there we thought this was the best and most pointed effort.

From the Mark Tapscott at the Washinton Examinor.

The gears above or the photo below will link you up.

 

Issa report exposes the wink and nudge of 'congressional ethics'

 

 

An investigation by the House Committee on Oversight and Government Reform demonstrates why the House and Senate Ethics committees are as useless as the proverbial screen door on a submarine.

The oversight committee -- which is chaired by Rep. Darrell Issa, R-Calif. -- reviewed more than 120,000 documents and interviewed legions of witnesses during its three-year probe of how Angelo Mozilo's Countrywide Mortgage gained sufficient influence to block reforms that could have prevented or significantly lessened the Great Recession of 2008.

It's a sordid tale that includes sweetheart mortgage deals for key Senate Democrats, three former Clinton administration Cabinet secretaries, and several strategically placed congressional aides from both sides of the aisle.

The committee estimates that more than 17,000 special mortgages were issued via Mozilo's "Friends of Angelo" VIP program at Countrywide between 1996 and 2008. Among the many recipients, two stand out in the Issa report.

Sen. Chris Dodd, the Connecticut Democrat who chaired the powerful Senate Committee on Banking, Housing and Urban Affairs, initially claimed not to know about his preferential treatment. He was cleared by the Senate Select Committee on Ethics in August 2009, but he then retired in 2010 after the public learned how close a friend of Angelo he had been. Dodd received waivers of all fees on two mortgages whose combined worth was nearly $800,000.

The Issa panel says Dodd must have known more than he has let on so far, because he also "referred Mary Jane Collipriest, communications director for Senator Robert Bennett, to the VIP unit when she refinanced her mortgage in 2002. Countrywide waived processing and junk fees for Collipriest." ("Junk fees" is a trade term for assorted upfront lender charges.)

Collipriest's immediate boss was then the second-ranking Republican on the banking committee. She became Bennett's chief of staff in 2006.

Dodd helped launch the bailout mania that seized Washington in 2008. The Issa report said "on June 17, 2008, the same day he acknowledged for the first time that he was a Countrywide VIP customer, Dodd announced that he was bringing to the Senate floor a housing bailout to help Countrywide and other struggling subprime lenders.

"Dodd's plan, known as the Dodd-Shelby bill, allowed mortgage lenders to dump up to $300 billion of their worst loans on to taxpayers via a new Federal Housing Administration refinancing program."

The Issa report notes that shortly thereafter, this newspaper "obtained a 'confidential and proprietary' document" that made clear the bailout section of Dodd's measure was exactly what Countrywide wanted.

 

Wait a Minute!

Submitted by Roanman on Fri, 02/10/2012 - 16:15

 

From American Banker via Zero Hedge.

 

Missing Settlement Document Raises Doubts on $25B Deal

 

 

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the document as "coming soon."

That's because a fully authorized, legally binding deal has not been inked yet.

The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document's non-final status, saying that the terms were already fixed.

"Once the documents are finalized, they'll be posted to nationalmortgagesettlement.com," the representative said in an email to American Banker.

Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete documents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.

Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

 

On the positive side, Tyler Durden is in rare form over this.

 

 

It is only appropriate, and so ironic, that a politically motivated settlement whose purpose is to squash any claims of pervasive defective document fraud (and contract law but just ask GM bondholders about that - it's hardly news) is itself found to be ... defective.

American Banker reports that the reason why the terms of the so-called historic (just ask the Teleprompter in Chief) foreclosure settlement deal are not public yet, is "because a fully authorized, legally binding deal has not been inked yet."

Wait, so America's cohort of AGs just all, pardon the pun, robosigned a piece of paper that does not exist?

Oh and anyone who had doubts that the settlement, which incidentally is paid for by you, dear taxpayers, in the form of bank bailout cash, of which the banks still owe over $10 billion in some capacity, was merely a political ploy to get taxpayers to fund Obama's reelection campaign by subsidizing squatters with $2,000 per vote in the presidential race come November, using banks as intermediaries to make the administration seem oh so powerful and daring to take on the banks, who in fact are the only ones benefiting from this farce, by holding a gun to the head of the hold out AGs forcing them to sign a piece of paper that does not even exist, this should put all those doubts to rest.

 

And just in case you have forgotten, here are just a few of the ubiquitous Linda Green's many signatures.

Click the image below for details.

 

 

The Top 12 Reasons to Hate the Mortgage Settlement

Submitted by Roanman on Thu, 02/09/2012 - 18:36

 

 

You probably should just stay away from this post unless you're already crabby.

Go to Naked Capitalism for the last eight.

 

Here are the top twelve reasons why this deal stinks:

 

 

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

 

I've checked none of this yet as I have plenty of stuff in front of this to make me crabby enough already, but I will.

 
 

The single clearest metaphor we've seen yet on this mortgage thing.

Submitted by Roanman on Thu, 11/17/2011 - 06:49

 

Helga is the proprietor of a bar. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Helga keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).

Word gets around about Helga’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Helga’s bar. Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Helga’s gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Helga’s borrowing limit.

He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS.

These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold to them as “AA” “Secured Bonds” really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar. He so informs Helga. Helga then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.

Since Helga cannot fulfil her loan obligations she is forced into bankruptcy. The bar closes and Helga’s 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Helga’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers. Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Helga’s bar.

Now do we understand?

 

Dan Edstrom tracks his mortgage

Submitted by Roanman on Mon, 11/29/2010 - 05:50

 

Dan Edstrom does "securitization audits".

Basically he analyzes the history of transactions concerning a given mortgage and note from the moment it's signed through it's sale, securitization and hopeful payoff ................. or foreclosure.

Here's the chart for Dan's own mortgage.

I clicked on the small version and then again to enlarge it to it's full size, thinking I'd follow it all the way through it's history.

I'm not gonna lie to you, I quit after about three seconds.

I'm thinking now that this debacle has no chance of resolution outside of default, foreclose and bankruptcy, and by that I mean both individually and at the level of the subsequent securitized instruments.

 

From Zero Hedge, which is of the sites I skulk, easily both the toughest read and the toughest to join.

On the positive side, it's free.

It is also consistently among the most rewarding of the sites I frequent if one is prepared to grind some.

Click the chart below for the Zero Hedge site and the story.

 

The sordid journey of just one mortgage.

 

 

Reading on a Saturday Morning

Submitted by Roanman on Sat, 04/10/2010 - 11:22

 

As far as I'm concerned, Peggy Noonan is one of the finest writers in America.

I make my son read her editorials in the Wall Street Journal (he hates it) ... (I don't care).

Here's her analysis of what went wrong with the mortgage market.

Click anywhere below to get the entire piece.

 

You, for political reasons, both Republicans and Democrats, finagled the mortgage system so that people who make, like, zero dollars a year were given mortgages for $600,000 houses.

You got to run around and crow about how under your watch everyone became a homeowner.

You shook down the taxpayer and hoped for the best. 

"Democrats did it because they thought it would make everyone Democrats:

'Look what I give you!'

Republicans did it because they thought it would make everyone Republicans:

'I'm a homeowner, I've got a stake, don't raise my property taxes, get off my lawn!'

And Wall Street?

We went to town, baby.

We bundled the mortgages and sold them to fools, or we held them, called them assets, and made believe everyone would pay their mortgage.

As if we cared.

We invented financial instruments so complicated no one, even the people who sold them, understood what they were.

"You're finaglers and we're finaglers.

I play for dollars, you play for votes.

In our own ways we're all thieves.

We would be called desperadoes if we weren't so boring, so utterly banal in our soft-jawed, full-jowled selfishness.

If there were any justice, we'd be forced to duel, with the peasants of America holding our cloaks.

Only we'd both make sure we missed, wouldn't we?"

 

I think that just about covers it.

 

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