Category: The New Depression

Quote of the day

~ susie

Krugman:

So, it’s an amazing thing: Obama and company have managed to convince people that big government failed, without actually delivering big government.

The bums are back

~ susie

Big Tent Democrat:

Governing well is the best way to win elections. The Obama Administration and the Democratic Congress simply were not good enough on economic policy. The “bums” were thrown out. Of course the old bums were reinstalled. And catastrophe is what we can expect. But that’s how elections work. You throw out the bums you have, even if it means bringing back the old bums.

Alan Grayson

~ susie ~ 1 Comment

Boy, he’s really not a cooperative politician — and I mean that as the highest compliment! He just does the right thing.

I was talking to a woman the other night who told me she was planning to get her real estate license and start buying up foreclosure properties. I told her it was a bad idea, because no one really knew how to verify if the properties had a clear chain of title. She emailed me a day later, explaining that since her husband never heard of such a thing, it couldn’t possibly be true! Oy.

I replied, “Google mortgage foreclosure fraud. There’s a story on the front page of the Wall St. Journal, I guess your husband missed it.”

Kicking the can down the road

~ susie ~ 2 Comments

From Bloomberg BusinessWeek, a look at the maneuvering by banks to avoid paying for their toxic loans (via):

Bank of America, the nation’s largest lender, has resorted to tough tactics in resisting repurchases of bad loans. Facing pressure from Freddie Mac, one of the two government-controlled mortgage financing companies, to buy back money-losing home loans with problems like inflated appraisals, overstated borrower income, or inadequate documentation, Bank of America issued a blunt threat, according to two people with direct knowledge of the incident. If Freddie Mac did not back off its demands for the buybacks, Bank of America officials said, the bank would take more of the new, more profitable mortgages it is originating these days to rival Fannie Mae, these people said. Freddie and Fannie, known as GSEs (government-sponsored entities), need a steady supply of healthy new loans to climb out of their financial hole.

The claimed threat from Bank of America, which was not put into writing, according to one of these people, was taken seriously enough that it has been discussed at several Freddie Mac board meetings, including one in mid-October. Some officials have urged the Federal Housing Finance Agency—the government conservator that has controlled Fannie and Freddie since they were bailed out in 2008—to confront Bank of America and prevent it from trying to play one against the other, which may be infuriating but is not illegal. “If the tactic worked, I’d be shocked and appalled,” said Thomas Lawler, a former portfolio manager at Fannie Mae and now an economic consultant. “The GSEs are supposed to be run now to minimize losses to the taxpayers. Freddie ought to ignore the threat.”

[…] Wall Street’s unspoken strategy has been to kick mortgage losses down the road until an economic recovery reinflates the housing market. The faulty-foreclosure crisis has forced the issue back into the present tense, triggering a fight over who will bear the brunt of those losses. The combatants—all of whom are trying to minimize their share of the damage—include homeowners, lenders and mortgage brokers, loan servicers and the underwriters of mortgage-backed securities, the buyers of those securities, title insurers, rating firms, and the federally controlled mortgage buyers Fannie Mae (FNM) and Freddie Mac (FRD).