Mortgage & Financial News
Bush to buy Citibank?
By Mortgage BreakDown
There's a very good chance the United States government will now be
buying some of our biggest banks as many now seem to be on the verge of
failure. With Wells Fargo winning the battle against Citibank for
Wachovia, it appears Citibank "may" not be able to survive without
Wachovia's deposit base.
At the current rate the government is going it should take no time at
all for them to own most of corporate America in the name of saving us
from ourselves. The further Wall Street falls the more liberties
it's willing to give up to the big man in the White House. I for
one look forward to asking George Bush if I can super size my order when
Washington owns everything including fast food. Without his Dad's
power McDonalds might be the only government job he qualifies for and
even that may be a stretch.
I would suggest folks start writing their representatives and inform
them the United States is not made of money no matter what the morons in
the White House think. If the government continues on this path
the FDIC limits of $250k on your bank accounts will mean nothing.
This will happen when, not to far off in our future, countries stop
financing our spend spend spend approach to all problems. Once
they decide to cut us off, the dollar will collapse and along with it
the United States as we know it.
We currently have over $10 trillion in debt and the government brings
in roughly $2.4 trillion a year. If you equate these numbers to
you and your family it's much easier to see how impossible a situation
the government is putting us in. If your family grosses $50k a
year and owes $200k on credit cards you could easily see how dire a
financial problem you'd be in, right. Well, minus the fact the
United States isn't paying credit card like interest rates, it's still
easy to see we must make changes to the way Washington operates NOW!
Every year we choose not to worry about it, is decades more misery our
children or grandchildren will have to suffer for our unwillingness to
put our country before ourselves.
It's sad to watch, but even sadder knowing that unless millions of us
come together to change the way Washington operates nothing will ever
happen and our proud country will fail.
US government to punish responsible homeowners!
By Mortgage BreakDown
We can not allow John McCain or Barack Obama to push for a mortgage buy
back or principle readjustment bailout for main street. The $700
billion bailout is bad enough for most Americans to stomach, but now you're
going to watch your neighbor have his/her principle magically reduced by
$100k!
Here's what's about to happen to your neighborhood if we let this happen:
The government will decide that your neighbor can not afford the
$300k house they purchased 3 years ago.
The fed will then decide that mortgage foreclosure is no longer
an option for homeowners, because even they are "too big to fail"
nowadays.
The government will then step in and reduce your neighbors
PRINCIPLE loan amount from $300k to an amount your neighbor can more
readily afford. Lets say the feds pick $175K as the new principle
amount for the mortgage loan because the housing in your area has fallen
to these levels. This allows your neighbor to wipe
away $125k in debt; free and clear.
-
You and others in your neighborhood that can afford your payments,
but still owe $125k more than the homes worth because of the housing
crash, are now screwed. You and the others like you will need to
wait the required 10 - 20 years it's going to take before you'll
breakeven and be able to move again, but hey keep your chin up because
you personally helped the neighbor who was facing foreclosure out when
you paid taxes to the morons in Washington.
This scenario is getting ready to play out all across the country.
This government seems willing to go to any lengths and spend any amount of
money to prove it hasn't screwed us all by saddling us with debt load that
it will never be able to payoff. We unfortunately know that this and
many generations ahead of us are already screwed by the inability of
Washington to run a NON-corrupt government.
By the way, that neighbor the government helped out, well they sold their
house the month after the government helped reduce their mortgage $125k and
were able to move to an area with a better local economy while your still
stuck in your house for decades to come. Tell Uncle Sam thanks.
As if there wasn't enough proof around that our government was inept,
today we find out AIG is going to need another $37 billion dollars.
This proves without doubt the United States government has little
understanding of the problems it's facing. The current figure of $122
billion is now the total needed to "save" AIG and it's spa loving
executives, while with only $50 billion we could have saved the country of
Iceland from the world's first national bankruptcy ever recorded.
If this is Democracy, it sucks!
By Mortgage BreakDown
WE
MUST HAVE TERM LIMITS for the House and Senate
What happened to the way Washington was designed to be? The bailout
is showing us "simpletons" that Washington's democracy just doesn't work
anymore.
The SOS "savior of the stupid" bailout bill failed to pass the house of
representatives last week, yes I said it failed. Today the house will
be voting on it again, how exactly
can that happen if it failed last week?
Here's the way our so called democracy works now a days.
Vote on a bill and have it fail.
-
Have party leadership decide that is not the appropriate ending, it
was "supposed" to pass whether 90+% of Americans wanted it to or not.
-
Party leaders try to bully certain representatives who voted no into
voting yes.
-
After bullying them doesn't work, house leaders decided they need to
Bribe representatives for their votes!
Bribes consist of adding bulls#&$ earmarks to a bill so that
certain representatives will vote yes. In return for this
"loyalty" they are given profitable earmarks that will usually help them
politically in some way.
-
The bill is put up for repeated votes until it passes, with democracy
and every American losing in the long run. The wasteful bulls#&$
our government puts in every damn bill is throwing our tax money away
and taking food off our tables.
-
Representatives gets to go back to his/her constituents' waiving
checks , showing how much money he/she got for them.
Some of the lovely earmarks that just HAD to be included
in the
"451 page" Bailout Bill to save America!
-
$2 million tax benefit for makers of wooden arrows for children
-
$100 million tax break to benefit auto racetrack owners
-
$192 million in rebates on excise taxes for the Puerto Rican and
Virgin Islands rum industry
-
$148 million in tax relief for U.S. wool fabric producers
-
tax incentive worth nearly $48 million a year for film and TV
producers who produce their work in the United States.
-
Allows certain corporations to reduce their tax liability on
income earned in American Samoa, at a cost of $33 million over two
years.
The SOS bill also enables the Untied States to raise the National Debt to
$11.3 trillion, only $1.7 trillion higher than it is now.
Don't even bother to e-mail me with the normal, "Well it's still the best
system in the world". That's a bunch of crap and you all know it, you're
simply settling for what Washington is doing to you and your rights.
Market up, recession is over! Congress cancels all mortgages.
By Mortgage BreakDown
Ok maybe not, but the market is up 485 points today and all of
the sudden there's talk of the fallout from this crisis not being so
bad
after all. Don't kid yourself, the only reason the market is
up today is because there's BS going around that the "savior of the
stupid (SOS) bill" is going to pass Thursday. Don't count on
it!
The bill to buy $700 billion mortgage backed securities, looks like
$350 billion now with more later if needed (like they wont need it
later. Come on people!), the FDIC insurance limits moved from $100k to
$250k (this should have been done decades ago) and now their adding tax
cuts and a "bridge to nowhere" in addition to god knows what else.
What happened to democracy? If 9 out 10 Americans are telling
their representatives NO, how can they pass the SOS bailout bill anyway?
Washington and Wall Street are telling Americans they are too stupid to
understand "so just shut up and deal with it". If it does somehow pass
there will be hell to pay come election time or sooner.
Other heart warming news on the wire today -
Home prices continue to plunge as
July's national average for the previous 12 months dropped by 16.3%.
Some housing markets are continuing to take the worst of it - Las
Vegas - dropped 30% , Phoenix - down 29% and Miami was down
28%. Many other "sunbelt" cities took huge hits of 20% and 30%
down.
-
Foreclosures are still running at record numbers and due to get
worse this winter as heating and other cost make those mortgage
payments even harder to make.
-
Unemployment and homeless continuing to rise.
-
Less than 3 months 'til Christmas and consumer confidence is near
16-year low - HoHoHo
-
$25 billion to the auto industry in "low" or no interest 25 year
loans. Who wants to take bets the airline industry is next?
-
The good news is the housing market is closing in on the bottom,
with an additional 10%-13% drop expected in the near future by our
formula. This does not take into affect two things:
-
A continued down turn in the economy will push this down even
further. If we head into a depression all bets are off.
-
Many homeowners who "can" afford their current loans are
going to "smarten up". They're going to realize it will
take decades to break even in their current house. they're
going to cut their loses and let the bank have it, move into the
house down the street and save themselves $200k or even better
buy a "second home" elsewhere and then make it their primary
home. If the banks that wrote these crap mortgage loans
get away with it through the SOS bailout, then why should the
average American pay for it twice for decades to come; once
through their home and once through taxes to cover the SOS
bailout.
JUST SAY NO!
By Steve Kendall
Thank god they didn't pass the "bailout" plan! Buying up all
the bad mortgage backed securities from all these crazy ___ mortgage
banks is ridiculous. So what if the market went
down
777, so what if we lost $1.2 trillion in market value today.
We're here to build the future folks, take the damn never ending money nipple
out of the mouth of Americans. We need to suck it up, get rid of waste and
start thinking about the future for once.
Our children are only going to get one chance at this, so lets find a way to
force Washington to deal with this "mortgage" crisis.
Whether Barack Obama - Joe Biden or John McCain - Sara Palin wins the
election is going to make very little short term difference. I'm not a big
fan of Barack Obama, but there is no way in hell I'll be saluting the
incompetent Sara Palin. I mean seriously, after that Katie Couric
interview there is no way she could handle the nation if/when John McCain has a
heart attack in the next 4 years.
So please, lets just get ready for the dark ages that are ahead.
Remember folks, sometimes we need to go one step back to go two steps
ahead.
MAP of the US showing who voted NO for the Bailout
A Monday to Remember!
By MortgagBreakDown
The bailout is going to cost all of us and our children an amazing
amount of money in the future. We as a country just can not afford
to continue adding to a national deficit of what will be more than $11
Trillion by the end of this year.
We fully understand the implications of no bailout. It is pretty
much guaranteeing at this point that we and the rest of the world will drop
into a 1930's type depression. As scary as that sounds we should be
willing to go through the tough times ourselves to allow our children to
prosper in a stronger United States of America in the future. If we
choose the easy way out by continuing to throw good money after bad, we risk
destroying any future for our children or our country.
What's ridiculous is the Senate is apparently passing a bailout plan
which will not even be enough to have a chance at saving the markets, if it
were possible at all. It looks like they've agreed on something around
$350 billion and this just isn't going to be enough to unclog the credit
issues or save any of the banks that are in big trouble.
What our lovely morons in Washington are going to do is spend $350
billion of our taxpayer money to accomplish nothing as the market looks to
be too far gone to save by such a "small" infusion of cash.
Expect Wachovia to fail by
the end of the day with Wells Fargo ready to
jump
in and buy the good pieces once the FDIC officially takes over. The
failure of National City
looks to be a little behind Wachovia, with many more banks in line behind
these two failed mortgage giants.
We would expect the market to take news of this new bailout as
insufficient to fix mortgage backed securities and open well down from
Friday's close. As of today, if you have money above the FDIC insured
levels in any bank besides BofA, Wells Fargo or U.S. Bank you should be
looking for immediate alternatives like
Treasury Bills.
This is going to weigh huge on the coming presidential vote. Whether
it's Barack Obama - Joe Biden or John McCain - Sarah Palin it appears like we're
all in big trouble, maybe we should all just vote none of the above.
Washington Mutual Fails as FDIC seizes
assets.
By Mortgage BreakDown
Mortgage giant Washington Mutual Inc. failed this week as the Federal
Deposit Insurance Corporation (FDIC) stepped in and seized all of WAMU's
assets. J.P. Morgan immediately bought certain profitable sections of
WAMU for $1.9 billion dollars as WAMU's demise is showing the nation sure
signs of just how much trouble the mortgage sector is in.
WAMU had been in real financial trouble since last year after writing so
many bad mortgage loans, but company executives continued to believe they
had enough cash reserves to weather the storm. The latest problem
started around September 15th, when a classic run on the bank started with
over $15 billion being withdrawn by customers in less than 10 days after it
became clear the mortgage giant was going to fail sooner rather than later..
This led the government to step in and take over WAMU and although we
expected it to happen at some point, many were surprised by the speed of the
collapse. Those that still have deposits at WAMU should be less
worried than if you had money in any other institution that hasn't failed,
with J.P. Morgan purchasing WAMU from the FDIC your deposits are "currently"
safe. The government has stated all deposits are safe even if they
were over the $100k limits at WAMU.
Their are still two of the "big" mortgage banks that are now in desperate
shape. National City & Wachovia are said to be the next to fail with
that coming possibly on Monday if the "bogus" bailout package isn't passed.
If you have deposits over $100K in ANY bank at this point you should be
looking at getting that money into U.S. Treasures immediately or risk losing
it.
If you have questions about your WAMU account click
here
President Bush's overreaction to 9/11 may
have helped doom the United States financially.
By Mortgage BreakDown
First off, no one is down playing how horrible and shocking 9/11 was to
the country. It truly was a time of grief and a huge wake up call to
how porous our borders were and still are, but did the terrorist win in the
long run.
If you're a terrorist organization in the the late 90's trying to figure out
the best way to attack the United States, your obviously not thinking of a
frontal attack on its borders. We all know strong arming would never work
against a country as militarily strong as the United States.
You would need to come up with a plan which would create such a sense of fear
among the general public that the political parties involved would be allowed to
spend any amount of money in the name of fighting terrorism. We use the
term "fighting" terrorism because it's impossible to "stop" terrorism.
Stopping terrorism would be the equivalent of stopping evil, it just
unfortunately can never be done.
When 9/11 happened it allowed President Bush to exercise his religious views
on the rest of the world, while trying to eradicate any "evil" he could.
This has cost taxpayers over $1 trillion to date just for the "War on Terror"
and will continue to drive the United States in to financial death if the same
course is continued in the future.
The presidents inability to focus on anything other than the "War on
Terror" for so many
years
has allowed persons in the financial sector (mortgage industry, investment
bankers, etc.) to run rampant. As long as the economy was still on
fire nobody seemed to care how they were doing it.
Many of us had been warning for years that mortgage loans created by
lender's were going to destroy this country's economy when the bubble burst.
We should have been focusing the trillions of dollars on helping Americans
deal with our immense domestic issues instead of wasting it fighting
something we can't see.
The national debt was $6 trillion when Bush took over and know it's going
to be over $12 trillion when he leaves office. That's an average of
$750 BILLION over budget each and every year since Bush has been in office.
What do we have to show for it besides a debt load that our children will
surely be suffering from for decades to come.
Do you feel safer because of the "War on Terror"? I doubt it, we
all feel safer than the day terrorist attacked on 9/11, but most of that is
time passing. If anyone out there can convince us that the $6 trillion
in debt and the future financial security of the United States was worth
pushing us into another Great Depression, We'd love to hear from you.
Don't get us wrong we believe measures needed to be taken after the
attack on the world trade towers, but strategic air attacks to take out key
terrorist positions and leadership over the years would have been a much
better solution then ground wars that spend trillions and lead nowhere.
We believe the Bush administration didn't give the terrorist enough credit
for what they were planning and that the terrorist got exactly what wanted, a
weakened and financially beaten United States of America.
Naked short selling gone forever?
By Mortgage BreakDown
Thankfully naked short selling is now banned. Seriously who
needs to see those naked Wall Street guys biking to work just so they
can short some stocks!
It seems like only now that the market has crashed is anyone
questioning why Treasury Secretary Henry Paulson kept naked short
selling around for as long he did. Minus of course money!
The government wouldn't keep a dangerous product around in the financial
sector for this long just because the big boys were making money off it,
would they?
I wonder who the genius was that decided to allow selling a stock
short without first borrowing the shares or ensuring that the shares can
be borrowed as is done in a conventional short sale.
On top of this, Paulson now goes overboard and does the worst thing he
could have done, ban normal short selling. Paulson is talking
about keeping the ban until the end of the year now, instead of what
initially was going to be just 30 days. Let's just get rid of the
free market place all together and ban normal short selling for life.
Basically anything that might drive stocks down is banned, who cares if
the companies are run poorly. The U.S. Government has decided that
throwing good money after bad is the way to go.
After one of the craziest weeks ever on Wall Street, U.S. Treasury
Secretary Henry Paulson proposed a $700 billion bailout plan to help
financial institutions get the country's toxic mortgage debt off their
books. We believe this number will continue to climb, ending up
somewhere between $1.25 trillion to $1.75 trillion. These numbers
do not include the almost $1 trillion it's likely going to cost for the
previous bailouts.
The Federal Reserve said late Sunday it had granted a request by
Goldman Sachs and Morgan Stanley to change their status to bank holding
companies from investment banks. The move will strengthen both
banks in the long run by giving them a stronger deposit base, but should
drive their stocks lower Monday because of the smaller profits bank
holding companies make due to more stringent regulation. This is
going to force Wall Street to lower their current and future earnings
estimates for both companies.
Your Tax Dollars
at work.
By Mortgage BreakDown
Looks like the United States isn't going to worry about hitting $10
trillion in national debt. They're going to skip 10 and go straight to
$11 trillion in debt with what the government is planning on spending
with these so called bailouts.
Welcome to the socialist, with a tinge of communism, United States of
America. There's just no other way of looking at it now that the
government owns 80% of AIG, has paid $30 billion
to
save Bear Stearns, what may end up being $800 billion for Freddie Mac
and Fannie Mae, banning short selling for a short time. Just in
case that wasn't enough the government is planning on forming another
Resolution Trust Corporation (RTC)-type Government-owned
asset-management company to buy all or at least most of the bad debt.
The RTC which was used from 1989 to 1995 to liquidate the assets of the
Savings & Loans debacle. They received assets from banks which had
"already" gone under and liquidated those assets to recover some of the cost
for paying back depositors.
The new and as of yet unnamed government facility will take on commercial
and investment banks bad debt in excess of $500 billion. The
government allowed all of these companies to offer trillions of dollars in
risky mortgage loans over the last 5 years and now they are going bad (big
%#^ surprise). So, we the taxpayers get to bail them out and thank
them again for bending over the American public, not once, but twice.
First time they gave illegal and risky loans to people causing the market
to skyrocket and collapse and the second time is having taxpayers pay for
financial institutions to stay in business, instead of going under like they
should of.
Oh what the the heck, send me a bill George Bush how much could my share
of an additional $1,500,000,000,000.00 (trillion) be!
White knuckle
Wednesday and turnaround Thursday?
By Mortgage BreakDown
After the Fed's saved AIG on Tuesday with a mere $80-$90 billion in
taxpayer money, it looked like the market was to going to hold it
together after closing up Tuesday, but Wednesday's 449.00 point loss
changed that.
The short sellers are running rampant and just might be able to
finish off Goldman Sachs,
J.P.
Morgan, Wachovia and Washington Mutual on Thursday. If they have
their way all of the companies may be forced into bankruptcies or
mergers.
The SEC has brought back some previous rules and enacted some new
ones for the start of Thursday's market in an attempt to slow the short
sellers down:
1. The Securities and Exchange Commission (SEC) adopted rules it said
would provide permanent protections against abusive naked short-selling.
Naked short-selling occurs when sellers don't borrow the shares before
selling them, and then look to cover after the sale.
2. Investment managers with more than $100 million holdings in
securities will be required to promptly begin public reporting of their
daily short positions.
3. They also brought back the up-tick rule.
These are all wonderful rules that the SEC has come up with but the
biggest problem is the fundamentals of the companies and their balance
sheets. The new rules may indeed slow the carnage down, but there are
still trillions in debt that need to be absorbed before we can start to see
the light. This may take days, weeks, or even months it all depends on
how often the Fed sticks it nose where it doesn't belong.
Let the market correct itself without Federal intervention. If it
takes, god forbid a depression then so be it. I for one would rather
have to go through a depression then have my children try to figure out how
they can save the United States in 30 years from the uncorrectable $30-$50
trillion in debt we saddled them with.
Now, we the taxpayers are going to have to bail out the financial
companies, auto makers and the airlines. Where does it stop and why
does the Federal Government think they can just keep printing money without
dealing with the consequences. This has moved from a housing crisis to
an equity crisis to a credit crisis as the mayhem spreads worldwide.
Can someone tell me where the heck the President of the United States is
while the country is collapsing? Any other President would have been
on television Wednesday night assuring the people everything was all right,
maybe he's too busy trying to save the profits he made off the oil industry.
Tuesday
should be interesting, to say the least!
By Mortgage BreakDown
Well it's a sad day to see a company like Lehman Bank go bankrupt and
disappear after being around since pre civil war days. Although
short term these are trying times, in the long
term
we believe it's much better than the government saddling itself with
even more debt.
There's hours to go before the market opens Tuesday and the "players" of
the day will be AIG and WAMU which both had their credit downgraded again
overnight; WAMU was cut to junk status. This is going to make it very
hard to raise capital and hold off bankruptcy, so look for both companies to
be scrambling for life lines. WAMU keeps talking tough, telling
everyone they are fine with more than enough capital to survive, only time
will tell.
The fed's will be meeting this morning. We'll see if they bow to
market pressure and cut rates 25bps or 50bps.
Goldman Sachs will be announcing earnings early this morning and lets
just say if the Fed's don't announce what the market is expecting, all hell
may break loose and then some.
On a side note, Wachovia CEO Bob Steel was on Cramer yesterday saying
they had 500 billion in loans with only 10 billion or 2% of those loans
which "could" go bad. This was AFTER he just got through telling
Cramer that a full one third of their loans (159 billion) were in equity
loans. Jim Cramer's face looked incredibly shocked at the exposure
Wachovia had to equity loans.
With the vast majority of Wachovia's loans in California, we would find
it impossible to believe that they don't have a much higher percentage to
worry about.
Black Monday?
By Mortgage BreakDown
Well it's happened, the sky may indeed fall when the stock market opens
later this morning. Lehman
Bank has filed for bankruptcy as nobody wanted to step up and save the
158 year old company, without federal guarantees. Even though the
government is not going
to
step in and spend billions to save Lehman, exactly how many billions did
Lehman pull from the fed's discount window in the last few months before
going bankrupt?
Merrill Lynch has been
saved by Bank of America for the wonderful price of $50 billion in an all
stock buyout. Is everyone on Wall Street taking those seemingly easy
to find stupid pills lately? Bank of America could have bought Merrill
Lynch for a fraction of that price once the market opened today. The
government must have been applying pressure behind the scenes. I would
be very surprised if the government didn't offer Bank of America something
for agreeing to pay such a seemingly over inflated price before the market
opened today.
Bank of America is already
trying to absorb billions in losses it's continuing to sustain from its
acquisition of Countrywide. But now, they are going to absorb
overpaying for Merrill Lynch by as much as 30 billion or more. This
includes the billions of future loses from Merrill's portfolio and the
billions of its own right offs from risky loans.
While Washington Mutual
seems to have avoided Black Monday, there are still many questions about the
company and I would imagine further pressure will be applied to its stock
Monday morning. If their stock falls far enough they may have their
credit rating lowered further causing a possible implosion. This all
depends on how much pressure is applied to its stock price by the end of the
week.
American International Group Inc. (AIG)
the world's largest insurer is also seeing some amazing pressure as Friday
its stock was absolutely hammered. Right now it's trying to raise an
additional 20 billion to hold off a credit downgrade. A downgrade
would be devastating for the company and could force it into bankruptcy if a
buyer does not step in soon.
Economy on the rebound?
By Mortgage BreakDown
One has to wonder sometimes who exactly are the people filling out
these questionnaires about the economy. How a recent survey from
Reuters & the University of Michigan on
Friday
can show the consumer index soaring over 10 points to 73.1 is amazing.
What exactly happened from last month's reading of 63.0 to make all
these Americans think the economy just got a lot better?
Hmmm, well gas is down around $.30 cents in our area from last month, but
I really hope the consumers they are surveying don't pin their optimism
on gas going back to $3 or even $2, it's probably never going to happen.
If we've learned one thing about gas prices is that they never go back down
for long. It always seems like the oil baron's use the lovely
"Americans don't want to see $3 gas so shoot the price up to $4 plus.
Then they'll love us when we bring it back down to $3". Now, who out
there can say that doesn't seem familiar?
All this great news coming out PLUS one-year inflation expectations
dropping to 3.6% from an August reading of 4.8%, can you say biggest 1 month
drop in 3 years. The experts get one report and now they expect the
Fed to lower rates, yesterday the experts said the Fed would most likely
raise rates to hold inflation in check. Let's see if they still feel
this way if Lehman, Washington Mutual and Merrill Lynch all collapse.
Forget the housing market crisis, national debt of almost $10 Trillion,
unemployment on the rise and energy prices still well above where we're
comfortable. Apparently the experts have surveyed the folks in Beverly
Hills again and it's all roses in 90210.
Pending Home Sales Tumble
By Mortgage BreakDown
Pending home sales fell more than twice the expected rate in July
after rebounding slightly in June. Although the rate of decline is
slowing and improvements are being seen across the board, we're
stressing
the bottom is still far off. Prices are still falling in
most markets, but the pace at which it's happening is starting to
moderate.
The Freddie-Fannie takeover has brought rates tumbling faster than
predicted, with rates nearing 5.75% for a 30 year fixed. We'll have to
wait and see if lending standards remain to stringent or if institutions
start to return to standard lending practices.
It's amazing, 2 years ago if you had a pulse you could get a loan and get
it with no down payment and make payments that were less than the monthly
interest on the loan. Now you better have more than 20% down, be ready
to sign over your soul, give them your grandmother and get
three appraisals on the property.
When will Lehman Bank collapse?
By Mortgage BreakDown
Well, it looks like Lehman Bank is going to win the prize for the
next major government bailout. The rumor mill is running rampant
on whether they will actually be able to make a deal before the
government makes its move. At this point it looks like the
smartest thing
Lehman can do is let the government step in and bail it out.
With their stock falling over 50% today and still no word from anyone in
the company you can bet their talking to anyone in Washington that will
listen.
Seriously, the government steps in, gives them 20-30 billion of our
tax money and then returns it to Lehman share holders. This
would mirror what some of the geniuses in Wall Street are talking
should be done with the Fannie Mae - Freddie Mac debacle, which
could now cost tax payers $800 billion. This numbers going up
so fast god only knows where it will be by year-end.
On a good note it looks like a Goldman Sachs oil analyst is now
predicting oil to go to $200 from current levels of around $130.
Well heck at least the government has pulled it's head out of it's rear
long enough to take care of the energy problem correctly.
Oh wait one minute, I forgot they haven't been able to do a darn
thing right with that either. So all hail $5+ gas.
Does the U.S. Government have it all wrong?
By Mortgage BreakDown
The Government Sponsored Entities (GSEs) bailout is now predicted to
cost taxpayers between 50 - 300 billion, with Former Federal Reserve
governor William Poole saying the 300 billion
number was closer to reality.
The stock market is loving the bailout of mortgage giants Fannie Mae
and Freddie Mac, as seen by the 2.59% gain in stocks Monday. It
has done an amazing job of holding up what would have otherwise been a
complete collapse of the housing and financial market, let alone the
economy.
The bailouts are seen as a short term fix and show the governments
carelessness to throw money at every problem. The next bailout is
anyone's guess, but both Washington Mutual and Lehman Brother or looking
like good bets.
With the national debt already near
$10 Trillion, it's anyone's guess as to when the bottom will
fallout. Our wonderful politicians in Washington continue to spend
our money with very little regard for us or future generations.
With receipt's of $2.4 Trillion and spending of $2.8 trillion in 2007
and interest payments now more than 10% ($243 billion) of total
receipts, the end or collapse must be getting near.
We can all sit back and thank the government for postponing what
would have been a very nasty economic downturn if they had not bailed
out Freddie and Fannie. Many would have preferred to deal with the
repercussions now, instead all of the losses we just avoided will still
have to be absorbed by generations to come. In the meantime our
government will continue to operate like a company that should have been
bankrupt decades ago.
Government to seize Fannie Mae and Freddie
Mac mortgage giants?
By Mortgage BreakDown
The Government is now expected to take over mortgage giants Fannie
Mae and Freddie Mac by Monday morning, a move designed to protect the
market from the failure of both companies.
Both
companies combined hold or guarantee over 5 trillion in mortgages which
is almost half of the nation's total.
These seizures are quite a surprise to most in Washington and Wall
Street as they hadn't expected this unless the mortgage giants were
having trouble funding operations.
President Bush's rescue plan is now set to cost tax payers another
$27 billion. The government is set to apparently keep anything
from failing for fear it will drive the economy down further.
Proof of this is could be the governments next billion dollar mistake,
Lehman Bank. President Bush and Bernanke are not allowing the
market to self correct itself as the government is simply prolonging a
slower march downward.
But concern is growing over, not only, the billions in common stock
that could disappear, but the roughly $35.8 billion in preferred stock
which could prove very costly for insurance and banking companies.
A record 9 percent of Americans are now behind on their mortgage or
in foreclosure. With these figures being two months old, imagine where
we're at now.
Mortgage rates on the move?
By Mortgage BreakDown
Mortgage rates continue to hold steady with the national average at
6.35%. This has changed
little
over the last 1-2 years, but we are not expecting that to continue
through 2009.
The economy looks like it will unfortunately continue its downward
spiral, even with slow growth we're calling for a 75% chance that
inflation will accelerate from current levels. Look for Ben S.
Bernanke and the rest of the Federal Reserve to start raising rates
towards the end of the year in an attempt to control inflation.
With the US looking at anemic growth over at least the next few quarters,
let alone the continued fallout from credit and housing, we're finding it
hard to be optimistic when looking ahead.
Will the current housing implosion end up
worse than Great Depression levels?
By Mortgage BreakDown
It now appears that 1/3 of all homeowners' who bought or refinanced
in the last 5 years owe more than their home is
worth.
While housing has yet to fall to an inflation adjusted rate equal to
that of the Great Depression, the current 24% decline is expected to
move past the 30% Great Depression number in late 2008 or early 2009.
Now, with the market expected to continue down for another 1 to 3
years the bottom is still well out of reach. With almost every
aspect of the economy beginning to sour, you had better buckle up and
hold on it looks like the road's going to get very bumpy.
Many homeowners' may be waiting to see if the bottom hits soon hoping
on a quick turn around back to double digit gains once we do hit bottom.
This likely will not happen for many years or even decades to come as
the housing market rarely looks like a "V". The market will more
than likely (after it bottoms) be stagnant for a few years before
recovering to sustainable single digit growth, leaving millions of
homeowners very little chance, but to ride it out for possibly decades
or more.
53 billion in option-arm loans maturing
faster than previously thought!
By Mortgage BreakDown
Option-arm loans are coming due much faster than previously thought
with a large percentage of homeowners choosing to make the minimum
monthly payment. The
minimum
payment is lower than the interest payment, which is causing these loans
to hit 110%-115% LTV(loan to value). When homeowners hit this
number it automatically recasts their loan, raising the minimum payment
for these homeowners substantially.
With so many option-arm homeowners now owing more then the house is
worth, selling the property has become impossible (for some) without a
lender approved short sale.
Refinancing the option arm is not an easy choice for most homeowners
since hefty pre-payment penalties were attached to many of these loans.
Even if lenders were to erase the prepayment penalty, refinancing a home
that's now worth well below what is owed is still a herculean feat.
The option-arm will undoubtedly go down as one of the worst loan
products ever designed by lenders.
Overdues, foreclosures continue to rise
By Mortgage BreakDown
Delinquency and foreclosure rates began to rise in mid-2007 and the
end is still no where in sight. With the hardest hit areas in the
south continuing to have foreclosures spiral out of control,
we're not expecting a turn around until late 2009 or early 2010.
This could be pushed well into 2010 or even 2011 if the economy
continues to tumble as many consumers are starting to really tighten
their purse strings. With inflation on the rise and no end insight
for global oil shortages, expect those strings to get even tighter
moving toward the holidays.
Lenders are slashing prices on foreclosures which continues to drag
the median price down across the country. It's hard for many
existing homeowners to watch this happen, but their homes are going to
fall to these levels no matter how lenders unload foreclosures.
Many of the hardest hit areas will more than likely see a decline of
20-40 percent over a few month time, however, the faster prices
drop to levels the median income can sustain, the faster we can put this
behind us and move forward.
With a large amount of homebuyers looking at substantial negative
equity, it is all too easy for them to walk away from a home that could
otherwise take decades to recover from.
Lenders enjoyed huge profits throughout the first half of this decade
by creating and then giving risky loans to "qualified" and "unqualified"
buyers, it's hard to believe none of the industry's highly educated
leaders foresaw the collapse.