Tuesday, August 31, 2010

Banks helping more troubled homeowners than Obama

That's the claim made by CNNMoney:
Remember how everyone complained that banks weren't doing enough to help troubled borrowers?

Well ...

Banks have realized that foreclosing on home after home after home may not be in anyone's best interest — least of all their own. So they've ramped up the number of loan modifications they're handing out to their delinquent clients.

Banks are doing nearly twice as many modifications under their own foreclosure prevention initiatives than under the Obama administration's signature Home Affordable Modification Program, known as HAMP.

But before homeowners rejoice, they should take a close look at the terms of their bank modification offers, consumer advocates say. Many may not be as good as HAMP, which lowers monthly payments to 31% of pre-tax income.


  1. "Banks have realized that foreclosing on home after home after home may not be in anyone's best interest"

    Well except for those who want to buy a home one day.

  2. Case Shiller is out. DC home prices are up - again. DC is now up 7.3% YOY and up 12% over the absolute bottom in March 2009.


  3. They are making a cold-blooded decision whether to take the asset based on the value of the loan vs. the value of the asset. They have been doing this, exactly this, all along -- it is just that the economics of it have shifted. If they are handing out loan mods, I'm betting that they include several little legal changes that indenture the "owners" in perpetuity -- one of them being that it improves the situation for the bank if and when MERS blows up.

    The people who take the mods had better get legal help, and pay very, very close attention to what they are doing. Because the whole concept that banks "help" anyone is incredibly foolish.

  4. "nonpartisan said...

    And now it is time to Watch-and-Learn again - beginning August 2010, you will see a RAPID decline in home prices resume - there will be no immunozone.

    Bring it on.
    May 15, 2010 7:37 AM"


  5. Yep, macroeconomic trends do not apply to DC.

  6. http://www.calculatedriskblog.com/2010/08/on-case-shiller-house-prices-october-is.html

    "As we've discussed for some time, the Case-Shiller index is seriously lagged to real time data. The release today was for "June", but it is really an average of April, May and June.

    Home sales were strong in April, May and June, and then collapsed in July. And prices have probably been falling for two months now - but that won't show up in Case-Shiller until the end of next month or even October (the Case-Shiller release at the end of October will be for June, July and August)."

  7. Yep, macroeconomic trends do not apply to DC.

    Actually, it sure looks like that. I have been watching the Trustees Sales notices and another one popped up in my microcosm - 807 Buchanan, NW, likely ~370k (though I haven't looked up the note). This is not a shell (though it's not great), and not a bubble-buyer. Looks like a HELOC-whore.

    The number of >$500k homes sold in my hood dropped last month and several would have contributed to falling CS prices (ie, previous sale was higher). Still, the aggregate number shows increases - and a big pick up for DC.

    I wonder how much of this is a change in the mix of homes actually sold. The added problem with the CS numbers for DC are, of course, that it includes a lot of NoVa and MD. The MoCo Trustee's Sales are through the roof!

  8. I guess, to clarify, I'm with the CR poster - the index is a trailing indicator and therefore not really indicative of the direction of the market going forward. I do see local signs of faltering. Clearly, though, there is a lot of DC's native industry (government) which is recession-proof and keeps high-end demand (at the least) going.

  9. "which is recession-proof and keeps high-end demand (at the least) going."

    The federal government is functionally bankrupt. While I agree that the local industry (federal jobs) does serve to prop up the local economy, I also beleive that any reasonable person would conclude that the whole thing is a house of cards. Its a question of when it comes down; not "if".

  10. So Stan, are you suggesting the the USA is solvent? If so, you have any evidence to support that claim?

  11. "I also beleive that any reasonable person would conclude that the whole thing is a house of cards. Its a question of when it comes down; not "if".

    Correct, and when the great reset button is hit, be it now, or 100 years from now, unless they decide to physically move the government of the newly renamed "Reformed States of America", this area will keep churning out bureauracy like it always does.

  12. In support of Stan, the federal government is not like a corporation or an individual, so terms like "solvent" may not really apply. The government can inflate its way out of debt if needed.

  13. They have finally realized it is in their best interest. I think they originally were planning on trying to ride out the downturn.

    I have also heard that the 1 year after loan mod default rate is through the roof. Hopefully these new loan mods are better than the ones from a year ago.

  14. "unless they decide to physically move the government of the newly renamed "Reformed States of America", this area will keep churning out bureauracy like it always does."

    Man - can you imagine how much "make work" this area would see from that? The new entity would likely create the "office of transition" and employ thousands of people to help the citizenry of the new country deal with holdover issues from the old one. Another new bureau for money transition, property, etc, etc.

    Hitting the reset button may turn this area into the biggest boomtown of all time!

  15. Rob said...

    The most ABSURD real estate bubbles have been going on in India and China for the past 20-30 years, where homes have appreciated about a THOUSAND times. A one thousand US dollar investment in India's metro real estate in the 1970s is now worth more than a million US dollars. Home owners in India and China are unbelievably rich and are far more wealthy than their Western counterparts. Despite the ABSURD appreciation in the past 30 years, the mentality in India and China is that real estate is the easiest and best form of investment, with values doubling every 2-3 years. Note that these so called homes in India and China are small, with little features, very low quality, have no good infrastructure and so filthy that no sensible person would spend even a 100 bucks on, yet are being sold and bought for millions of dollars each in the greatest PONZI game ever played. Note also that the median income in these places is still just a few thousand dollars per year, yet the median home prices are about a million dollars. This PONZI game has created inflation, which then fuels the PONZI game even more and you get the idea. Compare all of this to the United States. Homes have hardly even tripled in value in the last 30 years, and yet, we are quick to point this out as a bubble. We are playing the reverse PONZI here, where we want to destroy absolutely fabulous homes to complete worthlessness. A regular 2000 sqft 4-BR American home would cost several million dollars everywhere in the world except in the USA, where it costs a measly USD 200000. Yep, Americans want everything for free. If it is not free, it has to be a bubble.

    Rob you are an IDIOT! Who is paying a million dollars for a filthy, very low quality home in India? Do you even know anyone in India?

  16. And the banks would have the liquidity to do this without Obama's bailout? Right......

  17. "Correct, and when the great reset button is hit, be it now, or 100 years from now,"

    Right. Because we all know that blood has never been shed on American soil as a result of inner turmoil and upheaval.

    In fact, human history suggests that 'hitting the reset' button will be a peaceful occurrence; accepted passively by the historically-passive people.

    JAC, you're the guy who didn't consider that the DC mayoral election would have an effect on your decision to buy a home in DC, right? You're short sighted. Consider the fact that the "Baby Boom" generation is right around the corner from drawing social security. At the current rate; the only budget items that the federal government will be able to 'afford' in coming decades based upon tax revenues will be Social Security, Department of Defense, and Medicare. (say goodbye to the FAA, FDA, USDA, DOT, DOI, etc.)

    Just keep staring into your television, and all will be well. Empires always last forever!

  18. Love the crazy talk, James, and the layers of sarcasm have me wondering if I'm even typing this right now (violent or peaceful, I have no idea what the hell you're talking about).

    Also, thanks for the personality evaluation, it's like you've known me for years--I'll have to bring up this short sightedness thing with my therapist and hopefully we'll be able to work it out.

    However, what does any of this have to do with a fiat monetary system in which all US debts are in US currency?

  19. Doakes, I'm curious: the three biggest items in the budget are SSI, Medicare and the Defense budget.

    Yes, they are ballooning. I'm curious: why do you think the relatively critical and by comparison minuscule departments will be the ones that get cut? SSI and Medicare are statutory expenditures, with their own separate wage-taxes, but Defense is huge and it's discretionary.

    You cannot seriously believe that the government will somehow be ruled "insolvent" and just go out of business?

    While I'm on it: you can't seriously believe that the mayoral election will really change a significant number of people's minds about where to buy in the Metro area? I mean, sure, there'll be a few cranks like you who self-select out, but the gentrification that's been going on since 2000 is much more a function of the great credit loosening from '98-'08 than it is a function of Tony Williams' reforms.

    I personally think things will change in DC like elsewhere - due to the great credit tightening (current contraction) - though much less due to the ability of underwater folks to hold their breath - low UE. Even with the low UE (that Lance, Partisan, et. al. trumpet), though, the flood of foreclosures in MoCo will depress prices in the District.

  20. James doakes said...

    Right. Because we all know that blood has never been shed on American soil as a result of inner turmoil and upheaval.

    Oh there very well could be bloodshed perhaps massive in scope. Still, it is highly doubtful, the eventual prevailing party will try to move the seat of government out of the DC area.

    Thanks to the resultant bureaucracy, sucessive generations will proclaim, "man can you believe this house used to go for 2,341 credits 5 years ago? Thanks to the war and the influx of bureaucrats its worth at least 5,000 credits now!!!

  21. "e influx of bureaucrats its worth at least 5,000 credits now!!!"

    Influx of the corpses of bureaucrats, perhaps.

    Otherwise, no.

  22. Ummm, who holds massive amounts of US debt valued in US currency? (hint: Dim Sum, anyone?)

    So we default on the Chinese, and they laugh and say "oh, that's ok. We're planning to bury your nation, as we've done with all others, so you just go right ahead and welsh on your debts, USA."

    MontP; you lost me until I read your last paragraph. I can't disagree, but your moderate viewpoint may not be realistic. (just as my pessimistic viewpoint may not be realistic, either.)

    We'll see. Lets review the data early next year.

  23. James, I'll try not to lose you by continuing a discussion of topics you have raised.

    Please explain the mechanism by which we "default" on the Chinese?

    And you mention the Chinese have buried all other nations--what is the sense in which the Chinese have buried, say, Luxembourg?

  24. Reset button would be great.

    Last time we hit it was during the great depression. In that timeperiod when deflation was ravaging the country, this area was going like gangbusters.

    Between 1930 and 1940, DC population rose 36% - highest increase ever. Besides the tent cities on the mall, people had to live somewhere and house prices exploded.

    From the book "DC through the decades" by William Seale (1982):
    The great depression transformed the District like never before. The first administration of Roosevelt had brought the New Deal and tens of thousands of federal employees swarmed to Washington. The earliest newcomers were pleased to find they could buy homes for a very low price, patch it up, wall in the back yard and have a pleasant living situation. However, as the ranks of the bureaucracy swelled, so did the home prices as housing all the new employees soon became a critical issue.

    Others took notice of the shortage for business investment. Said one newcomer at the time, "We'd buy a house for $300, clean it up and paint it, and sell it for $400". Oregon Senator Frederick Stewier was known to have purchased over 50 homes which he was able to sell at a substantial profit within a few years. Said one aide at the time, "there is far more money to be made in real estate than there ever was in politics."

    It was thus one of the more interesting ironies of the great depression. While the rest of the country saw collapsing prices for real estate and other goods, the insationable demand lead to ever increasing prices in the District of Columbia. At the beginning of the depression, a typical home would cost $400 to $500 dollars. By the end of the decade, it was hard to find housing for under $1,000.

    If history is any guide, hitting the reset button would be the best thing that could ever happen to DC real estate!

  25. Now a days its becoming very hard to even think about Home, home affordable programs should be implement so that the home honors get some relief.

    bank sink

  26. The banks have realized that closing the day at home at home at home would not be in nobody's interest - least of all themselves. And they start in the number of amendments to the loan that will be distributed by their criminal clients.But rejoice before the house, they should look closely to changes in supply of bank.