Author Topic: This was starteling to me.  (Read 3407 times)

Pokethis

  • Guest
This was starteling to me.
« on: December 08, 2008, 05:48:58 PM »
From http://market-ticker.denninger.net/ and posted here in full:

I would normally consider this "tinfoil" in the extreme, but Steve Liesman has reported it TWICE in the last hour on CNBS, so here you have it:

        Administration officials are allegedly considering using eminent domain to buy up MBS, with the justification for doing so being invocation of "national security".
Edited by SW, due to copyright issues -- please see here for Fair Use info.
« Last Edit: September 08, 2010, 08:12:16 PM by Sister Wolf »

GroundPounder

  • Guest
Re: This was starteling to me.
« Reply #1 on: December 08, 2008, 07:38:06 PM »
Always remember that politicians do what it takes to get themselves elected.  They only care about what it takes to get them through the next election.  'Saving' people's mortgages is great for votes, bad for the economy.

Pokethis

  • Guest
Re: This was starteling to me.
« Reply #2 on: December 08, 2008, 09:11:00 PM »
Yeah, I'm sweatin' now.  Just gotta keep going and not get paralyzed.  Must focus.

GroundPounder

  • Guest
Re: This was starteling to me.
« Reply #3 on: December 08, 2008, 09:23:46 PM »
Why are you sweating?

Pokethis

  • Guest
Re: This was starteling to me.
« Reply #4 on: December 08, 2008, 09:44:05 PM »
I just think the fallout from all this is going to be very bad.  :-[

Offline chris

  • Survival Demonstrator
  • *******
  • Posts: 3137
  • Karma: 1034
Re: This was starteling to me.
« Reply #5 on: December 08, 2008, 09:50:04 PM »
I wish I was surprised.

Pokethis

  • Guest
Re: This was starteling to me.
« Reply #6 on: December 08, 2008, 10:27:25 PM »
LOL Chris. 

Well, I have been preparing for a financial meltdown (my terrorist attack, nuclear bomb, etc.) for a while but as always you feel like you have more time (Grasshopperness).  I have much more to do!

Offline ejsandstrom

  • Survivalist Mentor
  • *****
  • Posts: 414
  • Karma: 21
  • Right in a left world
Re: This was starteling to me.
« Reply #7 on: December 09, 2008, 11:30:10 AM »
So what about mortgages that are not in default getting modified? I have been kicking around getting in touch with the bank. I'm not in default (for now) but things can change in a heart beat. And before we cast aspersions. I did not buy a house that was to expensive, or over valued. I bought a house that even today is worth more than I paid, and is not double mortgaged to 100%. I did how ever take a 15k per year pay cut to work for a more stable company.

Pokethis

  • Guest
Re: This was starteling to me.
« Reply #8 on: December 09, 2008, 12:02:46 PM »
I don't know what the answer is.  I did some research about the NSP (Neighborhood Stabilization Program) program from the fed in that 2008 economic stabilization act.  What they are doing seems right out of Naomi Klien's Shock Doctrine (A Must read if you haven't).  What the program does is buy houses from the bank - the forclosee has to move out.  The person hurting is taken out of the picture.  They, the city, can rehab, tear down or just plain resell the house.  They can even establish land banks.  So the fed buys up houses from the bad, bad terrible normal person and do what they want with it at the local level, even change the purpose of the land or release it to developers.  I also learned the hardest hit neighborhood was a large area about 300 yds north of me!

I think Obama may have a bunch of programs come out.  If there is one that is directed at home owners check what the requirements are and check with a professional or two (not government) and start becoming eligible as soon as you can.

Also, google "hopenow your city" for foreclosure relief information.
« Last Edit: December 09, 2008, 12:22:13 PM by Pokethis »

Offline Stein

  • Dedicated Contributor
  • ******
  • Posts: 1853
  • Karma: 66
Re: This was starteling to me.
« Reply #9 on: December 11, 2008, 02:43:59 PM »
Here is the problem.  Chances are very good that the people you mail your mortgage check to don't own your mortgage.  They "service" the loan for the true owners which means they collect your payment, take a fee and distribute the rest to the owners of the note.

"Securitization" resulted in your mortgage being broken into tens or hundreds of pieces and sold off around the globe.  Yep, there may be 100 people that own a piece of your mortgage payment.

One big problem is that Uncle Sam can't put the pieces back together - nor can anyone else.  Say you fall behind on an ARM and your only hope of staying in the home is getting a fixed rate.  Well, if you are underwater or don't have the big income for the big house you are out of luck with a refi.  No problem, the bank would rather modify your loan than have your house.  Only problem is that the "bank" is acutally 100 people - everyone from a pension fund to Saudi Arabia to a guy who doesn't even know he owns it buried deep somewhere in his 401(k).  Unless you can convince all 100 people to give the servicing bank permission to modify the loan, you are screwed.

So, the theory is the US "takes" all the parts and puts the mortgages back together and either holds or sells them.  It is easier to sell what you can see and understand than a big fat stinky MBO full of California subprime loans.

So, what does the US do?  They tried to suck them all into F&F and simply wait it out.  Eventually, you will either be foreclosed on, pay off your home or refinance and the parts will come together.  That hasn't worked and we don't have the luxury of time.

The real solution - at least the most plausible one is to force rates down, way down.  Like 3% 30 year mortgages down.  This motivates everyone to refinance as well as pulling lenders from the sidelines.  Every house goes on an even bigger sale since the payments are lower due to the low interest.  It also gives people more room in their monthly budget or allows them to shave years off their loan (for those that don't bump the refi back to 30 years).

This forces the securities to mature (pieces back together) and cleans up a big part of the plug in the pipes of finance.  It also helps put a floor under housing prices and stimulates buying.

This is a very rosy picture short term.  Longer term, what happens when banks have all these 3% loans on the books and rates naturally go back to 6-9%?  They will again loose their collective shirts and we will need to either buy the loans from them or subsidize the rates.

Pokethis

  • Guest
Re: This was starteling to me.
« Reply #10 on: December 11, 2008, 10:29:35 PM »
Crap!!  This is one hell of a storm we just have to wait out.  Damn.