While the MSM would like to keep our attention focused on the global arena, like that ‘tempest in a teapot, Greece while reports keep surfacing about incidents of reckless chicanery being perpetrated by the money powers closely connected to our own government.
For example, that ‘gift’ on Christmas Eve of lifting the ‘cap’ on the balance sheets of both Fannie and Freddie. Now it appears the two GSE’s are going to ‘re-purchase’ the non-performing mortgages in the MBS they issued (at, no doubt, 100 cents on the dollar) in an effort to raise the value of assets that remain.
This is very nice for investors but it sucks huge for taxpayers (even though you already know they are going to default on the debt!) What’s REALLY going to suck is the same asshole we bail out at 100 cents on the dollar will be the same one who demands twenty-percent interest on his treasury bonds!
No good deed goes unpunished…
Why does it seem as though you’re always getting fucked? Because we can never do enough for the already wealthy!
We SHOULD keelhaul the lot of ‘em…under a powerboat! But that’s just me…
Anyway…onward with tonight’s offering:
Strategic Non-Foreclosure Becomes Official Policy
by Barry Ritholtz [Purloined from The Automatic Earth]
One of my favorite bizarre twists on the credit crisis and housing collapse has been the concept of Strategic Non-Foreclosures. I usually mention this when speaking to groups to see the reactions people have — they tend to be stunned at the banking opposite of Walkaways (Strategic Defaults.) [Worse, nobody is holding the bank’s feet to the fire for committing this injustice! Don’t get it wrong here, the ‘foreclosure’ proceeds normally right up to the eviction; then the chiseling bank stops short of taking possession. Leaving the former owner ‘on the hook’ for a property they have been denied the use of…]
But now, under the guise of new bank experiments, the Strategic Non-Foreclosure is becoming official policy. First, we get friendlier terms such as “Soft foreclosure” or “Deed for Lease.” And, it appears to offer numerous benefits for both parties (though more for the banks then the borrower:)
• Delinquent Borrowers get to stay in their homes for longer periods of time;
• Lenders get to avoid paying utilities, homeowner association fees, and providing maintenance costs such as snow shoveling and lawn cutting;
• RE Tax obligations remain in the name of the borrower;
• Banks do not have to take an immediate right down of a bad loan;
• Other properties in the same neighborhood where the lender may have exposure delay suffering the negative price impact of a foreclosure; [Which is to say prices remain artificially higher than a foreclosure auction would reveal…]
Here’s the Washington Post:
Seeking alternatives to the nation’s struggling foreclosure prevention efforts, federal and mortgage industry officials increasingly are looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.
Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition. The bank estimates that up to 20,000 borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio could be eligible. [Um, understand this is just one mortgage lender and we’re talking millions of foreclosures.]
The program is just the latest amid a growing acknowledgment that foreclosure prevention efforts will fail to reach millions of borrowers over the next few years.”
As you can see by the Credit Suisse chart below, the policies might have become official recently, but the gap between delinquencies and foreclosures has been expanding for quite some time.
There have already been millions of foreclosures…and maybe a million properties sold at auction…a vast majority don’t receive bids the banks can live with so they hold on to them…waiting for the day when the market returns…
Sadly, many of the homes sold at auction were purchased with ‘creative financing’ by idiots who thought housing was ready to ‘turn around’. Which is to say they still paid too much but didn’t care because they bought the properties ‘on spec’, planning to let the renter or the next buyer take the loss.
Ironically, this is how we landed in this mess in the first place. Part of the endless search for the ‘Greater Fool’ is never realizing that the greater fool is you.
Our pal ‘Flipper’ has fulfilled the vital social role of village idiot. Sadly, we can’t build a sustainable society if it means satisfying the delusions of the village idiots.
Not only must we put a stop to these endless attempts to fleece our way to the top but we must shut down the avenues the criminals use to take the rest of us hostage.
Thanks for letting me inside your head,
Gegner
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