News, Research & Insights for American Homeowners, Patriots & Constitutional Conservatives
The battle of Lake Erie
While all eyes will be on the POTUS battle in Ohio tonight between Romney and Santorum, it’s worth remembering that you can get even more entertainment value for your political dollar with some of the down ticket races. You’ll want to pay particular attention to a stretch of real estate out by Lake Erie. The [...]
Wow, when it comes to our economy, what a difference a month or so makes, wouldn’t you say? I mean, last month the economic news was not good… terrible, even. And to make sure that everyone understood what was up… or, rather down… I wrote about it here, here, and here. To say nothing of here and here.
So, wasn’t I surprised to find that less than a month later, everything economically speaking had completely turned around and we were once again having a “recovery.” Obviously, the ‘Happy News’ folks that have tremendous influence over the mainstream media in this country had been working overtime, so I thought I’d better look things up and set things straight once again.
So, here are a few of the recent headlines:
“Consumer spending drives stronger U.S. growth”
“U.S. Economic Growth Accelerates”
“Economy expands 2.5 percent in the third quarter”
“Where are the recession calls now?”
Ooooh… SNAP!
Why that sure does make one feel happy does it not? Woohoo! Go ahead and click the play button… you’ve got an extra minute or two… Come on get happy!
Okay, so the first claims I wanted to look at were the reports that consumer spending had recently exceeded the expectations of economists, and was providing proof that the economy was once again not in a recession. Consumer spending, or “personal consumption” as the government’s econowonks like to call it, is said to be roughly 70 percent of our GDP.
The bottom-line… much of what the government is reporting is nothing more than a mirage, with the rest either easily explained or not indicative of a growing economy, but rather a shrinking one.
Borrowing…
Let’s start with the government’s claim that total borrowing in September, excluding any meager real estate related borrowing, increased by $7.4 billion. This looked like an extraordinary increase to me, because the prior month, August, reports showed a $9.7 decrease in consumer borrowing, the largest decrease in 16 months.
According to AP…
Total consumer borrowing rose by $7.4 billion in September, the Federal Reserve said Monday. In August, it had fallen by the most in 16 months.
The September increase reflected a 5.8 percent increase in borrowing in the category that includes car and student loans. But the category that covers credit card purchases dropped 1 percent after larger declines in July and August.
To begin with, the $7.4 billion number is NOT seasonally adjusted… they probably didn’t have time to do those calculations. And beyond that apparent oversight, roughly half of the increase came as a result of student loans? Wow, student loans in the fall… go figure. Who would have thunk it?
The other half was auto loans, and that number was easily understood by looking at the average age of U.S. vehicles on the road today, which has surged to 10.7 years, from 8.9 years at the start of the decade, according to R.L. Polk & Co. That’s both an all-time record, and sales resulting from pent up demand, not a growth spurt in the economy.
Oh, and by the way… the other kind of borrowing… you know, the kind that really would indicate that things were looking up for American households, credit card borrowing actually DECLINED by one percent or $627 million.
But, according to the Bureau of Economic Analysis (“BEA”), the increase “primarily reflected positive contributions from personal consumption expenditures,” but a big part of the problem lies in what the government thinks we personally consume. To keep things in nice round numbers let’s assume our GDP to be $14 trillion, and 70 percent of that we’ll call $10 trillion.
So, for example, out of the $10 trillion in personal consumption, you’ll find a little over $2.0 trillion in claims paid by Medicare, Medicaid and providers of private health insurance for things like hospital stays, prescription drugs, doctors, nursing homes, durable medical equipment… all of health care’s goods and services.
Now, clearly consumers aren’t really “spending” these dollars, it’s more like they’re being spent on behalf of consumers. My wife was recently in the hospital for some surgery and our health insurance company will be paying the bill, which I’m sure will be tens of thousands of dollars, but we wrote a check for our deductible, $500. (And, she’s just fine, by the way.)
The government’s GDP calculations also include several categories referred to as “imputed,” which total $1.5 trillion, roughly 11 percent of GDP. Included in the “imputed” category are things that don’t involve any actual money changing hands.
The largest of these is the $1.1 trillion considered “rent” that in theory homeowners pay to themselves to live in their own homes… the government refers to this category as, “imputed rental of owner-occupied nonfarm housing.” As to what this actually means, I have no idea. What I do know is I’ve never written myself a check to cover the rent for living in my own home.
And there’s also a $240 billion entry that’s supposed to cover “financial services furnished without payment,” you know… like the supposed value of services like free checking accounts, or free online banking… to which I can only say… LOL.
There’s also a “social services” category to cover things like spending by religious groups and social advocacy organizations, spending on research and development by universities and other private institutions, and spending by political parties. I understand why this category is included… all of the areas listed above are to some degree funded by individuals making contributions, although government funding is also involved, as is interest income earned on the investments of the organizations themselves.
To call these entries in the GDP calculations “consumer spending” is kind of… what’s the word I’m looking for… oh yeah… goofy. The amounts are not “spent” by consumers; they’re just accounting entries that are used to make the government’s books balance, and they certainly create a situation far too opaque to be any sort of reliable indication that things are looking up.
Still, the casual observer is seeing the headlines proclaim that consumer spending is going nowhere but up… so are they really? The answer is an easy one… of course not. Why in the world would consumer spending be “up” all of a sudden? The only answer is… it wouldn’t. But you have to dig in to find the distortions.
The lion’s share of the overall increase was for services and by “services” the government was talking about necessities: housing and utilities, health care, food services and accommodations, and financial services and insurance. When you consider that the Consumer Price Index (CPI) is up 3.9 percent on an annualized basis, which includes food prices being up by 4.7 percent and energy up by 19.3 percent, it’s pretty clear that we’re not talking growth, we’re talking inflation driven by higher oil prices… which again would tend to reduce consumer spending… at least the kind of spending that matters when talking economic growth.
Additionally, our trade deficit shrunk again, with exports increasing by $31.6 billion, while imports only went up by $7.3 billion… and, like credit card debt, the lower number for imports would point to a reduction in consumer spending, not an increase.
Here are a few other facts that have to be weighing on consumer spending, no matter what the government wants to say…
According to MSNBC News, Most of the unemployed no longer receive benefits
Early last year, 75 percent were receiving checks. The figure is now 48 percent — a shift that points to a growing crisis of long-term unemployment. Nearly one-third of America’s 14 million unemployed have had no job for a year or more.
In the recoveries from the previous three recessions, the longest average duration of unemployment was 21 weeks, in July 1983. By contrast, in the wake of the Great Recession, the figure reached 41 weeks in September. But the economy has remained so weak that an analysis of long-term unemployment data suggests that about 2 million people have used up 99 weeks of checks and still can’t find work.
And there’s more good news behind that…
Number of Americans in poverty at record high
A record number of Americans — 49.1 million — are poor, based on a new census measure that for the first time takes into account rising medical costs and other expenses. Based on the revised formula, the number of poor people exceeds the record 46.2 million, or 15.1 percent, that was officially reported in September.
Without food stamps, the poverty rate would have risen to 17.7 percent, which translates to about 5 million more people. That program was expanded in 2009 as part of the federal stimulus plan; the expansions are now phasing out gradually and will expire completely in 2014.
Best if taken with a grain of salt… or maybe two grains…
Just to give you an idea of how reliable the projections of consumer spending can often be, in a Bloomberg/BusinessWeek from April 9, 2008, the following paragraph appeared:
Some economists think the combination of economic stimulus checks soon to arrive from the federal government and lower interest rates should keep consumer spending from falling off a cliff. “We think consumers will narrowly skirt a downturn despite the recession in the overall economy,” write Richard Berner and David Greenlaw of Morgan Stanley in a just-released report.
So, yeah… nice job forecasting, fellas… we really dodged a bullet there.
The fact is that there are so many ways the numbers reporting consumer spending can be manipulated that it’s completely impossible for anyone to be sure their numbers are right… or even close to right.
On September 20, 2011, an article titled, Consumer Spending Data: If It Is Right, Is It True? had the following to say:
However, so many studies are issued on the subject, it is hard to know which ones are true. Statistics fluctuate so greatly that it is impossible for any report to be a single, entirely accurate reflection of what American consumers are doing now and what they will do in the future.
What we do know…
Here’s what we do know… consumer spending always picks up in the fall… it’s back to school and pre-holiday shopping at work. And we know from the website shadowstats.com, run by economist, John Williams, that unemployment if calculated properly is a lot closer to 23 percent than it is to the 9 percent “Happy” number reported in the press.
And we also know that, according to an AP News story on the latest data from Fitch…
Fitch: Foreclosure rates are now twice last year’s
Foreclosures on delinquent U.S. mortgages have almost doubled from this time last year, according to the latest reading from Fitch Ratings. Fitch said the higher foreclosure rate will push housing prices lower by increasing the inventory of houses on the market.
So, knowing those things… that foreclosures are up dramatically, and that unemployment is being under-reported by the federal government and ultimately the main stream media… and that since the crisis began, all of these sorts of projections have been wrong far more times than they’ve been right… we shouldn’t really have to go to the trouble of looking this stuff up every couple of weeks just because the government is releasing more… well… crap would be a good word there.
For the foreseeable future, whenever you hear that everything’s coming up roses, just say… okay… and pass the salt.
Mandelman out.
P.S. And since we started with The Partridge Family making us happy, I thought we should close out with a more appropriate theme song for our times… come on, click play… you’ve got another minute…
Remember years ago how people who worked for the federal government didn’t make a lot of money or, at least generally speaking, have a lot of money? Like, they were public servants and only after someone left their government job, then he or she might get a job in the private sector and start making a few bucks. I remember those times. And I’m not at all sure when they ended, to tell you the truth, but they sure seem to have ended, and I’m starting to think that it’s affecting how things go in this country.
Herb Allison, who was the Assistant Treasury Secretary under Geithner, and headed up the $700 billion TARP bailout fund, followed a slightly different path, and look what happened there.
Herb started out with a B.A. in philosophy from Yale University, which is… oh, I don’t know… funny to me. A Yale philosophy major? I really didn’t know they made those. Maybe it was the philosophy of money and he minored in inheritances? From there Herb did an MBA at Stanford, but big deal… I did my MBA at Pepperdine and although perhaps at one time, I knew my way around an HP 17B II, today I can barely balance my checkbook.
Herb then spent 28 years at Merrill Lynch, including a stint as Director of Human Resources, where I’m sure his background made him an excellent choice for explaining the company’s health plan to a bunch of financial advisors. And after that, he became National Finance Chair for John McCain’s first failed presidential campaign.
Between 2003-2005, Herb somehow managed to become director of the New York Stock Exchange. Now, I don’t remember these being particularly challenging years at the NYSE, so the place probably pretty much ran itself, I would think, because overlapping with that responsibility, from 2002 to 2008, Herb was the shiz at TIAA-CREF. These were some very rough and tumble years for those in the financial services industry, so all in all… very nicely done there.
And, to round it all out, Herb had a cup of coffee at the helm of Fannie Mae back in 2008.
So, what else would you expect someone with that kind of resume to do next? Manage the $700 billion TARP bailout fund? Why, that’s right… that’s what I would have guessed too.
You remember the TARP… the $700 billion decoy bailout fund that had absolutely no accountability built right into it? We handed the money over and then weren’t even allowed to ask where it went or what anyone did with it. Without question, the least transparent tax-payer funded fund in the history of the world. All we really know is what it wasn’t used for… it didn’t buy the toxic assets off of the balance sheets at our too-big-to-fail financial institutions. Yep, that TARP. I wonder what that job is like, managing a fund that no one reports on, asks about, or even knows where was spent.
When Herb announced he was stepping down last fall to return to his home in Connecticut, Herb said that TARP, or the Troubled Asset Relief Program for long, was a proven success… and I don’t see how anyone could have a basis upon to which to challenge that statement, since we’re not allowed to know where it went or for what it was used. He also said that the bailout fund stabilized the nation’s financial system and laid the groundwork for an economic recovery. Um… well, okay… if you say so.
Just writing down all the things that Herb did in his career makes me tired, so it’s easy to imagine that he needed a break, so he bought a place in Connecticut… a cottage by the sea… just somewhere comfortable where he could put his feet up and relax… take stock… reflect on life’s accomplishments.
So, he bought Phil Donahue’s and Marlo Thomas’ $25 million Greens Farms mansion. The estate is three separate lots for a total of 7.7 acres. The home is a 7,379-sq.ft. 1911 wood and stucco Tudor with 17 rooms, including nine bedrooms. There is also a guest house. That’s a photo of the estate just above. Beautiful, don’t you think? Lovely, it really is just lovely.
So, getting back to the point of this article… wait, what was the point of this article?
Oh, yeah… I remember now… I was talking about how people that worked for the government didn’t used to make much money until perhaps they left their government jobs and went to work in the private sector.
You see, it seems to me that our government has become increasingly out of touch with the rest of our society, especially lately, that is to say that the current administration appears to have no connection whatsoever with the American middle class, for example.
The HAMP Disconnect
Neil Barofsky, the SIGTARP, or Special Inspector for the Troubled Asset Relief Fund was fairly critical of the Home Affordable Modification Program over the last six months or so, right up until he resigned from his position a month or so ago.
At one point last fall he made the observation that the administration had established “meaningless” goals for its “flagship mortgage assistance program.” He pointed out that when President Obama introduced the program in the latter part of February of 2009, he claimed that the program would help 3-4 million homeowners, but as it turns out, the program has at best helped… and I use the term “helped” very loosely… about 170,000 homeowners to-date. (This was back in September of 2010, today that number would be just north of 500,000.)
The administration’s response was… and I am not making this up, in fact I wrote about it at the time… that the plan’s goal wasn’t to actually help 3-4 millions of Americans, but rather merely to OFFER to help those millions.
Neil Barofsky replied by stating the incredibly obvious:
“Defining success by how many offers are given can reasonably be perceived as essentially meaningless,” Instead, the program’s goal “must relate to how many people are helped to avoid foreclosure.”
Enter Assistant Treasury Secretary Herbert Allison, just prior to his departure to that lovely cottage on the water in Connecticut. Herb responded to Barofsky’s report in a letter, saying that the statements about the plan’s goals “have not always been precise.” Then he argued that “offers of help” is a meaningful measurement because some borrowers who don’t qualify for the government program would still be able to avoid foreclosure, and I could stop and try to interpret that sentence, but I’m just not going to as I’m not wearing my mouth guard.
Now, you see my point here, right? As Herb is making this inconceivably obtuse point, we as a nation are in the third full year of the foreclosure crisis, the byproduct of the worst economic meltdown in 70 years. Millions of Americans have already lost their homes to foreclosure, and all forecasts point to millions more certain to lose their homes in the next couple of years. Headline unemployment is hovering around 10%, and the administration is clearly scrambling to make the economic recovery take hold somewhere… anywhere.
And Herb Allison, God bless him, is actually arguing that the “OFFER” of help is really what matters, as opposed to the “PROVIDING” of help to millions of American homeowners, as the program promised. Like, to Herb, when it comes to saving homes from foreclosure, the main thing is that we try, not so much that we succeed.
Of course, Herb was spouting this insensitive drivel a month or so before he was off to retire to his 7,379-sq.ft. 1911 wood and stucco $25 million Greens Farms Tudor mansion with the 17 rooms, including nine bedrooms, on 7.7 acres… with the guest house… that
used to belong to Phil Donahue and Marlo Thomas.
See… because in the old days, our public servants, those that worked for the government, seemed to make less money than Phil Donahue or Marlo Thomas. They didn’t used to have 7,379-sq.ft. 1911 wood and stucco $25 million Greens Farms Tudor mansions with 17 rooms, and nine bedrooms on 7.7 acres… with the guest houses. And they used to seem more like the rest of us… more in touch with the lives of middle class Americans.
Maybe, if that were the case again, if our public servants were’t so far removed monetarily from the rest of us, maybe they would see the problems were facing with more clarity, and take them more seriously. For instance, maybe HAMP would have worked better than it did… maybe the foreclosure crisis would have ended by now, you know… if Herb wasn’t a zillionaire who lived in a Phil Donahue’s $25 million mansion on the waterfront.
And, maybe Herb is actually being sincere when he says that trying is as important as succeeding… that offering is as important as providing… because none of it will ever come close to affecting him personally. Herb, I’m fairly certain, isn’t going to lose his $25 million 7,379-sq.ft. Tudor 9 bedroom mansion to foreclosure, in fact, my guess would be that he’s never going to know anyone in that predicament either. So, “we tried”… might be the most we can expect from this government.
Maybe Herb feels about HAMP’s underwhelming performance the same way the rest of us might feel if the capital gains or inheritance tax were to triple next year, and we were charged with preventing that from happening. Like, we might say… look, we tried… and isn’t “trying” what really matters here? The important thing was that we OFFERED to keep the capital gains tax the same… we “TRIED” to keep it the same… and that’s how you really have to measure the success of our efforts, as opposed to succeeding and and actually keeping the tax rates the same.
Like, we might one day say to them: Oh well, we tried and we offered… and that’s what was important about our efforts… your Capital Gains and inheritance tax rates have tripled, however… so… sorry about that… chin up.
Mandelman out.
Special thanks to Nomi Prins, who is my new favorite author and person. She’s the one who pointed out Herb’s $25 million purchase of Phil’s and Marlo’s waterfront pad to me, and I swear to God, she’s sort of… well, me. Okay, she’s smarter than me, and I’m not sure she breaks into show tunes in the middle of writing about banks and mortgage-backed securities, as I am prone to do, but in an awful lot of ways, she’s Mandelman Matters in a much more attractive package. I’ll be reviewing her latest book, “It Takes a Pillage,” in the next week or two, as I’ve read it so many times at this point that I’ve almost memorized it. You can visit her site here, Nomi Prins… and really… I cannot recommend doing so highly enough.
WELL, WELL, WELL.
For years we’ve heard the Johns v. Gillian mantra, “the mortgage follows the note” and the MERS mantra that “assignments of mortgage don’t matter”
Well now we’ve got a little bulletin that shows that after all the mortgage does matter. The assignments do matter. Go ahead and grant all the summary judgments that you want. And as some folks have been saying…..You think you’re seeing gridlock in real estate right now, wait until the title insurers realize just how badly screwed up title to property is and stop writing title insurance on these properties….
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I really wonder sometimes and can only believe that the problem is the problem is too big so they cannot figure out how to swallow the camel. But think about all the agencies that could do something. FBI, OCC, Dept. of Justice, Dept. of Treasury, State Attorney Generals, Circuit Court Judges, I become discouraged and doubtful and even if they do come riding in to uphold the law, any law, at some point in time, what about all those people who lost their homes today? Why couldn’t you have come one day earlier? But one fighter shared the following bit of hope:
I got a call from the cops today. There were times in my life when that wasn’t a good thing and ordinarily I wouldn’t be so … elated? I hung up the phone smiling.
The SEC Enforcement Division called me because I had filled out a form online about 60 days ago telling them I knew something about the securitization of real estate which might be helpful in their investigations. Apparently I was intriguing enough yet vague enough to warrant a real live person.
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Like my favorite quote from my favorite lawyer movie, A Few Good Men, “And the hits just keep on coming.” Or take this quote I picked off in the comments on Nake Capitalism’s website…..
Why do bankers wear tassled loafers?
Because they can’t tie their own shoelaces.
These are major decisions from important courts all across this country that are finding fatal problems with the entire foreclosure, mortgage and real estate servicing industries. We’ve been screaming about these problems forever and now our courts are really starting to hammer away at the practices that have infected our court system. These two decisions are long, but incredibly important….read them carefully….
b+r+US+Trustee+Response+in+Support+of+Debtor’s+Objection+to++GMAC+Proof+of+Claim[1]
b+r+US+Trustee+Response+to+Debtor’s+Motion+Objecting+to+BAC+Home+Loans+Proof+of+Claim[1]
Finally, read the commentary from Yves Smith’s Naked Capitalism Site….and bookmark hers for excellent commentary on all these issues……
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Clowns to the left of me, jokers to the right, here I am, stuck in the middle with all of them…
So, are you ready for this? I can promise you that you’re not. ProPublica, a Website I’ve just recently started paying attention to, is reporting that there seems to be one giant stupid, and inconceivably insensitive debate going on in our nation’s capitol concerning the use of principal reductions as related to loan modifications.
Now, before I say anything about this, I just want to mention that this was a stupid debate last year when a similar group of untrustworthy buffoons were kicking the idea around, but this year it’s just turn-your-head-and-look-the-other-way STUPID.
Last year, and I write about it then too, they were discussing whether principal reductions were a good thing or a bad thing. I mean, do you think it occurs to these people how incredibly embarrassing it is for them to be having such a discussion… talking about concepts like “moral hazard” and the like? These people are the moral hazard… they’re the crown princes of moral hazard, are they not? And as far as irresponsible borrowers go, well shiver me timbers, like the world has never seen they are irresponsible borrowers.
So, for them to actually have a job where they get to sit around and pontificate about the pros and cons of granting principal reductions, and the potential impact of doing so as opposed to not doing so… as if they’ve done even one thing right, or forecasted even one aspect of this housing meltdown correctly, well… it just boggles the mind, that’s what it does… it just flat out boggles it.
If I could be a little talking bird that could land on the window sill of their meeting room, I’d say… come on guys, you’ve already lost all credibility, no one will believe you anyway… give it a go… what can you lose? I mean, Treasury was suppose to launch the HAMP PRA, that’s Principal Reduction Alternative program on October 1, 2010, according to their own press release. Anyone seen hide or hair of it? Right… the answer is no.
And that overlooks that HAMP was supposed to offer some number of principal reductions in the first place, after taking the interest rate down to 2% and the term of the loan out to 40 years… the servicer was supposed to consider reducing the principal. Let me guess at how the banking lobby would respond to that:
“Servicers do consider reducing the principal on every single loan modification application. They just decide against it every time.”
To which all I can think about is beating the crap out of some fictional banking lobbyist.
So, anyway… enough of that… Treasury is allegedly for principal reductions… the House Republicans, as if they should get to vote on anything, say Nay! The Obama Administration is purportedly for the idea of bringing down the balances on loana, but now… are you sitting down… the FHFA, the Federal Housing Finance Administration, the regulator of the failed Fannie and Freddie, says no.
And no, means no, I suppose?
Who the hell is the FHFA, is that even a real regulatory agency? I think they just made it up a few years ago to make it appear as if something was actually regulating Fannie Mae. And that brings up another good point.
Now? Now when perhaps there could be the modicum of a chance to perhaps save even a few from foreclosure, like it could be my next door neighbor we’re talking about, and hence maybe another fifty grand slashed off of my fast diminishing theoretical equity position… now you start regulating Fannie? Like, where the heck have you been… say, when Fannie was leveraging itself 110:1, I believe the figure was when the bough broke. And Freddie… a jaw dropping 170:1? And now you’re looking at saving a few foreclosures and you saw…
“Nope. It wouldn’t be prudent, not at this juncture.”
Since when is anything that Fannie Mae does even remotely prudent? Yeah, because that’s what comes to my mind when I think of the word “prudent”… Fannie Mae. Nice castle, by the way.
You guys are smoking crack over there, right? Tell me you are and I’ll leave you alone. I promise, you won’t hear another word out of me. Otherwise, I’m going to find a way to friend your mom on Facebook and tell her what you do at work.
And Fannie Mae and Freddie Mac… excuse me for a moment, but am I wrong to say they’re both entirely bankrupt, like as in gonzo… out of here… the showers are on… ball four, take a hike, you’re all done here?
Oh, I know, you’re going to tell me about how their in something called “conservatorship,” right? Yeah, well then let me rephrase my question.
If Fannie Mae and Freddie Mac were anything but fraudulent-semi-pseudo-quasi-government agencies in the first place, would they be long gone bankrupt? Thank you… I thought so.
So, FHFA… what are you doing over there? The President of the United States and the most powerful man in the world, Treasury Secretary Tim Geithner both say they want Fannie and Freddie doing some principal reductions, who are you to say no to them… I mean, I can understand you telling Obama to pound sane, half the bankers on Wall Street don’t even show up for his meetings, but Tim Geithner? Don’t you know who he is? That man can snap his fingers and Ben Bernanke starts up the printing presses from his nightstand by his bed. Tim Geithner… even Lord Blankcheck over at Goldman Sachs takes his calls. And Vikram Pandit over at Citi? Yeah, well I heard he comes over to rub Geithner’s feet in the evenings. It’s true, that’s what I heard.
Seriously now… Freddie and Fannie were GSEs for years… you know… “Government Spending Entities.” What’s the big deal if they shave a little off the balance balance due on a few thousand homes. It’s not going to natter anywat… buy next year at this time they be underwater again… you won’t have really changed a thing. And besides, the two mortgage queens have never had any principles before why not cut some of them off now that they’ve got a few.
For God’s sake man, Fannie Mae stock is trading OTC right next to Blockbuster! What could you possibly be holding onto? Are you holding your shareshoping for “the bounce”? Dollar cost averaging into either one of those piles of dung, is that what you’ve got going on over there?
And get ready for this whopper of a sentence from the article on ProPulica…
“In this case, reducing principal for some homeowners could add stability to the housing market and save Fannie and Freddie money in the long term, but it would also force them to take an immediate hit to their balance sheets.”
Okay, first of all… “balance sheets,” as in more than one? Was that just your Freudian slip showing, or are Fannie and Freddie running two sets of books again? Wouldn’t be the first time, you know.
And back up… read that paragraph again… reducing principal “for some homeowners could ADD STABILITY to the housing market and SAVE FANNIE and FEREDDIE MONEY in the LONG TERM, but it would also force them to take an immediate hit to their balance sheets?”
So, who gives a crap about their “sheets?” Treasury dumps tens of billions into their bottomless pits every quarter that I can remember anyway. To hell with their “sheets”. In fact, while you’ve got the go ahead to pull Fannie and Freddie up to the Treasury Department every quarter and say: “Fill ‘em both up.” Wouldn’t now be a good time to take the hit to the “sheets?”
Because the way things are going, the Democrats may be replaced by a whole team of Alvin Greenes next election, or who knows… maybe even a few Republicans, and if that happens, how long do you think it’ll take the GOP to change your sheets? An hour? Not even that long… they’ll phone that vote in from their limos on the beltway. And then what will you say when you go down in history as the man… I’m assuming it’s a man we’re talking about, but I’ll look it up in a second and tell you for sure… what will you say when you go down in history as the only man ever who couldn’t throw a few hundred billion away? It’ll be embarrassing at the club, have you thought about that?
ProPublica asked Fannie Mae for a statement and apparently Amy Bonitabus, Fannie Mae’s spokesbetch said:
“We are continuously reviewing our policies regarding the modification of mortgages based on changing economic circumstances and our analysis of whether the policies are working.”
I swear… did she sound like she was smacking her gum when she said that, or was that just me?
Hey Amy… pssst… over here… that’s right, here… to the right… a little closer… that’s it… good… blow me.
Was that too unprofessional for you? Yeah, well I’ve got a few choice words for you too in that case. This is out of control… someone needs to take someone over his or her knee and give him or her a hot bottom. (You know, that’s a better sentence when you don’t make it grammatically correct.)
And first of all, what “changing economic circumstances” are you currently reviewing your policies by? And name one policy Fannie Mae has ever had that anyone but that clown Franklin Raines thought was working? And besides, wasn’t that Franklin Raines that played Lamont on Sanford & Son? I think it was… that’s why you never see the two of them together.
You guys at Fannie have never reviewed a loan modification policy in your lives… I don’t believe it. Name one. One thing that Fannie Mae does consistently that has to do with loan modifications? Go ahead, betch, I’m waiting.
Oh, did your Crackberry go off and you’ve got a meeting… I thought as much. Loan modification “policies” at Fannie Mae… that may just be the finniest thing I’ve heard all year.
And how about what the Wall Street Journal reported last week… according to ProPublica…
“The Wall Street Journal reported last week that the Obama administration has been pressuring the FHFA to allow Fannie and Freddie to reduce principal, and that they are “in talks” about joining the program that targets borrowers who aren’t behind on their loans.”
Oh, come on… is this some sort of gag article… am I on Candid Camera… I’m serious… is that a camera in my closet next to my “Nobody tell Obama what comes after a trillion, okay?” coffee mug?
Obama has been pressuring them… the President of the United States is pressuring them… Ohhh, is it like Guantanamo… or more like Canyon Ranch… pressure me some more, Barack… I like it when you pressure me… a little to the left… ahhhh, that’s it… now down… yeeesss…
And the pressure has resulted in “talks” and after all that they may consider participating in the program that targets borrowers who AREN’T LATE? You mean the program that’s never been used once… because no one modifies loans that aren’t late, and if they do, they certainly never tell a soul for fear of embarrassment.
And the hits just keep on coming…
“Industry analysts, however, have expressed doubts that the talks will have much impact. Congressional Republicans have been particularly vocal in pressuring the FHFA against doing principal reduction.”
Congressional Republicans, huh? Do I have one of those in my district? If I do I think I‘ll go find out where he parks and key his car… every day… for a year. I’m kidding about that, by the way, I’ve never keyed a car in my life. The sound would kill me… screeeeech… yikes.
But why do Congressional Republicans have a view on this issue? What are they a roving bunch of bullies that prowl the halls of the Capitol and intimidate people on issues that don’t have anything to do with them?
But, I’ll tell you what… why don’t you check to see if you have a Congressional Republican in your life and start sending him or her letters. Every day. Write seven on Sunday and then drop one in the mail every day of the week ahead. Then, get a friend of yours to do the same thing… then another… and another. I’m not sure you’ll accomplish anything for the principal reduction cause, but you’ll start feeling a whole lot better by Wednesday of week two at the very latest, I promise you that.
The ProPublica story explained that Obama does appoint the head of the FHFA, and that really blew me away. Obama appoints the head of the FHFA but Obama’s been pressuring him and it’s still a no go. Damn it, Obama, call Dick Cheney… he’ll tell you have to handle this… can you imagine this same thing happening to Cheney?
The article also said that Congress can also pass a law forcing the FHFA to allow principal reductions, but no one thinks Congress can pass anything but gas.
And get this… from the ProPublica article touched on my favorite subject… bankers putting down aid for homeowners because it constitutes a bailout:
Credit Suisse analysts wrote last week, “Given the current make up of Congress, it would be difficult to get a borrower bailout law approved, in our view.”
A “borrower bailout bill?” Did the guys from CREDIT SUISSE actually say “bailout bill” and sound snarky? Someone needs to find out where they hang out after work, throw them in the truck as they’re leaving, and take them on a Hannibal Lecter Tour of Great Places for Liver and Onions”. That’s just what I want to hear, snarky Credit Suisse guys making fun of principal reductions by branding them a “bailout bill for homeowners.”
Now, get this… ProPublica claims that based on data from OCC’s Mortgage Metrics, their analysis shows that banks have been doing principal reductions and discovering that they do make sense.
Meanwhile, banks have also been seeing the benefits in reducing principal in certain cases as well. Indeed, nearly all principal reductions that occur happen for the loans banks hold on their own portfolio, where they have the fewest obstacles to the modifications. Over the last year, banks have used principal reduction on almost a third of modifications on loans they own, according to ProPublica’s analysis of regulator’s data.
The article even goes as far as to say that both Wells Fargo and Bank of America have agreed to CONSIDER principal reductions for those that qualify for HAMP… but there’s that word again… “CONSIDER”. Why does the Treasury keep using that word? Don’t they know that we got hip to that crap like more than two years ago?
But, according to ProPublica…
Wells Fargo and Bank of America, for example, have both agreed to consider principal reductions in the Treasury’s main loan modification program, but only for loans that they own outright. One bank executive said that their internal analysis predicts that a “good percentage” of their government modifications will soon involve principal reduction, since the calculations indicate that they will recoup more money by reducing principal.
“If it’s good enough for their own balance sheets, where the banks have the risk, why wouldn’t it be good enough” for Fannie and Freddie, asked FHA Commissioner Stevens.
Gee, I don’t know Commissioner Stevens… but you might… why don’t you share the answer with the rest of the country.
The article goes on to explain that Fannie and Freddie have arrangements that are different from others, because they can force others to cover losses on some delinquent loans, and it also implies that by granting a principal reduction, their ability to recoup losses from lenders that originated mortgages to buy back bad loans becomes limited in some way, although I don’t understand exactly why that’s the case.
And the article points out that many of Fannie and Freddie’s loans have mortgage insurance, so there’s an insurance company on the hook should the loan default.
Now, does that mean that the two insolvent GSEs are actually allowing those loans to default and go into foreclosure instead of modifying them because they’d prefer to recoup the insurance proceeds than prevent a foreclosure? Because that’s sure what it sounds like to me, and that’s just unbelievably wrong in so many ways… and must be exposed and stopped.
Look at what’s happening here…
Treasury Secretary Geithner just recently testified that he thought there’s a solid economic case for Fannie & Freddie to participate in the principal reduction programs, such as the new HAMP PRA, but they don’t participate in any of them. I mean, F&F aren’t participating in the new PRA even though, as the article says:
“For example, the voluntary “Principal Reduction Alternative” to Treasury’s main loan modification program encourages adjustments only where reducing principal costs less than letting the home go to foreclosure or than doing a modification that doesn’t trim the loan. But Fannie and Freddie are not participating, even though the program is only for principal reductions that would save them the most money.”
That means that it’s all about short-term losses for Fannie & Freddie, avoid them at all costs, and their regulator, the FHFA is enforcing that stance. But, Fannie & Freddie, in my way of thinking shouldn’t even be given the choice. They are both bankrupt. Gone. History. They’ve already been NATIONALIZED, for God’s sake. Oh, I know… it’s a conservatorship, or whatever… and that means… I DON’T CARE WHAT THAT MEANS.
Listen up, Washington D.C. You don’t have any money. You’re the world’s largest “irresponsible borrower.” You are where you are to serve the people of this country. You are not here to hand out our money, and then say… “Do whatever you want to them, we don’t care.”
You are paid to care… elected to care… there to care. Stop not caring…
Mandelman out.
The consters and Wall Street Fat Cats are not slowing down with their fraud and abuse in the face of all this scandal….to the contrary, they’re speeding it up. We need our local judges to stop all this. We must demand that they stop it.
We are all in very dire straits, it impacts not just the mortgage and real estate markets, but our entire economy. How was it allowed to get this bad? Where were all the smart people?
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Read the attached article on Fraud in Foreclosures that recently appeared in the Jacksonville Times Union. Then read carefully the huge dodge of responsibility set up by ProVest’s mouthpiece:
“I expect them to sign their returns of service,” said Karen M. Kelly, the general counsel and chief compliance officer for ProVest.
She said her company has routines for checking the quality of work but adds the servers are independent contractors with their own licenses who are responsible for their actions.
“It’s his job to do it according to the law. We’re not that involved with how they do what they do,” Kelly said. She said she didn’t think ProVest carried any legal responsibility for work done improperly “unless I’m sitting there doing it with him.”
I’m expecting that every reporter and lawyer who’s already sniffing around about fraud in foreclosures and looking for the next big case or story would be reading these statements very, very carefully. Apparently Provest, “one of the nation’s largest legal support services firms” has attempted to insulate itself from any of the massive liability that is coming from the tsunami of litigation surrounding fraud in service of process.
Remember I reported earlier that title to real estate and now a huge portion of our economy are based on “independent contractors” who are “responsible for their own actions”…….sounds like more fuel for the fire……
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Look back through this blog. I’ve been warning for months now that one of the biggest problems with the rampant foreclosure fraud
Click here for a market ticker on title companies.
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So, you know The Real Estate Guys radio show, right? Russell Grey & Robert Helms? Sure you do… Not only are they like famous on the radio, but Robert and Russ have co-authored the very highly rated book Equity Happens and star together on The Real Estate Guys TV Show which can be seen on The Success Training Network (TSTN).
So, they asked me to be on their show and I said… well, I said sure. So, I did it, and it was fun and then I completely forgot about posting the show here. Isn’t that just so… me. Well, the truth is that not being in real estate, I really had no idea about their show, and I thought it sounded pretty boring… sorry, I did… but it actually wasn’t. It’s sort of like Click & Clack, those brothers that do Car Talk on NPR on weekends. You think it’s going to be dull, but then it’s not.
Well, they’ve become pretty big all over the country, and they have a really cool Website, which you can find here: The Real Estate Guys.
The thing is, the show was done last fall, so I wasn’t really sure it would still be relevant today, but luckily for me… we’ve made no progress whatsoever in the loan modification department, so if I did the show today, I’d be saying pretty much the same stuff. How lucky is that? Gee, I hope we make no progress again next year and I can just keep this show up indefinitely… of course, we’ll all be living under one of those bridges President Obama keeps saying we’re fixing as part of the economic stimulus, but so what…
So… if you want to hear a little Mandelman on The Real Estate Guys talking about loan modifications and the mess that is the foreclosure crisis, well then you have to click below… if not, not.
Come on… you want to hear it… I know you do… click it! It doesn’t suck, I swear. And if it skips in the beginning, don’t stop it, it just takes a minute or two to load.
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Foreclosure News
