The Foreclosure Dump

[Jhhnn]

We kinda gave them a shitpot of money to help them buy their competition for pennies on the dollar not long ago.

Must be Obama's fault. He used time warp Kenyan mind control to force Bush and Paulson to make that possible, obviously.

 

[her209]

The way I read it, those amounts are the value of forclosed homes the banks now hold, not losses.

Fern

Whoops, you're right. I meant to say values, not losses. Point still stands. Are those 7 billion and 25 billion figures based on actual market value of the houses or values based on arbitrary valuation? I suspect its the latter, i.e., the banks are hiding losses.

 

[ericlp]

Whoops, you're right. I meant to say values, not losses. Point still stands. Are those 7 billion and 25 billion figures based on actual market value of the houses or values based on arbitrary valuation? I suspect its the latter, i.e., the banks are hiding losses.

I am sure it's the losses of the bank MADE when the loans were first drafted. But the federal reserve is a private entity that owns the banks so what do they care? They control how much to print up, so print away! You can't tilt a table on a bank... They are untouchable by a bigger corrupted system then even our own government is. The sad part the government has to play along with these people.

 

[SammyJr]

And within three months, a good percentage of those "gifted" with clear title to their foreclosed houses would re-finance and go on spending sprees. And three months after that those losers would lose their houses again. Except that in that scenario, we'd also have hyperinflation driven by all the extra money in circulation.

Part of the terms could be that they would not be allowed to refinance for 10 years.

 

[SammyJr]

It only proves the bank bailout was never meant to correct the source of the housing problem, instead it just prolonged the agony and the inevitable is finally here. IMO, the only way to fix this problem is to actually just "bite the bullet", which means let the housing market find its own price level. Temporarily supporting unrealistic prices as the bailouts did will not solve it. There will be a lot of losers but not for long. Soon the price will stabilize and bottom out, then start it's way up again. The housing market can't go up until it hits bottom! And temporarily supporting it like bailouts is just prolonging the inevitable.

Of course not. It was to make sure that the aristocracy wouldn't have to do without another ivory back scratcher.

 

[her209]

Banks repossess 1 million homes in 2010
http://www.businessweek.com/ap/financialnews/D9KN8HJG1.htm

Home foreclosures in 2010 top 1 million for first time
http://www.reuters.com/article/idUSTRE70C0YD20110113

 

[Darwin333]

Must be Obama's fault. He used time warp Kenyan mind control to force Bush and Paulson to make that possible, obviously.

Wow, that is exactly what I said...

Funny, I could have sworn that I have repeatedly called for Hank Paulson to be tried as a traitor.

And just to ruffle your feathers a bit, Obama must have let Bush borrow his Kenyan mind control to force Clinton to sign the repeal of Glass-Steagall. Psst, both parties are owned by the same banksters.

 

[Darwin333]

The way I read it, those amounts are the value of forclosed homes the banks now hold, not losses.

Fern

True but if that is the case it doesn't take into account 2nd mortgages which would be total losses if the property is underwater. Even the losses on the 1st will be pretty high for the banks, at least on paper, since they are currently using insanely high values on their balance sheets.

As I have been saying for a while, we didn't fix a damn thing. All the bad debt is still out there and eventually it will be forced into the light of day. The math always wins.

 

[dmcowen674]

and while everyone was focusing on the 1 million homes that is about to jump to 5 million you all forgot all the bad commercial loans.

Look for monumental announcement on that around the 31st.

 

[Fern]

and while everyone was focusing on the 1 million homes that is about to jump to 5 million you all forgot all the bad commercial loans.

Look for monumental announcement on that around the 31st.

Yeah Dave, that's what I've been waiting to hear about.

Some time ago this 2nd wave of forclosures was predicted, but has been curiously absent from the news.

What's supposed to happen around the 31st?

TIA

Fern

 

[Fern]

Whoops, you're right. I meant to say values, not losses. Point still stands. Are those 7 billion and 25 billion figures based on actual market value of the houses or values based on arbitrary valuation? I suspect its the latter, i.e., the banks are hiding losses.

In accounting etc, we don't have an actual FMV unless and until a (bona-fide arm's length) transaction/sale has occured.

So, given that these homes are unsold and just sitting in the banks inventory, unsold) their values are just estimates. I do not know how they were arrived at.

Fern

 

[JS80]

In accounting etc, we don't have an actual FMV unless and until a (bona-fide arm's length) transaction/sale has occured.

So, given that these homes are unsold and just sitting in the banks inventory, unsold) their values are just estimates. I do not know how they were arrived at.

Fern

Fern - if a company pays $1 million to the landlord to break the lease early, how do you treat the cost? Full expense as soon as the decision is made to discontinue the office?

 

[Londo_Jowo]

What's supposed to happen around the 31st?

The government will be dropping Cabbage Patch Kids dolls from helicopters in all the major cities in the US.

 

[the DRIZZLE]

The Fed is not going to allow housing prices to adjust to their proper value because the consequences are politically untenable. They will continue to inflate the currency to keep housing prices from falling further.

 

[Fern]

Fern - if a company pays $1 million to the landlord to break the lease early, how do you treat the cost? Full expense as soon as the decision is made to discontinue the office?

That can get complicated. But assuming the business is paying the lease cancellation fee to move to a new location or go out of business, etc, yes generally they can get a full deduction immediately (or if a cash basis, when paid).

Otherwise, there are various senarios where the fee gets capitalized and the deduction is spread out over a period of years.

Fern

 

[JS80]

That can get complicated. But assuming the business is paying the lease cancellation fee to move to a new location or go out of business, etc, yes generally they can get a full deduction immediately (or if a cash basis, when paid).

Otherwise, there are various senarios where the fee gets capitalized and the deduction is spread out over a period of years.

Fern

Thanks.

Discontinuing foreign operations and closing down the office. Taking full expense in that year.

 

[Darwin333]

In accounting etc, we don't have an actual FMV unless and until a (bona-fide arm's length) transaction/sale has occured.

So, given that these homes are unsold and just sitting in the banks inventory, unsold) their values are just estimates. I do not know how they were arrived at.

Fern

Hope, prayer, and a whole lot of drugs. At least thats my theory.

 

[Darwin333]

The Fed is not going to allow housing prices to adjust to their proper value because the consequences are politically untenable. They will continue to inflate the currency to keep housing prices from falling further.

That isn't what has kept housing prices artificially high so far and I highly doubt even they are dumb enough to attempt to use inflation as a means to keep housing prices high/stable.

Their ZIRP has helped keep prices high but, at least imo, they are locked in to ZIRP because of the Federal budget. All of our major entitlement programs (you know, the majority of our spending) are indexed to inflation. Any type of major inflation will cost the Feds 10 times whatever it saves them.

 

[Jhhnn]

Wow, that is exactly what I said...

Funny, I could have sworn that I have repeatedly called for Hank Paulson to be tried as a traitor.

And just to ruffle your feathers a bit, Obama must have let Bush borrow his Kenyan mind control to force Clinton to sign the repeal of Glass-Steagall. Psst, both parties are owned by the same banksters.

Just Joshing, tossing out some chum for the usual trolls. It wasn't really directed at you.

By the time Clinton signed the repeal of Glass-Steagal, it was already dead, given that a variety of exceptions had been granted by congress over the preceding 2 decades. I never figured out why Righties hated him so desperately- he was the best Republican president since Eisenhower, after all.

 

[the DRIZZLE]

That isn't what has kept housing prices artificially high so far and I highly doubt even they are dumb enough to attempt to use inflation as a means to keep housing prices high/stable.

Their ZIRP has helped keep prices high but, at least imo, they are locked in to ZIRP because of the Federal budget. All of our major entitlement programs (you know, the majority of our spending) are indexed to inflation. Any type of major inflation will cost the Feds 10 times whatever it saves them.

I'm not exactly sure what you're saying because the ZIRP is inflationary. But the fact that entitlements are indexed to inflation is irrelevant because nominal tax revenues go up as well. Also keep in mind that what is reported is the CPI but thats not necessarily the best way to measure inflation.

I'm not saying this is good policy but it is whats happening. It's simply more politically expedient deal the with consequences of devaluing the dollar then the consequences of a true collapse of the housing market and the financial collapse that would be triggered by it.

 

[Brigandier]

Haven't we had enough leaks? Now we're in for dumps? This country is turning into a 1 year old

 

[Jhhnn]

Mortgage servicers, the big investment banks, haven't been in a big hurry to foreclose, at all. Nor are they really interested in renegotiating mortgages, because they're sucking investors dry with fees and charges associated with delinquent homeowners. As servicers of mortgage pools and the revenues promised to investors, they get to divert monies paid on performing mortgages into their own pockets for all the "work" they have to do wrt non performing mortgages in the same pool. When all the delinquent mortgages in a pool are flushed out, and the properties resold, their cut gets smaller. Who'd want that?

 

[Kwatt]

Apparently foreclosure is losing it's appeal to the banks/financial companies now.

http://www.chicagotribune.com/class...t-biz-0113-walkaway--20110113,0,7716930.story


...

 

[hal2kilo]

Then why doesn't that same "tough love" lesson need to be applied to those that allowed this to happen in the first place, the banks?

They made unwise loans to people that shouldn't have been given them, created a fake market to trade these highly volatile commodities (CDOs) and then took hundreds of billions of dollars of taxpayer money on top of that, doled out their seven and eight figure bonuses to the same people that put them in that position and then also got 0% loans from the government.

I guess personally responsibility doesn't apply to corporations because they aren't a person...unless it comes to donating to politicians' campaigns so that they can get more favorable legislation..THEN they want to be considered persons again.

The white collared elite will just send more money to the lobbyists. There's no problem with the banks. This only happened because of lazy and lying dead beats.

 

[Darwin333]

I'm not exactly sure what you're saying because the ZIRP is inflationary. But the fact that entitlements are indexed to inflation is irrelevant because nominal tax revenues go up as well. Also keep in mind that what is reported is the CPI but thats not necessarily the best way to measure inflation.

I'm not saying this is good policy but it is whats happening. It's simply more politically expedient deal the with consequences of devaluing the dollar then the consequences of a true collapse of the housing market and the financial collapse that would be triggered by it.

Could you please explain exactly why nominal tax revenue, and therefore wages and profit, would go up?

I see quite the opposite if inflation really sinks its teeth in, commodities go up (a TON of which we buy from elsewhere) and wages stay relatively the same. Even if they remain dead even on an internal basis we still import a ton of stuff and those prices will either drastically increase or you will see margin collapse. Producers within the US that use any of those commodities will likely see the latter as the consumer simply won't be able to bear the price increases.

At the same time our cost to service the debt shoots the moon and I mean bigtime as the bond market prices in the inflation. This will also cause interest rates to rise which will kill the housing market anyway. Entitlement spending, which along with servicing our debt, consumed ALL of last years revenue by law must be increased but we won't even be able to cover that because our interest payments have consumed a much larger chunk of our revenue.

Pretty much the worst case scenario. I doubt even our politicians are that dumb.