Tsunami of Foeclosures Coming

So much for all the “good” news coming out of  D.C. Goldman Sachs, JP Morgan Chase, B of A are all happy campers with their billions in profits, while the rest of us lose our jobs and watch our state sink into bankruptcy. No one ever mentions that, besides the TARP money since repaid,  Goldman Sachs got $12 Billion from AIG to cover hedge fund losses. And, of course, where did AIG get the dough to cover its insurance policies? Why, funny you should ask, that also came from tax payers…So, it’s kind of an endless circle of taxpayer funds creating “wealth” for these jokers while the rest of us starve. That’s capitalism, right?

But, back to real estate…What does all this have to do with real estate. Plenty, as it turns out. Chase and B of A are, of course, banks, now, in fact, the biggest banks in the country. That means they also control a majority of the mortgage loans and how the rising default rate is to be handled. In case you hadn’t heard, default rates are up and rising. Could that have anything to do with the also rising unemployment rate now over 10% in 30 states and 12.6% in California last time I checked. Here, even the “good” state jobs are now at risk and going down the tubes faster than your 5-year-old at Raging Waters.

With no job or prospect of a job, when underemployed or working only part-time or sporadically, home owners can’t cover their mortgage payments. Add to that, the factor of plunging prices. It’s estimated that by now, after more than a year of record foreclosures and drops in home values, 27% of all California home owners are under water, that is, they owe more than their homes are worth. Of course, the smart ones are short selling their homes. It’s hard to give up the old homestead and all the work and money put into it, but once the underwater mark hits 30% loss of equity, it really makes more sense to let it go. It will be years before that equity returns given the numbers involved.

home floating on waves

What about the refi program discussed in a previous post? For some, that might be an option. It’s no help if you’ve lost your job. You won’t qualify.  If you still have a job and can afford the payments, this is an option. Though, notice–you still owe the money your home is no longer worth. You do pobably have a better rate and more managable payments, but, the debt is still there.

What about the loan mod program also discussed in a previous post? Well, there we’re back to these big banks, Chase, B of A, Wells Fargo and all the rest. These banks do most of the loans in the country, so borrowers  have to apply to these banks to get  loan mods.  Obama’s Homeowners’ Stabilization program, announced amidst much hopeful optimism in March, has proved less than effective, shall we say. Chase trumpets that it has modified 138,000 loans since April. That sounds reasonably good, but the program was supposed to modify more than 4 million in 3 years…Not much of a start, so far…

Then, there’s B of A which says it’s done 45,000 loan mods since April. That’s for the ENTIRE COUNTRY.  Think about this: California ALONE had 135,431 notices of default [NODs] send out from January through March of this year. B of A and its newest acquisition, failed California-based Countrywide, probably account for at least 30% of those loans or 40,000 loans. So, B of A is basically DOING NOTHING to help at this time of NATIONAL CRISIS. And, remember 27% of California homeowners are under water and so need to have their loans modified. How many actual borrowers would that be? I don’t know, but we have 35 million people, so that’s got to be in excess of 1 million loans….Nationwide, in the first quarter 1.8 million homeowners fell more than 60 days behind on their loans, 15% more than the prior quarter [Q4 08]. To repeat: this is a NATIONAL CRISIS.

What is going to happen next? Is B of A going to change its corporate culture and start helping homeowners?  Not bloody likely. Digging deeper into the trough of public money is more apt  to be that bank’s continuing attitude.  Just try to do loan mods with Countrywide and B of A or short sales. They take forever–4 months is the minimum; there is no maximum time.  The paperwork demanded is just stunning. B of A NEVER, to my knowledge, forgives even one penny of any under water loan balance as some banks actually are doing.   Its idea of what it owes to the common good is EXACTLY ZILCH, NOTHING, NADA.

So, those foreclosures, kept off the market by useless cycling of paperwork in rejected refis and loan mods, will come onto the market, especially here in California.  Last summer, foreclosure sales statewide hit a high of 26,500 a month.  Before this year is out, we may well beat that record. I am one of many real estate brokers who supply lenders with estimates of value or broker price opinions [bpo] and I can say, anecdotally, that I am very busy, often doing 3, 4 or even 5 every day.  If  I am that busy, so are the others who do this work. That means so many foreclosures looming…

Reblog this post [with Zemanta]

Goldman Sachs To Give Record Bonuses

Wow, as if we hadn’t already suspected a giant conspiracy to defraud the public and sack the US Treasury, those barbarian bandits over at Goldman Sachs are giving out the biggest bonuses in their 140-year history! Yes, this is the same company that was about to bring down the entire global financial system a scant nine months ago…How did they accomplish this remarkable turnaround?

central bank manipulation ecb fed

Why, you already know the answer. Their former CEO was US Treasury Secretary Henry Paulson and he arranged for billions of taxpayer bailout to “save” this company while others went under…remember Lehman Brothers?  So, now thanks to NO COMPETION LEFT, Goldman is cleaning up. Trading foreign currency, bonds and fized-income assets, the company has had a spectacular first half of the year.  Now, they’ve paid back the bailout money, leaving them free from the government’s new rules about executive compensation and bonuses.

Hey, wait just a darn minute there, cowboys…Isn’t this just a little too cozy? As was suggested at the time and has continued to be suggested, isn’t this just a giant conspiracy to elimnate the competition and  here’s another idea being thrown around–how about a conspiracy to derail the proposed government regulation of the financial sector?  These Hogs at the Trough can never have too much money and it’s always amusing for them to dupe the poor schmucks who actually work for a living.

In fact, this whole bailout thing is increasingly looking like The End for the middle class.  Barry Ritholtz of Bailout Nation has come up with this amazing visualization of the taxpayer’s money already spent or promised…Showing that the Barbarian Bailout, the hordes sacking our Treasury, has already consumed more than the sum total of ALL American wars since the beginning of the Republic. This is $12 Trillion…

Bailout Blues

Credit goes to  Jess Bachman at Wallstats, Ritholtz’s  list of expenditures (inflation adjusted of course). This early Bailout Nation graphic shows the the total costs to the taxpayer of all the monies spent, lent, consumed, borrowed, printed, guaranteed, assumed or  otherwise committed.

It is nothing short of astonishing.

It includes the total outlay for all the bailouts to date. In just about one short year (March 2008 –  March 2009), the bailouts managed to spend far in excess of nearly every major one time expenditure of the USA, including WW1&2 (omitted from graphic), the moon shot, the New Deal, total NASA budgets (omitted from graphic), Iraq, Viet Nam and Korean wars — COMBINED.

206 years versus 12 months. Total cost: ~$15 trillion and counting

Yesterday, the N. Y. Times published a poll showing that 72% of Americans are in favor of a government-opotion health-care plan, opposed, naturally, by those who enthusiastically voted for this Barbarian Bailout.  Cost for  health-care reform? $4 Trillion? Why don’t we have that dough to ensure the health of every citizen of this nation….Guess.

Reblog this post [with Zemanta]