Posted on 04/17/2014 7:00:09 AM PDT by SeekAndFind
Americas foreclosure crisis has been over for more than a year, if it ever really existed. But the government/activist/media blob is still trying to convince the public that there is an epidemic of bad borrowers who need public relief.
At Harvard Law School, a student group called Project No One Leaves recently concluded its fourth annual conference aimed at creating what one attendee called a multi-faceted, national housing justice alliance.
Milwaukee mayor Tom Barrett recently gave $200,000 to a community organization called ACTS Housing to fight the foreclosure crisis by buying up bank-owned properties even as the number of new foreclosure starts in the Badger State continues dropping by double-digit percentages.
Politicians in Irvington and Newark, N.J., are, with strikingly little legal justification, claiming eminent-domain powers to seize foreclosed properties a scheme the Star-Ledger politely terms a new strategy to dig out from the foreclosure crisis.
According to Treasury Department official Christy Romero, the Obama administrations $30 billion Home Affordable Modification Program (HAMP) which has already spent more than $11 billion of taxpayer money on principal reduction refinances needs to be extended to prevent any hiccups in the inflation of house prices.
Will Treasury help [bad borrowers] get back on their feet in the same way it helped the banks get back on their feet? Romero, special inspector general for the Troubled Asset Relief Program, asked the Washington Post in March.
The Post also seized on another constant feature of the HAMP that it has always been a magnet for swindles, fraud, redefaults on modified loans, and other forms of deadbeating to argue that the foreclosure crisis is still burning years after the housing crisis ended.
In fact, the rates of foreclosure sales and new foreclosure-processing starts are the lowest they have been since 2007, according to HOPE NOW. CoreLogics most recent equity report shows that 6.5 million homes 13.3 percent of all homes had negative equity (i.e., the borrower owes more than the house is worth) in the fourth quarter of 2013. That compares with 11.1 million underwater homes or 23.1 percent of all U.S. houses in the fourth quarter of 2010.
This recovery is also evident in the Office of the Comptroller of the Currencys Mortgage Metrics Report, which has shown a steady decline in new defaults. Interestingly, the fourth-quarter Mortgage Metrics Report showed a substantial uptick in redefaults in which deadbeats go deadbeat again after negotiating new loans but thats after several years of sharp decline in the repeat-delinquency rate.
Overall delinquencies are way down, says Christopher Thornberg, founding partner of Los Angelesbased Beacon Economics. Mortgage conversions which are current mortgages going delinquent are way down. . . . Were seeing a housing market thats bouncing forward.
The drop in delinquency by mortgage borrowers has been in progress for several years now. The reinflation of the real-estate market has removed much of the incentive to go bad on a mortgage. It is also notable that the supposedly catastrophic spike in mortgage foreclosures peaked at only about 10 percent of all U.S. home loans. Roughly nine out of every ten American homeowners preferred to stay current on their mortgages even when underwater rates were much higher. And Thornberg notes that they dont have much pity to spare for people who chose to default.
For all the populist rhetoric, the vast majority of Americans didnt have a lot of sympathy for these people, Thornberg tells National Review Online. It made good press. I think of [Senator Elizabeth Warren (D., Mass.)]. But now youre dealing with a situation where the housing market has come bounding back. And so its hard to make the argument that the high rate of foreclosures crashed the market; it was the other way around. Foreclosures were a symptom of the market crash.
Supporting Thornbergs claim is that negative equity correlates with mortgage delinquency far more clearly and consistently than any other explanation job loss, illness, interest-rate adjustment, among others advanced during the real-estate price correction that began in 2006 and continued through the early part of this decade. Moral concerns aside, going bad on an underwater mortgage is a rational choice in which the benefits in many cases outweigh the costs.
Market intervention by the Bush and Obama administrations (both of which supported and pursued less interventionist policies than the ones proposed by 2008 Republican presidential challenger John McCain) distorted this calculus, but in the wrong direction. Programs like HAMP made it more attractive to go bad on a loan, in hope of a bailout, a refinance at a lower rate, or just more time. Patterns of behavior at the margins reflected this distortion.
Thornberg says the recent spike in the rate of redefaults noted above is a holdover effect of this kind of tinkering with the market. These late spikes are occurring as federal interventions, as well as state and local efforts such as Californias Homeowner Bill of Rights, run their course.
HAMP: Thats whats causing the recidivism rate to climb, he tells NRO. If youre underwater on a house, you go through the modification process basically so you can get a year of free rent.
One thing is certain: The public-policy push for loan modifications has created such a lawless environment that Wikipedias entry on HAMP breaks out a special section on Proliferation of scams from companies claiming to offer loan modifications.
Recent news articles that come up on a Google News search for loan modification include:
Massachusetts man pleads guilty in loan modification fraud scheme;
Michigan man uses fake religious business in loan mod scam;
These cons are not surprising, but they are part and parcel of the bad citizenship programs like HAMP set out to reward. Failing to pay back money you borrowed is, in all but a catastrophic handful of cases, a willful decision; and the moral calculus of that decision is the same whether the money was loaned to you by a gigantibank, a relative, or a child.
The good news is that 90 percent of us take that moral point seriously. The bad news is that were still being forced to give money to the other 10 percent.
Tim Cavanaugh is news editor of National Review Online.
So the 15% of my neighborhood that is sitting empty and foreclosed isn’t real?
A few weeks ago there was a story of a lady who was losing her house. She had a 2/28 mortgage, which meant it was interest only for 2 years and then the payment was adjustable for the next 28. Shockingly she couldn’t afford the adjustments because she only qualified for payments of the first 2 years.
Stupid of her to take the loan. Criminal for the bank to give her the loan. They gave her the loan and sold the mortgage as a AAA US backed security. They knew she couldn’t afford it but didn’t care because they planned to sell it.
Didn’t the Fed’s encourage/require lending institutions to qualify these types of loans in the name of ‘fairness’ and ‘equality’?
I have an acquaintence that is still living in her home and has not made a mortgage payment in over five years. She is perpetually negotiating with the bank and they have drawn many red lines that have turned out to be watercolor. And they get a lot of rain in Seattle.
Sure they did and the banks helped push that through. The banks also jumped on those huge profit margins while transferring the risk to the American tax payer.
To imply the “fairness and equality” regulations were the only reason the banks made these loans is extremely dishonest.
I got my $150,000 for $99,000! Thanks foreclosure!
In many cases the banks know they can’t foreclose due to poor records or improper handling of the title.
The typical limit I’ve seen for most of those is 2-3 years. I have neighbors like that but I think the bank lets them stay because at least they are taking care of the property.
Here in Florida the empty houses degrade very quickly.
uuuhhh
... maybe that's because banks have been loath to initiate the process? Like maybe as long as someone is camped out and keeping the place up they take YEARS to take them back?
Yes and yes. I told her to just drag it out as long as possible and enjoy the windfall. Sure, eventually they’ll kick her out, and then she can buy something else or even rent...
If the market ever improves the foreclosure rates will probably go up.
Its a bad situation but the people who really caused this are never going to suffer. I’m referring to politicians and the big bankers. They all made millions from these deals.
The ONLY reason?
Banks are in business to make a profit.
The means by which banks can make that profit are determined by laws, regulations and market conditions.
IF banks committed fraud by misrepresenting sales packages of loan portfolio's, then those responsible should be prosecuted to the fullest extent of the law.
IF Federal guarantees or requirements induced the banks to qualify certain lenders, then those responsible should also face the consequences of their actions.
This is QUITE honest.
Tell her to apply for a HAMP modification. Drop her rate to 2%, recapitalize missed payments (banks love that!), and she'll keep her house.
If Sam Clemens were still alive, he'd say there are 3 kinds of lies: lies, damn lies, and HAMP modifications.
It ended because banks could not stomach having one more foreclosed abandoned home on their books.
The above chart tells me that the foreclosure rate is still HIGH by historical standards. People became aware of mortgage crisis sometime in late 2007. We’re still ABOVE the 2007 foreclosure rate.
So, NOPE, the crisis has NOT ended.
Still high but the “crisis” is over. The rate has been trending down for the last 4 years. The pig has moved through the python ($1 to Ivy Zelman).
Not necessarily. The way the banks roll them into the system the rate will stay fairly constant. Even if they reclaimed all the available inventory they’d still sell them off at a rate to keep prices as artificially high as possible.
No and neither are the legal foreclosure ads in the classified section of your local paper and mine. Figments of our imagination.
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