Free Republic

As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess. Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans. But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other...

... In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default. In 2007, the government did not insure a single mortgage in [San Francisco], one of the most expensive in the country. Buyers here, as well as in Manhattan, Santa Monica and every other wealthy area, were presumed to be able to handle the steep prices and correspondingly hefty down payments on their own. Now the government is guaranteeing an average of six mortgages a week here....

America’s mainstream religious denominations used to teach the faithful that they would be rewarded in the afterlife. But over the past generation, a different strain of Christian faith has proliferated—one that promises to make believers rich in the here and now. Known as the prosperity gospel, and claiming tens of millions of adherents, it fosters risk-taking and intense material optimism. It pumped air into the housing bubble. And one year into the worst downturn since the Depression, it’s still going strong. ... America’s churches always reflect shifts in the broader culture, and Casa del Padre is no exception. The message...

Architects of Ruin: How Big Government Liberals Wrecked the Global Economy — and How They Will Do It Again if No One Stops Them By Peter Schweizer Harper, $24.99, 217 pp. With Architects of Ruin, Peter Schweizer again delivers a knockout punch of a book that is the must read of the season for conservatives and should be a main topic of conversation for conservative media. Schweizer blows the lid off the 30-year leftist war on banking standards in the name of “equality” that created the housing bubble and caused the foreclosure crisis. (Somebody get this book to Glenn Beck...

National Mortgage News reports that Home Mortgage Disclosure Act figures for 2008 show that minorities “were big losers in the market contraction last year.” And with credit still tight, the outlook for minority access to home loans this year and next looks bleak. But is that a bad thing? Subprime lending enabled more minorities to become homeowners during the boom, but many of those folks got mortgages they couldn’t afford. The result: record foreclosures. Lending to Hispanics fell by more than half, from $266 billion to $130 billion. African Americans also registered a sharp drop in mortgages last year, from...

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Coporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. [And they did] Fannie Mae,...

Just about everyone has become familiar with America’s foreclosure capitals – metropolitan areas like Las Vegas with the nation’s highest rate of foreclosed properties (1 in 20) or No. 2 Merced, Calif., (1 in 27). But the problem is expanding to new cities. In fact, as the subprime-mortgage crisis eases for some of the top metro areas, like Merced and No. 3 Cape Coral-Fort Myers, Fla., economic pressures are creating new foreclosure capitals. One of them, Reno-Sparks, Nev., broke into the Top 10 foreclosure metros in the third quarter, according to a RealtyTrac report released Thursday. And others are gaining...

Calpers burns in subprime fire 24 Oct 2009, 0000 hrs IST, REUTERS SAN FRANCISCO: Faced with huge losses on subprime loans, Calpers is suing the rating agencies which it said misled them by giving top ratings to mortgage bond funds which later turned out to be a house of cards. Calpers also was overcharged for foreign exchange transactions, says state Attorney General Brown, who is suing bank State Street. The market rally this year also has helped. “The recovery now is showing our asset strategy is doing pretty well,” Oliveira said. Calpers’ losses have been cut by about half from...

Subprime mortgages: Myths And Reality Kent Cherny & Yuliya Demyanyk 17 October 2009 The global crisis is said to have originated in the US subprime mortgage market. This column argues that many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. Subprime mortgages have received a lot of attention in the US since 2000, when the number of subprime loans being originated and refinanced shot up rapidly. The attention intensified in 2007, when defaults on subprime loans began to skyrocket triggering what was known at the time as the “subprime crisis”...

Small Banks Fail at Growing Rate, Straining F.D.I.C. By ERIC DASH Published: October 10, 2009 A year after Washington rescued the banks considered too big to fail, the ones deemed too small to save are approaching a grim milestone: the 100th bank failure of 2009. In what has become a ritual, the Federal Deposit Insurance Corporation has swooped down on a handful of troubled lenders almost every Friday, seizing 98 since January alone and putting their assets into the hands of another bank. While the parade of failures still represents a mere fraction of America’s small banks, it underscores a...

From 2002 to 2007, Fannie Mae and Freddie Mac loaded up on $1.73 trillion of subprime and $1.44 trillion of Alt-A loans and securities, taking a lion's share of these markets, according to mortgage market guru Ed Pinto. The agencies' share of loans and securities, then, was higher than the total for all private label mortgage-backed securities market held outside the agencies' purchases -- contrary to widely held views in the mortgage markets. The two agencies hid the level of risky lending and investment in securities by failing to classify the loans initially as subprime or Alt-A.

Why haven't the rating agencies that were complicit in the subprime-mortgage securities scandal suffered the fate of Arthur Andersen? Despite some moves in Congress to change their behavior, U.S. authorities are still treating the agencies with extreme gentleness. Moody's and Standard & Poor's, the two giants of the industry, are still around despite causing the loss of hundreds of billions of dollars by badly rating subprime-mortgage-backed securities. Not only that, they are basically doing business the same way, taking fat fees from the investment banks whose securities they rate. In testimony before the House Committee on Oversight and Government Reform...

The visits had a ritual quality. Three times a year, a coalition of Chicago community groups met with the Federal Reserve and other banking regulators to warn about the growing prevalence of abusive mortgage lending. They began to present research in 1999 showing that large banking companies including Wells Fargo and Citigroup had created subprime businesses wholly focused on making loans at high interest rates, largely in the black and Hispanic neighborhoods to the south and west of downtown Chicago. The groups pleaded for regulators to act. The evidence eventually led Illinois to file suit against Wells Fargo in July...

The Federal Housing Administration said Friday that its financial cushion will sink below mandatory levels for the first time in its history, but officials insisted the agency won’t need to be rescued. “Under no circumstance will any taxpayer bailout be needed,” said David Stevens, the F.H.A.’s commissioner. He also said its borrowers are unlikely to see any change. Amid the collapse of the subprime lending market, the government has taken up the slack. The F.H.A. has insured nearly a quarter of all new loans made this year, and about 80 percent of that business is from first-time homebuyers. But the...

(Automatic Translation from Spanish to English)Source: Channel T47, TelemundoTitle: Immigration / "Illegal Immigrants Can Buy Homes" (Indocumentados Pueden Comprar Casa) by Delinés Batlle (BEGIN TRANSLATION) PUBLISHED: September 7, 2005 at 12:11 pm (ET) UPDATED: 30 September 2005, at 9:16 am (eastern) NEW YORK, NY. -- Thanks to an initiative of private banking it is now possible for illegal immigrants to buy homes in the United States without having a social security number. A new program helps immigrants who can not afford home to fulfill their American dream. Elena Hernandez has long had the dream of buying a home, but...

Here is a list of ACORN’s crimes—take special note of number nine. 1. This is a group that was knee-deep in voter fraud during the president’s election. 2. There seems to have been zero accountability for this fraud by the group’s leadership. 3. ACORN does not appear to have any true ‘leadership’ to speak of. 4. ACORN has now been deeply embarrassed by two amateur journalists. 5. They were embarrassed because they were assisting two people—posing as a pimp and a prostitute—who wanted help getting a loan on a house to keep 13 El Salvadorian sex slaves. 6. They did...

I think a lot of people are missing something here, I hoped I could bring focus to it more. This girl Kenya is trying to buy a house. That gets lost in the child prostitution part(and for good reason) but what it does is expose a part of the mortgage crisis that us conservatives have talked about for a while. ACORN couldn't do what it's doing without all the help it gets from government. Not just the 501c3 status, but also all the laws on the books that make way for politically correct loans. Now let's say this all actually...

As it tried to help shore up the ailing housing market during the past year, the Federal Housing Administration increased its exposure, particularly to mortgages in high-cost states that have also seen some of the sharpest price declines. Now concerns are mounting that the agency -- and the U.S. taxpayer -- may have to pay the price. The FHA insures loans secured with down payments as low as 3.5%. But values in many markets in which it has been increasing its activity have fallen far more than that in the past year. The result: A growing number of homeowners with...

Many of the lenders eligible to receive billions of dollars from the government's massive foreclosure prevention program helped fuel the housing crisis by issuing risky subprime loans, according to a report to be issued Wednesday by the Center for Public Integrity. Under the $75 billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations. Much "of this money...

More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full. ... At a 3 percent...

A Senate panel has subpoenaed financial institutions, including Goldman Sachs Group Inc. and Deutsche Bank AG, seeking evidence of fraud in last year's mortgage-market meltdown, according to people familiar with the situation. The congressional investigation appears to focus on whether internal communications, such as email, show bankers had private doubts about whether mortgage-related securities they were putting together were as financially sound as their public pronouncements suggested. Collapsing values for many of those securities played a big role in precipitating last year's financial crisis. The subpoenas are the latest in a series of moves by Congress to trace the roots...

NEW YORK (Reuters) - Companies that service risky residential mortgages are warning U.S. officials that a key program to slow foreclosures may push some financing costs higher and derail their efforts, said a leading subprime firm. Their concerns about financing payments for defaulted homeowners comes as pressure mounts from Congress, regulators and state legislators for servicers to do more for the plan, which aims to slow foreclosures and modify loans. The U.S. Treasury wants the companies to spend more on its resources, including hiring staff and expanding training programs. At least four servicers from the coalition were among the 25...

WASHINGTON — The Obama administration, scrambling to get its main housing initiative on track, extracted a pledge from 25 mortgage company executives to improve their efforts to assist borrowers in danger of foreclosure. In an all-day series of meetings Tuesday at the Treasury Department, government officials reached a verbal agreement with the executives for a new goal of about 500,000 loan modifications by Nov. 1 and stressed the program's urgency. The sessions came amid concerns that the Obama administration will fall far short of its original goal of helping up to 3 million to 4 million troubled borrowers with modified...

So you thought the financial crisis ended the mad leveraged mortgages. Think again. Mortgage bonds guaranteed by U.S. agency Ginnie Mae will probably swell to $1 trillion by the end of 2010 because borrowers with low down payments or bad credit scores can only qualify for government-insured loans, Bank of America Corp. analysts are saying. The Federal Housing Administration, which insures loans with down payments as low as 3.5 percent and has no credit-score requirements, is “the only source of funding for these leveraged borrowers,” according to Ankur Mehta and Ohmsatya Ravi, who wrote the report, say. Loans backed climbed...

For many U.S. homeowners, crisis hasn't meant urgency. Just as potential buyers have waited, many would-be sellers facing paper losses have not been forced to act. The standoff shouldn't be confused with stability. The housing freefall slowed in April. Prices dropped 18.1% year on year, according to S&P/Case-Shiller's index of 20 cities. They were lower in every city, but economists were encouraged by slightly more modest declines compared with March -- a possible sign the market is near a bottom. In some overbuilt cities, foreclosures have helped clear inventory while rapidly bringing prices back to reality. Phoenix and Las Vegas,...

Barney Frank was a leading opponent of the regulation of Fannie Mae and Freddie Mac. Frank never made to answer about how we got into the present crisis. Why he fought so hard to squash regulation or why he pushed Fannie and Freddie to get involved with making loans to people who could not afford them? Because he was never confronted, he has been empowered to go at it again. In March, Fannie Mae announced it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent,...

Sales in the decimated housing market may finally be bottoming, but don't expect home prices to stop dropping before mid-2010 at the earliest, analysts and economists say. Indeed, prices in the battered housing market could get a lot worse before they get better as an avalanche of specialized adjustable rate mortgages, known as option ARMs and Alt-A mortgages, are slated to reset over the next 18 to 24 months, and rising unemployment causes a surge in the number of prime mortgages going into default. All of this is expected to trigger another round of foreclosures and cause home prices to...

The Obama administration’s latest financial regulatory reform proposal contains a stunning surprise hidden on page 67: “Rigorous application of the Community Reinvestment Act should be a core function of the CFPA.” The Community Reinvestment Act, or CRA, should be a core function of the CFPA or the Consumer Financial Protection Agency. Along with Fannie Mae and Freddie Mac at the very epicenter of the financial meltdown last year, the CRA is one of the vehicles used to inveigle, incent or threaten banks into lowering their lending standards to provide home loans to those who simply cannot afford them. According to...

Today’s Wall Street Journal carries the amazing story of a small Texas brokerage that pulled a fast one on some of the biggest banks in the world. The short version goes like this. Amherst, the Texas brokerage, and others sold hundreds of millions of dollars of credit default swaps on bonds back by $29 million of subprime mortgages to JP Morgan, Goldman, UBS RBS and other banking giants. The banks paid steeply for the swaps—up to 90 cents for every dollar of insurance—but thought it was easy money. After all, these were Lehman packaged California subprime loans made in 2005,...

Foreclosure rates slowed in May; now the market can slug out its interpretation. Will investors pay attention to these better numbers, or rue the looming outlook? In May, foreclosure rates fell 6%, according to RealtyTrac, with more than 321,000 households receiving at least one foreclosure-related notice last month. But it was still 18% higher from the same time last year and the third straight month with more than 300,000 households receiving a foreclosure filing. In a normal economy filings generally fall around 100,000 a month. And this slowdown in foreclosures might not last for long. The mortgage industry has only...

The data for April and May prove that Obama's plan to rescue those facing mortgage foreclosure is a dismal failure. Since this issue was the cornerstone of his economic program during the campaign, its abject failure is a significant setback for the administration's economic plan. In the month ending on May 26, there were 464,983 foreclosures of subprime and Alt-A mortgages (out of a universe of 3.2 million studied). So 15 percent of all subprime mortgages were foreclosed in May! Only 19,041 -- a paltry 6 percent -- were modified during this period. And of those modified, only 11,200 involved...

The next group of Americans to lose their homes seemed to have good credit and affordable loans. But those families have been walloped by the recession. There's a simple reason you shouldn't get too excited about the "green shoots" of an economic turnaround. In the housing market, a lot of prime mortgages are becoming subprime as a new wave of foreclosures begins to hit. Mainstream homeowners -- those previously "safe" borrowers with sound credit who have conservative, fixed-rate mortgages -- are getting into trouble at an alarming rate. In the first quarter, the percentage of these borrowers who were behind...

NEW YORK -- The mortgage crisis is spreading and hitting new heights: Borrowers with good credit now make up the largest share of foreclosures as job losses and pay cuts exact their toll. The genesis of the recession - risky adjustable-rate loans made to borrowers with bad credit - remains a significant factor in foreclosures. Today, almost half of all subprime ARMs are past due or in foreclosure. In Florida, New Jersey and New York the number is above 55 percent. [snip] "These (borrowers) are the best of the best out there," said real estate analyst Mike Larson with Weiss...

WASHINGTON (AP) -- Barack Obama is considering former top military leaders among his possible running mates, according to a senator who met Tuesday with the Democratic presidential candidate's vice presidential vetting team. North Dakota Sen. Kent Conrad told The Associated Press said the team asked him about potential candidates from three broad categories _ current top elected officials, former top elected officials and former top military leaders. Conrad would not disclose which names they discussed, and the Obama campaign has been keeping the process a closely guarded secret. "We talked about many names," Conrad said, including "some that are out...

After virtually every disaster created by Beltway politicians you can hear the sound of feet scurrying for cover, see fingers pointing in every direction away from Washington, and watch all sorts of scapegoats hauled up before congressional committees to be denounced on television for the disasters created by members of the committee who are lecturing them. The word repeated endlessly in these political charades is "deregulation." The idea is that it was a lack of government supervision which allowed "greed" in the private sector to lead the nation into crises that only our Beltway saviors can solve. What utter rubbish...

After a decade of growth, the gains made in homeownership by African Americans and native-born Latinos have been eroding faster than those for whites, according to a report released Tuesday by the Pew Hispanic Center. The numbers indicate that the gains for minority groups, achieved between 1994 and 2004, were disproportionately tied to relaxed lending standards and subprime loan products, and that those gains are now being reversed. The exception to the pattern was foreign-born Latinos, whose rate of homeownership, while low, has stalled in the downturn but has not fallen. Since 2004, homeownership for all Americans has declined to...

The shell game is very clearly laid out now... FHA, Fannie, Freddie, and now even state governments will be giving out nothing to "3%ish" down loans, to low credit borrowers who will have no stake in the home since many will be putting nothing down. We will declare housing recoveries. Then quarter by quarter the sausage will be squeezed out the other end as Freddie, Fannie and eventually the FHA suffer magnificent losses. We've outlined the losses Freddie and Fannie are already taking, and Friday morning, another $20B bailout that I'll delve into in a separate piece. This is truly...

Not quite. But it seems that during his pre-Senator years, he and Michelle spent substantially more than their income and made up the difference by repeatedly taking out loans against the rising value of their home during the home-price bubble. At least according to this story... In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line...

The top 25 US originators of subprime mortgages – the risky assets that sparked the global financial crisis – spent almost $370m in Washington over the past decade on lobbying and campaign donations as they tried to ward off tighter regulation of their industry, an investigation has shown... Most of the top 25 originators, most of which are now bankrupt, were either owned or heavily financed by the nation’s largest banks, including Citigroup, Goldman Sachs, Wells Fargo, JPMorgan and Bank of America. Together, they originated $1,000bn in subprime mortgages in 2005-07 – almost three-quarters of the total... The banks, which...

May 4, 2009 The Next Housing Bust Everyone knows how loose mortgage underwriting led to the go-go days of multitrillion-dollar subprime lending. What isn't well known is that a parallel subprime market has emerged over the past year -- all made possible by the Federal Housing Administration. This also won't end happily for taxpayers or the housing market. Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage...

Subprime Loans, Corporate-Style, Will Fuel Defaults By FLOYD NORRIS Correction Appended The loans went to borrowers who might never before have been allowed to borrow. When they found repayment difficult, they were permitted to refinance their loans, generating fees for the lenders and postponing the ultimate reckoning. Then the credit markets turned and both the borrowers and lenders were in deep trouble. So it went with the subprime mortgage crisis. And so it is now going with corporate loans and bonds. It appears that defaults on leveraged loans and corporate bonds will soon rise to levels not seen since the...

WASHINGTON (Reuters) - The Treasury Department is considering giving banks and investors billions of dollars in fresh incentives to modify troubled mortgages and save homeowners from foreclosure, sources familiar with official deliberations said. Under one scenario, investors in second liens would receive a cash payment if they agree to ease the terms of troubled loans and accept a smaller return on their mortgage investment, the sources said. During the height of the housing boom, some borrowers were able to buy a home with no downpayment by adding a second lien and many of those loans are now failing as the...

At dinner on Friday night I was talking with an intelligent young woman who seemed shocked at my suggestion that it is a bad idea for the government to subsidize the creation of "green jobs." Given that it was a dinner conversation, I couldn't get much farther than the observation that "you cannot create wealth by subsidizing the inefficient production of energy." I'm afraid that her dismay would be shared by many relatively well-informed people. This analogy might help to convey the danger lurking behind the friendly color green. In the London Times, Dominic Lawson writes: "Beware green jobs, the...

After writing several articles about this country’s mortgage meltdown and the little-talked about role which illegal aliens have played in this crisis, a woman who I will call “Mary” contacted me with inside information on the crisis. What follows is a brief interview I conducted with Mary. (I am protecting her identity because she still works in the mortgage business.) Q) What is your background and who have you worked for? A) I am in the Mortgage Industry and personally audited thousands of sub prime loans while working as a contractor. The last company I worked for was EMC, previously...

GMAC revives sub-prime car loansGeneral Motors' (GM) finance division is cutting financing costs and reviving sub-prime lending to speed up a car sales revival.GMAC Financial Services will make an extra $5bn (£3.46bn) available as loans to car buyers over the next 60 days. Dealers are also having fees and repayments slashed or delayed to help them clear a back-log of unsold cars. GM has been given a 1 June deadline to come up with a restructuring plan. The alternative is bankruptcy. GMAC's additional car financing packages will be made available for buyers of both new and used cars. ..... GMAC,...

<p>It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.</p>

provided by NYT If mark-to-market accounting is to blame for the current financial crisis, then the National Weather Service is to blame for Hurricane Katrina; if it hadn't told us the hurricane hit New Orleans, the city would never have flooded. This is the logic the bankers are using, and they are getting sympathetic ears in Congress. The bankers have gotten two members of Congress to introduce a bill to establish a new body that could suspend accounting rules for financial institutions. Edward L. Yingling, the president of the American Bankers Association, says the proposal addresses "systemic risks that accounting...

From the ramshackle, plywood deck on Brad Goodyear's rural Vancouver Island home, most people see piles of trash, a mattress, abandoned appliances and heaps of salmon fishing nets. Mortgage lenders, however, have looked at the same property and, until recently, seen nothing but cash. But after two decades of continually borrowing up – plowing through mortgages from Royal Bank, private lenders and credit unions, until settling on two subprime lenders – the 46-year-old fisherman has landed in a foreclosure proceeding. Records show that at least nine different lenders have given mortgages to Mr. Goodyear and his wife Tracy since they...

The New York Times has once again gotten itself some financial breathing room - and once again it's coming at a high price. The cash-strapped newspaper yesterday finally struck a deal with investment firm W.P. Carey & Co. to sell space in its sleek Midtown Manhattan headquarters for $225 million, and lease it back from the buyer. As part of the deal, W.P. Carey is paying a low purchase price and getting a high initial rate of return - known in the industry as the capitalization rate - of nearly 11 percent. Real-estate experts said the Times is paying a...

Florida leads the nation in the number of homes delinquent or in foreclosure according to a fourth quarter survey by the Mortgage Bankers Association. The survey found that 20.1 percent of mortgages on Florida homes were delinquent or held in foreclosure. Nationwide, more than 11 percent of American homeowners are either delinquent or in foreclosure. The survey covered 85 percent of the country’s residential mortgages. In the fourth quarter, 11.1 percent of Florida residential mortgages were past due by at least 30 days – with 4.4 percent past due more than 90 days. Nationwide, the number of borrowers at least...