Posted on 01/21/2008 9:51:30 PM PST by HAL9000
I have a question - weren’t a lot of the loans in the “sub-prime” market also carrying PMI? If so, doesn’t that protect the lender when the borrower defaults? The property is foreclosed on, sold, and the difference is covered by PMI (or so I am told is how it is suppose to work).
So in the end, the lender gets their money back - even if it takes a bit of work.
I am confused.
I just read over all those postings you pinged me on. Crap...some bad “stuff” is going down. It was predictable though. ...all caused by a stupid bunch of people loaning money to an even stupider bunch of people who couldn’t pay it back. Sheesh....
The homes are worth 10 to 20% less than the loans.....up to 40% in some California and Florida areas.
The problem with foreclosures is they typically sell for 30% less than market value. In markets that have seen 10% drops in market value, these house will only fetch the banks about 60%. On top of that, the process takes a while, all during which banks are losing interest every month and accruing legal fees. Even with PMI covering the first 20%, the banks will still take a 30% loss of the home. It takes a lot of good loans to make up for that hit.
That may be a good point, I’m just not familiar enough with that territory to know. Thanks for bringing it up though. Perhaps others will comment on it.
There are hundreds of them. Some are always going broke, even now.
The reaction to this kneejerk fed cut is tepid at best and paints a big thumb your nose at the Fed as far as credibility goes.
So the Fed fired a salvo off their destroyer. The round bounced off the target. Now what?
The fed is only partially responsible. It’s Wall Street again. Wall Street Journal is basically saying, “You shouldn’t have left the kilo of coke out on your desk! You know I’m an addict!”
The loan application at the small mortgage banks became putting a mirror under the applicant’s nose to see if it fogged. If it did, you got $500K on some tweaked ARM variant. The small mortgage banks then sold the loan immediately to consolidator banks that the investment banks used to package the mortgages into securities.
The investment banks were selling the securities at such a rate that demand outstripped supply, hence the relaxation of loan qualifications in order to generate more mortgages.
You try coke, you like coke, you want more coke. This is just a complete replay of the Junk Bond fiasco of the 80’s. The latest LEGAL ripoff scheme of Wall Street. Now the junky is on the doorstep, crying and biting his own kneecaps, begging for a bailout.
I say let them die. The borrowers, and the banks. They should both burn before we bail them out. Let Cramer have a meltdown on CNBC about all his fellow junkies out there dying in a chair with syringes stuck in their arms.
We have lending standards for a good reason. You don’t want to follow them, it’s cool. You are going to do well for a few quarters, and then you are going to die spectacularly.
My brother was talking about 1200 sf homes in CA for $650,000. Who didn’t see this coming?
George W has extended his tax relief plan to an $800 check for every man, woman and child on Earth.
so that is 800 x 5,000,000,000,000
my HP 12C doesnt go that high.
And who is to blame for the supposed depreciation? Think about it.
Who pushed the supposed value of those properties up in the first place? Was it fraud? I suspect it was on many levels.
But that doesn’t take away from the PMI bit. It is designed to take up the slack. Even with seriously depressed property prices, the rake from the sale after foreclosure plus the PMI payoff to the lender should make up the majority of the so-called lost money. And certainly the mega-billion dollar price tag is even more inflated than those house prices were before the bubble burst.
It is called “double-dipping”. You take the insurance payoff, sell the property, then write the whole thing off as bad debt.... you get to take a deduction from taxes, while actually not loosing the total claimed.
of course there was fraud, on many levels...from the home appraisers that were pushing up prices, to the mortgage brokers than put people into adjustables even though they qualified for fixed, just to double their fee.
It isn't tepid.
Get real.
It is an outright rejection.
You missed the part about the mortgage brokers who were paid a commission for every buyer that they were able to qualify. It was too late to take back that commission when the loan went into default.
Unfortunately, so many reliable low risk mortgage loans are resold often in financial deals between banks, insurance companies, brokerage houses, underwriters, etc. and routinely re-packaged with some riskier loans too as the seller reduces exposure in some areas, raise capital for another deal, margin calls, etc., or simply wants to rake some profits because the seller knows what's on the horizon. The exact nature of the original loans become fuzzy to some degree by the time it has passed 3 or 4 hands especially them sub-prime loans, CDO's etc.
I think basically all the potential profits from the original upfront monies to developers, building suppliers, laborers, loan originators, appraisers, insurers, banks and real estate agents has been rung out of the artificial run up. There's no value left in the original papers for the building loans and many defaulted ARM's and those defaulted sub-primes. So, now the corporate bailout is in for the fix.
Now many are being asked to cover those loses globally. What an ENRON in the US housing market.
Geez!
You’re right. I didn’t mention them, but its the rare good thing in the whole sordid yarn.
The small banks actually made a killing and walked away from it. They’ll still be laying off a bunch of people, just from a lack of volume, but they did make a killing.
They, and the short-siders, are the only ones who win. In about a year, maybe 18 months, people with cash are going to come in and buy all kinds of foreclosed real estate from the banks (who may actually decide to sell blocks of the properties in packages). They in turn will sell at a bit of a markup to qualified buyers and clean up.
Maybe the banks should go back to assumable mortgages, like we had in California until the mid eighties.
It’s actually a good plan. Problem because deflation. Why assume a $500K mortgage on a place that’s worth $250K?
The bank would have to eat the difference and like it. At that point, I think you’d be better off with a new mortgage at a new price and interest rate.
We aren’t seeing those kind of numbers around here. The prices may have only fallen ten percent, if that.
Posted by garylmoore to Sir Francis Dashwood
On News/Activism ^ 01/22/2008 11:09:04 PM PST · 20 of 22 ^
John McCain is a maverick senator and former Vietnam veteran and prisoner of war for 5 years in North Vietnam.
1. Here are some negative allegations:
- McCain was one of the Keating Five, congressmen investigated on ethics charges for strenuously helping convicted racketeer Charles Keating after he gave them large campaign contributions and vacation trips.
Charles Keating was convicted of racketeering and fraud in both state and federal court after his Lincoln Savings & Loan collapsed, costing the taxpayers $3.4 billion. His convictions were overturned on technicalities; for example, the federal conviction was overturned because jurors had heard about his state conviction, and his state charges because Judge Lance Ito (yes, that judge) screwed up jury instructions. Neither court cleared him, and he faces new trials in both courts.)
Though he was not convicted of anything, McCain intervened on behalf of Charles Keating after Keating gave McCain at least $112,00 in contributions. In the mid-1980s, McCain made at least 9 trips on Keating’s airplanes, and 3 of those were to Keating’s luxurious retreat in the Bahamas. McCain’s wife and father-in-law also were the largest investors (at $350,000) in a Keating shopping center; the Phoenix New Times called it a sweetheart deal.
- Mafia ties: In 1995, McCain sent birthday regards, and regrets for not attending, to Joseph Joe Bananas Bonano, the head of the New York Bonano crime family, who had retired to Arizona. Another politician to send regrets was Governor Fife Symington, who has since been kicked out of office and convicted of 7 felonies relating to fraud and extortion.
- At least one veteran’s group (U.S. Veteran’s Dispatch) really hates him, and accuses McCain of cooperating with the North Vietnamese while he was their prisoner. They also sketch McCain’s ties, through his wealthy father-in-law, to various Arizona scandals including the murder of reporter Don Bolles.
Check out their version at the US Veteran’s Dispatch web site.
- Family troubles: McCain has a reputation as a politician who has difficulty keeping his pants zipped, according to Republican sources. He acknowledges that his adultery broke up his first marriage. His second wife Cindy, the daughter of a wealthy Budweiser beer distributor, was addicted to prescription narcotics and even stole hard drugs from a medical charity that she ran. McCain acknowledges that she didn’t want him to run, and only agreed once he promised that she doesn’t have to go to New Hampshire or Iowa.
Quotes:
- Do you know why Chelsea Clinton is so ugly? Because Janet Reno is her father. — John McCain
Sources:
The Pampered Politician , by Amy Silverman, The Phoenix New Times, May 15, 1997
See John Run Off at the Mouth , Phoenix New Times, October 1, 1998
Opiate for the Mrs. , Phoenix New Times, September 8, 1994
Flashes: What’s Up, Murdoch? , Phoenix New Times, September 17, 1998
the US Veteran’s Dispatch web site.
Symington Gets Slammer , Phoenix New Times, February 2, 1998
Election 98: Arizona Governor, Fox News web site, 1998 coverage (no longer on web)
Keating Gets New Trial , CNNfn Web Site, December 2, 1996
No More Wagging, , (editorial) by Maureen Dowd, The New York Times, January 3, 1999
John McCain, rock-and-roll dad , by Andrew Essex, The New Yorker Magazine, December 6, 1999 p52
Unmasking Darth McCain , by William Cleeland, The Daily Illini, March 9, 2001
A post to me from Calpernia...
(1990) John McCain said on the floor of the Senate: “Mr. President, I am anxious to construct a new relationship with our old adversary (Vietnam)”. He, who was in a Vietnamese prison camps for five and a half years, was pushing hard for normalized relations with Hanoi long before anyone else was.
Between when Clinton said that he would not normalize relations with Vietnam until there was a full accounting of POWs/MIAs and the time he lifted the Trade Embargo only two Americans had been accounted for in Vietnam.
Lifting the embargo opened the door for the multi-billion dollar corporation, Lippo Group with American business partners, such as Stephens Investment of Little Rock, AR to conduct business in Vietnam. Mr A. Vernon Weaver, at that time the Vice-President for Operations in the Pacific Rim of Stephens Investment and a member of the Board of Visitors at the U.S. Naval Academy was instrumental in arranging an upgrade of the position of Commandant of the U.S. Naval Academy from two stars to four stars.
Former U.S. Navy officers, Senators John Kerry and John McCain supported this reorganization.
http://www.usvetdsp.com/billbell.htm
An indication of just how deep and subtle Red Chinese roots run in U.S. business and government affairs deals with McCain and Kerry. Both McCain and Kerry fought long and hard to provide the political cover Clinton needed when he made the controversial decision to normalize relations with Vietnam. McCain’s wife, Cindy, is the daughter of James Hensley, who is the second largest Anheuser-Busch distributor in the United States. McCain is an officer in Hensley & Co. and Cindy is a vice president. The McCain family owns several million dollars in Anheuser-Busch stock.
As a part of an aggressive campaign to enhance its international standing in the beer market, Anheuser-Busch has had signned contracts and invested hundreds of millions building brewery operations in China and Vietnam. I can’t link any of those contracts involve Lippo. Some docs retrieved from the net revealed that Riady’s Lippo is the holder of a license for Sea World in Indonesia and that Anheuser-Busch owns all the Sea World themeparks in the United States as well as some overseas.
Is there a connection between Anheuser-Busch and Lippo?
http://www.usvetdsp.com/billbell.htm
SeaWorld/Lippo Connection:
Old URL: http://www.lippo.co.id/Main.htm
Internet Cache: http://web.archive.org/web/19980530014836/http://www.lippo.co.id/Main.htm
Net cache shows Lippo holds/held the license on Sea World in Indonesia.
“Today I am lifting the trade embargo against Vietnam because I am absolutely convinced it offers us the best way to resolve the fate of those who remain missing and about whom we are not sure.” Two things happened between November 1992 and February 1994 which bear on this issue. One was that Senators John Kerry and John McCain lobbied the president to drop the embargo. The second thing was that in September 1993 the head of the Lippo Group, Mochtar Riady, led a trade mission of Asian bankers on a trip to Vietnam to (in his words) “size up business opportunities there.” Lippo helps, among other things, to finance trade deals. It therefore stood to benefit enormously from expanded trade between Vietnam and the United States;
Old URL: http://www.empower.org/html/policy/misc/roadmap3.htm
See Internet Cache:
http://web.archive.org/web/20000816001233/http://www.empower.org/html/policy/misc/roadmap3.htm
Keywords:
China... Clinton... McCain... BAILOUTS... WorldCom... Enron... Arkansas... Huckabee... WalMart... Illegals... Invasion... Keating Five... Mortgage Crisis... Subprime Lending...
Wall Street... New York Political Pundits... Madison Avenue... Thieves... Liars...
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