;^)
Posted on 06/11/2010 10:46:23 PM PDT by blam
Verdict: HAMP Failed
Friday, June 11. 2010
Posted by Karl Denninger
"See, I told you so"
Redefault rates on 1.2 million first-lien single-family mortgages are running above 50%, according to an internal note sent Wednesday to the company's salesforce by Sean Dobson, the chairman and chief executive of Amherst Securities Group LP.
You have to chuckle at the claimed "problem" though:
"As we predicted, it [Hamp] did not work," Dobson wrote. "If we want families to escape foreclosure, a real solution to the second-lien issue must be implemented.
There isn't one other than forcing the banks to eat those loans. And as I have pointed out repeatedly, doing so likely means that all or most of these institutions are recognized as insolvent.
Otherwise the Hamp program has only had the effect of loss deferral and exacerbation rather than a more responsible goal of foreclosure avoidance and loss minimization."
Translation: The banks are lying and the longer they lie the worse the eventual damage will be.
"Force the bad loans out into the open and default them" has been my mantra since the beginning of this mess. Why? Because losses due to bad loans happen when the loans are made and cannot be avoided. They can be "deferred" through various accounting tricks and games (some of which were retroactively made legal where they were not before) but doing so both fails to actually avoid the loss and increases the dollar amount of the eventual loss.
There is no escaping this fundamental fact folks.
You mean that people that couldn’t afford interest only loans couldn’t afford refinanced interest+principle loans? Golly, didn’t see that coming.
It failed because we didn’t spend enough on stimulus.
[Channeling Krugman, Reich, etc]
;^)
No job. No income. No problem.
Here. Have a $500K house. Oh wait. I have this house in foreclosure overlooking the Pacific Ocean in Montecito, Laguna Beach, Santa Barbara, Crescent City, Everett, WA,.....and then, there’s always the Hamptons. Want to take a look at this estate that’s on the market?
If you want families to escape foreclosure you will have to keep them from realizing that the appraisals they got when they baught the properties were fraudulent, and they were upside down up to thrice the actual value of the property the moment they signed the loan. None of this real estate has just suddenly lost so much of its value in the last year and a half, rather - the value was vastly overstated.
The only possible way to keep all the home owners from escaping through foreclosure, would be hiring mercenaries to shoot them.
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