Michael Burry: “My number one concern is that there has been a complete utter total abdication of personal responsibility though out our entire society.

Michael Burry (interview on Bloomberg)

The former hedge-fund manager who predicted the housing market’s plunge, said he is investing in farmable land, small technology companies and gold as he hunts original ideas and braces for a weaker dollar.

“I believe that agriculture land -- productive agricultural land with water on site -- will be very valuable in the future,” Burry, 39, said in a Bloomberg Television interview scheduled for broadcast this morning in New York. “I’ve put a good amount of money into that.”

Burry, as head of Scion Capital LLC, prodded Wall Street banks in early 2005 to create credit-default swaps to bet against bonds backed by the riskiest home loans. The strategy paid off as borrowers defaulted, letting his investors more than quintuple their money from 2000 to 2008, according to Michael Lewis’s book “The Big Short” (Norton/Allen Lane).

Burry, who now manages his own money after shuttering the fund in 2008, said finding original investments is difficult because many trades are crowded and asset classes often move together.

“I’m interested in finding investments that aren’t just simply going to float up and down with the market,” he said. “The incredible correlation that we’re experiencing -- we’ve been experiencing for a number of years -- is problematic.”

Comments on the Blame Game

“My number one concern is that there has been a complete utter total abdication of personal responsibility though out our entire society. I don’t think anyone anywhere is taking blame themselves for what they did to contribute to the crisis.

 And again I think it gets back to that blame game. It is the most damaging thing we can do as a country is to blame a narrow set and not look within ourselves for what each of us did or didn’t do to the basic wrong that led to this mess.” “From the borrower to the average broker all the way to the federal reserve through Congress, the President, several Presidents, I think that this has been coming for awhile and there has been a lessening of the credit standards over a period of time that ultimately led to the kind of blow off top that we have.”

Comments on the overall housing market

“It’s an artificial market. There are a tremendous number of homes where the home homeowner, I think it’s between 2.5 to 3 million homes, where the home homeowner are more than 9 months past due and are not giving notices that they are past due and they’re just living there for free. I actually know one that has been there for a few years without having to pay anything.

I think that Fannie and Freddie are basically being used as special purpose vehicles by our government to support the housing market. The private mortgage market is practically nonexistent; 96-97% of mortgages are flowing through Fannie and Freddie now. I think Fannie and Freddie are exercising a tremendous amount of power over the market by withholding properties from sale and not forcing foreclosure, the foreclosure process. I think that it would be best for the government just completely got out of the mortgage market and let the housing, because home prices are a function of income the leverage applied. Bloomberg Recap

Once again, Banks to Benefit from White House program to fight foreclosures

Banks to benefit most from White House

program to help fight foreclosures

By Vicki Needham - 08/15/10

The Hill.com

Banks will get the biggest benefit from an Obama administration housing program designed to help unemployed homeowners escape foreclosure.

Housing experts expressed concern that banks, not homeowners, will be helped by the White House's $3 billion funding infusion — $2 billion from the Treasury Department and another $1 billion from the Housing and Urban Development Department — going to those states hit hardest by the housing market crash and unemployment.

"Giving money to the banks isn't what the government should be doing right now," said Dean Baker, co-founder of the Center for Economic and Policy Research. "I'm not a big fan; it's ill conceived," he said.

The basic principle is to help struggling homeowners, but with so many people underwater on their mortgages, the new funding is unlikely to do much good, Baker said.

"You need to make sure that someone benefits from the program other than banks," he said.

Baker suggested that if the government is going to provide up to $50,000 in loans over the course of two years to those struggling homeowners that the money should be used for any of their needs, not just to pay the mortgage.

He said banks could offer a program that would allow homeowners to rent their home back from the bank at a lower monthly rate than their mortgage payment for up to five years, providing some security for those struggling to make monthly payments.

The arrangement would provide lenders with a real incentive to negotiate with homeowners because they don't want to be landlords.

If the recently announced program is expected to work there has to be a reasonable expectation that at the end of the two-year program homeowners will have some equity in their property.

"If that's not the case, then it's not worth it," he said.

He said he'd be "very surprised" if the vast majority of those who take advantage of the program don't eventually lose their homes.

Foreclosures were up 4 percent in July with 325,229 filings, a nearly 10 percent increase over the same month in 2009, according to a report from RealtyTrac, a group that tracks foreclosure filings.

David Abromowitz, senior fellow at the Center for American Progress, said the main problem with the funding is that lenders will benefit without requiring any concessions or matching of the federal aid.

"My concern is what are we asking from lenders who are going to get the benefits source to pay those loans for 24 months," he said.

Under the program, lenders don't have to make principle reductions on loans or major modifications, he said. Lenders should also be required to make concessions and possibly even match funding.

"Banks also should be required to share in the burden being faced by homeowners," he said.

Despite his reservations with the funding, he emphasized that with millions facing foreclosure, the fragile economy and a slowing economic recovery, "anything that slows or stops foreclosures is good."

"It's targeted well toward people facing a temporary situation when they can't pay their mortgage because of unemployment," he said.

Still, the challenge is difficult as federal officials try to find ways to get the economy to turn the corner and pick up pace.

"No one piece is going to turn the tide," Abromowitz said. "But this certainly could help in the housing market."

Under the federal program, Treasury will direct the $2 billion to the "Hardest Hit Fund" created earlier this year, while HUD will create a new "Emergency Homeowners Loan Program" that will provide zero-interest loans of up to $50,000 for two years. The funding will be divided up among 17 states and the District of Columbia.

The funding allocation announced last week is the third payout for the housing program, pushing the cost of the program to $4.1 billion. Complete article

Grandpa

On behalf of all children and grandchildren, grandpa suggests implementing the B.A.R.E. program (Bailout Awareness and Resistance Education). Our kids continue to be placed in financial harms way and our administration and congress has a moral obligation to afford them a fair opportunity!

Treasury officials blame Fannie Mae for underestimating HAMP delinquencies, although neither Fannie nor theTreasury possess basic math skills

By Corbett B. Daly
WASHINGTON Aug 6 (Reuters) - The Obama administration on Friday acknowledged it had underestimated the number of homeowners who fell seriously behind on their mortgage payments even after getting government help.

Treasury officials blamed the error on mortgage finance giant Fannie Mae, which acts as the program administrator for President Barack Obama's $50 billion Home Affordable Modification Program (HAMP).

The program had been criticized for its overly optimistic estimates of the number of struggling borrowers helped by its subsidies of new mortgage terms.

The actual numbers of permanent modifications that have lasted at least nine months through the end of May is tiny: just 4,764 borrowers. And 53,041 borrowers had one for at least six months through May.

Treasury said about 14.9 percent of the 4,764 borrowers who have had a permanent modification for at least nine months by the end of May had re-defaulted on their loan. That's more than six times the 2.4 percent rate they reported on July 20.

For loans that had been permanently modified for at least six months, about 6.1 percent had re-defaulted, up from just 1.7 originally estimated. Re-defaults are defined as 90 days or more late.

For loans 60 days late and not yet in re-default, the number of borrowers in trouble is even higher.

For loans that had been permanently modified for at least nine months, 19.6 percent of the loans were at least two months behind on their payments, more than two and a half times the 7.7 percent rate first reported.

On loans permanently modified for at least half a year, 10.1 percent were 60 days or more behind on payments, compared to the 5.9 percent originally reported.

"We are confident that this data table correctly reflects the performance of the permanent modifications over time. Early program results indicate that the vast majority who receive permanent modifications through HAMP benefit from them and remain in the program," said Treasury spokesman Mark Paustenbach.

The issue arose after several Wall Street analysts said the numbers Treasury first issued seemed suspiciously low.

Treasury then asked Fannie Mae to review the numbers.

Fannie Mae spokesman Brian Faith said his company found "an issue in its implementation of the delinquency statistic methodology."

"Fannie Mae has now corrected the implementation and validated the revised table through review and verification by an independent third-party consultant contracted by Fannie Mae's Internal Audit Group," Faith said.

Treasury on July 20 said that the number of borrowers dropping out the program grew in June at almost twice the pace of those getting a permanent modification. Those figures were not revised.

The dropout rate could signal a rise in foreclosures in the second half of the year at a time when the housing market is still fragile and analysts fear another housing slump could threaten the nascent economic recovery.

About 91,000 borrowers dropped out of the program in June, putting the total number of dropouts at 530,000. At the same time, about 49,000 borrowers received a permanent modification in June, bringing that total to 389,000.

That means more than 40 percent of the roughly 1.3 million borrowers who have started in the program since its March 2009 inception have since dropped out, while just over 30 percent have received permanent new terms for their loan.

(Reporting by Corbett B. Daly; Editing by Gary Crosse, Gary Hill and Jackie Frank)

Fed aid program aims to avoid Michigan foreclosures, just another $155 million dumped on grandkids

BusinessLansing.com (7/8/10)
Gov. Jennifer Granholm on Wednesday announced the kickoff of the state's $154.5 million "Helping Hardest-Hit Homeowners Fund."

The first-come, first-serve program is expected to help 17,000 households statewide. A more detailed forecast was not available.

State officials anticipate the money will run out in 12 to 18 months.

"The purpose of this fund is to keep the families who have been hardest hit by this economy in their homes," Granholm said. "Perhaps they are on unemployment and they're having trouble making their mortgage payments because of that. This fund will help them."

Funds are available in three different categories:
• Homeowners receiving unemployment benefits can get up to $9,000 ($750 a month, or half of the monthly payment, whichever is lower, for 12 months) toward their mortgage payments.

• Homeowners who are behind on their payments because of obstacles such as a temporary layoff, divorce or serious illness can receive up to $5,000.

• Homeowners who can't afford payments due to reduced income can receive up to $10,000 to pay down the mortgage principal. Funds are a one-to-one match of the lender's contribution.

Granholm said she's asked the Obama administration to extend the program to those whose jobless benefits expired because Congress hasn't approved a benefits extension.

Residents should contact their mortgage servicers to apply. Eligible applications should be approved within 48 hours.

Participation by mortgage servicers is not mandatory, though the Michigan Bankers Association, Michigan Credit Union League and Michigan Association of Community Bankers all support the program.

"This new program is a great opportunity to once again encourage homeowners to contact their lender at the first sign of a problem in paying their mortgage," said Robert Chapman, board chairman of the Michigan Bankers Association. "If the program is not suited for them, there may be another option available for them."

Though mortgage aid programs are helpful, they're not a catch-all solution to foreclosures, said Bob Hubbell, CEO of Coldwell Banker Hubbell Briar-Wood Real Estate Co. in Delta Township.

"It's an epidemic," he said.

Ingham, Eaton and Clinton counties had 723 foreclosure filings in May, up 11 percent from April and about 8 percent from May 2009, according to RealtyTrac. Foreclosure filings include things such as notices of default and sheriff sales, and it's possible for one property to receive more than one filing in a month.

Hubbell said mortgage aid programs just delay inevitable foreclosures in some cases because many homeowners remain unemployed.

"It's not the solution," he said. "It's definitely a remedy, it's a benefit and I'm glad to see them take steps to help these folks."

In February, President Obama announced $1.5 billion in funding for innovative measures to assist families in the states that have been hit hardest by the aftermath of the housing bubble. The Michigan State Housing Development Authority is one of five state housing finance agencies sharing the funding.

Grandpa: Get divorced and receive up to $5,000! Grandpa remains genuiunely empathetic to all who have incurred hardship as a result of serious illness however when did paying for home ownership become a entitlement progam? 

Generations of families have incurred difficult and challenging times without the socialized belief that future generations should shoulder their financial burden. Another $1.5 BILLION program to appease those in the "it's all about me", "I'm entitled" and "life is not fair" era.

An entire generation learning to take nourishment, sit, walk and talk are not yet aware of how unfair life has become.

Some in history that truly embraced future generations:

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson

Each generation should be made to bear the burden of its own wars, instead of carrying them on, at the expense of other generations. James Madison

For the first time in the history of mankind, one generation literally has the power to destroy the past, the present and the future, the power to bring time to an end. Hubert H. Humphrey

The Constitution of the United States was made not merely for the generation that then existed, but for posterity- unlimited, undefined, endless, perpetual posterity. Henry Clay

Leadership requires the courage to make decisions that will benefit the next generation. Alan Autry

A politician thinks of the next election. A statesman, of the next generation. James Freeman Clarke

 

Average Homeowner In Assistance Program UNDERWATER (Huffington Post)

Shahien Nasiripour
Huffington Post
7/6/10

The average beneficiary of the Obama administration's flagship homeowner-assistance program owes their mortgage lender more than $1.50 for every dollar their home is worth, which means they fall into the stratum of homeowners most likely to simply walk away from their mortgages, recent government data show.

This little-noticed statistic was disclosed in a June 24 report by the Government Accountability Office. Citing government data collected through mid-April, the report found that even homeowners who receive lower monthly payments through the administration's Home Affordable Modification Program are still struggling "under water," meaning they owe more on their mortgages than their homes are worth.

A recent study by Federal Reserve economists shows that underwater homeowners are, not surprisingly, much more likely to default on their mortgages. Moreover, borrowers who are deeply underwater -- like those in HAMP, who average negative 50 percent home equity -- are far more likely to default willingly; that is, to give up on trying to overcome their growing mountains of debt, and just stop paying at all.

This revelation underscores the problems with the path taken by the Treasury Department to help homeowners, who merited federal attention only after the government gifted Wall Street banks with hundreds of billions of taxpayer dollars to survive a financial meltdown largely of their own making. Rather than designing a program exclusively focused on homeowners, the administration chose to set up an initiative that seeks to balance the needs of homeowners with the interests of lenders and investors.

Thus, while the average homeowner in the program is saving more than $500 a month, 28 percent more homeowners have been bounced from the program than have been helped. Homeowners that receive permanent reductions in their monthly mortgage payments end up deeper underwater than they were before they were "helped." Meanwhile, lenders and investors continue to foreclose on properties at a record pace.

On Tuesday two top Republicans released a Thursday letter to Treasury Secretary Timothy Geithner calling for the administration to "immediately" end HAMP.

"It defies common sense that taxpayer money is being used to pay banks to modify loans that are likely to default anyway," said Rep. Darrell Issa (Calif.), the ranking Republican on the House Committee on Oversight and Government Reform. "In cases where loan changes could keep borrowers out of foreclosure, banks have a clear incentive to make changes without a need for public funds." 

They don't necessarily have an incentive to help homeowners, however. Consumer advocates like Diane E. Thompson, a lawyer with the National Consumer Law Center, said part of the reason the average HAMP homeowner is so deeply underwater is that underwater homeowners are more likely to get a loan modification approved than less-desperate borrowers with positive equity in their homes.

That's because of the test that mortgage servicers run to determine whether homeowners qualify for the program. Called the "net present value" test, it essentially tells lenders and investors whether they'll make more money foreclosing on the home or modifying the borrower's mortgage. This profit motive determines whether distressed borrowers will keep their homes or be kicked to the curb.

The test "favors homeowners who are underwater," Thompson said. "The less equity you have in the house, the more likely you'll pass the NPV test."

"One of the real failures of HAMP" is its inability to help the "little old lady who's lived in her house for 30 years," Thompson added.
 Link to yet another failed government program

Unbelievable levels of debt placed on the backs

of our grandchldren for WHAT REASON?

436,000 borrowers have dropped out of the $75 billion HAMP plan

Alan Zibel, AP Real Estate Writer, On Monday June 21, 2010, 12:03 pm
WASHINGTON (AP) -- A growing number of homeowners who sought help from the Obama administration's main mortgage aid program are in danger of losing their homes.

About 436,000 borrowers have dropped out of the $75 billion plan as of last month, the Treasury Department said Monday.

That's about 35 percent of the 1.24 million who enrolled since March 2009 and exceeds the number of homeowners who are getting help through the program. And nearly 155,000 of those who fell out of the program did so in the past month.

The result could be a new wave of foreclosures that could weaken the housing market and hold back the broader economic recovery.

Most of those homeowners were rejected during a trial period lasting at least three months. More than 6,300 dropped out after having their loans modified.

Another 340,000 homeowners, or 27 percent of those who started the program, have received permanent loan modifications and are making payments on time.

Experts say more borrowers are likely to drop out in the coming months. Some homeowners who owe more on their loans than their properties are worth are likely to conclude that paying an oversized mortgage simply isn't worth the cost.

Even after their loans are modified, many borrowers are simply stuck with too much debt -- from car loans to home equity loans to credit cards.

"The majority of these modifications aren't going to be successful," said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. "Even after the permanent modification, you're still looking at a very high debt burden."

Obama administration officials contend that borrowers are still getting help -- even if they fail to qualify for the program. The administration published statistics showing that nearly half of borrowers who fell out of the program received an alternative loan modification from their lender. About 7 percent fell into foreclosure.

Another option is a short sale -- one in which banks agree to let borrowers sell their homes for less than they owe on their mortgage.

A short sale results in a less severe hit to a borrower's credit score, and is better for communities because homes are less likely to be vandalized or fall into disrepair. To encourage more of those sales, the Obama administration is giving $3,000 for moving expenses to homeowners who complete such a sale or agree to turn over the deed of the property to the lender.

The program is designed to lower borrowers' monthly payments by reducing their mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Mortgage companies get up to $75 billion in taxpayer incentives to reduce borrowers' monthly payments.


Grandpa:
The U.S. government agreed to absorb unlimited losses on Fannie Mae and Freddie Mac for the next three years.  The Congressional Budget Office "guesstimated" the total cost to the government (a.k.a. grandchildren) at $291 BILLION. To date, the government has injected $112 BILLION into these two zombie entities.

The results of the $75 BILLION Home Affordable Modification Program (HAMP) are disgraceful. If the HAMP program was a high school, parents would demand that heads roll. 340,000 graduated to permanent modification status while 436,000 dropped out! For every one graduate, 1.5 dropped out (a.k.a. flunked) and our grandchildren are once again burdened with another $75 billion. 
 

U.S. Government Best-Seller

April Pending Home Sales

National Association of Realtors
Washington, June 02, 2010

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.

The PHSI in the Northeast jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago. In the Midwest the index rose 4.1 percent to 104.2 and is 17.9 percent above April 2009. Pending home sales in the South slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago. In the West the index rose 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.

“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues. There could be a sizable number of homebuyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30.” Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.

Grandpa: requesting Congress to provide flexibility on the deadline for closing! Congress extended and expanded the home-buyer tax credit in November 2009. A 5 month head's up and you want Congress to be flexible! ENOUGH IS ENOUGH with the "oh poor me syndrome". If a buyer cut the transaction process too tight and opted to pursue a "distressed property", too bad!

Assume responsibility for your decisions and give our grandchildren a break. The inept, selfish and irresponsible have already placed an undue financial burden on all grandkids.

US homebuilder sentiment index jumps in May-BIG WHOOP!!!

Associated Press:
Alex Veiga, AP Real Estate Writer, On Monday May 17, 2010, 3:10 pm EDT



LOS ANGELES (AP) -- U.S. homebuilders are growing more optimistic about their fortunes, with many expecting improved sales and customer traffic in coming months despite the end of homebuyer tax incentives.

The National Association of Home Builders (NAHB) said Monday its housing market index, which tracks industry confidence, rose three points this month to 22, the highest reading since August 2007.

Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.

Builders have seen sales and home orders improve this year thanks to low mortgage rates and two government tax credits -- $8,000 for new buyers and $6,500 for current owners who who buy and move into another property.

The government incentives helped gin up home sales this spring as many buyers raced to purchase a home in time to qualify before they expired at the end of April.

Without the tax credits, however, many experts anticipate home sales will slow in the second half of this year. In addition, high unemployment and tight mortgage lending continue to keep many buyers on the sidelines.

Regardless, homebuilders polled in the May survey were hopeful the sales momentum will hold.
"Builders are more comfortable that the market is truly beginning to recover, and that positive factors for buying a new home -- low interest rates, great selection, stabilizing prices and a recovering job market -- are taking the place of tax incentives to generate buyer demand," said David Crowe, the trade association's chief economist.

Sales of new homes rose 27 percent in March, the biggest monthly increase in 47 years. Still, new home sales are down 70 percent from their peak in July 2005.

The latest index of builder sentiment bodes well for May sales, however.

The reading for current sales conditions jumped three points to 23. The index measuring foot traffic from prospective buyers also rose three points to 16, and the index for sales expectations over the next six months improved three points to 28. The report reflects a survey of 416 residential builders nationwide.

Grandpa: you will not get the following from the cheerleaders on CNBC as the following is brought to you via the NAHB website and grandpa's spreadhseet calculations:
51.33 Average annual reading from 1985 through 2009
44.80 Average annual reading from 2000 through 2009
50.60 Average annual reading from 1990 through 2009
18.00 Average annualized reading through the first 5 months of 2010


Break out the champagne, let's produce a CNBC homebuilder documentary and let's have Steve Liesman "stand up, sit down, SHOUT-SHOUT-SHOUT!!!"

Home Modification Workout Failures Soar in April

Borrowers flunking out of trial mortgage modifications
By Tami Luhby, senior writerMay 17, 2010: 1:14 PM ET
NEW YORK (CNNMoney.com) -- The number of troubled homeowners falling out of President Obama's foreclosure rescue plan soared in April.

More than 122,000 borrowers had their trial mortgage modifications canceled in April, bringing the total to 277,640 since the program began about a year ago, according to federal statistics released Monday. Meanwhile, only about 68,000 homeowners were converted from these trials to permanent modifications.

Under the program, known as HAMP, eligible troubled borrowers are put into trial modifications to determine whether they can keep up with the lowered payments and to give loan servicers time to verify income and hardship.

Some 295,348 people have received permanent long-term help under the loan modification plan, but another 3,744 have had their permanent modification canceled.

Modifications are usually canceled if the borrower fails to make the adjusted payments or does not hand in the required income verification paperwork during the trial period.

So far, some 24.6% of trial modifications have become permanent, up from 19.8% a month ago. Some 637,353 troubled borrowers remain in trial modifications, officials said.

New rules on their way
Big changes to the program are coming down the pike in the wake of criticism that the administration must do more to help troubled borrowers.

Starting June 1, homeowners will have to provide all their income verification documents before they are put into trial modifications. This will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance.

Separately, the administration plans to roll out its new program for the unemployed on July 1. Eligible borrowers could enter a forbearance program, which either suspends their monthly payments entirely or reduces them to less than 31% of their pre-tax household income.

Later in the year, two more initiatives will begin. One will encourage servicers to lower loan balances for delinquent borrowers when that is more advantageous to mortgage investors than reducing interest rates.

Principal reduction would be available for eligible borrowers who owe more than 115% of their home's current value. The balance would be forgiven as long as the homeowner makes timely payments for three years.

The other initiative will allow some borrowers who are current on their mortgages but have seen their property values drop to refinance into Federal Housing Administration loans worth no more than 97.75% of their home's price. The program is set to start in the fall.

If the borrower has a second lien, the total mortgage debt could not exceed 115% of the property's value. Homeowners, however, must meet FHA's qualifications and have a credit score of at least 500. Their new monthly payments would be no more than 31% of their monthly income.

Grandpa: The results of this $75 BILLION program have gone beyond a joke to truly being sad. It is sad as not lony have billions of debt been dumped on our kids and grandkids, it has been dumped without any measurable return.

Freddie "Krueger" Mac wants another $10.6 billion

McLean, VA – Freddie Mac (NYSE:FRE) today reported a net loss of $6.7 billion for the quarter ended March 31, 2010, compared to a net loss of $6.5 billion for the quarter ended December 31, 2009. After dividend payments of $1.3 billion on its senior preferred stock to Treasury, Freddie Mac reported a net loss attributable to common stockholders of $8.0 billion, or $2.45 per diluted common share, for the first quarter of 2010, compared to a net loss attributable to common stockholders of $7.8 billion, or $2.39 per diluted common share, for the fourth quarter of 2009.

“Though more needs to be done, we are seeing some signs of stabilization in the housing market, including house prices and sales in some key geographic areas,” Haldeman said. “But as we have noted for many months now, housing in America remains fragile with historically high delinquency and foreclosure levels, and high unemployment among the key risks.

The collective total loss for fiscal year end 2009, 2008 and 2007 attributable to shareholders is $80 billion or $47.86 per share!!! Freddie "Krueger" Mac also requested another $10.6 BILLION from Treasury (a.k.a. taxpayer).

No America, this is not a dream; since the government took over Freddie, the U.S. taxpayer has poured $50.7 billion into Freddie. Dear Congress, it is time to kill this recurring nightmare.

 

Europe follows in the footsteps of Bernanke, Geithner and Hank Paulson and Bails out Greece

The European leadership has taken a page from the Ben Bernanke, Geithner and Hank Paulson playbook on bailouts. Moral hazard has officially gone global let alone the debt burden placed on grandchildrens' shoulders around the planet!! 

By KAREN JOHNSON And BRADLEY DAVIS
Wall Street Journal
An unprecedented €110 billion ($146.45 billion) aid package for debt-laden Greece should give the euro a boost this week, but any relief rally is likely to be short-lived amid concerns that other fiscally strapped euro-zone members will also need support.

The positive news from the euro zone could also be overshadowed by measures announced by China to tighten bank-lending standards to prevent its economy from overheating. That could weigh on growth-sensitive currencies, such as the Australian and Canadian dollars, which have benefited from the strength of the Chinese economy. Investors could also be rattled by the discovery of a car bomb in Manhattan's Times Square on Saturday and head for the safety of the greenback and U.S. government debt.

Still, when New York traders arrive at their desks Monday—many markets, including the U.K., are closed Monday—their focus is likely to be on the aid agreement announced Sunday by the euro zone, the International Monetary Fund and Greece. The plan requires the euro zone to put up €80 billion and the IMF €30 billion. National parliaments are expected to sign off on the deal swiftly and euro-zone leaders will validate it Friday, allowing Greece to access the funds before a mid-May debt payment of €8.5 billion is due. In return for the aid, Greece must implement tough measures to cut its budget deficit.
Link to complete article

Likely Response by quant fund algorithmic gamers

trading the equity futures overnight 

Actual response in Greece

Nouriel Roubini discusses U.S. Government Deficits

Nouriel Roubini discusses U.S. Government Deficits and suggests the U.S. is in worse shape than Greece. He also references the "kick the can down the road" manner in which the U.S. addresses (or does not address) the deficit issue.

Bailout helps Buffett plenty; He has argued for it and will benefit from it (Charles Piller)

A most informative article and albeit one year old, it remains timely given Buffett's recent comments defending Goldman Sachs and Lloyd Blankfein. Mr. Buffett benefited tremendously from the taxpayer bailout. He comes across as a character from Andy Griffith-Mayberry however the wolf in sheep's clothing comes to mind.

By CHARLES PILLER Sacramento Bee
April 4, 2009, 12:56AM SACRAMENTO, Calif. — Billionaire investor Warren Buffett has been lauded for his plainspoken denunciation of the greed and foolishness behind the economic crisis. He’s pushed the massive federal bailout of imploding banks as the essential response to an “economic Pearl Harbor.”

When Buffett speaks, people in high places listen. He’s so highly regarded that in a fall debate, both presidential candidates said they’d consider him for Treasury secretary.

A Sacramento Bee examination of regulatory records has found that his extensive holdings in financial firms have made Buffett, the world’s second-wealthiest person behind Microsoft Chairman Bill Gates, one of the top beneficiaries of the banking bailout.

Just 28 companies received more than 90 percent of the funds so far disbursed to financial firms by the $700 billion Troubled Asset Relief Program.

Buffett’s company, Berkshire Hathaway, hasn’t received any of that federal aid, but Berkshire, based in Omaha, Neb., owns stock valued at more than $13 billion in the top recipients of TARP funds, including Goldman Sachs Group, US Bancorp, American Express and Bank of America, which analysts all thought were in deep trouble before TARP was approved in October.

Boon for Berkshire

That total, The Sacramento Bee found, ranks Berkshire fifth among all investors in TARP-assisted companies. Berkshire’s TARP holdings constitute 30 percent of its publicly disclosed stock portfolio, and that proportion reflects at least twice as much dependence on bailed-out banks as any other large investor.

Berkshire, for instance, is the largest shareholder in San Francisco-based Wells Fargo, which got $25 billion — 91 percent of the TARP funds invested in institutions headquartered in California.

Buffett increased his bank holdings in September, while he was arguing in the media that Congress should approve the bailout to prevent the collapse of the global financial system.

“If I didn’t think the government was going to act, I would not be doing anything this week,” Buffett told CNBC after investing $5 billion in Goldman Sachs. “I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly.”

The more the bailout props up these financial companies, the more secure Berkshire’s and other shareholders’ investments in them are. Berkshire shares have risen sharply with the financial sector stock rally in recent weeks, but they’re still down nearly 40 percent since September. In Friday trading, they closed at $92,490 a share.

“People can draw their own conclusions” about Buffett’s stake in the bailout, said Richard Coppes, an expert in business ethics at the international law firm Jones Day, and a former general counsel of the California Public Employees’ Retirement System. “But it shows one reason Buffett is so intensely interested in TARP.”

Buffett, whose company is also the largest investor in Goldman Sachs and American Express, declined to be interviewed. In a February letter to Berkshire shareholders, he said that without government intervention, the consequences for the economy would have been “cataclysmic.”

“Like it or not,” he wrote, “the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”

Question of fairness

Experts agree that preserving a functional banking system, TARP’s goal, benefits everyone. In dispute is whether the bailout was the fairest and best approach.

Some say that large shareholders such as Buffett have been the primary, and perhaps only significant beneficiaries of TARP. Bank stocks have recovered significantly in recent weeks — Goldman’s share price has more than doubled since November — and no TARP bank has failed.

Critics, however, worry that TARP propped up Wall Street against bankruptcy at the expense of taxpayers. The Treasury Department expected TARP to get loans flowing again, but the market has barely thawed, and unemployment has surged.

Thomas M. Hoenig, the president of the Federal Reserve Bank of Kansas City, recently advocated a government takeover of moribund banks until their balance sheets can be cleaned up.

“Shareholders would be forced to bear the full risk of the positions they have taken,” Hoenig said, “and suffer the resulting losses.”

Foreign firms also have gained much from the U.S. bailout. The Sacramento Bee’s examination of federal data found that foreign investment firms hold more than $31 billion in TARP-assisted financial companies. That lends credence to U.S. concerns that some European countries should more forcefully stimulate their own economies.

The Europeans agreed to loans and trade guarantees at the G-20 economic summit last week in London, but not to the stimulus package sought by President Barack Obama.

“It shouldn’t just be the obligation of the U.S. to bail out the global system,” said Richard C. Ferlauto, the governance and pension director for the American Federation of State, County and Municipal Employees, AFL-CIO, whose members’ pension assets total more than $1 trillion. “Each country has to step to the plate proportionately.”

The Sacramento Bee also found that many of the leading TARP recipient companies cross-own large shares of other TARP banks.

Northern Trust received about $1.5 billion in government investments, yet its holdings in other TARP-assisted banks are about four times that amount. State Street got $2 billion, and holds nearly $24 billion in shares of other TARP recipients.

Each company has a stake in at least a dozen California banks, large and small, that received TARP funds.

Those commingled interests are partly responsible for the financial meltdown, Ferlauto said. “Ownership interlocks among these large financial institutions meant that no one was willing to rock the boat,” he said, in the period leading up to the financial meltdown.

“There needs to be a lot more transparency on the part of large financial institutions as to how they act as fiduciaries of other financial companies,” he added. “It’s collusion of ownership.”

To be sure, most of the investments by banks in other banks are investments of private clients managed by the banks. Those clients, however, aren’t disclosed to regulators — another way that some beneficiaries of the bailout are shielded from public scrutiny.

'Reeks of favoritism'

When told of The Sacramento Bee’s findings, Robert Kuttner, the author of a recent best-seller on the economic crisis, said they reveal a bailout program designed out of public view, and one that “reeks of favoritism and special treatment.”

“TARP was designed that way,” Kuttner said, “to concentrate power with almost no effective oversight. That, to me, is the scandal.”

The lack of clear criteria for awarding TARP funds continued after the recent change in government, according to Kuttner and other experts.

“The Obama administration said it would offer transparency and openness. But the single most important thing they are doing is being done largely behind closed doors, and the design is by, for and in the interest of large banks, hedge funds and private equity companies,” he said. “Because there are no explicit criteria, it’s very hard to know if a Citigroup or a Goldman got special treatment.”

The Sacramento Bee’s findings follow a recent controversy over some Buffett holdings that may have contributed to the economic crisis.

Berkshire owns more than 20 percent of Moody’s, a top credit-rating agency, making it by far the largest stakeholder. Moody’s has been faulted for enabling the global crisis by overvaluing mortgage assets.

Although Buffett has been outspoken about the need for government intervention in the crisis caused by the mortgage meltdown, he’s said nothing publicly about the role of a company in which his firm is a minority holder.

Buffett also has decried “credit default swaps” — which are similar to insurance policies, in which mortgage bonds and other financial instruments are insured against default — as “financial weapons of mass destruction.” He criticized the profligate use of these unregulated financial tools, or derivatives, widely blamed as a root of the credit collapse.

Yet Berkshire has issued tens of billions of dollars in derivatives. In a letter to shareholders, Buffett justified derivatives as relatively safe and likely to yield vast profits.

Leading economists, however, said that Berkshire’s credit default swaps are much the same as those that sank American International Group, the insurer at the epicenter of the derivative fiasco.

“I assume that (Buffett) is being more responsible than they were,” said Dean Baker, the co-director of the Center for Economic and Policy Research in Washington. “But this is a difference in quantity, not quality.”

Simon Johnson, a professor at MIT’s Sloan School of Management and the former chief economist for the International Monetary Fund, said that despite the banking collapse, financial leaders such as Buffett have retained surprising control over the government.

“There’s this general presumption that Wall Street knows best. But they may not know best for the taxpayer,” Johnson said. “We’ve gotten into the habit of deferring to them a little too much — including Warren Buffett.”

This report is based, in part, on an evaluation of investor filings to the Securities and Exchange Commission as of Dec. 31, the most comprehensive recent data, and on Treasury Department disclosures of federal stock purchases.

For overall shareholder figures, The Sacramento Bee considered the 28 firms that received at least $600 million from the Troubled Asset Relief Program as of March 24 — comprising about 92 percent of TARP outlays.

TARP-assisted California banks were separately reviewed if their market capitalization was at least $25 million. The figures cited exclude federal investments in American International Group and federal loans and investments for auto companies.

The value of investor holdings in TARP-assisted companies was current as of the market close on March 27. Assistance on ownership analysis was provided by Cary Krosinsky, vice president of the research firm Trucost.

References to Berkshire Hathaway’s total stock portfolio include a $5 billion investment in Goldman Sachs Group. That investment pays a 10 percent annual dividend and includes the right to purchase another $5 billion in Goldman stock.


Thank you Mr. Piller! This is one article for the collection.

1 million could lose unemployment benefits and "You can't go on forever" says Max Baucus

By Brian Faler
April 29 (Bloomberg) -- Since the U.S. recession began in December 2007, Congress has extended the length of unemployment benefits for the jobless three times. Now, the lawmakers may have reached their limit.

They are quietly drawing the line at 99 weeks of aid, a mark that hundreds of thousands of Americans have already reached. In coming months, the number of those who will receive their final government check is projected to top 1 million.

It’s a deadline that has rarely been mentioned in recent debates over jobless benefits, in which Republicans have delayed aid because of cost concerns. The deadline hasn’t been lost on Teauna Stephney, a 39-year-old single mother from Bothell, Washington, who said she could become homeless once her $407 weekly checks stop in June.

“What are people like me supposed to do?” said Stephney, who said almost two years of benefits haven’t proved long enough for her to find work after she lost her last job in August 2008. Referring to lawmakers, she said, “I would like them to come and talk to me and spend a day in my shoes.”

Democrats who have pushed through the past extensions agree there’s insufficient backing to go beyond 99 weeks, largely because of mounting concern over the federal deficit, projected to reach $1.5 trillion this year.

“You can’t go on forever,” said Senate Finance Committee Chairman Max Baucus, of Montana, whose panel oversees the benefits program. “I think 99 weeks is sufficient,” he said.

“There’s just been no discussion to go beyond that,” said Senator Byron Dorgan, a North Dakota Democrat.

Damned If They Do’

Allowing the ranks of those who lose their aid to swell carries risks for Democrats in November’s elections.

“They’re damned if they do and damned if they don’t,” said Stuart Rothenberg, publisher of the Rothenberg Political Report. Voters are “sensitive these days to spending and deficit issues and yet there are going to be people who need help, and if the administration ignores them, they’ll look rather callous.”

Baucus said extension legislation would fail in the Senate because of both the deficit and the negative “atmospherics” of lengthening the weeks of aid into triple digits.

“The best thing to do is get this economy turned around” to create jobs, said Baucus.

Unemployment aid has become one of the federal budget’s fastest-growing components, with costs this year likely to reach $200 billion. That’s six times what was typically spent before the recession.

Since the recession began, aid extensions added 53 weeks of assistance to the 46 weeks that had been in place. About 11 million Americans, roughly 70 percent of the nation’s jobless, in March received unemployment checks averaging $320 per week.

The challenge for lawmakers is that while benefits have reached record lengths, so has long-term unemployment. According to the Bureau of Labor Statistics, 44 percent of the jobless have been out of work for at least six months, the biggest share since the government began keeping track in 1948.

About 3.4 million Americans have been out of work for more than a year, according to a study by the Pew Fiscal Analysis Initiative.

The states, not the federal government, track how many exhaust their unemployment benefits, said U.S. Labor Department spokesman Matthew Wald. Grandpa Note: which means the weekly jobless report by the numerically challenged Department of Labor does not offer details for a drop as they simply do not track them!
Link to full article

As grandpa noted in his post this morning, this is a jobless recovery. "You can't go on forever" states Max Baucus. Rather ironic that he notes you can't go on forever albeit he has been in congress since 1975. 35 years as a career politician. AND FOR THE RECORD, Max voted Yea on the Gramm-Leach-Bliley act. You know, the act that carved out significant portions of Glass-Steagall which gave Wall Street Investment banks the congressional endorement to pillage and plunder!


Oh, and who could forget: December 2005, following the public corruption probe of Jack Abramoff — who was later convicted of fraud and corruption — Baucus returned $18,892 in contributions that his office found to be connected to Abramoff. Included in the returned donations was an estimated $1,892 that was never reported for Baucus's use of Abramoff's sky box at a professional sports stadium and concert venue in downtown Washington in 2001.


Only career politicians with Wall Street and the Health Care Industry in their back pocket "go on forever" Max.

Homebuyer tax credit-8 days remain for repeat buyers to stick it to grandchildren

Grandchildren everywhere are celebrating the end of the government's program to reward repeat buyers with a $6,500 gift at the expense of grandchildren. 8 days remain and grandkids everywhere are begging our congressional spenders will not extend or expand the U.S. Government sweepstakes program.

Our government has piled up historical levels of debt and yet continues to hand out tax credits like confetti at a ticker tape parade. This is America, the land of bailouts and entitlement. Simply spend today and let the grandchildren carry the burden.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance
To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.

The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.

The tax credit applies only to homes priced at $800,000 or less.

The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.

Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Winning photo on the Federal Housing Tax Credit website

Granpda's photo entry (it did not even place)

Changes to federal foreclosure program announced-Government relaxing rules

Associated Press
Tamara Lush, Associated Press Writer, On Friday April 2, 2010, 4:09 pm EDT

ST. PETERSBURG, Fla. (AP) -- The federal government announced Friday that it is relaxing some rules to make it easier for communities to spend funds on redeveloping abandoned and foreclosed properties.

The changes, effective immediately, will allow cities, counties and states to buy properties in mortgage default and uninhabitable homes with lingering code violations through the $4 billion Neighborhood Stabilization Program.

The program was started in the midst of the nation's foreclosure crisis, but a year later about a third of more than 300 local governments that got grants have barely made a dent in them, according to a recent report from the U.S. Department of Housing and Urban Development.

Some city, state and county officials say they have had trouble spending the grant money because federal rules are confusing and cash investors have often outbid them for residential properties.

"It became clear to us that the Neighborhood Stabilization Program as originally designed was too restrictive and limited the ability of our local partners to put this funding to work quickly, Mercedes Marquez, HUD's assistant secretary for community planning and development, said in a statement. "We need to be more flexible so our local partners can respond to market conditions and reverse the effects of foreclosure in these neighborhoods as quickly as possible."

James Miller, spokesman for the Florida Department of Community Affairs, which got $91 million to distribute to 24 cities and counties, called Friday's announcement wonderful news.

"It just broadens the pool of available properties that local governments can target," he said. "This opens up more possibilities for them."

Buying a foreclosed home can be complicated, and the new rules will make it easier for communities by giving them a broader pool to work from.

Now a community can buy a property that is at least 60 days delinquent on its mortgage if the owner has been notified, or if the property owner is 90 days or more delinquent on tax payments.

HUD also expanded the definition of an abandoned property to include homes where no mortgage or tax payments have been made for at least 90 days or a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective action.


Common sense news flash forMercedes Marquez: Continuing to throw money at programs with nominal to no returns only further damages the future of our children and grandchildren. Do you honestly believe saying you will "reverse the effects of foreclosure" will make it happen? The staggering debt level of this country continues to mount and Mr. Miller deems the announcement "wonderful news".

Another $600 million for housing courtesy of the Treasury Money Tree

Alan Zibel, AP Real Estate Writer, On Monday March 29, 2010, 1:06 pm EDT

The Obama administration unveiled Monday $600 million in financial aid for five more states with high unemployment that have been slammed by the housing bust.

The funding is for North Carolina, Ohio, Oregon, South Carolina and Rhode Island.

It comes on top of the $1.5 billion in funding announced last month by the Obama administration for Arizona, California, Florida, Michigan and Nevada, which all have deeply depressed home prices.

After that announcement, lawmakers in other states pressed Obama officials for additional aid. Sen. Jack Reed, D-R.I., who was among those pushing for more help, called the funding "a smart investment that will help Rhode Island and other states that have been hit hardest by the recession."

The new money is going to housing finance agencies in states with the most people in counties with unemployment rates above 12 percent. The agencies will design programs that need to be approved by the Treasury Department.

Ohio got the largest share of funding, at $172 million, followed by North Carolina at $159 million and South Carolina at $138 million.

Oregon and Rhode Island are due to receive $88 million and $43 million respectively.

Sen. Sherrod Brown, D-Ohio, called the announcement "a victory for Ohio communities."

It's the latest tactical chance for the Obama administration, which has been under pressure to do more to tackle the foreclosure crisis after its original plan fell flat. On Friday, the administration launched a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break.

Administration officials cautioned that the plan won't stop all foreclosures or help all troubled homeowners. Instead, officials said their goal is to meet their original target, announced last year, of helping 3 million to 4 million borrowers avoid foreclosure.

Associated Press Writer Michelle R. Smith contributed to this report from Providence, R.I.

Grandpa: No wonder the 3 year freeze was pushed out until 2011, as the administration has yet to pluck off all the money tree leaves.

Sunday Comics

Sarah Palin's Twitter message:

"Don't retreat, instead RELOAD"

The administration will annouce their THEFT Program Sunday afternoon.

(Tree House Equity Fatigue Terminator program)

Treasury Dept. will terminate all eligible tree house mortgages,

pay off the balance and issue $1,500 to each THEFT recipient

for loss of use of said tree house.

Eligibility: must not be a primary residence, prove that all

prior equity was spent on non-performing-depreciating assets.

Alan Greenspan during a Bloomberg Interview explaining

the Federal Reserve's inability to see bubbles.

Nancy Pelosi securing the final votes required

for passing the Healthcare Reform Bill

Geithner's response on how to fix Fannie and Freddie