cnbc: JPMorgan Chase is forecasting another 4 to 5 percent drop in home values over the next 12 months

[Stillers6SB]

Distressed sales account for 62.5% of Orlando-area home sales

The Orlando Regional Realtor Association said the level of home sales that aren't REO nor short sales rose for the fourth month in a row in May, accounting for about 37.5% of all sales. Therefore, sales of bank-owned homes and short sales on distressed properties make up 62.5% of the market, and these sales continue to hurt the overall median price in the central Florida region.

That's a whole lot of bank losses (roughly $50,000 loss per sale). No way that the banks want to make risky mortgages now. They can't securitize them anymore and pass the risk onto foolish investors.

[Fresh8686]

Somewhat off-topic but interesting nonetheless... has anybody read the IMF report "A Fistful of Dollars: Lobbying and the Financial Crisis"? http://www.imf.org/external/np/res/seminars/2009/arc/pdf/igan.pdf

Here is the abstract:

Has lobbying by financial institutions contributed to the financial crisis? This paper uses detailed information on financial institutions’ lobbying and their mortgage lending activities to answer this question. We find that, during 2000-07, lenders lobbying more intensively on specific issues related to mortgage lending (such as consumer protection laws) and securitization (i) originated mortgages with higher loan-to-income ratios, (ii) securitized a faster growing proportion of their loans, and (iii) had faster growing loan portfolios. Ex-post, delinquency rates are higher in areas where lobbying lenders’ mortgage lending grew faster. These lenders also experienced negative abnormal stock returns during key events of the crisis. The findings are robust to (i) falsification tests using information on lobbying activities on financial sector issues unrelated to mortgage lending, (ii) instrumental variables strategies, and (iii) a difference-in-difference approach based on state-level lending laws. These results suggest that lobbying may be linked to lenders expecting special treatments from policymakers, allowing them to engage in riskier lending behavior.

Further evidence that has me wondering why campaign finance reform isn't as important a topic as it should be.

[Stillers6SB]

Somewhat off-topic but interesting nonetheless... has anybody read the IMF report "A Fistful of Dollars: Lobbying and the Financial Crisis"? http://www.imf.org/external/np/res/seminars/2009/arc/pdf/igan.pdf

Further evidence that has me wondering why campaign finance reform isn't as important a topic as it should be.

Third, and perhaps the most likely, alternative interpretation is that overoptimistic lenders may have underestimated the likelihood of an adverse event affecting the mortgage market more than other financial intermediaries did. Under this interpretation, these lenders would have lobbied to prevent a tightening of lending standards to exploit their better information on the market or to fully use their capacity at increasing the supply of mortgage loans.

I think this alternative is more likely than the authors' hypothesis. The vast majority of Americans were convinced that home prices would continue to rise indefinitely. The lenders should have known better, but didn't until it was too late.

[boobiemiles]

You can't be serious. Interest rates are rising a few basis points off the lowest rates of all time.

I mean, do I really have to post this stuff?

No, they don't. Maybe you still need a 750 credit score if you want to take out one of the insane no money down loans that our government seems to be deliriously intent on keeping in existence, but I very much expect that I could find evidence dispelling even that notion with a few minutes on The Google.

You're right. In a depressed economy, it makes much more sense to make riskier loans. Especially when the economy is depressed in the first place due to the aftermath of too many risky loans.

No, we won't. We'll just set ourselves up for the next crash. Something called "math" says that there are limits on what loans can be paid back. We tried ignoring those limits and got the worst recession since 1929. We're still ignoring them now, just to a lesser extent than we were five years ago. Loosening even further would cause an incredibly predictable result: First, economic statistics would get better, for the same reason they got better in 2003 and 2004. Then, when that dang "math" forced another annoying force called "reality" to come into play, we'd have another crash.

You are very dramatical. I am not saying we go back to 2005 when anyone with a pulse can get a loan. Quite simply the banks do not believe in the economy, so they put a lot of restrictions on lending. But taht is bs. We bailed them out, when they use derivatives, and credit defualt swaps to get rich. We gave them tax money to keep a float. They owe us. Instead of getting fat off M&A and topp end equities trading, why not invest some resources into the economy as a whole? You don't have to abuse the system, like they did before. Instead they can set the bar lower than 750.

Let's say you have 675 with three years of employment, what's wrong with that?

[SnyderShrugged]

No Boobie..."WE" didnt bail them out, the establishment hacks in both parties bailed them out, despite the fact that many, many people were against it.

You support those same hacks, yet cry foul at their actions?

---------- Post added June-14th-2011 at 07:21 AM ----------

It's a reckoning, folks. The housing market was out of control for a long time and is still in the process of correcting itself. Lots of folks think it will be 2020 before housing prices return to where they were pre-burst. I actually think that's pretty optimistic in some areas. Unfortunately, I live in an area of LA where everyone seems to have an endless supply of money except me. Prices really haven't dropped that much.

as painful as it is for me personally (already wrote one $80k check in 2009, and my new home value is dwindling to boot). I firmly believe that you are correct and the correction will have to occur.

[Larry]

Sorry, folks. Byut my opinion is that as long as people look at home buying as "If the price of the home goes up, then the homeowner gets the profit. But if the price of the home goes down, then the bank takes the loss.", then I don't see the banks wanting to throw money into real estate nearly as much as they did.

5 years ago, the banks were basing their business model around the assumption that it was impossible for them to lose money. So what if the guy who's buying this $800K beachfront house works at McDonald's? When the introductory rate expires, and his payments quadruple, then we'll just seize the house (which will be worth $900K by then), and we'll still make money.

But now, the tactical situation has changed. Now, every house that's under water is a potential big loss to the bank. (And according to a chart somebody posted a while back, for example, 50% of the homes in Florida are under water.)

And remember, the banks have been heavily leveraging their money, too. If the bank loses 5% on a loan, then that way well mean losing 100% of the money that the bank put in.

Is it really shocking that the banks, in that situation, don't want to expose themselves any more than they already are?

[Busch1724]

Well it's not surprising, factor lending requirements with an over supply of houses on the market and the prices have to go down. It's gonna take longer than 3 or 4 years. JPMorgan Chase was being optimistic IMO.

[Hubbs]

You are very dramatical. I am not saying we go back to 2005 when anyone with a pulse can get a loan. Quite simply the banks do not believe in the economy, so they put a lot of restrictions on lending. But taht is bs. We bailed them out, when they use derivatives, and credit defualt swaps to get rich. We gave them tax money to keep a float. They owe us. Instead of getting fat off M&A and topp end equities trading, why not invest some resources into the economy as a whole? You don't have to abuse the system, like they did before. Instead they can set the bar lower than 750.

Let's say you have 675 with three years of employment, what's wrong with that?

Dude, I don't know where you got the idea that it's impossible to get a mortgage with a credit score below 750, but you're wrong.

[Thiebear]

I have a 718 to 746 on the three credit scores and cannot even consolidate my First with my (Second-ARM) that scares me.

Nothing special like taking the upside down part of the loan out, or no points.

As it is the only loan in America not under Fannie/Freddie i can't even go the gov't route to get anything done.

Stuck. I've tried paying a bit more into it, but i now have an ex.bro in law with child living with me till he gets on his feet again.

trudging along till 2020 is not an option.

[Hubbs]

By the way, techboy...

As decided by the New York Supreme Court on June 7th:

LEVENTHAL, J.This matter involves the enforcement of the rules that govern real property and whether such rules should be bent to accommodate a system that has taken on a life of its own. The issue presented on this appeal is whether a party has standing to commence a foreclosure action when that party's assignor—in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS) —was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes.

We answer this question in the negative.

...

According to the plaintiff, Coakley indicates that this Court has determined that such broad provisionsin mortgages, such as the initial mortgage and second mortgage here, standing alone, grant MERS, asnominee and mortgagee for the purpose of recording, the power to foreclose. On the contrary, the Coakley decision does not stand for that proposition. This Court's holding in Coakley was dependentupon the fact that MERS held the note before commencing the foreclosure action. In the absence of thatcrucial fact, the language in the mortgage instrument would not have provided "further support" for theproposition that MERS had the power to foreclose in that case. Furthermore, the language in the initialmortgage and the second mortgage in this case, purportedly granting MERS the right to foreclose, wassuperseded by the consolidation agreement. Moreover, as discussed above, the broad language reliedupon by the plaintiff cannot overcome the requirement that the foreclosing party be both the holder orassignee of the subject mortgage, and the holder or assignee of the underlying note, at the time theaction is commenced.In sum, because MERS was never the lawful holder or assignee of the notes described and identified inthe consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was withoutauthority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show thatit had standing to foreclose.

MERS purportedly holds approximately 60 million mortgage loans (see Michael Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan, New York Times, March 5, 2011), and is involved in the origination of approximately 60% of all mortgage loans in the United States (see Peterson at 1362; Kate Berry, Foreclosures Turn Up Heat on MERS, Am. [*6]Banker, July 10, 2007, at 1). This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property.

[kubstix]

I was able to get 0% financing on my new car......I wonder if I'll be able to grab a 0% interest on a house pretty shortly.

[techboy]

By the way, techboy...

Yes, there have been a few individual cases, in lower courts. As I recall, the original article you cited focused on another.

[Hubbs]

Yes, there have been a few individual cases, in lower courts. As I recall, the original article you cited focused on another.

Right. Just keeping you updated.

[Predicto]

Yes, there have been a few individual cases, in lower courts. As I recall, the original article you cited focused on another.

And without speaking on the ultimate merits, just be aware that the New York Supreme Court is misnamed. Unlike all the other states in the Union, New York calls its county trial courts "supreme courts." The real New York Supreme Court is called the Court of Appeals.

[Hubbs]

And without speaking on the ultimate merits, just be aware that the New York Supreme Court is misnamed. Unlike all the other states in the Union, New York calls its county trial courts "supreme courts." The real New York Supreme Court is called the Court of Appeals.

Weird. Good to know.

[Predicto]

Weird. Good to know.

No problem. It's jsut a historical anomaly.

BTW, I followed the link, and the court in your case was the Supreme Court Appellate Division, which is the appeals court that lies between the trial court and the state supreme court. That makes it a very important decision, actually. It's not just a trial court decision. I wonder if the bank sought review from the Court of Appeals (the real New York supreme court). I don't know the answer to that.

[Hubbs]

No problem. It's jsut a historical anomaly.

BTW, I followed the link, and the court in your case was the Supreme Court Appellate Division, which is the appeals court that lies between the trial court and the state supreme court. That makes it a very important decision, actually. It's not just a trial court decision. I wonder if the bank sought review from the Court of Appeals (the real New York supreme court). I don't know the answer to that.

Thanks for sorting that out. It never even crossed my mind to check if the "Supreme Court of the State of New York" was actually the state supreme court.

Learn something new every day.

[Stillers6SB]

I have a 718 to 746 on the three credit scores and cannot even consolidate my First with my (Second-ARM) that scares me.

Nothing special like taking the upside down part of the loan out, or no points.

As it is the only loan in America not under Fannie/Freddie i can't even go the gov't route to get anything done.

Stuck. I've tried paying a bit more into it, but i now have an ex.bro in law with child living with me till he gets on his feet again.

trudging along till 2020 is not an option.

How much equity do you have in the house? Is the second mortgage held by the same bank as the first mortgage?

[Larry]

How much equity do you have in the house?

I may be misreading his post, but I think he said he's under water.

Which might explain why the bank is reluctant to write him a new loan.

but it's just a theory.

[stoney26]

I read articles like this every 2-3 months but our sales have been steady for the past 18 months and we actually raised the base price on some of our models in April. We seem to be doing fine.

[twa]

I read articles like this every 2-3 months but our sales have been steady for the past 18 months and we actually raised the base price on some of our models in April. We seem to be doing fine.

It is in just certain areas,just like the bubble

Housing doesn't appear to be getting cheaper here either,and they are certainly still building

[Beans]

I was able to get 0% financing on my new car......I wonder if I'll be able to grab a 0% interest on a house pretty shortly.

Oh, you paid the interest one way or another. Let me guess, you financed through the dealer.

[PCS]

If memory serves,this thread covered the D.C. area and maybe a few other areas when it comes to housing prices and such.

http://www.extremeskins.com/showthread.php?347919-WP-Home-prices-hit-lowest-level-since-April-%9209-in-double-dip-(except-for-DC-area

[Stillers6SB]

I may be misreading his post, but I think he said he's under water.

Which might explain why the bank is reluctant to write him a new loan.

but it's just a theory.

You're right....100k under water. No first mortgage holder will want to consolidate in that case. The second holder would love to.

[deejaydana]

Oh, you paid the interest one way or another. Let me guess, you financed through the dealer.

Not necessarily he didn't. dealerships are still desparate to move inventory and 60 month 0% deals are still out there.