Date: Wed Jul 16 19:29:50 2008
Sender: AJ Perko
It's interesting you never hear this side of it-
Is that for every 8 of those horrible sub-prime loans for borrowers with
"less than perfect credit, or who can't show W2 income- that which were just
so evil and deceptive according to the FED and their latest legislation, - 92
of them were families, investors who had an opportunity to buy a home, and are
now living responsibly.
8% is the Subprime foreclosure rate.
92/100 borrowers who couldn't show W2 income are still in their homes.- I
hope they all got 30 year fixed mortgages, because when this new bill goes
through they won't be refinancing.
Date: Thu Jul 17 00:50:06 2008
Sender: Just Oz
I think that number will grow simply because a lot of those people got in on
interest only and their APRs are about to jump.
When their APRs jump, they WONT be able to refinance because they will be
upside down in value/loan amount.
Date: Thu Jul 17 07:34:32 2008
Sender: Eric Opperman
Yeah, the foreclosures aren't done, and it's probably going to end up quite a
bit higher than 8 percent. There's a *LOT* of defaulted payments right now
that will turn into foreclosures soon enough.
Date: Thu Jul 17 08:12:05 2008
Sender: AJ Perko
Banks will work with someone who is upside down as long as it isn't overly
severe, they just lock them into a 30 year mortgage, knowing that in a few
years it will appreciate and still be a good investment- or they'll even eat
the additional cost to refinance the true value. The last thing a bank wants
right now is a foreclosure, even if it means partial payments-
What they won't do or can't now- is use non-traditional income. The point
being, I did so many loans for self employed borrowers. Business owners,
bartenders, service industry, anywhere you make tips, etc, etc...
Even the ones who make 100 or 200K plus per year in profit will have no way to
refinance. Even if you make 150K per year by the time your done writing off
everything, dividing your income between your corporate accounts and such- your
only going to claim about 50 or 60K.
These people will be so screwed. This is a huge deal that the FED seems to
be out of touch on.
The point of this post remains the same though. For every 8 people who
shouldn't have gotten a house- 92 did. Of my client list I have 3 or 4
foreclosures and about 30 people who were able to by their first home, and few
investors who made in the 100's of thousands of dollars and changed their
lives.
Furthurmore, If the banks "risk assesment" department was so inept, and now
they can't handle 8% foreclosures- to hell with them. They shouldn't have lent
the money.
Date: Fri Jul 25 07:06:58 2008
Sender: William Johnson
The worst part of this 'forclosure mess' is something I heard on the radio
yesterday. That fanny mae and freddie mac own about 50% of all mortages in the
US. Which isn't the worst part, the worst was when they said that in the early
90's someone pushed legislature to make it easier for underqualified applicants
to receive home loans. Read: “The National Homeownership Strategy: Partners in
the American Dream".
While Clinton started this mess by pushing for loans to unqualified
applicants, Bush did not help it by leaving it affective. I hadn't heard there
was another reason for the housing problem (other than it being Bush's fault).
I guess those right wing radio talk shows are evil. Without them, I would never
have heard Clinton started the problem that we are paying for now. But, since
it is happening on Bush's watch then it is all Bush's fault?
Date: Fri Jul 25 07:45:13 2008
Sender: Morris Cohen
Think what you want :)
Date: Fri Jul 25 10:06:11 2008
Sender: AJ Perko
Actually Phil Gramm is more to blame than either President, and he did it Dec.
15, 2000.
Gramm always had ties to the financial industry. When Congress and the rest of
the country was all tied up over the Bush-Gore election debacle, he slid the
Commodity Futures Modernization Act into the back of a Giant Spending Bill
Congress was in a hurry to hammer out.
The bill which was written by financial lobbyist and had a large Enron
influence was designed to "protect financial institutions from overregulation"
mostly.
The big thing it did was removed the auditing of Credit Defualt swaps. Credit
Defualt Swaps insured a banks hedge funds could cover their losses (in the case
of say.. FORECLOSURE!)
Without any oversight and regulation the entire mortgage market lost all
stability and became similar to a single corporate stock.
In essence, playing the odds on the transaction became more lucrative than
the transaction. The riskier subprime mortgages yielded the biggest return,
and banks were betting these mortgages planning on these paying off and
THINKING THEY WOULDN'T NEED THE CAPITAL (or Credit Defualt Swaps) to cover
their bets.
So that was the framework Phil Gramm laid out, and when the market bubble
burst. Which was really just a slight backwardization of appreciation in the
top markets and some of the more risky investors couldn't refinance, the banks
couldn't cover it, the investment market began tightening guidelines, house
values began to snowball.. and woolah.
Phil Gramm pretty much laid the groundwork for the entire Forclosure mess.
(If Fannie and Freddie weren't here things would have been even worse, they
actually hold about 60% of all paper in the secondary market. Do to their
federal preferences Fannie and Freddie were expected to purchase mortgages to
keep other banks afloat- which they did)
Date: Fri Jul 25 14:28:56 2008
Sender: Brian Dust
I thought the subprime mess was all Obama's fault, but if Clinton can be
blamed, that's just as good!
Date: Fri Jul 25 16:54:20 2008
Sender: Brian Dust
Future of Fannie and Freddie:
http://www.businessweek.com/magazine/content/08_30/b4093028591793.htm?chan=search
Date: Fri Jul 25 19:37:40 2008
Sender: AJ Perko
except....
92% Subprime success rate wouldn't have been an issue if not for Gramm's bill.
Date: Sat Jul 26 05:59:53 2008
Sender: William Johnson
Aren't the only ones worrying about this are the private banks? Aren't they the
ones who kept bundling subprime home-equity loans? Equity loans on homes that
the owners could not afford (so they kept taking loans to pay bills), with that
plan eventually catching up to them? So, while Gramm created a large fortune
with his connections and trickery of the super intelligent political machine,
the 'real' problem stems from loans made to folk who could not afford them and
were not qualified to have them. Correct?
Isn't Gramm's financial plan of the 90's simply a tool that was used by the
banks while purposely allowing loans to folk who could not afford them because
they were being directed to do this? Weren't the banks risking this current
mess by allowing these loans in the first place?
So, if home ownership to unqualified folk had not been allowed, how much of
this crisis would have happened?
Date: Sat Jul 26 11:11:18 2008
Sender: AJ Perko
Gramms tool had nothing to do with investor guidelines or types of loans.
It had to do with removing regulation, and accountability. (See Enron). Prior
to Gramm's bill, it was general knowledge what a banks lending power and how
much assets they had to cover their bets.
***** His bill in essence, kicked the auditing out of the office and turned the
housing market into a "Futures Market" where many of the investors didn't have
the funds to cover any losses**** where before they would have had to insure
their bets with Credit Swaps.
Private Banks just sell programs, the programs are created by the secondary
market. Which is comprised of Fannie, and Freddie for conventional financing.
Then private investors, hedge funds etc.. for all the subprime and alt A
stuff.
They buy the programs, the create the guidelines. If they aren't buying
banks aren't selling them. It's a more complex model than that though. There
are buybacks for early foreclosed loans, sometimes the hedge funds own the
banks, some banks are required to carry their own paper for _________ amount of
months.
I suppose it can be considered genuis for the 5% of the population who got
rich, for the other 95% it was incredibly stupid.
So that makes Phil Gramm a greedy profiteer who betrayed his country or an
idiot.... take your pick.
Date: Sat Jul 26 11:16:11 2008
Sender: AJ Perko
"Isn't Gramm's financial plan of the 90's simply a tool that was used by the
banks while purposely allowing loans to folk who could not afford them because
they were being directed to do this?"
I think you'll find more foreclosures are 2nd homes and investment
properties- not primary residences.
This was mostly perpetuated by the Republicans deregulating the finance
institutions, and then really encouraging a borrow and invest in a bubble
economy-- so similar the the late 20's... right before the stock market crash.
(Ie.. for about 5 years Bush got to say.. wow look how strong our economy is!!!
while never mentioning all the capital driving it was BORROWED)
Date: Sat Jul 26 11:29:40 2008
Sender: William Johnson
" So that makes Phil Gramm a greedy profiteer who betrayed his country or an
idiot.... "
Or, he had another reason (trying to get rich) and this current result
wasn't a planned-in cause. I wouldn't say he was an idiot, but he either missed
this loophole, or intended it, not knowing the possible end result. But, I
don't think it was a betrayel of his country.
" This was mostly perpetuated by the Republicans deregulating the finance
institutions, and then really encouraging a borrow and invest in a bubble
economy-- "
I don't think mostly would fit. Wasn't it Clinton who signed legislature
that made this legal? Didn't he also come out with a directive to sell more
houses to 'not currently qualified' recipiants?
I guess he didn't realize the ultimate results either of his goal to have
more Americans in houses.
Date: Sat Jul 26 11:52:57 2008
Sender: AJ Perko
I don't know who signed it, it was a footnote in a Omnibus Bill, that no one
read because it was signed 2 days before the Bush-Gore Presidential verdict.
(Intentionally)
Point being Republican or Not..... when you incorporate a totally unregulated
investment model into your economic theory you are going to have spikes and
crashes.
and when it crashes you start at the top with blame, not the bottom.
1) American Consumers took risks 92% succeeded, 8% failed (so far) they knew
the outcome would be forclosure, they'd lose their house, have to rent for a
few years and would start over. But for many it was worth the risk to buy a
house you couldn't afford. A 150K house in 2003 was a 400K house in 2006 in
Florida... I don't blame someone for taking that chance.
2) Bankers and Lenders took their risk, some got rich, maybe closed up shop
and failed...(and sometimes still got rich anyway). Win some- lose some,
they'll start over. Many of these lenders were just a few guys with a
marketing plan, using someone elses money.... again, I don't blame them for
taking a chance
3) It's the big investors behind the scenes who can't handle the consequences
and now the government is having to bail out these same pricks who pushed the
non-regulatory policies through. now they want to point fingers, claim
everyone is corrupt like they are some victim? Thats the part that pisses me
off.
Date: Mon Aug 4 06:34:28 2008
Sender: William Johnson
" and when it crashes you start at the top with blame, not the bottom. "
Phil Gramm wasn't at the top (at any time). Why is he being blamed?
Date: Mon Aug 4 09:01:10 2008
Sender: AJ Perko
sure he was- consumers and small banks don't send interest groups to Washington
and lobby to remove oversight from the financing industry.
This isn't just my opinion. If you look beyond the shallow CNN news
articles or some headline on Yahoo and look at the more intellectual sources
like the Wall Street Journal on Money magazine and things like that- much of
what they think is this "foreclosure mess" is just part of an economic model
and should be left alone to fix itself.
the economic model being Gramm's version of unregulated Capitalism, which so
many of the countries wealthiest support- problem being, they always cry for
help (and get it) whenever it fails.
Date: Mon Aug 4 14:52:59 2008
Sender: Anthony Young
"privatize the profits but socialize the risks" seems to be the motto of wall
street
Date: Tue Aug 5 05:51:44 2008
Sender: William Johnson
" sure he was- consumers and small banks don't send interest groups to
Washington and lobby to remove oversight from the financing industry. "
Right, they send them to the senators and congressmen who create laws that
achieve their goal. Then the president agrees with them. There are two groups
above Gramm who deserve the blame; other senators (who agreed with him) and the
president (who wanted the results of his idea).
By your theory, you can no longer blame Bush for the mess in Iraq. You must
now blame every senator who demanded action against Saddam during the late
90's. The president only wanted to go in, the senators demanded it. So, the
mess isn't Bush's fault, but the senators who demanded he go in. Just like this
mess, not the president's fault, but the senator who thought of the idea?
Date: Tue Aug 5 08:07:12 2008
Sender: AJ Perko
Do you know anyone who went to Washington and lobbied to Congress to remove
auditing and oversights from major lending institutions?
Nope- neither do - I and I deal with a lot of home owners, I don't know anyone
who played a part in the creation of lending guidelines or bank regulating
legislation.
I suppose you could blame the people who signed the Big Omnibus bill, they
should have read the entire 364 page document for new pork. Because it's
commonly accepted Gramm pulled a fast one by slipping that stuff in there at
the absolute last minute.
If you don't like my opinions on this, again you can find essentially anything
I've said in any journal.
Only the conservative Republican ones will claim the model still works and
claim it's just an "adjustment period" and the liberal ones will say it is
obviously flawed.
Date: Tue Aug 5 08:11:21 2008
Sender: AJ Perko
PS... Bush only had congressional support for Afghanistan-
A resolution was passed that gave Bush authorization to disarm Saddam Hussein
if he had WMD's.
The Bush Administrations fabrication (see: Scott McClellan.. he would know)
of that WMD evidence was pure fraud. He did not have Congressional approval
for this war in Iraq- as there were NO WMDS!
Date: Tue Aug 5 10:48:54 2008
Sender: Brian Dust
http://www.reportonbusiness.com/servlet/story/RTGAM.20080804.wworld0805/BNStory/Business/home
Date: Tue Aug 5 12:57:52 2008
Sender: AJ Perko
thats a pretty good article....
I pretty much agree with all of it.
Date: Tue Aug 5 18:09:10 2008
Sender: William Johnson
" I suppose you could blame the people who signed the Big Omnibus bill "
Or you could blame the president who signed it into law. After all, it is
his job to know what he's doing and not rely on others to tell him any intel he
needs to be aware of, right? Oh, wait... that darn faulty intel played a part
in the WMD mess. Blame Bush, blame Clinton. Like you said, go to the top to
assign blame.
Date: Tue Aug 5 19:04:44 2008
Sender: AJ Perko
If you can't see the difference between someone's designed intention...
(Phil Gramm on the deregulation of finance or GW Bush on the invasion of
Iraq) and the rest of the legislators missing oversight or failing to
understand the true nature of a proposal
Then we have nothing left to discuss here. Plain and simple, it was Phil
Gramm's deregulation bill that opened the door for the mortgage mess today.
Sometimes I wonder how many terms? how many years? decades? centuries? it
would take before Conservatives like yourself accept accountability for
anything.
Date: Wed Aug 6 05:49:28 2008
Sender: William Johnson
" If you can't see the difference between someone's designed intention... and
the rest of the legislators missing oversight or failing tounderstand the true
nature of a proposal Then we have nothing left to discuss here. "
If you can't see the difference... Clinton demanded a program that would
allow unqualified people to purchase homes. Gramm provided that program.
Clinton signed that program into law. Gramm simply did what the president
demanded of his subjects. Clinton even bragged about how many previously
unqualified people now owned homes. That was one of his main goals while
president. Now, his idea turns out to be a nightmare for the mortgage system
and you want to blame the republican, simply because you refuse to admit a
democrat was at fault.
I see why you don't want to discuss it anymore. Because you're wrong.
Clinton demanded this bill, Gramm provided it. Gramm gets rich because of it
and the mortgage industry is nearly ruined because of Clinton's stupid idea for
fame and glory and you blame ONLY Gramm? OK, let's not talk about it anymore.
Date: Wed Aug 6 11:24:22 2008
Sender: AJ Perko
"Clinton demanded a program that would allow unqualified people to purchase
homes. Gramm provided that program."
where are you getting this from? The development of the newer programs didn't
even start to evolve until the early 2000's. Peaking with the most liberal in
around 2005.
Not to mention the programs with 8% failure (subprime) were not the problem-
it was the deregulation which allowed banks to lend with out having the
capability to insure their loans.
This is the best article you will read on the topic. In fact, I will probably
start using it as a reference for my clients.
Regardless of Clintons push- it wouldn't have collapsed if not for Gramm's
economic moves.
seriously- this is very well written as a historical document, though calling
subprime loans racist is retarded.
http://www.ickypeople.com/2008/04/bill-clinton-major-part-in-subprime.html
Date: Wed Aug 6 17:48:29 2008
Sender: William Johnson
" Regardless of Clintons push- it wouldn't have collapsed if not for Gramm's
economic moves. "
Ok, since the president signed the bill, that he wanted to have, that would
allow unqualified borrowers to get loans we should blame the guy who wrote the
bill that the president wanted? Of course that makes sense. Now, since the
senators wanted to go into Iraq and remove the threat of WMD's from Saddam we
should now stop blaming Bush, right? Isn't that your theory? Blame the guy with
the ideas...not the guy who performed the actual act?
Date: Wed Aug 6 22:49:47 2008
Sender: AJ Perko
What is an "unqualified" borrower?
There is no "qualification" in the constitution or law. It is a fluid
interpretation based on risk/reward decided by someone who eventually will hold
the investment.
Clinton wanted more lenient programs, however, the system should have handled
an 8% failure rate, and it would have had Gramm, Citibank, and all the other
finance lobbysist not bought off all regulation and oversight.
Heck you had banks loaning at 40:1.... meaning banks that had 1 million, were
loaning 40x that at one point in 2006.
- That was totally a product of the Gramm legislation.
Date: Thu Aug 7 22:08:01 2008
Sender: William Johnson
" What is an "unqualified" borrower? It is a fluid interpretation based on
risk/reward decided by someone who eventually will hold the investment. "
Right. Based on whose (law writer/law signers) priority for giving loans?
Date: Fri Aug 8 12:20:17 2008
Sender: AJ Perko
thats not a law.
We could start a bank today and lend on whatever crazy guidelines we wanted
today.
- Granted no investors will buy our portfolios.
The difference was in 1998 we would have actually have had the money to lend.
After Gramm, in 1999 we could have had 1 million dollars, and lent 40
million.
(based off the intention to sell the loans to investor)
Date: Sun Aug 10 05:52:49 2008
Sender: Brian Dust
Here's a link for another interesting column relevant to the subject:
http://www.reportonbusiness.com/servlet/story/RTGAM.20080808.wdecloet0809/BNStory/robColumnsBlogs/home
Date: Sun Aug 10 19:27:09 2008
Sender: AJ Perko
whats irritating, is the top execs claiming they didn't see it coming.
Everyone knew it was a bubble, I get broker correspondence from Citibank
talking about making the most of the bubble.
They knew it was a risk...
now they are crying for help- especially the scumbags at Citibank, who were
the driving force in creating the environment.
Date: Mon Aug 18 19:42:51 2008
Sender: Brian Dust
While the book reviewed in this link (CHAIN OF BLAME: HOW WALL STREET CAUSED
THE MORTGAGE AND CREDIT CRISIS) is unlikely to make my reading list, the
subject remains interesting:
http://www.businessweek.com/magazine/content/08_32/b4095080483312.htm
Date: Tue Aug 19 15:52:06 2008
Sender: Brian Dust
This link is for an article about people looking for bargains in the real
estate market. Mostly I thought it would appeal to AJ, but others may find it
interesting too.
http://www.businessweek.com/magazine/content/08_33/b4096066689672.htm
Date: Tue Aug 19 18:33:58 2008
Sender: AJ Perko
that first article is crazy, I didn't realize lenders were doing some of that..
wow.
The 2nd one, is funny and I know that building...
"My position is that it will require three to four years to reach this value,
which suits me fine," Durliat says. It will take that long for the Miami market
to work through its glut of inventory, he adds.
I totally disagree with Durliat. The Miami Condo market is so over-saturated
with units, 3 to 4 years is a very positive outlook. The lender will only
give him 60% of the value, because any lenders left in business aren't taking
any chances.
I'd say 7 to 8 years to reach that value for a Miami Beach condo.
Date: Tue Aug 19 19:17:41 2008
Sender: Brian Dust
AJ, with the second link, to the right of the article there's a "RELATED ITEMS:
why he's not buying it", a gent named John Burns (President of John Burns Real
Estate Consulting), agrees with your view. He's predicting a 2014 recovery.
Date: Tue Aug 19 19:30:49 2008
Sender: AJ Perko
different times for different areas....
the problem with the Miami Beach Condo market is the same one we were asking
during the boom?
Who buys a million dollar condo?
1) rich people who can afford it.
2) investors who hope to flip it to make big bucks- and they probably can't
afford it.
- Considering about 50% of the purchases were catagorie #2, with normal
appreciation (not the crazy 40% per year)- you have to ask? Are there enough
rich people down here who simply want a miami beach condo to keep up with the
thousands of units that were quickly build between 2000-2007?
I don't think there are.
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