[newarts]

.... We need more roads, bridges and public transportation. Our need for more single family homes is questionable.

I lean towards housing related activity in part because I think there is more labor fraction per dollar spent in the building trades than in transportation (not to say that transportation & infrastructure shouldn't be pursued.)

So I guess I'm back to supporting a publicly underwritten effort to improve housing energy efficiency... that would put a lot of people to work as it is quite labor intensive. Plus it'll pay off in long run energy savings as well as stimulate the economy and get people off the streets.

[GeneV]

I lean towards housing related activity in part because I think there is more labor fraction per dollar spent in the building trades than in transportation (not to say that transportation & infrastructure shouldn't be pursued.)

So I guess I'm back to supporting a publicly underwritten effort to improve housing energy efficiency... that would put a lot of people to work as it is quite labor intensive. Plus it'll pay off in long run energy savings as well as stimulate the economy and get people off the streets.

Do you have some figures to show that housing construction produces more jobs than building roads, bridges, rails, etc.? I honestly don't know. It seems to me that jobs have to be balanced with need for the end result. Our infrastructure has more serious needs than our housing in most parts of the country.

Expanding single family housing just creates demands for more infrastructure, and it is not a very energy-efficient way to live. Here is where that mortgage interest deduction may, again, be promoting something that does not make so much sense today.

By the way, on the second point, this report is a superb and readable source for how much energy there is to be gained with efficiency in buildings. http://www.mckinsey.com/en/Client_Service/Electric_Power_and_Natural_Gas/Lat...ll_report.ashx

In residential, half the use is appliances and lighting, so I'm not sure that the payoff with retrofits and jobs is there, but I have not finished this very detailed report.

[newarts]

Do you have some figures to show that housing construction produces more jobs than building roads, bridges, rails, etc.? I honestly don't know.

I honestly don't know either but think the capital costs of heavy construction are likely a greater fraction of costs than for light construction like building repair and maintenance.

It seems to me that jobs have to be balanced with need for the end result. Our infrastructure has more serious needs than our housing in most parts of the country.

Certainly infrastructure is important and should be attended to - but we need to put carpenters and other craft people back to work too.

Expanding single family housing just creates demands for more infrastructure, and it is not a very energy-efficient way to live. Here is where that mortgage interest deduction may, again, be promoting something that does not make so much sense today.

True. I was thinking of making better use of our existing housing and putting people to work in that endeavor rather than expanding single family housing.

By the way, on the second point, this report is a superb and readable source for how much energy there is to be gained with efficiency in buildings. http://www.mckinsey.com/en/Client_Service/Electric_Power_and_Natural_Gas/Lat...ll_report.ashx

In residential, half the use is appliances and lighting, so I'm not sure that the payoff with retrofits and jobs is there, but I have not finished this very detailed report.

Thanks for the comments and reference. If there are better ways to give people opportunities for productive work I'm all for them. Even work like the CCC and WPA did was better than no work at all but I don't expect to see direct federal funding for artists or work crews to build public parks anytime soon.

[GeneV]

Well, now the NYT editorial board does lean toward principal reductions for homeowners with troubled mortgages. http://www.nytimes.com/2011/08/22/opinion/homeowners-need-help.html?_r=1&hpw I'm not sure how I feel about that. From the bank's standpoint, reducing interest reduces the value of the loan the same way as reducing principal, but I start to have the same feelings Jim had when they talk about reducing the principal of the loan.

[jeffkrol]

I still consider it "psychologically odd" that we accept paying off the banks but not the people......... Each has the stigma of "rewarding" the "culprit" yet one is err.. tolerated and the other is demonized......
funny flat world we live in........

[newarts]

I still consider it "psychologically odd" that we accept paying off the banks but not the people......... Each has the stigma of "rewarding" the "culprit" yet one is err.. tolerated and the other is demonized......
funny flat world we live in........

One can imagine a lending tradition in which lender and borrower share in profit & loss on the collateral.

I believe this is the basis for at least some Islamic lending (which doesn't permit interest on loans.)

For some reason buried deep in our culture's tradition, both capital loss and gain accrue to the borrower.

While it might be nice to have property values "marked to market" and splitting any loss/gain between both parties of a mortgage, it'd be a regulatory nightmare I suppose. On the other hand it seems stupid to carry wrong values on the books....because then the books are a sham in my view.

However a friend who is in finance points out that the value of a loan to a bank is the income it generates and the actual value of the collateral comes into play only rarely.

[jeffkrol]

Which brings up the point marking "bad loans" as future profit, when in fact many are never going to generate that direct profit (foreclosure and resale exempted here) is a fools errand and part of the problem.. They don't want to "lose profit" on something that will never be profitable..........

But stupid human psychology.................

DON'T even THINK of giving money to the "little people".......... heavens to betsy that's socialism........and rewards "bad behavior"........ Of course the "little people" would have paid it back IN the economy......how much of this made it you "your" economy???

Bloomberg reporters Bradley Keoun and Phil Kuntz catalog the Fed's $1.2 trillion in "secret loans" to banks, including Bank of America, JPMorgan, and Goldman Sachs. Morgan Stanley accepted as much as $107 billion, with Citigroup and Bank of America taking more than $90 billion each in public money to finance their operations amid the private lending freeze. A beautiful interactive chart provided by Bloomberg lets you watch the bank's loans pile up in the nadir of the credit crunch, September 2008, and wind down through 2009.

http://www.theatlantic.com/business/archive/2011/08/the-feds-secret-12-trill...street/243938/

---

Last edited by jeffkrol; 08-22-2011 at 09:33 AM.

[GeneV]

I still consider it "psychologically odd" that we accept paying off the banks but not the people......... Each has the stigma of "rewarding" the "culprit" yet one is err.. tolerated and the other is demonized......
funny flat world we live in........

I'm not really inconsistent. I would have bought the loans from the banks at a discount and then renegotiated the terms with the borrowers, getting them out of the subprime trap. That is not the same a buying them a house or paying their debt. The banks take a loss and the borrowers may as well, hopefully without a catastrophic crash.

[newarts]

I'm not really inconsistent. I would have bought the loans from the banks at a discount and then renegotiated the terms with the borrowers, getting them out of the subprime trap. That is not the same a buying them a house or paying their debt. The banks take a loss and the borrowers may as well, hopefully without a catastrophic crash.

It would seem fair that lender and borrower share in profit or loss on principal/collateral at the time of resetting terms. After all, both parties were wrong when they agreed on the value of the collateral. We presume they acted in good faith

[jeffkrol]

I'm not really inconsistent. I would have bought the loans from the banks at a discount and then renegotiated the terms with the borrowers, getting them out of the subprime trap. That is not the same a buying them a house or paying their debt. The banks take a loss and the borrowers may as well, hopefully without a catastrophic crash.

See that was the problem, buying them "at a discount" from the banks.. THEY still don't accept that they will lose more than they will gain in the current situation...

The fed would have had to buy them at face value.. discounted it to the owners and then watch the fury over "socialized housing"....

none of the solutions is psychologically acceptable to the little people.. IF you told the banks you were going to clear there books to start over, they would take it in the proverbial heartbeat UNLESS they STILL believe they could get best of both worlds (like they sort of did) Get paid by the fed, get paid by the "good lenders", and get paid by the foreclosures (or loss balanced against the 2)...........

Only "edge" that would have worked was.. Hey so the fed bought a few houses for people.. look yours is now increasing in value again.......
So the fed bought a few houses for people, look their refinancing to keep afloat AND are feeding money into YOUR economy...


See we are still too stupid to do the right thing, for the right reason and wait a bit for the right outcome........

[jeffkrol]

It would seem fair that lender and borrower share in profit or loss on principal/collateral at the time of resetting terms. After all, both parties were wrong when they agreed on the value of the collateral. We presume they acted in good faith

FBI — Mortgage Fraud

From foreclosure frauds to subprime shenanigans, mortgage fraud is a growing crime threat that is hurting homeowners, businesses, and the national economy. We have developed new ways to detect and combat mortgage fraud, including collecting and analyzing data to spot emerging trends and patterns. And we are using the full array of investigative techniques to find and stop criminals before the fact, rather than after the damage has been done............................


Mortgage fraud continued at elevated levels in 2010, consistent with levels seen in 2009. Mortgage fraud schemes are particularly resilient, and they readily adapt to economic changes and modifications in lending practices.

Mortgage fraud perpetrators include licensed/registered and non-licensed/registered mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, bank account representatives, and trust account representatives.

YET WHO got rewarded and who is "paying" and you worry about a few "free" homes... Those non-free homes are costing us a fortune..

Penny wise pound foolish.........

DISCLOSURE : I wouldn't get one..........

Addendum.. carrots: give everyone w/ 'mortgage holiday" of a month to a year.. It's the fed's money anyways..............

The current and continuing depressed housing market will likely remain an attractive environment for mortgage fraud perpetrators who will continue to seek new methods to circumvent loopholes and gaps in the mortgage lending market. These methods will likely remain effective in the near term, as the housing market is anticipated to remain stagnant through 2011.

10bil = 100,000 $100,000 homes.........

[jeffkrol]

1) I have found another source from 9/2007 having 20.4 and a break down by states, region and metropolotian areas (some of these details do not add up exactly)

2) Another source has 55.4 Million Homes.

3) A US Census 2000 document has the total value of 6.5 Trillion.


4) To pay for the Bush years we need to give 115 million taxpayers a annual raise of 62,000 dollars and then over the next 8 years apply a marginal tax of 20% to generate enough revenues to meet this cost.

$11,500,000,000,000 Bush Term Cost

$230,000,000 BTC/Taxable Population with 50,000 income

$100,000 With 115,000,000 Payers to be Taxed this is the amount (cost) over 8 years

$12,500 x/8 Amount of tax per year over 8 years

$62,500 5x Average tax rate of 20% needs 5 times in income to generate

$5,750,000 Payed by the 2 Million in the Inaugural


$230,000,000,000,000 These raises could cost business and government works alike assuming a 5% return on invested captial

$20,500,000,000,000 2007 Compare with total worth of all homes in the USA compare with ($35T with $13T as mortgages and 2 Trillion Recent Loss)

Note all these numbers are hard to get so please supply what have, since these problems really can't be this bad?

Read more: What is the total number of home mortgages in the US, and the total value of the motrtgages? | Answerbag What is the total number of home mortgages in the US, and the total value of the motrtgages? | Answerbag
this one's "fun"

http://www.scribd.com/doc/18187868/US-Residential-Mortgage-Report

As one can see, this time it is not subprime mortgages but instead Alt-A and optionAR M’s that are about to be refinanced. As mentioned in Business Insider recently, the new wave of resets concerns borrowers with originally better credit scores than subprime holders, however they have pursued similar strategies. In essence, they have financed loans with low starting rates and when time has come to refinance there are three options basically. First, you can sell the house (not an option for most homeowners since LTV>100%). Secondly, you can work out a new comparable deal (not likely today with delinquencies and foreclosure rates rocketing). Thirdly and what increases in popularity with worrying speed is that you can just walk away. This “strategic default” as the media calls it has rocketed during the first half of 2009 and now amounts to 26% of all defaults across the US. According to a study from Northwestern University and

University of Chicago, there is an 82% chance that someone who knows a person that has defaulted strategically will do it themselves. In other words there is considerable risk for a negative domino effect if this kind of defaults continues.

Nowadays, according to a Reuters article the average American just “owns” 8% of their home (8% equity,

92% loan). However, this includesall house owners even them with no mortgages, meaning that the average U.S mortgage holder actually have negative home-equity. If we look closer at the numbers from the Freddie Mac report (bar graph on p. 5) an 8% equity stake today would mean the U.S housing market has shrunk to a total value of $12.8tn from $19.3tn a year ago, all else being equal. Of the $12.8tn, approximately $11.8tn would be the $ amount of mortgages outstanding and the remaining one trillion the equity stake. If the numbers above are correct the U.S housing market has declined in value by 33.7% in juston e year and $7.7tn worth of home equity is gone. Both the Case-Shiller U.S HPI as well as the Case-Shiller 20 year composite index indicates shrinking values equalling 20-25% over the last year

[thazooo]

Turning the properties over to investors in lots to be turned into Rental Units sounds great on the surface. The mind set of the investors in my area of the country is dismal at best. Get the property cheap, give it a quick paint job ( I call it putting lipstick on a pig ), and get it rented. Don't maintain it, don't be concerned about who moves in or what they do to the neighborhood, and when that tenant moves out, Repeat. After several years of this process you have a worn out house sitting in the middle of a neighborhood of owned houses. Property values drop and the investor could care less. The Investors to busy looking for a federal grant to fix up the property so the cycle can start over. I know because I started my business working for Investors, applying that Lipstick on the Pig. I've long since left that part of the business behind. But the Investors are still playing the game.
It's much better to leave the house sit until a buyer comes along. At least the holding companies cut the grass and keep the house presentable. Investors won't.

[jeffkrol]

Funny comment.............

Mortgages (2004-2007) are not like normal loans
Megan argues that defaulting on your mortgage is not OK just because your house is underwater. Having the property secure the debt does not give you a free put option.

Ordinarily I would agree, but not for loans made during the housing bubble. During that time, lenders were not concerned about the borrowers ability to repay (see NINJA), but were, in collaboration with the borrower, making a bet on rising housing prices.

Since ability to repay was not part of the loan decision, there is no obligation to pay on the part of the borrower.

winterspeak.com

[GeneV]

Funny comment.............



winterspeak.com

As long as they were for owner-occupied homes I tend to agree. However, for those who thought they would get rich based on a real estate seminar,... not so much. At the height of the housing bubble (2006) 36% of the homes sold were second homes, mostly for investment. The default rate on these homes is more than twice that of owner-occupied.