#OccupyHomes. Radical proposal: Massive debt relief to kick-start economy. By ReutersSunday, October 2, 2011 21:09 EDT By Jennifer Ablan and Matthew Goldstein NEW YORK (Reuters) – More than three years after the financial crisis struck, the economy remains stuck in a consumer debt trap. It’s a situation that could take years to correct itself. That’s why some economists are calling for a radical step: massive debt relief. Federal policy makers, they suggest, should broker what amounts to an out-of-court settlement between institutional bond investors, banks and consumer advocates – essentially, a “great haircut” to jumpstart the economy.
What some are envisioning is a negotiated process in which cash-strapped homeowners get real mortgage relief, even if it means forcing banks to incur severe write-downs and bond investors to absorb haircuts, or losses, in some of the securities sold by those institutions. “We’ve put this off for too long,” said L. At the start of the crisis, household debt as a percentage of gross domestic product was 100 percent. Reuters. Countrywide protected fraudsters by silencing whistleblowers, say former employees. ‘Fund the loans’ Countrywide had been slower than many other mortgage lenders to fully embrace making subprime loans to borrowers with modest incomes or weak credit. By 2004, though, Countrywide had become a player in the market for subprime deals and many other nontraditional mortgages, including loans that didn’t require much documentation of borrowers’ income and assets.
These loans were part of the plan for meeting its CEO’s audacious goal of growing his company from a giant to a colossus. Mozilo had vowed that his company would double its share of the home-loan market to 30 percent by 2008. Some former Countrywide employees say the pressure to push through more and more loans encouraged an anything-goes attitude. In one example, Countrywide approved a loan for a borrower whose application listed him as a dairy foreman earning $126,000 a year, according to a legal claim later filed by Mortgage Guaranty Insurance Co., a mortgage insurer. Markopoulos couldn’t be reached for a response. New housing complex will offer resources for ‘grandfamilies’ House prices fall for 15th month in a row | Money. Further evidence of a double dip in the housing market is published today in a survey by property data specialist Hometrack, which revealed that prices fell by 0.1% in September, the 15th consecutive month of price falls.
A sharp fall in the number of new buyers, down 2.6% on the month, and a rise in the gap between asking prices and actual sale prices, point to a deepening recession in the market, Hometrack said. "As the gap between supply and demand widens, we are likely to see an acceleration in the level of price falls as we head towards the end of the year," said research director Richard Donnell, who forecast that falls will be heaviest in the north and north-east. The brief recovery that began in mid-2009, largely in London and the south-east, has petered out and nearly all the house price indicators are now showing an increasingly distressed market.
The Hometrack data reveals that the remaining buyers in the market are making offers substantially below asking prices. Foreclosures Are Killing Us. California Pulls Out of Talks on Foreclosure Settlement. Arizona foreclosure assistance program turns to short sales as ‘best tool’ Thursday, Sept. 29, 2011 By Joshua Armstrong Cronkite News Saving Save Our Home AZ Save Our Home AZ, originally meant to help with mortgages, now offers other aid to help homeowners avoid foreclosure. • Principal Reduction: Lowers principal on loan as much as $50,000 (with matching contribution from lender and second mortgage settlement) How many approved (by Sept. 20): 3 Hardest Hit Fund used: $62,947 • Second Mortgage Settlement: Provides up to $5,000 to settle second mortgage, can be combined with other programs How many approved: 11 Hardest Hit Fund used: $41,692 •Unemployment Mortgage Assistance: Provides up to $50,000 for monthly payments - maximum $2,000 per month for 24 months - and rescue payments (with second mortgage settlement) How many approved: 154 Hardest Hit Fund used: $3.5 million •Short-Sale Assistance: Pays 3 percent in closing costs and provides up to $4,500 in transition expenses (announced Sept. 21) How many approved: N/A Hardest hit Fund used: N/A Arizona Housing Woes.
A Frightening Satellite Tour Of America's Foreclosure Wastelands. Federal Reserve continues to artificially lower mortgage rates to keep shadow inventory values inflated for banking allies. Source: Dr. Housing Bubble The Federal Reserve monetary policy hammer approaches every problem as if it could be solved with its arsenal of interest rate nails.
If low rates were the solution to a healthy economy we wouldn’t be in this financial mess. Remember those teaser 1.25 percent mortgage rates? What about our near zero Federal Funds Rate (FFR) that spurred the housing bubble? Repeating history, the Fed is actively trying to make mortgage rates even cheaper as a method to pull us out of this financial crisis. Why low rates will fail the American economy You always get a few comments about how wonderful low mortgage rates have become and how they will save the economy now that we have moved a few basis points down. Read Full Article Here... Left vs. White House over mortgage deal - Edward-Isaac Dovere. Our Guide to Obama’s Floundering Foreclosure Programs. It's a sobering list. Obama himself has called his approach to the foreclosure crisis one of his biggest mistakes [4] dealing with the recession.
Overall, the foreclosure programs have failed to reach more than a fraction of the homeowners they were designed to help. Here are the depressing details: Programs That Have Been Enacted Plan: Help millions of homeowners by encouraging servicers to lower mortgage payments Obama launched his "homeowner bailout," Making Home Affordable [5], in the spring of 2009, with the aim of helping at least 3 million to 4 million homeowners avoid foreclosure. Reality: Mistakes, lost documents, lax oversight; billions remain unspent As we've detailed, the program has been marked by deep dysfunction [6].
Meanwhile, as of August, only about 816,000 homeowners [9] had received loan modifications through the program, or fewer than one in four of those who applied [9]. Plan: Allow millions of homeowners to refinance their mortgages at lower interest rates. Attorneys General Settlement: The Next Big Bank Bailout? | Matt Taibbi.