California Assemblyman Ted Lieu, D-Torrance, during the recent November special session introduced his proposal for a 120-day foreclosure moratorium. Lieu on Nov. 14 introduced the California Foreclosure Prevention Act, which was “designed to force Wall Street to help the citizens of ‘California Street.’” In addition to the moratorium and an exception for lenders with “comprehensive” loan modification programs, the proposed act would require “regular reports” from lenders on loan modifications and foreclosure reductions.
Yes, his name really is Lieu…as in, “Deed-in-Lieu”. He is another politician that thinks that if foreclosures just magically stopped then the economic collapse would stop.
Lieu also released a press statement Thursday again urging action to prevent foreclosures and calling into question the soundness of Treasury Department secretary Henry Paulson’s strategy to boost the economy and alleviate the credit crunch. The problem, Lieu said, is not borrowers’ inability to buy homes but the lack of assistance given to them to stay in their homes. “In other words, ‘It’s the foreclosures, stupid,’” he said.
Ok, picking a fight with Henry Paulson is the soup-du-jour. It doesn’t get any easier than that. When I feel bad about myself, I just think “At least I’m not Henry Paulson”.
Here is the icing on the cake:
“Home loan defaults and all its consequences are causing the credit and liquidity crisis, not the other way around. Until we solve the foreclosure problem, we will continue to have credit and liquidity issues.”
Now I understand. If we just out-law the act of “default” then the problem just goes away. It’s so simple that I missed it. Good thinking Mr. Lieu. While we are at it, let’s just out-law drug addiction and bad breath. We could do without them too.
I had a hard time coming up with a title for this blog without using “Hitler” or “Nazi” in the title. I don’t really feel like showing up under those keywords on google searches. Never the less, this video has almost 1,000,000 views on Youtube. It’s pretty funny.
That’s an oldie but goodie. This is video of Peter Schiff from November 20, 2008. His counter-point suggests that the auto companies should be bailed out because, in his opinion, the “workers have already compromised enough”. As if that really matters.
This second video features a future manufacturing ghost town. It is sad. But one thing that I do not understand is how does keeping a failing company running, benefit anyone long term. If the company keeps paying people too much and making cars that no one wants, then what good does it do to subsidize it?
The one guy actually argues that the bail out is “justified” because the worker did nothing to “deserve” this. Isn’t that applying 4th grade logic to a pretty advanced problem? As a matter of fact, I don’t think my dad would have let that logic fly in 4th grade, never mind amidst a global economic crisis.
Not even NAR can cheer lead for this existing homes sales report. From NAR :
Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 3.1 percent to a seasonally adjusted annual rate1 of 4.98 million units in October from a downwardly revised pace of 5.14 million in September, and are 1.6 percent below the 5.06 million-unit level in October 2007.
NAR Chief Economicst, Lawrence Yun, had this to say:
“Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” he said. “We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.”
Unfortunately, it does not seem likely that home price “stabilization” is anywhere on the radar. Mr. Yun’s own quote should prove that “stabilization” is not likely. Some experts (like him) estimate that up to 35-40% of existing home sales from October were distressed asset sales which include foreclosure sales and short sales.
The question “Should I pay my mortgage” implies that you can pay your mortgage but wonder whether it is beneficial for you to pay it. To me, this is an exclamation point on what a strange world we live in. As more and more home owners realize that they are completely upside down in their property, the question of the optional mortgage becomes more common. This is the moral hazard that many threatened was coming.
Happy holidays, from your friends in the U.S. government — at least, that seems to be the message sent Thursday afternoon by both Fannie Mae (FNM: 0.30 -9.09%) and Freddie Mac (FRE: 0.41 -16.33%), both of whom said they will suspend foreclosures and evictions on occupied homes until Jan. 9 of next year. The twin mortgage finance giants said the decision to suspend foreclosures for the next six weeks came as part of an effort to work with servicers to implement the so-called streamlined modification program, recently announced by government officials and the Federal Housing Finance Agency.
It is becoming more clear that no amount of intervention can slow the housing bust. According to HousingWire:
Severe delinquencies on recent-vintage Alt-A RMBS are quickly getting worse than expected, Moody’s Investors Service said earlier this week; the rating agency said worsening trends in Alt-A have forced it to undertake a revision of lifetime loss projections for 2006 and 2007 vintages, as a result. Moody’s last revised its loss expectations for the Alt-A sector six months ago.
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