<![CDATA[Hedgehogs.net: '' related content]]> http://www.hedgehogs.net/tag/subprime+mortgage+crisis?view=rss http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402557/wmi-liquidating-trust-files-lawsuit-against-former-directors-and-officers-of-washington-mutual Thu, 23 Oct 2014 16:48:27 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402557/wmi-liquidating-trust-files-lawsuit-against-former-directors-and-officers-of-washington-mutual <![CDATA[WMI Liquidating Trust Files Lawsuit Against Former Directors And Officers Of Washington Mutual]]>

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http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402491/goldman-sachs-set-to-shun-uk-banking-standards-review-council Thu, 23 Oct 2014 12:48:35 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402491/goldman-sachs-set-to-shun-uk-banking-standards-review-council <![CDATA[Goldman Sachs set to shun UK banking standards review council]]> 11402491 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402386/the-market-ticker--standards-and-down-payments-are-just-too-high Thu, 23 Oct 2014 08:09:08 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402386/the-market-ticker--standards-and-down-payments-are-just-too-high <![CDATA[The Market Ticker - Standards and Down Payments Are Just Too High?]]> You have to be kidding me -- this was just spewed at CNBS, and caused me to need a new keyboard.

read more...

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http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402281/postforeclosure-hell-garnished-wages-seized-assets-deficiency-judgments Thu, 23 Oct 2014 03:39:31 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402281/postforeclosure-hell-garnished-wages-seized-assets-deficiency-judgments <![CDATA[Post-Foreclosure Hell: Garnished Wages, Seized Assets, Deficiency Judgments]]> Walking Away" was the rage. (skip the adds and scroll down to my list of articles).

Back then, I frequently cautioned Before Walking Away Consult An Attorney, advice repeated in nearly every reference to the practice.

Walking away without declaring bankruptcy, especially with a recourse mortgage was always a dangerous practice.

Moreover, law is complicated because rules vary from state to state, and non-recourse loans often became recourse loans if refinanced.

Post-Foreclosure Hell

Unfortunately, Post-Foreclosure Hell is the sorry result for those who did not consult an attorney.
Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets.

By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago.

Using a legal tool known as a "deficiency judgment," lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come.

The most aggressive among the debt pursuers is Fannie Mae. Of the 595,128 foreclosures Fannie Mae was involved in – either through owning or guaranteeing the loans - from January 2010 through June 2012, it referred 293,134 to debt collectors for possible pursuit of deficiency judgments, according to a 2013 report by the Inspector General for the agency’s regulator, the Federal Housing Finance Agency.

It is unclear how many of the loans that get sent to debt collectors actually get deficiency judgments, but the IG urged the FHFA to direct Fannie Mae, along with Freddie Mac, to pursue more of them from the people who could repay them.
The article notes that Florida is one of the more aggressive states in pursuing "deficiency judgments". For example ...
Bank teller Danell Huthsing broke up with her boyfriend and moved out of the concrete bungalow they shared in Jacksonville, Florida. Her name was on the mortgage even after she moved out, and when her boyfriend defaulted on the loan, her name was on the foreclosure papers, too.

On July 5, a process server showed up on her doorstep with a lawsuit demanding $91,000 for the portion of her mortgage that was still unpaid after the home was foreclosed and sold. If she loses, the debt collector that filed the suit can freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off 2005 Honda Accord.
I specifically spotlighted Florida in Before Walking Away Consult An Attorney.

But it's not just Florida.

Reuters reports "Once financial institutions secure a judgment, they can sometimes have years to collect on the claim. In Maryland, for example, they have as long as 36 years to chase people down for the debt. Financial institutions can charge post-judgment interest of an estimated 4.75 percent a year on the remaining balance until the statute of limitation runs out, which can drive people deeper into debt."

Hundreds of thousands of people will soon be in extremely hot water because they failed to seek advice from an attorney, advice which may have cost only a couple hundred dollars in 2009.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com ]]>
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http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402210/what-happens-when-cash-is-no-longer-trash Wed, 22 Oct 2014 22:09:01 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402210/what-happens-when-cash-is-no-longer-trash <![CDATA[What Happens When Cash Is No Longer Trash?]]> Those who actually create value as opposed to chasing yield with nearly-free money will actually have some traction once the swamp of excess liquidity drains.

When those closest to the money spigots of the Federal Reserve can borrow billions for next to nothing, cash--laboriously saved from years of paychecks--is reduced to trash. What chance does a saver have in a bidding war for a house or other asset against a financier who can borrow essentially unlimited cash?

Answer: none. The saver can leverage his cash at best 4-to-1: a 20% down payment leverages a mortgage of 80% borrowed money. The financier can borrow as much he wants for next to nothing.

The saver will lose every bidding war, thanks to the excess liquidity created by the Fed and other central banks. The reason given for this vast expansion of credit is that if credit is cheap enough, people and businesses will put that nearly-free money to work.

The problem with cheap credit is that it does not flow to productive investments--it flows to safe yields. Launching a new product or service is risky, especially in a stagnant economy, so the safe way to play unlimited credit (i.e. liquidity) is to chase assets that reliably generate returns.

Consider housing as an example. If a saver wants to buy a house to rent out as an investment, he is going to be paying 4.5% or so for the 80% of the money he is borrowing via a mortgage.

The rental income has to exceed his costs--the mortgage, property taxes, maintenance, etc.--by at least 3%. Otherwise he might as well buy a long-term Treasury bond and earn the 3% without the risk of vacancies, unexpected expenses like a new roof, etc.

Since his mortgage costs 4.5%, the yield has to be considerably higher than 5% to make buying the house a good investment. Let's say the rental has to generate a return of 10% to yield a net return (after paying the mortgage, property taxes, etc.) of 3%.

The financier paying less than 1% for his borrowed money has an entirely different calculus. Since the cost of his borrowed money is so cheap, he can bid the asset price up and still earn a return above 3%. Raising the price of the house quickly raises the costs of owning for the saver, as the interest costs of the bigger mortgage eat away at the yield.

The financier can raise his bid by 25% and the additional interest on the nearly-free money is trivial.

The systemic result of excess liquidity (cheap credit) is bubbles in every asset class that yields a low-risk return. Buying low-yield assets is still profitable if you can borrow money for next to nothing.

Though the timing of the collapse of excess liquidity is unknown, we can safely predict excess liquidity will collapse because all extremes eventually revert to the mean. At some point assets reach such heights that even free money isn't earning a real (i.e. adjusted for inflation) return.

At that point, participants lose faith in the easy-money policies that have issued cheap credit as the cure-all for stagnation. The excess liquidity is still gushing out of central banks, but even financiers don't want any more as there's no way left to earn a return even with nearly-free money.

As correspondent Jay F. observed, the collapse of excess liquidity will be a positive development, as it will restore the equilibrium between cash that is saved and the real returns on assets.

"A worthy subject for your attention and treatment is how the collapse of credit liquidity is actually a very helpful thing for individuals who are real creators of real value-- as they now get to compete on a much more level playing field. I see this phenomenon unfolding all around us as overvalued assets and professions go on the chopping block to maintain the status quo. It's actually a very good thing."

Well said, Jay. Those who actually create value as opposed to chasing yield with nearly-free money will actually have some traction once the swamp of excess liquidity drains.



Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
go to Kindle editionAre you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.


And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.
Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.

Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube) 



NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Mark H. ($10), for your most-welcome generous contribution to this site-- I am greatly honored by your support and readership.

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http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401840/us-regulators-approve-eased-mortgage-lending-rules Wed, 22 Oct 2014 19:21:53 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401840/us-regulators-approve-eased-mortgage-lending-rules <![CDATA[U.S. Regulators Approve Eased Mortgage Lending Rules]]> 11401840 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401825/us-to-go-easier-on-mortgage-rules Wed, 22 Oct 2014 19:21:32 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401825/us-to-go-easier-on-mortgage-rules <![CDATA[U.S. to Go Easier on Mortgage Rules]]> 11401825 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401744/mba-mortgage-applications-increase-in-latest-mba-weekly-survey Wed, 22 Oct 2014 18:40:14 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401744/mba-mortgage-applications-increase-in-latest-mba-weekly-survey <![CDATA[MBA: Mortgage Applications Increase in Latest MBA Weekly Survey]]> From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey
Mortgage applications increased 11.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 17, 2014. This week’s results did not include an adjustment for the Columbus Day holiday. ...

The Refinance Index increased 23 percent from the previous week to the highest level since November 2013. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier....
...
“Continuing concerns about weak economic growth in Europe and a few US economic indicators that came in below expectations caused a flight to quality into US Treasuries last week, leading to sharp drops in interest rates,” said Mike Fratantoni, MBA’s Chief Economist. “Mortgage rates have fallen close to 30 basis points over the last four weeks. Refinance application volume reached the highest level since November 2013 as a result, and the average loan balance for refinance applications increased to $306,400, the highest level in the survey’s history.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.10 percent, the lowest level since May 2013, from 4.20 percent, with points increasing to 0.21 from 0.17 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Mortgage Refinance Index Click on graph for larger image.


The first graph shows the refinance index.

The refinance index is down 66% from the levels in May 2013.

Even with the recent increase in activity - as people who purchased in the last year or so refinance - refinance activity is very low this year and 2014 will be the lowest since year 2000.


Mortgage Purchase IndexThe second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is down about 9% from a year ago.

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http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401737/tuesday-existing-home-sales Wed, 22 Oct 2014 18:40:04 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401737/tuesday-existing-home-sales <![CDATA[Tuesday: Existing Home Sales]]> From Dina ElBoghdady at the WaPo: How a top housing regulator plans to make it easier to get a mortgage. Excerpts:
It’s unclear if Watt's downpayment plan will do much to ease access to credit. The average downpayment remains lower today than it was in more normal, pre-housing bubble times, said Sam Khater, chief deputy economist at CoreLogic. That’s because the Federal Housing Administration – which backs loans with as little as 5 percent down -- has a larger share of the mortgage market than usual, Khater said. Having Fannie and Freddie also accept downpayments as low as 5 percent would only help on the fringes, Khater said.
...
Today, the average credit score on a loan backed by Fannie and Freddie is close to 745, versus about 710 in the early 2000s, according to Moody’s Analytics.
From David Stevens, MBA President: MBA’s Stevens Applauds FHFA Steps to Ease Credit for Homebuyers
“Offering lenders better clarity around representation and warranty requirements will ensure lenders are accountable for any material mistakes they may make in the loan process, yet acknowledges the fact that minor, immaterial loan defects should not automatically trigger a repurchase request. As a result, lenders will be more confident in offering mortgages to qualified borrowers within the full boundaries of the GSEs’ credit requirements.
Tuesday:
• At 10:00 AM, Existing Home Sales for September from the National Association of Realtors (NAR). The consensus is for sales of 5.09 million on seasonally adjusted annual rate (SAAR) basis. Sales in August were at a 5.05 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.14 million SAAR. A key will be the reported year-over-year increase in inventory of homes for sale.

• Also at 10:00 AM, Regional and State Employment and Unemployment (Monthly) for September 2014

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http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401735/fhfa-director-watt-reps-and-warrants-to-be-clarified-in-coming-weeks-sensible-and-responsible-guidelines-for-lower-downpayments Wed, 22 Oct 2014 18:39:59 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11401735/fhfa-director-watt-reps-and-warrants-to-be-clarified-in-coming-weeks-sensible-and-responsible-guidelines-for-lower-downpayments <![CDATA[FHFA Director Watt: Reps and Warrants to be Clarified in Coming Weeks, "sensible and responsible guidelines" for Lower Downpayments]]> From FHFA Director Melvin Watt: Prepared Remarks of Melvin L. Watt, Director, FHFA, At the Mortgage Bankers Association Annual Convention

On lower downpayments:
To increase access for creditworthy but lower-wealth borrowers, FHFA is also working with the Enterprises to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent. Through these revised guidelines, we believe that the Enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower-down payment mortgages by taking into account “compensating factors.” While this is a much more narrow effort than our work on the Representation and Warranty Framework, it is yet another much needed piece to the broader access to credit puzzle. Further details about these new guidelines will be available in the coming weeks as we continue to advance FHFA’s mission of ensuring safety, soundness and liquidity in the housing finance markets.
On Reps and Warrants:
We know that the Representation and Warranty Framework did not provide enough clarity to enable lenders to understand when Fannie Mae or Freddie Mac would exercise their remedy to require repurchase of a loan. And, we know that this issue has contributed to lenders imposing credit overlays that drive up the cost of lending and also restrict lending to borrowers with less than perfect credit scores or with less conventional financial situations.

To address this problem, FHFA and the Enterprises have worked to revise the Framework to ensure that it provides clear rules of the road that allow lenders to manage their risk and lend throughout the Enterprises’ credit box. These revisions are consistent with our broader efforts to place more emphasis on upfront quality control reviews and other risk management practices that provide feedback on the quality of loans delivered to the Enterprises earlier in the process.
...
As I committed FHFA to do when I announced these refinements in May, we have continued to engage in an ongoing process to address the issue of life-of-loan exclusions. Life-of-loan exclusions are designed to protect Fannie Mae and Freddie Mac from instances of fraud or other significant noncompliance, and, as a result, they allow the Enterprises to require lenders to repurchase loans at any point during the term of the loan. The current life-of-loan exclusions are open-ended and make it difficult for a lender to predict when, or if, Fannie Mae or Freddie Mac will apply one of them.

So, we have continued to address this issue, and I can report that we have reached an agreement in principle on how to clarify and define the life-of-loan exclusions. These changes are a significant step forward that will result in a better Representation and Warranty Framework and facilitate market liquidity without compromising the safety and soundness of the Enterprises.

First, we are more clearly defining the life-of-loan exclusions, so lenders will know what they are and when they apply to loans that have otherwise obtained repurchase relief. These exclusions fall into six categories: 1) misrepresentations, misstatements and omissions; 2) data inaccuracies; 3) charter compliance issues; 4) first-lien priority and title matters; 5) legal compliance violations; and 6) unacceptable mortgage products.

Second, for loans that have already earned repurchase relief, we are clarifying that only life-of-loan exclusions can trigger a repurchase under the Framework. This is a straightforward clarification, but one that we believe will reduce confusion and risks to lenders.

The Enterprises will provide details about the updated definitions for each life-of-loan exclusion in the coming weeks ...
emphasis added

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