Friday, February 26, 2010

Obama May Make the Housing Problem Even Worse

Seriously, who the F$%K voted for this guy?

"Obama May Prohibit Home-Loan Foreclosures Without HAMP Review  The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program."  Bloomberg Link

Honestly, this will create such a backlog of non-paying mortgages and delay payment resolution that ultimately it will do nothing more than stimulate and incentivize "jingle mail,"  in which underwater, cash-strapped homeowners turn in their keys to the bank and simply walk away from the situation.  Distressed homes will pile up, creating a massive inventory problem and the decline in home values will accelerate.

Furthermore, it will create a massive delay in the disbursement/payment of ANY cash flow to banks holding the mortgages and to the investors in the mortgage trusts which helped finance the housing bubble.  Of course, this may also set up the direct subsidization of dead-beat homeowners, as banks bleeding dry from lack of cash flow from the defaulted mortgages will cry to Obama and Congress, who will then authorize the payment of Treasury/Taxpayer money directly to the banks until the defaulted mortgages are restructured.

The bottom line is that the Government should absolutely not be using Taxpayer money to subsidize the banks and distressed homeowners.  This is not a social or legal or national security issue.  This is a business problem that should be settled between the homeowners who took on more than they could pay and banks who were willing to lend to them.  Why should I be required to take money out of my pocket to help settle a bad business decision made by others?

It just gets worse by the day...


  1. Final nail in the MBS coffin - as if it needed one....

  2. Mandatory HAMP reviews or postponement of foreclosures serves the banks interests, Davey my man. The longer a loan can be stalled and the property kept from distress sale means the longer defaulted loans can be carried on the banks books as "mark to fantasy." Once the proerty goes to sale, only mark to market is available and the loss is realized.

  3. Yes, there's a lot of reasons the banks are pushing for this, the most of significant of which is that it will lead to much greater Government subsidization to the banks.

  4. Just another indicator that responsible financial behavior will NOT be rewarded...punish the wise. I love this country.

  5. waterboy - i bet I know which comedic actor is your favorite LOL

  6. Damn, I was hoping to be able to buy a house for a song in 2012. Guess I'll just have to wait until 2014...

  7. They might as well make the banks landlords and rent their homes until they get back on their feet.

    If you can't afford your home now, a loan modificaton won't help 75% out there.

  8. @Adam: why buy at all? Regardless of how "cheap" homes get, the Govt will in all likely be forced to jack property taxes up to an astronomical rate. Plus, when the bailout money for insurance companies/banks dries up, the cost of insurance will do a moonshot. renting rocks!

    @Harvey: it ain't the banks that are landlords - the money is coming from Taxpayers.