Wednesday, September 19, 2007

The Bendover Congress


House approves bill helping mortgage borrowers
By Robert Schroeder, MarketWatch
Last Update: 4:24 PM ET Sep 18, 2007
WASHINGTON (MarketWatch) -- Reaching out to hard-hit borrowers in the subprime-mortgage market, the House on Tuesday passed a bill that lowers down payments for borrowers, raises loan limits and boosts funds for housing counseling.
Passed by a vote of 348 to 72, the bill reforms the Federal Housing Administration and is the latest lifeline thrown to borrowers from Washington as the fallout in the mortgage market continues.
About two million loans are expected to reset to higher rates in the next two years, with defaults expected to follow. Congress and the White House have floated various proposals to stem the damage.
The bill directs up to $300 million a year into an affordable housing fund.
----

Hat Tip to Sweet Cashback who posted in the previous thread while i was preparing this post.

53 comments:

Salt Lake Mortgage Guy said...

First to comment on this yesterday.

Salt Lake Mortgage Guy said...

You're getting slow Rob...

Entertained said...

"Because FHA has been driven from those parts of the country where consumers are most in need of affordable financing, such as California, millions of borrowers have been forced to turn to high-cost financing and other non-traditional loan products," wrote NAMB President George Hanzimanolis

Seriously, if you can't afford to live in California what can you do? I mean, it's not like you can just move to a different state with more affordable housing.

visioneer said...

"lowers down payments for borrowers, raises loan limits and boosts funds for housing counseling"

How exactly does this bill help existing FBs? Seems like its intent is to get more people into properties they can't afford.

Or perhaps I need to STFU and go read the article.

Edgar said...

Too bad they didn't blow $300 trillion. I think that would be uber funny!

serinitis said...

Its not about help FBs. It is about helping mortgage companies. The FBs will now be able to sell their houses to future FBs and the mortgage company will have the original mortgage paid off and be able to write a new one

Sweet Cashback said...

@serinitis

I totally agree, 300M is nothing compared to the potential havoc these new rules can generate. We now have creative, socialized sub-prime lending that people will sue for to get into. There is no bottom to the lending anymore as everybody will claim the right to participate in this government program. No income documentation can't be a reason to deny and past debt incidents can't be either.

You are in prison? Hey no problem we can get you into a home!

Heck soon you will receive a FHA mortgage application inside your welfare application kit.

Rob Dawg said...

I don't remember how long ago I predicted this would happen but I do remember at the time I made fun of it by calling it "Section 8[ Trillion] Housing."

Everybody is right about the $300m. I won't even waste my time on a trivial amount like that. That's what 43 minutes of Federal spending. Rounding error.

Alrigt. All you decent, honest, hard working responsible types line up over here and empty your wallets.

Pleather Murse said...

From the "duh!" department:


Economist Predicts Housing Downturn

http://biz.yahoo.com/ap/070919/risky_mortgages_congress.html?.v=6

tough guy said...
This comment has been removed by the author.
Funny Circus Bears said...

Exited @ $21.10 CFC long position opened @ $16.52.

Didn't initiate a short position due to current market optimism.

This weeks social indicators:

OJ's toothless grinning carney-barker.

and

"Don't tase me, dude!"

Sac RE Agent said...

don't see that Legion has checked in yet. but it is NOW a great time to buy a house! :-)

ha38349 said...

Too bad KC wasn't available to testify to the value of cash back at closing to get buyers off the fence and into houses. That is what we really need to stem the housing crash. The idea that someone should save up a down payment is just un-American. Hmm, $300 mil budget at say $30k cash back at each closing that would be 1,000 homes. Seems like a drop in the bucket but I'll do my part and "buy" 100.

Lost Cause said...

I all for congress, except in public places.

TK said...

FCB:

"Don't tase me BRO!"

WHat are your thoughts on length of time before current optimism evaporates? Your calls are spot on, and I enjoy your commentary. Toothless retards and irritating, argumentative college students indicate market optimism? Hmmmmmm.

The_Scum said...

I already notified my senators I was against any bailout program a couple weeks ago...and they both responded (OR AT LEAST SOMEONE ON STAFF SENT BACK A CANNED FORM LETTER REGARDING MY TOPIC).

Damn caps lock malfunction.

$300,000,000 = 600 houses?

HAH hahahha hahaahh.

Funny Circus Bears said...

TK,

Turns out the Toothless Retard is Anthony Barbieri, a comedy writer who has insinuated himself into numerous other public, rancid, malignant freak fests.

I bow in his general direction.

I'm having a Tshirt made with "Don't tase me, bro!" on it.

I'll chime in when I take CFC short, but I missed the last ride down so I am not always right!

Akubi said...

In other bendover bun news, I have some sweet new white fishnets and black fishnets. While I have tons of other images to upload, I was grinding my teeth all night and woke up with a headache.
The Saudi situation isn't helping with the relaxing biofeedback shit I'm supposed to do about.

Legion said...

@Sac RE Agent


Sheesh, 300 million? You could give a million bucks each to 300 people in the US for their overpriced million dollar homes (In cali 2 bedroom 1 bath 1000 square feet) and then what?

I actually may be looking to buy a house soon, the trip to NM was real nice, though I think I'll stay away from Rio Rancho...

@FCB

Nice chunk of change you made there, and I think you were smart not to sell short right after you sold. More BS and "good news" about the mortgage market..doesn't change the fact that a ton of ARMS are still on their way. that 300 million will seem like hunting a whale with a bb gun. You just can't stop that MUCH momentum.

Pleather Murse said...

Interesting Prudent Bear article which came out the day before the Fed cut:

When markets lose their mind
by Martin Hutchinson
September 10, 2007

(snip)

The decade of cheap money has exacerbated the problem; behavior that would have been punished by bankruptcy before it became widespread has been allowed to spread throughout the world’s markets. . . . .

More important, money must be kept tight, in order that periods of irrational speculation do not extend themselves as they have done since 1995. It is likely that this will also involve a substantial shrinkage of the financial services industry, even if not to its 1970s size of approximately half its present proportion of the economy. . . .

If after say 5 years the stock market is continuing to soar, the Fed should bring it back sharply to earth by a rise in short term interest rates. Alan Greenspan should have done this when he spotted “irrational exuberance” in December 1996; it is to his everlasting disgrace that he didn’t.

http://www.prudentbear.com/index.php?option=com_content&view=article&id=4755&Itemid=53

Pleather Murse said...

Oops, I guess it came out last week. My bad. I must've been on calendar ignore mode.

Curious said...

@ Legion:
I actually may be looking to buy a house soon, the trip to NM was real nice, though I think I'll stay away from Rio Rancho...

I've been planning a trip into this area and would appreciate your thoughts.

Sounds like Rio Rancho has California pricing though. At least for now.

I still plan on visiting soon but would really appreciate more insights. How can we hook up via email if you're willing to share your thoughts?

-Curious

Peripheral Visionary said...

Net profit for Bear Stearns is down 62%, Morgan Stanley down 17%, Lehman Bros off 3% . . . and net profit for Goldman Sachs is *up* 79%. Hey, maybe Goldman is just that much better than anyone else!

Legion said...

@curious


I'll get back to you with an email...I'll create an antispam one heh heh

Albuquerque is a nice city, lot's of nice houses in certain areas, and rio rancho is aobut 20-30 mins west of there from what I remember. Houisng prices are still high but they WILL go down, when I was there I was told that they are starting to feel the housing bubble aftermath. Even their rentals are nice however. I'm actually going back next week for antoher look.

spooq said...

1.00 CAD = 0.999163 USD

Thanks for the blog, been reading since Serin and haven't found a better one yet. Every time I do find a blog with an insightful comment like the ones here, it turns out to be Rob Dawg anyway.

polizeros said...

L.A. real estate update.

We sold our house in Van Nuys on Jan. 28. Our broker just told me if he was to list it now, the price would be 15-20% less.

He's been looking for investment property for five years but prices were too high, if they drop another 10% he might start getting interested.

spooq said...

Sorry for going off-topic twice in my first two posts (although it's not that far off really), but just a little while ago a Canadian dollar was worth more than a US dollar. A lot of people out there are letting the Fed know exactly what they think of the rate cut. Forget economics, this is the kind of headline that changes election results.

Salt Lake Mortgage Guy said...

Senate Banking Committee passed FHA Reform bill yesterday. One more vote and Bush's signature make this law.

Peripheral Visionary said...

I'll be blunt, in that I don't like the FHA reform bill, but it could be worse. The FHA (and FNM and FRE) are still keeping some underwriting standards, even though they're being loosened in the loan amount and equity requirements. That's not good news, it means they'll be taking on more risky loans, and their losses from defaults will be going up.

But the problems in the housing market weren't primarily caused by high value, or 0% down loans--although both of those played a role. The real problem was caused by home buyers who couldn't afford the home they were buying under any reasonable standard, and who only got into it through "liar loans" and/or ultra-low teaser rates. Those are loans that anybody with any underwriting requirements at all would reject. As long as FHA and the GSEs retain their basic affordability requirements--and I don't see any evidence of that changing--they'll be avoiding the worst of the loans, in particular the "toxic waste" that is giving the markets headaches.

Lost Cause said...

Fishnets

Entertained said...

Bernanke Assures Hill on Mortgage Hit
http://ap.google.com/article/ALeqM5hhsOwOsGhKflopz_JpXK3wHVsCTA

I'm the only one that is less than optimistic about this get-tough claim, right?

Rob Dawg said...

spooq said...
1.00 CAD = 0.999163 USD

Thanks for the blog, been reading since Serin and haven't found a better one yet. Every time I do find a blog with an insightful comment like the ones here, it turns out to be Rob Dawg anyway.


Yep. And Tar Sands will make that an even better bet going forward until at least oil goes off the dollar metric. Then all bets are off.

Thanks for the extremely (undeserved) kind words.

Rob Dawg said...

polizeros said...
L.A. real estate update.

We sold our house in Van Nuys on Jan. 28. Our broker just told me if he was to list it now, the price would be 15-20% less.

He's been looking for investment property for five years but prices were too high, if they drop another 10% he might start getting interested.


Wow, you were like the last guy on the lifeboat eh?

That's about right. The RE investment window closed in 2002-03. We sold Apr '06 and that was the next to last lifeboat for that area. That said, 10% ain't even gonna get me to click on a weblink. 25% or more and it is time to start shopping carefully. People with 20% negative equity trying to sell at any price are irellevant to what you need to purchase. Purchase price didn't matter on the way up did it?

Rob Dawg said...

Lost Cause,
Thanks. Roxy is a favorite. Remember the album cover with the two chicks in black and white panties in front of the pine trees? No fishnet, sniff. ;-(

Peripheral Visionary said...

Treasuries melting down, and market lending rates going up. Bernanke's got his own conundrum--how to explain to everyone how his rate "cut" is actually increasing the rates consumers are paying.

serinitis said...

Are we headed for an epic bear market?

Northern Renter said...

>spooq said
>1.00 CAD = 0.999163 USD

BWAHAHAHAHA!

I'm rich now, I tell you, rich!

NR

Pleather Murse said...

More light on the USD-Can$ situation, plus some potentially more significant news about the Euro buried in the story:

Dollar at 30 Year Low Vs Canada Dollar

http://biz.yahoo.com/ap/070920/dollar.html

The dollar took another fall on currency markets Thursday, reaching one-to-one parity against the Canadian dollar for the first time in 30 years and plumbing a new low against the 13-nation European currency.

(snip)

The euro breached the $1.40 barrier against the dollar on Thursday. That level had long been seen as a key benchmark in terms of solidifying the euro's position on currency markets and giving it momentum toward becoming a reserve currency of choice -- a position long held by the now-weakening dollar.

Sun said...

Alright, I never comment but wanted to address this Bill. $300 mil is nothing more than a token, it's about as little as Congress could appropriate without getting completely hammered.

There is too much political pressure not to do anything. This is just enough to 'sound' like a lot of money to people that do not understand the budget (same type of people that took out subprime loans in the last 2 years...duh!)

We're spending something like $5 billion a month in Iraq. The 'move' by the FED was far more panderous...and sad really.

Funny Circus Bears said...

I completely missed the boat on GS long by waiting for it to come back to 185.

I may have also missed this current short opportunity in CFC by not entering at 21.

Pleather Murse said...

The big wave of foreclosures is still coming (LA Times)

http://tinyurl.com/2zpg6r

Remember that the current spate of foreclosures relates mostly to: overbuilding in hot spots, fraudulent loans (mostly people falsely claiming they'll occupy a property) and a relatively small number of borrowers whose subprime rates got jacked way up.

The big wave of foreclosures is still coming: people who DO occupy their house and who did not necessarily commit fraud to get the loan, but simply took out an Option ARM and have watched their loan balance grow as their house value has dropped.

...Most of those Option ARMs have not yet even seen the big payment adjustment that's coming. When their payments double (as they will), many of those borrowers will find themselves with too little equity to either sell or refinance (especially if they had 2nd mortgages on TOP of their Option ARMs). Throw in the tighter underwriting standards that have been imposed recently and you have a still-coming perfect storm.

The Option ARM foreclosures will only start in mid 2008 and will climax in 2009-2010. The biggest purveyors of Option ARMs have been Countrywide and Washington Mutual. The percentage of homeowners with Options ARMs is highest in California.

Think of an Option ARM as a bomb with a five year fuse. Millions of fuses are still burning.

Sun said...

re: Pleather Murse

yes - things like this can just snap in an instance, just like a song, clothing style, stock market, big time actor, tulips, etc. One day you're raging hot, the next day you couldn't pay someone to take your spoils. Human/group psychology.

Usually housing has a much softer curve, but it will be interesting to see what happens with the ARM reset.

side note: A great movie to watch is Rogue Trader - true story about Nick Leeson who single-handedly lost so much money for England's oldest bank that they went bankrupt.

ratlab said...

Rogue Trader is a great flick. I even have a Brit Quad poster that was later recalled b/c the very large image of the British Pound was used without authorization.

TK said...

Is anyone else here more than vaguely concerned that Dubai's ruling family is buying 20% of the nasdaq and nearly 30% of the London stock exchange?

Lou Minatti said...

Is anyone else here more than vaguely concerned that Dubai's ruling family is buying 20% of the nasdaq and nearly 30% of the London stock exchange?

I'm not. They are capitalist swine, same as anyone on Wall Street. They want nothing to do with the jihadis. They prefer luxuries.

The Emirates are, I think, the world's greatest bubble. We like to laugh at Miami condomania. Miami is a fart in the breeze compared to Dubai. You know the Burj Dubai going up right now? I think it will end up being the ME's version of Kim Jong-il's Ryugyong Hotel.

The kings and princes want to diversify their holdings so that when the time comes for their own local bubbles to pop, they have holdings in a stable capitalistic society.

Cynical people may say that doesn't describe the US. I say that even with our warts, our laws and regulations are better than most. If you think the country is going to hell in a handbasket and we have no future, you have the opportunity to vote in little over a year. We'll have new leadership. You can't say the same thing about Dubai.

Let them buy. They can buy at the peak, much like the Japanese in the 1980s. Then we can buy it all back at a discount in a few years.

Legion said...

Actually, if you watch rogue trader, you will see a lot of similarities between him and Casey, particularly at the end where the rogue trader is so excited about being a "celebrity" that he doesn't even show remorse about screwing a bank.

@curious legionEnation@hotmail.com

if ya got any questions bout NM

Akubi said...

@TK,
I am.
Iraq has been our Afghanistan.
We've pretty much lost all of our international credibility politically and financially and there's only so long we can float this BS economy before the feeding frenzy begins.

Lost Cause said...

When George W. Bush is saying that the economy is wonderful, you know what is going to happen next. People might wake up in the middle of the afternoon tomorrow, or perhaps on Monday, but it is going to happen.

Pleather Murse said...

Re: Dubai (again!)*

I'm more concerned with what will happen when the Dubai royals go the way of the last Tsar and his family.

*Anyone remember when they tried to buy U.S. port services?

The_Scum said...

At 1:25 PM, Salt Lake Mortgage Guy said...
First to comment on this yesterday.


At 1:26 PM, Salt Lake Mortgage Guy said...
You're getting slow Rob...


Don't you have some credit reports to pull on people who piss you off? Maybe a few houses to sell or koi to raise? Or a murse toting loser to wine and dine?

Possibly you need to spend some time putting together a slanderous website?

Maybe if anyone visits yours you have some posts to delete?

No matter how fast you post crap to your blog, no one will ever know. Because no one goes there.

Have a nice day!

Scummy.

spooq said...

I always cringe when I see the ads for Dubai property investment. Why would anyone put their money in a place with so many serious long-term strategic risks? The sheikhs have the right idea - move next door to the Russians in Mayfair.

My plan is to stay in Euros and wait for bargains. Is the Trump World Tower a nice place to live? I don't know much about US property yet... however I think I shall soon understand how much fun you Yanks had buying up all the best bits of my homeland :)

Peripheral Visionary said...

I'm not worried at all about Dubai buying shares in our exchanges--it's Chinese ownership of U.S. government debt that has me the most worried. The Congress goes into a frenzy when they hear that the Arabs might be buying assets in the U.S., but we have official representatives going to the Chinese with hat in hand asking them to please buy more of our securities. Totally backwards.

And the oil supply doesn't bother me either. Recent history has taught one important lesson: black or brown or white, Christian or Muslim or agnostic, democratic or totalitarian, good or evil, whoever it is that controls the oil fields will be happy to sell us oil. It's whether or not we should buy from them that's the question.

Salt Lake Mortgage Guy said...

FHA reform has stalled. Good job politicians...