Foreclosure follies

When I take a break from blogging, I'm a real estate title abstractor. I'm....in-between.... employers at the moment. Why? Nope. Not because of the foreclosures. If every house on the market that should be foreclosed was being sold, I would have a job. My industry depends upon the transaction, the sale, of homes. And responsible banks and buyers get titles checked before they buy. And lenders and buyers need title insurance.

THIS is why I'm sittng at home, blogging.

About 1.2 million loans out there are in limbo: The borrower is in serious default yet the bank has not started the foreclosure process. Another 1.5 million are in early stages of the foreclosure process but the bank hasn't yet taken possession of the home. Counting these and loans that are highly likely to end up in default, one analyst estimates three million to four million foreclosed homes will come on the market over the next few years.

...state mortgage-mediation schemes as well as the Obama Administration's Home Affordable Modification Program, which at last count had managed to prevent 235,247 homes from coming onto the market...

Between ACORN (ie, the government) pressuring banks to give out bad loans, bank bailouts reducing the risk of the banks, and Barney Frank and co. wanting to reignite the housing mortgage bubble, and the press not wanting to give any bad news to the public because that would make their heroes look bad, we are screwed. The banks don't want to take the loss that reduced prices would bring. Remember, when the owner is the bank on an "underwater" mortgage, they are in the same boat as the previous owner. They want the money to pay their debts. No one is willing to take the loss and Congress wants to save their investment money bail them out.

You think that the FDIC is broke now? That banks are going under now? Just wait.

A comment from the post:
The FHA is writing about a third of all purchase mortgages, most of them with no money down (after the 8% tax credit). Believe it or not, USDA mortgages are gaining market share too. Yeah, USDA. And the mortgages the private sector writes, it quickly turns around and sells. The biggest buyer is, you guessed it, the government.

God forbid that any possible Democrat voters have pain. We must buy their vote help them! The government can buy all that debt! We have our money invested in those banks! We have to help the poor! We're with the government and we're here to help.

But all that money is going to be for naught.

Because the commercial real estate foreclosure crisis is on the way. Won't THAT be fun?

New housing bust in on the horizon

and its being encouraged by the exact same people, with the exact same mindset, that caused the last sub-prime loan bust.

Everyone knows how loose mortgage underwriting led to the go-go days of multitrillion-dollar subprime lending. What isn't well known is that a parallel subprime market has emerged over the past year -- all made possible by the Federal Housing Administration. This also won't end happily for taxpayers or the housing market. The Wall Street Journal is on top of it. I bet this won't make the news at MSNBC.

(emphasis mine)

The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent -- nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in "serious delinquency," which means at least three months overdue.

The FHA is almost certainly going to need a taxpayer bailout in the months ahead. The only debate is how much it will cost. By law FHA must carry a 2% reserve (or a 50 to 1 leverage rate), and it is now 3% and falling. Some experts see bailout costs from $50 billion to $100 billion or more, depending on how long the recession lasts.

Under the Bush Administration, the FHA then began a bizarre initiative to "regain its market share." And beginning in 2007, the Bush FHA, Congress, the homebuilders and Realtors teamed up to expand the agency's role.

The bill that passed last summer more than doubled the maximum loan amount that FHA can insure -- to $719,000 from $362,500 in high-priced markets. Congress evidently believes that a moderate-income buyer can afford a $700,000 house. This increase in the loan amount was supposed to boost the housing market as subprime crashed and demand for homes plummeted. But FHA's expansion has hardly arrested the housing market decline. The higher FHA loan ceiling was also supposed to be temporary, but this year Congress made it permanent.

Congress knows about this. THEY regulate the FHA. Of course it will be a great surprise to them when they spring the bailouts on us. The bailout will be needed IMMEDIATELY or the world will end! No where will they state that this had been known for months. They will need yet MORE money, in addition to what they have now. Its Freddie/Fannie all over again. Why the hell does a governmental agency need to improve "market share?" Less market share means LESS TAXPAYER RISK! And liberals love to call Bush a conservative......idiots.

h/t Founding Bloggers