Saturday, January 03, 2009

Foreclosures to rise

From a December 11 CNN article by Les Christie:

Foreclosure filings dropped 7% from October to November, according a report released Thursday. But don't break out the bubbly. The tide of foreclosures may be ebbing now, but the flood isn't over yet.

"There are several indications that this lower activity is simply a temporary lull before another foreclosure storm hits in the coming months," James Saccacio, RealtyTrac's CEO, said in a statement...

A total of 78,179 families lost their homes during the month, down 8% from October when 84,868 homes were repossessed by lenders. A total of 1,014,618 homes have been lost to foreclosure since the housing crisis hit back in August 2007.

But while there's a dip in both foreclosure filings and evictions, that's because of temporary measures taken by Fannie, Freddie and state moratoriums. And that won't continue.

The article continues:

Last week, Credit Suisse issued a report forecasting 8.1 million foreclosures by the end of 2012, accounting for 16% of all U.S. mortgages.

And this week I saw another report estimating 10 million foreclosures in the next few years.

I hope Washington wakes up and realizes their Chavez-style nationalization of industries won't work... unless they want to shift into high gear and really go for the gold by taking a slightly more Leninesque approach to their bailouts?

Seriously though... Bush's approach to governing is terrible. Just today I was reading about the difficulties facing Ford.

What happened to Ford, you say? They were in relatively good shape, right?

Well, now GMAC is offering 0.0% financing with five year purchase programs. So, how exactly is Ford supposed to compete with a company that's being showered with Ben's Helicopter Money?

On monetary policy, both Bush's Bernanke and Obama's Geithner need to go.

Tim White


Anonymous said...

Chris Dodd and Barney Frank are quite effective, as well.

tim white said...

Interesting article... also worth mentioning the date and headline:

March 27, 2008
Frank, Dodd work to decrease foreclosures

tim white said...

But March 27 was about the time that Bear Stearns reared it's ugly head. So by the time of the July homeowner's bailout, I guess their attention had gotten diverted by BS and they dropped the ball so that their bill to stop foreclosures was a largely a failure.

Or maybe such tactics simply won't work in the market. That is, when you give Hank Paulson a blank check for $700 billion (447 pages of $150 billion of pork does not = safeguards), then Hank will give his Wall Street cronies blank checks... and they'll spend their money buying more banks, instead of helping people.

Oh wait... they're helping the stockholders who had just gotten bilked by those same guys with their nonsense "profits."

Anonymous said...

No, Tim even in July 2008, Dodd and the DC establishment were in complete denial of reality

"If you were to ask Democrats Barney Frank and Chris Dodd -- the principal architects of the massive housing bill signed yesterday by President Bush -- which of its many features pleases them most, the answer would surprise you.

It is not the bailout of Fannie Mae and Freddie Mac, the embattled mortgage giants, or the aid the bill provides for thousands of homeowners struggling to afford their subprime loans in a faltering real estate market.

Instead, it is the section creating the National Housing Trust Fund, a creative way of meeting the chronic shortage of affordable low-income rental units -- a huge problem in cities and rural areas across the country.

Dodd, a senator from Connecticut, told me, "That is the part that will have the greatest long-term impact." Frank, a Massachusetts representative, said in a separate interview, "That's what I'm most proud of."

Their views are echoed by two other legislators without whom this legislation would never have made it to the White House. Democratic Sen. Jack Reed brought his passion for affordable housing with him from Rhode Island and never gave up on pressing the cause. And Richard Shelby of Alabama, the former chairman and now ranking Republican on the relevant Senate committee, gave the measure the bipartisan backing it needed.

Even with Shelby's help, Dodd notes, the bill had to survive several cloture votes and the threat of a presidential veto, later withdrawn.

The lobbying campaign that supported this effort began in 2001 and involved hundreds of local governments and social service agencies. Sheila Crowley, president of the National Low Income Housing Coalition -- the person who coordinated the campaign -- kept hammering home the basic numbers: 9 million extremely low-income households in the United States and only 6.2 million units of affordable rental housing.

The bill addresses that imbalance by creating a new program within the federal Department of Housing and Urban Development. The National Housing Trust Fund does not depend on annual appropriations by Congress, which might never arrive, given the size of the federal budget deficit, the costs of two wars and runaway health-care programs.

Instead, it taps a portion of the profits that Fannie Mae and Freddie Mac make on their mortgage loans, estimated to yield at least $300 million a year and perhaps as much as $700 million.

Fannie and Freddie have had a rough time in the current housing slump, but all the sponsors of this legislation told me they are confident the two big lenders will survive. In one of the compromises that cleared the way for passage of the bill, next year the profits of Fannie and Freddie will be held in reserve to offset any losses the government incurs in helping seriously strapped mortgage-holders. So it will be 2010 before funding of the trust begins."

Yep, "profits" from Fannie Mae were going to be used to add more "affordable housing"---right when housing values were dropping like a stone across the country.

tim white said...

I need to call Peter Schiff again to learn his plans...