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Tuesday, February 12, 2008

All Day Long

I really have been mulling over the announcement of the new "Lifeline" initiative all day.

There is one and only one real result I would expect, and that is to cut down the number of foreclosures reported in the first quarter and thus to make things look a little better for a while. That is literally the only thing I can imagine that this proposal would produce.

It might be the real reason for cobbling this up.

It keeps coming to my attention that once you refinance, your loan changes from a 'non-recourse' to a 'recourse' loan in many states. That would make me want to get them refinanced if I were a banker!
Credit is still available here, as of yesterday my bank was offering no down payment, the interest rate is a bit higher if your FICO is below 630!
Rates aren't the big problem. It's the bloated prices to incomes. All the financial crooks have us really deep into murky financial waters (as well as lying to foreign investors).

We'll have to see if it's a bait to get more on the hook for the big fish. Or will they slash those bubble prices back behind the scenes? That doesn't seem as likely though when they got the jackass politicos to give them an upgrade to 700k for loans?

If they don't cut those loan prices back 30-40%, my money is on people take the walk away route.
Gayla - the credit crunch is more of a factor in the markets with outrageous prices. No one wants to admit it, but that's the truth.

Anon - yes. The problem is that in some markets you have a huge number of borrowers with loans to large for them to carry on an amortized basis, secured by homes that are rapidly depreciating and worth less than the homes.

To stop a lot of walkaways in such places (DC area, CA, hunks of FL, sections of the NE, parts of AZ, etc) the only option is to write down principal to the point that the borrowers can carry the loan. It will be done if that's the lowest loss for the lienholder. However, once you start, you implicitly downgrade entire swaths of loans. I think that's what's really holding this up.
I love it. I advised three folks with a total of 7 investment properties to max out the HELOCs and walk away. And they are doing it.

Basically, anyone who pays their mortgage, auto loan, boat loan or credit cards is a total moron.

Thanks for ruining our country Hank.
One area of the whole bailout is the cost of running interest rates so low. Personally, I am mad as he$$ about it and am looking to invest my dollars in foreign deposits other than US$.

But wait until pension plans start announcing their lack of returns. This is going to cost US businesses in the form of higher pension cost or more likely, reduced pension benefits.

Another cost is how are we going to attract the $2-3 billion a day we will need to cover our deficit spending? We are going to offer 4% on a 30 year? I just don't think the world will stand for it, especially after their experience with our fine subprime products.

ww..still looking for the positive
I suppose you will see lots of leadership' where no risk is taken and the result is little, but there are grand titles and lots of talk.

Its a controlled burn policy. I see no better option. We certainly don't want Northern Rock's in every town.
Am of Smart Independents grouping.
Don't want to give out my password, but am would give e-mail moniker.

Am am not the same "anonymous" who advised 7 to take helocs and walk away.

Loan prices need to come down to 2-3 times incomes max. just as the old time standard.

Prices have to come down 50-60%
in most areas.

This has been a massive Ponzi Scheme sucking investment monies away from production and export chain.
After all, it only has to look good until November 5, 2008...
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