Financial News

[NorthSideSox72]

I really feel like your guys' opinion that it's just a casual series of unavoidable mistakes really misses the essence of the problem. Your argument makes sense if the case I cited above was a rarity. It really isn't; that is explicitly how the program has worked for the millions of people who have had their trial modifications denied. There are a ton of examples. If it's an accident and a mistake...it's a mistake that has lingered for a year and a half, which no one has had any reason to correct.

 

LAT

Those are s***ty things that those banks did. Of course, its also not possible to do a foreclosure in 30 days anyway.

 

What makes you think that this is anything other than the obvious - that the bank f***ed up? The bank does not want to foreclose - its in their best financial interest to have their people keep making payments. Foreclosures cost the bank thousands of dollars to execute, not to mentionthe cost of selling it, so they don't win in this. What is the motive here that would be effective?

 

[Chisoxfn]

You are trying to make something black and white, that isn't.

 

First, yes, obviously, the systems need improvement. Second, do you really think that any institution dealing with something as complex as mortgages and foreclosures and HAMP is going to get everything right, every time? Third, you have these banks taking on all these new programs and regulations, and it takes time to adjust to them. In the meantime, people will get hurt, I never said otherwise.

 

Still, this particular situation is weird to me. It sounds as if, if she missed just one payment, but kept paying, she'd be at worst a month behind. That one month of mortgage payment is not enough to make financial sense of the bank to foreclose - it would cost them a lot more than that just to handle a foreclosure.

Yep and this is why I don't really believe some of these articles (some situations, clearly are horrible, but the bank f***ed up and I still can't imagine there aren't ways and people to contact to ensure that the action is corrected. I've been way too involved and have too many people that I'm very very close to that have been involved in the real estate business for significant time and are very familiar with what is going on with the foreclosures and what you are saying Brian just isn't the case.

 

That isn't to say situations aren't happening improperly, but I find it hard to believe that it is a systematic problem and some trillion dollar class-action is awaiting. This is a huge fundemental problem, but in no way shape or form are you going to be able to ever convince me that the banks are getting rich of this.

 

The biggest reason the banks are paying little to not attention to this is because it is not there main business or strategic input and as a result they don't have the people capable of handling things in this value appropriately and more importantly, these loans have already been pretty much written-off well below the value of the actual property at this point so it isn't as if they are going to take any additional financial losses so to speak.

 

While it might sound stupid, the reality is, sometimes companies get in a position where they hold stuff they don't want, don't have the resources to handle, and as a result take losses on the stuff or make inappropriate decisions to try and get away from the situation as fast as possible (i.e., these banks not always making the smartest sales). And than there is the fact that the people deciding what price to take are making decisions that I'm sure investors would vomit about.

[jasonxctf]

http://www.monitordaily.com/Story_Page.asp...;Type=AlsoToday

[NorthSideSox72]

B of A is restarting on the foreclosures already. Apparently they reviewed and feel they are good to go. They say it will result in delays for about 30k foreclosures, but still feel they are valid going forward with their processes.

 

[Balta1701]

Link

Today, the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS sent a Notice of Non-Performance (Notice) to Countrywide Home Loan Servicing, as Master Servicer ("Countrywide Servicing"), and to Bank of New York, as Trustee, identifying specific covenants in 115 Pooling and Servicing Agreements (PSAs) that the Holders allege Countrywide Servicing has failed to perform.

 

The Holders' Notice alleges that each of these failures has materially affected the rights of the Certificateholders under the relevant PSAs. Under Section 7.01 of the PSAs, if any of the cited failures "continues unremedied for a period of 60 days after the date on which written notice of such failure has been given ... to the Master Servicer and the Trustee by the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates," that failure constitutes an Event of Default under the PSAs.

 

In a previous release, the Holders emphasized their intent to invoke all contractual remedies available to them to recover their losses and to protect their rights. Kathy Patrick of Gibbs & Bruns LLP, lead counsel for the Holders, emphasized that the Holders' notice does not seek to halt loan modifications for troubled borrowers. Instead, it urges the Trustee to enforce Countrywide Servicing's obligations to service loans prudently by maintaining accurate loan records, demanding the repurchase of loans that were originated in violation of underwriting guidelines, and compelling the sellers of ineligible or predatory mortgages to bear the costs of modifying them for homeowners or repurchasing them from the Trusts' collateral pools.

[Cknolls]

 

http://www.cbsnews.com/8301-503544_162-20019931-503544.html

 

 

 

Keep up the good work boys, In one more year you will pass up the fiscal conservative, GW Bush. Just pathetic!

[NorthSideSox72]

http://www.cbsnews.com/8301-503544_162-20019931-503544.html

 

 

 

Keep up the good work boys, In one more year you will pass up the fiscal conservative, GW Bush. Just pathetic!

And you don't think BushCo and the GOP Congress had some part in that?

 

Plenty of blame to go around.

 

[StrangeSox]

And you don't think BushCo and the GOP Congress had some part in that?

 

Plenty of blame to go around.

and, of course, substantial economic decline.

[Balta1701]

Updating that last post, this one tells who the players are bringning that suit against BofA.

Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York

The NY Fed is involved. That counts as a BFD I think.

[NorthSideSox72]

Updating that last post, this one tells who the players are bringning that suit against BofA.

The NY Fed is involved. That counts as a BFD I think.

Yup, they are getting slapped around now.

 

And as I talked about earlier, this is all about the underwriting. That's where the s*** is going to roll to.

 

[Balta1701]

Yup, they are getting slapped around now.

 

And as I talked about earlier, this is all about the underwriting. That's where the s*** is going to roll to.

I know you disagreed with the idea that they had any issues with the people they were foreclosing on, but I missed where you thought they had any issues with their investors over these.

[NorthSideSox72]

I know you disagreed with the idea that they had any issues with the people they were foreclosing on, but I missed where you thought they had any issues with their investors over these.

I feel like I need to respond, but I don't understand your post. I thought I illustrated the chain of players in a likely battle here, and really, its the same chain for investors or mortgage holders, except for the very low end of it. Is that what you meant?

 

[Balta1701]

I feel like I need to respond, but I don't understand your post. I thought I illustrated the chain of players in a likely battle here, and really, its the same chain for investors or mortgage holders, except for the very low end of it. Is that what you meant?

I got the impression that you thought the banks really weren't facing much in the way of systemic risk of lawsuits at all, whether they came from the mortgageholders or the investors. probably my mistake.

[NorthSideSox72]

I got the impression that you thought the banks really weren't facing much in the way of systemic risk of lawsuits at all, whether they came from the mortgageholders or the investors. probably my mistake.

I think there is risk, I think you are just using the term "the banks" differently than I am. The mortgage securities themselves are only in danger if the underlying characteristics are materially flawed, as this lawsuit is contending. That falls to the security issuer, and then that falls to the mortgage issuers, and then that falls to the underwriters for the most part.

 

I think there is risk there, and there will be lawsuits (as I think I said, maybe I didn't though), but I do not think the risk is of some giant toxic unwind like we saw in swaps, and I don't think the people that will actually be hit hardest are the mortgage banks that you are talking about. The number of mortgages that will turn out to be materially flawed, in my view, will be relatively small.

 

Of course, part of the issue here is, what the exact contract language looks like in the MBS's.

 

[NorthSideSox72]

I got the impression that you thought the banks really weren't facing much in the way of systemic risk of lawsuits at all, whether they came from the mortgageholders or the investors. probably my mistake.

We get a hint in the article of what the conditions are, that the holders feel are being violated:

 

it urges the Trustee to enforce Countrywide Servicing's obligations to service loans prudently by maintaining accurate loan records, demanding the repurchase of loans that were originated in violation of underwriting guidelines, and compelling the sellers of ineligible or predatory mortgages to bear the costs of modifying them for homeowners or repurchasing them from the Trusts' collateral pools.

 

So no one is looking for an unwind, no one is looking for anything earth-shattering. They are looking for better records and docs (easy to fix), and then looking to put onto the bad lenders the obligations of underwriting. What this will do is focus the badness on those parties who wrote and specifically underwrote bad loans, that they were aware of or obviously should have been aware of being bad in the first place. That will end in a narrow set of parties paying big, the MBS securities remaining intact, and the security bundlers having to just keep better records and use better trustee conventions.

 

That's my take anyway.

 

[Balta1701]

We get a hint in the article of what the conditions are, that the holders feel are being violated:

 

 

 

So no one is looking for an unwind, no one is looking for anything earth-shattering. They are looking for better records and docs (easy to fix), and then looking to put onto the bad lenders the obligations of underwriting. What this will do is focus the badness on those parties who wrote and specifically underwrote bad loans, that they were aware of or obviously should have been aware of being bad in the first place. That will end in a narrow set of parties paying big, the MBS securities remaining intact, and the security bundlers having to just keep better records and use better trustee conventions.

 

That's my take anyway.

Well, here's the biggest problem...most of those bad lenders are long since gone and out of business. There's probably a few left, like Countrywide, which is BofA's nightmare now, but there's no originators left from the boom to go after. The only people left to go after are the people who approved the loan and then packaged and sold it...aka, the big banks.

[NorthSideSox72]

Well, here's the biggest problem...most of those bad lenders are long since gone and out of business. There's probably a few left, like Countrywide, which is BofA's nightmare now, but there's no originators left from the boom to go after. The only people left to go after are the people who approved the loan and then packaged and sold it...aka, the big banks.

If the originator is gone, the mortgage was taken on by another financial entity, and yes, they then assume the risks. But I think you are vastly overstating who is gone now. The banks who originated the loans are mostly still around, though some have been acquired.

 

And the big banks are only a part of who approved the loans. Furthermore, the securitization process is handled by a different type of financial than the mortgages. Buck stops with the underwriter in most of these cases, and the underwriter will always still exist - just might be they were acquired.

 

I think what we will see is some new names of financials that are foreign to many people. Underwriting specialists. Thing is, most of those firms live and breath their own protections, so I'm guessing things won't be as bad as is being characterized here. And yes, the mortgage writers will get a ton of flack too, because the underwriters will say "well, the writer said the lender had X qualifications, and they didn't". There will be a whole lot of finger-pointing.

 

But ultimately through all of this, what still bleeds all the way to the investors is risk of choice. These instruments are not guaranteed in any way. The mortgages themselves are not even guarantees. So I'll bet that you will see many of these lawsuits fail or fade, or settlements made for relatively small sums.

 

[Texsox]

I believe this also ends the last of the "safe" investments, real estate. People will now understand that there are risks and values can fall. I remember buying my first house, conventional wisdom was buy more house than you could currently comfortably afford because your income will rise and the value of the home will increase. It worked wonderfully for me because A and B happened, now I realize how foolish that move may have been.

[Balta1701]

I believe this also ends the last of the "safe" investments, real estate. People will now understand that there are risks and values can fall. I remember buying my first house, conventional wisdom was buy more house than you could currently comfortably afford because your income will rise and the value of the home will increase. It worked wonderfully for me because A and B happened, now I realize how foolish that move may have been.

I gotta call B.S. on this Tex. The groupthink that has driven the last 2 bubbles isn't going to go away. There was every reason in 2001 to think that the Stock Market was a risky investment, but books called "Dow 36,000" were still published. Housing bubbles had happened and popped repeatedly throughout history. California had one in the late 80's. There's the legendary Florida land rush before the depression. Hell, there is every reason to believe China has a monstrous real estate bubble going right now as we speak, and their interest rate increase today probably will wind up being something similar to what was going on in the U.S. market in 06 or so.

 

If things like leverage aren't regulated, the same groupthink will take over, some wizard will convince himself he's come up with the new security, and bang.

[Texsox]

I gotta call B.S. on this Tex. The groupthink that has driven the last 2 bubbles isn't going to go away. There was every reason in 2001 to think that the Stock Market was a risky investment, but books called "Dow 36,000" were still published. Housing bubbles had happened and popped repeatedly throughout history. California had one in the late 80's. There's the legendary Florida land rush before the depression. Hell, there is every reason to believe China has a monstrous real estate bubble going right now as we speak, and their interest rate increase today probably will wind up being something similar to what was going on in the U.S. market in 06 or so.

 

If things like leverage aren't regulated, the same groupthink will take over, some wizard will convince himself he's come up with the new security, and bang.

 

 

Good thought. I will agree if you placed some sort of time on that. I think this pain will be remembered for many years. But as a new generation of home buyers enters the market they will probably believe they are smarter than their parents.

[Balta1701]

Flying lawsuits.

Bank of America Corp (BAC.N), the largest U.S. bank, has sued the Federal Deposit Insurance Corp over $1.75 billion of investor losses mainly from the 2009 collapses of a large regional bank and large mortgage lender.

 

The lawsuit concerns the FDIC's role as receiver for the main banking unit of Alabama's Colonial BancGroup Inc (CBCGQ.PK), and the implosion of Taylor, Bean & Whitaker Mortgage Corp, where federal prosecutors say a multi-billion dollar mortgage fraud took place. Bank of America is trustee for notes issued by Taylor Bean's Ocala Funding LLC unit.

 

In a complaint filed this month in Washington, D.C. federal court, Bank of America said the FDIC has wrongly denied claims by Ocala noteholders to recover from Colonial Bank and an Illinois lender also in receivership, Platinum Community Bank.

 

Bank of America accused executives at Taylor Bean, Colonial and Platinum of having fraudulently schemed to "double- and triple-pledge mortgages and steal assets" to hide their faltering conditions as the housing market declined.

[jasonxctf]

Paraphrasing writer Mark Twain, the reports of the U.S. manufacturing sector's death are greatly exaggerated. The nation's factory sector unexpectedly expanded at a faster pace in October, as the Institute for Supply Management manufacturing index jumped to 56.9 from 54.4 in September.

 

It was a broad-based gain, as three of four key components -- new orders, production, and employment -- rose.

 

October's ISM report marked the 15th consecutive month manufacturing activity expanded and the highest index level since May.

 

Readings above 50 indicate an expansion; under 50, a contraction. Analysts surveyed by Bloomberg had expected the manufacturing index to rise to 54.5 in October from a revised 54.4 in September. The index was at 56.3 in August, 55.5 in July, and 56.2 in June. Readings above 50 indicate an expansion; under 50, a contraction.

 

 

 

See full article from DailyFinance: http://srph.it/976ziB

 

[NorthSideSox72]

Many feel that small businesses ramping up is often the first harbinger of a stronger economic recovery. If that's true, then recent data about small businesses would seem to suggest the beginnings of a surge may already be underway...

 

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, rose 16 percent in September from a year earlier, PayNet said. The index rose 15 percent in August, and is now at the highest level in almost two years.

 

A surge in borrowing by small businesses can be a harbinger for the broader economy, because small firms account for as much as 80 percent of new U.S. hiring. Small businesses typically use the loans PayNet tracks to buy new equipment, and eventually they will need to hire people to operate it, said William Phelan, PayNet’s president and founder.

 

“This doesn’t point to anything but a robust recovery,” Phelan said in an interview. “These small businesses are people who see the demand in the economy every day, and they are alert to react very quickly to that demand.”

 

From Trib Biz.

 

[Balta1701]

QEII officially sets sail.

The Federal Reserve launched a controversial new policy on Wednesday, committing to buy $600 billion more in government bonds by the middle of next year in an attempt to breathe new life into a struggling U.S. economy.

 

The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.

 

The U.S. central bank said it would buy about $75 billion in longer-term Treasury bonds per month. It said it would regularly review the pace and size of the program and adjust it as needed depending on the path of the recovery.

 

In its post-meeting statement, the Fed described the economy as "slow", and said employers remained reluctant to add to payrolls. It said measures of inflation were "somewhat low."

[Cknolls]

QEII officially sets sail.

 

 

Total is $1 Trillion. They are also buying $35 billion/mo in mortgage bonds if I read it correctly??

Edited November 3, 2010 by Cknolls