I don’t know when it was that we reached absurd-absolutem as .gov bailed out- no, rewarded- gamblers. But banktards, mortgage broketards, realtards, fliptards, homedebtors- and the greater fools within each link of the chain, should feel smug and snug as a bug in a rug now that they’ve successfully bankrupted (“but I don’t feel tardy”) the rest of us.
Instead of acting responsibly and soberly, marking down principal on mortgages so we can move on, the path taken has been an attempt to re-inflate the bubble. Banks received so much money from taxpayers that not only have these recipients of the greatest theft absconded with booty from future public coffers they are surprisingly, suddenly, startingly proftiable (Wait. How did that happen? Why ever did they need a bail-out?). Just to show what their true colors are, banktards connivingly refuse to pass on the saving to US.
Corrupt, unelected cronies are still at the helm, deciding which direction the rest of us shall go (cue: “Straight to Hell”).
So what, since the election, has changed exactly?
They bought themselves a little more time. So for now, this country can continue to maintain an appeareance of “affluence” to the rest of the world. For now, they’ll continue to buy our debt (“Treasuries” but as I like to call it “Federal scrip”) because they’ve got very little choice. For now.
First payment defaults are a warning sign of fraud. What is a first payment default? Oh, you’ll love this. This is basically where a borrower fails to make the freaking first payment! Absolute fraud. And look at the above rates. The 4.37 percent for subprime loans is incredible. But take a look at the Alt-A products. Yup, those suckers are moving on up following a trend that we are all too familiar with. This isn’t one or two bad apples. This was an industry that operated like a casino giving out loans to anything that moved. And now we are entrusting this same industry to modify the loans of the people it screwed? What a shock that re-default rates are up over 50 percent.
The cram-down is the only option. You make the lender eat it. The taxpayer has already been forced to eat Fannie Mae and Freddie Mac, AIG, and we practically own a piece of every large bank in the country. The cram-down would have had a better success rate because you address the root of the problem that is the actual principal value of the mortgage. That is, you bring down the price of the home to market rates. It is useless to lower rates or extend the term if the price of the home is still underwater. It might sound good to the press or make the servicer happy to get a fee, but in the end the borrower will be back at square one because many homes are still over valued. That is the crux of the problem yet no one can openly admit this. It is the elephant in the room. Home values in many metro areas are still too high!
“Loan modification is the new refi!” -as overheard on the idiot box