My Times, My Onion

The Times talks about the people falling through the cracks of the Obama mortgage relief plan, centering their story around a chap whose story is unlikely to resonate with Middle America or even the most devoted libs of the Upper West Side.  Their chosen hero is a used car dealer, not exactly the most trusted profession in America; I doubt he gains credibility points by specializing in used luxury cars.  And for the xenophobes out there (surely not on the West Side) we learn this tidbit:

Mr. Moussa now has monthly mortgage payments of $8,700 and a home that may never recover its equity. The stress has eroded his marriage, and his wife and daughter are now with her family in Beirut.

What kind of a country are we living in that people can't emigrate here, get bailed out on a huge mortgage, and then move back to their home country?

And this is really the most typical story of a struggling homeowner that the Times could find?  No one in Westchester County has lost their job in financial services and is struggling to make their mortgage payments?  They had to go all the way to California to find a used car dealer?  That is first-class reporting. 

More on the Obama mortgage delinquency plan here.

[END OF THREAD]

Comments

[kim]

Hah, hah, Beirut's a better place to be than California. I get it.
=======================================

[kim]

We all yearn for Teheran, you know.
=================================

[kim]

Damascus? Oh, don't ask us.
===========================

[bad]

Administration officials estimate that the plan will help as many as four million people avoid foreclosure, at a cost to taxpayers of about $75 billion.

Doesn't that work out to about $187,000 per mortgage if all of the 4 million are helped?

This ain't gonna play well in Peoria....

[bgates]

And this is really the most typical story of a struggling homeowner that the Times could find? No one in Westchester County has lost their job in financial services and is struggling to make their mortgage payments?

You thinking of anyone in particular?

[bad]

Sorry, that's an average of $18,750 per mortgage. (I found the calculator)

[Old Lurker]

Girls and math, Bad?

[Old Lurker]

To be fair, Bad, with these guys there are simply too many zeros floating around...

[Thomas Collins]

Federal Reserve Board of Governors to taxpayers: up yours. See LUN.

[Ranger]

And in other housing related news, after ardently promising that his bail out plan would not "help speculators who took risky bets on a rising market and bought homes not to live in but to sell." The WaPo reporst today that "Fannie Mae and Freddie Mac said they would refinance loans for some second homes and investment properties, too."

Via http://campaignspot.nationalreview.com/post/?q=MGUxMmYzNjI3M2MwM2M2NmI0ODllYTZkNmE4ZjQ2MGE=>Campaign Spot

[Cecil Turner]

Here's a good pre-mortem from IHT (Housing aid won't solve U.S. crisis):

Data from the U.S. Office of the Comptroller of the Currency show that more than 53 percent of loans modified in the first quarter of 2008 had defaulted again within six months. Nearly 36 percent went bad within just three months. And this was when the U.S. economy was in better shape than it is today and unemployment lower.

But politically, this is a good move. It reinforces the spin that the financial situation is a "foreclosure" crisis, hence insulating Democrats from their actions to stimulate high-risk housing loans.

[bad]

Old lurker, it was from using too many zero. My "reasonable estimate" antenna doesn't function in those numbers.

Ranger, I'm not surprised. I've speculated from the beginning that the "righteous" test on who gets a bailout wouldn't produce enough mortgages to address the problem.

It was a stupid promise for Obama to make in the first place.

[bgates]

It was a stupid promise for Obama to make in the first place.

If the purpose in making the promise was to keep it, yes. If the purpose was to be seen making the promise, then he's succeeded in keeping the approval of tens of millions of people who still think he took public financing, kept lobbyists out of his administration, stripped earmarks from the budget, etc.

[Tom Maguire]

I've speculated from the beginning that the "righteous" test on who gets a bailout wouldn't produce enough mortgages to address the problem.

It was a stupid promise for Obama to make in the first place.

Agreed. And consider his argument that avoiding foreclosure benefits the whole neighborhood (probably true), so therefore taxpayers all across America should chip in - the fact that the foreclosure is occurring on a house owned by a speculator probably does not make it less of a blight on the neighborhood.

Besides, those speculators created jobs by building spec houses, and paid for people's retirements by buying existing homes and letting the old owners move to Florida. If Obama wants to means-test mortgage relief, he should say so, but why pick on speculators?

[Old Lurker]

Bad, and these are mere billions. I tried one of those calculations last week with trillions and it took me forever to get the right number of zeros down on paper!

[Rick Ballard]

I know that the NYT is unreliable tabloid trash but surely somebody on staff might read the latest guidelines prior to printing information which is incorrect. The two most glaring errors in the Times gargle regard the 105% LTV - which is not part of the new guidelines which state: "There is no minimum or maximum LTV ratio for eligibility purposes." and the statement in the article that "Refinancing is only for loans owned or backed by Fannie Mae and Freddie Mac, or roughly half of all homes.", which is not contained within the new guidelines either (AFAICT).

Perhaps the news and facts are just moving too quickly for the sclerotic and dying NYT but that article may actually be taken as pertaining to the truth by some fool who will give up because the Times says he doesn't qualify - or some credentialed moron who believes the Times told him he didn't qualify.

I saw the same garbage regarding LTV and loan ownership in an AP article yesterday. I understand that Turbo and Zero have poor communication skills due to their dedication to prevarication but the staff prepared guidelines are not unintelligible - except, apparently, to Columbia Trained and Certified Journalists.

[bgates]

consider his argument that avoiding foreclosure benefits the whole neighborhood (probably true), so therefore taxpayers all across America should chip in

That's a bigger difference in scale than billions vs trillions.

[Matt]

anyone notice that AP is running articles critical of the republicans every day now? The latest was an "analysis" that said Palin'
s looks hurt McCain.

They will ignore graft and corruption and socialization of the nation for this garbage? These are much more than fellow travelers.

[RichatUF]

Matt-

More comfort food for the credentialed moron class. An article based on a "study" of 133 democrat college students doing a "Hot or Not" write up on Gov. Palin-people actually get paid for this crap?

[Paul Zrimsek]

Count yourself lucky you're not Japanese, Bad. In Japan when you lose face due to a math error you're expected to sharpen a pencil and commit sudoku with it.

Contra TM, the NYT story isn't even up to Onion standards: Moussa isn't an Area Man.

[Pofarmer]

Pop was talking to a neighbor the other day who's nephew lost his high paying financed job on the east coast and just wasn't going to be able to make his $6700 a month house payment.

Boo.

Frickin.

Hoo.

[narciso]

You meant seppuku, sudoku is more confusing than painful. Why I am not surprised that Al AP as Rush calls it, would lead with that
story; is anything they do more transparent than this. This obscures the main point, she was right about the auto bailout, looks like GM is thinking about bankruptcy anyways. Ha suckers, meaning us.

[MayBee]

Pop was talking to a neighbor the other day who's nephew lost his high paying financed job on the east coast and just wasn't going to be able to make his $6700 a month house payment.
Boo.
Frickin.
Hoo.

I have sympathy. It's no more fun to lose your expensive home than it is to lose your inexpensive home.
It doesn't mean I want to bail him out, but I sure do feel for him.

[bad]

LOL PaulZ

[Matt]

very funny Paul!

one of our manager's brother in law ran a Porsche dealership. he and his wife both had brand new cars, a $7-8K/mo mortgage, and were living the high life.

18 months ago they declared bankruptcy. Now they still have the nice cars an big house somehow, but they screwed all of their creditors. These are the kind of people who got us into this mess.

[Jane]

It was a stupid promise for Obama to make in the first place.

I don't see why. No one seems to mind that he never does what he says.

They just announced 60+% approval ratings. I dunno, I see a lot of people changing their minds.

[bad]

And consider his argument that avoiding foreclosure benefits the whole neighborhood (probably true), so therefore taxpayers all across America should chip in - the fact that the foreclosure is occurring on a house owned by a speculator probably does not make it less of a blight on the neighborhood.

Obamalogic...

[bad]

Did Obama just say he is getting letters that start:

I never thought I'd be writing to you....

[narciso]

Jane I wanted to say, that the program with Fr. Preble, was one of the best I've heard in the series, before TypePad swallows up my comment. Hope he'll have more in the future like that. So basically he's saying that we're liable for any foreclosed property because of its impact, regardless of how it came to that state.

[Sue]

OMG. I need a calculator to figure out how much money my 401k just lost while Obama was speaking. Did you see the ticker at the side going down, down, down? ::sigh::

[Jane]

Narciso,

Thanks. I've had a few say he rolled over for me too quickly. I haven't heard it yet, so I have no opinion.

[Rick Ballard]

OL,

Wrt your concern about BK refs being able to modify mortgages, I'd say these new guidelines will have just as deleterious effect. This language:

An NPV Test will be required on each loan that is in Imminent Default or is at least 60 days delinquent under the MBA delinquency calculation. This NPV test will compare the net present value (NPV) of cash flows expected from a modification to the net present value of cash flows expected in the absence of modification. If the NPV of the modification scenario is greater, the NPV result is deemed positive, and the servicer must modify the loan (absent fraud, etc.) However, an “NPV positive” result is not necessary to qualify a loan for a Home Affordable Modification and the associated lender/investor, servicer, and borrower payments.

removes discretionary judgment from the servicers and will be detrimental to owners of the MBS. Holders of '05 and earlier vintage MBS look like they'll be discovering the reality of the Dem NewD irection in short order.

That doesn't mean I'm opposed to the program - just that sorting out the winners and losers is a bit complicated. OTOH - anyone dumb enough to buy MBS deserves a lesson, even if they bought a nice CDS belt and suspender set to go with it.

[Old Lurker]

Rick's NYT quote: "loans owned or backed by Fannie Mae and Freddie Mac..."

Last week that same (mis)construction starting showing up in the press, with some reporters talking about loans "guaranteed" by Fannie/Freddie. If FM bundles 10000 notes into a pool and sells MBS based on that pool, that's not the same as "owning" or "backing" or "guaranteeing" in the usual or implied sense.

[MikeS]

Obamalogic...
No Bad. The problem is Obamalingua. A lot of people just don't understand what Obama is saying and blame the misunderstanding on his logic.

Some have trouble understanding Obama when he says he government won't grow bigger, though it will increase in size. Or some misunderstand when he explains that he will root out corruption and earmarks from government even though he roots for pork barrel spending, or how he will eliminate partisanship by ignoring the other party.

People who don't believe that Obama can pay for his plans with the relatively meager amount of revenue he can get by taxing only the rich, simply don't remember the story of the loaves and the fishes.

Remember, With man this is impossible, but with O. all things are possible.

[Old Lurker]

Rick, you are exactly right about that "If NPV<=>...Then..." garbage.

One of the contributing factors to the 87-91 meltdown (caused largely by a bubble in commercial real estate) was created when the Feds invented similar formulae/rules to guide outside appraisers in evaluating complicated commercial projects so bank examiners could then tell the banks what to do to the borrowers. Central Command & Control in real life finance just simply does not work.

[Extraneus]

Uh oh. The Politico goes after one of our leader's crutches:

Obama safety net: the TelePrompter

“The problem is he never looks at you. He’s looking left, right, left, right – not at the camera. It’s almost like he’s not making eye contact with the American people.”

[snip]

"Whether one uses note cards or a teleprompter, the American people are a lot more concerned about the plans relayed than the method of delivery. This is not always true of the media," said Bill Burton, deputy press secretary.

[Old Lurker]

Man, Rick, that language you quoted "If X, the Servicer must modify" is a staggering shift of responsibility & risk away from borrowers and onto lenders.

Worse, while the debate so far has assumed a power conferred on BK judges, and that implies the borrower has crossed the line and filed for BK (and therefore opened himself to other reviews and sanctions), Chris Van Hollen (D Md) was saying they intend the threat of these new powers to "encourage" servicers to grant these gifts before the borrowers even take that step.

Is it Christmas yet?

[steve sturm]

Obama and his cheering section are pushing the theme that the mortgage relief benefits 'deserving' homeowners, with the implication that we're talking about responsible americans who have lost their job and thus fallen behind on their mortgage. But as I think I've shown, these people make up a minority of those who are currently in trouble. Most people in trouble are those who bought more house and took on more credit than was wise.

[Matt]

I can understand when someone loses their job and needs some short term relief. But the reality is that even when times were good, many of the debtors had a clock ticking on ARM's and 2nd's where they knew they could never have met the monthly payment once the loans reset. The people who took those loans out should not be allowed in any program, as they will never be able to afford to pay a market rate mortgage. This also drives up the cost of everyone else's mortgage as well.

The markets will freeze solid if the BK judges get themselves involved. This is already being discussed in the industry. If there is no predictability of return on investment for the people holding the notes, whole sectors of debt will simply cease to be traded. Insurance will become unavailable, and the instruments will become even more toxic.

[jorod]

You have to find a story to fit the facts. Why can't you understand this?

[Old Lurker]

"If there is no predictability of return on investment for the people holding the notes, whole sectors of debt will simply cease to be traded."

Matt, as I know you know, the market can and does deal with uncertainty of the actual returns, and always balances that uncertainty against the expected level of return. What markets do not factor into investment environments like that of the (former) US is a radical change in property rights and contract enforcement. THIS challenges investors on both scores. Even the threat of this forces global investors to calculate the risks of dealing with us differently than last year.

[RichatUF]

Old Lurker-

Haven't been following the write ups on the Obama mortgage plan, but the "stress test" on the borrower can also string out the terms for 40 years. Railing the interest to 2.0% and the terms out for 40 years a loan of 185k would have a P+I of $560/mth. In Michigan that sort of work out would probably be worth it.

However, I'm not sure what the servicers will do because they have enough flexibility on the NPV test with interest rates and term length they can force-fit pretty much anything into the 31%-38% window. Will probably start seeing screwy mortgages with 2.875% for 37.5 years.

[Rick Ballard]

"Even the threat of this forces global investors to calculate the risks of dealing with us differently than last year."

OL,

I have this mental picture of German and Swiss investment advisers with clients to whom they had peddled MBS (w/CDS belt and suspender set) reading through this and then slamming a hand down repeatedly on the desk while screaming "Nein! Nein! Nein! Dummkopfs! Scheissekopfs!

I'm very curious as to what Wells Fargo's reaction will be. They service a lot of the foreign flavored MBS and the foreign flavors (Credit Suisse, DeutscheBank and UBS) all suck badly regarding expected performance.

Gentlemen! Start your attorneys!!

[Ignatz Ratzkywatzky]

Will probably start seeing screwy mortgages with 2.875% for 37.5 years.

With the ten year at 2.9% that doesn't seem too awful.
However, if inflation kicks in lenders will be stuck with low mortgage rates in a rising interest rate environment.
Their only hope would be that inflation started kicking home values up too. Or maybe some whizz kid could come up with an even more esoteric derivative to make a silk purse out of Ears.

[sbw]

I can see a situation where someone takes O aside and says: "Look, Mr. President, you don't know what you are doing, don't know why, and don't know how. Now, I know you have dreams, but I don't care what you want to do, now is not the time. I'll let you do the talking with your TelePrompTer, but you're gonna say my words real clear. If you don't say what I tell you to say about limiting what you do to smooth the market drop, real quick, with feeling, I am going to look into that camera at CNN and say I have lost confidence in you.

That person is Bill Clinton.

[Old Lurker]

Rick my thoughts of those Swiss bankers lately concern whether they will follow Swiss law on foreign owner account confidentiality, or US law... :-)

Not for me of course, The First Federated Bank of St. Jane will need a trustworthy foreign correspondent. We need to hide the profits from the Bumper Sticker business, the Trumbril Cart Rental Business etc.

[Rick Ballard]

OL,

I've been wondering when the Fed/Treasury Ponzi scheme involving 'Fed dollar' purchase of agencies to fund purchase of Treasuries is going to get some attention. It's a cute trick to hold that 10 year rate at the 2.9% which Ignatz mentions and I'm sure the bond traders are enjoying the commissions generated but it's distorting the "real" market. Unless the Fed intends to become the only "real" market.

What's next? A merger of ZombieGroup, ZombieMotors and ZombieInsurance, as Rich mentioned? 100% tax credits for the purchase of UAW/Dem Widowmakers with a 12 month "lifetime guarantee"?

[bad]

Rick, would I be correct in speculating that those low interest rates on "safe" investments resulted in much more market exposure for a large percentage of the population?

[Matt]

OL;

never before have we tread this path, and that is what is scaring the daylights out of the markets. If a BK judge can adjust a mortgage, what are the limits? With the slicing and dicing of the instrument itself already a fait accompli, who gets what and who takes the hit? No one has yet been able to price in these factors because they are highly risky and with the politicians involved, who knows what will happen. Thus the markets will shy away from this debt until there is some transparency. This will simply push a recovery further back.

[Old Lurker]

"What's next? A merger of ZombieGroup, ZombieMotors and ZombieInsurance, as Rich mentioned?"

Rick/Rich, old JP Morgan would be so proud! Just what he had before the trustbusters screwed up his world!

Matt, you are so right. This was mind numbingly complex before...and these rule changes make the new calculus just too dangerous. So capital is hiding and waiting.

[Rick Ballard]

Bad,

I don't think so. A "Fed dollar" injected into the economy through the purchase of agencies (those are Federal Home, Fannie or Freddie issues) is explicitly inflationary. I.e. - the money supply has increased but the amount of goods has not. The "Treasury dollar" subtracted from the economy through the sale of new Treasuries is deflationary. If the Treasury was vacuuming up dollars through new debt issues it would eventually (because of the amount of money involved) wind up paying more interest in order to attract buyers (yes, I do understand that this is oversimplified). The Feds injection of money compensates for Treasuries subtraction and artificially depresses interest rates - for the moment.

The other factor holding interest rates down is the fact that institutions (the big buyers - pension funds) continue to have a net inflow of contributions without many attractive places to park it. The corporate market is kinda dull at the moment in terms of new issues and the old standby - ABS - is, well the technical term is "pretty much dead" wrt new issues.

It may be that the absence of new ABS and corporate issues is having a greater effect than the Fed injections but I have no doubt that the Fed injections are having an impact.

[Will]

My heart breaks for this guy. He pulled about $500,000.00 cash out of this house and cant make the payment. Imagine that.

For Mark Klepper, 50, who lives in Miami, buying a big house was a way to establish credit to start a business. In 2004 he bought a home for $585,000, and watched its value rise to $1.4 million. After refinancing twice, he owes $1,064,000. But the home is now worth a little more than he paid for it, and his income has fallen by 40 percent. He stopped paying his mortgage in January. If he were to continue paying, he said, the drain would crush his business. The government’s plan does not help him.

[RichatUF]

So much for the so called "Blue Dog Dems" growing up a little bit.

House vote on Bankruptcy Judges as Mortgage Brokers...passes 234-191.

Wonder if some lawyers are parsing over the default triggers and might be looking at popping a few partial default grenades?

[bad]

Thanks Rick

[Pagar]

Drudge has a note saying that a candidate for deputy treasury post has withdrawn (labeled developing). I can't get it to link.

[Matt]

the trial lawyers are loving it....

[Rick Ballard]

Pagar,

Here is the story on the withdrawal. I guess there isn't enough cheese on the ship to lure the rats. That or they know it will be a quick round trip.

(Actually this reeks of Zero Admin ineptitude - like the Zinni matter.)

[Matt]

Rick;

apparently Geithner has no assistants or deputies to assist him. The clown is in the middle of the greatest financial crisis we've seen in 50 years and he's working alone? Very scary.

[bad]

March 5 (Bloomberg) -- Former U.S. Securities and Exchange Commission member Annette Nazareth has taken herself out of the running to be deputy Treasury secretary, according to people familiar with the matter.

Nazareth, who hadn’t yet been nominated, grew frustrated at the length of the selection process and was concerned that her SEC work would be assailed at Senate confirmation hearings, the people said. Before becoming a commissioner, Nazareth was head of the SEC’s market regulation division where she helped design an oversight regime that has been criticized for missing Wall Street’s excessive risk taking.

She should have been more than concerned. Those gasbags would have put on such a show --- just before voting for her confirmation.

[Pagar]

Thanks, Rick, Matt, and Bad.

That Geithner is working by him self, in the current most critical job in Washington is not good, but the fact that he has to waste his time appearing at all kinds of stupid congressional or other functions is doubly insulting in my way of thinking.

[bad]

But Pagar, look how well he did monitoring Citi....

[Pagar]

Bad, that was before he had to pay all those pesky taxes. When they forced him to pay up like everyone else, it just broke his spirit and he hasn't been the same since.

[PD]

commit sudoku

That's about how I look at sudoku, yes.

[Matt]

as Doc Holiday said, "it would appear the strain was more than he could bear"....

[Garth]

ah loves me some anecdotes...