Friday, April 20, 2007

Subprime Mortgage Bailout: Windfall to Lawyers

Christmas comes early to the legal profession if the government-sponsored bailouts by Fannie Mae and Freddie Mac proceed.

From CNN/Money:

"Tax regulations make it difficult to rewrite the terms of securitized loans. . . . To cover its responsibilities, the servicer would probably want to clear the details of each case through counsel, which can take lots of billable hours, and wait until the loan is in arrears by 60 days or more. The delay often means the borrower gets deeper in debt."

The IRS and lawyers are involved, so what could go wrong?

Hat Tip: Matt's comment at The Housing Bubble

Tuesday, April 17, 2007

Bipartisan Bloodlust for Mortgage Lenders but Congress Blind to Borrower Fraud?

Congress Investigates Housing Bubble Mortgage Lenders: Bipartisan Inquisition Starts Today.

Congress today eyes new restrictions on your access to money:

“Ideas that seemed out of the mainstream today may become mainstream in the future”— Andy Laperriere, International Strategy and Investment, quoted by Caroline Baum at

Bipartisan Bloodlust . . . but Blind to Borrower Fraud?

Barney Frank (D-MA) and Spencer Bachus (R-AL), party leaders of the House Financial Services Committee, vowed to hold mortgage-bond investors liable for deceptive lending practices—but I saw no intention to investigate deceptive borrowing practices.

Does predatory borrowing get a free pass?

Check your C-Span listings and make the popcorn.

Thursday, April 12, 2007

Jobs Sustain Bubble: Await Recession for Final Reckoning

From Investor's Business Daily:This is bad news for 3 reasons:

  1. California is a monumental housing bubble still waiting to pop.
  2. The jobs explanation tells us that it is a mistake to fixate on subprimes when they are only the posterboy du jour for massive overleveraging under a wide array of guises and financial instruments (all the non-subprimers who nevertheless stretched to bid above asking price or are otherwise overleveraged and one paycheck away from default).
  3. The bank-blaming bailouters will not let these facts get in the way of slick politicking--but they might use these facts to exploit the old rustbelt constituency and expand their bailouts to Chrysler, Ford, and General Motors . . . again.

Wednesday, April 11, 2007

Lobbyists Mobilize To Demand Mortgage Bailout

"Activists" and "civil rights groups" blame business for lending people money and threaten lawsuits to avenge "victims."

Quoted from

"We've heard one heartbreaking story after another of borrowers with limited incomes being sold mortgages they could not afford," Sen. Sherrod Brown, D-Ohio, said at a briefing on Capitol Hill.

"We want to send out hope to the victims of the subprime lending crisis," said Bruce Marks, NACA's chief executive.

Activist and community groups are stepping up efforts to aid homeowners affected by the housing market's woes. They argue that banks and mortgage brokers_not borrowers_bear most of the blame for the industry's problems.

Last week, civil rights groups called for a six-month moratorium on foreclosures resulting from high-risk loans given to people with shaky credit, arguing that lenders could face lawsuits if they don't help borrowers.

Senator Schumer Rushes Federal Mortgage Bailout

Senator Chuck Schumer (D-NY) jumped on the bailout bandwagon by pledging a federal “infusion” of hundreds of millions of dollars. Schumer stated that he will introduce bailout legislation soon and that it must be done right away.

Thursday, April 5, 2007 Adds No-Bailout Letter created a no-housing-bailout letter. Please, read it, comment on it, compare it to Marinite's letters, and consider sending it or your own version to the powers that be.

Please tell them that Not One Cent sent you.

Maybe we should post a no-housing-bailout-letter roundup.

Housing Bust Raises Unemployment Nationally

"U.S. Initial Jobless Claims Rose to 321,000 Last Week."

"Construction and housing-related businesses and auto makers are trimming staff."

Today, the Labor Department reported increased unemployment. The news could be dismissed as a modest correction in an overall stable labor environment or as the first signs of increased recession risk.

More jobless might mean more foreclosures and more unsold homes (fewer buyers).

However, more jobless might mean more chance that the Federal Reserve might cut interest rates and thereby lower adjustable mortgage rates (not likely at the moment).

What does all this mean for odds on any housing bailout?

Tuesday, April 3, 2007

Banks Lose Bailout Bonus in Moody's Ratings

Moody's removes government guarantees from risk calculations:

Subprime market downturn stings major U.S. banks

Rate Bubble Bailout News Tool

I added Google News below the header to help us keep up to date on housing bubble bailout proposals. You can see the search phrase at the left and then the relevant link. Let us know what you think or suggest a search phrase.

Thank you.

Sunday, April 1, 2007

Wiki letters

My wiki now has two letters of opposition against the bail-outs for people to copy-and-paste into an email or whatever. Here's the first one. Here's the second one.