Mandelman Matters Presents: ARE YOU READING THIS STUFF?
Mandelman Matters Presents:
ARE YOU READING THIS STUFF?
What am I supposed to do?Ā I read constantly and it’s painful.Ā I figured that maybe by sharing it with you, I would know I wasnāt alone, and it would stop me from slamming my fingers in my car door for want of a distraction.Ā So, here it isā¦ the first edition ofā¦ Mandelman Matters Presents: Are You Reading This Stuff?
1. Rethinking Freddie and Fannie Business Week/Bloomberg
(And Iām rethinking whether thereās an actual real estate or mortgage market anymore.)
“ā¦ They are single-handedly keeping the nation’s mortgage machine going as the only ones buying and securitizing home loans from originating lenders. Without Fannie and Freddie, it would be nearly impossible to buy or sell a home today.”
Hey, wait a minute hereā¦ who broke the damn bond market?Ā And letās get make sure we get this straight: We give tax credits to the buyers to get them to buyā¦ only government spending is the ONLY provider of mortgagesā¦ thereās a giant shadow inventoryā¦ foreclosures are going strong everywhereā¦ a new wave of foreclosures is expected over next three years as Option ARMs and Alt-A loans resetā¦ the only people selling homes are those who have to sellā¦ and donāt even ask about commercial properties underwater by an average 44%ā¦ BUT things are recovering?
Well, alrighty then.Ā Iām tired of fighting about it.Ā Hurray for the recovery.Ā Great job, guys.Ā Crackerjack work.Ā Now go fix Europe.
Not that anything approaching the true carrying cost of all that red ink is appearing on the government’s balance sheet.Ā The real-time, mark-to-market losses are kept out of Administration talking points on the cost of the bailout.
Perfectly logical in the todayās America.Ā Keep it off the balance sheet and out of the talking points.Ā That should fix things in no time.
As recently as April 23rd, Treasury Secretary Timothy Geithner told Congress that rescue programs will tally only about $87 billion, including Fannie, Freddie, and the Troubled Asset Relief Program.Ā The Congressional Budget Office figures that keeping the pair afloat will cost taxpayers $389 billion between 2009 and 2019.
Anyone care to place a little side wager on who turns out to be right on this one?
They can’t continue as they are, and the fragile economy can’t function without them. “Washington has essentially nationalized mortgage credit,” laments Doug Noland, senior portfolio manager of the Federated Prudent Bear Fund and a longtime critic of the GSEs. “It’s difficult to see how the private sector can now go alone without government guarantees.”
What does that guy at the Prudent Bear Fund mean by āessentially nationalized mortgage credit,ā and ādifficult to seeā?Ā Dougās got a way with words, doesnāt he?Ā I love the guy.
2. Law Firm Probed Over āFalseā Documents Filed in (FORECLOSURE) Court Cases DailyBusinessReview.com
Orā¦ Will the Real Scammer Attorneys Please Stand Up?
“ā¦ The Florida attorney general is investigating one of the nationās largest foreclosure law firms over allegations it falsified legal documents to expedite foreclosure cases filed by its lender clients.”
“Tampa-based Florida Default Law Group āappears to be fabricating and/or presenting false and misleading documents in foreclosure cases,ā according to the attorney generalās Economic Crimes Division in Fort Lauderdale, which is leading the investigation.”
I wonder why this isnāt national news, but some poor schmuck lawyer in Nowhere, Illinois who somehow didnāt succeed 100% of the time in getting a bank to modify a loan is.
The office of Attorney General Bill McCollum is reviewing consumer complaints, taking depositions and researching the companyās business practices to determine whether Florida Default has violated any state laws.
I seeā¦ because I guess itās possible that Florida law doesnāt make it illegal to āfabricate and/or present false and misleading documents in foreclosure cases?āĀ Let me guessā¦ if itās a bank and the Attorney General is running for Governor itās okay, right?
The investigation is based on allegations that Florida Default lawyers submitted misleading documents to judges hearing foreclosure cases. The documents included assignments of mortgage that āhave later been shown to be legally inadequate and/or insufficient,ā according an April 28 statement by the attorney generalās office when the investigation was opened.
Theyāve later been SHOWN to be LEGALLY INADEQUATE and/or INSUFFICIENT?Ā The Florida AG should open a Euphemism Factory and start shipping his crap all over the country.
Firms like Florida Default, which handles thousands of cases on behalf of lenders, are known in the industry as āforeclosure mills.ā Their job is to do all the legal work lenders need to foreclose on homes.
Wouldnāt it be more accurate to say: āTheir job is to do all the ILLEGAL work lenders need to foreclose on homes?ā
Foreclosures usually arenāt contested, so companies like Florida Default are rarely challenged over the validity of their affidavits and court filings. But homeowners are increasingly hiring foreclosure defense lawyers to scrutinize a lenderās right to take their home.
Damn those homeowners!Ā They keep insisting on hiring lawyers!Ā Something has to be done about this.
Most lawyers request copies of notes and mortgages to verify that the lender actually owns the mortgage on a distressed property. These documents can be hard to find because loans are often bought and sold many times. As a result, lenders often donāt have those documents available when they file a lawsuit. Months into the litigation, they produce documents, like assignments of mortgage, that were recorded long after the suit was filed.
See, thatās what I meanā¦ typical lawyersā¦ have to verify every little detailā¦ like that we actually own the mortgage before we foreclose on it.Ā If theyād just trust us, then we wouldnāt have to keep forging fraudulent documents for the judge.
Foreclosure defense lawyer Thomas Ice said the investigation into Florida Default is overdue. āIt was a long time coming for a governmental agency to get involved in investigating what foreclosure defense lawyers are showing the courts every day,ā he said, adding that he often sees misleading affidavits and other court documents allegedly filed by foreclosure lawyers representing lenders.
Well, thatās an easy one to figure out: Theyāve obviously been too busy searching for lawyers scamming homeowners out of a couple grand to deal with the lawyers scamming homeowners out of their homes.
It is unclear why the AGās office linked its investigation into Florida Default with another investigation of Docx, the Jacksonville mortgage processing service company.
Docx parent company, Lender Processing Services, said in a filing with the Securities and Exchange Commission that its subsidiary made an āerror in the notarization of certain documents, some of which were used in foreclosure proceedings across the country.ā
Docx āseems to be creating and manufacturing ābogus assignmentsā of mortgage in order that foreclosures may go through more quickly and efficiently,ā according to the Attorney Generalās office. āThese documents are used in court cases as ārealā documents . ā¦ when it actually appears that they are fabricated in order to meet the demands of the institution that does not, in fact, have the necessary document to foreclose.ā
Okay, letās not get carried away here.Ā Itās probably just these two companies that are doing this, right?Ā No one else, just these two.Ā Iām positive of that.
Want to hear something really funny thoughā¦ the Federal Bankruptcy Judges in South Florida are holding a conference in a few weeks.Ā Care to guess who the conference sponsor is?Ā Lender Processing Servicesā¦ Woohoo!Ā This is starting to play like a movie based on a Tom Clancy novel starring Harrison Ford.Ā Come on over, Iām making popcorn.
A call and e-mail to Florida Default president Michael Echevarria were not returned.
Hugs and kissesā¦ thatās just adorable, donāt you think?Ā Iām sure we shouldnāt read anything into thatā¦ he was busy.Ā Dentist appointment he made a long time ago, perhaps.Ā Stop itā¦ stop itā¦
3. Were Bad Math Skills Behind the Housing Bubble? Christian Science Monitor
A study finds a possible cause for the housing bubble and foreclosure crisis: bad math skills of sub-prime borrowers.
This may just be my favorite article of the last two yearsā¦ come on, stick around.
The foreclosures that led to financial crisis began with homeowners falling behind on their mortgage payments. Yet, have all the factors behind the foreclosures been uncovered?
Why no, they havenāt.Ā So far, there has only been time for the three of the worldās top economists, Simon Johnson, Joseph Stiglitz and Paul Krugman, to write books about the causes of the crisis, along with Andrew Ross Sorkin of The New York Times, and of course, Michael Lewis.Ā You know how un-thorough those guys can beā¦ they probably left a lot of stuff out by accident.Ā I bet when you tell them about your thesis, theyāll be sooo embarrassed.
To date, much of the blame has been assigned to predatory lenders. However, a new and strikingly simple finding explains another significant factor. The Atlanta Federal Reserve has recently released a paper that shows that the numerical skill of homeowners has a meaningful impact on the rate at which they fell behind on mortgage payments.
Okay, Houston we have a problem.Ā Julie Greenfield, who is like my older sister would be if I had an older sister, just got finished jumping on me for using inappropriate words in my attack of that jackass at Freddie Mac.Ā She says itās beneath me, and that I donāt need to use language likeā¦ well, read it yourself.Ā And I promised I wouldnātā¦ itās not like I do it very often anyway.
And now look at this.Ā Since I canāt say anything malsĆ©ant, as the French would say, Iām thinking I should go kick the ever-loving shiz out of this intellectually deficient mongoloid betch.
āThe economists tracked down a large number of sub-prime borrowers in New Englandā¦ then subjected (them) to a series of questions that required simple calculations about percentages and interest rates.ā
āEven accounting for a host of differences between peopleāincluding attitudes to risk, income levels and credit scoresāthose who fell behind on their mortgages were noticeably less numerate than those who kept up with their payments in the same overall circumstances.Ā The least numerate fell behind about 25% of the time.Ā For those who did best on the test, the number of payments they missed was almost 12%.Ā A fifth of the least numerate group had been in foreclosure, but only 7% of those who were more numerically adept had.
āSurprisingly, the least numerate were not making loan choices that differed much from their peers. They were about as likely to have a fixed-rate mortgage as the more numerically able. They did not borrow a larger share of their income. And loans were about the same fraction of the houseās value.ā
And so what exactly did you conclude based on this wholly inadequate description of this inconceivably questionable study, youā¦ youā¦ you donut-head.Ā (Howās that, Jules?Ā Can I say donut-head?)
Okay, first things firstā¦ this study, assuming that it was intended to be quantitative in nature in the first place, and if so was conducted scientifically meaning that the sampling methodology, sample size, and confidence interval were each properly considered and applied, seems to say that people who are relatively more educated have a lower propensity to be foreclosed on, regardless of the type and terms of loan, which would make sense because they also have a higher propensity to make more money than their less educated brethren.
Donāt get me wrongā¦ the study is seriously inadequate in how itās described in those two paragraphs, so I still donāt like anyone drawing any conclusions that they will subsequently project upon the national population in order to explain a financial crisis that few in our government yet understand, but that was most certainly caused by the massive fraud of the banking and finance industries.Ā But, letās move onā¦
The Atlanta Fed has managed to show that homeowners that are better at these math skills tend to also be better at managing household finances. In and of itself, itās a hardly surprising finding.
Actually, noodle-brain, the Atlanta Fed study showed nothing of the kind.Ā In fact, for all we know from that description of the study, it could be that those with lesser math skills as measured by this single test, strategically defaulted as a result of negative equity in greater number, thus showing them to be smarter or faster decision makers than their nerdy counterparts.Ā And we donāt know anything about anyoneās ability to manage household finances from what was written above.Ā Youāre a moronā¦ a Christian Science Moron, but a moron, nonetheless.
However, it also goes to show that basic numeracy offers some ability to predict the outcome of sub-prime homeowners, much like other factors generally used to judge creditworthiness, such as income and credit scores.Ā Maybe loan officers should start including a math test in their assessments.
Forgetting that Iād like to see your data on the relationship between credit scores and the outcomes of mortgages during the current foreclosure crisis, since over 50% of the foreclosures have been and continue to be PRIME LOANS, and with those high credit score Option ARM and Alt-A mortgagees about to fall off the cliff.
And instead of a math test, how about if we also include a reading comprehension or critical thinking exam with a mortgage application, and thereby ensure you spend your lifetime renting.Ā In fact, Iād like to administer your examā¦ how would that be, you pompous prig?
But, in addition to, and much more importantly that any of thatā¦ did you really just refer to some group of people as: āsub-prime homeownersā?
Julieā¦ this just isnāt fairā¦
Iām going to bed.
4. Housing Market Diagnosis: Bi-polar CNN/Money.com
Our housing market is manically depressed?Ā Should we flush a Xanax down our toilets every 4 hours?
Bi-polar is what comes to mind when diagnosing the post-homebuyer tax credit market. There are two separate forces pulling it in opposite directions, and experts aren’t yet sure which path the market will take.
Which experts?Ā Where?
On one hand, sales and prices are rising, indicating recovery. On the other hand, so are interest rates and repossessions, which most certainly do not.Ā And then there are the millions of foreclosures that need to be sold but haven’t yet been listed — so-called shadow inventory — that could derail a real recovery if they hit the market in floods.
Yeah, so on one hand we have a few prices rising as compared to record lows for a month or soā¦ the last month or so of the homebuyer tax creditā¦ and on the other we have rising interest rates, ongoing record foreclosures, and untold millions in a shadow inventory, to say nothing of the vibrant secondary mortgage market thatās got no one but us taxpayers deficit spending to fund mortgages.Ā And there are experts unsure of which way itās going to go?Ā Seriously?Ā What do these guys mean when they use the term, āexpert,ā do you suppose?
The prognosis? Negative short-term but turning positive by the end of 2010.
Bwhahahahahaā¦ heās kidding right?Ā Shut up.
“In the short run, I see a mini-collapse,” said Richard DeKaser, an independent housing market analyst and founder of Woodley Park Research who correctly predicted a downturn back in 2005 when he was chief economist for National City Corp.
A āmini-collapse,ā did he say a mini-collapse?Ā Like a tiny cave in?Ā A mild implosion?Ā And are they trying to tell us that someone at National City predicted something having to do with the mortgage market accurately in 2005?Ā Whatās the deal, did he keep it to himself?
One of market’s biggest hurdles is getting beyond the lapse of the $8,000 homebuyer tax credit. Thanks to the incentive, buyers scrambled to beat the April 30 deadline, pushing new home sales up nearly 30% in March.Ā But that just borrowed buyers from later months. And now we face the hangover effect.
“In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR).
Actually, I donāt have the hangover you speak of just yet, but if I keep reading you, Iām likely to spend a good portion of my lifetime with such a hangover.Ā I knowā¦ a mini-collapseā¦ it sounds so cute.Ā Like maybe Disney should make a ride out of it for Kiddieland.
That vicious cycle could cause prices to bounce up and down for years. “I see a saw tooth bottom,” Humphries said. “Prices go up; inventory rises, which sends prices down again. That plays out for three to five years of no appreciation. … Without price appreciation, it leaves more homeowners in negative equity. That’s toxic. Any setback, like a job loss, they go into foreclosure.”
Yep, the articleās headline was almost rightā¦ these people forecasting real estate sales trends are absolutely bi-polar.Ā The marketā¦ no, itās just depressed.
See you next time for another exciting edition of: Are You Reading This Stuff?