The Collected Works of Author and Blogger Larry Roberts

Archive for 2010

Most of the policy decisions coming out of the Federal Reserve appear as if they are making it up as they go. During 2008 and 2009, some of the emergency lending windows opened at the Fed likely saved the economy from total collapse; however, many of the policy decisions have not been as successful, and the attempt to re-inflate the housing bubble to save bank balance sheets is failing as house prices roll over despite historically low interest rates. Are the Fed's Honchos Simpletons, Or Are They Just Taking Orders? (November 1, 2010) -- Charles Hugh Smith Without exception the Fed's policies are pernicious failures; either they are exceptionally thickheaded, or they are just taking orders. At the risk of…[READ MORE]

Mortgage Mess: Shredding the Dream The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses October 21, 2010 -- Peter Coy, Paul M. Barrett and Chad Terhune In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage. The loan servicer, Washington Mutual, tried to foreclose…[READ MORE]

Last week I profiled a neighborhood in Irvine that inexplicably dropped about 20% in value since the tax credit expired. As it turns out, widespread price declines are beginning to show up in the aggregate statistics. The leg down we have been expecting this fall and winter is happening now. Clear Capital: Home price drop sudden and dramatic by KERRY CURRY -- Friday, October 22nd, 2010, 12:25 pm Clear Capital said a 6%, two-month decline in home prices represents a magnitude and speed not seen since March 2009. “Clear Capital’s latest data through Oct. 22 shows even more pronounced price declines than our most recent (Home Data Index) market report released two weeks ago,” said Alex Villacorta, senior statistician with…[READ MORE]

If I had to narrow my list down to the people most responsible for the housing bubble, Anthony Mozilo would be near the top of the list. The Option ARM loan was the primary loan product that inflated the housing bubble. Using negative amortization and teaser interest rates, people were able to borrow more than twice the amount than they could afford with a conventional 30-year fixed-rate amortizing mortgage. Once the Option ARM imploded and lending retreated to conventional mortgages, prices needed to fall significantly to rebalance affordability. The Option ARM was the Ponzi virus that caused the debilitating financial disease that inflated the housing bubble and created the current economic morass still plaguing the country. The only person perhaps…[READ MORE]

The mortgage industry was kissed by a witch in the night. Looking for their own selfish gain they came up with a cunning system to transfer mortgages and shortcut the public recording system. Washed clean by the market crash, mortgage holders insisted their title claims were true, and the system is nursing its pain. Bubble, Bubble, Toil and Trouble in the Foreclosure Market By: Stan Humphries, -- October 11th, 2010 Well, what initially looked to be a technical road bump in the foreclosure process is now certainly blossoming into something with a more material impact on the housing market. Initially, this situation had the appearance of a sloppy record-keeping scandal, one that was important to resolve but that involved supporting…[READ MORE]

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