The Collected Works of Author and Blogger Larry Roberts

Archive for March, 2012

It's always better to get something from a house rather than nothing. Lenders finally figured this out. For the first five years of the housing bust, lenders preferred to allow delinquent borrowers to squat in the bank's house without making any payments. Someone at BofA finally realized they could foreclose on owners or allow them to turn over the deed and stay in the property as a renter. The bank can collect rent, and if the occupant fails to pay, it's much easier to get them out if the former owners are no longer on title. Besides the cashflow benefits of a plan to lease properties, the plan also keeps for-sale properties off the MLS allowing the housing market to…[READ MORE]

The amend-pretend-extend policy of lenders is designed to avoid recognizing losses. They hope to replace their old bad loans with good new ones. So far they have been successful at keeping this bogus debt on their books. The result is millions of delinquent borrowers in shadow inventory. Fannie economist: Mortgage deleveraging yet to end By Jon Prior • March 19, 2012 • 11:01am Households shed mortgage debt each month for more than one year now, but the deleveraging has yet to end, according to Fannie Mae Chief Economist Doug Duncan. Either through payoffs or foreclosure, total U.S. mortgage debt dropped or remained flat for 15-straight months, according to Federal Reserve data. The peak came in the first quarter of 2010,…[READ MORE]

Principal reduction is on everyone's mind these days. The political left embraces this method of looting the public coffers to buy votes. In their world view, principal reduction is a populist handout to noble loan owners who are victims of circumstance. In my opinion, that's bullshit. Today's featured article caught my attention because the headline speaks a basic truth: The housing crisis is crushing responsible homeowners. However, when I read the article, I was shocked to find the reporter cited all the wrong reasons and came to exactly the wrong conclusion. The reporter concludes falling prices hurts responsible homeowners, and therefore we should grant them principal reduction. In truth, the housing crisis is crushing responsible homeowners because the government and…[READ MORE]

Among the valuable lessons we can learn from the housing bubble is the myriad of ways to cripple a housing market and prevent a recovery. Ever since prices started falling, loan owners put huge pressure on policymakers to "fix" the housing market -- which in the mind's of loan owners means making prices go back up. In reality, policymakers from the government and federal reserve exacerbated the problems of the market and ensured any recovery would be slow and painful. Today, with some help from Charles Hugh Smith, I intend to review how we can mess up the housing market again in the future. How To Cripple the Real Estate Market in Five Easy Steps (March 19, 2012) -- Charles…[READ MORE]

The housing bubble has many lessons to teach us. I have written on the subject for five years now in hopes that people can learn from the successes and failures of those impacted by the housing bubble. Someone recently posted a link in the thoughtful remarks to a website devoted to those who are underwater. It's a chance for people to share their stories. As you might imagine, this is a giant pity party and a support group for housing bubble losers. Below is a selection of stories as well as some others I have collected over the years. Personal stories from America Underwater Tell me, what have you learned from these people?[READ MORE]

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