The Collected Works of Author and Blogger Larry Roberts

Archive for 2012

Edward DeMarco is a thorn in the side of the Obama administration. He has consistently resisted calls to pander to loanowners by forgiving principal on GSE loans. Many on the political left are calling for his head, and the Obama administration is poised to oblige them -- and that's not appropriate. DeMarco has proven to be a thoughtful administrator who protects the interests of the US taxpayer. Of course, that's the problem many politicians have with him. They want to raid the coffers of the treasure to buy more votes. If DeMarco is replaced by someone who will allow politicians to steal from the treasury to buy votes, it would be a travesty. Unfortunately, I am not hopeful that Conservatives…[READ MORE]

Major banks were bailed out during the financial crisis of 2008. Ever since then, they have been scrambling to avoid financial responsibility for their imprudent lending practices that precipitated the crisis. The banks entered into a large settlement with the attorneys general across the country to ostensibly pay restitution for their shoddy paperwork and foreclosure practices, but that was not the end to the pain for their misdeeds. Now, a series of both public and private entities are suing them for fraud, duping investors, and lax underwriting standards. I hope they lose. They deserve to lose. The banks must bear the full brunt of their mistakes, or they will almost certainly repeat them. Mortgage Crisis Presents a New Reckoning to…[READ MORE]

The Mortgage Forgiveness Debt Relief Act, a law temporarily amended the federal tax code to allow mortgage debt on a principal home that is canceled by a lender through a loan modification, short sale or foreclosure to escape taxation as ordinary income, is set to expire on December 31. The prospect is scaring the hell out of loan owners. If this law is not extended, millions of loan owners who plan to sell over the next several years will have to claim potentially hundreds of thousands of dollars of taxable income on the sale. The Mortgage Forgiveness Debt Relief Act was originally passed out of necessity. The tax bills were going to push millions of insolvent former debtors into bankruptcy.…[READ MORE]

Home prices have been increasing, mortgage rates are at all time low, and the cost of ownership is below the cost of renting in some market places.  So, why isn't private banking lending money to borrowers?  After the federal government took over Fannie Mae/Freddie Mac and then greatly expanded the scope of FHA there were reassurance that private lending would be reintroduced into the mortgage industry.     Currently, federal government insures or guarantees 95% of all newly originated mortgages.   Wouldn't this be a good time for private lending and private mortgage insurance to get back into the market.  Here are some news articles that indicates this will not occur any time soon. FHA FHA has a large market…[READ MORE]

We've become so accustomed to foreclosures on underwater homes that we forget that's not how it used to be. Foreclosures have always been part of the system, and prior to the housing bust, foreclosures happened to people who had equity in their properties. Foreclosures happen because people borrowed money and failed to repay it. The lender exercised their contractual right to call a public auction to recover their capital. They go to the auction and bid up the price to the outstanding value of their loan. If other bidders want to bid more, they are welcome to do so. When the loan is less than 80% of the value of the property, which used to nearly always be the case,…[READ MORE]

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