The Collected Works of Author and Blogger Larry Roberts

Archive for March, 2016

All delinquent borrowers living in properties worth less than the outstanding balance of the loan will be offered a loan modification in lieu of a foreclosure because the banks can't absorb the losses. Prior to the housing bust, lenders always foreclosed on delinquent borrowers — always. They had no incentive to kick the can with a loan modification because they could reclaim their capital and loan it to a borrower who would pay the full rate. Lenders only kicked the can when house prices fell and they could not recover the full amount through a foreclosure. Can-kicking is a policy of necessity. If lenders had foreclosed on all the delinquent mortgage squatters and liquidated the inventory, house prices would have…[READ MORE]

For the missing MLS inventory to return to the market, borrowers need debt forgiveness, and house prices need to move even higher. The financial media inundates us with stories about the "problem" of low MLS inventory that supposedly holds back first-time homebuyers, who are buying in near record low numbers. Whether or not this is a real problem or a fiction of the financial media depends on your point of view. Bankers don't consider low MLS inventory a problem; after all, bankers engineered the MLS shortage in order to drive up house prices to restore collateral value to the bad loans they made during the housing bubble. Homeowners are happy to go along for the ride. Neither bankers nor homeowners…[READ MORE]

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