“The agencies will continue to examine and supervise financial institutions according to existing standards. The agencies will not penalize financial institutions that pursue reasonable workout arrangements with borrowers who have encountered financial problems. Further, existing supervisory guidance and applicable accounting standards do not require institutions to immediately foreclose on the collateral underlying a loan when the borrower exhibits repayment difficulties. Institutions should identify and report credit risk, maintain an adequate allowance for loan losses, and recognize credit losses in a timely manner.”

The weasel is “adequate allowances for loan losses” as agreed with your friendly local don’t-rock-the-boat OCC or OTS examiner. Once the property is foreclosed, it’s harder to play pretend with market comparable pricing…but certainly not impossible

Seems to me, banks ought to offer a time out from troubled mortgages. The clock should be stopped if the homeowner pays a set percentage of his monthly payments. This way, house stays occupied, ownership remains in place, families kept intact, banks get someincome from delinquent properties.

Except it’s not banks, it’s servicers acting on behalf of pools of investors who own various tranches of these pools of loans and must agree somehow.

Where the loans are actually held by the banks that made them, what you say makes sense – another reason it’ll never happen.

We are so screwed.

Really! Five million homes were sold. In FEBRUARY! My goodness. And those are just “existing” homes. I wonder how many “non-existing” homes were sold.

And they sold 7.25 million homes in Septenber of 2005! Let’s see. That’s 84 million homes per year, more or less.

Garbage. I guess they figure the “glazed over” eyes will keep this kind of nonsense from being called.

I know, I know. Those are yearly figures but that’s not what they are saying, is it?

If you have not heard this, well worth a listen!!

Our Confusing Economy, Explained

http://www.npr.org/templates/story/story.php?storyId=89338743

April 3, 2008 · Perplexed by the U.S. economy? You’re not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.

Greenberger is a professor at the University of Maryland School of Law and the director of the University’s Center for Health and Homeland Security.

1) Rising cost of living
2) Job losses
3) Real estate price meltdown

If you think the stock market has “priced” this in already, you are dreaming in technicolor.

TALLAHASSEE, Fla. Threats of early prisoner releases and the potential for bank failures emerged Wednesday as a series of austere spending measures advanced in the Senate as part of the budget-writing process.

Several prison guards sat in the front row as one panel unanimously agreed on a justice system budget that includes eliminating 2,200 positions from the Department of Corrections and 382 from court support staff. The cuts would amount to 8 percent for Corrections and 11 percent for the courts.

One lawmaker, meanwhile, said banks could be at risk if decimated courts are forced to delay foreclosure cases.

Lawmakers expect to spend about $5 billion less than this year as tax revenues continue to decline due to the state’s slumping economy

“It’s not beyond the realm of possibility that prosecutors will not be able to prosecute certain cases,” Perry told the committee. He said charges may be dropped if defendants cannot get speedy trials.

Perry said the courts also are being deluged with foreclosure cases. Without enough resources, that could mean greater financial losses for banks and other lenders due to long waits before they can sell distressed properties, particularly if courts shift resources to criminal cases. Sen. Alex Villalobos, R-Miami, suggested that could result in bank failures.

http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20080402/APN/804020853&template=printart