By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick
The turn of the year is the time to make predictions and projections. I’m optimistic that the tide will finally turn for the American middle-class, suffering silently in a one-sided economic war. I don’t think this will be because of altruism, or even justice, but rather simple pragmatism. Specifically, I believe that parasitic financial institutions have pushed the boundaries so far that they’ve put their host, the middle-class itself, at risk. One new bit of information suggests the housing front is in more perilous shape than most pundits believe.
One challenge when performing any type of analysis is that information is scattered in many different places, and even when disseminated by the government its accuracy is oftentimes questionable. We’ve already seen existing home sales for recent years revised downward from their already dismal position, with barely a yawn from the public and no accountability whatsoever from government regulators who used that information when more reliable sources existed.
I don’t understand why accurate housing data, which is supposed to be open to the public, is so hard to come by. The housing crisis arguably rises to the level of a national emergency, one we can see and fee every day as it ripples through the economy. Despite that, government-owned Fannie Mae still keeps loan-level data away from the public, it’s extremely difficult to get data from Freddie Mac, and MERS’ database remains a black hole.
There is one piece of data only recently released — and, as far as I can tell, has gone unnoticed — that, if true, suggests the housing market is in such dire straits we’ve finally reached a critical mass where only radical out-of-the-box solutions will work. If this information, which comes of a highly suspect albeit well connected insider, is accurate, then extend and pretend has finally reached its natural end.
On April 15, 2011, Ft. Lauderdale, FL attorney Steve Jaffe took the deposition of former “Foreclosure King” David J. Stern. For whatever reason the transcript was not filed until Dec. 21, 2011, and with the holidays it’s taken even those of us who’ve been watching the Stern road-wreck — a group he actually hands a shout-out to towards the end – some time to plow through the 277 pages.
Forgive me for being self indulgent and giving you a sense of what Stern’s deposition is like.
Jaffe: What are your plans with the office?
Stern: I’m shutting it down.
Jaffe: How soon?
Stern: Not soon enough.
Jaffe: Why do you say it like that?
Stern: It’s done, it’s over. I have no desire to do this anymore. It’s a backstabbing business. A guy finds a way to make success and people get thrills of seeing them come crashing down, not the American dream, not the way I am.
Stern filed false court documents on such a scale that it engendered scrutiny and pushback, a rare development in our bank friendly economy. Cutting corners to fatten your wallet while throwing families out on the street doesn’t engender widespread admiration, yet Stern somehow sees himself as a victim.
Now to that revealing statistic.
For a quick bit of background, Stern took the “back-office” of his law firm public in early 2010, calling his new company DJSP. Right before his second quarter earnings release, he told investors in a meeting in New York that foreclosure filing volumes looked peachy. However, my own data showed didn’t things look great from Stern’s vantage point. Filing activity was markedly down, for him and everybody else.
During that conference Stern reassured investors. He even gave them t-shirts of himself as “Capitan DJSP,” holding back two busses with his bare hands. At the time I was relaying my data to some of Stern’s investors. It turned out my data was right; Stern’s wildly off base. What Stern knew and when he knew it was the reason he was sitting in a marathon deposition.
Here’s the excerpt that should send a chill down the spine of any housing analyst … and everybody else too.
Jaffe: .. you’re reading reports. You’re seeing volume. You’re seeing new file intakes. You’re seeing how fast they’re closing. And you’re seeing cash flow in and out of the company.
Jaffe: And so, you have — in 2010, you have a handle on what’s happening with the business?
Stern: As the numbers are reported in the quarterly earning calls and the investors or the world, whoever elects to participate in that call is made aware of the day-to-day happenings.
Jaffe: Right. But you have that information, that institutional knowledge of your own business far in advance of those calls and reports for that matter.
Stern: When Fannie Mae comes in and sits down and says, “David, we have 600,000 shadow inventory loans,” we say “You mean, 60,000”? And they go, “No. We mean, 600,000.” And I say, “Oh, that’s nationwide”? And they go, “No 600,000 shadow inventory in the State of Florida”. Sure, I know. Yeah, it’s exciting. [Note: transcribed verbatim from the transcript.]
Let’s repeat that. In the spring or summer of 2010, before the robosigning scandal caused a massive slowdown in the number of foreclosures filed, Fannie Mae apparently had 600,000 loans they expected to foreclose upon. Not Fannie Mae, Freddie Mac, FHA, VHA, and private label mortgages, Fannie Mae alone.
Granted, Stern has a credibility gap; he’s clearly one of the lawyers whom FHFA Director Edward DeMarco was clearly referring to when he expressed to Congress that he was “puzzled” why state Bar associations have taken no disciplinary action. The Federal Housing Finance Agency (FHFA) is the government agency which oversees the GSE’s.
FHFA reports that Fannie Mae’s share of total US mortgage debt, at the end of 2010, is 27.7%. If Fannie Mae really does have 600,000 homes they expect to foreclose upon we’d expect to see about 2,165,000 shadow inventory homes total .. in Florida.
It’s impossible to believe this figure is accurate. Let’s look at some data. First, the Census Bureau reports there are just under nine million housing units in the entire state at the end of 2010, 8,989,580, to be exact. According to court records between July, 2010 through December, 2011, inclusive, there were 1,044 foreclosure filings per month in Stern’s home county, Broward County, FL; 22,144 filings total. However, from January, 2009, through June, 2010, inclusive, there 2,544 monthly filings in the same county; 48,144 filings total.
If the number Stern relayed is accurate, that would put a theoretical backlog of filings, for that one county, at 26,000. If we extrapolate to the rest of this high foreclosure state it’s safe to say shadow inventory estimates for the US have been dramatically underestimated, in much the same way that existing home sales were overestimated, albeit to a much more severe degree.
One thing is certain. Either a) Stern lied during his deposition, or b) Fannie Mae lied to Stern, or c) government and non-government organizations that project shadow volume have massively blown it. On Wednesday, Dec. 21st, 2011, HousingWire reports that CoreLogic projected shadow inventory to be 1.6 million homes throughout the entire United States. If Stern relayed the information correctly, and Fannie relayed it to him correctly, that figure looks more like it could be the shadow inventory of South Florida alone. Except that would mean they expect to foreclose on about half the houses in this state, which seems … impossible.
All this calls for far more disclosure on the part of the GSE’s, regulators, and courthouses. There is no legitimate reason to keep these figures locked away behind password-protected websites. Everything from the MERS database, to the Fannie/Freddie loan-level information, to the pile of mortgages the Federal Reserve has purchased should be open. This issue rivals a pressing matter of national security: there is no reason to force investors, home buyers, and others to speculate; to search for information.
But if Stern’s figures are anywhere near accurate it makes me optimistic that 2012 will be a turning point. Why? Quoting John Maynard Keynes, the only economist who seems to know how to pull a country out of an economic depression, “If you owe your bank manager a thousand pounds, you are at his mercy,” Keynes said. “If you owe him a million pounds, he is at your mercy.”
If he’s even partially correct then congratulations, Wall Street; we’ve reached a place where the foreclosures would cause Housing Armageddon. Where the middle-class itself has become Too Big To Fail.
“It’s impossible to believe this figure is accurate” –
You need a Fannie insider to blow this sky high.
Where can one find data to collaborate any of this?
Property maintenance companies? (why are all the houses in my subdivision suddenly using cheap lawn services)
Local utilities? (water shut offs, bills not paid by banks, bills now paid by banks)
Credit bureaus? (delinquent mortgages/2nds for over a year, perhaps)
And this is on top of the houses I see go on the market with FSBO signs once or twice a year for a week or a month before the signs come down, waiting to try again when the market picks up.
It used to be Ma Bell. The land line had nearly 100% household penetration. Today the only indispensable land line is electricity, even if you go solar, you are probably staying on the grid to sell excess capacity. The electric utilities are the major source of precise real estate info and regional economic development. They know how many customers are live, how many new ones may come on line. Electricity power is well managed by necessity. The stock market needs it to trade, the military needs it to operate and so on and so forth.
Trouble is electricity doesn’t necessarily count households or houses. Only if every meter is hooked up exactly right would it do so. “Sharing” electricity is not unheard of in poorer areas.
Still probably the most accurate way to measure.
The banks keep power to foreclosures today.
Also do not forget to laws that require individuals to show citizenship.
This is driving rentals into vacancy.
We have just begun to see a new round of vacancy and lack
Lack of business for small business because of this.
We are in a flat spin and those with cash are licking their chops to pick up assets for free. It happened in Florida in the last depression and it is happening again!
you’d see it in usage rates.
A vacant house will be pulling minimal power, so, look at accounts with demand 2 sigma down from average, that will be the shadow inventory.
Plus empty meter sockets.
Credit bureaus should know, but that assumes the servicers are reporting the data accurately to them .. I’m working on a follow-up on that subject.
The rest wouldn’t change because the people stop paying but keep living there. They mow the lawn, pay the utility bills, some even do maintenance and pay property taxes and/or HOA fees; they just don’t pay the mortgage.
These people aren’t necessarily strategic defaulters, or trying to game the system. Many, especially those who worked in RE related-fields, are underemployed but can afford to pay something. But they can’t afford the 12% interest, on double the home’s FMV, for the exploding Option-ARM their bank won’t refinance.
People keeping a home up is common enough here that even when a foreclosure is finished, when a bank takes title, it’s not uncommon for a servicer to approach the person living there — after they’ve “sold” the house to themselves — and, rather than evicting them offering them low/no cost rent (depending on the FMV of the house) in exchange for keeping up the property.
The money that would have been spent to pay the pretend mortgages is being used to pay for everything else. This is why the economy has not yet turned into a great depression.
“But they can’t afford the 12% interest, on double the home’s FMV, for the exploding Option-ARM their bank won’t refinance.”
Now this–the rigged to explode and self destruct mortgage– is something we heard a fair amount about at the beginning of the crisis, and about which we haven’t heard much since what with the “blame the borrower” meme in full swing.
It would be good to hear more about this again.
Depends what they’re calling shadow inventory. If it includes not just properties they expect to foreclose or short sales, but also properties underwater and people just waiting until the market picks up, then the number is totally believable.
Distressed properties tend to find there way into the selling inventory sooner or later. Mark Hanson who has done extensive research on this subject notes:
“When you look at DTI as the real driver of loan default you get a much clearer picture of why loan mods don’t work — and why they will never work — and how insurmountable the problem really is…people need full debt portfolio mods not just ‘mortgage’ mods.”
The underlying issue with distressed property is the reality that the middle class cannot continue to drive the economy without significant higher income levels or they must choose a lower economic lifestyle by reducing consumption for auto,vacations and property. The implications of the current housing crisis go far beyond new housing starts and rates of foreclosure but instead signal a lower standard of living for most Americans.
Case-Shiller Index info is sooooo out of date. I have seen properties sold, reforeclosed and sold 3X over just in my zip code still listed on Case Shiller as the original bank owned foreclosure! Did you know Case Shiller is owned by S&P? There’s reliable info for ya!
The banks and the loan “owners,” Freddie and Fannie, are afraid to put the actual numbers out there. If buyers knew the extent of the Shadow Inventory, home prices would drop so low that the WS investment banks would only get a small percentage of their money back. They’re trying to get as much out of foreclosures and short sales as they can.
when are you going to stop rejecting my comments because i call idiots idiots?
I have no reason to doubt those numbers would be correct. After all, when banks made those loans, they were fairly certain which could be paid and which could not. They made their derivative bets on that information to maximize their profits. There’s not much doubt that most if not all the homes purchased since 2000 or so, are worth far less than what the selling price was. Sure, a fair percentage of families are able to make the payments, but for what? For a house that’s worth less then the remaining balance? Sure, the tax man, and hyped up sales figures have them believe they’re even or ahead of the game, but as the months go on they clearly aren’t able to keep pace with the declines. Possibly, Fannie Mae’s conversation with Stern already had that decline figured in. Their reasoning for not opening the books on it all is pretty simple. If most rube’s figured the game out, in a month or so all the home loans would be non-performing. That would mean no bonuses for the bankers….
if one could discover the exact total of the debt of all kinds that is already nonperforming–that will never be collected–no, that must be kept classified, it would be dangerous knowledge in the hands of the “wrong people”…. hahaha
You should know by now that comments has tripwires, and if you use the wrong words or expressions, the comment goes into moderation because the use of said words and expressions is usually a sign that the comment is ad hominem or otherwise that the vitriol to substance ratio is out of whack. You are acting as if this is personal when it isn’t.
It can also be b/c you mentioned a77emp7er.
Your pun would be perfect if you changed those 7’s in the obfuscatory sense to 6’s!
1) I see no pun in the comment.
2) a66emp6er? I guess you see them as better lower-case T’s. This substitution doesn’t seem to be standard l33t…
Leet – Wiki
Rule #692 in the A. Jones Institute’s, “Generally Reliable Idiot Detector,” provided here for the first time FREE:
692. Whining about a blog owner’s right to allow whatever comments he/she sees fit (especially when not knowing the comment moderation procedure).
[N.B. As indicated by its title, the Institute’s Idiot Detector is only *Generally Reliable* and should not be confused with jake chase’s *Infallible* internal detection mechanism, bestowed upon him by the Shadow Government’s massive Genetic Modification Idiot Detector Program, operated by the shadow CIA for the last 51 years, coincidentally begun just after the Bay of Pigs.]
“Where the middle class itself has become Too Big To Fail.”
Unfortunately, you seem to be overestimating the intelligence of the banksters. Recognizing the TBTF status of something requires that you recognize the value of long term thinking and have enough ‘character’ to defer gratification. Neither of which applies to the present generation of banksters if their actions and posturings are any guide.
Historically speaking, maximum stress on the middle of the societal structure is the perfect precursor for Authoritarian movements. The Tea Party is one example that comes to mind.
If Keynes did indeed find a way to bring the West out of the Depression, he needed willing political powers to implement his ideas. Luckily for us, he caught the ear of FDR. Across the pond, a certain Herr Hitler also applied some of his methods. Who will we get here in America this time?
In light of NDAA, and seeing how the Perkinsian economic hit job has become SOP (faking data, building debt-based sorcerer’s apprentices designed to induce perpetual indentured servitude): Who says we ain’t already got him?
I just watched Arnie Gundersen’s latest report on Fukushima http://fairewinds.com/content/tepco-believes-mission-accomplished-regulators-allow-radioactive-dumping-tokyo-bay. In it, he relates Article II of the IAEA charter (c. 16:25). It’s an EHM’s wet dream job description: “The agency shall seek to accelerate and enlarge the contribution of atomic energy to peace, health and prosperity throughout the world.” (sic) IOW the agency most people presume to be a regulator is instead a promoter.
Isn’t that the same pattern we’ve used to parasitize economies around the world? Isn’t that what’s happened here at home? Haven’t presumptive regulators in fact been promoting the fraud? There are way too many mistakes–all in a row, all enriching the same class of perps–for it to be happenstance, in my amateur economic opinion.
Doing so becomes so much easier when there really is no meaningful distinction between regulators and regulatees. In a sense, it’s all insider trading. Imagine if privateers wore uniforms so we could see who among our so called “public” servants is a pirate in disguise.
One problem with hoping for self-regulation from greed heads: they don’t see us the middle class, as living, growing, organisms, but as just god-forsaken mechanical matter, just “human resources,” to be plundered to exhaustion like every other bounty on earth. Seems to me, “econ hit job as SOP” will only end over our dead bodies, unless we repel the privateers in disguise ourselves.
…what did people think when lobbyists lobbied for-wrote new bankruptcy law circa 2006??
Personally, I thought, “One whole helluva lot of Americans are going to go bankrupt…”
unintentional my posterior…
Obama seems just as happy with authoritarianism as Bush….
….but seems strangely unwilling to implement sufficient Keynesian measures.
This is actually kind of weird. We’ve got this bizarre austerity consensus among the elites.
I really have no idea who will emerge as leader of the US, but the first one to successfully apply Keynesian principles *correctly* — that is, a *large enough* amount of money going into the hands of *the masses*, WPA-style — that person will win control and the pre-existing Democratic and Republican parties will wither into nothing.
I have no idea how such a person will get into power or what their other policies will be (good or bad). I suspect, actually, they’ll have to be an environmentalist, because it’s now impossible to sustain an economic boom without switching to renewable energy. But it could be a right-wing racist theocratic environmentalist, or something which today sounds similarly odd.
“you seem to be overestimating the intelligence of the banksters.”
Yes, that does seem to be the case. Can anyone cite anything that would show us that the banksters have any sense at all that long-term interests might be something of which they should be cognizant. Can anyone cite anything at all from the FIRE sector.
The can anyone please point us to a citation or two that might indicate that anyone in American business might consider the long-term in deploying a business strategy?
I suspect business in USA in general long ago quit looking any further ahead than one quarter. Even a year’s forward looking would seem like a lot, I imagine, to most American businessmen.
Psychopathy has been shown to be the inability to have anticipatory fear — the lack of reaction to the threat of pain in the future.
The fact that American CEOs and bank executives are mostly psychopaths explains quite clearly why none of them are thinking again.
Um, “why none of them are thinking ahead”
Of course, with the recent track record of prosecutions of bank executives, one could make the argument that it is not psychopathic lack of fear but rational knowledge of probable lack of consequences that drove their behavior.
do you have a source on psychopaths’ in ability to have anticipatory fear? that’s one i’ve missed in my readings on that disorder.
Sociopaths often engage in high risk or thrill seeking behavior. I don’t know about lack of fear per se.
I think you are mistaken as to the nature of the game. Few if any of those at the top of corporations and the banks care about survival of the middle class, the system, or the institutions they drive for that matter. Their only interest is grabbing as much as they can as quick as they can for themselves and bailing out before it collapses or riding it down if that pays better. Greg Palast tells a story about an interaction he had with one of the Koch brothers. The final quote from Koch was: “I want what is mine. I want it all”.
They mostly aren’t even thinking that far ahead. Being psychopaths, they’re incapable of being afraid of the guillotines and tumbrels which are coming to them.
They’re just grabbing as much as they can now, and not even thinking about tomorrow.
It’s a logical consequence of a system of finance/investment (much of it institutional and/or computer-driven) that’s only focused on rate of return, with no concern about the actual things being invested in.
This is standard end-game behavior.
My wife was in the USSR as it fell, tells amazing stories of Comsomol leaders grabbing property, their criminality, …
Nobody on the inside expects the system that is the USofA to persist. No system can withstand this much dishonesty + debt.
To survive, we would need huge changes in the incentives for those in government, banks, and the voting public. That would require a political system that was not under the control of those whose incentives need changed.
More than half of the voters are net tax gainers. They will go on voting their Net Present Value of government until that NPV is zero. Only then will reform be possible.
So, the politicians go on being bribed by the banksters and other crony capitalists, and voters with a current positive NPV of government maintain them in office.
Great system Progressives have set up.
This was not set up by Progressives. This is Ronald Reagan’s system.
A few days ago, someone in a thread listed 10 or so laws that he thought were the culprits, the ones used to empower the Banksters and oppress the rest of us.
All but one were Left Progressives, depending on how you count Clinton.
Almost all politicians are, and have been for 50 years, Progressives of either the Left or the Right. The Progressives of the Right do their good works in the arenas of international diplomacy with the option of war. The Progressives of the Left do their good works on the domestic scene. They strongly support each other : look at all of the Ds who voted for the Bush-Obama wars. Look at all the Rs who voted for the various welfare programs. All of the major increases in social welfare programs have occurred in the midst of a war, were the price of the opposite party supporting the war.
To me it isn’t clear who has the worst record in their various engineering projects.
Progressives have created this system, all of the government structures that are now failing so dramatically. They deserve all the blame for passing the laws that have allowed the 1% to seize the government.
“…good works in the arenas of international diplomacy with the option of war…” Can you name any such good work since, arguable, WW II?
Good grief, give it a break! No one wants to play Dem vs. Rep, or left vs. right, or “Progressives of either the Left or the Right” vs. whatever team you’re !#$%ing on, Fred. Rah rah!
“Maam” should be “Sir”. I think you usually pay more attention to the origin of the post.
“He caught the ear of FDR. Across the pond, a certain Herr Hitler also applied some of his methods. Who will we get here in America this time?”
Excellent point ambrit. I for one am not optimistic. I see a further deterioration of the middle class until the political process is reformed by making legalized bribery illegal. The reality is that the middle class has experienced a slow decay for the last 30 years. Obama has done nothing to reverse this, in fact his health care reform has made it harder to address. Market Fundamentalism was always a bankrupt ideology, nothing has been done to reverse the tide.
The devils in the details, or there’s a fly in the ointment. We shall see, as the new year progresses. One thought though, I wonder if the financial wizards factored in the fall of the middle class in this country? If so, then who will be able to buy? They may have looted the treasury, picked the pockets of the population, but as with all good things, it too must come to an end. The short term greed is rapidly catching up, soon there wont be any thing left in the trough for the pigs to gorge themselves on. Indeed, 2012 could be the year.
Again, they didn’t think ahead. This is what makes them different from you and I. Because they are psychopaths, they simply didn’t think about the future; they just did what got them the most *today*.
“This issue rivals a pressing matter of national security: there is no reason to force investors, home buyers, and others to speculate; to search for information.”
Actually, Wall Street’s Opacity Protection Team wants to prevent exactly this information from being revealed. Remember, Wall Street makes money from opacity… actually putting out loan-level information would limit what Wall Street can make.
For the record, I have been arguing since BEFORE the financial crisis started that loan-level information should be made readily available.
Under the same logic that there is no reason that Fannie and Freddie should not disclose this information, there is no reason all financial institutions should not disclose this information. Wall Street’s Opacity Protection Team understands this and will undermine the middle class before releasing this information.
We have reached Great Depression levels of 1933 or greater in the need for administrative reform of lawful procedures to move our society out of the canyon it has fallen into. Until Congress is isolated by our decisive behavior to send them unequivocal messages, they will continue to turn our backs. Only Congress, acting in the larger scheme of things, can set this situation right by setting up administrators to pull all of the waterlogged mortgages out of the river at the bottom of the canyon. The size of the job is monumental of that this article makes clear. Criminal prosecutions of the perpetrators in the fraud must be pursued. But until the Congress acts in a massively decisive manner; more mortgages will go under and the society as a whole will remain in what now has to be called Depression.
Meanwhile, yes moving on the Jobs Guarantee plan and other massive fiscal programs is necessary as well.
All of the complacent, lazy, bought-out, complicit-in-crime partners who call themselves members of the leading elite should be given their walking papers.
sb to turn their backs on us.
Don’t know…there aren’t $600 trillion in mortgages-there ARE $600 Trillion in “derivatives”..
Are foreclosures merely a banking smokescreen, whereby banks can continue
to posture investors, fannie=freddie-bad actors on home loans are the problem?
We KNOW banksters kept 2 sets of books-one for “securitized mortgage”s. Therefore they knew enough to keep 2 sets of books…
Senate designated banking chairman Rob Johnson states the $600 trillion “derivatives” number, then states 6 U.S. “investment banks”=Wall $treet owns
The numbers of abandoned foreclosure cases and homes that have just been forgotten about by the banks are just too big to even begin to wrap one’s head around….and no way to track….like staring into a long and very deep hole….and still the lamestream media quotes RealtyTrac and National Association of Realtors….delusions.
Condos. Plain and simple. From all the housing data, condos seem to be the mostly forgotten aspect of all of this. Where I am in Chicago, for example, condominium development was in crazy overdrive from 2000 to about 2009 (the builders got caught like everyone else, there are plenty of vacant buildings…plus the builder of our building apparently used the properties he had as an ATM to build more, but that’s a different minefield to navigate).
Now, I was on the board of our building, and in our area, it’s crashed completely. There’s a good 1 square mile area on the north end where nothing is selling, and the few that are are going for $50,000-$200,000 under original sale price. People are getting hammered. And every time I read the reports from real estate agents all over the city, 25% underwater on a condo is seen as dodging the bullet.
Everyone in our building is “shadow inventory,” because as soon as any of them think they could get out, they’d sell, which would spike the market further. Multiply these 25 unit buildings by 4-5 per block, and you’ve got yourself quite a stock of housing sitting around.
Also, many of these buyers are in Alt-A loans that have actually adjusted lower, so they can afford to stay or rent. But that doesn’t change the fact that their $200,000 investment is worth less than $80,000 now. And someday, that chicken will come home to roost.
Point is, if they overdeveloped in Florida into high rises (which I thought I read that Miami was particularly horrible about), then it’s easy to think that there could be hundreds of thousands of people who bought in for “investment” who are now stuck as landlords, probably renting for under what they’re paying on their mortgage.
When someone figures out non-single family homes into this housing equation properly…watch out.
Fannie Mae claims to have a 12 percent delinquency rate in Florida. If they hold a quarter of all mortgages in FL, and presumably some portion of FL homes are mortgage-free (it’s roughly 1/3 nationally), then the number of delinquent loans would be on the order of 150-200,000. While FNM has had its share of, ahem, management problems, not the least of which is dealing with guys like Stern, it seems unlikely that they are underreporting delinquencies by a factor of 3.
It appears obvious to some the “derivatives” were financed by using “securitized
mortgages” as collateral to borrow against (Paulson went to SEC to deregulate
“leverage” circa 2003) to drive commodities-derivatives-futures markets…it also appears true that legislation was passed to disallow government oversight
of books-keeping books secret…nice.
>> Specifically, I believe that parasitic financial institutions have pushed the boundaries so far that they’ve put their host, the middle-class itself, at risk.
Do the top 1% care? I suspect not. Rather, I suspect they’ll go on impoverishing the bottom 99% until they’re as poor as anywhere else.
Looking at the field of robber baron candidates (Obama, the Republican field sans Paul), who’s going to stop them?
“I can hire one-half of the working class to kill the other half.”
Yeah, these guys love to pretend their wealth isn’t dependent on the “assets” they hold that are defaulting at massive rates; said defaults due to the weakness in middle class incomes. Their ego will not allow them to admit they are dependent on the middle class. Their ego makes them stupid and in the end will wind up bankrupting their companies. Couldn’t happen to a bigger bunch of douchebags.
Sadly, Paul won’t stop them either; he’s too clueless about money, and they’ll trick him into doing exactly what they want. *sigh*
Yeah, I see no hope at the federal level. The states, however, still exist, and we may be able to get something going there. The banksters have committed massive *state* crimes.
Do you know what else is under-reported??? The total amount of foreclosures since 2007. When I first started my fight, I remember the figure over 6 million foreclosures, that was back in 2009. The figure they now are reporting as total amount?? 4 million foreclosures….so…either they are giving homes back at an alarming rate, or they are under-reporting. My figure of total foreclosures since 2007 is 11 million. I didn’t do a scientific search, but just a general one. I’ll bet the number of foreclosures is MUCH higher than they are reporting now.
Even if they were unreporting the amount of foreclosures….isn’t 4 million too many??? When are We the People going to say ENOUGH???
…when people find out the truth…
Dr. Housing bubble used to quote lots of numbers, no idea if the blogs still going or if he’s on the money.
Yes, The Shadow Housing Inventory Vastly Larger Than Widely Believed.
Look this is no surprise.
The government wants to keep up the happy talk offensive. Elections coming you know.
The banks can continue to claim insignificant hits to their balance sheets.
So are the number correct – of course not – Too many large powerful entities have a profitable stake.
Since the September 2008 meltdown, both banks and their lackeys in government have been doing everything they can to mask the size of the housing problem because any real assessment of what houses are worth in this country would expose the massive underlying insolvency of the banks.
The most interesting thing I have come across recently was the Case-Shiller index which showed that housing prices even now are still twice what they were in 1997. This suggests that the American housing sector remains not just vastly overpriced, but overvalued.
It’s a prime reason why the FASB rules were changed so that banks could cook their books and why all the government programs, like HAMP, to help homeowners went nowhere, indeed were never meant to go anywhere. The one thing that can never be allowed to happen, from a banking point of view, is for housing to be accurately valued. So refis have all been about rescheduling payments and not about revaluing the underlying assess. It’s not even about keeping homeowners afloat a little while longer before they redefault. It is about keeping the value of the house artificially pumped up that much longer.
Misstating the number of existing housing sales is just part and parcel of a pervasive system of deception about the extent of, not the housing crisis, but the ongoing banking crisis. There are the short sales. There are the properties that banks could foreclose on but do not since this would increase inventory and depress prices, that is begin to show where prices really should be. And of course, none of this touches on legal jeopardy the banks are in because they engaged in so much fraud that there probably isn’t a mortgage in the country written since 2000 that could be legally foreclosed upon, if our court system actually worked. Or the terms of all the CDO and CDS floating out there that would detonate if housing valuations returned even remotely close to their 1997 pre-bubble levels.
“The one thing that can never be allowed to happen, from a banking point of view, is for housing to be accurately valued.”
Hugh, I think it’s not just from the banking point of view. What about the local government and school district POV — if housing values were accurate, how would our city services and schools be funded?
Again and again, systemic reform of the monetary system seems to come up as the only answer.
Local governments do not, in any real sense, care about the valuation of individual homes.
You know how this works. If everyone’s land value goes down, the local government just has to raise the tax rate to compensate. The tax levy stays the same.
….as I said, systemic reform of the monetary system…
This is exactly why I am selling my house this month, which I purchased in 1995. It’s nominally worth about 2 x what I paid, I figure get out now, buy back in later for much less. Cash is king in a deflationary environment.
Please hear Catherine to hear about mortgage related fraud.
Catherine is president of Solari, Inc. and the managing member of Solari Investment Advisory Services, LLC and Sea Lane Advisory, LLC. She previously served as managing director and member of the board of directors of the Wall Street investment bank Dillon, Read & Co., Inc. She also served as Assistant Secretary of Housing/Federal Housing Commissioner at HUD in the first Bush Administration, and was the president and founder of The Hamilton Securities Group, Inc., a broker-dealer/investment bank and software developer. Catherine has a BA from the University of Pennsylvania, an MBA from the Wharton School, and studied Chinese at the Chinese University of Hong Kong.
Gregory Dean Lemke shared a link.
Senator Cantwell to Justice Department – “Investigate Fraudulent Foreclosures before Bank Settlement
Nationalmortgageinvestigation.com . .. .. . . Letter To: Piggybankblog Board Member Greg Lemke . Dear Gregory, I hope that you’re getting the chance to relax and enjoy this holiday season. I wanted to send you a quick note to tell you how much I appreciate all your hard work and support this past ye…
Past Candidate for State Representative Republican 2002 ending returns 41% of the vote. Not seeking office but trying to do the right thing for home owners facing unlawful forclosures. Fore more detail please contact Senator Cantwell Office and help her with the reforms needed to prevent continued foreclosure abuse of the home owners at risk.
Gregory Dean Lemke
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Michael Olenick: Is Shadow Housing Inventory Vastly Larger Than Widely Believed?
TO: 1 More1 recipientCC: recipientsYou MoreBCC: recipientsYou Hide Details FROM:Steve Morberg TO:Steve Morberg Message flagged Monday, January 2, 2012 11:35 AM Message body
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During 2010 Fannie had about 1MM loans nationwide that were 60+days delinquent and about 1.5 MM total delinquencies (see page 16 http://www.fhfa.gov/webfiles/22826/3q11FPRF.pdf).
If 60+ day were used as a proxy for shadow foreclosures, it seems hard to believe that 60% of the nationwide total was in Florida.
If Stern has such a contemptuous indifference to the law, he probably has a contemptuous indifference to numbers and data.
Stern may not be reliable. It struck me, after reading his deposition, that he was careless to the point of reckless in running his law firm and setting up companies. He admitted not knowing answers to many questions about basic facts of their structure and operation. If Stern couldn’t be bothered to stay abreast of his own enterprise, I doubt he was paying attention to Fannie Mae’s numbers.
I’m a tax preperer in Southern California, with about 500 clients, solidly middle class. I have witnessed four significant trends over the last several years. One, you would be surprised how many of my clients are not making house payments, some for 2-3 years, without even receiving a notice of default. They intend on staying until forced out. And, though many have tried, I hardly ever see a client who has been granted a loan modification. Two, I’d say that 1/2 of my clients who own a home want to sell, and are waiting for the market to get better. Thus, if the market starts to get better, there are so many people waiting to sell that they will flood the market with inventory. Three, virtually none of my clients are earning more money. Most have incurred pay cuts, or best case, their income has just stayed the same. The first couple of years they complained about it, now most say they are happy to still have a job, even if they are making less. Home prices will not be going up if wages are falling or stagnating. And four, I’m seeing an incresing amount of people moving out of Calif., to places with a less expensive cost of living (not good for the State of Cal tax revenue).
I know this is anecdotal, and only applies to Southern California. But I just don’t see how housing returning to any sense of normalcy anytime soon.
thanks for reporting in. this is information without spin–a rarity today.
Agreed, I appreciate your insights George.
So you see folks?
The reason why the economy hasn’t totally tanked is that the money that homeowners would have paid the mortgage with is being used to buy everything else to survive. Utilities, food, gas, clothing, Christmas presents etc.
Sure thing Washington knows this and knows the real numbers of defaulting loans. The numbers defaulting will only increase when neighbors finally share what is really going on and more and more people realize they too are no longer willing to starve to pay their underwater mortgages.
Thank you for the honesty. The figures and reports that I have been reading just haven’t seemed true. Since you are seeing what people have, my other question is are these people really saving lots of cash on the sidelines? If so, the honest people that got squeezed out still will not be able to compete in buying power.
With respect to the comments “don’t bankers care about their futures?” :
The unstated assumption is ‘I do, why can’t they?”
In fact, reality is quite huge, so huge that humans don’t differ in their ignorance until about 20 decimal points to the right of zero.
Thus, anyone who believes they understand enough to see any future is deluding themselves. The future is hidden by the effects of mathematical chaos, computational complexity and the emergent properties of systems. The fact that causality is clear in retrospect doesn’t mean that it was clear before the fact.
Very few people see the future in enough detail and reliably often enough to make money off of their predictions. Those who do are mostly betting on the flaws of their fellow humans, which are much more reliable than ‘market fundamentals’ or other methods.
For Progressives of both the Left and the Right, the challenge is to navigate to a desired future, given that you can’t predict any particular future.
The track record for government programs of all kinds, including wars, is very very very bad.
So, bankers are just as good at looking out for their futures as anyone else : take the short-term win, you can’t depend on anything long-term. As we get nearer a system crash, that is better and better advice.
Such emotional idiocy….
So you can see how the future must be, huh?
From what pattern ?
And what do YOU know of what is desired by anybody – much less “desired as a future for society” – for it seems to me from your comment, that you aren’t clear as to what is that you yourself desire, from the present, the future, or even the operation of your reason. Let alone society!
Back to your lonesome crags and dark cold hollows, thou loathsome croaking raven of despair!
I know what I desire: to commit fewer typographical errors!
“…clear as to what it is…”: in my above.
The only way this data will come out, is for hackers anonymous to hack into these companies’ networks…
because, the regulators, officials of these companies, the politicians and president are all working towards maintaining this status quo !!
I don’t think the numbers could be so far off in the negative direction or the economy would, in fact, be much worse than it is, even taking into account robust official data massaging.
The reason you’re not finding accurate public information is because the powers that be don’t want you to find it.
The fact of the matter is that most of our banking institutions would be found to be insolvent if they had to disclose the true state of their assets and liabilities. The banks aren’t in any hurry to foreclose people, not because they don’t want to have to sell off a whole bunch of houses at 20-30% discounts. They could care less about taking a loss. Nor do they believe that they will ever be able to recoup those losses or even find a way to close the gap on some of those foreclosures.
The only thing keeping thing keeping the banks afloat is hiding their shadow inventory and QE.
no shadow inventory in QUALITY markets.
there’s ZERO inventory period…
people forget many areas were F CKED UP BEFORE the collapse.
If you live in an ultra corrupt state like New Jersey or Florida
GET OUT NOW
Power should remain on because in most jurisdictions, you have to bring the whole house up to code in order to get it turned back on if you shut it off. Word to the wise, it is foolish to turn off electricity to property you own. It is also foolish because mold will grow in an unairconditioned house. I recently was in charge of selling my grandmother’s house that had fuses instead of a breaker box. I wisely did not turn off the electricity because of my Hurricane Katrina experience.
But how can this potential disaster make anyone feel good for 2012? If there’s a bailout for millions losing their homes, that bailout will involve printing unprecedented amounts of fiat money. The psycholological damage is more costly than economists seem to measure. Emotional depression is making a contribution in dragging the economy down. Gun sales are up because people think the worse is yet to come. Liquor sales might be up too. Keynesians think America has immunity (at least to hear them talk)to inflation. That is a stupid and tragic assumption if so. 2012 IS the year to gather family or business and talk about investing in rural farmland suitable for crops, and general extended survival. Some place where you might feel safely far from potential gangs of chaos. Do not delay.
Scary thought. The bigger question is what the banks will do with it all. Are they going to dump it on the market, or think up another excuse to hold back once they finish dealing with the robo-singing fiasco? Check out this article, that discusses a program they are testing in Florida: http://www.homeforsure.com/banks-try-kickbacks-to-short-sellers