Foreclosure Fraud: It's Worse Than You Think

^^ That's a headline from a CNBC article today. The writer assumes that the reader doesn't know how bad the "Foreclosure Fraud" has become but I know. I've looked into the hearts of men and I have found unbounded greed, lust, and a thirst for vice. Think about it this way: As bad as someone tells you something is, multiply it by 5 to get the true reality of the situation. Sometimes you have to muiltiply it by 10 depending on how good a liar the official in charge is.

   Where do we go from here? Now that the writer Diana Olick has told us how bad it is, what happens? Well, nothing really. Facts and figures don't make things happen. What does make things happen is greed, lust, and a thirst for vice. The country will slog through the mortgage and foreclosure mess for a looooong time until someone figures out a way to make money from all this crap. Once that spark is ignited, action will be taken, swamps will be cleaned up, and things will get moving again. Until then, the reality will be like molasses. Slovenly, syrupy, and slow to move.

How Banks Can Fix the Foreclosure Crisis

   Daniel Gross has written an article for Yahoo Finance which states that banks can "Fix the Foreclosure Crisis" by doing the following:

"Jamie Dimon of J.P. Morgan Chase, Brian Moynihan of Bank of America, and other banking CEOs willing to show their face in public should call a press conference today and announce their intention to hired 50,000 people to deal with all aspects of the foreclosure crisis. They should hire processors who will actually read the legal documents, but also professionals to work on debtor counseling and modification, landscapers to mow loans of real estate they own, and security guards who will ensure that repossessed homes aren't stripped or occupied by squatters."

   Does Daniel Gross live in a fantasy land where 50,000 people can be hired and marshalled into a foreclosure force capable of efficiently going through the muddle that is the American real estate crisis? How long will it take for the banks to train those 50,000 people and ensure that the foreclosure process is performed in admirable fashion? My estimate would be at least 3-5 years and banks aren't going to invest the capital and time for that. In the eyes of the banks, hacking and slashing people out of their homes should be quick and painful. Daniel goes on in the article to state the following:

"Doing so would help put a small chunk of the underemployed workforce back on the job.  It would be a bold, public gesture that might spur other companies to hire. It would demonstrate to courts and politicians that the banks are finally getting serious about getting on top of the problem. Perhaps some of the newly employed will use their wages to stay current on their mortgages, and the banks can certainly afford it. Fifty thousand people at $50,000 per year comes to $2.5 billion. J.P. Morgan Chase earned $4.8 billion in the second quarter. In other words, it would cost the industry about what one of its leading members makes in seven weeks."   

   Since when was altriusm part of any banks' business model or vernacular? I found this sentence particularly laughable" "It would be a bold, public gesture that might spur other companies to hire." HAHAHA. Daniel, you do live in fantasy land. Can I join you and look at the unicorns and rainbows? Daniel insinuates that just because banks hire people, other businesses like Dunkin' Donuts, Saks Fifth Avenue, and British Petroleum are going to start hiring people too. Damn, that's the kind of logic that writers for Yahoo are capable of? He even works out the equation for hiring 50,000 people and then multiplies everyone's $50,000 in annual wages to come up with $2.5 billion in total wages. This guy is a simpleton of the highest order and he can't be taken seriously. I'm done with this guy and his future articles will be shitcanned immediately.

White House doubts need to halt all foreclosures

   That headline up there is from an AP article today. First off, who is proposing a "need to halt all foreclosures?" A few paragraphs into the article, we find one of the culprits who are calling for a moratorium:

"Rep. Debbie Wasserman Schultz of Florida, a top House Democrat, said she backed a foreclosure moratorium and government talks with the banking industry to concoct ways to let lenders reshape troubled mortgages. She said the foreclosure problem has been "extremely vexing" in her state."

   I'm not going to blame her for being a woman. I'm not going to blame for her being stupid. I'm not even going to blame Debbie of being self-serving in the face of her proposal. I'm not going to do any of those things because there simply won't be a moratorium. It really is that simple. Why belabor or argue a point when I know that nothing will come of it? Debbie, you're going to get some votes and nods from constituents but that's pretty much it. Well, the banks probably won't contribute anything to your next campaign but you'll probably make it up from the donations provided by impoverished homeowners who are facing foreclosure. Yeah, that's the ticket.

Employers in U.S. Cut More Jobs Than Forecast in September

From a Bloomberg article today:

http://finance.yahoo.com/news/Employers-in-US-Cut-More-Jobs-bloomberg-126013039.html?x=0&sec=topStories&pos=main&asset=&ccode=
The U.S. lost more jobs than forecast in September, reflecting a decline in government payrolls that shows the damage being done by rising fiscal deficits.

   So, the economists doing the forecasting are continually wrong month after month. What are they good for then? What else do they do in their offices? Play desktop pool? Surf porn sites? What?

Employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent.

   I love the following sentence: "The unemployment rate unexpectedly held at 9.6 percent." Why should the unemployment rate at 9.6% be unexpected? Are the economists so out of touch with reality that these data points are "unexpected?" I've said it before and I'll say it again. Economists are useless. Worthless. They'd serve society better if they worked at a Staples or an Office Depot... at the copier machine. At least they'd be working with data that's useful for someone.

Real Estate Collapse Spells Havoc in Dubai

   Think back to the summer of 2007 when real estate around the world was still booming and average citizens were caught up in the hype. Goaded by cheap money, easy mortgages, and the infectious "me-too" mentality, everyone was getting into real estate. Janitors who couldn't afford it, single-income families who definitely couldn't afford it, and people like Casey Serin who eventually lost all of the houses he speculated on.

   The disease of real estate speculation also reached Dubai as an article in the Times relates today:

http://dealbook.blogs.nytimes.com/2010/10/07/real-estate-collapse-spells-havoc-in-dubai/
On a sultry June evening in 2007, more than 100 people camped out at the offices of Emaar, a prestigious Dubai property developer, to ensure that they would land a coveted spot in a gleaming new skyscraper scheduled to open this year near the Burj Khalifa, the world’s tallest building, Liz Alderman writes in The New York Times.

Today, the property, designed by the New York architect Frank Williams (who died in February), is like a number of others around Dubai — little more than a foundation. Its value has plunged by more than 40 percent since 2008, after the collapse of Dubai’s real estate boom.

   This type of capital destruction was happening everywhere at around the same time and billions in wealth got transferred in a big way.  The speculators and buyers got swindled and bamboozled by a slick shell game that ended in 2008. If global real estate was a piece of golden farm land in 2007, it's a bombed out crater now.

Wells Fargo to pay $24M to end mortgage probe

   The real estate boom years seem so long ago given the pickle that housing's in but it was only 4 years ago that housing was the road to riches for a lot of Kool-Aid drinking Americans. There's news today concerning Wells Fargo's payoff to eight states to close an investigation into option adjustable rate loans that are contributing to the current malaise. From the AP:

WASHINGTON (AP) -- Wells Fargo is paying $24 million to end an investigation by eight states probing whether lenders acquired by the company made risky mortgages to consumers without disclosing their perils.
The states said loans known as option adjustable rate loans, or "pick-a-payment" mortgages, were deceptive to borrowers. Those particularly toxic loans allowed borrowers to defer some of their interest payments and add them to the principal balance. Borrowers could make payments so low that loan debt actually increased every month.
San Francisco-based Wells Fargo & Co. announced the agreement Wednesday with attorneys general in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington state.
The loans were made by Wachovia Corp. and a California company it acquired, World Savings Bank. Wells purchased Wachovia at the end of 2008. Wachovia had already stopped making those loans before the acquisition was complete.

   What the @&*# were the banks thinking back then? That things had changed and this time was different? When the real estate market eventually recovers in the next decade or so and things are looking bright again, the banks will be making these kinds of crazy ass loans once again. You know why? Because memories are short and short term profits will always be on the forefront of profiteering banks.  

Midnight grocery runs capture economic desperation

   An AP story that's being flashed on the usual news carriers today reveals the hard times that Americans have found themselves immersed in. From the article:

http://www.businessweek.com/ap/financialnews/D9IMAS8G1.htm
FREDRICKSBURG, Va. (AP) -- Once a month, just after midnight, the beeping checkout scanners at a Walmart just off Interstate 95 come alive in a chorus of financial desperation.
Here and at grocery stores across the country, the chimes come just after food stamps and other monthly government benefits drop into the accounts of shoppers who have been rationing things like milk, ground beef and toilet paper and can finally stock up again.
Shoppers mill around the store after 11 p.m., killing time until their accounts are replenished. When midnight strikes, they rush for the checkout counter.
"The kids are sleeping, so we go do what we've gotta do. Money is tight," Martin Young said as he and his wife pushed two carts piled high with ground beef, toilet paper and other items.
The couple said they need food-stamp benefits, which are electronically deposited onto debit cards, because his job as a restaurant server doesn't quite cover expenses for their five children.
"We try to get here between 10:30 and 11 because we know we've got a lot of stuff to get. That way by 12 o'clock we're at the line cashing out and done," he said.

   I knew things were bad but didn't know they were this shitty. Here we are in 2010 with iPods, iPads, blazing fast internet, and the Hubble Telescope peering into the universe above our heads and Americans are waiting around in supermarkets like a 2010 version of Communist Russia? The debit cards have replaced the ration tickets but the gist is the same. It brings a tear to my eye when society never seems to evolve in a continual path but devolves and evolves in cycles. Two steps forward and one step back is how the world works and it's a damn shame.  
  

Pending Home Sales Rise 4.3 Percent in August but Remain Below Last Year's Pace - AP

   Some good news on housing coming down the pike? Nah, not really. From today's AP article on home sales:
   WASHINGTON (AP) -- The number of people who signed contracts to buy homes rose in August for the second straight month but remained far below last year's pace. The weak economy and fears that prices will fall are keeping many consumers away from the housing market.
The National Association of Realtors said Monday that its seasonally adjusted index of sales agreements for previously occupied homes rose 4.3 percent to a reading of 82.3. That's still more than 20 percent below the pace in the same month a year earlier.
Economists surveyed by Thomson Reuters had expected the index would rise to 81.4.

   Don't you love the part about economists expecting the index to rise to 81.4? I do. It bolsters my contention that economists are far removed from reality and operate on models, dogma, and "data" that insulates them from what's happening in the real world. I'll bet that no economist surveyed by Thomson Reuters has a clue about how the average American family lives or what the price of a quart of milk is. Until the reality of life blows through the sanctified world of the economists, we'll continue to get dumb and nonsensical expectations about the real estate market and the economy.

Bank of America delays foreclosures in 23 states

   During the height of the real estate boom when anyone with a pulse was able to get a home loan, banks were signing off on mortgages like risk was dead. Back then, banks couldn't process mortgages fast enough and liar loans were approved without much of a background check or due diligence.

   All of that laxity came back to haunt and nearly destroy the big banks during the real estate crash of 2008-2009 when loans soured like milk under a hot Alabama sun. Now, news come from the likes of JP Morgan, GMAC Mortgage, and Bank of America that they didn't do their due diligence when processing foreclosure documents. Homeowners in foreclosure now have the process delayed while the banks go through the paperwork to determine if the foreclosures were properly handled.

   Are the banks really this shitty? Well, yeah, I guess so. When big banks have the full backing of Uncle Sam and by proxy, the American taxpayer, banks have a blank check to do whatever they want. When they take on too much risk and that risk bites them in the ass, it's okay. Taxpayers will bail them out. Bail Out Nation. That has a nice ring to it.

Housing Conversation

   I reconnected with an old college buddy yesterday who sent me an email asking what I was up to. I called him and we talked for about 30 minutes. I consider "Brad" one of the most down-home good 'ol boys I've ever had the privilege of knowing. He's honest, upright, and I guess you could call him a square. Brad's a family man with a 9-to-5 and he tends to believe what he sees and hears in the news. In other words, he hasn't been bitten by the cynicism bug yet.

   He supported President Bush, is wary of Obama, and has no opinion on Sarah Palin... yet. Our conversation turned to housing and he told me that he's been unable to sell his house due to the market. My ears perked up. "Why do you want to sell your house," I queried. "My wife says we need more space but we can't get a house until we sell the current one we got," he replied. I wanted to go into a rant about consumerism and why the real estate market wouldn't bottom for at least another decade but I spared him my diatribe. I don't think he'd appreciate what I had to say and his wife definitely didn't need to hear about my prognostication if her heart was set on another house. So, I encouraged Brad to continue trying to sell the house and suggested hiring a staging company to spiffy up the house and show it every other weekend to drum up traffic. If Brad sells the house, I'll post up an update but I think it's going to be a long time coming.