Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1683.3 | -1.4 | -0.08% |
| Eurostoxx Index | 2755.1 | -4.1 | -0.15% |
| Oil (WTI) | 103.6 | 0.5 | 0.46% |
| LIBOR | 0.266 | 0.001 | 0.23% |
| US Dollar Index (DXY) | 82.12 | 0.290 | 0.35% |
| 10 Year Govt Bond Yield | 2.68% | 0.07% | |
| Current Coupon Ginnie Mae TBA | 103.8 | -0.4 | |
| Current Coupon Fannie Mae TBA | 103.3 | -0.4 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.36 |
Markets are slightly better after some good economic data. At 2:00 pm we will get the FOMC decision. Mortgage Applications fell. Bonds and MBS are getting beaten up on the good data.
The ADP jobs report showed the private sector added 200k jobs in July, and June was revised upward to 198k. The ADP report is supposed to mimic the final jobs number, not the advance estimate we will get on Friday.
The advance estimate of second quarter GDP growth came in at + 1.7% This was higher than the 1% estimate. First quarter GDP was revised down by a lot… from + 1.8% to + 1.1%. That said, it looks like the growth came from inventory build as consumer spending cooled. If spending doesn’t rebound, that will depress growth in the future.
Count Richmond California as the next locality threatening to use eminent domain to seize mortgages. Unsurprisingly, SIFMA (the Securities Industry Financial Markets Association) which runs the TBA market condemned the idea. SIFMA told San Bernardino that if they proceeded down the eminent domain path, that mortgages originated in that jurisdiction would become ineligible for TBA trading. This would effectively cut off the locality from Ginnie Mae and Fannie / Freddie loans. Which is 90% of the mortgage market. FHFA nominee Mel Watt has taken a pass on the whole eminent domain issue, which is yet another reason why he faces an uphill battle for confirmation.
Filed under: Morning Report |
All Things in Moderation 
On what value basis would mortgages be taken by eminent domain? Who would appraise them and how would investors be reimbursed? Wouldn’t some people be glad to have underperforming assets taken off their hands?
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Under the San Bernardino model, which is the one we know the most about, here is how it would work. Say 145 Main street is worth $100,000 and has a $200,000 mortgage on it. The homeowners are current on their mortgage. The city would partner with a hedge fund in the Bay Area and force the MBS to sell it to them at something under the value of the home, say $96,000. The hedge fund would then modify the loan and re-securitize it, getting probably $102,000 for it. The city and the hedge fund would split the $6,000 profit.
If the loan is current, the bank is probably marking it at par or close to it. Or the investor – a pension fund or mortgage REIT, or whatever. This scheme only works for people who are currently paying their mortgage because the hedge fund won’t be able to flip a non-performing loan back into the securitization market. So, the investor takes a pretty huge haircut.
And here is why this is so stupid. What is going to happen to real estate values in that area once you cannot get a mortgage anymore? Who do they think they are helping?
Also, with respect to being happy that underperforming assets are being taken off their hands, it isn’t as if there is no market for underwater current mortgages. They could sell these loans tomorrow in a competitive bidding process if they chose to. Current, but underwater mortgages are not trading at 48 cents on the dollar. Nowhere close to that. The investor is getting ripped off here.
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Thanks. That method makes no sense to me as the loan is being refinanced at the fair market value of the property rather than the fair market value of the loan. This all assumes that the value of the loan stays higher than the value of the underlying asset. Otherwise, as you said, there are markets for performing loans.
It does seem to me that there should be some mechanism for current homeowners to write down their mortgages to current property values without being played for suckers for not just walking away. The crux would be who eats the loss of value. Currently this is totally on the paying homeowner. It gets further complicated if the property later rises back in value. Perhaps there is some equity sharing mechanism that could be developed with the investor’s share being limited to the original value of the loan.
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If I were negotiating a deal between private parties it might look like this:
1] agreed markdown of loan in consideration for mortgagee taking an ownership interest in the premises [a “partial agreed foreclosure”, if you will]
2] due on sale clause.
3] If and when loan is paid off by original borrower, borrower has three options within a specified time frame of less than one year:
a] sell the home on the open market and split the revenue; or
b] buy the balance of the home from the lender for the value of the difference between the loan balance at the time of the accommodation and the marked down loan balance, interest adjusted; or
c] sell the owner’s balance of the home to the lender for interest adjusted value of the original marked down loan balance.
Probably cannot be done in some states or with resold mortgages, anywhere.
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the difference between the loan balance at the time of the accommodation and the marked down loan balance, interest adjusted
Paying off the carried interest on the written down portion of the loan would be prohibitive unless the value of the property had appreciated so much as to make it better for the homeowner than splitting the equity.
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YJ, the accommodation I proposed would make that Borrower’s choice. I would define “interest adjusted” for this purpose as the balance in question increased by the note rate for the years from the accommodation to the payoff. Depending on the number of years, the interest rate, and the market at the time of payoff, the Borrower would make the choice, which could also include selling Borrower’s portion to Lender. That last might me modified in negotiation to where Lender retained that option if the third party sale proposed by Borrower was “unsatisfactory” to Lender.
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Delicious blast from the past by our betters.
But jeebus are Birthers pathetic!
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Ron Fournier realizes what Capital Hill realized 5 years ago. Obama can’t lead, he can only lecture and finger wag.
http://mobile.nationaljournal.com/politics/what-if-obama-can-t-lead-20130731
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Leading requires people following orders. I wouldn’t say that is Obama can’t lead as much as he can’t negotiate. He can’t offer anything the other side wants. The distance between the two sides is too great.
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yello:
Leading requires people following orders.
I think leading requires making people want to follow orders. Obama and his fans like to blame his inability to “get things done” on a recalcitrant opposition, but the truth of the matter is that all politicians face opposition. Real leaders don’t complain about it. They overcome it. If Obama is unable to overcome it, as he has been so far, then I think manifestly he is not the leader he thinks he is.
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lms:
And I’m wondering how a creepy mayor in San Diego became a National political issue?
I think it is the same reason guys like Todd Aiken become a national political issue. They are a convenient and easy means of painting their political comrades in ways that are politically useful to their opposition.
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lms:
To answer your questions:
Libertarians seem to be for both open borders and abortion, in some cases “on demand”, even I don’t believe in either of those suggestions, so is that to the left of me?
I don’t think so. Placing libertarians on the traditional left/right continuum has always been a questionable exercise, but ultimately I think left/right/libertarian is not so much what position you hold on a specific issue but rather how you got to the position.
I guess I’m wondering where all this will eventually lead. How hard will it be for Libertarians to vote for a Republican of the evangelical sort?
Depends on the alternative.
Is it just a case of voting for the lesser of two evils in a Presidential election, or even a local election?
For me, yes. The only politician that I have ever voted for out of enthusiasm rather than necessity was Ronald Reagan. And my political thinking is decidedly different now than it was then.
When do your votes and principles collide?
Every time step into the voting booth.
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Good!
@DavidMDrucker: RT @DavidNakamura:In closed door meeting with House Dems, Obama tells them: “We are not negotiating on the debt ceiling,” reports @pkcapitol
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Like a said, not a leader, he’s the worst kind of know it all. He must be insufferable. No wonder Speaker Pelosi hit the mute button.
@zbyronwolf: After Obama meeting, one congressman tells @danabashcnn that POTUS can’t get thru a mtg w/ House Dems ‘without chastising us.”
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Goes to my earlier question.
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@jbendery: MT @DanaBashCNN: Dem source tells me POTUS was “rude and dismissive” to freshman dem maloney who asked about a loan guarantee program/jobs
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Tweet of the Day.
@B_MartinTRS: The IRS scandal is so phony Lois Lerner had to plead the 5th to keep from incriminating herself with the truth.
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Scott
Didn’t realize people were answering my post over here…………..nearly missed the comments. I don’t follow the comments in the Dashboard.
Anyway,
I think it is the same reason guys like Todd Aiken become a national political issue.
Except that Todd Aiken was running for a spot as a US Senator. Don’t you think that’s different than a mayor in San Diego?
I truly don’t understand how this stuff gets political. As a woman I’m insulted by both of them, regardless of their party affiliation. There’s no shortage of jackasses on either side of the political divide when it comes to women.
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The other difference is that Todd Aiken’s stated political views were were representative of other candidates as well were very offensive to vast range of voters. Filner is under criminal investigation for his personal conduct which is being universally derided.
It’s a big distinction.
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lms:
Sorry…I always respond via the dashboard (it has editing functions on the comment box) and I accidentally “responded” to a comment on the wrong thread.
Except that Todd Aiken was running for a spot as a US Senator. Don’t you think that’s different than a mayor in San Diego?
I guess it makes him interesting on a state level rather than a local level. But still I think the reason for the elevation is the same. There is no real substantive reason for either story to be interesting on a national level, except insofar as the story can be used to impugn other politicians on a national level.
There’s no shortage of jackasses on either side of the political divide when it comes to women.
I’d say there’s no shortage of jackasses on either side of the political divide…..period. Indeed some of those jackasses are women.
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Also Scott,
Thanks for answering my questions. I pretty much feel the same way about voting. Obama was actually the first Democratic Presidential candidate I’ve ever voted for and I wasn’t crazy about that. I generally vote third party or used to write in “none of the above”.
ultimately I think left/right/libertarian is not so much what position you hold on a specific issue but rather how you got to the position.
I don’t know what you mean by this.
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lms:
I am going to move my future responses to the proper thread. I will link back to your comment.
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Goes to my earlier question.
You are really stuck on the “What did Nancy Pelosi know and when did she know it aspect?” of this aren’t you?
As I said earlier, the closest analog is the Mark Foley/Daniel Hastert situation. The parallels are very close but with some distinctions.
1. Foley’s conduct was while still a congressman. Filner is being charged with conduct while mayor after leaving congressional office.
2. Foley had been previously reported to House leadership for his behavior. No smoking gun on Filner has emerged.
3. Foley’s case involved live boys. So far no dead girls have shown up associated with Filner. (That’s a joke playing off the old maxim that the only scandals which can wreck a politician are to found in bed with either a dead girl or a live boy. It is fairly inaccurate as the cases of Anthony Weiner, Gary Condit, and others have shown.)
The distinction between creepy and criminal is gray and broad. Filner is definitely the former and possibly the latter. Making Nancy Pelosi an accomplice might be quite a pull but I’m sure some will try.
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Plus he spent 20 years in the House doing, among other things, co-founding w/ Speafer Pelosi the Congressipnal Progressive Caucus.
http://moelane.com/2013/07/20/nancy-pelosi-former-colleague-bob-filner/
Seems newsworthy.
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Scott
Indeed some of those jackasses are women
Sure, like Michele Bachmann………….haha. But seriously, I was referring to the majority of comments and behavior displayed by men with regards to how they speak to and about women, luckily it’s not the majority of men who do it though. Obviously, there are exceptions, such as the Weiner campaign spokesperson……………wow. She’s a keeper right?
As women, we occasionally talk crap on men too, but generally because they’ve insulted us first. Again, there’s always the exception. I think a lot of people, both sexes, just can’t help themselves and don’t have the good sense to know it. Rudeness is a much more accepted trait now than when I was young. 😉
Yello had a couple of good points about the distinction between the San Diego mayor’s behavior and Todd Aiken’s. I also think it matters to the rest of us who wins state elections for Congress. Both the Senate and the House vote on issues that affect all of us.
I think you’d have an easier time convincing me of your point when I get pissed off about comments and policies coming from State Houses…………….not to give you any ideas or anything.
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Do you think his behavior started 8 months ago?
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Do you think his behavior started 8 months ago?
Absolutely not. I hope you’re not expecting me to defend him in any way. And given the status of some of the other woman he has hit on, I wouldn’t be surprised if he did something untowards to Ms Pelosi herself. Again, the distinction is between creepy and criminal. I’m just going to need more evidence before I call for Nancy’s head as an accessory before, after, or during the fact. It may be out there. There could be documents and payoffs and killed witnesses and video of the two chuckling over it together for all I know, but just the fact that the two worked together isn’t a smoking gun. After all, Jerry Sandusky’s wife had no idea what her husband was up to.
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