Does Anyone feel like Bailing - Page 10

BigV · 10-03-2008, 01:28 PM

short answer:

No.

In my opinion, this is the wrong approach. Bailing is an appropriate illustration. And a certain amount of bailing is needed if you're in a leaky boat. But to make the boat seaworthy, you need to patch the leaks, not just bail. And I believe the leaks in this case are (largely) the defaulting mortgage holders. Those are the leaks that need to be PLUGGED.

Where in this whole spasm of FUD is an acknowledgment of the source of the crisis, and where is there an effort to address (one of the major) the root cause--mortgage defaults.

I'll hold forth in a later post on this BIG issue for me. Right now I have to type elsewhere.

classicman · 10-03-2008, 02:24 PM

IMO - The first thing that needs to be addressed is the accounting methods for the banks/lenders. No more "mark to market" - That is fuckin beyond insane!

BigV · 10-03-2008, 04:58 PM

I strenuously disagree. Mark to market is a good accounting practice. Without it, how in the world could you know the value of a company's assets? When the news is good, we'll tell you. When the news is not good, we'll just pick a number we like?

wtf?

eta:

For example:

You have a net worth. It is some value, some number. How do you reach that number? Well, today, you'd add up all your debt, then add up all your assets, subtract your debt from your assets and voila'! Your net worth.

But how do you assign a value to your debts? Well, I look at my loan statement. It tells me what I still owe. And your assets? How do I add them up? How do you value an asset? Your car, for example. What value is assigned to the car? *Your car is worth what you can get for it today.* No more, no less. Notice you don't have to sell your car to get that value, but you do have to make an estimation of what you would get if you did sell. That's mark to market. And the same goes for your house. And your baseball card collection. Without mark to market, what would you use as the basis for your valuation of your assets (or of the assets of a company)?

SamIam · 10-03-2008, 06:24 PM

The problem is mortgage backed securities that now have next to no value. Lending institutions want to fix their books with a "some day my prince will come" value for their MBS's. Well, some day he may indeed come, but not today. We cannot go from a relatively transparent system of accounting to one that is opaque. How are we supposed to make informed investment decisions without mark to market? I'm with BigV.

Griff · 10-03-2008, 07:44 PM

My Rep voted no. I will vote for my Rep.

classicman · 10-03-2008, 11:08 PM

The system in place for so many years prior worked just fine. The guarantee is that there is a contract with a value associated to it. The mark to market system nullifies much of the "real value of the loan.

xoxoxoBruce · 10-03-2008, 11:40 PM

You want to buy a house appraised at 100K.
Bank1 gives you a mortgage for 90k.
Bank1 figures you will repay 270k over 30 years.
Now when Bank1 sells that loan to Bank2, how much does Bank1 get?

You pay 10k on the mortgage loan, then default.
Bank2 now owns the house, and sells it for 100k.
Bank2 calculate it's loss at what they paid Bank1, minus 110k?

Of course to make it a simple example, I've left out payments to Bank1, before they sold the mortgage, and changes in the market value of the house.

jinx · 10-04-2008, 08:35 PM

I wonder if this will catch on...

Quote:

Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff's deputies tried to evict her from her foreclosed home.

Fannie Mae foreclosed on the Akron, Ohio, home of Addie Polk, 90, after acquiring the mortgage in 2007.

Addie Polk, 90, of Akron, Ohio, became a symbol of the nation's home mortgage crisis when she was hospitalized after shooting herself at least twice in the upper body Wednesday afternoon.
On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against Polk and sign the property "outright" to her.

footfootfoot · 10-04-2008, 09:46 PM

Quote:

Originally Posted by jinx

I wonder if this will catch on...

I am going to punch myself in the nose and see if my mortgage co. will let me skip a payment.

BigV · 10-04-2008, 10:16 PM

That's a sad story, jinx.

My biggest complaint about this whole freakin debacle is the cnspicuous absence of a mechanism to balance the equation at the homeowner level. We have a very well established system for rebalancing a mortgage on a *second home* in the bankruptcy courts. Judges are empowered to call borrower and lender to the table and enforce a renegotiation of the terms of the loan, but, for reasons unknown to me, this power is not extended to cover loans on primary residences.

Why not? I would think that there is no class of borrower than residents who are more motivated to make it work! When I'm faced with getting the note paid or living under a bridge, I'm alllll over it. But for a second home, that same motivation isn't there. Why wouldn't you want to extend the same set of options to the borrowers for primary residences???

Because now, let's say someone doesn't pay and the home goes into foreclosure. Imagine that the mortgage is one that has been purchased as the security behind one of these corporate notes that have rapidly fallen out of favor. So we the people own the note and we're not getting paid. What now?

Foreclose? Kick them to the curb? Wouldn't the homeowner possibly think, no wai GWB is gonna boot me out. I'll just stay. That might happen, sure it could. Now we're not getting paid. Dammit.

Or.

Or we decide to evict him. Now we own the house. Who's gonna mow the lawn? Who's going to sell the house? Who's gonna buy it? And for what amount? A foreclosure sale is often offered at the loan balance, but the previous homeowner couldn't afford that rate, maybe the market isn't there. So we have to lower the price. Now savvy cash rich investors/speculators sensing that the market is heading downward would what? Wait, of course. Until the price goes down even more. Now we have to sell at some discount.

Why didn't we just DO THAT IN THE FIRST PLACE WITH THE FREAKIN HOMEOWNER? We could have saved all the processing bs and cost AND had a homeowner taxpayer stay in the home, helping keep the fabric of our community and economy stay knitted together.

These kinds of decisions are of course all case by case basis only. I don't think second homeowners should have any such benefits. Or at least back of the line buddy. Let the resident borrowers principal residence people, let them come together with the lenders (US) and work it out.

xoxoxoBruce · 10-05-2008, 01:30 AM

Quote:

Originally Posted by BigV

Why didn't we just DO THAT IN THE FIRST PLACE WITH THE FREAKIN HOMEOWNER? We could have saved all the processing bs and cost AND had a homeowner taxpayer stay in the home, helping keep the fabric of our community and economy stay knitted together.

Because of the cash flowing from the lobbyists for the, Copper Plumbing/Wiring & Aluminum Window/Door/Siding, Recycling Association. It's much more convenient when the house is empty.

Sundae · 10-05-2008, 06:54 AM

Quote:

Addie Polk, 90, of Akron, Ohio, became a symbol of the nation's home mortgage crisis when she was hospitalized after shooting herself at least twice in the upper body Wednesday afternoon.

How in the name of all that's holy does a 90 year old woman have a mortgage?!

TheMercenary · 10-05-2008, 08:28 AM

Quote:

Originally Posted by Sundae Girl

How in the name of all that's holy does a 90 year old woman have a mortgage?!

She doesn't anymore:

Quote:

the mortgage association had decided to halt action against Polk and sign the property "outright" to her.

She could have easily gotten a 30 year at the age of 60 in 1978.

Sundae · 10-05-2008, 08:31 AM

Wow. It's hard for people over 40 to get 30 year mortgages here.

TheMercenary · 10-05-2008, 08:46 AM

Quote:

Originally Posted by Sundae Girl

Wow. It's hard for people over 40 to get 30 year mortgages here.

My MIL, who was 63 at the time, got a 30 yr mortgage and she had impecible credit. I guess they figure that the house itself could have been resold at a profit and they would get their money back. They didn't figure that we were smart enough to place all of her assets in a trust before she died and that all of those assets would be transfered to the trust. Now the trust still pays her house payments from her remaining nest egg even though she died in Feb. The problem is they are coming from the nest egg and the house has not sold. So my wife's and her brother's inheritance dwindles in the mean time.

10-03-2008, 01:28 PM	#136
BigV Goon Squad Leader Join Date: Nov 2004 Location: Seattle Posts: 27,063	short answer: No. In my opinion, this is the wrong approach. Bailing is an appropriate illustration. And a certain amount of bailing is needed if you're in a leaky boat. But to make the boat seaworthy, you need to patch the leaks, not just bail. And I believe the leaks in this case are (largely) the defaulting mortgage holders. Those are the leaks that need to be PLUGGED. Where in this whole spasm of FUD is an acknowledgment of the source of the crisis, and where is there an effort to address (one of the major) the root cause--mortgage defaults. I'll hold forth in a later post on this BIG issue for me. Right now I have to type elsewhere. __________________ Be Just and Fear Not.

10-03-2008, 02:24 PM	#137
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	IMO - The first thing that needs to be addressed is the accounting methods for the banks/lenders. No more "mark to market" - That is fuckin beyond insane! __________________ "like strapping a pillow on a bull in a china shop" Bullitt

10-03-2008, 04:58 PM	#138
BigV Goon Squad Leader Join Date: Nov 2004 Location: Seattle Posts: 27,063	I strenuously disagree. Mark to market is a good accounting practice. Without it, how in the world could you know the value of a company's assets? When the news is good, we'll tell you. When the news is not good, we'll just pick a number we like? wtf? eta: For example: You have a net worth. It is some value, some number. How do you reach that number? Well, today, you'd add up all your debt, then add up all your assets, subtract your debt from your assets and voila'! Your net worth. But how do you assign a value to your debts? Well, I look at my loan statement. It tells me what I still owe. And your assets? How do I add them up? How do you value an asset? Your car, for example. What value is assigned to the car? Your car is worth what you can get for it today. No more, no less. Notice you don't have to sell your car to get that value, but you do have to make an estimation of what you would get if you did sell. That's mark to market. And the same goes for your house. And your baseball card collection. Without mark to market, what would you use as the basis for your valuation of your assets (or of the assets of a company)? __________________ Be Just and Fear Not. Last edited by BigV; 10-03-2008 at 05:04 PM.

10-03-2008, 07:44 PM	#140
Griff still says videotape Join Date: Feb 2001 Posts: 26,813	My Rep voted no. I will vote for my Rep. __________________ If you would only recognize that life is hard, things would be so much easier for you. - Louis D. Brandeis

10-03-2008, 11:08 PM	#141
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	The system in place for so many years prior worked just fine. The guarantee is that there is a contract with a value associated to it. The mark to market system nullifies much of the "real value of the loan. __________________ "like strapping a pillow on a bull in a china shop" Bullitt

10-03-2008, 06:24 PM	#139
SamIam Registered User Join Date: Jun 2007 Location: Not here Posts: 2,655	The problem is mortgage backed securities that now have next to no value. Lending institutions want to fix their books with a "some day my prince will come" value for their MBS's. Well, some day he may indeed come, but not today. We cannot go from a relatively transparent system of accounting to one that is opaque. How are we supposed to make informed investment decisions without mark to market? I'm with BigV.

10-03-2008, 11:40 PM	#142
xoxoxoBruce The future is unwritten Join Date: Oct 2002 Posts: 71,105	Clue me in, please. You want to buy a house appraised at 100K. Bank1 gives you a mortgage for 90k. Bank1 figures you will repay 270k over 30 years. Now when Bank1 sells that loan to Bank2, how much does Bank1 get? You pay 10k on the mortgage loan, then default. Bank2 now owns the house, and sells it for 100k. Bank2 calculate it's loss at what they paid Bank1, minus 110k? Of course to make it a simple example, I've left out payments to Bank1, before they sold the mortgage, and changes in the market value of the house. __________________ The descent of man ~ Nixon, Friedman, Reagan, Trump.

10-04-2008, 10:16 PM	#145
BigV Goon Squad Leader Join Date: Nov 2004 Location: Seattle Posts: 27,063	That's a sad story, jinx. My biggest complaint about this whole freakin debacle is the cnspicuous absence of a mechanism to balance the equation at the homeowner level. We have a very well established system for rebalancing a mortgage on a second home in the bankruptcy courts. Judges are empowered to call borrower and lender to the table and enforce a renegotiation of the terms of the loan, but, for reasons unknown to me, this power is not extended to cover loans on primary residences. Why not? I would think that there is no class of borrower than residents who are more motivated to make it work! When I'm faced with getting the note paid or living under a bridge, I'm alllll over it. But for a second home, that same motivation isn't there. Why wouldn't you want to extend the same set of options to the borrowers for primary residences??? Because now, let's say someone doesn't pay and the home goes into foreclosure. Imagine that the mortgage is one that has been purchased as the security behind one of these corporate notes that have rapidly fallen out of favor. So we the people own the note and we're not getting paid. What now? Foreclose? Kick them to the curb? Wouldn't the homeowner possibly think, no wai GWB is gonna boot me out. I'll just stay. That might happen, sure it could. Now we're not getting paid. Dammit. Or. Or we decide to evict him. Now we own the house. Who's gonna mow the lawn? Who's going to sell the house? Who's gonna buy it? And for what amount? A foreclosure sale is often offered at the loan balance, but the previous homeowner couldn't afford that rate, maybe the market isn't there. So we have to lower the price. Now savvy cash rich investors/speculators sensing that the market is heading downward would what? Wait, of course. Until the price goes down even more. Now we have to sell at some discount. Why didn't we just DO THAT IN THE FIRST PLACE WITH THE FREAKIN HOMEOWNER? We could have saved all the processing bs and cost AND had a homeowner taxpayer stay in the home, helping keep the fabric of our community and economy stay knitted together. These kinds of decisions are of course all case by case basis only. I don't think second homeowners should have any such benefits. Or at least back of the line buddy. Let the resident borrowers principal residence people, let them come together with the lenders (US) and work it out. __________________ Be Just and Fear Not.

10-05-2008, 08:31 AM	#149
Sundae polaroid of perfection Join Date: Sep 2005 Location: West Yorkshire Posts: 24,185	Wow. It's hard for people over 40 to get 30 year mortgages here. __________________ Life's hard you know, so strike a pose on a Cadillac

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