Funny how these things happen, isn't it? Hmmm... let's see... as pontificated on February 18th, March 3rd, 4th, 22nd and 29th, today, September 5th, there are reports that the Treasury is near a plan to backstop Fannie Mae and Freddie Mac, effectively wiping out the shareholders and placing the burden of these completely insolvent institutions on the American Taxpayers' backs.
Pathetic. No... incredibly pathetic. Will common sense ever return to the American Pysche? I think not. Not until we hit rock bottom. Crack addicts hit rock bottom and either slowly rebound or die. This is where we are, America. Don't believe it? Think again. Our Government continues to feed us lies we know are not true but cling to in an effort to deny the oncoming pain.
As I said on February 18th of this year in Are Fannie and Freddie The Next to Fall:
"Fannie and Freddie have already posted MULTI-BILLION DOLLLAR LOSSES. All due to the fact that foreclosures on their books are at record levels. Now, let's add mortgages that are almost THREE TIMES THE SIZE of the median home price in the country. Mortgages that are either in default or about to go into default. Let's burden the GSE's with these toxic buyers. Oh yeah, and add on a heavy dose of depreciating assets.
What do YOU think will happen. It's clear to me, as it should be clear to everyone out there, that the government has absolutley NO idea what to do with this crisis. It's also very clear that Wall Street is not running for cover, but DIVING for it.
The thought that we are about to dump this problem on Fannie Mae and Freddie Mac should be a very sobering one."
Gee... I guess Bernanke, Paulson and company didn't see THAT one coming.
Following up on March 1st with Pulling The Plug on Fannie Mae and Freddie Mac:
"Who's passing out the crack pipe at these "meetings"? These firms are both upside down and insolvent. Their loan pipes are spiraling towards mass foreclosure on the subprime, Alt-A and prime side.
Increasing the loan limits and encouraging them to take more risk is going to help?
Not a chance, folks. This is a big set up for a taxpayer funded bailout, and yet another brilliant example of Wreckonomics....
The goal here is for these companies to take the bad mortgages off the books of the big banks (that are all teetering on the edge of failure as we speak). Once this happens, it will be much easier for the sheeple to accept a taxpayer funded government bailout.
Once again... the wicked web is weaved, and we are the flies getting the juice sucked out of us."
And, on March 4 the lunacy continued, as outlined in Big Ben and the Fed - The Setup is Here:
"The bailout, however nuts, is in the works. Bernanke goes on to say:
"The government-sponsored enterprises (GSEs), Fannie Mae (FNM) and Freddie Mac (FRE), likewise could do a great deal to address the current problems in housing and the mortgage market," Bernanke said. "New capital-raising by the GSEs, together with congressional action to strengthen the supervision of these companies, would allow Fannie and Freddie to expand significantly the number of new mortgages that they securitize."
"I urge the Congress and the GSEs to take the steps necessary to allow more potential homebuyers access to mortgage credit at reasonable terms. "
The groundwork is being laid. The fix is in, and they know it. We are going to pay for this mess, folks. Better get used to the idea."
As not to overdue the obvious, it pays also to read This Storm Will Have Many Eyes and Here Comes the Bailout, both from March.
The point? I think you get the point. The real estate party is over, baby. For anyone who believes it isn't, get a life. NO... really... get a life. Or a job, but those are going to get increasingly harder to come by as well.
What's going to happen? Well for starters, you can bet your bottom dollar that down payment requirements are going to increase. By the end of this year, you can count on needing a minimum 10% down payment on any sort of conventional type mortgage. Don't believe it? Zero down is gone. 3% down is gone. 5% down is currently available only in "non-declining markets" of which there are few. FHA is increasing their down payment from 3% to 3.5% on October 1st.
Wasn't it just about a year ago there was talk of lowering FHA's minimum requirement to "help" homeowners? What happened to that?
Things got worse. That's what happened. The bottom is nowhere near. We've got another 20%to go. Foreclosures are at a 30 year high, deliquencies are almost 9% on PRIME mortages, Alt-A is getting worse and subprime (remember that term?) is still going bad at a 25% clip. The inventory of available homes for sale is rapidly rising.
Now throw in hundreds of thousands of job losses and a broadly weakening economy. You get the point.
Who Do YOU Believe?
As part of my series on the Who, What, Why, When and Where of this tragic tale...
I present the WHO.
Today, we see that Fannie and Freddie are once again on the verge of collapse. But wait... here comes Uncle Sam to the rescue. You know... the government bailing them out.
Who let this happen? Who is going to fix it? Who is going to pay the price?
Easy. We did. We are. We are.
Why "We" and not the banks, brokers, agents, appraisers, financiers or the government? Really. Why not?
This is a question I've thought about over and over for the last 2 years. You see... I'm a mortgage professional. I've been helping people get mortgages for 19 years. I've been a broker and a banker. I've seen good credit and bad. I've watched thousands of people "over-buy" pushing for that sliver of the American Dream. All the while, lending standards slowly began to disappear ultimately, in my opinion, disappearing all together. When you can offer 100% financing on a NO DOCUMENT loan... there is no such thing as an underwriting standard. As a matter of fact, there was, if you will, no such thing as an actual underwriter during that time. Sure, there were people called underwriters, but essentially all they did was check to make sure applications and disclosures were signed and dated correctly but beyond that... well.. you can do the math.
There's a finger pointed in every direction on this one. The banks are pointing at the appraisers and the brokers. The brokers are pointing at the banks. The appraisers are pointing at the brokers and the banks. Analysts are pointing at the Government. Analysts are also pointing the finger at the banks, brokers, appraisers and the buyers.
My first inclination was to point the finger at the Government. After all, it's our Government who encourages things like spending our tax rebates. It's our Government who encourages us to borrow more and more. Just look at what they do... our National Debt is crushing us. We borrow.
Then it hit me. Our Government. We, the people. Sound familiar? We are the Government. We are the banks, the brokers, the appraisers, the financiers, the representatives, the agents and the buyers. We did it. We knew it wouldn't last. We did not want to believe it could end, so we turned the other cheek and ignored the problem. It's all of us. It's our fault. We have no one to blame but ourselves.
The real question here is "Who will fix it?"...
We will. How? Well, that is the 65 million dollar question, now isn't it. One thing I can tell you is that our current form of Government won't do it. They continue to lie to us on a daily basis about the severity of the problem.
Remember the subprime issue? That was a good one. According to Hank Paulson, Ben Bernanke and company, that was over oh... about a year ago. Remember the housing market? Didn't that bottom out 5 or 6 times now? Consider New Fears Of A Fannie and Freddie Bailout Hit Shares and Foreclosure Plague Widens, both recent articles from CNN on the ongoing and widening process.
Freddie Mac is continuing to assert the insane fact that they are adequately capitalized. Please. Stop lying to us. Our Government continues to attempt to artificially prop up already INSANE housing prices by passing meaningless bailout legislation like the Housing Bill just inked. PLEASE... STOP LYING TO US.
WAIT... If WE are the Government, aren't we STILL LYING TO OURSELVES??
Really, America... Who HAVE we become? WHO ARE WE?
Self respect has disappeared.
I present the WHO.
Today, we see that Fannie and Freddie are once again on the verge of collapse. But wait... here comes Uncle Sam to the rescue. You know... the government bailing them out.
Who let this happen? Who is going to fix it? Who is going to pay the price?
Easy. We did. We are. We are.
Why "We" and not the banks, brokers, agents, appraisers, financiers or the government? Really. Why not?
This is a question I've thought about over and over for the last 2 years. You see... I'm a mortgage professional. I've been helping people get mortgages for 19 years. I've been a broker and a banker. I've seen good credit and bad. I've watched thousands of people "over-buy" pushing for that sliver of the American Dream. All the while, lending standards slowly began to disappear ultimately, in my opinion, disappearing all together. When you can offer 100% financing on a NO DOCUMENT loan... there is no such thing as an underwriting standard. As a matter of fact, there was, if you will, no such thing as an actual underwriter during that time. Sure, there were people called underwriters, but essentially all they did was check to make sure applications and disclosures were signed and dated correctly but beyond that... well.. you can do the math.
There's a finger pointed in every direction on this one. The banks are pointing at the appraisers and the brokers. The brokers are pointing at the banks. The appraisers are pointing at the brokers and the banks. Analysts are pointing at the Government. Analysts are also pointing the finger at the banks, brokers, appraisers and the buyers.
My first inclination was to point the finger at the Government. After all, it's our Government who encourages things like spending our tax rebates. It's our Government who encourages us to borrow more and more. Just look at what they do... our National Debt is crushing us. We borrow.
Then it hit me. Our Government. We, the people. Sound familiar? We are the Government. We are the banks, the brokers, the appraisers, the financiers, the representatives, the agents and the buyers. We did it. We knew it wouldn't last. We did not want to believe it could end, so we turned the other cheek and ignored the problem. It's all of us. It's our fault. We have no one to blame but ourselves.
The real question here is "Who will fix it?"...
We will. How? Well, that is the 65 million dollar question, now isn't it. One thing I can tell you is that our current form of Government won't do it. They continue to lie to us on a daily basis about the severity of the problem.
Remember the subprime issue? That was a good one. According to Hank Paulson, Ben Bernanke and company, that was over oh... about a year ago. Remember the housing market? Didn't that bottom out 5 or 6 times now? Consider New Fears Of A Fannie and Freddie Bailout Hit Shares and Foreclosure Plague Widens, both recent articles from CNN on the ongoing and widening process.
Freddie Mac is continuing to assert the insane fact that they are adequately capitalized. Please. Stop lying to us. Our Government continues to attempt to artificially prop up already INSANE housing prices by passing meaningless bailout legislation like the Housing Bill just inked. PLEASE... STOP LYING TO US.
WAIT... If WE are the Government, aren't we STILL LYING TO OURSELVES??
Really, America... Who HAVE we become? WHO ARE WE?
Self respect has disappeared.
Coming Soon To A Digital Download Near You: The iTax
My series on the WHO, WHAT, WHERE, WHEN, and WHY of the credit crunch steps aside briefly...
And on a humorous note (though not really, if you think about it), I've come across this little tidbit:
A Proposed Tax on Digital Downloads
Interesting read. The basics are simple... you download a 99 cent song from iTunes, you pay the state sales tax. I'm not going to bore you with the details... click the link above to read the article.
One thing I did think was funny, though, was that the guy from NetChoice, and industry tech group lobbying against the tax uses the argument that downloads are eco-friendly as opposed to all the pollution casued by transporting CD's to and from stores.
"With global warming and a world that's running out of oil, the last thing
governments should do is add taxes on something that uses no oil and produces no
carbon," said Steve DelBianco, executive director of NetChoice. "A digital
download is the greenest way to buy music, movies, and software, since it
requires no driving to the store, no delivery vans, and no plastics or
packaging."
Really. That's funny.
The dollars and sense of it, however, tell a consistant story. As you
can see from the article,
"Including Nebraska and Tennessee, there are 17 states, plus the District of Columbia, that tax digital downloads, according to our earlier research: Alabama, Arizona, Colorado, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Maine, New Jersey, New Mexico, South Dakota, Texas, Utah, and Washington."
Anyone in any of those states realize this? It would be interesting to know.
Anyway... look for this idea to gain support nationwide and even and attempt to push this to a congressional vote. Keep in mind I said attempt.
Regardless... states are hurting for tax dollars, as they, too, became serious consumers through this boom, and as foreclosures rise and employment falls, any thing that can generate significant revenue to shore up bleeeding budgets will be fast tracked....
And on a humorous note (though not really, if you think about it), I've come across this little tidbit:
A Proposed Tax on Digital Downloads
Interesting read. The basics are simple... you download a 99 cent song from iTunes, you pay the state sales tax. I'm not going to bore you with the details... click the link above to read the article.
One thing I did think was funny, though, was that the guy from NetChoice, and industry tech group lobbying against the tax uses the argument that downloads are eco-friendly as opposed to all the pollution casued by transporting CD's to and from stores.
"With global warming and a world that's running out of oil, the last thing
governments should do is add taxes on something that uses no oil and produces no
carbon," said Steve DelBianco, executive director of NetChoice. "A digital
download is the greenest way to buy music, movies, and software, since it
requires no driving to the store, no delivery vans, and no plastics or
packaging."
Really. That's funny.
The dollars and sense of it, however, tell a consistant story. As you
can see from the article,
"Including Nebraska and Tennessee, there are 17 states, plus the District of Columbia, that tax digital downloads, according to our earlier research: Alabama, Arizona, Colorado, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Maine, New Jersey, New Mexico, South Dakota, Texas, Utah, and Washington."
Anyone in any of those states realize this? It would be interesting to know.
Anyway... look for this idea to gain support nationwide and even and attempt to push this to a congressional vote. Keep in mind I said attempt.
Regardless... states are hurting for tax dollars, as they, too, became serious consumers through this boom, and as foreclosures rise and employment falls, any thing that can generate significant revenue to shore up bleeeding budgets will be fast tracked....
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