From one post below --
MIKE WHITNEY you are SO NOT doom and gloom. You are SO SO SO right on the money!!
I just left the orthodontist's office and was able to read the WSJ. Front page headline today:
IN HOME LENDING PUSH, BANKS MISJUDGED RISK
I can't produce the whole article yet. I'm sure someone will have it up soon.
In the meantime, WSJ online has been gracious enough to post
a few bullets here
Also, Nouriel Roubini's blog has some of it up also.
I took some notes from the paper at the Dr.'s office:
HSBC Borrowers Fall Behind on Payments.....
HSBC Hiring MORE COLLECTORS (my bold). They have hired a whole fleet of people to seek payments from borrowers. If they can't get it now, they are willing (my italic) to work out repayments - case by case.
HSBC is the world's 3rd largest bank by market value and one of the biggest sub-prime lenders in the U.S. (Washington Mutual is another one in trouble). Sensing opportunity in the bottom end of the mortgage market, the giant british bank bet big on sketchy credit records. "We made some decisions that could have been better" says Tom Detelich (?sp), the HSBC exec. in the US spearheading an effort to clean up this mortgage portfolio.
HSBC acknowledged that it erred in the way it assessed such sub-prime mortgages. "What is now clear is that FICO scores are less effective or ineffective when lenders are granting loans in unusually low interest rate environments" says Douglas Flint, HSBC's finance director. A spokesman for Fair Isaac says: "It's up to lenders to decide how to use them" -- (FICO scores that is). THAT'S RIGHT -- But most likely no one (judges) will take this into consideration. These smaller sub-prime lenders are filing bankruptcy left and right. Now, how is that possible I'd like to know?
At first, way way back in the year 2005, these lenders thought their default numbers were increasing because in 2005, a lot of homeowners bailed, right before the bankruptcy laws changed (there was a big spike in'05). But, according to these lenders, this "spike" kept on going. (I'm not making this shit up.) Come 2006, they said now these owners could not refinance because the interests rates were higher and the owners aren't seeing any equity building up in their homes anymore. (These lenders, AND realtors told the buyers that they would be able to do this down the road). Ooops bad call -- oh well. Now, these homeowners have to default.
These bankers aren't just "preditory lenders" --
THEY ARE THE SCUM OF THE EARTH
Did you know they don't even verify employment anymore? Yes, you have to produce a W-2. That's about it. They don't even call the "employer". When we bought our house a few years back, we were amongst those "fraudulant buyers". We knew hubby's unemployment was running out soon. As long as we had the W-2 for the closing we were able to get into the house. Yes, we took a HUGE chance, but we couldn't resist the 4.7%. I knew we'd never see that again. He was marketable, and luckily got a job not too long after we closed. It's been close a few times over the years -- he's in manufacturing and has, so far, avoided the quarterly lay off's.
I stopped selling real estate last year for this reason. The only way the majority of my buyers were going to get into a house was with zero down and a lot of "creative" financing. I got sick of using this selling technique. These kids had no business buying a house yet. Plus, I knew what was going on. I was a realtor. If I wanted to make any money, it was better I kept my "knowledge" to myself. I remember buying our first home way back when. You signed where ever they told you. You did whatever they said you had to do during the loan process. YOU WANTED THAT HOME! And I got even sicker putting the hard sell on for the homeowners for which I had the listing for. By now ('06) there was no easy way to convince a seller to price their home realistically. They had plans for all that money.
I quit, hence the job search now. Yesterday, I passed up a great offer with the Corporate Relocation department at the same brokerage company I was with. Corporate Relo is BOOMING -- they're the only ones with the money now. They're now becomming the #1 buyer of homes today. If they want the employee -- they have to buy them out of their home.
Maybe the corporations will save the housing market!
BTW, did you know that one of Hillary's biggest campaign contributors is the NAR (nat'l assoc. of realtors). I can't access the article over at the housingpanic blogspot at the moment. I'll put it up shortly.