topic Re: Banks repossess 1 million homes in 2010 in Credit in the News

Banks repossess 1 million homes in 2010

MarineVietVet — Thu, 13 Jan 2011 17:34:00 GMT

http://news.yahoo.com/s/ap/20110113/ap_on_bi_ge/us_foreclosure_rates

Re: Banks repossess 1 million homes in 2010

haulingthescoreup — Thu, 13 Jan 2011 17:40:52 GMT

But will they make them available for resale at a true market price?

No, they'll just sit on them, month after month, hoping that the Magic Money Fairy will wave her wand and make potential homebuyers willing to pay way over market value, so that the bank's books look better.

Re: Banks repossess 1 million homes in 2010

marty56 — Thu, 13 Jan 2011 22:51:16 GMT

@haulingthescoreup wrote:
But will they make them available for resale at a true market price?

No, they'll just sit on them, month after month, hoping that the Magic Money Fairy will wave her wand and make potential homebuyers willing to pay way over market value, so that the bank's books look better.

Last year, a friend at work tried to buy a short sale but BofA declined it and let the house go into foreclosure. Granted it was BofA but still it should have been a no-brainer to let him buy the home.

Re: Banks repossess 1 million homes in 2010

Anonymous — Sat, 15 Jan 2011 06:49:50 GMT

I read that they expect there to be 1.2 million foreclosures in 2011:

http://www.wtvr.com/news/wtvr-home-foreclosures-expected-to-peak,0,1129581.story

Re: Banks repossess 1 million homes in 2010

Watchmann — Sun, 16 Jan 2011 19:21:14 GMT

As the great economist, Tom Sowell, recently penned, "why are we continually trying to help keep people in homes that they can no longer afford instead of helping those people who would love to take buy them and move in at the true market price? Aren't they just as worthy of help as the current homeowners?". Answer, the politicians are in the business to get reelected so they buy votes by helping the current homeowners who they figure are more important, votewise. It is counterproductive, but what else is new in government policy.

Re: Banks repossess 1 million homes in 2010

haulingthescoreup — Mon, 17 Jan 2011 02:44:42 GMT

@Watchmann wrote:
As the great economist, Tom Sowell, recently penned, "why are we continually trying to help keep people in homes that they can no longer afford instead of helping those people who would love to take buy them and move in at the true market price? Aren't they just as worthy of help as the current homeowners?". Answer, the politicians are in the business to get reelected so they buy votes by helping the current homeowners who they figure are more important, votewise. It is counterproductive, but what else is new in government policy.

I disagree. The politicians are in the business of getting reelected, so they're keeping the big corporations (i.e. banks) happy by not creating conditions that would result in foreclosed-upon homes being put on the market at fair market value. I don't think that the votes of individual citizens, whether in overpriced homes or not, matter a flip any more. This btw is the viewpoint of that other great economist, Dean Baker. (He foresaw the collapse of the housing market and the financial industry long before any other economists were writing about this.)

Re: Banks repossess 1 million homes in 2010

MattH — Mon, 17 Jan 2011 14:07:40 GMT

@haulingthescoreup wrote:

@Watchmann wrote:
As the great economist, Tom Sowell, recently penned, "why are we continually trying to help keep people in homes that they can no longer afford instead of helping those people who would love to take buy them and move in at the true market price? Aren't they just as worthy of help as the current homeowners?". Answer, the politicians are in the business to get reelected so they buy votes by helping the current homeowners who they figure are more important, votewise. It is counterproductive, but what else is new in government policy.
I disagree. The politicians are in the business of getting reelected, so they're keeping the big corporations (i.e. banks) happy by not creating conditions that would result in foreclosed-upon homes being put on the market at fair market value. I don't think that the votes of individual citizens, whether in overpriced homes or not, matter a flip any more. This btw is the viewpoint of that other great economist, Dean Baker. (He foresaw the collapse of the housing market and the financial industry long before any other economists were writing about this.)

I am neither great nor an economist, but I personally began to worry about the housing market some time in 2006, I don't recall the date but I have a vivid memory of the moment. I was in some chain bookstore (probably either Borders or Barnes and Noble [or is is spelled Nobel, I'm too lazy to check]) and I noticed about half the books in the Personal Finance section were "Make Money Fast By Flipping Houses." I actually exclaimed out loud "houses are today's tulips!" standing right there in the store. By tulips I meant the Dutch Tulip Bubble in the early Seventeenth Century.

Since Dean Baker started writing about a likely housing bubble in 2002, he noticed the problem about four years before I did; as I say I am not an economist. But what does seem clear to be about economists as a group is how very badly most of them did over the last few years. Very few of them appear to have noticed a bubble that should have been obvious to all of them, and even fewer economists have shown much willingness to reconsider their theories in the light of recent data! They call economics "the dismal science," but the visible reluctance of many economists to let data change their cherished theories makes be think it maybe does not deserve to be called a science. I only took three Economics courses as a student, the last of these around 1980, so what little formal training I have in the field is decades out of date. But I do read what prominent economists have said in the media, and as a scientist myself I am familiar with the cognitive standards expected of an empirical and reality-based science. I see very little evidence many prominent economists are doing anything resembling what I do on a daily basis as a working researcher.

Some professional money managers did notice what was going on. Some of my money is in New York Life, and their Annual Report to Policyholders 2007 made for unusually interesting reading because it had an essay about the company's response to the credit bubble and subsequent meltdown. In early 2007 their management became concerned about the state of credit markets so "based on our belief that the markets were acting irrationally" they moved billions of dollars into safer investment classes, and "by August 2007, the credit market problems we had feared were front page news," the essay ended.

Re: Banks repossess 1 million homes in 2010

haulingthescoreup — Mon, 17 Jan 2011 17:46:56 GMT

I had never really thought about the fact that many "leading economists" (however that's defined) make a nice income on the lecture circuit, and they are frequently invited to speak by various entities in the financial community. If someone is making $50 or $100K or more giving speeches about the direction of the economy, they might well think twice before noting aloud or in print how their hosts' practices are undermining the economy.

It's awfully hard deciding whom to believe any more...

Re: Banks repossess 1 million homes in 2010

Lel — Tue, 18 Jan 2011 04:23:58 GMT

In terms of clairvoyant skills, I give credit to Peter Wallison. Though he didn't predict a housing bubble per se, he did anticipate a bailout of the mortgage giants back in 1999.

Fannie Mae Eases Credit To Aid Mortgage Lending

"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's

"'From the perspective of many people, including me, this is another thrift industry growing up around us,' said Peter Wallison a resident fellow at the American Enterprise Institute. 'If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'"