Q: I work for the New Mexico VA health care system. My question is that, I think as an integral part of being Hispanic, being from here, home is very integral to that, and not only for Hispanics, for all New Mexicans, for all Americans. And yet I hear stories of my family members’ friends, veterans that I treat, of losing their homes due to this economy that we’ve been through or are going through. And I guess my question is, what are we doing to prevent people from losing their homes?
I know education is truly incredible — it moves people beyond what we can ever expect — but if we don’t have homes to go to, what good is the education?
THE PRESIDENT: Well, the housing crisis helped to trigger the financial crisis. And it’s a complicated story, but essentially what happened was, banks started seeing money in peddling what looked like these very low-interest-rate mortgages, no money down. Started peddling these things to folks. A lot of people didn’t read the fine print, where they had adjustable-rate mortgages or balloon payments, and they ended up being in situations where they were in homes that they couldn’t necessarily afford.
The banks made a whole bunch of money on all these mortgages that were being generated. But what happened was — is that when the housing market started going down, then all these financial instruments that were built on a steady stream of payments for mortgages, they all went bust, and that helped to trigger the entire crisis
Now, this is a multitrillion-dollar market, so there’s no government program where we can just make sure that whoever is losing their home that we can just pick up the tab and make sure that they can pay. And frankly there are some people who really bought more home than they could afford, and they’d be better off renting, or they’re going to have to make adjustments in terms of their house.
What we have tried to do, though, is to make sure that people who had been making their payments regularly, who are meeting their responsibilities, if they could have a little bit of an adjustment with the banks, if some of the principal was reduced, if some of the interest was reduced on their mortgage payment, they could keep on making payments. The bank would be better off than if the home was foreclosed on, obviously they’d be better off, and as the housing market starts picking back up again — which it will do over time, although not in the same trajectory as it used to, right; it’s going to be more much gradual — then potentially the bank could recoup some of the money that it had lost by making the adjustments on the mortgages.
So we’ve set up a number of these mortgage modification programs that are out there. But I don’t want to lie to you — we’ve probably had hundreds of thousands of people who’ve been helped by it. I think there have been a couple of million who’ve applied. But that doesn’t meet the entire need because this is such a huge housing market.
And what really is probably the most important thing I can do right now to keep people in their homes is to make sure the economy is growing so that they don’t feel job insecurity. That’s probably the thing that’s going to strengthen the housing market the most over the next couple of years. If we’ve got a growing economy, unemployment is gradually being reduced, then people are going to feel more confident; they’re going to be able to make their mortgage payments; new — homeowners, people who are potentially buyers of homes, are going to say, you know what, I don’t mind entering the market because I think things have sort of bottomed out — that starts lifting prices and that gets us on a virtuous cycle instead of a negative cycle.
But it’s going to take some time. We’re working our way out of overbuilding in the housing market, a lot of not very sensible financial arrangements in the housing market. And we’ve got to get back to sort of a traditional, more commonsense way of thinking about housing which is, if you want a house you got to save for a while. You got to wait until you have 20 percent down. You should go for a mortgage that you know you can afford. You’ve got to — there shouldn’t be any surprises out there, right? That kind of traditional thinking about saving and thinking about the house not as something that is always going up 20 percent every year and you’re going to flip and take out home equity loans and all that — we’ve got to have a different attitude, which reflects what you talked about, more of an attitude that this is your home. This is not just a way to make quick money.
Bloomberg reports US Home Prices Fall Again:
Sept. 22 (Bloomberg) — U.S. home prices dropped 3.3 percent in July from a year earlier, the eighth consecutive decline, as foreclosed properties flooded the market.
Prices fell 0.5 percent from June, the
Federal Housing Finance Agency in Washington said in a report today.
Economists had projected prices to fall 0.2 percent from the previous
month, based on the average of 15 estimates in a Bloomberg survey. The
agency revised the previously reported May-to-June decline to 1.2
percent from 0.3 percent.
Foreclosures are boosting the supply of available properties and reducing prices, even as mortgage rates tumble to record lows. The time it would take to clear the market of homes for sale was 12.5 months
in July, the highest in more than a decade of data, according to the
National Association of Realtors. Banks seized a record 95,364
properties from delinquent borrowers in August, according to RealtyTrac
Inc., an Irvine, California-based seller of housing data.
This should be of no surprise to anyone that reads the BoomBust or
follows me regularly. I’ve been warning about the crash for over 5 years
now, and those who feel we are nearing a bottom need to take out their
spreadsheets and plug in some historical numbers.
Paying Subscribers are welcome to download the mortgage and credit
template that was used in the original US (Don’t) Stress (US) tests,
otherwise known as SCAP. We have taken the liberty to update the
template on a periodic basis for the government, since it appears they
are not forcing the banks to do so SCAP Assumptions Updated_09082010 Web Version.
This model shows a weakness in the Case Shiller method of following
prices in that the CS doesn’t include investment properties (usually the
first to go into foreclosure), new construction, and REOs. As a matter
of fact, Case Shiller actually looked slightly rosy as of late. The
following graphs were generated from SCAP Assumptions Updated_09082010 Web Version..
Notice how the federal numbers show falls where CS doesn’t. Signs on the street tell me the federal numbers are correct.
As a matter of fact, things are so bad that I believe banks will have
a perverse incentive to actually walk away. Now wouldn’t that be
something??? Next, we take a look into the home builder that makes more
money doing distressed investing than it does building and selling
homes.
Related content of interest:
- I
Told You Housing Was Going to Take a Downturn for the Worse. I’ll Tell
You Something Else, We Are in a Housing Depression! It’ll Get Worse
Until Market Forces Rule Over Government Bubble Blowing! - Anecdotal Evidence That Banks Are Hiding Depressed High End Real Estate
- As I Made Very Clear In March, US Housing Has a Way to Fall
- The Shortlist of the Shortlisted “Stocks to Short for 2010″: What We See as the Most Profitable Bear Postions for 2010
- Commercial
Real Estate Continues to Dropped into Foreclosure as the Landlords of
Said Properties Enjoy Skyrocketing Share Prices? Yep, Makes Plenty of
Sense - Recent Mortgage Loss and Credit Performance Commentary
- Australia: The Land Down Under(water in mortgage debt)
- Australia: The Land Down Under(water in mortgage debt), pt. Deux: Which Banks to Short?
- Aussi Bubble Video to Go With You Aussie Bubble Speculation?
Arrowheadlines: Chiefs <b>News</b> 10/2 - Arrowhead Pride
Good morning, AP and welcome to the weekend. As always, you'll find today's Kansas City Chiefs news below. Lots of love today. The O-line, Crennel, Happy Haley, and our Rookies should be feeling pretty proud of themselves according to ...
Pulse <b>News</b> Reader for iPad 2.0: More sources, better organization
Alphonso Labs reported today that their Pulse News Reader for iPad (currently US $1.99) has been updated to version 2.0. The new version of the app addresses one of the major complaints about the original by allowing up to 60 news feeds ...
Tony Hawk: Shred dated <b>News</b> - Page 1 | Eurogamer.net
Activision's launched an interactive website "that gives players a head start on honing their over-the-top skate and snowboarding skills as they explore new game content, the latest news and much, much more!" Check it out here. ...
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bench craft company rip off
Arrowheadlines: Chiefs <b>News</b> 10/2 - Arrowhead Pride
Good morning, AP and welcome to the weekend. As always, you'll find today's Kansas City Chiefs news below. Lots of love today. The O-line, Crennel, Happy Haley, and our Rookies should be feeling pretty proud of themselves according to ...
Pulse <b>News</b> Reader for iPad 2.0: More sources, better organization
Alphonso Labs reported today that their Pulse News Reader for iPad (currently US $1.99) has been updated to version 2.0. The new version of the app addresses one of the major complaints about the original by allowing up to 60 news feeds ...
Tony Hawk: Shred dated <b>News</b> - Page 1 | Eurogamer.net
Activision's launched an interactive website "that gives players a head start on honing their over-the-top skate and snowboarding skills as they explore new game content, the latest news and much, much more!" Check it out here. ...
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Q: I work for the New Mexico VA health care system. My question is that, I think as an integral part of being Hispanic, being from here, home is very integral to that, and not only for Hispanics, for all New Mexicans, for all Americans. And yet I hear stories of my family members’ friends, veterans that I treat, of losing their homes due to this economy that we’ve been through or are going through. And I guess my question is, what are we doing to prevent people from losing their homes?
I know education is truly incredible — it moves people beyond what we can ever expect — but if we don’t have homes to go to, what good is the education?
THE PRESIDENT: Well, the housing crisis helped to trigger the financial crisis. And it’s a complicated story, but essentially what happened was, banks started seeing money in peddling what looked like these very low-interest-rate mortgages, no money down. Started peddling these things to folks. A lot of people didn’t read the fine print, where they had adjustable-rate mortgages or balloon payments, and they ended up being in situations where they were in homes that they couldn’t necessarily afford.
The banks made a whole bunch of money on all these mortgages that were being generated. But what happened was — is that when the housing market started going down, then all these financial instruments that were built on a steady stream of payments for mortgages, they all went bust, and that helped to trigger the entire crisis
Now, this is a multitrillion-dollar market, so there’s no government program where we can just make sure that whoever is losing their home that we can just pick up the tab and make sure that they can pay. And frankly there are some people who really bought more home than they could afford, and they’d be better off renting, or they’re going to have to make adjustments in terms of their house.
What we have tried to do, though, is to make sure that people who had been making their payments regularly, who are meeting their responsibilities, if they could have a little bit of an adjustment with the banks, if some of the principal was reduced, if some of the interest was reduced on their mortgage payment, they could keep on making payments. The bank would be better off than if the home was foreclosed on, obviously they’d be better off, and as the housing market starts picking back up again — which it will do over time, although not in the same trajectory as it used to, right; it’s going to be more much gradual — then potentially the bank could recoup some of the money that it had lost by making the adjustments on the mortgages.
So we’ve set up a number of these mortgage modification programs that are out there. But I don’t want to lie to you — we’ve probably had hundreds of thousands of people who’ve been helped by it. I think there have been a couple of million who’ve applied. But that doesn’t meet the entire need because this is such a huge housing market.
And what really is probably the most important thing I can do right now to keep people in their homes is to make sure the economy is growing so that they don’t feel job insecurity. That’s probably the thing that’s going to strengthen the housing market the most over the next couple of years. If we’ve got a growing economy, unemployment is gradually being reduced, then people are going to feel more confident; they’re going to be able to make their mortgage payments; new — homeowners, people who are potentially buyers of homes, are going to say, you know what, I don’t mind entering the market because I think things have sort of bottomed out — that starts lifting prices and that gets us on a virtuous cycle instead of a negative cycle.
But it’s going to take some time. We’re working our way out of overbuilding in the housing market, a lot of not very sensible financial arrangements in the housing market. And we’ve got to get back to sort of a traditional, more commonsense way of thinking about housing which is, if you want a house you got to save for a while. You got to wait until you have 20 percent down. You should go for a mortgage that you know you can afford. You’ve got to — there shouldn’t be any surprises out there, right? That kind of traditional thinking about saving and thinking about the house not as something that is always going up 20 percent every year and you’re going to flip and take out home equity loans and all that — we’ve got to have a different attitude, which reflects what you talked about, more of an attitude that this is your home. This is not just a way to make quick money.
Bloomberg reports US Home Prices Fall Again:
Sept. 22 (Bloomberg) — U.S. home prices dropped 3.3 percent in July from a year earlier, the eighth consecutive decline, as foreclosed properties flooded the market.
Prices fell 0.5 percent from June, the
Federal Housing Finance Agency in Washington said in a report today.
Economists had projected prices to fall 0.2 percent from the previous
month, based on the average of 15 estimates in a Bloomberg survey. The
agency revised the previously reported May-to-June decline to 1.2
percent from 0.3 percent.
Foreclosures are boosting the supply of available properties and reducing prices, even as mortgage rates tumble to record lows. The time it would take to clear the market of homes for sale was 12.5 months
in July, the highest in more than a decade of data, according to the
National Association of Realtors. Banks seized a record 95,364
properties from delinquent borrowers in August, according to RealtyTrac
Inc., an Irvine, California-based seller of housing data.
This should be of no surprise to anyone that reads the BoomBust or
follows me regularly. I’ve been warning about the crash for over 5 years
now, and those who feel we are nearing a bottom need to take out their
spreadsheets and plug in some historical numbers.
Paying Subscribers are welcome to download the mortgage and credit
template that was used in the original US (Don’t) Stress (US) tests,
otherwise known as SCAP. We have taken the liberty to update the
template on a periodic basis for the government, since it appears they
are not forcing the banks to do so SCAP Assumptions Updated_09082010 Web Version.
This model shows a weakness in the Case Shiller method of following
prices in that the CS doesn’t include investment properties (usually the
first to go into foreclosure), new construction, and REOs. As a matter
of fact, Case Shiller actually looked slightly rosy as of late. The
following graphs were generated from SCAP Assumptions Updated_09082010 Web Version..
Notice how the federal numbers show falls where CS doesn’t. Signs on the street tell me the federal numbers are correct.
As a matter of fact, things are so bad that I believe banks will have
a perverse incentive to actually walk away. Now wouldn’t that be
something??? Next, we take a look into the home builder that makes more
money doing distressed investing than it does building and selling
homes.
Related content of interest:
- I
Told You Housing Was Going to Take a Downturn for the Worse. I’ll Tell
You Something Else, We Are in a Housing Depression! It’ll Get Worse
Until Market Forces Rule Over Government Bubble Blowing! - Anecdotal Evidence That Banks Are Hiding Depressed High End Real Estate
- As I Made Very Clear In March, US Housing Has a Way to Fall
- The Shortlist of the Shortlisted “Stocks to Short for 2010″: What We See as the Most Profitable Bear Postions for 2010
- Commercial
Real Estate Continues to Dropped into Foreclosure as the Landlords of
Said Properties Enjoy Skyrocketing Share Prices? Yep, Makes Plenty of
Sense - Recent Mortgage Loss and Credit Performance Commentary
- Australia: The Land Down Under(water in mortgage debt)
- Australia: The Land Down Under(water in mortgage debt), pt. Deux: Which Banks to Short?
- Aussi Bubble Video to Go With You Aussie Bubble Speculation?
bench craft company rip off
Arrowheadlines: Chiefs <b>News</b> 10/2 - Arrowhead Pride
Good morning, AP and welcome to the weekend. As always, you'll find today's Kansas City Chiefs news below. Lots of love today. The O-line, Crennel, Happy Haley, and our Rookies should be feeling pretty proud of themselves according to ...
Pulse <b>News</b> Reader for iPad 2.0: More sources, better organization
Alphonso Labs reported today that their Pulse News Reader for iPad (currently US $1.99) has been updated to version 2.0. The new version of the app addresses one of the major complaints about the original by allowing up to 60 news feeds ...
Tony Hawk: Shred dated <b>News</b> - Page 1 | Eurogamer.net
Activision's launched an interactive website "that gives players a head start on honing their over-the-top skate and snowboarding skills as they explore new game content, the latest news and much, much more!" Check it out here. ...
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Arrowheadlines: Chiefs <b>News</b> 10/2 - Arrowhead Pride
Good morning, AP and welcome to the weekend. As always, you'll find today's Kansas City Chiefs news below. Lots of love today. The O-line, Crennel, Happy Haley, and our Rookies should be feeling pretty proud of themselves according to ...
Pulse <b>News</b> Reader for iPad 2.0: More sources, better organization
Alphonso Labs reported today that their Pulse News Reader for iPad (currently US $1.99) has been updated to version 2.0. The new version of the app addresses one of the major complaints about the original by allowing up to 60 news feeds ...
Tony Hawk: Shred dated <b>News</b> - Page 1 | Eurogamer.net
Activision's launched an interactive website "that gives players a head start on honing their over-the-top skate and snowboarding skills as they explore new game content, the latest news and much, much more!" Check it out here. ...
bench craft company rip off bench craft company rip off
Arrowheadlines: Chiefs <b>News</b> 10/2 - Arrowhead Pride
Good morning, AP and welcome to the weekend. As always, you'll find today's Kansas City Chiefs news below. Lots of love today. The O-line, Crennel, Happy Haley, and our Rookies should be feeling pretty proud of themselves according to ...
Pulse <b>News</b> Reader for iPad 2.0: More sources, better organization
Alphonso Labs reported today that their Pulse News Reader for iPad (currently US $1.99) has been updated to version 2.0. The new version of the app addresses one of the major complaints about the original by allowing up to 60 news feeds ...
Tony Hawk: Shred dated <b>News</b> - Page 1 | Eurogamer.net
Activision's launched an interactive website "that gives players a head start on honing their over-the-top skate and snowboarding skills as they explore new game content, the latest news and much, much more!" Check it out here. ...
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