Short sales have to be the best device for those determined to kick the can down the road – the processing delays are already legendary, and many end up in the black hole of goo.
IF the servicer gets pressured about making a decision, they can resort to ‘the big start-over’, and sell the loan to another entity.
Eric Wolff of the North County Times touches on it here, and below you can see how the closed short sales have been increasing this year:
After the vaunted ARM-reset chart, the Great Recession, unemployment through the roof, and state and local governments as broke as ever, many thought (including JtR) that by now we’d be in a bank-directed-sales environment only, with nothing but REOs and short sales.
But with the REO listings dwindling, the regular sales are enjoying a healthy resurgence – May and June regular sales were as high as they have been in a year:
If the banks’ intention is to make the liquidation of property as excruciating as possible in order to drag it out for years, they have found the magic formula – spit out a few trustee sales, and direct their defaulting borrowers to loiter around the short-sale bin. This might take a while?
Thank Paulson. Thank TARP. Thank the Fed for using printed money to buy MBS.
Banks using tax dollars to stay in business while “homeowners” drag out the free rent.
Meanwhile in the real world employers are downsizing and businesses are flowing overseas.
Government can only manipulate the economy for so long. There’s going to be a breaking point. Maybe it will be on the ballot box. Maybe somewhere else, but change is going to come and it might not be pretty.
TARP, the bank bailouts, etc., were, IMHO, the least worst choice. The only other real choice, doing nothing, would have resulted in the Second Great Depression. Amazing that people refuse to acknowledge that.
Geotpf,
Take a step back and look at who benefited from the bailouts…
Benefited
1. Bankers / Didn’t lose their jobs
2. Politicians / Got to “buy” votes and be a savior
3. Homeowners / Who got to live for free
4. Real Estate related employment / Didn’t lose their jobs
Lost
1. Taxpayers / Skyrocketed the National debt
2. First time home buyers / Are paying artificially high prices
3. The Young / Will have the shoulder the burden of future debt
4. Anyone working but not owning property / Your tax dollars keep the rich in their homes
* I’m a person that believes that the only time changes occur is when they are forced. Business will always find the way to make money. But you want business to make money off producing a product rather than just flipping paper back an forth or scamming the government.
Geotpf, we are in a depression.
Daniel – IMHO, No food lines = No depression
If society can still afford internet connection, new Iphone, Ipad, gym membership, netflix, cable tv, cool car, etc = no depression
recession I’ll give you.
we’re deleveraging, which is a good thing, if the gov will just let it happen. don’t get involved in highly leveraged items and you will be just fine.
Sure you may lose some nominal equity, but did you really? If a home was $1mm all cash, then goes to $600k all cash you feel like you lost $400k, however, you can still repurchase that same asset with your $600k thus what have you really lost? You still have the home and the same amount of cash in the bank as before.
Now if you were leveaged into that $1mm house with your only $100k cash and $900k debt, your $100k is wiped out and you have no way to repurchase the asset at $600k (which would now take $120k cash at 20% down).
Leverage can do more harm than good as most don’t time the market well enough to benefit from the leverage.
Great post Clearfund!!
“Daniel – IMHO, No food lines = No depression”
There’s a lot of food stamp stuff that you don’t see because it takes place at the grocery store, or because you drive by it on the freeway without looking.
I don’t know. I wasn’t around in the ’30’s, but this feels nothing like the Great Depression I’ve heard and read about. Love this comment:
“If society can still afford internet connection, new Iphone, Ipad, gym membership, netflix, cable tv, cool car, etc = no depression.”
I second the praise for Clearfund’s post.
Look, things are (still) pretty bad, but without government intravention they would be a lot worse.
Plus, I disagree that much of the banks’ delaying tactics are due directly to the government’s policies. In a lot of cases, it makes sense to the bank to delay foreclosure for simple dollar and cents reasons. (Examples: Arranging a loan mod where total due to the bank would be more than the net proceeds of an REo sale, or if the bank expects home prices to recover in the near term in an area and they could then get more for the house when they do foreclose then than now, but they don’t have to pay for maintenance in the mean time.)
I believe you don’t see lines for food because the government is giving out debt cards. And free housing is keeping the homeless population down. How much debt can we incur without serious ramifications. We are about to find out when the monies the Fed has been pouring at State and local governments ends. Should be interesting.
Rigged, yes
Fixed, yes
Unsustainable, yes
Ticked off, yes
Short sighted, yes
Depression, no (or at least not yet)
BTW – have been legging into positions to ‘short’ mid term treasuries for a year. thus, I believe that crashing will occur, just not as quickly as initially expected.
JTR has shown, via this blog, that while things should be one way (higher inventory and lower prices), they don’t always get there as soon as one would plan.
Just have to play defense against the offense they throw at you, regardless of what the scouting footage looked like.
TARP, the bank bailouts, etc., were, IMHO, the least worst choice. The only other real choice, doing nothing, would have resulted in the Second Great Depression. Amazing that people refuse to acknowledge that.
Geotpf | July 15th, 2010 at 6:55 am
——————–
Geotpf,
You’re making the assumption that we have somehow “magically” avoided the depression because of the govt money. Do realize that the printing of that money reduces every working person’s purchasing power. Additionally, it places today’s burden on tomorrow’s economic activity.
We have NOT avoided the depression. They’ve strung it out and made it bigger, so that a recession/depression that might have lasted a couple of years will now last a decade or more — and it will create much more damage over the long term, and transfer the burden from the risk-takers to the savers and future workers.
Do not be fooled by this “recovery.” It is all smoke and mirrors. The underlying foundation is growing weaker with every manipulation.