I made a brief comment towards the end of this video about strategic defaults.
I don’t know how many people are strategic-defaulting. But when the servicers insist that you start missing payments to get their attention, then work you over during the loan-mod/short-sale process while getting you addicted to the free-rent program for a year or two, it wouldn’t surprise me that a large segment of the foreclosures are voluntary:
From HW:
One of the many villains in the Financial Crisis Inquiry Commission report out Thursday is Goldman Sachs. According to page 235 of the report, they recognized the delusion in the subprime mortgage market and decided to short it before the crash in 2008.
Goldman came under fire following the crisis by allegedly selling clients on mortgage-backed securities and other various financial instruments it was allegedly betting against on the side. Bond insurer ACA Financial Guaranty filed suit in January seeking $30 million in compensation and $90 million in punitive damages from how Goldman marketed the synthetic collateralized debt obligation named ABACUS.
In 2010, Basis Yield Alpha Fund, a hedge fund and Goldman client, sued the firm alleging it was frauded out of $11.25 million in investments in the Timberwolf CDO.
Goldman CEO Lloyd Blankfein told an FCIC hearing on Jan. 13, 2010 that the bank regretted selling clients MBS that it believed would default while shorting them simultaneously. But the bank reversed course and issued a press release the day after the testimony, clarifying that Blankfein was “responding to a lengthy series of statements followed by a question that was predicated on the assumption that a firm was selling a product that it thought was going to default…Mr. Blankfein does not believe, nor did he say, that Goldman Sachs had behaved improperly in any way.”
But the FCIC report shows that in December 2006, Goldman executives “decided to reduce the firm’s subprime exposure” after an initial decline in its asset-backed securities indices and 10 consecutive days of trading losses.
Analysts at the firm submitted a report on “the major risk in the Mortgage business” to Chief Financial Officer David Viniar and Chief Risk Officer Craig Broderick on Dec. 13, 2006, the commission reports. The next day, executives began reducing their mortgage exposure.
What follows is a narrative of Goldman employees moving the subprime risk, and when customers began to dwindle, the FCIC cites documents indicating that the firm “targeted less-sophisticated customers in its efforts to reduce subprime exposure” rather than hedge funds that were on the same side of the trade as Goldman. From December 2006 to August 2007, Goldman sold roughly $25.4 billion of CDOs, including $17.6 billion in synthetic CDOs, according to the FCIC.
Goldman did not have a comment on the FCIC’s report, and neither did ACA Financial Guaranty. A spokesperson for Sen. Carl Levin (D-Mich.), who chairs the Permanent Subcommittee on Investigations, said that while Levin had no comment on this report, the subcommittee would have one of its own soon.
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The N.Y. Times has this article today that describes more fixes for Fannie/Freddie (dubbed “Frannie”). An excerpt:
The best proposal I have heard is a remarkably simple one put forth by John Hempton of Bronte Capital, a hedge fund based in Australia. He says Frannie should simply raise the fee for its guarantee — now about 20 basis points, or one-fifth of a percentage point — every six months by five basis points. He would have the rate continue to go up until no one wanted to buy the insurance anymore and the private market was once again lending to the vast majority of borrowers.
Had enough of the McMansions? Here’s an older beach house on a big lot:
Hat tip to bubbleinfofan who sent this in:
Hat tip to downturn for sending this along, from tampabay.com:
When armored vehicles knocked down the house on 28th Avenue S in St. Petersburg on Monday, it climaxed an hours-long gunfight that claimed the lives of two St. Petersburg police officers and the wanted felon who shot them, Hydra Lacy Jr.
It was also the last echo of the frenzied house-flipping that lured Lacy and millions of other investors during the nation’s real estate boom.
The Crayola-orange dwelling at 3734 28th Ave. S was the only house among seven that Lacy bought between 2004 and 2007 that did not end up in foreclosure. But like all the others, its flattened remains are testament to a bust that has hit St. Petersburg’s Midtown area especially hard.
“The properties are back in the 20s, 30s, 40s, and three years, maybe four years ago they were in the $100,000-plus amount,” says Lou Brown, a veteran real estate agent. “I guess maybe we got a little greedy.”
More evidence that corporate America is now all about making deals – from Housing Wire:
Iowa Attorney General Tom Miller told more than 200 homeowners and consumer advocates in a meeting Tuesday that the investigation into foreclosure practices at major lenders is drawing to a close, and that negotiations will begin soon.
Major lenders froze foreclosures in October when employees were found to be signing affidavits en masse and without a proper review of the files as required by law in some sates. Miller and the other 50 state AGs along with seven federal regulators launched an investigation into what is now known as the robo-signing scandal.
In December, Miller met with homeowners for the first time, revealing that a possible settlement with the banks could result in payouts to victims, requirements to write down the principal of the loan and even criminal charges for executives.
But in the January meeting, Miller avoided revealing any details of what the settlement could possibly hold, according to a transcript of the meeting Miller’s office released to HousingWire.
“Since we’re really getting close to negotiations, I’m not going to talk about, I don’t feel I should talk about, what’s going to be in the agreement, what isn’t going to be in the agreement,” Miller told homeowners. “That’s something that we have to hammer out with the Justice Department and the federal people, and with the banks in a negotiating session.”
Apparently I need to upgrade:
From HW:
Notices of default, the first step in the California foreclosure process, dropped 17.5% in the fourth from the year before, but the decline may not have come from borrowers improving their financial situation, real estate data provider DataQuick said.
Lenders recorded 69,799 NODs at California county offices in the fourth quarter, down from more than 84,000 in the fourth quarter of 2009 and the lowest level since the second quarter of 2007.
“We don’t know how much of the decline is due to less household financial distress, and how much is due to shifts in lender and servicer foreclosure policies,” DataQuick President John Walsh said. “The level of default activity would certainly be higher if it weren’t for alternative strategies such as short sales, or even lengthening grace periods.”
More than half of the homes in California that received an NOD in the last 18 months have been foreclosed on or sold through a short sale. The status of the other half isn’t clear, DataQuick said, but they should be in the modification or short sale process.
“The institutions that hold these loans in their portfolios will do whatever it takes to lessen their losses, including waiting,” Walsh said. “An additional factor is all the turbulence when it comes to the formalities of the foreclosure process.”
When The Captain put his amazing corner penthouse in the Trump World Tower up for sale last September, the original listing showed off completely barren rooms. But the listing was recently updated to show a fully furnished urban palace.
See the before and after photos >
The price is holding steady at $20 million.
The 5,425 square foot pad faces south off the 88th floor — which due Donald Trump’s weirdly inflated numbering rules is actually the 70th — offering an incredible view of Manhattan’s iconic skyline through huge 16′ tall windows. It has 4 bedrooms, 5.5 baths, chef’s eat-in kitchen, dining room, den, and living room complete with a fireplace.
Jeter’s residence also boasts a variety of fancy gadgets, including a Lutron lighting system and a Crestron home audio/visual system.
The penthouse atop Manhattan’s Trump World Tower was put on the market last September for a gigantic sum of $20 million (he bought it for $12.6 million in 2001), prompting rumors of the departure of the free agent to-be. The Yankees squashed any more speculation when they signed their All-Star shortstop to a 3-year, $51 million deal in December.
No one knows for certain why he’s giving up this bachelor pad, but we do know that the 30,875-square foot ultra-mansion he’s building down in Tampa seems to be nearing completion and rumors of Jeter taking the next step with girlfriend Minka Kelly have gotten more intense.
Not much of a lawn, but the private boat launch more than compensates.
(hat tip to yahoo, businesinsider, and realestalker)
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