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Posts Tagged ‘Housing Crisis’

“The Giant Elephant in The Room”

Posted by Larry Doyle on September 21st, 2010 12:02 PM |

What is holding back our economy? Why isn’t there more credit available in our banking system?

I have answered these questions numerous times over the last two years BUT many in Washington pretend not to know the answer and pander to their constituencies in the process. Regular readers of Sense on Cents are well aware that the books of our banks–especially our largest money center banks–remain chock-filled with loans that are being valued far in excess of what they are truly worth. Let’s navigate.   

I first addressed issues within the second mortgage and HELOC (home equity line of credit) space in Fall of 2008 (Sense on Cents/Second Mortgages). Here we are a full two years later and America still has not received a straight answer and a full accounting by the banks or their regulators as to this “sinkhole” on their books and in our economy. 

Let’s dive into this hole, get a little dirty, and again expose the issues within this sector. (more…)

A Proposed Solution to the Foreclosure Crisis

Posted by Larry Doyle on August 17th, 2010 12:12 PM |

With the Conference on The Future of Housing Finance being held in Washington today, do we really expect the government to propose anything that may help support or fix our system of housing finance? I am not optimistic and I am an optimist by nature. I am a big believer in unleashing the power and strength of entrepreneurial minds to address our problems. Why haven’t these minds developed solutions? Do you think that these minds are stifled by the overwhelming presence of Uncle Sam? I do. Back to housing and entrepreneurial spirits.  

I love when Sense on Cents can provide fertile ground for the free and open exchange of ideas, opinions, thoughts, and analysis on critically important issues of the day. I am deeply grateful when people not only comment here at Sense on Cents but I encourage people to provide written commentary. I can not promise that I will run every commentary that is submitted but I will seriously review and consider running those that I believe are deserving of greater exposure. I appreciate your allowing me to make those judgments. Plus ….it is my blog.

I have always maintained that jobs and housing are the two great linchpins upon which our economy rests. The government has thrown hundreds of billions of dollars at our housing crisis with no meaningful success….all reports aside. What can be done to solve the foreclosure crisis weighing on our housing market, our economy, and ultimately our nation?  (more…)

Fannie, Freddie Summit Preview

Posted by Larry Doyle on August 16th, 2010 4:03 PM |

In June 2009, I highlighted the expectation of massive losses within Fannie Mae and Freddie Mac in writing Uncle Sam’s Dirty Little Secret. Fourteen months and hundreds of billions of dollars in losses later, America awaits to see how our ‘wizards in Washington’ will look to deal with these housing ‘wards of the state.’ Tomorrow, the Obama administration hosts the “Conference on the Future of Housing Finance.”

In anticipation of this conference, this past April the Obama administration had asked for input as to how our housing finance system might work. I wrote then (and would like to resubmit now), Sense on Cents Responds to Obama Administration Request for Input:

President Obama wants input on the reform of the housing finance system. Given my career, I consider myself eminently qualified to give it to him. Despite this request, though, I still think he should focus on job creation (which he highlighted during his State of the Union address).

I welcome giving President Obama, Treasury Secretary Geithner, and the rest of the the White House economic team a very healthy dose of Sense on Cents. (My response is a little lengthy, but it is not everyday the President gives us this opportunity. Out of respect, I owe him my best effort.) I will let you know if they respond with anything more than a form letter, or if they do not respond at all. From the U.S. Treasury today:

Obama Administration Seeks Public Input on
Reform of the Housing Finance System (more…)

Fannie and Freddie: The Legacy of Washington’s Financial Illiterates

Posted by Larry Doyle on June 14th, 2010 8:54 AM |

When the day of reckoning comes, the record will show that those misguided, incompetent and reckless legislators who supported and were supported by the house of cards known as Fannie Mae and Freddie Mac will have cost our nation untold hundreds of billions of dollars. In fact, the losses attributed to these organizations may ultimately cross the trillion dollar threshold. Think about that for a second.

While Franklin Raines, Leland Brendsel, Daniel Mudd, and other Fannie and Freddie execs walked out the door with tens of millions of dollars, our nation is left with a financial sinkhole that will serve as a drag on our economy for years if not generations. How and why did this happen? (more…)

Lew Ranieri: Housing Recovery Is Years Away

Posted by Larry Doyle on April 29th, 2010 3:34 PM |

Despite all reports to the contrary, markets in general and housing in particular are ultimately a function of supply and demand. On that note, why isn’t the housing market poised to truly do better anytime soon? The overhang of housing supply due to ongoing strategic mortgage defaults is increasing. These strategic mortgage defaults are much more a factor in the prime-Jumbo market segment than the conforming or sub-prime mortgage market. (more…)

Freddie Mac, Fannie Mae Deja Vu?: Part II

Posted by Larry Doyle on April 8th, 2010 11:51 AM |

On Christmas Eve 2009, the Obama administration provided a blank check to the wards of the state known as Freddie Mac and Fannie Mae. (“Fannie and Freddie’s Huge Christmas Bonus”)

What other quasi-government institutions have a very similar business profile as Freddie and Fannie? The Federal Home Loan Bank system, acronym FHLBs, commonly referred to within the financial industry as FLUBs. I will reserve comment on that moniker. Ten months ago, I questioned whether the dynamics at work within the FHLB system would be the equivalent of what has transpired at Freddie and Fannie. I wrote “Freddie Mac, Fannie Mae Deja Vu?” and highlighted:

Can our economy absorb another financial hit of the magnitude of Freddie Mac and Fannie Mae? (more…)

Barack Really is Going to Pay Her Mortgage

Posted by Larry Doyle on March 26th, 2010 8:24 AM |

My blood is boiling. Why?

The assault on the principles of free market capitalism is escalating with news that banks are poised to start reducing principal balances on certain mortgages.

I empathize with those who are strapped, but I have never felt more strongly on a topic than this principal reduction. Despite any and all bulls*%# put forth by those in Washington, the principal reduction program is an enormous escalation of the violation of moral hazard which our country sadly continues to embrace. I have no doubt it will expedite the development of a socialized housing finance system.

Do not think for a second that banks will take the hit on these principal reductions. Who will take the hit? Me and you. Those who have worked hard, saved, played by the rules, and taught our children to do the same. (more…)

Where is Wall Street Hiding Hundred Plus Billion in Lo$$es?

Posted by Larry Doyle on March 8th, 2010 11:24 AM |

U.S. Rep. Barney Frank (D-MA)

Banks are increasingly healthy, right? Our nation’s accounting rules promote real transparency and integrity in our financial reporting, right? Housing is bottoming, right? No, no, and no!

Why so pessimistic, you may ask? I am not pessimistic at all. I am merely searching for the truth in the midst of the smoke and mirrors on Wall Street and in Washington.

Thank you to our friends at 12th Street Capital for sharing a recently released letter from Congressman Barney Frank imploring the four largest banks involved in mortgage originations to write off second liens they are holding on their books at inflated values.

Why does Congressman Frank believe these loans need to be written off? (more…)

Fannie Mae Plays “Let’s Make a Deal”

Posted by Larry Doyle on March 5th, 2010 12:38 PM |

“Let’s see, do you want to go for the prize behind Door #1 or take a chance on what’s in the big box?”

“Well Monty, I’m playing with your money so it doesn’t really matter now, does it?”

1970′s vintage TV may have been entertaining, but is the current deal-making used by Fannie Mae to liquidate housing inventory truly the way to develop a healthy and robust housing market?

Just what is Fannie Mae doing? (more…)

Fannie Mae Blight Plagues America

Posted by Larry Doyle on February 26th, 2010 6:22 PM |

Is it any surprise that the next drawdown in a multi-billion dollar ongoing bailout gets posted at 5pm on a Friday afternoon? Not in this economy where Uncle Sam, that’s you and me boys and girls, continues to pay for the woefully mismanaged financial and legislative practices of those in Washington.

The gutless typically prefer to operate under a veil of darkness.

I am referring to the sinkhole that is the organization known as Fannie Mae, as it comes back to the well for another $15 billion. Bloomberg highlights this ongoing bleeding in writing, Fannie Seeks $15 Billion in U.S. Aid After 10th Straight Loss:

Fannie Mae, the mortgage-finance company under federal conservatorship, said it will seek $15.3 billion in aid from the U.S. Treasury after posting a 10th straight quarterly loss. (more…)






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