Are You Ready? 6 – 7 Million More Foreclosures. Politicians criticize Fannie Mae & Freddie Mac out of one side of their mouths. Read: Who got the most money from FNMA. (by Joe /vera)
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, helped his firm avoid losses that hit Wall Street. is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
He was recently asked if more foreclosures are expected to hit the market? He responded that over the next three years it could be as many as 6 -7 million more foreclosures.
Pulled the following from an old report. It was called shot in the Fannie Mae.
1997
Fannie Mae is a GSE (Govt. Sponsored Entity) regulated by Congress.
Fannie Mae buys mortgages from other companies.
It is backed by the taxpayers for all losses, but keeps all profits.
1998
Banks begin making thousands of bad loans,0 down, no documentation, for 120%! (1998 – 2008).
Executives at Fannie receive huge bonuses if loan targets are met.
Franklin Raines and Jamie Garelick from the Clinton Administration are appointed to run Fannie Mae.
2003
President Bush proposes a new oversight committee to clean up Fannie Mae, but Democrats derail the effort.
1999-2004
Raines earns $100 million in bonuses.
Garelick earns $75 million in bonuses.
In 2004, Enron collapses, congress investigates, Executives Skilling & Lay go to jail, for fraudulent bookkeeping.
Congress responds with the Sorbanes-Oxley Act, more heavy regulation of corporations.
2004
An OMB investigation finds massive fraudulent bookkeeping at Fannie Mae.
False numbers triggered executive bonuses every year.
Congress holds no hearings, no one goes to jail, or is punished.
WHY NOT?
1999-2005
Fannie Mae gives millions to Democratic causes, examples: Jesse Jackson & ACORN.
Fannie Mae pays millions to 354 congressmen and senators, from both parties.
Who got the most money?
#1 Sen. Christopher Dodd , (D-CT) Chairman of the Banking, Housing, & Urban Affairs Committee
#2 Sen. Barack Obama , (D-IL) Federal Financial Management Committee
#3 Sen. Chuck Schumer, (D-NY) Chairman of the Finance Committee
#4 Rep. Barney Frank, (D-MA) Chairman of the House Financial Services Committe
2005
Franklin Raines & top execs are forced to resign from Fannie Mae.
They do not go to jail.
There is no media “perp. walk.”
They keeps all of their bonuses
They finally pay $31.4 million in civil fines.
2005
The Federal Housing Enterprise Regulatory Reform Act is sponsored by: Sen. John McCain, (R-AZ) Armed Services, & Commerce, Science, & Transportation, “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
None of the top 4 recipients support the legislation.
The reform act is blocked by Democrats, never even making it out of committee.
None of the politicians return any of the money, tainted by fraud.
2008
Fannie Mae & Freddie Mac go bankrupt and the govt. takes them over completely.
Lehman Brothers, goes bankrupt from investing in bad mortgages.
AIG get $85 million in loan guarantees, after insuring bad loans & projects.
Taxpayers will ultimately pay BILLIONS.
2008
Franklin Raines is now an advisor to the Obama Campaign which wants the govt. to take over more of the economy.
Did government involvement in the mortgage market work out?
How will even MORE government involvement make it better? Do you want to be Sweden?
McCain favors revising regulations & loan standards, selling off Fannie & Freddie.
Sources
Congressional Record, 5/25/06
“Hannity & Colmes,” Fox News, 9/16-9/17/08
Herald Tribune, 4/18/08
New York Times, 9/13/03
www. govtrack.com, 9/17/08
This was produced as a Power Point presentation by an Adjunct Instructor a Dennis Jantz in 2008.
Showing posts with label real estate market. Show all posts
Showing posts with label real estate market. Show all posts
Saturday, July 2, 2011
Friday, July 1, 2011
Pimco’s Simon: There Was Never a Housing Recovery
Are You Ready For 6 to 7 Million More Foreclosures. Politicians criticize Fannie Mar & Freddie Mac out of one side of their mouths. (by Joe Vera)
Pimco’s Simon: There Was Never a Housing Recovery
By Dawn Wotapka
Bearish outlooks on housing aren’t hard to find these days, but one stands out even for this market.
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
In a lengthy Q&A posted on Pimco’s website today, Mr. Simon discusses everything from foreclosures to Fannie Mae and Freddie Mac. Calling his outlook “dour” would be generous—home prices could fall more and the pain could drag on for a decade or more.
Excerpts are below. (Both the questions and answers are from Pimco.)
Q: Could you begin by framing the current state of the housing market? Do you see a double dip market?
A: We are seeing signs of what we have long suspected: There never was a housing recovery. In fact, I argue the market is in a fragile state that is far easier to break than to fix. If policy makers alter the government’s current approach to housing and unwittingly break the market, they may not be able to repair the damage within the foreseeable future. … We anticipate an average decline from here of about 6% to 8% in prices across the country.
Q: Are more foreclosures expected to hit the market?
A: We see potential for a substantial number of foreclosures over the next three years – as many as 6 million to 7 million additional foreclosures, on top of the roughly 2 million we estimate have already occurred. Foreclosures may peak in about two years, but the numbers could still be high for a few years after that and then likely taper off.
Q: Let’s switch gears to discuss housing finance. Is the home-loan market still reliant on government support?
A: Yes, government is essentially considered the mortgage market today, but this needs to be put in context. Government has been involved in housing for some 70 years with pro-housing subsidies of all sorts, from homebuyer tax credits to guaranteeing loans to mortgage interest tax deductions. … If we ended government support in all forms, mortgage rates could rise significantly, because home loan investors would need to be compensated for greater credit risk, and loan availability could decline. Higher rates and less mortgage availability would put downward pressure on home values, with potentially negative consequences for the market and also for the economy as a result of wealth destruction and consumer confidence declining.
Q: What are politicians and policy makers proposing to do about Fannie Mae and Freddie Mac? Are there serious alternatives being discussed to provide liquidity to the market?
A: From what I have observed in visits to D.C., when the conversation comes around to Fannie and Freddie it is very easy for people to get irrational. Fannie and Freddie seem to draw negativity like giant lightning rods because they lost so much money. But what is often overlooked is that the majority of losses have not come from their core business: 20% down-payment, prime mortgages. They got in trouble because they expanded beyond their core business to maintain market share. …But politicians from both parties look at the losses of Fannie and Freddie and think, “I’d better say Fannie and Freddie stink and we should shut them down and that they are evil.” But the market still relies heavily on Fannie and Freddie. If policymakers err in tinkering with that support while the market is so fragile, the unintended consequences could be extreme.
Q: And when do you expect action on this issue?
A: Despite the heated rhetoric, there appears to be no rush to kill Fannie and Freddie, from what I have observed. Initially, we heard talk of getting the government out of housing in two years, and lately the talk is five to seven years. I think in Washington-speak, five-to-seven years more likely means 10-to-15 years, which is actually a more realistic timeframe in my opinion – by then the housing market should hopefully be on firmer ground.
Pimco’s Simon: There Was Never a Housing Recovery
By Dawn Wotapka
Bearish outlooks on housing aren’t hard to find these days, but one stands out even for this market.
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
In a lengthy Q&A posted on Pimco’s website today, Mr. Simon discusses everything from foreclosures to Fannie Mae and Freddie Mac. Calling his outlook “dour” would be generous—home prices could fall more and the pain could drag on for a decade or more.
Excerpts are below. (Both the questions and answers are from Pimco.)
Q: Could you begin by framing the current state of the housing market? Do you see a double dip market?
A: We are seeing signs of what we have long suspected: There never was a housing recovery. In fact, I argue the market is in a fragile state that is far easier to break than to fix. If policy makers alter the government’s current approach to housing and unwittingly break the market, they may not be able to repair the damage within the foreseeable future. … We anticipate an average decline from here of about 6% to 8% in prices across the country.
Q: Are more foreclosures expected to hit the market?
A: We see potential for a substantial number of foreclosures over the next three years – as many as 6 million to 7 million additional foreclosures, on top of the roughly 2 million we estimate have already occurred. Foreclosures may peak in about two years, but the numbers could still be high for a few years after that and then likely taper off.
Q: Let’s switch gears to discuss housing finance. Is the home-loan market still reliant on government support?
A: Yes, government is essentially considered the mortgage market today, but this needs to be put in context. Government has been involved in housing for some 70 years with pro-housing subsidies of all sorts, from homebuyer tax credits to guaranteeing loans to mortgage interest tax deductions. … If we ended government support in all forms, mortgage rates could rise significantly, because home loan investors would need to be compensated for greater credit risk, and loan availability could decline. Higher rates and less mortgage availability would put downward pressure on home values, with potentially negative consequences for the market and also for the economy as a result of wealth destruction and consumer confidence declining.
Q: What are politicians and policy makers proposing to do about Fannie Mae and Freddie Mac? Are there serious alternatives being discussed to provide liquidity to the market?
A: From what I have observed in visits to D.C., when the conversation comes around to Fannie and Freddie it is very easy for people to get irrational. Fannie and Freddie seem to draw negativity like giant lightning rods because they lost so much money. But what is often overlooked is that the majority of losses have not come from their core business: 20% down-payment, prime mortgages. They got in trouble because they expanded beyond their core business to maintain market share. …But politicians from both parties look at the losses of Fannie and Freddie and think, “I’d better say Fannie and Freddie stink and we should shut them down and that they are evil.” But the market still relies heavily on Fannie and Freddie. If policymakers err in tinkering with that support while the market is so fragile, the unintended consequences could be extreme.
Q: And when do you expect action on this issue?
A: Despite the heated rhetoric, there appears to be no rush to kill Fannie and Freddie, from what I have observed. Initially, we heard talk of getting the government out of housing in two years, and lately the talk is five to seven years. I think in Washington-speak, five-to-seven years more likely means 10-to-15 years, which is actually a more realistic timeframe in my opinion – by then the housing market should hopefully be on firmer ground.
Sunday, June 26, 2011
Government guarantee preserves 30-year mortgage
Look closely & see a weird COMMUNISM. Democrat or Republican, sell outs to the Banks are just plain sell outs. (by Joe Vera)
Lawmakers: Government guarantee preserves 30-year mortgage
by JACOB GAFFNEY
Tuesday, June 21st, 2011, 5:39 pm
The prevalence of the 30-year mortgage in the housing market will rapidly diminish and eventually disappear without a government guarantee for related mortgage-backed securities.
Two members of the House Financial Services Committee, Reps. Gary Peters (D-Mich.) and John Campbell (R-Calif.) told attendees at the American Securitization Forum’s annual meeting in Washington that this is precisely what will happen if legislation they plan to introduce is not passed into law.
“How many of you are going to be excited to buy a package of 30-year, mortgage-backed securities in the TBA market that’s not government guaranteed?” Campbell asked the crowd of secondary market issuers and investors. “Let the record show, the hands showing up are zero.”
Campbell said the insurance program will be on bonds and not on institutions. It’s an idea that holds bipartisan support and is supported by the Federal Insurance Deposit Corp., as well, he added.
“Thirty-year mortgages will need to be securitized. The FDIC will not allow banks to hold them. And the banks want to do it privately,” Campbell said. “We don’t like to call it a GSE bill, because we aren’t going to have GSEs. If we are going to have housing recover, we need housing finance to recover.”
In May, Campbell told HousingWire the proposed bill had already garnered support from around the industry.
Campbell and Peters are pushing to create guarantee associations. These will be private entities, which hold 5% risk retention on mortgage bonds, and regulated by FHFA.
“We are not doing (Fannie and Freddie) all over again. Fannie Mae and Freddie Mac are guaranteed entities. This will guarantee the performance of the loans, not the entities itself,” he said.
Campbell said the legislation will create five such associations, at least as a start. In the future, he hopes these associations will increase in number and specialize in different operations. This way an entity can fail, but the mortgage markets will be diverse enough to absorb the blow.
“Americans don’t want hedging strategies based on changing mortgage rates,” added Peters. “They want 30-year, fixed-rate mortgages with no surprises.”
During the question and answer portion of the panel, one observer wondered why the GSEs shouldn’t become the first two such guarantee firms. It would be easier, he posited, to wind down GSE issuance and transform the firms into insurers. This would save an enormous amount of taxpayer money, he said.
Campbell countered that Fannie and Freddie are now too political for such a solution.
Peters quickly added: “The system of private gains and socialized loss is a moral hazard and needs to end.”
Lawmakers: Government guarantee preserves 30-year mortgage
by JACOB GAFFNEY
Tuesday, June 21st, 2011, 5:39 pm
The prevalence of the 30-year mortgage in the housing market will rapidly diminish and eventually disappear without a government guarantee for related mortgage-backed securities.
Two members of the House Financial Services Committee, Reps. Gary Peters (D-Mich.) and John Campbell (R-Calif.) told attendees at the American Securitization Forum’s annual meeting in Washington that this is precisely what will happen if legislation they plan to introduce is not passed into law.
“How many of you are going to be excited to buy a package of 30-year, mortgage-backed securities in the TBA market that’s not government guaranteed?” Campbell asked the crowd of secondary market issuers and investors. “Let the record show, the hands showing up are zero.”
Campbell said the insurance program will be on bonds and not on institutions. It’s an idea that holds bipartisan support and is supported by the Federal Insurance Deposit Corp., as well, he added.
“Thirty-year mortgages will need to be securitized. The FDIC will not allow banks to hold them. And the banks want to do it privately,” Campbell said. “We don’t like to call it a GSE bill, because we aren’t going to have GSEs. If we are going to have housing recover, we need housing finance to recover.”
In May, Campbell told HousingWire the proposed bill had already garnered support from around the industry.
Campbell and Peters are pushing to create guarantee associations. These will be private entities, which hold 5% risk retention on mortgage bonds, and regulated by FHFA.
“We are not doing (Fannie and Freddie) all over again. Fannie Mae and Freddie Mac are guaranteed entities. This will guarantee the performance of the loans, not the entities itself,” he said.
Campbell said the legislation will create five such associations, at least as a start. In the future, he hopes these associations will increase in number and specialize in different operations. This way an entity can fail, but the mortgage markets will be diverse enough to absorb the blow.
“Americans don’t want hedging strategies based on changing mortgage rates,” added Peters. “They want 30-year, fixed-rate mortgages with no surprises.”
During the question and answer portion of the panel, one observer wondered why the GSEs shouldn’t become the first two such guarantee firms. It would be easier, he posited, to wind down GSE issuance and transform the firms into insurers. This would save an enormous amount of taxpayer money, he said.
Campbell countered that Fannie and Freddie are now too political for such a solution.
Peters quickly added: “The system of private gains and socialized loss is a moral hazard and needs to end.”
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