I got "Humped by Hamp" will be the Realtors motto for 2010!

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This goes into effect in April, although servicers can start offering these programs earlier.

Yep. The Great Deflation will be staved off until as many people-who-will-go-broke as possible are suckered into filing 1040s for 2009-owed by 4/15/2010.

Then, we hit the rocks under a full head of steam.

Karl, I can't Thank-You enough for this Ticker! Nice catch!

Higher interest rates plus a huge increase in inventory by late spring....30% drop in prices seems assured.

Par for the course.

If this is the case; I would think that there will be even more 'strategic defaults' even among the $8000 tax credit folks (although paying back the credit will add to the agony of the decision) when they realize just how 'done in' they were by .gov...

How stupid are they - crashing the housing market prices further and all at once which this is sure to do, will only deepen the hidden losses of the TBTF's - and really, all financial institutions.

Massive FAIL.

Hussman has a pretty good take of what is happening with the Fed, the Treasury, and the American democracy. The damage that the Fed is causing by trying to inflate the housing prices can destroy our very form of democratic government.

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What will be a game-changer is if Congress fails to recognize that the Treasury's action is at minimum an evasion, and possibly a usurpation of powers that are enumerated to Congress alone. If Congress does not forcefully defend that prerogative – even if it ultimately ends up voting for exactly the same policy – it will have relinquished the power of fiscal policymaking into the hands of unelected bureaucrats. This is real public money that is being spent to make bad mortgage loans whole. It may not appear to be costly at present, since risk-averse individuals conscious of credit risks, and foreign countries running massive trade surpluses, are still willing to accumulate the Treasury securities being issued, with no apparent impact. But ultimately, those securities will either stand as claims on our future national production, or they will be inflated away. Either the Treasury securities will retain value, so that holders such as China get to use them to acquire our productive assets in the future, while we ultimately tax ourselves in order to pay off that debt, or we must dilute the ability of those Treasuries to claim real goods and services, which is another way of saying we inflate away the debt.

http://www.hussmanfunds.com/wmc/wmc10010....

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If Congress does not forcefully defend that prerogative – even if it ultimately ends up voting for exactly the same policy – it will have relinquished the power of fiscal policymaking into the hands of unelected bureaucrats.

This Congress would GLADLY relinquish fiscal policy-making power to bureaucrats.

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The HAFA program simplifies and streamlines the use of short sale and DIL options by incorporating the following unique features:

•Complements HAMP by providing viable alternatives for borrowers who are HAMP eligible.
•Utilizes borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
•Allows the borrower to receive pre-approved short sale terms prior to the property listing.
•Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
•Requires that borrowers be fully released from future liability for the debt.
•Provides financial incentives to borrowers, servicers, and investors.

I'm not sure I see anything bad about this. Banks have been dragging their feet trying to not recognize losses, and in the case of some short sales tried to stick borrowers with deficiency claims (note bold part). Basically this says if you are eligible for HAMP (meaning you can't pay your mortgage), and you don't qualify or drop out or fail at HAMP, GET OUT! This makes sure there are no really bad consequences for "borrowers" and streamlines getting the property to market.

Only thing I don't like is the realtor fee thing.

edit: this also gets around the sometimes many months long foreclosure process, and a lot of expenses for both lender and borrower. The one thing is does eliminate is leech****s paying no mortgage for years while banks sit on unrecognized losses, or wait while state or local foreclosure laws mandate unending delays or 2nd 3rd etc chances and various workout attempts. All the HAMP paperwork applies directly to expidited short sales or DIL. Maybe this is not perfect but it is a step in the right direction. Yes it does man a new dump of REO or cheap short sale property.

Fred, this is good for the market.

What it is bad for, however, is the more than a million Americans who got BUTT****ED by not telling them this was going to show up in April - and who as a consequence bought a house at DRAMATICALLY over true value based on the $8,000 "tax credit."

Just as with "Cash for Clunkers" which was instantly exploited by dealers (who were selling at full sticker with no negotiation and in some cases ABOVE sticker!) the tax credit was a butt**** for the American Consumer, who was NOT TOLD that this "Addendum" was going to be shoved down all the servicers throats come April, guaranteeing the collapse in prices.

To me this appears as much as anything a screwover on the holders of these MBS- many of whom are foreign. How is recourse for the MBS holders handled in the bill?

KD, yeah I can see that...I just don't give a **** about them much. They got 8k of taxpayer $$ and ran off to catch some knives. I thought prices would collapse anyway with Fed stepping out of agency paper QE stuff, now this will add to it.

Would the banks get ahead of this by dumping the inventory they are sitting on?

If this happens, how long before RE prices restabilise, Q4 2010 or maybe Q1 2011?

Then there will be the added inventory from all the loans that will reset big time in mid year.

What would be good plays on this from an investment perspective?

Thanks, Killersdad

"If Congress does not forcefully defend that prerogative – even if it ultimately ends up voting for exactly the same policy – it will have relinquished the power of fiscal policymaking into the hands of unelected bureaucrats."



The Constitution has been a dead letter, and the FED has been exercising more and more power, for decades.

I weep for the comrades that sucked on the redistributionist tit. Really.

well, if I weren't already tremendously relieved that I sold my overpriced home two months ago (with cash in my pocket), I'm positively ecstatic now. I haven't been a renter in over 20 years, but given the reality of today, I would MUCH rather be paying my rent than still be stuck under my former $300k mortgage.

So, if this sort of additional real estate property implosion happens just as a result of government games failing, what's going to happen when interest rates inevitably go up?

I'm eager to see what sort of opportunities present themselves to this cash buyer over the next year or so.

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So, if this sort of additional real estate property implosion happens just as a result of government games failing, what's going to happen when interest rates inevitably go up?

Even more booms.

This fits in nicely with the rumour that the banks will dump 600K foreclosures on the market in the first quarter doesn't it?? Get out before being forced to take more pain?

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Specifically, the "first time" home buyers tax credit (and repeat credit) both require contracts to be signed by April 30th, 2010. This program's mandatory effect begins on April 1st, which means that with the ordinary process of approval and evaluation (set forth in the document linked above) that inventory will hit the market right about May 1st. That $8,000 "credit" may be the most expensive $8,000 you have ever received compared to the deal you would obtain had you waited a couple of months and bought into the maw of the short sale and deed-in-lieu unload.

Good catch IF they do away with the $8,000 credit. I have been reading that not only do congress/NAR/etc. want to extend the credit, they want to "bump" it up to $15,000.

Gen,

Do you call someone with large amounts of negative equity a homeowner?

That question has been on my mind for some time now.

Glass, I don't but "they" do (both the government and the putative "owner")

So, will this 'stick' at all encourage banks to get more aggressive with modifications or will they all just take their chances and go for the short sales?

There's no reason to get "aggressive" with a mod that returns less than a short sale.

Glass,

That's where "Homoaner" comes from.