Tuesday, July 29, 2008

but you can call me scum....

I am a commercial real estate lender and that means that I am trained to assess and price risk. I do not get them all right, but I get enough right that I have been successful over the years. But I am trained to deal with certain types of risks. For example, K-Mart has announced that they are walking away from 335 major retail leases across the country, a significant potential loss for the properties and developers involved, but the commercial real estate industry is prepared to deal with this type of event.

The problem is that we have no training in how to assess and price the risk of terrorist acts. I can assess and price the risk of a K-Mart bankruptcy, or I can buy insurance against the risk of a building burning down. But if I cannot assess the risk, and borrowers are unable obtain insurance, I will not do the deal, particularly when various government officials continue to state that the chance of another terrorist attack is 100%.

That was a mortgage banker, one Kieran Quinn -- current Chairman of the Mortgage Banking Association -- in 2002, testifying calmly secure in his craft, his competence. Testifying before a House subcom on the topic: "How Much are Murkins @ Risk Until Congress Passes, heh, Terrorism Insurance Protection?"

Mr. Kieran Quinn was quite sure that his training enabled him to deal with certain types of risks. Things like terrorism, tho, not he, therefore the need for the insurance, l'assicuranza.

Only now we see, from the perspective of Mr. Paulson, Fannie Mae, Freddie Mac and with a splendid view of a nearly non-finite passel of Fuckin' Mooks that the story is not that. The very people who were trained to assess risk but not terrorist acts are now beginning to develop a certain Osama-ish flair, having -- despite their best efforts to manage the risk (to their own professional stature) -- succeeded in demonstrating that they themselves in fact were the real and present terrorist threat - a far more serious one than the imaginary and real enemies of Mr. Bush - that they confessed to being incompetent to assess.

Sunday, July 27, 2008

National Bullshit

If the economy or the nation go into a tailspin, one could look here for a clue as to why, how, and who:

Congress Passes Housing Bill

July 27, 2008 4:01 a.m.

WASHINGTON -- U.S. Senate lawmakers on Saturday overwhelmingly passed a broad package of housing legislation, hoping to send a calming message to financial markets and voters amid the ongoing deterioration of the housing market and a growing number of bank failures.


Meeting in a rare weekend session, the Senate voted 72-13 in favor of the bill, which includes tax breaks for homeowners, a $300 billion program to refinance loans for struggling borrowers, and a dramatic rescue plan for embattled mortgage finance firms Fannie Mae and Freddie Mac. Other provisions include an increase in the federal debt limit to $10.6 trillion and long-sought reforms to the Federal Housing Administration.

"For Americans out there today with distressed mortgages and worried about their economic future, we hope this legislation could be the first piece of good news in a long time," Senate Banking Chairman Christopher Dodd (D., Conn.), told reporters after the vote.

Treasury Secretary Henry Paulson said provisions in the bill dealing with Fannie and Freddie, including the creation of a new regulator, were especially important.

"These components are orders of magnitude more important to turning the corner on the housing correction," Mr. Paulson said in a statement.

The vote completes congressional action on the legislation, which is the result of months of political wrangling and negotiations between the House and Senate, Treasury Department, and other federal regulators. The House voted 272-152 to pass the bill on Wednesday.

It will now be sent to President George W. Bush, who the White House has said will sign the bill despite voicing earlier misgivings about certain provisions of the legislation. Senate Majority Leader Harry Reid (D., Nev.) said Saturday the bill could reach the White House on Monday.

The White House has made no plans to have an official signing ceremony for the bill, though most major pieces of legislation typically receive such treatment. When asked about it Saturday, Mr. Dodd said he was disappointed and said a public ceremony with lawmakers and Mr. Bush would "reassure the American people we're on the job trying to make a difference."

"I think that's a moment you don't want to miss by just having a secret, closed-door signing ceremony as if you didn't do it," Mr. Dodd said. "I think it's more important for him to stand up and be heard on this and express through that office the importance of making a difference for people."

The presumptive presidential nominees from both parties weighed in following the Senate vote, though neither Sen. Barack Obama (D., Ill.) nor Sen. John McCain (R., Ariz.) attended the vote.

McCain spokesman Taylor Griffin said in a statement that "relief for struggling homeowners is overdue."

In a statement released by his office, Mr. Obama said the bill would help prevent hundreds of thousands of foreclosures and "provide critical support to communities that have been hard hit by the housing crisis."

Policymakers hope the wide-ranging bill will help invigorate a housing market that continues to collapse and has roiled financial markets worldwide. Data released in recent weeks reveal that home sales have hit a 10-year low and home prices continue to decline around the country. Importantly, the number of homeowners facing foreclosures continues to rise, raising the specter of vacant homes and neighborhood blight.

Foreclosure-tracking firm RealtyTrac said Friday that 740,000 properties received some form of foreclosure filing in the second quarter, a 14% jump from the previous quarter and soaring 121% from the second quarter of 2007. More breathtaking: One in every 171 households received a filing in the second quarter, and all but five of the nation's 100 largest metro areas experienced year-over-year increases.

The omnibus housing package completed Saturday attempts to deal with the housing crisis on a number of fronts. It includes $180 million for "pre-foreclosure" counseling for cash-strapped homeowners, creates an affordable housing trust fund to increase the supply of rental housing, and would raise the size of loans eligible for purchase by Fannie Mae and Freddie Mac to 115% of the local area median home price, with a nationwide ceiling of $625,000 for loans.

The centerpiece of the legislation is a program of up to $300 billion of FHA-insured mortgages to help refinance cash-strapped borrowers into affordable loans. The program would rely on lenders voluntarily writing down the value of a distressed loan for the homeowner to qualify for the new FHA-backed loan, and in return borrowers would have to share future price appreciation with the federal government.

Lawmakers hope the program will help avert foreclosures, with Democrats estimating it could help up to 400,000 borrowers that now face defaulting on their loans. To encourage lenders to work with borrowers, the legislation also provides some legal protections for mortgage servicers and lenders who modify the terms of loans.

Also included is an emergency plan authored by Paulson over Paulson over the last two weeks to provide a federal backstop for Fannie Mae and Freddie Mac. Hatched in the wake of financial market concerns about the firms' solvency and capital, the plan would expand the $2.25 billion lines of credit the firms have with the Treasury, as well as allow the Treasury to take an equity stake in the government sponsored entities. Importantly, it also gives the Federal Reserve a "consultative" role to work with the firms' new regulator to ensure their safety and soundness.

It also includes tax relief for future homebuyers and current homeowners. First-time homebuyers purchasing a home between April of this year and through June of next year would receive a tax credit for 10% of the value of their home, up to $7,500, while current homeowners who do not itemize their tax returns would be able to deduct up to $1,000 for property taxes.

Other provisions include nearly $4 billion in grant money to state and local governments to buy up and rehabilitate foreclosed homes. Intended to avoid community blight in areas hard hit by foreclosure, the program directs that homes purchased through the program be offered to low- and moderate-income families.

Write to Michael R. Crittenden at michael.crittenden@dowjones.com

Tuesday, July 22, 2008

Guess where?

From 2000 to 2007, regulators allowed at least 10,529 people with criminal records to work in the mortgage profession. via
No blog was never more aptly named than this...

Want more?
• More than half the people who wrote mortgages in Florida during that period were not subject to any criminal background check. Despite repeated pleas from industry leaders to screen them, Florida regulators have refused.

• Confronted with a growing epidemic of mortgage fraud -- Florida now has the highest rate in the nation -- the number of license revocations declined over the last five years, leaving borrowers at the mercy of predatory brokers.

• During the peak of the housing boom, the Office of Financial Regulation ignored a state law enacted in 2006 that compelled it to perform nationwide criminal background checks on applicants. That failure allowed people convicted in other states -- and in federal court -- to peddle loans in Florida without any scrutiny.

• Regulators allowed at least 20 brokers to keep their licenses even after committing the one crime that seemed sure to get them banned from the industry: mortgage fraud.
''I knew we had a problem. I had no idea how bad,'' U.S. Sen. Doofus Mel Martinez, Ripyouoffagain-Fla., said when told of The Miami Herald's findings.