Skip to comments.Here’s what it looks like when foreclosure ‘pig’ moves through housing-crisis ‘python’
Posted on 07/25/2017 8:06:16 AM PDT by Lorianne
As the effects of the housing crisis further recede, markers of distress are declining, with one notable exception: Among the batches of severely delinquent mortgages bought by institutional investors, foreclosures are on the rise.
The trend is a reminder of the reasons many community advocates resisted allowing institutional investors to buy delinquent mortgages in government auctions that began in 2010. Wall Street, those advocates said, shouldnt be rewarded for its role in creating the housing crisis with the chance to buy for pennies on the dollar the very assets whose values it dented.
The government auctions promised a risk-sharing solution that would benefit nearly everyone: Homeowners whose mortgages had been bought dirt-cheap could get loan modifications, investors would get profitable assets, and communities would see tax revenues restored and neighborhoods revitalized.
But that win-win-win scenario may bring little relief to the most distressed among those troubled assets. A new Attom Data analysis for MarketWatch shows increasing foreclosures in the mortgages auctioned by the government.
A subsidiary of private-equity firm Lone Star Investments, for example, has foreclosed on nearly 2,000 homeowners this year, through early July, and has increased foreclosures every year since 2013. And a Goldman Sachs GS, +1.96% subsidiary called MTGLQ, which has more than doubled foreclosures each year from 2014 to 2016, may do the same again this year, based on early 2017 data.
Those figures stand in stark contrast to the housing market overall, where foreclosures fell 22% in the second quarter, touching an 11-year low of just over 220,000.
(Excerpt) Read more at marketwatch.com ...
The bank keep the good mortgages for themselves, and bundle and sell of the crappy ones. To the extend they are government insured, the taxpayer foots the bill.
Banks make billions, investors and taxpayers get screw#d.
John Bird and John Fortune (the Long Johns) brilliantly, and accurately, describing the mindset of the investment banking community in this satirical interview....
If we can’t shut down the Federal Reserve, then we need to return to some link to gold and also - return to double-liablity for public banking firms
We have a socialized, highly political, centrally-planned monetary system now - and as one would predict, it is full of moral hazard, to the tune of $ Trillions.
Your take on this would be welcomed by THIS FReeper.
The “affordable housing” advocate organizations continue to blame the crisis, past and present, on lenders and holders of the mortgages, past and present, instead of recognizing the REAL FACTS are that people bought houses they could not afford, and in spite of all the government help some still cannot afford. THAT is not “Wall Street’s fault”.
True but someone had to lend them the money without performing all the financial due diligence.
The government did more damage by offering to buy up all those sub par loans.
“True but someone had to lend them the money without performing all the financial due diligence.”
Greed on one end of a transaction that should not be does not excuse greed on the other end. The “affordable housing” advocate organizations refuse to admit that and see greedy buyers are mere victims of someone else, not their own greed.
Neither will you get them to admit - “The government did more damage by offering to buy up all those sub par loans.”
No one is excusing anything, greedy buyers will always exist, just like drug addicts and alcoholics.
Just because a drunk wants another drink doesn’t mean I am obligated to serve it to him.
As long as you can admit that a greedy buyer has no one to blame except themself, fine. Otherwise, I take your continued comment as trying to excuse them.
The increases in foreclosure numbers year over year are probably due to the investors holding off while property values continue to rise. Why take back a place now when it’ll be worth 8% more next year? So now they’re cashing in on places they most likely could have foreclosed on in 2013 or 2014. More of a business decision and a statement on improving home values overall than an ill omen about more families losing their homes. Of course, I could be completely wrong.
I would no more excuse them than an alcoholic, you work for a lender or something because you seem to be apologizing for them.
I never did nor do work for any financial institution involved in banking or mortgages, or directly investing in mortgages or any financial instruments related to them.
The government CREATED the market and government positions to encourage the sub-prime loan mess. It is the fault of no one but those behind those who created those conditions that any bad actors stepped up to the plate to provide what the “affordable housing” mandates wanted. It is the fault of no one but greedy buyers that the loans got made.
If you go looking for a drug dealer you can find one. They exist BECAUSE enough of you will look for them.
You accusing me of something pal?
In my case, specifically, I knew there was going to be trouble when I purchased a house 20-ish years ago. I was pre-approved for a loan where the payments met (actually, slightly exceeded) my monthly net income, and I got that far with little more than a signature and a paystub.
Obviously, I was smart enough not to buy a house that would leave me unable to afford luxuries like water, electricity, and food. But there are plenty of people who aren't that smart, and plenty of predatory lenders or "affordable housing" (read: diversity) advocates who are happy to take advantage for a quick buck.
Contrast this with my next home purchase where I was pre-approved for exactly the amount needed, not a nickel more, and had to jump through a myriad of hoops just to get that far. It was the same bank, and its internal controls were ratcheted down, to be certain.
We had a mortgage on draft and made extra payments to pay it off early. Now nobody knows where the title is because it was bundled and sold so many times. we’ve a statement that it was paid off but no title. We’ve been told that we can get a title from the courthouse but that’s a snakepit to stay away from.
There was a clause on it that it couldn’t be transferred more than twice. We know that it was transferred at least 4 times.
Yep, taxpayers on the hook for billions more.
It is the government’s fault for putting the taxpayers on the hook for bailing out lenders and investors (and Wall Street).
It’s the government fault for scooping up all the foreclosures and then selling them IN BULK to more investors who are, apparently, now going bust on the same properties.
Who do you think is going to bail them out?
Well, well. The "Insiders" role in the '29 stock market crash all over again.
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