Comments on: As Obama and Congress fiddle, America liquidates housing sector http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/ Wed, 16 Jul 2014 00:47:01 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: DiegoForever http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-472 Sun, 08 May 2011 18:43:06 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-472 The reason the housing bubble inflated is because there was a disconnect between borrowers and lenders. The disconnect was facilitated by Nationally Recognized Statistical Organizations (Fitch, Moody’s, S&P) and government guarantees and by government loan guarantees.

Twenty percent down and requiring originators to keep a large proportion of the loans they fund on their balance sheet would fix the problem. In fact it would have prevented the problem from occurring in the fist place.

Central planners always have such complicated solutions.

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By: robertsgt40 http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-305 Wed, 13 Apr 2011 15:09:24 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-305 All Ponzi schemes evenyually crash. That would be the Fed and anything tied to finance.

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By: Laster http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-303 Mon, 04 Apr 2011 01:57:33 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-303 You would think that in a time of quandary – the exact definition of what constitutes a QRM – whether it be an ethical canon or prudent step, erring on the side of caution in the given formula would not only alleviate the greater moral hazard but also possibly restore some equity, and quite possibly confidence, in the home mortgage market.

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By: Tobyh http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-297 Thu, 31 Mar 2011 00:56:45 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-297 Louis XIV married Maria Theresa and presided over one of the golden ages of France. Surely you don’t want to compare Louis XIV to Obama and the housing slump.

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By: jerseycity64 http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-296 Wed, 30 Mar 2011 20:50:40 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-296 Possibly the dumbest commentary on the presidency I have ever read. There’s just no place to begin. Moronic.

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By: bogrady http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-294 Wed, 30 Mar 2011 17:01:08 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-294 Not to quibble, but it was mentioned twice–I think you mean Louis XVI, not XIV. Louis the XIV was a very effective leader (the “Sun King”). Louis XVI was married to Marie Anntoinette and was the only French King to be exeucted by his subjects.

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By: Paca http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-293 Wed, 30 Mar 2011 16:14:18 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-293 The key is, as I believe your referenced post of March 28 suggests, is that what you refer to as the MI industry is always been a Ponzi scheme scam where risk has been purposely under estimated with the assumption that housing prices “which never fall” along with market inertia will overcome the hopelessly flawed business model. Whether the participants are criminals or not is apparently up for debate. The answer IMHO is for the MI to adopt the model of the surety industry. Instead of “insuring” the mortgage in excess of 80% LTV, MIs would act as a surety. What this would mean is that MIs would of necessity seek and obtain additional collateral, co-signers and other security that would preclude a borrower from merely walking away from a mortgage and saying “never mind”. In the case of default, the surety would have the legal obligation to pay up the mortgage holder and then have a legitimate opportunity to recoup from the borrower. Maybe some additional legislation would be required to assist in that mission but, as surety companies demonstrate many times each day, it is a business model that has stood the test of time.

The preeminent issue IMHO is that the borrower must have some skin in the game. That can occur only if the borrower is truly on the hook for some reasonable portion of the purchase price (we can argue about 20%+-). The current business model of MIs must be recognized for the scam it has always been before any improvement in the mortgage financing market can occur. Obviously my suggestion is easier said than done, but that is where political leadership is of critical importance.

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By: egreen711 http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-292 Wed, 30 Mar 2011 15:23:31 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-292 I think referring to Louis XVI, who was married to Marie Antoinette, and overthrown. Louis XIV was very savvy: “L’etat c’est moi.”

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By: furiouschads http://blogs.reuters.com/christopher-whalen/2011/03/29/as-obama-and-congress-fiddle-america-liquidates-housing-sector/comment-page-1/#comment-291 Wed, 30 Mar 2011 12:48:43 +0000 http://blogs.reuters.com/christopher-whalen/?p=302#comment-291 We need to clear the market by reinstituting something like the Home Owner’s Loan Corporation process. During the depression, this agency took illiquid underwater mortgages off bank’s books in exchange for bonds. It then refinanced the loans for the homeowner. To some extent we have already started clearing the bank’s books.

Until we do this completely in a workmanlike manner, the overhang of unrecognized losses on bank balance sheets, combined with locked in, terrified homeowners will keep our economy in a zombie state.

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