Comments on: Foreclosure datapoint of the day A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: y2kurtus Tue, 31 Aug 2010 15:05:10 +0000 Please try to knock some holes in the following logic:

The goverment substantially inflates home values through the tax code, (interest diduction.) And now even more directly through other means like the tax credit for purchace, and by using the GSE’s to depress morgage rates.

These goverment subsidies flow mostly to the upper and middle classes.

These subsidies flow ENTIRELY from the upper and middle class as they are the only groups who pay net taxes to the goverment.

The working poor and non-working poor are as a group net recipiants of goverment transfers, (as they should be!)

The goverment has historically favored the working class owning homes rather than renting homes. Simply put the goverment is (rightly) afraid of people who have nothing to lose.

Prior to the massive massive massive spike in morgage equity withdrawal , or MEU, people tended to build equity over the course of their working lives with most seniors ending up owning their homes outright about the time they retired. Even now this is still the case. Nearly 40% of homes have no debt attached to them at all.

For those who propose reducing (or god forbid eliminating) the goverments preferential treatment of homeowners what other program do you propose to force/incent/subsidize a lifelong savings program?

If you want to level the playing field for renters and homeowners… that’s fine do that. Just plan on the percentage of Americans who reach their “golden years” with virtually no assets to increase more than it has already.

I advocate forced tax advantaged savings in a 401k style plan at 10% of wages. This could be introduced gradually to avoid the total distruction of the consumer discressionaly sector.

By: MattJ Sat, 28 Aug 2010 17:07:07 +0000 How does forcing loan servicers to allow homeowners to stay in their houses at market rent break the cycle? Assuming the market rent is significantly less than the owners are paying for their mortgage, won’t doing so force the lenders to right down the loan to the amount implied by that market rent? This will still force housing down to its actual value, and defeat the governments attempt to prop up housing at an artificially high level. Unless you see a path by which underwater homeowners get to pay less than their current payments, while the lenders get to pretend that they aren’t losing any money?

By: TaxLawyer Sat, 28 Aug 2010 05:00:21 +0000 I am not a Hoover liquidationist, but the idea of keeping people in underwater homes simply seems counterproductive, and fails to clear existing and growing housing inventories.

I would prefer to see a wave of foreclosures, rather than artificially trying to prop up a real estate bubble. The FIRE economy should be allowed to die, and government should step in to build a real economy, rather than subsidizing finance, insurance and real estate.

And one other point–foreclosed owners are not “homeless”, they are now just “renters”. I have rented for the past 8 years, and I resent throwing money to underwater homeowners–to me it is just a giveaway to banks that does nothing to help the struggling homeowner.

By: JimFickett Fri, 27 Aug 2010 23:31:45 +0000 Just as HAMP’s temporary improvement of the foreclosure rate has now gone into reverse, soon the HAMP improvement of delinquencies will go into reverse.

Currently, a large number of trial modifications are still being converted to “permanent”. As that happens, the loans, which remain marked delinquent during the trial mod, are designated as current (with the missed payments added to the principal). However the active trial modifications have already dropped from around 800,000 to around 200,000, and in another couple months almost all will have either been converted or canceled. At that point the positive effect on delinquencies will also go into reverse.

For a graph see id=investment:commentary:2010:08:20-hamp _putters_on_a_little_longer.