Comments on: Geithner’s bizarre foreclosure logic A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: ahouse1 Tue, 15 Mar 2011 19:11:59 +0000 Geithner or as I affectionately call him, Capt Transparency is at it again does anyone think this guy is working for the American Home Owner at risk. He is gonna close the conference room door and cook the books into a nice big cake for the American homeowner to eat instead of bread after they are evicted. Felix, Thanks for keeping an eye on the Hypocrisy that currently rules The fact that the issues are so wide spread and specifically documented may not be enough. Hopefully individual Americans will question the authority and make these alleged Bankers pay…

By: Zdneal Thu, 14 Oct 2010 18:10:04 +0000 So, maybe a moratorium on the foreclosure of occupied buildings?

By: VinnieTheSnake Thu, 14 Oct 2010 17:49:31 +0000 The actual problem with foreclosures to date is that Title Insurance companies cannot guarantee a legitimate chain of title because of the robo signing.
If banks were willing to sell foreclosed properties, Title Companies are not willing to insure a clear title without the opportunity to see the chain of title, which the banks cannot provide.
That is what is driving the foreclosure problem.

By: hsvkitty Thu, 14 Oct 2010 03:42:46 +0000 Great discussion. I am going with Steve on the explanation and klhoughton on the why. The media is being manipulated and this is the precursor statement to justify ‘tweaks’ in law to get the ‘paperwork problem’ (that sends individuals to jail but banks are immune to the law of late) out of the way being it will more like a year, not a month, before this is resolved legally.

The notes are evidence of debt, so if the public can be convinced the homeowners are the culprit and those still in their jomes are all deadbeats (sure some are but not all)

The systemic risk that is being down played in most media, is the possible downfall of banks if they have to eat the loans and we all know the public is not looking too kindly on them in the USA. So golly gee, whose side is he taking anyway?

It would be fairly safe to say the legalities of hashing this out would cause more economic problems, but changing the law in the banks favour to ‘fix’ this?


By: ErnieD Thu, 14 Oct 2010 03:06:27 +0000 TurboTax Timmy could also be know as Mr. “Extend and Pretend.”

He has not made a single decision at the NY Fed or Treasury which was not wholly in favor of letting the banks off the hook for incompetent and egregious behavior. In fact, the rising compensation at the banks over the past few years has shown that he has been enriching them at a time when a number of them should have been “resolved” less favorably.

By: Jakesnake Thu, 14 Oct 2010 02:39:23 +0000 Who does Geither work for? The Treasury. And who do they work for? The banks. What does anyone expect the guy to say?

By: OnTheTimes Thu, 14 Oct 2010 02:27:41 +0000 We don’t need the government or anybody else to institute a moratorium on foreclosures. Let’s just fine banks $500,000 for every house they foreclose that isn’t done properly (and $5 million for foreclosing on houses they don’t own). That will achieve the desired goal, which is that these banks do their job right. It’s a lot to ask, I know, but that’s why they get the big bucks.

By: AnonymousChef Wed, 13 Oct 2010 22:04:37 +0000 The interview itself has such a different flavor than what I get from reading this article and its comments.


Charlie Rose was fishing for Geithner to support a blanket moratorium. Geithner responded by criticizing the large banks, supporting moratoria at banks that had problems, but not supporting a blanket moratorium.


I think this is Treasury’s point:

Assume a six month moratorium. The houses that have already been abandoned during foreclosure will remain unoccupied six months longer than usual, because the bank can’t sell them until the moratorium is lifted.

Now, you might respond that the occupancy rate will go up on net because the people who stayed in their houses during foreclosure (and everyone who would have been foreclosed on) will stay in their houses. And over the short term, maybe it will. But that’s not correct over the long term, because in six months, they’ll go into foreclosure, and will presumably have average length unoccupancy periods thereafter. Their unoccupancy is just being delayed.

I think that’s Treasury’s model. Now, there are a couple assumptions you can pick at here. The most notable is that it assumes the paperwork problems, while pervasive, can be overcome to the satisfaction of judges that will be very skeptical.

By: Greycap Wed, 13 Oct 2010 19:44:52 +0000 What klhoughton said. The first paragraph of the treasury response is not actually a valid justification.

Regarding the second paragraph: was “a blanket moratorium” on all mortgage foreclosures, regardless of mortgage holder, actually proposed? And if so, why? Isn’t the conveyance problem with securitizations? How would a moratorium on foreclosures associated with RMBS threaten the safety and soundness of “smaller community banks”? And is it “pristine borrowers” that are in short supply, or pristine lenders?

By: klhoughton Wed, 13 Oct 2010 19:07:56 +0000 Let’s follow the logic:

(1) There are houses that have been foreclosed and are on the market.

(2) There are other houses where the owner is behind on payments, and will not be the owner at some point in the future–assuming the real owner can claim possession of (clear title to) the house.

(2b) Those houses will go on “the market” after they are foreclosed, because the bank doesn’t want to own them either.

(2c) Some section of those houses in (2b) are already vacant. All of the houses in (2a) are vacant. If the foreclosures proceed, all of the hosues in (2b) will be vacant. If they do not, there is a chance that some of the (2a) houses will be sold to people wanting to own them, and therefore become occupied.

Having once tried to buy an in-foreclosure-process house where my realtor was on both sides of the transaction–and having been unsuccessful then, despite title not being an issue–I believe I can safely say that Tim Geithner is, as usual, lying. (That he is doing so in such a way that people try to give him the benefit of the doubt is why, pace Brad DeLong, he generally wins political arguments.)