Comments on: Why you can’t use eminent domain to buy performing mortgages http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/ A slice of lime in the soda Wed, 19 Jun 2013 10:36:09 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Jerome77 http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41724 Jerome77 Thu, 12 Jul 2012 16:42:34 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41724 Dear Felix, you clearly do not understand the secondary mortgage market and as such should not even be commenting on it. The link you gave to 106 price on MBS containing underwater performing mortgages is referencing AGENCY debt, NOT private label securitizations. As such, the government fully guarantees every single loan in the pool, regardless of whether it continues to make payments or not. This is NOT the same as the non-agency market! Non-agency underwater performing loans do not trade anywhere near 106! Dear Felix, you clearly do not understand the secondary mortgage market and as such should not even be commenting on it. The link you gave to 106 price on MBS containing underwater performing mortgages is referencing AGENCY debt, NOT private label securitizations. As such, the government fully guarantees every single loan in the pool, regardless of whether it continues to make payments or not. This is NOT the same as the non-agency market! Non-agency underwater performing loans do not trade anywhere near 106!

]]> By: MrRFox http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41536 MrRFox Tue, 10 Jul 2012 04:31:26 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41536 Like 80% of underwater mortgages are fully current and performing - and those are carried on lenders' books at full face-value AIUI. Writing all of them down to FMV of the securing property would erase like $1.0Tril from lenders' balance sheets. Any program that creates an incentive for borrowers to go delinquent and/or otherwise compels a write-down of all underwater loans before that financial hole is filled has got "calamity" baked into it. Those who pay on underwater debt do so out of a sense of duty and/or to preserve their credit ratings - dangerous at this time to do anything that disturbs that. This whole matter reminds me of the attitude of several former mistersses - they loved the task of selecting the color and accessories of the next sports car I was looking to buy, and had not a care in the world about how to pay for it - that was my problem. Like 80% of underwater mortgages are fully current and performing – and those are carried on lenders’ books at full face-value AIUI. Writing all of them down to FMV of the securing property would erase like $1.0Tril from lenders’ balance sheets. Any program that creates an incentive for borrowers to go delinquent and/or otherwise compels a write-down of all underwater loans before that financial hole is filled has got “calamity” baked into it. Those who pay on underwater debt do so out of a sense of duty and/or to preserve their credit ratings – dangerous at this time to do anything that disturbs that.

This whole matter reminds me of the attitude of several former mistersses – they loved the task of selecting the color and accessories of the next sports car I was looking to buy, and had not a care in the world about how to pay for it – that was my problem.

]]> By: Bernanke http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41517 Bernanke Mon, 09 Jul 2012 21:30:16 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41517 First, it's San Bernardino, two "r's" Second, it leaves out agency back mortgages. In San Berdo county, that's gotta be at least 3/4 of all mortgages... and that's how you know that this thing is/was never gonna happen. It's pure political theater. A way for the politicos to look like they care about the little guy, and also extract campaign money (or just plain cash) from "donors." First, it’s San Bernardino, two “r’s”
Second, it leaves out agency back mortgages. In San Berdo county, that’s gotta be at least 3/4 of all mortgages… and that’s how you know that this thing is/was never gonna happen. It’s pure political theater. A way for the politicos to look like they care about the little guy, and also extract campaign money (or just plain cash) from “donors.”

]]> By: MyLord http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41516 MyLord Mon, 09 Jul 2012 21:22:23 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41516 I am not sure it is needed for those properties. Short sales and foreclosures are, or can be, swift and probably as efficient as eminent domain, and if they want to sit on nonperforming assets, that is their business. As people rarely stay put more than seven years and most mortgages are paid off within twelve, it will clear itself over time. Occupants of performing loans will seek an opportunity for exit, (bankruptcy, job loss, death, divorce, transfer, etc.) so the lender will face a loss eventually but that would be spaced over time and could be in the distant future. Eminent domain might work if they were immediately auctioned off, allowing the lender to refinance their own property, but few would want the certainty of a loss now in place of a possibly smaller one in the future, but unless you want to force recognition of the the loss now, I don't see what eminent domain has to offer. I am not sure it is needed for those properties. Short sales and foreclosures are, or can be, swift and probably as efficient as eminent domain, and if they want to sit on nonperforming assets, that is their business. As people rarely stay put more than seven years and most mortgages are paid off within twelve, it will clear itself over time. Occupants of performing loans will seek an opportunity for exit, (bankruptcy, job loss, death, divorce, transfer, etc.) so the lender will face a loss eventually but that would be spaced over time and could be in the distant future. Eminent domain might work if they were immediately auctioned off, allowing the lender to refinance their own property, but few would want the certainty of a loss now in place of a possibly smaller one in the future, but unless you want to force recognition of the the loss now, I don’t see what eminent domain has to offer.

]]> By: Hartzman http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41512 Hartzman Mon, 09 Jul 2012 20:25:54 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41512 Some answers to questions asked by an independent investigator from Oyster consulting answered by George Hartzman on his Wells Fargo Whistleblower filing http://hartzman.blogspot.com/2012/07/some-answers-to-questions-asked-by.html Felix, I can't quite understand why this isn't being reported. I could use some help. I can't say more than please. I feel like I am screaming inside of a sound proof shell. Some answers to questions
asked by an independent investigator from Oyster consulting
answered by George Hartzman
on his Wells Fargo Whistleblower filing

http://hartzman.blogspot.com/2012/07/som e-answers-to-questions-asked-by.html

Felix, I can’t quite understand why this isn’t being reported.

I could use some help.

I can’t say more than please.

I feel like I am screaming inside of a sound proof shell.

]]> By: walt9316 http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41508 walt9316 Mon, 09 Jul 2012 19:36:38 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41508 In non-recourse California, the market will start to clear when more of those performers realize that they are sending good money after bad and declare bankruptcy. Their stream of payments should be going to a market-priced house. Unfortunately the 20% down payment required by some would be a problem. In non-recourse California, the market will start to clear when more of those performers realize that they are sending good money after bad and declare bankruptcy. Their stream of payments should be going to a market-priced house. Unfortunately the 20% down payment required by some would be a problem.

]]> By: dWj http://blogs.reuters.com/felix-salmon/2012/07/09/why-you-cant-use-eminent-domain-to-buy-performing-mortgages/comment-page-1/#comment-41505 dWj Mon, 09 Jul 2012 19:09:07 +0000 http://blogs.reuters.com/felix-salmon/?p=15874#comment-41505 I had thought it sounded like a decent idea, partly because I thought he was talking about non-performing loans. Even there, I'd feel better about eminent domain "bailing in" holdouts after a tender offer for 2/3 (or so) of the CDO is accepted voluntarily. If you're trying to solve a collective action problem and avoid holdout problems, there's a case for that; if you're trying to get investors to give up assets for less than they're worth, with or without any collective action problems, this isn't a country where government officials should make that happen for you. I had thought it sounded like a decent idea, partly because I thought he was talking about non-performing loans. Even there, I’d feel better about eminent domain “bailing in” holdouts after a tender offer for 2/3 (or so) of the CDO is accepted voluntarily. If you’re trying to solve a collective action problem and avoid holdout problems, there’s a case for that; if you’re trying to get investors to give up assets for less than they’re worth, with or without any collective action problems, this isn’t a country where government officials should make that happen for you.

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