Oooooooh, THAT's Why!

When something does not make sense, a good rule of thumb is to follow the money and see where it leads. When you find out which person in power is making money, you can then be pretty sure you can stop asking "why?"

So many people have been totally unable to get their banks to move on short sales and flat out cash purchase offers of underwater home mortgages, I have repeatedly wondered why it should be this way. Why would they want to lose money and not take a short sale vs. a frank loss?

Follow the money. I didn't have all the information - the banks aren't losing money on foreclosures, they are making money hand over fist. That right there also explains why they were having robo-signers rubber stamp so many loans into foreclosure: profit. The bank loses money, but it's only a paper loss, and only until you consider that the taxpayer (read: your mom) turns the losses into profit.

Might Have to Change Banks Over This One.

I may actually have to change where I do my banking. We started out with Washington Mutual which was swallowed up by Chase. Chase, as you may have heard, is evil. Oh, you didn't hear that? Then read all about it my friends. And consider what it means that your money is making this business' profits.

Two Doozies In One Post

Naked Capitalism rang my bell twice tonight.

1) They had robosigners, sure. They also had people hired to forge signatures because ONE robosigner on your foreclosure team is just too slow!

2) They didn't just break the rules a little bit. They broke the rules a LOT when it comes to who holds a bunch of mortgages, and some lawyer may be getting rich soon on damages at least 3x the value of the properties treated this way

The post is a bit esoteric, but the main thrust is that the less-ethical banks in the mortgage business were in some cases REALLY unethical.

Reinforcing The Idea

The price of a house in America is on its way back to 1990s levels. This is a good thing, unless you "invest" in houses. I have said this before. My hunch is (arguably) backed up by the news that homes are selling at about the same volume as in 1996.

Great Good News for Your Pocketbook*

(*unless you are a "Real Estate Investor")

For those people more interested in living than investing in houses, good news! The price of a house is falling straight through the levels last seen at the beginning of the most-recent housing bubble! This means your dollar buys more. This is, by the way, a sign of a deflationary economy (in case you missed it).

3 Quick Hits

Not worth their own articles here:

Unemployment hits 11% (or higher)(or 8.8%)(depending on whom you count as unemployed)

Australia's housing bubble looking increasingly almost-ready to burst

This right here is awesome:

So I Says To My Banker, I Says:

Housing prices are looking to retrace all the way back to 1994, and then after that, Historical Average here we come! This was part of a conversation about how, though money is tight around chez VFD, we already have our affairs well-enough in order that a refinance with cash-out at today's interest rates doesn't make sense for us.

Wait, what? 1994? The Economy is recovering VFD!

Right, sure. Go ahead and have a look at this house price trend analysis at Of Two Minds. Then consider the implications of the Obama administrations' real estate negotiations falling apart. Also not helping: how strong is the world's economy, when Portugal and Spain are starting to look bailout-y?

Yes, I am still waiting for the double-dip. I am secretly hoping it turns into a return to historical averages, but don't tell anybody; they'll think I'm a pessimist.

Housing Trifecta from Calculated Risk

Housing prices: Still 15-25% higher than they soon will be

. . . or is that 5-10% high?

In Wells Fargo USA, homeowner foreclose on the bank! (click this one if you only click one)

********

And please remember: some of us have been saying housing prices are still too high for a while now. Count me in with Schiller's 15-25%-still-to-go crowd.

HOORAY! THE ECONOMY HASN'T RECOVERED!!!11!

It is tiresome sometimes, hearing the MSM try to blow enough smoke to reinflate an economy obviously still very deep in a deflationary cycle. Today on at least three occasions (and that's just when I was listening) I heard the radio news on two different channels say how "new home sales were up in November" like it was all kinds of good news. Sure enough, the devil is in the details. Guess what, folks? That's the "we fudged the numbers" number. You want the real number?

A record low of 21,000. They are trumpeting "seasonally-adjusted" numbers being up 5% and the actual sales number is DOWN TO A NEW RECORD LOW. Plus, prices were down!

Now, for those who have been through a decent (read: not in government school) economics class, what do you know when you have low sales and falling prices?

New home prices are not done falling. The housing bubble is still in the process of bursting.

Thanks to Calculated risk for telling the truth. This is only one of several graphs that help illustrate why this was actually a BAD new home sales report. Click the image to see it full size:

No Crisis Here!

When you have hundreds of thousands of new housing units sitting unsold for years, and it was anticipated they would be snapped right up (by people building them?) you have a problem. Half the total value of your national real estate value being at risk of default is also a problem. If you refuse to acknowledge it, it only means more people are caught by surprise when the bubble is acknowledged to have burst.

There's going to be a lot of surprised people in Spain in the next year or two.

Next Step, Victory?

"First they ignore you, then they ridicule you, then they fight you, then you win."

The banksters who swept a trillion dollars of junk onto their books and then tried to foreclose on houses they didn't necessarily own are increasingly turning to the tactic of intimidating and suing people shining a light on the house of cards. Unfortunately for the little guys, the big guys aleeeeegedly in the wrong have deep pockets. Still, as they say, the truth will out eventually.

Meantime, who's got popcorn?

Australia: Party's Over, Mates

I am not surprised, but some people will be. Those people have not been paying attention. Mish calls the housing bubble "over."

Canada is on the backside of the peak, now joined by Australia. Soon, China and various other smaller nations. Then we'll see what a global depression looks like.

Ford Motor Company went bankrupt when they could still get financing from the global market. They trimmed some of the fat and they are on their way to the top. GM and Chrysler went bankrupt when it was too late to get financing. They are zombies now. In this analogy, the USA is Ford, having been first to the crash after Peak Credit struck. China, Australia, and Canada are GM and Chrysler. Let us hope all together that the Freshman Republicans in Congress will trim some fat so that, when everyone else is clearly losing their shirts, pants, and drawers, we will merely lose our shoe laces.

Note: if we can't get the Senate and Congress to have a budget-slashing veto-proof majority (or coalition) in 2012, we will be losing our shirts, pants, and drawers -again- when everyone else joins us in the coming Double Dip.

Here Comes Your Double-Dip.

Search this blog for "double dip" and you'll see I've been predicting one since before the "end of the Great Recession" was declared - because the structural problems in the USA's economy (and the world's) have not been fixed.

Here it comes. This looks an awful lot like the corner being turned. Housing prices are (ahem) "unexpectedly" falling off a cliff, and we're set to close more banks this year than last year (with two months left to go!)

I could be wrong. It could just be the collapse of demand after government artificially inflated prices with a tax credit (a.k.a. Cash For Clunkers round II) but -20% is a low number that will "unexpectedly" a lot of people right back into being scared to spend money . . . then the winter hits and nobody is buying houses, driving prices even lower, causing greater trepidation about the economy. The socialists in the White House can try to blow the bubble again, but this is known in sober economic circles as "kicking the can down the road." It ends up accomplishing nothing good while increasing our debt.

Foreclosures to Begin Falling "Unexpectedly"

It will be hailed as god news: in the coming months home mortgage foreclosure rates will plummet. Look for transient rises in stock market averages on this news, but remember: It's happening because the foreclosure system is very badly broken.

About a month or two after the banksters start getting the legal mess sorted, look for foreclosures to unexpectedly start taking off like a rocket again. Somewhere in the mix, the Too Big To Fail banks may lose a few gozillion dollars. Some of them might actually fail because of this. Unexpectedly.

Socialized Housing Market In America: Here, Now.

"We now have socialized housing. If you disagree, just imagine the consequences if government intervention were withdrawn. Real estate markets would collapse immediately. The government is the market. There is no exit strategy.

"In fact, I doubt that policy makers even understand the problem."

If Uncle were not backing new mortgages, there would be none. To say this is an unhealthy market is very euphemistic. The abandonment of MERS tells us taht the mess in housing is much worse than most analysts thought. There will shortly be a drastic need for people who can go through paperwork and see if it is all straight, or not. If you're out of work and actually trying to find a job, you might bone up on mortgage laws in your state. If your house was in foreclosure, you just may have another +1 year of living there with no mortgage payments.

This is a huge mess. It happened mostly on Obama's watch, but he's guaranteed to be an innocent party. Feel free to blame him, but he couldn't have orchestrated this cluster[deleted] if he had tried.

Read the whole thing. It's long. What, you have something better to do?

Texas Veterans' Widows Now Entitled To Benefits.

From the radio news today: The Texas Veterans' Land Board has announced the spouses (read: wives) of servicemen killed in the GWOT are entitled to benefits just the same as their Husbands would have been, had they not been killed.

Good.

"Unexpectedly" Low Home Sales Number Coming.

Home sales are slow.

"Unexpectedly" will likely be the key word next week unless the surveyed economists suddenly start reading Mish and Calculated Risk this weekend.

Spin: An Example

"Austin homes sales up 24 percent in May"
"New home sales rebound 24% - Jul. 26, 2010"
"New home sales up nearly 24%"
"GTA new home sales up 24 per cent in 2009"

Today I heard this headline and I said "waitaminnit, what about that -34% reported last time the statistic was published!"

Well, my gut was more correct than what passes for news on some local radio stations. Calculated Risk brings the charts:



You have to squint at the full-sized version (click on the chart) to see that this month's report is a huge upswing. It's a record bad month for June and that's the story unless you are a leftist who wants Obama's economy not to look so bad when you report on it. More complete reportage might also include the fact that the huge dip the previous month was due to what people thought would be the end of a government handout.

Well, There Goes China.

Mish says that the housing bubble in China has apparently collapsed. Blame may be (incorrectly) laid at the feet of the Chinese government, which tried to slow the apparent growth in the Chinese economy recently. That wasn't the problem (bubbles always burst, was the problem) but if it helps convince the people in China that the Communists need to be evicted from power, I'm all for it.

Note: this happens just after Canada's housing bubble began to burst, and when the US is slipping into the double-dip we have been waiting for.

The economic news heading into this mid-term election is going to be murderous on incumbents.

Surprised At The Wrong Thing

Even with the US federal government giving away free money from heaven, home sales are falling off. The real estate industry says it is because they are not giving away enough free money. I say it is because the supply of homes is greater than the supply of people willing to strap themselves to huge debts during this period of economic depression. They are surprised that people are not jumping on board because of an effective 4.5% price reduction, during a time when prices are up 2.7%.

To restate: The government is giving a 3% discount on homes, paid by the taxpayers of America, and the People are still buying fewer homes. The real estate agents are surprised that the demand is falling. I am only surprised that demand is falling while the homebuying tax credit is still being given. Note that this is a TERRIBLE sign for the state of the USA's economy. The housing market is set for a mini-crash (a.k.a. a market correction) when the credit expires. If it is allowed to expire. They have renewed it once, and the keynesian clowns are making noise about renewing it again. Note: this helps no one but the real estate agents. The people who should be renters, who buy a home, are strapped for cash. If you don't believe it, drive through a a new housing development and see how many homes have bedsheets (or nothing) hanging in the windows instead of decent curtains. When these people put themselves under a fresh mortgage debt, it doesn't make them participate in the economy more, it makes them go bankrupt faster.

But what do the real estate agents and banksters care about that? Your loan will have been sold off to Fannie or Freddy long before that, and their cut will already be securely in the bank!