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Banks Commence Wholesale Unsolicited Mortgage Forgiveness
http://www.zerohedge.com/article/banks-commence-wholesale-unsolicited-mortgage-forgiveness

[The NYT reports that "big banks are going to borrowers who are not even in default and cutting their debt or easing the mortgage terms, sometimes with no questions asked. Two of the nation’s biggest lenders, JPMorgan Chase and Bank of America, are quietly modifying loans for tens of thousands of borrowers who have not asked for help but whom the banks deem to be at special risk."]

Looks like the JPM and BofA are finally admitting that those ridiculous valuations that they allowed to get past their loan officers are toxic.
They are now reducing debts to the tune of 50% for borrowers that took out ARMS and are now considered a risk for default.

I think that more and more people are walking away from their mortgages.




Job Cuts At Major Banks Intensify
http://www.reuters.com/article/2011/07/04/us-britain-banks-jobs-ifr-idUSTRE7633RT20110704

[Credit Suisse, Goldman Sachs, Lloyds and RBS have been the first to move, slashing hundreds of banker positions in recent days

"Nobody is really prepared for what might come," said one senior capital markets banker at a US firm in New York. "You can't even fill gaps in the business any more because investors expect you to be more disciplined; they are expecting a real focus on the short-term costs."]

Its about time that these guys are cut loose from this giant industry of casino earnings. Somebody has to produce something, for them to bet on or against.





Apple Moving Jobs From China to Buffalo NY?

250K jobs to be created as Apple relocates one of its manufacturing plants from China to Buffalo, NY.

So, it seems that China isn't the cheapest place to put your Labor. I wonder if it was the cost per hour of labor, or the cost of communication and travel that made Apple move the plant. I might actually buy an Apple machine, now that its made here. The QC in China really killed the brand for me.






Moody's finds that 10% of China's GDP is now determined to be Bad Debt
http://www.zerohedge.com/article/mo...ad-debt-claims-china-debt-problem-bigger-stat

Well, this should slow the Chinese Yuan vs. US Dollar spread a bit in the US's favor. How much remains to be seen. Slower devaluation vs. China currency will slow down our local inflation, seeing how 90% of our goods come from there. However, its Moody's, so many might think that its just some Western propaganda. Maybe China's rating agencies will respond with a different outlook.
 

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anybody else find the loan modifications a bit crazy? The banks are at fault for peddling this crap out as investments, but the buyers are definitely at fault for buying a house that they could not afford in the first place.

So basically, these spenders get a nice asset, with a reduction in the amount they owe, while honest Joe who is servicing his loan faithfully gets to bail out this guy.
 

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anybody else find the loan modifications a bit crazy? The banks are at fault for peddling this crap out as investments, but the buyers are definitely at fault for buying a house that they could not afford in the first place.

So basically, these spenders get a nice asset, with a reduction in the amount they owe, while honest Joe who is servicing his loan faithfully gets to bail out this guy.
The banks are simply attempting to head off further "walk aways". Which ARE increasing and by folks who can afford to stay, have employment, are not in dire financial straits.

Most of these homes were not due to folks buying houses they could not afford ... the values simply have imploded. The folks that "bought too much house" are pretty much all gone and foreclosed/short sold/etc by now. These are the folks that CAN afford to stay and make the payments but have figured out it's a losing proposition.

I know a couple of folks who are contemplating walkaways to simply cut their losses ... they can well afford the payment but in their mind why throw good money after bad if they can drive down the street and rent a newer house for less than their mortgage? Why pay who knows how many more years just to level out the value IF then? It's akin to setting fire to the principal portion of their payment each month to say nothing of the interest carrying portion. Nothing like paying interest in order to LOSE money.

Not saying I necessarily agree with that premise but I see their point. If the banks come in and "modify" the mortgage I guess they feel that keeping folks paying their mortgage is better than accepting ANOTHER underwater foreclosed home to add to the inventory.

This is, essentially, maybe FINALLY "Honest Joe" who HAS been paying faithfully all along getting a break.

Tricky waters here, though, they can't modify EVERYONE obviously ......
 

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And on another facet of the current situation I read this interesting take on why the US and Greece are NOT the same or even close. From a site that is pretty much neutral in their writings and articles.

http://seekingalpha.com/article/277790-america-cannot-go-the-way-of-greece

America Cannot Go the Way of Greece

The headline piece on CNN yesterday was an opinion piece by Fareed Zakaria asking whether or not the USA will suffer the same fate as Greece. He writes:

Will America face the same financial disaster that the Greek government faces, with a soaring deficit and debt, markets that have lost faith in it and a downward spiral of budget cuts that then further depress the economy?

It might, but let us understand something really important: It might, but let us understand something really important: America stands in a fundamentally different place than does Greece.

At this point my ears perked up because it seemed like a major mainstream media pundit might be on the verge of a major breakthrough in understanding the US monetary system and how it differs from Europe. But then Zakaria goes into all the reasons that we are not Greece without ever mentioning the absolute most important point.

(Please pardon me while I scream this because it is a message that desperately needs to be heard more loudly than I have previously said it): GREECE IS A CURRENCY USER. THE USA IS A CURRENCY ISSUER. LIKE A HOUSEHOLD, BUSINESS OR STATE GOVERNMENT IN THE USA, THE SPENDING OF GREECE IS ALWAYS CONSTRAINED. THAT MEANS GREECE MUST ALWAYS ACQUIRE FUNDS BEFORE THEY CAN SPEND MONEY. THE USA DOES NO SUCH THING. IN FACT, IN ORDER FOR US CITIZENS TO PAY THEIR TAXES OR BUY US GOVERNMENT BONDS THE US GOVERNMENT MUST FIRST SPEND MONEY INTO EXISTENCE. MORE IMPORTANTLY THOUGH, WHEN THE US GOVERNMENT WANTS TO SPEND MONEY THEY SIMPLY CHANGE NUMBERS IN A COMPUTER SYSTEM (OFTEN REFERRED TO AS “MONEY PRINTING” BY THE MAINSTREAM MEDIA”). THEY DO NOT CALL CHINA AND ASK FOR A LOAN FIRST. THEY DO NOT COUNT TAX RECEIPTS FIRST. THEY SIMPLY CHANGE NUMBERS IN THE COMPUTER SYSTEM. GREECE CAN DO NO SUCH THING.

Now, Zakaria comes close to getting this point right, when he says that the USA has no solvency issue, however, he doesn’t connect the dots accurately. He later goes on to say:

America could face a liquidity problem – that is, it could have difficulty financing its debts and deficits if markets lose faith in it. But, again, let’s be clear: This has not happened yet. In fact, right now the world is lending to America more cheaply than ever before.

THIS IS ABSOLUTELY NOT TRUE. THERE IS NO SUCH THING AS THE US GOVERNMENT NOT BEING ABLE TO “FINANCE” ITS SPENDING. AND THERE IS NO SUCH THING AS MARKETS DECIDING NOT TO “FINANCE” THE SPENDING OF THE USA. BOND MARKETS AND TAX COLLECTION SERVE NO FUNDING FUNCTION IN A NATION IN WHICH THAT CURRENCY ISSUER IS COMPLETELY AUTONOMOUS WITHIN A FLOATING EXCHANGE RATE SYSTEM. THE IDEA THAT THEY ARE FINANCING OPERATIONS ARE MYTHS THAT REMAIN FROM THE DAYS WHEN THE USA WAS ON THE GOLD STANDARD AND TRULY CONSTRAINED IN ITS SPENDING. THAT ERA IS LONG GONE.

Zakaria goes on to conclude with one salient (though misguided point):

If we do end up losing the trust of markets, and it can happen, it will not be because they lost faith in America, in our economy and our society, but because they despaired at the country’s selfish and self-defeating politicians.

On July Fourth weekend, that’s a pretty depressing thought.

Yes, markets could lose faith in America, but not in the way that Zakaria is describing and certainly not in the way they have lost faith in Greece. The only form of insolvency that America could suffer is via hyperinflation and as I have described in detail, there is very little about the current state of the US economy that is consistent with past cases of hyperinflation. Regarding our politicians – well, they’re as much to blame as pundits like Zakaria who push inaccurate messages based on misconceptions about the way our monetary system actually functions.

While the message Zakaria is trying to portray is accurate (that we are different from Greece), the argument is filled with holes that leave the American public doubting whether the USA really is different than Greece. This sort of misconception needs to end as it is leading to misguided policy responses and a destructive widespread sentiment throughout the nation. The fact that this sort of misconception and misunderstanding persists on such a mass level is the truly “depressing thought” this weekend.
 

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So the banks are offering Real Estate Investors (as well as those who just over spent and and took out play money) who leveraged their properties with negative amortization and unaffordable loans a bailout at my expense? Not only that she made a profit on the sale after getting a 50% rebate on her original loan, while I made responsible decisions and see no benefit.

This could be the final straw on the back of responsible folks living within their means. I don't eat at expensive restaurants or eat junk food out, buy housing beyond my means, refi for expensive vacations, expensive toys etc. I refuse to pick up the tab for those who did, I'll just retire from my business and no longer feed the beast.

Even if they were to spread this discounting of principal across the board it will not change the fact that the toilet has already been flushed and there is no stopping the swirl from going down the drain.
 

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Does anyone think maybe the original papers are lost and the banks want a do-over on the loan to get papers straightened out? Some of the documents have been shipped to who-knows-where as the mortgages were packaged and sold.
 

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The funny things about this is that my husband and I were talking about this issue WAY back in 2008. I'm not an economist but to me, revaluing the mortgages to equal their market value seemed like the only way people would be able to sell homes. This is what the banks SHOULD have done with the bailout money given to them by the govt (IMO). Currently our home is over 100K underwater...I don't want to lose my home but I can see the point of people walking away. I mean, realistically, how long will it take to recoup these losses and just break even? Many people are walking away because they see it as a bad business deal and they don't see it tipping back in their favor in the foreseeable future. :(
 

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All this means to me is that things are a lot worse than we know.
Agreed. Except for Apple moving jobs BACK to the US, this all seems pretty grim for JPM and BofA. Maybe they're just trying to appease govt. regulators and officials who desperately want to improve the economy just enough to gain reelection.
 

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sierra skierSo the banks are offering Real Estate Investors (as well as those who just over spent and and took out play money) who leveraged their properties with negative amortization and unaffordable loans a bailout at my expense? Not only that she made a profit on the sale after getting a 50% rebate on her original loan, while I made responsible decisions and see no benefit.
Again, I don't think it's the "neg am, flippers, RE investors, etc" this time. They're pretty much long gone. It's the Regular Jack and Jills who bought their homes say in 2004 with 10% down and a 30 yr fixed who are now 15 to 30 % underwater SIMPLY because of the marketplace. Not to "flip", not to use as a piggy bank, simply to live in. No "fault" to afix here other than "what goes up must come down". However Jack is now talking Jill (or vice versa) into making a "business decision" to walk away from a losing situation. Jill is seeing all the stories about folks living in their homes for 2 plus years without paying a cent with no foreclosure in sight or folks packing up, moving two streets over and renting a newer home for $1000 LESS per month than their old mortgage payment and shedding the debt in the bargain. Jill now thinks that Jack is right and that THEY might be the suckers.

That's what the banks are attempting to head off.

This could be the final straw on the back of responsible folks living within their means. I don't eat at expensive restaurants or eat junk food out, buy housing beyond my means, refi for expensive vacations, expensive toys etc. I refuse to pick up the tab for those who did, I'll just retire from my business and no longer feed the beast.
You are 1,000% correct and dead spot on here ..... it is absolutely a slap in the face to all responsible folks. Again, tricky waters here for the banks to navigate. I'll be P.O.'ed right along with you.

I think this is simply the banks doing everything to limit their loss ... "let's see, if they walk away we get nothing and another albatross house to sell OR if we offer to shave off $20K or non-existent equity they will stay, think they got something for nothing and continue to pay".

Everybody "loves" a "bargain", no?

seawind: All this means to me is that things are a lot worse than we know.
I think you are right. I live in a "good" area so far largely unaffected by the RE massacre other than pricing and we are now seeing more and more "for rent" signs and what would appear to be on first glance "walk-aways" (unmowed lawns, no curtains, obviously empty house, unkempt landscaping, empty or green pools, no activity at all, no lights at night, etc) around.
 

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This sucks. I should have lived the 'American Dream' and bought that 4 bedroom house in a planned community and my big cars, boats, rv's and suv's all on credit. Then get bailed out because it wasn't my fault that the banks lent me easy money. Instead I've been living frugal and within my means and being looked upon as poor. But at least I can say I did it all on my own. Also, how much financial education did it take to see that the market was over-inflated.

Link to Long Haired Country Boy by Charlie Daniels: ('I ain't asking nobody for nothing, if I can't get it on my own')
http://www.youtube.com/watch?feature=player_detailpage&v=XVo22f7tmps
 

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I tend to doubt the kindness of the banks.

Not their ususal shark-like tactics at all.
Sort of shark-like ... "lose" 20k today yet keep payments coming in for the next however many years left on the note or lose $100K in six months with no payments coming in the entire time.

They're attempting to take the lesser of two evils and over time will still make money the first way. Second option is a guaranteed loss.

I just wonder how the IRS is going to view this magnimonious activity ....... seems to me any "forgiveness" of mortgage debt could be construed as income or at the least a "gain".

Still a taxable event I would think.
 

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The funny things about this is that my husband and I were talking about this issue WAY back in 2008. I'm not an economist but to me, revaluing the mortgages to equal their market value seemed like the only way people would be able to sell homes. This is what the banks SHOULD have done with the bailout money given to them by the govt (IMO). Currently our home is over 100K underwater...I don't want to lose my home but I can see the point of people walking away. I mean, realistically, how long will it take to recoup these losses and just break even? Many people are walking away because they see it as a bad business deal and they don't see it tipping back in their favor in the foreseeable future. :(
Call your bank and ask. What's the worst that will happen ... they will tell you no.
 

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Does anyone think maybe the original papers are lost and the banks want a do-over on the loan to get papers straightened out? Some of the documents have been shipped to who-knows-where as the mortgages were packaged and sold.
I'm convinced this is the real reason. The banks have no motivation to suddenly change their stance towards principal reductions except for one: when they realize they don't have a paper trail for an asset they think they own. So they graciously offer the owner a reduction, the owner trips over themselves to accept the offer, and presto, a new set of mortgage documentation and a fresh wet-ink signature on file. Problem solved.

Too bad the owner could have had a 100% principal reduction had they asked the bank for the original documentation in the first place.
 

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Apple is moving a chinese run factory to buffalo and this is going to create steady jobs?

Hard pill to swallow.

Here's what will probably happen. Those employees are going to unionize (it is NY after all) and once that happens, the workers pay is going to go through the roof.

Whats the big deal?

Your iphone, ipad, iwhatever price is going to shoot through the roof to pay for this workers inflated wages, healthcare, benefits that the chinese workers don't get.

When this happens, people will get laid off since Apple isn't selling as much product around the world. I give it a few years, they will move it back to China.

This country is not business friendly. The business industry is over regulated and strong armed by unions. This wont be good for you apple fans when your iphone costs you 1k bucks to buy.
 

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So the banks are working things out so they dont have to write off all those mortgages as a loss and people are thinking this is a good thing?

lmfao.


seems like they are trying to prolong the fact that they are dead ass broke and holding MILLIONS of bunk ass mortgages.
 

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I'm convinced this is the real reason. The banks have no motivation to suddenly change their stance towards principal reductions except for one:
Sure they do. Take Javagirl's situation in that she is 100k underwater (by her estimate). IF she walks away the bank will take at least 18 months under the best time frame currently to get the house to auction or resale. No one including the bank knows exactly what they will get back but let's say Javagirl is correct and she was $100k underwater and the house re-sells for $100k under the mortgage balance. That is a loss of $100k PLUS the cost of the resale/auction PLUS the loss of 18 months interest on the original mortgage to the bank. PLUS the loss of interest payments on the ORIGINAL mortgage amount for the rest of the mortgage term since Javagirl simply walked away. That's IF they "only" lose the $100k -- the truth is they will lose more given the inventory out there.

Now IF they come to Javagirl and offer to reduce the mortgage balance by 30or 40k they keep the house as a paying asset, Javagirl is LESS LIKELY (no guarantee, mind you) to walk away and they ultimately will make up the 30 or 40k over the life of the mortgage. It becomes a write down instead of a loss.

I've asked for my original docs and had them pdf'ed emailed to me within the same day and the note had been sold/transferred/bank mergered three times in two years. A couple of the folks at work were underwater on their homes and as a wild chance I suggested they attempt to catch the lender without docs ... no dice, same thing, they provided them within hours.

I think the stories about "lost" paperwork are a little overblown or limited to a few incompetent lenders.
 
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