Gary Null and Richard Gale - America’s Foreclosure Crisis Leading to Rising Poverty

Last July, approximately 1.5 million homes, 1 in 352 homes, were in a stage of foreclosure, and 14.9 million of all mortgages—31 percent—are underwater. The foreclosure rate right now is on course to overtake 2010’s high of 2.9 million foreclosures among 3.8 million filed. Combining these two figures, and estimating an average of 4 family members per home, we are looking at a future of 65.6 million new victims entering homelessness or on the verge of homelessness.

Economist Dean Baker, co-director at the Center for Economics and Policy Research, identifies only two policies in effect for underwater homeowners: foreclosure or mortgage modification. Both procedures, according Baker, are dismal failures on many scores and continue to fuel loss of homes and the degradation of home values. Mortgage modification, basically written by the banking and mortgage industries, was never meant to be universal. Only a small percentage of homeowners, after numerous hurdles, manage to qualify in the programs.

As a simple example, a home valued at $400K at the time of purchase may be as low as $200K-$300K after mortgage default. At auction, the property may go for $100K and often sold to a person affiliated with the bank. The new owner can either enter the home into the rental market or flip and resell it at $150 to a speculator. Everyone has made money through the transactions except the original owner.

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Jeff Cox - Time Bomb? Banks Pressured to Buy Government Debt

US and European regulators are essentially forcing banks to buy up their own government's debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.

Regulators are allowing banks to escape counting their country's debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.

"Captive bank demand can buy time and can help keep domestic yields low," Lorenzen wrote in an analysis for clients. "However, the distortions that build up over time can sow the seeds of an even bigger crisis, if the time bought isn't used very prudently."

"Specifically," Lorenzen adds, "having banks loaded up with domestic sovereign debt will only increase the domestic fallout if the sovereign ultimately reneges on its obligations."

Read More:

http://www.cnbc.com/id/47633576

Richard (RJ) Eskow - JPMorgan Chase: Break Up The Big Banks Now. Here’s How.

When Jamie Dimon revealed that JPMorgan Chase had lost billions through risky and legally questionable trading, he said the losses would be about $2 billion and maybe more. Apparently it is more - a lot more. People in a position to know are saying the real figure is probably in the $5-7 billion range.

The JPMorgan Chase scandal - and yes, it is a scandal - shows us why we need to break up the big banks as quickly as possible.

But that won't happen unless we can get our hands around the real scope of the problem, which is probably far greater than we're being told. That means cutting through the enveloping shroud of jargon, euphemisms and double talk - "crap," if you will - that keeps us from seeing the situation as it really is.

Here's why we need to do it, and here's how.

Read More:

http://www.nationofchange.org/jpmorgan-chase-break-big-banks-now-here-s-how-1337698419

Dean Baker - Mortgage and Securitization Fraud: Where Is the Task Force?

It was almost four years ago that Federal Reserve Board Chairman Ben Bernanke, Treasury Secretary Henry Paul Paulson, and then New York Fed Bank President Timothy Geithner ran to Congress warning that the end of the world was near. They told members of Congress that the banks were drowning in bad debt and without a massive bailout they would soon be forced into bankruptcy. Congress quickly coughed up the money in the form of $700 billion in TARP loans. The Fed contributed trillions more.

Undoubtedly most of the bad debt was due to stupidity, which does not seem to be in short supply on Wall Street despite the high paychecks. The folks running the major banks somehow could not see the largest asset bubble in the history of the world. The fact that house prices had risen by more than 70 percent above their trend level, with no plausible explanation in the fundamentals of the housing market, did not trouble these high-flyers.

But there was more than just stupidity involved here. There was an epidemic of mortgage fraud that was identified by the FBI as early as 2004. The general story was that the big subprime issuers were pushing their agents to issue as many mortgages as possible, because they knew that they could sell almost any mortgage the next day in the secondary market. As a result, many mortgage agents put down information that they knew to be false, often changing information provided by applicants to allow borrowers to get mortgages for which they were not actually qualified.

Read More:

http://www.opednews.com/articles/Mortgage-and-Securitizatio-by-Dean-Baker-120522-871.html

Insight: Falling home prices drag new buyers under water

More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.

As of December 2011, the latest figures available, 31 percent of the U.S. home loans that were in negative equity - in which the outstanding loan balance exceeds the value of the home - were FHA-insured mortgages, according to CoreLogic.

Many borrowers, particularly since late 2010, thought they were buying at the bottom of a housing market that had already suffered steep declines, but have been caught out by a continued fall in prices in wide swaths of America.

Even for loans taken out in December - less than four months ago and the last month for which data is available - nearly 44,000 borrowers, or about 7.5 percent of the total, now find themselves under water.

Read More:

http://www.reuters.com/article/2012/04/26/us-usa-housing-negative-idUSBRE83P12E20120426

Beware The 'Student Debt Bomb', says New Report

The amount of student borrowing crossed the $100 billion threshold for the first time in 2010 and total outstanding loans exceeded $1 trillion for the first time in 2011, according to a new report. 

The report titled, The Student Loan "Debt Bomb": America's Next Mortgage-Style Economic Crisis? (pdf), was published the National Association of Consumer Bankruptcy Attorneys (NACBA), and paints a frightening economic picture of the world created by skyrocketing tuitions and high interest rates in a job market that continues to offer few jobs to graduates.

"How big is the danger to the US economy?" the report asks. Most worrisome to those on the ground during the 'mortgage crisis' that sent the world economy into a tailspin in 2008, is that the atmosphere and metrics around the student debt crisis feels much the same.

"As with the mortgage foreclosure crisis, the staggering amounts owed on student loans also will have repercussions for the broader economy," reads the report. "Just as the housing bubble created a mortgage debt “overhang” that absorbs the income of consumers and renders them unable to afford to engage in the consumer spending that sustains a growing economy, so too are student loans beginning to have the same effect, which will be a drag on the economy for the foreseeable future." And continues:

Read More:

http://www.commondreams.org/headline/2012/03/09?print

Watch Trailer to documentary:  Default: The Student Loan Documentary  http://vimeo.com/2618035

Bank of America: Maximizing Profits Off the Backs of Struggling Homeowners

A complaint unsealed in court yesterday from a whistleblower alleges that Bank of America defrauded the federal Home Affordable Modification Program (HAMP), designed to help homeowners facing foreclosure, by preventing "scores of eligible homeowners" from receiving loan modifications in order to prevent losses while at the same time receiving benefits for being part of the HAMP program.

Reuters reports today: 

The complaint unsealed Wednesday was filed by whistleblower Gregory Mackler, a Colorado resident who said he worked alongside Bank of America executives while an employee at Urban Lending Solutions, a company to which Bank of America contracted some of its HAMP work.

Read More:

http://www.commondreams.org/headline/2012/03/08-2

Mortgage Settlement 'Whitewash': US Taxpayers Will Pay for Big Bank Settlement

UPDATE: Reports in the Financial Times and elsewhere say that US taxpayers may be on the hook to bail out big banks -- again.

Neil Barofsky, the former special inspector-general of the TARP, said this morning that the recently approved mortgage deal between the nation's largest banks was "supposed to be a settlement for this remarkable fraud that the banks and the servicers have created across the country" is, in fact, a "political whitewash" because instead of the banks facing punitive action it "is actually going to involve money flowing from the taxpayer into the banks." And, straight to the point, he said, "We're bailing them out again!"

Barofsky, appearing on Marketplace radio this morning in an interview with Adrien Hill, said of the deal:

Read More:

http://www.commondreams.org/headline/2012/02/17-0

Foreclosure Nation: 2012 Could Bring Wave of Foreclosures

A report today from foreclosure listing firm RealtyTrac Inc. shows that 2011 showed the lowest number of homes entering the foreclosure in four years.

As Reuters reports:

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, slid by 34 percent in 2011, the lowest level since 2007, just as the housing market was starting to crumble. RealtyTrac said there were filings on 1,887,777 homes last year.

Yet 2012 does not present a rosy scenario for many homeowners, as the Associated Press reports:

The listing firm anticipates that 2012's foreclosure rate will be higher than last year's, but will remain below the peak of 2010.

Read More:

http://www.commondreams.org/headline/2012/01/12-1

Mike Whitney - Foreclosure Crisis Goes Global

Even though housing is in terrible shape in the US, it’s not nearly as bad as Ireland. Irish real estate is in freefall. Prices have plunged 60 percent across the country and 65 percent in Dublin. Austerity measures have sent unemployment soaring (18 percent) and housing into the doldrums. According to the Guardian, prices dipped 8 percent in the last quarter alone, “the largest ever quarterly fall in house prices in Ireland.” (“Ireland’s house prices at lowest levels since 2000″, The Guardian)

And things aren’t so hot in neighboring Spain either where housing prices slumped 7.4 percent in the third quarter year-over-year, “the fourteenth straight quarter of falls.” (Reuters) The wreckage from Spain’s housing bubble is visible everywhere, from the dysfunctional, underwater banking system, to the skyhigh unemployment (22 percent), to the droopy state revenues. The country’s dreary finances have led to the ousting of Prime Minister José Luis Rodríguez Zapatero and his Socialist government to be replaced by rightwing hardliner Mariano Rajoy. (Rajoy promises to slash government spending wherever possible, even if it means rolling back popular social programs.) Here’s more on Spains’ housing bubble from Reuters:

Read More:

http://www.counterpunch.org/2012/01/06/foreclosure-crisis-goes-global/