Countrywide Bank CEO Charged With Fraud – Mazilo’s Emails Reveal Complete Understanding Of Pending Mortgage Crisis & Its Causes

The following emails from Countrywide Bank CEO Angelo Mazilo, released as part of a report concerning the charges brought by the SEC against Mazilo, clearly show that Mazilo understood the causes of the current mortgage crisis before it occurred ……

Excerpts of E-Mails From Angelo Mozilo

Sept. 26, 2006 – following up a meeting with Sambol the previous day about the Pay-Option ARM loan portfolio:

We have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet. The only history we can look to is that of World Savings however their portfolio was fundamentally different than ours in that their focus was equity and our focus is FICO (Credit Score). In my judgement [sic], as a long time lender, I would always trade off FICO for equity. The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales.

… pay options are currently mispriced in the secondary market, and that spread could disappear quickly if there is an foreseen [sic] headline event such as another lender getting into deep trouble with this product or
because of negative investor occurance [sic].

“timing is right” … to … “sell all newly originated pay options and beginrolling off the bank balance sheet, in an orderly manner, pay optionscurrently in their port[folio].”

April 17, 2006 – to Sambol concerning Countrywide’s subprime 80/20 loans:

In all my years in the business I have never seen a more toxic prduct [sic].

It’s not only subordinated to the first, but the first is subprime. Inaddition, the FICOs are below 600, below 500 and some below 400[.]

With real estate values coming down…the product will become increasingly worse. There has [sic] to be major changes in this program,including substantial increases in the minimum FICO. … Whether you consider the business milk or not, I am prepared to go without milk irrespective of the consequences to our production.

 

April 13, 2006 to Sambol, Sieracki, and others to address issues relating to the 100 percent subprime second business in light of the losses associated with the HSBC buyback:

Loans had been originated … “through our channels with disregard for process[and] compliance with guidelines.”

He “personally observed a serious lack of compliance within our origination system as it relates to documentation and generally a deterioration in the quality of loans originated versus the pricing of those loan [sic].”

“[i]n my conversations with Sambol he calls the 100% sub prime seconds as the ‘milk’ of the business. Frankly, I consider that product line to be the poison of ours.”

On March 28, 2006 – to Sambol and others:

Directed them to implement a series of corrective measures to “avoid the errors of both judgment and protocol that have led to the issues that we face today caused by the buybacks mandated by HSBC.” …

… The 100% loan-to-value subprime product is “the most dangerous product in existence and there can be nothing more toxic and therefore requires that no deviation from guidelines be permitted irrespective of the
circumstances.”

McAuleys World: At the insistence of Fannie Mae and The Federal Reserve these “toxic loans” continued for another 2 years after these emails, right up until the collapse of the financial system last fall. These very same loan products have been repackaged, renamed and continue to be marketed today.

You might note that at the same point in time that Mazilo prepared this email, Senator Chris Dodd was “accepting” “special treatment” in his loan processing with Countrywide Bank. Senator Dodd was one of a select few to belong to a group called the “FOAs” or “Friends Of Angelo”, referring, of course, to Angelo Mazilo.   

http://www.foxbusiness.com/story/markets/countrywide-ceo-mozilo-charged-fraud/    

For more info on the “Friends of Angelo” watch this NBC report:

 If you want to understand the history of how the Federal Government “mandated” the creation of the “toxic mortgage products” discussed in Mazilo’s emails read these articles:

1) From The Boston Globe: http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

2). Article by John Lott, Senior Research Scientist at the University of Maryland. http://johnrlott.tripod.com/op-eds/FoxNewsMortgagesReg091808.html

Obama puts critics of financial overhaul on notice! Just more of the same old ****. Video of “Regulators reporting to Congress”

Have you read this …….

WASHINGTON – President Barack Obama said Saturday that current financial rules exploit consumers and he put critics of his proposed overhaul on notice: “While I’m not spoiling for a fight, I’m ready for one.”

Obama used his weekly radio and Internet address to defend his recent proposal, which is intended to prevent a repeat of the breakdown that has sent the U.S. economy reeling. But such major changes face a fight in Congress and opposition from some leaders in the banking and insurance industries.

In the address, Obama focused on a consumer watchdog office that he wants to set up.

“This is essential,” Obama said. “For this crisis may have started on Wall Street. But its impacts have been felt by ordinary Americans who rely on credit cards, home loans and other financial instruments. http://news.yahoo.com/s/ap/20090620/ap_on_go_pr_wh/us_obama_consumers

It is generally agreed that the current financial crisis started in the mortgage industry and the primary entities responsible for the collapse were Fannie Mae and the Federal Reserve. Yes, the same Federal Reserve Obama wants to give more power too.

Do you know how many “Federal Regualtors” were employed to “over see” Fannie Mae in the last deacade?  Two hundred, full time regulators. Were they asleep at the wheel?  Heck No! They did their jobs and then were ignored by Congress when they reported the misdeeds they uncovered.

The video below is a sample of one group of regulators reporting to Congress on this very issue ……

Franklyn Raines – CEO of Fannie Mae, later entered into a plea deal on charges of cooking the book …..

Note that a question was asked in the video, “why should Congress trust OFEO?” (the Regulatory Agency) who both discovered and alerted Congress to the misdeeds  – The real question is can the people trust “politically motivated” Polticians who ignore the Regualtors who are already in place.  

What did the Congress suggest – changes in Fannie Mae?  Heck No. Listen to Congresswoman Maxine Waters – the Regulators were “to blame” for trying to stop Fannie Mae – yep tose are Rep. Waters word the Regulators were to balme for trying to Fannie from starting this crisis. Presented with evidence of the problem Barney Frank denies a problem existed – listen to his words above and listen to him later try to deny these very same words below …

Take this article, from the Boston Globe, as a uniquely honest example of reporting on the topic ….

 The Boston Globe

Frank’s fingerprints are all over the financial fiasco

 

‘THE PRIVATE SECTOR got us into this mess. The government has to get us out of it.”

That’s Barney Frank’s story, and he’s sticking to it. As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by “bad decisions that were made by people in the private sector,” Frank said; the country is in dire straits today “thanks to a conservative philosophy that says the market knows best.” And that philosophy goes “back to Ronald Reagan, when at his inauguration he said, ‘Government is not the answer to our problems; government is the problem.’ “

In fact, that isn’t what Reagan said. His actual words were: “In this present crisis, government is not the solution to our problem; government is the problem.” Were he president today, he would be saying much the same thing.

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits — many of whom have been learning lately just how pitiless the private sector’s discipline can be — they weren’t the ones who “got us into this mess.” Barney Frank’s talking points notwithstanding, mortgage lenders didn’t wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so – or else.

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

For a history of the Federal Reserves’ active participation and the Feds “active regulatory activity” that started this mess see this article: http://johnrlott.tripod.com/op-eds/FoxNewsMortgagesReg091808.html

The last thing America needs is more regulation from the same people who “regulated” the colapse into being in the first place. Amercia needs to get the Politican out of our wallets and 401ks and let America get back to work. Higher taxes and additional, corrupt regulation, won’t create more jobs. It will mean a weaker economy.

Additional Regulation won’t work if Congress can ignore the Regulators who are already in place …… while they take cash from the regulated ……..

and using their offices to work sweetheart deals (Senator Chris Dodd and Countrywide Bank) with those being regulated ….

Before you respond that Fox News is biased – check out this report from NBC …

Angello Mazillo, CEO of Countrywide has been charged with fraud and insider trading …..

http://money.aol.com/article/sec-charging-ex-countrywide-ceo-mozilo/481893?bId=MoneyBoard&tId=mfida481893&bpId=%2F&sort=3&pg=4

We don’t need more regulations that the crooked Politicians refuse to enforce …. We need fewer crooked Politicians.

Obama’s Economic Programs Bog Down – Hollow Political Slogans Leave Empty Political Promises

The Obama Presdiency is now 6 months old – his election took place 7 months ago. He is 1/8 of the way through his presdeincy. Time for his Freshman Year mid-term grades ………..  

THE STIMULUS PACKAGE AND UNEMPLOYMENT 

Obama promises more than 600,000 stimulus jobs

WASHINGTON – President Barack Obama is promising to deliver more than 600,000 jobs through his $787 billion stimulus plan this summer, repackaging a pledge the administration made weeks earlier as the economy continues to lose hundreds of thousands of jobs each month. (THE LARGEST SPENDING PROPOSAL IN THE HISTORY OF THE WORLD – COSTING EVERY AMERICAN, MAN, WOMAN AND CHILD, THOUSANDS OF DOLLARS EACH. Even if  the Obama promise is kept it will cost the American Taxpayer $1.3 million dollars for every job created – WOW – what a success – a part time, make work, Government C ontsrtuction job that will pay a worker $20,000, true a much needed $20,000, but at what cost ! $1.3 Million per job? For those that doubt the math 787 Billion is written this way $787,000,000,000,. Divide that by the 600,000 and you get $1,331,000 per job.

Obama’s promise to create large numbers of jobs — a vow that Vice President Joe Biden made last month — quickly drew criticism from oponents and economists who have argued his stimulus plan thus far hasn’t delivered.

“I think these estimates are overly optimistic,” said Arpitha Bykere, a senior analyst with RGE Monitor.

The government reported last week that the number of unemployed continues to rise; the unemployment rate now sits at 9.4 percent, the highest in more than 25 years. Hundreds of thousands of Americans continue to lose jobs each month.

Just how much of an impact Obama’s recovery program had on the pace of job losses is up for debate. Obama has claimed as many as 150,000 jobs saved or created by his stimulus plan so far, even as government reports have shown the economy has lost more than 1.6 million jobs since Congress approved funding for the program in February. ( 3 million jobs have been lost since Obama was elected – more jobs have been lost since Obama’s election than during the enitire 8 years of the Bush presidency)

Republicans remain critical of the stimulus spending, slamming it as a big government program that ultimately will do little for recovery. With only a fraction of the federal money actually spent thus far, it’s premature to give the stimulus plan credit for economic trends, congressional Republicans said last week.

“I think the economy is just as likely to begin to recover on its own, wholly aside from this, before much of this has an impact. So I’m very skeptical that this massive sort of spending binge that we’ve engaged in is going to have much of an impact,” said Senate Minority Leader Mitch McConnell, R-Ky, in March 2009.

Obama initially offered his stimulus plan as a way to put people back to work, a promise that 3.5 million jobs would be saved or created. The administration’s predictions that unemployment would rise no higher than 8 percent already have been shattered. Unemployment stands at 9.4% and is rising. The Obama Adminstration’s projection at a worse case secnario for unemployment, 8.0%, has been crushed. Unemployment is already 25% percent higher and is rising.  http://finance.yahoo.com/news/Obama-repackages-stimulus-apf-15470798.html

OBAMA’S MORTGAGE ASSISTANCE PROGRAM 

NEW YORK (AP) — The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

That’s the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won’t be able to afford.

Yields on 10-year Treasury notes, a benchmark for home mortgages and other consumers loans, jumped from 2.5 percent in March around the time of the Fed announcement to as high as 3.7 percent in recent days. 30-year mortgage rates jumped more than a quarter-point this week to 5.29 percent, the highest level since December, Freddie Mac reported.

“If the meltdown continues in the bond market, then mortgage yields will soon be at levels that choke off refinancing activity,” said economist Ed Yardeni, who runs his own investment firm. “Even worse, they could abort any necessary recovery in home sales and prices.”

One explanation is that bond investors anticipate a greater supply of government debt being sold to fund federal spending. Investors are also increasingly fearful that the trillions of dollars the government will need to borrow in the coming years to finance the various stimulus programs will lead to a new bout of inflation.

The White House estimates that the government will rack up an unprecedented $1.8 trillion budget deficit this year — more than four times last year’s all-time high. (THAT IS RIGHT THE OBAMA WHITEHOUSE ADMITS THEY HAVE INCREASED DEFICIT SPENDING 400% MORE THAN IN THE BUSH WHITE HOUSE)

“The bond market is calling the Federal Reserve out,” said Mike Larson, a real estate analyst at Weiss Research Inc. in Jupiter, Fla. “Investors are saying that the Fed can’t just print money out of thin air to finance a massive deficit.”

Fed Chairman Ben Bernanke acknowledged Wednesday in congressional testimony that large budget deficits could threaten financial stability by eventually eroding investor confidence and endangering the economy’s prospects for long-term health.

For a brief period of a few weeks sales of new and existing homes began to trend higher. Mortgage refinancings also jumped, allowing borrowers to lock in lower rates. Fee income from this activity helped lift profits at many battered banks and gave consumers more disposable income to spend, which helped lift their confidence about the economy’s prospects. All that was good for the nation’s businesses.But now, surging mortgage rates are threatening to undermine all that. Seventy percent of refinancing activity could be knocked out as rates close in on 5.5 percent, according to Mark Hanson, a managing director at the independent research firm Field Check Group of Menlo Park, Calif. (At the time of this posting rates have already climbed to 5.79 percent for those with “excellant credit”). Also, many homeowners who wanted to refinance didn’t lock in the super-low rates in April when the refi boom took off. “Half the deals in the pipeline are dead,” Hanson said. “People were applying to refinance to improve their situation, but now they are seeing it won’t be much improved.” All this means that even though mortgage rates are still low by historical standards, many of the trends that seem to be pointing to economic recovery in recent months could be undone fast.

http://finance.yahoo.com/news/ALL-BUSINESS-Bondmarket-rout-apf-15457158.html

12 percent are behind on mortgage or in foreclosure

AP

NEW YORK – A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. And the wave of foreclosures isn’t expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure. There were no signs of improvement.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis.

Mortgage rates above 5 pct for 1st time in 3 months

http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_foreclosures

In February Obama stood before a crowd of 50,000 in Phoneix Arizona and outlined his program – now, 4 months later here are rthe facts:

Under a program announced in February by the Obama administration, the government is to spend $75 billion on incentives for mortgage servicing companies that reduce payments for troubled homeowners. [The Obama Administration claimed the program would help 4 million home owners]. But three months after the program was announced, a Treasury spokeswoman, Jenni Engebretsen, estimated the number of loans that have been modified at “more than 10,000 but fewer than 55,000.” [Why can’t the Government be more exact than this – a 45,000 mortgage gap between 10,000 and 55,000. Where is the $75 Billion in Taxpayer money going? If the “true number” of modified mortagges is 10,000,  the Obama program cost taxpayers $7.5 million per mortgage. Who is kidding who? Someone is robbing the US Taxpayer blind, fewer people have been helped NATIONALLY than attented the speech in Phoenix] 

In the first two months of the year alone, another 313,000 mortgages landed in foreclosure or became delinquent at least 90 days, according to First American CoreLogic.

“I don’t think there’s any chance of government measures making more than a small dent,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital.

Last year, foreclosures expanded sharply as the economy shed an average of 256,000 jobs each month. Since then, the job market has deteriorated further, with an average of 665,000 jobs vanishing each month.

http://www.nytimes.com/2009/05/25/business/economy/25foreclose.html?pagewanted=1&sq=May%2025,%202009%

OBAMA’S ENERGY PROGRAM.

Candidiate Obama and the Democrats, including Nanacy Pelosi, promised the American Publci to prusue and “all avalaible means” energy policy when it came to making America Independent. The promises included and increase in the exploration and development of domestic America’s gas and oil reserves. Democrats joinmed Republicans and echoed the chant or working Americans across this Country in a chant of “Drill Baby Drill”. Since agining office Obama and Speaker of the House Pelosi have blocked this development at every turn. Did you know that American Oil Companies offered to pay the State of California $45 Billion Dollars a year to develop off shore oil resources and the democrats refused. $45 Billion dollars, enough money to balance the budget of the State of California at the time. What have we received instead, empty promises. The price of a barrel of oil has topped $70 a barrel, thanks mainly to the activities of oil speculators, not to a sudden surge in the US economy, and gasoline prices are headed to $4.50 a gallon, manipulated by an Administration that wants artifically high gasoline prices to support the economic agenda of its finanical backers in the “Green Inustries”. How will $5.00 a gallon gasoline help the unemployed?

OBAMA ON FOREIGN POLICY

North Korea, Iran, the U.S. as apology central

Yes We Can, Yes We Can, Yes We Can ……… The question is “yes you can” what?

Obama’s First Term Freshman Grades: What do you think? Should they be higher or lower than what he earned at Columbia in his Freshman Year?  What were Obama’s grades at Columbia? No one knows, he won’t release the transcripts.

Obama Administration Continues to Waste 100’s of Billions In US Taxpayer Funds

Time Magazine recently pointed out that the new “GM” or “Government Motors” will employ approximately 40,000 individuals, down from the historical high of 600,000 workers it employed less than a generation ago. Through mismanagement, unreasonable unions and improper Government intervention, 14 out of every 15 jobs at GM have been lost. http://www.time.com/time/business/article/0,8599,1901345,00.html?xid=rss-biztech-yahoo  https://mcauleysworld.wordpress.com/2009/05/28/with-14-out-of-5-gm-jobs-gone-why-is-the-government-spending-100s-of-billions-of-taxpayor-dollars-on-a-company-that-will-employ-less-than-40000/

So, where does the waste come in? The Government continues to spend taxpayer dollars recklessly. Universally, the “price tag” for the Government’s purchase of GM has been estimated (best case scenario) at 100’s of billions of dollars. You might ask, “What is the current market value of GM”?

Clearly, the Obama Administration has not asked this question. Today, May 28, 2009, GM has a “market cap” or “market value” of something less than $700 Million dollars. GM is not worth even $1 Billion Dollars, let alone the $100’s of billions being committed to this “political folly”. With this type of business acumen the entire endeavor is doomed to failure. A “Market Cap” is the “total value” of all of a Companies outstanding stock. At the close of business on May 28, 2009, the total value or “Market Cap” of all GM stock was $683 Million dollars, something  just over 1/2 a Billion Dollars.

So why, exactly, is the Obama Administration paying 200% of GM’s current value to take over the failing company? I have no idea and Congress hasn’t bothered to ask. I can tell you this, no business consortium, no group of private investors would ever embark on such a course of action. No investor group would pay that amount for GM. To do so would result in a Bernie Madoff type “perp walk”. GM’s stock is currently trading at $1.12 per share, yet the Obama Administration is “investing” upwards of $150 a share in taxpayer money in this boondoggle. Only a politician woudl refer to paying 130 times the true value of anything an “investment”.  

You may have heard of Toyota Motor Car Company, a major rival of GM and the most successful car company in the world. Toyota’s “Market Cap” at the close of business on May 28th, 2009, was $137 Billion Dollars. http://finance.aol.com/quotes/toyota-motor-corporation/tm/nys

The Obama Administration is having American Taxpayers pay a “Toyota Price” for  a “GM value”. This is beyond the ridicuolus, it is criminal. The Obama Administration is paying for Toyota and getting GM in return.  

No wonder the Country is in such a mess.

GM To Announce 14 Plant Closures, Monday June 1, 2009

GM to announce 14 plant closures MondayAP

DETROIT – The news no one wants to hear is coming Monday morning to General Motors Corp. factories across the U.S.

The troubled auto giant will identify 14 factories it will close by the end of 2010 as part of its restructuring plan, according to a person briefed on the plans.

The announcement could coincide with GM’s all-but-inevitable bankruptcy protection filing, expected to come by Monday.

Factory-level union leaders have not yet been told which plants will be shuttered, but four vehicle assembly plants will be among those to be closed, along with parts stamping, engine and transmission factories, said the person, who asked not to be identified because the plans have not been made public.

GM has said it plans to close 16 more U.S. factories by the end of next year, shedding 21,000 jobs. Two have already have been announced — an engine plant in Massena, N.Y., and a parts stamping plant near Grand Rapids, Mich.

United Auto Workers union officials in Detroit have been telling plant-level officials that the company will make the announcement rather than the union, according to the person.

GM spokeswoman Sherri Childers Arb would not comment on Thursday.

http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_gm_plant_closures

Government Update: 1 Out Of 8 Mortgage Holders Are Now Delinquent Or Are In Foreclosure

12 percent are behind on mortgage or in foreclosure

AP

NEW YORK – A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. And the wave of foreclosures isn’t expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure. There were no signs of improvement.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_foreclosures

Obama’s Economic Recovery Program Is Failing – New Wave of Mortgage Foreclosures, Unemployment Continues To Rise, Automakers Prepare to Shut Plants – Layoff 10’s Of Thousands

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. [Remember, the Obama Administration predicted a maximum unemployment rate of 8.9 in its projections of economic recovery- McAuley’s World]

That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis. [Now that we have wasted 100’s of Billions in tax payer dollars helping the reckless and those not qualified to be homeowners, where is the assistance for those who played by the rules? Mc Auley’s World].

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

Under a program announced in February by the Obama administration, the government is to spend $75 billion on incentives for mortgage servicing companies that reduce payments for troubled homeowners. [The Obama Administration claimed the program would help 4 million home owners]. But three months after the program was announced, a Treasury spokeswoman, Jenni Engebretsen, estimated the number of loans that have been modified at “more than 10,000 but fewer than 55,000.” [Why can’t the Government be more exact than this – a 45,000 mortgage gap between 10,000 and 55,000. Where is the $75 Billion in Taxpayer money going? If the “true number” of modified mortagges is 10,000,  the Obama program cost taxpayers $7.5 million per mortgage. Who is kidding who? Someone is robbing the US Taxpayer blind] 

In the first two months of the year alone, another 313,000 mortgages landed in foreclosure or became delinquent at least 90 days, according to First American CoreLogic.

“I don’t think there’s any chance of government measures making more than a small dent,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital.

Last year, foreclosures expanded sharply as the economy shed an average of 256,000 jobs each month. Since then, the job market has deteriorated further, with an average of 665,000 jobs vanishing each month.

http://www.nytimes.com/2009/05/25/business/economy/25foreclose.html?pagewanted=1&sq=May%2025,%202009%20Mortgage%20foreclosures%20&st=cse&scp=1

GM announces an additional 47,000 job cuts amid palns to shut 5 US auto plants.   (February 2009). http://www.wilx.com/home/headlines/39750882.html

U.S. to steer GM toward bankruptcy … The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and re-emerge as a global competitor, sources familiar with the discussions told the Washington Post. http://scoop.chrysler.com/2009/05/22/us-to-steer-gm-toward-bankruptcy/

Chrysler confirms 6 additional plant closings – May 2009. http://scoop.chrysler.com/2009/05/06/chrysler-issues-plant-closing-statement/ 

GM plans to shut 14 more auto plants, reduce employees by 20,000.  (April 2009) Gm announces planned cuts did not go far enopugh, additional cuts planned. http://money.cnn.com/2009/04/17/news/companies/gm_jobs/?postversion=2009041712

From the WSJ: Mortgage Defaults, Delinquencies Rise

… A spokesman for the FHA said 7.5% of FHA loans were “seriously delinquent” at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.

The FHA’s share of the U.S. mortgage market soared to nearly a third of loans originated in last year’s fourth quarter from about 2% in 2006 as a whole, according to Inside Mortgage Finance, a trade publication. That is increasing the risk to taxpayers if the FHA’s reserves prove inadequate to cover default losses. http://www.calculatedriskblog.com/2009/03/fha-mortgage-defaults-increase.html

 

 

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