Tag Archives: housing crisis

Here’s an opportunity for the Tea Party: fighting foreclosure fraud by banks!

Summary:   The long recession has brought forth episodes of oppression and lawlessness that cry out for citizen activism.  Another Tea Party.  But we snooze on.  Here’s one such, and reports of the some embers of the Republic which still burn brightly.  At the end are conclusions and links (for those who would like to know more).

Here’s an opportunity for the Tea Party.  Or for a Tea Party.  A large-scale injustice by powerful institutions against middle America, something deserving populist action.  Somewhat like the East India’s Company’s mercantilist policies in colonial America, supported by an unrepresentative government in London.  It looks like mass fraud and perjury in the foreclosing of homes, now supported by a large body of court documents.

 Today’s Tea Party movement was born of opposition to the bank bailouts, so this would be a natural for them.  Except that they’ve been totally co-opted by power elites, so their primary interests are preventing health care reform or lower taxes for the rich.

But there are still a few representatives who actually represent their constituents.  Such as Congressman Alan Grayson (D-FL), who wrote to the Chief Justice of the Florida Supreme Court:

I am disturbed by the increasing reports of predatory ‘foreclosure mills’ in Florida. The New York Times and Mother Jones have both recently reported on the rampant and widespread practices of document fraud and forgery involved in mortgage assignments. My staff has spoken with multiple foreclosure specialists and attorneys in Florida who confirm these reports.

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Rumors of the coming “Slam Dunk” economic stimulus

Summary:  Having missed the last opportunity for legislation to avert the possible double-dip in late 2010 or early 2011, rumors fly that Team Obama plans a massive unconventional stimulus.  I suspect these rumors represent the flotsam and jetsam from serious discussions held in secret.

After the global economy crashed in late 2008, mainstream economists (e.g., Krugman, Delong, Romer) recommended a large fiscal stimulus.  Some (e.g., Krugman) said that Obama would get only one chance.  The resulting legislation fell short of that required to stabilize a decline in many ways like or worse than 1029-30.  Now that stimulus is fading, the US economy visibly slows, and fears of another downturn steadily grow.

The Republicans having decided that “the worse, the better”, nothing can go through Congress without stronger leadership than the Democrats have at present.  What else might Obama and Company do?  Two articles suggest a possible plan of action.

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Housing Update – dynamite to blast us out of our lethargy?

Summary:  Housing statistics are often misrepresented.  Much of the analysis comes from industry shills, and the data during this downturn challenges the long-standing American love of real estate.  Today the Census provides a powerful follow-up to Cutting through the fog to clearly understand the housing crisis.

Today’s bleak news from the Census Department: a stunning and record-high 19 million housing units are vacant (18,943 thousand, 14.4% of all units)!   Most articles about this report only the total “vacant for sale or rent” (one-third of the total vacant), ignoring the important “held off-market” category.

Vacancies are up year-over-year (YoY)  in every category except seasonal homes and vacancies due to recent sale/rental.  The Census shows YoY comparisons to avoid seasonal effects (the data is not seasonally adjusted).

Some fraction — perhaps a large fraction — of this national wealth (capital) eventually will be destroyed.  Vandalized, burned, or deliberately plowed under municipal governments.

A sad ending for an obvious and widely predicted crisis, but inevitable for a nation that allows it’s key public and private institutions to be easily hijacked by special interests for their personal benefit.  That’s true of our wars as much as our housing-lending-WallStreetGambling crises.  Our descendents will ponder with horror the record of a great nation pouring its wealth down the toilet.

Perhaps these events will sharpen our wits and end our lethargy.   Let’s hope so.  The clock is running.

Other posts about the housing crisis

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Cutting through the fog to clearly understand the housing crisis

Summary:  the housing crisis can only dimly be seen through the fog of disinformation.  Much of which comes from the desperate real estate industry.  Their heavily spun news gets eagerly accepted because we love housing — and want to believe the happy days will soon return.

  1. Sales of existing housing measure turnover.  Up or down tells us nothing about the health of the housing market or the direction of housing prices — and means nothing to the economy.  High volume and rising prices shows a bullish market.  High volume and falling prices shows a bear market.
  2. Sales of new homes tells us little.  It weakly forecasts new home construction, which is a moderately important factor for the national economy (but new permits does so better).  Almost every new home built gets sold, eventually.
  3. Rising new home starts makes the housing crisis worse, since some of these get built in areas with excess vacancies — absorbing demand that would otherwise fill older houses.
  4. The number of homes listed for sale is not the “inventory”.  Almost all those sellers will move into another housing unit.   The inventory of homes consists of vacant homes, reported quarterly by the Census as Table Four.  The total commonly reported is vacant for sale and for rent, now 6.4 million units.  This ignores the millions of other vacant units, esp the 7.1 million “held off market.”  A total of 19 million housing units (not just homes) are vacant, as of the first quarter of 2010,.  That’s 14% of the total 131 million units.
  5. Eventually many of 19 million vacant units will be destroyed, either by the owners, the local government, or vandals.  The remainder will take years to be absorbed, although housing shortages will develop in areas with net in-migration.  This will probably break America’s love of real estate speculation — our national get rich quick scheme — an affair that began with the first european settlers.  We’ll have to just work for a living, like everybody else.

Other posts about the housing crisis

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Who should we blame for the mortgage crisis?

Here are questions asked on the FM website this week (some of these were assertions, which I’ve rephrased at questions).  Click on the question to go directly to the answer.

  1. Did FNMA and the other Government Sponsored Enterprises cause the sub-prime mortgage crisis?
  2. Did the Community Reinvestment Act cause the housing crisis?

(1) Did FNMA and the other Government Sponsored Enterprises cause the sub-prime mortgage crisis?

Stuki Moi wrote about the subprime mortgages here.  Did FNMA and the other Government Sponsored Enterprises cause the sub-prime mortgage crisis?

The primary cause of the housing bubble was a series of changes in regulation of the financial system, removing constraints imposed during and after the Depression — changes driven by banks. For a description of these changes in laws and regulations see “The Evolution of the Subprime Mortgage Market” by the St Louis Fed.

Let’s take the analysis one step further. Given the primacy of these structural changes by Congress and regulators, what was the role of the GSE’s as players in the sub-prime part of the bubble? At Calculated Risk, one of the go-to sites for reporting on the housing crisis, Tanta said:

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Updates to posts past on the FM website

Some articles you might find of interest, updates about matters discussed on the FM website.

Contents

  1. About government efforts to control the news
  2. At last, sensible action to mitigate the housing crisis
  3. News about the financial crisis
  4. About the US dollar

(1)  About government efforts to control the news

“Media Criticism, Chicago-Style“, Glenn Reynolds, op-ed in the Wall Street Journal, 5 November 2009

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Has the US financial system been nationalized?

No, but we’ve taken big steps in that direction.  For example, the government owns a large insurance company (AIG).  More importantly, it has nationalized 95% of the single largest component of the financial sector:  home mortgages.

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Investor Type Shares of Mortgage Origination (black = other)

From “Recent Developments in Mortgage Finance“, John Krainer, Federal Reserve Bank of San Francisco Economic Letter, 26 October 2009.  Federal Housing Administration loans are included here in the Ginnie Mae share.

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