Current Housing Indicators |
| CURRENT | PREVIOUS | ||
| Existing Home Sales | 4.49m | ▼ | 4.74m |
| New Home Sales | 309,000 | ▼ | 344,000 |
| Housing Starts | 583,000 | ▲ | 477,000 |
| Building Permits | 547,000 | ▲ | 531,000 |
| HMI | 9 | UNCH | 9 |
| Existing Home Prices | $170,300 | ▼ (annually) | $199,800 |
| New Home Prices | $201,100 | ▼ (annually) | $232,400 |
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Bankruptcy Cramdown Is Back
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Now we've already discussed ad nauseam the main argument against the idea, which is that it would throw into question the value of all mortgages, and therefore raise the cost of a mortgage for everyone else. So far only Citigroup has said it would support such a bill, but supposedly the other big guys, like JPMorgan Chase and Wells Fargo are heavy in the negotiations. The lobby against is strong, and banks, while down, are certainly not out in the beltway bargaining game.
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What's important to recognize now, though, is that we're coming at this idea a bit differently than we have in past go-rounds (Dems tried to get it passed last summer, but no go).
The administration's Making Homes Affordable program is well underway, with banks supposedly doing their all to modify home loans by reducing monthly payments under a certain formula. Let me emphasize that the program is barely a month old, so it may not be fair to judge it on its merits just yet. But here's what I'm hearing:
Banks/servicers are overwhelmed, borrowers are getting the serious run around, investors are mounting new offensives over who will take the losses on these modified loans, and many borrowers who are getting through to the right lines are being turned down. If judges are allowed to modify loans, then investors would likely take all the losses because they'd have no legal recourse against servicers for breaking any contracts. Servicers would be following judicial orders.
The big concern on Wall Street is that the bankruptcy cramdown will keep investors out of the mortgage backed securities game, but frankly, the only ones out there buying loans are Fannie, Freddie and Ginnie, which when you put them all together are you and me.
Ironic, isn't it.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes
