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Topic: U.S. Housing Recovery Gaining Momentum
Username: Revelation
Posted 2012-09-19 09:11:21 and read 2416 times.

Are you seeing this in your area? Seems like the "bottom feeder" prices are gone in my area.

Not particularly good timing for the Romney campaign, but I'm sure they're happy about it too, no?

Quote:

A jump in sales of previously occupied homes and further gains in home construction suggest the U.S. housing recovery is gaining momentum.

Sales of previously occupied homes rose 7.8 percent in August from July to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said Wednesday. That's the highest level since May 2010, when sales were aided by a federal home-buying tax credit.

At the same time, builders broke ground on 2.3 percent more homes and apartments in August than July. The Commerce Department said the annual rate of construction rose to a seasonally adjusted 750,000. The increase was driven the best rate of single-family home construction since April 2010.

The pair of reports comes amid other signs of steady progress in the housing market after years of stagnation. New-home sales are up, builder confidence is at its highest level in more than six years and increases in home prices appear to be sustainable.

Ref: http://news.yahoo.com/us-home-sales-...e-may-2010-140225603--finance.html

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: comorin
Posted 2012-09-19 09:47:05 and read 2396 times.

Quoting Revelation (Thread starter):
but I'm sure they're happy about it too, no?

Altruism has no place in politics...

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: zckls04
Posted 2012-09-19 09:55:09 and read 2392 times.

I bought in March, and the market was dead. Hardly anything was coming on the market and those on the market weren't selling. Now everything has picked up, with most houses for sale in my area getting multiple offers above asking price. Very glad I bought when I did as I'd no longer be able to afford the place I'm in.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: comorin
Posted 2012-09-19 10:01:43 and read 2385 times.

Consequence : Alas, another nail in the coffin for a certain contender....

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Klaus
Posted 2012-09-19 10:12:53 and read 2380 times.

Quoting comorin (Reply 1):
Altruism has no place in politics...

...unless you're capable of distinuishing between campaign tactics and substantial policies.

Assumed you even have any actual policies beyond populist talk on the campaign trail.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: comorin
Posted 2012-09-19 10:32:06 and read 2370 times.

Quoting Klaus (Reply 4):

You know, Klaus, in the world of business you set a goal and do anything needed to get there. This includes going on long lunches with people you detest, or playing golf with riff-raff. So if you are a businessman whose only goal is to become CEO of a country, you do the needful to get there. If you are a turnaround specialist, you are obviously going to view the US as a scalpel-worthy sick enterprise. And you don't tell anyone what you plan to do.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Klaus
Posted 2012-09-19 11:01:16 and read 2358 times.

Quoting comorin (Reply 5):
You know, Klaus, in the world of business you set a goal and do anything needed to get there.

Being the head of a national government is in several critical ways fundamentally different from being the CEO of a corporation.

That Romney clearly has no clue about that distinction is part of why he has effectively destroyed his campaign, and I'm not just talking about his infamous (and totally false) "47%" remark.

Hilarious footnote: In one of his primary debates Romney had quipped to Gingrich that Gingrich's plan to eliminate the capital gains tax would effectively have meant that he, Romney, would not have paid any tax in recent years.

Translation: Romney has apparently by his own statement not paid any income tax himself – so he is apparently himself part of the group which he so harshly dismissed. Which would be an excellent reason why he's steadfastly refusing to present his tax returns. Together with other statements there are various peculiar discrepancies in this entire complex.

If his apparent total ignorance about social matters was the only thing it would be one thing – but defense, foreign policy and other fields have shown him completely and utterly clueless as well. All issues which a CEO doesn't have to deal with, but which are crucial to being President of the USA.

The more I learn about Romney, the more I'm shaking my head.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: PPVRA
Posted 2012-09-19 11:22:45 and read 2335 times.

Quoting Revelation (Thread starter):
Not particularly good timing for the Romney campaign, but I'm sure they're happy about it too, no?

I don't like Romney. In fact, I think it may be better if Obama wins again. But, eventually housing was gonna hit bottom and this does not mean economic troubles are over anyway, so I don't think this is too much a concern for him.

Quoting Klaus (Reply 6):
Hilarious footnote: In one of his primary debates Romney had quipped to Gingrich that Gingrich's plan to eliminate the capital gains tax would effectively have meant that he, Romney, would not have paid any tax in recent years.

Translation: Romney has apparently by his own statement not paid any income tax himself – so he is apparently himself part of the group which he so harshly dismissed. Which would be an excellent reason why he's steadfastly refusing to present his tax returns. Together with other statements there are various peculiar discrepancies in this entire complex.

Your use of the word "himself" makes your statement technically accurate. But if Romney's companies pay income taxes then that's substantively the same as Romney paying income taxes.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: PHX787
Posted 2012-09-19 11:27:03 and read 2331 times.

I checked some statistics released recently by a certain bank (I won't name)

But all of the increases in housing sales, etc, were occurring in Red States, like Texas and Arizona.


Your move, blue states still in enormous debt and with myriads of issues.
When y'all decide to come to AZ and visit, leave your 1%er politics and your "progress" behind in Cali because we have our own progress!  

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Revelation
Posted 2012-09-19 11:27:31 and read 2331 times.

Quoting zckls04 (Reply 2):

I bought in March, and the market was dead. Hardly anything was coming on the market and those on the market weren't selling. Now everything has picked up, with most houses for sale in my area getting multiple offers above asking price. Very glad I bought when I did as I'd no longer be able to afford the place I'm in.

It's amazing how fast this stuff can turn around.

Note that the report says "builders broke ground on 2.3 percent more homes and apartments in August than July" so it seems they are firing up to fill demand.

It'd be very good if the housing sector was helping the economy instead of dragging it down.

All the folks I knew that were in danger of losing their houses over the last few years already have lost their houses and new buyers are in those homes.

Maybe we are past that wave of pending foreclosures?

I certainly am not seeing bankruptcy sales here anything like we saw a few years ago.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: zckls04
Posted 2012-09-19 11:53:24 and read 2313 times.

Quoting PHX787 (Reply 8):
I checked some statistics released recently by a certain bank (I won't name)

Why on earth not? You should always cite statistics like that.

I'd like to see how the recovery correlates with the length of the foreclosure process; I bet it's a strong inverse relationship.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Aesma
Posted 2012-09-19 17:04:52 and read 2268 times.

I wish our housing market was more like in the US (albeit with houses made of concrete). Here when the economy is good prices crop up, when there is a crisis they continue to go up ! People invest their money in real estate, without even bothering to rent it, the value increase alone makes it worth it.

Meanwhile millions can't find a place to live, I had to go back to my parents' home because with an average salary I could only rent a minuscule studio, not worth spending my money on.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Revelation
Posted 2012-09-19 17:41:19 and read 2254 times.

Quoting Aesma (Reply 11):
Here when the economy is good prices crop up, when there is a crisis they continue to go up ! People invest their money in real estate, without even bothering to rent it, the value increase alone makes it worth it.

Sounds like it's ripe for a collapse. It might be wise to invest in companies that make money when a collapse happens, like real estate services companies that are hired by banks to stabilize properties that get foreclosed on.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-19 19:10:47 and read 2226 times.

Point 1: Unemployment (Including those that have given up and are living on a couch someplace) is at 15% and has not shown any indication of declining. That hurts the buyers' market. Home ownership continues to plummet.



Point 2: There are still millions of empty homes which constitute excess inventory, far above historical average rates.



And that does not include about 5 million delinquent and foreclosed mortgages where the home is not on the market.

Point 3: Yes, housing starts increased, but from an extremely low base.



I just don't see any significant recovery any time soon. I think prices can still come further down.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: DeltaMD90
Posted 2012-09-19 20:37:11 and read 2208 times.

What I don't get (and every side is guilty of this) is when something is steadily declining and the first instant it "levels off" or goes up a bit the side makes a big(ish) deal about it. I'm glad there was a gain, but I think we should be cautious and make sure this is a trend and not a one-time event

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Revelation
Posted 2012-09-20 06:03:53 and read 2178 times.

Quoting Dreadnought (Reply 13):
Unemployment (Including those that have given up and are living on a couch someplace) is at 15% and has not shown any indication of declining.

It's definitely an issue, although the measurement of unemployment is difficult, and some temporary distortions like ongoing extension of unemployment benefits is distorting the historical trendlines.

Quoting Dreadnought (Reply 13):
Home ownership continues to plummet.

The fact that you are picking such a huge timeline distorts the result.

Quoting Dreadnought (Reply 13):
There are still millions of empty homes which constitute excess inventory, far above historical average rates.

Even though the last part of your curve is getting flat, and your graph isn't clear enough to tell me when the last sample was taken?

Quoting Dreadnought (Reply 13):
And that does not include about 5 million delinquent and foreclosed mortgages where the home is not on the market.

That's data I didn't have. As above, all I have is my personal sense that those around me at risk have already lost their homes and those homes are already resold.

Quoting Dreadnought (Reply 13):
I just don't see any significant recovery any time soon. I think prices can still come further down.

Even though I'm criticising some of the info, it is very helpful to get the big picture, so thanks for posting it.


Quoting DeltaMD90 (Reply 14):
What I don't get (and every side is guilty of this) is when something is steadily declining and the first instant it "levels off" or goes up a bit the side makes a big(ish) deal about it.

Because a lot of money gets made or lost based on the change from declining to being flat or going up.

It seems to me that the markets have been become over-sensitive to the second derivative (rate of rate of change) vs the first (rate of change).

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: zckls04
Posted 2012-09-20 10:25:00 and read 2161 times.

Quoting Dreadnought (Reply 13):
Point 1: Unemployment (Including those that have given up and are living on a couch someplace) is at 15% and has not shown any indication of declining. That hurts the buyers' market. Home ownership continues to plummet.

A huge part of the upswing in that curve is due to sub-prime lending though, which most people (I think) agree was a bad thing. I would argue that at least some of the downswing is a (no doubt temporary) return to more responsible lending practices.

Ditto the large inventory; those houses which were sold to people who couldn't afford them are now back on the market. Places like Phoenix and Vegas (and parts of California e.g. Sacramento) that underwent enormous expansion due to enormous numbers of new builds are not recovering greatly, and probably never will; fundamentally the market for those houses wasn't there among people who could afford what the developers wanted.

Near me however, that bubble never really happened. The inventory has always been limited, and unqualified buyers were always the least attractive to sellers, all other things being equal. Thus the housing market is definitely rebounding in my area, despite the national average telling a different story.

If you consider the situation in 2004-2008 to be a "healthy" housing market, then yes, it's true that the market has plummeted and is nowhere near back to its height. However I think that's not the case- the banks are just not being as careless with their lending practices right now. How long that will continue I'm not sure, but for now seeing home ownership decline on your graph indicates a return to stability rather than an unsustainable plummet.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: D L X
Posted 2012-09-20 10:45:15 and read 2157 times.

Quoting Revelation (Thread starter):
Are you seeing this in your area? Seems like the "bottom feeder" prices are gone in my area.

Yes, it is definitely happening near me. I'm not overwater yet, but the units in my building are being snatched up pretty quickly. My house value has returned to 90% of what I owe, from an amazing 60% of what I owe just a couple years ago.

Quoting Revelation (Thread starter):
Not particularly good timing for the Romney campaign, but I'm sure they're happy about it too, no?

Given how many homes they own, of course they're happy!

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-20 11:15:15 and read 2150 times.

Quoting zckls04 (Reply 16):
A huge part of the upswing in that curve is due to sub-prime lending though, which most people (I think) agree was a bad thing. I would argue that at least some of the downswing is a (no doubt temporary) return to more responsible lending practices.

Not sure about that. The government is begging (demanding) banks lend more mortgages to whoever asks, and the Sub-Prime Mortgage Bond market is growing rapidly once again. As long as there are ARM mortgages out there, I think we are headed for the same disaster again.

Quoting zckls04 (Reply 16):
If you consider the situation in 2004-2008 to be a "healthy" housing market, then yes, it's true that the market has plummeted and is nowhere near back to its height.

I'd say the last time the market was healthy was mid-early 1990s, before CRA was given big teeth and started exploding the market.

Let's not forget that Obama himself was part of the whole sub-prime thing.

http://communities.washingtontimes.c...ama-created-subprime-loans-lawyer/

Barack Obama used his status as a legal hired gun to sue Citibank to force them to give loans to poor minorities in Chicago.

In other words, he sued a bank into creating subprime mortgages.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: D L X
Posted 2012-09-20 12:14:14 and read 2133 times.

Quoting Dreadnought (Reply 18):
Let's not forget that Obama himself was part of the whole sub-prime thing.

http://communities.washingtontimes.c...ama-created-subprime-loans-lawyer/

Barack Obama used his status as a legal hired gun to sue Citibank to force them to give loans to poor minorities in Chicago.

In other words, he sued a bank into creating subprime mortgages.

Citing Communities.Washingtontimes.com is like citing a poster on airliners.net. Or an iReport. Or FoxNewsNation.

That is not journalism, but rather a private citizen. Someone with time on his hands who wanted to write something and get published in a conservative rag.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: zckls04
Posted 2012-09-20 14:46:30 and read 2117 times.

Quoting Dreadnought (Reply 18):
I'd say the last time the market was healthy was mid-early 1990s, before CRA was given big teeth and started exploding the market.

Except CRA started in the seventies, and really had nothing to do with the sub-prime crisis. It makes a good clarion call, but in reality the majority of the junk loans were not issued by institutions subject to CRA, but by private-label non-bank lenders. CRA loans formed a minority of the loans and were less likely to default than those not subject to CRA.

Of course, Fannie and Freddie eventually got in on the act in an attempt to win back market share, but their mistake had nothing to do with CRA, and everything to do with being too stupid and greedy to see the bubble before it burst.

Quoting Dreadnought (Reply 18):
Barack Obama used his status as a legal hired gun to sue Citibank to force them to give loans to poor minorities in Chicago.

The suit (which Obama had only a minor involvement in) said that Citibank discriminated in not giving loans to minority-dominated neighborhoods, income and credit etc aside. That has nothing to do with "the whole sub-prime thing" unless you believe that minorities are inherently less likely to pay their mortgage than non-minorities, assuming equal income and credit (a position known as racism). I've no idea about the merits of otherwise of the case, but it's clear from that that Citibank was in no way forced to lend to anybody as a result of that suit.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-20 14:54:10 and read 2113 times.

Quoting D L X (Reply 19):
Citing Communities.Washingtontimes.com is like citing a poster on airliners.net. Or an iReport. Or FoxNewsNation.

That is not journalism, but rather a private citizen. Someone with time on his hands who wanted to write something and get published in a conservative rag.

LOL, don't tell me this is new to you. The story came out years ago. Of course it is overstated - Obama himself was just a junior attorney in the lawsuit, billing 138 hours of work on it. But the case was one of the key events (along with CRA as revised by Clinton) that forced banks to remove the protections and restrictions on lending to potentially risky customers - the root cause of the 2008 meltdown.

So yes, he was involved - peripherally - and on the wrong side.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: zckls04
Posted 2012-09-20 15:27:53 and read 2103 times.

Quoting Dreadnought (Reply 21):
the root cause of the 2008 meltdown.

   False, as per above. Neither that case nor CRA were the root cause of the meltdown.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: casinterest
Posted 2012-09-20 15:35:56 and read 2096 times.

Quoting Dreadnought (Reply 21):
But the case was one of the key events (along with CRA as revised by Clinton) that forced banks to remove the protections and restrictions on lending to potentially risky customers - the root cause of the 2008 meltdown.

This doesn't pass the smell test. It also doesn't explain why such locations as Arizona, California, Florida, and Nevada were among the hardest hit states. THe problem wasn't with CRA, it was with Banks being able to sell of derivatives of loans they percieved to be good values. THe locations all seemed to occur in high destination spec markets, and not in "poor" neighborhoods.

The housing markey is beginning to stabilize and improve. Anyone that has gone and checked Apartment rentals and rates vs home ownership loans in the majority of states will realize we are only about a year away from a very strong reversal. Especially with rates as low as they currently are.

For the record I bought and sold a house this summer. The market in Raleigh is very busy.
Whether it will be the kick to get the economy going, or the edge of a cliff from which to fall should europe fail remains to be seen, but when 2 bedroom apartments are going for the rate of a mortgate on a 2500 square foot house, there isn't much keeping the market down.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: pu
Posted 2012-09-20 20:45:03 and read 2063 times.

Quoting Dreadnought (Reply 21):

But the case was one of the key events (along with CRA as revised by Clinton) that forced banks to remove the protections and restrictions on lending to potentially risky customers - the root cause of the 2008 meltdown.

.
Bad legislation should be repealed and the Republicans controlled the House, Senate and White House from 2001-2007. The Republicans are sure advertising their potential ability to repeal Obamacare. BY NOT REPEALING the CRA the Republican controlled government in power for six years either:
.
.......A. Agreed the CRA was good (or popular) legislation while they were in power and hence did not repeal it, OR,
.......B. Were asleep at the wheel, (perhaps preoccupied with pointless foreign wars) & let bad legislation stay on the books
....
....
EITHER WAY, if the CRA is the "root cause" of the 2008 meltdown, the Republicans are just as negligent, if not more so, than the CRA's original sponsors since they, the Republicans, had 6 years to repeal it as its alleged negative effects were becoming more and more obvious in the economy.


Pu

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: jet-lagged
Posted 2012-09-26 16:35:22 and read 1859 times.

I bought my home just over a year ago, and based on rather steady sales around the neighborhood I estimate that it's worth 5% more now than it was then.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-26 18:42:44 and read 1840 times.

Quoting pu (Reply 24):
Bad legislation should be repealed and the Republicans controlled the House, Senate and White House from 2001-2007. The Republicans are sure advertising their potential ability to repeal Obamacare. BY NOT REPEALING the CRA the Republican controlled government in power for six years either:

I don't think repealing CRA was necessarily required, and it's very probable that repealing it would not have stopped the crash. Think of the progression. In the 70s, banks were told to ease up on restrictions, and then in the 90s, told REALLY to ease up. Whereas before, banks would frequently hold on to their own mortgages as secured sources of revenue, they were faced with the prospect of holding what were essentially junk bonds - but without even the high rate of return. Enter the term: toxic assets. Fortunately for the banks, Fannie and Freddie had begun buying these assets and bundling them - the famous mortgage backed securities, and convinced rating agencies to believe the hype about "government insured mortgages" enough to give them high ratings. Now banks did not have to hold onto these toxic assets - they could flip them onto the secondary market, and what was junk was now golden. Repealing CRA would have done little to break the cycle, I think. The Snowball was already rolling down the hill. But had CRA never existed, I believe that A) Banks would have continued to hold onto their mortgages to a much higher degree,and the secondary market for MBSs would not have taken off like it did, B) The housing boom and bubble would not have happened (home ownership rate would have stayed stable around 64-65%), and C) the 2008 bust would not have happened. There is also D) - minority home ownership would probably have been lower, and the housing boom would not have contributed to the economic good times we saw.

The other way of getting control of the situation was to firm up regulation of the Mortgage industry. GWB tried repeatedly to do so, but was routinely blocked by Democrats and enough limp-wristed Republicans to stop it.

http://georgewbush-whitehouse.archiv.../releases/2008/10/20081009-10.html

Quote:
2001

April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity." (2002 Budget Analytic Perspectives, pg. 142)
2002

May: The Office of Management and Budget (OMB) calls for the disclosure and corporate governance principles contained in the President's 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
2003

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.


September: Then-Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.


September: Then-House Financial Services Committee Ranking Member Barney Frank (D-MA) strongly disagrees with the Administration's assessment, saying "these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." (Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie Mae," The New York Times, 9/11/03)


October: Senator Thomas Carper (D-DE) refuses to acknowledge any necessity for GSE reforms, saying "if it ain't broke, don't fix it." (Sen. Carper, Hearing of Senate Committee on Banking, Housing, and Urban Affairs, 10/16/03)


November: Then-Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)
2004

February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital and calls for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore … should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)


February: Then-CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)


April: Rep. Frank ignores the warnings, accusing the Administration of creating an "artificial issue." At a speech to the Mortgage Bankers Association conference, Rep. Frank said "people tend to pay their mortgages. I don't think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren't there." ("Frank: GSE Failure A Phony Issue," American Banker, 4/21/04)


June: Then-Treasury Deputy Secretary Samuel Bodman spotlights the risk posed by the GSEs and calls for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)
2005

April: Then-Secretary Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)


July: Then-Minority Leader Harry Reid rejects legislation reforming GSEs, "while I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process." ("Dems Rip New Fannie Mae Regulatory Measure," United Press International, 7/28/05)
2007

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, the White House, 8/9/07)


August: Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd ignores the President's warnings and calls on him to "immediately reconsider his ill-advised" position. (Eric Dash, "Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected, As Critics Complain Of Opportunism," The New York Times, 8/11/07)


December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, the White House, 12/6/07)
2008

February: Assistant Treasury Secretary David Nason reiterates the urgency of reforms, saying "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)


March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)


April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)


May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

"Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow state housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)


"[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)


"Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)


July: Congress heeds the President's call for action and passes reform legislation for Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.


September: Democrats in Congress forget their previous objections to GSE reforms, as Senator Dodd questions "why weren't we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem? … I have a lot of questions about where was the administration over the last eight years." (Dawn Kopecki, "Fannie Mae, Freddie 'House Of Cards' Prompts Takeover," Bloomberg, 9/9/08)

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: zckls04
Posted 2012-09-26 20:39:20 and read 1825 times.

Except that, as I stated above, CRA, Fannie and Freddie had little to do with the genesis of the mortgage crisis. CRA loans are, and always have been, less likely to default than private-label loans.

It's convenient to blame CRA for everything because it allows pro-business types to deflect the blame away from greedy companies with dubious and often illegal business practices and onto minorities, who make a good punching bag. But the facts tell a different story.

1) CRA loans were less risky than their non-CRA counterparts. Private label loans had a default rate six times higher than Fannie and Freddie loans during the housing bubble.
2) The housing bubble occurred during a period when Fannie and Freddie's market share of high-risk mortgages, and mortgages as a whole dropped.

Fannie and Freddie got in on the act later, it's true, when their market share dropped. But by then it was already too late. I fear however that if the idealogical position that the free market is always free from any blame will mean nothing whatsoever changes in terms of regulation, and in a few years we'll have the same problems again.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Flighty
Posted 2012-09-26 20:45:04 and read 1820 times.

Quoting zckls04 (Reply 27):
I fear however that if the idealogical position that the free market is always free from any blame will mean nothing whatsoever changes in terms of regulation, and in a few years we'll have the same problems again.

Of course. The "bankster" mythology holds that something illegal / immoral happened. Actually it was just a speculation boom by ordinary families. And it will happen again.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-26 21:18:04 and read 1806 times.

Quoting zckls04 (Reply 27):
Except that, as I stated above, CRA, Fannie and Freddie had little to do with the genesis of the mortgage crisis. CRA loans are, and always have been, less likely to default than private-label loans.

We should add the FHA. The FHA introduced the concept of federally insured mortgages - something that encouraged the secondary market to trade them. Fannie and Freddie introduced liquidity into the industry directly through the secondary market.

It is the existence and magnitude of the secondary market in mortgages that led to the 2008 crash. And like I said, until mortgages started being federally insured, highly rated, and traded in large volumes with rapid turnover, mortgages were generally not traded - the bank that issued them kept them themselves as a near certain 10-30 year income stream. The secondary market in mortgages only existed for banks needing cash for reserve requirements, and almost always resulted in a loss for the bank that sold a mortgage that it had originally issued. The federal government changed all that when it launched the widespread secondary market. That was indeed the whole purpose of Fannie and Freddie - to create and fuel a secondary market in order to "liquify" the asset base.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: pu
Posted 2012-09-26 21:38:24 and read 1800 times.

Dreadnought, what you just said is more persuasive than blaming so much on the CRA.

YES, when mortgages started to get traded around (eventually even sent to Europe and elsewhere - very bizarre), that is when the speculation bubble really took off. ... as it became easier and easier to sell their mortgages to Wall Street and eventually even overseas, well, lending went wild.

But, again, blaming the CRA just stinks of partisanship - the disaster happened 5-6 years into the Republican watch. If they weren't obsessed by Iraq and Afghanistan, someone might have noticed the dangerous bubble forming and stopped it earlier, making the crisis only a "routine" recession perhaps.

Also, I would say Wall Street is more to blame than Freddie and Fannie. Wall Street is what took the concept of repacking mortgages and really ran with it, peddling mortgages all over the economy and all over the world, into insurance companies, into foreign banks, etc... Freddie and Fannie alone were never competent enough (or so profit-motivated) to sell something so thoroughly.

Finally, don't forget the role of insanely low interest rates put into place in the wake of the post 9/11 economy (aka the 2002/2003 recession) that have never risen for a sustained period even 10 years later.

Pu

[Edited 2012-09-26 22:04:34]

[Edited 2012-09-26 22:07:21]

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-26 22:18:05 and read 1787 times.

Quoting pu (Reply 30):
But, again, blaming the CRA just stinks of partisanship

I'll grant that it is simplistic - but frankly most people's eyes glaze over when you start interlacing the different elements:

1) CRA introduced mechanism to force banks to lend to people who banks would otherwise not want to hold the mortgages, and really pushed under Clinton, which started the housing boom.
2) Fannie/Freddie injecting large amounts of liquidity on the secondary market.
3) FHA introducing "Federal guarantee" on Mortgages. Enough to convince rating agencies to rate high.
and 4) The refusal of Congress (mostly but not uniquely by the Democrats) to try to bring the secondary mortgage market under control, in spite of repeated attempts by GW Bush to address the issue.

You complain of partisanship. But you want to blame the GOP, when their leadership tried to correct the several timesproblem. It is the Democrats who closed ranks and blocked any such efforts, even claiming that such efforts were driven by racism. So, pot, kettle, black, my friend.

Quoting pu (Reply 30):
Also, I would say Wall Street is more to blame than Freddie and Fannie.

Wall street is simple a marketplace. They will trade anything if they think it is a worthwhile commodity and somebody is willing to buy and sell at a fair price. As discussed, traditional mortgages were generally not sold often on the secondary market, because the only banks that would sell them would be ones that were desperate for cash. More of a liquidation business, really. If the Federal government had left the mortgage market alone, that secondary market would never have taken off. Once again, the evidence shows that markets regulate themselves quite well, but when the government pokes its nose into it for the purposes of social engineering (i.e. trying to increase home ownership), unintended negative consequences inevitably follow.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: pu
Posted 2012-09-26 22:44:01 and read 1787 times.

Quoting Dreadnought (Reply 31):
CRA introduced mechanism to force banks to lend to people who banks would otherwise not want to hold the mortgages

My reading of the CRA is that it had ZERO effect on credit requirements. In fact it mandated prudent lending. As far as I can tell it was mainly about making it illegal to refuse mortages for non-credit-related reasons, like race. Another poster has indicated CRA loans had a very low default rate, much lower than 'regular' mortgages. Furthermore, my information is that most of the failing loans that caused the big devaluations, and by far the largest amount in dollar volume, were COMMERCIAL mortgages, not defaulting individual home buyers.

Again, it seems like your just reaching to fix blame instead of fix the problem.

Quoting Dreadnought (Reply 31):
FHA introducing "Federal guarantee" on Mortgages. Enough to convince rating agencies to rate high.

WTF are you talking about? There have been federally guaranteed mortgages since at least WW2, both parties equally bought into this. Republicans love it because it allows vets to buy homes, Democrats because it allows poor people to buy homes.

Quoting Dreadnought (Reply 31):
The refusal of Congress (mostly but not uniquely by the Democrats) to try to bring the secondary mortgage market under control, in spite of repeated attempts by GW Bush to address the issue.

The Republicans controlled the WH and Congress for 6 years prior to the meltdown, the Democrats were irrelevant. Furthermore, if GW Bush "tried to address this issue" he could have made a lot of corrections to Freddie and Fannie and a bunch of other details by Executive Order, as he did in numerous other areas.

Quoting Dreadnought (Reply 31):
But you want to blame the GOP, when their leadership tried to correct the several timesproblem. It is the Democrats who closed ranks and blocked any such efforts

I don't want to blame the GOP, I want to call attention to the ignorant partisanship that never takes responsibility for failures. BTW, Are you high? The Republicans controlled congress from 1995-2007, the Republicans had a decade a more to make this issue a priority but CHOSE NOT TO.

Why not just say: Republicans & Democrats failed to see this coming and both wanted easy mortgages to satisfy their clientele (poor people versus Wall Street)??? Wall Street made it worse by marketing uncreditworthy securities as AAA, through the bribery of credit rating agencies, and so forth...Why so obsessed with blaming the Dems?

Pu

[Edited 2012-09-26 22:45:19]

[Edited 2012-09-26 22:46:47]

[Edited 2012-09-26 22:50:03]

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: pu
Posted 2012-09-26 23:23:43 and read 1770 times.

Quoting Dreadnought (Reply 31):
the evidence shows that markets regulate themselves quite well,

Tell me, what happened to the institutions known as "Savings and Loans"????

...It seems like they regulated themselves so well that a big round of DEregulation in the 1980s led to the Savings and Loan crises costing taxpayers billions. It got a bit lost in Gulf War I and only real experts talk about it today... but it in retrospect the S*L crises was a shot across the bow for how lenders and Wall Street will happilly collude, given a lack of regulation, to write bad loans and build ponzi schemes based on fraudulent credit.

Markets don't function perfectly. In fact, left to themselves they often self destruct or become not a market at all and instead become a monopoly. This isn't a party issue, but it is more often partisan right wingers who insist on deregulation as the answer to everyone's problems. Market economies work best, but there are built in problems with them that need correction. IMO.



Pu

[Edited 2012-09-26 23:34:52]
Ps the more I look into the S&L crisis the more compelling it is that it was an almost exact earlier version of the recent fianancial chaos. The main difference is that Wall Street spread the most recent crisis overseas by selling bad loans to foreigners, while in the S&L crisis Wall Street mosly just repackaged the toxic assets around through America.


[Edited 2012-09-26 23:45:14]

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: pu
Posted 2012-09-27 00:00:34 and read 1757 times.

Quoting Dreadnought (Reply 31):

CRA introduced mechanism to force banks to lend to people who banks would otherwise not want to hold the mortgages, and really pushed under Clinton

The CRA applied to banks only. The bulk of the subprime lending that caused so much trouble were made by the likes of Countrywide and other mortgage-only specialists not subjetct to the CRA.

The CRA didn't make these non-bank lenders write bad loans, but lack of regulation allowed it.

Pu

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: ltbewr
Posted 2012-09-27 04:43:55 and read 1734 times.

The recovery from a national view is probably distorted by some markets that never 'bubbled' and had far more stable employment rates (that is, faced less job losses like NC and Texas). I also suspect that the richest 5% are taking advantage of the still low pricing for right-sized homes in good condition in the best locations using their own cash from the recovery for them and banks having plenty of money at cheap rates to the most qualified buyers and mortgage takers.

Many areas have hit bottom so have no where else to go but up, some still have to sell due to moving for jobs, deaths, older homeowners who can no longer can afford the property taxes or other costs for a home or need such a large home anymore. Some markets like Detroit and other 'rustbelt' cities may never recover as the industrial base is gone or gets paid a lot less. In many places new homes have not been built, towns won't allow new homes or even rental housing so don't want more children in schools with the much higher costs on remaining taxpayers so in some desirable areas the market is tight. Short term 'Flipping' due to the risks, lack of potential profit, higher costs for government fees and licenses, tighter zoning and planning enforcement, has also limited the market. Millions of homes under foreclosure are also still being held by banks waiting for prices to go up or due to complicated issues or their mortgage owned by 3rd parties so those home are not on the market to hold down prices.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: Dreadnought
Posted 2012-09-27 05:16:12 and read 1724 times.

Quoting pu (Reply 32):
The Republicans controlled the WH and Congress for 6 years prior to the meltdown, the Democrats were irrelevant.



The GOP had simple majorities, but never had a supermajority necessary to override Democratic blocking. Not to mention Democratic screams of "racism" successfully cowed a number of GOP congressmen to back off support, especially when the severity of the problem was not so obvious.

Quoting pu (Reply 32):
Furthermore, if GW Bush "tried to address this issue" he could have made a lot of corrections to Freddie and Fannie and a bunch of other details by Executive Order, as he did in numerous other areas.

The reforms required laws, not executive orders.

Quoting pu (Reply 33):

Markets don't function perfectly. In fact, left to themselves they often self destruct or become not a market at all and instead become a monopoly.

Nobody is advocating complete freedom. A lawless market would be a failure because it would lack the key ingredient that all economic activity depends on : Contract Law. The concept that that one must do what they promise to do can only be enforced via government laws and regulations.

Topic: RE: U.S. Housing Recovery Gaining Momentum
Username: flipdewaf
Posted 2012-09-27 05:29:23 and read 1721 times.

Quoting Dreadnought (Reply 18):
I'd say the last time the market was healthy was mid-early 1990s, before CRA was given big teeth and started exploding the market.

Let's not forget that Obama himself was part of the whole sub-prime thing.

http://communities.washingtontimes.c...ama-created-subprime-loans-lawyer/

Barack Obama used his status as a legal hired gun to sue Citibank to force them to give loans to poor minorities in Chicago.

In other words, he sued a bank into creating subprime mortgages.

I was under the impression that the problem wasn't the actual mortgages themselves but the way they were packaged when traded so that the actual risks were masked making it difficult for traders to know exactly what they were trading with.

Fred


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