Predictably, your local pols are at work making the housing market weaker. Read the headline below. Boston Globe excerpts in italics. My comments are in red.
The Patrick administration is considering a plan that would make mortgage lenders pay moving expenses as well as the first and last months' rent of homeowners who lose their homes to foreclosure.
The proposal is part of foreclosure prevention initiative administration officials will present today at a meeting with some of the state's biggest mortgage lenders. The plan would make lenders that foreclose on homeowners pay $5,000 for the relocation and administrative costs that nonprofit agencies would incur in finding them a new home, according to a draft obtained by the Globe.
"The Patrick administration is in the process of trying to put together a comprehensive plan to try and solve this foreclosure crisis," Jones said. "We are committed to protecting homeowners and communities throughout the Commonwealth."
Oh boy, another "comprehensive plan"...sort of like the one that will simply wipe away the illegal immigration imbroglio.
Deval, if they have no equity and can't pay the bills, then THEY ARE NOT HOMEOWNERS!
Next thing you know, they'll be calling border-jumping identity thieves "undocumented immigrants"...
The goals are to "prevent as many foreclosures as possible and to minimize neighborhood destabilization by reclaiming vacant foreclosed properties for owner-occupied homeownership," the document said.
What the heck is "owner-occupied homeownship"? How do you analyze or respond to clowns speaking in Esperanto?
The Patrick administration earlier this month unveiled a $250 million fund that would help some subprime borrowers refinance into more affordable mortgages. As part that plan, state officials said they would use hardball negotiating tactics to force lenders to absorb any financial losses on the troubled mortgages the state will seek to refinance.
A taxpayer bailout for over-leveraged Morons? Hardball tactics aimed at making the lenders take the loss? Why don't you just say you want to absolve the borrower of debt and forcibly take the properties from the true owners?
Yeah, this won't have any blowback. Lenders in this state will just stop writing mortgages ALTOGETHER in the subprime category. AND they will just raise rates on creditworthy buyers to cover Deval Patrick's "solution". Higher rates all-around will just aggravate weak home prices and of course lead to even more foreclosures.
This is what I mean about Boston and its Institutionalized Stupidity.
Meanwhile, Countrywide Financial, a large mortgage lender, just saw its stock price hammered yesterday (-10.4%) after reporting increasing delinquencies in all mortgage classes, i.e. in all tranches from sub-prime to prime.
Only an indefatigable Moron can think that foreclosures, number one, are limited to the sub-prime demographic, and secondly, that some little taxpayer fund combined with unconstitutional lender arm-twisting will "solve" the crisis.
The problem for these demented socialists is that they simply can't impose costs on "lenders" for the simple reason that lenders these days are individual bondholders. Gone are the days of one bank holding the deed over an over-leveraged borrower's head. As I said above, mortgages today are stripped up and packaged down into various classes and sold en mass to individual investors (hedge funds, pension funds, insurance companies, etc.)
Point of fact, Devil Patrick is illustrating precisely why the big banks got out of the mortgage-holding business in the 1990s and into the mortgage-package-and-resale business. They have learned from the last real estate cycles that when the market sours they become big easy targets for ambitious prosecutors and politicians.
They will go after the banks anyway because rule one for lawyers (remember that's what they all are) is to sue whomever has the deepest pockets - that would be Citigroup, Bank of America, HSBC, etc. I have no doubt that they will shake them down for something.
This little trick with individual bonds I believe was popularized by Robert Moses when he was chiseling New York into his urban idyll. He tied municipal bonds to revenue streams from toll bridges. As such, the private bondholders had a sacrosanct contract with said bridges and could not be tampered with by politicians who were increasingly outraged by his over-running expenditures. Similarly, I sincerely doubt that Deval Patrick can meddle with existing private contracts between borrowers and lenders by assessing new terms to those satanic lenders. In all likelihood, all he can do is promulgate new standards and terms of foreclosure for mortgages written in the future.
And to reiterate, that will just raise both creditworthy and subprime's borrowing costs a few more basis points.
Devil's Advocate - Maybe Deval and Co. know this won't help borrowers but just want to market themselves as vanguards of the disenfranchised?
First off, I wouldn't bet on these clowns knowing anything. Secondly, if they have the actual capacity to protect the little people, then how come they didn't prevent them from borrowing beyond their means in the first place?
Deval is just a robot programmed to solve "problems" by more business regulation and prosecution. He knows not what he is doing, nor do any of his constituents. Worst of all, he is oblivious to the collateral damage of his policies (no pun intended).
Not long ago, a news item like this would get me riled up. But the wiser I have become, the more I am becalmed by the sheer predictablity of what happens. Use this knowledge to make money; put off buying that house because you know the "fixing" will most certainly give you a better entry point. Lucky for first time homebuyers, there are Deval Patricks all over the country, hard at work lowering the value of residential real estate.
Life is a comedy for those that think and a tragedy for those that feel. (Horace Walpole)
To me that means, if you cry a lot, perhaps you aren't much of a thinker.
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