Banks On The Verge of Collapse: Up To 46% Of Bailed Out Homeowners Can’t Pay Their Mortgage (Again), Monthly Home Payment Soars 40% To 2008 Levels, And Bernanke Is Definitely Going To Taper Soon!
It was all stall and loot. The Fed has been purchasing worthless Mortgage Backed Securities loaded with defaulted mortgages at full face value to the tune of 85 Billion per month for over a year now in an attempt to reinvigorated the limping housing market. At the same time the Fed has been holding the 80% of foreclosed homes in the US that they own the paper on out of the market.
The Fed can just leave these houses to rot, but keep them on their books at full value indefinitely, because they aren’t subject to the same regulatory rules on foreclosed properties that the banks are.
This has been a vain attempt to both bail out banks of toxic assets, and reinflate the housing bubble, at the expense of the taxpayers…
But as this program progresses, interest rates on 30 yr mortgages have steadily increased and are now well over 4.5%. when these rates go over 5% this bubble will pop, again, and along with other terrible economic indicators, take the world economy with it.
This is the death of the dollar and the complete looting of America…
Re-Default: Up To 46% Of Bailed Out Homeowners Can’t Pay Their Mortgage (Again)
The Treasury Department and managers of the Home Affordable Modification Program (HAMP) are scrambling to figure out why homeowners who used the government’s bailout mechanism to save their homes are re-defaulting on their payments.
The program, originally designed to assist homeowners who were facing foreclosure following the 2007 sub-prime crisis, has reportedly saved 1.2 million people from losing their homes, but a report from the Special Inspector General who oversees the government’s Troubled Asset Relief Program (TARP) says that the loan modifications that were supposed to get American families back on their feet aren’t working as well as expected.
“We launched this program in response to the worst housing crisis since the great depression,” Treasury Assistant Secretary for Financial Stability Tim Massad said in a press call.
“There will always be an inherent risk of homeowner default in programs like this,” Massad added.
Approximately 10% of homeowners with an active HAMP permanent modification — a total of 88,000 out of 865,100— have missed one or two monthly mortgage payments and are at risk of redefaulting out of the program.
Redefault rates of the oldest 2009 HAMP permanent mortgage modifications have continued to increase as they age and have reached a 46% redefault rate. The 2010 HAMP permanent mortgage modifications are redefaulting at a rate of 38%.
The Treasury department is going to launch an investigation into why the program isn’t working.
Not only has the program fallen far short of that goal but with each year of the program, a growing number of homeowners have re-defaulted, the inspector general found.
“Treasury needs to research why so many borrowers are dropping out of the program,” said Christy Romero, the head of SIGTARP.
Monthly Home Payment Soars 40% To 2008 Levels
The following chart from Credit Suisse fully explains why the US housing “recovery” has just ground to a halt: in a few short weeks, US housing affordability (a topic we first covered a month ago) has collapsed as a result of the monthly payment on the median home sold soaring by nearly 40% from under $800 to just shy of $1100, a level not seen since 2008.
Mortgage Defaults Boost Bank, Credit Union Failures
There were 35 mortgage-related casualties in the first-half 2013, according to The Mortgage Graveyard from Mortgage Daily.
The second-quarter portion of the total was 20, more than the 15 tracked in the first quarter and the worst quarter of the past four.
But bank failures jumped to 12 from four in the prior period.
Credit union casualties rose for the fourth consecutive quarter to six.If credit union casualties — which have risen each quarter since the second-quarter 2012, when there was just one — continue on their current trajectory, even more can be expected this quarter.
ANALYST: Bernanke Is Definitely Going To Taper Soon, And It Has ‘Nothing’ To Do With The Economy
This is an interesting note from Credit analyst Harley Bassman at Credit Suisse, who argues that Ben Bernanke is guaranteed to “taper” soon (meaning, reduce the pace of the Fed’s monthly bond purchases) and that it has nothing to do with economic reality.
1) The announcement of “taper” has NOTHING to do with the economy, it has everything to do with Mr. Bernanke’s legacy. This was his “irrational exuberance” speech to deflate the asset bubble the FED has so assiduously inflated. By stopping out the over-levered trader’s who were trying to monetize the “Bernanke put”, the FED has mitigated a 1994 or 1998 or 2007 scenario (the last times that gamma vols sunk below 80). Mr. Bernanke does not want a Greenspan redux where a financial calamity occurs soon after his departure and he takes the blame….
Bernanke To Be Deposed In Court Over AIG Bailout
•U.S. JUDGE SAYS EX-AIG CEO GREENBERG SHOULD BE PERMITTED TO DEPOSE FED CHAIRMAN BERNANKE OVER INSURER’S BAILOUT — COURT RULING
•U.S. COURT OF FEDERAL CLAIMS JUDGE THOMAS WHEELER SAYS THERE ARE “EXTRAORDINARY CIRCUMSTANCES” FOR TAKING OF BERNANKE’S DEPOSITION
China has no more monney to waste on US treasuries.
Credit-Crunch in China and All Over Asia
The strain that is being put on lending at the moment is primarily due to three factors:
•Domestic funding that is deteriorating.
•High non-performing loans.
•Declining loan demand from customers.
Banks on Verge of Collapse in Denmark !!!
JPMorgan Accused By FERC Of Manipulating Power Market, To Be Fined $400 Million