Ever since the mortgage crisis started in 2008, there has been a wide divergence in opinions on who was to blame for borrower defaults.  Many blame greedy bankers who abdicated sound underwriting principles for financial gain by approving mortgages for unqualified borrowers.  Others blame the borrowers themselves for being irresponsible and taking on debt that their income could [...]

Republican Representative Jim Jordan of Ohio has introduced legislation to end the Home Affordable Modification Program (HAMP), calling it a “colossal failure.” The HAMP program was the showcase of the Obama administration’s plan to stop foreclosures by modifying mortgages to a payment level that was affordable for distressed homeowners. It was originally estimated [...]

The latest news on housing remains distressing and points to continued depreciation in home values. New Home Sales Plunge Again – The Census Bureau and the Department of Housing and Urban Development released figures showing that the number of new homes sold in 2010 totaled only 321,000 – the lowest reading in 47 years.  The 2010 figures represent a decline in sales [...]

In a strongly worded speech at the Summit On Residential Mortgage Servicing For the 21st Century, FDIC Chief Sheila Bair condemned the mortgage servicing industry for their role in extending the mortgage crisis. Ms. Bair stated that the housing industry has been stabilized by emergency measures but that the effects of the housing bust and financial crisis remain very much in evidence.  [...]

The recent Massachusetts Supreme Court ruling against Wells Fargo and U.S. Bancorp is likely to bring foreclosures to a crawl, resulting in a further destabilizing of housing markets.  The Court ruling is a major win for debtors and a severe blow for creditors trying to clear a backlog of millions of defaulted mortgages. The Massachusetts Court set aside two foreclosure sales, [...]

Two new reports make a compelling case that the markets have not fully discounted the probability of another flood of residential foreclosures precipitated by the continuing decline in home values.  The potential impact of price depreciation on the quality of loan portfolios casts serious doubt on the notion of a long term profit recovery for the banking industry. The two reports [...]

December 15, 2010 – The Congressional Oversight Panel (COP) was created by Congress during the height of the financial crisis to oversee the handling of $700 billion given to the US Treasury to stabilize the U.S. economy.   Part of COP’s responsibility is to issue regular reports on the Treasury’s actions and to guarantee that Treasury’s actions are in [...]

Although bank stocks have rallied recently, it may be premature to expect a recovery for the banking industry.   There are multiple indicators that a housing recovery is little more than a distant dream and current trends suggest that mortgage defaults may increase substantially.   With banks currently holding approximately $3 trillion dollars in residential mortgages, the prospect [...]

October 13, 2010 – Can the economy improve without a recovery in real estate values?  This question was addressed today by FDIC Chairman Sheila Bair, in a speech to the Urban Land Institute in Washington, D.C.   Despite optimistic forecasts by various analysts, Ms. Bair cited the daunting challenges that must be overcome in order to restore stability to the real estate [...]

September 15, 2010 – Big banks seem to be on the nation’s list of most hated institutions.  After being blamed for causing the financial crash of 2008 through reckless lending, banks are now taking heat for prolonging the recession with excessively stringent lending standards.  One industry to which banks have aggressively extended credit is now drawing criticism from [...]