Housing
mikethemadbiologist | October 13, 2010Have no doubt, despite the claims of propagandists, the foreclosure documentation crisis is not nitpicking. Providing the court with affidavits with unverified information is fraud: were you or I to do this, we would go to jail. One of Yves Smith's commenters describes this in more detail:
An affidavit is a legal document which can substitute for live witness testimony in court. All testimony in court is governed by the rules of evidence or by statute. All testimony requires that the witness swears to tell the truth, is competent and has personal knowledge of the facts they are testifying…
mikethemadbiologist | October 10, 2010So it turns out that Obama isn't completely tone deaf. To his credit, he has essentially* vetoed a bill that would have forced courts to recognize out of state foreclosure-related documents. Given the wide-scale fraud in forclosure-related documentation--to the point where it's not clear who actually holds the title or liens for millions of homes--this is a great move, since it will allow courts to hold the lenders and foreclosures accountable.
Of course, if policy makers had adopted cramdown legislation, this issue probably wouldn't have arisen in the first place.
But what I want to know…
mikethemadbiologist | October 5, 2010When I'm writing about politics, I've been regularly discussing the legal problems related to the collapse of Big Shitpile (the foreclosure crisis). At Naked Capitalism, Yves Smith lays out why this matters (so I don't have to stumble my way through this):
Make no mistake about it: the nature and scale of these frauds cut at the very heart of our judicial process. We didn't call the Florida courts "kangaroo courts" lightly. A home is most people's most important asset; shelter is a bedrock of personal security. Both the Fifth and the Fourteenth amendments enshrine the notion of due process…
mikethemadbiologist | October 2, 2010I remember, back in the 1980s, there was a conservative school of thought that believed many of our problems could be blamed on poor, single, often non-white mothers who refused to 'take personal responsibility' (e.g., welfare queens, Murphy Brown! ZOMG!). I never quite understand how anyone could believe that the most powerless Americans would be able to destroy us. I thought that societal breakdown would be triggered by the failure of political and economic elites.
Well, guess what? We're approaching breakdown:
Let's look at one example of banana republic faux justice in the US, via a…
mikethemadbiologist | September 30, 2010Why, yes, I did. For a while now, I've been writing about how improper paperwork could completely screw up the foreclosure process. While I've never thought foreclosure was the way to go (I wanted subsidized cramdowns), we can't even get foreclosure to happen, which is a huge drain on the economy:
Lawyers for distressed homeowners and law enforcement officials in several states on Friday seized on revelations by GMAC Mortgage, the country's fourth-largest home loan lender, that it had violated legal rules in its rush to file many foreclosures as quickly as possible.
Attorneys general in…
mikethemadbiologist | September 29, 2010Paul Krugman is absolutely correct about deleveraging:
In the end, I'd argue, what must happen is an effective default on a significant part of debt, one way or another. The default could be implicit, via a period of moderate inflation that reduces the real burden of debt; that's how World War II cured the depression. Or, if not, we could see a gradual, painful process of individual defaults and bankruptcies, which ends up reducing overall debt.
And that's what is happening now: as this story in today's Times points out, the main force behind the gratifying decline in consumer debt appears to…
mikethemadbiologist | September 14, 2010In light of yesterday's post about teachers and education, I think this column by The Washington Post's Courtland Milloy comes very close to identifying the a key problem facing urban education. Milloy:
From a commentary by D.C. Schools Chancellor Michelle Rhee that appeared in the Feb. 8 issue of Spotlight on Poverty and Education:
"I believe we can solve the problems of urban education in our lifetimes and actualize education's power to reverse generational poverty," Rhee wrote. "But I am learning that it is a radical concept to even suggest this. Warren Buffett [the billionaire investor]…
sastyk | September 8, 2010Super-quickie from me today - officially I'm in transit, but while my visiting my MIL and miraculously having time to read the entire New York Times before breakfast (admittedly the skinny Wednesday edition, but hey, I'll take it), I wanted to draw your attention to this article by David Leonhardt about how to think about housing.
Read the whole article - it is a good, basic overview of how economists generally view housing. What I'd like to write about it, but don't have time for right now (we hit the road shortly) is the way in which I think both of these viewpoints are inadequate to the…
mikethemadbiologist | August 27, 2010While conservatives still blather on about 'judicial activism' whenever a federal judge decides that they've gone too far in cramming their theopolitical crap down our throats, the ongoing housing crisis*, aka Big Shitpile, could result in some honest-to-Intelligent Designer judicial activism. How?
I've discussed previously how the poor, or even non-existent, paper trail for many foreclosed mortgages that were bundled together and then traded multiple times has led to judges preventing foreclosure proceedings to continue. There are legitimate legal grounds for doing so:
The issues in this…
mikethemadbiologist | August 23, 2010
Meet your new Treasury Secretary
My guiding political principle is "people have to like this crap." That is, if a policy makes peoples' lives worse, then it's a shitty policy*. More about that in a bit.
Last week, a bunch of bloggers went to visit the Treasury Department, and one of the topics for discussion was the Home Affordable Modification Program ('HAMP'). HAMP has been accused of doing little to help people from avoiding foreclosure, and, instead, has only prolonged their attempt to meet a (doomed to fail) series of payments (this is derisively called "extend and pretend"). In…
mikethemadbiologist | August 13, 2010In an otherwise excellent article about the Breitbart scandal/Sherrod non-scandal*, Eric Alterman writes the following:
To be fair, Kurtz does come up with one legitimate example [of liberal excess]. He quotes MSNBC's Keith Olbermann, observing that Sherrod's reputation had been "assassinated by Fox News"--which is undeniable--but who also referred to and "that scum Breitbart." Olbermann is always the example that conservatives use, but even though he does go too far on occasion, his antics are in no way comparable to those of Glenn Beck or Rush Limbaugh.
What's more, there are more accurate…
mikethemadbiologist | April 23, 2010Or, if you prefer, the housing bubble that started well before the onslaught of CDOs. First, let me point out for readers that ScienceBlogling Mark Chu-Carroll's description of the latest Vampire Squid Goldman Sachs scandal is perhaps the clearest and most concise description of the whole CDO problem. Having said that, CDOs weren't the fundamental problem. The fundamental problem was a housing bubble that existed before CDOs became rampant--although CDOs probably ran the bubble up further. But as I've noted elsewhere, housing prices were already wildly inflated .
Dean Baker lays out the…
mikethemadbiologist | April 14, 2010I'll have more to say about housing as an investment (hint: in quite a few cases, it's incredibly bad), but one thing to keep in mind is that people don't always protect their investments as well as they should. Last week, there was a massive, nine-alarm fire, in a Boston apartment building--fortunately no one was seriously injured, in part because many people were at work. But this is what shocked me--no fire sprinklers in a ten story building (italics mine):
The lack of sprinklers was of particular concern to fire officials. The building, formerly known as the Cambridge House and built as…
mikethemadbiologist | April 11, 2010In fact, it didn't even require much in the way of theory. As financial reform legislation moves its way through the legislative process, we're going to hear a lot of claims along the line of "No one could have predicted this." Which makes me wonder if we're going to militarily occupy Wall Street for a decade too. Of course, this is bullshit, and economist Dean Baker calls out this ersatz 'consensus':
Yeah, it's all really really complicated. Except it isn't.
Nationwide house prices had diverged from a 100-year long trend, increasing by more than 70 percent in real terms. There was no…
mikethemadbiologist | February 13, 2010One thing about Big Shitpile that seems to have gone under the radar is the potential for--and, increasingly, the reality of--debtor revolt. That is, people who owe more than their home is worth refuse to pay without a renegotiated mortgage. Sean Broderick thinks that "a debtor's revolt is going to be one of the defining trends for 2010", and recounts this episode:
Two years later, Adam's $450,000 Loxahatchee House was worth only $189,000. And he couldn't find a renter for his home in Lake Worth. He tried working with the bank (one bank had given him mortgages on both properties), but they…
mikethemadbiologist | February 5, 2010There's been some discussion about Joel Kotkin's argument "The War Against Suburbia", kicked off by The NY Times making it their Idea of the Day. Leaving aside whether there should be a 'war against suburbia', it's just not true. First, there has been a decades-long policy of federal subsidization of housing prices through the mortgage interest tax deduction. Since there are far more homeowners in suburbs than in cities, this is a massive wealth transfer to suburbs. Also, Obama's non-cramdown policies which have the effect of (temporarily) keeping housing prices higher than they should be…
mikethemadbiologist | January 21, 2010In response to my post about the scientist glut, ScienceBlogling Razib writes:
But that aside, what's the point of funneling more math and physics graduates into math and physics instead of finance if they can't put bread on the table? Or is the issue narrower, specifically the difficulty of getting an academic job? Or perhaps the major dynamic is that science & engineering professions are just really bad at capturing the value they generate for the society as a whole?
One of Razib's commenters hits the nail on the head:
We do not need more scientists, but academic science as practiced…
mikethemadbiologist | January 20, 2010File this under caveat mutuor. Henry Blodget points out the obvious in his retort to those who claim people have a moral obligation to remain in mortgages that are 'underwater' (paying more than the house is worth)--it's a business contract. Blodget (italics mine):
Importantly, the reason is not that "Wall Street deserves it" or "We've got to teach the banks a lesson" or any of the other bogus "retribution" logic being thrown around. The reason is that you and your lender engaged in an arms-length transaction in which you balanced your competing interests and spelled out your agreement and…
mikethemadbiologist | January 10, 2010I've made this point before--if your mortgage is underwater, you should consider a 'strategic default' (which is what it would be called if you were a business), and, unless you were speculating, it's not unethical to do so. First, you didn't force the lender to give you the money (and to the extent that there was fraud, it was usually the lender who enabled it--ninja loans, for instance). Second, since housing loans are traded as commodities, there is no community bond: you're not hurting the ability of a local bank to make loans to your community (or driving up the borrowing costs of…
mikethemadbiologist | December 29, 2009With Big Shitpile rolling on, there's been a lot of discussion about the ethics of defaulting on a home mortgage. Several people have commented on the hypocrisy of denigrating homeowners for doing the same thing that businesses do, without any moral qualms, so I won't say any more about that here. What I do find odd is the inappropriate personalization of who holds housing loans. This is a typical attitude:
Tom Sobelman, whose family of four lives across the street from Ms. Richey, at 3127 Club Rancho Drive, sees mortgages as a moral as well as financial obligation. He's still paying the…