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How
to game the system with FHA loans for maximum advantage - (www.ochousingnews.com) FHA just recently revised their modification
guidelines to basically throw out any relevant ratios (Housing Ratio, Total
DTI) Essentially we all see this as a sign of, “For the love of god just get
some payments coming in on these mods”. We see clearly that their liquidity is
drying up and they are getting crushed by claim payments, particularly on short
sales where they’ve insured the full balance of the mortgage and are taking
enormous losses. They’ve basically decided, as you stated above, that these
squatters making some payment is better than none at all. The crazy thing is,
it’s just like the housing bubble, where anyone who could fog a mirror was
offered a loan. Now FHA is offering anyone who can fog a mirror, a mortgage
modification, completely irrespective of their ability to pay (for instance,
giving people with a 70% housing ratio a mod, instead of foreclosing on them
because they clearly cannot afford even the reduced payment) They are now
extending and pretending, within the extend and pretend program itself. FHA’s
insolvency is a 100% certainty.
Costliest Jet, Years in Making, Sees the Enemy: Budget Cuts
- (www.nytimes.com) The Marine version of the F-35 Joint Strike Fighter, already more
than a decade in the making, was facing a crucial question: Could the jet,
which can soar well past the speed of sound, land at sea like a helicopter? Articles
in this series are examining the American military and the decisions
confronting it in a new age of austerity. On an October day last year, with Lt.
Col. Fred Schenk at the controls, the plane glided toward a ship off the
Atlantic coast and then, its engine rotating straight down, descended gently
to the deck at seven feet a second. There were cheers from the
ship’s crew members, who “were all shaking my hands and smiling,” Colonel
Schenk recalled. The smooth landing helped save that model and breathed new
life into the huge F-35 program, the most expensive
weapons system in military history. But while Pentagon officials now say that
the program is making progress, it begins its 12th year in development years
behind schedule, troubled with technological flaws and facing concerns about
its relatively short flight range as possible threats grow from Asia.
Chinese Official Denies Owning 80 Homes, 20 Cars, Xinhua
Reports - (www.bloomberg.com) A Chinese village official accused of
accumulating personal assets of more than 2 billion yuan($321
million) denied online reports that he had some 80 homes and 20 cars, the
official Xinhua News Agency said. “Among the eight properties that were made
public online, five to six are mine,” Zhou Weisi said in an interview with
Xinhua published today. He acknowledged that he has more than 10 cars,
including Porsche, BMW and Mercedes-Benz vehicles. Zhou, a vice director in the
Nanlian neighborhood of Shenzhen’s Longgang district, was suspended and put
under investigation yesterday,
Xinhua reported. It said the suspension came after reports of his wealth on the
Internet “triggered public outrage.”
Allied
Bank revisited? - (www.creditslips.org)
Last Friday was the filing
deadline set by (a rather irked) Judge
Griesa for Argentina and interested third parties in
that country's long-running battle with NML and other restructuring holdouts.
NML's reply brief is due today, but it has already made clear that it wants to
be paid in full (roughly $1.4 billion) and that it expects the district court's
injunction to bind a lot of third parties, including the trustee for
the exchange bondholders. The genius of NML's strategy is that it has found a
way to enforce its claims without having to find and seize Argentine assets.
(Not that it's afraid to seize anasset or two.) If the
strategy works and can be used in other cases, it will have major policy implications.
Readers familiar with the sovereign debt markets may remember the Allied
Bank litigation - a trilogy of opinions that launched the modern era of holdout
litigation. The parallels between the Allied Bank case and this one
are striking, right down to the identity of the district judge. Allied Bank also
involved litigation by holdouts, although the holdout there was a member of a
commercial bank syndicate that filed suit in 1982 after Costa Rica suspended
payments on its external debt. A primary question was whether the lawsuit was
barred by the act of state doctrine, which prevents courts from hearing certain
lawsuits that might interfere with foreign policy matters. Judge Griesa
initially sided with Costa Rica and a panel of the Second Circuit affirmed. The
decisions sent shock waves through the New York financial community, which feared
the consequences for New York financial markets if US courts effectively
declared sovereign debts unenforceable. The Second Circuit agreed to rehear the
case and, persuaded by a US government amicus brief, it changed its mind. The
appeals court sent the case back to Judge Griesa with instructions to enter
judgment for the plaintiff.
Neighbors
stealing from neighbors, HELOCs make a comeback - (www.ochousingnews.com) When bankers make bad loans,
they are supposed to lose money. The fear of loss is the only thing that
compels bankers not to take excessive risks like the ones that brought down the
economy in 2008. If bankers know they can look to the US taxpayer to bail them
out and absorb their losses, bankers have every incentive to take wild risks to
generate private profits. The US taxpayer shares some portion of these profits
through taxes, but it assumes 100% of the liability for losses, not a
particularly good deal for taxpayers. So far, the US taxpayer has absorbed
about $150 billion in losses through the GSEs. Plus, through the variety of
loan modification and short sale incentive programs, we have paid investors and
bankers billions for their worthless securities. For example, we now pay second
lien holders $6,000 to sign off on a short sale. Since these securities are
subordinate to an underwater first mortgage, they have no value at all. Paying
these investors — who ostensibly knew the risks — $6,000 from the treasury for
their worthless second mortgage is a government bailout of an investor’s bad
decision. Theft.
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