Chart courtesy of OC Register
HAMP so far has only converted 4% of trial modifications to permanent status. As well as Option ARM and Alt-A toxic loans are ineligible under HAMP. So its all useless in the end for housing markets in California, Nevada, Arizona, and Florida. The banks are making money on all of the fees from HAMP and not doing a damn thing in the end. This at the end of the day is the game they are playing with the tax payer. Since the start of the recession we have seen trillions poured into housing via the tax payer through the banks and we have delinquencies and foreclosures at record peak highs. BTW....the economy still stinks. The banks have stopped foreclosing because they don't want the extra inventory on their books. They are only modifying mortgages because they get the tax payer to foot the bill via FHA. All in all taking money from the Fed at zero percent and lending it to the Treasury for 4 percent. This is how the banks are operating today. There is zero real lending going on because guess what? There is no end user aggregate loan demand. Housing via Case/Shiller gets better only because foreclosure activity has slowed, tax credits (Presto) subsidized by the morons who are the tax base, and impending shadow inventory is purposefully being left off of bank balance sheets. Both Fannie/Freddie are a disgrace and the FHA is re liquefying old bubbles.
This is currently the grand scheme by our elected officials to get us out of this housing mess. Let the banks figure out a way to rip off the tax payer and pay billions in bonus money. Its the height of stupidity to let the banks have the authority to resolve a mess that they were the culprits in creating. With the untold trillions banks have received we could have paid off every single mortgage in the country. But alas as we have all have figured out by now the bailouts were never about helping the public, rather to protect crony capitalism/kleptocracy on Wall Street.
The only reason any homes are moving in this market is because of the inherent government guarantee that is tied to it. If the banks had zero guarantee from Uncle Sam, you can assume that rates will be between 10% and 12% easy. But because the only morons who are buying mortgage paper is the government, we see rates at or near 5%.
Then we have Bernanke yesterday telling us that low rates had nothing to do with housing keeling over. Its beyond belief. Alan Greenspan dropping rates to 1% juiced and greased the housing market completely. Would people be buying homes if mortgages were 10% Ask yourself this one simple question!
As I noted before in my earlier post about Fannie/Freddie. We are at the point that the government is figuring out that they are the suckers at the poker table. This is why the caps have been lifted for the GSE's. This is why I believe that DC and Wall Street are one and the same. That DC is just a paid subsidiary of the Banking Sector. Its such a sham that its beyond defensible. The banks are telling everyone that the reason modifications are off to a slow start is because the paperwork is long and laborious. REALLY! Are these the same banks that pushed paperwork through the underwriting process for $700k Condo's for people making $50K? The same banks where dead people were used as co-signers? The banks are lagging and dragging their feet because they already have tax payer money in their pockets. Why should they try to help the masses when they can borrow from the FED at zero percent and lend to the Treasury at 4 percent? Obama is so superficial when he talks about "Fat Cat Bankers.
The Bankers can go back to gambling with tax payer money while Rome burns.
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