You know things are going well for the economy when Bernard Madoff is fighting in prison over the stock market.  Maybe the argument revolved around dollar cost averaging into this easy money rally.  Here in California, specifically in Southern California there seems to be a lot of energy getting behind the housing bottom parade.  Prices […]

You know things are going well for the economy when Bernard Madoff is fighting in prison over the stock market.  Maybe the argument revolved around dollar cost averaging into this easy money rally.  Here in California, specifically in Southern California there seems to be a lot of energy getting behind the housing bottom parade.  Prices have stabilized to a certain degree.  Yet is this really a bottom?  It think it is important to frame the argument in relation to employment, incomes, and demographic trends.  Simply saying we are at a bottom is like saying home prices will always go up just because.  Hopefully people will learn from this bubble that housing prices can be inflated with interesting loans like Alt-A and option ARMs.

Speaking of option ARMs:

“(Housing Wire) Several of our investors have questioned the current loss severity in light of negative amortization and home price decline,” researchers wrote in the report. “Our analysis suggests that option ARM loss severity will likely range between 60% and 70% provided home prices have stabilized.”

As we have highlighted before most Alt-A and option ARM products sit in California.  Los Angeles County has the largest number of Alt-A loans of any county in the United States.  Wells Fargo has a large option ARM portfolio brought on board through their acquisition of Wachovia but many of these are of the Pay Option ARM variety that have 10 year life spans.  Even with that, many of these loans are imploding already:

Source:  Housing Wire

On a positive note, the Governator signed new mortgage legislation that includes, the destruction of option ARMs:

“(LA Times) Late Sunday night, the governor signed AB 260 by Assemblyman Ted Lieu (D-Torrance). The measure, which takes effect Jan. 1, tightens restrictions on mortgage brokers so they cannot steer borrowers to riskier, higher-interest loans when they qualify for less-expensive ones.

The new law also bans so-called negative-amortization loans, which offer the option of monthly payments so low that the loan amounts can actually grow over time.

The law also limits prepayment penalties to no more than 2% of the loan balance and allows state regulators to enforce federal lending laws.”

Option ARMs never had any business of existing so this is positive news.  Yet the option ARMs that will cause problems are already out there recasting from 2010 to 2012 and no one is originating option ARMs anymore since the government is the lender of first and only resort.

When we talk about a housing bottom we really need to look at history to gain some perspective.  It wasn’t always the case that California had a higher median home price than that of the nation.  Yet slowly over time California started disconnecting from the nationwide median price.  I thought the best way to highlight this divergence is to plot data from 1968 comparing nationwide and California median home prices:

Now this is a fascinating comparison.  Nationally, prices moved up steadily until the late 1990s when they seemed to disconnect from the trend.  California however had a few surges.  We see one occurring in the mid-1970s when prices started diverging from nationwide prices.  Then, we see another surge in the 1980s when we had another real estate bubble.  Finally, we hit a trough around 1995 and take off like a lunar expedition and the bubble of the century is born.

Prices have crashed as they do when bubbles burst.  But are prices at a bottom?  In the last peak in the 1980s California home prices cost about twice that of the nationwide median price.  At the height of the current bubble, it almost reached 3 times the nationwide median price.  Take for example the trough in 1996:

1996

California Median Price:                                $177,270

Nationwide Median Price:           $122,600

At this juncture, a California home cost roughly 44 percent more than a median price home throughout the country.  Let us run the numbers as they stand today:

2009

California Median Price:                                $285,480

Nationwide Median Price:           $174,000

A California home will cost you 64 percent more than the nationwide median price home.  Keep in mind that this bubble of course is unprecedented in nature but the argument that somehow prices are historically cheap doesn’t even line up with the 1980s bubble trough.  Clearly this bubble that has wiped out over $12 trillion in household wealth is much larger.  Plus, we have yet to see the Alt-A and option ARMs hit the market and this will bring prices lower in mid to upper tier markets – in fact, this is where the action is going to take place in the next few years.  Even if we go back to the trough ratios of 1996, we still need a 10 percent drop in prices.  How significant is that?  Well if you are using a FHA backed loan that will easily wipe out your saved down payment and some.

It is also important to understand that we are entering the slow selling season for real estate.  Let us examine Southern California data:

Now this chart is worth exploring.  Fall and winter are historically slow selling months.  Spring and summer without fail bring out the buyers.  Boom or bust these are typically good times for home sellers.  As you can see from the above chart, without exception since 2000 the low season selling point is reached in January or February.  Keep in mind the recent boom in Southern California was largely due to investors, first time home buyers lured by the $8,000 tax credit, low interest rates, and people looking at the first chart where prices have crashed and assuming it is now a good time to buy.

But what if the tax credit is removed as it should be?  What will happen?  You can rest assured that this coupled with the seasonal trends will only push sales lower and most likely prices.  What you need to factor in as well is that foreclosures don’t care about seasons.  They are going to happen no matter what because they are dependent on the real economy.  We can run extend and pretend loan modifications but without employment growth, it is merely a paper façade.  So for those just rushing to buy right now they are entering a market with so much artificial stimulus right before the following:

(a)  Tax credit removal (it will happen at some point)

(b)  Slower selling season

(c)  Alt-A and option ARMs coming online in full force 2010 to 2012

(d)  Banks holding off inventory and moving like snails with foreclosures

These are a few items that artificially boost the market and it has only stabilized prices, it has not created a boom.  The reason prices will continue to have pressure on the downside is California employment is weak.  12.2 percent official unemployment with a under utilization rate of 23 percent:

Without job creation housing prices will continue to face pressure to the downside.  If you want to see some added job pressure just look at this data:

Source:  OC Register

So prices are still too high reflecting the actual economy.  You need to remember that California wages boomed in the 1990s because of the technology bubble and unemployment was relatively low and heading lower so home price increases made sense.  Incomes went up, unemployment went down, and housing prices went up.  Yet now we are to believe that incomes going down, unemployment going up, is somehow the reason for prices to move up?  I don’t buy it.

I think most of us would agree that housing at the very minimum has to reflect the incomes of households in their community or potential buyers.  Otherwise, your home will sit on the market.  As a property owner I know this well.  I can “want” $2,000 a month in rent but if the market is only paying $1,500 then guess what?  I can sit back and have the place sit vacant for months losing monthly cash flow or I can work with the market rate.  The difference with the current housing market is the government is trying to inject artificial stimulus by giving tax credits, artificially lowering rates, and trying to back stop the entire banking industry just so people can go and buy homes.  But until the job situation recovers, there won’t be any sustained recovery.  That is why this belief that a jobless recovery is no problem misses the entire point that people purchase homes when they feel secure in their jobs and have wages that will allow them to buy a home within their price range.

Let us look at the actual MLS data:

It is interesting since the peak in fall of 2007, the inventory number has steadily decreased.  But this brings into question the big X-factor of the shadow inventory.  Keep in mind this is MLS public data.  The real factor is how many homes are in the shadows for Southern California.  Here’s some interesting data from the Amherst Mortgage Insight study:

Source:  Amherst Mortgage Insight

Now this is fascinating data.  We need to also include the Inland Empire above and you have some of the top 5 areas with shadow inventory.  In fact, that MLS number trend heading lower is dwarfed by the growth in shadow inventory.  Factor in the shadow inventory for L.A. and San Diego and the shadow inventory is nearly twice as big as the actual MLS listed properties.  We’ve never been in a spot like this so to assume things will play out nicely is ignoring the facts.

There is a false sense of security in the current market.  If you are looking to buy, be cautious.  The market is really artificially stimulated and the only outcome so far is stabilization (or at least on the surface).  Remove this, and you can guess what will happen next year.

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A Comprehensive Look at the Southern California Housing Market: 60,000 Properties Listed on the MLS but over 100,000 in Shadow Inventory. California and Nationwide Median Home Price Trends since 1968. Say Good-Bye to Option ARMs.

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Filed under: Newspapers, New York Times’A’ (NYT), Gannett Co (GCI), Media World

The folks in the news business are probably growing to hate Mondays. Gannett’s (NYSE: GCI) profits are off by more than 50%, and the New York Times announced that it’s chopping 100 jobs from the newsroom, along with an unspecified number elsewhere in the newspaper. Like Gannett, the New York Times cites declines in ad revenue as the reason for the decision. The company is hoping that employees will take voluntary buyouts where offered, but it is prepared to conduct a round of layoffs if necessary.

The newspaper, which is the flagship property of the New York Times Company (NYSE: NYT), cut 100 newsroom positions last year, mostly through voluntary buyouts, before a “relatively small” round of layoffs. This year’s 100-job cut is approximately 8% of the newsroom, but the paper will still have the largest in the United States. Approximately 1,150 reporters and editors will remain. Already, 100 jobs have been slashed on the business side, leaving it now staffed at 1,850.

Continue reading New York Times to cut 100 newsroom positions

New York Times to cut 100 newsroom positions originally appeared on BloggingStocks on Tue, 20 Oct 2009 10:40:00 EST. Please see our terms for use of feeds.

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Filed under: International markets, Competitive strategy, Wal-Mart (WMT)

The international division of Wal-Mart Stores (NYSE: WMT) would rank as the fifth-largest global retailer if it were a standalone company. With sales of $100 billion, it certainly looks impressive from a sales perspective. But, Wal-Mart international has failed in quite a few markets in recent years under the then-leadership of current company CEO Mike Duke.

Recent partnerships in India and China have repaired Wal-Mart’s somewhat disjointed international picture, and international operations are now given autonomy and freedom to operate as needed inside the culture of each region and country where they are located. Long gone are the days of the “big box” retailing format being simply exported to other countries. That strategy obviously does not work.

Continue reading Wal-Mart progressing in international markets — finally

Wal-Mart progressing in international markets — finally originally appeared on BloggingStocks on Tue, 20 Oct 2009 11:20:00 EST. Please see our terms for use of feeds.

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Filed under: Verizon Communications (VZ), Stocks to Buy

Verizon Communications’ (NYSE: VZ) shares have pulled-back from a high above $32 registered earlier this year, but you can view this move lower as a way to establish or to add to a VZ position, which is I’m reiterating my Buy rating for the company, first recommended on February 12, 2009 at a price of $29.86.

Verizon, which boasts 6 million landline subscribers, is still viewed by institutional investors as more old economy than new economy — this despite being the largest wireless carrier in the U.S. with about 88 million wireless subscribers. Further, VZ’s FiOS broadband service continues to exceed expectations, and the company’s recently raised dividend adds to the positive mix: not bad, for a ’stodgy’ old company.

Continue reading Verizon: It’s hard to beat modest growth with safety

Verizon: It’s hard to beat modest growth with safety originally appeared on BloggingStocks on Mon, 19 Oct 2009 17:20:00 EST. Please see our terms for use of feeds.

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The Credit Crisis of the last two to three years has changed the whole face of the economic landscape. The knee jerk reaction of the government didn’t take long to appear in the form of HARP, HOPE and other cute acronyms.

A program that hasn’t received half as much attention has been TARP. Maybe because the acronym is not as cute or because TARP is not as linked with reducing loan payments as with cleaning the mess when things don’t work out.

This article deals with what TARP is and what it means for homeowners as well as providing a short analysis how Loan Modifications have fared so far. TARP stands for Troubled Assets Relief Program which sounds nearly as bad as TARP which sounds like something you would paint on your fence to keep woodworm away, which is kind of what TARP is designed to do for Banks and foreclosures.

Enough bad illustrations, what is TARP all about and how is it linked to Loan Modifications?

Troubled Assets Relief Program (TARP) was established by the Secretary in consultation with the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation and the Secretary of Housing and Urban Development. What did such a venerably group of people prepare?

Well, Tarp is designed to provide lenders and loan servicers with compensation to cover administrative costs for each loan modified according to a set of standards. This was an important factor in cajoling banks into accepting the whole Loan Modification program. Banks and other loan servicers are designed to provide loans and receive payments not modify loans.

The government offered compensation in exchange of lenders re-tuning their administration to allow for faster loan modifications. This hasn’t quite worked as the government hoped, but more on that later. The second “job” of TARP is to provide loss sharing guarantees for certain losses incurred if a modified loan were to re-default. This is a kind of insurance for banks and other loan providers. This of course costs money. The government has set aside up to $100,000,000,000 for these purposes.

So what has been the result of all this investment, not only in TARP but also HARP, HOPE and other government sponsored programs? There is no doubt the government in the United States and other governments alike around the world have put a lot of energy and money into it. The results have been disappointing to say the least.

Many would say that the government is dealing with the wrong issues, that this is a credit crisis not a mortgage crisis. Others will grant that loan modification programs take time to prove themselves.

What are the figures so far? Nearly one in four loan modifications in the fourth quarter actually increased the monthly payments of homeowners. Which is a pretty bad result for loan modifications that are designed to make loan payments more affordable.

The re-default rate was about 50 percent where the monthly payments remained the same or increased, while it was 26 percent when monthly payments dropped.

That means that people are more likely to meet their monthly payments if they are cheaper… mmm, no surprises there.

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1. The Obama Loan Modification Aid Program, What Are The Benefits?
2. TARP, Capital Purchase Program…Making It Up As They Go Along?
3. Loan Modifications, 3 Nightmare Stories You Don’t Want To Copy

Related posts:

1. The Obama Loan Modification Aid Program, What Are The Benefits?
2. TARP, Capital Purchase Program…Making It Up As They Go Along?
3. Loan Modifications, 3 Nightmare Stories You Don’t Want To Copy

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It seems Obama’s administration has a program for every issue. If you are struggling with your mortgage but are keeping up with your payments (wouldn’t that be 90% of us) you can get help with HARP. If you are delinquent (behind in your monthly mortgage payments) you can try your luck with HAMP.

HAMP stands for Home Affordable Modification Program. The program is designed to help borrowers who are struggling to keep their loans current or who are already behind. HAMP does this by providing incentives to mortgage loan servicers to modify existing first lien (primary) mortgages. The Treasure hopes this will motivate mortgage providers to move faster with loan modifications. It doesn’t seem to be working quite as planned but the effort is certainly there.

What makes HAMP any different to the other loan modification programs? To start, as mentioned above you can apply for HAMP even though you are behind in your payments. You can also apply for a HAMP loan modification even if your mortgage is not provided or guaranteed by Fannie or Freddie, a requirement most other government programs have.

So what are the requirements for a HAMP Loan Modification?

1.) You must have a home and live in it. The home must have one to four units.

2.) You must owe a principal balance (the actual amount you borrowed without interest) that is equal or less than:
1 Unit: $729,750
2 Units: $934,200
3 Units: $1,129,250
4 Units: $1,403,400;

3.) Be the primary mortgage and have been contracted before January 2009.
Your monthly payments must be greater than 31 percent of your monthly income. If it isn’t we kind of assume you don’t need a mortgage modification.

Unfortunately for many the mortgage is the least of their “loan problems”.
Have a mortgage that is not affordable due to financial hardship that can be documented (that means you can prove it).

If you answered yes to all the above questions you MAY qualify for a HAMP loan modification. The final yes will have to come from your mortgage provider. You must contact your provider in order to find that out.

But what if you aren’t behind in your payments, can you apply for a HAMP Loan Modification.

Yes, the requirements are those stipulated above, no more, no less.  This is good news for borrowers that are making payments, want a loan modification in order to take advantage of the lower interest rates but can’t do so because their home value has dropped and they don’t have a mortgage with Fannie or Freddie.

What you will need to do is prove why you are struggling to make your payments. This will have to be documented so be ready to show paperwork to back your claim.

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1. Loan Modifications and FHA Refinance What Is The Deal
2. Freddie Mac educates borrowers via YouTube
3. Mortgage Refinancing For Underwater Borrowers Now Available

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1. Loan Modifications and FHA Refinance What Is The Deal
2. Freddie Mac educates borrowers via YouTube
3. Mortgage Refinancing For Underwater Borrowers Now Available

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California is still unable to find the key to job growth.  Last Friday new data showed that the California unemployment rate broke through another record coming in at 12.2 percent.  Data for August was revised upward to 12.3 percent.  Good news right?  Well the reason the unemployment rate fell in September was because thousands of […]

California is still unable to find the key to job growth.  Last Friday new data showed that the California unemployment rate broke through another record coming in at 12.2 percent.  Data for August was revised upward to 12.3 percent.  Good news right?  Well the reason the unemployment rate fell in September was because thousands of Californians gave up looking for work.  In fact, employers ended up cutting 39,300 jobs in September alone.  The California budget situation is still in a fragile situation.  The state has had to contend with $60 billion in budget short falls and already preliminary data shows the state is $1.1 billion behind on recent estimates.  These estimates were done with pessimistic expectations and even then, they over estimated the amount of tax revenues they would be collecting.

Source: BLS, EDD

I’ve compiled the U-6 rate for the state and it is over 23 percent.  That is why most people either know of someone that has been let go, has seen their hours cut back, or is one of the over 2 million unemployed in the state.  With the state hiking taxes, this impact has been felt by all.  Yet California isn’t alone.  Many other states have seen their tax revenues decline.  Unlike the federal government with access to the U.S. Treasury and Federal Reserve printing presses, most states have balanced budget requirements.  A recent study shows the massive decline in state tax revenue:

Source:  Rockefeller Institute of Government

The reason overall state taxes are falling much harder and faster than local taxes is many states take in a big chunk of money from personal income and sales taxes.  California in fact brings in over 50 percent of their revenue from personal income tax.  In recessions, the amount collected falls.  Combine this with another fluctuating revenue source like sales tax that also declines in recessions and you can understand why the state has had to deal with $60 billion in budget gaps.  We are already expecting a budget deficit of $5 to $8 billion depending on what analysis we look at.

Local taxes have faired better simply because of more stable income streams.  But even this hasn’t protected them completely.  Here in California the state has gone to battle with local municipalities in terms of paying on obligations.  This is not the way to handle major budget deficits.

For the second quarter of 2009, state tax revenues across all states saw a 16.6 percent revenue decline.  This is the largest decline on record dating back to the early 1960s.  This is not a typical recession.  This is the deepest protraction since the Great Depression.  This only adds fuel and a reason to be cautious and suspect of the California housing rebound.  The state is going to be left with two options to balance future deficits.  Either raise taxes further or cut spending (more job layoffs).  Both cases do not bode well for housing.

Let us now shift gears to the Home Affordable Mortgage Program (HAMP).  Much is now being made about the “success” of the HAMP program with nearly 500,000 mortgages now in the trial modification period.  We have major reasons to doubt this premature success.  Let us go into detail why the HAMP program is largely a smoke and mirrors exercise in trying to stem foreclosures.

Let us Smoke some HAMP

On the surface the HAMP seems like a good initiative.  Let us try to keep borrowers in distress in their homes.  After all, a major reason for our current problems are due to housing so why not work with borrowers?  Yet the problem is in the way the program is structured.  The way HAMP has been carried out is largely a big extend and pretend program.  In fact, HAMP is another reason adding to shadow inventory.  Instead of going to another source for data, let us go directly to the HAMP website and get some documents:

Source:  HAMP

I always took issue how the program was structured.  The essence of the program is the belief that the problem is the interest rate and terms of the mortgage.  Yet the real issue is something we all know.  The banking industry is the main culprit in setting up this housing bubble and gave loans to people it shouldn’t have.  Wall Street and banks made billions in profits and when things went bad, they took the taxpayer for trillions.  HAMP is actually designed to help the banks, not the borrower.
Look at the guidelines from the site above.  First, the borrower needs to be delinquent or face imminent risk of default.  That is easy to establish.  So what is the solution?  Look at the three steps given to us above.  Drop rates to as low as 2% and if necessary, extend the term of the note to 40 years.  They even give us the option of capitalizing principal to the note.  In other words, these are option ARM-lites.  This is straight from the program’s site.  We are even given a document that resembles option ARM terms:

This is provided to us as a sample modification agreement boilerplate.  Let us go back to those 500,000 trial modifications.  Keep in mind these are trials, the program is too early to show whether this is permanent.  JP Morgan announced a $3.6 billion profit last week based on their investment banking and private equity divisions.  Losses are still growing in their mortgage holdings and also with their credit cards.  In other words, JP Morgan is basically using taxpayer money to play the stock market casino.  Forget about traditional commercial banking profits.  It is now operating like an investment bank.

It is important to look at JP Morgan because they swallowed up toxic mortgage All-Star Washington Mutual who by the way, made billions in toxic option ARMs here in California.  JP Morgan by sheer size has entered into the most HAMP trials by any bank in the country:

This data goes up to the end of September.  So 3 million mortgages are estimated to be eligible for HAMP and nearly 500,000 are now in the trial phase.  Keep in mind 757,955 offers were sent out.  Another brainy move by the U.S. Treasury was allowing servicers to use stated income in allowing for the trial program.  That is correct, the same style underwriting for Alt-A and option ARMs is being allowed for entrance into the trial period.

Initially the trial period went for 3 months but is now up to 5 months.  I am not making this up:

The announcement of 5 months was recent so it may not show up in some of these boilerplate documents.  So what does this mean?  We will know success in mid to late Q4 or early 2010.  Most of the trial modifications have occurred in the last few months:

So I would imagine that once we move from trial to permanent, many of these will re-default or will not qualify.  To move from trial to full mod there is a requirement to vet income.  Why not do that now?  Good question.  It is always good to put quick gimmicks in front of good public policy.  A good example of horrible public policy is the $8,000 tax credit.  A waste of time brought on by the lobbying arm of the housing industry and politicians with no backbone.

There is also interesting data out on the first trial modifications.  Look at the chart above again.  50,130 trial modification were entered into in May of 2009.  Even with the 5 month extension, we can now see how many entered the full modification phase.  How many went into a permanent modification?  1,711 or roughly 3 percent.  Some interesting data on this:

“(HuffPo) Here’s why: Permanent modifications under Obama’s Home Affordable Modification Program (HAMP) first go through a three-month trial period. Since the COP and Ocwen figures are as of Sept. 1, that means that those permanent modifications entered the trial phase back in April and May. As of the end of May, 50,130 borrowers were in trial plans (there are now 500,000). The low number of permanent modifications is partly due to the fact that “the initial volume of HAMP trial modifications was quite low,” the COP noted in its report.

Even at this preliminary stage, the low number of permanent modifications is still shockingly low. Warren’s panel said it is “concerned about the low rate of conversion from trial to permanent modifications.” Unless the rate increases “substantially… HAMP will come nowhere close to keeping up with foreclosures.”

The panel’s report discusses possible reasons behind the low conversion rate, including data reporting issues and the failure of borrowers to comply with the program, like making timely payments. One issue stands out: “the difficulties servicers have in assembling completed documentation on modifications commenced on a ‘verbal’ or ‘no-doc’ basis.”

Yes, not making a payment would somehow be a problem.  So let us assume a rate that is nearly twice (5%) that of the early trial modifications dating back to May.  This would mean that out of the 500,000 trial modifications some 25,000 mortgages will be helped!  $75 billion to help 25,000 mortgages?  This is insane!  This is like the $40,000 per house that taxpayers ended up footing because of the $8,000 tax credit.  In fact, let us be generous here.  Let us assume all the 3 million loans in the target range get a trial modification and 5 percent go into the permanent phase at the higher rate.  We are talking about 150,000 mortgages.  So do the math:

$75 billion / 25,000      =          $3,000,000 / for each fix

$75 billion / 150,000    =          $500,000   / for each fix

Dr. HB back of the napkin solution

$75 billion / 500,000 =             $150,000 / for each fix

This is nuts.  I even ran a back of the napkin scenario that does better.  It is simple.  The median home price in the U.S. is $170,000.  How about we pick all loans that fall under this number, see if they are delinquent, and then flat out pay off 500,000 of these mortgages via a lottery system.  I’m not even sure where all this money is going.  If we only have 1,711 loan mods and basically all they are doing is lowering the interest rate and extending the terms, something has to give.  Oh yes my friends!  It is another crony handout to the banks.  Let us look at some documentation provided to banks/investors to entice them to enter this program:

What an absolute waste to basically extend and pretend.  Keep in mind that principal reduction is basically absent in any of these loan modifications.  Yet right off the bat, even when a borrower can “make things up” to enter the trial period the servicer is paid!  Paid for what?  We already know the current success rate is only 3 percent.  Are we to expect a sudden jump over the months?  Even at 10 percent we are wasting money at the front end.  We would have better success just doing a lottery of delinquent loans and paying off 500,000.  I assure you we are not going to have 500,000 permanent loan mods given these current measures unless something drastically changes.  Also, you can modify all you want but unless we start seeing some job growth, what are people going to pay their mortgage with?

Now keep in mind I’m not advocating for the lottery option.  This is an extreme example to show where the money is being wasted.  But also, big banks love this.  Why?  Because these loans are still held on the books at full face value.  That is right, banks can extend and pretend and buy some time, another 5 months by simply extending the trial period to a large number of loans – they don’t even have to check for income.  Think that JP Morgan profit would be so huge if it had to deal with those 437,000 mortgages that are 60+ days late?  You can bet that with WaMu and California lending, they probably have a ton of $500,000+ mortgages that are going to go bad when the option ARMs recast next year.

Either way, HAMP is simply another handout to banks.  So far we only have 1,711 permanent modifications.  Banks are laughing at Washington D.C.  They did with the last administration and the current one.  Why not just go in and claw back those profits and clean house?  Why not tax bonuses on Wall Street up to 90 percent?  After all, they should be thankful because they would be gone without the taxpayer.  And who really knows if the loan mods won’t re-default since we don’t have that data.  But data from the OCC and OTS shows re-default rates of 50, 60, or even 70 percent depending on the loan category.  Even if all these mods go permanent, all you are doing is extending the problem.  The rate eventually will go up.  But they are betting on what, another housing bubble?

Policy has gotten so bad that we might as well do a lottery.  Seriously.  A random Vegas style lottery would have better results.  What a joke.  Banks are controlling this country and policy.  HAMP is $75 billion in the scheme of trillion dollar bailouts but the amount of loans that are now being shelved for another 5 months is a lot larger.  In other words, it is another way for banks to hide losses.

After seeing things like this you might need to role one and smoke some HAMP.

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California Budget and HAMP: Is the Home Affordable Modification Program Helping? California Tax Revenues Falter and Employment Breaks Historical Record.

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