S&P Pushes Back Timing on “Bottom” of Housing Market — 2011

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

The chief economist at S&P, echoing the same conclusions by virtually all experts, now places the timing of the bottom of the housing market as “sometimes” in 2011. My opinion is the same as it was before — they are being too optimistic and applying old formulas to new problems. To be sure there will be life in some markets around the country where the demographics had not been targeted (yet) by  Wall Street in their scheme of the GRAND ILLUSION called SECURITIZATION. But overall, with the job outlook bleak and wages still declining, there just isn’t any reason to expect the national housing market to improve. On the other hand I’m sure that Wall Street will come up with ways to make money on THAT too.

Most people see another 10% drop in housing prices before we really hit bottom, and most of us don’t see any real improvement, although after the bottom is hit, the market is usually oversold and there is a little bounce effect to correct the market pricing.

With inventories of new and old housing units at all time peaks (enough to supply housing units for years without construction), rising interest rates, elimination of pensions (see stories about Alabama, with retirees going to work at Wall-mart because the pension money is gone, thanks to bogus mortgage bonds), a virtual guarantee of municipal bond defaults starting in July, 2011, Wall Street announcing that their earnings are going to take a hit (that is over 40% of our economy now according to the metrics now used), and a glance over at Japan where the 4th quarter is now guaranteed to show a contraction, there just isn’t any news of anything substantive that will wet the appetites of anyone holding money to do anything except protect the money they have from devaluation.

All of this is abundantly obvious as an increasing number of people who would never have dreamed of walking away from a debt, are joining the ranks of those using the strategy of strategic default — just stop paying. They stay in the home as long as possible and then they hit the road with some money in their pockets from not paying anyone, least of all the parties claiming they are in default. Some are litigating, some are not. But the phenomenon is rising rapidly. The stigma of foreclosure is considered an even trade off or better when it comes down to having some money in your pocket and walking away from the debt that can never be justified by the value of the asset because the whole thing was a lie to begin with.

If the lawsuits keep producing results like we expect here, then eventually we are going to see signs of acceptance that the obligation is NOT secured and that the note is NOT a correct description of the obligation. This will shift the bargaining power completely away from the banks, and re-start house-hunting, but at much lower prices.

2 Responses

  1. You know fellas, I could sure some confirmation on the assignment flow. This is not a MERS loan and quite frankly, it seems like the certificate holders put up money to buy securities with a promise that they would be collateralized. Where is the agreement that says the certificate holders also own the collateral by assignment to the trustee? Perhaps it is out there somewhere. The PSA just says the securiiies will be collateralized. Right?

    The Note and Deed of Trust was signed by the borrower to the Originator of the Loan.

    Then that Note was endorsed over to others and there should have been like assignments for each endorsement.

    In the case of the Depositor who supposedly purchased the loan from the Originator (but really the warehouse or sponsor) but who states that it is not a pledge but a bona fide sale.

    Yet, the Originator assigns to the trustee, (per the Mortgage Loan Purch Agreement) rather than the Depositor who paid part cash and non offered securities to supposedly the Originator ( although we know there was a warehouse entity who actually took the money from the Depositor and gave it to the originator for funding the loan.) Is that correct?

    The Assignment from the originator to the warehouse (which has now come into the picture after four years) is now assigning to the Trustee on behalf of the Certificate Holders.

    Question: Why does not the Depositor have to endorse the note and execute an assignment to the Trustee? Rather than the originator (or warehouse if they fess up that another party was involved)?

    Question: Why does not the Warehouse entity who really got the money first,(and gave it to the originator) not have to execute an assignment to the Depositor (who paid for it) ? The trustee did not pay anything.

    Question: Why does not the originator not have to assign to the warehouse entity before the warehouse entity assigns to the Depositor who in turn should have to assign to the Trustee ? Is that right?

    Now we all know that the warehouse entity took the note, etc. from the originator when they gave the originator the money to fund the loan at closing.

    We all know that the Depositor purchased,(per the MLA agreement) from the Originator, however, the Depositor really gave the money to the warehouse entity who was given the note, etc. by the originator along with the closing file and passed on to the trustee.

    We all know that the Purchaser (originator) was told to endorse the note in blank…….. to the trustee,

    Why does the Depositor not have to endorse or assign to Trustee? Does the Trustee have to assign to the Certificate Holders. I know they say trustee on behalf of, but wil that hold………?

    Most of the loans securitized have just about the same game plan. I need one of you fellas that is the expert to just answer these couple of questions.

    Thank you. If you can do it by Monday night, would be much appreciated.

    Now I know how I believe it should be handled. But I need confirmation.

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