Thanks alot

Gary Konowitz

415-453-8450

And if we didn’t use taxpayer dollars to bail out creditors this market would self correct, and lenders would only make loans to folks they were pretty darn sure could repay. In fact if lenders hadn’t been able to shift risk to others by lifting long standing regulations against it (put in place after the great depression), I honestly don’t think we would have had this credit bubble in the first place.

Couldn’t agree more with your last paragraph, and yes, the dutch system is interesting.

I don’t buy the argument that the banks were more aware than the common citizen…….if that’s the case then no-one should ever be allowed to buy a home or make any major purchase using credit unless they take some sort of class, offered by whomever, to educate them on the common sense and basics of debt and overall personal finance. It’s really not rocket science. Maybe that’s the new requirement….that way, the excuses can finally stop. Then it’s no longer the vendors fault that they “burdened” people with debt.

I agree the homeowner should not get off free but what do you think is happening right now? I’m in real estate, I see it all the time…….people taking advantage of the system after already having taken advantage of any equity they did have when the market was better. Our homes are not banks, they are homes and they are something that one should own with the intent of living in it and eventually owning it to give future financial freedom…..until that attitude changes people will continue to willingly walk away and (other than bad credit) be completely undamaged while the responsible people get shafted. Trust me, I know plenty of people who can make their house payments but CHOOSE to not…….and I guess that’s okay according to the new morals of our society. Plenty of these people took equity out and bought lots of fun expensive toys…….the ones they are still driving while not making payments on their home. They go right along with people who have lived in their homes for a year or two without making any payments…….wow. Wrong is the new right I guess.

How is the bank “entitled” to a silent second….how is that entitlement? It simply holds the owner of the home responsible for the entire loan amount (which IS what they legally agreed to) while reducing the payment to a manageable monthly amount…….I’m missing any argument for an entitlement to the bank.

Inevitably the larger concern here is the road to socialism. As our government starts to “force” free market enterprise to do things, we start to lose our freedoms as Americans.

Let the free market clean up what has happened and then instill regulations in our market that make sense (on both businesses AND individuals) so that BOTH parties are equally responsible and can equally be pursued if this happens in the future…..take a look at the Dutch mortgage and housing market…..very interesting.

A lot of interesting news yesterday. Chase is saying, yes we are losing money on loans. B of A saying for the umpteenth time we are going to start foreclosing. But a couple of interesting government tidbits.

HAMP is not working–duh, and Treasury is saying now–no more extensions.

HUD appears to have changed the rule on flipping (giving an out to investors at foreclosure sales?)

I find these things interesting and pose a hypothetical that the cap on Fannie and Freddie was taken away not for principal write downs but to finally start allowing losses on foreclosures and short sales.

Why now? Well, because “housing finally seems to have bottomed”. Enough folks are saying that the housing freefall has haulted, we know our bottom, we can evaluate our losses. There is pent up demand. If we sell now, we recoup as much as possible in the next 10 years, so let’s take the hit, things will be much better than if we wait for interest rates to start rising and then take bigger and bigger hits later on.

I still say a a short sale or foreclosure beats a principal write down in the short term because banks and investors get paid back immediately and now some other chump (ie. FHA) will be on the hook. In the long term, its worse because a flood will negatively impact values thereby creating a perpetuating downward pressure on pricing. But short term, with the current pent up demand for reasonable priced housing seems like a good way to go. This will also raise some doubt for someone currently paying who will just default in hopes of a principal write down.

I think that for the short term thinking banks and politicians it makes perfect sense to in the short term flip the foreclosure switch for the next 2-3 months, allow demand to wipe up the excess and then flip the off switch when losses start looking to high.

I’m asking you why this would not make sense (given our political and economic environment)

Given that lenders are today’s rentiers, should they really be entitled to your proposal of silent 2nds, not to mention bankruptcy protection? I’m not suggesting the homeowner should get off free, but the banks with their analysts and economists were in a better position to realize these loans were a mistake than the average homebuyer.

Paying back TARP likely provides some political cover, but it hardly gives the banks free rein. Don’t forget many were forced to take TARP in the first place. What says they can’t be forced to do other things?