Is bail out relief in the billions to banks and the mortgage industry really the answer? Will it really help the economy or hurt the economy and country even more? We have many families losing jobs and the highest unemployment in 15 years hitting 9.3% in Los Angeles. California being more and more less desirable for businesses to remain in California or be able to do their business here.

Is it just another way for the rich to get richer and the poor get poorer? Just another way for wealthy investors to flip homes? Isn’t many of the reasons why we are really in this mortgage mess is investors flipping properties, some realtors not listing homes on the MLS so they can double end a property instead of split a commission, only present an offer to a homeowner if that listing real estate agent represents the homebuyer too and even holding open houses and telling a homebuyer if they really want this home they can’t use their real estate agent and would have to go through the listing agent to get the home, telling a homebuyer to get that home the homebuyer would have to pay such and such price and at times $100,000 or even more over the last recent sale in the same year. Even real estate agents were told that there is so many relocating to Southern California that from this point on there will not be enough housing to those moving to Southern California and many homebuyers may never be able to afford to buy a home due to increasing prices so homebuyers will need to pay the growing inflated prices. Homebuyers getting an interest only loan just so they could get into a home thinking in a few years there would be so much equity in their home they can refinance getting a better loan or just buy another upgraded home.

I’ve personally lived in Canyon Lake for 3 years and some homes have been sitting vacant since before I’ve lived here and obviously no one has maintained the home including water and probably the POA dues weren’t paid by someone. Seeing the properties sit vacant for at least 3 years and not even having a for sale sign or on the MLS personally ticks me off. In the 1990’s banks would list their properties with real estate agents and put the homes on the MLS once vacant and available so the home still had a chance to sell for a fair price not hurting the property values drastically as home auctions. In today’s economy many families are willing to work with the banks, still many getting kicked out of their homes because the bank won’t work with them, the homes sit vacant long lengths at a time with no real estate sign and not even listed for sale, not on the MLS so real estate agents and the public see it available and have the opportunity to be sold at a fair price and even auction off the home for an unreasonable way below even current market values.

Example a Canyon Lake home sold in August 2004 single family residence, 1500 sq. ft. waterfront with dock, 50 ft. wide lot, sale price $690,000 loan amount $565,000. The homeowner recently had financial problems and instead of the bank reappraising the home to today’s fair market value, negotiating a lower interest rate, not working with the current homeowner, doesn’t list the property so real estate agents know the home is available, not listed on the MLS, auctions off the home with the homeowner still living in the home that’s still wanting to negotiate with the bank to keep the home. Most of the public doesn’t know about auctions or how to get information about homes being auctioned. Most homebuyers wanting to purchase a home rely on websites such as http://www.Realtor.com and a real estate agent thinking all real estate agents have access to what is available to buy. Even going to a search engine such as Google inputting the actual address most times no information comes up on these homes and is a secret to even real estate agents that may even have a homebuyer that would consider buying that home at fair market value. The example home was auctioned off recently for $250,000. Is this right? We have wealthy investors buying up properties well below a fair market price, less than half of what the actual loan is, available to very few that have information on the property with just intentions of turning around listing with a real estate agent for what the area is currently selling for. The losers are families being kicked out of their home, ruined credit, many that can never recover and tax payers having to pay to help the bank bail outs and the banks keep asking for more and more bail out money.

Banks should be doing everything possible to work with the homeowner or as soon as the home is foreclosed and vacant list the property for sale with a real estate agent with a for sale sign on the property and on the MLS so everyone can see the home is available and for what price. Laws need to be in place that banks need to have to list a property for at least 90 for sale with a real estate agent and listed on the MLS for the public to see at a fair market price before a home can be auctioned off. If the bank does not they should lose their license. Receiving bail out money and just dumping a property for any price is not the answer and will not help the economy or country.

(Under this hypothesis), The banks are STILL bankrupt after the bailout. Their balance sheets, if honestly marked to market, have hugely negative net capital. (And the value of assets, tied to mortgages and derivatives thereof, are still racing to the bottom with the Case-Schiller index.)

The purpose of the Bailout was to reassure the public that the banks would be there tomorrow for their ATM withdrawals, for their credit cards to work, for their checks to clear. It was touch and go for a while, as the banks themselves refused to believe in the fiction. But LIBOR, and spreads over it, are now back out of the stratosphere, and the carping about a bad deal can begin.

But any deal, no matter how much the Gummint bought senior equity, still leaves the Gummint holding equity rights to… nothing. It is senseless to talk about how good a deal Treasury got, because the bailout — complete with the wink-wink nonsense that “we don’t really need this money but we’re taking it so as to reduce the possible opprobrium tbat others would earn from accepting it” — is merely an effort to buy time until somebody can figure out how to reflate the asset prices. But pushing up housing again probably can’t be done without the massive inflation that nobody wants, and a direct bailout of all the “bad actors” who bought McMansions with no down and liar loans has already been made impossible due to the very visible moral hazard that would entail.

So we have this creak-along Bailout Theater. Hope the ending is interesting. Wish the ticket price wasn’t so high because I’m not liking what I’ve seen so far.

http://www.thefreedictionary.com/deny
http://www.thefreedictionary.com/predicate

indeed…

here in America we turn the other check and forgive
(well .. maybe not when it comes to money . we get even)… if possible

anywhichway … an fyi to log

I have quoted Mr John Mill before, but it bears repeating: ““Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.” The extent to which capital has been betrayed in the past quarter century under Bretton Woods II, bank deregulation and the Basle Capital Adequacy Accords is unrivalled in the history of fiat banking. The bankers, lawmakers, regulators and academics who collaborated in the betrayal still hold power, like the well-armed brigands in the fortress, and their continued collaboration to prevent accountability must inevitably discourage honest savers from risking further loss. Even so, it is the savers/peons who hold the ultimate power as they can starve the brigands.

Some day soon savers will revolt at financing further depredations. They will refuse to buy even government securities, gagging at the quantities of issue forced upon them under terms of only negative return. When that final massive bubble bursts, deflation will follow its harsh corrective course and clean out deficit-financed “unproductive works”.

When that happens, if reason is restored in markets with effective oversight, I might consider investing again, very selectively, in whatever productive works might then be on offer and only when secure in realising – and retaining – a positive yield.