Barney Frank wants to shift TARP funds for foreclosure aid
After Hank Paulson released that he was going to change course and not use the bailout funds for bad assets or partial continued capitalization of the banking system, he was instead going to focus on credit card, auto and college loan debt to try and restart normal lending. We now see what their purpose was and people are not happy at all. Frank wants to see homeowners helped with our taxpayer monies.
Personally, I don’t see why any money is needed to get lenders to modify their mortgage portfolios. You would think if it was in their best interest to keep people in their homes to avoid foreclosure costs then they would do it regardless. My vote is if the borrower has an income that supports a normal fixed rate payment then they should stay and if not then they should be foreclosed on.
News:
The chairman of a key U.S. congressional committee said on Tuesday he expects a change in the Bush administration’s resistance to spending money from a $700-billion bank bailout fund on reducing foreclosures.
U.S. Home foreclosure filings up 55% percent in July
No surprise here, these are mostly the sub-prime loans that are having their interest reset to a higher amount which is usually too high for the borrower or the value of the house has fallen so much that the mortgage is more than the current value of the home.
Next year we should expect another uptick in the 4th quarter and 2009 when the Alt-A loans start to reset as well and we should see foreclosures to rise in areas where we thought would not see any increase. We are still not through this housing mess, stay tuned.
Report:
U.S. foreclosure activity in July rose 55 percent from a year earlier as a slump in once-sizzling housing markets forced yet more borrowers to default on their mortgages, according to a monthly report.
Foreclosure filings — default notices, auction sale notices and bank repossessions — rose 8 percent from June and 55 percent from July 2007 to 272,171, according to RealtyTrac, which records property in various stages of foreclosure.
U.S. Alt-A RMBS delinquencies rise in June 2008
It looks like the sub-prime show just keeps going. Ratings Direct issued a report on July 22nd that showed alt-a residential loans made in 2005, 2006 and 2007 are all showing increased late payments, foreclosures and REO (properties that go back to the bank).
These so-called RMBS or Residential Mortgage Backed Securities were the end product of pools or home loans that were originated during our lasting housing bubble and packaged into huge securities and sold off in Tranches to investors that would make money off the payments the new home owners would make.
Investors Purchase $2.5 Million Bulk REO Foreclosure Notes for .18/dollar
BridgePoint Ventures West announced that it closed a deal on 2.5 million dollars of notes on foreclosed properties. They noted that the underlying asset with worth more so it worked out to be .18 cents on the dollar. BPV specializes in making bulk reo purchases on distressed real estate assets. Here is the release about the news.
Release:
BridgePoint Ventures West recently announced that their investor group has raised the necessary capital to purchase a $2.5 million dollar bulk REO portfolio directly from a major bank. The notes were purchased from the bank at a remarkable rate of just eighteen cents on the dollar. This particular bank was so impressed by the urgency in which BPV West acted that they’ve come to them again for a similar offering of $6.4 million dollars, again at 18 cents on the dollar, but gave them only 3 weeks to fund the entire deal.