Fed moves to limit foreclosures. Post 118

Fed takes major step toward stalling foreclosures

January 27, 2009

WASHINGTON (Reuters) – The Federal Reserve on Tuesday took a step toward easing mortgage foreclosures threatening millions of Americans, announcing that it would write down troubled mortgages to keep people in their homes.

Fed Chairman Ben Bernanke said the initiative would specifically include $74 billion of assets held in connection with the bailout last year of Bear Stearns and American International Group.

“The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank,” he said in a letter to Rep. Barney Frank, chairman of the House of Representatives financial services committee.

The Fed was instructed by the law last year that authorized a $700 billion bank bailout with public money that it must do what it can to minimize foreclosures.

President Barack Obama has said that part of the second $350 billion tranche of the money, that was released to him by Congress earlier this month, will be used to stem the tide of foreclosures.

Private economists estimate that millions of Americans are at risk of losing their homes after the collapse of the U.S. housing market savaged house prices and forced up unemployment as the economy slid into recession at the end of 2007.

MODIFYING RISKY LOANS

Research firm RealtyTrac says 850,000 foreclosed homes are already on the market and expects this number to rise by another 1 million homes in 2009, with 2 million more homes entering the foreclosure process during the same period.

In a bold effort … the Fed said it would encourage mortgage servicers to modify loans at risk of default … It will also “assist” the loan servicer in making modifications, The Fed has said it will purchase up to $500 billion of mortgage-backed securities by the end of June to make home loans more affordable to boost demand for houses.

The Fed said it would consider reducing the interest rate paid on mortgages at risk of default, extending the term of the loan, and accepting “a deferral or reduction of the outstanding principal balance of the loan,” according to the Fed document.

See entire article: http://news.yahoo.com/s/nm/20090127/ts_nm/us_usa_fed_foreclosure

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Coach Mitch’s REFLECTIONS™

 

The bad debt

Our bad seed child, the American banking system, is causing havoc, again, acting like the infamous black sheep of the family, the wayward daughter, or the weird uncle. It was only 1990, the last time we had a bad mortgage crises, and it virtually brought down the Savings and Loan system.

Mortgages, many of which should never have been created, will be put into a big pot, labeled “toxic” and sold off in large tranches, at ridiculously low prices, to privileged insiders, in similar fashion to what was done with the Resolution Trust Corporation during the Savings and Loan fiasco. Be ready for it. There will be much bad paper to purchase.

The “real” culprit

In the world of banking, manipulations to create profit, is the name of the game. It does not matter to the banker how profit is accomplished, as long as the profit continues to flow.

We saw this in the first round of taxpayer bailouts. The big money center banks lined up at the trough and pigged out. In a brazen show of power and with indifference and insensitivity to public outrage, the banks used the taxpayers’ monies to purchase troubled banks and to further consolidate their positions, rather than lend the monies to those wanting to refinance or to purchase.

We now have about six ultra large banks. They will own and control most of the mortgages that are generated by American households. Hooray for Fascism, it has won the day.

The non-silver or lead lining

In a move that might sink US, the toxic mortgage debt had been largely sold to foreign interests. Since WWII, the US has been seen as the safest haven for investment. Because of this mortgage debacle, the world may seek other places to invest or “park” its money. Who then will buy our Treasury bonds? How will we raise the $850 billion for economic stimulus monies? Would you buy US bonds, especially when knowing that inflation will be raised significantly and your return will be wiped out? What secret guarantees will the Fed have to give so that big borrowers will buy our debt?

Beware

The only thing left that bars total dictatorship in America is that we still have guns in private hands. The last Supreme Court vote, to ban guns, only a month ago, was 5 to 4. Four justices saw no personal right to bear arms in the 2nd Amendment, even though there is the phrase, “… the right of the people to keep and bear arms shall not be infringed.” Despite the writings and the general understanding at the time of the nations’ founding, that a society can only be free when government is kept in an inferior position to the citizenry, the current social view is that the government is superior to the public.

Yet, somehow, the Justices did see justification that the constitutional phrase, “promote the general welfare” shall no longer simply mean that American governments’ duty is to enact laws that shall be for the good of Americans, and rather, they construed this term of art to mean that an entirely new class of Americans should be created, the “welfare recipient.” Hypocrisy at work. They see what they want to see and we are stuck with the bill.

Prepare

If things continue in this manner, many will head for the hills. Like refugees the world over, we could be seeking a “special” place to go. If you are so inclined, then look at tax delinquent property to find your “oasis.” An inexpensive parcel of land or a cheap parcel with a home is only a small effort away. You can literally find these parcels for the proverbial “pennies on the dollar.” I can show you how.

If you want to be ready to “go to the mattresses,” then call upon Coach Mitch’s “Ridiculously Simple System…”™.

Hunger and privation knows no politics.  Therefore, no matter your politics, you must prepare for the economic dislocation that more and more credible voices are predicting is coming, and soon. You must have income sources other than a 9-5 job. Don’t believe me, read, check many sources, learn. Check the predictions yourself and learn what experts are saying to protect yourself for hard times – collect hard assets. Most importantly, don’t believe anything the Miscreant Poltical Class has to say.  Their vested interest is in keeping you fat, dumb, and quiet.

See Coach Mitch’s “Ridiculously Simple System…”™ for details.
Get ready – it’s coming,