Have you noticed a recent lack of Republicans posting "how great the economy is?"?

Question

Economists fear wave of evictions on way in US

Last updated: September 7 2007 03:00

The fate of the US housing market is increasingly in the hands of an opaque part of the financial system normally associated with moves to evict families from their homes.

Mortgage service companies, which are responsible for calling on Americans to keep up with their loan payments, have assumed a pivotal role in President George W. Bush's market-oriented strategy for dealing with the pending wave of foreclosures in the subprime mortgage sector.

An estimated 6m high-risk subprime loans, worth a total of more than $1,000bn, are outstanding, which will in many cases reset to higher interest rates in the next 18 months, putting more than 2.5m Americans at risk of foreclosure.

"It is sort of like being in New Orleans a month before Hurricane Katrina hit when you know there is a storm coming," said Guy Cecala, of Inside Mortgage Finance.

Economists fear that a wave of evictions of borrowers unable to afford the higher payments will blight neighbourhoods, hit home prices, deepen the worst housing downturn in 16 years, and harm the wider economy.

The response to this crisis outlined by the president places considerable faith in the ability of mortgage servicers to mitigate this blow by helping distressed borrowers to stay in their homes.
Edward Lazear, chairman of the Council of Economic Advisers, said: "I believe, and I think the president believes, that markets are very good at finding ways to solve problems."
But many experts claim that the mortgage service sector is not fit for this purpose.

They argue it does not have the capacity to perform this role, and lacks the personnel, financial resources, technical tools, experience, incentives and oversight to deal with an economic crisis of this scale.

"Theoretically, it makes sense, but not in the real world," said Scott Syphax,a director at the Federal Home Loan Bank of San Francisco. "These institutions are not built to handle this scale and volume of problems."

"The notion that federal regulators can urge services to reach out and contact borrowers who may face distress is unrealistic," said Mr.Cecala. The mortgage markets' success rate where it does modify loans is also poor. About half of loans that are modified still wind up in foreclosure a year later. In past housing downturns, large banks have been able to retool their mortgage servicing operations to adapt to conditions.

But shifts in mortgage finance and innovations in the financial sector mean that most subprime loans are no longer handled by federally regulated banks.

Most have been issued by specialist lenders that have sold the mortgages on to secondary markets through complex financial instruments.

The job of servicing many of these loans has also fallen to myriad smaller companies that have no contact with the ultimate owners of the loans and are themselves coming under stress.
American Home Mortgage services about $50bn of loans and filed for bankruptcy last month.

A court order has given the subprime lender until October 31 to sell its mortgage servicing operation.
But as more service companies fall into the hands of vulture investors, the task of co-ordinating a national response is likely to become complicated.

"The fixes being proposed by the president are not going to result in Americans being rescued from their homes, quite the opposite," said Richard E. Gottlieb, a lawyer who specialises in mortgage servicing.”

http://www.ft.com/cms/s/0/5f67d75a-5cdb-11dc-9cc9-0000779fd2ac.html

TO RUKIDDING: tell that to the people being evicted from their homes. And I don't "hope" for a bad economy, I just don't paint daisies and rainbows on piles of dog crap like YOU'RE trying to do.

To Gman: WE DON'T HAVE A "FREE MARKET SYSTEM.

Geez you people KILL me.

To EastCoaster: You clearly did not READ the article.

Why are you people so allergic to words?

To "a bush family member" Not even close. I must admit, albeit begrudgingly, that I am mesmerized by that small percentage of automatons like you who will bow and scrape and bleed to come up with whatever geometry or ballet or cubism is necessary to throw CLINTON into the mix.

bush is 100% responsible for the greasy pit of GREED which has taken over America.

To Aim: Did I say anything about "bailing out homeowners?"

No, I didn't. But I notice that YOU did not say anything about the

FIFTY BILLION BUSH GAVE TO "BAIL OUT" THE PREDATORY LENDERS.

And the problem isn't 50K a year people shopping for $400K homes, doll. The PROBLEM is predatory lenders (GREED, thanks bush) and people losing their JOBS (thanks bush).

I really don't get it.
People like you don't think regular citizens should get help, but don't bat an eye when bush gives BILLIONS AND BILLIONS to corporations.

I really don't get it.

Again to Amy: Yeah, here's a "sidenote" for you:
YES. bush is responsible for what has taken over this country in the past seven years. Don't whine to me that you have blinders on.

Answer 1

What? NO! The economy is great! Oil companies can still make record profits! Weapons are still being cranked out for good profits... Oh, wait, did you mean YOUR economy? ROFL! Sorry about your luck! Who said we cared about YOUR economy?

Answer 2

The economy in my area is going great. I live in Central FL (I have all of my life). The economy here is better than it was under Clinton. I say that because when I got married in 1994 our taxes were so high we couldn't save up to buy a house. My husband and I had a daughter but still had to pay income taxes out the nose and we didn't make that much to begin with. Once President Bush got into office we got some relief and finally in 2002 had saved enough to buy our first home.

Answer 3

Yes but no lack of blame on various types of women and people with opposing political views. It couldn't possibly be unaffordable housing, health insurance, uncounted unemployment and some people's insistance that minimum wage hurts business (as opposed to unaffordable rent or whatever).

Answer 4

I sincerely hope you are not suggesting that even the Repugnants have finally figured out that the economy is on its ***. Do you think their powers of denial are so week?

Jim D

Answer 5

Another reason to never believe any republican.

Update:: found one who thinks bush kickstarted the economy.
Search for this question. - - "Do you think George bush is a good president?"
look for G-man. Just dont believe him.

Another update:: rukidding "but the economy isnt as bad as you'd hope". lmfao

Answer 6

Man! And to think I thought Congress made laws and controlled the public purse strings!

I am so glad that I was wrong and that the President can Tell Congress to implement all of his plans now with all the funding needed. I am sure Nancy Pelosi is ready to hop right on that!

Thanks for clearing that up!

Answer 7

Again the government is responsible for bailing people out who are in over their heads.

Are you a homeowner, Blue? If not, have you shopped or been in the market for one in the last couple of years? I have. Let's say you earn $50K a year, for example; would you buy a house for $400K? There are factors you are LEAVING OUT.

Answer 8

Blame Clinton. He basically told the banking industry that it was ok to make subprime loans. He also allowed the loans to be sold to the U.S. government's home loan division.

Clinton Allowed The Government To Enter The Subprime Mortgage Business. Freddie Mac is one of the largest mortgage lenders in the world.

""Freddie Mac, one of the primary government-sponsored enterprises involved in the purchase of mortgages, recently announced plans to enter the secondary market in subprime loans by purchasing significant numbers of "A minus" subprime mortgages by 1998 and the higher-risk "B and C" loans by 1999.(20) "
http://www.ftc.gov/os/1998/03/grass5.htm

The report was generated in 1998.
Quote"Prepared Statement of the
Federal Trade Commission"
http://www.ftc.gov = Federal Trade Commission.

Answer 9

They are all busy pulling out their investments and putting in cold hard real gold!

As we all should

Answer 10

It's fine. It's not Bush's fault the dumbass banks gave loans to people they shouldn't. The economy will recover and is. Or perhaps you would like the government to regulate our economy and ruin the free market system.