Is MS’ QE2 refi for all on the way or is Ben blowing sunshine up our axxes?

So is QE2, (the quantitative easing not the ship), on the way or is Ben blowing sunshine and/or smoke up our axxes again?


From Fed Chairman Ben Bernanke: Challenges for the Economy and State Governments

On the economy:

While the support to economic activity from stimulative fiscal policies and firms’ restocking of their inventories will diminish over time, rising demand from households and businesses should help sustain growth. In particular, in the household sector, growth in real consumer spending seems likely to pick up in coming quarters from its recent modest pace, supported by gains in income and improving credit conditions. In the business sector, investment in equipment and software has been increasing rapidly, in part as a result of the deferral of capital outlays during the downturn and the need of many businesses to replace aging equipment….

UHHH come again? Exsqueeze me? Increased consumer INCOME???? consumer spending?? Have you SEEN the savings rate and the PCE?

Memo to Ben: Wishin’ and hopin’ and thinkin’ and prayin’ is NOT an economic strategy! Give us Growth or tell the SOOPERGENIUSES in the WH to get the hell out of the way!

Ben continues~(…) To be sure, notable restraints on the recovery persist. The housing market has remained weak, with the overhang of vacant or foreclosed houses weighing on home prices and new construction. Similarly, poor economic fundamentals and tight credit are holding back investment in nonresidential structures, such as office buildings, hotels, and shopping malls.

Importantly, the slow recovery in the labor market and the attendant uncertainty about job prospects are weighing on household confidence and spending. After two years of job losses, private payrolls expanded at an average of about 100,000 per month during the first half of this year, an improvement but still a pace insufficient to reduce the unemployment rate materially. In all likelihood, significant time will be required to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009. Moreover, nearly half of the unemployed have been out of work for longer than six months….

Why  yes!!!, that pesky LACK OF FRAKKIN JOBS is holding us back, just a WEE bit, mighty white of Ben to notice, pardon the pun, my days in the Bronx…

Let’s hope QE2 the MS way is coming (see excerpts and linky below), BTW guess who suggested this 1 pg refi for all??? JOHN MCCAIN IN 2008. yep.

The ONLY WAY IN HELL Ben’s forecast for ‘increased consumer spending and income!!!’ will materialize is if plans are in the works or about to be to launch the MS QE2 plan in which all Americans paying on time get an ‘instant 1 pg refi’ drop in their mortgages to market rates (which, following another buying binge by Fed would be 2.99% let’s say) in CONJUNCTION with cutting principle on the defaultees (this way the foreclosures will stop and the prices will stop dropping in housing) with the new rates for all! the larger group who pay on time wont be so pixxed since they get theirs too…

From the MS PDF-If it were possible to inject a significant amount of stimulus into the US household sector, and this stimulus had zero impact on the budget deficit, did not require an exit strategy, did not distort the markets, and took effect almost immediately, wouldn’t it seem like a slam dunk?
Such an option actually exists in the form of a change to
mortgage refinancing requirements. The Fed and
market forces have pushed mortgage rates to historic
lows, yet many homeowners are unable to take
advantage because they are blocked from refinancing.
This problem could be addressed if the Government
merely recognized its existing guarantee on the principal
value of a large part of the mortgage market – the
mortgages that are backed by Fannie, Freddie and
Ginnie – and acted to streamline the refi process.
There are 37 million mortgages outstanding whose
principal value is backed by the Federal government.
When these homeowners apply for a refinancing, the
application is subject to a standard underwriting process
that involves an LTV test (requiring a property appraisal),
an analysis of the borrower’s FICO score, and income
We estimate a potential average rate reduction of 125 bp on 50% of the outstanding volume of agency-backed mortgages. In the aggregate, the savings amounts to $46 billion per year. That’s more than the cost of the latest extension of unemployment benefits and more than taxpayers saved under the Make Work Pay tax
credits in the 2009 fiscal stimulus legislation.
The bottom line is that market conditions have created a
potential costless windfall that is not being used. There
is no need for a case-by-case analysis of a borrower’s
credit quality when the principal value of the mortgage is
already backed by the government.

…How Many Borrowers Could Be Impacted?
As seen in Exhibit 3, roughly half of all US households have a
mortgage. Of these 55 million households, 37 million have
mortgages whose principal value is already guaranteed by the
Federal government. Yet, when these homeowners apply for a
refinancing, the application is subject to a standard
underwriting process that involves an LTV test (requiring a
property appraisal), an analysis of the borrower’s FICO score,
and income verification. Obviously, the drop in home prices

during the past few years means that many borrowers will notmeet the LTV requirement – especially since there has been a significant tightening in the appraisal process according to press reports. Indeed, our housing analyst Oliver Chang estimates that more than one-third of all agency-backed mortgages outstanding now have an LTV above 80% (see Exhibit 2). Looking at the principal value of these mortgages, the proportion is even greater (a little above 40% of the total) because an outsized share are located in California, where property values are higher than the national average. There are probably an additional 10% or so of borrowers who don’t qualify for refinancing because of job loss or a low FICO score.
Thus, we believe that perhaps 50% of the outstanding principal value of agency mortgages may not be refi-able at present. As seen in Exhibit 4, this estimate is broadly consistent with actual versus predicted prepay9(ment speeds that currently prevail in the mortgage market. (go read the entire paper and how they propose this be addressed, seems a win/win to me)

but if they do not plan to do this then he is either totally disconnected or full of shxt and lying to us, neither is good…

August 2, 2010. Tags: , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St. 2 comments.

Market Mover Tuesday: Case-Shiller Housing Index…

Just released Case-Shiller Housing Index:

10 of 29 Metro Areas show record rates of annual decline

15 metro areas showed price declines of over 10% vs Feb of 08

10 city composite posts annual decline of 18.8% in February

20 city composite down 18.6%

here is how CNBC morning crew is spinning this to be a good number:

Annual home price decline did not set a new record for the first time in 16 months

well alrighty then, let me pop my Korbel cork right now, LOL…..

So the Delta is slowing, that would be IMO the foreclosure sales, however we still have a RECORD inventory out there and with the foreclosure moratoriums ending I suspect prices will fall farther as those ‘shadow inventory’ short sales hit the market…but by all means it is good if the rate of decline would frakkin slow or better stop…or you know actually show an increase in value, HA!

Dow futures are sharply lower after the Dow ended yesterday down 50+, futures down -103 before the open…

*VH House of Pain courtesy of 5150EVH5150

*Straight off of the Gene Simmons Demos, the House Of Pain! Its basically just the basic riff from the 1984 HOP, with different choruses, different verses, and a different solo. The Intro and outro to the solo are also in the 198 HOP, although in different places here. Enjoy!

April 28, 2009. Tags: , , , , , , , , , , , , , . Economy, Entertainment, Foreclosures, Housing, Music, Uncategorized, Wall St. 1 comment.

Video Update: Housing: Existing Home Sales Drop 3% in March….

Update: We STILL have a 9.5 month supply of homes, I do NOT agree this is a bottom, as UE goes up, and the foreclosure moratoriums end, the supply continues to grow. But to be fair here is the other side, second clip below, also if you need to refi or modify, check out the website here: NAR clip number 3, recall the NAR is in business to increase home sales, LOL, talk about a rosy view…

Breaking CNBC Chryon..

This comes after a bump up in sales in February, which some had hoped signalled a bottom and a resurgence in Spring Home sales…

March existing home sales fall 3% to an annual rate of 4.57 million…..

April 23, 2009. Tags: , , , , , , , , , , . Economy, Foreclosures, Housing, Uncategorized. 1 comment.

Updated: Housing Update: More Details Released…

UPDATE: Treasury increases commitment to Fannie and Freddie from $200b to $400b, now they each get 200 billion..

Obama Housing plan will establish a 10 billion insurance fund to ‘discourage foreclosure’

Treasury will establish uniform guidance for mortgage modifications…all future recipients of TARP money REQUIRED to implement loan modification plan

CNBC Steve Liesman breaking it now…

According to Treasury plan includes: Plan to help 4-5 million homeowners refinancing plan

ADDITIONAL PLAN THIS IS NEW!!: Treasury to help fund principal writedowns?? need details there..more than expected

75 billion  homeowner stability initiative to reach an additional 3-4 million at risk homeowners supporting low interest rates by increasing confidence in Fannie and Freddie…

Homeowner Stability Initiative aimed at those who ‘commit to making reasonable monthly mortgage payments’..

Obama plan promises, “no aid for speculators”..

Aimed to help households ‘at risk’ who are current in payments..

Many incentives built into the plan for servicers and lenders to get on board says Steve…

Lenders under Homeowner Stability Initiative will bring down payments to 38% of borrowers income TOLD YA!! That is Sheila Bair’s plan right there…THEN the government would match further reductions down to 31% of the borrowers income…

a low interest rate must be in place for 5 year after which it can gradually be raised to market rates, UH OH THAT IS A TEASER NO NO NO!!!! WTH do they want more ARMS this will lead to waves later, oh good gawd!!!

Treasury will share in the cost of reducing principal on mortgage, need details there!!

Incentives:  Servicers receive $1000.00 upfront fee for each modification and success fees for keeping borrowers current, 1k a year for 3 years.

additional fees for servicers who get mortages modified before default….

February 18, 2009. Tags: , , , , , , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Uncategorized, Unemployment Statistics, Wall St. 1 comment.

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