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From: AskCathyHarris@...

To: askcathyharris@... ; natl-black-agenda-online@yahoogroups.com

Sent: Saturday, December 08, 2007 1:20 PM

Subject: [Natl-Black-Agenda-Online] Creating False Hope by Junious Ricardo Stanton

*From The Ramparts*
Junious Ricardo Stanton
*Creating False Hope*

/ “The program is only delaying the inevitable. If you’re in a home you
can’t afford and/or are currently unable to refinance, chances are
you’ll need a sharp increase in income, a reduction in principle or a
reduction in your interest rate to keep your home long-term. Delaying
the ‘ARM day of reckoning’ by five years is unlikely to make a
difference for most home owners.” /5 Holes in the Government's Mortgage
Bailout Plan
http://seekingalpha.com/article/56480-5-holes-in-the-government-s-mortgage-bailo
ut-plan

Yesterday the Bu$h administration announced its plan to assist
homeowners who are struggling to hold onto their homes amidst the
ravages of the current housing/mortgage/credit/monetary crash. Bu$h, his
Treasury Secretary, the HUD Secretary and representatives from the
lending industry, investors, mortgage counselors and loan servicers
held a joint press conference to announce the details of a five year
interest rate freeze. The move is essentially a PR gambit to give the
administration the appearance they are on top of this situation and
assuage the anxieties and fears of lenders, investors, Wall Street, a
gullible US public and the global economic community. The White House is
touting this initiative as a “private sector” solution, meaning there is
no taxpayer bail out for Wall Street or the homeowners nor is it a
government intervention to stop the sub-prime mortgage tsunami from
devastating more US homeowners and taking the US economy under. The
problem with this plan is, it is not a real solution to the problems.
This “plan” will not help most of the people facing foreclosure or who
are feeling the angst of ARM resets that will balloon their mortgage payments up several hundred dollars a month.
The plan called HOPE NOW Alliance will only assist a small number of
people facing default or foreclosure. The problem is the meltdown is not
just in the “subprime” lending arena. Go to
http://seekingalpha.com/article/56596-some-straight-talk-on-the-mortgage-mess
and read the article entitled /*Some Straight Talk On the Mortgage
Mess*/. Read it thoroughly and you will see why Bu$h’ plan is spitting
into the wind. We must understand this is PR, strictly for show, it is a
total sham. The media focus is on “subprime borrowers” those folks
supposedly with poor credit scores but as the article I asked you to
read clearly points out, there are numerous other levels of borrowers
who have higher/better credit scores who are also facing deep financial
trouble not merely because they foolishly overextended themselves, but
because the whole system is crooked from the top (Federal Reserve Bank, Wall Street, commercial lending institutions, the rating services,
mortgage brokers) all the way to the bottom (straw or third party
buyers, wannabee real estate moguls and speculators, folks trying to
keep up with the Jones etc). The system is corrupt and crumbling and as
the crisis worsens, more and more folks will feel the squeeze and
succumb to the undertow. “Sub-prime aren’t the only kind of loans
imploding. Second mortgages, hybrid intermediate-term ARMS, and the
soon-to-be infamous Pay Option ARM are also feeling substantial
pressure. The latter three loan types mostly were considered ‘prime’ so
they are being overlooked, but will haunt the financial markets for
years to come. Versions of these loans were made available to sub-prime
borrowers of course, but the vast majority were considered ‘prime’ or
Alt-A. The caveat is that the differentiation between Prime and ALT-A
got smaller and smaller over the years until finally in late 2005/2006
there was virtually no difference in program type or rate.
The bailout we are hearing about for sub-prime borrowers will be the
first of many. Sub-prime only represents about 25% of the problem loans
out there. What about the second mortgages sitting behind the sub-prime
first, for instance? Most have seconds. Why aren’t they bailing those
out too? Those rates have risen dramatically over the past few years as
the Prime jumped from 4% to 8.25% recently. seconds are primarily based
upon the prime rate. One can argue that many sub-prime first mortgages
on their own were not a problem for the borrowers but the added burden
of the second put on the property many times after-the-fact was too much
for the borrower. Most sub-prime loans in existence are refinances not
purchase-money loans. This means that more than likely they pulled cash
out of their home, bought things and are now going under. Perhaps the
loan the y hold now is their third or forth in the past couple years. Why
are bad borrowers, who cannot stop going to the home-ATM getting bailed
out? The Government says they are going to use the credit score as one
of the determining factors. But we have learned over the past year that
credit scores are not a good predictor of future ability to repay. This
is because over the past five years you could refi your way into a great
score. Every time you were going broke and did not have money to pay
bills, you pulled cash out of your home by refinancing your first
mortgage or upping your second. You pay all your bills, buy some new
clothes, take a vacation and your score goes up!
The ’second mortgage implosion’, ‘Pay-Option implosion’ and ‘Hybrid
Intermediate-term ARM implosion’ are all happening simultaneously and
about to heat up drastically. Second mortgage liens were done by nearly
every large bank in the nation and really heated up in 20 05, as first
mortgage rates started rising and nobody could benefit from refinancing.
This was a way to keep the mortgage money flowing. Second mortgages to
100% of the homes value with no income or asset documentation were among
the best sellers at CITI (C), Wells (WFC), WAMU (WM), Chase (JPM),
National City (NCC) and Countrywide (CFC). We now know these are
worthless especially since values have indeed dropped and those who
maxed out their liens with a 100% purchase or refi of a second now owe
much more than their property is worth.”
http://seekingalpha.com/article/56596-some-straight-talk-on-the-mortgage-mess

Do you grasp the implications of all this? There are folks who have
refinanced their homes so much by cashing in on the “appreciation” of
their homes which are now falling in value they now owe more than the
house is worth! Most of these people are not getting caught up in the
resetting of interest rates, they are losing their homes because they
can’t afford them. “The wires are reporting that the White House is
working on a plan that would freeze rates on adjustable rate mortgages
for certain borrowers, in an attempt to help curb the rapid increase in
home foreclosures expected in coming months. While it certainly will
help the situation, consider a slide from Countrywide (CFC)'s Keynote
Presentation at the 37th Annual Bank of America Investment Conference in
September which showed the following: Causes of Foreclosure (July 2007)
58.3% Curtailment of income,13.2% Illness/Medical, 8.4% Divorce, 6.1%
Investment property/Unable to sell,5.5% Low regard for property
ownership, 3.6% Death, 1.4% Payment adjustment, 3.5% Other” Rate Freezes
Won't Solve Foreclosure Problem
http://seekingalpha.com/article/56460-rate-freezes-won-t-solve-foreclosure-probl
em
.
The chickens are coming home to roost big time! People lost their minds
thinking they could borrow and spend wantonly and their day of reckoning
would never come. Alas for an increasing number of AmeriKKKans their day
of reckoning is either here or fast approaching. “Having been
miseducated to the point where they cannot think rationally, Americans
began using their houses as cash machines, refinancing as they went. In
2005, private households raised $1.08 trillion through mortgages. Of
this amount, they only spent $95.1 billion on higher-priced homes.
Spending on goods and services rose in total by $539.9 billion, relative
to an increase in disposable income of only $354.5 billion. In other
words, about one-third of the increase in consumer spending was based on
home mortgage borrowing. The real estate bubble began to burst in the
third quarter of 2005, with mortgage borrowing peaking at $1.23 trillion
per annum. Falling steadily, by the second quarter of 2006, borrowing on
home equity was down to $819.6 billion. Some of this sharp decline was
also caused by increases in consumer credit costs.” Economic Cannibalism
http://www.new-enlightenment.com/econ_crash.htm
Each passing month more and more families face default and foreclosure.
The last thing Bu$h and Co. want is a deeper economic collapse
(depression) on their watch, hence the HOPE NOW PR scam. The fact of the
matter is, this program will only help a small number of people on the
verge of default or foreclosure. “This plan was purposefully and
carefully constructed to help virtually no one but lenders. The very
last thing the lenders want is to foreclose on homes that are hugely
underwater. What Homeowner s Benefit? This plan will benefit homeowners
who meet ALL of the following requirements: The homeowner has at most 3%
equity. The homeowner is not hugely underwater on current loan to value.
The home is in an area where home prices are not apt to plunge over the
next few years. The freeze will permanently prevent foreclosure. It
takes all four conditions before homeowners will benefit. The plan has
negative benefit for nearly everyone in the small select group of people
that meet the carefully crafted eligibility requirements.” Hope is Now a
Sucker Trap Mike Mish Shedlock
http://www.minyanville.com/articles/hope-homeowners-lenders/index/a/15141
Bu$h and Co don’t have it in them to do anything really good for the
un-super rich, middle class or working folks. As I said previously this
is all smoke and mirrors to keep the hell hounds off his tail until he
can distract the masses with some other bogus issue. But sooner or later
the real deal will become more widely known and Bu$h will be seen for
the ogre he really is.

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