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Bank of America Shows Some Heart

By Rick Ackerman Posted on March 26, 2010, 12:01 am EDT Last Updated March 25, 2010, 4:39 am EDT

The mortgage relief plan just announced by B of A is the most consumer-oriented idea to come out of the banking sector since real estate prices began to implode in 2007.  The goal of the program is to allow individual mortgages to fall to a level where they approximate the market value of  homes whose value has fallen underwater.  B of A, the nation’s largest mortgage lender since acquiring Countrywide in a shotgun wedding, estimates that about 45,000 customers will qualify. However, because other banks will be under pressure to match the offer, the number of beleaguered homeowners who could get some relief could eventually be ten times that. We doubt that would suffice to stabilize prices throughout the country, but it would be a step in the right direction.  In any event, it would at least slow the pace of foreclosures, since homeowners would have an incentive to stay in their homes rather than leaving their keys in the mailbox and renting a place down the street.

To qualify, borrowers must have missed a least two payments and owe at least 20 percent more than theirs homes are currently worth. The limit of forgiveness would be 30% of a customers’ total mortgage balance. This suggests that, far from being an empty gesture or a public relations ploy, B of A and its shareholders will face actual risk. That’s because homeowners whose monthly payments are current could deliberately withhold a couple of payments just to qualify.  There is also a moral calculation at work that could rile those who have borrowed responsibly and need no relief.  Indeed, there is every likelihood that debt forgiveness will send the wrong message to at least some borrowers who got in trouble because of recklessness rather than misfortune.

Wall Street’s Reaction

The Treasury Department already has a mortgage modification program in place, and borrowers will need to qualify for that program in order to get a break from B of A. However, the fact that a program similar to the government’s has spread into the private sector is the most encouraging news that financially troubled households have gotten sense the housing crisis began. For B of A, it will make good on an agreement with state attorneys general made 18 months ago to settle charges over high-risk loans made by Countrywide.  While it’s tempting to portray anything the banks do these days in a cynical light, Wall Street’s reaction so far is heartening. B of A’s shares have risen nearly seven percent in the last three days, suggesting that usually hard-hearted investors may have accepted the idea that it’s possible to do right by doing good.

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  • John Wright April 21, 2010, 6:42 am

    WHERE IS MY LOAN MODIFICATION BANK OF AMERICA?

    If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

    BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.

    http://www.youtube.com/watch?v=NTmeHM-Hojg&feature=related

    Have you seen the little piggies
    Crawling in the dirt
    And for all the little piggies
    Life is getting worse
    Always having dirt to play around in.

    Have you seen the bigger piggies
    In their starched white shirts
    You will find the bigger piggies
    Stirring up the dirt
    Always have clean shirts to play around in.

    In their ties with all their backing
    They don’t care what goes on around
    In their eyes there’s something lacking
    What they need’s a damn good whacking.

    Everywhere there’s lots of piggies
    Living piggy lives
    You can see them out for dinner
    With their piggy wives
    Clutching forks and knives to eat their bacon.

    John Wright vs. Bank of America Lawsuit at:
    http://news.yahoo.com/s/prweb/20100323/bs_prweb/prweb3766544_1

    When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.

    Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.

    Divided we might have fell America, but united we must stand!

    Please send your email directly to Bank of America and include the following:

    1. Your name
    2. Your complaint concerning your experience with Bank of America.
    3. Please end your email “I support John Wright vs. BofA Lawsuit!”
    4. Please send a copy of your email to johns-wright@hotmail.com
    5. Please send your email to both BofA link below and the CEO email

    BofA Linked Email:
    https://www3.bankofamerica.com/contact/?lob=general&contact_returnto=&state=VA

    CEO Brian Moynihan:
    brian.t.moynihan@bankofamerica.com

  • photoradarscam March 29, 2010, 8:20 am

    “The government’s and B of A’s program will be catastrophically deflationary because, for each homeowner who succeeds in getting his debt reduced by having his home’s value marked down by the lender, five or ten neighbors who don’t get mortgage-reduction relief will be sitting on properties that have lost tens of thousands of dollars worth of value overnight.”

    I disagree. The value wasn’t lost overnight. It hasn’t been there for months or years. Any principal reductions will probably reduce balances down to the present values, but not below them.

    &&&&&&&

    “Overnight” was meant figuratively, but it accurately describes the precipitous way in which denial will cease to be an option. RA

  • QQQBall March 28, 2010, 7:59 pm

    Clearly, the loan program is not the cause of the r.e. price deflation, it is an effect, and IMO it is an attempt to arrest the rate of price/value decline. The loan program will only delay the ultimate reckoning b/c it is a defacto price support. Prices will reach a market clearing level b/c demand was pulled forward via excessive leverage, imprudent lending and borrowing, lax regulation, absurdly low IRs, etc. The sooner prices reach a level that afford folks a manageable monthly payment at a market IR after an adequate 25% to 30% down payment, the sooner the market will begin to recover. The sooner the imprudent realize the losses they have sustained (that’s right – already sustained) the quicker punishing of the prudent will end. The longer people and institutions are backstopped against losses, the longer the imprudent behaviour will continue.

    I am sick of paying for fraud, lying and political posturing. YOU, the over-leveraged borrower, followed the herd off the cliff; grow-up, I and others like me are not your personal financial parachutes. Quit whining, get up off your knees and suck it up. You never could afford the home – maybe neither could I, but you blew-up, not me.

  • mario cavolo March 28, 2010, 6:41 pm

    …..great stuff John Wilson but the thing is that it is more likely than not that there will not be much of the “utter collapse” you call for. The call is way too broad even though the extreme pessimism is righteous, and the anger is righteous and I share it with everyone, I’m SO pissed…..but the practical reality is not screaming broad utter doomsday. I keep trying to explain the idea that the problems cited are systemic, but the damage is limited to newly defined segments of the society, not the whole society…I have oft writen that the middle class of America has been raped and pillaged….but so what? seems to be the mantra of the the OTHER folks in America whose lives have apparently gotten immeasurably better and richer and who apparently are still out there creating and producing and spending…has the country come to a complete standstill? No…have corporations NOT cut costs and enabled themselves to now be much more profitable and productive in a coming upturn? It seems they have….so then, 100 million American middle class have had their lives made worse…another 50 million were already poor….that leaves the other 130 million, which includes the kinds of folks right here in this board with plenty of assets and cash and business and careers and reasonable debt levels….THAT group is the new American economy and THAT group along with the government is going to be burdened to have to start supporting the other group, going the way of socialist Europe…so, big shifts, nasty shifts, ugly shifts are in the cards, painful for many but not everyone. But utter collapse….rhetorical nonsense, provocative reading but most likely no more than that. We all need to get smart fast now to know where and how to position ourselves for the shifts that are coming. U.S. deflation will linger as Rick has well spelled out, but beyond that, inflation is coming big time, higher bond yields are coming, currency roller coasters are coming, gold/silver down for awhile longer, then to the moon, same for oil, nuclear energy coming big time….APAC led by China rising, rising, rising with more wealth and cash than anyone realizes, a very scary prospect, yet it is the side the global bread is buttered on…it is the new reality.

    Cheers, Mario

  • John Wilson March 28, 2010, 2:54 am

    Rick, glad to hear you were not fooled. Was a little concerned there for a few days 🙂
    The cynicism is a byproduct of the activity of the fools in charge, and justly felt. What “truths ” come out of any agencies these days? They play with the unemployment numbers, productivity numbers, lie about transparency in any government agency, lie about troops out of Iraq, lie about closing Gitmo, lie about the health care bill, and on and on.
    I truly feel that the only way to stop this fiasco (and the Republicans are not much better, and I question if they are any better) is to pull a John Galt, as talked about in Ayan Rand”s “Atlas Shrugged”. Let all of us who actually produce , stop – give control of the country to the robbers and thieves, and let them have it all. See how long they last when there is no one left who actually produces a product to steal from. It would all come down in less then a year.
    But, we keep struggling on, in spite of the robbers on wall street and the thieves in Washington. Why? Because it is in our nature. Honest, hard working productive people always want to be that way. To let it fall by the way side is a mind boggler!! I am in the process of just letting it all go, and it is really TOUGH!! To have the attitude of ” I cannot change this, it has been going on for years, and unless they loose the people to steal from, it will go on for as long as honest people allow others to steal from them”
    My humble opinion. The bloodsuckers have shown there true colors over the last few years, and they can have what I have now, but very little in the future. I refuse to participate or allow these Washington leeches to suck my blood anymore.
    Tea party, Patriot Party, or Republican party will make no difference. It has to be torn down, bureaucratic agencies have to be shut down (Education Department, Health Care Department, HUD, IRS, and many others), and we need a fresh start.
    Anger at Democrats over the health care is just the beginning. If ever the American people realize how badly they are being robbed and cheated, a brick through a window will appear like child’s play.
    I just do not see any way around a complete and utter collapse to right this country. There is no leader in either major party right now that can put us back on a path that is anywhere close to what the Constitution was drawn up for – state and individual rights. I truly believe that the U.S., as I once knew it , has been lost. More government control in the near future just bodes ill winds for the far future. What we have now is a sham, a charade. I do not even need the help of my finger to bring up my disgust.

  • JohnJay March 28, 2010, 12:38 am

    Man! You guys are even more pessimistic, angry, and cynical than I am!
    Maybe there will be enough furious citizens to get a Constitutional Convention called and the Federal Government abolished! There is no other way. Voting is a meaninless joke, lobbyists are writing legislation that no one in Congress even pretends to read. The system can’t be reformed or mended, it can only be euthanized.

    • AverageJoe March 31, 2010, 6:48 am

      JohnJay, Your call for a constitutional convention is scary! That would open up our constitution to any change – the entire constitution would likely be discarded.
      And don’t complain about voting until you are really involved by going to your monthly Dem/GOP county meetings. If you are in a caucus state, I hope you attended caucus.
      The next step is to run for a local office or board of directors.
      Or are you too busy to really get involved?

      Cheers.

  • TahoeBilly March 27, 2010, 8:44 pm

    I really am starting the think that the Banksters have suffered a sort of infuriority complex compared to the tech industry and everyone else. This is why the got so “creative” and had the Fed print them so much funny money. Why should they just stand and watch the Tech industry and Hollywood have all the “creative growth” when they too had so many “wild ideas”. Okay so a fancy new derivative is not quite as sexy as say an new Apple product, but why should they have let that slow their creative juices from flowing. “Hey Alan, look over here, we are a leading American industry too, see all this crazy stuff you can’t understand, were are just like Silicon Valley!”

  • John Wilson March 27, 2010, 10:56 am

    I cannot believe that you have fallen for this scam from B of A. I state this, because I just did a strategic default with them less then a week ago.
    I do not believe that these clowns will live up to what they are saying they will do. In 19 months of not paying my mortgage, not once did I receive a call from anyone at the bank asking to sit down and work out a plan for me to stay in my house.
    I was capable of paying my mortgage, but when my neighbor bought his house for approximately 50% of what I paid for mine, I told the servicer (Wells Fargo) to either lower my principle, or take the house back. Well – low and behold, CWMBS ( a subsidiary of Countrywide) was the mortgage holder, offering nothing as far as an inducement for me to stay in the house. They took the house back last weekend.
    I truly believe this is a ruse. Watch B of A, and see if there is really any follow through from them to work with home owners. Having dealt with Wells Fargo, with the lies and frustration of never talking to the same person twice, I would be a large bettor that this will not slow the foreclosures one bit. Watch and learn about these blood suckers of American citizens.
    With the manipulation of the precious metals, the whistle blowers who told the regulatory agencies about the scams in the hedge funds and mortgage industry, it is all propaganda that these agencies and banks are working for the American people. This is a prolonged death march for America, placing the wealth of the country into the hands of the few in power and control. Just like the lies they told about the health care plan, this is no different. It will not be followed through on, though it will be talked about in the press for days, if not weeks. Watch in wonder as these blood suckers still do nothing to stop this fiasco of socialism in the U.S.S. A. ( United Socialist States of America)
    Mark my words here and now – B of A will NOT slow done the foreclosures. B of A will NOT work with homeowners to the benefit of getting them anywhere close to owing on their homes what they are really worth in todays market.
    I have enjoyed my subscription to your service, feeling that you are one of the few that really “get” what is going on in this country. But, a little disappointed that you have fallen for the lies from B of A. On face value, one would think that this would make sense , and would work. Having dealt first hand with these bozo’s , all I can say is “good luck with that plan” – it is just an effort to continue the scam that has been going on over the last few decades. B of A will not follow through on this.
    Time will tell. Maybe I should offer to do a hula dance in Times Square in the middle of January if these clowns for B of A actually do follow through on what they have said they will do. 🙂
    Keep up the good work , Rick. But do not believe for one minute (unless they get money from the government to make up any losses they incur) that B of A will , out of the goodness of their hearts, take losses to accommodate the clients that they have who are way upside down in their homes.
    Regards

    &&&&&&&

    Thanks for weighing in, John – and please note that I have not been “fooled” by B of A; rather, I felt it was time to give my own cynicism a brief rest. The government’s and B of A’s program will be catastrophically deflationary because, for each homeowner who succeeds in getting his debt reduced by having his home’s value marked down by the lender, five or ten neighbors who don’t get mortgage-reduction relief will be sitting on properties that have lost tens of thousands of dollars worth of value overnight. RA

  • QQQBall March 27, 2010, 7:14 am

    Someone who commits fraud to obtain a loan, is NOT the victim when a loan goes bad. Someone who buys a home in 1960’s for $40,000, eventually encumbers it with $640,000 in loans by 2009 and then defaults on the loan(s) is not a victim. Someone who buys a $600,000 home with $18,000 down payment at a teaser rate may be an idiot, but they are not a victim, particularly if they live in the homes for 18 months after they stop paying property taxes and mortgage payments. There are people who bought at the top and lost, there always are, but there are many more that acted prudently and continued to save and pay rent while awaiting home prices to decline. Instead, their gov’t uses their tax dollars to promote “savings” liars, cheats and idiots… They are in fact victims. people acting criminally all through the system – we as society are victims of their crimes – they should be forced to pay restitution, not be given $100 of thousands of dollars in loan mods.

    BTW, a passage I read stated that FNM saves borrower 7 bps on the IR – that’s .0007… Time for the gov’t to claim victory and take the losses on FRE and FNM and get the hell out of the loan business. FNM was never intended to portfolio loans – if they can eff-up something like making FTDs, what will the ydo with brain surgery?

  • Occdude March 27, 2010, 3:49 am

    Aren’t we forgetting something here? Like the grand enabler who allows B of A to express its benevolent side, the “you s of a ?”. Only the government could formulate a toxic miasma of opportunistic homeowners with opportunistic lenders. Both sides need to get dunked. The “poor consumer” gets his credit card shredded and they are now cash and carry and the dumb lenders go broke, period. Justice served, move along. Instead we haven’t even begun the correction and now all of us are dumb lenders and greedy borrowers and part of an economy that manufactures idiocy and waste.

  • PhotoRadarScam March 26, 2010, 10:56 pm

    The whole problem is a paradox.

    Many of the people who are late or missing payments would gladly keep their house and resume payments if you reduced the principal and their payments accordingly. However, the bank would end up eating all of the loss and more by accepting a short sale or foreclosing. But (until this article), the bank wouldn’t consider the SS or foreclosure option until the homeowner starts missing payments. Reducing the princpal and keeping people in their original home is a more preferable scenario than one involving a short sale or foreclosure, and is probably cheaper.

    I’m personally upside down but I can continue to make payments and I am making them. However, I would be upset if my neighbors got their principal reduced just because they started to miss a few payments (or simply because they had a different mortgage company), and I didn’t… especially if it’s done with taxpayer dollars. How you would amdminister such a program fairly I don’t know, and I don’t suppose it’s possible to make everyone happy.

    But who *deserves* to be helped? Those who are current on their payments and can afford it? Try telling a bank that they need to devalue their portfolio of performing debt. Or those who can’t, and have a significant chance of defaulting in the future?

    A principal reduction program would help the country greatly though as those who are currently stuck in their homes could maybe relocate as their mortgage situation is hindering their ability to move somewhere else for work.

  • John B Collier March 26, 2010, 8:47 pm

    what does awaiting moderation mean ?

  • ter March 26, 2010, 7:46 pm

    Haven’t seen the Fed’s plan in writing. Commenters have suggested it is intended to benefit banks stuck with first mortgages, and “servicers” of mortages with multiple owners ,while buying off second mortgage holders for $1,500, and denying them recourse to law. It keeps homes occupied. It also, I infer, denies the mortagee the opportunity at a foreclosure hearing to demand of the mortgagors and servicers proof (in the form of the original mortgage) that, say, BAC has the legal right to seize the property. Remember, many securitized mortgages have numerous partial owners. Further, copies of such mortages were to have been stored at a single midwestern location. Either they were not prepared at all, or they can’t be found. In Ohio and Florida, the mortgagor failed to satisfy this contractual obligation, so the homeowners were left in possession.
    I have described the Federal program written by the banks, as I recall its details. BAC’s sounds similar, but not identical. Correct me where necessary. It’s a program by and for the banks.

  • Rich March 26, 2010, 6:45 pm

    Aloha Rick et al
    If you bought the median-priced home in 1979, you are now underwater.
    http://2.bp.blogspot.com/_goypolxEFd4/S6yt0RPizLI/AAAAAAAAEjE/OyvnQa0ZBRU/s1600/single+family+home+prices.gif
    We bought DRV above 8.05 yesterday to celebrate…
    Regards*Rich

  • Jason March 26, 2010, 6:21 pm

    Rick:
    In general, when the 1st mortgage (non-recourse) is refinanced (including HELOCs), it is the intent to change the terms of the old loan with a new loan and new terms. The lender can change back the terms of the loan to favor the borrower, but why would they want to do that?

    When someone refinances a non-recourse loan, it would be prudent to try and get non-recourse terms on the REFI. If that is not possible, a borrower should weigh whether losing the non-recourse terms would be worth it to do a REFI.

    Many people are not aware of their state laws, the terms of their loans, tax consequences.

    For example, when borrowers who had recourse loans got foreclosed or did a short-sale, all of them thought it was all over. They get new jobs, get back on their feet, build up some savings. Suddenly, they wonder why their checks have not cashed; there is plenty of money in their account. Then, they find out that their lender is now coming after them for the rest of the balance of the loan.

    In addition, some states did not follow the Federal suspension of treating mortgage debt cancellation as income. So, the borrowers are also getting hit with a large tax bill.

  • Mike Eck March 26, 2010, 5:49 pm

    Rick wrote: “To get back on track, let me reiterate my prediction that home values will fall by at least 70 percent before deflation has run its course.”

    Yeah, I did not see that having much, if any, overall effect. I’m still on hold, while watching prices fall, regarding buying a winter home.

    Mike

  • John B Collier March 26, 2010, 5:48 pm

    B of A along with Washington and Wall Street have no morals and are just trying to make our middle class “all equal” for reasons that we all understand. The responsible citizens are being pulled down to be equal to those that are not responsible. Our country has lost its heart and soul. Those that concur with these actions by them are just enablers for them.

  • DG March 26, 2010, 4:53 pm

    Does the government ever “govern” pricing the way they want it to go? Give student loans and voila, tuition goes through the roof. Give cheap money for homes and prices go through the roof, then the floor (“first through inflation, then deflation…” huh). Give welfare and poverty increases. Increase taxes and eventually tax receipts go down. Anybody care to guess what will happen when they attempt to keep house prices from going down? Go down even further? Sure is fun trying to play pinball with the government constantly tilting the machine. Entropy cometh.

  • fallingman March 26, 2010, 4:28 pm

    Yeah, B of A is all about nice.

    QQQBall speaks the simple truth. The market needs to clear. The banks can’t let it. Politicians won’t let it. And so the fun goes on and on and on and on.

  • Mark Loeffler March 26, 2010, 3:23 pm

    Hi Rick,

    I agree with it’s a nice thing to do. My only thought is how solid is BOA and are they on the verge of default? If they are close, it may be their only way to keep assets from being liquidated at street value “which is horrid” and forcing deleverage for their company. My guess is the assets or liabilities if you may are leveraged so highly that they have no choice but to write down twenty percent rather than take one in the teeth which adds to the leveraged position. Whether they come off as caring or desperate it’s still great for the consumer and looks pretty grim for BOA.

  • BDTR March 26, 2010, 2:37 pm

    Pavlov’s dogs are lifting their legs to piss on the vast majority of the estimated 4 million homeowners turning in their keys this year. That’s up from 2.8 million last year.
    As to the motives of BoA’s new-found forbearance on the plight of 45,000 soon to be former homeowners, heart has about as much to do with it as chopped liver. Try Bush era carry-back tax breaks.

    For 2009, Bank of America netted a $2.3 billion benefit related to income taxes, according to its annual report: It had a benefit of $3.6 billion from the federal government, and an expense of $1.3 billion that it paid to different state and foreign governments. It will pay no corporate income tax into the foreseeable future, …. however short that future may be.

    With appropriate congratulations for consumer prudence to Mr. QQQball above, the current batch of unfortunate citizen home-losers are victims of economic collapse, not it’s cause. Laid off or lose your job lately? Get sick after the fact? Let’s try to keep it in perspective. A significant percentage of the 5% of Americans controlling over 80% of it’s wealth are corporate and banking executives and Congress-persons, not the former the UPS driver, the former teacher, the former machinist, the former tech specialist, etc.
    We should maybe celebrate any every-man’s good fortune to save what little equity’s left in a average life. But, please Rick, spare the praise for the heartless, corporate bloodsuckers.

    BTW, I thought that there might be some insightful chat resulting yesterday’s rarified and revealing public CFTC malfeasance hearing. But that focused on yet another officially sanctioned, publicly propped institutional leech. Oh, well.

    &&&&&&

    Thanks for putting B of A’s “generosity” in perspective, Ralph. My commentary was calculated to flush out responses such as yours, since I sometimes tire of my own cynicism. To get back on track, let me reiterate my prediction that home values will fall by at least 70 percent before deflation has run its course. RA

  • Jason March 26, 2010, 10:14 am

    Citigroup is also doing likewise.

    But… “Beware of Bankers Bearing Gifts”

    In many states, the first mortgage is a non-recourse loan. If the borrower defaults, the lender gets the property. The loan is secured by collateral or real property, and the borrower is not personally liable.

    If a loan is refinanced, or converted to an equity line of credit, for example, these loans can be made to be recourse. If the borrower defaults, the lender gets the property and likely sells the property. If the sale of the property does not cover the loan balance, the lender comes after you for the difference.

    The lenders realize that a large segment of borrowers cannot afford the houses, and it is just a matter of time before the default. If they can make the loans recourse, they can get more of their money back.

    &&&&&&

    Jason: Can the original loan be made to revert to non-recourse of the HELA is retired? RA

  • Occdude March 26, 2010, 7:28 am

    Apparently somebody ran the numbers and figured out that throughing a current loan holder out and assuming a devalued asset is more expensive than allowing the loan holder to just revalue the loan amount.

    Smart move, but who pays? If you say that John Q. Public has to pay one more nickel, people are going to start burning stuff. I have a hard time right now watching my underwater neighbors in their luxury housing tracts enjoying government assistance while I stew over on the other side of the tracts wondering why I didn’t join the “fast and loose crowd”. I mean, what a chump I’ve been, buying a 30year fixed mortgage when I could have gotten an adjustable rate ninja loan after I took all the equity out and lived like Caligula for about the same price. Shouldn’t my cautious actions be rewarded by lower housing prices? Shouldn’t I and my family be living in those houses across the tracts?

    A society CAN NOT be rewarded for bad behavior otherwise like Pavlovs dogs, bad behavior will dominate. I hear that alot of these people in various government workouts are not making payments and still running up their credit card bills and not saving a nickel leading to this phoney recover we have going on. It appears that profligate idiots now drive economic growth and we actually need them to stop a depression. If that is the case I say bring it on, I’m tired of this phoney BS economy, it’s unfair, unjust and unsustainable.

  • JohnJay March 26, 2010, 6:06 am

    As the offshoring of jobs and technology continues, the slow death spiral of this economy continues unabated. We are headed for a world of eight to ten dollar an hour part time jobs with no benefits. Once the Congress and Obama ram through amnesty, we can look forward to tens of millions of new instant peniless citizens to help bankrupt us all. Most likely we will see an endless litany of home loan modifications, Fannie and Freddie bailouts etc. all the way to the bottom. Here in Southern California, I am already seeing more and more young American high school kids working at the fast food joints, I can’t remember the last time I saw that happen. The town of Hemet, which used to be a sleepy desert retirement town, is now gang central with the gangs openly attacking the police there. The supply of shacks for sale there for 50k created a repeat of the Palmdale/Lancaster situation. If you don’t already have it made, you probably never will. If you have it made, you still can’t feel good about what has happened to this once great country. Starting to get scary out there.

  • Other Paul March 26, 2010, 6:02 am

    There goes B of A’s capital ratio and any other bank’s that goes down that road.

    Will the banks’ bondholders lead the social unrest as they are left holding the bag?

    Are regulators and auditors willing to be participants in Extend and Pretend, Part II?

    I’m smelling Frannie and Freddie, through the Fed, exchanging their crisp, new, electronic cash for more banks’ mortgage investment cow pies.

  • QQQBall March 26, 2010, 5:59 am

    This is hilarious. Its good for the liars that bought homes they could never afford. And anything that is consumer-orientated is good in USA.

    Why am I paying for someone’s house. They earn less than I do, spend more than I do and have never saved a penny – and that includes the 43% of population that has less than $10,000 set aside for retirement. They live in a much nicer home with new furniture, two new cars in the garage , 50″ LCD entertainment center, etc. I live in a modest home that is F&C due to living below our means and living prudently.

    One more program to transfer wealth from the prudent to the imprudent. Oh happy day – at least I’m not a renter getting taxed to pay for someones home while the gov’t artificially holds up r.e. prices.

    What needs to happen is banks need to foreclose and the homes get resold at marketing clearing prices, which will allow lower debt service. The liars need to go live in apts and the apt dwellers will be able to afford homes with sustainable debt levels. The common equity in any insolvent banks will get wiped out and the debt holders will get converted to equity. and life goes on… so everyone is back living w/in their means – what a concept!

    We just continue to do anything to avoid the truth – and idjits cheer and clap.

  • life's good March 26, 2010, 5:29 am

    45,000 homes? There are more than double that many underwater homes in at least 20 California cities surrounding the Bay Area, Sacramento and LA. Furthermore, 30% max forgiveness only begins to address the losses and this is supposed to bring hope and renew the search for nonexistant employment opportunities? Thank goodness B of A is looking out for their customers now that their bonus checks have cleared, at least we’ve that going for us. Stocks are rising simply because of the massive liquidity Uncle Ben and Timmay continue to pump into the system, keep focusing on the Dow 30, everything must be great, stocks are higher. Why is anyone being prudent and paying their mortgage, property taxes and insurance when the fraudulent bankers wave this ridiculous olive branch under the noses of desperate, bankrupt, neighbors…wtf

  • PhotoRadarScam March 26, 2010, 1:55 am

    This very well could be the beginning of the end of the dollar. As pointed out in the article, how do you give this benefit to some people but not all? Can you imagine the potential social unrest?

    I would agree that this is ultimately what needs to happen but there’s no way to implement a program fairly. A much fairer and more politically favorably resolution would be to inflate real estates price so everyone is in the black again.


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