Friday, November 26, 2010

Holiday Notes…

– Posted in: Rick's Picks

The next tout updates will be out Sunday night, since I plan to take Friday off.  I'm letting the commentary on "Jubilee" run for the remainder of the week because it has provoked some great responses.  Have a great holiday!

Time for Mortgage Lenders to Consider a Jubilee?

– Posted in: Commentary for the Week of March 8 Free

[Nearly three years of strenuous efforts by the Fed to lift home prices has not added even a dime’s worth of inflation to the average dwelling. Perhaps it’s time to try a new approach by bailing out beleaguered homeowners, more than 35 million of whom owe more on their mortgages than their properties are worth.  In the essay below, our astute friend Doug B, a Colorado-based financial advisor and formidable outside-of-the-box thinker, asserts not only that debt forgiveness can help return the real estate market to health, but also that lenders are likely to support it when they ponder the alternative of empty houses falling rapidly into an unsaleable state of neglect. RA] With the latest round of discovery in the real estate market characterized by the foreclosure crisis, it is time to ponder the concept of Jubilee. Originally coined in Deuteronomy and Leviticus, Jubilee refers to forgiving of debt. Not being a student of the Bible, I shouldn’t try to interpret the reasons why it became law in the days of the Old Testament; but being a student of the Housing Bubble, I think I can weigh in on what it means for price discovery as we embark on the “C” Wave of the real estate market collapse. One look at the Case-Shiller Housing Index and you can see that calls for a bottom here or even another 10% lower is wishful thinking under the theology of Bob Farrell’s 10 Market Rules to Remember. Household Debt Ratio John Mauldin has written several thoughtful commentaries on how the carelessness in mortgage underwriting during the bubble will continue to create enormous friction in the foreclosure process, while revealing who the rightful owners are for much of the paper gone bad. Suffice it to say that the Financial Crisis still has some life in