As Irvine Renter as stated before, cabals are unstable. The is a another sign that the banking cabal is showing some trouble. The wrinkle is that pushing bad loans was public policy by both the Bush and Obama administrations.
Freddie-Fannie Push Bank Bad Debt Cost to $84 Billion: Mortgages
By Donal Griffin and Laura J. Keller on August 15, 2012
Fannie Mae and Freddie Mac have expanded efforts to get refunds on soured mortgages, boosting the cost of faulty home loans and foreclosures at the biggest U.S. banks since 2007 to at least $84 billion.
Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc. (ALLY), set aside almost $3 billion to buy back bad home loans in the first half of 2012, according to data compiled by Bloomberg. Regional lenders including SunTrust Banks Inc. (STI) disclosed at least $1.3 billion of added costs, exceeding their total for all of 2011.
“More and more financial institutions are reporting this and some of those that behaved themselves pretty well during the mortgage cycle are starting to see this happen,” said Blake Howells, an analyst with Becker Capital Management Inc., which oversees about $2.3 billion, including shares in JPMorgan andPNC Financial Services Group Inc. (PNC) “It certainly impairs earnings power.”
Fannie Mae and Freddie Mac (FMCC) are stepping up attempts to hunt down and sell back faulty mortgages bought from lenders during the U.S. housing bubble, according to bankers, investors and analysts. The goal is to whittle down the $190 billion cost of bailouts for the two taxpayer-backed firms. Investors’ concern about the potential damage helped push Bank of America’s stock down 40 percent since the end of 2010 and discouraged some banks from writing new mortgages, regulators have said.
Adding Reserves
Bank of America, whose Countrywide unit was the biggest mortgage lender before the housing bust, added $677 million to reserves for buying back bad loans in the first half of this year while San Francisco-based Wells Fargo, the current market leader, set aside $1.1 billion. Total mortgage-related costs for the 15 biggest U.S. banks and Ally rose by $7.7 billion to at least $84.2 billion since 2007, the data show.
Bloomberg’s tally was assembled from regulatory filings, company statements and financial presentations from U.S. lenders since the start of 2007. The data cover provisions and expenses tied to repurchases, foreclosure errors and abuses, payments to reimburse investors for lost value on faulty mortgages, legal settlements and litigation expenses.
It also includes some writedowns of assets, such as mortgage servicing rights, when the company specifically attributed the loss in value to problems in mortgage underwriting or foreclosures and the costs of remedies. The totals may increase as more detailed breakdowns become available. Actual losses may be lower if banks recover some of the costs by reselling the loans or seizing the property.
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Proprietary OC Housing News home purchase analysis
1749 North GLENVIEW Ave Anaheim, CA 92807
$415,000 …….. Asking Price
$350,000 ………. Purchase Price
6/26/2003 ………. Purchase Date
$65,000 ………. Gross Gain (Loss)
($28,000) ………… Commissions and Costs at 8%
============================================
$37,000 ………. Net Gain (Loss)
============================================
18.6% ………. Gross Percent Change
10.6% ………. Net Percent Change
1.8% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$415,000 …….. Asking Price
$14,525 ………… 3.5% Down FHA Financing
3.70% …………. Mortgage Interest Rate
30 ……………… Number of Years
$400,475 …….. Mortgage
$105,441 ………. Income Requirement
$1,843 ………… Monthly Mortgage Payment
$360 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$104 ………… Homeowners Insurance at 0.3%
$417 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,724 ………. Monthly Cash Outlays
($279) ………. Tax Savings
($609) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$124 ………….. Maintenance and Replacement Reserves
============================================
$1,978 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,650 ………… Furnishing and Move In at 1% + $1,500
$5,650 ………… Closing Costs at 1% + $1,500
$4,005 ………… Interest Points
$14,525 ………… Down Payment
============================================
$29,830 ………. Total Cash Costs
$30,300 ………. Emergency Cash Reserves
============================================
$60,130 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Nearby Foreclosures
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$425,000 1948 HARRISON Ct |
0.52 miles 3 bd / 2.25 ba 1,450 Sq. Ft. |
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0.63 miles 4 bd / 2 ba 1,640 Sq. Ft. |
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$449,000 225 South MCCARRON St |
0.76 miles 3 bd / 2.5 ba 1,629 Sq. Ft. |
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0.82 miles 3 bd / 2 ba 1,615 Sq. Ft. |
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0.91 miles 4 bd / 1.75 ba 1,355 Sq. Ft. |
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0.94 miles 4 bd / 1.75 ba 1,459 Sq. Ft. |
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0.99 miles 4 bd / 2 ba 1,459 Sq. Ft. |
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1.06 miles 4 bd / 2 ba 1,530 Sq. Ft. |
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1.14 miles 3 bd / 1.5 ba 1,684 Sq. Ft. |
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$444,900 4364 East ALDERDALE Ave |
1.29 miles 3 bd / 2 ba 1,516 Sq. Ft. |
This change is being sold to us as a wind down, but it is not a liquidation.
Treasury Announces Plans to Wind Down Fannie Mae, Freddie Mac
Treasury announced Friday a set of modifications to Preferred Stock Purchase Agreements (PSPAs) between itself and FHFA designed to help speed up the wind down of Fannie Mae and Freddie Mac.
In addition to reducing the GSEs’ mortgage portfolios in a more timely manner, these modifications are designed to ensure that each firm’s earnings benefit taxpayers and help reform the housing finance market.
The modifications include a few key components, such as an annual plan to reduce taxpayer exposure to mortgage credit risk and a full income sweep of all of the GSEs’ future earnings to benefit taxpayers for their investment, replacing the 10 percent dividend payments made to Treasury on its preferred stock investment with a quarterly sweep of all profits each firm earns going forward.
In addition, the agreements require an accelerated reduction of Fannie Mae and Freddie Mac’s investment portfolios. The GSEs’ investment portfolios must be reduced to the $250 billion target set in previous agreements four years earlier than previously scheduled.
The modified PSPAs are consistent with FHFA’s strategic plan for the conservatorship of Fannie Mae and Freddie Mac released in February.
“With today’s announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac while continuing to support the necessary process of repair and recovery in the housing market,” said Michael Stegman, counselor to the secretary of the Treasury for housing finance policy.
Treasury said it hopes to use these modifications to prevent the market from returning to its previous form and to end the “circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury.”
“As we continue to work toward bi-partisan housing finance reform, we are committed to putting in place measures right now that support continued access to mortgage credit for American families, promote a responsible transition, and protect taxpayer interests,” Stegman said.
In a statement released by FHFA, acting director Edward DeMarco said the PSPA modifications will help build a future for the operations of the GSEs.
“These changes provide certainty to Fannie Mae, Freddie Mac, and market participants as they continue to perform their critical mission of providing liquidity and stability to the country’s housing market. The steps today are also important as Congress and policymakers contemplate the future of Fannie Mae and Freddie Mac,” DeMarco said.