Thursday, May 6, 2010

US Government Now 96.5% of the Mortgage Market Q1, 2010

If You Were NOT Paying for Your Neighbor's Mortgage, How Many Home Sales Would There Be?

The US government IS the US housing market.

The US Government underwrote 96.5% of the mortgages in the 1st quarter 2010, up from 90% 2009. How many homes do you think would have sold without the US government intervening in the mortgage markets through Fannie, Freddie, Ginnie and the FHA?

Do you think mortgages rates would be 5.12% without the US government writing 96.5% of the mortgages? Would mortgages be this low without the Fed holding interest rates at near 0% at you the savers expense, and the Fed buying $1.2 trillion in securitized mortgages so, among other things, Fannie and Freddie can keep buying up pumped out mortgages?

Making Homes More Affordable: The Myth of Fannie and Freddie

As Ilargi at the Automatic Earth so succinctly points out in:

"Power, Transparency and Debt":

"Fannie and Freddie (and the FHA and FHLB systems) were once conceived with the alleged goal of making homes more affordable for the poorer segments of the population. And, strike me dead if they don't, most people still believe that's what they do."

"Which is easily squashed and put to rest by the fact that Congress increased the limits on the size of loans that Fannie, Freddie and the FHA can guarantee to $729,750 in high-cost housing markets."

"Wherever you live, you're neither poor nor in need of taxpayer help if you buy a home that size and that price."

So Why Oh Why Are Fannie and Freddie Gobbling Up 96.5% of Mortgages? Wall Street Derivatives Explain It ALL

Again, Mr. Ilargi:

"Let nobody try and fool nobody else anymore. Fannie and Freddie have nothing to do with the less privileged: they are the ultimate tools for Washington to keep Wall Street alive."

"Not only would significantly lower home values put severe strains on the major banks' balance sheets, they would also implode and destruct what Mortgage Backed Securities and various other housing related derivatives can be put on the books for."

Ah yes, Mr. Obummer and his SPECIAL FRIEND Jamie Dimon of JPM.

How Many Mortgages Without the US Government and at What Rate?

So mortgage rates would rise without the US Government intervention. Without the US Government, who would lend? Who would write mortgages? Certainly not the TBTF banks tax payers have bailed out to the tune of $9.7 trillion in gifts, loans and subsidies ALL... 100% at tax payer expense. Lending by the TBTF that dominate the US banking markets have decreased. The more TARP and Fed free money you take... the less lending you do.

What are they doing with tax payer subsidized free 0% Fed money? Buying US Treasuries and charging US tax payers 3-4% to borrow the free money you gave them. The rest of the free Fed money? Using high frequency trading (HFT) to churn the market higher by buying and selling the same stocks back and forth 70% of the time in a low volume market to front run pensions and 401k investors and collect bogus liquidity fees.

A handful of worthless stocks that would have been bankrupt with out the unfortunate involvement of the US tax payer, AIG, Citi Fannie, Freddie and BofA are traded back and forth by the likes of Goldman and JPM 38% of the time. Goldman alone has been skimming $100 million a day by HFT front running and churning liquidity scams.

That is $100 Million A Day That Should Be In Your Pension Fund and 401k.

That is the Fed that charges YOU interest to create your own currency directly complicit in the frauds against the American tax payer. That is the Fed that keeps interest rates at near 0% for the Wall Street banks robbing your savings account everyday of interest you SHOULD BE EARNING on your hard earned savings.

US Mortgage Market By The Numbers

So if the US government was not writing 96.5% of the mortgages, and the 6 TBTF banks who control more than 60% of the financial markets are not increasing lending, how many mortgages would be written if it was only up to your community and regional banks? The FDIC has closed 64 banks in 2010 alone after 140 bank failures in 2009. The problem bank list is currently estimated to be 722 long. Are local and regional banks in a position to write $364 billion in mortgages in one quarter?

First quarter 2010 mortgage lending was around $378 billion. The US government underwrote almost $364 billion of those mortgages. Private banks, insurance companies and trusts kept just $14 billion of the entire mortgage market on their own books at the close of the 1st quarter.

The top ten lenders produced 78% of that volume, $295 billion and sold them off to Fannie, Freddie and Ginnie Mae. 5 of those top ten are TBTF, Wells Fargo, BofA, JPM Chase, GMAC (What???? Not car loans you ask?) and Citi. They are the top 5. The top 10 are 78% of the market.

Insurance companies, regional banks, trusts and general mortgage dealers are currently writing 22% of the market at about $83 billion a quarter with them selling $80 billion off to government entities and keeping $3 billion on their books.

So again the question: If the US government was not guaranteeing 96.5% of the $378 billion in mortgages written in just 1 quarter of 2010... how many mortgages do you think would be written? If the $14 billion in mortgages that were not guaranteed by the government were all that was written... 3.5% of the current volume how much do you think mortgage rates would have to be above the current 5.12% to bring more mortgages onto the market?

Without your neighbor providing $364 billion in a single quarter, your neighbor subsidizing the Fed to provide the banks with 0% free money and the Fed using your neighbors money to buy $1.2 trillion in securitized mortgages... how much would your home be worth today?

Mr. Ilargi:

"The government needs to explain, for instance, why it has decided to prop up home prices at levels that are far higher than what they were prior to the 2002-2007 housing boom. This is vital data, because it will, or at least may, alert enough people to the fact that domestic real estate prices have zero percent chance of staying at those levels unless taxpayer money is used into perpetuity to guarantee any and all mortgages."

"In a lovely case of irony, the most lucrative policy Fannie, Freddie, the FHA and the Treasury could develop is to buy credit default swaps betting that the trillions of loans for which they use a taxpayer money guarantee will fail."

"And for all we know, some or all of them may well have done so already. A government betting against its own citizens, that would be rich, and still only just one notch up from Goldman using zero percent discount window taxpayer money to do the exact same thing."

Who Is Accountable? Like HAMP, HARP and HUMP... Another Obama Backdoor Bailout For Wall Street

But then again, we really don't expect any explanations from Mr. Change. Every one by now has heard enough all talk and no action shill speeches out of Mr. Obummer like the Cooper Union debacle. Even the corporate owned media whores yawn at the thought of another Obummer empty oratory of Wah-WAH-wah-WAH-WAH. President Obummer sounds more and more like Charlie Brown's teacher everyday.

We Are All Paying Too Much For Housing

All of these schemes to benefit Wall Street stop the market from asset price discovery, stop homes from becoming affordable based on incomes and the renal market. It keeps you the public forced into artificially high mortgage debt to the benefit or a rent seeking oligarchy who own Obummer, the corporate Democrats and well as Professor Miller at NYU states, the Republicans... a criminal enterprise under the RICO act masquerading as a political party...

By not allowing price discovery and the correction in the housing bubble, we are all paying too much for housing. Jamie Dimon's puppet has already weighed in on no reform "reform" for Wall Street and the US economy.

My Special Voting Foot

You see Mr. Obummer, I have this special voting foot. I am lacing up my voting boot and looking for a few good corporate shill Democrats to place my voting boot in their ass come election day 2010... It is just a warm up for my special voting foot to be deployed for you in 2012.

You see Mr.Change, I did not vote for you or any worthless two party corporate owned clowns. But you lied to enough people in record time who did vote for you, that I feel a moral obligation to correct your mistaken using of the US voting public.

You are Mr. Obummer, the most duplicitous, disingenuous, deceptive individual since Richard Nixon's 1968 "Peace with honor" and reconciliation tone campaign...
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