The Concept Of Lending Into A Problem
A weekend topic starting with Bloomberg. “Fannie Mae and Freddie Mac said a regulator’s plan to boost their capital would increase mortgage borrowing costs for the millions of Americans who rely on the companies to buy homes and asked that the proposal be dialed back. Fannie and Freddie said the new capital requirements proposed by the Federal Housing Finance Agency would likely require the companies to raise the fees they charge to backstop mortgages. Fannie said fees would likely rise 0.2 percentage points on average, after making certain assumptions. Freddie said fees might have to rise between 0.15 percentage points and 0.35 percentage points.”
“Both companies said that the need for higher fees could end up shrinking their businesses by pushing lenders and borrowers to other outlets for mortgage financing.”
From Florida Today. “U.S. Rep. Charlie Crist, D-Fla., is claiming victory after the Federal Housing Finance Agency (FHFA) decided to postpone a new fee for homeowners looking to refinance. ‘I am overjoyed that Pinellas homeowners will be spared from the Trump Refi Tax until at least December,’ said Crist. ‘With Floridians facing the dual emergencies of the pandemic and the economic meltdown, it is no time to be adding new refi taxes to homeowners looking to save money on their mortgage. Today’s news was made possible because of all the homeowners, consumer advocates, and industry leaders who made their voices heard. Alongside my colleagues Representatives Denny Heck and Lee Zeldin, I was proud to lead the bipartisan group that came together and put their differences aside to deliver results ‘For the People.’”
“‘Right now, Americans are facing unprecedented financial burdens stemming from COVID-19 – and many are finding themselves unable to make mortgage and other payments during this crisis,’ said Heck. ‘This is simply the wrong time to be raising costs on homeowners who have chosen to refinance. What’s more, increasing housing fees during economic recovery has a history of failure. We must learn from the lessons of the 2008 financial crisis and allow American families to recover from this pandemic.'”
The South Florida Business Journal. “More than 33,000 homeowners in South Florida have fallen behind on their FHA mortgages, according to government data obtained by the American Enterprise Institute. The delinquency rate soared past 20% during the Covid-19 pandemic. Borrowers with FHA loans are particularly vulnerable to swings in the economy. The program allows people to purchase homes with relatively little cash down, although it does requires mortgage insurance. The dollar amount of FHA loans is capped base on median housing prices in the area. That means the program is often used by middle-class, and first-time homeowners without large reserves of capital.”
“FHA lending typically makes up one-fifth of home mortgage lending in South Florida, according to the AEI. The FHA has a foreclosure and eviction moratorium for FHA loans in place through Dec. 31 due to the pandemic.The growing surge of delinquent FHA mortgages shows there’s a big mess to clean up in order to make those borrowers current. The borrowers will eventually have to make up the missed payments.”
“Here’s a look at the FHA mortgage delinquency rates in South Florida as of July. Loans in forbearance were included in the delinquency count. Miami-Dade County had 13,490 delinquent FHA loans, or 24.4%. That was the sixth-highest delinquency rate in the nation. Broward County had 12,703 delinquent loans, or 25.8%. That was fourth highest. Palm Beach County had 7,480 delinquent loans, or 22.2%. That was ninth highest. The highest FHA loan delinquency rates were in Nassau-Suffolk County, New York; New York City; and Newark, New Jersey.”
“Nationally, 17% of FHA mortgages were delinquent in July. The rate was only 4% in February, the month before the pandemic began to hurt the economy. ‘It would be expected that these delinquency percentages will increase over time,’ said Edward J. Pinto, director of the AEI Housing Center. ‘At some point, a significant percentage of the then delinquent loans would be expected to be placed on the market by owners under distressed conditions or become foreclosures, and then enter the market.'”
The Orange County Register in California. “‘The stability of the entire rental housing sector is thrown into question.’ Those are not my words, but I concur. Doug Bibby, president of the National Multifamily Housing Council, wonders how his industry will survive after a week that saw California and President Donald Trump temporarily ban evictions, pushing off a landlord’s ability to toss out non-paying tenants until next year.”
“The coronavirus has made the landlord business difficult in numerous ways — and it’s getting worse with no simple solutions to fixing it. The big risk is that a collapsing rental industry could take down the recovering homebuying business, too. It all starts with the pandemic, which devastated employment prospects for the renter class. Paying the rent became especially difficult after a weekly $600 jobless stipend evaporated.”
“How much are landlords hurting? Well, after a post-Great Recession rebound that ballooned rents and inflated property values one could say today’s troubles are a comeuppance. Still, these are tough times: Empty units will grow. REIS forecasts the national vacancy rate, at 4.8% in the spring, will jump to ‘at or close to 7% by early to mid-2021.'”
“Rising skipped payments. The apartment council found 7.9% of tenants made no August payment vs. 6% a year earlier. That non-payment gap averaged 1.4 percentage points the previous four months. Rents are moving in the wrong direction. The asking rents of big Southern California landlords dipped for the time in a decade. The Consumer Price Index shows local rent spending growing at the slowest pace in five years.”
“Incentives double. In six California markets tracked by Zillow, 32% of rental listings on average showed some discounting in July vs. 15% five months earlier. It adds up to ugly. One rent-paying metric from Rentec Direct found landlord collections nationwide were down 29% from March to August.”
“The home-selling business appears to be on its way, for now, to a nice pandemic rebound thanks to what may prove to be overly generous government largesse. But housing can’t be considered ‘recovered’ with a rental market on the brink of collapse. It’s especially tough on smaller landlords who don’t have big banks or Wall Street to help them out.”
“Yes, some of the same mortgage forbearances offered to homeowners might be useful for ‘mom and pop’ landlords with mortgages. But they’ve got other bills, too — property taxes, insurance, upkeep, etc. And what about property owners who have no loans? Using the logic of how the mortgage and home-selling world has been propped up by federal assistance, somebody smart has to figure out how the government can “’buy’ and ‘insure’ rental agreements of folks truly impacted by the pandemic. That would keep a roof over tenants’ heads and their landlords paid.”
“If not, we may see a home-selling market flooded with rental units for sale — a wave of motivated sellers that could swamp a burgeoning homebuying upswing. And even if there’s enough pent-up demand for ownership (wink-wink!) … where will the renters living in these units go?”
The Financial Brand. “The challenges of the COVID-19 recession for lenders have not yet begun to bite in earnest, but banks and credit unions are going to start feeling it soon, according to an expert from Accenture. The impact on credit of all kinds is going to be felt in different ways depending on the makeup of each financial institution’s portfolio and on the demographics of their consumer and small business borrowers.”
“But as the summer of 2020 moved into fall, the Novocain was wearing off on the recession pain as certain credit relief efforts tailed off and as the impact of multiple stimulus programs ended. Chris Scislowicz, Managing Director of Accenture’s financial services practice, and Head of North American credit practice, told The Financial Brand that many lenders, with the exception of the very largest, are only now beginning to get a handle on where they stand on the credit side and what is likely to come.”
“An Accenture report, ‘How Banks Can Prepare for the Looming Credit Crisis,’ states that ‘We are in the calm before the storm, the moment in which payment holidays are not flowing through into consumer credit scores and where underlying business health is being masked by furlough and payroll protection schemes.'”
“That calm is ending, according to Scislowicz, and many financial institutions are figuring out where they stand. He explains that the drain of the Paycheck Protection Program and forbearance programs on lenders’ attentions and energies cannot be overestimated. In many organizations each stage of the PPP, the Main Street programs and more combined to divert staff and time away from more analytical tasks due to the nature of the health and economic emergency.”
“‘The implications for the industry were pretty profound,’ says Scislowicz, ‘in terms of pulling people off the line. But now the folks with key responsibility for portfolios are starting to take a hard look at things. They are asking, now that programs are winding down, what it means for their books of business.'”
“While issues have already surfaced in commercial lending, that will be expanded as consumer credit forbearance begins to go away. ‘I was on the phone with a chief credit officer from a major superregional bank in mid-August,’ says Accenture’s Scislowicz, ‘and he said that they were just starting to see delinquencies tick up.'”
“Accenture believes that because this recession is not being placed at banks’ doorsteps this time around lenders have the opportunity to be heroes. Some of this has already been seen in early efforts to voluntarily offer credit relief, such as skip-a-pay programs. But this is a limited-time opportunity. ‘It will last right up until the point where their shares start to suffer and their shareholders come after them,’ says Scislowicz. ‘By that point they will have their own challenges.'”
“He explains that the risk is that lenders will start putting consumers and small businesses into categories based on broad characteristics of their borrowings and making blanket decisions. ‘This includes such actions as deciding that anybody who has been delinquent for X number of days gets put into either foreclosure or special assets or what have you,’ the analyst states.”
“‘Liquidity nearly dried up in 2010,’ recalls Scislowicz. ‘If banks suddenly put a hold on funding, we could find ourselves quickly in a different crisis. Similarly, if banks started to suddenly start foreclosing on homes rapidly, they could create a real estate crisis.'”
“The firm isn’t saying that this kind of development will come, only that it could come if lenders aren’t careful. ‘There are levers that lenders can pull and certainly some of those levers could make this recession worse,’ says Scislowicz. Another potential risk, for example, is institutions liquidating assets too quickly, flooding the market involved and driving down prices.”
“‘There’s the concept of lending into a problem, giving someone with a strong business model the funds to get through six more months,’ Scislowicz explains. ‘But the catch is that nobody’s got a crystal ball on how long this is going to last. If we’re still sitting in our homes wearing masks in August 2021, the U.S. will be a very different place, and some very different actions will have to be taken.'”
This Post Has 90 Comments
Comments are closed.
Realtors are liars.
It’s sometimes a challenge deciding how much to put into a post like this. I’ll have a lot more later. One thing stands out to me: here we are listening to the REIC tell us red-hotcakes! The guberment is backing cash out refis, massive shack loans (more on that later too) and at the same time telling people not to pay their mortgage or rents.
Oh and they can’t protect cities from rioters or uphold the rule of law. We’ve got all sorts of governments saying that laws are void. What could possibly go wrong?
“they can’t protect cities from rioters”
Note to self: do not buy house in city.
I’ll read Andy Ngo’s Twitter feed to learn about all the violence that Real Journalists won’t report on. Tim Pool on YouTube is a new favorite this summer. Real Journalists have really sh*t the bed on their “peaceful protest” narrative.
I am a rich renter (redundant, I know), and I will not be generating any property tax or sales tax revenue for cities.
LET THEM BURN.
Or the lack of violence that’s not being reported. Even with a few hotspots nationwide violent crime continues to fall.
Police departments in Democrat-run municipalities have repeatedly been caught manipulating their crime stats to make them appear more favorable.
I live in a Democrat ran city. Our old vehicle was stolen and reported. It never showed on the live crime map for the city.
Just an anecdote, but still.
They did mark the stolen vehicle as a DUI. It was very creative since there was no suspect for the theft.
This sponsored content post paid for by the Southern Poverty Law Center.
A failed state, and morally bankrupt society.
From another website:
“I was thinking:
I would rather take a chance on getting Covid
Than taking a chance on taking their Vaccine
But then I thought about it a little more…
I would rather GET Covid
Than take their F’n Vaccine
It may be time to rethink owning firearms
Because now I think…..
I would rather do jail time or be shot
than be FORCED to take a vaccine
Because my personal safety is not worth
the loss of my Grandchildren’s freedoms
Or their HEALTH“
A reader sent this in:
https://www.staradvertiser.com/2020/09/03/hawaii-news/lanai-no-longer-isolated-from-high-unemployment/
“Lanai Resorts LLC informed state and Maui County officials last week that it has furloughed or temporarily laid off 752 workers at its two Four Seasons Resort properties, owned by billionaire Larry Ellison. The move is expected to blow up Lanai’s unemployment rate to around 58% and make it the highest of any island by far after staying under 5% this year through July.”
He kept them on the payroll this long? There have been no tourists since April.
This could be Ellison’s opportunity to purchase what little of the island he doesn’t already own.
‘kept them on the payroll’
Guberment subsidized, I’m sure. Recently we read about a Palo Alto bar that squandered $88,000 of free cheese to stay open for a couple months then closed again. Lots of this going on and ending soon.
The PPP loans were a money bomb for anyone who could pose as a “small business”. I know of a number of people who bought cars and, in one case a house, using PPP funds. I pizza franchise owner I’m acquainted with bought his&hers BMWs…
Once you have the money you’re golden as it’ll just be converted to a 1% loan if you didn’t use to make payroll or pay rent on the business location. Some are betting that it’ll just be forgiven outright.
“Some are betting that it’ll just be forgiven outright.”
A Biden-Harris vote?
I know of a number of people who bought cars and, in one case a house, using PPP funds. I pizza franchise owner I’m acquainted with bought his&hers BMWs…
This makes me red-faced angry.
39 PPP Fraud Prosecutions So Far, and Counting
Report fraud here: https://www.sba.gov/about-sba/oversight-advocacy/office-inspector-general/office-inspector-general-hotline
Thanks for the links, RpRd. Interesting stuff.
Oligarchs taking advantage of the scamdemic and its open-ended lockdowns to buy up the distressed assets of the proles on the cheap? Inconceivable!
He already owns 98% of the island, which has 3100 residents. Half the work force was in his employ. I wonder if he’ll bribe everyone to leave then make the remaining land owners an offer they can’t refuse. If he can accomplish that he can post “Private Island – No Trespassing” signs. The ultimate bug out bunker.
‘Using the logic of how the mortgage and home-selling world has been propped up by federal assistance, somebody smart has to figure out how the government can ‘buy’ and ‘insure’ rental agreements of folks truly impacted by the pandemic. That would keep a roof over tenants’ heads and their landlords paid’
‘If not, we may see a home-selling market flooded with rental units for sale — a wave of motivated sellers that could swamp a burgeoning homebuying upswing. And even if there’s enough pent-up demand for ownership (wink-wink!) … where will the renters living in these units go?’
Wink wink indeed. May see? You might want to check out SF Jon. Also recall the post I found a while back that said California inventory is the highest since 2011.
A few hours north of SF there is effectively zero inventory. Everything that lists sells almost immediately. It’s freaking insane.
Thinking in a year or two there are going to be a lot of people regretting their rash purchases.
“California inventory is the highest since 2011”
Totally anecdotal, from my notes on inventory in the zip codes I watch in West LA –
Feb 13, 2020: 746 homes for sale
Sep 5, 2020: 1,096 homes for sale (+47%)
More of a breakdown for anecdotal data junkies:
Feb 2020
746 homes for sale
Under $1 mil – 147 (20%), of which 40% are sale pending (58 out of 147)
Over $1 mil – 599 (80%), of which 19% are sale pending (114 out of 599)
Sep 2020
1,096 homes for sale
Under $1 mil – 244 (22%), of which 28% are sale pending (69 out of 244)
Over $1 mil – 852 (78%), of which 18% are sale pending (153 out of 852)
“massive shack loans”
Somebody just loaned some kids a massive chunk of cheese in my hood. Last house built on the last lot. Prices had already went screaming past insane a few years ago, I thought https://youtu.be/rfh4Mhp-a6U coronavirus would bring an end to it but sadly enough it didn’t happen soon enough for those late twenty something year-old kids at the end of the block.
‘Miami-Dade County had 13,490 delinquent FHA loans, or 24.4%. That was the sixth-highest delinquency rate in the nation. Broward County had 12,703 delinquent loans, or 25.8%. That was fourth highest. Palm Beach County had 7,480 delinquent loans, or 22.2%. That was ninth highest. The highest FHA loan delinquency rates were in Nassau-Suffolk County, New York; New York City; and Newark, New Jersey’
‘Nationally, 17% of FHA mortgages were delinquent in July. The rate was only 4% in February’
So this gets picked up by a relatively obscure Florida biz journal site, while 99.9% of the media is screaming red-hotcakes! And this is only FHA, what about the GSE defaults? Why is the guberment subsidizing subprime loans in NYC?
“Palm Beach County had 7,480 delinquent loans, or 22.2%.”
I don’t think the Realtor divulged this information to those kids who just purchased at the end of the block.
“underlying business health is being masked by furlough and payroll protection schemes”
I dipped my toe back in the stock market this summer, and now I’m selling off everything. Remember Warren Buffett’s two rules for investing:
1) Don’t lose money.
2) See rule #1.
I dipped my toe back in the stock market this summer
Why?
they weren’t even staying on campus they were in a hotel….
Northeastern has dismissed 11 first-year students after they were discovered together in a room at the Westin Hotel in Boston on Wednesday night, in violation of university and public health protocols that prohibit crowded gatherings. Their $35,000 tuition won’t be reimbursed.
https://www.yahoo.com/news/11-freshmen-northeastern-were-dismissed-002119628.html
“Their $35,000 tuition won’t be reimbursed.”
Let this be a lesson to all of you…
OBEY
Unless of course you are Nancy Pelosi and you need your hair done or you are attending an Antifa, BLM or Get Off My Neck rally in which case you may carry on.
Pregnant Australian mom arrested for Facebook post planning lockdown protest
By Natalie O’Neill
September 2, 2020
Police arrested Zoe Buhler, 28, for incitement at her home near Melbourne after she created a “Freedom Day” protest event on Facebook and urged people to come, according to the the Guardian.
“I have no idea why you guys are doing this,” the distressed mother can be heard telling officers in a Facebook Live video. “My two kids are here. I have an ultrasound in an hour. I’m happy to delete the post.”
Buhler, of Ballarat, created the since-deleted “Freedom Day Ballarat” event scheduled for 11 a.m. Saturday, proclaiming, “Please join us in our fight for freedom and human rights.”
As a Victoria police officer slapped cuffs on her, she insisted she hadn’t broken a law.
“I don’t really understand what I’ve done wrong. This is ridiculous,” she can be heard saying.
One of the officers snaps back, “Actually you are — that’s why we’re arresting you.”
Victoria police defended the arrest in a statement saying the planned protest was a “public health risk. “
“Any gathering of this nature is in blatant breach of the chief health officer’s directions and puts Victorian lives at risk,” the statement read, according to the Guardian.
Buhler is the fourth person to be charged with incitement in Victoria amid a crackdown on anti-lockdown protests in recent days.
https://nypost.com/2020/09/02/pregnant-mom-arrested-for-facebook-post-planning-lockdown-protest/
Be a Kyle Rittenhouse—Not!
https://theflashtoday.com/2020/08/31/be-a-kyle-rittenhouse-not/
A comment:
“He was not a Kenosha resident exercising his undeniable right to use force—even deadly force–to defend himself or his property from a rioting mob”
‘The dead pedophile commie, dead felon wife beater commie, & the other room temperature IQ’d felon/w gun commie who had his bicep blown off (so good) were not from Kenosha either, Mr. Cross. If you had done you’re homework, Mr. Cross, you would of known (obviously intentional on your part) that Mr. Rittenhouse lives closer to Kenosha than the dead parasites he justifiably killed. Did you receive your PhD in liberal arts, MR. cross!?! Mr. Cross, stick to teaching dance, art, or philosophy, & please don’t spew things that you have a zero understanding of….What a silly, ridiculous waste of your time, & everybody else who actually read past the first paragraph of your invalid crap. Best!’
https://pjmedia.com/instapundit/398200/
https://gab.com/Matt_Bracken/posts/104773487166400702
A comment:
‘Seen elsewhere…forever known as “The Kenosha Hat Trick”
Facebook’s Rittenhouse Mistake
The speech blackout for his defense threatens due process.
https://www.wsj.com/articles/facebooks-rittenhouse-mistake-11599260134
‘The fact that the platform may only be used to declare Mr. Rittenhouse’s guilt, but not his innocence—though lawyers say the self-defense argument is plausible—could prejudice a jury pool in the high-profile case. One of America’s most powerful companies is effectively giving its official imprimatur to Wisconsin prosecutors’ case against a specific defendant.’
Of course, that’s the goal.
Don’t bring a skateboard to a gunfight. Zing!
The Rose City Antifa Facebook page (and that of innumerable other violent far left terrorist groups) are still active, because Mark Zuckerberg is a CUCK for Antifa.
Kyle’s gonna walk. And after he does, he’ll be so wealthy he won’t have to work a day for the rest of his life.
His surviving attacker can spend the rest of his life in his mom’s basement jerking off to his Che Guevara posters, WITH HIS LEFT HAND.
You know where Pedo-Jojo was working? Wendys.
‘Seen elsewhere…forever known as “The Kenosha Hat Trick”
I tried not to laugh but that effort failed more miserably than my first marriage. 🙂
https://westernrifleshooters.us/2020/09/03/challenge/
Remember, this why Leftists want to tear up the Constitution. No First Amendment protection for you, mate.
If there’s any lessons to be learned from history, it’s that those who seek to disarm you have malign motives for doing so.
https://www.ammoland.com/2012/12/americans-never-give-up-your-guns-a-warning-from-a-russian/#axzz6BPK8eYc2
Do not be fooled by a belief that progressives, leftists hate guns. Oh, no, they do not. What they hate is guns in the hands of those who are not marching in lock step of their ideology. They hate guns in the hands of those who think for themselves and do not obey without question. They hate guns in those whom they have slated for a barrel to the back of the ear.
^^^ This. The Trump supporter executed in Portland would still be alive if the Democrat DA hadn’t dropped the charges against the Antifa felon arrested for illegal possession of a handgun at a previous violent demonstration.
“Stay calm, you won’t get hurt.”. As long as you’re quick enough to dodge the flying metal chairs.
BLM rioters smashing up restaurants, chasing off scared guests in Rochester, NY
38,588 views•Sep 4, 2020
https://youtu.be/q8QESv_t2Lk
(third video down it’s going to get real ugly real soon if this soon)
NEW YORK BLM Attacking Random People, Shutting Down Restaurants, Climbing Into Homes in Rochester
ByShore News Network
Posted on September 5, 2020
The videos captured below show BLM rioters attacking innocent victims and randomly targeting people in the streets of Rochester, New York.
https://www.shorenewsnetwork.com/2020/09/05/blm-attacking-random-people-shutting-down-restaurants-climbing-into-homes-in-rochester/
(third video down, it’s going to get real ugly real soon if they don’t step on this and start putting people away for a few years)
Black Lives Matter supporters chanting, “If you don’t give us our sh*t, we shut you down”, while turning over tables and throwing chairs inside and outside Rochester, NY restaurants.
At least BLM is out in the open now about what this is really all about: extortion and forcible “redistribution of the wealth.”
Remember, Comrade Pelosi and senior Democrats took a knee for these criminals.
Climbing Into Homes in Rochester
Here in the Centennial State we have a law colloquially called the “Make My Day Law”, which allows you to use deadly force against home invaders.
BLM rioters smashing up restaurants, chasing off scared guests in Rochester, NY
How many of those diners were virtue-signaling libtards who had BLM signs on their suburban lawns? Now that they’ve come face to face with what they’ve been supporting, what percentage of them will see the light? 1%? 2%?
All those cucks shuffling meekly away (and no doubt stiffing the restaurant). It’s a good thing the BLM thugs didn’t try that crap at a BBQ joint. I bet every firearm and round of ammo in a 50-mile radius has sold out already.
Their $35,000 tuition won’t be reimbursed.
The education industrial complex’s collapse is going to be epic. We already had one “college” bite the dust in Dumver: Johnson and Wales University. Their campus is for sale. Good luck unloading it.
Watching all the Cultural Marxists who have burrowed their way into academia since the 1960s cast out from their ivory towers into the outer darkness of our oligarch-looted economy is going to be schadenfreude at its purest. Let’s see what happens when their ideology runs up against hard reality.
Very few of them have practical skills. So a majority of them have to learn real life skills to get a decent job. Some of them know how do math but apply it poorly to real data.
“The education industrial complex’s collapse is going to be epic.”
– Epic, and well deserved, IMHO.
– Way to many administrators with high salaries, as is typical of any bloated bureaucracy. Current and prospective future students looking at the value prop. and having an epiphany moment about cost vs. job prospects. Where’s the value-add? “The emperor has no clothes.”
– With so many lower cost options, traditional brick & mortar higher ed. (think cartel) as we know it is going to be a much smaller and, just maybe, a little humbler going forward. In any case there will be significantly fewer colleges and universities as the failed business model collapses.
– Not to mention that 1) both K-12 and higher edu. have become indoctrination centers for Communism vs. institutions of learning, and 2) high tuition enabled by government student loan guarantees. but I will.
“The education of all children, from the moment that they can get along without a mother’s care, shall be in state institutions.”– Karl Marx
The Ten Planks of the
Communist Manifesto
1848 by Karl Heinrich Marx
1. Abolition of private property in land and application of all rents of land to public purpose.
5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.
10. Free education for all children in government schools.
No matter what happens online, upperclass STEM students still need to play in the lab. Despite what the happy hipsters say, computer modeling isn’t the end-all be-all. Our world is still made out of STUFF, and someone will need to invent, improve, and maintain it.
The Financial Brand. “The challenges of the COVID-19 recession for lenders have not yet begun to bite in earnest, but banks and credit unions are going to start feeling it soon, according to an expert from Accenture.”
“But as the summer of 2020 moved into fall, the Novocain was wearing off on the recession pain as certain credit relief efforts tailed off and as the impact of multiple stimulus programs ended.“
‘We are in the calm before the storm, the moment in which payment holidays are not flowing through into consumer credit scores and where underlying business health is being masked by furlough and payroll protection schemes.‘”
“‘The implications for the industry were pretty profound,’ says Scislowicz,”
– This is exactly where we are. Sort of a twilight zone between economic hardship and extend-and-pretend schemes, with the primary intention of delaying a lot of the pain until after the Nov. 3rd elections. Can-kicking can postpone the inevitable, but not prevent it.
– My observations and anecdotal evidence of lots of new cars, full parking lots at brick & mortar stores, restaurants, home purchases says that the stimulus, deferrals, and forbearance have indeed postponed the financial hardships for many. “I’ll take a raincheck on that.” What happens after the elections will likely be somewhat different. Contract law and financial obligations have been temporarily suspended. “Party on, Garth!”
“A politician thinks of the next election; a statesman thinks of the next generation.” ~James Freeman Clarke, Sermon
“There are many men of principle in both parties in America, but there is no party of principle.” – Alexis de Tocqueville
“There are many men of principle in both parties in America, but there is no party of principle.” – Alexis de Tocqueville
Agreed. Both parties of the Republicrat duopoly represent only their globalist donors. We the People literally have no one representing our interests on Capital Hill.
Gregory Mannarino describes himself as apolitical, but had a most excellent commentary on our feckless political class and how America in its present form has become all but unrecognizable.
https://www.youtube.com/watch?v=KVd9xHp5bdE
Sarasota, FL Housing Prices Crater 14% YOY As Gulf Coast Retirement Property Market Turns Toxic On Appraisal Fraud
https://www.zillow.com/bee-ridge-sarasota-fl/home-values/
*Select price from dropdown menu on first chart
As a national broker shared, “Mortgage crime has gone prime time.”
Freddy Mercury would’ve been 74 today. RIP, Freddy.
The big risk is that a collapsing rental industry could take down the recovering homebuying business, too. It all starts with the pandemic, which devastated employment prospects for the renter class.
Wrong. The big risk is that the collapsing rental industry could take down the speculators who levered up on debt to “invest” in insanely overpriced housing. It didn’t start with the pandemic: it started with the Keynesian fraudsters at the Fed and their deranged money-printing that has fed a debt-and credit-fueled speculative binge in asset bubbles since 2009.
Paying the rent became especially difficult after a weekly $600 jobless stipend evaporated.”
How many deadbeats were living large being paid to sit at home and do nothing, rather than honoring their financial obligations?
after a weekly $600 jobless stipend evaporated
That a whole month has passed and there is still no stimulus bill in progress is encouraging.
And by “in progress” I mean almost ready to send to the President’s desk for his signature. Sure, the Dems have a bill they would like to pass, but it’s DOA.
The word is that after the last jobs report, more stimulus seems unlikely.
‘While issues have already surfaced in commercial lending, that will be expanded as consumer credit forbearance begins to go away. ‘I was on the phone with a chief credit officer from a major superregional bank in mid-August,’ says Accenture’s Scislowicz, ‘and he said that they were just starting to see delinquencies tick up’
This article is worth reading in full. As has been noted here before, the REIC is getting ready to start foreclosing. It’s already started in CRE.
“‘Liquidity nearly dried up in 2010,’ recalls Scislowicz. ‘If banks suddenly put a hold on funding, we could find ourselves quickly in a different crisis.
In October 2019 – well before the scamdemic become a factor – liquidity was drying up as well. Interbank lending locked up as it did right before the 2008 financial crisis, and for the same reason: the banks stopped lending to each other because they knew the collateral being offered to secure those short-term loans was toxic-waste crap. That forced the Fed to step in “temporarily,” first pumping $105 billion A DAY through its repo window, then announcing this “temporary, non-emergency” liquidity-pumping was being extended into 2020, then into perpetuity. The instant the Fed stops pumping $1.4 billion AN HOUR into these Ponzi markets, they are going to crater, along with the Fed’s asset bubbles. Invest accordingly.
Lockdowns, Coronavirus, and Banks: Following the Money
https://www.unz.com/article/lockdowns-coronavirus-and-banks-following-the-money-2/
How’s the September stock market crash treating your HODLings thus far?
At least it’s not as bad as October crash month!
The globalists have been now and the election to crash the Fed’s Ponzi markets and torpedo Trump’s chance of re-election. Invest wisely.
HBB
Long May You Run
https://youtu.be/dVM8_jAL86w
Quintuple threat!
Guitar, Harmonica, Keyboards, Producer, Vocals: Neil Young
Inside a movie theater for the first time since March. COVID-19 transmission risk doesn’t seem bad with less than 15 audience members, all wearing masks — much lower than heat stroke risk outside with 100+ F degrees temperatures putside.
However, bankruptcy risk for the theater chain seems quite high.
My son who attended the movie with me today used to work at the theater we visited today. He said the theater we were in seats 300-400, so the attendance was 5% or less of capacity. They’ll either have to get attendance numbers up or else go out of business.
The only movie I’ve seen in the theater in the past couple of years was the last Star Wars film, and I regretted wasting that time and money. If the cinemas go under I won’t miss them.
We saw TENET. It definitely works very well on the big spring. It’s sad to see the theaters running on empty.
“The apartment council found 7.9% of tenants made no August payment vs. 6% a year earlier.”
Wait wait wait, I thought landlords were doing just great until the eviction moratorium and “don’t have to pay rent” laws made them go broke overnight, and now they deserve one of those pandemic-related bailouts because of skyrocketing non-payment rates. Is going from 6% to 7.9% skyrocketing?
Oh, it’s not? And these landlords were struggling with high non-payment rates and going broke long before covid? Weird. Could it be they just paid too much and the rent was too dang high? We should totally bail them out anyway. Cuz covid.
Nobody put a gun to real estate investors’ heads and forced them to outbid folks who just wanted to buy a home to live in for the rights to earn historically high rates of bubble price appreciation while charging their tenants exorbitant rents.
After having it so good for so long, landlords need to learn to love the risks of real estate investment losses they assumed when they decided to lever up in order to buy investment properties.
love the risks
Indeed. The adrenaline rushes on the way up as well as on the way down.
My radar really goes up when I see anything that reeks of Commie power grabs. It’s interesting how a evil nut like Hilter accended to the power he did.
It would be hard for the Commies to take over the USA when it’ was properous and free and the balance of power was more operative.
The Commies have been working for decades to destroy the US from within.
The Globalist , the Monopolies, Money people, are just moviated by greed and looting and unfair excessive profits.
In this regard the money Looters find it easy to get in bed with the Commies, even when their core motives are different.
I have said before that in the final analysis the Commies will eat the Globalist for lunch , but for now they just use each other.
It’s like when the German Gov. at the time thought they could control Hilter by giving him a little power at first. When you make deals with the devil, the Devil wins.
Karl Marx as a person was a devil. This guy was a big leach his whole life, overspent and didn’t pay his debts expecting everybody to bail him out. He drank a lot, and he would get in your face if you disputed him. A very mean spirited person who blamed everybody but himself for his bizarre lifestyle. This Capitalist Son named Engel that supported Marx a good deal of the time held this bum Marx up, just so he could publish his posion Commie shit, that wasn’t even popular at the time.
So, I’m just saying that this loser Karl Marx spawned one of the most unfair Economic theory and Gov system that only a irresponsible leach bum could do.
“…somebody smart has to figure out how the government can “’buy’ and ‘insure’ rental agreements of folks truly impacted by the pandemic. That would keep a roof over tenants’ heads and their landlords paid.”
Sounds like nothing a little Unlimited Quantitative Easing plus a little Modern Monetary Theory magic can’t fix.
What’s interesting to me is the asymmetry between the self- pleasant cockiness of the bovine herd when asset prices are rising, versus their adrenaline fueled rage, fear, and sense of entitlement when prices are cratering.
What’s interesting to me is the asymmetry I don’t see an asymmetry but a pairing: self-satisfied greed on the one hand and frustrated greed on the other hand. Greed all the way up and down!
Good way to frame it!
The comparison is confounded by the asymmetry of the Fed’s risk asset investment subsidies, which include NRIRP and stock market cheerleading
to encourage reckless gambling when asset prices are bubbling up, coupled with plunge protection and unlimited bailouts when prices crater.
It’s easy to see why so many bovines come to the entirely reasonable conclusion that asset prices always go up when you take a look at the extreme measures the man behind the curtain is undertaking on an ongoing basis to punish risk averse savers and reward reckless gamblers.
At the end of this will come a real economic collapse due to the cumulative effects of the protracted period of extreme centrally planned risk subsidies, but it’s hard to predict the timing.
Finance & Development, March 2020, Vol. 57, No. 1 PDF version
Back to Basics
How Can Interest Rates Be Negative?
Central banks are starting to experiment with negative interest rates to stimulate their countries’ economies
Vikram Haksar and Emanuel Kopp
Money has been around for a long time. And we have always paid for using someone else’s money or savings. The charge for doing this is known by many different words, from prayog in ancient Sanskrit to interest in modern English. The oldest known example of an institutionalized, legal interest rate is found in the Laws of Eshnunna, an ancient Babylonian text dating back to about 2000 BC.
For most of history, nominal interest rates—stated rates that borrowers pay on a loan—have been positive, that is, greater than zero. However, consider what happens when the rate of inflation exceeds the return on savings or loans. When inflation is 3 percent, and the interest rate on a loan is 2 percent, the lender’s return after inflation is less than zero. In such a situation, we say the real interest rate—the nominal rate minus the rate of inflation—is negative.
In modern times, central banks have charged a positive nominal interest rate when lending out short-term funds to regulate the business cycle. However, in recent years, an increasing number of central banks have resorted to low-rate policies. Several, including the European Central Bank and the central banks of Denmark, Japan, Sweden, and Switzerland, have started experimenting with negative interest rates —essentially making banks pay to park their excess cash at the central bank. The aim is to encourage banks to lend out those funds instead, thereby countering the weak growth that persisted after the 2008 global financial crisis. For many, the world was turned upside down: Savers would now earn a negative return, while borrowers get paid to borrow money? It is not that simple.
…
You may need to look no farther than the globalist central banking cartel’s decision to use NRIRP as a permanent bailout policy to understand why there’s currently so much crater in commercial and residential real estate. Extreme risk subsidies are a very reliable recipe for a deep crater when bubbles burst. And serial hair-of-the-dog hangover cures ultimately lead to Skid Row, DTs, and cirrhosis.
Well, I for one am getting a little nervous about the potential for thousands of people to be thrown into homelessness now because of this bizarre Covid 19 shut down .
I would think Trump is the better guy for rebuilding efforts, where Biden is just trying to copy Trump now on concern for building back jobs.
Just look at the priorities that come out of the mouths of these leftist. They are just on some other planet and it’s not the practical World.
I would not be surprised if Trump did some bail outs to prevent homelessness.
The problem with Gov. Bail Outs is they never do them right. They seem to do Natural Disaster relief a little better.
What I’m getting at is that would be a disaster in itself for that many people to be homeless. We already had to many homeless as it was before Covid- 19.
There is such a thing as temporary relief verses the long term welfare type corruption.
I don’t know why anyone would want to be President post Covid-19 , because the aftermath is . not going to be easy. But, law and order has to be restored now in light of the problems to come.
This is where one can’t have any confidence at all in Biden/Harris , who aren’t even on planet EARTH.
I don’t have a lot of love for the current incarnations of either party.
But playing the devil’s advocate. if Harris-Biden took power, they might be more open to the kind of debt jubilee needed to reset the financial clock to February 2020, once the COVID-19 dust settles. Lots of financial whales would lose buckets of money on bets gone wrong, which would be szd. But perhaps the seeds of revolution would be less likely to germinate.
I hear you Professor Bear, but their Revolution has already started . They aren’t going to stop until the strong arm of the law comes down on them.
I wish I knew how many are in those groups in total.
I guess SoftBank caught $4 bn in helicopter drops of Powell bux before pulling the plug in on their U.S. tech stock options bets.
Not a bad haul!
Bloomberg
Options Traders Whipped Up Stock Boom With SoftBank Buying
Katherine Greifeld, Sarah Ponczek and Hema Parmar
September 4, 2020, 11:36 AM PDT·6 mins read
Options Traders Whipped Up Stock Boom With SoftBank Buying
(Bloomberg) — It’s a notion that would’ve drawn skepticism in the past: That options buyers could drive extreme rallies in tech companies — and in turn push benchmark indexes to record highs — by piling into single-stock contracts. Such side bets, according to conventional wisdom, wouldn’t have enough financial might to move a $30 trillion market.
But after watching call volume explode in Apple Inc., Amazon.com Inc., Facebook Inc. and Tesla Inc. recently, just as the pace of their stock rallies quickened, analysts are starting to embrace the theory. They posit that by acting boldly on a select set of high-flying shares at a time when the professional class is frozen with indecision, traders are able to wield outsize influence. This rush into call contracts, they say, created a bullish feedback loop as dealers were forced to recalibrate hedges.
“In a world where volumes are distorted by the frantic trading of algos, any real order flows may have surprisingly large impact on prices,” Peter Tchir, head of macro strategy at Academy Securities, wrote in a note Tuesday. “By trading options, they leverage their position.”
Signs options buying was driving tech stocks has provoked rampant theorizing on who or what set the speculation off. SoftBank Group Corp. bought billions of dollars worth of options tied to U.S. tech stocks over the past month, according to a person with knowledge of the matter. Bloomberg reported on Aug. 11 that SoftBank had been targeting wagers of more than $10 billion — potentially even tens of billions of dollars — in public stocks using financing structures that can prevent it from showing up in public records as a direct shareholder.
SoftBank, in its August earnings call, said it had acquired positions in some of the FAANG stocks. “Our focus is still companies driving the information revolution,” SoftBank CEO Masayoshi Son said on the call. A SoftBank spokesman declined to comment on Friday.
…