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07 October 2008
So, if the feds buy up all the bad mortgages, who holds title to the properties?
Nah, I don't think it's Bob. Let's work this out...
Alice owned the house. Bob wanted to buy the house, so he went to Charlie who gave him a no-doc loan, which he bundled with the loans from David and Ernie, creating a new kind of mortgage-backed derivitive, which he sold to Fred, who wrote a bunch of warrants off the back of it, which he sold to George who was still holding them when everyone noticed what a pointless waste of paper they were. Harry heard about George's troubles, and ran off to Washington to get Iain to make a few phone calls to borrow a metric shit-ton of money from Jerome and Kaito and Li, to bail out George. Of course, all this borrowing had to be authorised by Congress, so Mike (R-MO) made sure that some of the money would build a big new road through his district, Nigel (D-NY) made sure that some of the money would build a big new road through his district, and Oliver (R-TX) made sure that some of the money would build a big new road through his district. Peter, sensing the tidal-wave of OP money soon to wash over the heartland, formed a company to help build the roads. With all the cash he made, he formed a PAC, run by Quentin to make sure the boys and girls in Congress were doing the right thing by the road-building industry. With his PAC salary burning a hole in his pocket, Quentin asked Robert the realtor to see if he couldn't find a bargain in the post-crash real estate market.... So... anyway, I'm giving up before I get to the difficult letters.
Tom the title attorney wrote up a quitclaim for Alice, which released her from the title, who sent it to Ursula at the records office, and once it was in the system, Victor who took over Charlie's clients after their banks merged and got the angry phone call from Bob wondering who the hell actually owns his house now, took one look at Charlie's records, and promptly called his travel agents Wilma and Xavier, who recommended a nice soothing trip to the Bahamas and another unnamed island in the Carribbean somewhere with Victor's girlfriend Yolanda, and man I'm getting tired....
The federal government. Or, more specifically, some sort of body or agency that will be set up that is an agency of the federal government, specifically charged with the debt management.
And by federal government, I of course mean, us, the taxpayers and citizens, who are the federal government.
I suspect that while a government trust will hold title to the properties they will not administer them. Up until now FannieMae and FreddieMac have backed mortgages but not administered them. If I had a high risk mortgage from Big State Bank it would be bundled up and sold to Fannie or Freddie and they would hold title but BSB would administer the mortgage, take a cut, and forward on the rest to Fannie or Freddie.
If BSB did not find it useful to bill to administer the mortgage then BSB would sell the administration to Jack's Mortgage Shack and Discount Car Wash.
I doubt that will change. What might happen is push downs. If someone owes $387,000 on a property that could at best fetch $290,000 the title holder (the government ie. you) may just eat the loss and let the mortgager refinance at the lower price. Jack's Mortgage Shack and Discount Car Wash will still make coin and BSB will have the bad loans off the books and be able to make more loans.
Actually Doohickie, it is the likelihood of Obama winning that led me to wondering what the (Democrat-controlled) federal government will do with this massive inventory of empty houses that it should be about to own.
I really don't see how it matters who wins the election. The results will be the same. It's a fate accompli. IF things go OK with the economy then the paper will be sold at a discount to US or foreign investors. If things are really bad the paper will languish and the taxpayer will have lost most of the $700 billion.
No matter what happens the properties that get abandon will be sold at huge discounts or left to rot.
Here in the manufacturing heartland (Southern Michigan, Northern Ohio, and South Western Ontario) things are bad but real estate is booming. People with money are buying up empty mills, plants, and warehouses. They then bulldoze them and put up a fence to lower the taxes. Because they are buying at a big discount they will hold them for the next decade or more taking a tax loss against income then selling when times are better.
The Dems still insult the poor white rednecks who got screwed over during the Reagan years while telling them that white folks have all the good stuff. The GOP keeps telling the poor white folks that the GOP is just like them; common folk with good values, and neither party wants to admit US politics is not about race but all about class.
Actually, politics is about both class and race with both ideologies entertwined to the point where talking about one without the other is to ignore a large subsection of the population. Now American society is way more about race than class so it is easy to get confused about what's what.
the property and the mortgage are two different things. the homeowner holds title to the property by virtue of receiving a deed. the mortgage represents a financial lein against the property. owning the mortgage is owning the right to collect the contracted sum of money according to the contracted schedule along with the contracted interest rate. owning a mortgage is NOT owning the property. the government will not hold any title to property as a result of buying mortgages.
The government is buying the debt. I imagine if the property goes into foreclosure, it will be auctioned like property seized by the police, or like a tax auction.
Zed killed all the brutals. The gun is good! The penis is evil! The penis shoots seeds, and makes new life, and poisons the earth with a plague of men, as once it was. But the gun shoots death, and purifies the earth of the filth of brutals. Go forth and kill!
I suspect that if it gets as bad as the S&L crisis, something like the Resolution Trust Corporation will be set up to get rid of the houses that go into default no matter what. That's how I got the house I have now.
"Now American society is way more about race than class so it is easy to get confused about what's what."
stynxno, I respectfully disagree. I think both parties are more about class than race. The dems link poor to non white while the GOP talks to the poor whites.
From your link Eide; "an accomplished fact; a thing already done:". How is that a "new one" to you?
" owning a mortgage is NOT owning the property" true q but how does that differ in practice?
" owning a mortgage is NOT owning the property" true q but how does that differ in practice?
the question was "who holds title to the properties". it answers the question. i certainly understand that the end result of mortgage default is the transfer of title through seizure, but if you doubt that you truly and legally own it until it's paid for, well, just try getting the bank to be responsible if someone is injured on your mortgaged property! see if a credit union will pay damages to another motorist injured by your loan-encumbered vehicle! nope - you own them!