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Who Could Even Have Imagined?
December 9th 2008 Economy, Dumbasses, Bailouts

Homeowners re-defaulting after getting aid | Reuters

However, data which is to be issued by the OCC and the Office of Thrift Supervision (OTS) next week could throw cold water on a push by some U.S. policymakers for loan modifications as the key remedy for the ailing U.S. financial and economic crisis.

Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted.

The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.

Regulators speaking at an OTS-housing forum did not provide any explanations for the causes behind the data.

How about this for an explanation: The government encouraged banks to make loans to deadbeats. The deadbeats defaulted. Then the government directly loaned money to these deadbeats. And - mirabile dictu! - the deadbeats are defaulting!

Because that’s what deadbeats do.

I really enjoy the air of puzzled incomprehension on the part of the writer of this piece of news. But it’s not as if there is any mystery - or even surprise - to this outcome.

Daily Pundit » The Mortgage Mod Squad

…Lenders have long modified loans for homeowners facing job loss, illness, divorce or a death in the family. But with many borrowers nationwide struggling to keep up with mortgage payments, mortgage companies are prodding anyone who’s having trouble making payments for any reason to call them.

This ain’t gonna work. Many of these borrowers should never have had loans in the first place – in any amount, or under any terms.

As the ever-prescient Lastango posted here a year and a half ago, deadbeats are deadbeats. And they aren’t going to pay.

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-Bill Quick







Comments on this post:

  • Ray Eckhart
    December 9th, 2008 | #1

    Not worthy of Page 1 A-section treatment, apparently, but buried in the business section of today’s WaPo, an investigative report:

    Fannie and Freddie’s distress has its roots in the new, risky mortgages the companies bought and guaranteed in increasing numbers, largely from 2004 through 2007. These new products included home loans made to people with blemished credit histories, called subprime loans, and mortgages made without verification of income, assets or employment, often called Alt-A.
    As Mudd’s and Syron’s decisions have been called into question, they have described their push into these new areas of the mortgage business as an inevitable consequence of dueling mandates to support affordable housing and maximize profit for shareholders. And they’ve said that the collapse of the housing market was unforeseeable and the primary reason behind the company’s fall.
    But the documents show how top executives at both companies were told that the new subprime and Alt-A loans were dangerous both to the companies and to the borrowers they were charted by Congress to help.

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