Saturday, April 5, 2008


Even as a bill races through the Senate to "save" homeowners, foreclosures and delinquencies are mounting at never seen before rates. This bill is not for everyone. As a matter of fact, it's specifically for homebuilders, not homeowners. Senator Dodd, chief author of some of the legislation, admitted yesterday that the bill in its current state would not stem the foreclosure wave. It will however, amount to a $6.2 billion dollar tax break retroactive 4 years for the homebuilders. That's great. No different from a Bear bailout, the same people who flooded the market and helped create the bubble will recoup their losses.

Meanwhile, the attached article becomes a must read. Reported foreclosure rates are simply way too low because banks are taking forever, and in some cases, intentionally not foreclosing on delinquent owners. Just a few years ago, banks would hammer a foreclosure sign in your front yard after being delinquent for 30 days. Now, going 90 days over on your payments is the norm and banks weigh getting an occasional check versus the headache of kicking you out of your house. As I have mentioned several times, this sickens me. I continue to make timely payments while others squat in a house they're not paying for, or even worse, pay rent to an owner who pockets that money with no intention of putting it towards the mortgage. If we provide money to rewrite loans for these losers, I'll be a little more than enraged....

Perhaps I should have listened to my own advice. Homebuilder index XHB rose 12% this week on the possibility of legislation. I didn't see a good entry point for Jan. 10' calls, but with earnings season upon us, hopefully some dismal reporting will bring the XHB back to a current reality. NCC was down 8% yesterday and has been extremely volatile. That works well with my strangle as I hope to make money on both ends.


Anonymous said...

Once again another great posting by the Ax. I agree with just about everything in the article except for XHB calls. I think now is still a good time to get in on them.

Anyway, how about that Senator Dodd and his legislation. What ever happened to the Free Market? Is it true that the bill which I thought was initially intended for people with ARMs also includes people with fixed rates as well? Welcome to the Nanny State!

I am glad you make your payments on time Ax, so is the govt because they cannot wait to take your money and the money of many (actually the majority, responsible homeowners) and give it to the irresponsible. Both homebuilders and "homeowners".

Do not get me wrong I think there was some predatory lending acts out there probably around 3% but lets get real the majority of the people in a bind right now tried to play the system in a risky game and they got crushed.(I.E. the no doc, no money down, ARM, buyer who bought a 500,000 house on stated income that was false, and only makes 30k)Lets make sure we bail out these "credible people".

This is a sad sign of things to come. The Nany State is getting closer and closer. Thank goodness for people like you Ax who are responsible so the govt can can keep taking from you to give not to the those in need but to the "deceivers".

How about a Post on two words missing from the congress's vocabulary: Responsibility and Accountability

AX said...

Wow! Quite a rant Anon! Impressive. I guess we'll just keep paying our bills and looking for our chance to sweep in on those that don't to reclaim and enhance our equity. Look for today's post for something we discussed previously...Thanks for reading as always.