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Schumer Bill to Protect Subprime Victims

Well, whatchagonndo?

Schumer acts like a complete wienie when it comes to appointing an Attorney General, votes to weaken the voice of the anti-war movement, and otherwise irritates us no end. But then he goes and does something meaningful like introducing this bill and you’re glad he’s in the Senate. Thanks, dude, but you’re driving me nuts, already.

OpenCongress – S.2346

A bill to temporarily increase the portfolio caps applicable to Freddie Mac and Fannie Mae, to provide the necessary financing to curb foreclosures by facilitating the refinancing of at-risk subprime borrowers into safe, affordable loans, and for other purposes.

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The Bright-Side of Recession

Paul B. Farrell introduces us to what he believes will be the positives of what may well be an inevitable recession.  I’d say that, on balance, it’s an interesting set of ideas but probably reckless wishful thinking.  There’s no doubt but that economic growth is entirely tied up with the political fortunes of our leadership (a concept hinted at in the article, though not directly expressed).  I don’t doubt that all the cited benefits of recession would, in a perfect world, be excellent opportunities.  We should probably use the impending recession to get our house in order, but do we really think that’s what’s going to happen?

Hardly.  It’ll just be one more reason to “throw the bums out,” while we continue to pile up credit card debt like there’s nothing wrong with that.

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The Subprime Meltdown and it’s Consequences

Here’s an interesting ripple in the Subprime debacle: Niagara County has been looking forward to a new HSBC data center project worth millions of dollars in tax revenue, but those plans have apparently been put on hold by the company who is reeling from the Subprime fallout:

Lockport Union-Sun & Journal Online – DEVELOPMENT: HSBC passes up Cambria property

“Given the current overall business climate, we are not proceeding at the original development pace we had planned for our data center in Niagara County, New York,” the statement said. . .The reference in the statement to a business climate may be a way for the bank to point to the recent subprime mortgage market crisis which has hit the industry hard.

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RIT Professor’s Prediction: Subprime the Tip of the Iceberg

We keep hearing this from multiple sources, but the author of Credit Card Nation has also weighed in on a Dallas newspaper:

The changing face of debt || ColumbiaTribue.com

The first phase involved urban, low-income minority consumers who exhausted their consumer credit and had no other sources of funds to help them through their financial crisis, he said.

The second wave will come in the next two years and will take down high-income, middle-class suburban homeowners with mortgages of $200,000 or more, Manning said.

“Not only have they overpaid for their homes, but they’ve also refinanced their credit card debt when they refinanced into their mortgages,” he said. “These are the people who are going to run through their lines of credit.”

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Ranking the Subprime Tailspin

It’s hard to rank the effect of people losing their homes metrically. Still, the Kansas City Star has a chart
showing, by city, how hard the impact of the subprime fallout is hitting across the country. Despite reports of as much as an estimated 21,000 affected homes and 2 billion dollars worth of subprime debt in the Finger Lakes area, New York cities have gotten off much easier than others across the country. It’s scary that such dismal numbers constitute “not that bad.”

Rochester’s ranked number 84, fairing better than Buffalo but worse than Syracuse. That seems like a good thing, and certainly, being at the bottom of this particular list is better than the top (a refreshing change, actually). But hold on: check out the percent change. We’ve had 58.2% more foreclosures this year than the same quarter last year, but 39.3% less foreclosures than last quarter?

Of course, a lot of this is reflected when you go check out Nothnagle.com and similar sites: there has been a swell of new homes on the market over the last half year.  Hopefully, that tapering we’re seeing between last and the current quarter is a trend that continues, but nationally, the prediction is that we’re only seeing the beginning.

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Tom Tancredo: Immigration Caused the Subprime Crash

Tom Tancredo is a certified douchebag.

In fact, until very recently, they did not certify douchebags in any way. Millions of douchebags were imported every year, many from China, without any kind of oversight. But once Tom Tancredo decided to take up the anti-immigration clause, it quickly became apparent to all concerned that someone needed to look more closely into the douchebag market to make sure such things do not happen again:

Nashuatelegraph.com: Tancredo talks immigration

Open borders and the illegal immigration they allow erodes the United States’ sovereignty, security and culture, he said. The millions of immigrants moving here illegally and not being assimilated into our culture, he said, are an attack on the country’s cultural mores. It also leads to higher crime rates and even to the sub-prime mortgage crises, he said.

I see. The problem is not predatory lending. The problem isn’t that the mortgage market became so lucrative that “feeding the beast” new mortgages became more important than making sure those mortgages could be paid. The problem was illegal immigrants who couldn’t even apply for a mortgage. . . .

Like I said, douchebag.

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Arguing for the Gold Standard

Sometimes, knowledge can be gleaned by reading between the lines.  Here is a somewhat paranoid, One World Order kind of rant of the, . .  oh, shall we say, “Nouveau-Conservative,” Ron Paul college kid variety?  Typically, like so many such rants, the logic is a little too pat and the game a little too perfect to be believed anywhere outside of the X-Files.  But much of the fact-based writing is worth a read, if you’re not up-to-snuff on your fiat money history.  Here’s more primer (not sub-primer) as well.

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Subprime Hell Ripping Through Rochester

I linked through this from an Albany Project post. The New York Times has a great interactive Flash map showing the breakdown of subprime mortgage lending across the state. You can use the map to center on Rochester and see what our city looks like. It is, as you might have expected, not pretty:

Subprime Mortgages in New York, New Jersey and Connecticut – The New York Times

High-cost subprime loans became widely popular across the region in 2005 and 2006. They were especially numerous in low income and minority areas, but even middle class and high-income areas had many subprime mortgages. Chart shows the percentage of mortgages for 1 to 4 family residences, either for purchase or refinancing, that were subprime in 2006.

Another ripple in all of this to consider is the relationship to Maggie Brooks’ Great Sales Tax Heist: schools that had budgeted for much more money than they ended up with after the filtching are going to need to make up the difference in property taxes. However, with 30 – 40% of all new mortgages in Irondequoit, Gates, Greece and Henrietta – not to mention as much as 80% in parts of Rochester – you can probably count on a whole lot less property tax revenue when people default on their mortgages and properties sit empty.

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The Sub-Prime Hell is Rolling Through Rochester, too.

The local media seems hell-bent on down-playing the problem of the sub-prime lending credit crunch, but it’s no small matter for a city already teetering on the edge of Flint, MI status. Oddly, while this report cites job losses in comparison to post-9/11 fall out (not the only such comparison out there right now), it also takes the lending industry’s word for it that things won’t be that bad in Rochester. Odder still is the uncharacteristically personal follow-up by staff writer Steve Sink, who says his son in Long Island got canned in the lending industry’s cut-backs. He also reminds us that our relatively modest real estate market does not mean that we’ll avoid the crunch forever.

And meanwhile, in the NYT is evidence of just what that crunch might look like in Rochester. It seems that, in addition to a potential nation-wide recession, there is evidence that there will be an unheard-of nation-wide loss in property values:

Drop Foreseen in Median Price of U.S. Homes – New York Times

Now, however, that financial cushion is disappearing for many families. “We are having to start from scratch and rebuild for a down payment,” said Kenneth Schauf, who expects to lose money on a condominium in Chicago he and his wife bought in 2004 and have been trying to sell since last summer. “We figured that a home is the place to build your wealth, and now it’s going on three years and we are back to square one.”

Now, this could be nasty for our region and downtown in particular.