Thursday Links Have a Huge Incentive

BofA: Mortgage Walkaways Have Huge Incentive – CNBC, Diana Olick

On the conference call to announce the program this morning, BofA’s credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters (those who can pay their loans but opt not to) are “more than we have ever experienced before.” He went on to say, “there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers.”

Schakett says the foreclosure process is still taking 13 to 14 months (and by my estimates that’s an optimistic assessment), and so there’s over a year of free rent. While the banks are trying to improve the time, they’re just not there yet.

Research: 270 Days is Optimal Time in Foreclosure – Calculated Risk

They studied the foreclosure time lines and costs in several states and found that 270 days is sufficient time to allow the borrower to cure, and any more time actually incentivizes the borrower to strategically default…

Real estate market stalls recruiting, promotions – Atlanta Journal Constitution

That fabulous promotion came with a price: The $30,000 he’d invested in home improvements, the 20 percent he’d put down on his house and the extra payment every year for 7 1/2 years would be a wash, along with settling on a selling price well below what he’d paid for the home and just about all its contents. Add living away from his family in a one-bedroom apartment for eight months while his home languished on the market and his frustration accrued.

“It was horrible,” said Ledbetter, who relied in part on relocation assistance from his company. “It was constant, horrid stress. There were a number of times I said to myself, ‘What have I done?’ ”

Into the Abyss: The Cycle of Debt Deflation – Seeking Alpha

One of the most famous quotations of Austrian economist Ludwig von Mises is that “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later, as a final and total catastrophe of the currency involved.” In fact, the US economy is in a downward spiral of debt deflation, despite the bold actions of the federal government and of the US Federal Reserve taken in response to the financial crisis that began in 2008 and the associated recession. Although the vicious circle of debt deflation is not widely recognized, precisely what von Mises described is happening before our eyes.

[Manhattan Absorption] Up To $3M Has Reasonable Rate – Matrix

The absorption rate continues to hover around the ten year average up to about $3m above which it expands at differing rates depending on the region.

The Unraveling of Mortgage Applications - Tim Iacono

From Mortgage News Daily (not a group prone to hyperbole, though I don’t really know for sure) comes this report of the “housing industry unraveling” due to record declines in mortgage purchase applications now that the free government money has stopped.

The Future Of America’s Working Class – New Geography

In Britain today white, working-class children now seem to do worse in school than immigrants. A 2003 Home Office study found white men more likely to admit breaking the law than racial minorities; they are also more likely to take dangerous drugs. London School of Economics scholar Dick Hobbs, who grew in a hardscabble section of east London, traces yobism in large part to the decline of blue-collar opportunities throughout Britain. “The social capital that was there went [away],” he suggests. “And so did the power of the labor force. People lost their confidence and never got it back.”

Jon Stewart and Arthur Brooks – Arthur Brooks discusses America’s new culture war about government’s role in the economy.