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Saturday, October 1, 2016

Exclusive: Mark Zandi Talks Housing, Recession, And The Foreclosure Settlement

Mark Zandi, a former John McCain adviser and the chief economist at Moody’s, said on Tuesday that there is a “better than even” chance of a new recession if we do nothing more to stimulate the economy, urging lawmakers to pass the president’s jobs bill at a debate on the legislation in New York.

Speaking to The National Memo prior to the debate, he said “there’s no home run” on juicing up the housing market and getting the economy going, but lauded the president’s new refinancing initiative for struggling homeowners as “a single that is substantive and meaningful.”

  • kurt.lorentzen

    So let me get this straight. First we loan the banks billions of tax dollars to bail them out. Now this guy thinks a “home run” strategy is to write-down the principal with, once again, the taxpayers footing the bill and making up the difference? So, let me think about this….. who wins?…..OH, again it’s the banks! Don’t be so swooned by someone pandering to your ideology. A salesman can make gravel sound like gold. Let’s use some common sense. A little of that a decade ago would have prevented the housing bubble, the burst, and the bust.

  • Jon

    Lets be very clear about this. The Federal Government created the mess by insuring loans they forced the Banks to make with taxpayer money. The bubble burst, trashed the economy, put taxpayers on the hook for the bad loans, so the banks had to be bailed out by the few working taxpayers, and now, by writing down principle that was inflated by all the above, the taxpayer takes it on the chin again! Everyone involved in this mess from Congressmen, Senators, Freddie Mac, Fannie Mae, the oversight agencies, Federal reserve.. all should be in Jail next to Bernanke and Geithner and the whole Obama Administration. Were it NOT Government and their ‘friends’, but private industry, they WOULD be in Jail, (just like all those Illinois Politicians that gave us Obama and crew). The two chief architects of the mess were Chris Dodd and Barney (slobbering fool) Frank. Taxpayers should say NO MAS, (so even the illegals hear it). No more putting taxpayers on the hook for the crisis they created. No more making the responsible people pay for the irresponsible ones. Obama wants Class Warfare, he’s got it. But it’s the responsible citizens versus the socialists, communists, and ‘takers’. By next year, there will not be enough workers and taxpayers to pay the takers. At that point, other countries will stop lending us money. How will the ‘takers’ be paid then? And what do you think all the older people who paid taxes, Social Security, and worked for over 1/2 a century are going to do, as everything they accomplished gets wiped out?

  • Good12

    They should pass the job bill. Because encomment is’n getting any better. The rallys are going to get wose. I have’t worked sent 2007. Fell and her my ankle and be trying for disability for the last 2years. And take to long for that be walking with a boot on by ankle send April 2011. Can get the things I need to get doing because there no insurance. Like the one’s in WASHINGYON.

  • Leonardo

    Same old rhetoric from naysayers posting here – ranting and slamming whoever and whatever gets in the way of their economic fundamentalism. The home run is not the substance of the article, only dicta – said to be “polticially unfeasable…(chances of happening are) extraordinarily low…” Mark Zandi is not a left wing economist or political ideologue. In fact, states hardest hit by the under-water mortgages are already: “The three states are trying to avoid helping owners who used their homes as ATMs during the housing boom. All three held focus groups or public hearings to help them define what is a deserving borrower. The programs will only help lower- and middle-class homeowners who can document financial difficulties. They will not trim a loan’s balance all at once. Instead, they forgive some of the principal over three to five years, depending on the state.”

    That above statement is what Zandi means by his carefully chosen phrase, “very well structured targeted (loan modifications…”

    Three states (California, Nevada, and Arizona) are currently working to design a “well structured targeted” plan to accomplish these types of write-downs.

    Until the housing market is back on its feet, there will be no general recovery for middle-class Americans who (back to the article) require jobs, something they must wait for until after the election and Democrats retake the House and re-elect Obama. Can’t wait to say, “I told you so.”

  • ashley211

    I thank God daily for our President. He knew that the President prior to him would place us in serious trouble and it happened that way. President Obama has all that he has done to turn this country around. I cannot believe that he gets enough sleep. He is my hero and I appreciate him and his beautiful family.I feel sorry for the Tea Party and will get on my knees and pray that they will soften their hearts and pray for the best for everyone who is capable of doing their best! Just like our President and his family and have God continue to pray for America.

  • [email protected]

    I have been a Real Estate Broker for 35 years and I have never seen anything like this, not even back in the early 80’s when interest rates climbed to 17 and 18%. This is ludicrous how the banks have gone from one extreme to the other and these loan modifications are a joke….because they’re bogus. I have been through hell and back myself this year with Citimortgage promising me loan modifications on 3 different occasions and then dropping the ball and passing the buck. In the meantime sending me into foreclosure, adding on monthly mortgage payments to the tune of $12,000.00 over and above my principal balance and WON’T ACCEPT ANY payments, but yet tell me that money is owed!!!!!!!!!!!!!!!!!!!!!! That is absolutely absurd. The banks can’t possibly expect people to have “pristine” credit in these “bad economic” times. The banks have made it next to impossible for people to get a mortgage with their new rigid guidelines, not to mention what it has done to the mortgage industry. The banks should go broke, after all; they’re not lending any money and the present homeowners are not getting the help they need, in spite of the media’s take on it. I wish I were younger because if I had the energy I would get involved in all of this. I also have credit card debt that creditor banks aren’t willing to settle less than 40 or 50%….and yet some are settling at .20 cents on the dollar which they very well should. When people have to turn to credit cards to pay their bills because of job loss or a BAD REAL ESTATE MARKET, they should go BROKE…they don’t deserve to be in business, they’re not HELPING ANYONE!! the way they should be helped. I am so thoroughly fed up with all of this and I don’t even know how to fight it…but I’m sure going to try…..THIS IS JUST UNACCEPTABLE AND SOMETHING HAS TO BE DONE TO REVERSE THIS OR THERE is going to be more suffering for people than there already is. I can totally relate to the stress that people are going through because I’m one of them.
    I also think everyone should cut OBAMA some slack, considering what he walked into and what he’s tried to fix with a constant fight with the Republican party who have divided the parties worse than ever. I am NOT a party for that very reason. All I heard was “BIPARTISANSHIP,” working as one to get the job done and the Republican party has fought everything every step of the way. What happened to working as ONE and working TOGETHER to fix this country and the catastrophic MESSES we’re in. WE ALL NEED HELP AND THINGS NEED TO TURN AROUND or we’re going to have absolutely NO RECOURSE left for ANYTHING!!!! All you politicians need to CUT YOUR PAYCHECKS to help this economy instead of raising taxes and trying to find other ways out that affect families who are already in diar straights including myself who’s career has been affected for TWO YEARS, facing a foreclosure and creditors who are unwilling to deal. THIS IS NOTHING BUT ABSOLUTE CRAZINESS and something seriously has to be done here without worrying about “THE PARTIES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!” Janet E. Gordon, Rochester, New York

  • janieliza

    Some people would say Obama split the moon if we were dependent on moonlight.
    The issue here is that the BANKS wrote loans without adequate financial ability to pay what the banks wanted to charge by the people wanting mortgages… so the banks wrote the mortgages with just that loss leader listed as payment and the people who don’t trully understand that the banks were out to get Fannie and Freddie money to support their avarice in making bad loans went along to get into housing… their first for some people. These loans were bad paper from the get go and it was easily determined by anyone watching that the banks knew they would be in foreclosure in no time. But the banks knew they would be running the mortgage servicing evn in foreclosure and that none of THEIR money was at risk because they got the financial risk OKed by one of three risk management advisors… to fool Fannie and Freddie… but after all, they didn’t have to do that either, because the contracts of the executives of Fannie and Freddie were set to burgeon in payments of over a milion dollars if they were able to write more loan guarantees. So the system was gamed within the financial community.>> NOT THE GOVERNMENT. Sure, the Republicans cut down the banking regulations, but since when did that become Obama’s fault. Everybody wanted a boom but what we got was a bust.

    So now as to what to do with the bust!>>>> It is high time that the banks were made party to the payment for making bad loans and foisting them off on Fannie and Freddie… and those execs should have been jailed instead of getting $M bonuses. The federal government is the only hope of getting the housing market out of foreclosure but the banks have to pay their part… an it ought to hurt the ones who did it, but most of them have found greener pastures elsewhere. So now it is up to us. I will cost us in the long run with inflation, but right now it is costing us in lives with no purpose, no jobs, no future. THAT IS NOT FAIR. So it is time to get it fixed. Banks with that much crap on the books need to be reviewed and the feds doing it need to require that every bad loan on a home see the home released for resale, rented, or torn down. They must all go on the block. There are plenty of us out here to buy those homes or rent them. But there is NO OTHER WAY TO GET THE ECONOMY BACK TO WORK. RIGHT NOW WE ARE ON THAT SLOW DEATH SPIRAL AND WE MUST BITE THE BULLET AND GET IT STOPPED.

  • dpc

    It is common knowledge, and needs to be understood by all that reductions in mortgage underwriting standards were the root cause of our foreclosure fiasco. Now how did all this take place?

    In 2003-2004 our then current administration was under pressure to give all Americans, the “American Dream” – an affordable home. It wasn’t “fair” that not all could aspire to that dream. And so affordable housing was politically mandated. What was happening was that people with “X” income were allowed to purchase homes with “2X” needed income. There was only one way Fannie and Freddy could do this. Loan standards were drastically modified and thus in came no-doc and low-doc loans. It was now possible for low-income and minority borrowers to purchase the “American Dream”. The “Dream” became reality and we now see the results of that political pressure on Fannie, on Freddie, and on the banks that were mandated to float that paper.

    So everyone, before you point fingers at specific targets as to who started all this mess do a little homework. Ask your legislature, ask your administration, ask them if gee-whiz folks did you guys have anything to do with all this mess? Ask and watch them squirm!

  • sarahg

    Just like the refinancing joke, this jobs bill will do nothing to help this economy and the millions and millions of Americans and their families who are being killed by job loss, destroyed credit ratings, the domination of the evil legal system and the enslavement of debt! I hope this economy tanks even further just so Americans get off their stupid asses and realize that they are enslaved by finacialism and legalism–and f$%king revolt!!! I can’t believe that out of touch reject, who was a former McCain advisor, described the Obama refinace inititiative as substantive and meaningful. Wow do we need a violent revolution or what!! These people are all fat, bloated, rich, elite scum bags who remind me of the French aristocracy on the eve of revolution.

  • dpc

    It is common knowledge, and needs to be understood by all that reductions in mortgage underwriting standards were the root cause of our foreclosure fiasco. Now how did all this take place?

    In 2003-2004 our then current administration was under pressure to give all Americans, the “American Dream” – an affordable home. It wasn’t “fair” that not all could aspire to that dream. And so affordable housing was politically mandated. What was happening was that people with “X” income were allowed to purchase homes with “2X” needed income. There was only one way Fannie and Freddy could do this. Loan standards were drastically modified and thus in came no-doc and low-doc loans. It was now possible for low-income and minority borrowers to purchase the “American Dream”. The “Dream” became reality and we now see the results of that political pressure on Fannie, on Freddie, and on the banks that were mandated to float that paper.

    So everyone, before you point fingers at specific targets as to who started all this mess do a little homework. Ask your legislature, ask your administration, ask them if gee-whiz folks did you guys have anything to do with all this mess? Ask and watch them squirm!

  • sarahg

    DPC, i hate to tell you, friend, underwriting has almost nothing to do with what happened to this coutnry. That’s the filthy lie told by those soulless tumors who run this country in a sly effort to basically blame sub-prime borrowers–which is a total frigging joke because there are not nearly enough of them to cause a ripple in the economy, let alone a herculean fall. That is on your government and the elite financial institutions of this country who ran around selling these giant mortgage packages to investors all over the world which caused huge inflation of prices and value (falsely I might add) and a whole lot of other domino like effects–and then kabooom!!! went the United States economy. But you also have to realize that there is a world economic problem in addition, so that makes things much, mu h worse. But make no mistake about it, sub-prime borrowers have nothing to do with the cancerous grewed that is killing this nation and our people. That would be on the elites in your gov’t and these evil, rotten corporations. So by arguing that it’s all underwriting is not only a very short sighted understanding of what’s going on, but you are showing the results of a successful government brainwashing campaign to pin in on innocent Americans. What rotten bastards!!!!

  • Leonardo

    I tend to agree with SARAHG. DPC is simply stating the same right-wing party line that emerged since Obama’s election. It was after Countrywide’s Angelo Mazillo perfected the liar sub-prime loans because he could offload them quickly to the banks who didn’t care because they were in turn selling them to high financiers who in turn didn’t care because they could slice and dice mortages beyond comprehension and sell them to unsuspecting investors of every kind who were relying on ratings agencies in bed with these same wizards. Worse, it was possible to purchase “insurance” to cover losses if these incomprehensible financial instruments should ever fail. Meanwhile an orgy of fees and bonuses were being sucked up by do-nothing financial hot-shots on Wall Street. Fannie and Freddie jumped into the market late, once they saw that others were purchasing these mortgages and that activity threatened their bottom lines. Of course, their behavior was reprehensible, but they were Johnny-come-latelys compared to Countrywide et. al. This thread has veered off from discussing the specifics of Obama’s Jobs Plan so I’m going to drop off. I agree SARAHG – those rotten bastards!!

  • TiredTaxpayer

    Since the day of his inaugeration the right has been dedicated to “Obama must fail” as Limbaugh put it. Mitch has said numerous times his primary goal is to make Obama a “one term president”, even if the country collapses into depression. Damn the county, they elecetec Obama, we don,t care what happens to them.

  • TiredTaxpayer

    THE REPUBLICANS ARE COUNTING ON THIS HAPPENING

  • dcole

    It is not helpful to call each other names. It is my understanding that the subprime mortgage issue comes from the fact that many lenders took advantage of the government program fraudulently. The idea that everyone should have an opportunity to live the American dream is not wrong. What was wrong was the falsifying of applications to get the loans and then hiding the fact by combining and selling off the mortgages so that the original loans were not recognizable. Banks earned “points” for the number of low-income mortgages they made; but they were never required to lend to someone beyond that person’s means to repay. Be careful that you are not being deceived in where to assess the blame–it is a common tactic to distract attention away from the actual offenders (because they usually have the money and connections to influence the media and public opinion)

  • DavidRuggles

    The turning point was when a group of RWers, including Arthur Leavitt, Alan Greenspan, Phil Gramm, and others blocked Brooksley Born’s attempt to regulate credit default swaps. It was the swaps, issued with no reserves to pay potential claims, that enable the MBS assemblers to gain the coveted AAA rating. It allowed them to do thing that Fannie and Freddie were prohibited from doing by law.

    Economies are fueled by consumption. Ours is two thirds domestic consumption. People unemployed, worried about being unemployed and/or people who have taken a 6 figure hit to their personal balance sheet in the form of home equity tend to be reluctant consumers.

    What could be done? A entity like the Resolution Trust could be funded to buy up all of the foreclosed homes. The threat of this action would cause the “bottom feeders” to rush to make purchases before the gov’t shouldered them out with higher purchase prices. This would force prices up. Taking so many houses off of the market would have the same impact. Refurbishing the ones needing an occupancy certificate would be a “jobs program.” Work done to refurbish and maintain other properties would also employ people. Property taxes and insurance would be paid. Properties could be disposed of gradually with a rent to own feature designed for those whose credit was bruised along the way. Properties would be released into the market gradually. Everyone’s property values would increase, including the government entity’s. As with the previous Resolution Trust, this idea would provide the boost the economy needs while losing the government and taxpayers as little money as possible.