Foreclosure Shockwave From BofAML’s Michelle Meyer: After 6 Million Foreclosures, We Still Have 8 Million More To Go

05 Dec

As Business Insider Reports,

“Michelle Meyer, the well-known housing analyst for BofA/ML, has some bad news:” [...]

“The most crucial input to our forecast for construction and home prices is our assumption for foreclosures. Our securitized products research team estimates another eight million homes will be liquidated over the next four years, which adds to the six million homes that have already been liquidated since 2007. All told, we expect 14 million foreclosures or a quarter of all homeowners with a mortgage.

Not only is the wav of foreclosure not close to over, but 2013 will actually be the worst year yet.”

While this item is getting some media attention, we note that the attention it is getting is all about the desire to predict the US housing market price direction.  Have we hit a bottom or a rebound? So many pundits have declared that the worst is over and we are headed to a stabilization.

The entire focus of Ms. Meyers’ statements is toward this attempt to predict the direction of US housing prices.  But look what falls out into plain view as she does so.

For instance, does it not seem interesting how Ms. Meyer is coming to the conclusions she is offering here?  Look at what she attributes as the source of her data:

Our securitized products research team estimates another eight million homes will be liquidated over the next four years,

Just let that sink in…

Can you hear what it is telling you?  It is telling you that the people in charge of peddling the RMBS products admit there are still 8 million homes out there with loans that they never should have gotten – that the borrowers cannot afford and that will either go to:

1.  Reset (end of teaser rates and massive uptick in monthly payment)

2.  Reset: (End of Interest Only Fixed Rate period and either a massive balloon payment or see number one above)

Oh, we suppose they may have some models which are tracking the new two tier wage system sweeping the nation, or the consistent lack of new jobs (oh, right the monthly  jobs numbers are GOOD – right. 120,000 new jobs, 315,000 people just gave up looking. We need at least 125,000 new jobs every month  just to keep pace with the new workers entering the job market
but hey – the numbers are good…)

And what if  BofALM’s securitized products research team buys that idea that the numbers are good?

Then there is a  number 3 reason for even higher numbers than they are predicting in their model:

3.  Tracking of the new two teir wage system in the US and falling employment  statistics will account for even more loans to go delinquent.

One thing you can be certain of; none of this was set up by the borrowers, and none of it yet is designed to help the borrowers either – in fact, the number of foreclosures is in the midst of a upsurge right now,  even as the first actual criminal investigation in to foreclosure fraud recently began in Nevada – and even with that new investigation there is no reduction in the number of foreclosures taking place in Nevada or elsewhere.

Do you hear that sucking sound?

That’s the sound of the US economy being wiped out by massively over leveraged banking debt which the government has decided the people are going to pay for: not only in the loss of their homes by in direct payments to the banks added on to their tax bills.

That sound is not getting softer, it’s getting louder.  Now you don’t have to take our word for it – listen to this is the top housing analyst from Bank of America telling you that all the foreclosures which have already taken place are not even half of all that will have taken place by the time they are done.

She actually says right there that fully one quarter of all US mortgages will go to foreclosure.

If you don’t get what is wrong with this picture, we don’t think we can help you.

And don’t you just love that word “liquidated’ – sounds like someone is going to get an aweful lot of liquidity pumped  into their books – and some other folks are going to lose a whole lot of real non-liquid assets.

You should know, that if she is serious about the word, she means those houses will all have sold.

We do have to wonder since it is largely reported that Fannie and Freddie already ‘own’ 93% of all US mortgages, how they could not already jave beem ,ade liquid to the banks.

But we also know that there are still boat loads of houses in that first 6 million figure of hers that are sitting empty and vacant’ – they are all about to get auctioned off to the highest insider bidder by Fannie and Freddie’s overseers – in blocks of a billion dollars worth at a time – to the same banks and hedgfunds who started this whole mess in the first place.

Corruption is sure a beautiful thing for those who control it.


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