Comments (6)

1. I don’t know about other states, but in my state of Indiana, contractors have no obligation to preserve graveyards if their owners sell the land to them. They don’t even have to move the bodies to build over them! Every so often the local paper will have an article about a guy that found a pile of 19th century tombstones piled of at the edge of a strip mall parking lot or housing sub-division which some builder uncermoniously knocked over and dumped at the edge of his building site before starting construction.

   posted by Zach on 10-23-2008 at 7:30 am

2. “I had wondered why banks didn’t just adjust mortgages to allow residents to keep their homes instead of foreclosing and losing a ton of money as the housing market tanks. Looks like banks are beginning to do just that.”

   The reason is that many mortgages are much more complicated. Your mortgage is now not owned by a single entity, but repackaged into multiple bonds owned by different people. Your mortgage is sliced and diced into multiple tranches. Some tranches could be interest payment for the first 5 years of the mortgage. Another may be principle payment in the 10-30 year range.

   If the banks want to renegotiate the mortgage, they would have to either 1) have all the tranche owners agree or 2) pay off the entire amount of the mortgage.

   Solution 1 is nearly impossible. An investor that owns the AAA tranche has different incentives than an investor that owns a lower grade tranche.
   Solution 2 is nearly impossible because the value of the house has dropped well below the value of the mortgage. So the homeowner is not going to put up all that money (if he had that money, he wouldn’t have taken out the mortgage in the first place) and the bank is not going to take the loss.

   Lastly, the mortgage originating banks don’t have a vested interest in renegotiating the mortgage because they’ve already sold off all liabilities.

   In addition to this, this creates a moral hazard in that one person that is on time with their mortgage is now worse off than someone that has been irresponsible.

   posted by Johnie on 10-23-2008 at 7:35 am

3. Johnie, I can really relate to the last line of your comment. I have an extra house I paid for over years and years; it’s the only wealth I have. Now I can’t even get the original price out of it, much less any of the interest I paid.

   But the market will recover at least somewhat before I’m old enough to retire. I hope.

   posted by Miss Cellania on 10-23-2008 at 7:44 am

4. I was going to post, but it appears Johnie hit every point. I work in the mortgage industry and I second all of Johnie’s points. It really just sucks, I hear McCain argue that Fannie and Freddie Mac are the problem, but its much deeper and the blame can be spread accross many entities. I think its a matter of retooling the system and then waiting to see better days!

   posted by Marty on 10-23-2008 at 9:08 am

5. Another great set of links! I loved the cemeteries and the “why Luke Skywalker is an idiot, and also the famous people who have been homeless. You’re a link genius!

   Re: the mortgage debacle and financial meltdown, Salon.com posted a link to a very brief “debate” between a journalist from the left and one from the right on the causes of the meltdown. Salon called it “more like a one-sided obliteration.” The guy on the left simply eviscerates the right-tard and in the process specifically highlights the blame placed on Fannie and Freddie and why it’s not the issue. Go to nymag.com and search for “taibbi”. It’s the second result, headlined “Matt Taibbi and Byron York Butt Heads…”

   posted by Southern Buddhist on 10-23-2008 at 12:06 pm

6. I need My Morning Cup O Links more than I need a morning cuppa coffee.

   Thanks Miss Cellenia!

   posted by Beth on 10-23-2008 at 1:52 pm

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