Some even SCARIER housing numbers(by rasputin)

Some even SCARIER housing numbers	rasputin	NEW 11/11/2007 6:33:06 AM
Man,ya gotta love the “Real Estate Industrial Complex”, and especially thetrade associations such as the Mortgage Bankers Association and TheNational Association of Realtors. These guys make “Baghdad Bob” looklike a paragon of honesty and virtue!!! In a presentation givenin October at the 94th MBA Expo, Doug Duncan, Ph.D. and Senior VicePresident and Chief Economist Mortgage Bankers Association (uh oh,there are a couple of warning flags right there: BOTH a PhD AND an“economist!) tried his level best to put perfume on the dead pig thatis the mortgage and housing industry. His presentation islinked below (note: our “Fuzzuwuzzy” provided this informationyesterday in a post. Fuzzy's conclusions regarding what will happengoing forward are far different from mine, but hey, everybody isentitled to their opinion): Youcan trust us; we're from the Mortgage Bankers Assn. and we have NOconflicts of interest or reasons to try to convince the world that theentire mortgage industry hasn't just imploded!!! One of themore interesting slides (slide #15, for those of you keeping score athome) deals with the percentages of homedebtors that have mortgages aswell as the individual types of mortgages. He conveniently, however,omits BOTH the total number of mortgages AND the actual dollar amountsof the mortgages involved—probably so as to obscure the TRUE, horridreality. Therefore, below I have culled what I consider to bethe most relevant statistics from the slide; then have added my owntypical useless, error-prone, skewed, and paranoid analysis/conclusions. First, the stats: MBA Mortgage Statistics: As of Q2 2007: Percent of Homeowners with No Mortgage:35.0% Percent of Homeowners with A Mortgage:65.0% For Homeowners With A Mortgage Prime Fixed:61.5% Prime ARM:15.2% Subprime Fixed:6.6% Subprime ARM:7.4% FHA Fixed:15.8% (Ras Analysis):Once again for the record, the slide carefully omits BOTH the totalnumber of homedebtors trapped in these death pledges AND the totaldollar amounts, so I will fill in with my own stats. (Note todart-gun-toting nitpickers: The numbers I am filling in here are my ownbest estimates drawn from various sources and some conjecture. If youhave issues with my analysis here, please provide your own, backed upby legitimate references and your methodology before firing your tinylittle missives). Regarding TOTAL amount of mortgages, from theblog “Of Two Minds” by Charles Hugh Smith, I recall an analysis he didearlier this year that stated there are approximately: 55 million mortgages outstanding in the U.S. So,I will use this number as my base. Furthermore, from the MBApresentation cited above (slide 33), I will use the average price of$223k for a McMansion in my calculations. Now, onto how the MBA stats translate into scary reality: Total number of homedebtors with so-called “Prime Fixed” loans: 34.1 million Total dollar amount of these loans: $7.5 trillion (Ras note):Let us remember that even this so-called “prime” group is suspect asmany of them stretched their finances, lied on apps to get into theMcMansion, and also millions of them HELOC'd their way to riches. Total number of homedebtors with so-called “Prime ARM” loans: 8.3 million Total dollar amount of these loans: $1.8 trillion (Ras note): Eight million so-called “prime” homedebtors with ARM loans that are resetting into higher interest rates. Total number of homedebtors with “Sub Prime Fixed” loans: 3.6 million Total dollar amount of these loans: $800 billion (Ras note): Now we're getting into the very risky group. Total number of homedebtors with “Sub prime ARM” loans: 4 million Total dollar amount of these loans: approx.. $1 trillion (Ras note): And these guys are beyond risky and into the “insanely risky” category. Total number of homedebtors with “FHA Fixed” loans: 8.5 million Total dollar amount of these loans: approx.. $2 trillion (Ras note):Believe it or not, this group is also very risky as the FHA has droppedits lending standards in order to compete with the sup-prime slimemortgage originators. Well, well, focusing on BOTH the number ofhomedebtors/mortgages AND the dollar amounts looks a little scarierdoesn't it? No wonder the MBA conveniently left those little detailsout of the presentation. Okay, now we will get intoeven-deeper-conjecture part of my analysis. The following is my (and myalone, because all the REIC shills have much, much lower predictions)prognostication for the default and recovery rates, the numbers anddollar amounts involved, and the effects on the economy. I base these projections on: 1.The unprecedented, historic rise in mortgage originations, low lendingstandards, fraudulent appraisals, equally-fraudulent loan applications,AND the continuing criminal enterprise that was Wall Street jumpinginto BOTH the securitization process AND the mortgage originationprocess, as well as: 2. The coming financial and economicmeltdown (which is part of the self-feeding cycle of mortgage defaults,economic contraction, MORE mortgage defaults, MORE economiccontraction, and on and on…) Therefore, predicated on the above criterion I predict the following: Total percentage of defaults, across all categories (“prime”, “sub-prime”, etc: 25% Total number of houses foreclosed upon (*Note: with the caveat below): 13.75 million Total dollar amount wiped out Assuming an average of $25k equity per McMansion, leaving a loan balance of approximately $200k):$2.75 trillion ”Recovery Rate” (number of McMansions that can be foreclosed, repossessed and resold in some fashion:25 % Total number of McMansions that will be recovered and resold: 3.4 million Remaining McMansions rotting to the ground, empty: approx. 10 million Total dollar amount that will be recovered from the above 3.4 millionMcMansions (at NEW, lower selling price per home of an estimated $100kAND over about five or more years) $340 billion Total NET dollar amount vaporized by housing collapse: $2.4 trillion (Which is consistent with my earlier predictions of the total amount being approximately $3 trillion.) (*Note/Caveat:All numbers and dollar amounts are computed BEFORE factoring in themassive, unprecedented response by every federal, state, and localgovernment agency, bank, business and other group wanting to sticktheir fingers in the pie—effectively nationalizing the housing industryin a desperate attempt to save it.) Ras Conclusion):Please keep in mind that the above $2.4 trillion dollar amount thatgoes to “money heaven” has a FAR greater amount of loans,securitizations and derivatives on “the other side of the ledger”sitting at the GSEs, the banks, the hedge funds, mutual funds, moneymarket funds, and other bagholders, so the ripple-through effects willprobably be at least TEN TRILLION DOLLARS if not much, much more. Inaddition, the crippling of the “Great Secutitization Machine” and theentire “REIC” complex and all their fees, jobs, related industries, andmoney-multiplier effects will reverberate throughout the entire world'seconomic and financial system, causing untold mayhem and madness foryears to come. Therefore, I see NO other alternative than theattempted effective “nationalization” of the entire REIC, with thevarious government entities simply taking over the entire enterprise,through various “Save the Sheeple” acts, monetization of the debtlosses, and creation of “RTC II the Nightmarish Sequel” to try tocreate an orderly process of liquidation. This will result in the“Weimarization” of the U.S. monetary system as the desperate measuresmust include trillions of dollars of monetization/government backing ofthe debt. Ultimately, their efforts will result in the largestcredit/debt collapse the world has ever witnessed. Finally,on a side note, after this is played out I would HOPE that tens ofmillions of sheeple will have been so chastened by their collectiveexperience that they will recoil in abject horror at the mere mentionof the word debt. We shall see…