Whole bunch of interesting stuff over at Clusterstock. For starters, the ominous news that mortgage borrowers are redefaulting on newly “modified” — government subsidized — loans at an alarming rate.
Over one-third who got their loans re-written with better terms in the first half of 2008 were right back in default in just three months. As John Carney notes, that is before the spate of nationwide layoffs started and while real estate values continue to fall. It is not is stretch to think that over half of this year’s “modified” loans will redefault. If so, that would mesh with what Wachovia chief economist John Silvia told me the other day — that some people are just not cut out to make mortgage payments. We pretend otherwise at our peril.
Carney also wonders how long ML’s John Thain will last at Bank of America and comes up with about one single quarter. That seems long to me at Thain is already looking to hit it and quit to the tune of $10 million.
In turn, that has NY AG Andrew Cuomo on the warpath. Cuomo calls a $10m. payout to Thain on the heels of ML’s $11 billion in losses this year as “shocking.” You know what, I’m with Cuomo. Ken Lewis would be a stone-cold fool to let that happen. But who knows what kinds of promises Lewis has made to Thain.
Finally, Joe Weisenthal calls BS on — guess what — another one of those tear-jerking multi-part McClatchy series. This time it is The Miami Herald flogging “Borrowers Betrayed,” a look at mortgage fraud in the go-go South Florida real estate market.
Trouble is, as Weisenthal points out, it is lenders who were deceived and ultimately betrayed by false loan application info. Some allowed themselves to be duped, no doubt, but most operations had someone along the issuing matrix who was looking for accurate data and who quiet possibly lost their job because of the fraud.
Related: Henry Blodget notes that Thain’s ML is on the hook for part of the $13 billion in debt the Tribune Company is walking away from via bankruptcy. Is this the first wave of media bankruptcies?
