There is definitely a lot going on right now for the insightful observer. I am often left wishing there were six additional hours in the day to get everything I’m doing done, research the world of information effectively, blog something entertaining, interesting, and possibly enlightening every so often, and get enough rest to be able to wake up refreshed the next morning.

Everyone be sure to check out our Real Estate and Credit Deflation series, Steve Moyer (my dad) penned a new real estate commentary yesterday and it is very on point relating to how we got into the mess we’re in today. When people ask, “What happened?” Feel free to direct them to the article. I find it to be a pretty definitive account of the past decade in real estate and related credit issues.

Now on to a real-estate-heavy six pack:

1. Ben Bernanke wants banks to renegotiate loans to avoid foreclosure filings. Basically write off portions of the principal to reflect falling prices. This would be great for faltering homeowners (do they really deserve a bail out?), would slice value off the banks’ balance sheet (this is happening regardless) and would be a definite slap in the face to prudent home buyers who bought with proper equity as well as those who refrained from buying due to the ridiculous prices being tossed around. As the “leader” of the “free world” central bank, Bernanke is awfully anti-free market in his recommendations (although this one can be argued to be done out of free choice). I think the Fed should be abolished, in part, relating to nonsense like this (among other reasons).

2. Fannie Mae and Freddie Mac, the massive government sponsored mortgage packaging behemoths are worried about their business and are fighting to maintain proper capital levels. These entities were created hoping to help more people afford to buy homes, but really they just helped lead to a massive mortgage bubble and severely over priced real estate. The government should have just let the market be and we would not have been in this particular crisis today.

3. Thanks to non-sensical borrowing and lending which was made on the basis of getting potential home buyers into a house regardless of their true ability to afford such, adjustable rate mortgages (ARMs) were abused throughout the bubble. Now many of these mortgages are resetting and it spells trouble for already stretched home “owners” who started with very low equity in the first place. It also spells bigger trouble for lending institutions that pushed these foolish loans (hence the panic at the Fed).

4. Over 2% of all home loans outstanding were in some stage of foreclosure as of the fourth quarter. Overall non-current mortgages reached nearly 8% in the fourth quarter! Check out the article and the stats here. Basically, these numbers are what we expected and we did not expect good things, lets put it that way.

5. Ghost towns are showing up across America due to the vastly overbuilt residential real estate market. Plain and simple, too many homes were built during the bubble and now they sit collecting dust waiting for prices to adjust markedly.

6. Mike Shedlock (Mish) comments on reports that the mortgage market is totally unhinged as all the projections from Ponder This… related to the insanity of the housing and mortgage markets and their respective unsustainability continue to come true. According to Mish and other published reports, the mortgage backed security market is in total disarray. Simply put, there will be much less mortgage credit for buyers going forward. This is the natural outcome in a post-bubble environment and we have been sounding warnings since 2005. If you heeded our advice, you stayed out of the carnage. Please be wary of other associated issues that may pile on, including potential bank failures and commercial real estate disruptions. There is still a lot of excess to work through the system.

Filed under: Social Mood, Economics, Six Packs