Increase in foreclosure rate could mean banks knew they were seizing properties they didn’t actually own

In the 3rd quarter of this year banks repossessed a total of 288,345 properties – by far the largest quarterly total since the meltdown began. The 4th quarter of this year is likely to have the fewest repossessions of the meltdown because of “the decision by several of the largest lenders to halt filings after it was discovered that paperwork for many loans is missing or incorrect.” The increase is a sharp spike in the total number of repossessions. The 4th quarter numbers were a 7% increase over the previous quarter and a 22% increase over the same period of 2009. According to RealtyTrac: “A record total of 102,134 bank repossessions were reported in September, the first time bank repossessions have surpassed the 100,000 mark in a single month.

So, did the banks know what was coming and try to get as many properties safely in to their possession as they could before the hammer came down? If this is not the case then why the increase?

Now I am not a real estate lawyer – to put it mildly – so I don’t know the answer to the following: Is it legal for banks to foreclose if they know that they cannot substantiate ownership? My guess is no. I hope the 50 state attorneys general now looking into this hunt around for any signs of foreknowledge by the banks. If the banks were doing something they knew to be illegal – as opposed to just making more mistakes – then it raises the question of whether or not there was a conspiracy to commit fraud. Were any of this to be true it would worsen the already dubious condition of many banks’ balance sheets.

What makes this even more interesting that it was just yesterday that analysts were cooing over the better-than-expected earnings J.P. Morgan. This was one of the reasons the press gave for explaining the very odd fact that the Dow closed at or over 11,000 for a fourth straight day. It is worth noting that the Dow has risen more than 1,300 points since July 2, presumably on the basis of all the good economic news of late. Could someone please remind what that news was? Anyone? Bueller?

As long-time readers know I view the stock market as much more of a leading psychological indicator than an economic one. I am still hoping for evidence that will convince me otherwise.

THEN AGAIN IT COULD JUST BE A COINCIDENCE: Bill McBride, who writes Calculated Risk, says: The banks are still catching up on the earlier foreclosure moratoriums – and extended periods for trial modifications.  This surge in repossessions was expected and I think unrelated to “foreclosure-gate”

 

Worst of the Worst: The List of 2009’s 10 worst lists

2009’s 10 worst …

  1. IPOs (The Street)
  2. Films (t5m)
  3. Economic Myths Reiterated by “The Media” (BusinessAndMedia) 
  4. Ads (BNET)
  5. Obsessions (Scene)
  6. Movies (Metromix)
  7. Odd, Overreaching ‘Decade’ Lists (AtlanticWire – and they went with 9 just to be different)
  8. Toys (W.A.T.C.H.)
  9. Sex Scenes (YourTango)
  10. iPhone Apps (Fortune)
  11. Tech Failures (ReadWriteWeb)
  12. Concept Cars (AskMen)
  13. Linux Distributions (DaniWeb)
  14. Countries to be a Blogger (CPJ)
  15. Real Estate Markets (Fortune)
  16. Album Covers (AOL) 
  17. States for Job Losses (ClassesAndCareers)
  18. Sexy Halloween Costumes (Washington City Paper)
  19. US Cities for Traffic (RealEstateBloggers)
  20. Exchange Traded Funds (EveryDayFinance)
  21. Stocks (MotleyFool)
  22. Celebrity Endorsements (Financial Times)
  23. Rock albums (About.com)
  24. Pop Culture Halloween Costumes (BuddyTV)
  25. Foods (Shine)
  26. Summer Jobs (AutoBlog)
  27. Cities for Asthma (eMedicine)
  28. US Cities for Rodents (TheRealEstateBloggers)
  29. Dictators (Parade)
  30. US Places to Live (StrollerDerby)
  31. iPhone apps (ITPro) 
  32. Social Media Marketing Tips (Social Media Today)
  33. Movies (Examiner.com)
  34. Airports (Travel + Leisure)
  35. Things That Are Behind Us Now (AdAge)
  36. Predictions (Foreign Policy)
  37. Tax Gimmicks (Fox And Hound)
  38. Movies (Columbus Other Paper)
  39. Video Games (Virgin Media)
  40. Movies That Failed To Live Up To The Hype (IGN)
  41. Business Deals (Time)
  42. Dressed World Leaders (Time)
  43. Gay Happenings (AutoStraddle)

How high the moon? How low the Dow?

Has anyone started a betting pool on where the Dow will settle at? CollateralDamage Sr. and I were discussing this today. He said 7000. I said 6000.

Anyone?

Bueller?

More happy news: Welcome to the wonderful world of deflation A new post by me over at BlownMortgage:

Like everyone else I’m relieved gas prices are dropping. As gas prices drop so do those of a lot of other things, like food and shipping and clothes. That’s all good, right? Yeah, unless they don’t stop dropping. When that happens you have deflation and it is very bad.

Simple definition:  “A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy.”

Click above if you have the stomach for it.

No matter how many times it bounces, the cat isn’t getting any less dead

Dead CatStocks and commodities plummeted on Wednesday as the euphoria that carried equity markets to massive gains a day earlier gave way to nervousness that the broader U.S. economy hasn’t yet escaped the dangers of the credit crisis.

Has anyone else noted that we are no longer trying to avert a recession? Now the news stories all say that various actions are being taken in order to avert either a “deep” or “prolonged” recession. Expect to soon read about the steps being taken to end the recession without any formal announcement of its actually having begun. Of course, as M Horn likes to point out, the word recession has been redefined to a point of uselessness. Where it once meant “a decline in GDP for two or more consecutive quarters,” it now is a synonym for “the current mess.”

Whatever you choose to call it, the current mess is large and has quite a bit of room and reason to get worse. Mere economic facts are not enough to prevent the markets from spiking as it did yesterday. During these bounces facts are replaced by faith. Thus the believers know a cut in an interest rate, a not-so-terrible earnings report or the news that oil DECREASED to $104 is the leading indicator that all prayers will soon be answered. At times like these the thinking gets so magical that the Fed, or whomever, gets endowed with the power to make anything impossible come to pass. Thus for a few hours Mr. Bernanke was deemed capable of getting the Cubs to the World Series.

I have always been amused by the idea that the stock markets in some way reflect reality. The markets, like the monetary system itself, are a form of collective wishful thinking. Investors as a group convince themselves that a thing has a value and thus it does. Sometimes these values are connected to the actual needs and demands of the society: oil allows things to function, as does the Windows OS. However a high price is no guarantee of a thing’s pragmatic worth. Frequently a high price indicates only the desire to people to posses them. This explains why people have at different times in history paid exorbitantly for pieces of gold, tulip bulbs, the US dollar, and shares of Bear Stearns. These items’ only actual worth is if A) you want a metal that is both malleable and highly conductive; B) you are a horticulturalist; C) you have a fetish for wallet-sized rectangles of green paper; and D) … well, let me get back to you on that one.

It would be cynical to insist that a connection between a thing’s price and its usefulness is the exception and not the rule. But many people do act this way. Thus the “bigger fool” theory of investing, where the idea is to hope that you will be able to sell your investment to someone who is an even bigger fool than you yourself are. This point-of-view equates the markets with nothing more than a legalized Ponzi scheme. It is a POV that will sadly be gaining many adherents in the near term. There are some contrarians — I believe Mr. Buffet has made some slight amount by not following this course. I have no idea which is right. If I did I would have the funds to not be concerned about a current lack of employment.

Dead cat bounce: A temporary recovery from a prolonged decline or bear market, after which the market continues to fall. As in: “Even a dead cat will bounce if dropped from high enough.”

If you’re using this blog for investment advice, you’re [Bleeped]

Yesterday I noticed a huge number of visits to a post I wrote in August, When Crocs™ are outlawed only outlaws will wear absurdly expensive & brightly colored soft plastic footwear. All the visits came from here, a message board at Yahoo! finance. To save you the trouble of clicking through: someone used my post as a reason for giving a strong sell rating on Crocs stock.

While I appreciate the extra traffic, allow me to say BWA HA HA HA!

Dear whomever, if your message was a sort of satirical comment on the silliness of unvetted advice about stocks then it was very well done.

If it was anything else then it was indeed a Croc.

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