Oh my! From Nick Timiraos and Jeannette Neumann at the WSJ: Richmond’s Seizure Plan Complicated by Size of Mortgages
The city of Richmond, Calif., is seeking to acquire mortgages as large as $1.1 million under its plan to invoke powers of eminent domain to purchase and restructure underwater mortgages.
…
“The city will pay fair value for every loan,” said [John Vlahoplus, the chief strategy officer for MRP]. “Any loss on a loan has already occurred because of the fall in home prices.”
It isn’t true that a loss has occurred on a loan just because the value of the collateral declines. Frequently a loan will be for more than any collateral securing the loan (this happens frequently with car loans and I could give many other examples). This doesn’t mean a loss has “already occurred” – in fact most of these loans are paid in full with no loss.
Friday:
• At 8:30 AM, the Census Bureau will release Housing Starts for July. The consensus is for total housing starts to increase to 904 thousand (SAAR) in July.
• At 9:55 AM: the Reuter’s/University of Michigan’s Consumer sentiment index (preliminary for August). The consensus is for a reading of 85.5, up from 85.1 in July.