The Fed Has Purchased 1.43 Million Homes Worth of Mortgages

[BarryDonegan]

"According to analysis by Cliff Kule, the Federal Reserve has spent enough on mortgage-backed securities since September of 2012 to have purchased 1.43 million homes outright, considering the current average price of a home in the US. Its relentless bond buying program has artificially inflated the demand for otherwise valueless mortgages by 130,000 homes per month. Let’s discuss this looming disaster that hangs over the US housing market."

http://silverunderground.com/2013/08/the-fed-has-purchased-1-43-million-homes-worth-of-mortgages/

 

[Zippyjuan]

for otherwise valueless mortgages

Otherwise valueless?

mortgages by 130,000 homes per month

That amounts to less than one third of all home sales.

http://online.wsj.com/article/SB10001424127887323610704578625701831078508.html

WASHINGTON—Sales of new homes surged in June despite higher mortgage rates, maintaining momentum for a key sector driving the economic recovery.

New-home sales increased 8.3% last month to a seasonally adjusted rate of 497,000, the Commerce Department said Wednesday. That was the highest level since May 2008. Sales were up 38% from a year earlier.

The sales jump comes amid a sharp escalation in mortgage rates, which began rising in late May. The average for a 30-year fixed-rate loan is now up about one percentage point from its recent low to 4.58%, according to Mortgage Bankers Association data also released Wednesday. That's down from 4.68% a week earlier.

"The increase in mortgage rates over the past two months does not appear to have dented new-home sales, at least not yet," said Stuart Hoffman, chief economist at PNC Financial Services Group. He cited pent-up demand, a better labor market and stronger consumer confidence as factors behind the sales boost.

Somebody is buying the other 367,000. There was nearly $2 trillion in mortgage backed securities issued last year alone. http://en.wikipedia.org/wiki/Mortgage-backed_security

The total of all Fed MBS holdings is about $1.2 trillion. http://www.reuters.com/article/2013/08/08/us-usa-fed-discount-idUSBRE97714020130808 (which is still quite a bit).

 

[torchbearer]

zippy, is it the mission of the federal reserve to buy securitized mortgages?

 

[torchbearer]

I think Peter Schiff was offering you on olive branch when he said he'd accept the federal reserve of 1913 over the one today.

 

[cubical]

That amounts to less than one third of all home sales.

You think the fed owning 1 out of every 3 mortgages is fine?

When one unelected official has this much power you know our system is screwed up.

 

[Zippyjuan]

I would agree with you on the Fed owning them in the first place. Their initial intent was to try to unfreeze the market in them when the value of the bonds when the housing market collapsed to try to protect the banks from also collapsing. At that time, the vaue of the underlying bonds was unknown- (they still had value- just an unknown one) which meant nobody was willing to pay anything for them so the Fed agreed to trade some of their Treasury holdings for them and to later sort out the real values and possibly re-sell them later. It was fairly successful at that goal- markets unfroze and collapse was halted. Should they have continued to buy them after that? I am not convinced they should have.

 

[kathy88]

They should never have been involved at all.

 

[Carson]

They should never have been involved at all.

Exactly.

At least if you want a capitalist system to prevail.

With the new world order of back-door stealth socialism creeping into every aspect of life on the planet, perhaps it is mandatory.

 

[wgadget]

So.

What does a mortgage that the Fed has purchased look like? Does it look like the foreclosure down the street that went to auction last summer and is still vacant? Who bought it? There's no one living there...Did the Fed give the money to the bank so they could leave the place vacant until the price artificially rises?

I made an offer on it a full 10% over asking price and no cigar. Yah, I'm bitter.....

 

[puppetmaster]

So.

What does a mortgage that the Fed has purchased look like? Does it look like the foreclosure down the street that went to auction last summer and is still vacant? Who bought it? There's no one living there...Did the Fed give the money to the bank so they could leave the place vacant until the price artificially rises?

I made an offer on it a full 10% over asking price and no cigar. Yah, I'm bitter.....

good question.

 

[ctiger2]

The Fed Has Purchased 1.43 Million Homes Worth of Mortgages (With money created out of thin air)

I sure wish I had the power to create infinite credit/debt. I'd be the most powerful person in the world.

 

[torchbearer]

The Fed Has Purchased 1.43 Million Homes Worth of Mortgages (With money created out of thin air)

I sure wish I had the power to create infinite credit/debt. I'd be the most powerful person in the world.

i see what you did there.
zippy can't even debunk that one- because that is the whole point of this system.

 

[Carson]

So.

What does a mortgage that the Fed has purchased look like? Does it look like the foreclosure down the street that went to auction last summer and is still vacant? Who bought it? There's no one living there...Did the Fed give the money to the bank so they could leave the place vacant until the price artificially rises?

I made an offer on it a full 10% over asking price and no cigar. Yah, I'm bitter.....

I would think what it looks like is a bundle of mortgages that is being held by one of their buddy's that went along with the run up of the housing market.

They then fired up the fake money presses and printed enough to bail out their co-conspirators.

That in effect transferred the steaming pile over to the public's side of the property line.

So...

steaming pile. Or you can pick your own way or words to describe it. We've paid for the right!




Or maybe I've got it wrong.? You say the Federal Reserve has purchased these bonds?

This whole smoo is starting to smell like a monumental steaming pile of bull.

Could things be so bad they are doing a right thing???

Then I remember it props up their illusion.

And I remember when ever they fire up the fake money presses it doesn't add anything to the pile of stuff we all have, it just shifts the property lines. They have in effect sapped the strength out of US and OUR EVERYTHING.

http://www.ronpaulforums.com/Inflation viewed from above the timberline.

 

[Zippyjuan]

So.

What does a mortgage that the Fed has purchased look like? Does it look like the foreclosure down the street that went to auction last summer and is still vacant? Who bought it? There's no one living there...Did the Fed give the money to the bank so they could leave the place vacant until the price artificially rises?

I made an offer on it a full 10% over asking price and no cigar. Yah, I'm bitter.....

They are all kinds of mortgages. Some may be behind, some possibly facing default, many being paid on time or even ahead of time. The problem at the start of the economic crisis was that the amount of potential defaults in them was unknown so that crushed the value of even the good and current mortgages. But actually they are bonds based on the value of those mortgages- a loan agains them as it were.

 

[Durendal]

So.

What does a mortgage that the Fed has purchased look like? Does it look like the foreclosure down the street that went to auction last summer and is still vacant? Who bought it? There's no one living there...Did the Fed give the money to the bank so they could leave the place vacant until the price artificially rises?

I made an offer on it a full 10% over asking price and no cigar. Yah, I'm bitter.....

While I cannot speak for all of the Fed purchased mortgages I can say they purchased mine within two months of the ink hitting the paper on my mortgage. Bought a foreclosure with a standard 30 year fixed rate mortage, less than two months after all was finalized I received a letter stating that the fed had purchased my mortgage.

Next 5 years or so of my life will be dedicated to getting out of debt with the fed for both this mortgage and student loans.