This Orange County Register article — like many from this paper — gets behind the headlines and beneath the rhetoric of ideologues to examine the facts:

Did a 31-year-old law giving poor people a break at the bank accidentally break the bank?

A lot of opinion leaders think so. From the editorial pages of The Wall Street Journal to talk shows to the op-ed page of The Register, people are charging that the Community Reinvestment Act of 1977 forced banks to make bad loans, leading to financial Armageddon.

There's just one problem: It isn't true.

A Register analysis of more than 12 million subprime mortgages worth nearly $2 trillion shows that most of the lenders who made risky subprime loans were exempt from the Community Reinvestment Act. And many of the lenders covered by the law that did make subprime loans came late to that market – after smaller, unregulated players showed there was money to be made.

Among our conclusions:

* Nearly $3 of every $4 in subprime loans made from 2004 through 2007 came from lenders who were exempt from the law.
* State-regulated mortgage companies such as Irvine-based New Century Financial made just over half of all subprime loans. These companies, which CRA does not cover, controlled more than 60 percent of the market before 2006, when banks jumped in.
* Another 22 percent came from federally regulated lenders like Countrywide Home Loans and Long Beach Mortgage. These lenders weren't subject to the law, though some were owned by banks that could choose to include them in their CRA reports.
* Among lenders that were subject to the law, many ignored subprime while others couldn't get enough.
* Among those standing on the sidelines: Bank of America, which made no subprime loans in 2004 and 2005; in 2006 and 2007 subprime accounted for just 2 percent of its loan portfolio. Washington Mutual, meanwhile, raised its subprime bet by 20 times to $5.6 billion in 2006 – on top of its already huge exposure through its ownership of Long Beach Mortgage.

Here are some tips from the book Foreclosure Myths:

You've heard that improvements to kitchens and bathrooms tend to pay off.

Items like wine cellars, dedicated gyms, tennis courts and swimming pools seldom yield anything close to a good return on investments…

Rehab a home to bring it up to or slightly above market standards, not to grossly exceed those standards. That's why you spent time checking out the neighborhood… Avoid the temptation to over-improve.

Your goal is to make the property more attractive to buyers. A clean, attractive property in good repair sells more easily, because buyers can easily pictures themselves living or working there. They can move in immediately.

Whatever repairs you make, make sure they meet local building-code requirements.

Don't think you have to make all repairs yourself.

REPORT:

SPEAKERS: FDIC CHAIRMAN SHEILA BAIR

STEVE INSKEEP, NPR ANCHOR

[*] INSKEEP: Another plan to help homeowners comes from Sheila Bair. She leads the Federal Deposit Insurance Corporation. The FDIC has been cleaning up after the failure of IndyMac Bank, and now, Bair wants to rework the terms of millions of American mortgages the same way that the FDIC changed many of IndyMac’s mortgages.

(BEGIN TAPE)

BAIR: We have been going through those systematically and restructuring them to provide an affordable payment.

First of all, everybody pretty much gets the same type of modification. We use a combination of interest rate reductions — if we can’t get you an affordable payment that way, we will extend the amortization of your 30-year loan to 40 years.

INKSKEEP: Oh, which lowers the monthly payments.

BAIR: Which lowers — or — and if we can’t there, then we will also forbear principal. We won’t eliminate the principal…

INSKEEP: They can put it off ‘til later.

BAIR: Well, actually, it’s permanently deferred unless you refinance or sell the house. And we’ve done this with — we’ve modified about 5,000 so far — we have several thousand more.

INSKEEP: But what are you doing — what is it that you want to do for millions of mortgages that might be out there?

BAIR: Well, we’d like to use this — this protocol — and we’re proposing some financial incentives to get this done. Specifically, we’re proposing that if servicers modify a loan to this IndyMac protocol, the servicer will get $1,000 for each loan modification. And then, if the loan is modified, but it still defaults later on, the government will share up to half of the losses on that redefault.

So we think we can get about 2.2 million loans modified. It would be at a cost of about $25 billion. We propose that the program lasts through 2009. The government is getting something in return for this, which is keeping these houses off the foreclosure rolls, because these escalating foreclosures is creating more and more downward pressure on home prices, which is having a very negative impact on our economy.

INSKEEP: I just want to understand something here, though.

BAIR: Sure.

INSKEEP: Because you’re talking about, now, if your proposal were accepted, renegotiating mortgages where somebody’s spending about a third of their income on the mortgage every month. How on Earth are you going to distinguish between the people who got in over their heads, were a little bit deceived by the person who sold them the loan, and those people who just made a conscience choice to buy a big house, and they’re out there paying right now, and suddenly, you’re going to let them off the hook for part of their payment?

BAIR: Right, well, you know, I think — first of all, we would — you’d have to below the conforming loan limit, so it wouldn’t — for the super expensive houses, this program would not be available.

And yes, there may be some who knew that they had an unaffordable mortgage and took it anyway, and got into that house. And you know what? Yes, you’re right, they’re going to be benefiting by this.

But you know what else? Why take a punitive step of forcing them into foreclosure — you’re going to have another empty house sitting on the neighborhood for over a year. Who does that help? I don’t think that helps anyone.

Here are some tips from the book Foreclosure Myths:

A good loan for a lender is a loan made to a borrower who demonstrates both the ability and willingness to repay that loan. Your current financial situation determines your ability to repay. Your willingness to repay is determined largely by your past credit history and thus your credit score. How you've handled credit in the past.

Lenders ask two basic questions about your ability to pay. Is your income large enough to cover the expenses of the loan and other debt obligations? Do you have enough cash to meet the up-front cash requirements of the loan? Can you cover the down payment, closing costs and monthly payments?

If you're turned down for a particular loan, don't assume that being turned down is a bad thing. Think of it as getting a second opinion. Perhaps the lender thinks that the chance of making a profit off the property is not all that great and has saved you from making a costly mistake. Take the rejection in stride and keep looking for better investment opportunities.

REPORT:

After bailing out banks, investment houses, a big car loan company and AIG insurance (twice), the federal government finally may be getting around to individual homeowners. It’s about time.

After all, it was failing mortgages that fueled this fall’s financial crisis; fixing them ought to help everyone involved. But Treasury Secretary Henry Paulson and other Bush administration officials, while happily bailing out Wall Street, have been slow in getting around to the residential streets where actual people actually live.

The Federal Deposit Insurance Corp. has a plan — already in effect at IndyMac, the Los Angeles-based bank that the FDIC seized in July — that reworks troubled mortgages to make them affordable. If the reworked loan subsequently defaults, the FDIC shares the losses.

FDIC chairman Sheila Bair wants to take the plan national, using $40 billion to $50 billion of the $700 billion bailout package passed by Congress. That would save 3 million to 4 million homeowners from foreclosure.

It’s a good plan, although it’s drawing some resistance from the Treasury Department, and the White House isn’t on board yet. President-elect Barack Obama, while not explicitly endorsing Bair’s plan, said last week that "It is critical that the Treasury Department work closely with the FDIC, Housing and Urban Development and other government agencies to use the substantial authority they already have to help families avoid foreclosures and stay in their homes."

The Bair plan is progress. But it alone will not solve a maddening paradox: Lenders often lose more money by foreclosing than they would by modifying a mortgage to make it affordable. Yet the mortgage industry keeps foreclosing when it should be modifying, and families keep losing their homes needlessly.

Meanwhile, the glut of foreclosed properties accelerates the decline in housing prices. Falling home prices then make it harder to put a floor under the price of mortgage-backed securities, which are burning holes in bank balance sheets. Those burning balance sheets stoked the financial crisis. It is a vicious cycle that must stop.

FROM THE WSJ:

"This administration wants to privatize Wall Street's gains and socialize Wall Street's losses," said Rep. Elijah Cummings (D., Md.).

Mr. Kashkari said Treasury continues to focus on the foreclosure issue and said Mr. Paulson is "passionate" about preventing foreclosures. "We are using every tool at our disposal to get at this problem," Kashkari told lawmakers.

When asked directly by lawmakers how he would solve the housing crisis, Mr. Kashkari said lowering mortgage rates would be the best long-term solution. Lower rates, he said, would allow now-struggling homeowners to refinance into sustainable long-term loans.

Mr. Kucinich also grilled Mr. Kashkari on the Treasury's role in fostering the acquisition of National City Corp. by PNC Financial Services Group Inc. Lawmakers have been critical of the deal because PNC Financial has received preliminary approval for billions in government funds, while National City was not chosen to take part in the capital injections.

Mr. Kashkari declined to speak about specific institutions, including PNC Financial and National City, but said federal banking regulators determine which banks are allowed to apply for the Treasury's capital injection program. In a heated exchange with Mr. Kucinich, however, he said Treasury shouldn't prop up struggling institutions.

"I don't think it's a good use of taxpayer money to put taxpayer capital into a financial institution that is going to fail," Mr. Kashkari said.

Mr. Kucinich fired back to Mr. Kashkari, "That statement that you just made you will hear about for the rest of your career."

Here are some tips from the book Foreclosure Myths:

Lenders may want you to assume the loan.

Lenders don't want to foreclose. They want to make loans, collect fees and collect payments. They don't want to incur the time and expense necessary to foreclose and then sell the property. Lenders lose money on foreclosures.

Assuming a loan simply means that you take over the owner's mortgage. You then become officially responsible for repaying the loan. You buy the home by taking over the mortgage.

Why would you assume a loan? Because you might get a lower interest rate than is currently available, have an easier time qualifying for the loan. You will definitely pay lower closing costs.

It used to be that nearly all mortgages were assumable.

Just because you can assume the owner's mortgage, that doesn't necessarily mean you would want to. If the home has several other liens against it and you assume the first mortgage, you may take on the responsibility of paying off those other loans too. In such a case, you would probably be better off buying the property at the foreclosure auction, so the foreclosure would wipe out any junior liens.

From The New York Times:

TREASURY secretary Henry Paulson’s decision to not have the US government purchase troubled mortgage-related securities puts more pressure on housing lenders and investors to work out problem loans on their own.

Paulson’s support of a Federal Deposit Insurance Corporation (FDIC) pilot programme to systematically help troubled borrowers focuses more attention on FDIC chairperson Sheila Bair, who emerged as a leading figure to help resolve the housing crisis.

The outgoing Treasury secretary indicated that tax dollars should not be used to recast loans of borrowers facing foreclosure.

This was because the government would not be able to recoup its money, as is intended under the 700billion bailout passed last month.

Instead, with the government pumping capital directly into banks and other lenders, Paulson indicated those companies now have a responsibility to prevent foreclosures among their customers.

Following his point, government financial regulators on Wednesday stepped up pressure on lenders and other mortgage holders to adopt systematic and proactive programmes to modify problem loans.

“The agencies expect banking organisations to work with existing borrowers to avoid preventable foreclosures, which can be costly to both the organisations and to the communities they serve,” the regulators said.

ANOTHER REPORT:

Following the election of Democratic Senator Barack Obama as president and the Democrats' increase of their majority in Congress, Paulson might be fighting a losing battle, said Brian Gardner, vice president at investment firm Keefe Bruyette & Woods.

"It might not happen on his watch, but I think we are going to see a broad loan modification program by the next administration," he said.

POLICY TIFT

Since she first floated the idea of a government guarantee for failing loans in late October, Bair has been lobbying the George W. Bush administration to allocate some TARP money to bankroll such a program.

So far, Treasury has committed $250 billion to buy stakes in large banks so they can expand lending and return financial markets to good health. Paulson said he was reluctant to dole out aid to borrowers because that would make less cash available to aid finance companies.

"The top priority has to be stability, making sure we have resources in reserve to deal with any systemic events," Paulson said.

In recent weeks, companies like Citigroup Inc, Bank of America Corp, and JPMorgan Chase & Co have said they will ease some loan terms. On Monday, the federal overseer of Fannie Mae and Freddie Mac said the companies' struggling borrowers can apply to have their mortgage payments lowered to 38 percent of their income.

Paulson credited finance companies for those efforts but critics said they are part of a piecemeal approach to the housing crisis that has so far failed to reverse the trend toward increasing delinquencies.

FROM THE NEW YORK TIMES:

Nearly three weeks ago, Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, told Congress that the agency was working closely with Mr. Paulson’s department to develop a robust anti-foreclosure plan. Since then, the Treasury Department has balked and equivocated while the White House has argued that it is already doing plenty to help homeowners.

After a year of doing far too little to stem a flood of foreclosures, the problem is getting worse. Defaults lead to foreclosures that push down all house prices. Those falling prices — combined with rising unemployment, falling incomes and another expected surge in monthly payments on adjustable rate loans — will surely lead to more defaults and deeper price declines, threatening bank solvency and prolonging the credit crunch.

Clearly, the system won’t stabilize until house prices stabilize, and banks won’t lend freely until losses on defaulting mortgages abate.

The crisis may never have spun so far out of control if the government had initiated a rigorous effort last year to prevent mass defaults. Instead it kowtowed to the mortgage industry, backing voluntary, loan-by-loan renegotiations that have failed to solve the problem.

If the administration’s $700 billion bailout has any hope of working, it will have to address the foreclosure problem — now, not later.

The F.D.I.C. has developed a sensible plan that is being used, with promising early results, to rework defaulting mortgages at IndyMac, the failed Southern California bank. Under the plan, the banks restructure troubled mortgages — lowering the interest rate, extending the loan term or deferring payment on a portion of principal — so that they’re affordable. The goal is to reduce the monthly payment to about a third to two-fifths of a borrower’s after-tax income.

Here are some tips from the book Foreclosure Myths:

You can use government-backed financing to buy a foreclosed home if you play by the rules:

* FHA and VA financing requires you to live in the home
* The process for getting approval for an FHA or VA loan can take time.

Some investors simply lie about their intent to live in the home to get FHA or VA financing. If the lender finds out, you could lose your financing and your home and have to pay a big fine and even do jail time. Lying on a loan application is a felony.

Home equity loans can be used for any purpose, including buying foreclosed property.

Equity refers to the difference between your home's value and the outstanding balance on your mortgage.

There are two subtypes of home equity loans — a home equity loan and a home equity line of credit.

Home equity lines of credit are harder to get when the market contracts.

Many people buy foreclosures with credit cards.

FROM INMAN NEWS:

A plan for the government to partially insure lenders when they agree to modify troubled borrowers' loan terms could help stabilize housing markets, restore confidence, and bring buyers back into the market.

Federal Deposit Insurance Corp. chairwoman Sheila Bair wants the Bush administration to provide incentives for lenders to do as many as 2.2 million loan modifications.

Under a proposal unveiled by the FDIC Friday, the government would pay servicers $1,000 for each loan modified to defray their expenses, and then agree to cover up to 50 percent of losses if a loan should re-default.

Assuming one in three modified loans were to re-default, the plan would cost taxpayers $24.4 billion, but prevent 1.5 million foreclosures by the end of next year, the FDIC said.

The plan and others intended to stem foreclosures could help stabilize housing markets, but "speed is of the essence," said Paul Bishop, managing director of research for the National Association of Realtors.

NAR, which has its own four-point legislative plan to stimulate housing markets, has concentrated on incentives for buyers like a $7,500 tax credit for homebuyers and government-backed interest-rate buy-downs (see story).

NAR also wants Congress make credit more easily available to would-be homebuyers. One way to do that, the group says, would be to make permanent the temporary increase in the upper loan limits for Fannie Mae, Freddie Mac and FHA. The limits, boosted in February to $729,750 in high cost areas, are set to come back down to $625,500 on Jan. 1.

ALAN ZIBEL WRITES:

Freddie Mac. The mortgage finance giant asked for an initial injection of $13.8 billion in government aid after posting a massive quarterly loss yesterday. That is the first request to tap the $200 billion promised by the Treasury Department to keep it and sibling company Fannie Mae afloat after the two were seized by federal regulators in September. Freddie Mac said it expects to receive the money by Nov. 29.

The McLean, Va., company posted a loss of $25.3 billion, or $19.44 per share, for the third quarter. The results compare with a loss of $1.2 billion, or $2.07 a share, in the year-ago period.

The FDIC foreclosure plan unveiled yesterday could be taken up by congressional Democrats next week when they return for a lame-duck session. Or the plan could set the stage for a new foreclosure-prevention initiative once President-elect Barack Obama takes office in January.

The plan, posted on the agency's Web site, would guarantee 2.2 million modified mortgage loans - made mainly to borrowers with weak credit or small downpayments - through the end of next year. The loan modifications involve reduced interest rates or longer loan terms, reducing the monthly payments.

"If we can avoid those foreclosures, then you will get more stability in the housing market," Michael Krimminger, a senior adviser to FDIC chief Sheila Bair, said in an interview.

The FDIC said the government guarantees will make the lending industry more willing to modify loans because taxpayers will absorb half of the losses if the borrower defaults again.

Even if a third of borrowers default again on the modified loans, 1.5 million homes would be saved, the FDIC said.

Under the agency's plan, monthly payments should not be more than 31 percent of homeowners' pretax monthly income. The FDIC said its plan should apply to about 4.4 million loans that are likely to become delinquent though the end of next year.

Jack Cummings writes the book Real Estate Finance & Investment Manual:

Timeshares are filled with traps that can attract even the smartest of all developers and will then cause them to lose their investment capital property.

The reason for this is the fantastic profit potential that the winner can take home if he hits the timeshare market right. The kind of timeshare I am talking about is the one you see that advertises itself as the "best resort in the Rockies," or "Orlando's Finest Timeshare Resort." It is the "hotel-minded" kind of place that caters to you during your week. These places are hard-sell, expensive properties that the developer sells for one week or more at a price of from $3,000 to $20,000 per week depending on the week and the place.

FROM THE BALTIMORE SUN:

In Maryland and across the nation, a flood of foreclosures is continuing to push house prices lower while adjustable-rate loans are moving monthly mortgage payments higher. That's a combination that leads to more defaults and still lower home prices. It's hard to imagine how the economy can recover until that downward spiral ends and home prices stabilize.

Despite that challenge, Treasury Secretary Henry M. Paulson Jr. this week took another wrong turn in his management of the government's $700 billion rescue package. He said he would shift his priority from buying toxic mortgage-based securities and begin providing funds to credit card, auto and student loan companies to encourage consumer spending and help spark a recovery. The billions he has already invested in banks thus far has done little to make bank loans more available, and it is not clear that these new investments will produce a better result.

Meanwhile,Mr. Paulson continues to pay only lip service to efforts to help millions of struggling homeowners facing foreclosure who are at the heart of the current recession. That should command his attention. Mr. Paulson has said that he and his aides "are examining strategies to mitigate" foreclosures. It's time to stop studying and take action - a successful strategy is already in place.

Several weeks ago, Sheila Blair, chairwoman of the Federal Deposit Insurance Corp., said her agency was working closely with the Treasury Department on an anti-foreclosure plan.

Jack Cummings writes the book Real Estate Finance & Investment Manual:

This can be fun, easy and profitable. It can be your best way to increase your real estate benefits without having to spend any of your own cash. The method I shall describe is one of the best uses of other people's money.

* Look for positive properties.

* Anticipate the kind of market you will be selling in before you tie up the property.

* Make offers that tie up the property but give you an out. When buying a property for a syndication or private timeshare ownership.

* Have all bases covered.

* Have a good joint ownership agreement drafted by a lawyer.

* Make sure you are in the driver's seat. This is your deal, your property, your contract. You are allowing other investers to buy a part of your deal. One form of ownership you might consider would be a general partnership. Here you would be the general partner and all other investors would be limited partners.

* Get paid for your work.

REPORT:

Dodd and Bair (the FDIC) still can't get it through their thick skulls that there's nothing they can do that can stop the drop in housing prices. Foreclosures are only a symptom, really, of the problem, which was simple: People borrowed more than they could afford to pay because they assumed they would not HAVE to pay. They assumed they would refinance, cash out at an inflated price, or they didn't bother to do the math at all.

This Washington Post article explains just how demented Bair and Dodd are. They're currently touting a mortgage bailout for deadbeats that bases its costs to taxpayers on a fantasy. Bair's current bailouts at Indymac are not doing well, because reducing payments doesn't cover the disappearance of the massive fantasies that underwrote these mortgages and home prices.

Of course, this hasn't stopped her from contining to try and push this bleeding-heart plan through any government channel that will give her a listen. Since her own bosses have stopped listening to her, she's teaming up with Chris "I got a sweetheart deal from Angelo Mozilo and looked the other way while the entire housing Ponzi scheme was making him rich" Dodd.

Borrowers who have missed at least two monthly payments would be eligible for a reduction in their payment. The new payment would require that they spend no more than 31 percent of their monthly income, a relatively conservative standard. By comparison, lenders historically calculated that borrowers could afford to spend up to 28 percent of monthly income before taxes on housing.

In exchange, mortgage companies would receive a basic guarantee: If the borrower falls behind on the new monthly payments and the company ends up losing money on the loan, the federal government will cover half the loss in most cases.

The estimated cost of the plan is based on the assumption that only one in three borrowers who get a modification will be unable to make the lower payments. That would require a higher success rate than existing modification programs have achieved. About 45 percent of borrowers who received loan modifications from mortgage companies last fall already have slipped back into default, according to a Credit Suisse research note.

Bair and Dodd are either stupid, liars, or both, if they claim this plan can exceed by 22 full percentage points the success rate of the prior deadbeat workouts.

I vote for some from both columns. Worst of all, they can't do simple odds in their head, because their rationale for the plan (that this would save the economy) requires an entire string of unlikely draws to come through in succession.

FROM SLATE:

"The Washington Post leads with word that the Federal Deposit Insurance Corp. will announce a new plan today to help stem the tide of foreclosures across the country. The new plan, which would carry a $24.4 billion price tag, could help prevent 1.5 million ">

The Washington Post leads with word that the Federal Deposit Insurance Corp. will announce a new plan today to help stem the tide of foreclosures across the country. The new plan, which would carry a $24.4 billion price tag, could help prevent 1.5 million foreclosures in the next year by offering to share losses with companies that agree to decrease monthly mortgage payments. The New York Times leads with the diminishing chances that Democratic lawmakers will be able to pass a bailout for Detroit's automakers before January. While Democrats tried to put on a happy face and say that they'll get what they want once President-elect Barack Obama takes office, some fear one of the Big Three will go under before then.

USA Today leads with this weekend's economic summit in Washington that will bring together leaders from 20 of the world's top economies. Among other issues, leaders will discuss how to increase transparency and regulation as well as the best ways to stimulate economies that are on a seemingly endless downward spiral. No one really expects any immediate, dramatic action to come out of the meeting, as the leaders will focus on long-term solutions. The Wall Street Journal leads its world-wide newsbox with the Food and Drug Administration's decision to block all products from China that contain milk. The FDA discovered traces of melamine contamination, which has sickened more than 50,000 babies in China, in several products; it now says importers must prove their goods are safe before they can be sold in the United States. The Los Angeles Times leads with the fire that broke out last night in the upscale community of Montecito in Santa Barbara County, Calif., and has burned at least 800 acres and destroyed as many as 80 homes.

Democratic leaders appear to be widely enthusiastic about the new plan to prevent foreclosures, but FDIC Chairman Sheila Bair continues to face resistance from the Bush administration. But that may not matter that much now because, as the WP puts it, "proponents increasingly view the Bush administration as a roadblock with an expiration date." Those who have missed at least two monthly payments would be eligible for the program. It would require lenders to decrease payments to no more than 31 percent of a borrower's monthly income. In order to encourage companies to participate, the government would essentially offer to split the loss with any lenders that lose money from most of the modified mortgages.

Jack Cummings writes the book Real Estate Finance & Investment Manual:

Zero coupons are a function that stockbrokers and bond dealers use. The essence of this kind of financial transaction on the stock or bond market is the instrument sold is a note, bond, or debt obligation that has an original face value, and that no payments are made against the debt for a period of years, then the debt balloons.

Split funding is a psychological approach to payment. It gives the buyer the opportunity to say, "I'll pay you what you want as a down payment; only, I'll pay it when I'm good and ready to."

Often we own property that has benefits that do not appeal to us. These benefits were not the principal reason we purchased the property, or we no longer need or have use for those benefits. These benefits usually attribute to the cost of ownership of the property and now become a negative to the ownership of that property.

WASHINGTON (Reuters) - The federal agency that insures most U.S. bank deposits unveiled a plan to prevent about 1.5 million home mortgage foreclosures by promising to share any losses with mortgage companies that agree to refinance certain home loans.

The agency, the Federal Deposit Insurance Corp, said on Friday the plan would cost the government about $24.4 billion, which could be paid from the U.S. Treasury's $700 billion bailout program for the financial industry.

So far, most of the money in the bailout program, the Troubled Asset Relief Program, or TARP, has been injected as capital into banks.

FDIC Chairman Sheila Bair, who spent weeks unsuccessfully lobbying Bush administration officials for the foreclosure prevention plan, unveiled her agency's proposal two days after Treasury Secretary Henry Paulson dismissed the idea of the government underwriting failing home loans.

Paulson told reporters on Wednesday, "That (foreclosure plan) is a subsidy, or spending, program. The TARP was investment, not spending."

The FDIC pushed forward with its plan, posting it on its website Friday morning (http://www.fdic.gov/consumers/loans/loanmod/index.html).

FROM THE WASHINGTON POST:

Officials at the Federal Deposit Insurance Corp. yesterday detailed a plan to prevent 1.5 million foreclosures in the next year by offering financial incentives to companies that agree to sharply reduce monthly payments on mortgage loans.

The proposal, which has the support of leading congressional Democrats, would considerably expand the scope and force of the government's efforts to stem foreclosures. Agency officials estimated the cost to the government at $24.4 billion.

FDIC Chairman Sheila C. Bair continues to face opposition within the Bush administration. Treasury Secretary Henry M. Paulson Jr. said Wednesday that he opposed funding the plan from the government's $700 billion financial rescue fund, which has been used primarily to rescue banks and encourage lending. FDIC officials say they are still in talks with the Treasury, but proponents increasingly view the Bush administration as a roadblock with an expiration date.

"We think it's essential that we actually strike at the underlying cause of the problems in the financial markets," said Michael Krimminger, special adviser for policy at the FDIC. "We think it's time to make a decisive difference in the housing markets on foreclosures."

Jack Cummings writes the book Real Estate Finance & Investment Manual:

The sliding mortgage technique is when you slide a mortgage from one property to another. In essence, you replace the security to the debt with another asset. By moving that specific debt from one property, you are substituting collateral. The new collateral may be other real estate or some other asset.

One situation would be when you want to assume a favorable existing mortgage because of its term, interest rate or other provisions. If you can move the existing mortgage over to another property or asset, you can accomplish that task, and often buy a property without having to invest any of your own capital. If you have purchased a property and the seller is to hold a purchase money mortgage, ask for the right to slide that mortgage to another property of equal or greater value. This technique is often best set up when you purchase a property and the seller holds a first or secondary mortgage.

Double finance is simply the application of two or more techniques of finance to allow the buyer to maximize the financing and minimize the capital invested.

The pitfalls of double financing are the same as any overleveraged property.

A glue transaction is any financial transaction that occurs where the glue person puts up his good name and/or credit to a transaction and other parties put up the initial cash.

In a shared equity transaction, you "sell" your property to a tenant, who will get a percentage of the equity at the time of a future sale.

WASHINGTON, Nov 14 (Reuters) - The White House on Friday said it was carefully reviewing a plan by the Federal Deposit Insurance Corp to prevent foreclosures by sharing any losses with mortgage companies that agree to refinance certain home loans.

"The FDIC has developed a proposal that the administration continues to review," White House spokesman Tony Fratto said.

"As we review proposals we're thinking about how effective they would be, how they fit with other programs," he said.

"And we have to think about cost," Fratto said, adding that the TARP programs were designed to have some return for the taxpayer. "So ideas that are straight outlays of taxpayer money, with no return expected, need careful review," he said.

MORE:

WASHINGTON (AFP) — The US banking system regulator Friday proposed a 24.4 billion-dollar program to restructure troubled home loans to avert foreclosures.

The Federal Deposit Insurance Corp. said the effort could, through 2009, avert 1.5 million home foreclosures — actions that intensify the financial crisis by pressuring borrowers and banks.

The FDIC said voluntary loan modifications are being done at a slow pace, affecting only about four percent of the seriously delinquent loans outstanding.

"It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures," the agency said.

The FDIC said a program based on its actions at IndyMac Federal Bank, which the agency seized this year, could be applied to reduce mortgage payments to as low as 31 percent of a borrower's monthly income.

"The FDIC would be prepared to serve as contractor for Treasury and already has extensive experience in the IndyMac modification process," the statement said.

FDIC said that of some 4.4 million problem loans, about half can be modified. But even if some of those go back into default, the program would avert 1.5 million foreclosures.

Jack Cummings writes the book Real Estate Finance & Investment Manual:

Positive leverage occurs when you borrow money at a lower interest rate than the return you get on the amount of cash…

Most real estate investments are inherently risky because of the investor's inability to properly assess the needs of the investment.

The effect of leverage is always examined with its relationship to the constant rate of the mortgages and the constant cash flow rate of the net operating income.

Real estate in the United States normally is considered the single most secure form of security for a loan.

FROM THE WSJ:

It’s been a while since we revisited the foreclosure crisis, which has obviously gotten worse. Foreclosure numbers are skyrocketing, while numerous states, the federal government and financial institutions are tackling the issue in various ways.

For the legal beagles at so-called foreclosure “mills,” which do assembly-line lawyering for lenders and other mortgage owners, the crisis has meant lots of work but also woes, including sanctions and stern lectures from judges (examples here, here and here). Why are judges so frustrated? The increased volume is leading to mistakes and irregularities, which we’ve chronicled before.

Now comes the foreclosure case of Joanne Fredenburg, a widowed homeowner in Lehigh Acres, Fla., where real estate prices have plummeted. Last month Ms. Fredenburg was served with not one but two foreclosure lawsuits from two different plaintiffs that both claimed to own her promissory note and mortgage and said she owed them each more than $276,000. That, of course, is impossible. (Click here and here for the two complaints.)

One lawsuit seems to make sense. The plaintiff is a unit of Deutsche Bank that acts as a guardian or “trustee” for investors of mortgage-backed securities.

REPORT:

You wouldn’t expect a $1 million home on Easy Street on Smith Mountain Lake to end up in the same situation as a $20,000 house from inner-city Lynchburg.

One was built as a lakeside mini-mansion in 2006. It has 5,200 square feet, granite countertops, cathedral ceilings and geothermal heat.

The other was built in 1892 with a wood frame and siding. Its 1,500 square feet are warmed with electric baseboard heaters.

Both met the same fate this year.

Foreclosure.

So did more than 200 other homes in the Lynchburg area. After homeowners failed to make mortgage payments, lenders ultimately took the homes to foreclosure auctions.

An examination by The News & Advance of land records in Lynchburg and the counties of Amherst, Appomattox, Bedford and Campbell show that more people have lost their homes this year than last year, up 33 percent overall.

From January through August, local property owners — including individuals and a few businesses — lost 211 properties to foreclosure. Records showed 159 foreclosures over the same period in 2007.

The number of foreclosures nearly doubled in Bedford County, from 42 to 82, including expensive homes on Smith Mountain Lake and in Forest.

In Lynchburg, the number of foreclosures grew by 21 properties, or 39 percent, mainly in low-income neighborhoods.