Am I the only one scratching my head about an editorial on the subject of public shaming of lenders that does not name the lenders in question?

The Dayton Daily News knows who the lenders are. The DDN knows where the properties are. A 20-minute title search would tell them when the mortgages were filed and what the sales price was and who the original seller was. Either the DDN didn't do this or the DDN refuses to report what it has. Now, why would that be?

If I had to speculate--and it would be irresponsible not to--I'd guess that the properties were picked up in a foreclosure or pre-foreclosure short sale in the first place. The odds that the original transactions were fraudulent are quite good (see the coy reference to the lender who has "filed suit" against one of the borrowers), but I doubt the purchasers walked away with significant cash: if the loan balances were significant, the lenders wouldn't be this willing to carry the loan rather than foreclose. I would further speculate that the "real estate investors" in question have some political connections--you notice they weren't named in the editorial either.

Memo to everyone who believes that the OCC and the OTS are going to "crack down" on the lenders sufficiently to cool off the speculative market: banks already have to report this kind of stuff. There is already a bank examiner sitting in an office somewhere looking at a report showing a fair number of non-accrual loans that nonetheless are not being processed for foreclosure--a standard canary in the coal mine. However, it appears that the pressure is coming from intrepid, low-budget community activists with hand-made signs, not the folks who have, among other things, the power to issue cease and desist orders.

If I'm right, this is a classic example of the bagholder circle-jerk that is quite common on the very low end of the RE market: lender A makes a "creative" loan to slumlord A on a distressed property in foreclosure to take the heat off of lender B who currently holds the note. Then lender A finds itself with a nonperforming loan and can't find lender C or slumlord B. Nobody pays much attention because the loan balances are probably about $20,000 and you can tuck that write-down into a big report.

It's when this dynamic goes "upmarket" that the carnage starts.

I just drove through Dayton - I believe it. It looks like the place is about to be abandoned... a more than a few other cities in Ohio, W Va and Pa I drove through...

But not too far away in MD near the shore I saw peanut farms bordering on swamps & salt marsh bulldozed and advertising 'family homes starting at $490s'... small lots with big ugly plastic sided homes.

For you folks on the W Coast or central US who have never been to an East Coast salt marsh... they are wonderful places to fish or bird... some of the most fertile areas on the planet. Unfortunately one of the products of that fertility are mosquitos... I have been all over the northwoods of Canada & US and swamps of the Mississippi River watershed... I have never experienced mosquitos in the numbers & ferocity of east coast salt marsh mosquitos...

$490K+ mass produced homes within a rocks throw of a massive salt marsh... Obviously these are homes targeted to 'city folks' who have never experienced overnights in the tidewater region except for 'ocean front hotels'... They will learn. Lotsa folks will learn.

the Fed is well aware of the RE bubble and the dependency the economy has on it. we've probably all heard the calculation of 43% of job growth since 2000 being RE related. Greenspan in a recent testimony mentioned the RE bubble possibility. he never talks about something unless there's a good reason. that of course doesn't mean they'll take any action.

the M3 money supply is once again on the move providing more liquidity on top of the existing mounds of cash. there's dirty work afoot, and its hard to say what is spooking the Fed to keep the fiat money machine expanding. if it wasn't for importing deflation from our developing nation trading partners, this whole thing would've fallen apart years ago. i'm just not sure how much gas is left in the RE tank when you see where prices are today.

DF what will happen to the houses near the marsh is that the marsh will be drained to eliminate the mosquitos and of course to build more houses.

Not this marsh vader - it is a 'salt marsh'... they would have to 'drain the ocean'... or start giving some of those coveted H1b's to dike builders from the Netherlands instead of programmers from India.

I know exactly what they will try to do though - control the bugs by spraying... I've been there after tropical storms have dumped oceans of rain... the mosquito population explodes to the point where even daily fogging (huge trucks spraying God knows what) can't make a dent in the mosquito population... knocks them down for a few hours then they are back.

Seriously this is one of the worlds worst sites for a 'single family development'... fishing or hunting shack great site... families who expect to do things like 'play outside'... or 'sunbathe'... no chance.

And starting in the $490s!

An interesting comment I saw on Bloomberg was from the Indian oil minister who stated that there is no rational basis for current oil prices except for speculation

Never trust a handicapper with a horse in the race.

There are LOTS of rational reasons for oil to be this high... two big ones come right off the top of the head... (1) steady unending world wide growth in demand... until that shows a tipping point where demand actually falls then prices aren't too high... (2) uncertainty - including the politics of the Persian Gulf & South Asia... something the Indian oil ministers knows as well as anyone.

"There are LOTS of rational reasons for oil ..." Don't we assume that peak oil may be a reality also?

I am not an expert on the oil industry but was trained as a chemical engineer (more into biochemicals though - which doesn't explain why I now work in metals - go figure)... So have more of a passing interest.

Anyway I think you are right but believe people misunderstand 'Peak Oil'... It won't be a sharp peak like the Mattahorn... it will be more of a large mound or even a bumpy plateau... as we approach peak we will see production increasing slowly & struggle to maintain it, even as prices rise rapidly... Only when we are well past peak and looking back will we be able to say 'yup' that was it.

Having said that I don't believe we have 'summited' the peak yet... but the air is getting thin for sure.

Tanta, I've gor a question about an earlier response of yours on mortgage foreclosure: "judicial foreclosures are long & expensive, so the basic fact is that you don't get deficiency judgements in CA."
Is it possible that banks (huge lenders) have looked into this & have found a way to cut back on the time & costs?
I read over the weekend that anational bank (Wells Fargo) won an appeal of a piddly little lawsuit suit, to protect their "right" to grab an extra day's mortgage interest over what the state allows. It's been quite a while since banks gave away ANYTHING & I just can't digest that they might let mortgagees (especially those with sizable incomes) walk away with just a bad credit rating & an IRS bill.