Government Motors =Ford took the money

[38P]

Re: Government Motors =Ford took the money

ford got 16 billion from the feds and
DEARBORN, Mich., Nov. 27 ? For the first time in its 103-year history, the Ford Motor Company is mortgaging its assets, including factories, equipment, office buildings, patents and trademarks, and stakes in subsidiaries like Volvo, in order to raise $18 billion to overhaul itself.

16 billion is a lot of money

Ford didn't mortgage to the government. Unlike GM, it planned ahead and borrowed the money to get through the recession BEFORE the collapse.

As for the "secret bailout," all that happened was Ford's credit arm sold some commercial paper to the Federal Reserve. Regular banks do it all the time. The only novelty here was that Ford Motor Credit wasn't technically a bank.

It wasn't a bailout. If it hadn't happened, there would have been no way to make auto loans to any FoMoCo customers because the banking crisis had frozen the commercial paper market.

Besides, while everyone wants to focus on the greedy UAW, they forget that (1) it's Depression-era federal law that prevented the Detroit automakers to evade unionization like the Japanese, Korean and German "transplants" did by building plants only in "right to work" states; (2) 40+ years of unfunded emissions and safety mandates and unfair trade practices (i.e. Japanese protectionism/dumping/subsidy) caused much of the problem.

[SpiderGearsMan]

Re: Government Motors =Ford took the money

oh yes , the heroic ford debtor nation
junk ...GM still out selling them ...junk

[JeffMcKC]

Re: Government Motors =Ford took the money

Out sell them all they want LMAO at a loss as in No Profit

[SuperBuickGuy]

Re: Government Motors =Ford took the money

to be clear - what I said is not a pot shot at unions; it's a pot shot at the process itself. One party's pork is another party's new road.

it's like AARP, Social Security is going nowwhere because those who are most likely to vote would vote someone out who had the audacity to suggest doing away with it.... same with unions, they are an organized structure whose interest is not the same as the general taxpayer who'd rather not bail out anyone (unless, of course, it's that aforementioned new road)....

foreclosure, scott gave you the shorthand. the longer version is whoever was the last lender is the one who is screwed - most of these 100% loans were one conventional loan for 70-80% of the value, then one or more mortgages that were junior to the conventional loan. Those are the ones that got really screwed because they were selling those loans to investors as "mortgage backed investments"..... which they were only an investment in the most tortured expression of the word.

I've done foreclosures (ages ago), and in the hundreds I've done only one had homeowner equity that would (in theory) go back to the owner.... which is where the re-writes occurred. A homeowner sees the conventional loan which is more or less equal to 100% of the value of the house; and thinks "oh, but the junior lenders have nothing so why lose my house - just erase the junior lenders." As you might expect junior lenders don't agree with the "new" value - so the fight begins.... I was in bankruptcy court listening until my client was called; and a person was arguing that the sailboat they owned should be sold to them for the reduced value the sailboat now had..... I do like the bankruptcy judge's response - but it's not your boat anymore to own or to demand sold to you... it's the banks. Same with houses, most of the banks feel that they were snookered by the buyer and his/her appraiser so if they're going to lose; they want the homeowner to lose as well.

[38P]

Re: Government Motors =Ford took the money

I've never met a banker that would rather have another piece of foreclosed property in "REO" (real estate owned) instead of a performing mortgage loan. Nor have I met one that would rather have "heat" or "supervision" from the Feds because of a portfolio of bad loans.

I'm also very skeptical of the claims that foreclosures yield "100% profit" for banks. The initiating banks borrowed the money they initially loaned out (profit is based on the "spread" between the cost to borrow and the amount collected (either at resale of the loan to investors or, if the bank keeps the mortgage loan, from the borrower) Then when the loan goes bad, there are all sorts of legal costs incident to foreclosure. If the bank holding the mortgage at foreclosure ends up with the house at the end of the foreclosure, then it has the expenses of securing it, fixing it, paying taxes on it (in most states) and marketing it, all while most of the money loaned on the house is tied up in it and not producing any present income whatsoever. And that assumes there's no bankruptcy chapter or fights with other creditors in the whole mess.

Given the decline in real estate values since the collapse of the "bubble," the glut of foreclosed properties on the market, and the "fire sale" nature of foreclosure sales, many banks have lost a ton of money on foreclosures.

[ls7gto]

Re: Government Motors =Ford took the money

thanks guys, very interesting read.

[SuperBuickGuy]

Re: Government Motors =Ford took the money

when a bank forecloses, generally the junior mortgages disappear - and while they can exist if, by some miracle, there is equity left after the 1st position lender has money - in most cases, the junior ones simply get nothing. it's quite a bit more complicated (especially if a junior lender buys out the lenders in superior position); but if you want to know why WAMU doesn't exist and BofA does - it's because the number of loans which were secured by 1st position rather then lower position loans...... in the end, many state laws allow the junior position lenders to attempt to collect from the borrower - but finding a borrower that still has assets after they lost their house happens as often as a junior lender realizing any money from its loan.

[455 LeMans]

Re: Government Motors =Ford took the money

Hmmm, sounds political...

[SpiderGearsMan]

Re: Government Motors =Ford took the money

nah , just the ford vs chevy battle
foreclosures ain't my game , those people generally got what they asked for

[SuperBuickGuy]

Re: Government Motors =Ford took the money

Hmmm, sounds political...

why?

[SpiderGearsMan]

Re: Government Motors =Ford took the money

car talk is political when the government does a joe stalin and seizes the joint

[milner351]

Re: Government Motors =Ford took the money

The only winners in the foreclosure market are the folks that have cash to buy houses for $20k or less that were selling for $100k or so a few years ago.

That is - if the market recovers.

A friend has purchased three homes for $20k or less, cash. Fix up, and rent - for say $750 a month. That's now an income stream after property taxes and landlord insurance. Not a bad gig, but not without risk or hassle. Only God knows if the market will recover, and if so, by how much.

[SuperBuickGuy]

Re: Government Motors =Ford took the money

Last I heard there were free houses in Detroit - of course they come with an issue or ten... but just because you paid nothing for them doesn't mean you can't lose..... example - you buy a house in a ghetto side of town, do a quick paint n carpet to the house and rent it out to a nice couple who just "happened to be in the neighborhood" they said "oh this neighborhood is turning around, that's why we want to be here." they never move in, they let their "cousin" move in and he runs the house as a meth lab. Never makes another rental payment. Police get a phone call, find the remains of the cooking operation and declare the house uninhabitable. You're stuck with tearing it down, your mortgage, now you're in the hole 80 grand..... you say "the heck with that" you leave the house up. vagrants move into the house... eventually kids playing with matches do the coup de grace to the house... unfortunately one of the kids doesn't get out in time..... parents sue you for maintaining an attractive nuisance - they get whatever money you have left after the bank liens your home.....

of course, I'm kind of in a dark mood today so perhaps I'm just being a lawyer again and not seeing the upside. :