Chris Whalen: It’s Still 3-6 Months Until Foreclosure-Gate Really Gets Out Of Control

Chris Whalen of Analyst Institutional Risk Analytics spoke with CNBC this afternoon about foreclosure-gate and its impact on the banks.

  • 0:50 There is declining interest income on one side of the house and increasing costs in servicing foreclosures of properties. They are losing money on both sides.
  • 1:05 The efficiency ratio for banks is going to go close to 100%, banks are going to be bleeding cash.
  • 1:30 The next three to six months is when things are going to get out of control; banks servicing departments don’t have the capacity to own and operate the real estate. Dodd-Frank legislation may be used to restructure banks.
  • 2:15 Fannie and Freddie are the biggest sellers of real estate in the U.S., Fannie Mae is the biggest landscaping company in the U.S. now.
  • 2:30 Banks are not equipped to be owners of real property; when their assets get illiquid they can’t lend. Banks are walking away from the properties.

Check out Chris Whalen’s terrifying presentation on the 2011 foreclosure crisis >