Trying To Minimise Their Losses In The Present Glut
It’s Friday desk clearing time for this blogger. “Increasing danger lurks in the mortgage market, and economists say it could put the financial system at ‘even greater risk’ when the next recession strikes or too many borrowers fall behind on their mortgage payments. A growing segment of the mortgage market is being financed by so-called non-bank lenders. Borrowers with poor credit have increasingly turned to these alternative lenders instead of traditional banks. The alternative lenders are subject to far less regulation and have fewer safeguards when borrower defaults start to pile up. ‘A collapse of the non-bank mortgage sector has the potential to result in substantial costs and harm to consumers and the US government,’ economists at the Federal Reserve and the University of California, Berkeley, write in a paper.”
“As of 2016, non-bank financial institutions originated close to half of all mortgages. They originated three-quarters of mortgages with explicit government backing, underscoring the risk to taxpayers. The danger is that non-banks may have fewer resources to weather economic shocks to the mortgage market, like a rise in interest rates or a decline in house prices.”
“‘What happens if interest rates rise and non-bank revenue drops? What happens if commercial banks or other financial institutions lose their taste for extending credit to non-banks? What happens if delinquency rates rise and servicers have to advance payments to investors?’ the authors write. ‘We cannot provide reassuring answers to any of these questions.’”
“Property investors were bullish on the U.S. housing market in 2017, flipping more homes than in any year since 2006, when the real estate bubble that helped upend the global economy was still inflating. ‘The long up-cycle that we’re in is giving more and more people confidence to try their hand at home-flipping,’ said Daren Blomquist, senior vice president at Attom. Rising home prices are ‘pulling more people onto the bandwagon.’”
“Still, red flags show up in local markets. Flippers in Austin, Texas; Santa Barbara, California; and Boulder, Colorado, earned gross returns of less than 25 percent (which don’t include the cost of renovating the homes), suggesting that investors in some markets are depending on slim margins. Flips represented almost 13 percent of home sales in Memphis, Tennessee, in 2017, more than twice the national average, a sign that some flippers are becoming overconfident, Blomquist said.”
“More than 10 years after a former Denver man was charged with securities fraud for his role in an $8.3 million real estate scam, he continues to make monthly restitution payments to his victims. But Jason Sharkey’s criminal background hasn’t stopped him from becoming a key player in an $80 million to $100 million riverfront redevelopment project in Wausau, Wis., that’s funded in part by city money, according to records from the U.S. and Canada.”
“‘That’s insane. That’s just crazy, that’s what that is,’ said Broomfield resident Thomas Severino Jr., one of many investors lured into the Colorado scam by Sharkey. He and his wife invested $40,000 with Sharkey, who still sends them about $15 per month in restitution.”
“As the Bay Area exodus continues, U-Haul is watching its trucks drive out of the region and not return — leaving the company with a shortage in the area, Mark Perry, a finance and economics professor at the University of Michigan wrote in a blog post. So the company is raising and lowering its prices accordingly. ‘They’re almost paying people to get the trucks back into San Jose,’ he said. That suggests ‘there’s a huge outflow, and a lot of outbound moves leaving the area, and very few moves coming in.’”
“A marble-filled duplex apartment in Midtown Manhattan’s Olympic Tower returned to the market Tuesday with a new reduced $25 million price tag after spending more than a year in hiatus. The ask is $8 million less than the $33 million that the home was asking when it was last on the market in November 2016, listing records show. ‘Today they are realistic sellers and they are basing the price on market conditions,’ said listing broker Leonard Steinberg of the discount. ‘At a little bit over $3,000 per square foot, it is a remarkably good buy.’”
“The unit isn’t the only big-ticket Manhattan property to get a fresh price tag this week. On Monday, a co-op on Gracie Square received a discount of $7 million to $11.5 million, also presumably a response to difficult market conditions at the highest end of the market.”
“While housing prices in Okotoks fell slightly last year, local realtors say the outlook for 2018 is a more steady market. The current inventory in Okotoks of more than 200 active listings is more than average, said Jacky van der Ven of CIR Realty Okotoks. ‘It’s more inventory than we should have,’ she said.”
“Zurich’s housing market boom is starting to fizzle out. Home values in the canton fell in the fourth quarter, the first decline in almost two years, according to Zuercher Kantonalbank. Demand is unlikely to pick up in 2018, the Swiss lender says, in part because fewer people are moving to the country’s largest city. The decline comes after a decade in which home values jumped more than 50 percent to an average of about 1.3 million Swiss francs ($1.4 million), helped by years of negative interest rates.”
“After seemingly unstoppable growth, Kenya’s real-estate sector is showing signs of oversaturation, while affordable housing remains in woefully short supply. But now, questions are being asked about whether it’s all been too much, too quickly. Empty housing blocks and office spaces are a common sight. According to property services company Broll Kenya, there are occupancy rates as low as 60% in some buildings in Upper Hill and Westlands.”
“David Nahinga, CEO of housing company Ujenzibora, tells The Africa Report: ‘Our market activity is too little, and there is no single player shouldering widespread risk.’ Nahinga says it is the banks who are likely to be the most exposed: ‘The only player in the sector who should talk about a bubble should be the financier or the bank,’ he says. ‘But even for them, funding the built environment can crank up the loan book through revaluation to show the property is worth more than the liability.’”
“Chie Nozawa, a professor of the Faculty of Science and Engineering at Toyo University, spoke with The Yomiuri Shimbun. What problems have there been with Japan’s housing policies? Chie Nozawa: Japan already has more homes [buildings] than households [people to live in them], yet more and more new housing continues to be built, leading to a ’society with excessive residential supply.’ At this rate, future generations will be saddled with the burden of worthless inheritances. We need to find solutions soon.”
“Some major developers have started selling land in non-prime locations over past few months, while some are exiting local markets amidst Malaysia’s soft property sector and the uncertainty caused by the upcoming general election this year, reported The Malaysian Reserve. The central region is also suffering from an oversupply of properties, and it’s uncertain if the existing un-occupied units can be absorbed by the market.”
“Property consultancy MacReal International’s Principal Partner Michael Kong noted that it’s a strategy of developers to focus their resources on sought-after locations at the expense of far-flung areas. Developers are now trying to minimise their losses after ‘getting hints from the media and statistics announced by Bank Negara Malaysia (BNM) and the National Property Information Centre (NAPIC) on the present glut,’ he explained.”
‘The danger is that non-banks may have fewer resources to weather economic shocks to the mortgage market, like a rise in interest rates or a decline in house prices.’
Hey Fed dudes, I can tell you what Quicken has for economic resources. Some filing cabinets, phones, water coolers, desks. Payables to radio and teevee stations should be deducted though.
‘What happens if interest rates rise and non-bank revenue drops? What happens if commercial banks or other financial institutions lose their taste for extending credit to non-banks? What happens if delinquency rates rise and servicers have to advance payments to investors?’ the authors write. ‘We cannot provide reassuring answers to any of these questions.’
Given your track record on such matters, whatever you come up with wouldn’t be reassuring.
‘What happens if commercial banks or other financial institutions lose their taste for extending credit to non-banks?’
The article says these guys run on lines of credit. A line of credit can be pulled overnight. Yeah, let’s make 30 year loans based on that.
+1 Ben. Lines can be pulled.
Dan Gilbert, the owner of Quicken, owns half the buildings in downtown Detroit. But if Quicken needs a bailout, I’m sure those buildings are protected by legal firewalls.
Boutique hedge funds might need the fed’s discount window.
Don’t these non-banks usually just originate the loan then sell the paper to someone else?
Yes, but they need credit lines to fund enough loans to create large enough pools to sell. If rates go up before they sell the pool, the value of the pool goes down. It can be a fairly dangerous game.
‘Fruit Mania Grips Chinese Speculators As 60 Billion Apples Trade’
‘In just four hours this week, Chinese speculators traded as many apples as the country consumes in three months. That’s about 60 billion of the Fuji variety, enough to keep the doctor away for a very, very long time.’
‘In an extraordinary bout of trading on Tuesday, investors on the Zhengzhou Commodity Exchange bought and sold about 964,000 futures contracts. At 10 metric tons apiece and a price of about 7,200 yuan ($1,138) a ton, that’s almost $11 billion worth of apples.’
‘Even in the febrile world of China’s commodity markets, where everything from steel to eggs change hands with an intensity that makes the world’s more established exchanges look docile, the explosion in apple volumes stands out.’
‘Trading in commodities across the nation’s three main exchanges has exploded in recent years with regulators repeatedly stepping in to quell fears of a bubble during particularly wild bouts of activity. Shortly after the launch of the apples contract, the China Securities Regulatory Commission said it would strengthen supervision of the futures and firmly fight against market manipulation. Traders are undeterred.’
“Everyone in the market has got their own view on prices,” Gao said of the apple futures.’
China’s money printing is off the charts.
The desire to gamble must be in their genes.
must be in their genes.
Cellular processes for gene/DNA duplication do resemble card-shuffling.
Zhou-bucks looking for a place to die.
Norwegian Joy was built by Meyer Werft in Germany, in response to a booming Chinese market for cruises. Over the past year the number of Chinese holidaying at sea has more than doubled, to 2.1m, according to the Cruise Lines International Association, a trade group. These numbers are likely to encourage other lines to build ships just for China, instead of using cast-offs from America and Europe. The Norwegian Joy has a much bigger casino than usual, to cater for the Chinese love of gambling.
https://www.economist.com/news/business/21724441-many-question-whether-state-subsidies-business-will-be-money-well-spent-china-bulks-up
Apples are the new tulip bulbs!
I just bought 3 apples in a small shop on Nandan Rd. In Shanghai yesterday afternoon. I remarked to my friend how surprisingly expensive they were…..about $0.75 each…..but the peach was more at $1.10. Now I understand why!
I marvel every day here at how massive an undertaking it is to feed 1,400,000,000 people living in a land area the size of the U.S. This country is amazing.
I marvel every day here at how massive an undertaking it is to feed 1,400,000,000 people living in a land area the size of the U.S.
And like the USA, big chunks of the mountain west are almost empty. So the crowded places are seriously crowded. Second tier cities are bigger than anything in the USA.
Yes, and the infrastructure and architecture is truly amazing. I just took a bullet train from Shanghai to Wuxi. 115 kilometers in 45 minutes.
Wuxi is 6 million people. There are lots of available buildings for lease, open land with improved roads, lots of construction happening, and a very progressive industrious feel. Oh yes, there is also quite a bit of have. It reminds me of LA in the 1970s & 80s.
…haze….” quite a bit if haze”. It is smoggy, like our country in the 1970s and 1980s!
For all the tea in China.
The key to modern investing is to predict, correctly, what asset Chinese will speculate in next, and get there first.
So China is going to replace the Fed?
Santa Clarita Housing Prices Crater 14% YOY As California Economy Weakens
https://www.movoto.com/sing/market-trends/
“He and his wife invested $40,000 with Sharkey, who still sends them about $15 per month in restitution.”
Bahahahahahahaha …
(doin’ some math here …)
… this means it’ll take him two thousand six hundred sixty-six months to pay him back.
(doin’ some more math …)
… that’s … that’s sumtin’ like two-hundred and twenty-two years!
Bahahahahahahahahahahahahahahahahahahahahahahahahahaha.
The irony?
Of many…
It is still more punishment than Jon Corzine recieved.
‘The only player in the sector who should talk about a bubble should be the financier or the bank,’ he says. ‘But even for them, funding the built environment can crank up the loan book through revaluation to show the property is worth more than the liability.’
If only we had generally accepted accounting principles and procedures backed by fraud laws.
Oh wait, we did.
But obama found them inconvenient.
Oh lookie. 2-fruit dropped the black man card again. Maybe if Obama wrestled with some sluts in Vegas everything would be good with him.
reverse racis
“A growing segment of the mortgage market is being financed by so-called non-bank lenders. Borrowers with poor credit have increasingly turned to these alternative lenders instead of traditional banks. The alternative lenders are subject to far less regulation and have fewer safeguards when borrower defaults start to pile up.”
(snip)
“As of 2016, non-bank financial institutions originated close to half of all mortgages. They originated three-quarters of mortgages with explicit government backing, underscoring the risk to taxpayers.”
Let’s boil this down a bit …
Borrowers with poor credit have turned to alternative lenders who are subject to far less regulation and have fewer safeguards when borrowers defaults start to pile up, but nevertheless three-quarters of mortgages with explicit government backing are originated by these alternative lenders, lenders who loan money to people with poor credit.
This should end well.
The Mel Watt Plan.
It truly is a beautiful thing to behold.
If you complain, you are a racist.
some w CRA complaints
lefty media never mentions CRA
rasis
CR8R coming!
Wonder how Trump would handle the situation, if it occurs on his watch?
2019 ain’t going to be pretty
u have to have a recession sometime
Yes, I noticed headlines today about “recession in 2019″. Wut? I thought it was supposed to be now, March 2018. Of course, for many, recession never went away.
I don’t know if there is a recession coming this year. The job numbers today sure looked really good.
I agree. There is a lot of momentum still buulding. All that has to dissipate and the economy must turn downward before we have a recession. 2020 or later.
These non-bank lenders turn around and securitize the newly originated mortgages as fast as they can. Their business model is fee-based and if the loans go bad, then it’s not as if they’re holding them on their balance sheets. Those loans are written to be sold ASAP.
It all works fine until the music stops and you have sh*t no one wants to buy (RMBS), and your warehouse lines want their money back.
When did that happen before? Hmmmmm….
Miramar Beach, FL Housing Prices Crater 6% YOY As Vacation And Second Home Demand Collapses
https://www.movoto.com/miramar-beach-fl/market-trends/
Realtors are liars.
… and every closing a crime scene.
Anybody price the rate both ways for a Uhaul betwixt Mexico City and LA?
???
I missed the joke. Is this for dreamers who will eventually be deported?
I thought all dreamers are destined to become doctors and engineers?
Landscape engineers?
At any rate, I can’t remember the last time I saw a non-Hispanic working in the landscape maintenance field…
I was standing in line ordering food today at Wendy’s and I saw a black guy and two white guys with a landscaping company t-shirt on. The company was a Latino name (Miguel’s landscaping company), but all the workers at that Wendy’s were non-Latino. Looks like the landscaper owns the joint and is calling the shots now.
“I can’t remember the last time I saw a non-Hispanic working in the landscape maintenance field”
That’s why I love North Central Florida. Feels like I moved back to the US. All the folks in landscaping around here are either black or white Americans. I love it.
Not far from where I live is an older run-down place that is Latino owned. It’s a large place, and several generations reside there, all of ‘em working, gone during the day. They have more new cars there, friend’s new cars visiting, lots of large diameter “alloy wheels.” Gotta be a half a million dollars worth of cars there every evening, on the front lawn, around the side of the house as well as clogging the driveway. Doesn’t look like they’re saving one cent for tomorrow.
That Latino could be a native-born US citizen who owned that landscape company through hard work.
Or are you looking at the Latino name and assuming it’s an illegal immigrant? Sounds rather racis to me.
Not at all. I have no idea about the surname, immigrant or 3rd generation American. My point was just that not all landscaping workers have to be Latino working for a white boss.
I know a dude in loveland , bought a semi,somewhat fixer 2 years ago and figures to make a buck
looks like last two years about 14% appreciation
minus 6% for real whore and walks w 8?
8% less cost of the fixes.
He’s underwater if your math is sound.
Bellevue, WA Housing Prices Crater 6% YOY As Residents Flee Seattle Quality Of Life Issues
https://www.movoto.com/bellevue-wa/market-trends/
re: below:
does gross profit include the time of the flippers?
——————
“Still, red flags show up in local markets. Flippers in Austin, Texas; Santa Barbara, California; and Boulder, Colorado, earned gross returns of less than 25 percent (which don’t include the cost of renovating the homes), suggesting that investors in some markets are depending on slim margins. Flips represented almost 13 percent of home sales in Memphis, Tennessee, in 2017, more than twice the national average, a sign that some flippers are becoming overconfident, Blomquist said.”
azdude made me sad.
The Purpose Fairy to the rescue …
https://www.purposefairy.com/5426/3-things-you-should-do-to-overcome-sadness/
I find this website upsetting.
Can you repurpose me, Mr Banker? I seem to have lost my way.
First let’s start with a refinance then maybe we - you and I working together - can set up it up in such a way that your entire life will end up becoming repurposed.
Did the mulatto skunk provoke you?
What’s a mulatto skunk?
“What’s a mulatto skunk?”
Comment by azdude
2018-03-09 07:18:45
where is the skunk in the woodpile?
We’re all praying for your redemption azdude.
https://www.youtube.com/watch?v=j3HxemRElGY
“This is what happens when Bitcoin miners take over your town.”
https://www.politico.com/magazine/story/2018/03/09/bitcoin-mining-energy-prices-smalltown-feature-217230
This is just nonsense. What a hideous waste of natural resources. What exactly is this producing?
I’m guessing that very few people who post here read Salon. But for those who do, if you don’t turn off your ad-blocker, the site will use your unused computer power to mine cryptocurrency.
http://www.businessinsider.com/salon-hijack-your-laptop-to-mine-cryptocurrency-2018-2
I think Yahoo (mail) is doing it. I posted here the other day that lately it’s been sucking mass power from my PC at times. I’m running a coin blocker, too.
Thanks, this article seems to do a great job of explaining bitcoin and the mining process.
Wenatchee like Yakima has been turned into a 3rd World shithole thanks to illegals. Used to be a nice small city. Truly a shame and goes to show no part of the country is immune.
Whites are too phat for hard work… hence illegals.
When I was maintaining foreclosures I did all the yard work. Sometimes I’d be knocking out 50 to 70 houses every two or three weeks. It was mostly string trimmer work but some lawns in Flagstaff or eastern Arizona. Sometimes I’d hire a guy to help for a day. They were always white because I didn’t know anybody else in Flagstaff. I cut bushes and cleaned gutters too. I did all the snow shoveling, but I contracted out the plow work.
I did all the shack cleaning as well. One time I asked some gringas to give me a price on one in Doney Park and they wanted twice as much as the client was paying me. I got pretty good at it. Generator if there wasn’t power. Two 5 gallon jugs of hot water. The thing about cleaning is you have to work fast or you’ll be there all day. I didn’t have to carry a toilet scrubber with me cuz the FB’s always left those behind. Lots of hand wipes - most important tool for property preservation.
Opps, I meant non-gringas. Some Mexican women who made their living cleaning houses in Flagstaff.
+1 again Ben. Good story. I’ve been there many times.
landscapers have gotten out of control with prices.
“landscapers have gotten out of control with prices.”
Yet another white privileged racis comment from azdude.
“landscapers have gotten out of control with prices.
You can always mow your own lawn. I think it would be physically beneficial to most people to do it themselves.
Here in the desert we do “xeriscaping”.
Wenatchee and Yakima are rather large agriculture areas. The work is physical and relentless during the growing season. Very little Latino obesity, lots of rough working hands.
typo? por que es
Based on Zillow’s analysis, the typical borrower would pay an additional $390 per month on the median U.S. home for a 15-year fixed rate mortgage. A 30-year non-conforming loan would cost borrowers $20 more per month.
Denver, CO 80211 Housing Prices Crater 9% YOY On Record High Cash-out Refinancing
https://www.zillow.com/denver-co-80211/home-values/
*Select price from dropdown menu on first chart
Did you hear about the construction site fire near downtown on Wednesday?
2 dead, building a total loss, adjacent buildings damaged, dozens of cars torched.
Saw the fire in the news video… looked really hot.
“At this rate, future generations will be saddled with the burden of worthless inheritances.”
Merciful heavens, NO!!! The unimaginable horror. We need a coordinated global effort - the most coordinated global effort in history - to make sure our elders’ shacks, air boxes, cars and Beanie Babies go up in value forever!
go up in value forever! ??
Why does it need to go up in value to justify buying it ?? When I purchased my first house, I really did not give a rats $ss if it went up in value.
people assume they get free equity when they buy.
buy a house today and u will be a rich man soon.
Are you gonna burn a cross in Maryvale this weekend, or are you one of those San Tan nazis?
not into that bs. have u ever been to san tan flats? San tan has a decent beer.
Have the buses of folks from so cal showed up to queen creek yet?
Surprise, surprise, surprise!
“The dumb money is helping the smart money exit the stock market.”
http://thegreatrecession.info/blog/dumb-money-helping-smart-money-exit-stock-market/
If it didn’t both groups would need new names.
Is grandma, with her savings, going to be taken behind the woodshed forever?
she need to buy stocks so wall street can fleece her again.
The rich are getting filthy rich manipulating their own stocks.
Chevy Chase, MD Housing Prices Crater 27% YOY As Foreclosures Flood Northern Virginia Housing Market
https://www.movoto.com/chevy-chase-md/market-trends/
azdude
I feel bad about yesterday so to take some of the pressure off I went out and found you…
15 part-time jobs for retirees
JENNIFER LAWLER
MARCH 5, 2018
https://www.bankrate.com/retirement/10-part-time-jobs-for-retirees/
“Inventories shot up cause no one bought anything.” who would have thunk?
“republicans are the party of tariffs.” SHP
“Princeton could use a guy like Joel”
Talking Heads - Swamp (1983)
https://www.youtube.com/watch?v=_ZuWllLXFNk