Bits Bucket And Craigslist Finds For July 19, 2006
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Please have mercy on a newbie: what does FB stand for?
Fudged Borrower.
Please see SoCalMgtGuy’s blog to the right, “Another F’d Borrow”. Unfortunately he had a change of career and is no longer a SoCalMgtGuy (good for him!) so it hasn’t been updated much.
FB = F**ked borrower, i.e. the fools who take on reckless and irresponsible levels of debt to get into overpriced houses they really can’t afford.
Debt forces one in four to fall behind on monthly bills
The Atlanta Journal-Constitution
Published on: 07/19/06
Despite a growing economy and low unemployment, nearly one in four Americans say they frequently fall behind in their monthly bills because they’re in debt, according to a national survey being released today.
Worries over debt are so pervasive that 82 percent of the 1,000 people surveyed said debt is a “very serious or somewhat serious problem” that’s growing worse.
The survey, conducted by a Republican pollster and a Democratic pollster on behalf of the Center for American Progress and the Center for Responsible Lending, shows the country’s growing “economic anxiety.”
American Progress is a Washington think tank founded by John Podesta, former President Bill Clinton’s chief of staff. Responsible Lending focuses on consumer issues such as predatory lending.
U.S. credit card debt, cited as the No. 1 source of people’s debt in the survey, stands at $813 billion, according to John Halpin, a senior fellow at American Progress. He said the average American family is carrying more than $8,000 in credit card debt.
Personal savings, meanwhile, is at seven-decade low, with Americans dipping into their savings or borrowing against lines of credit.
Despite those sobering statistics, Americans actually are carrying debt well beyond credit cards, the study found.
More than half of those surveyed said they owe more than $10,000. Two in 10 of those are $20,000 in debt, the survey found.
Mortgage debt is not included in those figures.
Seven in 10 Americans reported their debt has grown or stayed the same during the past five years. They traded disposable income for homes and cars, college loans and impulse purchases. But they also cited factors beyond their control: a higher cost of living, low wages, unemployment, rising gas and energy prices as well as child care and medical costs.
The “Debt Matters” survey looked at debt in relation to other concerns. For example, Americans are more worried about falling behind financially because of medical bills than becoming victims of terrorist attacks or natural disaster.
Once thought to be a problem of the poor, household debt is “clearly seen as a middle class issue now,” said Halpin, also an opinion analyst at American Progress. “It is a real threat to middle class aspirations.”
The findings will be released today in Washington at a day-long conference on household debt.
One of the most troubling findings in the report: 86 percent of those surveyed said they believe more Americans are struggling with debt in the past five years.
“Eighty-six percent is a stunning number as a pollster,” said Bill McInturff, partner of Public Opinion Strategies, an Alexandria, Va., Republican polling firm that helped conduct the survey. “This survey adds a dimension about what’s happening in people’s personal lives.
“At the macro level we have a lot of good numbers. At the micro, personal level, people are expressing concern about their debt. And this survey tells us why people have been resistant to adopt a more positive outlook about the economy.”
Scariest quote:
“Personal savings, meanwhile, is at seven-decade low, with Americans dipping into their savings or borrowing against lines of credit.”
2006 - 70 = 1936. So savings now are worse then they were back when people were RECOVERING from the Great Depression. Ouch. Can you say Greater Depression?
Here is an example:
http://losangeles.craigslist.org/sgv/rnr/184039776.html
Subject: Any Real Estate Lawyers out there?
I was promised a 30 year ARM that was fixed for 5 years.
I went over the details of this loan time and time again with this “professional mortgage broker”. 30 year ARM with a fixed rate for 5 years. After not returning my calls a few times and a few lame excuses (my back went out, family emergencies, ive been out sick) this “professional mortgage broker” finally said she got my loan ready to go and that her notary public would come to my house to sign papers.
We went over it again: 30 year ARM fixed for 5 yrs.
Here’s what she really gave me:
The 1% option ARM where now all I can afford to pay is the “minimum payment” because the rate is so high and I lose thousands in equity every month. My loan balance is about 30 thousand dollars more than it was when I started with this company. I have since called them back and spoke to the head of the company. He in his own words told me “I’m sorry, it sounds like you got screwed”.
Now I know its basically my word against theirs since I don’t have any recordings of any phone calls, and I know I should’ve hired a lawyer to look over the loan docs before I signed (even though I couldn’t afford it).
I am furious at this company. I don’t know how the could just mess with peoples lives like that.
Do I have any legal grounds to stand on? Or am I just “screwed” like the CEO said.
Oh and the company’s motto is “we won’t bait and switch you like those other companies”
Yeah right.
I can’t wait till my pre payment penalty is up and I can refinance. (another thing they lied about). I am probalbly going to lose my house because my principal balance will be so high.
These guys should be locked up!
Foreseeing barristers, as of late?
Here’s this morning’s good bad news:
July 19 (Reuters) - Rising rents pushed up U.S. core consumer prices an unexpectedly steep 0.3 percent in June, but energy costs were lower, a government report showed on Wednesday in a report that could send mixed signals to the inflation-wary Federal Reserve.
This will pressure the fed to continue to raise rates. There will also be pressure to make the “rising rents” number magically go away.
easy have BLS switch to home prices instead of equivelent rent- cpi will go down! look for this move in 07
Would make sense with homeownership well over 60%. And what convenient timing!
Could they do it in ‘06? (To lower my mom’s SS adjustment next January)
I sure noticed that energy prices were down when I filled up my tank at $3.65 a gallon this morning. Is this governement honest about anything? Between CNBC and Washington, DC telling me the inside scoop, I think its time to hide my money under the matress and build a bomb shelter.
gas did actually go down in June(compared to May). In July it’s way up..
At the local gas stations it seemed prices were actually relatively stable for a while after the big surge earlier in the year, and started going up again in the last week or two.
As discussed elsewhere on the blog, rent pressure will probably drop off when holders of vacant housing are forced to sell or rent.
I pay almost a dollar less per gallon. The difference is gov’t regulation and taxes, the root of all evil.
Core CPI up 0.3%?
Hmmmm, that sounds trivial, but this is the 4th month in a row if I recall correctly.
BB, as a self-styled data watcher, is now really going to have some credibility problems if he pauses in August.
And doesn’t he have to front Congress shortly?
One thing to watch: Do “rents” average the rent across the full spectrum of rental housing? Because as stuck flippers start to rent out the luxury condos and larger SFRs they bought as investment properties, the average quality of rental units is likely to increase. Thus a higher average rental rate may be picking up a quality improvement rather than an increase in rent on comparable property.
It does, but some 80% of rents is the implied rent in owned homes.
The hotels are going have a hard time in Orlando with these type of deals:
http://orlando.craigslist.org/vac/183668114.html
Bigger than expected drop in housing construction:
http://biz.yahoo.com/ap/060719/housing_construction.html?.v=2
From the LATimes:
Home Sales Fall Again; Prices Rise
“Meantime, prospective buyers are capitalizing on the increased competition among sellers to drive harder bargains, real estate agents say. ‘It’s definitely a buyer’s market, but there are plenty of scared buyers too,’ said John Rygiol, a Seal Beach-based agent who works exclusively with home buyers. ‘That’s the really weird thing right now, the uncertainty. Buyers are hesitant to buy because they think prices will drop.’”
“From the LATimes:
Home Sales Fall Again; Prices Rise”
This cannot last. Economic “law” of supply and demand - when supply of widgets increase, prices should go down, not up.
anyone have link to consumer , j6p type sentiment on housing ?
Trying to find stats on the types of loans they are being foreclosed upon.. what’s the rate of 30 year fixed loans being foreclosed on compared to ARMs and IOs? anyone have any hard data for this?
Did you catch the bad math by the DataQuick Chief Analyst in the LA Times Story reporting the YoY price decline in SD?
“San Diego had a 100% increase in the past five years,” he said. “So far, it’s been able to keep 99% of that, which isn’t so bad.”
Hmmm… Prices went up 100%, then declined 1%. We’ll overlook the fact that the decline was over 12 months, not from peak. Did you keep 99% of gains? $100k property increases to $200k. 1% decline is $2k, or 2% of the prior gains. After prices decline by 50%, I wonder if he will be saying, “We made 100%, then lost half of our gains. Not bad.”
Just wanted to say that I found a Robert Prechter book at the library yesterday and started reading it when I got home. I got to the part where he describes how the fed really works and what the dollar really is. Once my stomach settled I was very very tempted to just shut the book and hide. I vaguely remember economics class in high school but I dont remember anything mentioned in the class about the fed. (Then again I was a terrible slacker so maybe they did) Shouldnt stuff like this be hammered into kids before they get released into the real world? How come the average people like me that surround me dont know about this? If they did know and understand I am sure they would be spitting flames. Why is economics sooooo boring in school and text books yet the meat of the topic is so friggin scary?? Ok Ill stop rambling now. Thanks for letting me vent a bit. This is new to me.
“How come the average people like me that surround me dont know about this?”
“If they did know and understand I am sure they would be spitting flames.”
I think you answered your own question.
What is the title of the book?
“Shouldnt stuff like this be hammered into kids before they get released into the real world? ”
Yep. And it should start at home. Before my kids were out of kindergarten, I was teaching them about money by giving them a dollar to spend at the flea market (garage/rummage/tag sale). A very simple beginning exercise, but they learned a little basic math and how to budget their money. They are now 22 and 28 and are huge savers. The youngest is just out of college (May…Summa Cum Laude, btw :-D), just landed her first big full time job, and is already executing a plan to save $10,000 by next summer. Regarding the high school economics class…I think at that age, since most of them don’t have a household to take care of, have no bills, may not have a genuine interest in econ, and have money given to them, they are not that interested. They probably just do enough to pass the class…and then on to the next one.
It’s definitely good to vent. Get it out, ask questions, read as much as you can. That’s how many of us are now learning about the economic mess that the U.S. is in. What is the name of the book, btw? I think I will pick it up, as well. I still feel I need to get more basics under my belt.
BayQT~
What was the title of this particular book? He’s got dozens listed on amazon. Thanks.
The name of the book is Conquer the crash you can survive and prosper in a deflationary depression. I looked for the other titles he refers to in the book but this is the only Prechter book they have. He listed lots of other places to info hunt so I will start looking them up. Like I said earlier, I am learning about this now and it is all new to me. Better late than never. AzGolfer, how is your friends house selling(or not selling)?
Why don’t we learn about the reality of the Federal Reserve in school? Those who control the Fed also influence what is taught in schools. And remember what Henry Ford said:
” It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. “
Home Sales Fall Again; Prices Rise>>>
That’s total BS. The mix of houses being sold is changing. But the same house, any house would have sold for more a year ago.
Exactly. Show me a home that has appreciated $.01 since last August in
the State of CA. without any modifications and was not a Foreclosure and I will pay $100.
A lot of lower income areas are still appreciating in SoCal. Check this out in West Van Nuys from zillow. As you can see, the deflation of the bubble is taking longer in some areas. Parts of North Hollywood are the same.
http://tinyurl.com/s34ao
Nine months after opening the most expensive condos in Shaighai, not one apartment has been sold of 220 units . They are not going to reduce their prices, instead they are planning to rent them out. They expect demand to return from foreign buyers.
Good luck.
The stupid thing is, these people then attempt to overcharge for rent too. I see this happening all the time. They have disdain for people who are renters, demand everything but your first born child and then try to get the renter to cover their entire nut plus a profit.
Incredible. Time for some toughlove for these wannabe landlords.
You remind me of another question mark that hangs over statistical evidence on whether rents are increasing or decreasing. It is important to differentiate between rent asked and rent paid. Many FBs will be advertising their homes for rent at levels that will cover their high carrying costs, but many of these will remain unoccupied until they bring their rent asked in line with the rent at which a tenant will sign a lease. For this reason, rent statistics that are based on the advertised rent rather than what tenants are actually paying will tend to exhibit upwards bias.
Here’s a perfect example (This complex has been discussed here before)…..
http://orangecounty.craigslist.org/apa/183656513.html
….Intro teaser rates for rentals???
“Luxury High Rise Irvine Condo” = oxymoronica
Marquee Park Palace
Unit 1: Original ask $4000/mo now $2500, 185 days on market
Unit 2: Original ask $4325/mo now $2795, 177 days on market
Unit 3: Original ask $4300/mo leased for $2900 101 days on market
I think the HOA on the first luxury high rise experiment in OC is $1000 a month, and the cheapest price when sold by Bosa Development was in the $500Ks. Once again, this is another examples of homeowners losing to renters.
A HOA of $1,000?! Uh oh….wait…wait…yep, my nose is bleeding. Blood pressure just shot through the roof. Just kidding.
But, damn, $1,000 for HOA? That’s scary.
BayQT~
Hehe, it says “walk to movies”. I remember that being able to walk to the movies from that complex has always been a selling point. Well guess what? That movie theater has shut down! Now it should say “Walk to generic strip mall”. Irvine has a generic strip mall every 2 blocks. These towers will be a joke for a long time.
Doctors would probably recommend walking 2 miles to see a movie. Same on the way back. Justifies the Big Bucket? No. Still, better than before.
Just read several articles today on :
Costs of Iraq War: Now Beyond $432 Billion
That’s $18,000 for every person in Iraq. certainly don’t want to get into a political thread. It is just a huge # ,and how much of that I could have used …what would be $1440 for every person in this country.
Our national debt is in excess of $8 trillion. which is about $26,000 for every child, grand pa and grand ma and every adult. How wonderfull !
Do not worry be happy.
Well, that’s about 6 months of HOA fees if you buy in some of those new developments. Or two months of property tax payments for some of my McMansion friends. (I actually thought the war cost was going to be higher than that. Oh well.)
( which is about $26,000 for every child, grand pa and grand ma and every adult. How wonderfull !)
we need as many immigrants as we can get!
This is what happens when a moron is elected to be our president. I wonder where our country would be now if we had President Gore instead of a Bush?
not in Iraq is the first thing I can think of. reason enough.
I hate Republicans, but I REALLY hate Democrats.
Markets are way up, thanks to Gentle Ben. However reading what Ben actually said , one should expect more hikes in the future. Is the market, again, celebrating and trying to increase the money inflow?
What do you think?
Quotes:
While the Fed forecasts “moderating inflation,” high energy and commodity prices combined with low unemployment, and high use rates in factories in plants “may increase the pricing power of suppliers of goods and services” and potentially “sustain inflation pressures,” he said.
“The recent rise in inflation is of concern,” Bernanke said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=arZuTL6yCrJ4&refer=home
From Bernanke’s testimony (per MSNBC):
“The recent rise in inflation is of concern” …possible increases in the prices of oil as well as other raw materials “remain a risk to the inflation outlook.
“Persistently higher inflation would erode” the economy’s performance “and would be costly to reverse,” Bernanke added. “The Federal Reserve must take account of these risks in making its policy decisions.”
“The extent and timing of any additional firming that may be needed to address inflation risks will depend” on what incoming barometers say about the price climate and economic activity, Bernanke said.
To me, the last paragraph above telegraphs that he WANTS to be “Gentle Ben” if he can, and is signalling an end to the Fed increases, regardless of if/when there is one more.
Don’t know if he knew the CPI numbers when he drafted that testimony. If the numbers force his hand, expect a mirror image down day on the Street shortly.
U.K. Inflation Accelerates to Match Nine-Year High (Update4)
For every raise in rates by G8 members the Fed will be forced to raise rates in order to keep foreign investment supporting the national debt.
July 18 (Bloomberg) — Inflation in the U.K. accelerated more than economists expected in June as energy costs climbed, matching a nine-year high and increasing the prospect that the Bank of England will raise interest rates. …
Hoz –
Any thoughts on what happens if the Fed pauses while BOJ, BOE, and ECB all tighten?
Simple. Our dollar will buy less of everything except for Chinese goods. Even then, I expect China to start taxing exports a little (because they can) to help pay for the new interstate program.
Inflation is ahead kiddies.
Neil
Hi GS - IMHO the actual inflation for the last 6 months is ~ 9+%, The JOC-ECRI index went up ~1.5 % last month alone and up ~20% for the last 12 months. So we have real inflation! That the core indicators are up only .3% is because the government statistics exclude true life situations (oil, A/C, Heating, Gas, restaurants, automotive repairs, tuitions, sports tickets, concert tickets, a date with SFBayQT or TXChick - much more expensive this year than last -, etc.). World demand for Oil and other commodities are not slowing down; the US burns 22 million barrels of oil per day China is burning 20 million barrels of oil per day and its use of oil is growing at 10% per year! The US economy might stagnate but the world economy (after 4 years of stagnation) is taking off. The world economy expanding is the result of 2.7 trillion dollars of our currency floating overseas.
(see: The Rise of the Chinese Consumer
By Frank E. Holmes)
… China plans to build 14 express highways, six railways and a dozen new seaport facilities before 2010. India invests 3.5 percent of its GDP on power plants, roads and other infrastructure and the government there is financing “industrial townships” to promote more manufacturing. Even Bangladesh , one of the world’s poorest countries, is building hundreds of miles of highways, as well as schools, water systems and the like.
China ’s energy consumption is expected to be 69 percent higher in 2010 than in 2002, according to the Federal Energy Information Administration. That growth rate is five times higher than the estimate for the United States and more than 15 times higher than Europe ….”
http://tinyurl.com/zmxhc
Japan is expanding and having killed ZIRP will continue to tighten credit. “…”Future increases in interest rates need to be implemented prudently, with their impact on each economic sector taken into account,” the Cabinet Office said in the Annual Report on the Japanese Economy and Public Finance 2006.”
Japan Times July 19
http://tinyurl.com/kzxla
If the world is recognizing inflation and the US fails to act with prudent fiscal responsibility who will finance our 8 trillion in debt? Will China continue to finance our purchase of goods? Will the oil producing countries continue to finance our oil? (The US oil purchase from the mideast is
Any theories out there on how towns will handle the down turn.
Property taxes must be up as homes get re-appraised, but then what….?
June housing start numbers out:
http://www.census.gov/indicator/www/newresconst.pdf
Whither rents — up, down, or sideways?
http://www.signonsandiego.com/news/business/20060719-9999-1b19rent.html
JA - that’ll be an omen about what is to come in this country - when you see small towns and municipalities defaulting or looking for bailouts. Property taxes 1/4 - 1/2 plots here (just north NYC) running as high as 15K yearly. How much more can they take. Yet the local Police average over $110k yearly with OT . They start young retire at 42 with a fat pension, COLI’s and full bennies for life. These guys’ll live another 50 years. At some point soon , there;ll be more retired Cops on the towns payrolls than active ones. Soon after , twice as many. Then 3 times asd many. The Cop retiring today , his replacement (who’ll retire in 20) and the replacements son who was born yesterday and’ll become a cop in 22 years and retire 20 therafter - will all be on the town dole at the same time , in the future. Throw in COLI with the pending inflation (and make no mistake there will be serious infaltion as the US is forced to default , implicitly , on the ridiculous debt by just printing boatloads of money) and skyrocketing Health Care, and the numbers are about as scary as Star Jones. But hey , these guys are entitled to live worry free for 50 or 60 years , I mean after all , they suffered through their 20 Barney Fife cop years of white-suburban danger. If you even begin to consider the ramifications of the local teacher’s union thrown into this mix , i guarantee you will start to build a bomb she;ter - or an ark maybe. But nobody cares. Nobody wants to worry about what is inevitable in 10 or 20 years. It’s all good times and noodle salad. I mean after all , the economy is growing darnit. I mean of course the economy is growing - everyone from the high school seniors to yuppies to the federal government themselves is borrowing money and spending it - on trinkets or fast food or war, don’t matter- between that and the handouts to the illegals and Silver Panthers -read: AARP- which are also spent as fast as received , the economy has to grow. But it’s growing on a big fat debt racked fault line , and when it comes home to roost - you better have a home in New Zealand to run to. Okay there , done ranting. And before you ask , yes , I had a Y2K bunker , LOL.
This one had me LMAO, I live in Baltimore near this area. Reservoir Hill was never fully gentrified and is still half abandoned and run down. No way is this place worth 415000 even if it was finished. Esp. since there are lots of available condominiums and multiple family houses available in nearby solid neighborhoods. This guy wants you to pay him 415000 for the chance to essentially build your own building in a shitty neighborhood:
$415000 - Reservoir Hill - Builders Special - no more Red Tape!!
——————————————————————————–
Reply to: hous-183711802@craigslist.org
Date: 2006-07-19, 10:49AM EDT
Own your own multifamily building in Historic Reservoir Hill on prime
Eutaw Place. Perfect opportunity for the entrepreneurial builder.
This is a 5,000 sq foot building currently being renovated into 3 units. All of the administrative work is done already! Building permit is in hand, property tax credit is approved, condo documents are awaiting approval.
Renovations are about 30-40% complete. Demo, framing, and roofing are complete. Plumbing and HVAC are 50% complete…you finish the rest. Use one of the units for yourself and rent/sell the others…or sell/rent them all. You decide!!
The price for the property is $415,000 + renovations cost spent to date.
Has BB already decided to abandon his inflation targets, in favor of a respiking of the punch bowl?
http://tinyurl.com/mly2n
I think BB’s cognizant of the fact that although consumer inflation slowed, it has to be short-lived with the current energy turmoil that’s occurring over in the middle east and here in the US with the extremely hot summer.
I’d be very surprised if he doesn’t kick up the rate another quarter point next month. But that’s just me….
195+ homes on greater SD ziprealty inventory show a listing date of 7/18/06 — the highest number of new listings for one day that I have ever seen. Does anyone know how to get a full count of the number of new listings off zip? (One means would involve displaying more than 200 homes at a time — I have not yet figured out the trick.)
Also, does anyone have comparable figures for the pace of new listings? I am not sure about how to separate the “market crash” hypothesis from the “red hot summer sales season” hypothesis unless I see how fast homes normally come onto the market in mid-July.
Wow! A tuesday too… I thought Thursday was the “big listing day.”
We’ll continue to plod along until the fall. Patience folks… patience.
Neil
wells fargo has a home loan program for illegal aliens,and so do some other banks…..can the aliens save this market? or do we need a pandemic?
6-mo T-bill shows a 17 bps premium over the 30-year Treasury yield. The bond market seas the gathering storm clouds of recession on the horizon…
http://www.bloomberg.com/markets/rates/index.html
“sees” not “seas”… (but perhaps the storm is coming in from the sea, like Hurricane Katrina)
They should let these illegals stay in Phoenix, plenty of empty house! LOL
http://news.yahoo.com/s/ap/20060719/ap_on_re_us/immigrants_found
You’d have to pay me to live in Reservoir Hill.
The next bubble …
Awhile ago this blog used to query what would be the next bubble. I didn’t give much thought to it back then … but have recently felt , via being bombarded by infomercials that tout investments in it as well as direct mail solicitations …. and even people I see at recent family parties “brag” about their investments in …
The next bubble is precious metals investing. This may still have some legs to the upside, but I feel the run-up has been recently pushed by speculators. There isn’t so much of a demand for gold/silver from a commodity usage standpoint that is pushing the price up, but rather investors. While some may say that gold acts as a hedge against inflation, I feel that in the next year it will become apparent that inflation isn’t that much of a threat — in fact deflation is probably more of a factor in the next couple of years.
“The soft-landing people are full of nonsense,” said Christopher Thornberg, senior economist at UCLA. “This is a classic bubble. And unit sales are falling faster than in past bubbles.”
“We are in the middle of this decline. If we are lucky, prices will go flat. But we are not going to have prices fall like the stock market. You won’t see declines of 10 percent or 15 percent per year. What will happen is that prices will flatten out,” he said, adding that there might not be housing appreciation until 2011.
So Thornberg says a soft landing theory is “full of nonsense”, then he predicts flat prices for five years. WTF?
http://www.sbsun.com/news/ci_4067499
from the same article:
“After trying to sell a house in Redlands for six weeks, Judson St. John believes he is close to selling his five-bedroom Redlands house.
A potential buyer should be making an offer soon, St. John said Tuesday.”
Not even an offer yet, and he feels he’s close to selling his house!? Is that what sellers are relying on these days, some person who walked through and is considering making an offer? This market has turned so quickly it’s astonishing.
For the landlords on this blog — don’t read unless you want to weep.
http://villagevoice.com/nyclife/0629,tucker,73881,15.html
Saw this at Orignationnews dot com.
MARI: Stated-Income Loans Invite Fraud
“One lender discovered that a large percentage of its customers who applied for stated-income loans exaggerated their incomes by more than 50%, according to the Mortgage Asset Research Institute. The unidentified lender sampled 100 of its stated-income loans and checked the borrowers’ salaries with the Internal Revenue Service. “Ninety percent of the stated incomes were exaggerated by 5% or more,” MARI said in a recent report to the Mortgage Bankers Association. “More disturbingly, almost 60% of the stated amounts were exaggerated by more than 50%.” Lenders that don’t require income verification are opening the door to fraudsters, MARI warns. “These results suggest that the stated-income loan deserves the nickname used by many in the industry — the ‘liar’s loan’.”
Like this is any big surprise??????
I admit that I am surprised by the numbers. Not the fact that the FBs lied, but just the extent of the lies. Basically, 90% of the FBs lied. And almost 60% basically claimed that they made more than double what they actually make. That’s a lot people doing a lot of lying. How long until the lies catch up with them?
From today’s Milwaukee paper:
‘The numbers are so dramatic’ As of last December, 8,865 single-family lots were approved for sale in southeastern Wisconsin’s 11 counties - a 15.6% higher inventory than the 7,666 a year earlier and about 60.2% more than the 5,533 two years earlier, according to Amerifax Data Corp., a Germantown-based group that tracks land development.
Meanwhile, Amerifax research shows, this year’s new home starts are running about 35% below the norm of the previous five years’. Not a single month this year has sales approaching the performance of 2001 through 2005, according to Amerifax counts in Milwaukee, Waukesha, Racine, Ozaukee, Jefferson, Kenosha, Washington, Walworth, Fond du Lac, Dodge and Sheboygan counties.
“The numbers are so dramatic, it stops me in my tracks,” said Amerifax President Bob Snow. “Home sales are down - pathetically down. So far down, it’s hitting everybody. I’ve never seen it this bad, and I’ve been doing this since ‘89.”
“I’ve been in the business since ‘61, and I’ve never seen it quieter than the last six months,” said Mike Rosen, owner of Cedar Development Companies in Mequon. “Things were tooling along beautifully for like the last 10, 15 years. It seemed everybody was getting into the subdivision business, new people and old guys like me - everyone was busy. Then all of a sudden, it stopped. Business dried up.”
nope, no bubble here. lol
http://www.jsonline.com/story/index.aspx?id=472310
This time it is different. This time, normally icy Wisconsin is a red-hot bubble zone, destined to crash along with the hot coastal areas.
I’m pretty far down on the list already, but I’ve been looking into this issue all afternoon and I can’t find a good answer. A week or two ago someone posted a listing of the 50 F’d banks who far exceeded Freddie and Fannie guidelines for mortgage exposure. I’ve been thinking about how many mainline banks might have overwhelming mortgage exposure right now because it might be important for banking purposes in the future, i.e. if the bank goes under and takes my deposits with it, I’ve got a real problem. Unfortunately, I’m having real difficulty finding any current numbers. There’s probably a reason for this. For example, Bank of America’s numbers from 2003-2004 look like this:
“In 2004 and 2003, the Corporation converted a total of $96.9 billion (including $18.0 billion originated by other entities) and $121.1 billion (including $13.0 billion originated by other entities), respectively, of residential first mortgages and commercial mortgages into mortgage-backed securities issued through Fannie Mae, Freddie Mac, Government National Mortgage Association (Ginnie Mae), Bank of America, N.A. and Banc of America Mortgage Securities. At December 31, 2004 and 2003, the Corporation retained $9.2 billion (including $1.2 billion issued prior to 2004) and $1.7 billion of securities, respectively.”
http://www.bankofamerica.com/annualreport/2004/backmatter/cfsn/cfsn_note8.cfm
They go on to talk about having hundreds of millions of dollars in recourse liability.
Another page of their 2005 report shows the mortgage-backed securities losses in 2005 were almost ten times the losses in 2004 and the gross dollar value of MBS’s for sale in 2005 were a hundred times larger than those for sale in 2004. http://www.bankofamerica.com/annualreport/2005/financial_review/45_note6.cfm
Yet another table on the same page showed there were approximately $160 billion in “temporarily impaired” MBS’s which had been held for less than 12 months.
Perhaps someone more analytically-minded than myself might begin to piece together what is really being said in these financial statements.