‘Housing Market Is Cooling Substantially’
Some housing bubble reports from Wall Street and Washington. “Ratings agencies would have to give Fannie Mae and Freddie Mac additional scrutiny under a proposal that lawmakers will consider on Wednesday. One amendment would require ratings agencies to publicly disclose any work they do for one of the government-sponsored enterprises.”
“Another would compel the agencies to judge each enterprise’s risk as if the government would not bail it out in the case of a default.”
“Ohio Attorney General Jim Petro brought suit against Fannie Mae on Friday in the latest of several legal actions against the nation’s largest secondary market lender. The class-action lawsuit was filed on behalf of the Ohio’s public pension funds and other Fannie Mae stockholders and charged that Fannie Mae Corporation and its top executives ‘manipulated earnings in a fraudulent scheme to deceive investors about (its) true financial state.’”
“Two groups of stockholders have also sued Fannie Mae in the last few weeks, and if previous state government originated lawsuits, such as..against tobacco companies, expect to see many other states follow Ohio’s lead.”
“U.S. mortgage applications last week sank to their lowest level in over four years, an industry trade group said on Wednesday, further evidence that the once robust U.S. housing market is weakening.”
“Drew Matus, senior financial economist at Lehman Brothers, said that while the indexes are volatile on a weekly basis, they point to a sector that is softening. ‘The data suggest that the housing market is cooling and it’s cooling pretty substantially,’ he said.”
“In the second quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances, according to Freddie Mac’s quarterly refinance review.”
“This percentage is up from the first quarter of 2006, when the share of refinanced loans that took cash out was a revised 86 percent, and is the highest since the second quarter of 1990.”
“‘This quarter we saw $81.0 billion cashed out, up from a revised $74.1 billion cashed out in the first quarter of 2006,’ said Amy Crews Cutts, Freddie Mac deputy chief economist.”
“‘Borrowers are reacting to both incentives to cash out home equity through refinance and incentives to change their mortgage as they hit an interest rate adjustment. Freddie Mac estimates that $500 billion in first lien mortgages will adjust this year and another $650 billion in second liens will see at least one rate change this year, said Frank Nothaft, Freddie Mac chief economist.”
“Pending home sales, a leading indicator for the housing sector, have risen for the last two months, according to the National Association of Realtors. The index, based on contracts signed in June, is 9.6 percent below June 2005.”
“The Fed meets Aug. 8 to consider whether the slowdown and 17 straight interest-rate increases will be enough to curb inflation pressures.”
“‘Slower increases in house prices could put a crimp in consumer spending,’ Federal Reserve Bank of San Francisco President Janet Yellen said. ‘While I expect the housing situation to have only moderating effects on economic activity going forward, I should note that we can’t ignore the risks of more unpleasant scenarios developing.’”
The RE-Fi portion is down almost 40%. The MEW is what has kept the consumer going!
Here is more detail on the lawsuit:
‘Specifically, the Complaint alleges that on September 22, 2004, Fannie Mae publicly revealed that its regulator, the Office of Federal Housing Enterprise Oversight (“OFHEO”), had found that Fannie Mae and its management had intentionally misapplied Generally Accepted Accounting Principles (“GAAP”) for the purpose of causing Fannie Mae to distort its financial results to show “smooth” earnings growth quarter over quarter’
And from Yahoo:
‘Irwin Financial Corporation, a bank holding company focusing on small business and consumer mortgage lending, today announced its intention to seek the sale of its conventional mortgage business and as a result this segment is now reported as ‘Discontinued Operations.’ The core mortgage production and servicing operations were profitable in the second quarter, but the total discontinued operations recorded an after-tax loss of $5.2 million’
why doesn’t the media pay more attention to the huge problems at these GSEs? when will they connect the dots? I just don’t get it.
Irwin Fiancial……one of the pioneers of the 50yr mortgage.
Now that is good news that a pioneer of the 50 year mortgage is going down.
I just about died when the banks around here rolled those 40 and 50’s out last winter.
I agree; but they still have their interest only products, which can be thought of as “infinite-year mortgages”.
Inputting negative numbers into the below equations is not going work…
You must always input the required positive inputs or the Compounding interest commercial banking system begins to implode…A sustained failure to input the required inputs leads to an inescapable implosion…
Below is the ancient The Money Lenders to the Money borrowers operation that you foolishly think is still in operation.
There is a maximum potential to obtain the required inputs…GOLD and silver is one such Maximum potential…It is limited in supply and impossible to counterfit…The top of the top sucking from the bottom hierarchy likes that but of course the strength of GOLD and silver is also the weakness since with a limited supply and a limited ability to expand the supply the ability to obtain the required inputs to postpone the inevitable implosion is limited…
This is where the more modern Money lenders become the Debt creators to the former money borrowers who now become the debt requestors scenario begins to play out to it’s logical conclusion…
A simple solution that can be institued by the top who owns the medium of exchange in a top sucking from the bottom hierarchial food powered make work project is to change the medium of exchange into something else that can be expanded enough to obtain the required inputs…Paper money or banknotes that are designed to be hard to counterfit is one solution backed by GOLD and silver fractionally…
The next problem is that the longer you sustain the system past the point of the GOLD and Silver maximum potential the smaller the fraction of GOLD or silver becomes in relation to the banknotes or IOU’s…
A simple solution is to eliminate Gold and silver from the equation and just back the new IOU’s with the old IOU’s fractionally…Or the new debts are backed by the old debts which are fractionally reserved…The current method in operation or the Fractionally reserved Debt backed by debt compounding interest commercial banking system…Now you don’t even need physical monetary units…Ledger entries/checkbook money are enough…Or electromangnetic polarity differentials on hard disk platters hidden behind multiple layers of encryption in secure locations…
Ok but is there another maximum potential? You bet…The final one that can not be escaped from…
The required inputs are always not too much and not too little…In the early days of the 600 year old compounding interest commercial banking system many banks failed simply because they either sucked too much or sucked too little…Both result in killing the goose that lays the golden? egg…
Too much will cause a hyperinflation which causes the system to operate faster and faster towards the reaching of the maximum potential which then leads to a premature implosion…since if you did not cause a hyperinflation of debt the system would have taken far longer to reach maximum potential…
Too much is no Good…But too little is even worse since too little is the reaching of maximum potential and leads directly to implosion or a premature implosion since if you did not take too little then the implosion would not have happened…Ok then what is a solution to solve this problem?
The 311 year old Central banking system was created to regulate the compounding interest commercial banking branch networks…
That is what the FEDERAL RESERVE/Central bank does. Engineer the entire system so that the conditions of not too much and not too little do not take place at least not supposed to…Just the required amount to obtain the inputs…
Now for the final maximum potential…We’re getting there.
Eventually the system requires infinte inputs…An example of this scenario playing out was Germany in the 1920’s…Or a classical hyperinflation of a fractionally reserved debt backed by debt compounding interest commercial banking system sustained by Government subsidy…
Why did it stop…The only thing hyperinflating was the debt…You still have to obtain the required inputs but as the system moves faster and faster the time you have to figure out the required amount becomes less and less until of course it becomes impossible to figure out how much you require…The required amount becomes infinite…You then have to capitulate to GOD.
Ok that was that situation…The current situation in the USA is different…The actuall hyperinflationary event was stopped before it became uncontrollable…
It ended in 1981…How? Well to sustain a hyperinflation you require a closed loop…The manufacturing sector in an economy is key to the hyperinflationary scenario like Germany experianced…The solution was to export the manufacturing sector of the USA out of the USA into external low wage and slave wage zones…Allowing debt inflation to continue but with very low price inflation which is ultimately caused by wage inflation within a debt backed by debt fractionally reserved compounding interest commercial banking system…
Even slaves cost…But they are easier to fund the existance of than indentured servants…The required amount of funding to sustain the existance and proper functioning of an indentured servant is far greater than a slave…
…The compounding interest commercial banking system due to it’s ability to expand the size of the money supply made the replacement of slavery with the Indentured servitude you currently enjoy economically feasible…There is no doubt about that…And I would be foolish to say that slavery is better than indentured servitude…But what you percieve as indebtured servitude in your economic zone is different than what is happening in another economic zones like China…There you would consider a typical indentured servant as a slave…You would kill yourself if you had to all of a sudden exist as a Chinese indentured servant…
So then what is the maximum potential we are all heading to?
The price inflation was stopped but not the debt inflation…That can never stop or the system implodes…
So then how do we keep the system from imploding? Simple obtain the required inputs to sustian the required amount of new debt inflation to service the previous debt inflation.
The situation since 1981 in the USA is one in which wage inflation has been keept low by cheap imports but the debt inflation has been sustained by engineering interest rates lower and lower when debt inflation began to slow sometimes called recessions when the people in the system notice the effect of the slowing and want to know what is going on…
As you engineer rates or the yield which the top obtains from the bottom lower and lower it takes greater and greater volumes to sustain debt inflation…
The yield from $1000 at 10% is $100 and if you require a yield of $1000 to input into your own personal compound interest equation to prevent your own personal debt inflationary fueled empire from imploding then you have to get other people to sign on the dotted line for at least $10,000
The yield from $1000 at 1% is $10 so then to obtain a yield of $1000 you have to get other people to sign on the dotted line for $100,000
Well then how does this work in it’s simplist form…
The top lets say a home builder goes to a commercial bank and requests $100,000 to of course construct a house…At a short term wholsale debt manufacturing cost of 6% for a year to build the house and mark it up to $250,000
The line signer or Home buyer then goes to a commercial bank and requests $250,000 to of course to buy the house…At a long term retail debt manufacturing cost of 5.6% for 30 years…
The whole operation can take place within a month…
The end result…
The home builder gets $250,000 - the $100,000 - the 8000 or so interest…
profit to blow like a drunken sailor = $142,000
The banking system recieves $8,000 plus a $250,000 mortage which is a monitizable asset…
New money that did not exist a month earilier flooding out into the domestic economy? $250,000
The Home buyer spends the next 30 years or less of course servicing the top…since the monthy yield the bank recieves from the $250,000 mortage is $1166 per month profit while the principal is $268 or a total payment of $1425 a month with of course the interest portion shrinking while the principal portion is increasing during the 30 year period… At month 360 or 30 years later the principal being paid is $1426 while the Interest is just under $7 since the final payment is adjusted to account for rounding to the nearest cent…
Ok what is going on? what’s the problem? Once a unit of human capital has basicly consumed the maximum potential debt the pool of potential debt requestors will shrink if the supply of debt requestors is not inflating fast enough…
So then what is the maximum potential of a fractionally reserved debt backed by debt compounding interest commercial banking system under the current rules?
Maximum potential is reached when the volume of debt requestors required to request the required amount of new debt to service the old debt becomes impossible to obtain…
So far during the past 23 years of engineering rates lower and socially engineering the pool of potential debt requestors along with some other accounting tricks the required volume was obtained…While mantaining low wage inflation along with low consumer price inflation…
But from the top in 1981 where the yields or basis points were 2050 to where they are now at 600 up from 400 in 2003 the ability to engineer rates lower and lower is reaching the maximum potential…
Rates topped out at 950 in 2000 and were engineered lower to escape from the recession to 400 or a chop of 57%…
The last recession rates were 1150 and were engineered lower to escape from the recession to 600 or a chop of 47%
And the one before that rates were 2050 and were engineered lower to 800 or a chop of 60%…
800 600 400…200 is next…There then need to be twice the volume than the last time in 2000 to 2003 or the helicopter drop that you all are waiting for but that already took place…
Ok then what was the debt to income ratio at each one of those points?
At the 800 point the average debt requestor had a debt to income ratio of 60% meaning 40% free to use as the collateral backing the request for a commercial bank by the requestor to manufacture new debt…
At the 600 point the average debt requestor had a debt to income ratio of 78% meaning 22% free to use as the collateral backing the request for a commercial bank by the requestor to manufacture new debt…
At the 400 point the average debt requestor had a debt to income ratio of 95% meaning 5% free to use as the collateral backing the request for a commercial bank by the requestor to manufacture new debt…
At the theoretical 200 point the average debt requestor currently has a debt to income ratio of 107% meaning -7% free to use as the collateral backing the request for a commercial bank by the requestor to manufacture new debt…
That is a serious problem…No amount of interest rate games will solve it either…
Now due to the mathamatical mechanics of the compound interest equation
The following 3 stages of a debt backed by debt compounding interest commercial banking system take place…
Stage 1 is the inflation of debt and the destruction of savings…
The total circulating debt supply in 1981 was $5 Trillion and the savings rate was 11%…
Now the total circulating debt supply is 38 Trillion and the savings rate is 0 or negative…
Stage 2 is the deflation of debt and the destruction of equity…
Ok here’s where it gets tricky…A recession this stage 2 begins to take place…Debt inflation slows and debt inflated assets like real estate or equity begins to be destroyed but fortunatly rates can be engineered lower and the volume increased to escape…no problem as long as the debt to income ratio is not too high and you have enough basis points to play with…
This is the stage we are beginning to enter into currently…
Federal funds? what was it at when the prime rate was 800? 600 at 400 it was at 300 and at 400 it was at 98…
So at 200 it will have to be around 0.5%
And of course twice the volume that existed during the 2000-2003 helicopter drop that you missed will have to exist or game over…
The maximum potential of the top to obtain a yield from the bottom will have been reached…then there is no escape from stage 2 of the debt backed by debt compounding interest commercial banking system…
Which then leads to stage 3…
Bankruptcy of the banks collapse of the economy/division of labor and the consolidation of power…
Here’s where it gets tricky again…
The crown system already went bankrupt…In the 1930’s… the period from 1933 to 1945 was the bankruptcy reorganization of the then 236 year old “Global” Crown or City of London system…
The system emerged from 1933 to 1945 reorganized but still bankrupt…It is still bankrupt currently…
Prior to 1929 the three stages of the compounding interest commercial banking system took place within a space of 60 years or so…25 to inflate and 25 to deflate and 10 for the base…The last bottom inside of the USA was in the late 1890’s and the top was in 1929…and the normal natural cleansing process began to take place…
One slight problem…Modern technological civilization is incompatable with the natural cleansing process…The actual deflation that occured in 1929 was only 4 years long…Not 25 like all the previous ones…
If the natural cleansing process were to have been allowed to run it’s course Modern technological civilization would have completely collapsed into rubble…
Ok the top stopped it…Yay…But all they did do was prolong the inevitable reaching of maximum potential…
so from 1933 to 2005 or 72 years means that stage 1 of the compounding interest commercial banking system has been extended almost 3 times it’s normal length…
Which means when the inevitable reaching of maximum potential occurs the magnitude of the implosion will make all previous implosions look like walks in the park…
And there is nothing your most worshipful masters can do to postpone the wrath of G-D any longer…Jigs up. G-D can’t be tricked and their ability to trick you into dropping to your knees and worshiping the compound interest G-D like you are now will also become impossible…
Ultimately the top is not really evil…The compounding interest equation must have the required inputs to postpone it’s inevitable implosion as long as possible…failure to input the required inputs means implosion of everything…
The whole kit and caboodle…The ends then justify the means…The top has no choice but to worship the crown…To satisfy the Crown…failure means the collapse of the entire fantasy world you currently use and abuse how you see fit…Game over…
Ignorance of the truth is the root of all evil…
The compound interest equation at the core of the program you are all following insures that you will march off a cliff…
The death march to oblivion that is reaching it’s logical conclusion began 311 years ago…sorry…
Due to the nature of the compound interest equation you either supply the required inputs to postpone the walking off the cliff as long as possible or you don’t then you walk off the cliff…
If you try to stop the system from imploding it will implode…
All that a compounding interest commercial banking system can do is inflate to maximum potential then implode…That is all it ever could do, can do, and will do…
The top knows this but it’s the source of their power…If the top were to come out and tell the truth the lie you are all living would “prematurely” implode…
So then it comes down to a choice of the lesser of two evils…
Causing a premature implosion is irresponsible…Who wants to take responsibility for that?
Answer? no one…
Don’t worry the top has already created the scapegoats that you will all blame and are currently already blaming…
I have studied all the previous implosions and the general drone population within the food powered make work project is always convinced that an effect of the top is the cause and is to blame…
Like George Bush and the Neocons…They are effects of the cause which is the top…
poor people? they are effects of the cause which is the top.
Well then what is the cause that the top is an effect of?
GOD exists and all that GOD does is cause choices to be made…The top has chosen to reject GOD…
That is the ultimate cause of this depraved soap opera you all are mesmerized by currently…
The tops rejection of the truth…To them the system is sustainable as long as you are all ignorant of it’s true operation…And you have been for 600 years so far…That is how old the compounding interest commercial banking system as you see it in operation today is…
Ignorance of the truth is the root of all evil…
Then people ask me…What is truth?
GOD is Truth and Truth is GOD…
What is GOD? The infinte and indestructible source of power that powers everything…The Government of the Universe that can’t be overthrown and the Law that can not be broken…
The compounding interest commercial banking system attempts to break the Law that can not be broken overthrow the Governement of the Universe and defeat GOD with the ultimate goal of obtaining absolute power over all…”
Hypertiger
Nutball alert! Nutball alert!
Please open your own blog for your favorite ideas and stay away from this one. No answer for you.
“What is GOD? The infinte and indestructible source of power that powers everything…The Government of the Universe that can’t be overthrown and the Law that can not be broken…”
GOD is GOLD with the L removed. HELL is GOLD with GOD removed and HEL inserted. HEL is HELOC with the OC removed. The OC is HELOC with HEL removed. And that’s the way it is.
Now where on GOD’s earth did I leave that tinfoil hat again?
And OC is GetStucco backwards with the cutSteG removed!
It’s all so clear now, man! So very clear!
The colors!
Attack of the tinfoil hat brigade. I see someone forgot his medicine today? Just lie down and count backwards form 8 million, OK Buford?
Meanwhile, back on the planet earth….
“Ignorance of truth is the root of all evil.”
Actually, ignorance of truth is the root of all religion. Not that I know truth, mind you - I just KNOW that you do NOT. You are just doing what you’re told. Just like the Hezbollah idiots.
The rich rule over the poor, and the borrower is servant to the lender.
Proverbs 22:7
Plan: Estimate Cost.
Suppose one of you want to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, This fellow begun to build and was not able to finish. - Luke 14:28-30
A fool and his money are soon parted. - Proverbs
The plans of the diligent leads to profit as surely as haste leads to poverty.
Proverbs 21:5
Do not boast about tomorrow, for you do not know what a day may bring forth. Proverbs 27:1
Do not be overawed when a man grows rich, when the splendor of his house increases; for he will take nothing with him when he dies, his splendor will not descend with him. Though while he lived he counted himself blessed - and men praise you when you prosper - he will join the generations of his fathers, who will never see the light of life. A man who has riches without understanding is like a beast that perish. - Psalms 49:16-20
Antidote for covetousness: “Turn my heart toward your statues and not toward selfish gains.” - Psalms 119:36
Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions. - Luke 12:15
Diversify: Cast your bread upon the waters, for after many days you will find it again. Give portions to seven, yes to eight, for you do not know what disaster may come upon the land. - Ecclesiastes 11:1-2
Dishonest money dwindles away, but he who gathers money little by little makes it grow. - Proverbs 13:11
He who oppresses the poor to increase his wealth and he who gives gifts to the rich - both come to poverty. - Proverbs 22:16
Prosperous men’s attitudes toward poor
Men at ease have contempt for misfortune as the fate of those whose feet are slipping. - Job 12:15
Hi! Can you please summarize your post into 500 words? Thanks.
No obstante, es muy interesante y suena la verdad.
Oh. Imeant to include this portion above, but I forgot.
“It ended in 1981…How? Well to sustain a hyperinflation you require a closed loop…The manufacturing sector in an economy is key to the hyperinflationary scenario like Germany experianced…The solution was to export the manufacturing sector of the USA out of the USA into external low wage and slave wage zones…Allowing debt inflation to continue but with very low price inflation which is ultimately caused by wage inflation within a debt backed by debt fractionally reserved compounding interest commercial banking system…
Even slaves cost…But they are easier to fund the existance of than indentured servants…The required amount of funding to sustain the existance and proper functioning of an indentured servant is far greater than a slave…”
Espero que hace mas sentido, pues.
Duh!!
For release:
Tuesday, April 25, 2006
Median price of a home in California at $561,350 in March, up 13 percent from year ago; sales decrease 15.1 percent
LOS ANGELES (April 25) – The median price of an existing home in California increased 13 percent in March and sales decreased 15.1 percent compared with the same period a year ago, the California Association of REALTORS® (C.A.R.) reported today.
let us not forget, above report from 90 days ago would lead a FOOL to think their money was better spent in California Real Estate than in T Bills.
Blame for all of this falls on directly on CAR , gary watts, LAY and Lereah for blowing up this balloon. Interest rates have nothing to do with inventory. It’s Prices on that Inventory which has gone up 100% in 4-5 years that is causing problem!
I venture that most of that gain was during the early summer, and the same YoY stat in mid/late summer will show either minimal gains or slight losses.
I should note that we can’t ignore the risks of more unpleasant scenarios developing.
Nice CYA words there. Doesn’t exact a lot of confidence.
There were two interesting stories on Bloomberg today regarding credit quality in the mortgage arena. Sorry I don’t have links, but I excerpted them at my blog above. Suffice it to say that home equity ABS (asset backed securities) are starting to suffer some “performance issues” while default notices are surging in CA.
I still be gettin paid 100k a month
F Raines
I can’t believe the NYSE has not de-listed this stock. How can you possibly know what an enterprise is worth when they haven’t even filed financials in what, 2 years - or is it 3?
This is ridiculous!
While I agree with your indignation, de-listing the stock would create a market meltdown scenario.
Even for those who don’t have much in the stock market, this is also bad. Remember those great parents, the aging boomers who own all the real estate? What happens when their real estate AND stock portfolio meltdown right at retirement? You’re just asking for legislation to increase Social Security benefits…and guess who pays for those?
I somehow missed the news that all these different people and organizations have been suing Fannie Mae lately. I thought it was odd (no suits), considering all the pensions tied up with them.
What a pleasant development!
Is Elliot Spitzer on this yet?
I should note that we can’t ignore the risks of more unpleasant scenarios developing.
You mean like “Dawn of the Dead” type unpleasant scenarios? I wonder how many Hummers, flat screen tvs, and swimming pools, Fannie, Freddie, and Ginnie, have collectively financed? Does anybody really think the GSEs are going to get paid back for all that garbage?
28 Rate Hikes Later
(slingblade voice) I like the way you talk.
(Slingblade voice) Mmmm….
BayQT~
Around here there has been a dramatic increase in the number of homes falling out of escrow, so a very small increase in pending sales may very well still result in lower closed sales. Our BOM (back on market) to sale ratio has gone from 21% last June to 28% this June- meaning 28 BOMs for every final sale. So, it takes a lot more pendings now just to end up with the same sales volume by closing.
That means the appraisals arent hitting and the borrowers are the bottom of the barrel type ,(in that they are not qualifying ).Looks like the lenders are starting to tighten up .
I agree Deb. Fascinating that small apartment bldgs I have looked at over the past 6 months in Houston and Seattle (both no bubble here places) markets are back on the market too. My Houston broker/friend admitted recently that he has had time to do personal stuff for about a month now and that maybe things are slowing.
Re Hawaii, I asked a mortgage broker neighbor to confirm that we didn’t have a glut of homes on the market here in east Hawaii, like on the mainland, because we don’t have large homebuilders here. There was only one spec house built in my subdivision, empty since completion. His answer, it’s a glut.
Wait, do you mean 28 for every 100 sales?
That’s pretty high. What’s the long-term average?
Summary of Y-o-Y declines in pending home sales:
South -4.8%
MidWest -11.9%
West down -14%
Northeast down -11.6%
Overall: -9.6%
In other words, the only somewhat affordable area of this country, the South, is propping up this number. As the bubble implosion continues, this number will deteriorate rapidly.
Regionally, the PHSI in the South rose 2.5 percent in June to 130.7 but was 4.8 percent below June 2005. The index in the Midwest increased 1.9 percent to 103.3 in June but was 11.9 percent below a year ago. The index in the West was unchanged, holding at 110.1 in June, and was 14.2 percent lower than June 2005. In the Northeast, the index dropped 6.3 percent in June to 99.4 and was 11.6 percent below a year ago.
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/PHSIJune06?OpenDocument
Speaking of shenanigans, this article was front page of the St. Louis Post-Dispatch this AM on real estate fraud:
http://www.stltoday.com/stltoday/news/stories.nsf/stlouiscitycounty/story/593F5C32867FD9BB862571BE001804CB?OpenDocument
Ya’ll, we’re getting closer to the time we wanna get short these indices for the fall crash. Word. I bought my first little group of index puts this morning. I am ALWAYS early though.
Which indexes exactly. and how do I buy a put? Thanks
If you need to ask how to purchase a put, you really shouldn’t.
You need to start somewhere.
Buy those DOGs. Lots of them. Okay? Every account you can.
Look on google for “PUT options”, read up, get an online account with long option authorization.
And most importantly, START SMALL. Very small. PUTs are quite volatile.
Cool. Thanks. Yup, gotta start somewhere.
I dunno know txchick. I looked into natural gas and bought some after you mentioned it a couple months ago. Pretty good!
Gracias!
I have been lurking on this blog for awhile. Very insightful stuff! I’m in Florida and have been thoroughly convinced to sit on my need to buy for at least a few more months. I found this post today http://creditboards.com/forums/index.php?showtopic=191678 (sorry I don’t know how to do the tiny url thing) and thought someone might get a kick out of the post.
Can anybody confirm whether or not the larger lenders are tightening their lending policies? Are the guidelines getting more strict for the same programs they offered last year?
is the spread growing on morts 30 yr vs. 10 yr bond ?
should be
Spread is shrinking!
Shrinking, you say? Take a look at 30 year rates… Unbelievabe at 6.25 when the FFR is 5.25! There is no margin of error. Those buying MBS bonds now are just begging to get financially spanked!
88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances, according to Freddie Mac’s quarterly refinance review.”
The “fix” is in…The entire lending industry is corrupt!!!!!!!
L/O’s are using crooked appraisers to punch the numbers needed to do these loans.
Values in nearly all markets are in a state of decline simply due to both rising interest rates and supply/demand factors.
NO FOOKIN’ WAY THESE PROPERTIES ARE WORTH WHAT THE APPRAISERS ARE SAYIN’…If accountants were compromising themselves in such a manner they’d all be in jail.
As as been said on this blog before…FNMA & FDMC are nothin’ more than an Enron waitin’ to collapse. Let the class action lawsuits begin.
I’m still waiting for my dumb inlaws to lose their shirts. Yes, I wish absolute financial failure for them. They are mortgage brokers, and here is a brief chronology of their statements and actions:
Feb 2005 - “Most of my customers are taking out ARMS, and option ARMS. They are very sophisticated investors though.”
May 2005 - “I hear everyone talking about a bubble! There is no bubble.”
June 2005 - “I think prices will stop going up, and we will have a permantly high plateau.”
December 2005 - Bought a BMW, and a condo in SF Bay Area. Also owns 2 Phoenix, AZ condos.
Jan 2006 - “I’ll be fine. There will always be refinancings.”
Feb 2006 - Changed jobs. Now works for Countrywide. Claims everything is “fine”. Husband also changes jobs, and is now a salesman.
June 2006 - Said they are looking to purchase an investment condo in Las Vegas, or Miami. She thinks they are good buys, cuz prices are going down.
I havent heard from them recently. But I suspect they are still running around thinking everything is fine. They might panic however if Countrywide begins layoffs. Financial Guidos like my inlaws deserve to have every dime taken away from them.
Yep, they’re chum for the sharks. Sad, though isn’t it, because there is always collateral damage, kids, pets, etc.
September 2006-”Say, how would you guys feel about lending us a few thousand dollars, just for a couple of months until we can sell some of these properties. We’re not broke-we’re worth millions-just having some liquidity issues….
October 2006: How would you feel about us moving in with you for a couple of months….
December 2006: We are considering selling our kidneys ….how would you feel about driving us down for dialysis once a week.
LOL.
Be careful what you wish for. Before you know it, they’ll be homeless, bankrupt, surfing your couch and drinking your OJ right out of the carton. In-Laws make fun house guests
What does the wife think?
In June 2006 - condo in Miami or Vegas. Do they not read? How idiotic can one (or two in this case) be? I think you should help them out, otherwise they might be moving in with you. That would suck.
Let in laws move in? NEVER people! Unless both spouses are GREAT with it and there is enough physical space so that you can ignore them if you want.
NEVER people NEVER!!!!!
I would rather eat a fiber glass burrito than have my in-laws move in.
I will not allow them to move in. I will not help them either. They felt they were financial geniuses, and they should reap the full rewards for their brilliance.
Do they have kids? If yes, can your wife help the kids somehow when they need it? Let the parents take care of themselves, but the kids haven’t deserved what they got.
“Inlaws” usually means parents-in-law.
To quote a phrase, ” the wheels of justice grind slooowwwly.” I firmly believe that the principals involved are going to be held accountable, maybe not for a few years, but they will. Now that the bubble has burst, the shell game at the GSE’s is over. They have been doing the 4 corner stall for 2 years but I believe the clock is running out of time. I will celebrate the day i see Franklin do the perp walk in the orange jumpsuit. Perhaps in 07 or 08.
Oh my, another tale of doom here perhaps, but I’m still working out the details. One of my co-workers bought a humongous McMansion an hour and a half out of DC, way in the boonies in Maryland (near Hagerstown). OK, maybe two hours out during daylight hours; to be honest, I’ve never driven that far out of DC on a workday! 5,500+ sqft of livable spec, PLUS basement! That was in June of last year. $750k+ range.
Since that time, things turned hard for them. They “had” to sell. Dunno why, lots of quiet talk about family *or* money. Heck, maybe it was a 1-year ARM that got ‘em — the timing would be right. In any case, she refuses to talk about what price they sold it for, but we’ll find out via property records soon enough, hon’! But whatever the case, she was NOT happy, and she was grousing about.. .dread the thought… actually having to knock $50k off her price! My heart bleeds. Did she lose money? She gets angry and refuses to say.
She should be happy. At least she and her husband sold it and got out! In that nice, new, “exclusive” subdivision, there are 20 McMansions, and I gave a look to online listings: There are 5 on the market right now! 25% of them are for sale. Might be a few FB’s there. I sure wish I knew how to look up Maryland mortgage docs online without traipsing cross country to the courthouse. If I get bored, maybe I’ll look up the purchase prices versus the sales listing prices.
Anyway, she and her husband are definitely convinced that this is an anomaly, since they “flipped” before and made lots of profit, and they are already in a new house, literally new, in the same area, miserable commute to the Beltway where she works. But they hope this time to repeat their lucrative flipper ways and rake in the money. Real estate always goes up, and yes, she says that. She might learn a second expensive lesson soon.
There is no universe where Hagerstown = exclusive.
I can’t believe they managed to sell and then did the same!exact!thing! OMG, what is the definition of insanity again?
On the creditboards post, I find it disturbing that one can declare bankruptcy and buy a 400k house a year and a half later. Silly me.
“‘Slower increases in house prices could put a crimp in consumer spending,’ Federal Reserve Bank of San Francisco President Janet Yellen said. ‘While I expect the housing situation to have only moderating effects on economic activity going forward, I should note that we can’t ignore the risks of more unpleasant scenarios developing.’”
The Fed guvs always try to put a gloss on economic news. They don’t want to cause negative market action with their remarks, so they speak very carefully. Translated from Fedspeak, here’s what Yellen said:
“Tiiiiiiiiiiiiiiiiiiimmmmmmmmmmmmmmm — bbbbbbbbbbbbbeeeeeeeeeeeeeerrrrrrrrrrrrrrrrrrrrr!!!!!!!!!!”
Alternatively,
“FFFFFFFFiiiiiiiiiiiiiiiiiiiiirrrrrrrrrrrrrrrrrrrreeeeeeeeeee!!!!!!!!!!”
See the reader comment at the end of the following article in the Portland Press Herald. It’s from a lender counseling it’s always a good time to buy. He then leaves his hotmail address in the comment. Hmmm, sounds like an ad to me.
*******
Friday, July 28, 2006
New-home sales fall for first time in four months
By , Associated Press
©Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Sales of new homes fell in June for the first time in four months, and the government also lowered figures for May, providing further evidence the high-flying housing market is losing altitude.
The Commerce Department reported Thursday that new home sales dropped by 3 percent last month to a seasonally adjusted annual sales pace of 1.131 million units. It was the first decline since an 11.5 percent drop in February.
The government also marked down sales activity in May to a pace of 1.166 million units, substantially below its initial estimate of 1.234 million units.
Mortgage rates retreated slightly this week. The 30-year mortgage dropped to 6.72 percent, down from a four-year high of 6.80 percent last week but still a percentage point above where rates were at this time last year.
Orders to factories for big-ticket durable goods jumped by a stronger-than-expected 3.1 percent in June.
Bonds wobbled, with the yield on the 10-year Treasury note edging up to 5.04 percent from 5.03 percent late Wednesday. The U.S. dollar tumbled against the Japanese yen; gold prices surged to more than $645 per ounce.
Oil futures posted more gains amid caution about the Middle East conflict and pipeline snags at Shell’s Nigerian operations. A barrel of light crude gained 60 cents to settle at $74.54 on the New York Mercantile Exchange.
The number of people filing for unemployment benefits last week fell by 7,000 to 298,000.
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Charlie of S. Portland, ME
Jul 28, 2006 11:01 AM
There are always good ways to cope with any economic circumstance, whether buying or selling real estate…whether refinancing or adding equity lines of credit.
ARM’s need to get into fixed products, and if your interest rate is high, there are “comeback programs” to lower your interest rate over a 4 year period with on-time payments.
The “climate” has changed, indeed, but it’s only a matter of staying on top of things and remaining positive about what you are doing for yourself over the long-haul.
As a loan officer, it’s easy to get negative about “down markets”, but the fact is, there is never a bad time to buy or sell, as long as you do it right. Happy to answer mortgage and loan refinance questions at my hotmail address chasinport.
Charlie
http://pressherald.mainetoday.com/business/stories/060728econ.shtml
Guys, I’m all set if I get laid off during the next downturn.
Thanks to the downpayment which I didn’t use on an overpriced property, and the fact that my landlord has absolutely no pricing power over me (my rents have been flat for years and will continue to be so during the next renewal period), and that RE mortgages in my area average 2x that of rent, I have three years of rent money (in revolving CDs) saved for the downturn. I don’t even need to touch the brokerage and multicurrency accounts.
And thanks to my perfect on time payment history, I get VIP treatment as far as the management company fixing stuff quickly which breaks in my apartment (sinks, tiles, fixtures, AC ducts) for both retention and since they don’t want me to complain to the housing board, which could get me around 6 months of free rent.
I’m sure I can find a job within two (nevermind three) years and even if the full time job market goes soft, I can consult part-time to put some extra cash in the bank and food on the table.
Ok, so where’s all this benefit from being a homeowner? All I see is a bunch of people on the verge of being foreclosed on within a few months of getting laid off whereas I can actually look forward to some time off, though I’d prefer to bring home a paycheck. And if I decide not to pay rent, I still get six months of free housing (though an irate/fuming landlord) whereas how many times does “the check’s in the mail” excuse work on mortgage lenders before they throw you out on the streets? I say two months and the gag’s up.
Part of the reason Fannie & Freddie haven’t been spanked, or the media barely covers the problems, is they are “Democratic” companies. The opposite is true of Enron, at least in the eyes of the left, which is why it still gets coverage, even though the FSEs are MUCH bigger problems.