‘Sinking Money Into A Depreciating Asset’ A ‘Real Fear’
Some housing bubble reports from Wall Street and Washington. “Shares of homebuilders declined in midday trading Wednesday, led by Hovnanian Enterprises Inc., after JPMorgan issued a note on the builder raising questions about stock options practices and forecasting weaker earnings per share growth.”
“Merrill Lynch issued a bearish note on the homebuilding sector, predicting a slowdown already under way will get worse before it gets better. ‘We are neutral on the homebuilders because fundamentals are still too strong to call a bottom,’ Merrill analysts wrote. ‘In short, housing starts remain too high, margins are declining and rate cuts will provide little benefit from here.’”
“The Mortgage Bankers Association today released its Weekly Mortgage Applications Survey for the week ending August 25. On an unadjusted basis, the Index decreased 2.3 percent compared with the previous week and was down 22.4 percent compared with the same week one year earlier.”
“More subprime borrowers are defaulting in the early months of their home loans, a trend that has led to greater fear among investors and lenders of rising delinquencies and losses.”
“‘If those borrowers are finding themselves in trouble very early on, it may give lenders an indication that the underwriting criteria or quality control are not sufficiently tight,’ says Damien Weldon, at LoanPerformance. Based on the year-to-date data, Weldon says early payment defaults on subprime mortgages are expected to increase this year.”
“The secondary market, where lenders sell the new loans, could also see more pressure from rising delinquencies. Merrill Lynch analyst Kenneth Bruce wrote in a recent report commenting on H&R Block’s announcement that ‘if the fixed-income market anticipates further losses, it could begin to pressure spreads on lower rated bonds, thus undermining whole-loan pricing.’”
“Citigroup, Bank of America, and JPMorgan Chase are among the biggest losers in the bond market, where the largest U.S. banks’ borrowing costs are the highest in three years. ‘We’re probably at the top of the mountain for loan quality, and it’s going to start falling pretty soon,’ said James Hannan, who oversees $3 billion in fixed-income securities.”
“Higher borrowing rates have contributed to shrinking lending margins, a measure of profitability for banks. S&P said this month that those margins were at their lowest since 1991.”
“Federal Reserve Bank of Dallas President Richard Fisher said inflation has been running higher than he’d like to see, and said the central bank must make sure price pressure remained contained. ‘Our current inflation indicators are not presently as well behaved as I would like them to be,’ Fisher said.”
“He counted himself as unworried by the slowing housing sector. ‘The declines are moving housing markets from very high and unsustainable levels toward more normal levels, unwinding some speculative activity,’ Fisher said. He added ‘not all the consequences of the unwinding of a bull market in housing are bad.’ Fisher explained ‘as prices cool off, we may finally begin the long process of allowing income to catch up with housing costs.”
The Washington Post. “In the latest sign of the cooling home sales market, a luxury home builder in Rockville has begun resorting to the kind of tactic usually reserved for screaming electronics discounters, the Lowest Price Guarantee..from the time a customer signs to 45 days before settlement. The thinking goes, jittery buyers shelling out $500,000 to more than $1 million for one of the builder’s single-family houses can rest assured that they’re not sinking money into a depreciating asset.”
“‘That’s a very real fear,’ said John J. Lavery, for the home builder. ‘Obviously, there’s been a big correction in the market. Our view is that it’s the lowest point in the market cycle now.’”
“Builders offer such enticements because they are reluctant to upset previous buyers by cutting their base prices. But in some places around the country, builders have begun cutting those prices, too. Mid-Atlantic has not reduced its base home offering price, but it has increased incentives to as much as $55,000.”
“Lorenzo Wooten Jr. said that even in his Prince George’s County neighborhood, he has noticed more houses on the market and longer sales times. Wooten and his wife, Courtney, signed a contract last month to buy a $1.2 million house in Woodmore North. ‘I feel pretty comfortable where the Washington, D.C., market is,’ said Wooten, 33, a regional manager for Fannie Mae. ‘I really don’t think that they would have offered this price guarantee if the prices weren’t fairly priced currently.’”
The idiot who works for Fannie Mae, who is “buying” a $1.2M house at only 33 likes where the DC market is right now. Have I got that right?
Man, this ship has a long way to sink.
‘I really don’t think that they would have offered this price guarantee if the prices weren’t fairly priced currently.’
The builder should include a “CHUMP” t-shirt along with the price guarantee.
This does help explain why the DOJ dropped its criminal investigation of Fannie Mae. It appears Fannie’s problems were born of stupidity rather than fraud.
45 days, wow that should cover everything.
From signing to 45 days prior to settlement. That is a lot longer than 45 days, since we’re talking about new construction.
Give him the good old “I’m with stupid” t-shirt that has an arrow pointing upwards towards his pea-brain. Does anybody really expect anybody from Fannie Mae to recognize reality?
If there is any justice , his own mortgage will be dumped back onto the Fannie scrap pile and will be the final one that breaks the camels back when he’s foreclosed . Good gawd it is going to cost the taxpayers so much to clean this mess up, in the form of inflation from the countless grillions that will be printed up to save the banks, that lent to dolts, that bought the house that Jack built.
How much is a grillion?
More than a jillion , less than googleplex.
Last I heard Fannie wouldn’t buy that sort of super-jumbo mortgage, although they were trying to get the rules changed so that limits were higher in high cost areas.
I hope this bastard loses his a$$…How can a 33 yr old 1st line manager at FNM afford a 1M dollar house?…Total BS…
Well, he is after all a “regional” manager. I wonder what exactly he manages? Is he a sales, administrative, IT, or just one of a myriad of other “regional” managers that come as bland and useless as a ham and cheese sandwich in a bar-mitzvah?
WOw we can understand the term “public servents”!
$1.3 million with a price gaurentee! @ 33..
Who was the builder….sounds like a great impendng short!
Is this anything like last year’s…builder speculator clause that required a 50% return on any profit from sales within 12 months..while said builder is still selling phases in the same development?
“Man, this ship has a long way to sink.”
Understatement Txchick, complete understatement. I wonder how much cash he put in the deal. I also didn’t think Fannie paid so well.
This is another classic bubble snippet. So much stupidity and cluelessness in so few words. One of my all-time faves. We should start making a ‘Chump’ list and contact some of these people in 3 or 4 years, comparing statements now to what they will presumably be saying in a few years. (Looking back, do you still feel the DC market was “fairly priced” when you bought?)
I’m selling Fannie Mae stock short in the morning.
1.2 million for a house in PG county? Does it come with bulletproof vests for the kids?
Wow, how much does Fannie Mae pay its rank and file? Is it hush money?
Maybe I am in the wrong business….. But, jesus christ, $1.2 million to live in the suburban slum of PG county……
Well.. there are plenty of non-slummy areas of PG county. They’re building lots of McMansions out Bowie way. I would argue that 1.2 m for a McMansion out there isn’t nearly as absurt as 600kfor rowhouses in Hyattsville http://www.eya.com
P.G. isn’t as heavily developed as the other suburb counties. You can still probably find some farm land and wilderness there, even with the recent bubble growth.
It’s the western part of the county cradling D.C. that’s the real problem.
Oh, man, if you want to have some fun then google “lorenzo wooten”. First thing that came up suggests that he was a scam artist before embarking on his Fannie career: http://www.geocities.com/CapitolHill/Lobby/7049/gripes.htm
Or maybe this is Senior? Ha-ha.
Lorenzo Wooten joined the broker’s sales team in June 2002. Lorenzo is responsible for
consulting and training mortgage brokers on the use of Desktop Originator and the
opportunities available through Fannie Mae’s products. His region covers the Washington, DC,
Baltimore, and Philadelphia metropolitan areas. His experience in the mortgage banking
industry stems back to 1994 where he started his career as a branch manager with
Beneficial Finance Company. After three years as a manager, Lorenzo transitioned into
wholesale lending as an underwriter and then as an account executive with CIT Consumer
Finance, a sub-prime lender in Columbia, MD. During his five-year employment at CIT, Lorenzo
achieved tremendous success in building relationships with mortgage brokers in the
Washington, DC and Baltimore metropolitan areas. In addition, Lorenzo exceeded his sales
goals each year and was the recipient of the company’s 2001 “Admiral’s Club” award for
being the #1 sales performer in the region. His success can be attributed to his vast
knowledge of the mortgage banking industry and tenacious energy in providing service
to his customers.
This quote from the Fed president didn’t get around much:
‘Our job is to keep energy-price increases from passing through to a broader array of prices,’ Lacker said. ‘That’s something we didn’t do in the’70s. It’s something we’ve done a better job of lately, although not as good as I think we should.’
‘There is a risk of growth slowing more rapidly. There is also a risk that inflation doesn’t subside over the next year but instead becomes entrenched at or above current levels. ‘If that were the case, that would greatly increase the chances we would have to raise rates more sharply, and that could lead to a more rapid slowdown in growth.’
The phrase from the Fed minutes that struck me “many members thought that the decision to keep policy unchanged at this meeting was a close call and noted that additional firming could well be needed.”
Cracks me up to no end how the creators of inflation act so tough about fighting inflation.
Maybe someone should tell him that there is a correlation between energy prices and inflation. He’s clearly unaware of this phenomenon.
Energy price increases have already passed through in the form of surcharges and higher shipping costs. But that’s not counted as inflation, so every-thing’s OK.
“Lorenzo Wooten Jr. said that even in his Prince George’s County neighborhood, he has noticed more houses on the market and longer sales times. Wooten and his wife, Courtney, signed a contract last month to buy a $1.2 million house in Woodmore North. ‘I feel pretty comfortable where the Washington, D.C., market is,’ said Wooten, 33, a regional manager for Fannie Mae. ‘I really don’t think that they would have offered this price guarantee if the prices weren’t fairly priced currently.’
That jumped out at me, too. Talk about risky behavior. A thirty-three year old who works for fanny mae, is purchasing a 1.2 million dollar house in a declining markert. Yikes.
Even if prices were sane, this would be a riskier than normal move because it results in lack of diversification for the individual. Both his job and his largest asset will be susceptible to the whims of the housing market.
Am I the only one who finds it ironic that a 33 y/o manager at fannie mae can afford a $1.3M home? It’s like working for pets.com in 2001 and buying more founders shares!
I am unable to imagine this making any sense, unless young Lorenzo is indepndantly wealthy and pays as much attention to his work and Brownie did to his. Alternately, he could be a monumentally stupid person. Wither way, if he goes ahead with the purchase, god save him, because no man will be able to help.
I think that Lorenzo more than anything meets certain criteria:
1. He graduated from a prestigious university in the Northeast.
2. He most likely is a minority that was scolastically aided to get through his college, or played college football, basket, or baseball.
3. He drank the Kool aid and even spiked it some convincing some of his friends to buy in the same “sub” so that they can be environmentally friendly and car-pool. No matter that they use 1.3 terawatts of electricity in the summer cooling the house and heating the pool.
4. He is one of the 70% of americans that think that they are above average intelligence.
He is one of the 70% of americans that think that they are above average intelligence
Spot on. Hearing his quote made me think of the line in business, “If you’re sitting down to negotiate a deal, and can’t spot the clueless guy in over his head, it’s you!”
Indeed. But if you think fast enough, and spot the obvious, would you not be in a better position, as the others have assumed that you are the bait? It almost works like sharks letting the marks win a few before coming in for the kill. At first the mark wins easily, and think that he can keep on beating on the fool. At last, the guy screams double or nothing, and you do not even get a turn at the queue….
If the mark is smart enough and figures it out, he will bail before the last double or nothing, and then he would have outfoxed the shark, leaving him down. The trick is to know when that last double or nothing comes into play!
There is a reason I do not play the stock market. I know that I am the bait. I do not have either the resources, or the information to beat the game.
I wrote a long response to this already, so sorry if it double posts.
FOR THE LOVE OF GOD, STOP INSERTING YOUR RACIST DRIVEL IN OTHERWISE CONSTRUCTIVE CONVERSATIONS!
Every third post here has some gratuitous appeal to a racist argument of the following form:
1) Some person’s name is Lorenzo.
2) Lorenzo is a common name of people of the dreaded class: “minority.”
3) Lorenzo is an idiot.
therefore:
Lorenzo is an idiot because he is a minority.
Incidentally, you spelled “scholastically” wrong.
I know a white guy named Lorenzo.
Bruin-
You are right…..to a point.
There remains the overwhelming probability that Mr. Wo
oten is black, and that his race accounts for his position at Fannie Mae (which is itself a government -subsidised advancement programme for expensively educated minorities).
I agree with bruin…leave it out, especially given that it’s an utterly irrelevant point. You couldn’t possibly be implying that only people who didn’t attend properly in their undergraduate classes are currently participating in the delusional RE scheme, right? You can’t be saying that people who “really deserved” to go to fancy unis in the Northeast *aren’t* buying outrageously overpriced props in DC area and convincing themselves they’ve made good choices, right?
Then it just comes off as strange extra details motivated by lord knows what at best, imho…
Thank you bruin. I’ve noticed that a large number of posts include racist comments snuck in between the lines. It doesn’t take additional skin pigmentation to collect welfare, either from the government directly, or indirectly through Fannie-Mae.
d-
You are missing the point. Here is the point: It does not matter what color this bozo is.
What matters is he is a bozo.
The fact that you are conjecturing his color *based on NOTHING* is what makes these statements racist.
As someone said in a previous post, “Racism makes people stupid”.
To go from 1) idiot who 2) works at Fannie Mae to 3) named Lorenzo to 4) must be black/Latino is 5), I’ll be kind here: RIDICULOUS and adds nothing to the discussion.
On top of everything else, Lorenzo is an Italian name, as in “di Medici”.
Sheesh!
Probably he works for Fannie Mae AND he’s been a flipper/tradeupper for several years and has worked his way up to enough for this house…too bad it’s his last flip.
On of my all time favorite shows was Lorenzo. We used to love doing the Lorenzo Stomp.
On =One, and the comment was not meant to be a doubleantandra, but it does work better that way.
Jeez. You guyts take everything way too seriously. Chill, I would be considered a minority, therefore a subject of my own derison.
Pinch-a-penny,
Your comment was not horrible. It is the frequency of these little jabs that has started to get to me. I wasn’t trying to out you as a white supremacist or anything.
Back to housing… hopefully with less of this nonesense.
Who’s the idiot who said there’s “overwhelming probability” that Lorenzo Wooten is black? I’ve only known one person with that last name, who was white, as are these Memphis Wootens and is Atlanta artist Vernon Wooten. There’s a musician named Victor Wooten who is black–a Grammy-nominated bass player who has played with Bela and the Flecktones.
There’s no evidence here that suggests the color of Lorenzo Wooten, let alone an “overwhelming probability” that he is black and only holds his position due to affirmative action.
I don’t know what nonesense is.
Maybe his wife makes a lot of money? It didn’t say what she does.
A quick Google Search results in a showing here http://www.nyamb.org/htdocs/Word/0905_Brochure.pdf#search=%22lorenzo%20wooten%22 in which one Lorenzo Wooten, identified as a “Sales consultant with Fannie Mae’s sales division” made a presentation about Desktop Originator in September, 2005, about 11 months ago. The presentation makes him sound like a “consultant.” Indeed, if you read further down, you find his bio where it states as follows:
Lorenzo Wooten joined the broker’s sales team in June 2002. Lorenzo is responsible for consulting and training mortgage brokers on the use of Desktop Originator and the
opportunities available through Fannie Mae’s products. His region covers the Washington, DC, Baltimore, and Philadelphia metropolitan areas. His experience in the mortgage banking industry stems back to 1994 where he started his career as a branch manager with Beneficial Finance Company. After three years as a manager, Lorenzo transitioned into wholesale lending as an underwriter and then as an account executive with CIT Consumer Finance, a sub-prime lender in Columbia, MD. During his five-year employment at CIT, Lorenzo achieved tremendous success in building relationships with mortgage brokers in the Washington, DC and Baltimore metropolitan areas. In addition, Lorenzo exceeded his sales goals each year and was the recipient of the company’s 2001 “Admiral’s Club” award for being the #1 sales performer in the region. His success can be attributed to his vast knowledge of the mortgage banking industry and tenacious energy in providing service to his customers.
So we learn that Lorenzo was a branch manager, then a subprime mortgage broker, then an account manager / salesman at a subprime lender and is now training people on how to use Fannie’s loan originator program. Whether he has been using the subprime standards set by CIT is unknown.
The second entry here http://www.firstfridaysunited.com/pdf/American%20Dream%20Seminar%20Series.pdf#search=%22lorenzo%20wooten%22 lists him as being on the “Board of Advisors” for First Fridays United, which appears to be a seminar promotion outfit. His job description there is “Broker Sales Consultant Fannie Mae.”
I sincerely hope Mr. Wooten is not using or promoting any of his own subprime loans nor the underwriting standards he developed and used at CIT. Looking at their insider trades here http://finance.yahoo.com/q/it?s=CIT it appears that a large number of CIT executives began exercising their options in February, 2006, and the pace accelerated in May and June of this year. Eyeballing the numbers, it looks like some $50 million in options have been exercised and dumped by insiders between February, 2006 and the present. There haven’t been that many insider transactions reported at Fannie.
maybe his papa is vito corleone
That’s a very real fear,’ said John J. Lavery, for the home builder. ‘Obviously, there’s been a big correction in the market. Our view is that it’s the lowest point in the market cycle now.’”
No John, the pain ain’t goin away anytime soon!
“Our view is that it’s the lowest point in the market cycle now.’”
Well, he’s technically correct, that we are at the lowest current point in the market cycle, but not the bottom…not by a long shot.
That’s the quote that really stuck out for me too. Right up there with crashing sales, skyrocketing inventory & sellers refusing to budge on price = “Buyers market”. Yeah, we’re at a market cycle “bottom” alright –for the month of August.
Our view is that it’s the lowest point in the market cycle now.
How on earth can anyone make that statement right now? What cycle is he looking at?!…
He’s dead right. Since the August sales and pricing figures aren’t out yet, it is the lowest point of the cycle. And in a couple weeks, the next lowest - and on… I think the real sad truth is the amazingly short time horizon these people have. Next spring? That’s a lifetime away.
Correct me if I’m wrong . This builder is saying he won’t lower prices up until 45 days before settlement, so this means that the value is there ,(in this declining market ),according to this buyer ?
Are people brain dead out there ?
Let me just say that it would be more prudent to at the last minute try to make a deal on the builders fall outs from escrow when the market declines in prices by the time the project is built.
Is there a way to find new homes that have fallen out of escrow? Would they be listed in the MLS? I know builders don’t typically list new homes in the MLS, but I do see the occasional one…is that why?
Nikki. Builders have a number of ways of marketing the fall outs or unsold inventory . Usually if they have alot of them you go diretly to the tract ,(or find out the builders address or office and send him a offer ).That being said , I would wait until they are really hurting .
Oh, sorry if I was unclear, I have no intention of buying now! I wwas just curious if these are the new construction listings in the MLS that I see popping up. I guess some are and some aren’t, but it kills me when I go on Ziprealty and see 1. a new home that’s had it’s price increased since last fall, usually in the spring, with no subsequent reduction or 2. a new home (still from the builder, not a flipper) on the market for 300+ days with no reduction. Couldn’t they at least relist?
I’ve seen some flips around here that were purchased from the builder in March and May 2006 for prices lower (~$400K) than the homes still available from the builder are listed for now (~$479K). If the flipper got that kind of haircut off the list price back in the spring, imagine how much better of a deal one could get buying from the builder now!
Prices have nowhere to go but down:
http://tinyurl.com/e4so5
Go ahead, buy at a 100-year peak, you can handle the payments with 0% down, and remain underwater until you retire or the bank forecloses.
Lorenzo appears to be the poster boy for the housing mess…a 33 yr old “manager” at Fannie Mae buying a million dollar house that he feels is “fairly priced”. That’s one lucky seller.
And I thought the grocery checkout lady at my supermarket who bought 2 houses to flip was the height of misguided chutzpah.
I’m going to guess that young Lorenzo used some creative financing. I’m sure that ‘regional managers’ do ok at Fannie Mae, but I doubt that they get paid more than partners at big law firms.
By the way, his new neighborhood is an exclusive gated community that I’m sure is very nice on the inside but is located in Bowie, Md., which is one of the trashier parts of the DC metro area. There’s a good reason why the community is gated.
Bowie Maryland is located in Prince Georges county. I used to live there and went to school from grade to high school. Most people I know sent their kids to private school. Its one of the worst in DC area. I would never thought I would see a million dollar home in Bowie maryland.
PG County has the highest crime rate in the DC area (excluding certain rough parts of DC proper). I can’t fathom paying $1.2 million for a 3 bedroom house there. The price, the timing, the location are all as bad as can be. Lorenzo is in for touble.
I’ve heard that PG stands for Pretty Grim. It’s also called Pee Wee County by some.
That’s another thing . Who wants to lock in at pre-construction prices in a declining market where the builder might take a year or more to complete the unit /house . People where buying houses sight unseen in the boom market ,but scrxw that now IMHO. Builders give deals when they have inventory standing .
That’s exactly the point of the guarantee that’s being offered–you get the lowest sale price offered for your model between signing and 45 days before settlement. I.e., you’re not locked in on the price until 45 days before settlement.
Okay, we all get it now. Can we set some new thresholds for what constitutes news? 20-30% sales declines is so July. 2005 prices is like boring. Time to step it up a notch. Foreclosures the don’t involve live helicopter coverage of the evicition aren’t worth my time. Listening to FBs is useless unless it is live testimony at their murder trial. I know the HBs are seeing lower sales. Wake me up when one of them reports more cancellations than contravts; negative sales. Now that is the canary in the coal mine. Subprime loses? Give me subprime BKs or don’t bother me. And don’t get me started on realwhores. Don’t make read read another mea culpa unless it includes “i can only hope that my remorse is taken under consideration by the sentencing judge.”
If it bleeds it leads, eh?
It is getting tedious, isn’t it?
Buy now and be priced in forever.
A few months back I read a blip written by a desperate realtor. She was outlining “Reasons to Buy NOW!!”
Her “best ” reason (in my estimation) was:
“Your home will never have more equity/be worth more than right now”.
Wonder if she’s still in the biz.
If there are many people out there like “give me a 45 day guarantee and I’m happy” Lorenzo, she just may be.
I love quotes like “If those borrowers are finding themselves in trouble very early on, it may give lenders an indication that the underwriting criteria or quality control are not sufficiently tight”
Suddenly, out of the blue, starting about 4 or 5 years ago, people who could not previously get a car loan or a credit card magically started to qualify for half million dollar home loans. Suddenly, unemployed Uncle Charley, who can’t find a friend or relative to lend him $20 bucks could go down to the bank and borrow hundreds of thousands of dollars with a stated income loan.
And this didn’t throw up any red flags to the lending industry or to regulators? No, it didn’t, because every insider was getting very rich off all the new business. Suddenly it was about loan origination fees and quarterly performance rather than credit-worthiness and long term profits.
So, as far as I’m concerned, the whole stinking, corrupt and short-sighted lending industry in this country can just go up in flames. And as they burn they will scream “how could we have known?”.
Well, any half-wit who wasn’t blinded by greed could easily have known. But it’s far too late now for those who are just waking up from their cash induced sleep of fools.
Well said Binko . What kills me is how anyone could of thought it would continue . After I sold my property in mid 2005 ,my neighbor put her house on the market for 250k more than my sale,only six months later , (with only 100sq. feet more than my house had ). I understand the house is still sitting and has only come down 10k . I just wonder if any Lender would come in on that appraisal even if she found a greater fool to buy .
“We are neutral on the homebuilders”
Neutral!? Shares of builders such as Toll have lost about 50% of their valuation since July 2005. The sh$t could hit the fan and those Wall Street “strategists” would still be issuing buy statements. So in their language neutral means you better run for the hills. I wish I could be locked in a room with a WS strategist and a baseball bat. We could have a nice discussion about ethics and the effects of kinetic energy on the human body.
Investment speak: “Neutral” means “sell”. “Hold” means “sell”. Got it? By the time an actual “Sell” rating appears, the issue is a few months away from being pink sheeted.
Also, “Accumulate” means “hold” - and “Strong Buy” means “Buy”.
Make sure the bat is corked.
Well, if you ever wondered why FNM got so screwed up, now you Know.
Spot on. Everyone seems to have jumped on Lorenzo’s story. A “regional manager” at Fannie is not going to be that well paid. This is either a kid with familly money, or, he could have bought a rowhouse in one of the now-gentrified DC ghettos for $100K fairly soon after college. That might give him 500K down, but it’s still a $5,000 mortgage, plus all the other costs. Good mother of God….
Just to stir this up a bit, Lorenzo may really not be that under qualified. I don’t know how much the Regional managers make at Fannie, but certainly salaries in low paid state jobs have gone through the roof.
I know several people working for the public schools who make $100K+ salaries, and that is before you include the nice pensions, health insurance, disability. And remember they are only working 9 month a year! And before any of you start jumping up and down saying that teachers don’t make that much, stop. I know these people. I know how much they make and I am not saying all teachers make this, I am just saying a surprising number that I know make this amount or more.
So lets say he is making $100K. His wife might well make that as well working for a lobbying firm or law firm. So he is at $200K per year. Assuming no other debt he could reasonably borrow $600K conservatively.
Now assume they saved some (maybe $200K) and they had an inheritance ($400K) and bingo you have a $1.2M home that is very reasonably financed.
I am not saying this is the way it is, but it is also possible.
Oliver
Wait, so 15% is pretty much in the bag, right?
Its great that brokerage firms Merrill Lynch and JPMorgan are warning us not to buy homebuilder stocks now that they have fallen about 50 percent from their peak.
I wonder what my portfolio would look like a year from now if these guys did’nt warn sooner. Maybe I would have lost 80 instead of 50 percent. Way to go guys! Thanks.
Individual Investor
Didn’t Krammer give a BUY signal on homebuilders last week. The goof balls on CNBC are really in a class by themselves. And people actually invest their money based on these clowns. Never underestimate the stupidity of the American public.
Yeah, and when WCI was @19/sh, he called a “bottom”. WCI now trades @15/sh.
Well….I don’t know Lorenzo might just be right. Raines left? Ran away as fast as he could to the tune of $114k/mo. retirement. Ran FNM like a pump-n-dump ipo. Ran up figures so everyone got their bonus,and knew it was too big too fail… So ,ol’ Lorenzo probably gets a guaranteed buyout written in his release clause…
he’s just got make his numbers each month…..” we’re right on chief, Sales are just about right…priced fairly currently”
http://www.washingtonpost.com/wp-dyn/articles/A14462-2005Mar30.html
Pinch!
I think your all wrong.
His problem is the same as that on Wall Street. Youth.
At 33, he watched his college tuition and wages rise dramtically.
Gasoline has nearly tripled in the short time he started driving.
He works in the R.E. Mortgage business, that has never had (except during a depression) a national drop in housing!
He lives in a society that has credit card debt and lease car payments, like we once said of taxes and death!
He has never seen a qualified RECESSION and our government & FED has made certain that every asset possible has bubbled up until they boiled over. Then the Fed or Govt. intervened to make it feel painless…..Why wouldn’t he think his $1.2 million home (w/put) be good as the dollar?
I think his dad is dead, or brain dead.
I am just a wee bit older than he is, and I have seen at least 2 recessions that I can remember, and suffered through the tech implosion of a couple of years ago. Not all gen-x have only had good times. I also lived in a country that had a massive RE boom, and then bust, taking out most of the economy, and the banks. It is not pretty when banks like Citi, or Chase start heading south, and people’s money are trapped in them for a couple of years with no interest. It is even less fun, when there is massive inflation during those years. That is the worst possible outcome of this housing bubble, and I do not see a way out of it. Make no mistake, as banks will suffer, we will all suffer, no matter if we have been prudent, and saved, or have thrown out money away in dumb things like plasma tv’s.
Aha, he may have made a few bucks on the side with this shady venture, ripping off his “brothers”:
http://www.ww-realestatemanagement.com/AboutUs
Nice.
Lorenzo Wooten, Jr. and Marty Wynn are the principals whom lead this company
“Hey Marty.”
“Yeah, Lorenzo?”
“I’m putting this web site together. What sounds better to you: ‘whom lead this company’ or ‘who lead this company.”
“Well, ‘whom’ is what smart people say.”
“Yeah, that’s what I was thinking. Better go with ‘whom’.”
Ha-ha. I was laughing at this. What complete morons.
I know this discussion is dead but googling his partner, Marty Wynn. Is it really ok to run a business like this on the side when you work at FNM? I thought it was all about enablign “the American dream” but if your employee has a sideshow making money off the underclass buy getting them to take loans and buy property that they can’t afford…..
Anyway, googling his partner it appears that he his day… oops.. night job is a boxing promoter. Lots of stuff about some Tyson fight last year. Also Wynn is the name of the local congressman so it smells like they are heavily connected.
PG is a rotten place. The chief of the PG County school system was indicted for taking kickbacks recently…..
“Our view is that it’s the lowest point in the market cycle now.”
Then, you have no reason to end your “price guarantee” at 45 days before closing. Why not 90 or 180 days after closing?