“A Major Shift In The Market”
The Woodstock Independent reports from Illinois. “One year ago, the Parade of Homes trumpeted the opening of The Sanctuary in Bull Valley. ‘We love it,’ said Kristen Reyes of living in The Sanctuary. There is only one downside, according to Kristen. ‘It’s really lonely because no one lives here.’”
“One year later, only one house besides the Reyes’ home is occupied. Since the parade, construction is under way on seven additional homes. If sales were brisk or the economy was more robust, builders might put up a spec home and look for a buyer. ‘You won’t find too many of them building spec homes,’ developer Jack Porter said.”
“‘The market has slowed down across the country, especially for higher-priced homes,’ said Harding Real Estate agent Rick Bellairs. The problem is clearly illustrated in the neighboring Bull Valley Golf Club. ‘Normally, there are four or five homes on the market,’ said Bellairs. A recent drive through the subdivision revealed two homes with ‘Under Contract’ stickers and 19 ‘For Sale’ signs. The homes for sale range in price from $474,900 to $949,000.”
“To move the $949,900 property, agent Don Thurman is offering an incentive of a free Hummer H-3 or a five-year Bull Valley Golf Club golf membership.”
“In addition to a large inventory of homes on the market, The Sanctuary is a novelty in Woodstock: homes priced at $800,000 and up on 3 acres or less. A search of the MLS of Northern Illinois revealed that between 2001 and 2005, only six homes in the 60098 zip code sold for over $1 million, and all included more than 10 acres.”
“Currently, there are 14 properties for sale outside of The Sanctuary with price tags of $1 million. Three come with 2 to 5 acres; three more are set on 5 to 10 acres; and the remaining eight have more than 10 acres.”
“‘It’s hard to believe it hasn’t taken off more quickly,’ said builder Chic Martin of The Sanctuary. His Chic Martin Signature Homes still have The Richelieu on the market for $1.5 million. Martin saw one deal fall through with a prospect from Palatine who cited the high cost of commuting as the reason for not moving to The Sanctuary.”
“‘This type of land is much in demand,’ said developer Porter. ‘We always have cycles [in real estate],’ he said. ‘We think we have a great product.’ He laughed before adding, ‘We’re not in a fire sale.’”
The Grand Rapids Press from Michigan. “With ‘For Sale’ signs seemingly on every street, it may be surprising to hear bidding wars have broken out in the West Michigan real estate market. The bidding wars come most often with homes taken back by a bank, a result of the mounting number of foreclosures in the area.”
“Realtors say they see more of them, and the listing price is often below market value. ‘When I first started, foreclosures were one out of 10,’ said agent Ethan Dozeman, who has been in the business for five years. ‘Now they’re probably one out of four.’”
“Susan Kazma-Hilton, a (broker) in Grandville, said some homes are over priced for the market. ‘The homes are priced to get rid of debt, not priced to sell the house,’ she said. ‘I’ll bet you in 40 percent of the homes, the sellers owe more on the homes than they’re worth.’”
“Kazma-Hilton said it is a result of a combination of the unemployment rate depressing market values and mortgage deals that were too good to be true in the first place.”
“Agent Tami Vroma recently secured a buy-sell agreement with a first-time owner on more than two acres in the Rockford area. She did not reveal the price but said it was lower than the listing price of $235,000, which already reflected a $10,000 reduction.”
“‘I cannot even believe what we agreed to on a price,’ she said. ‘There are no buyers out there, and the sellers had to sell.’”
The Columbus Dispatch from Ohio. “The peculiar but tempting offers sometimes came a year or more after homeowners planted for-sale signs in their front yards. Interested buyers suddenly appeared, proposing to pay hundreds of thousands of dollars more than the asking price for houses in some of central Ohio’s elite neighborhoods.”
“The catch: the sellers must agree to immediately refund the difference between the asking price and the sale price. At least 14 such deals worth more than $11 million have closed since spring, and the offers continue.”
“‘We turned down five of them,’ said Bryan Wing, executive VP of CV Perry Builders. ‘Believe me, in this day and age, we could have used it.’ Others couldn’t resist.”
“A lawyer for the central Ohio chapter of the Building Industry Association warned group members in October to steer clear of such deals. Even sellers could be held liable if deals turn out to be fraudulent, he said, reminding builders of the danger of lawsuits or criminal racketeering charges.”
“‘This has been a really recent phenomenon,’ said David Martin, chief executive of Stewart Title, which refused some of the deals. ‘It’s like a whole new industry has formed overnight.’”
“It’s not unusual to borrow more than the price of a house to make improvements. But most of these houses are new, or nearly new, and the buyers in each case borrowed upward of $250,000 extra with little or no down payment, according to mortgages and deeds filed in Delaware and Franklin counties. Meanwhile, weeks or months later, the houses sat vacant.”
“‘Clearly, in times like this, when there’s a major shift in the market, people try to take advantage of situations,’ said Martin, the title agent. ‘Keep in mind, sellers will do anything. They’re desperate.’”
‘Welcome to the shell games played on the fringes of the modern mortgage market, where what you think you’re getting and what you get sometimes are two different things. The danger is especially acute in Battle Creek. A recent study by the Consumer Federation of America showed that Battle Creek ranked in the top 10 metropolitan areas in the United States for subprime refinancing of homes in 2005. More than half of the refinances here were subprime loans, the study revealed.’
‘In the process of researching what had happened to her, Carpenter found the house she bought for $93,000 suddenly had become valued at $160,000 by an out-of-town appraiser whose inspection she felt was cursory, at best. He called her near-downtown neighborhood “suburban” and missed on the square footage of the house by about a third, she said. Bitterly, Carpenter noted that the appraisal of her home as part of the foreclosure process placed its value at about $40,000.’
From the article:
Fred Davis of Battle Creek demanded a fixed-rate loan and got a flexible-rate loan for which the monthly payment now exceeds his disability retirement check. He realized the switchup at the closing, but was promised that it would be resolved if he would just sign the papers.
From the rest of the article: Of course, they lied and Fred got stuck with too much payment.
Why is it so hard for folks to just walk away from a closing?
When I closed on my mortgage I sat and read every blessed page of the loan documents, especially any language referring to the interest rate. The notary-on-wheels was really torqued.
I kept reading. It wasn’t her $$$ on the line.
Totally off the topic, but thought you guys might want a look at the NAR’s new ad campaign, which was rolled out today in select markets.
http://www.realtor.org/home_buyers_and_sellers/buy_now_ad.html
NAR $40 million dollar ad campaign lies:
the ad by the National Association of Realtors cites a 4.3 percent increase in the number of existing home sales contracts signed in August, from July, as evidence that “prices over all have stabilized.”
But Wednesday, new data released by the association showed that contract signings fell 1.1 percent in September, from August, and 13.6 percent from September 2005. A spokesman said that the first ads were prepared before the latest figures were available and would be updated next week.
This ad came out last Friday in the WSJ. I can’t imagine many of their readers will be running out to buy. Anyone see the NAR talking points? The sad thing is, most realtors will just regurgitate whatever they are told. They mention a continued high demand for housing, but what they fail to realize is that at current price levels, 90% of the population can’t afford to pay principle. Why is this so hard for people to understand!!! Alot of people want Ferraris too, but unless the price comes way down, then there won’t be many on the road. And hey, if the Fed says conditions are improving, then it must be true! The government would never lie to you, would they?
Talking Points for NAR’s “Buy Now” Campaign
* Conditions are now ideal for buyers. Interest rates are comparable to 40-year lows, and inventories are higher than they have been in decades. Consumers have exceptional choice. But these conditions may not last. August pending home sales rose 4.5 percent, and prices are expected to rise again next year. Even the vice chairman of the Federal Reserve says that the housing market outlook is improving.
* Real estate is an outstanding investment. House values rose 88 percent on a national average over the past decade. The number of U.S. households is expected to increase 15 percent during the next decade, creating a continued high demand for housing.
* Conditions are improving for sellers. This year will be the third-best on record, and prices are expected to rise modestly next year.
We should have a thread where we attack each of the points in the NAR’s ad. Generally its points range from “strongly opinionated/ fudged at best” to “blatant disinformation”.
It’s easy to dispute its claims, I could write some long post about it, but it’s more fun if we’re all discussing it separately.
So…. the bank value is 25% of the appraised price. Wow. Now apply that formula to the rest of the market…
Posted Topic ““A Major Shift In The Market”
^ minus f
Woodstock, Illinois… I had to Google-map that. Why on earth would anyone pay $1 million to live there? Why, oh why or why!? Unless it’s a big farm, which these places are certainly NOT.
From Chicago it’s MORE than halfway to Rockford and most of the way to Wisconsin. I like to joke that the distant suburbs here are “halfway to Iowa”… it’s not much of an exaggeration in this case.
There are good jobs in Lake County (Wheeling, Buffalo Grove, Libertyville), but that is a long commute, none of it on freeways. That’s the only viable place you can work, cuz you sure as hell ain’t commuting to Chicago from there.
You can live in decently Highland Park or Lake Forest for that much ($800-900K). There are plenty of desparate sellers in those towns nowadays. Woodstock or wherever carries NO advantage over this.
Count me as Not Getting It.
The houses are not selling, so we have another builder who completely misjudged the market. And almost certainly a lender/lenders who went along with it. If the reporter could find out that only 6 such houses had sold in years, what did the bank do?
The boys at iTulip nailed how this would go down, at least in the Chicago area.
http://www.itulip.com/forums/showthread.php?t=134
If you scroll down and look at the interactive graphic you see how the bubble starts in the metro area and moves out. Then reverses course by deflating in the rural areas and moving back into the metro. This is how it’s been happening here and the story out of Woostock is good example of that.
Yep, we’ve been making this argument in my “shoppe” (LOL) from the beginning. Bad newz for the SF and LA folks who want a bargain but the good newz for them is when they finally get their bargains, they’ll be the first to recover.
Bubbly-
“One year later, only one house besides the Reyes’ home is occupied.”
Not many other get it either.
passthebubbly,
Like so much development that’s been done over the last several years just b/c you found a lot or enough lots to build a sub division doesn’t mean there is a true market need! I grew up in that area and with their traffic today I can’t easily visualize anyone commuting from any farther than say Glen Ellen or maybe Wheaton. I knew several dads that did when we were kids and you seldom saw these guys. What’s really remarkable about all of this “distance development” is that some idiot signed off on these construction loans! A year into it and NO neighbors I’ll bet the lender is “re-thinking” his position.
I don’t see the Woodstock-to-Wheaton commute. Schaumburg, maybe. But if you’re working in Schaumburg already, why live so damn far away? Also, you can take the train into the city, but not to anywhere near Wheaton, Schaumburg has a long history of being public-transit-hostile.
Commutes from one suburban “region” to another (far NW to north shore, for example, or far NW to far west) are generally real rough.
I think what he means is commuting into the city, not suburb to suburb. The notion of commuting from Woodstock to Chicago is nuts. You’d be in your car at least 4 hours a day.
DinOR - I agree with you about not commuting from any further than Glen Ellyn or Wheaton (or their equivalents). Commute was a big factor when we moved out to the suburbs. We only looked in a few places based on proximity to the city and to the airport (my husband travels a lot), and we use Metra to commute.
OK, if D meant Wheaton is the furthest anyone would want be commuting TO CHICAGO, I concur.
And as Kathy implies, you better be close to Metra going in either direction, becuase you’ll go crazy trying to drive that every day.
I had the distinction of the conducting the external audit of the Woodstock financials (CAFR) way back in my public accounting days. Let me tell you, it is not commutable to Chicago. I actually stayed in a hotel while I managed the audit because I lived in the near west suburbs (Willowbrook) of Chicago at that time.
Also, Woodstock is where the film Ground Hog days was filmed.
Com’on guys. Woodstock is not even the end of the line for the train that goes that way. Remember, a lot of our Cali friends have no idea how our train system works, so a drive of that distance would be insane to other major cities. In this case the train ride is not insane, it is just crazy. At least one can get other work done on the train as opposed to driving the entire time.
This is too close to home to not comment, I grew up 10 miles from there.
Bull Valley is a beautiful area outside of town, with rolling hills, huge oak trees, small ponds, and plenty of space. This area has a railroad to downtown Chicago and you can driver to O’hare airport, so anyone that can make a good living could choose to live here. If you like it quiet and private, this would be “one fine place to live”.
Unfortunately for this developer, the bubble started to pop before he got the homes sold. I bet the homes are awesome.
‘It’s hard to believe it hasn’t taken off more quickly,’ said builder Chic Martin of The Sanctuary.
i love these `deer in the headlights` type comments.
Is Chic building houses or airplanes.
Cockpit voice recorders have shown that the most frequent last word uttered by the flight crew, just before impact, is “$H!T.” I betcha Chic will be using it a lot also.
Yah, I actually LOL’ed when I read that one.
Woodstock homes for everyone!! When they have the next Woodstock music festival, prices will skyrocket!
QUESTION: I would like a recommendation on a book or good article that suggests the best solutions to approaching an RTC-like market, from the investment side. Which names are the best to have in my rolodex, or better yet, which rolodexes should MY name be in? Since information and perhaps liquidity could travel faster and further during this bust, I would imagine the formula will be a little different. Any suggesions appreciated.
What kind of work do you do? If it’s legal or accounting/auction type stuff, get a copy of the FDIC guidelines for professionals and contractors and get your name on their lists ahead of time.
Thanks. Did the RTC use FDIC lists as a clearinghouse channel?
I was thinking about lenders’ lists, once they get in a panic and their normal channels can no longer absorb the volume.
Yes, they did. They have or had a lot of hoops you had to jump through to get on their contractor list so it’s best to get familiar ahead of the need and beat the latecomers to work when it begins. Once it gets rolling, there’s plenty for everyone but early is good. I had my friend who’s a real estate attorney get up to speed and on their lists a year ago. Same thing with the banks.
Here is the fundamental problem as I see it: We have had record low interest rates that allowed lender to get really, really creative. This unfortunately let people qualify for mortgage they really can’t afford. From the IRS website, here are the floors for each income threshhold (i.e. the smallest income for that bracket) from 2003 (the most current):
Top 1%: 295,495
Top 5% 130,080
Top 10% 94,891
Top 25% 57,343
Top 50% 29,019
To understand these numbers, they show that if you earned $29,019 in 2003, you were the lowest income in the top 50% of all incomes.
Now, using a mortgage qualifying calculator at http://www.webbuildersolution.com/calculator/MortgageQualifier.cfm?calcid=2&id=17629, and assuming NO OTHER DEBT beond the mortgage, here is the home you can qualify for:
Top 1% 881,606
Top 5% 382,435 (wow! what a drop)
Top 10% 288,335 (yikes!)
Top 25% 177,365
Top 50% 93,516
So, in my analysis, once underwriting returns to more normal proportions, only 1 in 100 households can qualify for these $1,000,000+ properties. So it seems to me that an artificial demand was created by underwriting guidelines. If the lenders tighten up, then fewer and fewer people will qualify, and that means less demand and we all know what happens as supply and demand try to find thier equilibrium.
Very nice summary. And absolutely NO surprise to me.
This is a key issue, affordability, without using Toxic loans is at an all time low!
And toxic loans will be harder and harder to come by. That leaves three options:
1. Houses don’t sell
2. Housing prices drop
3. Wages increase
I’m betting on door number two (followed by inflation)
posted “1. Houses don’t sell
2. Housing prices drop
3. Wages increase
I’m betting on door number two (followed by inflation)
I say door number two, followed by deflation. How do you all get inflation with housing prices going down? Plus the contraction in the economy that always follows?
“Helicopter Ben”.
Eggzackly, TJ.
Initial disinflation, followed the opening of the monetary spigots. The US will gid itself of some of it’s debt through inflation.
Not disinflation, but true DEFLATION. All credit bubbles end in a credit crash, which thereby means peoples debt has to be paid with the few dollars of REAL cash in the system. Cash becomes King which means the dollar becomes more valuable against all other goods ===== DEflation.
Assuming a 20% down payment, I get affordability values a bit high than that. And if we’re talking traditional mtgs, we should assume such.
Still, your point is valid. Also, are those IRS numbers from all tax returns, combining all filing statuses (single and joint)? So some returns would be from the very young or the very old, neither of which are really in the home buyer demographic. OTOH if they include joint returns they already account for combined two-earner income.
Anyway, using those IRS numbers with 20% down, zero other debt and the calculator’s other default assumptions I get:
Top 1%: 1.116M (6900/mo)
Top 5%: 491K (3035/mo)
Top 10% 358K (2214/mo)
Top 25% 217K (1338/mo)
Top 50% 110K (677/mo)
Given that half of all mortgages have been originated since 2003, and that all those purchase / cash-out refi borrowers will likely be underwater… who will have 20% for that traditional downpayment?
Again, most RE transactions are trade-ups, but you can’t trade up negative equity. Residential RE is sooooooo screwed.
Moreover, that figure shows that only the top 15-20% can afford the national median home price ($214K or so). Very low affordability rate.
Thanks.
If Borax Smith did the same homework, he probably wouldn’t have gone bankrupt.
So, how did Casey get his $2M + in debt? I know it was smoke, mirrors, and his lying ass to a bunch of equally sleazy folks. Should be the poster boy for going to the clinger.
Many years ago, when our kids were still in elementary school, we moved to a new section of a community in what was then the outer fringes of the Virginia suburbs of DC. Right afterwards, mortgage interest rates shot up, and buying stopped. For about 6 months or so if memory serves, we and one neighbor were the sole occupants among several streets and cul-de-sacs of completed homes. We shared that “uh-oh, what have we done” feeling. But everything is cyclical, and soon after the rates came down and buyers returned.
What kind of mtgs were people getting into back then, and what were house prices in relation to available salaries?
Borax…
It’s worse than that. In many areas such as Texas, the taxes, insurance, and utilities will drown anyone under the top 1% who buys up these large-lot McMansions. I see 2-5 acre lots with McMansions going up around here. Anyone want to guess how much it’s going to cost to water 2 acres of shade-free Bermuda grass during a typical Texas summer? Several grand a month just to keep it from shriveling up and blowing away. Then there’s the cooling on all those high-ceilinged single story houses. I expect there’s many a Texas home where the mortage itself is less than 50% of the monthly housing cost.
I posted a story on here during the summer about Trammell Crow (the person, not the company) using 50K worth of water per month on his yard in Highland Park (although the word “yard” is kind of a misnomer in that case).
Dollars or gallons? How can you use that much? Many many acres of water loving plants and ponds (high evap)?
Wouldn’t lawns made of cactus and dirt be more appropriate, like one sees in Tucson and other desert places?
Yes, but you have actual HOA bylaws that specify well maintained green grass in many places in Texas. Then all the neighbors are doing it to so there is social pressure.
In Central Texas which is not really THAT dry (except now while we’re in a drought) the gravel and cactus thing doesn’t really work so well because it would get completely overrun with weeds in short order. What does work well is native Buffalo grass and other native ornamental grasses along with various sages, yuccas, and native hollies. You can create a nearly water-free landscape that looks quite traditional and green using native plants. You just can’t buy them at Home Depot or Lowes or any other place like that which use national suppliers for their nursery stock.
“the gravel and cactus thing doesn’t really work so well because it would get completely overrun with weeds in short order.”
Weed barrier and Round-Up works wonders, you know…
‘When I first started, foreclosures were one out of 10,’ said agent Ethan Dozeman, who has been in the business for five years. ‘Now they’re probably one out of four.’”
Wait a second. Do I read this right? Is one out of 4 homes on the market (in this Michigan sub-market) already REO’s?!?
The peculiar but tempting offers sometimes came a year or more after homeowners planted for-sale signs in their front yards. Interested buyers suddenly appeared, proposing to pay hundreds of thousands of dollars more than the asking price for houses in some of central Ohio’s elite neighborhoods.”
“The catch: the sellers must agree to immediately refund the difference between the asking price and the sale price. At least 14 such deals worth more than $11 million have closed since spring, and the offers continue.”
“‘We turned down five of them,’ said Bryan Wing, executive VP of CV Perry Builders. ‘Believe me, in this day and age, we could have used it.’ Others couldn’t resist.”
I almost did a double post for this second topic is scary. How long until lendors are so bitten by this that they clamp down? How long until some sort of substantial down payment is required to ensure that if this fraud is occuring, the bank is covered.
How long before lenders require the mortgage broker, seller, seller’s agent, buyer, and buyer’s agent to sign that they, under penalty of purgery, are not doing a kickback? There should be a little clause in there about losing one’s license for doing such transactions. Note that any refund for repairs (e.g., roof) must be placed in trust and paid out to the contractor (or material supplier if the home buyer does the repair themselves). All surplus to be utilized to pay off the mortage.
This is going to create a panic tightening of the credit market. It will spook MBS buyers badly. But when?
I’m still betting on 2Q 2007 being when the “real ugly” starts.
I’m advising friends not to buy before 2008. (Hey, at that point if its not yet wise to buy… it will be easier to convince them. People just cannot concieve waiting until 2011.)
Neil
Repeat after me…..Don’t lend more that YOUR appraiser says the property it worth.
What if the appraiser is a crook Backstage ?
That’s why I said YOUR appraiser. Would lend some guy $500k without checking his ability to pay, AND that what he’s borrowing the money for is worth more than the amount of the loan?
I might if I did not have a stake in the outcome. But someone should.
close bold
“How long before lenders require the mortgage broker, seller, seller’s agent, buyer, and buyer’s agent to sign that they, under penalty of purgery, are not doing a kickback? ”
Technically, there is no additional document needed. It is already illegal for all of these parties to participate in this. it is just a matter of enforcement, and prosecution.
Sorry!
Bold off
test
Now that I’ve pissed everyone off with a mistaken unclosed bold…
This topic inspired me to do a post on my own blog of zero readers.
http://recomments.blogspot.com/2006/11/stopping-mortgage-fraud.html#links
Neil
Wow Neil , I really had to take double take on that part of the article also. It looks like these fraud rings have been hitting up the builders also .What appraiser would give a 250K increase from other comps or competitive neighborhoods if the appraiser wasn’t in on it . Appraisers/lenders are going to have to research the historic data on a neighborhood to stop this fraud also . No easy appraisals anymore .
This identity stealing is getting out of hand also . Think about the poor person who got their identity stolen and than they have to prove that they didn’t buy the house .
Alot of weird shit going on because of this easy money any appraisal goes market of the last 4 or 5 years. Wow
This is not rocket science. The appraiser is supposed to review the listing contract and compare with the sales contract. If the property sold for more than the listing price (or for more than the lowest listed comp in the immediate nieghborhood), then that is a red flag that more info is needed and/or there is fraud going on. This is part of the appraisal process. There would have to be a notation on the first addendum page of the appraisal detailing exactly why the home sold for more than the list price (fixtures or furniture included, seller-paid repairs, etc.).
“A lawyer for the central Ohio chapter of the Building Industry Association warned group members in October to steer clear of such deals. Even sellers could be held liable if deals turn out to be fraudulent, he said, reminding builders of the danger of lawsuits or criminal racketeering charges.”
That’s lawyer double-speak. IT IS FRAUD.
Further if the bank knowingly packaged such a loan and sold to Fannie/Freddie (conventional) then they have commited fraud as well (or gross negligence at the least).
Oh I agree with you Chrisusc ,the lenders/appraisers have not been doing their duty . Lenders have to go beyond even comps/recent listings because apparently these thugs are hitting whole neighborhoods /new home tracts .
It’s stupid that sellers think that they wouldn’t be subject to fraud charges also just because they didn’t get the buyer kickback money .
Somewhere along the lines this is going to so change the rules…
Could we go back to 1970’s like down payments? 20% + last year’s appreciation? My boss and parents had to do that in order to move beyound a “starter home.” Note I’m asking… but something is going to change.
The mortgage loaners are making the downturn worse by doing this. Cest la vie.
I’m waiting on the sidelines to see what happens…
Neil
The banks have to know this is happening! The fact that they have not already put the brakes on means that they are terrified of making a bad situation worse.
Screw the Lenders. They got us where we(you) are now. Reap what you sowed.
repeat after me:
keep the car
keep the country-club
lower the price
You are absolutely correct. Who would take a hummer instead of a hefty price cut?
The peculiar but tempting offers sometimes came a year or more after homeowners planted for-sale signs in their front yards. Interested buyers suddenly appeared, proposing to pay hundreds of thousands of dollars more than the asking price for houses in some of central Ohio’s elite neighborhoods.”
“The catch: the sellers must agree to immediately refund the difference between the asking price and the sale price. At least 14 such deals worth more than $11 million have closed since spring, and the offers continue.”
“‘We turned down five of them,’ said Bryan Wing, executive VP of CV Perry Builders. ‘Believe me, in this day and age, we could have used it.’ Others couldn’t resist.”
This is a well-known form of mortgage fraud. If the lenders are not savvy to it by now it is their own damn fault.
Kent ….No question that it’s the lenders fault ,(along with the crooks), but Im wondering how much the seller got out of the deal ? Most likely they got a smaller cut than the new buyer that got the inflated proceeds or slightly more than they would of got from a regular fair sale I bet .
Right now you would have alot of FB’s and upside down borrowers that are desperate to sell ,so this sort of seller might be vunerable to this sort of come on from these fraud rings .
So much more potential for fraud because of the up-side-down people out there .
I called the auction house about that 2.9 mm mountain view home being auctioned on nov 1. article said no reserve etc. but home did not get sold at auction. no explaination but the auction owner was polite.
Thanks for the info on the house. I thought there was no min bid.
I’ll try to get rid of the bold now — did that work?
testing
testing
Close
close closed?
OT:
‘Panic selling’ hits derivatives market
“Investment banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of reported “panic selling” in the US and European credit derivatives market last week.
“This heavy selling has driven the cost of insuring debt against default in the market for credit default swaps to record low levels – signalling either that investors are extraordinarily optimistic about the outlook for corporate debt, or that prices are so distorted that they are no longer being paid for the risks they are taking on.”
I don’t understand this. Why isn’t
“…the cost of insuring debt against default…to record low levels”
the opposite of
“…no longer being paid for the risks they are taking on”?
In case this wasn’t posted…
Mortgage lender warns of obstacles next year
Irvine’s New Century Financial expects mortgage industry’s loan volume to drop by 10 percent.
The Orange County Register
More stress is on the way for the mortgage industry, said Irvine’s New Century Financial, one of the nation’s largest lenders for people with risky credit profiles.
The real estate investment trust, in its third-quarter report, said industry loan volume should decline 10 percent next year.
And lenders will continue to sell a chunk of loans at a loss as investors scrutinize loan purchases for problems, New Century said. It said more borrowers are missing early payments, forcing the company to buy back more loans that it sold to investors.
New Century sold $410 million in loans in the third quarter at an average discount of 12.9 percent. That compares with an average discount of 5 percent in the prior quarter for $415 million in loans.
Kevin Cloyd, president of a subsidiary that sells loans, said the company should benefit from stricter lending guidelines it adopted recently. For borrowers with especially low credit scores, the company will review their ability to pay after “teaser” introductory rates adjust upward.
The company didn’t say how much of a dividend it plans to pay next year. It will enrich shareholders to the tune of $400 million with some combination of dividend payments and share buybacks, it said.
During a conference call last week, at least one investor expressed concern at the lack of specific dividend guidance.
“I hear your frustration,” said Brad Morrice, chief executive.
Morrice, in a statement, said the company will not expand its portfolio of loans “simply to support a specific dividend target.”
Patti Dodge, who is transitioning from chief financial officer to head of investor relations, said the company has kept staff levels flat since 2005.
“However, we will continue to manage headcount in accordance with our productivity metrics,” she said in a statement.
The company’s numbers fell across the board in the third quarter.
It reported a 45 percent drop in earnings to $66.6 million vs. a year earlier.
And it made $15.8 billion in loans, down 2.5 percent from the second quarter and 5.4 percent from a year-ago record.
I was in Woodstock a few weekends ago to pick apples. It is (was) a small farming community with a small but quaint downtown square. The movie “Groundhogs Day” was filmed here.
Woodstock is a fairly isolated place and you drive through cornfields to get there. However, there were literally hundreds of homes for sale in new developments in the surrounding areas. Every single intersection had dozens and dozens of “For Sale” signs for every type of home you could imagine. Condos, townhomes, single families, estate homes, you name it. (I could figure out why someone would want attached housing in the middle of a cornfield!)
I didn’t drive through the neighborhoods so I couldn’t tell you if they were empty or full or whatnot. I do know there were a lot of homes for sale. It took forever for me to drive back to Chicago where I live.
The ‘Groundhog Day’ house is for sale: $599k. If it comes with Andie MacDowell, I may go as high as $399k …..
From the OC Register article posted above: “For borrowers with especially low credit scores, the company will review their ability to pay after “teaser” introductory rates adjust upward.”
What a concept! How did the banking/lending industry get so far astray from the principles of common sense? Sane, financially prudent families have been effectively locked out of housing because of greedy lenders and foolish borrowers. What was their plan for the eventual re-set? So typical of Americans, no thought for tomorrow. Lenders and debtors stupid enough to play this game deserve to burn. F all of them!
““‘This type of land is much in demand,” Yea, for corn fields! Then he says:
“We think we have a great product.’ He laughed before adding, ‘We’re not in a fire sale.’”
Talk about denial! He won’t be laughing next year.
“Agent Tami Vroma recently secured a buy-sell agreement with a first-time owner on more than two acres in the Rockford area. She did not reveal the price but said it was lower than the listing price of $235,000, which already reflected a $10,000 reduction.”
Note the “…but I’m not telling” part.
So, you really think the sale price of this house is going to remain a secret for long?
test#&8482;