“Exuberance Wrung Out One Foreclosure At A Time”
The Miami Herald reports from Florida. “Coral Gables lawyer Brian Bieber is intimately acquainted with mortgage fraud, having represented people accused of the crime. But earlier this year, he was stunned when a broker instructed his own mother, a Broward County schoolteacher, to create phony evidence of a second job to get a mortgage for a Hallandale Beach condo.”
“‘That mortgage broker actually suggested to my mother that she obtain a false letter of employment from me and my law firm,’ Bieber said. ‘The broker went so far as to give her the explicit amount my mother needed to be earning per week and asked my mother to ask me to generate at least four pay stubs.’”
“Bieber called the North Miami broker, who he wouldn’t name, himself. ‘I confronted him and told him he could wind up getting indicted. He said, ‘Everybody does it.’”
“Florida has 67,266 licensed mortgage brokers, up from 41,211 three years ago. ‘You had all these guys doing [refinances]…they got used to a lifestyle where they were making $100 to $150 grand a year,’ said Scott Messina, a Stuart-based industry veteran. ‘Take the pie and divide it by half, and now instead of making $100,000 a year, their making $30,000. They have to make money, too, and desperate people do desperate things.’”
“Brokers and other originators can be forced to buy back fraudulent loans from investors who buy bundles of loans on the secondary market. Defense attorney Bieber told the broker who propositioned him and his mother to hang on to his phone number. ‘You better save your money; you may need my legal services in the very near future,’ he said.”
The Palm Beach Post. “In November, St. Lucie County saw its troubled real estate more than triple. ‘Tons of new homes have been built in St. Lucie County in the past couple of years, and a big chunk of those were snapped up by speculators,’ said Mike Larson, an analyst in Jupiter. ‘Now, some are finding they can’t rent them out for enough to cover their mortgages.’”
“Larson blames ‘excess speculation’ for driving prices far beyond what fundamental economic forces dictated. ‘Now, with prices falling, that irrational exuberance is being wrung out one foreclosure at a time,’ he said.”
The Bradenton Herald. “‘A prolonged weakness in house prices will no longer allow consumers to extract cash or liquidity from their home,’ said Jerry Kirschner, the executive director of a Sarasota-based liaison between business and government. ‘If homeowners face mortgage refinancing, increased property taxes and insurance, without consideration of maintenance expense, the homeowner mortgage financial obligation triangle will rapidly absorb household liquidity for many people in our area.’”
“Sarasota County Property Appraiser Jim Todora joked at Wednesday’s luncheon that he has had his share of ‘fan mail’ over the past year.”
“‘A person had wrote, ‘What are you doing down there? Are you out of your cotton-picking mind? Are you crazy? Don’t you know what is happening in the real estate market?’ Todora said. ‘I really enjoyed a homeowner who wrote to me lately. She said, ‘At this point you’ve probably been called every name in the book, so I thought I would skip that part and get to the important stuff.’”
“Dale Friedley of the Manatee County Property Appraiser’s Office, said the Sunshine State seems to have escaped fears of possible housing depreciation. ‘There’s no evidence at all of depreciation in Florida,’ Friedley said.”
“Any county that experiences a 27 percent increase in its taxable value in a year should call it a miracle, Todora said. ‘If we were to think that kind of trend was going to continue, I think we would only be kidding ourselves,’ Todora said. ‘We would probably break apart at the seams.’”
The Herald Tribune. “The plummeting real estate market could spell a rare downturn in taxable land values, at least in parts of Florida. And that could force local governments to raise tax rates to make up the difference.”
“Government officials say such increases are not out of the question. Charlotte County Administrator Bruce Loucks said that if property values fall, governments would have three choices: cut spending, raise tax rates, or both. ‘This isn’t a surprise to anyone,’ said Loucks.”
The Atlanta Journal Constitution from Georgia. “While sales and construction are not crashing here the way they are in some other places, Georgia is suffering a parallel, if milder, downturn in housing, said P. George Benson, of the University of Georgia. ‘The nation’s and Georgia’s housing markets are already in recession, both of them,” he said.”
“All in all, the r-word fits the situation, agreed Roger Tutterow, of Mercer University. ‘If you define a recession as contraction in the level of production and activity, whether locally or nationally, it is clear that is happening,’ he said. ‘You have to admit the housing market has slowed.’”
The Ledger Enquirer from Alabama. “The tide of the real estate market here has rushed out as quickly as it rolled in last year, real estate agents and property owners say.”
“Recent arrivals who hoped to turn their investments quickly and now suspect they’re stuck for a while. ‘The market has dropped off fast. It’ll come back again in the future, but nobody knows when,’ said Bill West. Two years ago, he put $190,000 into the land and the construction of the house, he said. Next year, he said, he plans to put it on the market for about $430,000. ‘It’ll be a hard sell, and I know it,’ West said.”
“Waterfront property values went up more than 50 percent in 2005, according to property sales records. Then in August came Hurricane Katrina and the following Gulf Coast-wide real estate slump. This year, property sales dropped back down to 2004 levels, and prices have dropped more than 30 percent from last year.”
“‘The trends here are pretty much in line with what you’re seeing everywhere along the Gulf Coast right now,’ said (realtor) Marc Estes in Bayou La Batre. The difference in the Bayou is that the market had only just begun to draw investor interest when Katrina hit, he said.”
“In 2003, just six properties were sold in the Bayou, according to records. In 2004, sales rose to 18 properties. Last year, 40 properties changed hands, more than 60 percent of them snapped up by investors and speculators, according to Mobile County property sale records. This year, just 16 properties were sold, according to records.”
“‘The entire Gulf Coast is facing the same problem right now,’ said (realtor) Lee Martin of Port City Realty. Sales on Dauphin Island are down 65 percent from last year.”
“West said he wished he’d known two years ago what he was getting into when he bought a lot in Woodbridge Landing. Four lots there sold in the past three years for $100,000 to $150,000 each, according to records. Houses were built on two of them, one of them West’s. The remaining five lots have sat, unsold and undeveloped, though each has bayou frontage.”
“The growth hoped for by people like West, Estes and James may come, but ‘it may be 10 years or more down the line,’ West said. Next year, he said, he expects to make a little money on the house he built, ‘but nowhere near what I was speculating.’”
‘The second largest Florida-based bank could be writing off nearly 15 percent of its annual profits because of fallout from a loan to Neil Mohamad Husani’s former business partner, Michael Tringali. ‘Until now, banks could point to five years of successful lending,’ said Jack McCabe. ‘That gave them a bulletproof feeling that they could do no wrong. Motivated by promotions and bonuses, they kept making loans even though their guts were telling them that what they were doing was highly risky.’
‘The same thing happens in every boom and bust cycle in every industry. Speculation and greed get out of control. Now that we’re in a decline, banks are going to have problems.’
‘South Carolina’s foreclosure rate remained among the nation’s highest last fall, and worsened for homeowners with the riskiest loans — subprime borrowers with adjustable rate mortgages. Columbia bankruptcy lawyer Michael Cox is finding more clients threatened with foreclosure because of increases in interest payments on adjustable rate loans. Rates might have started at 3 percent, but now are jumping past 8 percent.’
‘Berkowitz said many households took out adjustable rate mortgages not understanding the risks. ‘It’s a recipe for disaster,’ Berkowitz said. ‘You’ve probably got some on the edge of affordability anyway, and when the rates go up, it pushes them off the cliff.’
Ben,
I’m hardly discounting the fact that sub-prime is going to be a major problem. We’re already seeing plenty of evidence of that but as near as I can tell we’re fast approaching a point where “how” you got your loan and how much you owe isn’t going to make any difference. The bottom line is that you (FICO of 849 w/20% down) and your next door neighbor (FICO 549 w/125% loan) still live on the same street! Given the explosion in sub-prime loans, A LOT of your neighbors have a 549 fico!
As they say, “the sun even shines on a dog’s a$$ some days” and he gets promoted, and YOU get laid off! Your neighbor may be “white knuckling” his payments but you’re forced to sell in a down market. Do you see where a “reversal of fortune” could take place? Given today’s DTI can you see a point where FICO becomes much less meaningful OR do we become a Nation of sub-prime borrowers? I realize a lot of posters here w/strong fico’s will debate this vigorously but I’m starting to wonder if it isn’t inevitable?
It’s already the case IMO. People will “work around” the weaknesses to make a deal happen.
txchick57,
How do you mean, “work around” the weakness”?
There’s all kinds of places who will “re-score” you or dispute things just long enough to get the loan done. Alternative financing. Create new tax ID’s. All kinds of sleazy stuff. Having bad credit just means you’ll pay more, not that you can’t get it.
That’s right. The car dealers have paved the way: “Good credit, bad credit, no credit - No Problem!!” Everybody rides!
Trust me, I know people (brokers) that will get you a whole new score from the bureaus, if you have $10K or so. And the thing with the phone pay stubs, that is par for the coruse. Everybody does that now. When I left the mortgage business, I was constantly watching over the 11 loan officers I managed to ensure that they were doing fraudulent stuff. It was too stressful for me, and then they wanted me to go out and get my own warehouse line and start my own company (they were outta their friggin minds - all I need is to buy back a few dozen loans at $500,000 each).
phone = phony (USC education for you).
coruse = course, wher’d I get my learnin
I was constantly watching over the 11 loan officers I managed to ensure that they were doing fraudulent stuff.
AHA! So you’re the one!!!
I noticed that too but gave him a pass.
My bad - Freudian slip.
DinOR, very astute. I’ve wondered that myself.
palmetto,
Hey thanks! It’s not one of those revelations that comes to you all at once is it? These scenarios take time to develop as do our reactions to them. I just don’t have a hard time picturing in the very near future being in a tavern or at work and somone boasts to you they have a FICO of _ _ _ and the whole bar/office busts a gut! Like dude, you are SO clueless! Haven’t you heard…….? No one cares!
Don’t get me wrong. No, I’m not buying gold and please don’t fit me for a tinfoil hat but what say YOU and your FICO of _ _ _ come down to this end of the bar and buy the next round? Oh gee I’m sorry, they only accept Yankee dollars *not* FICO dollars! It’s not going to be a matter of having or not having a really great FICO when the cost of money is no longer dirt cheap and people look before they leap into debt. You know, like we “used” to?
DinOR, I’ve felt that a number of factors might contribute to making FICO scores a quaint, “thing of the past”, notion, not the least of which is identity theft, which is probably a much larger problem than people realize. ICE just busted a huge ID theft ring operating at six Swift meatpacking plants in different states. Depending upon which account you read, there were something like 1,200 people involved. I don’t even use my street mailbox anymore, I use a PO Box, because what’s to prevent someone from reaching in and taking my mail out? Anyway, that’s one of the factors that will make FICOs meaningless, but before that happens, there will be misery, I hate to sound so doom and gloom.
I totally agree. I’ve removed myself from as many databases as I can, could care less what my FICO score is and use a PO box for what little mail I get. I was able to buy 100K worth of cars on credit in 2000 with no job or verifiable income. In fact, when I went to pick one up, the finance manager asked me to come in his office and show he and a couple of his salesmen how to daytrade.
txchick57,
LOL! That is so funny! Well, daytrading is one way to make a living! Thanks for clarifying for me above and that’s a lot of what I was getting at! Pffft, FICO sure didn’t seem to matter on the way up, why make an issue of it now? Some may argue that fico will become more important than ever now that “credit” is tightening. Really? Oh you must mean it matters if I want to be one of the multiple bidders on your over priced POS? Uh, gee no thanks. Look, there’s nothing else in MY life that I would be needing to buy on installment payments and I’m just not interested in buying a house at these prices so who cares?
I can’t wait to see the next round of creative finance that comes around in an effort to help FB’s “roll over” their negative equity into a home they CAN actually afford?
Well, you may remember in the olden days, there were FHA and VA non-qualifiying assumable loans, which made some properties move w/o a foreclosure. But I don’t think there are anything like that anymore.
Tx chick,
I was able to buy 100K worth of cars on credit in 2000 with no job or verifiable income.
Can you explain to me how to do this. Im not sure I understand how I can buy 100,000 worth of cars with no income verified. Allthough I do have a good annual income and verification for it.
Beats the hell out of me. I did it in Dec. of 1999 because I was going to close out a huge winner of an option position on January 2, 2000 and pay the notes off. I just went in, put down 20% on each one in cash, filled out the credit apps, did not lie about anything, said I was self-employed, etc. They didn’t ask for tax returns or anything. The only thing they did bother to ask me was whether my husband knew what I was doing (which almost cost them the sale).
I rent 3000 sqft on 1 acre 2 miles from the pacific ocean for $2400/month (water/sewage included). I hope that all of my neighbors are sub-600 FICO and tapped out.
“The bottom line is that you (FICO of 849 w/20% down) and your next door neighbor (FICO 549 w/125% loan) still live on the same street!”
This is exactly my concern. You’ve provided an excellent example of the problem that faces almost every neighborhood these days.
peggy,
Well exactly, and Murphy’s law being as it is, he gets promoted, you get laid off (or you both get laid off). It really doesn’t matter. What makes the whole situation even more laughable is that for all the offers we all get from MB’s we decided (for a goof) to see what our long time bank was offering?
Talked to a very sweet no pressure gal. Why no pressure? They are keeping their loans in house and are basically doing it flat rate! Either you meet the min. lending criteria or you don’t. Every one either gets the same rate OR they will advise you to go elsewhere if you are sub-prime! Wow! She said it really has streamlined their underwriting process and the program is going well. Actually I have a fairly decent fico I just got so tired of people bragging during the bubble about a number that can only go down AND get you deeper in debt! So tired.
No matter how much one plays by the rules ,if everyone else around you got a house by this bogus world of mortgage fraud in qualifying ,you will go down with the ship also regarding your equity .
During the height of the boom I think many people asked ,”Wow ,where is all this money coming from .” It was coming from bogus paystubs and fake tax returns .Why do you think there has been a big disconnect between incomes figures and mortgage loan ability . When that mortgage agent said ,”Everyone is doing it”, that would have to be true based on the demand during the boom.
These lenders would hire young punks ,give them a one week class ,hold a big commision carrot up and turned them loose .
Why weren’t people turning this mortgage scum in to the authorties ? People didn’t do it because they wanted the big loan with appreciation profits . The time to turn the mortgage scum in is when the borrower goes into forclosure and the blame game starts .
Management can oversee their agents if they want to ,or underwriters can make a lot of calls to verify data ,but everybody was on the money-making “real estate always goes up” train .
“No matter how much one plays by the rules”
Exactly Mr. Housing Wizard! That’s really all I was trying to say (it just took like 12 posts but….)
So if it makes you feel like it gives you more swagger to your stride, hey good for you! In the end though even the “good actors” will be brought down at a very local level b/c they were unknowingly hanging out with the wrong crowd all along. What we may end up seeing is either FICO’s coming down across the board or an open outcry for total FICO reform! (I lost and can’t win, so…… now I wanna change the rules).
Housing Wizard,
Great Post. This same phenomenon played out in Major League Baseball regarding steroids.
Even players who wanted to follow the rules took steroids because if they didnt everyone else who was doing it would have affected them by pushing them out of the game as their statistics paled in comparison to everyone else.
This is exactly the same thing that has happened regarding your post with housing. Even people who played by the rules would be affected by the people around them who were just doing what “everyone else does.”
We need housing regulation just the same way that sports needs steroids and human growth hormone regulations.
If the playing field is equal then everyone has a chance to succeed or fail on their own merits.
When there is a secret playing field advantage that some people know about and use and others do not because they are doing the right thing then the ones who are doing the right thing are ultimately the ones who will suffer in the statistical production department.
Its an irony that the people who are cheating were doing better than the ones who didnt cheat. Now hopefully the cheaters will be caught, and the good rule following people will be finally rewarded. It’s long overdue.
This thread points out the importance of owning your house free and clear. If you own your house and lose your job you can probably muddle through (”do you want fries with that?”). If you have a $3000 alligator to feed and you lose your job that’s another story. The same argument goes for owning your car free and clear.
A few of my neighbors are going to be vacating their houses soon to become guests of the federal government, all expenses paid. This mortgage fraud is ending. The lenders I am alerting to are finally getting it and working with directly with the FBI to nail these fraudsters, before they can spend the $500,000 cash out acquisition financing. Then they will be going after the appraisors. Amazing stuff. I will give you a full update on Sunday.
I admire you my friend .
Ditto. A tip of the hat to the only one who got out there and doggedly pursued the fraudsters.
“Dale Friedley of the Manatee County Property Appraiser’s Office, said the Sunshine State seems to have escaped fears of possible housing depreciation. ‘There’s no evidence at all of depreciation in Florida,’ Friedley said.”
Has this person been smoking crack?
gov worker - he’ll get a raise !
Exactly. And that’s why he’s not seeing evidence of housing depreciation, because it is in his interest NOT to see it. Governments are like that. Once they have more funds coming in, they don’t let go of it easily. You’ve got people paying taxes on houses that aren’t worth what they’ve been appraised for and they can’t sell those houses at appraisal anymore. There’s his “evidence”.
OMG! I’m not sure any crack exists that is strong enough to make a person *that* delusional. I think we’re getting into PCP territory with this guy.
IMHO, this guy must have found an old stash of blotter, windowpane, or orange sunshine because he is definately hallucinating.
Electric Kool-Aid
Yup. There’s no organized crime problem in America, either.
It’s why I’m moving out of Florida. I see no meaningful relief possible. The politicians and bureaucrats spent the windfall and in the process increased recurring costs. To pay for those, they won’t let revenue drop back to what it was, plus inflation — which is where it should be. I don’t have enough years left to wait for enough recalls and un-elections to get the job done of rolling back government. Bye. Y’all take care.
his mom deserves jail- but he’ll get her and the mort broker off =scum et. al
“Bieber called the North Miami broker, who he wouldn’t name, himself. ‘I confronted him and told him he could wind up getting indicted. He said, ‘Everybody does it.’”
So Mr. Bieber, you simply dropped it at that? If some sleazeball attempted to try that with my mother, I would nail him to the cross.
And NO, EVERYONE is NOT doing it.
Jesus. I feel like I just woke up and it’s 1990 again.
Here’s a little term we may hear a lot of in the future. “Mortgage reform.”
By the time the posturing is finished it’ll be to little to late just like last time.
What? You’re going to bash your future customer? Oh, please.
Had a nephew (nice kid) buying a house who got a mortgage broker on the line with me at one point. Needed a “cosign” to close the transaction.
I asked the broker what would happen if something went wrong; “nothing can go wrong”. I said “you’re telling me that I will not be liable for any problem with this loan”…..silence.
It was amazing. The guy was completely comfortable trying to get me involved in the hope that I would “overlook” my exposure.
Needless to say the deal wasn’t done with my involvement (but it was done, somehow, as you can imagine).
jag,
That’s funny. Having had 2 daughters my nephew is (sigh) like my only son. Since his parents divorced long ago I hope he thinks of me as his father. He asked me to co-sign on a car loan and I said NO! I would NEVER do that (so I bought the kid a beater for cash) what a softie huh?
I’m still trying to figure out what a mortgage broker does to justify a six-figure income, and why Florida needs 67,000 of them.
Kind of reminds me of a political cartoon from the early 1990s. A man walks up to an S&L teller window and asks “hey, you guys have any more of those loans you don’t have to pay back?”
I posted this last week from iTulip.com
” as Keynes once pointed out, a banker’s job is not to avoid risk, but to make sure that if he’s making a mistake he’s making the same mistake as everyone else, so that he’s positioned to go down with everyone else and not stand out.”
Who’s going to prosecute, and whom, when the SHTF? Everyone seems to be doing,and no less the Govt., FNM, etc…The mantra is keep up the happy face ,and hope some new paradigm starts that will bail us out…until then ,grab all you can for as long as you can!
How about about a slogan change. No more “Keeping Up with the Jones’”. New saying. “Keeping up with Ben Jones”. That will keep those much more fiscally sound and educated. Pass it (and Ben’s wonderful blog address) along to any people that can still be saved from becoming an FBer.
need 2 leave ca,
Amen, please see my post above. The scenario isn’t too far from real life. I sold my house in 2004 (before the real insanity started) partly b/c I had the neighbors from hell (2 stroke dirt bikes on Sunday morning) but more b/c with the stock market in a meltdown it had become a burden financially.
My neighbor still works for a major entertainment chain (not as high up as he likes to think) and the wife works in the medical field. Neither have ever “missed” a paycheck (let alone a meal). They’ve had good fortune and we’re still friends. They elected to sell their home after only two years (duh) and sunk EVERYTHING into their dream home. I don’t believe they’re finacially stressed (no kids) but they’re definitely “a$$ deep” in it. They’ve probably cut back on their 401K contributions and neither has an IRA outside of their employer plan. But they’re so convinced that adding extras to their home (landscaping never ends) that they are now grossly over concentrated as individuals. We OTOH have maxed out our contributions and are financially fit as a fiddle w/ all the options in the world! Including bottom feeding when the right entry point presents itself!
I’m sure this couple is on yet another “2 year plan” but I think that now their expectations are being toned down and they’re probably already making plans to be more sensible next time. They’re stuck w/the 2YP (TM) and I can change mine on a daily basis. If that isn’t a reversal of fortune I don’t know what is. Keeping up with the Ben Jonses indeed!
Totally agree “need 2 leave ca” - before stumbling onto Ben’s Blog I thought I was the only one on this planet that couldn’t understand the insanity with home prices and those who were buying into it.
It so refreshing to come here and read “truth” because the fiction was starting to sway my judgement ….awesome work Ben….
The Miami broker noted “Everybody does it” reminds me of the Movie Wall Street where Charlie Sheen convinces a lawyer buddy to engage in illegal trading activity…classic…with no consequences…long live the American dream….(srew or get screwed)
“Everybody does it”->”If I didn’t do it, somebody else would”->”I was only following orders”
Foreclosure: everybody does it.
Yup. There’s absolutely no shame or dishonor to going tits up. There’s actually a mentality that you “get the man” if you swindle the bank. Foreclosure? Just the latest creative financing.
catherine,
I’m guessing you said that partly in jest but w/ a tinge of truth. Absolutely! That’s what we’re seeing all over places like Phoenix, SD and LV! Pffft, no skin off my nose. When I was a young stockbroker the old guy in the office told me to watch out for guys that call in out of the blue, buy a stock over the phone, give you all of their personal information without any reservation. I said why? Well, b/c if the stock goes up, then they’ll figure out a way to pay for it (or say “just sell it out and send me the profit”). If the stock goes down…… well then all you have is a phone number that’s disconnected and you’re stuck for the loss. It’s called “free riding” and this bubble has been built on it!
Come on and take Free Ride
Yeah, yeah yeah
*Edgar Winter
DinOr,
Oh, more than a tinge of truth. Really, I know people that could care less about their financial state of affairs…as long as the clerk at Target still swipes the credit card, they don’t give a rat’s ass about any of it. It’s disturbing and it annoys the hell out of me. All these whiners who can’t make the house payment play the victim, thereby probably, ultimately, getting assistance in some form or another, and will pass their genetic swill onto another generation of self-absorbed consumers.
catherine,
Perhaps for the purpose of illustration we could say “Home Depot and Lowe’s”? I hold out hope though that younger Americans will look at what is transpiring and think better of it. We can hope can’t we?
Something interesting about the Palm Beach Post report: It went on to say that while SFH foreclosures were up in St. Lucie county, they were down in Palm Beach county. I’m wondering what that means.
Is is that speculators speculated on SFH’s in St. Lucie (Just north of Palm Beach) but on condos in Palm Beach (the article alludes to this)? That would be an important fact to consider, were it true. Could it mean, for example, that SFH’s in Palm Beach will see less of a fall than condos in Palm Beach?
1. There is currently a 47 month supply of existing single family homes on the MLS in Palm Beach Colunty. This does not include all the FSBO or new spec homes still owned by builders.
2. There are over 6,500 new condos due to be completed in Palm Beach County in the next 30 months. 4,988 are in downtown W. Palm Beach, where only 1,200 have been absorbed in the last 5 years and no one would go down there at night before then.
3. I mention this website at all my speaking engagements and to most reporters I do interviews with.
4. Go Ben!! And happy holidays to all!!
Well, there’s a good slap of reality.
This thing is going to be bigger than the dot com bust that is for sure. Everyone is affected even renters have a home owner who has been effected.
Its all due to gov interventionin free markets of course. 1997 tax break + mortgage backing + federal reserve shenanigans = here we are. If you are in CA add prop 13 to the poison formula.
The Federal Reserve is a private entity.
They are still f*cking theives controlled by the govt.
The Bankers control the government.
“This thing is going to be bigger than the dot com bust that is for sure. Everyone is affected even renters have a home owner who has been effected. ”
Bigger, probably, but much slower and quieter, so that it won’t get as much negative publicity. The dot-com bust was like a lot of speedboats which hit a huge wave and sunk in minutes. This thing is like a ginormous freighter that’s slowly taking on water.
Plus, as much publicity as the tech stock bubble got, very few American actually had large exposures on a percentage basis. But the homeownership rate is up around 70% or so (or at least I recall seeing that number) - that’s a lot of the country that stands to lose $ once this unwinds. The pressure for a bailout will be huge, no doubt.
Hmmm………..with evey piece of bad news that comes out, the Home Builder’s stocks keep rising.
What am I missing?
The PPT (Plunge Protection Team) is swinging into ACTION!
a fellow Fleckenstein reader?
Nope, just a frustrated SHORT!
disclosure: Short BZH, CTX, HOV, & TOL
HOV’s CEO warned that 4thQ will be NEGATIVE and still the %$#^! stock goes UP….
Charts, my man. Got to use em.
Don’t short this market. The fix is in. If the SPX dropped 10% the Fed would turn the printing presses up even faster and start cutting rates 1% steps. They are not fooling around, and the market is not going down.
ahh! more good news out of the sunny state of florida
the sh*tstorm of bad news for fb’s just keeps on coming
Lifted from Mish’s site, where he is interviewing an auctioneer, that just disposed of some 40 condo’s at no reserve bids:
“Mish: Is this a Florida thing only?
Carter: No, but Florida probably has the biggest oversupply. We are getting calls from developers every day, and several attended the Tampa auction just to see how it works. Some developers who last year had never even thought about an auction are seriously considering it. We have done condo auctions recently in Door County Wisconsin, Austin Texas, Florida, Alabama and Michigan.
Mish: What about supply and demand issues?
Carter: Demand is still very weak, and supply is still increasing.
From that perspective it just seems very unlikely that we are close to a market bottom.
Mish: Are you speaking nationally or just Florida.
Carter: I am speaking nationally, but when it comes to the oversupply, Florida’s the national situation on steroids.”
“Carter: I am speaking nationally, but when it comes to the oversupply, Florida’s the national situation on steroids.”
LMAO! People in my neck of the woods (South Shore Tampa Bay) are freaking out. We were just slightly late to the development party around here, so some of the newer developments have an occupant here and there, but mostly unoccupied houses.
My landlord lives in South Tampa Bay and is a mortgage broker to boot! I keep thinking I may be able to buy this house out from under him cheap if things get bad enough there.
Txchick,
Are you in arizona now? I know you wanted to come out here but I have lost track of your whereabouts.
I’m in two places. It’s a long and boring story.
Just like this market. Get opex over already!
yeah… from his estate after he slits his wrists.
We can hope he is heist by his own petard (love that expression).
hoisted on his own petard
‘hoist’ (the imagery is better)
South Tampa Shores is a horrible area, the place where all the migrant farms are run by slave-drivers, while the migrants live in shacks without electricity (air-conditioning) or even running water. Also, no matter how far housing prices fall, the Hillsborough taxing authority can still appraise your house for what it THINKS it’s worth. The law stating that values shall be based on selling price has a loophole that allows the tax office to ignore the selling price, and concoct a new value. This was done with my sister’s house. So a bargain price from a desparate seller does not guarantee a rational property tax price. If a house went up to a million dollars in alleged value, then dropped ninety percent to a hundred thousand dollars in actual selling price, Hillsborough county would probably still appraise it at a million, and tax you accordingly ($25,000 a year).
For that reason, I am beginning to seriously wonder if it will ever make sense to buy here.
I have not been down to south Hillsborough since it was better known as the retirement area for carnies.
Incredulous, you are exactly right about the taxing authority in Hillsborough County. I happen to know the buyers of my home appealed the appraisal after purchase, as it appraised a little higher than what we sold it for.
But, I am not entirely sure if we are talking about the same area. I don’t know where South Tampa Shores is, sounds to me like that would be the southern part of the peninsula of the City of Tampa proper. SouthShore Tampa Bay encompasses Ruskin, Apollo Beach, Sun City, Sun City Center and Gibsonton. Some might include Wimauma and Balm/Riverview, but those are pretty far from the shore and are more considered East Hillsborough. I have seen some of the work camps in Wimauma and those ARE disgusting and I think it is a joke that they are putting in a HUGE luxury development right by the work camps. However, in Ruskin, the migrant and illegal workers are treated like gold and I have personal knowledge of this. There are a number of apartment home (three that I’ve seen personally) complexes dedicated to low income, with air conditioning, not to mention swimming pools. If you are middle class, but don’t want to spend an arm and a leg on rent, you don’t get to live as well as the lower income folks in SouthShore. You damn sure won’t be living in an apartment that has a pool, I can tell you THAT right now, but the illegal immigrants and low income residents do. The Farm Bureau sponsored some lower income housing developments a while back with nice little modest concrete block homes and I would not hesitate to purchase one of those, I’ve toured the neighborhood (no longer considered low income). The farming families of Ruskin go way back and they established clinics for the migrant workers that later were co-opted by Hillsborough County where residents can pay on a sliding scale basis. The health care there is excellent. I know. That’s where I go. Also, Homes for Hillsborough has a great program that I’ve seen in action here as well. I’d rather live in one of those developments than the standard KB Home etc. places here.
I can tell you that Ruskin and other places are still miserable for most migrants. My nephew and his wife spend a fortune every Christmas trying to help these families. If some government agency has decided to help them, it’s news to me, because the last time I was down there, it was awful. The multi-million dollar housing and condo developments on Tampa Bay are ridiculous, and building them involved destroying Indian artifacts and geological treasures, and killing and displacing countless poor animals, for which our County Commissioners (with one or two exceptions) seem to have no empathy. Environmentalists have been trying to stop the destruction, which is almost unprecedented in the modern Western world.
Hillsborough County is one of the worst, most backward places in the U.S. Also one of the most hideous. Yet, people keep flocking here thinking they can pick oranges from trees along the roads (it’s illegal to do so). The tax rate is outrageous considering what you get for your money (nada); it’s two to three times that of Beverly Hills, and for this one gets to look at a waste treatment plant, phosphate-stripped “mountains” (dirt piles) across Hillsborough Bay, two coal-burning electric plants, traffic in all directions, and almost no open space or vistas of any kind.
Allegation that outsourced (lax) underwriting causing problems with prime loans too:
http://www.creditslips.org/creditslips/2006/12/suitability_now.html#more
Speaking of FL sales, there’s one local brokerage that puts up West Palm Beach figures each month a few days ahead of the “official” Florida Association of Realtors figures. The November numbers are out and they look like this (year-over-year):
Sales: -60.4%
Inventory: +95.7%
Median price: -7.9% ($25,000)
Average days on market: +51%
I posted the full details and some additional comments at my blog:
http://interestrateroundup.blogspot.com
“…we have roughly 42 months of supply hanging over our heads.” (in the West Palm Beach area)
Whoa. The Inventory Bubble.
Just e-mailed this to a realtor in FL that keeps e-mailing me lists of properies for sale.
Question. How much longer til the greater fools who bought these lots 2 years ago get foreclosed on and I can pick one up for what it was going for before the Federal Reserve screwed over our money supply and Alan Greenspan encouraged people to temporarily bid up properties via ARMs and interest only loans to create a giant real estate Ponzi Scheme that won’t end well? Oh, and the NAR cheerleaded it all along. I’d be interested in helping out some of these underwater fools sometime in the future and gladly pay them what one of these lots was going for in 1997 (and is still only worth), and it’ll happen too. Everything I’ve read in the local papers and blogs with links to those local papers says that between unrealistic home prices (compliments of montary inflation and horrendously unsustainable sub-prime lending, kick-back appraisals etc..), and the local taxes and insurance have made owning and or living in FL an impossiblity for 99% of consumers without false home equity withdraws (which has just about come to an end now that the housing boom/credit boom is over) to make up the difference. When one of these current ‘owners’ (aka credit serfs) finally comes to their senses and realizes that they were that last greater fool in and are holding the bag and 20% appreciate (er, misaloocated monetary inflation) will be going into reverse for a protracted period of time, then I’ll be interested in buying something. In the meantime I’ll enjoy perusing the ads looking for sellers to get more and more desperate. I’m surprised the NAR hasn’t told sellers “It’s a great time to sell, before you’re priced out forever and have to pay back every dollar on that over priced place you bought last year.”
From the Miama Herald article:
“A culture of indifference, a low risk of being caught, lots of foreign investment and old-fashioned greed have created a thriving market for fraud in Florida, experts said. Scott Messina, a Stuart-based industry veteran who publishes a newsletter for the mortgage banking industry, said the run-up in real estate values is also largely to blame.”
What, what what?!?!
He blames the run-up in prices for the fact that their is mortgage fraud? It’s the other way around. What a self-serving moron.
Well, one way of looking at it is, if there were no such thing as a mortgage, houses would probably cause a helluva lot less. Same goes for credit in general. If there were no such thing as credit cards, merchandise would cost less, too.
Palmetto — can you imagine if there were no such thing as payroll withholding of taxes? Just that one change and I promise I’d never bitch about another thing for the rest of my life.
Chip, don’t know if you’ll see this, but I am a big proponent of a national sales tax and abolishment of the income tax. Not that it will happen, because politicians use taxes for social engineering. BTW, I’m sorry to hear you are leaving Florida, we need intelligent folks like yourself. But I don’t blame you. Me, I’m holding on a little longer to see what happens. Things should get really interesting by the spring.
So, it is unanomous (spelling doesn’t count - you know what I mean). “Keeping up with the Ben Jones’” = fiscally responsible and educated about buying (or not) your biggest investment/expense. “Keeping up with the Jones” = fiscally irresponsible and deep in debt doo doo.
So, it is unanomous (spelling doesn’t count - you know what I mean). “Keeping up with the Ben Jones’” = fiscally responsible and educated about buying (or not) your biggest investment/expense. “Keeping up with the Jones” = fiscally irresponsible and deep in debt doo doo.
“Keeping up with Ben Jones’” = conservative and frugal appearance on the outside. Some real wealth, peace of mind on the inside. “Keeping up with the Jones” = things look really great from the outside (McMansion, Hummer, vacations, lots of crap around, etc) and Oh $HIT, we are F&CKED on the inside when the piper shows up for his due.
This is rich
“Real estate fraud is going to make the S&L crash look like two cars in the parking lot that bumped into each other at five miles an hour,”
Who might the quoted authority be ?
predicts Ralph Roberts, the author of “Flipping Houses for Dummies,” in Warren, Mich.
This latest proud addition to the Dummies collection was published
LAST MONTH. Maybe he should
ammend the title to preserve a shred
of credibility:
Flipping Houses IS for Dummies
FRauditor — is that (your screen name) as in “fraud auditor?”
yes, disecting the components
of history’s most expensive fraud
Hopefully you’ll have colleagues or buddies who will be involved in tracing mortgage fraud. If you do, I think many of us would be very interesting in hearing how that comes along.
A late bit for this Florida thread:
“Haridopolos is pushing for a state constitutional amendment that would limit tax increases, matching them to cost-of-living increases and personal income growth. He cites a recent property tax review committee report that found county tax revenues statewide grew 80 percent since 2000, while family incomes grew just 39 percent.”
This is a state senator, quoted in “Florida Today”:
http://tinyurl.com/y5zr8t
This is depressing. I am really behind the curve, because my family’s income grew nowhere near 39% from 2000 to today. Try, less than half that.
check out this seller. Bought a 2br 2 ba Miami condo in Jan 2006 for $324K, out in 11K worth fo work, now she wants $550K!
http://www.nypost.com/seven/12142006/realestate/baby__youre_the_one_realestate_suzy_buckley.htm
In January 2006, I closed on my $324,000, 1,105-square-foot two-bedroom, two-bathroom unit with a balcony on a high floor of the building’s East Tower, directly on the water, and moved in.
Although an appraiser valued my unit at $609,000 at closing a year ago, here’s today’s market reality: At press time, the lowest price of a one-bedroom, one-bath unit in my tower is currently $349,000, while the lowest 2/2 is on the market at $499,000. Also for sale: a 1/1 listed at $525,000 and a 2/2 listed at $730,000. I added wood floors and ordered $15,000 in finishes. So conservatively, I’m confident my particular unit has at least $200,000 in equity.
Meanwhile, my building is getting some high-profile neighbors. Next door and across the street, construction on higher-priced luxury buildings (Epic Residences & Hotel, from seasoned developer Ugo Colombo, and Met 1, where Shaquille O’Neal is a partner) is well underway.
A few months ago, the thought of walking away with more than $200,000 enticed me to put my unit on the market for $550,000. I don’t need to sell: I’m locked into a great interest rate and - more important - I bought at a phenomenal preconstruction price.
But I see this market as an opportunity to trade up. If I sell my unit, I could put 40 percent down on a larger condo on Miami Beach or in downtown Miami that’s selling for $700,000 and - after considering the new taxes and maintenance fees - end up with monthly payments just marginally higher than I have now.
I’ve thought about it and don’t mind rolling my profits into somebody else’s bubble. I’m going to live somewhere long-term, so why not buy a bigger, better place and capitalize on the still-attractive long-term interest rate?
Prices throughout Miami are grinding to a halt, although I haven’t seen any of the so-called bargain-basement deals everyone’s been talking about showing up on the MLS. I think price points have a lot to do with it. Common sense says investors carrying a $5,000-a-month mortgage on a $700,000 condo will have a harder time renting their unit to cover costs than those with a $2,500 mortgage for a $350,000 condo.
Bottom line: I’m not the least bit worried. Although my agent showed my unit only a couple times when I first listed it in September, he showed it three times in two days two weeks ago. I’m getting lots of lookers; lots of wait-and-seers. I’m OK with living here long-term, and I put my place on MLS as much out of curiosity as anything else - as I assume many people who purchased at One Miami have.