Bits Bucket And Craigslist Finds For December 17, 2006
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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NAR Deleting Criticism of David Lereah on Wikipedia:
http://tinyurl.com/tg6hw
David
David Lereah Watch
Doesn’t DL own a bunch of condos in Fla??? No wonder he is hyping the (crashing) market.
first early signs of
“Money drying up for some investors in buyout firms”
http://www.immobilienblasen.blogspot.com/
sounds like a big ‘black hole’ in the making!
Sacramento Mortgage Fraud Update 12/17/06
Background: Five houses sold at more than $200,000 over market value, all with 100% sub-prime loans. Two sold in September, Three sold in October. I was surprised and incredulous when the first two sold in September and angry and upset when the next three sold in October. These homes are located on Hillwood Loop in the JTS Estates at Lincoln Crossing community in Lincoln (Sacramento MSA), CA.
The conditions were (and are) ripe for fraud, because the builder, JTS built 140 homes and sold them all to flippers. 80 flippers actually closed escrow and the builder got stuck with 50 when the last 50 flippers bailed. JTS has tried, with limited success, to dump the last 50 homes at $200,000 below the prices these homes sold for in April of 2006. Basically, “$750,000” homes are being heavily advertised and sold for $550,000. When you add more incentives into the mix, the actual sale value is approaching $500,000. JTS started their “liquidation sale” in June, right after they completed all the sales to the 80 flippers. In 6 months, it appears they have been able to sell about 10 more homes, and 40 still remain on their inventory. Even more amazing, the whole subdivision remains mostly vacant, with only 25-30 homes actually occupied. The street is known as “Haunted Hillwood Loop” among bubble bloggers. The builder and the flippers are all “catatonic” in this market, denying they are stuck with houses that cost them more than their market value. Perhaps they are all waiting for the “spring bounce”. It will be quite a site in March, when all 115 vacant homes get listed for sale again, to take advantage of the bouncing, bubbly, frothy, recovering 2007 real estate market!
Please note that the information I am sharing with you today is my opinion, based on research of documents, interviews with participants, victims, law enforcement officials, and the knowledge gained from reading articles written in other newspapers about mortgage fraud. Everyone is innocent until proven guilty.
Scenario #1: In 2005, a seemingly successful Realtor, buys 5 or 6 houses from the builder to “flip” at completion of construction to a greater fool, soon to be F’d borrower. I will call her “CNG”, and she takes title to the properties in her name, her maiden name and several of related party names. She paid $606,000 to $638,000 for the houses and used 90% financing. She probably calculated she would make $100,000 per house, for a quick half a million dollars, before summer of 2006. Then the market collapsed and the builder began to undercut her resale prices by up to $200,000/house. Unable to resell her homes, she evidently agreed in July to sell a couple of them to “KC”. The sale prices were to be $765,000 and $785,000 and required 100% financing from Long Beach Mortgage and First Franklin Mortgage. CNG had the home listed with her broker and immediately raised the listing prices from $730,000, to $839,000 and higher. I believe this was done to keep the lenders from getting “suspicious”. Two different lenders were used simultaneously, so each new nothing of the other. The houses closed in September and freed up $300,000 to $400,000 of cash.
One house is now occupied. The other is still vacant. There are no indications they are for rent or resale. It could be the perfect crime, except I watched it unfold and was curious about what was taking place. I called the FBI, DRE, CA Office of Appraisers, and started asking questions and reading up on mortgage fraud, which is what I believe happened here. I was a bit surprised to find no one was particularly interested in pursuing these crimes. So I called the Placer County DA and the Lincoln Police Department. Fellow bloggers recommended I notify the lenders and the media, and that has proved the most effective move. Needless to say, if you stir the pot long enough, the ingredients start getting mixed.
The most important part of stopping mortgage fraud is to notify the lenders. Once the lenders are put on notice, they cannot put the loans into securitized pools. If they do, they have committed a crime, too. The sub prime lenders are in business to make money, lots of money. Mortgage fraud costs them dearly and many are starting to go under, like Ownit Mortgage. First Franklin has opened an investigation on their Hillwood Loop loan. The FBI is now actively pursuing the case with them and they have a “very thick file”. According to sources in the investigation, CNG, who owns more homes on the same street, now lists her properties with another Realtor in an unrelated office. Her cell phone has been disconnected and her former real estate office claims she never worked there. I believe she made commissions putting a few other flippers into “investments” on Hillwood Loop, and they have all listed their homes with third party agents now. Long Beach Mortgage, owned by Washington Mutual, has been silent. WAMU has their own problems and will be paying a long time for their recent mistakes in sub-prime lending and other activities.
The problem with one person selling houses at over market prices is that once the market has a new comp, everyone gets to do it. JTS has a marketing group called Advantage Mortgage which provides the sales force to the builder. Someone at Advantage has been paying attention to CNG, which brings us to….
Scenario #2: Three more houses sold in late September under the same suspicious circumstances. Only this time, the seller was the builder. If you can’t beat’em, join’em? Yes, JTS and their marketing group appear to be copying the potentially felonious acts of CNG and her above market sales program! The irony here is that JTS runs “liquidation sale” adds every weekend in the Sacramento Bee announcing $200,000 savings. This did not stop them from selling two homes at $200,000 above market, to a woman we will call TD and her boyfriend, whom we will call Shifty. The two houses sold for $765,000 and $770,000, using 100% financing from New Century Mortgage and Alliance Bancorp.
New Century is not very happy with JTS, because they evidently helped a third buyer (we will call him BJ) close another loan for $770,000 on the same street the same week. New Century has opened ongoing investigation with the FBI and they seem intent on making any and all guilty parties pay up. Interestingly, titles to the two houses financed by TD are in her name only, as a single woman. Shifty’s credit must be sub, sub, prime and he could not qualify in the sub-prime only category. I guess all the sub, sub prime lenders have left the industry! Anyway, according to sources, TD just bought her boyfriend Shifty a nice new BMW for his birthday and they seem to be plowing through some serious money like they just won the lottery. Maybe they did!
Some thoughts:
I believe I am making a difference in ending these apparent frauds. The most effective move was to contact the lenders, copying the president and several others in the organization. I used “interpolated” email addresses, once I knew the players in each organization. Sometimes, I got immediate responses from senior people. Other times, I got responses from junior people, because the junior people knew senior officers were copied. One thing was always a certainty: They all wondered who I was and why I was involved. I jokingly suggested they order old re-runs of Have Gun, Will Travel.
I know New Century and First Franklin are taking serious action, because they have followed up with me for more details. Long Beach Mortgage (WAMU) seems bogged down in their own decline and eventual demise. The parent is probably spanking the bad child and no one is probably happy in that organization right now. WAMU has fairly deep pockets and my guess is that Long Beach cannot just fold up like Ownit Mortgage and other sub-prime lenders, who all shut down when defaulting loans were presented to buyback. I don’t know what Alliance is doing, but they have not heard the last of this issue from me. I a great gunfighter once said, “I don’t get paid by the bullet, I get paid by the dead body”. (Of course, my only “pay” here is satisfaction)
One blogger suggested I alert the mainstream media. The Sacramento Bee seemed to be a promising direction for a while and Jim Wasserman indicated serious interest in the subject. He has done nothing, though, and actually ran a story the other day noting sub prime defaults and foreclosures seemed to be running at acceptable and/or expected levels. Another blogger suggested I alert the TV stations, perhaps even 60 Minutes. I was hoping to give Wasserman and the Bee an exclusive, but it has been 3 weeks and still nothing. Thus, I am now onto the Phase II media play. I will start with the local TV stations and see who wants to run with this fascinating story. I will offer documents, names, addresses, physical descriptions, photos, car license plates, inside stories, law enforcement contacts…….on & on, but only in exchange for a commitment to further investigate and run with the story. Katie Couric, Anderson Cooper, Mike Wallace are you all listening?
There are some very good reporters working on these issues around the country. Carol Lloyd at the San Francisco Chronicle is doing excellent work (www.sfgate.com). Shannon Behnken at the Tampa Bay Tribune (www.tbo.com) and Amy Ning at the Orange County Register (www.ocregister.com) have both done excellent work. You can go to these sites and read their stories.
I have developed a program, which allows me to identify more mortgage fraud, and I have many more potential cases to expose. JTS and other desperate homebuilders may resort to desperate measures this spring. The liability is tremendous, because they are knowingly setting artificial comparable sales, which will open the door to massive lawsuits by all the FB’s they have created over the last year. I imagine a good law firm, with a sympathetic jury may be very interested in rebating $200,000 per home to 1000’s of FB’s when the true nature of the homebuilder’s actions become exposed as fraudulent. Hmmm. 30% of $200,000 times 500 FB’s is $3,000,000 in legal fees. That amount alone is worth a shakedown filing in court to get a certified action started.
My most immediate goal is to stop the potential for mortgage fraud before more starts. That is why I spend a significant amount of time writing on this and other blogs. It does seem ridiculous that sellers are still blatantly trying to dupe buyers and lenders. Subdivisions like Anatolia in Rancho Cordova, Laguna in Elk Grove and dozens of others. One of the most egregious is Catte Verdera in Lincoln. I have invested many hours of research checking for fraud there.
JTS has one house in Catte Verdera they cannot seem sell, so they are advertising a 9% commission to the Realtor who drags in the next greater fool. Amazing. That is almost like crying out that you will cook the books. The MLS # is 60114914 for 3401 Monteverde, and they want $1,099,990 for 3200 sq. ft. Wow. That sets a new comp record….$345/sq. ft. And now, sale pending. Wait until the new FB gets a knock on his door from the new FBI. This will give a whole new meaning to F’d Borrower! Perhaps even literally, when they get to prison.
You can go to Craig’s List and look at this next listing, just down the street at 1944 Ladera Drive. The seller blatantly advertises “$72,000 cash back at closing” if you buy at $895,000. Here is the link: http://sacramento.craigslist.org/rfs/249159596.html. This borrower also has the same house listed on the MLS (# 60104378) for $1,050,000. They bump the listing price so when the lending underwriter pulls up the MLS sheet with $1,050,000 price, the (cash back) sale price of $895,000 seems like a great deal. Here is a little irony for you from this sellers Craig’s list add: “NEVER LIVED IN!!! BUILT DECEMBER 2005!!! Very Motivated!!! Priced $75,000 below appraisal as I am looking to move out of the country.” This guy paid $817,000 a year ago and got 100% financing from First Franklin (will the lenders never learn?). So this FB is taking a loss and may be willing to commit serious fraud, because he won’t be around when the FBI comes knocking and the sub prime lender wants their $72,000 back. Do you want to be the one answering that door?
Conclusion: This housing bubble is way out of balance and the main reason is because there is too much funny money, sub prime lending. It must stop and that is my purpose. I believe this era is ending and I intend to help it along and insure its demise. Ownit Mortgage collapsed and left HSBC holding some big liabilities in this area. Other lenders are starting to drop too, and companies like Morgan Stanley and Merrill Lynch will not be happy paying the price. As these homes are resold, they must be done at market prices, otherwise we just keep fooling ourselves and perpetuating this destructive cycle. Enough is enough. When you see fraud, here are the three most important things to do: notify the lender, call the FBI and alert a reporter. When the light of day shines on these slimy critters and their predatory schemes, they crawl back under their rocks and die.
Paladin “Wire Paladin, San Francisco”
Wow! You need to add a black knight symbol to your screen name.
Great work and information!!
By the way, Ben has reshuffled his photos on the HBB Photo Gallery. The subject property pops up in the first photo. Nice perfect houses all in a row….just all vacant with no people living in them. That photo was taken in August and it is not much different today, 5 months later. Take a look by clicking on the red highlighted HBB Photo Gallery, above right.
Wow it truely is a ghost town!
Keep up the good work!
“I am looking to move out of the country”
That’s very interesting.
All I can say is I love it when you post this stuff.
Keep up the great work you are doing a great service to a lot of people.
d00d u r teh r0×0rz!
Good job, Paladin!
thanks!
Great update.
Paladin : Great work. You’ve put a lot of time into this.
It is a shame that things only happen if private people get so incensed, they have to take matters into their own hands. The ‘independent media’ are a joke. Should be rephrased ‘mediocre’.
The more I read, the more it becomes apparent how big this RE fraud is. Rewards vs apparent Risks are lopsided as there is so many people doing it. Momentous white color crime.
“Conclusion: This housing bubble is way out of balance and the main reason is because there is too much funny money, sub prime lending.”
There is light at the end of the tunnel on the finance side, as suggested by this article in The Economist:
http://economist.com/finance/displaystory.cfm?story_id=8424086
Stucco, you always cut to the chase with your $.02 worth. I think this RMBS meltdown in sub prime is just the start. The Economist seems to agree.
Excellent article. The Economist consistently has the best coverage of this issue, hands down.
Paladin, you are doing great work. These subprime fraudsters are destroying this Country. I hope your work provides some cushion to the destruction that sub prime is causing all around this Country.
Hey Paladin, how do I find out who the lender is for a home that recently sold in my neighborhood? It looks like one of these cash kick-back mortgage deals. I think the lender might be very interested in the price history of this home.
H a L, I have access to a title company computer, so it is just a few keystrokes for me. You may be able to call the county recorders or assessors office, but your best bet is to call a title company, ask for customer service, give them the address and ask if they can provide you the lender name and loan amount(s). They may even fax you the documents. Then remember to use that title company when you buy a home.
Paladin — the only flaw in your plan is trying to alert you *LOCAL* media. No one local wants to report that stuff (too much politics and too much local “but it’s different here!!!” sentiment). OTOH, I think if you found a reporter sympathetic to fraud/bubble issues who wanted a nice, cautionary tale outside his/her jurisdiction, you’d have it made — plus, a lot of people like to bash California and are looking for a well-documented excuse. Maybe try big papers outside CA and see if you get bites?
Paladin,
amazing work. Mojocat may be right…have you tried Gretchen Morgenson at the NYTimes, or even better, Bethany McLean, the Fortune writer who first broke the story on Enron, questioning their accounting.
Happy Hunting.
Dude i hope you arm yourself you are stirring a pile ,and some of these guys are mob.Be careful and good luck.
Interesting point… anyone else know more about this??
I do not think their is any mob connection with Lincoln Crossing. Just a bunch of greedy sub-prime loan officers.
I do not think there is a mob connection with 99% of the loan fraud that is going on, just a bunch of uneducated, unethical, realtor whores and sub prime slime officers.
Mob guys aren’t as stupid as you would think and are almost never bagholders.
We are clearly at the bagholder stage. I would guess that the mobsters may be still involved; but not at the levels that one would think.
Just a guess.
And I agree with the poster that mentions that the fraud was extensive and many more “civilians” were involved than Casa Nostra members.
When this onion gets peeled back I think we will find many, many layers of rotten skin.
I would still be careful. You are more likely to get whacked by a FB Soccer Mom Realtor(tm) vs Tony Soprano.
At what point do “incentives” turn into fraud? Getting the seller to pay the closing costs is a far cry from what we see on Miami’s Craigslist today.
http://miami.craigslist.org/search/rfs?query=cash%20back
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“At what point do “incentives” turn into fraud?”
When fraudulent appraisals are used to roll the cost of incentives into the purchase price of the home. This saves the builder the cost of the incentives, and delays the inevitable writedown of the rest of recently built inventory to the new, lower market value. The FB gets to learn later on when they try to sell that the value of the new car was not included as part of the market value of the house.
Thanks for the explanation.
We bought a JTS home for $765K one year ago, of course using their financing, and had our home appraised this week to re-finance out of the 8.125% interest loan JTS secured “for us.” The appraisal turned up the sales price of our neighbor, who bought from JTS, using their financing, two months ago, for $565K. We know the market has slowed or even dropped but $200,000? Did the JTS appraiser inflate our house value 12 months ago, and decrease the value a mere two months ago?
Anecdotal evidence of consumer spending slowdown.
I took a cab into DC last night from Northern Virginia and the cabbies both going and coming home complained that business has gone completely dead. One said, “It seems like everyone is staying home.”
For better or for worst mortgage payments (plural intended as many people have a 1st & 2nd mortgage + a HELOC around here) are forcing people to prioritize their spending. Keeping a roof over their heads and taking care of the necessities are a must. Next will come actaully saving for a rainy day (which is on the horizon). Thus any and all disposable income is gone. Therefore spending on anything that is not a necessity (luxuries or just simple things like going out for the evening) will drop to next to nill. This sadly will just add to and reinforce the intensity & duration of the predicted slowdown/recession (depending upon who you talk to, but at least no one is calling for continued expansion now). Hold on tight we live in interesting economic times, the hangover from the internet boom/bust could not be forstalled forever, and now its going to be reinforced with the hangover from housing excesses.
We were in San Francisco this weekend. It seemed very quiet. On Thursday, I was able to reseve a 7:30 PM dinner at for Friday night at a very nice resaurant. It was surprising, since they usually are booked months in advance for prime times.
Saturday morning, we walked to Fisherman’s Wharf. Three breakfast places had “barkers” out trying to get us to come in and eat. Barkers? Breakfast? I thought they only worked strip joints. It was almost pathetic. I so no one at any of the three restaurants.
Barkers aren’t strange in any high foot traffic business. My favorite NYC restaurant was only tried by me due to the laughs the barker generated.
I have to agree… something has changed. Restaurants are far too easy to get tables. This time of year people shop until they drop their fat butt into the restaurant’s seat.
The only thing I’m seeing move is flat screen TV’s. Even then… the stocks of flat screen TV’s are amazing. Has anyone seen any shortage of flat screen TV’s? Anywhere? Any model? I see the models that recently have received the great reviews selling the best… but there are always three or four more on the shelf.
I fact, the only shortages I hear about this Christmas are for Elmos, Wii’s, and PS3’s. One toy and short supply games consoles? That’s it? Maybe I missed something… or else the economy doesn’t just have brakes on but rather we’ve already triggered the ABS.
Neil
Good, down on the streets info guys…..
Streets were nuts here this weekend. Intersections that are usually dead had cars backed up about 10 deep. I think people were waiting for bargains and discounts and so now are out doing ALL their shopping.
I had to get a kids b-day gift for a party and the parking lot opposite Target was all the way to the barriers (maxed out). I didn’t think it was that bad inside though. I remember Framingham, MA in the 90s. Now THAT was bumper car (and bumper body) shopping!
I have been tp Fisherman’s Wharf several times and have never seen barkers.
Is that dude who “hides” behind a bush and scares tourists still there?
here in kingman az. the building has stopped. they issued 1100 building permits in 2005. in the last 6 months of 2006, 56 permits have been pulled. end of the line for thease greedie builders. they cannot even rent the new home inventory, local wages are $7-$9 per hour.
“they cannot even rent the new home inventory, local wages are $7-$9 per hour.”
Can’t argue with the fundamentals!
While you and me paid more at the pump this year, the Goldman Sachs crowd made out like bandits and may be dumping some of their booty on real estate soon, at least that’s what it says at
http://tinyurl.com/ymskxh
Personally, I’m not as sure they will be so quick to rush into real estate. The richer they are, the cheaper they are and the last thing they want is to be associated with a bad deal. I’m thinking some will pass on RE.
At the top end of the pay scale, it has been reported that Goldman was likely to pay a “golden 25″ managers, bankers and traders at least a cool $25 million each.
But a source close to the firm told The Post that some of the top performers may actually get four times that.
The $100 million bonus babies are in charge of making big bets with Goldman’s money on the direction of the prices of commodities, including oil and natural gas. And this year, they won big.
The bonus money the firm will dispense is going to prime the city’s economy as lucky recipients buy fast cars, big apartments and luxury goods.
Paladin taking his case to New Century and getting a serious response from them in laughable….at least 10-20% of the loans they originated from 2004-2006 are just as shady….they looked the other way, the majors Wells, WAMU, SunTrust, HSBC, all looked the other way, the hedgies and pension runners looked the other way, Merrill, GS (those 600K bonuses came from somewhere) looked the other way and banked the $$$$$…..THESE FOLKS ARE CO-CONSPIRATORS in every sense of the word. Incredible level of greed and what should be forthcoming is major shame and indictments, but that won’t happen because these are the powers that run our nation.
“THESE FOLKS ARE CO-CONSPIRATORS in every sense of the word.”
Except for one: All of them enjoy cover of plausible deniability.
http://en.wikipedia.org/wiki/Plausible_deniability
Darryl, You are correct in a rising market that covers the tracks. In a stagnant and declining market, the sub prime lenders very existence it threatened with the buy backs. Now, the buyers and sellers freedom will be threatened by the FBI (I hope). We shall see.
Hi Paladin, I appreciate your efforts……It is my contention that the lenders are just as guilty as the buyers/sellers presenting these loans…..they have lent out billions of dollars to unqualified folks using obviously overinflated values from newbie appraisers…….It may be highly offensive to see MS real estate rolling in a new Beemer, but her crimes are a drop in the bucket compared to what the mortgage guys have perpetrated over the last few years…..It really was a perfect storm of fraud masquerading as maximizing business opportunity…..It was the subprime lenders legal OBLIGATION to know and verify the quality of credit and collateral on each property/loan, but as long as they could quickly offload the debt they simply couldn’t have cared less, no matter who gets hurt in the future…….The same thing only worse has been happening in Florida and also the inner sections of LA….I still haven’t figured out who ultimately holds the bag as most of the subprime brokers won’t even exist in a year or two. Why aren’t the local DA’s reviewing every single loan made? We would have to build new prisons to house the guilty.
The lenders are going to be very concerned about any fraud now that real estate isn’t rising ,so reporting it will help .
Also ,sellers need to be alerted to the facts of how the crooks set up sellers on these inflated deals . Usually they look for someone who is desperate to sell .The crooks get the sellers/agents to inflate the listing to cover the cash kickbacks with a story that they need it for home improvements etc., but it has to be paid outside of escrow etc. Sellers are told that everyone is doing it by the RE agent and those sellers are desperate enough to go along with it . The seller will be engaging in a crime and could go to jail for it .Also crooks try to hit For Sale by Owner sellers to attempt these crimes .
All of the sellers and agents involved with Casey Serin and his real estate purchase cash kickbacks engaged in fraud . Just because they haven’t been arrested yet doesn’t meant they won’t be in the future .Casey has admitted to what he did .
One thing a seller has to keep in mind is that if you have a reported higher sale and you give cash back to some crook buyer ,how are you going to explain to the IRS that you didn’t really get that sales price ? A seller will be taxed on the sales amount and giving undisclosed cash to a third party is not considered a normal cost of sale .
“Why aren’t the local DA’s reviewing every single loan made? We would have to build new prisons to house the guilty.”
I can think of one here in CA, who was more than happy to tell me all about his flipping and a couple of questionable business practices.
I don’t think it’s just the lenders who have sometimes turned a blind eye to things. There’s too much money involved.
this topic never shows up on digg. a great chance to educate a big chunk of the online world.
http://www.digg.com/business_finance/What_1_Million_Buys_In_Homes_Around_The_World
Having a Merry Christmas on borrowed money
Kirk Caraway
Internet editor, kcaraway@nevadaappeal.com
December 17, 2006
December is a time when most Americans will run up at least a little extra debt in order to celebrate the holiday season.
Now, if we only saved up our money the other 11 months of the year, this wouldn’t be a problem. But we don’t. In fact, for the last two years, Americans as a whole have been spending more than we save. That hasn’t happened since the Great Depression. We are officially living on credit.
Americans have become used to living on credit. We think nothing of whipping out the plastic to get those things we “need,” like iPods and flat-panel televisions.
In 2005 and the first half of 2006, Americans borrowed $474 billion more than we saved to pay for all of these “necessities.” Add in the federal budget deficit, and you are talking almost more than a trillion dollars in debt, in just a year and a half.
Now, big numbers like this are hard to understand, so let’s look at it this way. Our economy has been tooling along at between 3 and 4 percent growth in Gross Domestic Product for the last two years. That’s not great, but it’s not a recession, either.
But if you subtract all that debt, then GDP goes into the red, and you are talking about the worst recession in a generation, headed into Great Depression territory.
http://www.nevadaappeal.com/article/20061217/OPINION/112170121
Last year’s real estate market — Always going up.
This year’s real estate market — Not sure, but one of these four scenarios surely describes it:
1) Yes, real estate is heating up, but you have to be in the right market.
2) Yes, real estate is cooling down (everybody knows about this scenario).
3) Real estate is headed for a deeper freeze.
4) Real estate is just hanging in there despite the challenges.
Pick your poison…
http://www.signonsandiego.com/uniontrib/20061217/news_1h17harney.html
Nice work Paladin. Cue the music.
Have Gun Will Travel reads the card of a man.
A knight without armor in a savage land.
His fast gun for hire heeds the calling wind.
A soldier of fortune is the man called Paladin.
Paladin, Paladin Where do you roam?
Paladin, Paladin, Far, far from home.
He travels on to wherever he must
A chess knight of silver is his badge of trust
There are campfire legends that the trailmen spin
Of the man with the gun
Of the man called Paladin
Paladin Paladin Where do you roam?
Paladin Paladin Far, far from home
Far from home. Far from home.
San Diego Building Industry setting the record straight in a full page ad in Union Tribune (page A13) this morning:
“Don’t be fooled by the headlines”
Picture of Truman holding a newspaper stating ‘Dewey defeats Truman’.
Picture of two newspaper clippings:
“Saturday March 25, 2006. San Diego Union Tribune
New-home sales slide is biggest in 9 years.
Inventory up, excrows down; decline sharpest in West”
“Los Angeles Times. Saturday March 25, 2006.
New-Home Sales Rise in Region”
(OK, so it’s up in LA and down in SanDiego?)
“Same day, same story. Two VERY different headlines.”
“If you’re just reading the headlines,
you could be missing a great opportunity
to buy a home.”
“Consider the real facts:
1. Demand has slowed for now, but San Diego needs 18,000 new
homes each year just to keep pace with population growth.
2. The current supply offers a range of choices for every budget.
3. Our local economy is strong, and mortgage rates remain at
near record lows.
4. The market is favorable for buyers today, but that won’t
last forever.”
“Headlines sell newspapers - we build homes.
We are San Deigo’s home builders.”
There’s a link http://www.biasandiego.org if you have appetite for more…
Ironic how the url starts with bias…?
Oh yeah, love the spin. Doesn’t piggington.com have charts showing new construction blowing way past population growth?
See my rebuttal of this shill piece on the Local Market Observations thread.
Foregive me if this was already posted:
http://tinyurl.com/txge9
Realty Times
What Causes Housing Price Declines? (”AKA Get off the fence and buy NOW, you greedy unrealistic fools, or you will regret it later”)
“Yet, buying conditions after 1999 changed:
Significant baby boomer wealth was poured into upsizing homesteads and purchasing second homes. GenXers came into their own with white collar jobs and stock market gains and were able to buy homes with less money down due to generous loan programs never before provided by lenders to previous generations…”
“Those positive conditions haven’t changed…Wall Street is on a roll with a record-flirting DOW, jobs are up, inflation appears to be under control with Federal Reserve rates standing pat, mortgage interest rates are low, and new home-building has slowed significantly. Each of these is a strong buying signal for housing, yet, encouraged by the financial press and Wall Street pundits, buyers are being told to force home sellers’ prices down, even in areas that sat out the boom. And it’s working — prices are down for the first time since 1968…”
“Dallas home appreciation has been under the national median for over 15 years, so it hardly cashed in on the recent boom, and while many investors already recognize Dallas as undervalued, others want to punish sellers. But are they cutting off their noses to spite their faces?”
“They’re telling him that he should offer $50,000 less than the asking price,” says O’Keefe, who has been showing the buyer townhomes. “Consequently, he’s lost out on two great properties with low-ball offers, but he just won’t accept that it’s his expectations are unrealistic, not the sellers. Properties are selling out from under him.”
“Some buyers aren’t going to be happy unless the seller’s blood runs in the streets. It’s about winning, not buying a home.
Common sense dictates that when prices decline, that’s the time to jump in.”
“Realtors working with buyers should be letting their clients know a basic economic fact of life: if fundamentals aren’t supporting a market decline, then it’s not going to decline for very long. If the nation and individual communities are adding jobs and population, a market decline is destined to be short-lived.”
“…..a market decline is destined to be short-lived”. The shortest decline in the history of declines was 34 months. We are now at 18 months. Come see me on Feb. 1, 2008. I will then tell you if the housing bust has tanked the job market, if people are still leaving California (net loss in 2005) and if housing has stabilized or is going to slide another 25%. There is no reason to risk buying anything until then. When housing reaches a bottom, it dones not turn the next day and jump 20%. It stays on the bottom for years. It is irresponsible to waste money on housing in 2006 or 2007. Save the difference in cash flow, moniter the market and get a nicer house for less money with more cash in 2008.
That agent cannot make those statements. The spinmaster fails to report lack of affordabily and supply being excessive because of speculation and faulty lending creating inflated prices .
What a lame Rah-Rah, last distch attempt to scare me into buying.
Hey Dude, I can’t afford to buy. The “fundamentals” don’t work.
40K a year salary , and California house prices… Just not gonna happen.
I’ll keep saving, and learing how to invest the $112.00 Air Force check I get every month.
http://realtytimes.com/rtcpages/20061215_sellfast.htm
“Here’s a short note from a seller in Florida that could easily be any seller in North America in our current market place:
“I have an investment property in Poinciana, Florida, that I have been trying to sell since February this year (2006). It is a brand new 4 bedroom, 2 baths, 2 half-baths condo and we did have it under contract for sale twice and both times, the deals fell through at the 11th hour. We now have it on the rental market and are still having a difficult time finding a qualified tenant. I am currently working with a property management company and am not pleased with the results to date. I am wondering if you have any investors that may be interested in purchasing the property at a discount or any creative ideas for selling/renting in the current market.”
If you’re going to sell in this market there are really only a few — but very important — things you must do.
1) Fix up the place……
….
2) Price it below market. Don’t mess around on this second point or you could lose more money as each month floats by without a sale. If the fish are biting at 20 feet, no expensive bait is going to bring those catfish up to 10 feet. The same is true about your house. If your competitors are selling at $30,000 or $50,000 less than yours, the hot tub, new kitchen and bath are obviously not attracting your “fish.” Get with it, lower your bait, and sell now so you can take advantage of the lower prices when it comes time for your own purchase.”
——-Wow!? Lower the price???——
“3) …..
….
4)…..
…..
5) Offer other non-real estate incentives to the buyer. Vacations, automobiles, jet skis, media centers, shopping sprees — could be what the buyer wants when it comes to moving into their new home. Check with your loan officer to make sure you can put together a program that will allow such incentives or you can construct them outside of the sales contract in a separate agreement between the buyer and the seller.”
Let’s take that one again: If your loan officer doesn’t allow such incentives, construct them outside of the sales contract in a separate agreement between the buyer and the seller. Hmm, that’ll make it legal?
I e-mailed that, asking if it would be considered fraud, to the Mortgage Bankers Association. Am trying to find the right contact info for the OTS, but not having too much luck. Lots of good info re: fraud on their site, though. They are clearly worried about the housing market & how it will affect them.
Nest Egg to Goose Egg
This LA Times story is only tangentially housing related. However, it illustrates people in their 50s retiring, then having to sell their houses because poor financial planning and bad advice left them unable to stay retired.
“BATON ROUGE, LA. — Like many of his co-workers, Bradley Simon had put in decades at the Exxon Mobil refinery, building up a stout 401(k) retirement account and enviable pension benefits.
So he listened carefully to the investment broker’s pitch that he should seize a head start on the golden years. This is just another example of the “free lunch” syndrome that seems tied up with the Flipper Nation and the get-rich quick greed that has propped up this bubble:
“He said, ‘Why are you still working?’ ” Simon recalled. “He said, ‘I can make you more money staying at home.’ ”
At 54, Simon quit his job making ethylene and turned over more than $700,000 to David L. McFadden, a broker for Omaha-based Securities America Inc. McFadden promised to keep the portfolio growing and told Simon that he could safely withdraw $65,000 a year for living expenses.
Then the stock market tanked. Simon’s savings dropped even more than the market, 65% over two years.”
Went shopping today. First went to a little cafe for breakfast with the wife, plenty of seating and then after bought some food items for Christmas dinner at the same cafe. Then I went to the mall and found parking right by Nordstrom no problem. The only line in the mall was for Santa Claus. Finished my shopping and then drove by home depot, parking lot was 30% full and half of those cars were probably employees. Then I went to a office retail store, which was empty. Then I went to a discount grocer, which was also empty and then went by a UPS store, but those are closed on Sundays, just found that out. Then I went home. Whole process took 2.5 hours.
I was on a pleasure trip to Los Angeles for the weekend. Nothing unusual in the airports (Los Angeles, Las Vegas, Phoenix). However you’d think there would start to be a pickup in travelers by now. I remarked about there being a lot of planes lined up to vly out of Vegas. The guy next to me said this is the slowest time of the year in Vegas - everyone heading out. But it gets very busy after Christmas, around New Years. We’ll see.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/NoMoreBubbles.aspx?wa=wsignin1.0
No more bubbles to bail out the housing bubble
(another great article in the above link by Bill Fleckenstein)
Paladin,
Can you post a “how to” list to spot this type of fraud for those of us without access to online records? I think there are a few of us who would be happy to try and help report on this. And I think we have the same thing happening all over the place here in Broward County, FL.