‘Slowdown Likely To End The Record Run”
Some housing bubble news from Wall Street. The Chicago Tribune, “About 500 Chicago-area workers at LaSalle Bank Corp. and other ABN Amro Bank NV businesses will lose their jobs by mid-2007 as its Dutch parent company looks to cut costs in a competitive environment. ABN Amro has struggled to control costs because the addition of customers in new markets has forced it to set aside more money for loan defaults.”
“And more cuts in the industry may be in the offing, said George Morvis, CEO of Hinsdale-based bank consulting firm Financial Shares Corp. ‘You’ll continue to see more banks get more efficient as business continues to be tough, especially on the retail side,’ he said.”
The Sun Times. “Layoffs are also expected at Harris, Chicago’s third-largest bank, though the timing and the numbers are not yet known, according to spokeswoman Amy Yuhn.”
“Yuhn said that as part of a large cost-management effort across Harris parent Bank of Montreal, jobs will be lost and ‘Harris is not immune.’”
“Harbourton Mortgage Investment Corp., Mclean-based Harbourton Capital Group’s wholly owned mortgage banking subsidiary, stopped funding new mortgage loans and began winding down its operations.”
“The company, which funded $1 billion in loans in 2005, says it was forced to make this move as it was unable to resolve mortgage purchase claims made by its investors who had bought mortgage loans from HMIC.”
“Harbourton Capital Group is likely to write off its full investment in the mortgage company. Harbourton already has taken significant losses this year as a result of the mortgage operations.”
“For the first nine months of 2006, Doral Financial had a net loss of $62.5 million. Doral Financial’s financial performance for the third quarter of 2006, compared to the third quarter of 2005, was principally impacted by (1) lower net interest income as a result of a decrease in net interest spread and margin together with a decrease in the balance of interest-earning assets, and (2) non-interest losses driven primarily by losses on securities held for trading, a servicing loss and lower gains on sales of mortgage loans.”
“The reduction in average interest-earning assets reflects the sale during the second quarter of 2006 of approximately $2.4 billion in mortgage loans as part of a previously reported restructuring of loan transfer transactions with a local financial institution. It also reflects the discontinuance of the practice of purchasing whole loans for subsequent securitization into mortgage-backed securities.”
“Doral Financial’s loan production for the third quarter of 2006 was $329.1 million, compared to $1.4 billion for the comparable period in 2005, a decrease of approximately 76%. The decrease in Doral Financial’s loan production is due to…changes in the underwriting standards…and competition from other financial institutions.”
From Bloomberg. “Low-rated bonds created by Lehman Brothers Holdings Inc. this year through four securitizations of mortgages and home-equity loans to the riskiest U.S. consumers may be cut by Moody’s Investors Service.”
“The potential for losses has ‘rapidly increased’ as consumers face financial difficulties, Moody’s said. Ratings on Lehman bonds from three securitizations of ’sub-prime’ home loans made last year also were put on Moody’s list of possible downgrades. A total of 30 bond issues with $416 million in balances were affected.”
“The Lehman bonds ‘caught our attention’ because of the high levels of late payments and foreclosures piling up early in the loans’ lives relative to the protection for bondholders they carry, according to Nicolas Weill, a managing director at Moody’s.”
“‘It’s hard for us when we just see the numbers to conclude’ why mortgages in specific recent deals, such as Lehman’s, are performing especially poorly, Weill said.”
“Defaults on sub-prime adjustable-rate mortgages made and securitized this year surged 27 percent last month, remaining at the highest level for new loans in five years, Friedman Billings Ramsey said. About 3.2 percent of sub-prime ARM loans, the most common type, were delinquent by 90 days or more, in foreclosure or already seized property, according to the investment firm.”
“As of Nov. 1, about 11 percent of the loans backing one of the securitizations, SAIL 2006-BNC2, were at least 30-days late, with 3.6 percent foreclosed upon, according to a securities filing. Some of the 30 bonds being watched by Moody’s still offer protection to investors similar to what they started with, despite ‘not having had a pretty start,’ Smith said.”
“Anaheim, California-based Fremont’s loans were the fourth- worst performing after the adjustments, while bonds issued by Goldman Sachs, General Electric Co.’s WMC Mortgage unit and Morgan Stanley were the worst, according to UBS. The adjustments reflect things ratings firms consider in assigning ratings.”
“The findings probably mean the ‘watched Fremont deals represent the tip of a wave of potential downgrades of the 2006 deals,’ the firm said.’
From Manufacturing.net. “A slowdown in home building is likely to end the record run enjoyed by lumber manufacturers over the past four years. The Western Wood Products Association said in its forecast that lumber demand fell in 2006 and is expected to slow further during 2007.”
“‘While home prices will still fall in some areas, we think that housing starts and home sales are nearing a sustainable rate,’ said Kevin Binam, the association’s chief economist. ‘But construction is going to be lower than we’ve seen in the past few years and that will mean less demand for lumber.’”
The LA Times. “KB Home has dropped plans for now to build a subdivision upriver from New Orleans, a proposed project that was to be one of the largest housing developments in the hurricane-ravaged Gulf Coast region. The Los Angeles company said Thursday that it let expire a contract to jointly purchase 3,000 acres of farmland west of New Orleans.”
“Developers had hoped to build as many as 12,000 homes. ‘We’re really committed to the area, but things didn’t work out,’ KB Home spokeswoman Caroline Shaw said.”
employment- let make it simple - if you’re not a fed work you’re going to make less in 07
State workers are not immune to being laid off. I wonder if the Fed may change it’s policy on firing - or if they will just inflate, inflate, inflate, so that everyone can stay on the payroll.
get busy on it
http://cagw.org or ntu.org
You know, during Bill Clinton’s era, Federal headcount dropped a fair piece. However, since it’s grown by about 1/3 in the last five years, some cuts might be in order.
Mac posts ” You know, during Bill Clinton’s era, Federal headcount dropped a fair piece. However, since it’s grown by about 1/3 in the last five years ”
So much for the primary plank of “small government” of the Rep’s….Some time’s I wonder if the current GOP beleives in anything. At least the Dem’s beleive even if it is wrong headed.
The GOP has had it turn at bat…. and what a mess! Does anybody really know how much we are truly in the hole due to the tax cuts and the unfunded war?
losts of sub contracting then- turns out Rord was the best w 51 spending vetoes
Get real. Billy boy hid the numbers of people on the public dole by contracting to private companies, paid for by the public funds. It made it look like he shrank the government dole but he enlarged it.
Go to work for a utility or an oil company.
Enron closed.
wtf is up with your axe grinding against federal workers? I work hard and I earn a modest salary with benefits, so what. Everybody here in the BA laughed their a$$ off during the late 90’s when I told them I worked for the G–that was so “old economy” and low paying. So now it looks like I made a decent career choice and you post something every day about how we are all a bunch of parasites.
I sure as hell didn’t see you out in the canyons when I was running around at 2am apprehending illegal aliens when I worked as a Border Patrol agent.
Your retarded schtick has grown quite old–save it for the Tim McVeigh-will-rise-again blog.
LOL. Well said.
And, as stated above, fed workers are definitely not immune to lay-offs nor pay cuts if a recession is sufficiently prolonged. Both have happened before.
“Low-rated bonds created by Lehman Brothers Holdings Inc. this year through four securitizations of mortgages and home-equity loans to the riskiest U.S. consumers may be cut by Moody’s Investors Service. The potential for losses has ‘rapidly increased’ as consumers face financial difficulties, Moody’s said. Ratings on Lehman bonds from three securitizations of ’sub-prime’ home loans made last year also were put on Moody’s list of possible downgrades. A total of 30 bond issues with $416 million in balances were affected. The Lehman bonds ‘caught our attention’ because of the high levels of late payments and foreclosures piling up early in the loans’ lives relative to the protection for bondholders they carry, according to Nicolas Weill, a managing director at Moody’s.”
When the subprime mad money dries up, home prices will have further to fall from the temporarily-slightly-below-all-time-high plateau where they presently reside. (Unless this time really, truly is different, of course.)
http://economist.com/finance/displaystory.cfm?story_id=8424086
Stucco: had the same thoughts when I read the bloomberg piece. IMO, these downgrades of MBS are big news and will really help quash this bubble. Sure, Bernanke can lower the cost of money, but if the suckers buying these toxic loans decide to bail out, then it is game over regardless of interest rates. We are only just starting to see what happens when you loan vast sums of money to subprime borrowers, and it will get worse. There is no way lenders will continue to do these loans if they have to personally hold them.
“‘While home prices will still fall in some areas, we think that housing starts and home sales are nearing a sustainable rate,’ said Kevin Binam, the association’s chief economist. ‘But construction is going to be lower than we’ve seen in the past few years and that will mean less demand for lumber.’”
Supply and demand don’t subtract up. So I guess Kevin thinks a never-ending increase in ghost tract home developments in the middle of the southwest desert is sustainable?
But construction is going to be lower than we’ve seen in the past few years and that will mean less demand for lumber.”
does this mean buying stock in a company making “14p nails” is not a good way to invest my money?
Depends on the price and how much downside is factored in already.
No problem. If these mortgage companies or banks get into trouble the government (or is it the tax-payer) will bail them out. Looks like the Savings and Loans scenario is starting to show up. Luckily, we have lots of green ink and well oiled money printing presses which have been running 24/7 for the past 10 years. What’s a couple of trillion more dollars here and there.
sure, US M3 is already growing at 12% yoy, I don’t doubt that Helicopter Ben can improve on that, e.g. by providing unlimited money to Wall Street to keep the stock and bond markets rallying.
And despite the chatter from the ECB, at 10% yoy (and with lower GDP growth) the EU is doing just as well in the currency depreciation race.
For heaven’s sake! Didn’t Alan and Ben tell you to stop looking at the M3? Are you being a bad boy and peeking anyway?
Regardless, this ponzi scheme will get out of whack sooner or later and come crashing down around us. I bet on sooner, as the avarage consumer will have less to spend on ever increasing prices.
The Fed only has so much ability to affect things. Time will tell.
Ben, new bubble material just came out:
Renters Gloat Over the Housing Slump
The Wall Street Journal Online
By James R. Hagerty and George Anders
Here, this is probably more helpful:
http://biz.yahoo.com/weekend/rentgloat_1.html
Interesting that two of the three ‘gloaters’ are highly active bloggers: Patrick (patrick.net); and Rich (piggington.com).
Blogging is coming more and more into it’s own every day.
Renters Gloat Over the Housing Slump
The Wall Street Journal Online
By James R. Hagerty and George Anders
I live in Irvine , Ca and was listening to two realitors talk about rents in Irvine and said ” rents are going way up because people cannot afford to purchase homes.” Where in the hell did they go to school? If housing is to high and rents go way up aren’t people just going to leave the area or are they right that Orange County is different than the rest of the country?
OMG, I just called the RE agent, out of curiosity, regarding these tiny little dumpy one bed, one bath duplexes in my area…there’s like four or five of them in a row, and according to the agent, they’re listed for $990,000 EACH, and most are IN ESCROW. The buyers should really have their head examined:
http://www.realtor.com/FindHome/HomeListing.asp?snum=30&frm=byzip&lid=Enter+MLS+ID&pgnum=3&ss_aywr=&st=&mls=xmls&mnbed=0&js=on&mnsqft=0&fid=so&vtsort=&poe=realtor&mnprice=850000&ct=&zp=90291&mxprice=1000000&typ=1&typ=2&typ=4&exft=0&exft=0&exft=0&exft=0&mnbath=0&sid=07D0A312A2D6C&snumxlid=1067720424&lnksrc=00002
So you don’t think the buyers are buying just for the lots, to re-build on?
Possibly, but I would estimate the size of those lots at 2500 SF, which would be okay for condos or townhomes with subterranean parking. However, there’s a two story height limitation on that street, and after paying 990K for the lot, I don’t know how much profit you could possibly make after building a two story structure with parking.
Those are beach properties so there is high premium. The real issue in CA is that ‘regular joe’ housing is way outta whack. Like Satan Clarita.
Investor Girl-
When it comes to a million dollars for a POS, I think I have you beat. Check out this house on the MLS in Bel Air for a million dollars MLS # 06-143853.
It’s red tagged which means it is unsafe because it is sliding down the hill. Just for kicks, click on the photos and make sure you see the shots at the end where the house is falling off the cliff.
Who would spend a million dollars for a house they cannot live in on land that is unstable? This kills me. I can’t believe a realtor could sell this with a straight face.
Jeez, that’s worse than buying in La Conchita, at least houses there are on the beach, cheap, and you get to enjoy a great lifestyle until a slide actually happens.
To lainvestorgirl: This has GOT to be a joke. Those are literally broken down tool sheds. What greedy shill thinks he can pawn them off for $950,000.
That’s the way it is..in a declining RE market rents often go up because landlords have to cover their costs that they would sometimes ignore if the rental is appreciating. Vacacy rates in Irvine are so low to begin with anyway so renters don’t have any choice.
Landlords don’t ignore rents. They charge what the market will bear. And I’ve never meet a landlord that didn’t think there rental was somehow special and deserving of a higher rent.
Too many empty flipper houses sitting around for any upward pressure on rents. The text book won’t work this time around.
Agreed. I’ve seen any number of expensive condos and houses go up for rent at unreasonable prices — in my area of central Florida, that generally is anything over $2,000/mo. They sit and sit, some for a year or more, and eventually every last one of the FBs reduces their asking price to below $2K. No one cares what the owner “needs.” The owner gets what a renter will pay.
It’s the downside of RE shills constant calls of rent being money that you are “throwing away”. It has sunk in. People are VERY sensitive to rent–if it’s too high, they’ll double up, rent a room, move to save $50 per month.
After a certain point, it will be very hard to push rents upwards. There are no “neg-am, teaser” rental rates to make people ignore how much they are really spending on housing.
Also, as the economy slows down, pressure will be on to LOWER rents.
There’s going to be so many empty houses, newly blighted areas, landlords are going to have to lower rents just to have people in the houses so vagrants don’t move in, turn it into a meth lab, or strip the house of copper piping, etc., which is already happening in some areas, including vandalizing entire abandoned areas of spec homes built but unsold.
I don’t think the rental market in Irvine is quite as happy as it may appear. I’ve been seeing Craigslist posts for 3BR places under $2k/mo– been a while on that one. Besides, my wife was in the complex office a couple of months ago & the asst manager was getting his a*s chewed for not filling empties (IAC).
I’ve also been seeing for-rent signs for IAC/Irvine complexes….all the way over in Fountain Valley (near Frys). Plus they now actively post openings on Craigslist, etc.
I live in Irvine also. There are several people putting their properties up for rent so I doubt rents will go up probably be flat or even go down. I know in the complex I live in they are having specials because its a slow month right now.
Question,
This thing about reset Loans for 2007 will be in the 1trillion. If this is true and we see alot of forclousers next year will that make Intrest rates go up or does that keep them where there at? How does this effect us First time buyers. Ya I might get a better price then I would in 05 or 06 but how does the market work with a bunch of forclousers hit the market. What should I be looking for and watch out for? Sorry if my question seems wired but im not sure what i should be looking for?
Thanks alot for your help! Please advise if you need more info to my question If needed!
I’ll take a stab at this one. If foreclosures become a big problem, I would bet the trouble will be more with the mortgage backed security market (MBS). Those who invest in MBS will want higher qaulity loans or more risk premium for their investment. The banks/lenders package the loans and they are then sold as securities. If foreclosures rise, these banks and lenders could be forced to buy back the non-performing loans. Nobody wants those things on their books. What I think will happen is the banks/lenders will have to scrutinize their loan applications much better. This will shrink an already small pool of buyers as the demand for subprime, no doc, neg am loans, etc dries up.
Also, foreclosed homes could make it back on the market driving up supply. Foreclosed homes can also drive down comps as they can often be sold at lower prices as banks don’t want them on their books.
The market controls interest rates. Mortgage rates tend to track the 10 year note. If inflation rears its head or the dollar really slides, the yield on the 10 year note could spike up taking mortage rates with them.
Hope this helps you out. If I am mistaken on anything, please someone on the blog correct me.
Sounds about right. My advice is to 1) continue to save a larger and larger down payment, 2) have your last couple of years’ tax returns and W-2s ready for copying (for the bank), and 3) patiently wait for distress.
I’m a first time buyer too and am doing these three things. Once things get ugly, only quality borrowers will get loans (which inherently means demand, and thus prices will be down). Having #1 and a good job will make you a quality borrower.
And for heaven’s sake, read every word of any document someone is asking you to sign in conjunction with purchasing a home–ask questions of someone you trust if you don’t understand something.
Mike — with your lack of knowledge, and I mean no insult by that, I recommend you not focus on foreclosures so intently. In the early stages of a bust, virtually all of the truly great deals are scarfed up by insiders at the lenders’ offices, or their buddies. I believe that new-home builders in most areas will continue to undercut the pricing of used-home sellers in 2007 and into 2008, for as number of reasons, so a modest new home may be your best best as a starter. As for interest rates, I’ll just pass on the wisdom long-since agreed by most of us here: better to buy a house with a low price and a high mortgage interest rate, than the opposite. Interest rates might go down later, at which time you can refinance, but the lender is never going to reduce your principal if you pay too much. Likely no one here is going to predict interest rates, but a lot of people I read elsewhere feel that the long-term norm in this country is 7%, so that any rate less than that is reasonable, at least.
All that said, I personally think that if you pay more for a house than it would have cost in 2000 or 2001, you’re likely to be paying too much. Me, I’m looking for 1997-1999 prices to return, plus 3.5%/yr for inflation.
I disagree with buying a modest new home. The fact is that there will be so many foreclosures on the market along with all the other stuff and so few buyers that there will be plenty of deals to be had.
Chip,
In my book that’s a soft landing. Knowing what we know, it’s not even going to be a hard landing, it’s going to be a spectacular crash & burn. The coming depression will see even coastal property return to below 3x median income.
Bay Area houses below $300k? Let’s keep our fingers crossed!
ditto
and 3x income might be less than the income is now, as many have renegotiated for less pay than years past, witness the airline industry.
Sacramento Mortgage Fraud Update 12/29/06
Background: Five houses recently sold on Hillwood Loop in Lincoln CA (Sacramento MSA) for about $250,000 over current market. They were financed by 4 sub prime lenders at 100% of purchase price. There are 3 borrowers (2 each bought 2 houses). The FBI and the DA are working on the issue, but the real action lately is with the lenders.
Update: After getting little satisfaction with the FBI & CA Dept. of Real Estate, a fellow blogger suggested I contact the lenders and let them know they seem to be making 100% loans at $250,000 over market values. This proved to be the most effective move.
New Century and First Franklin are taking action and have opened fraud investigations within their companies about these specific loans. Alliance Bancorp and Long Beach Mortgage (WAMU) have so far remained silent and apparently clueless.
New Century and First Franklin are upset that the builders seem to be taking part in this game, so they can off-load standing inventory. It appears the builder helped one borrower close on two homes simultaneously, both deals using “owner occupied” sub prime loans from two different lenders. Ooops! I believe the word is out now and the lenders are scrutinizing all Sacramento deals, even builder originated, instead of just “waiving them in.” There are about 6 “funny money” deals that show in the MLS as pending, which have been pending for a many months now and it appears the buyers can not “perform” (ie, sucker a lender). I believe this era of $200,000 cash back acquisition financing is screeching to a halt.
On a side note, foreclosed homes with loans originated by Ownit and Southstar Funding are now held in title by HSBC and Deutsche Bank, respectively. The listed prices are being steadily reduced (now down 20%) and they are going substantially below the foreclosed loan amounts. You have to think the major banks are starting to “kick the dogs” around in the sub prime kennels. That is having a desired effect of ending the worst of the stupidity. Unfortunately, these foreclosed homes are going to languish on the market, vacant for months, deteriorating and further eroding neighborhood values. The vicious cycle is just starting and it is their own lending policies that created the now avalanching cornices of credit.
funny that it is two EU banks that are getting hit with these foreclosed homes. In Europe there is no sign at all that banks are getting cautious, crazy lending is still getting more crazy every year and the mortage market keeps expanding at a healthy pace. I don’t doubt that in Europe (e.g. UK and Netherlands) there are many similar frauds going on that will surface some time in the future. Of course, real estate in Europe IS different and can never go down, so no reason to worry
At least someone it doing something
They are, in large part, because Paladin is pressing the issue. I’ve followed his posts and he’s had to scream to get someone to take a hard look at questionable transactions.
Hats off…..thanks for your work.
Thanks Dan. I must also say that the bubble blogs have been educational and inspiring. If they did not exist, I would be a big FB today (almost bought in Dec 05) and I would not have realized the systematic signs of mortgage fraud.
So I take my hat of to Ben, who provides the forum to share with each other. I have donated to other blogs, but realized today I had not sent anything to the “national” bubble blogger. So I just did.
good thing we’re paying for all these useless gov agencies
>> good thing we’re paying for all these useless gov agencies
And who gutted and made them useless. The same folks who said they didn’t want to starve gov., they wanted to drag it kicking and screaming and drown it in the bathtub. You can thank the GOP for this total lack of oversight.
The most blatant fraud cases like these where people close multiple loans and get huge money back from over inflated prices and appraisals will get procecuted. But I am afraid that just like the last cycle, the “little” frauds like over stating income and slightly over appraising values and mortgage brokers “dummy upping” loan files, will get away with it. I am certain most will get away with it, because there are not enough resources to get all the bad guys. So, all of this activity, which resulted in greatly overinflating prices, will stop, and it will take years to get markets like in SoCalif normal again.
If it is like the last cycle in the early 90s, the cost will be high, not only with lenders losing money, but also people with financial injury lasting years, marraiges ruined…. Of course, this time it might be different…..
Great work, keep it up!!!
Paladin,
In case you have not seen it yet, check out this report, which may help provide perspective on your “project”:
http://www.gao.gov/new.items/d061021.pdf
Good luck!
Thanks Stucco.
I did see this and thought what a bunch of wet noodle whitewash.
It is going to be up to the MBS buyers to stop this train by pushing bad loans back and driving up risk adjusted returns. How can they buy 5 loans and ultimately take a $1,250,000 hit on $3,875,000 in loans?
I think the pushing back effort is already underway. Click on this link and check out the chart.
http://economist.com/finance/displaystory.cfm?story_id=8424086
Paladin,
as ever, great post, great work on your part.
“Anaheim, California-based Fremont’s loans were the fourth- worst performing after the adjustments, while bonds issued by Goldman Sachs, General Electric Co.’s WMC Mortgage unit and Morgan Stanley were the worst, according to UBS. The adjustments reflect things ratings firms consider in assigning ratings.”
Those who own these MBS’s, including state retirement funds and bond mutual funds, and who have been sunning themselves on the beach are about to ask, “What’s happening to the ocean? Why is the water receding?….OH $HIT!”
Wow Orange County is different, not only does it have Fremont Loans but the nation’s 3 largest subprime lenders!!
I understand that Fremont (assuming it’s the same Fremont Investment & Loan) has been very active lending to condo projects in FL and SD. From what I’ve heard, they were aggressive even as recently as Q3 and early Q4 with these kind of loans.
Anyone know if their troubles have been solely in the MBS with individuals as borrowers? Or if it has spread to their loans to developers?
“… while bonds issued by Goldman Sachs, General Electric Co.’s WMC Mortgage unit and Morgan Stanley were the worst, …”
Since when is it profitable to issue bonds based on loans which are clearly destined to nonperform? There is something in this business model that just does not compute…
This belongs on this thread:
Comment by MaxedOutMama
2006-12-29 09:27:41
The rumor is that MLN is collapsing.
http://forum.brokeroutpost.com/loans/forum/2/81847.htm
There is also a comment about a company called secured funding laying off 80%.
http://www.securedfunding.com/index.asp
Cool — soft mortgage porn targeted at twenty-something males whose brains are hormonally governed by their gonads!
Just a victim of their hormones!
… but the language in that ad is so-o-o 2005:
“Home Equity is empowering homeowners and changing our economy; how are you using your home equity? Be it debt consolidation, home improvements, starting a business, home repairs, college tuition, a vacation, or unforeseen expenses, you can readily use the value of your home without having to sell it.
Secured Funding can help you find a solution that fits your situation with a customized home equity loan. As The Home Equity Specialist, we have developed specialized skills, innovation, a customer-centric approach, and comprehensive products that will help you maximize your home equity.”
I wonder if these loyal employees still work there:
__________________________________________________
“Fantastic environment, friendly people, futuristic loan process,
why would you want to work anywhere else?”
-Andrei S., Production
Funding Customer Service Representative
“Secured Funding is a great place to work if you want to grow
within a company and see your hard work payoff for your future.”
-Amy J., Production
Document Customer Service Representative
“Hands down the best place I have ever worked!”
-Dan S., Retail Sales
Loan Officer
“Secured Funding is a very dynamic company. Every workday is filled with energy and excitement. I have learned and continue to learn something new every day and I have developed friendships that will last me a lifetime.”
-Kimberly W., Wholesale
Account Executive
“It’s a fun and exciting place to work, the people are awesome and the atmosphere is always energetic!”
-Krista R., Marketing
Project Manager
Crispy — that is darned interesting. I suppose there is a 20% chance the screwups are because everyone has taken off for the long weekend, but those are some pretty nervous exchanges. For an outsider like myself, reading that thread feels like watching a slow-mo train wreck.
Looks like it is now past tense. MLN ran out of money, closed up shop.
Interesting thread to read though, confusion, then denial, then moderated optimism, then confirmed collapse–by fax. Damn, that happened fast.
very interesting indeed. this latest line:
“Just recieved a fax from MLN. Its officially over. They are closed and will no longer be funding residential mortgage loans.”
ouch.. MLN is pretty big, arent they? ($10-15B??) Not a great start to the new year. wow…
I love this comment from that forum:
Anyone want a steady stream of conforming loans? We’re not a big shop but we’re anal when it comes to quality.
I’m afraid MANY of these brokers have that same quality. Maybe not the way he means, though.
That was a great link.
Anyone who’s new to this forum, go back and click on the “brokeroutpost” on the top of this thread, if you haven’t already.
It will give you some insight as to why people think the markets’ going to crash, NAR stats aside.
I’ve been over there and it’s astonishing…..
One guy is trying to get financing for a couple with scores of 401 and 410.
At that level, isn’t there a chart that says “They never pay”?
‘You’ll continue to see more banks get more efficient as business continues to be tough, especially on the retail side,’ he said.”
I guess the Mavis idea of efficiency is just keep firing people. An interesting choice of words.
Vacation homes crashing at http://www.nytimes.com/2006/12/29/realestate/greathomes/29rent.html?_r=1&ref=realestate&oref=slogin — e.g.,
While second-home buyers aren’t as sensitive to pricing as other buyers, slower appreciation sent investors — who had fueled much of that appreciation — out of the market. The National Association of Realtors predicts that 30 percent of all home sales for 2006 will have been second homes, down from 40 percent last year, and attributes much of that drop to the exit of investors.
Hopefully this will happen soon in/around Aspen - it has been another record-setting year here in real estate with over 2 BILLION $ in transactions (three or four 20+ million dollar “homes” sold in December alone). RE ads for 5 Mil homes assume the purchaser will simply scrape them off and re-build “bigger and better”
“Harbourton … stopped funding new mortgage loans”
This morning, az_lender almost recanted her decision to stop funding new mortgage loans. The request in this case was for $50K, in line with amounts already owed her on similar lots. BUT this afternoon the fly in the ointment came to light: this particular lot is vacant, just has a big metal canopy for a motorhome, and a 10×10 shed. No soap radio. Others who owe me in the neighborhood of $50K at least have a reasonably modern MH on their lots. After discussing a 9% rate with the would-be buyer, I was quite happy to say no, doing my bit to keep prices in these parks under control. Gave them the name of a GFL (greater fool lender), what the heck.
MLN is done, apparently, if you read through to 1:30 p.m. on that message board. Another one bites the dust.
From the brokers blog in the morning: “Here is the skinny…. MLN is done for or at least headed for some MAJOR changes/consolidation… they have for a fact chopped AE commissions 75% and are suffering HUGE losses and buybacks… HOWEVER currently they are trying to outrun losses with volume which makes absolutely no since but it is done often… SO they will more than likely be aggressive closing loans and with pricing while their doors are still open - just dont be surprised if they close abruptly.”
Outrun losses with volume….???
My dad use to joke like that: “We lose a little on each transaction, but we make it up in volume.”
I always thought is was a joke, but I guess some people try to actually make that work. It is sort of like rowing a leaky boat: Ignore the rising water and row faster to see if the water will leak back “out”.
All I can say is these sub primes are getting their due. I don’t wish bad on anyone, but they have created a painful havoc in the single family residential world. And many of them new it and looked the other way to take a commission. I do hope the parent companies will be eating Billions (capital B). Who owns MLN and will take the hit?