A “Big Dropoff” In Massachusetts
The Boston Globe reports from Massachusetts. “Potentially hundreds of Massachusetts home buyers and other mortgage borrowers are being left in the lurch after Mortgage Lenders Network USA Inc. of Connecticut reneged on funding loans it promised to make, banking and government officials said yesterday.”
“‘I am thinking hundreds’ were affected, said Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, estimating the toll on Massachusetts customers.”
“In Massachusetts, the company made 1,140 mortgages worth nearly $240 million in 2005, state regulators said. Mortgage Lending Network’s executive VP, James Pedrick, yesterday attributed the cessation of the wholesale business to ‘turmoil’ in the subprime market.”
“The firm has been unable to resell some packaged, subprime loans on Wall Street, he said. This apparently interrupted the stream of financing necessary to make the next batch of loans, brokers said, though Pedrick would not elaborate. ‘We didn’t have the choice to fund those deals,’ said Pedrick.”
“Massachusetts brokers said some of their prime customers’ loans were also affected. Donald Lambert, a Dartmouth broker, said eight of his customers’ loans worth more than $2 million fell through, including some that apparently closed last week but were never funded.”
”And a home purchase scheduled to close Friday fell apart, driving the buyer and seller into a legal dispute over the deposit. Customers ‘are pretty upset,’ he said. The affected loans were for his top-rated, not subprime, customers.”
The Boston Herald. “Massachusetts banks have seen a 41 percent drop in home loan activity due to the recent slump in the local housing market, according to industry estimates. Kevin Cuff, executive director of the Massachusetts MBA, said the number of home-financing applications, both for mortgages and home refinancings, hit about 850,000 in 2004, the height of the recent housing boom.”
“But that number could fall to about 500,000 in 2006, based on preliminary estimates, Cuff said. ‘It’s cool out there - very cool,’ said Cuff of the housing market.”
“Local bankers say they’ve seen the big dropoff. ‘It’s pretty quiet,’ said David Falwell, chief lending officer at Middlesex Savings Bank in Natick.”
“Richard Holbrook, the new chief executive at Boston’s Eastern Bank, said fixed-rate mortgages originated at his bank hit about $800 million in 2005 and fell to about $500 million in 2006.”
“It’s the same outfit that criticized talk of a ‘housing bubble’ back when people were talking seriously about million-dollar “fixer-uppers” in toney towns like Newton.”
“Now the Massachusetts Association of Realtors has another news bulletin for you: The housing ‘correction’ may soon be over. That was fast.”
“With serious buyers scarce, that observation may be at odds with what many would-be home sellers are experiencing in the current market. And it is also at odds with an even more telling measure: the Realtors’ own statistics.”
“‘November figures, and the word on the street from our Realtor members, indicate that the correction may be nearing an end,’ David Wluka, the group’s outgoing president, stated in a press release last week.”
“Nor is it the first time that MAR predicted the struggling home sales market had turned a corner. In fact, it was a prediction made just a month before, in late November. A 2 percent drop in the median home price, and a 16 percent slide in sales, prompted this declaration. ‘It appears that the market correction may be about over,’ Wluka declared then.”
“To support its latest turnaround prediction, MAR used a month-to-month sales comparison, noting sales dropped by a mere .3 percent from this October to November. Yet for years, especially when the market began to lose steam, the spokesman for the Realtors group argued against such month-to-month comparisons.”
“Wluka, whose term as MAR president just expired, defended the recent use of month-to-month comparisons for what he called ‘trending.’ ‘I am very careful about not spinning because you lose all credibility,’ he said. OK, maybe spinning is the wrong word. Cheerleading is probably more accurate.”
How does this work a closing that didn’t actually close? Is there a domino affect?
“more than $2 million fell through, including some that apparently closed last week but were never funded”.
So the buyer’s lender screwed up, now the seller is in a lurch. If that seller is buying a new home does that deal fall through as well? And so on and so forth…
I think many times it will end with the buyer forfeiting the earnest money. Or if the seller is buying a new home, but that sale is contingent on the sale of seller’s current home, the seller can get out.
But there could be more dramatic effects - in this example where the closing fails due to the lender failing to fund the loan, technically the buyer is in default of the sales contract, even though its the lender’s error. If the seller finds a new buyer and the home sells for less than the original purchase price, the seller could go after the original buyer for the shortfall, if there was no workout when the loan fell through. It is (or was) more common for the seller to make as much or more when a new buyer was located, so it would still end up ok. But I suppose you theoretically could have several linked contingent sales that could get really messy if one buyer didn’t get funded. Or in situations where the sellers are struggling with mortgage payments (or impending resets) and won’t be able to locate new buyers quickly enough to avoid foreclosure. It could get ugly.
In Mass most home Purchase and Sales agreements include a financing contingency. If that’s the case here, I don’t see how the sellers could possibly keep the deposit.
In my state (IL) the financing contingency has to do with the approval not the funding. If you get to the closing table and the loan doesn’t fund for whatever reason than the buyer is in breach.
The loan could fail to fund for a million reasons. In this case, the lender had no money to give. In cases I’ve personally seen, loans fail to fund because of last minute credit rejections or the buyer walks because of unfavorable terms in the mortgage note. I’ve even seen a case where buyer mortgage lender refused to lend because it’s own appraisal said the property was worth $20K less than the selling price. The deal fell through and the buyer was in default. I negotiated half his earnest money back.
Mr. Buyer failed to qualify for his mortgage. Seems to me he should get ALL of his earnest money back…not just half. Any purchase agreement I’ve ever seen has a mortgage qualification clause.
These seems illegal somehow. Docs were filed people probably moved in and now theres no money. I have never heard of this. Has anyone ever heard of this before.
In IL people don’t move in until AFTER the closing. The very last thing the seller does before walking out of the office building is hand over the keys. They’re usually in an envelope and they slide it accross the table.
Closing in other states are different. I just had a deal in TX where the buyer and seller sent paperwork into the title company; no one had to appear anywhere; there wasn’t a closing; I got a check in the mail from the title company saying all the documents had been recorded. So anti-clamatic.
In IL the sellers hand over the keys as the very LAST thing the parties do. If the loan doesn’t fund then the buyers don’t get the keys. Maybe that’s something we have in IL that other states don’t have.
Certainly true in AZ and ME (keys not delivered till everything else in order).
Apropos of who loses what when a closing fails, I can only say that when I’ve made a casual oral commitment to fund a loan, I would be very fearful of not doing so, thinking either buyer or seller might come after me for some breach of promise. Sometimes I’ve been really annoyed with the amt of WORK required of me when the escrow agent is lazy or incompetent. First Amer Title hires inexperienced people at low wages, and they make an inordinate number of mistakes. Of course I’m not going to get out of my obligations by going bankrupt like MLN; I suppose it’s a mistake in Amer society today to have a positive net worth!?
In Cal, the financing contingency usually has to be exercised within a particular period of time (e.g., 14 days). In other words, the buyer can back out (and get his deposit back) only during the contingency period. At the end of the contingency period, the buyer either needs to cancel the contract or waive the contingency. And, like Chicago guy, the contingency deals with approval, not actual funding. So, the sellers would be entitled to keep the deposit.
While that might seem unfair, the idea is that the buyer would (potentially) have a cause of action against the lender for failing to fund. Of course, if the lender is insolvent, that doesn’t help the buyer much, but that is the risk that the buyer took in choosing to deal with the particular lender.
Is Massachussets a dry or wet escrow state? Vermont law prohibits an attorney from allowing closing documents to be executed unless funds are on deposit in his trust account.
Are you the casey who owns that ridiculous blog about all the screwed up real estate deals
No, I’m not that casey. I’m surprised that the Massachusetts Dept. of Banking and MA Bar Association allow transactions to take place without funds being on deposit with the attorney or title escrow company. (Dry or wet?) If the law requires that funds be there, then the buyer and seller can file a claim under the Attorney’s Errors & Omissions Policy. Or, if there was an intermediate lender who had requested a Closing Protection Letter, they could pursue a claim with the Title Insurance carrier - which may be difficult sense technically the check for the premium was no good or never issued.
However if Massachusetts does not require the attorney verify funds on deposit prior to a the transfer of title to take place, then there is probably little recourse.
You know, this happened before in Massachusetts - mid-1990s. A few mortgage brokers got caught in the squeeze when interest rates ratched up. They were playing the float/lock game. In response to the debacle, Massachusetts tightened their laws with respect to brokers and rate locks.
My recollection is that other lenders and the MMBA stepped up to fund the purchase transactions at a higher rate. As for the refinances, they missed the boat by signing on with a lender who crapped out on them - essentially for them, it was an opportunity cost. Fortunately, Greenspan lowered the rates in the late 90s and they got another shot at it.
Many of us have always contended the primary cause of the real estate bubble has been easy credit. This MA lending is getting caught in the squeeze. Watching this phenomenon is observing the mechanical structures beginning to unwind. The mortagage lenders will trigger the slide. gordo nyc
The last link is great. It’s a commentary piece where the jounalist actually calls out the Massachusets Association of Realtors for all the BS they have been spewing. It reads like the comments on this blog. It’s great to see a mainstream journalist finally challenge the RE cheerleaders.
Here’s the link to it again:
http://business.bostonherald.com/realestateNews/view.bg?articleid=175000
Just in case you want to e-mail the writer Scott Van Voorhis on the article. I’m sure the Realtors are not happy .
sbvanvoorhis@bostonherald.com
Thanks. I just sent him a thank you.
I sent him a note of thanks and encouragement too.
I sent him a quick email, too. We’ve got to encourage reporters who actually do a good job, since the vast majority don’t.
While we’re at it, us DC folks should contact the Powers That Be at the WaPo to praise Kirstin Downey. Her stuff is pretty straight-up. (Unlike, I may say, her cheerleader boss Haggerty.)
There is a rating system at the bottom of the article. I gave him 5 stars.
“Wluka, whose term as MAR president just expired, defended the recent use of month-to-month comparisons for what he called ‘trending.’ ‘I am very careful about not spinning because you lose all credibility,’ he said. OK, maybe spinning is the wrong word. Cheerleading is probably more accurate.”
_______________________________________________
I’m detecting little nuggets of honesty from this national group of charlatans, thieves, liars and nosepickers. Yet at this pace, we’ve got a long ways to go before they fully own the “fraudulent” label. That end may require the perp walk.
Note that the “OK, maybe spinning is the wrong word. Cheerleading is probably more accurate” comment came from the reporter, NOT the MAR guy.
Oops…. To think that I would believe a REIC charlatan would have an ounce of decency to utter the truth…… What was I thinking…….{grimmace}
Don’t you wish you could check on whether a reporter has read this blog?
I think Ben can check the IP addresses of visitors and see if they come from press organizations.
I was joking. I hope he maintains his high standards of confidentiality, as doing otherwise might alienate some of his best constituents.
They are regulary reading the housing bubble blogs.
David
Bubble Meter Blog
Yeah, it’s “know your enemy.”
Quirk –
I think you are being overly pessimistic. Think of blogs as a source of free research for any journalist who is smart enough to tap into it.
It’s interesting that it seems to me that terms and phrases that originated on blogs like this are starting to show up in mainstream vocabulary. I think a lot of our material is currently being plagiarized more than we know. Hey, it’s all good as far as I’m concerned.
Since most of us are anonymous, we can hardly claim plagiarism. However, I do agree that the terms are showing up and I take it as a sincere form of flattery.
Ben, thank goodness for this blog. I am almost certain I would have bought some overpriced POS last year when prices eased 5% had I not plugged in here. I know four very intelligent friends who bought last year, get this in 1) Las Vegas (1/2006), 2) Seattle (8/2006), 3) Ashland (11/2006), and 4) Bakersfield (12/2006). My boss, a single woman with a PhD and 5 years from retirement keeps telling me that RE just goes up!! So far, I have talked her out of buying yet in Seattle and a coworker out of buying his first home in S. Oregon.
This blog has been a great education and fun too!!
I don’t think we need to be so hungry for credit. We are hardly the only ones who know which end of the horse the hay goes into. I think most of what we talk about is simply common sense. I would hope that an intelligent reporter would visit this and plenty of othe sites in researching article. That alone would restore some of my lost faith in the media.
Seems like having good hair and the ability to stroke some pundit’s ego are all that’s required these days in the MSM.
“We are hardly the only ones who know which end of the horse the hay goes into.”
Great line. This site is worth visiting just to pick up on the phrases used by posters (bubble lingo aside).
I second that comment. Thanks, Mr. Fester!
wluka is a fine man and we will all miss him dearly. he will be very difficult to replace, as someone with the spin ability of that knucklehead doesn’t show up everyday.
The thing to remember with many of these subprime lending outfits that make loans, sell them off fairly quickly, then use the influx of capital to make new loans is that they rely on liquidity and quick turnover. They are not large diversified banks with billions of dollars of despoits at the ready to tide them over if the secondary markets shut down or seize up. They NEED a constant influx of new money to make new loans. If anything gets in the financing “gears,” and those gears seize up, they can go from viable business to bankruptcy in a matter of months, if not weeks. It’s EXACTLY what happened in 1998, when the subprime lending industry last blew up due to an excess of high-risk, 125% LTV lending and a seizing up in the capital markets related to the Russian debt default and Long-Term Capital Management crisis. This time around, things aren’t that bad yet. But they could get that way if more, larger lenders start experiencing funding problems.
http://interestrateroundup.blogspot.com
“This time around, things aren’t that bad yet. But they could get that way if more, larger lenders start experiencing funding problems.”
That’s pretty optomistic considering we are only at the beginning of a very huge wave of resets. If there are signs of stress with only $500B worth of resets. Imagine the strain when the next $2T reset between now and 2008. There is also a lag between reset and foreclosurer as people make a few payments, and there’s several months of notices. We are not even seeing the full effects of the 2006 resets yet.
Nope, the worlds biggest credit bubble in history will be followed by the worlds biggest economic crash in history. To consider otherwise is pretty wishfull (keep in mind there are contagions in the Derivatives/Hedge funds markets that make the housing market look like peanuts, $350T compared to $10T)
This is going to be; now how can describe it; “Scary beyond all reason”
…”the worlds biggest credit bubble in history will be followed by the worlds biggest economic crash in history.”
Of course, I agree, but I wonder what the parallels with the dot.com bubble are (or are not)? It seemed like the true fat cats kept cheerleading as they quietly moved their $$$ into real estate. The real estate fat cats started moving back into stocks in 2005. I wonder where the savvy criminals will be stashing their gains next? I agree that the fall out from the re bubble would seem to be huge, but I wonder if there will be another sham bubble that inflates as RE deflates?
Any ideas?
uranium
Fine Art
good question. I don’t know how anything can inflate after this because it looks like everything is a bubble.
as mentioned in a financialsense article today
(http://www.financialsense.com/fsu/editorials/ash/2007/0104.html)
Amaranth lost $5B in three days and it was bearly even mentioned on the news. LTM took three months to fall as much and it became part of financial mythology. Today nobody even blinkes.
The otherside of the coin is that nobody even blinks when Goldman and Sach’s makes $5B in a single quarter.
When there’s money like that flowing around and things are still crashing, how can it be inflated any further.
I don’t think there is anything left to re-inflate and we’re just going to hit a classic K-cycle winter (perhaps it’ll be called a “Kondreiff Ice age” once all the funny money disappears)
“Potentially hundreds of Massachusetts home buyers and other mortgage borrowers are being left in the lurch after Mortgage Lenders Network USA Inc. of Connecticut reneged on funding loans it promised to make, banking and government officials said yesterday.”
It sounds like the rest of the subprime lending community should see a boon from all the new business coming in from Mass buyers and borrowers who were reneged on by MLN.
Conversely, maybe…..just maybe, the folks buying up their worthless paper will begin to see it for what it is…..a big lending scam. IF so, perhaps folks looking for the higher returns will realize the risk is just too high, and the other lenders see their funds dry up very quickly, also??
We’ll see going forward. I am in the fund “desert camp” myself.
The new lending “standards” go into effect by the end of month.
Success has many fathers; failure is an orphan.
Especially financial failure.
This should not be that big of a deal since there are so many lenders. You just take the loan to another lender and you close 2-3 weeks later, unless, these loans were shaky in the first place and MLN used the “pulse” underwriting method, then maybe these loans won’t get closed and only the mortgage and real estate brokers lose and the borrowers don’t get to buy properties they can’t afford anyway.
“Massachusetts banks have seen a 41 percent drop in home loan activity due to the recent slump in the local housing market, according to industry estimates. Kevin Cuff, executive director of the Massachusetts MBA, said the number of home-financing applications, both for mortgages and home refinancings, hit about 850,000 in 2004, the height of the recent housing boom.”
Stories like this one about the recent dropoff in home lending activity are conspicuously absent these days from the pages of the WSJ. I guess they ran out of space thanks to the glut of stories about the great bull run on the stock market at the end of last year…
Yup, far more important to put Robert Nardelli’s tenure at Home Depot under the microscope, as well as the issue of ritual animal sacrifice in belgium.
“… including some that apparently closed last week but were never funded.”
Then they didn’t close moron!
This sounds a bit like the new homes that “sold” (according to official statistics) even though the order was cancelled.
Don’t count your chickens before they hatch.
If there was a closing, but the loan wasn’t funded, then someone was passing rubber checks. Oops.
recission is for the borrower, not the lender. any good attorney (and there are a few attorneys in the bay state) will have a field day with the broker, mln, the closing attorney, etc. word from the street this morning is that the banking commissioner is getting involved in a big way.
recission only applies to refianancing an existing owner occupied home and last 3 days before you get your checks. For a purchase, or refi on a rental, the checks are dispursed at closing
> Then they didn’t close moron!
I assumed that, if someone says that they “apparently closed”, it is not implied that they actually closed. Save your injectives for better targets.
“Wluka, whose term as MAR president just expired, defended the recent use of month-to-month comparisons for what he called ‘trending.’ ‘I am very careful about not spinning because you lose all credibility,’ he said. OK, maybe spinning is the wrong word. Cheerleading is probably more accurate.”
ITS CALLED ADVERTISING! No stop interviewing these guys and giving them free advertisement and do some REAL reporting!
“lose all credibility” - hmm, I guess that means you go from zero credibility to a negative credibility, meaning that your statements gain a positive value as contrarian indicators. Conclusion: the housing debacle is NOT anywhere near an end. Not that we needed Wluka to tell us.
This is what will make the market drop. If the subprime market stalls, then the move up buyer can’t buy, because they can’t sell their current house. This will continue up the price range.
High net worth buyers tended to slow their buying in the past year. One would think they might be more financially astute. This (subprime illiquidity) will hit the low and middle market and a real price decline can happen unless the rates decline so the variable rate loans can be turned to fixed. Then the subprime market can make a come back.
“unless the rates decline”
Let’s all hope and pray the Fed will stay the course. The alternative is a respiking of the punchbowl, which would result in sepsis of the festering subprime infection.
Don’t you think with the recent failures, (and I bet we will see more) we may be too far to interest rates drops to have much effect?
I agree with ft lauderdale…the frenzy phase, the “easy” profit and flip stage, is passed. Those who were naturally inclined to get rich quick have already played their hands here.
I’d bet there are very few “investors” out there that aren’t pretty sober about the prospect of higher prices. Its those enthusiasts who drove the prices to really stupid highs. They’re either gone, toast or in the process of realizing the unhappy reality of what leverage means when it begins working against you.
With the way the Fed notes read I’d be willing to wager that rates won’t go down….. for a very long time.
Where are all the loans going to come from when the much vaunted, by realtors anway, “spring bounce” appears? It’s going to be like going to the supermarket, which was thriving and open for business last week, and finding it closed and shuttered with a giant padlock on the door and a sign reading OUT OF BUSINESS. With supermarkets you might find another one open but with all the bad news about “risk” coming out in the loan industry, I cannot see many lenders stepping up to the plate to fill the void. If they do, they will want the borrower to have the old 20% down, good credit history, confirmation of income, etc.
Even if the Fed cuts 1% off the rates, they cannot do it all at once for fear of a panic. So we are looking at a year for that to happen. Over the course of a year a LOT of fb’s are going to bite the dust. Throw in a possible recession and it seems the long developing perfect property storm is starting to appear.
“If they do, they will want the borrower to have the old 20% down, good credit history, confirmation of income, etc.”
I wish you were right that reversion to traditional credit standards could somehow take place overnight, but I am afraid it is more likely to play out over a period of several painful years.
Even if the FED lowers it won’t necessarily pass on to the long term rates. If subprime is locked up lower short term rates won’t help either, the loans just won’t be available regardless of the current Treasury rates.
“In Massachusetts, the company made 1,140 mortgages worth nearly $240 million in 2005, state regulators said. Mortgage Lending Network’s executive VP, James Pedrick, yesterday attributed the cessation of the wholesale business to ‘turmoil’ in the subprime market.”
I have been keeping my eye out for WSJ articles about the “subprime turmoil” and either I am missing them, or they are strangely silent. Did I miss the “don’t ask, don’t tell” memo?
MA had 22,957 sales in 2005. These guys were lenders for 5% of all the sales.
pending home sales (.5) vs. (.7) exp. previous revised up slightly
tx-chick what is the news on oil inventory?
crude (1.3) vs. (2)
gasoline +5.68 vs. 1,5
distillate 1.97M vs +850K
I could never figure out why “banks” would loan money to such poor risks. Now I understand from reading this blog and others. Banks in general (not only these specialist lenders) were only at risk until they could package these “mortgages” and sell them on. Now the credit crunch is coming since up the chain nobody wants to hold this paper. So availability of credit of this type will shrink drastically. As has been mentioned by others, it is significant that Fannie Mae will by implication no longer accept this paper by the tightening of their standards. So the availability of easy credit is going to screech to a halt. That is what classically causes deflation and is what will happen here. No credit, therefore no buyers, therefore no demand, therefore falling prices. The only problem for even good credit risks is as deflation of this type takes hold banks that hold mortgages themselves will see their mortgage loan collateral (i.e. the real estate of good borrowers) drop in value, and Banks will start to pull in their horns to all borrowers to preserve cash for the inevitable write-downs. This will be compounded by even decent credit risk borrowers who took out HELOC financing getting these loans called in as the the bank’s collateral drops in value. Have you ever noticed that most loans of this type are “demand loans” where the Bank can ask for their money back at any time. So everybody gets dragged into the mess.
The Fed is perfectly aware of all this, and that is probably why the yield curve is inverted. They know that large numbers of ARM resets are going to reset this year and next, and have been getting other Central Banks to buy 10 year Treasuries to push down the long rate in the hope that the resets can be done at as low a rate as possible. Their best case would be that mostly only duds are forced out which is not the end of the world since they have no equity anyway, while real borrowers survive. However, history tells us that the market is stronger than even the Fed. Anything that causes these bonds to sell-off will set off the chain reaction for all of us. This is likely to happen. Depending on what happens to long rates in the next six months, it might be necessary for the government to bail out those who hold these mortgage packages through Fannie Mae or some other vehicle. But who will want to purchase the debt that the government will need to create since it will likely be looking at borrowing a trillion dollars? Keep in mind that they don’t actually print money, they create debt that someone has to buy. If nobody want to buy, the “price” needs to go up, hence interest rates spike, hence we are screwed anyway. So they may NOT be able to save this thing. Then we will have what was once called “Hard Times”.
“No credit, therefore no buyers, therefore no demand, therefore falling prices.”
= moral hazard for Fed to respike in order to try to offset deflationary pressure with the countervailing force of inflation
“I could never figure out why “banks” would loan money to such poor risks.”
Banks didn’t loan to such poor risks. Subprime mortgage specialists did. Which passed those mortgages off to an investment house, which wrapped them up in an MBS and sold them to an unsuspecting buyer. All for a very tidy management fee. The management fee was the impetus.
The only problem is that those instruments had guarantees and now that they are being broken, the investment houses have to buy them back ! Nobody expect that ! That is why the mortgage originators are blowing up ! It all goes back to them, so far, anyway.
Just wait until the investment houses get hit. Then the plot will really thicken.
What we have seen so far is just the tip of the iceberg.
Kudos to The Boston Herald’s Scott Van Voorhis for reporting accurately in the face of relentless realtor lies and deception.
http://business.bostonherald.com/realestateNews/view.bg?articleid=175000
Question:
I wonder if there is a mechanism whereby I could sell houses/condos short? You know, like stocks…where a broker might let me sell a house I don’t own but that they are holding. And then a few years later I could buy an equivalent house at the market price and cover the short sale with the broker. Hmmm…
Not equivalent in reality, but it FEELS a bit the same: my present occupancy of an unsold spec house. I know my rent covers only about 1/3 of the debt service, never mind the taxes and insurance. The builder has pestered me with “equity sharing” propositions. The most I would offer is to buy the mortgages and charge a slightly lower rate than the present lender. However, the amt the builder wants to borrow (which I believe exceeds the amt of his present mortgages) is 80% of the current asking price, and therefore unsafe. So, no deal. I believe someone will ultimately buy this house for a lot less, but the builder will probably be pissed off with me for taking advantage of his distress, so I am probably not the person who will get the good deal.
From the first articles: “Our number one priority is to get these loans closed and ensure that consumers are not harmed…”
Well which is it? Get the loans closed or not harm the consumers - come on MA, you can’t have it both ways.
Anyone out there tracking the listings on zip to see people jumping the gun on listing for the spring bounce?
Just following the listings under $600K in one zip. The number of listings has been hovering in high 30’s for months. Was 39 on 12/19, 39 on 12/29, has fallen to 38 today. Yawn, this process is slow slow slow.
Posted last night: SD zip showed 181 new listings for yesterday — greater than 1% of current used home inventory (16,410 homes). This is on the high end of what I have seen listed on one day since I have been paying attention (over a year now), and this is the “slow” season.
Anyone remember this article from last February?
The Boston Globe should do an update on the status of Kevin Patey’s clients!
YOU ROCK THE HOUSE, YOU CAN OWN A HOUSE
5 February 2006
Danielle Dreilinger (The Boston Globe)
Rock musicians cram into Allston basements so they can afford to pursue their art. Boston idol wannabes congregate in the cheapest Cambridge digs they can find. Life is all about the music.
But what happens when those musicians eventually decide to settle down?
Kevin Patey is there, man.
Patey, 35, moonlights with the band The Raging Teens “The Aging Teens,” he quips and manages the bands Darkbuster and Emergency Music, plus his wife, singer-songwriter Mary Lou Lord. But for the last year he’s also worked full time for Northeast Lending as a mortgage consultant, telling rockers they can buy a house, even with no day job and no savings.
Patey’s two paths sparked the idea for Rock & Roll Refinancing, a seminar that drew a dozen renters to Central Square club TT the Bear’s Place last month. It was the first of what Patey hopes to be quarterly sessions. The meeting at TT’s paired hard-core financial advice with a short set from the band Blythe Hollow.
While targeting a particular audience is nothing new in real estate, Robert Authier, executive vice president of the Mass. Association of Realtors, thinks Patey may have cornered the rock- musician market. More typical are agents who focus on vacation or retirement homes, Authier says. Still, realtors “tend to target the people they know first.”
Authier adds that he and his realtor brother performed as “The Midnighters” in the late ’60s and early ’70s clear evidence that rockers can reform.
At the TT session, modern midnighters express concerns that range from improving credit scores maxing out the plastic to put together a CD can do a number on them to documenting income and having less than $2,000 in the bank.
In response, Patey and realtor Stephen LaBollita, Patey’s partner in the seminar venture, suggest such options as interest-only mortgages and loans that don’t require income verification. LaBollita owns property in Attleboro, where he runs the small label Rotten Drunk Records. Patey and Lord own a home in Beverly.
Patey’s day-job boss, Northeast Lending’s co-owner Geoff Ricks, 28, explains to a reporter, “It’s not that you want to be in [those loans] forever, but you get in the door.”
Says Patey, “You can always refinance down the road.” In the meantime, “Spend the money on other stuff, like Pabst Blue Ribbon, supporting local rock bands that don’t make any money.”
It’s this attitude that makes Patey with his slicked-back hair, heavy glasses, and turned-up jeans think rockers will feel more comfortable with him than with “the guy with a suit and tie.”
TT’s bartender Shari Eleftherion, 37, agrees. With conventional real estate brokers, she says, “You can almost hear them in the back of their head laughing at you.”
Eleftherion hopes to buy in the next three years, and after the presentation, homeownership seems more realistic. Her off-duty colleague Joanne Miller, 35, shares her reaction.
“It’s time to grow up,” Miller says.
Asked later about ways to entice reticent rockers to join the ranks of homeownership, Patey e-mails, “I suppose I could throw a free house party with Darkbuster playing live upon moving into their new home, but the odds are fairly high they wouldn’t have much of a house left by the time the party was over. They certainly would have house guests till all the beer was gone!”
Wow, that’s up there with feeding the squirrels in sheer housing bubble lunacy!!! But in Feb 2006 the party was clearly over or is this like cab drivers trading Cisco in April 2000?
“Potentially hundreds of Massachusetts home buyers and other mortgage borrowers are being left in the lurch after Mortgage Lenders Network USA Inc. of Connecticut reneged on funding loans it promised to make, banking and government officials said yesterday.”
In the past few months we have begun to see the beginning of the end of the subprime mortgage market. I believe that 100% financing, toxic loans and stated income, even to prime borrowers, is also soon to become a thing of the past.
IMO, it doesn’t matter what the fed does, very soon there will be no lenders left to bail out all of the FB’s and GF’s that never should have been able to get a loan in the first place.
Maybe the coming buying season will be known as “Silent Spring”.
There goes liquidity. Once you remove the monopoly money the prices have no where to go but down.
Look out below.
“There goes liquidity.”
What makes you think a policy response is not ready and waiting to be implemented to offset the incipient loss of liquidity?
2 trillion in resets and by my own estimate roughly 22 trillion worth of realestate in the US. 9% of houses in this country are going to reset. Even if 9 out of 10 are able to make the increased payments…well…you get the point.
That Scott Van Voorhis article on the MAR was sooooooo refreshing! God I’d love to read something like that in the Orange County Register on the CAR. There’s hope after all!!!