“Now It’s Later” For The Housing Bubble
It’s desk clearing time for this blog. “Fraud and sloppy lending practices are likely to be at the heart of recent news of rising defaults in the sub-prime mortgage lending sector,’ said William Poole, the president of the St. Louis Fed, on Friday.”
“Poole said many of the sub-prime loans did not even require that borrowers document the income listed on their loan application with a pay stub. ‘Many companies made too many loans that were poorly documented and now those are coming home to roost as the mortgage interest rates went up,’ Poole said.”
From Connecticut. “There are still a few developers willing to take a chance on building homes in the hope that someone, someday soon, will want to buy them. ‘People pay top dollar when things are hot, and they get better bargains when it’s not,’ Jim McGrath said. ‘We’re giving them a little more than they’ve gotten in the past.’”
“Wisconsin’s home building business started this year as it ended last year: slow. Matt Moroney, executive director of Metropolitan Builders Association, called the January market ‘an election-year hangover.’ ‘With all that negativity, people were not as upbeat or willing to buy a home,’ Moroney said.”
From Florida. “Infrastructure, affordable housing and sustainability were just some of the issues addressed by a panel of experts Thursday during Michael Saunders & Co.’s fourth annual Luxury Living Conference.”
“‘We’re never going to be able to have affordable housing in Sarasota, so let’s shut up about it and worry about transportation,’ Saunders suggested.”
From the UK. “Shelter South West regional manager Jackie Beech said: ‘More and more people in Wiltshire are living with the devastating threat of homelessness. Sky-high prices created by a chronic shortage of housing are forcing more families to overstretch themselves to get on the property ladder.”
“Prices in the Jerusalem property market have been skyrocketing over the past couple of years, raising questions over whether a real estate bubble exists in certain areas of the capital city.”
“‘There is a housing bubble waiting to burst and those who bought property in certain neighborhoods of the capital as a short-term investment could lose out as there are signs of a slowdown in property sales in certain parts of Jerusalem and a decrease in flat sales by foreign residents,’ said real estate advisor and specialist Reuven Bielski.”
From Australia. “Stress in the housing market has led to growing problems with home-loan defaulters at the same time as more buyers say they will take out 100 per cent mortgages. ‘From a lending perspective, a lack of deposit is not a major obstacle,’ Wizard chairman Mark Bouris said. ‘What really matters is ensuring that prospective borrowers can comfortably meet their mortgage repayments and if interest rates were to increase.’”
From Illinois. “Dear Mr. Berko: I missed an opportunity to purchase a condo-hotel in Fort Lauderdale last April because I didn’t have enough money for a down payment. Now I have the money because we sold our interest in a farm. I’m looking at this beautiful condo-hotel in Las Vegas.”
“Dear B.R.: Condo-hotels … ugh — and at $1,000 per square foot! I marvel at the consummate gullibility of a trusting, easily exploitable and greedy American consumer.’”
“Renters be warned: Landlords are expected to raise apartment rents, a report to be issued today by Marcus & Millichap finds. Renters will get a bit of a break in places such as Miami, Las Vegas and San Diego, where investors bought thousands of condos. Since the market faltered in late 2005, many of those condos have been empty, and investors are seeking tenants to help pay the mortgage.”
“Mohamed Amar bought two Las Vegas condos in 2005 that he’s trying to rent. ‘I thought it was a good investment,’ says Amar. ‘But when I tried to put it on the market, the developer started cutting the price, and they killed everybody.’”
“The long awaited shakeout among real-estate agents is finally happening. If hordes of inexperienced agents are scrapping for business, says Christopher Galler, a senior VP of the Minnesota Association of Realtors, that can only lead to ‘a race to the bottom in fees.’”
“Cloude Porteus left his job at an Internet start-up in 2001 to start a career in real estate in Mill Valley, Calif. He says last year was a bust. ‘I didn’t make a penny in 2006, even though I had three listings,’ Mr. Porteus says.”
“Mr. Porteus found a new job last year as a product manager at another Web start-up, in Alameda, Calif. ‘Being at a start-up there’s always risk, but not having to worry about how much money you are going to make every month is awesome,’ he says.”
From Business Week. “Investors swallowed negative news from two of the biggest players in the subprime mortgage market on Feb. 8.”
“‘This is the leitmotif of this whole thing: These people don’t really know what they are doing in mortgage banking,’ says Stuart Plesser, a mortgage lender and insurer analyst for Standard & Poor’s. ‘They are writing whatever loans just to write loans, thinking they will worry about it later. But now it’s later.’”
What a week! My thanks to those who support this blog. Please check back this weekend for news, market observations and topics.
wow, what a wild week. Followers of Ben’s blog have been saying this for quite a while, but many of the topics and predictions seem to be coming to life right now.
those ABX indeces just took a clobbering. And the hoard of class actions filed today against NEW… the prices at auctions, etc… wow…
thanks again for all your hard work, Ben. And thanks to all the great posters and insights shared.
“NEW”
It looks as though the lights may soon go out permanently at their NEW San Diego building (at SR56 & I15)…
http://tinyurl.com/2drqu6
This week’s sub-prime wipeout is eerily like the NASDAQ meltdown in ‘01 when every day stocks found a new bottom. The short daytrading vultures piled on and drove prices down mercilessly, what’s going on now I’m certain in the whole sector. Any short covering rally was the next opportunity to load up and short again… many all the way down to ZERO.
I got a few trades in this week myself and still short FMT. The sweet angle here is, I despise that whole segment and what it did to the RE market, so every dollar I take out makes me smile that much more…
The next shoe to drop would seem to be home prices, though given the cluelessness of both sellers and the MSM about the situation, and the interest of the Fed in maintaining orderly markets, this is likely to play out over a matter of years rather than days. It takes a very long time for the market to get used to lower comp prices. And if the real comps (e.g., foreclosure auction results) are conveniently ignored by official data sources (like DataQuick), the adjustment process might ultimately have to wait until sellers can no longer eat negative cash flow (similar to dot com burnout).
This sub-prime business was the last source of fuel for the re market, especially beginning in early ‘05 when loan volumes started to decline. Credit and this business in particular is gonna get wiped out totally. That spells the end for re prices as foreclosures really accelerate from here. I thing this compresses the down cycle, in pricing declines. We’ll see…
“I thing this compresses the down cycle, in pricing declines.”
If it were all up to the free market to decide the outcome, I would agree with you 100%. But with so many large institutional players (both public and private) with a mutual interest in keeping the bubble aloft, and the endless potential interventions to forestall the inevitable, I am less confident about a quick denouement from here. They would prefer to keep the goose that laid golden eggs for them on life support as long as possible, even though euthanasia is warranted, as it is dying of cancer anyway.
Saxena White P.A. Files Shareholder Suit Against New Century Financial Corporation
Abbey Spanier Rodd Abrams & Paradis, LLP Commences Class Action Securities Fraud Suit Against New Century Financial Corp. - NEW
Law Offices of Brodsky & Smith, LLC Announces Class Action Lawsuit Against New Century Financial Corp.
Ademi & O’Reilly, LLP Announces Filing of Class Action Lawsuit On Behalf of New Century Financial Corp. Investors
http://www.marketwatch.com/quotes/new
There are several more there…
man, those lawyers sure can get the paperwork done fast. there’s what… 7 class actions now? holy moly.
who’s next? NFI? NDE?
Make that 8, now: “Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit against New Century Financial Corporation”
You knew that Lerach would jump on this.
You meant Lereah? Looks like you got the wrong slimeball there…?
Anyway, funny that the investors are suing. Are they claiming they didn’t know this was a sub-prime lender?
No, it’s Lerach - big time class action lawyer out of San Diego. Makes a ton of money for himself, not so much for the actual plaintiffs. The basis of the lawsuits is that NEW misled investors by putting out false financial statements (which they did, since they have stated that they were wrong and must re-state their last 3 quarters), thereby giving the impression that the company was much stronger financially. The lawsuit also looks at the fact that insiders sold a bunch of shares during this time, and that they had no real basis for their forecasts for loan production in 2007.
lawyer scums never make money for the plaintiff. only for themself. but we were talking about class action like a six months ago. i guess it took six months to get enough people to sign up. obviously i don’t know enough of the details. but i don’t care to know. i just want some good laughs.
This call-action crap is actually good news. It will encourage the rest of the slime to come clean, and quick, before they too need to restate. if there any chance of that even happening. I wonder now if there’s even a chance for NEW to rally from here, since anything left will get consumed by all the lawsuits. If they go to $0 and BK there’s nothing left for the lawyers to go after…
If Lerach is getting involved, this is going to be the next get-rich boondoggle for a whole lot of lawyers…
Made my first contribution. Thanks for running this blog, Ben.
I figure it’d the least I could do, especially since I did make some $$$$$ this week based on the info I got partly here about the sub-prime segment’s woes and who are the weakest players…
LET THE FINGER POINTING LOVEFEST COMMENCE!!!
Looks like things are finally starting to unwind very nicely. Time for us to exhale, relax, and enjoy the show.
Neil, get the popcorn machine a-popin’!
munch munch munch.
Definitely time to relax. Tonight, after booking part of my upcoming honeymoon and buying my valintine’s gift, my only concern is what wine to open.
I’d hate to be a stressed FB wondering how to make ends meet. Me and my fiancee spend tons this month (for the wedding) and we chuckled how that made us cash flow neutral.
Unfortunately, I have friends who are FB’s. There monthly expenses, like the majority of Americans, have exceeded the inflow. Cest la vie. I’ll support them, but not financially.
Got popcorn?
Neil
On the bright side, I will get to see if/how the FDIC works. I have a 90K CD with Washington Mutual that does not mature until 2008.
“Fraud and sloppy lending practices are likely to be at the heart of recent news of rising defaults in the sub-prime mortgage lending sector,’ said William Poole, the president of the St. Louis Fed, on Friday. Poole said many of the sub-prime loans did not even require that borrowers document the income listed on their loan application with a pay stub. ‘Many companies made too many loans that were poorly documented and now those are coming home to roost as the mortgage interest rates went up,’ Poole said.”
It is nice to hear a prominent Fed spokesman speak directly to the problems with subprime lending. But I am still wondering what form of social engineering the gubmint will cook up to compensate for the vanishing subprime bid. (Being a Chicago guy, I am guessing Poole might be happiest if the answer to that question was “Nothing at all.”)
Another Poole quote from the article:
“Some of this lending probably involved actual fraudulence where people misstated their income and qualifications to take out loans,”
to which I say……. REALLY? I’M SHOCKED, SHOCKED THAT THERE HAS BEEN GAMBLING GOING ON AT THIS ESTABLISHMENT!
probably
#%&~?@$!!!
Love the Casablanca quote.
The French Chief was a great character.
Got popcorn?
Neil
I’m praying the government will stay out of this because you and I are the bill payers on government bailouts and I don’t want to pay. They made their bed and short-sheeted themselves … let them sleep in it.
‘We’re giving them a little more than they’ve gotten in the past.’
How generous!
What, are they giving them a little lube now? Or maybe a reach around?
Yeah, an Option ARM reach around!!
Short Rusty Trombone (RTB)
You stole my quote!
LMAO just what the FBs need “more than they’ve gotten in the past”
Ben over and well give you more!
Bark! Beg! Talk dirty! Prepare for more!
All hands on deck! Prepare for the fully extended talleywacker!
:-):-):-)!!!
From Florida. “Infrastructure, affordable housing and sustainability were just some of the issues addressed by a panel of experts Thursday during Michael Saunders & Co.’s fourth annual Luxury Living Conference.”
“‘We’re never going to be able to have affordable housing in Sarasota, so let’s shut up about it and worry about transportation,’ Saunders suggested.”
Is it me, or does this woman remind me of Barbara Corcoran? It also goes with that buy now or be priced out forever. I hope Sarasota home prices crash so they’ll throw this lady to the dogs.
Yeah, that Saunders woman sounds like a real piece of work. If prices in Sarasota follow those in places like Naples, they’ll have affordable housing in no time. The article mentioned that the median house price in Sarasota was around $285K, so if they shaved 33% off of that, I’d bet that would make for some affordable housing (median would be around $190K - need a HH income around $63K for 3x income).
33% off…that seems like the magic number to me.
Wal-mart special
I love quotes like this too.
“Who cares if nobody who works here can afford a place to live; that’s not a real problem. Workforce housing is a thing of the past”.
So amazingly stupid. It just boggles the mind. Sure lady, you can bus people in from GA to work at your stores, be your nurses and teachers, fix your plumbing, etc. I am sure that’s going to work out just great for everyone involved.
Why can these people not see the eventual side effect of pricing “everyone” out of the market? Are they really that shortsighted.
What will happen? Plumbers will go from 50/hr to 125/hr. And then they will be able to afford to live there again. So stupid.
Actually, that is what they do. They bus people in, making a low paying job even more onerous with a long commute. Of course, they have trouble keeping people (one can’t find good help any more!) but heaven forbid some developer build affordable housing in the area and lower the “comps”! (Greater Boston in a nutshell, btw.)
There will be a bus, and they will complain about getting “stuck” in traffic behind the “empty” bus. Apparently, poorly paid service workers are invisible … I guess it would fit.
If I sound bitter … well, I’m a bus driver, and I just about lost it when some jerks on Tower Rd in Gainesville complained about the “empty buses holding up traffic” on one of the busiest non-student routes in the system. Earth to NIMBY: empty buses don’t hold up traffic, buses boarding and unloading passengers do. DUH.
I thought Boston was making some kind of big tunnel to keep all those buses underground and out of sight?
she is in my opinion just a complete dumbass…but who am i to state the obvious…she’s a no kidding RE HO
And a “luxury living conference”? What the hell is that?
Initially I thought it would be nice if a hurricane came along, the CAT 5 kind and wiped out Sarasota Real Estate, but then contemplated that it would just be a nice exit strategy for all these underwater investors, then it didn’t seem quite so funny.
“WALNUT CREEK, Calif., Feb. 9 /PRNewswire-FirstCall/ — The PMI Group, Inc. (NYSE: PMI) today announced that David Katkov, President and Chief Operating Officer of PMI Mortgage Insurance Co., will speak at the Goldman Sachs Housing Conference, which is being held in New York on Monday, February 12, 2007.
Mr. Katkov will participate on the Trends in Credit Quality panel. The
discussion, at 10:30 a.m. Eastern Time, will be webcast live and can be
accessed by visiting http://www.pmigroup.com/shareholders/ and then clicking on Presentations and Webcasts. A replay will be available approximately two hours after the conclusion of the live presentation and will be accessible through March 12, 2007.”
The Goldman Sachs Housing Conference, hmmm, I’m not sure what to think about that….? How about “the Trends in Credit Quality panel”?
‘“Renters be warned: Landlords are expected to raise apartment rents, a report to be issued today by Marcus & Millichap finds. Renters will get a bit of a break in places such as Miami, Las Vegas and San Diego, where investors bought thousands of condos.’
Not so fast. Rent is determined by economics, not Las Vegas style emotions and loose lending. Anybody with ANY income at all has already purchased a mortgage, regardless of downpayment, credit score, etc. The FBs might find a smaller pool of renters in places like CA!
True –unless they find a way to start funneling Fed/GSE bubble-bucks to renters. The banksters are so good at blowing bubbles, I wouldn’t put it past them to at least try. How about pick-a-payment rentals? 100-year balloon leases? Pay rent with your “magic” credit-card checks?
Rental bidding wars anyone?
“Rental bidding wars anyone”
Sounds comical but I kid you not, I once had to mucsle my way past 2 other couples so I could sign a lease. The slumlord said she would get back to me after checking my references and if they weren’t spectacular… she had taken backup offers…LOL!!
I have money and I could buy. But, I prefer to live 1 block from the beach in San Diego and pay 1/4 in rent as somone who bought right now would pay for an equivilent mortgage.
And when my porch light burns out the landlord fixes it for free!
My life as a homeowner: something breaks, wife complains, I waste weekend fixing it.
My life as a renter: something breaks, wife complains, I hand her the phone to call the landlord, and I go enjoy my weekend.
“And when my porch light burns out the landlord fixes it for free!”
In Northern Virginia, many leases state that the tenant is responsible for all repairs under a threshold (usually $75-$100). It’s in the lease.
“Some of this lending probably involved actual fraudulence where people misstated their income and qualifications to take out loans,” Poole said in answer to a question after a speech.”
PROBABLY??? No, this lending DEFINITELY involved a lot of actual fraud. And the regulators allowed it, and the GSEs and others bought this crap.
What a joke! He knows the truth, if not he is an idiot and should be fired!
Exactly! Acting like he’s just dicovered this fact is like claiming he never knew there was this mountain range called the Rockies in the middle of our nation. Either way, he’s an idiot for thiniking we’d believe the lie.
“the is an idiot”
Whatever he is, idiot ain’t it. You can’t survive the U of Chicago econ dept winnowing without a brain.
Then he is blind or just a liar!
But if he speaks the truth here, it will be amplified in the press: “The FED said …”, and he could be called the undertaker of the mortgage market. With qualifying his statement by “probably” makes it less visible and reduces the burden of proof on him, while being able to say later that he had said it before.
Nicely stated, and C&C, take note. With Fed-watching a major sub-sector of the financial economy, Fed deputies who want to propagate their personal memes in the press are under obligation to use weasle words in order to avoid accidently shooting the gun that starts an avalanche. I personally thought it was highly significant that a Fed president suggested point blank that lending fraud was a substantial issue.
Every Joe 6pack and his brother is in on it. Huge amount of money with just a few signatures and Joe’ll bring home 100K of cash.
Of course Joe repeated this a dozen times , and told all his friends to do
likewise. Even Egyptians, Jordanians are in on it:
http://www.columbusdispatch.com/emailme/emailme.php?story=245041
And repeat this story thousands of times across the country…Sounds just like the one(s) Paladin has mentioned.
This whole scam needs to stop and these guys need jail time.
Matt Moroney, executive director of Metropolitan Builders Association, called the January market ‘an election-year hangover.’ ‘With all that negativity, people were not as upbeat or willing to buy a home,’ Moroney said.”
——————————
BS. Was there an election-year hangover after the 2004 elections, you jackass? Just one more stupid REIC excuse to try to explain away the (oncoming/ongoing, depending on where you are) crash.
Of course not - his side one that one.
Of course not - his side won that one.
He must not follow the news.
It’s the fact that the world has weather that has caused the slowdown.
Matt Moron (maybe thats his real name) how upbeat could you get if the mortgage is higher than most peoples’ salaries?
These morons will come up with any excuse. Next, it will be because the AFC won the Superbowl. Maybe sales are off because the Croc Hunter died.
http://www.mortgagenewsdaily.com/292007_Cash_Out_Equity.asp
“Americans are continuing to treat their homes as cash cows according to a report released this week by Freddie Mac.
During the fourth quarter of 2006, 84 percent of new mortgages that were the result of refinancing were “cash out” loans. Cash out is defined as a new mortgage that has a contract amount at least five percent higher than the balance of the mortgage it replaced.
While the rate of “cash out” refinancings was down slightly from the 87 percent level reported in revised figures for the third quarter it still resulted in $70.7 billion in equity pulled out of American homes in a three month period. In the third quarter, refinancing “liberated” $80.2 billion in cash.”
Is it just me, or has the word “liberated” changed meaning in the last few years?
Refinancing itself accounted for 46 percent of all mortgage loans during the fourth quarter, up from 41 percent during the previous period.
“Frank Nothaft, Freddie Mac vice president and chief economists said, “The share of mortgages that were for refinance rose in the fourth quarter as 30-year fixed mortgage rates came down to where they started the year. Falling mortgage rates encouraged some people to refinance to lower their payments for example if they had an adjustable-rate mortgage that was scheduled to reset soon, but the primary driver of refinance continues to be equity extraction.”
That is demonstrated by another piece of information contained in the report. The median ratio of new-to-old interest rates was 1.06, that is, one half of borrowers who refinanced took out a loan that increased their contract rate by 6 percent or about three-eights of a percentage point.”
I’m not sure all that “liberated” money goes to consumption anymore. Wouldn’t 6% be app. the increase in principal if you abuse an option ARM to the max?
If that “liberated” equity is going to service debt, it’s an ugly spiral down from here.
Yep. Americans have no choice but to “liberate” what ever options they have. But, as I’m seeing more and more lately, this game is in the ninth inning. No more rope left. Somethin I’m getting accustomed to saying lately is “Sorry, there’s nothing I can do for you.”
Just curious - what is their response when you tell them that? Are they upset? Resigned to their fate because they’ve been told that by others?
Actually, the liberated equity may also chase returns in the equities markets to try to beat the mortgage rate.
While that may or may not be a bad idea (depending upon their resources and their level of experience in investing), I don’t think it’s happening too much by the average FB. Any cash they “liberate” will go to pay down past CC debt (which they will proceed to run up again) or buy new cars and toys. It’s the American way.
Sad but true. Bored Americans with no sense of purpose resort to spending.
Equity, this is CA… “We don’t need no stinkin equity”
I think there’s a reason that the Sub-Primes use the LIBOR index for their loans. It has to do with the borrower either being LIBORated from their house (once the adjustments start) or LIBORated from their money (if they can somehow afford the adjustments).
But seriously, the LIBOR is London-based index and so the Fed can do its thing and drop money all they want, but they better convince the British to do the same.
Thank YOU for working so hard and having this Great Blog Ben!
Maryland numbers for January just came out - everywhere got an up bounce. I’m hoping it was a one time event.
Apparently the same happened in San Diego, median up 0.4% from December (nobody reports Y-o-Y anymore, I wonder why?).
My explanation is that the first time buyers have dissapeared. That moves the median up, as the $400k (San Diego!) houses don’t sell anymore……
Professor Piggington address’s the supposed ‘Bump’ in San Diego prices.
http://piggington.com/
I’m thinking it was sellers that had to sell and buyers that had to buy.
Look up historical graphs on housing cycles. You’ll find that there is no down cycle without little blips to the upside on it’s journey to the bottom. The last bust of the late 80’s, early 90’s was no different. I’ll try to find a link I can post, or if someone has one ready to go, post it. It makes it easier to see that this is a normal down cycle trend.
Same with secular bear markets in stocks. Check out the 1930s (documented in Irrational Exuberance by Robert Shiller) — one or two significantly-up years in the middle of a downturn from 1929 through 1945…
I truly believe it’s buyers being suckered into thinking that prices will go up again in the Spring, so they better hurry and get the leftovers this Winter. Many of the foreclosures I see are are from buyers in the Fall and Winter of 2005/2006. I remember my agent calling me at the time and breathlessly telling me about all the incredible “deals”.
In my zip code in Virginia (according to http://www.mris.com/reports/stats/ for the month of January, there are 3.5 years’ worth of inventory for properties over 500K. (85 on the market, 2 sold). I guess I’ve got time to wait.
Before you shell out $690,000 for that glitz, glint, glimmer and gleam, try some common-sense research, which may be difficult. After a $70,000 down payment, you are going to pay 7 percent on a $620,000 mortgage, which is $43,000 in interest costs. Assume that your unit is rented 75 percent of the time (that’s a generous assumption) at $275 a night, which is $75,000 a year in rental income. However, 50 percent of that rental income stays with the hotel, so you keep $37,500. Right off the bat, you’re $5,500 in the hole. Include taxes ($5,000), maintenance ($5,000), management fees ($4,000), maid service ($10,000), plus insurance ($2,000) and your losses exceed $31,000 a year.
“A sucker is born every minute, and a promoter born every hour to make certain no sucker is spared.”
If you buy that condo-hotel in Las Vegas or even one in Miami, Orlando, or Fort Lauderdale, Fla., make sure that your group health policy covers psychiatric care because you’re going to need it.
——————————-
Now there is a man who makes sense. These condo-hotels are such a bad idea.
I agree, but one of the numbers is WAY off.
Taxes on 700K in S. FL are more like 12-14K, depending on the area, not 5K. Not that it much matters, as the investment is a terrible idea even with 5K in taxes, but at 12K, its even worse.
He was doing the numbers for a Vegas condo-hotel, so I’ll assume his numbers were about right for that. But, yeah, it makes even less sense in FL. You actually should the read the article, it’s pretty funny. The guy writing in is totally gung ho on the idea, and columnist just shoots him down in not so pleasant fashion.
That’s just Berko’s style. His is a dying breed.
The weird thing about our times is that we’re so rude (& I have been overseas–people treat each other differently in public than here) and yet when it comes time to have an honest discussion all we can do is kiss each other’s asses and spew bromides that won’t “offend” anyone.
Come to think of it, I wasn’t particularly taught how to be polite in school (except in part by a few remaining “old school” teachers) but we were taught how to be PC, in both the good and bad senses. For example, we had a program called “Understanding Handicaps” which I think was really positive, but on the flip side it was drilled into us that you could never criticize anyone’s religious or cultural beliefs, no matter how ridiculous. I work with a Brit who just flat off tells people when they’re full of shit. Gets him in trouble because we Americans seem to see it as an affront to personal honor or something.
People oughtn’t be faced with nasty racial slurs in the classroom or elesewhere, but we’ve gone too far when we push the idea that nobody should feel bad, ever. And I guess this spoiled child syndrome is how you get people who think “I can do whatever I want,” even if they’re inconveniencing or upsetting others.
Yep and because it’s a condo-hotel, you don’t even have the right to live in it!!! As it should be available 24/7 for customers…
Where I live in Tampa, the taxes on that would be $17,500.00, which is even worse. In some parts of Tampa they would run $21,000.00. Buyers often are NOT told in advance what the new taxes will be, but rather when the current taxes are, even though the law requires realtors to disclose all of this.
This was in reference to Michael Fink’s comments above concerning a 700K property.
Don’t you have to pay income taxes on that rental income, too?
No, because you won’t have any income.
Income = Revenue - Expenses
“Cloude Porteus left his job at an Internet start-up in 2001 to start a career in real estate in Mill Valley, Calif. He says last year was a bust. ‘I didn’t make a penny in 2006, even though I had three listings,’ Mr. Porteus says.”
This guys chasing money the wrong way…
Let’s say I’ve been responsible and put back 6 months earnings as my emergency fund. If I didn’t make a dime in three months, I’m lookin’ for a real job with a real paycheck. Who, in their right mind, goes a whole freakin’ year w/o an income?
Wow, he had three whole listings during an entire year. Hard to imagine he didn’t make a killing.
If that guy is coming back to a high tech job maybe its time to become a RE agent.
NAR Blow ME. I hope all of the realtors just bought extra investment homes in the last month. Its over and more and more people are realizing it. Watch for a stock market crash in the near future as the icing on the cake. Look out below.
Got feces? -carl
All I can come up with is grubner and “Got Scotch?” Damn, I feel so unworthy.
what about builders becoming farmers? leveling the housing stock for reverse lumber extraction? or shipping fully built housing to china as an export? These are really good ideas I have.
Also failed developments that are empty could be used as scenary/props for action movies. Like they could blow up a development with 30 or 40 empty homes to simulate an earthquake documentary or something like a volcano erupting. (done in the past I am sure but there could always be a sequel) Ah the tax rates are too high no studio will do that…
“‘It’s my opinion that, probably, our median price is not going to go down significantly,’ said Joan Lehman, broker in Grass Valley. ‘Our area is different from other areas down there. They have so many new homes, and when they don’t sell, builders give all kinds of incentives.’”
our area is different down here…did you guys see that bullshit? ok, i’m here to tell you … i’m about 20 min drive from grass valley…she’s on crack…the whole effin’ area is gonna drop to about 150k median at best…the only thing holding this place up was/is dumbass bay area specuvestors
Mortgagedaily.com is reporting that Merrill is yanking warehouse lines left and right. Look for a bigger blowup soon.
Here’s the Merrill goods:
http://www.brokeruniverse.com/hearing/
In some quarters it’s being called a liquidity crisis, the likes that haven’t been seen in the subprime sector since 1998. On Friday, National Mortgage News Online reported that Merrill Lynch was making margin calls on certain warehouse customers, asking these non-depositories for more capital. Meanwhile, we’re told that higher-ups at Merrill are questioning why it bought First Franklin — and why it paid so much money for it. Will heads roll at Merrill? A spokesman there told us that yes, margin calls are occurring, but the company is more than happy with First Franklin. We’re also told that some Wall Street firms are getting ready to trim back their warehouse lending operations. Which Wall Street firm will be the first to run screaming from the industry, shouting, “What have I done? What have I done?” Stay tuned…
Lenders Direct CEO Mike McQuiggan had this to say about the subprime carnage: “I see our industry in true recession right now. It’s touching everybody.” LD closed its wholesale platform on Thursday…
One source who’s been in the industry for 30 years told us that loan buybacks could affect, at worst, 10% of subprime production this year. If B&C lenders fund $600 billion, that would be $60 billion…
In case you missed it: HSBC increased its loan loss reserve on its subprime business to $10.6 billion, a 20% gain from an estimate it gave in December. What’s so strange is that I don’t recall the December number ever being publicized. I must’ve missed it. HSBC also is dropping its stated-income product and will cut its broker network. (Its purchase of Household Finance back in 2003 is not looking so good, is it? Expect heads to roll.) For the full story see Monday’s NMN. Don’t subscribe? Call (800) 221-1809. Also in Monday’s NMN a story by NMN’s Bonnie Sinnock about two U.S. firms buying a Mexican mortgage brokerage firm. Mexico’s vacation market is booming…
Subprime lender New Century Financial saw its stock dive by about 40% in two days after saying it would restate earnings because of accounting gaffes tied to loan buybacks. New Century, as you might recall, got socked around pretty good in the B&C meltdown of 1998, only to survive and emerge stronger…
And now for some good news: The former president of what was once the nation’s largest residential lender is buying mortgage firms. See Monday’s NMN…
Plenty of mortgage firms are for sale right now and many were sold over the past year. To track the action, check out the “M&A Database,” a NMN product. For more information e-mail Deartra.Todd @SourceMedia.com…
We’re told there could be an update this coming week on the sale of Ameriquest/Argent…
Congratulations to Matt Smith of Providers Mortgage of Oceanside, Calif. Matt/Providers is the first mortgage brokerage firm to answer our annual survey. To participate send an e-mail to Nequanya.Johnson @SourceMedia.com…
By the way, NMN is now publishing for free its complete rankings on commercial mortgage lenders and servicers. Visit our website…
Conspicuously absent at last week’s House subcommittee hearing on Katrina-related housing problems: Housing and Urban Development secretary Alphonso Jackson. Maybe he had to wash his hair…
More bad news for Michigan’s mortgage and real estate market: Drug maker Pfizer is cutting 2,410 jobs in the state. It’s a good thing the auto industry is picking up…
WASHINGTON NEWS: Federal budget documents indicate that the FHA Mutual Mortgage Insurance Fund could incur a loss next year — the first in the program’s 70-year history — unless the Federal Housing Administration increases premiums or Congress approves a Bush administration FHA reform proposal. See Brian Collin’s story in NMN.
MORTGAGE PEOPLE: Michelle Minier has assumed full CEO duties at Financial Freedom Senior Funding Corp., a reverse mortgage lender owned by IndyMac. Lenders One, an alliance of independent mortgage bankers, has named Bill Federhofer director of training. John Bonfiglio, a group managing director at Fitch Ratings, has been named head of U.S. structured finance at the rating agency. American Brokers Conduit has hired H. Hilary Hamer as senior vice president of its Midwest region. Mr. Hamer joins ABC from Wells Fargo Home Mortgage.
SURVEY NOTICE: Loan officers take note — NMN’s annual survey of LOs is now ready. Click here for the survey.
DATA NEWS: NMN has raised prices on its popular Quarterly Data Report and Alternative Products Quarterly Data Report. The QDR tracks the nation’s top lenders with breakouts on subprime, and servicing. The AP-QDR focuses on second-lien funders, alt-A lenders, payment-option funders and more. For more info contact Deartra.Todd @SourceMedia.com. Looking for a great contact directory on mortgage bankers, servicers, brokers and loan officers? Want access to online news reports on lenders/servicers appearing in the directory? Order the Mortgage Industry Directory which is available online as well as in print. The MID/eMID has exclusive rankings on lenders and servicers that you cannot get elsewhere. For more information e-mail Delores.Stokes @SourceMedia.com.
Only six more days until pitchers and catchers report to spring training.
That’s it for this week. See you next week.
Sorry, this link will work for the Merrill word:
http://tinyurl.com/2xxcwq
Good information and its sounds like the $hit is only beginning to hit the fan.
I’m guessing that a lot of you probably have already received this in your emails too, but for anyone who did not:
A Special Message From Christopher Ruddy
Publisher, NewsMax.com
2007: Year of Financial Reckoning?
Why the Dollar Could Crash and
Gold Skyrocket This Year
Dear Investor,
I hate to be the bearer of bad news, but as we enter 2007, the U.S. economy is balanced on a knife’s edge. Events we now consider very likely could well have a huge, negative impact on your investments unless you are prepared.
What I am talking about is a very possible run on the dollar with major effects on stocks, bonds, real estate, and most other investments.
While a major 2007 recession is certainly NOT a sure thing, the risk is now high. Even worse, there is little that financial authorities can do to stop it.
That’s not just my opinion. It’s the opinion of virtually every editor and financial analyst at NewsMax.
For decades, consumers have been spending like there’s no tomorrow, while real estate prices, stocks, and commodities have reached ever-greater heights.
Despite the 2001 stock market fall, it seemed like just about everyone was becoming “paper millionaires” thanks to the real estate boom, and the easiest money this country has ever seen.
But in 2006 the tide began to turn, with real estate prices tumbling nationwide, and interest rates starting to move sharply up.
2006 was also the year that many Americans began to wake up and realize that while everything looked rosy on paper, enormous hidden “stealth inflation” was ravaging their savings and eroding their purchasing power.
However, what most Americans have yet to realize is that decades of “easy money” have not only created an illusory “pseudo-affluence”, it also threatens our entire economy and has left financial authorities with nothing but bad alternatives:
On the one hand, the Federal Reserve, needs to keep pumping more money into the economy and keep interest rates low, to keep the financial party going. On the other hand, low interest rates and enormous hidden inflation have been steadily eroding the purchasing power of the dollar, causing foreign investors to slowly but steadily abandon the dollar.
Today, our economy is balanced on a knife’s edge: If the Fed keeps stealth inflation high and keeps interest rates artificially low, foreign investors who hold trillions of our debt, will accelerate their dumping of the dollar, threatening to destroy the dollar and plunging our economy into recession.
However, if the Fed stops printing money and increases interest rates, it will be disastrous for businesses, families, and every level of government, which have accumulated enormous debt.
The financial situation today is so precarious that even a small change could push our economy over the edge. Even doing nothing could mean a major recession in 2007.
Chris Ruddy wouldn’t be in the business of selling gold would he?
I am a gold bug and I sold a substantial portion of my gold this week. I think we may have more upside but I believe in the theory of paranoid investing (It is your money they are not going to let you have it) So, I decided to pare down my holdings for now.
I do not have a good understanding of money flows but with all the supprimes going under having some cash on hand to buy things cheap may be a good strategy. I owe my house a lot of postponed maintenance.
An old link but worth a read:
http://www.dissidentvoice.org/July05/Whitney0727.htm
Yeah, that was good. He’s now calling for a dollar collapse. These people have completely eroded whatever confidence I had in federal reserve notes. If you’ve ever wondered why precious metals funds can be top performers and yet never receive 5 stars from morningstar, it’s because morningstar’s people went to the University of Chicago, with the rest of the ideologes. Their time is running out. I truly believe that a dollar crisis will occur once a critical mass is attained. The housing/mortgage bust just might be the catalyst.
bet 1 in 5 jobs came from MIC since 2001
war& homeland worryland
Wow he really called the top of the market. He says he doesn’t believe Greenspan will be able to inflate his way out of this. I wonder if he believes this now that they are not publishing M3?
My friend rents from a 20-something mortgage broker/ speculator. He owns about a half-dozen properties in N. Virginia including a $1 million house that he upgraded to in 2005 at the peak. (Wise time to buy.) His portfolio was acquired starting 2003, so some of it is still in the black.
My friend’s condo was purchased near the peak and is about -10% ($30k) if he sold it today. He also runs about $600 negative cashflow (own admission); not sure if condo fee ($250) is included in the negative cash flow. Also claims to have put in $15k to renovate the place; of course, it has granite counters, but the building is a POS condo conversion from the 1980s boom.
Now the guys is obviously doing well for himself, although I expect that he is leveraged to the hilt and needs good income to support all this fun. I think he is on his fifth job since mid 2005. (He forwards his new job contact info every time.)
The irony was that the latest one was, you guessed it, New Century Financial. Can someone tell me why this guy is bouncing from mortgage job to mortgage job like this? His recent title is Portfolio Lender. As these people lose jobs or suffer reduced earnings then the default pressure will increase; it’s a self-reinforcing cycle because the REIC people are the biggest investors and they can’t support negative cashflow at some point since they aren’t bringing home the bacon. Also, they naturally maxed out their primary residences.
Another condo in the same development was also owned by a mortgage broker and the guess on the street is that nooon has purchased a unit to occupy since 2003. Saw some good flips making close to $100k in little over a year in this development in 2004-5.