“The Real Slide From Euphoria”
The East Valley Tribune reports from Arizona. “New-home sales continued to drag in January. Some 3,746 new homes were sold in January, down 7.1 percent from the same period in 2006, the latest housing market report from real estate analyst RL Brown shows.”
“Permits were also down year over year, with builders pulling 2,876 last month, compared with 4,423 in January 2006. But, Brown said, the number of permits has been increasing slightly the past three months.”
“‘It’s an encouraging sign,’ he said. ‘It appears that the real slide from euphoria has bottomed out.’ Builders have been cutting prices and readjusting their products, offering fewer extras like granite counter tops to make homes more affordable, Brown said.”
“‘I think the next move we’ll see more and more builders cutting the square footage in houses,’ he said. Builders are expected to pull about 40,000 permits for new homes in 2007, compared with 63,000 at the height of the housing boom two years ago.”
“Brown’s report estimates that builders need to unload 12,000 to 14,000 houses built on speculation still on the market throughout the Valley.”
The Las Vegas Business Press. “The writing was on the wall for months. Employees at Silver State’s loan pricing office in Addison, Texas (the division that packaged and sold loans to investors through securities traders), were seeing second-lien loans being sold for losses of millions of dollars. Employees warned company executives that things would have to change, and fast. They were consistently rebuffed, they say.”
“Last month, Silver State CFO Tom Edington abruptly resigned, citing personal reasons. Again, employees were told there was no need to worry.”
“‘We were told everything’s fine. That the owners have deep pockets,’ said one, a five-year veteran of the mortgage business, who now finds herself out of a job. Between 800 and 1,000 employees worked for Silver State nationwide.”
“The day before Silver State closed its doors, pricing-support unit employees finally got the confirmation in a company-wide e-mail that the end was near, despite management’s calm denials throughout the previous weeks.”
“Michael Stoddart, the company’s CEO, wrote on Feb. 13: ‘I know everyone is out there wondering if we are closing our doors today. The honest answer is maybe. We will either get capital infused today from a long term partner, to make sure we (have) cash flow and have breathing room, or we will close our doors if it does not happen.’”
“Silver State closed the following day. Employees have not received any further communication from the company, not even their final paychecks or payment for accrued vacation time.”
“Another Addison-based employee, who also wished to remain anonymous in hopes of getting paid for her last two weeks there, said she understands that employees in the Las Vegas headquarters were so upset that computers and other office equipment were stolen, and Silver State’s owners were threatened.”
“‘I heard the owners were told not to come to the office, that they received death threats,’ the Texas employee said.”
“Silver State joins a host of high-flying companies, 22 have gone bankrupt since December, that took advantage of expansion in the credit market in 2001 to offer loans to a wide variety of borrowers who would be denied credits in less-robust economic times.”
“Scott Bice, commissioner of Nevada’s Mortgage Division, which is investigating Silver State’s collapse, says he remembers seeing outrageous loans being made by alternative lending companies. One borrower, he says, took out a $1 million loan with no down payment and received the money despite having a very low credit score.”
“‘Because of the (high) default rates, the market has changed,’ Bice reported. ‘Loans you could get six months ago are no longer available. The credit market has tightened up.’”
“Silver State not only made such loans, it also served as a clearing house for other mortgage brokers. The company packaged the loans and sold them to investors as mortgage-backed securities. At one point, the company held $500 million in home loans. But when the housing market began to slow, borrowers started defaulting and investors forced Silver State to buy back the loans, which then could not be resold without significant losses.”
“‘Who wants to buy a loan they know will be defaulted on,’ one of the Addison employees asked, summing up the general feeling among employees handling this part of the business.”
“Three months ago, Silver State’s big institutional investors, among them Bear Stearns, began to jump ship and refused to buy any more loans, an employee in Silver State’s loan pricing division says. Washington Mutual was eventually forced to pull the plug before it too lost significant amounts of money.”
“Stoddart detailed why the company was going under in his e-mail to employees. ‘Our issues have to do with stale loans. These stale loans are in an under-curtailed position, making the warehouse lines freeze our incoming cash flow until the loans are purchased.’”
“Stoddart told employees the company needed an immediate infusion of $5 million. He acquired a $3 million guarantee. It wasn’t enough.”
‘In Las Vegas alone, 5,688 properties are in pre-foreclosure, 2,926 homes are up for auction and 3,918 bank-owned homes are for sale, according to RealtyTrac.’
‘Thousands of Pima County homeowners will see increases of $100,000 or more in the tax value of their homes when they get their 2008 valuation notices in the mail this week. Cindy Ayala said there is a bitter irony in the high valuations in her area. Her own valuation increased more than 25 percent. ‘We are the poorest neighborhoods, we have the lowest incomes in Tucson, and they increase our values the most,’ she said. ‘
‘The telephones at the Yavapai County Assessor’s Office have not stopped ringing since property owners received Notices of Value for the 2008 tax year. Stan Rowley said his Full Cash Value increased from $238,627 to $334,172, a difference of $95,545. ‘I am trying to find out how they figure the amount. Do they just throw amounts in a hat? According to the assessor’s office, they don’t have a prescribed formula,’ Rowley said.’
Don’t you “get it” yet? They figure out how much they want to increase their budget and their paycheck then they calculate the increases accordingly.
This whole prop tax increase and insurance increase is an old dance, repeated every up cycle.
Insurance in Florida had the added bonus of the Hurricaines to justify rate increases.
Property taxes will come down as the market prices decereases, it’ll take a little time to pry the dollars from the politicians claws, but will happen. The same with insurance. Part of the insurance increase was that new, hogher value of your home that they had to cover. Value goes down, insurance goes down. Give it time. My condolences to those who will pay real money through no fault of their own.
One little caveat to all those bitchin’ about this. If you had sold your house at the “inflated rate” about which you are now screaming, would give the money back? I think not.
Hey, I don’t blame you. I wouldn’t give it back either. I’m just sayin’…….
The unspoken downside to this newly discovered “wealth.” They can’t reap the benefits of equity gain without selling (or borrowing through HELOC), but they now have to write a larger check every month with real money.
It’s all fun and games until someone loses an eye.
Exactly right. It’s a real gain if you can borrow against it. If not, then appeal it. No grandmas will lose their houses… only lip-licking descendents.
Do they have the initialtive process in NV? If so, maybe a little prop 13 action would fix things.
I own a lot in Sedona in the Village of Oak Creek I purchased some 4 years ago and now my taxes have doubbled with no improvements. I was going to build but have put that on hold for a while . I have asked for a petition to try and get an adjustment but have little faith in GOVERNMENT to do the right thing. May be we ought to go Prop. 13 like Calif and send a big message to these thieves that think we can affor this SHI…….
Bet you haven’t complained about the appreciation in your lot the last 4 years eh?
I do not care about the appreciation as I just wanted to be able to live there. The problem is the lot will not sell at the appraised level. If it did I would sell it an move on. So I get to pay taxes on an over valued piece of property. WHY DO YOU PEOPLE NOT GET IT!!!!
This sounds alot like something mr Cote championed. The problem is you are looking at it from the wrong side of the equation, imo. Taxation isn’t the problem its spending. So vote for people who will spend less. When you distort the taxation policies a la prop 13, all you do is shift the burden, not eliminate it.
Josh
Amen. Any scheme that caps taxes for a select group of owners, and lets another group get hit with bigger increases (Prop 13, SOH), actually encourages higher spending.
You want lower taxes? Elect governments that spend less money.
I bought my house in the Coronado district of Phoenix in 1975. Paid it off in 1993. By 2001 I had paid in property tax more than the purchase price.
This surely doesn’t seem right to me.
The house has no more value to me than when I bought it as it is my fast intent to move only to the graveyard.
“Builders have been cutting prices and readjusting their products, offering fewer extras like granite counter tops to make homes more affordable, Brown said.”
Builders are able to buy / install features like crown molding, granite coutertops, wood floors etc at a fraction of what the retail customer would pay. Removing / not offering, these items does not add significant cost savings. They are nice extras to boost the profit margins. These days, builders are dropping prices and accepting less on the gross margin line.
Nice catch –you obviously have a finely tuned B.S. detector.
Indeed. One of my coworkers (a salesman who’s remodelling his house one room at a time by himself) was pricing out granite countertops. He was quoted $13k to $15k for the slab and installation, but found a remnant for $800 + cutting if he installed it himself.
Not to mention I haven’t seen a single house for sale by a builder that still didn’t have 5-6 figure incentives! Show me a builder not offering incentives! In fact, I’m seeing more extras and ‘credits’ toward ‘upgrades’ than ever before.
“Builders have been cutting prices and readjusting their products, offering fewer extras like granite counter tops to make homes more affordable, Brown said.”
How does a granite countertop make the homes more affordable?
does the price decrease once they put one into the house, or how does it work exactly???
I can’t believe that ponzi schemes like Silver State were knowingly allowed to go on.
Step 1. Find a would be home buyer that can fog glass.
Step 2. Lend him as much money as you can, despite his inability to pay it back.
Step 3. Bundle a bunch of these mortgages together and sell them to unsuspecting investors.
Step 4. Collect a big fee for doing this.
Step 5. When the defaults arise, claim bankruptcy.
Step 6. Retire in the Bahamas.
*shakes head* Wow. I just can’t fathom that this went on, but apparently it did. And everyone made money along the way. Now the homeowners, banks and MBS holders are stuck holding the bag.
Even the innocent homeowners are going to get hurt by the big fall in house prices.
I can’t believe that people bought the MBSes ! Aren’t the bond rating agencies supposed to do some due diligence ? Were these products rated ?
So now the middle men just claim bankruptcy and walk away with the earnings they collected ! Surely some of the big players that can’t just claim bankruptcy are going to get caught in this. Players like Bear Sterns, Morgan Stanley, etc. Surely sooner or later the lawyers for the MBS holders will come after their deep pockets ?
Can you imagine the market correction when all this comes to light ?
You can’t just “claim” bankruptcy. The chapter 7 trustees will look for the assets and depending on how motivated they are, they’ll find them.
We are speaking of corporate bankruptcy. Those companies had no assets. Desks, chairs, computers, phones, retained earnings. Maybe the building. That’s it. What are the creditors going to get ?
Without going into a long soliloquy, the creditors and trustees can file and prosecute adversary proceedings against principals of a bankrupt corporation to recover assets for the estate. If they have retired to the Bahamas, they’ll be targets. Think about Enron, Worldcom, etc. and how those executives were pursued.
In cases of fraud and negligence, yes. Otherwise the corporate shield protects the business principles. The principles of SS will say they were doing business like a lot of other mortgage companies and one day they couldn’t get capital. There is no crime in that. It was the whole industry that was criminal.
Silver State= one more Faro Table closed
There’s more to it than that. I’d say the folks at Silver State will be ponying up at some point if they have anything that’s worth taking. I understand what you’re saying but trustees are motivated to recover as much as they can for creditors, especially in a deal like this. I doubt they’d toss it into the “no asset” pile without at least some investigation, 2004 examinations, etc.
But Ken Lay is still alive and well somewhere with his new plastic face sipping his margarita.
Ken Lay alive? Nah, they opened his coffin and drove a stake through his heart, just to be sure.
the bitch was cremated - or was he?…
TxChick is right, execs of Silver State will be going to jail in this one. Once it hits the newspapers it is evidence that the powers that be are making an example out of them. Remember a few people have to go to jail in order for the sheeple to believe that their interests are being served.
All that needs to be done is to pull a few loans and audit them for consistency with lending standards. As well, once some of the P.O.’d employees start talking the execs are really in trouble.
Cremated very quickly (as in, the day after his death, wasn’t it?). That story was all wrapped up within a few days.
I can see how people question it….
Don’t most of the lenders give huge dividends to ALL the shareholders. Hard to get them after the fact, and hard to prove execs knowingly commited fraud. They all learned form Ken Lays mistakes.
>> Silver State= one more Faro Table closed
LOL. Faro is one of the most even odds casino games around. It isn’t played any more strangely. Bubble subprime is more like Russian Roulette played by adding a cartridge each time you “miss”.
I agree. There was no lending fraud — these companies are not banks and not subject to lending regulations because they process loans into bonds. Securities fraud? Only if they did not disclose the risk properly to defraud the bond purchaser.
Who exactly ends up with the houses when these mortgages go “stale”? Do unwitting borrowers of mortgage-backed securities actually end up owning bricks and mortar?
“…some of the big players that can’t just claim bankruptcy are going to get caught in this.”
According to the Economist they shorted the most vulnerable originators to make up for any losses and vertically integrated the others for market share advantage.
There is a flaw in your step 3; the investors weren’t unsuspecting…they didn’t care that the borrower was a big risk. In fact, investors were looking for big risks, because they were looking for big yields. When most asset classes were not generating a lot of return, investors start throwing money at things like this in an effort to meet their rate of return targets.
I guess I agree, investors were being greedy and ignoring the risk. Big yields ? How much ? 200 basis points over Fed ? That was quite a risk to take for those sorts of returns. I guess hindsight is 20/20.
Once again the quest for yield raises its ugly head.
Anyone remember the “wealth effect” discussions back in the early 2000’s by the fed and other unsavory characters? Well, their grand experiment is coming to an end for the average joe.
The owners should be jailed or shot, maybe both. The government will jail a few examples to show they are doing something. The rest will walk away with their winnings and head to the Bahamas. Just like the dot com bust. Jail a few and the rest are laughing all the way to the bank.
Addison, Texas, lol. Scam central.
Oh, no, I’m afraid Boca Raton, Florida lays claim to that title. Boiler room city.
Hey palmetto Ol buddy- Just found out Ivanhoe Mortgage here in Orlando closed up Monday afternoon. Blew out 300 people on the street here and many many more up and down the coast.
They were really big and good at what they did and that is produce. 2 bn a year. Bunch of pukes but they are all on the street now.
I had occassion to appraise a couple of the big dudes houses in the past 2-3 years and the opulence was not to be believed. I had an associate with me on one such occassion and she was awed by the cosmetics etc in the house as apparently they were very expensive.
When we got outside I grabbed her by the arm and said, ” don’t get stars in your eyes over this. In a few years these people will be flatass broke. The money that did this is funny money and will not last. These guys live like there is no end to the BS we are seeing and in the end they will all be looking for jobs and lose their properties.”
She walked into my office today and said, “hey aren’t those the guys you told me about?”
As in Roman times as the general drove the slaves before him from conquered lands and lavished the booty on the emporer there was a tribune saying in his ear, “remember thou art mortal,” over and over again.
Mortality is at hand my lender friends.
good to see the credit dealers go bellyup. bunch of greedy slimy whores.
As tweedle-dee commented above, they took the fee and close up shop, retiring in the Bahamas now. No doubt they also gave millions worth of
loans to friends and families.
The MBS suckers are holding the bag.
Its only going to get worse.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAKAB.JEeTX4&refer=home
FWIW, I don’t agree with Mr. Heebner. I think the US economy will go into recession. For the last number of years the US economy has lived on the consumer and their spending habits.
With a collapsing house market, those days are over. And its clear that the capex of business is not read to take over spending. Part of that is due to the movement of capital and people intensive industries such as manufacturing moving overseas.
I think we are about to pay dearly for the last 8 years of foolishness.
“`If you’re looking at the housing market, it’s not the darkest before dawn, it’s the darkest before pitch black,” Heebner said.
lol
Hey all. What happened to the inventory in LA. Down 5k in the last week? Is someone messing with the stats???? This will truly affect us bubblesitters if correct?
http://tinyurl.com/29vce4
there’s a link at the top of that page that says:
“You’re looking at the OLD HousingTracker website. Go here to view the new site with better data.”
The “better data” shows a slight weekly increase for LA
Your getting some bad data somewhere. Zip showing 41K and steady increases. Although, expect numbers to drop off today and early tomorrow with the end of the month, and then hold on to your hat. March comes in like a lion roaring its ass off.
Thanks. What an odd thing…the OLD site…they continue to update it weekly.
Stealing stuff from the office? Who-d-a thunk it?
BTW, does anyone remember the F-cked Company website? “Start stealing stuff now!” was a popular bit of advice offered to employees at companies that were about to be…
…effed.
Time to print up the T-Shirts:
“I worked for Silver States and all I got was this crummy computer”
That was a riot, wasn’t it. We used to short stocks based on things we read on that site.
That is where I read that MCI, our biggest customer at the time, was in trouble. It started with requiring the employees to adopt a plant, and then it continued to not restocking the coffee machine!
Funny you mention that–I’m sitting here in my over-priced desk chair that came from one of the very first F*cked dot-bomb companies! (RIP, 1997)
Of course in my case, they officially gave us permission to take home the office furniture from our very small 3-person satellite office, since it was too small to interest a liquidator. The only thing they asked us to send back was the one thing with actual resale value: the computers.
Aeron chair? I have one of those too, circa 1998
Actually…funny thing is that the chair has retained it’s value as a properly functioning chair. The 1997 computer, which was much more valuable at the time, it completely worthless now.
I was quoted in USA Today in a story on FC. I used to post under the name Mr. Negative.
Ah, the dot-com days of doing nothing and getting paid six figures.
I remember that type of advice!!! I still follow it…
“[E]mployees in the Las Vegas headquarters were so upset that computers and other office equipment were stolen, and Silver State’s owners were threatened … I heard the owners were told not to come to the office, that they received death threats,’ the Texas employee said.”
Walk it off you sleazy slimy scummy SOBs.
Looking for advice: Is the stock market just doing a dead cat bounce? Should I move my 401K into fixed fund (would be stuck there for 30 days) and preserve whats left of this years gains (maybe 1% after today if the rally holds)?
Thanks for any insight (and sorry about posting in the top, but unrelated story)
I don’t think the market took yesterday seriously and I don’t know that it should, yet. Larry Kudlow was going on and on about the Goldilocks free market economy yesterday. The bears got dismissed outright. It was a computer glitch, right ?
I think the market will level out this week and move higher. I think one of these days we will get some really, really bad news from the housing market or a big hedgie will collapse and that will trigger a full on sell off.
I can’t wait to read FMT’s reason for delaying its earnings. Isn’t GMAC supposed to come out with some news in the near future too ?
I went home last night and moved everything retirement related I could into Money Market Funds. I’ll take 4.89% for a month until I see the market isn’t pulling a fast one and “Cramericans” get their reality check. I am not going to sit still for watching my 401k funds get decimated the way they were the last time around.
I did the same about week ago. Thanks to Tx, Norcal, Dave and all the posters here. I didn’t loose a dime yesterday.
The one stock I’m long (with a BIG position, lol) is at its 52 week high today.
The rest of that story is, it’s still down 99.99999% from its bubble high in 2000. I bought it late last year, not then!
Sniggle,
Please, I don’t mean any disrespect with this reply. However, it seems unwise to ask strangers for advice on how to handle your retirement money. I mean, it might be assumed that the logic of this blog is relatively sound financially, but taking financial advice on where to put retirement funds seems like a decision what would need advice from more well known, and qualified people.
I’d like to get other visitors opinion on this, because I often see bloggers and discussion forum visitors ask for financial and legal advice from strangers, and it always seems awkward.
It it just me?
Well I don’t know how objective your advice would be from someone who makes his/her living by buying/selling from one position to another.
My ten years of working in asset management leads me to believe there are more self-serving, unethical brokers than not. Or maybe I just happened to work amongst them. Most of whom had a genuine concern for their clients seemed to get squeezed out.
But that’s my opinion.
I always wonder if those are just tongue-in-cheek questions, because, if you are smart enough to be on this blog, you probably aren’t dumb enough to be serious. (That was tongue-in-cheek, too, in case you are wondering.)
Well, to me it’s awkward to tell people what they can and can’t ask on a message board. If the guy’s intelligent enough to ask on this board, I doubt he’s going to rush out and buy or sell according to what he hears here. General opinions from a range of obviously experienced investors on here, tho, is always good. No?
Exactly. No reason not to ask the question….Get a range of views.I actually think this is a GOOD place to get a varied input.
lets consider this ..what does it take to become a “QUALIFIED” financial adviser? about as much as it takes to become a REAL ESTATE AGENT? probably less.say what you like, but do your own due dilligance.. rentr= 4000 sq ft $1700/month 0 at risk.
buy at the bottom…
The true advantage of written communication is one has the luxury of considering the individual propositions therein to determine the merits of the argument. This tends to be a far more analytical process than listening to Cramer say “BUY X” in the middle of some rant or the other that you can’t take the time to analyze. The other advantage is you can check both the internal logic and consistency and the prior posts of the person to determine whether they have been correct in the past or their argument is factual, likely, illogical or based on supposition.
Try to get that from your broker.
as discussed the best person to make this decision is either you or a professional, employed directly by you without conflicts of interest.
In the end the best thing to do is do it yourself. Read everything you can get your hands on, then make a choice of investment.
The reason it is awkward is that everyone has a differing point-of-view. The cheerleaders will tell you that the stock market can only go up. And at the other end of the spectrum, folks will tell you that fiat currencies die in a ball of hyper-inflationary fire, burning all who touch them. Now how do you plan your life with that kind of disparity present? That’s why you need to do it yourself. Find what you are comfortable with.
I dunno. My “Objective Advice” man gets his info from the well known well respected talking heads at junket destinations.
To a person, yesterdays stock sell off was treated with lack of concern. YET the drop IS the longest line on a 4+ year chart. Volume exceeded months of daily descending levels.
So Wall Street wants every one to think after grinding up month in month out as money supply shot through the roof, this was a “ONE OFF” event. ” a 5 day bear market!”
Think for yourself, if the great money machine (Sub Prime)lenders are blowing up daily. Who lent them the money to create these mortgages and repackage them to mutual funds & hot shot risk takers using OPM? The panic this time is Wall Street - IMO. Bad loans made by whom? Credit risk sold to whom..?
The story, i heard during the day {2/27/07}. There was a “credit swap panic” in the spread & MBS markets that spilled over into equities. Due to the confirmation of Fannie’s public disclosure that it would REJECT loans that could not prove the borrower could make payments on the highest allowed interest rate.
The equity market couldn’t bounce because everyone that wants in IS IN! and the huge theoretical hedging in to the emini (S&P) to offset the credit swap losses couldn’t be offset fast enough by rising treasuries, that pulled up the lower quality credits with it.
My question is :
If you are on this blog and believe the Real Estate Bubble has burst, why do you think the equity market can go merrily along while $3 trillion in MBS packaged loans (in US only), countless Billions in HELOCs, & credit card debt, with the accompanying derivatives { made to offset risk to somebodies grandma} can ignore this problem>? The equity markets REQUIRE liquidity, & that obviously dried up @ year end.(Aka Silver State, Nova Star, & 22 others etc.)?
Our system of money is based on debt..if everyone paid its loans there would be no money supply! Debts don’t allways get paid in full but by default. When a subprime lender defualts on its credit swap who is left to pay the WINNER?
My advice, don’t try and time the market. Except in extreme cases I don’t bother anymore. Well I did sell my house in Cali last year but that was an extreme case. And I did sell some stock in 2000 but another extreme case. And inverted yeild curves don’t make me rush out and buy stocks……..
Anyway the point is if you like following the stock market and playing around with it fine, otherwise my advice is buy a Life stragegy fund or target retirment fund with a company like Vangard and forget about it.
And yes I think this is a good place to get advice. Lots of smart people here.
if a single one day anomolie scares you , perhaps a fixed income instrument is better suited to your risk/reward tolerance
anomaly - what anomaly? I see a sick market…
Make sure you don’t have extra fees for “market timing” — my company’s 401k is good in a lot of ways — but, after I rotated a high percentage of my funds into money market, I got a warning that future moves “may” be construed as attempting market timing, and subject to a penalty. Of course — they give kind of iffy guidance as to what construes “market timing” (as opposed to say, “rebalancing”)
The stock market is overpriced. It may or may not continue to be overpriced. The reason why I say it’s overpriced is, the yield is almost nil, and the P/E assumes good growth going forward (which seems unlikely). Buy something with a cash flow. How about Iceland govt bonds. 66 krona to the USD today, yields in the high single digits or low double digits. If that’s too wild, take 5% while you wait for real opportunity.
“Another Addison-based employee, who also wished to remain anonymous in hopes of getting paid for her last two weeks there, said she understands that employees in the Las Vegas headquarters were so upset that computers and other office equipment were stolen, and Silver State’s owners were threatened.”
“‘I heard the owners were told not to come to the office, that they received death threats,’ the Texas employee said.”
LMAO! It never occurred to any of these idiots to walk out the door and find a better job, nah, just sit tight and when they lock the doors make with the death threats. Folks, we have the making of a top quality movie script, even the hollywood writers couldn’t make up some of the stuff coming down the pipeline.
Let’s come up with a movie title.
How bout Adjustable Rate Murder.
or we could call it
Full Mortgage Jacket.
Negative Amortization Hill.
Loan To Vegas
FB’s - F@$%ed Brokers.
Oh well… probably not very funny : ) Back to work…
ZERO POINT ZERO ZERO APR - Full Negative Amortization
Planet of the Subprime Apes
Harold and Fraud
Mission Cash Out Refi
“Harold and Fraud”
Still laughing as I type this. Thanks for that one.
Dead Men Walking
Terror at 4.9%
They already used the most appropriate title:
To Have and Have Not
Select phrases from the film “Jerry Perspires”:
“Show me the mortgage!”
“You had me at HELOC!”
mmm, that could be a good idea, a script for a “falling down” from the housing market, a comedy based on casey serin, (just think of the casting possibilities)..
Sheesh N GA Dave
You JUST HAD to say that !
I was ALL READY to sign him and his investments up with a Mad Mikey and Crazy Jim’s Real Estate and Used Auto Long Term Investments, LLC.
OT:
A good reason for markets to be nervous
“Where is David Lereah? The always-look-on-the-bright-side chief economist of the National Association of Realtors got a fair amount of media play yesterday, when he used a mild monthly bump-up in existing home sales to declare that the bottom of the housing market had been reached last September. But today, with new home sales going off the cliff (in the West, new home sales in January were 50 percent lower than a year ago!), he’s nowhere to be seen.
“One reason is that the existing home sales data was released by Lereah’s trade group, while the new home sales numbers come straight from the Commerce Department. But if I were him, I wouldn’t be taking calls today, because any way you cut it, today’s new home sales numbers, in conjunction with last week’s housing start figures, are bad news for those looking for a rebound. If it weren’t for Tuesday’s stock market plunge, the 16.6 percent monthly drop in new home sales would likely be the lead economic story. Not least because the numbers add fuel to the already blazing debate about whether troubles in the subprime lending industry are going to move into broader territory.
“So while the Dow Jones Industrial Average hovers about 55 points above its close on Tuesday (as of about 12 noon PST), let’s take a closer look at the housing story. Some analysts, like Bloomberg’s Caroline Baum, are already suggesting that risky business is set to spread from the subprime sector (where, by definition, we expect defaults to happen) to more reputable corners of the lending industry. In her column today, Baum writes that stress is spreading from subprime loans to what are known as “Alt-A” loans — mortgage loans made to borrowers who have good credit ratings but don’t want to provide complete documentation on their income and assets.
“Baum reports:
“It should come as no surprise that the distress is spreading beyond the subprime market to “Alt-A” loans, according to Andy Laperriere, managing director at the ISI Group in Washington.
“The risky characteristics of Alt-A loans are eerily similar to subprime loans and are likely to experience larger-than-expected losses,” Laperriere writes in a Feb. 26 report to clients…
“Data from First AmericanLoanPerformance, a mortgage research firm in San Francisco, bear out Laperriere’s suspicions. The more recent Alt-A adjustable rate mortgages — those originated in the 12 months through December — are performing worse than loans of similar age in recent years. The 3.1 percent delinquency rate for the 12 months ended December is the worst since 2000, according to Mark Carrington, director of analytical sales and support at the company.
“Similarly, wide play is being given on the housing beat to a quote from Charles Sorrentino, mortgage analyst at Merrill Lynch, who told the Financial Times earlier this week that “The delinquency numbers for the 2006 Alt-A originations are materially worse than a lot of people would have expected.”
More at the link…
Okay, call me a conspiracy theorist, but do you think that yesterday’s big drop in the American stock markets was engineered to take people’s minds off the tanking U.S. housing market?
You’re a conspiracy theorist.
I am waiting, patiently, for the 85249 area of Chandler to go on sale for about 50% off. It is laughable seeing homes in the Circle G area at Gilbert and Riggs that were ~700k in 2002, now have a wishing price of about double that.
I am hoping to write a short book of how I paid off my house in less than four years. It will look exactly like this - Had a McMansion built by Beazer homes at Cooper and Riggs (with granite countertops) in 2004 for $440,000 after “owning” it for 18 months and did not take out a HELOC. Sold it in 2006 for $705,000 after dropping the price from $899,000. Rented during the crash of 2007 and bought it again in 2008 for $425,000.
I have an acquaintance who had a Shea? home on a 1 acre lot in Seville built in 2006 and closed on it in Sept. 2006. He is into this thing 1,020,000. I would be surprised if he could get $800,000 out of it today if he had to sell. I don’t dare ask him what his mortage terms are. This acqaintance works for CFC in Chandler and during the boom he sure could speak like he knew it all. When I last saw him shortly after moving into the new house, he was a lot more fun to be around and I didn’t look like such a fool for selling when I did. Funny thing, we didn’t talk much about the housing market. My wife and I just kep re-assuring them how good the granite looked.
I don’t dare ask him what his mortage terms are.
You don’t need to ask him. You can find out for yourself on the Maricopa Recorder website:
http://recorder.maricopa.gov/recdocdata/
Just search by name and look at all the Deeds that come up next to his name. Very enlightening…
Darn you 85249 is Toast!! Spent way too much time at that site. Very enlightening indeed. Gee, I didn’t realize I knew so many “rich” people. I was a bit disappointed to see the original mortgage amount at only $972,000 (with a sales price of $1,019,902) . However, it will be over a $1,000,000 soon enough as the first year payment is only ~ $3,500 / month. May as well just mail in the key now and move back to the house that is sitting empty that he was unable to sell when moving into the new one.
Well according to jdd in the last thread:
why do you all care? I mean, c’mon this is capitalism! we should be HAPPY that Silver State lied to its employees, made outrageous $1 Million loans to people with no assets and a poor credit score, and that they packaged them up and sold them to investors, likely investors that are working on our behalf!
hooray for capitalism. this is great! I guess it’s also part of capitalism to not pay your employees.
TxChick: although the big wigs at this loan place MIGHT need to pay some sort of restitution, I highly doubt it. They will all come out FAR ahead when it’s all said and done. this is the beauty of the new American capitalist system. Create a corporation. Do anything/everything legal and illegal and slightly legal in the name of short term profits. Make tons of money based on that. Run the corp into BK. Then take your earnings and repeat.
How many of the S&L guys came out hurting? Very few. How about Enron? Maybe 3 or 4 tops. even the big winners kept most/all of their money (like Lou Pai). and that was High Profile. How about WorldCom? Most kept their winnings.
but as jdd states, we should be happy, this is capitalism at its finest.
“it’s also part of capitalism to not pay your employees”
Bullshit.
And your alternative? Well we know the only choice we have is either freedom or control. So, are YOU the person who is deemed worthy of the control? Me?
Every organization and team I’ve ever been on has been a “mess” of one sort or another, to some degree or another. Crooks in business? Wow, I guess there are none in government, academia or science are there?
Life is messy. Capitalism at least has the virtue of correcting the mess that INEVITABLY gets made by imperfect (sometimes greedy and corrupt) human beings.
The alternative is simple; paternalistic control. Maybe you prefer the comfort of a bureaucrat’s hands around your throat to those of an employer but at least theres hope you can find a decent employer from time to time…
Capitalism often sucks for sure but it sucks less, less often and for fewer people than any “controled” system devised by…..imperfect human beings.
Moderate levels of control are necessary to reduce externalities. It is not a binary problem of control yes or control no. The problem is that many modern American corporations have far too little oversight from the government, either due to corruption or overt deregulation. The result is exactly what Clouseau describes — slick con artists in expensive suits maximizing their own personal profit through whatever means they can get away with. That is pure free-market capitalism at its finest.
The great delusion is that “controls” work and that somehow just the right amount of control can be magically found.
I despise the “slick con artists” as much as anyone (if not more) but the way to deal with them is to not give them your money (buy their stocks, lend them money or buy their product/service).
Depending on “the government” to find, control and punish miscreants on any kind of effective level is nonsense. Sure, some are indicted and jailed occaisonally but some, like Marc Rich, simply move out of the country and then arrange a timely bribe. Even the highest, “most noble”, officials seem to be susceptible to bribes, no?
Controls, of some sort, are inevitable. No problem with that. But the government does no one any service by suggesting ANY control is sufficient to protect individuals from scum bags (of any sort).
That’s why taking personal responsibility for as much as you possibly can over your life is critical for society. The more each individual abdicates their personal health, safety and welfare to the “government” the more UNSTABLE society will become.
Certainly I would never suggest anyone put full faith in their government to get anything right 100%. I’d be happy if they could manage 70%. Personal responsibility all the way.
This is not your father’s capitalism.
You mean the Lou Pai that is the richest person on colorado? Yeah, he came out ok.
A Friend of mine who works at the same building one of FMT’s headquarters are at told me half the office looks closed and he thinks they just laid off 50% of the people. OUCH!
Good news, he gets to find an easier parking spot ince their Hummers and decked out SUV’s won’t be there (they actually take up 2 spots)
There are probably 4-500 people who work in that office… maybe more.
that’s very sad.
this is not gonna be fun
“just laid off 50% of the people”
Can anyone find a story on this?
This is just word from him. I wont tell you the company he works for or it will be a dead giveaway which office. He just said 50% of the people in that office were cut loose. This is about 250 people.
I’m surprised the FMT has made more news today. I guess with the drop off yesterday, they are small potatoes. But still !
Regional Head Quarters.. not the one in Cali.
FMT short last week was my best call this year. As I stated earlier on Bits, it’s bitter sweet making money from other’s suffering.
I will not be suprised to see this spread into the banks in the next couple of weeks. WM,WFC,BAC,WB, etc. They are standing too clse to the fire and they will definitely get scorched.
Txchick: isn’t property protected in Texas? I remember many moons ago where someone could own a 15 million dollar ranch furnished with classic art and all was protected in a personal BK.
florida too.
I remember Ken and Linda Lay on TV stating how Enron “ruined” them and they were “bankrupt” with Linda sobbing on TV.
Then the show went over the MILLIONS of dollars of assets they kept.
The sleazebags at the various financial institutions will need to give back maybe 1% of all they reaped to restore the semblance of order and that the law applies to us all.
Homestead, with restrictions. And you can’t buy it the day before you file anymore either.
Forgive me if this has been posted, but mortgage losses might go right to A rated loans.
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070228:MTFH21376_2007-02-28_18-19-03_N28452118&type=comktNews&rpc=44
And again, you and I will pay the price for this when we go to get a mortgage loan in a few years. Don’t know about you but after seeing what’s gone on, it’s gonna piss me off to have to succumb to a full cavity search to get a mortgage.
just pretend like you have been abducted by alliens to planet thrifty…
Why on earth would you want a mortgage. Neither a borrower nor a borrower be. You are making plenty of money. Save it up and RE will be cheap enough to buy with your own money. We will still have the problem of being taxed to death and hosed by insurance companies, but do not subject yourself to paying interest.
You mean now i can get that airport experience at the mortgage company ? Will they hire ex-TSA morons to go through my income docs too ?
Easy mortgage -> compete with jokers with funny money -> prices through the roof.
Hard mortgage -> only competition is people with actual money -> prices fall through the floor.
I’ll take door B!
Hey T- I suspect you will be assaulted by lenders asking you to please buy their POS homes.
Bzzzzzt! Maam - that buzzer just called security. I am required to inform you that your statement claiming to never have filed bankruptcy will be investigated. Are you sure you don’t want to tell me about how you got an Option ARM three years ago and short sold three investment houses?
Hey Bob! I’ve got one here that the computer say is actually telling the truth! Should I call the FBI?
Wow!
Hey Bob! What do I do to actually give a loan? Oh yeah, look it up in the manual. Can I borrow your copy?
Wow!
Hey Bob! What do I do to actually give a loan? Oh yeah, look it up in the manual. Can I borrow your copy?
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