March 7, 2007

“Asleep At The Switch” During The Housing Boom

The Boston Herald reports from Massachusetts. “The number of foreclosures in Boston is escalating dramatically in the new year as scores of the high-interest-rate subprime mortgages go bust. As of the end of February, lenders had filed 301 notices to foreclose against homes and condos in Boston, reports Dorchester housing researcher John Anderson.”

“That’s up from 86 during the same period last year, according to Anderson. If the current pace continues, Boston could wind up with 2,500 to 3,000 foreclosure filings by the end of the year, Anderson estimates. That’s compared to the 1,100 foreclosure filings in Boston last year, the worst in the 10 years he has been tracking these numbers.”

“The trend, though, is not a new one, with foreclosures in the city having begun to rise as far back as 2005, Anderson says. ‘It’s overwhelming,’ Anderson said. ‘Everybody who is all of a sudden concerned; they are two years behind.’”

“The nation’s subprime lending industry is now in full ‘meltdown’ and its woes are far from over, experts warned yesterday. ‘It’s a total meltdown,’ said Ernest Napier, an analyst with Standard & Poor’s. ‘Everyone had anticipated that the music would stop (on these type of high-risk mortgages). Well, it has.’”

“‘I think we’re just seeing the tip of the iceberg,’ said Lee Forker, president of Boston’s New England Research and Management. ‘This is serious stuff. . . . It’s not time to be putting your head in the sand.’”

“Gerard Cassidy, an analyst at RBC Capital Markets, agreed the situation is serious, especially since subprime lending accounted for about 22 percent, or more than $550 billion, of the entire $2.5 trillion mortgage industry in 2006.”

From Reuters. “In Massachusetts, where housing prices notched double-digit growth between 1995 and 2004 in a red-hot market, foreclosure filings surged 70 percent to 19,487 homeowners last year, as single-family home prices fell for the time since 1993.”

“The pace continued in January when the number of homeowners threatened with foreclosure more than doubled in a year to a record — the most for any state in the U.S. Northeast and exceeding the larger New York property market.”

“‘Our latest data indicates that 2007 may be even worse,’ said Jeremy Shapiro, president of ForeclosuresMass.”

“‘As the sellers finally get their head around the idea that they may be taking losses, they are listening more to the brokers,’ said Marc Charney, president of CharneyRealEstate. ‘There’s a real pattern that you’re seeing with people who are foreclosed. They over-leverage themselves by getting an interest only-loan or some sort of an adjustable rate mortgage. They take that money and plan an addition on the house.’”

“‘They start the addition but then realize they want to buy a car, or a sister needs money or something like that. So the work is half done. But you’re out of money and lose your job, or you get divorced and can’t make payments,’ he said.”

The Boston Globe. “The Patrick administration’s chief housing official yesterday called for better regulation of mortgage brokers and the establishment of a $5 million fund to assist the escalating number of Massachusetts homeowners facing the loss of their homes through foreclosure.”

“The majority of the record foreclosure filings in 2006 against Massachusetts homeowners, 19,487, were subprime loans to borrowers with poor credit ratings. ‘This is a serious problem and requires our immediate attention,’ Secretary of Housing and Economic Development, Daniel O’Connell said.”

“The Federal Reserve Bank of Boston found in a new study that adjustable-rate, subprime loans accounted for more than half of 2006 foreclosure filings in state Land Court, though they are only 7 percent of all loans outstanding.”

“While subprime mortgages grew to a $640 billion business last year, regulation of mortgage companies that make them has been patchwork and weak, in contrast to the heavily regulated banks. Housing advocate Bruce Marks, chief executive of a national, nonprofit lender to working people, said regulators were ‘asleep at the switch’ during the housing boom.”

“O’Connell said he would count on commercial banks to help with the state’s rescue effort, but Kevin Kiley, executive vice president of the Massachusetts Bankers Association, said out-of-state mortgage-banking companies that made these loans should be tapped.”

“Loans now in foreclosure ‘never should’ve been originated or funded,’ Kiley said. ‘Why should it be the responsibility of a bank to step in and fund that loan?’”

RSS feed | Trackback URI


Comment by Ben Jones
2007-03-07 08:39:08

‘Boston could wind up with 2,500 to 3,000 foreclosure filings by the end of the year, Anderson estimates. That’s compared to the 1,100 foreclosure filings in Boston last year, the worst in the 10 years he has been tracking these numbers.’

This guy is right, foreclosures were already bad at this time last year in Massachusetts. It’s interesting to seem the banks scrambling to get away from the mess. I wonder who is going to get stuck with the bill?

Comment by txchick57
2007-03-07 09:12:32

Not re Boston but I also wonder how it will play out in Dallas where spec builders and voodoo loans have rejiggered the 30 year price history and buyer demographic of certain inner city neighborhoods (lower Greenville, MStreets, Vickery Place, etc.) In the prior bust, people overpaid for existing houses and suffered for awhile but recovered and then some. But now newer McMansions are 200% and more more expensive. If the job market for white collar professionals goes and there was too much voodoo lending at those higher price points, what then. Those prices are many standard deviations away from the historical prices.

Comment by waaahoo
2007-03-07 09:20:42

TX OT but any insight into the volume difference between QID and the QLD? My guess is there is something better to trade the upside with but downside the QID is an easy option.

Comment by txchick57
2007-03-07 10:07:11

I’d have to look at the charts. I haven’t traded either one of those, just use the qqqq and/or nasdaq futures. I’ll do it this evening.

(Comments wont nest below this level)
Comment by zz09
2007-03-07 10:52:51

I wonder about this, too as I own a smaller, original home in Lakewood by the lake. I know many who bought the McMansions and at least some stretched to do it. Most are the white collar types you referenced. Their mortgages would keep me up nights, but we’ll see.

Comment by BanteringBear
2007-03-07 11:17:24

This is the situation with most bubble areas. And how about the locations which never had the jobs to begin with? The areas where pure speculation drove prices beyond what is even affordable for second home buyers. When you’ve got wages in the high $20k range, and starter homes in the $300’s, the future is obvious; pain.

Comment by rtex
2007-03-07 19:51:55

I have lived in the area for years…. the m street thing is unfathomable….you can’t send your kids to the schools…taxes are high, and the area is full of crime…I DON’T GET IT

Comment by crispy&cole
2007-03-07 09:21:15

“I wonder who is going to get stuck with the bill? ”

The US Taxpayers.

Comment by mrktMaven FL
2007-03-07 09:27:03

With mortgage securitization, bagholding may not be limited to US Taxpayers. This thing is global.

Comment by JA
2007-03-07 09:31:55

F^@k a 5 million dollar fund to help people out!

Comment by flatffplan
2007-03-07 10:26:25

better get bust and email.fax,call your reps

(Comments wont nest below this level)
2007-03-07 10:41:25

$5 million might cover the fraud in a single neighborhood in Calif.

(Comments wont nest below this level)
Comment by Melsky
2007-03-07 14:22:22

Maybe one block!

Comment by Matt_in_TX
2007-03-07 19:57:04

$5,000,000 / 3000 foreclosures = whew! They’re saved!

(Comments wont nest below this level)
Comment by Ben Jones
2007-03-07 09:46:04

The longer this plays out, the less likely a ‘bailout’ seems, IMO. I havewn’t heard any talk out of DC about one. The S&L bailout didn’t do much for all the personally bankrupt Texans, etc.

Comment by txchick57
2007-03-07 09:54:43

Three mid to large size law firms in Dallas have already blown up (Jenkens & Gilchrist, Vial Hamilton, Baron & Budd)

That’s a lotta white collar folks on the street.

(Comments wont nest below this level)
Comment by zz09
2007-03-07 10:56:31

Yes, but from what I understand, most at Jenkens just moved to Hunton. Vial was already a shell of its former self (to call it mid-sized would be generous) and Baron and Budd didn’t blow up, though they did lay off a bunch of staff. But I will agree with you that there are a lot of law types in the neighborhoods you discussed above, and if the big firms went bad, it would be painful.

Comment by Lou Minatti
2007-03-07 10:05:02

I was just getting out of college when the Texas S&L’s melted down. IIRC, my bank at the time was First United or something like that. I do remember that it took months for me to get a check for my savings account there once they were shut down.

Nope, no one here was bailed out. Only bailout was for people who had FDIC insured bank deposits. Everyone else was told to pound sand. The nice subdivision in northwest Houston I grew up in, Lakewood Forest (right next to the Compaq campus) had 20-30% vacant homes. Literally every third house was abandoned, and this was a NICE subdivision. The house my mom bought for $90k in 1979 went to $60k 10 years later, now it’s around $140k. Lakewood’s still a good neighborhood. Cheapy areas in places like Alief to this day have not recovered. They became slums.

I wonder if Californians truly understand the different surreal world they are about to experience. Except for maybe some readers here, I don’t think the future reality has quite sunk in yet. I made a joke post last year about ghost towns in Bakersfield subdivisions, but it was only a half-joke. These places really will become virtual ghost towns.

(Comments wont nest below this level)
Comment by technovelist
2007-03-07 19:08:33

I was just getting out of college when the Texas S&L’s melted down. IIRC, my bank at the time was First United or something like that. I do remember that it took months for me to get a check for my savings account there once they were shut down.

Never trust a bank with the initials “FU”.

Comment by Ft Lauderdale
2007-03-07 10:19:18

Good point, the S & L scandal is the closest type of crash in my memory, so I keep comparing the housing situation to it, but I am certain there are far more differences than similiarities between the two, I think that is what is so frightening/compelling/interesting about the situation (once you remove the outrage, anger etc at the greed and shortsighteness that enabled it)

(Comments wont nest below this level)
2007-03-07 10:43:38

The main difference, of course, is the diffusion of risk via MBS. They were deliberately criminal in the S&L scandal. They were mathematical geniuses who differentiated away all risk in this one.

Comment by txchick57
2007-03-07 10:44:31

So far, anyway.

Comment by AKRon
2007-03-07 14:35:55

One type of bailout to beware… when the housing market in Alaska went bust (in the mid 80s, due to low oil prices), one gov.t strategy was to condemn vacant properties and destroy them just to reduce inventory. Essentially wealth was destroyed to help keep housing prices higher. This time around, HUD, for instance, could take default properties and make them into low-income rentals to get them off the market. In other words, a desperation move might be to get the gov’t to absorb ‘excess’ unsold properties. That would be dumb, and would suck, but might happen if the bagholders have enough political clout.

(Comments wont nest below this level)
Comment by Lou Minatti
2007-03-07 10:25:24

Other than FDIC insured bank accounts at failed banks, I am not sure how US taxpayers will be bailing anyone out. How is an f’d buyer to be bailed out? They f’d up. Their lender f’d up. The bagholders f’d up. Who, other than bank customers at soon-to-be f’d banks, can be bailed out? And how? Cutting interest rates won’t do it. Throwing more money at it won’t do it. The fb’s can’t get loans anymore.

There is just one way out of this mess, and that’s to let the house of cards collapse. Severe pain is the only way. The morons at all levels will get burned, and in 5-10 years we’ll have a rational market again.

I can see Congress nibbling away at pain relief. Maybe forgiving 1099 taxes for fb’s who send in jinglemail, but that’s pretty much it.

Comment by Annata
2007-03-07 10:40:25

Well, that depends … I’m pretty sure any bailout would be directed at the businesses and investors, not at private citizens.

But I’m not even sure how this would work out if there was no government interference. People default on their loans, the banks revert the defaulted loans to the mortgage originators, the orignators declare bankruptcy and the banks get stuck with the loss? In the case of mortgages packaged as securites, do the investors in the securities simply suffer a decline in their investment?

(Comments wont nest below this level)
Comment by dimedropped
2007-03-07 10:43:03

I agree. You cannot buy your way out of this one. Too much, too many, and too late.

(Comments wont nest below this level)
Comment by LowTenant
2007-03-07 10:45:27

True, other than direct subsidation of victims out of the fed treasury (which screws the citizenry as a whole), any solution that helps one continstituency screws the others. There will be politicians beating the “help good folks keep their homes” drum, but they will be opposed by the “our financial institutions must remain strong” contingent. In recent years the latter sentiment has been stronger in national politics, so there will probably only be lip service for the f’d borrowers, and it’s hard to see what the government can do to save the lenders from their own bad loans. In general there will be a lot of talk but ultimately the pain will mostly be borne by those who initially took the risk of bearing it.

(Comments wont nest below this level)
Comment by LowTenant
2007-03-07 10:46:36


Comment by LowTenant
2007-03-07 10:07:23

Clearly, the equity portion of the sub-prime businesses is as good as gone — they’re all going to go insolvent. However, there’s a booming business developing in the purchase of their distressed loan portfoios. A hedge-fund manager I know is investing hundreds of millions in really low-quality sub-prime loans right now, at a collossal discount from face value of course. He says if half of the borrowers default, he still makes money. And as bad as it’s going to get, 50% is a pretty big number when you’re talking about individuals actually losing their homes. I guess “meltdowns” are great opportunities if you know what you’re doing.

Comment by txchick57
2007-03-07 10:34:33

That’s the collection agency business model. Doesn’t he think it’s a bit early in the game for this?

2007-03-07 10:45:41

Nope, this is the real New Paradigm going on at the mathematical hedgefunds. They will still by worthless paper for a short-term trade, to make the equations balance out. They knowingly play hot potato. They have the magic formula, so don’t worry.

(Comments wont nest below this level)
Comment by waaahoo
2007-03-07 11:17:38

I like my hot potatos at 10¢ on the dollar not 50¢.

Comment by LowTenant
2007-03-07 11:22:17

Distressed debt has been a hugely profitable investment sector in recent years, as I’m sure you know, and this guy is just looking for the next batch of bad loans that someone’s looking to unload in a panic. Sure it’s early but that can cut both ways — over time the buyer will know more about what he’s getting, but the seller might settle down a little and try to price it with a little less “panic discount” also.

(Comments wont nest below this level)
Comment by hd74man
2007-03-08 08:05:33

purchase of their distressed loan portfoios.

UGH..Paper backed by worn-out, rat infested, fully depreciated housing stock loaded with lead paint in dirt-bag neighborhoods.

Sounds like a winner to me.

Comment by seattle price drop
2007-03-07 21:58:15

I really wonder how this guy came up with the sum of 5 million? Who would such a paltry sum help and how?

This guy is severely mathematically challenged.

The only solution for these foreclosed people is: renting. Which *will* help some of those f’d flippers out, at least for a while.

Comment by arroyogrande
2007-03-07 08:50:12

“Everyone had anticipated that the music would stop”

Yeah, I remember how *everyone* was warning about the sub-prime industry 6 months, a year, two years ago. Absolutely *everyone*.


What stage is “revisionism”?

Comment by GetStucco
2007-03-07 09:02:40

Everybody saw the subprime problem in retrospect…

Comment by Houstonstan
2007-03-07 10:03:04

I have this skill: I can predict the past.

2007-03-07 10:48:37

Good luck on that. The ‘tubes have a quite a following for people who can’t even agree on the past.

(Comments wont nest below this level)
Comment by 85249 is Toast
2007-03-07 09:23:44

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”
— Arthur Schopenhauer

Comment by mrktMaven FL
2007-03-07 09:31:14

Everyone in the subprime and suicide loan business. Mozilo dumped 140 million dollars worth of stock over the last 18 months.

Comment by dwr
2007-03-07 10:02:12

Yeah, everyone saw this coming, including the scores of “expert” quoted last year who said either 1) “We have new credit risk models that significantly reduce the risk of subprime lending” or 2) “We’ve never had so much subprime mortgage debt before, we’ll just have to see how it plays out”.

2007-03-07 10:53:15

Don’t forget the laughingly hilarious ‘new education’ programs they instituted to edumacate them subprime hicks to the importance of owning a house. They had them on TV explaining how the American Dream was now within the reach of anyone, that taking these classes would some how magically make these deadbeats responsible borrowers and thus making them worthy of loans.

Comment by hd74man
2007-03-08 12:31:52

FHA/HUD had a program for 1st time homebuyers on how to take their own trash to the curb for collection.

Obviously, there were a numbers of non-grads after seeing basements filled to the brim with bagged trashed and other assorted debris of their guaranteed foreclosure’s.

(Comments wont nest below this level)
Comment by boulderbo
2007-03-07 08:50:44

word from the inside, new century is not funding their deals. not a very good sign from a company on the rebound. their warehouse lenders are not allowing any 80/20’s and limited disbursments on all other products. this is huge in terms of lawsuits, as these deals are out of recission, and recission is not for the lender, it’s for the borrower.

Comment by Tulkinghorn
2007-03-07 08:54:52

There is no rescission on a purchase, just on refi’s. If on a purchase there is no take-out financing, no discharge is going to get filed from the old lender. Then the seller has to go to Superior Court to get the sale reversed… a legal mess where no-one has cash to pay the attorneys.

Comment by crispy&cole
2007-03-07 09:26:51

They are getting killed on all fronts - SEC, Ca AG, 12 lawsuits for securities issues, etc…

Comment by boulderbo
2007-03-07 09:49:45

everyone is being told to remain calm, that all will be resolved by friday. not funding their deals will bring out hoards of state regulators on top of the suits already mentioned.

Comment by Tulkinghorn
2007-03-07 08:50:57

a $5 million dollar fund will help out… 20, maybe 30 homeowners?

This is less than a band-aid. Just politicians trying to look busy. They have never heard the true good government motto: ‘Don’t just do something, Stand there!’

Comment by waaahoo
2007-03-07 09:06:04

Yes. When I run for office it will be on a pledge to just cash my paycheck and stay out of the way.

Comment by WT Economist
2007-03-07 09:07:06

The smart ones will get into foreclosure quick to get the money. It won’t last long.

Comment by CA Guy
2007-03-07 11:16:54

You would get my vote! Sounds better than most of the ridiculous promises being hurled around.

Comment by az_lender
2007-03-07 09:24:42

The worst thing about the $5 million dollar fund (if implemented) is that the money will come from Mass taxpayers who did NOT try to get rich quick by borrowing big. As for the number “helped” by the fund, I suppose a legitimate use of the money would be some sort of legal aid for those who wish to attack fraudulent builders/lenders/appraisers.

Comment by waaahoo
2007-03-07 09:32:21

Give 5 million to the hounds in the prosecuters office and let them keep 33% of any funds they recover. The rest goes back into state coffers.

There is really no need to help the “victims” as most had no money in the game. Their bruised credit rating is the cost of their education going forward.

Comment by Grant
2007-03-07 09:39:26

And besides, what is the $5M going to do? Keep a few FB’s going for a few more months? And then what? If you can’t afford your reset mortgage now you won’t be able to afford it six months from now. What do they think these desperate homeowners are going to do - go back to school, get a law degree in six months, and get a new job at 2-3X their former pay. And how is this program “fair”? Who gets to decide which of the lucky FB’s gets the temporary bailout and who does not?

Comment by Lou Minatti
2007-03-07 10:47:32

$5 million is two Casey’s.

2007-03-07 10:57:16

Not really, the lenders will get back 20-50 cents on the dollar. So Casey’s $2.5 million will probably send back $1 million in REO. So this net’s Casey fisasco around $1.5 million. So $5 million will cover 3-4 Caseys. Things are looking up already!

(Comments wont nest below this level)
Comment by BanteringBear
2007-03-07 11:24:19

If I see some FB bailout fund coming to an area near me, I plan on screaming the loudest and longest. No way in hell my taxpayer funds are going to bail out the idiots who helped drive prices through the roof. To BK with them.

Comment by neuromance
2007-03-07 09:48:03

I would assume the five million would find its way into the pockets of a few contributors or constituents who stood to lose some money due to their actions in the market.

Comment by Bad Chile
2007-03-07 10:12:53

The worst thing is that the increased costs associated with mortgage broker licensing fees will be passed on to those who get mortgages in the future; meanwhile the benefits will be passed on to those who obtained mortgages in the past. The law, as written, benefits only those who (1) were ignorant of any aspect of obtaining a loan; (2) those who comitted fraud; and (3) those who trusted in the broker saying, “you can always refinance later”. Individuals who were prudent or who took it upon themselves to educate themselves in making the bigest purchase they’ll most likely ever make are the one’s who will end up paying for the system (if they choose to get mortgages in the future).

A better system would be to use the revenue from the program finance a manditory first time home mortgage obtainers course that was essentially a repeat of elementary algebra explaining how compound interest works. In this case, the users generating the fees would be the beneficiary of the services provided by the fees.

Of course, being Massasocialistachusetts, this will never happen. Which is why this potential “sub-prime rescue fund provider” will bail out of the Commonwealth prior to paying into the fund.

Comment by I'm Not Catchin that knife
2007-03-07 10:46:36

Greetings from Mazzholecusetts: Or New Governor got into a bit of trouble for making a call to Chase bank on the behalf of his former employer Ameriquest for a loan. So it seems that Mr. Patrick is looking out more for his buddies in the mortgage industry and realtwhores than the folks that are still waiting on the sidelines and did not use their home as an ATM for a Plasma TV and Hummer. Way to go Guv!

(Comments wont nest below this level)
Comment by seattle price drop
2007-03-07 21:49:06

re. this mandatory first homebuyers course:

Seattle had one of those. Every single person I knew who attended came away apalled: It was used as an excuse to show huge groups of people how they could afford more house than they had originally planned on. A total scam.

(Comments wont nest below this level)
Comment by CharlesM
2007-03-07 10:11:41

I am glad that this so-called bailout is bogus.

If the Massachusetts government tries to take serious money out of the pockets of responsible savers to give it to the spendthrifts and gamblers and idiots who have done nothing but spend unconscionable amounts more than they can afford and bid up the cost of necessary housing for everyone, then I will be at the front of the mob marching on the state house, torch and pitchfork in hand.

And I’m a liberal. I’m normally willing to pay my taxes. BUT NOT FOR THIS. FBs didn’t give me any help when I couldn’t afford to buy an overpriced POS house here, so I sure as h*ll am not going to bail them out now.

Comment by GetStucco
2007-03-07 08:54:08

“The Federal Reserve Bank of Boston found in a new study that adjustable-rate, subprime loans accounted for more than half of 2006 foreclosure filings in state Land Court, though they are only 7 percent of all loans outstanding.”

Who are the kingpins behind this new predatory lending, where poor people are handed loans to buy homes they can’t afford, with a future foreclosure almost for certain? Are they the big Wall Street investment banks? Will Barney Frank and the Democrats do anything to stop them?

Comment by Mark
2007-03-07 09:30:24

Our new guvna, Deval Patrick, was on the board of AmeriQuest. From a 2005 Boston Globe article: Deval Patrick, who is vowing to fight for the underdog as he begins his run for the Democratic nomination for governor, last fall joined the board of directors of a large national mortgage company that has been criticized by state regulators and advocates for the poor for what they say are unfair lending practices aimed at low-income people and members of minority groups.

The company, Ameriquest Capital Corp. of Orange County, Calif., acknowledged last month that authorities in 25 states were questioning the company about lending practices by its subsidiary, Ameriquest Mortgage. Attorney General Thomas F. Reilly’s office said Massachusetts is one of those 25 states.

Then, in todays paper: Two weeks ago, Patrick placed a call to former US Treasury secretary Robert E. Rubin, now a top executive at Citigroup, interceding on behalf of owners of Ameriquest Mortgage, which was seeking urgent financial assistance from the giant firm. When questioned by the Globe late Friday, Patrick defended the call, saying that he was not acting in his role as governor and that he simply offered a reference at the request of a top official at ACC Capital Holdings, which owns Ameriquest and other financial firms.

There’s no problem here in Massachusetts folks. Move right along…

Comment by seattle price drop
2007-03-07 22:06:23

Wow. That is really twisted Mark. Thankyou for that report.

Comment by hd74man
2007-03-08 12:44:38

The Ameriquest by Patrick arm-twisting is the only BS going on in Mazzholeland.

In the same Globe edition it was noted Bruce Marks chief executive of National Assistance Corp of America, a national non-profit lender to “working Americans” in conjunction with the Massachusetts Housing Finance Agency is “negotiating with Fannie Mae” to make a $100 million available to re-finance those who have been victimized by toxic loans.

And the slap on the wrist for the sleazebag lenderss…

A $250.00 state license for new loan agents working in a mortgage origination shop…

And they get to keep their Ferrari’s!

Comment by Grant
2007-03-07 09:45:28

B. Frank and other democrat leaders seem to be twisting themselves into knots with their public statements. They are coming out against “predatory lending practices” but these very same lending practices have allowed the poor and minorities, the liberals most cherished demographic groups, to buy homes. So if the evil, predatory banks tighten lending practices the poor and minorities won’t be extended the credit to buy a home or to refinance existing loans that they cannot repay. I expect a lot of position reversals and re-reversals from our glorious political leaders in the coming months.

Comment by mrktMaven FL
2007-03-07 10:30:58

They were given Carte Blanche — Too Big to Fail. Now the jig is up. Heads will roll.

A scandal is brewing.

Comment by John Law
2007-03-07 10:43:39

“B. Frank and other democrat leaders seem to be twisting themselves into knots with their public statements.”

no, they want sensible loans, even for the poor. they don’t want loans that will just help make the poor poorer.

Comment by Grant
2007-03-07 11:04:33

But the problem is it’s a chicken and the egg thing. The poor cannot afford to buy homes at current prices using a conventional 30-year fixed mortgage at market interest rates. The only way they can get into a home is with a “predatory” neg-Am or option-ARM loan. If you take away those loans, the poor won’t be able to buy homes at all unless prices come way down from their current levels.

But, of course, our ridiculous, maladjusted, housing-based economy will collapse if house prices come way, way down so this sets up a dilemma for politicians who want to “protect” the poor from predatory lending while at the same time allowing them to buy a house while at the same time keeping them employed in their job that is very likely housing- or service-oriented.

What is the answer to this dilemma? Dang if I know. Perhaps you will enlighten me?

(Comments wont nest below this level)
Comment by GetStucco
2007-03-07 11:37:35

“But the problem is it’s a chicken and the egg thing.”

It might appear that way until you step back and consider that if it weren’t for this epidemic scourge of exotic loans, prices could never have reached insane levels of unaffordability.

Comment by Grant
2007-03-07 12:16:19

True. From their point of view, the best thing for the poor, I think, would be if the whole house of cards did fall down. The poor would then be less poor relative to the largely-defunct middle class whose house-wealth had evaporated. The poor, with very little equity to begin with, wouldn’t lose much of their wealth, and as long as they could hold on to their jobs would be in a better position to buy a house.

Comment by jerry from richardson
2007-03-07 15:53:49

Get rid of the GSE’s and stay with the FHA. Also, HUD should not be in the business of buying brand new 3000sf houses at top dollar from homebuilders and moving Section 8 recipients into those houses. Most working Americans cannot afford to buy those houses, so women who had 10 children with 10 different men should not enjoy the luxury. The GSE’s are buying subprime loans up to $435K. How is that helping affordable housing? That is nearly 10x median income. They are promoting the ponzi scheme.

Comment by waaahoo
2007-03-07 12:16:32

Isn’t a sensible loan one that you have a chance in hell of paying back?

(Comments wont nest below this level)
Comment by Bob Carpenter of Rhode Island
2007-03-07 14:07:55

Who says everyone is entitled to a house. If your poor how do you afford a home? Are taxpayers responsible for poor peoples desires. If they are poor, find them a job. They can then find a way to save for a house like everyone else.

Comment by James
2007-03-07 14:29:41

The poor don’t like true answer. You can’t afford a home. period.

Funny accounting tricks and high risk loans are hurting everyone. So will inflation.

You have to let the economic forces play out or you have depression/currency collapse.

They just don’t like the answer.

Many are playing the victim card. Fact is these are the same people that were flaunting their wealth and buying SUVs and world cruises.

(Comments wont nest below this level)
Comment by arroyogrande
2007-03-07 08:54:45

“Loans now in foreclosure ‘never should’ve been originated or funded,’ Kiley said, tapping the wads of cash bulging out of his front and back pockets. “But I’m kind of glad that they did.”

Comment by JRinUT
2007-03-07 09:17:11

My prediction: This guy will die in his car, bleeding from a bullet hole behind his left ear. Any others predictions?

Comment by GetStucco
2007-03-07 09:00:29

“The nation’s subprime lending industry is now in full ‘meltdown’ and its woes are far from over, experts warned yesterday. ‘It’s a total meltdown,’ said Ernest Napier, an analyst with Standard & Poor’s. ‘Everyone had anticipated that the music would stop (on these type of high-risk mortgages). Well, it has.’”

By contrast, here is an article that appeared in today’s SD Union Tribune:

“Subprime lenders improve slightly from stock dive
By Mike Freeman
March 7, 2007

Shares of San Diego’s Accredited Home Lenders and other battered subprime mortgage companies recovered a bit yesterday after a massive sell-off and steep price declines Monday.

Accredited’s stock gained $1.52 yesterday, or 9.5 percent, to end at $17.58.

But yesterday’s gain failed to make up for the 26 percent decline in the company’s shares Monday, when they tumbled $5.14. The company’s shares are down 34 percent so far this year.

Other subprime mortgage lenders swept up in Monday’s slide also bounced back slightly yesterday, but not as much as Accredited.

The industry got a boost from U.S. Treasury Secretary Henry Paulson, who said problems in the housing market were unlikely to have a major impact on major U.S. financial institutions.”

Will Big Hank act to protect the subprime kingpins? And will Democrats have anything to say about lending programs that funnel money from very wealthy people into the hands of financially unsophisticated borrowers, encouraging the latter to buy homes they cannot afford without warning them about the substantial risks to their future financial health?

Comment by Bubbleviewer
2007-03-07 09:09:24

I listen regularly to Tom O’Brien show and he suggested we will know it’s a bottom when the local paper has three pages full of auction notices for houses.

Comment by txchick57
2007-03-07 09:14:16

For six months straight.

Comment by Matt_in_TX
2007-03-07 20:05:52

And NOT the same houses over and over

Comment by Army No. Va.
2007-03-07 12:33:25

This is about right….actually, after we pass this stage and it shirnks to 1 to 2 pages.

Comment by Pen
2007-03-07 15:35:48

I don’t think that the auction pages will thicken. Not because there won’t be auctions, but because they will posted on the web, instead.


Comment by Sad but True
2007-03-07 09:10:27

“Gerard Cassidy, an analyst at RBC Capital Markets, agreed the situation is serious, especially since subprime lending accounted for about 22 percent, or more than $550 billion, of the entire $2.5 trillion mortgage industry in 2006.”

If you read the rest of the link, this same guy then says, but “don’t worry, they won’t ALL default”. Excuse me? So it’s all right then if just half of them hand in the keys.

Much of the pain right now is from 2004-vintage loans. What happens when the even more hapless 2005 and 2006 crowd get reset?.

And did you laugh when Fremont said - “WE don’t do subprime - no, no, no! We specialize in Alt-A! That’s all right then.

Comment by hd74man
2007-03-08 08:08:17

Gerard Cassidy has always been known as a pretty straight shooter when he worked as a banking analyst up here in the Northeast.

If he says the situation is serious, IT’S REALLY, REALLY BAD!

Comment by WT Economist
2007-03-07 09:13:57

(Much of the pain right now is from 2004-vintage loans. What happens when the even more hapless 2005 and 2006 crowd get reset?.)

Recall a massive analysis of the ARM-reset situation linked here a while back that said the dislocations would be mitigated by the fact that the resets wouldn’t all happen at once, but would be spread out over three to four years. Looking at it now, that just means the forced sales will keep on coming.

Comment by flatffplan
2007-03-07 09:23:25

some 04 buyers can escape if they hurry
- subprime is BS whatever deal you made after fall of 04 is SUB, as in underwater

Comment by New2OC
2007-03-07 09:16:05

The really fascinating thing in Massachusetts is that the governor, Deval Patrick, was once on the board at Ameriquest:

“On the board of the parent company of Ameriquest Mortgage Co., Patrick was “the point man,” between the parent company’s board of directors and an Ameriquest negotiating team to settle a $325 million predatory lending case in 49 states and clean up the company.

“Patrick acknowledges that financial exploitation of the poor, elderly, and minorities were pervasive at Ameriquest, the stories often “horrific.” In May, after months of Reilly and his campaign flogging the issue, Patrick resigned his $360,000 a year board position, saying Ameriquest was “on a path to be a better, more responsible company.” The resignation was effective July 1 [2006].”

We’ll see if he gets caught up in the subprime mess in Massachusetts.

Comment by GetStucco
2007-03-07 09:17:29

“We’ll see if he gets caught up in the subprime mess in Massachusetts.”

We can only hope so :-)

Comment by az_lender
2007-03-07 09:33:44

Patrick’s primary win occurred in Sept 2006 and general election win was in Nov 2006. The resignation from Ameriquest board MAY have been just a response to the time/stress demands of a political campaign, OR … !!!

Comment by aNYCdj
2007-03-07 09:17:16

Asleep at the switch………….

I do free lance news video work , and i tried to explain to some of the reporters i met this was happening last year.. but to no avail.

My take: Reporting is very biased in America, not towards the Democrats or liberals or republican or conservative…..BUT CLUELESS.

Comment by 85249 is Toast
2007-03-07 09:38:25

Journalists today are, by and large, either lazy or starstruck. The lazy ones are no longer interested in doing their own research and instead rely on industry “experts” to spoonfeed them the news which they report verbatim. The starstruck ones do not want to lose their close ties to power and money for fear of being shut out of the inside scoop. There are very few muckrakers left in the world. They have never been needed more than they are today.

Comment by spike66
2007-03-07 10:23:08

Besides Seymour Hersh at the New Yorker, Gretchen Morgenson at the NYTimes, and the woman at Fortune who exposed the Enron mess, who is there? The rest are just overpaid talking heads.

Comment by AKRon
2007-03-07 16:28:54

A good one is Greg Palast.
Though he can be a bit wacky at times. He exposed a lot of the skullduggery going on with energy companies, and also the voter purging in the last election. I like Paul Krugman, also, though he is an economist, not really a reporter.

(Comments wont nest below this level)
Comment by WT Economist
2007-03-07 09:17:38

And look at this: from the Washington Post article linked via Reuters above:

“This is a dirtier side of the business because you’re trafficking in despair and loss.”

And right next to that quote in a box:

Featured Advertiser Links
Refinance Rates As Low As 2.9% - FREE QUOTES!
Refinance $150,000 for $483⁄month! Up to 4 Free Quotes!

Comment by Lisa
2007-03-07 09:42:33

“Loans now in foreclosure ‘never should’ve been originated or funded,’ Kiley said.

Okay, so if this becomes the new mantra for lending, we should be in for some very serious declines. People on this blog have been saying for a while that it was the marginal buyers who drove prices up, and it will be the marginal buyers who bring prices down.

Wipe out subprime and tighten for AltA, and this will be anything but soft.

Comment by Sad but True
2007-03-07 10:00:11

There’s the plankton theory rearing it’s head again…

Comment by GetStucco
2007-03-07 10:22:35

“it will be the absent marginal buyers who bring prices down”

Comment by John Law
2007-03-07 10:49:52

getstucc, you’re right. I keep hearing about how the trouble in subprime will be kept nice and comapartementalized. BS!

right now there are less buyers who can get money. that means prices will fall and trip the next set of people. we already saw it moved into the AltA. pretty soon we’ll be to where the prime market is under stress. that’ll be because of the absence of the marginal buyers you talked about.

it wasn’t too long ago that subprime was fine and defaults we very very low.

the housing collapse is spreading like a disease.

mortgage lenders

pretty soon the banks and commercial reits will probably tank. when this gets to the banks(think HSBC), look out below. a resumption of the bear market that started in 2000.

Comment by Clearview
2007-03-07 09:56:02

“…we are in full meltdown”
“…this is just the tip of the iceberg”

I think what we have here is a melting iceberg.

Comment by crispy&cole
Comment by txchick57
2007-03-07 10:14:03


Greenspan says housing decline is over. BS of course but I’m buying lenders for a trade (CFC, and afew others) woudn’t be shorting, that’s for sure

Comment by Clearview
2007-03-07 10:21:00

Greenspan also forecast a recession for later this year, so according to him we are going to have a rebounding housing market during a recession. The guy’s a quack.

Comment by GetStucco
2007-03-07 10:35:14

There seems to be an underlying assumption that a few subprime lenders can be dropped into a vat of acid and disappear without a trace Romanov-style with no adverse effect on the rest of the housing market.

Comment by Bob Carpenter of Rhode Island
2007-03-07 14:12:18

Greenspan, isnt he the guy that said there was no housing bubble. Buy homes with ARMs? Now hes saying the decline is over in something that was never there to begin with? Sounds credible to me.

Comment by rentfornow
2007-03-07 10:23:03

tx chick - wondering what you think of the Austin market. There seems to be a ton of building going on (lots of high rises and lots of building on the outskirts). Do you think this is overbuilding? (especially as outmigration from CA and MA eases as prices slip there?)

Comment by txchick57
2007-03-07 10:24:52

Austin is the same as Dallas or Houston. It has (had) marginally higher quality of life but is way overpriced due to speculation.

Comment by flatffplan
2007-03-07 10:31:39

my inlaw bought in Corpus Christie
tried to slow her down and I think she got some upgrades-oh well

Comment by Lou Minatti
2007-03-07 11:05:51

If you like California just stay there and rent and wait for the market to go to normal prices. You won’t be happy with Austin, despite some Austin residents pretending that it is a mini-San Francisco. Austin is a hot, humid, traffic-clogged hellhole with NO culture, unless your idea of culture is listening to bad college cover bands and listening to narrow-minded people yammering about how open-minded they are except when it comes to Mexicans moving into their neighborhood. Austin USED to be a nice town, but that ended 20 years ago. Now it’s no different than Dallas or Houston, and in many ways it’s worse. It’s grossly overbuilt and the NIMBY’s have prevented the required infrastructure improvements from being made.

Stay in California and just rent and enjoy the lifestyle you’re accustomed to.

Comment by txchick57
2007-03-07 11:08:23

Hey, an afternoon at Zilker followed by Chuy’s and then Scholtz’s Biergarten is not chopped liver!

Does anyone know if the Oasis was ever rebuilt?

Comment by CA Guy
2007-03-07 11:26:28

“…narrow-minded people yammering about how open-minded they are except when it comes to Mexicans moving into their neighborhood.”

Sounds like CA bay area folk! The self-labeled “liberals” are just as full of it as the other side. Of course they want housing built for the working folk, just as long as those same people don’t wind up driving through their hood.

Comment by Clearview
2007-03-07 12:36:49

Yeah, stay in California because all the people in Texas stink and Californians are oh-so advanced.

Stay in California, where a moldy old 1,000 square foot crackerbox shack anywhere near the coast will cost you $650,000-$1,000,000.

Stay in California where half the population are illegal aliens or the punk offspring of illegals.

Stay in California where the cost of living is 200% higher than Texas but the income is less.

Stay in California where the taxes are 50% higher than Texas.

Stay in California where cities like L.A have over 200,000 gang members (and growing).

Stay in California where 10% of the population in cities like Santa Barbara are homeless.

Shall I go on? “Stay in California and just rent and enjoy the lifestyle…” Give me a break.

Comment by Lou Minatti
2007-03-07 13:12:38

There are still plenty of nice places to live in California. Most of Cali is not gangland. There are plenty of affordable rentals in nice places in California. I don’t understand the urgent need to buy anywhere else if you’re priced out locally. Just wait a few years and buy that California house you want for half off.

Sometimes Californians are too hard on themselves. Most Californians didn’t participate in the idiocy, and California still has a lot to offer. Just not at current prices. Besides, Texans don’t want you here. We know that we live in a hellhole, but we live in a CHEAP hellhole and we don’t want equity locusts ruining things for us by driving up property taxes. Our hellhole is reasonably priced, unlike California hellholes such as the IE and Central Valley. And if you don’t like Mexicans, Texas is the wrong place to go.

(Comments wont nest below this level)
Comment by Clearview
2007-03-07 15:11:36

You know, I’ve talked to various Chamber’s of Commerce in Texas- Plano, Austin, Frisco, Allen, Round Rock and the one thing I came away with is how friendly and helpful they are. Texas welcomes newcomers . I’ve been to Hill Country and no way that place is a hellhole.

My guess is you’re a Texan who wants to keep people from moving to your State, so you try to give people the impression that Texas sucks.

For the record, and this is just my opinion, Texas Hill Country is just like the Santa Ynez Valley of North Santa Barbara County. Rolling to somewhat rugged hills, oak trees, hot in the summer but not too hot, moderately cool in the winter with not much snow (average snowfall is around 3-5 inches a year).

You, and every other Texan, better get used to millions of people moving to your state in the next 20 years. You cannot stop the tide.

By the way, a $200,000 home in the west Austin area is about average. The same home in Santa Ynez-Solvang would be about $450,000. West Austin has a way higher per capita income, lower taxes and fewer illegals. And the state of Texas is now taking the lead in removing illegal aliens, with the state and city governments denying benefits and services to undocs and going after employers who hire them and landlords who rent to them. Liberal California is a Mecca for those people.

Comment by Matt_in_TX
2007-03-07 20:09:46

>> Besides, Texans don’t want you here. We know that we live in a hellhole, but we live in a CHEAP hellhole

ROFL gasp gasp choke

Comment by Seattle_Renter
2007-03-07 10:41:52

The Boston Globe. “The Patrick administration’s chief housing official yesterday called for better regulation of mortgage brokers and the establishment of a $5 million fund to assist the escalating number of Massachusetts homeowners facing the loss of their homes through foreclosure.”

Comment by Seattle_Renter
2007-03-07 10:42:49

The Boston Globe. “The Patrick administration’s chief housing official yesterday called for better regulation of mortgage brokers and the establishment of a $5 million fund to assist the escalating number of Massachusetts homeowners facing the loss of their homes through foreclosure.”

This makes me sick. They made their bed, let them lie in it. Nobody set up a fund to help my little girl have a backyard to play in when prices were skyrocketing, or a place to work on my car.

Screw ‘em.

Comment by CA Guy
2007-03-07 11:33:53

Heck yes! Eff those people. It doesn’t take a genius to realize that a $500K home cannot be purchased on a median salary, despite what the broker told you! Do these “poor” homeowners believe car salesmen too? Were they shocked when their ab-lounger didn’t give them a six pack stomach? Geez, take some responsibility for your stupidity people!

Comment by AKRon
2007-03-07 18:01:42

Five mill is so infinitesimal compared to the oceans of debt out there. It will vanish into the black hole leaving nothing in its wake… I don’t know why they even wasted their breath with this one. It would be like starting a universal health care system where the gov’t covers the first 3 cents of your surgery…

Comment by hd74man
2007-03-08 14:29:27

It’s not just $ 5mil.

Nobody read the article in the biz section.

Mazz Housing Fianance Authority wants $100k from FNMA to bail out those victimized by toxic loans.

hehehe…and this is after Mazzholeland clips the US taxpayers for $29bil for the Big Dig, orginally budgeted at $3bil.

You can ‘ole Teddy K. will be strong-arming the honchos @ FNMA like Patrick & Citi.

Comment by TedK
2007-03-07 10:44:09

Here is what David Rosenberg of Merrill Lynch says. Sorry if someone else has already posted it.

“With completions running more than 30% ahead of housing starts, we believe that the worst of the decline in overall residential construction, employment and housing-related manufacturing output is actually still ahead of us.”,2271,19639,00.html

Comment by WestSideGeorge
2007-03-07 10:47:00

The plankton theory is spot on, and is where the federal bailout will occur. Subprime will disappear except for Fannie and Freddie, who will keep buying money losing loans on the low-end of the housing spectrum (i.e., mostly first time buyers). Eventually, we’ll all pick up the tab when Fannie and Freddie inevitably go belly up.

Comment by Grant
2007-03-07 15:22:04

Fannie and Freddie are very thinly capitalized relative to the size of their loan portfolios. They can’t keep buying garbage loans or the losses will force them into default very quickly. Keep in mind that the perceived government guarantee of Fannie and Freddie is theoretical. And even if it did happen, the cure could be worse than the disease.

Comment by kThomas
2007-03-07 11:01:10

Just to remind all you nay-sayers: Real-estate always goes up in value.

Who said that???

Comment by weez
2007-03-07 11:03:37

“The Patrick administration’s chief housing official yesterday called for better regulation of mortgage brokers and the establishment of a $5 million fund to assist the escalating number of Massachusetts homeowners facing the loss of their homes through foreclosure.”

assist homeowner’s in foreclosure????how they are going to pay down their mortgage or something???hire a lawyer for them???i dont understand where this money would actually go??? or where it comes from in the first place.

Comment by CA Guy
2007-03-07 11:44:29

If they have $5M burning a hole in their pocket, they should use it to set up a mandatory basic finance class that all foreclosure “victims” would be required to attend. Did you really think the 3% interest rate wouldn’t be adjusted? Do you believe banks and lenders are in business to just give money away?

Better yet, send that $5M back to the taxpayers because that’s where it came from. Overpaid for your home? Hey too bad, that’s not my fault. The problem is that too many people want the home, the cars, the boats, the vacations, the clothes, dining out, etc. What they don’t want is a budget and to make a list of priorities. In short, they don’t want to be responsible, and that is why I say eff 95% of them. I leave 5% open for sympathy because I know things like death and unforeseen illness can take a family down the pipes rapidly.

Comment by OCDan
2007-03-07 12:10:40

CA Guy, spot on. I have been yammering about this forever, but it seems no one outside of this blog and a few other small bastions of hope have seen it. It appears that 90% of Americans are all entitled to live in a 5K sq, ft. home, drive escalades, attend Havad, travel around the world on the QMII in luxury class (every year, I might add), and retire at 45.

What I want to know (without starting a generation war) is when did this mentality begin to infect this country? I can remember when it wasn’t always like this. People knew their place (hey may parents rented the top half of a 2-story) and for the most part lived within their means (we took a 2-week vacation to the Joisey shore every summer when I was growing up). If you didn’t like your staton, you improved yourself in order to move up the food chain.

However, now it seems everyone wants everything yesterday and we want it supersized. Well, the piper must be paid at some point and when the bill comes due it won’t be a pretty picture!

Comment by OCDan
2007-03-07 12:12:14


Also, not just when, but why did this thinking come to be so dominant? Therefore when and why did this thinking become so pervasive?

(Comments wont nest below this level)
Comment by CA Guy
2007-03-07 13:00:37

OCDan: love your posts, they are always interesting. I’ve been wondering about the same things. I’m only in my early 30s, and therefore haven’t come close to seeing it all, but it sure seems like this mindset came about during my lifetime. Personally, I think the dot-com boom was when it really got cemented. You’d see stories about secretaries and other underlings retiring on their stock from a company that literally had no profit or product. It was like all of a sudden anyone could strike it rich at any given moment. Of course the dot-com bubble finally imploded, but reality didn’t seem to take hold again. I have no idea why the disconnect held.

Now we’ve seen people making huge $ peddling homes and loans when just 6 months prior they were working retail for $10/hr. All you had to do was take a class and then a test that even a retarded chimp could pass. Hey, why go to college or learn a trade when you can be a player as a realtor? Maybe it has to do with all the crap reality TV and worship of celebrities, I honestly don’t know. Bob Hope, Audrey Hepburn, etc. were interesting people and I could understand people who followed them, but Paris Hilton? American Idols? Anna Nicole Smith? WTF???? They are top news stories! MTV doesn’t even play music anymore! It’s all about bread and circuses now. When you draw the historical parallels, it can really start to lool like we’re headed towards the sunset as a civilization. I could go on for days, but I’ll end it for now. Thank goodness (and Ben!) for this blog, it appears to be one of the last bastions of sanity out there.

Comment by OCDan
2007-03-07 13:35:38

I think you might be on to something, CA Guy. Sure, there have always been idols, like you mentioned. However, Bob Hope was funny and Hepburn was talented. And of course, J.P. Morgan on the gong show was famous for nothing, like P. Hilton. However, Morgan was 1 of a kind, not like the hundreds we see now. You are right, it seems as of it is all about bread and circuses. It is as if superficiality has upended depth and real meaning. Sadly, the more I read some of this blod’s entries, like yourself, I also can’t help but see the comparison to Rome and it’s last days. May God help us all if it ever gets that serious!

Comment by OCDan
2007-03-07 13:36:10

blod=blog. So sorry.

Comment by CA Guy
2007-03-07 14:12:02

“It is as if superficiality has upended depth and real meaning.”

Exactly. Hard to say who or what is real anymore. One thing that is real? Recession. Coming soon to a theatre near you.

Comment by CarrieAnn
2007-03-08 06:24:35

“What I want to know (without starting a generation war) is when did this mentality begin to infect this country?”

I think it was the Reagan years. That’s not a political statement. Just an observation that when I graduated college in ‘83, and many of my friends started to marry in their early and mid 20s, they immediately had the big house with the best appliances, floors, window treatments, etc. The music industry was rockin’ and everyone had and showed off the best equipment and speakers with thousands of dollars invested in their music.

I attended $30,000 weddings (in ‘84!) At their baby showers I was shown their oversized projection tvs which usually overwhelmed the room.

There were usually some darn nice vehicles parked in the driveway too. This as the women were scaling back or staying home from work altogether to care for their children which of course wore and played with only the best!

I suppose I can only speak for my NH friends but even the well to do families were not into conspicious consumption in the 70s….friends of the family who owned a very large portion of both commercial and residential buildings in our tourist town raised their 5 person family in a home that was less than 1800 sq ft. There were the larger historical homes but most of them showed their age.

The hot clothes were Izod shirts and chinos or bleached out painter pants….not exactly Abercrombie. A Fair Isle sweater ($50) meant you were stylin’. In ‘77 when I went to my first prom, Gunne Sax dresses were extravagant at around $100. Only a few of the attendees (600 kids in the class) had limos but at 15 I did have one of the most sought after dinners on the New Hampshire seacoast overlooking the surf. (This with a young man wearing a powder blue tux with wide collars LOL).

I do remember one doctor’s daughter who was pretty condescending about her station in life relative to others. But that was her. Her sister and brother were incredibly sweet and likeable to everyone. They never acted like they were better than others because of their Dad. Most people in my town were like that.

The 80s (The Al Franken “Me” Decade - see SNL) changed everything. It’s been a competititon ever since.

(Comments wont nest below this level)
Comment by rentfornow
2007-03-07 12:17:49

From the boston globe:

Governor Deval Patrick told reporters today he learned an important lesson after he made a call on behalf of Ameriquest Mortgage, a subprime lender where he was a board member before taking office.

By Lisa Wangsness, Globe staff

Governor Deval Patrick today urged his core supporters to keep the faith in him despite his latest and most serious blunder since taking office in January.

“Don’t give up on me,” Patrick said, following revelations that he called a top executive at Citigroup, which does extensive business with the state, on behalf of a controversial mortgage company.

“What I said all through the campaign, which is that I will make mistakes, but don’t give up on me, because I don’t intend to give up on the people of Massachusetts,” the governor told reporters this morning after a breakfast speech to the Massachusetts High Technology Council in Burlington.

Patrick issued a statement late Tuesday that said he regrets calling a top official at Citigroup and interceding on behalf of the owners of Ameriquest Mortgage, a subprime lender where he was a board member before taking office. Patrick was responding to a story in Tuesday’s Globe that described the telephone call two weeks ago between the governor and former US Treasury secretary Robert E. Rubin, who serves on the Citigroup board.

The state Republican Party issued a statement today announcing that it had sent a letter to the Ethics Commission requesting an investigation of the phone call Patrick made on behalf of Ameriquest, which is owned by ACC Capital Holdings.

“Governor Patrick’s effort to influence a business transaction at the request of his former employer raises serious ethical questions,” said Brian Dodge, executive director of the Massachusetts Republican Party, in a statement.

This morning, Patrick sidestepped a question about whether he realized at the time that it was wrong to make the call on behalf of Ameriquest or whether it never occurred to him that his efforts for a company that does significant business with the state would be inappropriate. Patrick would say only that he had learned from the mistake.

“I don’t get to draw lines between my life as a private person and my life as a governor, and that’s an important lesson for me to learn, and I’ve learned it,” he said

Comment by jerry from richardson
2007-03-07 18:39:31

politician = crook

Comment by Seattle_Renter
2007-03-07 13:30:06

This guy sounds like a ripe piece of work.

Comment by SHILOH
2007-03-07 14:52:55

It does not seem to me that 5M will go very far to bail out these borrowers. I would think it will make also make Patrick unpopular.

Comment by SHILOH
2007-03-07 14:54:47

It does not seem to me that 5M will go very far to bail out these borrowers. I would think it will make also make Patrick unpopular. But then, maybe the alternative would create local chaos in Boston.

Comment by SHILOH
2007-03-07 14:59:31

“I don’t get to draw lines between my life as a private person and my life as a governor, and that’s an important lesson for me to learn, and I’ve learned it,” he said

Geeze….can we move on now. What other “important” lessons do should we expect him to learn.

Comment by jerry from richardson
2007-03-07 15:48:02

Too bad most people are too stupid to see past their party affiliation. This country’s problems will never be fixed. How these idiots can join a party and get their talking points is beyond me. Try thinking for yourself instead of having your party boss telling you what to think.

Comment by B from Beantown
2007-03-07 18:20:33

Yeah.I hope all the Massholes that voted for Devalue Patrick are happy.I’m thinking of starting a Speech class so we can shake this friggin’ accent we have as it’s starting to become a real embarrasment every time we travel out of state.The press up here has been clobberin’ this guy since he took office.I wish they started before the election!”5 million dollar relief fund” while we’re looking at a one BILLION DOLLAR shortfall in the state budget!That fund might help out a couple of his buddies who live in Milton,but no one else.

Comment by WestSideGeorge
2007-03-08 19:57:59

The Government Bailout will occur by encouraging Fannie and Freddie to continue to purchase subprime 100% LTV that the market will no longer buy (with a guarantee they will be made whole). The following quote is from a broker on Mortgage Grapevine:
“On an unrelated note, I must give props to one of my subprime AEs for saying the msot intelligent thing in the world I have heard form a subprime AE in the alst 6mo. His company added MyCOmmunity to their lineup and they are pushing the more aggressive 100% lower fico situations heavily. In short, they are replacing Street backed collateralizations for Fannie backed packaging and letting FNMAE deal with the risk. No repurchases for EPD.
I spoke with him at length and incredibly enough, he actually was familiar with MyCommunity. He is the first rep who had a clue about how aggressive you can be with MyComm for purchases. Blv it or not I have had reps tell me they would refuse a MyComm loan, even with an accept, if it was below 600 fico. I chalk that up to either screwball rules at those companies or uneducated AEs (more likely) who dont know product.”

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post