Bits Bucket And Craigslist Finds For March 8, 2007
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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schadenfreude! hedge funds and new century / subprime
now i know why they call it “smart” money…….
http://immobilienblasen.blogspot.com/
You have to love the Homer Simpson x-ray. Where is the crayon that is wedged in his brain? Didn’t Moe give him “the old Crayola oblongata”?
Thanks to Chrisusa and his wife, Talon, and Nancy for showing up at the first ever Phoenix bubble party. I will post pictures latter in the photo gallery.
A few stiff cocktails, jump in the convertible and then bomb around Phoenix making low-ball offers and playing for-sale sign baseball (like mailbox baseball) ?
Next time we’re going to meet in an vacant McMansion in Queen Creek and leave behind lots of empty beer bottles and pizza boxes.
Sounds like a goodtime will be had by all.
6000 sqft of fun. Nice.
The pictures of the party are downloaded and sent to the photo gallery. Look for them soon.
Thanks to you AZGolfer for organizing and hosting the event. We had a great time. It was a pleasure meeting you guys and my wife said to tell you all hello.
thanks to todger rafter
the “smart” hedge fund guy resigns today from the new board…
Greenlight’s David Einhorn Quits New Century Board (Update1)
By Bradley Keoun and Jenny Strasburg
March 8 (Bloomberg) — Greenlight Capital LLC President David Einhorn resigned from the board of New Century Financial Corp., a mortgage lender that said last week it faced a criminal probe and a credit crunch that might put it out of business.
Einhorn resigned yesterday, according to a Greenlight filing with the U.S. Securities and Exchange Commission. His New York- based fund is New Century’s second-biggest shareholder, according to Bloomberg data, with a 6.3 percent stake.
New Century said last week U.S. prosecutors are investigating accounting and stock trading tied to the Irvine, California-based company.
Einhorn got a seat on the board in March 2006 in exchange for agreeing to drop a proxy fight. He called for the ouster of senior managers at Allied Capital Corp., a small-business finance company, after a criminal probe of some business practices was disclosed.
From Reuters
FDIC Sanctions Fremont Over Subprime Loans
Thu Mar 8, 2007 6:01 AM GMT
Email This Article | Print This Article | RSS [-] Text [+]
By John Poirier
WASHINGTON (Reuters) - The U.S. Federal Deposit Insurance Corporation on Wednesday issued a cease-and-desist order against Fremont General Corp. (FMT.N: Quote, Profile , Research) because of its subprime mortgage and commercial real estate lending practices.
The FDIC, a banking regulatory agency, said Fremont was operating without effective risk management policies and procedures and was marketing loans that substantially increased the likelihood of a borrower’s default.
Fremont, based in Santa Monica, California, agreed to the order without admitting or denying any wrongdoing, the FDIC said in a statement.
Subprime mortgages are made to homeowners with poor credit histories. The subprime lending industry has been hit with rising delinquencies and defaults as consumers miss mortgage payments and find it difficult to refinance.
“Our concern has always been that banks make loans that borrowers are able to repay,” FDIC Chairman Sheila Bair said.
Under the agreement with the FDIC, Fremont is required to adopt within 90 days a subprime mortgage lending policy to correct its practices, including underwriting future subprime loans with an analysis of the borrower’s ability to repay at the fully indexed rate, and to provide clearer disclosures.
The bank is also required within 90 days to describe how it will make restructure loans in distress. It is also required to fully comply with all consumer protection laws and correct its commercial real estate lending practices.
Fremont announced the cease-and-desist order last Friday and said it was in talks to sell its Fremont Investment & Loan subprime mortgage unit.
The company said this week that it stopped making new home loans and would not fund home loans in the pipeline that had not yet closed.
too little too late, and I’m missing a severe punishment like a 1 billion dollar fine to prevent this from happening again. Just shows that FDIC (like the FED) is only trying to pass the blame to other parties and totally uninterested in stopping this kind of crooks.
I don’t think the FDIC want to force a bank on the edge to pay an additional $1 billion dollars. If it falls off that edge, the FDIC is then going to have to come in and pay back depositers their money.
yes, but at the same time they keep the doors wide open for future fraud that is going to cost the taxpayers a multiple of $ 1 billion. I think they should sue the management of these companies until they are completely bankrupt (not the company, but privately) but well - will never happen
I’m curious…does anyone know if there has been a run on deposits at Fremont? I can’t imagine why people would keep their $$ there.
A guy wrote in just one or two days ago on this blog asking us if we thought his family should take their money out of that bank.
That’s just one guy, but still.
commercial real estate lending practices.
hmmmmmm contagion / spillover ?
Just to add…
Fremont says sale of subprime unit uncertain
Fremont General of Santa Monica sought to quell media reports about a possible sale of Brea-based subprime unit Fremont Investment & Loan by issuing a terse statement late Wednesday. It simply said, “There can be no assurance that the Company will be able to enter into any transaction involving its residential loan origination platform. As previously announced, the Company has determined to exit the subprime residential real estate loan origination business. The Company has ceased entering into new funding commitments with respect to subprime mortgage loans, although the Company will honor outstanding commitments.”
Meanwhile, the FDIC said Fremont has consented to its cease-and-desist order, without admitting wrongdoing. The FDIC said Fremont operated without proper subprime loan underwriting criteria and that it was making loans in such a way as to increase likelihood of default. The order also requires the bank “to correct its commercial real estate lending practices,” according to the FDIC
Who is going to buy a subprime mortgage unit that in such a bad state as to have a cease-and-desist order against it? If the unit gets sold, it will be for 1/3-1/2 of its “value”. I don’t see the point.
May I start this beautiful New York City day with a rant? We keep seeing people’s homes referred to as “an ATM”. “So-and-so has been using their home like an ATM.” This doesn’t make sense to me at all. I have to actually have real money in an ATM to withdraw it. I make a deposit of real coins, bills and checks and then I have access to the ATM.
I believe people have been using their houses like a credit card. They have been given credit on promises of future earnings. What do you think the conversation would look like if we started referring to it as “the housing credit card”? But once again the inoccuous term gets selected and through the simple use of a phrase the whole conversation is changed. Thank you for letting me vent.
Good Morning NYC. Rant on my Brother…
It is probably reffered as the housing ATM because like most American ATM transactions the customer uses a credit card to withdraw cash, not a debit card. In other words, they are not withdrawing “real” money! Easy credit yet again IMHO.
You can use credit cards in an ATM?
Sure can.
sure you can cash advances at like 30% apr
i’d rather borrow from joey in broooklyn
Could this country exist without credit cards?
i know i could live w/o them but many would starve w/o cc
I cut up all my credit cards over 8 years ago and haven’t looked back since. I have cash in the bank and CD’s.
What does a Credit Card actually do for you? Nothing… Get credit by buying a car and paying it off slowly. Or some other major purchase.
Also, Try to buy non-depreciating assets. Ie Older cars 5-10 years old, Paintings with an established “value”, old watches that you can sell on ebay for the same price or more than you paid for them.
I use credit cards for all purchases. (Still trying to figure out a way to pay my rent on the CC.) You are already being charged the transaction fee in the price of the goods by the store, so why let the store keep that money? You just need to pay the cards off every month.
Benefits:
I recently took a weekend trip to NYC and stayed at the Waldorf for a total cost on travel and hotel of $10 to pay for taxs on the free airline tickets. (Though a worthwhile night at Grape and Grain set me back a bit.)
15 to 45 days of float on all purchases.
I will be paying for the majority of my honeymoon’s expenses with points.
Just get a fee free card (I use both the Hilton Visa and Amex.) and let the benefits roll in.
- CC debt free since 2001
That is a very important piece. Everyone pays for folks to use their credit card. The stores don’t just eat the fee charged by the banks to use the service. They pass that on in the form of higher prices. Very few actually charge extra to use a debit card or credit card. Remember the days when it was cheaper to use cash? Not many places anymore.
If you can’t beat them, join them.
I have a Pay pal “credit card” and i can withdraw MY cash for only an extra $1 fee at a citibank ATM
I believe that if you look hard enough you will find some bank some where that has actually issued a plastic card, etiher debit or MC/VISA, that uses a HELOC. Would not be surprised.
Countrywide gave me one!!!!
In 2002! I threw it away and laughed at the time.
I’ve got my 2nd offer from Chase sitting next to my computer. It’s for a credit card against my home equity. I’m going to be writing them a little letter. HeHeHe!
And I posted they called me several weeks ago too just in case I missed the offer….they’re starting to appear somewhat desperate.
My mom’s had one of those for like 6 or 7 years.
NYCityBoy,
I prefer my own type of ATM. I schedule purchases of new T-bills on the day others mature. My ATM works in reverse. At the 5% rate, for every $1000 90-day T-bill, $987.50 leaves my bank account and $1000 goes in.
But I’m a dummy because I’m renting and not a RE buyer.
I’ve never used an ATM machine and never owned a credit card. But then again I’m kind of strange.
Kind of?
2007 is going to suck.
-Rent
Getting full millage out of your new signoff We Rent?
Got popcorn?
Neil
No, you’re just part Amish.
I did that for 3 months Dec-Feb to put away half of my IRS tax payment for 2006. Quite fun to have the money go out to support my government, and then come back in @ 5%, unlike the 0.002% or whatever interest WFC is paying.
I do it the easy way–I fired my retail bank and keep my money with ING. ING CD’s run around 5% (above or below depending on term & rollover bonuses). Higher than a T-bill, any denom, practically risk free and oh, so simple to manage.
Forgot to mention–ING has checking accounts now, too, which is why I was able to fire the retail bank.
You can get higher interest rates than that in a savings account these days. I love today’s savings rates. It’s makes it easy for me to put my dough in the bank without having to worry about inflation. And now that house prices are coming down, that savings account is getting closer and closer to its goal of buying me a house with cash
NYC, I was meeting a friend the other day for early breakfast meeting and I overheard a conversation that I’m certain must go on 1,000 times a day across the country.
It was a man and his wife talking with a gentleman, who I thought was his financial advisor. He mentioned to the gentleman he wanted to pay off his car loans, and start paying down some other debt.
As is turns out, the guy was refinancing his house and was taking $$$’s out to “payoff his cars” The guy he was speaking with was a loan officer / mortgage broker, not a financial advisor.
I thought to myself. Dude, you are not paying your car off, you’re just switching out the collateral. You still owe the money if not more after loan fees.
I guess I’m old fashioned. When I say I’m going to pay off the car, I mean I’m going to stroke the darn check. Not that I would have a car payment mind you.
It makes sense if they guy is getting a much lower interst rate on his HELOC than what he had on his car (assuming the car bank refuses to refi).
A few years ago, it was almost guaraneed that your HELOC would be lower that your auto loan. However, I opened my landlord’s mail last night (since his bank thinks he lives in my house), and discovered that his latest HELOC is over 8%.
I have a feeling that more and more people are refinancing to pay their overdue bills at a higher rate. Just delaying the inevitable.
I cannot see where it makes sense to go from a 5 yr loan to a 15 or 30 yr loan. What happens when the vehicle no longer serves its purpose? Buy a new car and end up with another payment. The stupidest form of consolidation possible.
That’s true. I never thought of the term thing. Spreading it out over 3x as many years would more than triple the interest. So I guess you’d have to get an interest rate that was like 1/4 of the original one? Hard to do the math.
When you add the fees to refinance, you’re probably right. It doesn’t make sense.
Watched CNBC this morning. DR Horton CEO said 2007 would SUCK all 12 months. The discussion after the comment was whether or not it was appropriate for a CEO to use the word SUCK. I think we have a problem.
Where would the English language be if it weren’t for the word “suck”? What did we use before?
Another word like this is “crap”. Cut the crap, look at all this crap, you’re full of crap, oh crap, housing is in the crapper, I can’t deal with all this crap, that’s craptacular. What’s the German, French or Chinese word for “crap”? This is the secret reason why English is the world’s language. No one else has words that quite mean “crap” or “suck”.
I think you are channeling George Carlin, I always like him…
“…if it weren’t for the word “suck”? What did we use before?”
Blow.
2007 is going to suck.
-Rent
The new SUCk is BITES. This Bites.
Or…when we’re snowboarding and wipe out, I ATE it.”
She took out a toxic loan on a property she purchased in 2005 and ATE it.
“wipe out” or “ate it”
we were using those terms in the 70s. usually skateboarding, surfing, BMX related.
and I believe sucks is really short for “sucks the big one”
As opposed to “sucking eggs” (wink wink, nudge nudge) or, more explicitly, “sucking big donkey balls”?
Right next to “bite me”.
“Scheisse”.
German is the world’s best laguage for swearing.
Yes, because nothing says “Move over, asshole” like “Du bloeder Hecht!”
Animal names. Bringing the barnyard to the town square since 1817.
OBTom, correction, your own language is the best one for cursing, counting and praying. I love to hear cursing in English, but it doesn’t shock me, I just find it interesting. Now, if I hear a string of outrageous cursing in Spanish, sometimes even I am shocked. In a foreign language, no matter how good you are at it, it doesn’t sound so terrible. It’s easier to be thick-skinned in a foreign language.
Here is the article
http://money.cnn.com/2007/03/07/real_estate/dr_horton.reut/index.htm?postversion=2007030717
That’s classic.
The builders are the # 1 contributor to sinking prices in the bubbly markets. While many individual homeowners decide to forestall listing their homes pending upward price movement, builders simply cut their margins and build, adding to the inventory.
He says outlook=”suck”, and DHI goes up again?
[rolling eyes]
It is appropriate for a CEO to use the vernacular when his audience includes employees at all levels in the company.
Besides, I like it because it might induce mass panic and accelerate the fall of this stupid market.
Here’s an idle thought, triggered by watching a group of wild animals doing the exact equivalent of eating their seed corn.
I wonder if predator/prey dynamics from zoology apply to parts of the RE industry?
Nah, it’s more of a worldwide lemming outing.
The Bubble Slide continues to pump the Carolinas (Greenville/Greer, SC)…the house next door to ours had 42 showings in 4 weeks on the market. They got 3 offers and took $500 under asking price for a buyer who could close this past Tues. Buyers from NY, couldn’t believe the great house they got here for $250K. Very hot market here in the $225-$350 range with little inventory available and the locusts swarming…
Aren’t those the future “ex-pat” Floridians looking to bail on the sunshine state? (And New Yawkers too, don’t forget the freakin New Yawkers)
Wait ’til those Greenvillians go to the next stage of their little real estate bonanza.
Stage 1: Peaceful life with affordable housing.
Stage 2: Yankees swarm and drive up the price of housing. Locals begin to cash in.
Stage 3: Yankee induced hell. Bye bye quality of life.
Good call, you nailed the discussion of choice at every cocktail party…
Radio adds in Southern California pushing real estate speculation in the Carolinas. Someone is eager to squeeze the last bits of go-go juice out of htis bubble
I can confirm it’s happening here. Spec homes are selling soon after they come on the market. Prices are up. Did you see the WSJ article showing the attractive $250K house for sale in Matthews, NC? It would go for more like $750K in the NoVA suburbs of DC. Also, its property tax was around $2500/year.
Paradise Lost.
The Carolinas are the new California. Best jobs market in the country supposed to be in the Triangle.
Moved from Palm Beach County, FL in 2005 to Asheville NC, the damn bubble followed me. I am now seeing here what was happening down there two years ago. The denial here is exactly what I saw two years ago down there.
NC is the favorite desination for people fleeing CA right after WA and OR.
It was my 1# relocation spot until the pump got going in 2004/2005. I have an uncle out there. He tells me they hate us californians out there for wrecking their economy. Seems just like us in Sacramento being disgusted with everyone coming from the BA.
I think the next “IT” spot will be TN. Austin is looking good but it’s been experiencing a flood for a while too.
I can’t wait for the 2006 state population numbers to come out.
I just got a mailer touting San Felipe, Baja California (that’s Mexico) ocean view lots. Great investment opportunity! Like California in the 1940’s!
There’s a sponsored “informational” meeting at Harry’s Plaza Cafe, maybe I’ll go for the free prime rib. (OT-Harry’s is a bona-fide old-school SB restaurant (zero tourists). Busy every night, hard core local eating and drinking, e.g., if you order a screwdriver, they throw a few ice cubes in the glass, fill with cheap vodka, and wave an open orange juice container over the glass, maybe letting a few drops of OJ fall in for color).
I thought it was against the law for Americans to own property near the ocean in Mexico. So they want you to take out a mortgage on a leasehold? Yikes.
San Felipe was where my buddies and I would go to get rip-roaring drunk. We’d only go into town for buying up more tequila, mescale, tecate, ice for the coolers, and M-100s and maybe eat some fish tacos and gawk at the motor homes that people put hundreds of thousands of dollars into. Then back to our cheap campground to listen to music, play UNO, set off rockets, repeat the sequence until late in the night and start the next day at around 10 a.m. One of our campers would open the first beer then. I was the health enthusiast so I would tend to wake up much earlier, run (if I was still not dizzy from the previous evening) along the beach 3 miles, do a bunch of pullups on a partially completed beach hut, do pushups, then finish with situps. The showers were only cold water showers. The toilets were BYOTP (Bring Your Own Toilet Paper). Locals would come to your campground with buckets of Camarone - we’d buy it up and grill it that evening. It was “roughing” it. But I had all I needed in the world. Even took a girlfriend with me once. She took all the guy activities in stride (drinking, belching, eating, and obnoxiousness). Campgrounds had names that were English names, kind of creative, like “Live and Let Live (or Die?).
Those were fun days alright.
Imagine a world without credit
It’s easy if you try
No minimum payment monthly
You’ll pay cash or be denied
Imagine all the people, living within their means?
You may say i’m a dreamer, that my countrymen, in reality don’t have Dollar one
10 years of living high on the hog though, was a little fun.
You may say i’m a dreamer
Brilliant, aladinsane (by the way, love the reference in your screen name to David Bowie’s song)
Thanks palmetto,
Sometimes you wake up with a jingle in your head~
Any Daily Show/Colbert Report fans on board?
I cut my teeth on SNL, in the glory years from 1975 to 1980, and it seems like this amazing hour of tv, monday through thursday, is the heir apparent, oh so funny each and every night.
It’s a shame to see SNL reduced to bathroom humor and tittie jokes. Bring back the Norge refrigerator repair man!
My fav was the Bass-O-Matic.
I loved the Colon Blow cereal skit.
one night stand..
Gilda Radner leaving her previous evenings trist, all tattered, getting into a cab…
“When you’e never gonna see them again”
Oh, Lordy, COLON BLOW! The best! One time, some friends (not any more) shilled me into coming over to their house for a “party”, which turned out to be a pitch by some guy for a multi-level marketing scam. The products were health and vitamin oriented, and he was going on and on about some formula that was supposed to “cleanse” the lower intestine. He was being terribly sincere and serious warning about the dire consequences of diseases generated by the colon.
The person sitting next to me whispers in my ear “Colon Blow” and the next thing I know, I’m like a kid in church who wants desperately to laugh. My eyes are bulging and tearing, my shoulders are shaking and I’m red as a beet trying not to explode in fits of roaring mirth, while the guy is droning on and on about impacted fecal matter.
Even now, past SNL skits from back in the day never fail to delight.
The perfume she wore was called “hey you”
couldnt recall the name,
guess I did too much colon blow in the late 70’s
I’m like the world’s biggest SNL fan.
Late boomer here (61′ model, new upholstery) and my biggest problem, when I was young, was staying up (I tended to fall asleep) to see a whole episode of SNL, and there was no internet back in those days and the following Monday @ high school, it was all everybody would talk about.
For the 1st 5 years, everybody in the cast (including Chevy Chase, eee gads) was a perfect fit~
Parental Units
nevermind.
I’m the Samurai Warrior fan. Too bad SNL has lost it’s mojo.
My wife and I watch a current SNL every year or so, just to see if it’s funny anymore.
It’s not.
The Ladies’ Man was my favorite.
Wild and Crazy Guys!
My heritage is Czech and during the communist era, you could get relatives out of Czechoslovakia, to visit us here in the USA, but only on a hostage basis, meaning that my aunt could visit, but my uncle had to stay back home.
I distinctly remember my aunt seeing those “2 Wild and Crazy” guys on tv, that claimed to be Czech and she had a conniption fit, of sorts.. ha
Love Daily and Colbert. I take a half-day off on Wed. and work out at the fitness center timing it for the 2pm reruns. People think I’m nuts because I start laughing out loud. I also loved the first few casts of SNL, but after that it Hortoned.
Colbert is a phenomenon, he started badly, almost unwatchable, for a month or 2 and then he bloomed into must watch tv.
An episode with Elliott Spitzer, Peter Frampton and Henry Kissinger had us on the floor, rolling in laughter…
No Coke! Pepsi!
The killer bees!!!
The recent show hosted by Rainn Wilson (Dwight Shrute) was just amazingly unfunny through the first 5 or so skits (I gave up after that).
I usually watch 30-45 minutes worth — and there’s usually about one funny skit. Nothing like the heyday, and even worse this year. Probably due to Tina Fey leaving.
Dan Aykroyd’s Julia Child skit may be the funniest five minutes ever seen on television. (Save the liver!)
Well just for sake of argument, even in the glory days, they were only batting about .500. But the benefit of selective memory means that you remember the ones where they hit ‘em out of the park, not when they struck out.
Anybody remember the
Jam-it-all commercial?
(a la Geritol: My wife I think I’ll keep her) I believe Chevy Chase and Dan Ackroyd were the couple.
We also love when Mike Myers did the hyperactive kid attached to the jungle gym that ended up yanking it out of the ground and hauling it down 5th ave(?) after scarfing down one of Nicole Kidman’s candy bars. You can pull that one up on you-tube.
http://youtube.com/watch?v=baibRobU4OM
I loooove Daily Show/Colbert. My favorite, when Colbert sang the Star Spangled Banner with that guy from New York. A classic, and very deep, if you really think about it. As for SNL, I don’t know, I know it’s not that good any more, but I’m loyal.
They would do the cheeseburger/chocolate shake skit and to this day I swear they got that from “Lucky Boy” in Pasadena. The accents, timing and delivery were identical to the guys that worked there.
Bravo!
Interesting article in the WSJ on hedge funds taking losses in mortgage back securities.
Those that be against them and made money have rushed to report earnings. Those that lost say they are having trouble valuing the complex instruments on their books, and have not reported.
But the WSJ says these funds already have valuations, don’t like them, and are shopping around for better ones to use in their statements. Value opinions can differ because there is so little trading — volumes and liquidity are substantial on the way up, but not on the way down.
No inflation. Right
Costco Wholesale 2Q Profit Declines 16 Percent on Costs; Sales Climb 7.5 Percent
ISSAQUAH, Wash. (AP) — Warehouse retailer Costco Wholesale Corp. said Thursday its second-quarter profit declined 16 percent as costs grew faster than revenue.
What sector do you like TX? It looks like a rally monkey day today. The dollar strengthened against the yen. I guess that cures all evils.
Healthcare IT. Only long position I have. I’m sidelined as to directional moves until option expiration or Dow 12,500, whichever comes first.
Oh, and to clarify, I have some networkers and subprime lenders for a short term trade only.
txchick or others:
I hear a lot about option expiry in March and its relationship to the recent rally. Could you explain this?
I haven’t studied the OI tables but I suspect there’s large open interest in the index puts vs. the calls near the money. If that’s true and it’s a lot larger, that will put a “floor” under the market absent some unforseen event. Too many puts = no market dump.
Here’s my little momentum monster. It’s way too late to buy it IMO, my cost is under $1 but it’s making a new high every single day. Seeking Alpha had a little blurb on it back in the fall w/my recommendation but hardly anyone even knows it exists.
http://stockcharts.com/h-sc/ui?s=haxs
Sweet!
Somewhere down the line, people aren’t gonna have the do re mi, to buy a 6 pack of 48 ounce ketchups, or a vat of velveeta cheese.
We’ll go back to buying normal portions of food.
Not neccessarily a bad thing?
well for one i cannot live with out my 96pack of eggo waffles
costco is good for a small business or a large family who likes to eat alot of crappy processed food
It’s not all crappy processed. I buy those big bags of frozen edamane, the frozen 3 berries thing, the big boxes of spring mix, etc. It’s great for health nuts too.
and they are good for proteins - chicken breasts, raw uncooked shrimp, 2% milk, cottage cheese, etc. We never touch the processed stuff and end up feeding the 2 of us for about $250 month including box lunches.
I just wish they’d start offering giant bags of frozen veggies for when I can get to the farmers market.
In LA, Costco is good for some types of meat and very good for wine. Not a lot of selection, but good stuff. Yesterday I bought 24 bottles of red wine (we drink wine with dinner). Also, you can’t beat Costco when it comes to paper towels, napkins, etc., the kind of stuff you can store forever. I like their cold cuts too, although my kids sometimes get tired of their salami sandwiches and I lay off for a while. Bad coffee, though.
BJ’s has frozen veggies that nuke up nicely, also frozen fish, chicken, and fresh meats in large cuts. Very economical, and healthy as long as you know how to cook.
If it’s soy, wheat, or corn, and it’s not organic, then it’s contaminated with Roundup residue.
Look it up on wikipedia. “Roundup”.
I’m sure Costco doesn’t mind selling this crap to you and calling it healthfood.
Costco is very sensitive to movements in the price of gasoline (because they refil their tanks more often than smaller competitors) from quarter to quarter.
Oh and they got hit hard by their return policy on TVs (which were caused by falling rather than rising prices), ironic huh.
I bought a Plasma from Costco, and the power supply went out twice (once it was fixed under warranty). I took it back to Costco for an exchange because the price had dropped $1,000 on the TV in those 8 months. They CSR forced me to take back a $1,000+tax Costco cash card along with the exchange. I explained how wrong that was and that I didn’t want it. The response I got was “buy something nice for your wife.”
–
“No inflation. Right”
Chick,
Cost increases for businesses, when they can’t pass them to consumers and result in lower profits, is a sign of deflationary force and NOT higher consumer inflation. No?
Jas
I wasn’t differentiating at what level the inflation is being felt. Someone’s paying higher prices.
Great posts TXchic Do you trade just for yourself?
I find a lot of inflation here in NYC, but a lot of it is product downsizing. Good old Hellmans Mayo is now a 30 oz jar, its always been a quart since i was a kid. Same with Entemans cakes a half ounce here a half ounce there, most of thier pie tins used to fill the box, not anymore, skippy peanut butter is smaller, jars of jelly are 17 oz intead of 18
And cat litter and food is up 20% or more in 2 years (probably dogs too) yet none of this gets counted in the CPI index, becuase they use the retail price, and not unit pricing.
The biggest lie about inflation, vis a vis government #’s is, that since we invaded one of the world’s richest sources for oil, the price of gas has doubled and the vast majority of everything we buy in this country, is transported via trucks.
Where are you going to hide the 3000 pound elephant, that is the increase in shipping costs?
You start stealing an ounce here, an ounce there. People are price conscious, they’ll never notice?
Re the smaller food qty/package:
Cooks notice….ever try to make an old family recipe and have to buy 2 containers to keep with the old measurements?
CarrieAnn, spot on, I don’t want to get carried away with something OT, but I’ve noticed that across the board too. Last week I mentioned a purchase or a mattress at Costco. In 2006, the mattress had springs on both sides. In 2007, lo and behold, the price is the same but the mattress has springs only on one side. Just the kind of think that drives me up the walls.
My son likes Slim Jims, we opened the new box and the meat sticks were shrunk but they hadn’t yet modified the shrinkwrap packaging so there was clearly about 1″ missing. He freaked out and I got to teach him about why companies shrink product sizes and we followed up with a call to ConAgra who sent us a $5.79 coupon toward our next purchase and apologized.
Luckily this was the week before the Peter Pan fiasco, after which they were probably swamped…
“meat sticks were shrunk”
Don’t you just hate when that happens?
LOL on the meat sticks.
We also switched Chinese restaurants. Our old fave used to pile on the large qty of extra large shrimp and had generous size egg and spring rolls.
Last time we ordered we were searching thu the noodles for our bite size steak/shrimp and the egg and shrimp rolls were 1/2 the size. Luckily the shop down the street from them is still offering generous fresh servings……for now.
Costco gets most of it’s stuff from South America, I think. So higher prices for Costco might mean the dollar is weakening against some South American currencies. If they can’t pass the price increase on to consumers, then I guess that means we’re in the beginning throes of a recession, right?
“Cost increases for businesses, when they can’t pass them to consumers and result in lower profits,” …
= stagflationary force (1970s are here again)
Arrowhead bottled water (among others) now comes in a “convenient, stackable” 3 litre bottle — for the same price as the former 1 gal. bottle.
1 US gal = 3.785 litres
You get 21% less water for the same cost…
The Housing Bubble could be hazardous to your health. Interesting article below on the first human case of Chagas Disease documented in the US. If you google for information on Chagas, one of the points made is that the parasite tends to incubate in sub-standard housing south of the border. Speculation is that the parasite has arrived here with the “guest workers” employed in the construction industry, many of whom went to Louisiana after Katrina. It is not a widespread concern at this time, but something to think about if you live in a Southern state and are contemplating buying or living in a new home with substandard construction built with “guest worker” labor during the bubble.
“Loyola biology professor Patricia Dorn, Ph.D., in collaboration with Dawn Wesson, Ph.D., of Tulane University Health Sciences Center and Loyola undergraduate student Leon Perniciaro discovered the first human case of insect-transmitted Chagas parasite in Louisiana and sixth ever in the United States. The discovery was made in July 2006 in a rural area of New Orleans.
The discovery was made after a resident brought insects to the attention of a pest control operator who identified them as kissing bugs. After researching the bug on the Internet, the resident realized the potential for Chagas transmission. Because Dr. Dorn is known in this area as the expert on Chagas disease and her ongoing international research in this field, she was contacted to administer the test for the Chagas parasite and further investigate this situation. Both residents were tested at Loyola and the Centers for Disease Control and one resident tested positive for the exposure to the Chagas parasite. Many insects have been collected in the house and the nearby building and studies carried out by Dr. Dorn and her students over the last several months indicate that more than half of the insects tested carry the Chagas parasite.
What does this mean and what are the implications for the general public?
Although we have known for many years that there is an endemic cycle in wild animals in Louisiana (approximately 30 40 percent of armadillos and opossums are infected with the Chagas parasite), this is the first report of infection in a human with the Chagas parasite by an insect in Louisiana. This is not a widespread public health concern since the person was living in a rural area in a very open house with numerous entry points for insects and no air conditioning and most people in Louisiana live in much less open homes.
Dr. Dorn has spent 14 years studying Chagas disease, mostly in Guatemala. She is continuing her work on the insects that carry the Chagas parasite in Central America and Mexico and working with researchers at the LSU Veterinary School on Chagas in dogs in Louisiana.
Dr. Dorn’s scholarly paper on this significant finding will soon be published in the journal of Emerging Infectious Diseases which is published by the Centers for Disease Control. She also presented her findings at the annual meeting of American Association of Tropical Medicine and Hygiene in Atlanta in November 2006. For a brief summary of Chagas disease and its natural transmission in the United States go to the following link on Dr. Dorn’s website: http://chn.loyno.edu/biology/bios/dorn-chagasresearch.html
Note: This story has been adapted from a news release issued by Loyola University New Orleans.
http://www.sciencedaily.com/releases/2007/01/070116131041.htm “
But Chagas Disease is doing a job that American diseases won’t take.
Chagas disease = Housing Bubble Disease. Who knew?
And the great disapearing bee dilemna…
http://www.valleyvoicenewspaper.com/vv/stories/beedeaths.htm
Disappearances because of the big pesticide firms?
maybe it is simply a result of climate change. In Europe we have many similar problems, especially with parasites that are moving north from southern europe and invading territories where they have no natural enemies. A few more years of accelerated warming and the whole agriculture sector will be in big trouble (but for Dutch politicians there is no problem: Netherlands is going to be the Riviera of Europe so home prices can only go up). Just like the US we don’t need manufacturing or agriculture any more, we have a huge finance sector that is extremely innovative when it comes to producing ever more debt.
nhz, lol. In California we are having the second warmest winter on record, and one of the driest. I don’t know why we haven’t started freaking out yet.
It’s going to be 88 degrees in the central valley of Califorrnia, this coming Monday…
You can stick a fork in the Sierra snowpack.
el lay:
Get ready for water rationing
aladinsane, I can’t wait. I’ve been working for free as a water vigilante for years. Now I won’t get the weird stares.
Oh goodie goodie…
be ever vigilant~
Was driving with a friend through Farmersville, Ca. and we got the hankering for java and went through a starbucks, (yes, they have invaded everywhere) and the kid asked if we wanted sugar and we said yes, and he gave us a bag of 23 packets of sugar.
We tend to waste our resources moreso, with every passing year of my life on this beautiful blue orb, why’s that?
that is the funniest damned comment I’ve ever seen here. thanks, slim.
I agree it was pretty darn good.
My personal Chagas parasite is currently in the slam.
Below Is an Advice From a Leading Economic Forecaster
What would be your advice to Rod?
Jas
-x-x-x-x-x-x-x-x-x-
March 5, 2007 8:35 AM
Lakshman,
I sold my condo a year ago because I was getting married and because your LHPI indicator was going down on the weekly update. In hindsight it seems to have been a good decision. We eventually want to get back into a bigger house, but it seems to be a bit early to me. Do you think that the worst is over? Thanks for your insight.
Rod
-x-x-x-x-x-x-x-x-x-x-x-x-x-
March 6, 2007 3:13 PM
Hi Rod,
Fist things first - congrats on getting married!
My guess, based on the recovery in the LHPI and in other ECRI leading indexes is that the home price decline will bottom soon, if it hasn’t already. That said, timing it perfectly can only happen with a good deal of luck, and local issues may be more important in the short term than the national cycle that the LHPI is designed to forecast.
At the same time, assuming that you’ll need a mortgage, the rates now may end up looking pretty attractive in retrospect.
Finally, I’ll just say that I strongly advised my younger brother (who is newly engaged) to buy a house now, which he just did (on Long Island).
Good luck.
Lak
[Lakshman Achuthan, Managing Director, Economic Cycles Research Institute]
-x-x-x-x-x-x-x-x-x-
March 7, 2007 7:20 AM
Lakshman,
Thanks I’ll start looking this spring.
Rod
http://investment.suite101.com/discussion.cfm/18#message_172
This housing ‘cycle’ is going to be a good education for folks who believe in driving by looking through the rear windshield.
He advised his own family to buy a house on Long Island?!
Dumba**
My guess, based on the recovery in the LHPI and in other ECRI leading indexes is that the home price decline will bottom soon, if it hasn’t already.
Economics Research Institutute, managing director, big title for big buck research offers us “my guess” is the bottom has been reached in housing. Here’s “my guess’ for free “The Trend is Your Friend” There is not one shred of evidence to suggest any change in the direction of this down market. The trend is more pain, and your relative just got burned. Nice going!
What would be your advice to Rod?
hmmm…, good question, Jas. Thinking.
Thinking, thinking….
Sorry, can’t come up with an answer right now. Probably due to the fact that as an American, I am born and bred to be a dupe.
Your question just shorted the circuits in my American dup-i-fied brain.
lol
Do you think that the worst is over?
Magic Eight-Ball says…
Zip Realty over 1 milly for those of you watching.
Cbass, Thanks!..I was watching that for the past year..highest I saw was 960k then fell again. While it isn’t a perfect indicator, it is a ‘windsock’ on which way the wind is blowing…Looks like a 30kt blow..
I’ve been watching the OC number go up, up, up over the last month. It makes my day! We are almost at 14K again…could get there today.
found a link to a thread on broker universe where one of the comments about the growing requirements for down payments.
“Point well taken… curious what the ratio of avg income vs home price is today versus ´back then´. In Volusia County, FL (Daytona Beach area) median home price is 7 times median family income. A family with a 5% annual savings rate will need 27.5 years to save 20% down. I´m sure Calif has an even uglier situation.
by Deep River March 7, 2007 ”
http://www.brokeruniverse.com/grapevine/thread/?thread=372654
I think I will help out Costco and get that giant size bag of popcorn.
Just saw a house in Celebration Fl for sale for $465,900. Said it was reduced $86,000 for quick sale. Priced below appraisal. Probably inflated refi appraisal from 2 years ago. The appraisal was $328,000 on the IAOO Oceola appraisal site and it was not a home with the Florida resident tax break. This person paid $399,000 in 3/05. Reality has not set in for these people. Refi appraisals are worthless, plus an appraisal is really only good for the day it’s done. A twister could come through and level your property, and it wouldn’t be worth that tomorrow. Sellers are just not getting it.
Celebration. Boo-yah! To be honest, I’ve never been there, but I’ve heard it is a hot, humid hell-hole from May to October. No sea breeze to relieve the heat. A community manufactured to capitalize on the Mouse. Anyone ever been there?
Yes, my husband and I went through there when it was first built and a few years later. At first it was absolutely beautiful and idyllic. Variety of houses to choose from, wasn’t cookie cutter like most florida communities but years later you would hear about the houses’ fascade buckling and little “technical difficulties that were cropping up. For the premium these people were paying they should have had premium built houses.
I’m there several times a week, and know about a dozen homeowners there. Wat too regulated for my tastes, but it is a nice community for the “Junior League” crowd.
“Reality has not set in for these people.”
I’m not sure if it is the humidity that rots the brain in Florida, but you are exactly right about that. I had an email this morning in response to an ad I had posted looking for a rental (I was displaced by a fire in the building over the holidays, I’m in a temporary at the moment). Person wants someone to “share” their house. They are out of town eight months of the year and don’t want to lose their homestead exemption. They probably shouldn’t have one in the first place. And then they listed all their terms and conditions, like having to show a certain amount of money in my bank account, pay stubs, etc., not to mention their offer was higher than the monthly amount I had posted. AS IF! That homestead exemption thing really got me. THEY are the crooks and they want to give ME a good probing for the honor of PAYING to protect their little lies.
I always find that the biggest crooks are the ones who are most concerned about getting paid.
You should forward their email to the Osceola property appraiser, they are trying to crack down on homestead/greenbelt fraud and might appreciate the info.
Maybe somebody has already posted this, but check out CFC’s REOs:
http://www.countrywide.com/purchase/f_reo.asp
I stopped counting in California at 350 when the scrollbutton indicated I was about halfway down the page, making approx 700 in the Folden State. I heard that CFC is going to be under the OTS now, I wonder if their examiners will force them to move this crap. I can hardly believe how much they own already.
I hope the owner of these CW & Downey REO tables keeps them upotodate.
http://spreadsheets.google.com/pub?key=pOSu8I1YrtgD6YqtUVBaINg&gid=0
I thought Countrywide was supposed to be a prime lender? Very few non-performing loans because of their quality checks? HA!
Here in the Northeast they buy a lot from the heavily marketed brokers, like 1-800-east-west. Prime, for the most part, but with completely outsourced due diligence.
(sorry if repost)
Maybe somebody has already posted this, but check out CFC’s REOs:
http://www.countrywide.com/purchase/f_reo.asp
I stopped counting in California at 350 when the scrollbutton indicated I was about halfway down the page, making approx 700 in the Folden State. I heard that CFC is going to be under the OTS now, I wonder if their examiners will force them to move this crap. I can hardly believe how much they own already.
“08:32 am : S&P futures vs fair value: +11.4. Nasdaq futures vs fair value: +20.0. Monthly retail sales figures from more than 60 retailers (e.g. WMT, COST, FD) continue to disappoint “.
I don’t get it - maybe someone here can help me? Why would the market open up very strongly on this bad news?
The yen carry trade…The dollar is up today vs Yen…117.15 ¥
That is all I can think of!
Weaker Yen v. the dollar but FXY is up $2.19 in early trades! Obviously not everyone believes in this new Yen weakness.
Never mind. It’s down.
Increased expectation of lower interest rates, I would assume.
Because there is a lot of money out there. Thats my best answer?
Way too much money and hints of inflation, stocks are a hedge aganist inflation. Notice the bond market is flat.
markets never go straight up or down. it’s always a zig zag line. check out Elliot Waves for more info.
doesn’t always mean people buy to invest. a lot of the mini rallies in a downtrend are just covering shorts
In No. VA. sales are still happening. A co-workers husband made the million dollar club in Feb. I think what is happening is the prices compared to the previous year or so look good so people buy.
by definition, people will be scooping up ‘bargains’ all the way to the bottom. With the current rate of (average) price declines that can take many years.
More-or-less the same mechanism as those overpriced homes that do not sell for months or years, are pulled back and then quickly reintroduced at double the price and sell in a few weeks (probably by accepting the first lowball offer). See it all the time in my area …
and while they are still buying those “bargains” using suicide loans the bottom is still a couple of foreclosure cycles away.
D.R. Horton CEO: ‘2007 is going to suck’
No. 1 U.S. homebuilder sees further write-offs due to unsold homes, lower value lands; expects ‘08 to be better.
http://money.cnn.com/2007/03/07/real_estate/dr_horton.reut/index.htm?postversion=2007030717
DHI up over 1.5% (.36) on their rosy forecast.
Go figure??
A friend of mine bought a new house in Phoenix 13 months ago (we live in the Bay Area, CA). She dove in without doing her homework, and didn’t know that she was not allowed to rent the place out until one year after purchase. So she ate the mortgage payments for 12 months (she’s single, rents here, I’m guessing she makes maybe $65k per year). She finally got a renter last month but I heard from a friend that she is completely broke - she just moved in with her boyfriend and he is paying all the bills. She cannot even afford to go to dinner with the girls.
Yesterday a clerk in my office showed me the house she is buying in the Bay Area. She told me she is scared because she’s going from living in a low income $600 a month apartment, to having a $3800 mortgage with her boyfriend. I think their combined income is probably less than my single income and I couldn’t imagine a $3800 mortgage - even with my husband’s combined income I wouldn’t do $3800. How are people still getting approved for these loans? This has to be 7x income or more for her. Also, I think they put close to zero down.
So, I’m seeing this bubble hit the people around me. I hate seeing these situations. I like both of these girls. And they are both otherwise smart girls. I see this ending badly for both of them. It’s hard to have sympathy though, even though I feel badly for them.
Hmmm….
Qualifies for a low-income apartment AND for a mortgage of $3800/month? Sounds like one of your “smart” friends is a bit of a fraudster.
“So, I’m seeing this bubble hit the people around me. I hate seeing these situations. I like both of these girls. And they are both otherwise smart girls. I see this ending badly for both of them. It’s hard to have sympathy though, even though I feel badly for them.”
I hear you loud and clear. I know several families who were drawn into the flames by the brilliant light, and now they all have buyer’s remorse. The middle-class jobs, benefits and retirements are being strip-mined from our economy, and you’re right…it’s going to end badly for many of these people.
I think the Spanish housing bubble will pop sooner than later. I found an article this morning about the home builders association fearing a decline of new homes demand for 2007 and 2008 (the article is in Spanish http://blogs.periodistadigital.com/ladrillos.php/2007/03/08/las_constructoras_alertan_de_un_frenazo_)…of course they are whining about how many jobs that would cost (200k but how many of those are illegal aliens’ jobs?, yes Spain has the same problem than the US) and that the building sector is responsible for 30% of GDP growth in the last 5 years (bubble years). So buy now or you will hurt your own country!…yikes! we will still have the sun and the tourists/retirees from nothern Europe (think of Spain as the European Florida).
I just cannot imagine how people thought a 24k average salary would sostain a 400k average “house” (condo) price! And today the ECB had increased the interest rate…that’s going to hurt, I have already read stories of people not been able to pay their mortgages and families going to court asking for BK (it is only allowed for companies under the Spanish law). I’ve also read about people wanted to sell their condos and rent because they saw the prices going up too much too fast…but the rental market in Europe sucks. So not many have that possibility.
A friend of mine just bought a second condo in my hometown, they have a condo in Madrid (primary residence) but with the high-speed train from my hometown to Madrid and a baby in the way, they thought it would be a good idea to live closer to their families. I am going to encourage them to sell asap. I have the feeling this spring will be the top of the bubble in Spain.
That’s it.
I’m selling all of the Spanish coastal real estate I don’t own.
I’ll miss not hanging out with pasty white Englishmen, but i’ll get over it…
At least we don’t have hurricanes…only droughts (ooopsss…there it goes the water for the new pool and the fancy golf field paid by the HOA fee each month)
You can always buy in the nice little island Spain currently leases to Germany
NAM, I may be wrong, but I thought a lot of the air in the Spanish bubble came from equity locusts in Northern Europe who remortgaged their homes to buy a second home in a sunnier climate. Things will get bad if they starting putting their properties on the market to salvage the homestead in London or Nuremberg.
The Nothern Europe “investors” and retirees are part of the bubble (specially in the coastal areas and in the islands) but they are not the only ones. There has been thousands of Spaniards getting rich thanks to the building industry (new and existing homes)
the ECB rate increase is NOT going to hurt, because mortgage rates (and rates on savings accounts) in most EU countries do NOT increase when the ECB raises rates. It is al a huge scam where savers are punished at the benefit of homeowners and the banks.
Trichet has made it absolutely clear again today that speculators have ‘carte blanche’ in Europe. Money supply was growing at 10% YOY at the beginning of 2007, I think it will be at 11 or 12% this summer. With the current pace of ECB rate increases, it will take 5-10 years before rates start hurting - and that is exactly what they want: cover their a** in case things go wrong, but certainly not do anything that might slow the housing/stocks bubble.
IF things go wrong in Europe, if will probably start in Ireland or the Spanish costas - those are the areas with biggest leverage.
Once prices decline there by 30% or so, it will spread to the other bubble markets like UK and Netherlands, because many homeowners there have been investing their virtual gains in Spanish real estate.
NHZ,
ECB rate increase will hurt in Spain very soon…Some people have Libor+ points as their mortgage rate but others have Euribor+points. Some have adjustable rates every X number of years (very common in The Netherlands) but others have adjustable every month!! (yes it is scary).
I agree the European bubble will pop in Spain and Ireland first (where the highest increases in prices and speculation). The Spanish coast is a disaster waiting to happen, but the big cities as Madrid, Barcelona, San Sebastian, Pamplona are not in better shape and that was not due to foreign investors but Spanish investors. Old people moved their savings from the bank savings account to real state commercial or residential.
I forgot to add the Spanish “investors” are not only the older or richer population trying to get a better return…actually most of the “investors” have paid with under the table money (called B money) in questinable operations. The B money used to be a good chunk of the Spanish economoy now it’s huge! there is no way to buy a Government subsidized condo without under the table money.
yes, and a lot of ‘B’ money comes from other EU countries (again, Netherlands and UK; probably some from Germany and France too). Spain is the only EU country where you can still buy property with ‘black’ money. Everybody knows this and despite complains from the EU (unfair competition to other housing markets …) the Spanish government has not acted yet. One of the reasons that a very big % of all EUR 500 notes end up in Spain …
How the heck do you get black money in The Netherlands? When I live there, not even once a plumber asked me to issue the Invoice with or without VAT, a common practice in Spain. Also in The Netherlands all employers paid legally when you were a legal resident (not in Spain where employers try to avoid to pay SS and government employment taxes).
The Spanish government (local, regional or national) is doing nothing about B money because they are corrupted crooks and scumbags…most of them have ties or own or accept briberies from builders and speculators.
NAM, the other day I happened to catch an investigative report in Spanish TV. They had taped a meeting btw city council members and builders. The whole thing was so coarse it made me laugh (of course I was not surprised, being Latin American, we have the same disease). One of the councillors was saying “OK, so I am the only “gilipollas” who only gets 7% while all the others get 11%, etc. He was really pissed off, not at having bilked the public, but at his paltry 7%. Boy was it amusing. I don’t know if the guys went to jail though…probably not.
Yes, I know, my family (medium-business owners) had several set backs on deals because they didn’t want to bribe (untar) local and regional politicians, they went to court and won but still lost a lot of money (no interest paid back for lack of return, only nominal investment refund). My grandfather used to say local taxes were bribery enough. Anyway, they might go to jail in 5 or 6 years, enough time for justice to be served.
Anyway, they might go to jail in 5 or 6 years, enough time for justice to be served.
At least your family got the moral victory. In these times, that amounts to a lot. My congrats.
Wow. So if I wanted to bum around in Europe for a few months and take an under-the-table job, Spain is the place, then?
Cool.
Anyone want to comment on what happens here. My Mom does taxes and a friend of mine went to her for advice.
Names removed:
I am really afraid that ‘S’ was involved in a scam. ‘S’ showed as the sole owner of a house. He paid all the mortgage payments and the ‘partner’ (now referred to as she) was supposed to pay him back. She got behind but he got all his payments when they sold the house in just under a year. He did not have his purchase documents but from what he said they sold it for 100K more than they paid. 20K was paid to the state for state income tax but I could find no record that any was kept out to pay federal income tax. ‘S’ received all the money for the sale and then wrote a check to his partner for almost 50K. She got the profit but the paperwork shows that ‘S’ got the almost 100k of profit. She supposedly did a lot of fix up to the house at her own expense but of course ‘S’ cannot use that because she has all the receipts.
So I think that ‘S’ has a real 5K profit. The interest and tax write off on his taxes even though she paid him back for the house payments and I think taxes. But he is stuck with almost 100K in profit on the sale to be reported on his federal and state taxes. And she has documentation showing she bought the house for what I believe is an inflated price so she can sell it (possibly to the next partnership) for a low price, and show a loss. He called the broker last night and the broker told him everyone else they had done this with made out like a bandit and he would to. Recommended that he go to the brokers mother for taxes as she had done this before. The mother is retiring on March 31. I told ‘S’ to go to her. I should have said I would like to review them when she is finished. Don’t know what she will charge him. TURKO Time???
My Mom does taxes and recently sent me this e-mail after I referred a friend (’S') to her:
I am really afraid that ‘S’ was involved in a scam. ‘S’ showed as the sole owner of a house. He paid all the mortgage payments and the ‘partner’ (now referred to as she) was supposed to pay him back. She got behind but he got all his payments when they sold the house in just under a year. He did not have his purchase documents but from what he said they sold it for 100K more than they paid. 20K was paid to the state for state income tax but I could find no record that any was kept out to pay federal income tax. ‘S’ received all the money for the sale and then wrote a check to his partner for almost 50K. She got the profit but the paperwork shows that ‘S’ got the almost 100k of profit. She supposedly did a lot of fix up to the house at her own expense but of course ‘S’ cannot use that because she has all the receipts.
So I think that ‘S’ has a real 5K profit. The interest and tax write off on his taxes even though she paid him back for the house payments and I think taxes. But he is stuck with almost 100K in profit on the sale to be reported on his federal and state taxes. And she has documentation showing she bought the house for what I believe is an inflated price so she can sell it (possibly to the next partnership) for a low price, and show a loss. He called the broker last night and the broker told him everyone else they had done this with made out like a bandit and he would to. Recommended that he go to the brokers mother for taxes as she had done this before. The mother is retiring on March 31. I told ‘S’ to go to her. I should have said I would like to review them when she is finished. Don’t know what she will charge him. TURKO Time???
What do you guys think?
Does “S” stand for sucker?
I hope that answers your question?
I am not sure I followed the scenario. It sounds like a common arrangement in which two people get together and buy a home, then flip it. The person with the gain being reported can put a statement in the tax return showing that there was another owner, who enjoyed the gain as well. He would want to attach a copy of the check for her share, to the tax return as well. He would subtract out 50% of the gain and report as Nominee Gain with her name and social security number, which hopefully he knows. He needs a good paper trail, otherwise the IRS will tax him for the entire gain.
I think that sounds right. I will pass the info on.
Wisconsin Condo Bubble Article
Weston Place woes: Frautschi condo project falls prey to soft market, high prices
http://www.madison.com/tct/news/stories/index.php?ntid=122043
Gas is already $3 a gallon (here in N. Cal), and they are calling for $4 a gallon this summer….combine that with the real estate meltdown and its gonna be one long hot summer here in California.
My slip-n-slide will be ready along with some cold sauvignon blanc and buttered popcorn
How about a buttery J. Lohr Arryo Vista Arroyo Seco chardonnay to go with that popcorn?
Big V,
Yeah baby! LOL
http://blogs.ocregister.com/mortgage/
The OC is waking up to the fact they may have a problem.
There is something strange and suspect about a stock market “rally” that rises stratospherically on the opening bell across all the major indexes and then just hangs on to a temporarily-high plateau level by the skin of its teeth…
http://www.marketwatch.com/tools/marketsummary/
Something is very wrong in the state of Denmark…
I’ll need a few more days before my check comes from my stock proceeds and I can pull an alchemist trick and turn paper into Gold.
Just gives “the boyz” more time to relax and extend their “lunch feast”
I agree !
And note that there is a slide in prices at the end of the day all the time.
I like how they have been ignoring all the bad new too. Its just starting to sink in that there might actually be a problem.
Realling interesting that copper is rallying too. What is that all about ?
Sucker rally? Demand’s going to drop precipitously in the US in the next few months. (In fact, it’s already coming down, but as we all know here, builders are still working on pending projects like mad and the recession hasn’t hit home in other sectors yet either.)
Dunno about the rest of the world… but the US is a pretty big market.
I’m hearing rumors that Countrywide is going to stop buying 2nds - anybody here anything about that?
Update on NEW: http://www.cnbc.com/id/17466927/for/cnbc/
The truth really sucks according to CNBC’s Diana Olick:
Robert Toll said, “The accepted intelligence is that ‘07 will suck and ‘08 will do OK, and I don’t see any reason for that being any better than any other prognostication you can event.”
Now yesterday, when Mr. Tomnitz said the word, Jim Cramer opined that perhaps D.R. Horton was harder hit by the housing downturn because the company builds lower-priced homes and may be particularly hurt by the subprime implosion. But guess what? Toll Brothers is the largest luxury homebuilder in the nation, and the adjective is the same.
URL: http://www.cnbc.com/id/17520714/site/14081545
It’s been one whole week since the federal regulators have tightened lending quidelines. Those who would have qualified as subprime no longer qualify period. Those who would have qualified as Alt A might qualify as subprime. Those who would have qualified as prime now may have to qualify at what used to be actual rime form days gone by. The whole qualifying chain gets bumped up - you don’t just move the bottom rung of the ladder. I’ll bet the builders haven’t even caught on to the fact that 50% of the potential buyers in all price ranges have been effectively wiped off the map. The same effect occurs in the resale market and since people can’t sell their existing home it makes it tough for them buy a nice new shiny big one even if the price is low and the interest rate drops to near zero.
Now think about what happens to all of those 1-1.5 trillion of ARM mortgages due to reset over the next 24 years. First it is unlikely any of them are prepared to pay the reset monthly payment and second they may now not qualify for a refinance especially if they sucked some equity out, but even without that they may not have the real income to support a real payment. Does anyone see a problem just slightly larger than the known universe developing here?
GMAC - a few days back a GMAC exec mumbled something about general problems in mortgage. Now the anlaysts are playing the guessing game of the impact on GMAC at 1 billion. They somehow don’t mention that would be GMAC’s portion since they now only own 49% of GMAC’s mortgage business. So the real impact is 2 billion, but don’t change that channel just yet, because if you look at the numbers of potential problem and the “run rate” on other lenders disclosure, if you double or triple that number it is probably a better guess. Now if you had paid billions for that business, do you think you might have some safety built into the contract? Something like “if bad stuff happens you pay” or “if a lot of bad stuff happens you get the whole ball of wax back”
Is anyone coming to the opinion we are in the calm before the storm and last week’s little scare was just the pre storm rumble of thunder ?
Consider this…
1) There is a whole new mortgage lending environment out there. The pool of potential buyers has probably been reduced by 20-30%.
2) People are much more aware of trouble in the housing sector now, including would be buyers. I mean if they didn’t know that housing was in some difficultly before, they sure do now.
3) Foreclosures are skyrocketing.
4) The MBS buyers are much more aware of the risks.
5) Home prices have totally stopped appreciating. Homeowners that were relying on appreciation to make things work now know the jig is up. No more HELOCs either.
6) Japan and China are now watching the US market much more closely. If they didn’t understand the housing bubble before, they do now.
7) Gas prices are about to skyrocket.
9) Retail sales are down.
I figure it will take a month or so for some of these effects to show up. And once they do, everything is going to correct even more.
I’ve got the feeling we are sitting in the calm before the perfect storm.
“People are much more aware of trouble in the housing sector now, including would be buyers. I mean if they didn’t know that housing was in some difficultly before, they sure do now”.
It’s amazing how many people are NOT aware of problems in housing. I have four friends who have bought in the last 2-3 months. They were all so excited and I didn’t really try to push them away too much.
They all had an awareness of housing woes but felt they were getting good deals.
Yes, I think you’re right.
That’s a great summary of where we are today — Calm before the storm. Soon the revulsion for anything housing related will be full blown. Already politicians all across the board are trying to get ahead of this debacle. Even Uncle Al just cried Uncle!
“I’ve got the feeling we are sitting in the calm before the perfect storm.”
Sort of like Sumatra’s tsunami. The earthquake has passed, the birds have settled down in the trees again, but the tide is going out…way out, and the clueless are walking out to pick up the fresh shells off the newly exposed beach, totally unaware of the tsunami headed their way.
Ben FBI is getting on the scab
http://money.cnn.com/2007/03/08/real_estate/fbi_mortgage.reut/index.htm?source=yahoo_quote