Will Industry Behavior Improve Or Deteriorate?
Readers suggested a topic on the real estate industry in a down market. “Will RE/Mortgage business behavior improve or deteriorate in a bear market?”
One posts, “I believe it will improve incredibly but not by their doing. The market will dictate that they don’t run amok because there will be so little activity. ‘If 100,000 houses are selling, how will anybody catch me if I fudge the numbers on 2?’ That will change to, ‘with only 1,000 houses selling I better not fudge on anything.’”
“‘If we are making $30 billion in subprime loans who is going to notice my $6 million portion of this madness?’ That will change to, ‘there are so few loans being made that I better do everything by the book.’ Reversion to reality will be ‘the new paradigm’ for the shysters.”
The first reply, “You’re kidding yourself.”
Another reply, “On the other hand, we may see a tendency to screw every last cent out of each individual deal, on the basis that the next deal could be a long way away. I’m thinking there will be some very hungry Realtors and Mortgage Brokers in a few months.”
Another added, “Desperate times bring desperate measures. This, I assure you, is already happening. Fraud and deception will increase in the months ahead, no question about it.”
One saw this, “I had a horrible thought. As the toxic loans solds as MBS explode, the buyers of those securities will be looking to the original sellers to buy them back for not performing. Would some of those original sellers, in desperation, look to any ‘good’ loans that they still have around to see if they have a demand clause, and if so, exercise the demand clause upon people in an last gasp attempt to raise cash?”
The New York Times. “On March 1, a Wall Street analyst at Bear Stearns wrote an upbeat report on a company that specializes in making mortgages to cash-poor homebuyers. The company, New Century Financial, had already disclosed that a growing number of borrowers were defaulting.”
“Last week, New Century said it would stop making loans and needed emergency financing to survive. The stock collapsed. The analyst’s untimely call, coupled with a failure among other Wall Street institutions to identify problems in the home mortgage market, isn’t the only familiar ring to investors who watched the technology stock bubble burst precisely seven years ago.”
“‘The regulators are trying to figure out how to work around it, but the Hill is going to be in for one big surprise,’ said Josh Rosner, an expert on mortgage securities. ‘This is far more dramatic than what led to Sarbanes-Oxley,’ he added, referring to the legislation that followed the WorldCom and Enron scandals, ‘both in conflicts and in terms of absolute economic impact.’”
The Arizona Republic. “The Valley’s real estate industry is lending regulators a hand in cracking down on mortgage fraud. Several real estate, escrow and mortgage firms are working not only to educate their own employees but those at other firms on how to detect fraud and what deals to pass on.”
“Barbara McDugald, the Phoenix general counsel for Security Title, made mortgage fraud the subject of the agency’s newsletter in December. ‘We are turning away a lot of deals, but there’s peer pressure in the industry because other firms are turning them away, too,’ McDugald said.”
The Denver Post. “Glenn Puller and Cindy Ingram are on their way to federal prisons for mortgage fraud. At a sentencing hearing last week, Puller received one year and Ingram received two years in prison for their separate roles as straw buyers in a massive mortgage fraud scheme in Aurora.”
“‘I apologize to the lenders,’ Ingram told the court. Puller said the same.”
“I wanted to laugh out loud in the courtroom. Lenders make money lending, even when borrowers never pay it back. The industry runs on loan volume, not loan quality. Mortgage companies sell the loans they make to Wall Street investment banks, which sell them to investors.”
“This is why Puller and Ingram were able to get loans to acquire multiple homes at inflated selling prices of around $600,000 apiece.”
“Among the lenders they defrauded was New Century Financial. New Century’s three founders made more than $40.5 million selling stock from 2004 to 2006, according to a report in The New York Times last week.”
“The founders do not seem punished to me. Meanwhile, the real losers are shareholders who didn’t sell their stock, and homeowners, whose home values rise and fall in a mortgage market with lax underwriting standards.”
“Former federal prosecutor Anthony Accetta, now a Denver-based fraud investigator, has helped shut down several mortgage companies for fraud over the years.”
“‘The guys at the top know exactly what’s going on,’ Accetta said of his experience. ‘They want the lending standards reduced so they can make as many loans and collect as many fees as they can. … They are the ultimate beneficiaries of the crime. And the crime is making false statements to get a mortgage loan.’”
“Another subprime market leader, Countrywide Financial, recently reported that 19 percent of its subprime loans were more than 30 days delinquent. Before news of Countrywide’s widening subprime delinquencies broke, its CEO, Angelo Mozilo, sold $140 million in stock over the past 14 months, The Wall Street Journal reported last week.”
“Mozilo defended a 19 percent delinquency rate. ‘That means 81 percent of these subprime borrowers are making their payments on time,’ he told the Journal. ‘That 81 percent never would have had the opportunity to own a home.’”
“Countrywide also was among lenders Puller and Ingram apologized to in court.”
Sorry for the lenders… sorry for the borrowers… sorry for the people who didn’t know better. Screw it, I’m not sorry for anyone. When it comes to money the only person I give a damn about is myself.
That’s was exactly the attitude of all those lenders and borrowers and people who didn’t know any better. They only cared about themselves. You sound typical of the times, passthebubbly.
The ultimate cause of this housing bubble and of the economic ruin that is approaching is our culture of self-centered, aggressive greed. Everybody wanted to get theirs and they didn’t care if they bent the rules or screwed the other guy.
The only way we will ever escape from this mess is by rebuilding a society where people DO care about others, where people are happy to live with their fair share and where endless grasping for more riches is not the center of life.
Sadly, there’s not much chance of that happening anytime soon.
Amen! That’s right!
“From now on I’m thinking only of me.”
“But, Yossarian, what if everyone felt that way?”
“Then I’d be a damned fool to feel any other way, wouldn’t I?”
From Catch-22, of course. It appears twice in the book, in fact.
There’s more than enough evidence from history to suggest that the default condition of the western world, and especially America, is “self-centered agressive greed.” At one point, namely after the Great Depression, America’s leaders recognized this and instituted safeguards that would protect the people from their own avarice. This was known as regulated capitalism. What we are seeing today is the corruption of this system–by a range of interests including those who merely wanted the economic benefits of deregulation to those who actively promoted collusion between the game players and the referees.
Right on, Binko. I see the “screw everybody, it’s all about ME” virus has even infiltrated some on this board. While I only take responsibility and accountibility for my individual decisions, the only thing that allows a functional society is a recognition of the concept of the “general welfare” and the greater good. Good help us if we become (even more so) a collection of alienated, atomized, uber-selfish individuals awash in a bland indifference to our collective duties and responsibilities.
Back in the day when survival of a group depended upon group agreements being kept by the individual members, a person who took a dump in the communal cave because it was “too cold to go outside” was immediately exposed to the elements by the tribe by being ejected from the cave.
Were imploder? Outside freezing.
There are so many people locked into their little, “talk on a cell phone in public, blast your iPod wherever you are, cut in front of people in line, let doors slam in other peoples’ faces” and always remember that you are the center of the universe. Manners are dead. And with that goes the thought of the collective good.
Walk around this City and you will see so many snotty little brats (corporate or otherwise) that sometimes it gets overwhelming. That personal attitude can’t help but bleed into all other spheres of life. It has certainly taken over when it comes to personal finance.
Note to any that are the self-obsessed type. Shove that Nextel walkie-talkie up your a$$ and let the rest of the world enjoy a little piece and quiet.
Overheard at Eviction…
Toddler: Why is the sheriff taking all our stuff mister?
New Owner: Because mommy and daddy were so coddled by an American system that rewards debt and punishes production that they thought nothing bad could happen and so didn’t care how much in debt they went. They’ll probably sue the Home Builder (producer) and the courts won’t throw the case out so they’ll have the idea that it’s ok to be stupid and then blame someone else for their problems. Does that clear up any questions?
Toddler: Can I watch Sponge Bob?
But I had to apologize to them. The judge said he’d give me ten years instead of two if I didn’t.
“The Denver Post. “Glenn Puller and Cindy Ingram are on their way to federal prisons for mortgage fraud. At a sentencing hearing last week, Puller received one year and Ingram received two years in prison for their separate roles as straw buyers in a massive mortgage fraud scheme in Aurora.””
One and two years….and they made how much money????? Is this considered a deterrent?
Why aren’t they forced to sell everything and have wages garnished for the rest of their life to pay damages? Will they be in a std prison with the masses or one of those country club versions?
Some days I wonder about switching to the dark side. I wonder if I’m an idiot for not joining the flow. The way things are headed in this country, honesty is for suckers.
I’m with you 100%…
You rob a bank with a gun and get 20+ years
You rob a bank with a pen and get 1.5 years
Anybody else notice the disconnect?
I wonder if Casey Serin read this.
The industry’s behavior will just move on somewhere else where there are new people to screw over. It’s all just one big cycle.
“Will Industry Behavior Improve Or Deteriorate?”
Well, FannieMea (FNMA) is still offering 100% loans to some people:
“MyCommunityMortgage: An Affordable, Flexible Mortgage for Underserved Markets”
https://www.efanniemae.com/sf/mortgageproducts/pdf/mcmaag.pdf
Some bullet points:
* Up to 100 percent LTV ratio (one-unit)
* Up to 40-year term and options for initial interest-only period.
* Flexibility on credit histories, nontraditional credit accepted.
* Income-source flexibilities, including boarder income from relatives or nonrealatives.
Brokers are starting to use this loan a lot more (at least for those that qualify for its special provisions) now that the easy sub-prime 100% loans are disappearing.
Heh. I first read that as “undeserved” markets, not “underserved”. Kinda made sense in the context…
the gov’t has been a strong enabler of this crisis and as long as they continue to create unlimited national debt it will continue.
Perhaps. but remember, fannie mae (FNMA) is a PRIVATE corporation.
put blame where blame is due.
The gov’t has it’s own share of blame including:
1) Creating the Fed and allowing/asking for current Fed policy which caused the credit bubble
2) allowing $250,000 tax-free profit on homes (what did they think would happen except for the commodification of housing?)
3) pushing “ownership” society
4) running up rampant debts
HIC
Inspector: Fannie is private with a huge credit line to Uncle Sam. Take away the credit line and the affordable community mortgage goes overboard.
While it’s true there is a line of credit, I believe it’s only one billion $. F&F raise many times that almost every week through bonds. It is the credit ratings firms that tell the world the US taxpayer will back those bonds, and IMO that is the real subsidy.
“PRIVATE corporation”
With implicit (if not explicit) backing by the federal government.
Yes, it’s not the same as being part of the government, but the added perks from being a GSE cloud the issue a LOT (implied backing by the US government, not having to file financial reports on time, etc.)
They were created, and continue to operate as policy devices (initially to inject liquidity into the mortgage market, currently to “providing financial products and services that make it possible for low-, moderate-, and middle-income families to buy homes of their own.”)
Why wouldn’t the government WANT this insanity to continue. They get rewarded with higher TAXES on property. I know, as I have a lot that went up 70% in value with no improvements ,just because they can. I have appealed with good evidence but he who owns the gold makes the rules.
So buy gold?
http://video.google.com/videoplay?docid=-1583154561904832383&q=money+masters
I just got done watching this video that I saw posted on here several weeks ago. Thank you to whoever posted it. I feel much more aware of how the system works.
The funny thing of watching this video is to see so many buildings in my neighborhood. That makes it even more enjoyable to watch.
Everybody needs to watch this video. It will further raise the dialog quality on this blog.
NYCityBoy:
Thank you for posting the Money Masters link. I don’t know if you’ll come back and check this now stale thread but I just got done watching the two parts of that video and it is excellent!
I’ll have to check and see if I missed any discussions the past few days but I saved the movie link on my computer and took notes. When my children are a few years older I will show this to them.
It’s chock full of historical info, and if you can let your mind go there, it is pretty terrifying. I noticed the video was made 11 years ago. I’m wondering if there have been any updates produced.
So now the gov. is in the business of strapping people to the wall for 40 years? Is this new or has FNM always offered 40 year loans?
The initial interest - only is pretty sick too.
Oh please let us get news of this organizations’ demise *soon*.
I think many aspects will get worse. The “boiler room” mortgage guys will prey on the stupid and the desperate. Raping them of anything they have left.
It may improve at the HSBC’s of the world but there is such a large seedy under belly to this industry, that people outside of this board don’t seem to know about, that will continue to operate ahead of the law for years.
http://chicagobubbleblog.blogspot.com/
yes, giving someone an incredible opportunity: Hundreds of thousands of dollars just on their signature is raping them. Gee, that’s about as backasswards as it gets.
These borrowers are stupid losers who can’t do 5th grade math. it just tells me not to have sympathy for broke ass people because they did a lot of stupid stuff to get where they are. When you are given access to that kind of money, and then spend it on an asset that is obviously going to crash, you are a loser and deserve what you get. Stop being so accommodating of stupidity. The weak and the sick and the stupid are culled from the flock. That’s how it is. Wake up.
Bozo(nian),
Where in my post did I express sympathy for the people I described as “the stupid and the desperate”? That doesn’t sound like sympathy to me.
http://chicagobubbleblog.blogspot.com/
Thanks!
Say it as often as needed - drill it into everyone’s heads!
The only way to stop this bs from happening again is to blame those who are truly are the cause of the unfolding financial fiasco - the end-of-the-line idiots who bought into it - with no thought to common sense, history, math, morality…
Greed, stupidity, emotionalism, laziness, self-centeredness, bragging rights…these people disgust me.
Those who ‘took advantage’ of them are teaching them a lesson in the only way that boneheads can learn a lesson - the hard way.
The fact that the system allowed this is the big problem. Some Target employee in Petaluma buying a $700,000 house with a 125% LTV IO neg am mortage isn’t the problem. The fact that they could is the problem.
The lenders didn’t stick it to the borrowers. They stuck it to the system. And we are the system. We should be mad as heck but where do you start if you want to dismantle the system? “All in all you’re just another brick in the wall”.
There’s plenty of blame to go around!
Nearly everyone has some culpability in this…borrowers who knew they couldn’t afford the home, lenders whoi knew the same, appraisers that fudged their numbers, etc.
The innocents are on this board waiting to hear confessions like a priest.
Only hippies and kooks blame “the system”.
” the end-of-the-line idiots who bought into it”
The credit line has two ends. Those at both ends of this line are gonna get whacked.
Hear, hear, crisrose! Exactly right. The problem lies not so much with the “elites”, whoever they may be, but with many of our so-called friends and neighbors, the end users, the wannabe “elites”. That’s why they buy into the madness.
Also, some pending sales are going to be impacted by the New Century implosion:
http://forum.brokeroutpost.com/loans/forum/topic.asp?TOPIC_ID=100677&whichpage=5
Drushel: “This is the latest from my AE:
“Here is the latest we have been told.
For the immediate future, we will not
be funding any 80/20 loans. We hope to
be able to fund them after 3/16, if not
earlier, but at this point, cannot guarantee
our ability to ever fund these loans.”
So basically I’ve been strung along all week on an 80/20 purchase that was set to fund Monday (the 5th) and I’m now finally being told that it may not fund at all.”
Poor guy.
The REIC is about to receive the mother of all backlashes. It’s the crime of the century. The mother of all scandals. This thing is about to break wide open as evidenced by the NY Times article. The levee just done broke bubba!
Maven - The century is still young. They’ll think up something bigger.
The crime of the century — new century
You can say that again. As I was reading the NY Times article I thought to myself that this was the “a-ha” moment when the masses really start to get it.
As deals that would have gone through easily in the past fall apart on a regular basis this summer and spring the masses will begin to “get it”.
Stand clear of the fan.
Will the RE industry’s conduct improve? Only if reform is forced on it from the outside, by drastically tightening the statutory and regulatory environment in which they operate. Oversight and enforcement in particular must be such that realtors, appraisers, loan originators, etc. will fear real consequences for snarky or illegal behavior.
Legal and regulatory reform has to proceed from the premise that the entire industry - individually and collectively - have shown themselves to be irredeemably corrupt, venal, and predatory. They deserve to be treated accordingly. Of course, lawsuits mount and bitter FBs share their tales of woe, the wiser among the populace (10%, maybe) are going to be a lot more wary when it comes to dealing with RE industry “professionals” (cough), which is a good thing. In addition, the coming elimination of the dumbest, most irresponsible 20% or so of the population from easy access to credit, and thus homebuying or refinancing, will further cull the herd, swell inventories, and result in a smarter class of buyers - sorry, RE skanks, no more multiple bids - taking the field as the lemmings are swarming over the cliffs to keep their date with destiny.
Until real RE industry reform occurs - and I’m not holding my breath - I think each of us can do our part by educating and informing the sheeple as to the true state of the RE market, and warning them of what reptiles most realtors and mortage brokers really are. Sending them links to this blog, and supporting it financially, are good first steps.
Sammy, I so totally disagree. I believe that standards need to be tightened, but look how slow government reacts to stuff like this. Right now, the 100% financing for sub-prime and alt-a buyers is drying up not because of government regulations, but because investors are FINALLY getting their *sses burned from investing in the toxic mortgage backed paper…think of it as the invisible hand finally doing some b*tch slapping to ignorant investors.
Government, feh! You still have FNMA doing 100% loans using “flexible” credit criteria in their “MyCommunity” loans.
The “Gub’mint” will continue its sorry tradition of going into full indignation/reform mode, long after the horse has left the barn. I have no illusions as to the efficacy of government intervention. That said, the RE industry is totally incapable of policing itself, and can only be counted on to safeguard its own interests. Who will safeguard the public’s? As imperfect as local, state, and Federal gov’ts are, those are the only entities capable of holding the RE industry accountable, in a comprehensive way, for their conduct. Lawsuits and public outrage will help out too, but for systemic, institutional reforms, I see few viable alternatives but to get the gov’t more involved.
Government regulation can be, eventually, efficacious.
Did the Securities Act of 1933 protect any of the people who were fleeced in the 1920’s stock market bubble and crash? There were all sorts of very slimy unregulated practices then, like in real-estate lending today.
No, it didn’t. But it did eventually protect investors in the decades to come; the securities industry chafes at these ‘nannying’ regulations but they have kept the capital markets more honest for their own good, and saved money of the naive investing public.
It takes time.
I disagree the reason is that real-estate bubbles have such a negative impact on our country. People are not even considering the stress FBs are under as they go down. And of course the negative impact on communities from foreclosure and responsible people not buying homes. People forget that in a responsible lending environment buying a home also means a community commitment. Free money in the form of excessive debt that is improperly risk assessed is no good for anyone. Obviously the investment bankers have shown time and again they are unwilling or unable to correctly price in risk.
Legal and regulatory reform has to proceed from the premise that the entire industry - individually and collectively - have shown themselves to be irredeemably corrupt, venal, and predatory. They deserve to be treated accordingly.
Bad form to reply to one’s own post I realize - forgive me - but I must add the other self-evident truism as a premise: A great majority of our fellow citizens lack the intelligence, information, and critical thinking skills to make informed, intelligent decisions. Therefore, to a reasonable degree, we have to help protect them from themselves - sad but true.
I don’t think regulations of the industry is right approach. “Nanny state” approach assumes that we are not intelligent to make a decision without state help.
I think FBs, banks, RE industry, and Wall Street were just greedy - not stupid.
Sure, they were greedy, but their greed unleashed doesn’t just hurt them… in other words, those of us who were prudent savers and saw this coming become the collateral damage in a major crash.
It’s kind of like the way we take the kids away when the parents are abusing them. It’s not that the state ought to be able to tell parents how to raise their kids, it’s that abused kids are more likely to become Johnny and Janey violent offender tomorrow. Violent crimes destroy lives, wealth, and quality of life. Thus, the state (ie, our collective interests) has a compelling interest in interdiction.
Plenty of families get unfairly targeted or broken up by child protective services, but, on the balance, the good to society of taking children away from abusive, drug abusing, criminal, or neglecting parents outweighs the faults and dangers.
Likewise with credit, a little bit of the regulatory medicine (and a Fed and gov’t responding to our interests, not those of the pigmen and warmongers) could be quite useful in providing greater stability.
While there is no easy answer as to what to do with abused kids. How can you be so sure that children raised in foster homes are better off?
I think that whole system needs to be re-vamped from the top-down. That would include considering incentives to those who choose to be sterilized, rewards to those who “should” procreate (non drug-using, law-abiding, etc.)…I don’t know, but have not seen any evidence to show kids from foster homes are in a better situation at all.
I think FBs, banks, RE industry, and Wall Street were just greedy - not stupid.
Most FBs are stupidity personified. The RE industry and Wall Street are predatory, and not as clever as they imagine themselves to be.
“we have to help protect them from themselves”
Philisophical differences between us. Even though I am sad when people do it, I believe that everyone has a “Right to Screw Themselves” (ie Free Will). Education is key, but in the end people *need* to be responsible for their own actions. Otherwise, what is the incentive to change (ie save money, only buy what you can afford, etc.)?
“to a reasonable degree”
I guess I agree with that.
“Education is key …”
But some people never get the lesson.
Actually our current system incentivizes the risk-seeking behavior. People getting into the ponzi scheme in 1995-2004 made tons and tons of money. The bagholders in 2005-2006 can BK and sit in the credit penalty box for 3-4 years.
I am shocked that my perfect credit is in the same pool as people with “NOD/FC > 36″, “BK > 24″ credit marks.
I think that overall the industry will be shocked into behaving better. Just looking back at the past week we saw the shocking upgrade on New Century on March 1 and then the news on NEW and probably the BK this week or takeover. In addition there will be more shocks like this to come, especially when the MBS’s get downgraded. In about six months many will look back on the past and see that the requirements to qualify for a mortgage increased dramatically, over 100 mortgage companies gone, and hundreds of thousands of jobs lost in the home building, selling, and mortage business. This will of course lead to a serious recession or worse.
You know, after that $2 million verdict came out for the woman who poured hot coffee into her crotch, I took an informal survey and asked a bunch of folks whether they would voluntarily pour boiling hot coffee into their crotch for $2 million. Every single person I asked said “Yes.”
Now you ask me whether I’d take millions in profits and do a one-year sentence at a low-security prison. Go on. Ask. It’s a no-brainer.
When they start handing out 20-year sentences with disgorgement of all profits plus civil penalties for full restitution of injuried parties, then this type of fraud might be deterred somewhat. As it is now, it’s a very high reward, very low risk and very low penalty endeavor. It’s not going to change because of the environment. It will only change if the penalties are much higher or if the lenders pull the plug.
To start with I think PUBLIC Humiliation ,like full restitution and picking up garbage on our nations highways for 5 years would be a start. Our State,County and Federal hiring could be reduced at the same time and save those tax dollars for constructive projects like schools to educate the masses about how to function in the financial world. As it is now most people only know about DEBT!!!
It wasn’t just hot coffee, it was extraordinarily hot, near-boiling coffee (35% hotter than coffee made at home). Given the reconstructive surgeries she had to go through to repair the 3rd degree burn damage to her privates, I’m not entirely sure I would undergo that for $2M. She initially sought $20K to cover the medical costs but McDonald’s told her to pound sand. The NM legal system eventually vended a $480K punitive damages award to her.
No way would I pour an entire cup of 180″ water on my crotch for $480K + medical bills.
McDonald’s now apparently sells their coffee at sane temperatures.
Additionally, a VP or some other McD’s muckity muck testified that McD’s was aware their coffee was served dangerously hot, but that they were just going to keep doing it anyway.
Wrong thing to say, dude. There’s a time and place for “And you can’t stop me, neener neener,” and a jury trial is not the place.
MacDonald’s had ignored more than 800 reports of people being seriously burned by their scalding-hot coffee. The jury considered that in its deliberations, and sent a message that Mickey D couldn’t ignore. Personally, I think they did the right thing.
Actually, Stella Liebeck got compensatory damages of $160,000 and punitive of $480,000 (three times the “actual” damages that were awarded).
McDonald’s refused an offer to settle with her for $2,000 in out of pocket costs(She spent 8 days in the hospital + skin grafts) and offered her only $800.
http://library.findlaw.com/1999/Nov/1/129862.html
That’s why we often see these ridiculous lawsuits. Corporations are so arrogant that you can’t get their attention with anything short of a massive kick to their legal groin. The tobacco industry is a good example. They lied with impunity and…well I’m not going to get started on tobacco but you get my drift.
What is it going to take for the HBs to face up to their shoddy workmanship in the years to come? It is going to be a mother of a class action. I still think the legal phase of this mania is what will bring down companies like KBH, TOL, PHM, CTX and the rest. Booms create a lot of sins and lawyers profit greatly from those sins during the busts.
McDonald’s brought that suit on with their own arrogance and then took a page from the Victim Playbook. Disgusting!
Dennis said . . .
“To start with I think PUBLIC Humiliation ,like full restitution and picking up garbage on our nations highways for 5 years would be a start. Our State,County and Federal hiring could be reduced at the same time and save those tax dollars for constructive projects like schools to educate the masses about how to function in the financial world. As it is now most people only know about DEBT!!!”
If only this would happen for ALL the crooks in our society, but, of course, their supporters would scream bloody murder, cruel and unusual punishment, blah, blah. I trust Karma will do what our equally corrupt politicians will not . . . and smack them (the politicians) too, while it’s at it.
As for the hot coffee question, no I would not burn myself for a billion dollars in illicit-gains, and the fact that people say they would for far less tells me Karma has a really big task in the wings.
Nope, wouldn’t be willing to burn myself OR spend a year in prison, no matter the profits.
Also agree that the jury did the right thing, as they often do in medical malpractice lawsuits.
If not for these types of awards, we’d see many more unnecessary deaths, disfigurements, disabilities, pain, suffering, etc.
Just wait until **YOU** or your spouse or child is permanently injured (imagine your six year-old child not being able to walk for the rest of his/her life) or killed solely because of a physician’s (or hospital or other agent’s) willful or “accidental” neglect or outright unwillingness to follow standard procedures.
Sorry, but that’s “worth” far more than the $250K cap Bush & friends are trying to impose.
Do people honestly think that the accidental death/injury rates would stay the same with a cap? Guess again!
Just a TYPICAL DAY looking at my e-mail box for any REAL JOBS:
learn how to do mortgages and real estate at the same time
learn from..
no. 52 in country for listing
in who’s who people in business
honored by core
26 yrs as a real estate broker
retired owner of real estate newspaper
investor and owner of over 100 million in sales
retired owner of 6 real estates(one in which was one of the largest office in ny
retired owner of title company
business developer for two very large banks
speaker/ trainer …in sales
and more
learn to make real money
i’ll teach you how
judith boggio……………….631 813-1444
Her website:
http://www.wannanetwork.com/ceoboggio
And her ONE property right smack in de Ghetto:
http://www.mlsli.com/unidetails.cfm?mlnum=1903496&PFormat=1&typeprop=1
The bottom line is Asian savers seem to have (or did have) an unlimited appetite for investing in american consumption - at comparitively modest interest rates
The reality is the subprime issue is not just about people buying houses or condos who couldn’t buy them - its about many borrowers buying larger houses than they could afford
Option ARMS, zero down plans, stated income loans and many other loan vehicles are included in this category, the point being its not just about minority buyers or urban single mothers buying their first home
Posting problems today???
Just a TYPICAL DAY looking at my e-mail box for any REAL JOBS:
learn how to do mortgages and real estate at the same time
learn from..
no. 52 in country for listing
in who’s who people in business
honored by core
26 yrs as a real estate broker
retired owner of real estate newspaper
investor and owner of over 100 million in sales
retired owner of 6 real estates(one in which was one of the largest office in ny
retired owner of title company
business developer for two very large banks
speaker/ trainer …in sales
and more
learn to make real money
i’ll teach you how
judith boggio……………….631 813-1444
Her website:
http://www.wannanetwork.com/ceoboggio
And her ONE property right smack in de Ghetto:
http://www.mlsli.com/unidetails.cfm?mlnum=1903496&PFormat=1&typeprop=1
I am not at all sure how the tranches and the MBS’s work. Can someone help me with this question: What will happen when the holders of the MBS tranches stops getting their 8 or 9% interest payment? Can this happen? I know that the tranches are a mix of many types of loans (AAA, AA, BBB, and CCC) Of course the triple B and C types of loans are subprime. So what I really am asking what happens to a tranch if large numbers of people simply stop paying their mortgage?
I’m not exactly sure, but I think that the higher-rated tranches get paid first. There is a pool of mortgages responsible for the pool of payments, somehow divided into payment security. So it would be like ranking creditors by seniority in a bankruptcy.
I think that realistically the specific terms of all these private securities are complex and variable, in reality.
http://en.wikipedia.org/wiki/Collateralized_debt_obligation
http://en.wikipedia.org/wiki/Collateralized_mortgage_obligation
Willie Sutton is best known for his reported reply to a question about why he robbed banks: “Because that’s where the money is.”
Today. The Big Easy Money is Fleecing Sheeple in RE
I have begun to feel a sense of relief. I think the insiders and the “people at the top” are realizing the problem is big, and not yet been flushed through the conomy, and positioning themselves more defensively. The crazy mortgages are being dialed back. Nobody wants to be the next NEW or FMT in the headlines.
No, it’s not over. But now we can be sure, that it at some point it will *BE* over. We are not going to have homes at 10x incomes or mortgage paymments 100% above rents for years to come…. A readjustment in management is taking place and there will be a different equilibrium in the future, between qualified borrowers and sellers.
yesterday’s Churchill quote . . . ‘not the end, not the beginning of the end, but it is, perhaps, the end of the beginning’ was from the time of the N African landings in late 1942, 3 full years into the war.
The Bubble Powers certainly won their biggest gains in 2004 (1939/40) & 2005 (1941), 2006 (1942) was a see-saw year bringing a balance of forces, 2007 (1943) was the start of the bloody 2 1/2 year grind to victory. Similar dynamics indeed.
Good one, Troy!
…and hopefully the financial karma looming ahead will clean out the ranks of the unqualified from the realtwhore and lender ranks.
No, it’s not over. But now we can be sure, that it at some point it will *BE* over. We are not going to have homes at 10x incomes or mortgage paymments 100% above rents for years to come…. A readjustment in management is taking place and there will be a different equilibrium in the future, between qualified borrowers and sellers.
I believe this to be forth coming as the MBS industry cannot and will not accept this high risk for long as purchasers will ask for much higher interest for this risk and it will ultimately send bonds higher and sink the RE industry into a dark period of extended duration.
Of course, you mean that it will send bond YIELDS higher.
For the immediate short term it will not get better. But thank God the same leadership of the financial institutions and government agencies who “let it all happen” are NOW finally acknowleding a problem (cya) and TALKING about a solution.
These are all the bozos who should be held accountable for letting this all happen. You can bet that under president Hillary that there will be a “redistribution of wealth” to help save all the infestors, crooks, and dimwits who fueled the bubble happen after our financial/government leadership set the stage and then “stood down” for 6 years while the bubble was inflating (But they did come out of hibernation long enough to change the BK laws in 2005).
Our financial/government leadership/oversight has completely failed. Meanwhile our savings/401Ks/retirement will all be at risk as our leaders direct/command us to help “bail them out” without a dime of their own personal fortunes being involved.
Time to punish the prudent/innocent, absolve the reckless/guilty, and glority our leadership for doing such a great job!!!
Nothing as vindicating as personal accountability…but it appears to be in short supply.
Well put Seattle. I totally agree.
Let’s see… it’s the Democrats fault because their candidate possibly will bail out all the fools two years hence. Gosh, and I thought the Republicans had the WH and congress through the bubble. What am I missing? Trilateral commission? Black helicopters?
I have no great faith that the Dems will not make the situation worse, but it is indeed correct to lay this mess at the feet of the Party that was in total power 2003-2006. They apparently had ‘other priorities’ than taking away the punch bowl.
My tinfoil implants tell me they wanted — at any costs — a slam-bang recovery to cover their asses for the 2004 election cycle, and that pumping trillions into the economy via loose lending was the easiest way to do the deed.
I’m quite left-leaning on economic matters, and am absolutely opposed to bailing out FBs or **lenders** (especially the lenders).
I want to see foreclosures and financial restitution — that restitution should come from the people responsible for the suicide financing (executives of banks, ratings agencies, financial firms, mortgage companies, etc.).
“earning $54,000 a year as a fence company construction worker. Then, almost like magic, he became the owner of a $543,000 home with no down payment.”
http://origin.mercurynews.com/news/ci_5411822
Is this a typical wage for non-english speaking construction workers who have only been in the country for six years?
“As part of the settlement, Neri and Pho, supervising broker of Vision Quest 21, agreed to be trained on properly informing people of the costs associated with buying real estate. Pho also agreed to instruct employees at Su Casa and Mariposa to provide loan papers in Spanish to Spanish-speaking clients.”
— So the mortgage brokers are going to be responsible and conscientous now.
Interesting, if you read the same article in the Contra Costa Times, it includes this paragraph which is missing from your link:
Mapula and his wife weren’t looking to buy a home when Plata was approached at the San Jose Flea Market in April 2004 by a representative of Century 21 Su Casa, according to their lawsuit. The company is a franchise of Century 21 that is independently owned and operated by Vision Quest 21, which has 315 salespeople and several offices in San Jose.
Plata deliberately gave the representative an incorrect phone number, she said in an interview. But when her daughter corrected her, she gave the right number.
“Then they started calling Luis,” she said.
“Nothing as vindicating as personal accountability…but it appears to be in short supply. ” How do we protect people from themselves, without regulating the industry? How do we protect the system without regulating people? This person obviously knew enough to write a letter or send an email to Robert Bruss, but she’s like a day late and about a million dollars short.
From today’s Chron:
Q: We are in the process of buying a larger home and aren’t sure what to do with the home we now own. We can’t afford both. If we sell our current home, we will lose about $50,000 based on similar nearby home sales, compared with what we owe. If we rent it for about $2,000 per month, that isn’t enough to pay the $3,300 monthly mortgage payment. We have about $15,000 in savings, but that won’t last long with a loss each month. I’ve been told about a short sale, which is a step above foreclosure. But I’m not sure what that would do to our credit. Would a rent-to-own work so we could increase the monthly rent? What should we do?
Hillary A.
Valencia, Los Angeles County
A: Why would you contract to buy another house before selling your old home if you can’t afford both houses?
Unless you are in default on your mortgage payments (which will greatly harm your credit and probably disqualify you from getting a mortgage on the new home), your current mortgage lender won’t even consider a short sale for less than the mortgage balance. Yes, a short sale will ruin your credit.
A lease with option to buy, also called rent to own, could help if you can get a tenant to pay enough rent to come close to paying that $3,300 monthly mortgage payment. However, the tenant will expect part of that high rent to go toward the down payment when the purchase option is exercised.
If the home is worth $50,000 less than your mortgage balance, a lease option probably isn’t your best solution.
I suggest you cancel buying that larger home. Stay in your current residence. Your situation shows why it’s always best to sell your old home before buying another one. I would like to be more sympathetic, but you got yourself into this mess and there is no easy way out.
The crazy thing is, a lot of these double buyers do so for mere “convenience.” I know that there was a lot of double-dipping on appreciation back in 04-05, but now they are going back for seconds of depreciation. Put your stuff in storage, dummies, and rent for a while. Do not even sign a lease until you have closed on the sale. If you insist on buying, make sure that you close after the one that you are selling closes. If you can not lease-back, then stay in a hotel for a week and enjoy “free swimming pool, free HBO. Ooh. Free Willy!”
I may be extreme, but I lived in an Extended Stay America hotel in north Phoenix for five months while looking for a good deal after selling a house in 2002. When I sold again in late ‘05, of course, I rented a house because I knew that the wait would be years, not months.
“Barbara McDugald, the Phoenix general counsel for Security Title, made mortgage fraud the subject of the agency’s newsletter in December. ‘We are turning away a lot of deals, but there’s peer pressure in the industry because other firms are turning them away, too,’ McDugald said.”
The problem, Babs, is that you have not been turning them away for the last three years.
Since everything said has already been said better here are some quotes on education for those of you who think it is the ultimate solution.
Education is not received. It is achieved.
Author Unknown
Education is a progressive discovery of our ignorance.
Will Durant (1885-1981) U.S. author and historian.
Education is the process of casting false pearls before real swine.
Prof. Irwin Edman
Colleges are places where pebbles are polished and diamonds are dimmed.
Robert G. Ingersoll, Abraham Lincoln.
The vanity of teaching doth oft tempt a man to forget that he is a blockhead.
George Saville, Marquis of Hallifax (1633-1695) English statesman and essayist.
Learning makes the wise wiser and the fool more foolish.
John Ray (1627?-1705) English naturalist.
I especially like the last one and think it fits well.
Calling all bitter renters and bubble sitters.
Fools makes feasts and prudent men eat them.
Dinner is served.
I like it!
‘This is far more dramatic than what led to Sarbanes-Oxley,’ he added, referring to the legislation that followed the WorldCom and Enron scandals, ‘both in conflicts and in terms of absolute economic impact.’
—————————
Glad somebody gets it.