“A Negative Domino Effect” In California
The Sacramento Bee reports from California. “A meltdown in the subprime mortgage lending market might mean trouble for a Sacramento-area market many believe is slowly coming out of its housing slump. Last year an estimated 27 percent of area buyers took out subprime loans. Now, many here and across the country are having trouble making payments, threatening the companies that issued the loans.”
“Currently, there are 11,400 existing homes and condos for sale in El Dorado, Placer, Sacramento and Yolo counties.”
“Nationally, mortgage officials expect the number of subprime loans in 2007 to fall 30 percent from last year. Locally, that might mean thousands fewer loans.”
“‘That takes a whole group of purchases and stops the food chain,’ said John Fabish, president of the Sacramento chapter of the California Association of Mortgage Brokers. Fabish said removing ‘that whole tier of no-equity folks, pretty much all first-time homebuyers, from the buying pool’ can easily start a negative domino effect.”
“‘Business will slow way down. Move-ups will slow way down. If nobody’s there to buy your house, there’s two transactions that don’t happen,’ he said.”
The Santa Cruz Sentinel. “As of March 6 this year, trustee deeds, which transfer ownership of property in default, total 105 for Santa Cruz, Monterey and San Benito counties, an exponential increase from this time last year, when nine such deeds were recorded.”
“Notices of default and properties in foreclosure have doubled in the three counties overall, with rates in Santa Cruz lower than in Monterey.”
“Peter Ogilvie, president-elect of the California Association of Mortgage Brokers sees a need for changes in mortgage industry practices in light of the increase in defaults and foreclosures.”
The Daily News. “Foreclosure activity soared an annual 145.3 percent across California during last year’s fourth quarter to its highest level since 1998, (Dataquick) said.”
“During the last three months of 2006, the DataQuick report showed that 7,445 property owners in Los Angeles County received foreclosure notices, up an annual 113.9 percent. The peak was 21,444 notices in the first quarter of 1996.”
“About 2.03 percent of subprime mortgages in California entered foreclosure, which is more than the 1.83 percent of loans that were already in foreclosure during the third quarter.”
The North County Times. “Stung by bad loans, a worsening credit crunch and a dramatic plunge in its stock price, Accredited Home Lenders announced Tuesday it was considering putting itself up for sale. ‘It’s clear the industrywide issues are really hurting everybody,’ said Bud Leedom, a San Diego-based stock analyst. ‘When one domino falls, it pushes over the domino it’s touching.’”
“The damage is likely to spread beyond the subprime sector to the real estate market as a whole, said analysts such as San Diego-based Rich Toscano and economist Christopher Thornberg. These analysts, who have long warned of a housing ‘bubble,’ say that a stream of must-sell homes re-entering the market will depress home prices by increasing supply.”
“San Diego County, one of the most expensive real estate markets in the country, is especially vulnerable, Toscano and Thornberg said. The price of real estate roughly doubled in the county between 2000 and 2005.”
“The number of foreclosures in San Diego County has nearly tripled from 4,541 in 2005 to 13,249 in 2006, according to RealtyTrac. To put it another way, 1 out of every 229 houses in San Diego County went through foreclosure in 2005. In 2006, 1 out of every 79 homes in San Diego County went through foreclosure.”
The Orange County Register. “New Century Financial of Irvine, once the nation’s second-largest subprime lender, disclosed Tuesday it’s under investigation by the Securities and Exchange Commission and that it has been subpoenaed in a federal criminal probe.”
“New Century offered no update on its efforts to salvage the business, which has nearly 7,000 employees, including 1,800 in Orange County.”
“As the problems mount, concerns are spreading to other local companies. New Century’s landlord, Maguire Properties of Los Angeles, said Tuesday it could lose $6.5 million if New Century stops paying rent for its Irvine offices, assuming it takes up to a year to find a new tenant for the 267,000 square feet of office space.”
“Maguire also was counting on New Century to occupy the top four floors of a 20-story tower under construction in Irvine.”
The LA Times. “Economists have been arguing for weeks about the crisis in mortgage lending to risky borrowers and whether it could turn the entire economy sour. Wall Street cast its vote Tuesday: It looks like trouble.”
“‘People have been using their homes as their banks,’ said retail industry analyst Adrienne Tennant. ‘When you figure you can’t refinance for the third time, you start wondering, ‘Oh, how am I going to pay for all this?’”
“Of the state’s 5.6 million mortgages, 3.25% were delinquent, or had payments past due, and 0.15% entered foreclosure during the period. Among the state’s 806,022 sub-prime home loans, nearly 11% were delinquent.”
“So far, the housing market in California has fared better than those in many other parts of the country. But the crisis in the sub-prime lending industry threatens to change that, economist Patrick McPherron said.”
“‘All it could take is a few more precipitous falls,’ he said, ‘and the bottom could fall out.’”
The Press Enterprise. “California is among the states hit hardest by late payments on subprime home loans made to borrowers with blemished credit histories, according to new figures released Tuesday. California by far had the most subprime loans being serviced of any state, with more than 806,000.”
“An economist for the mortgage banking group said California, on a year-over-year basis, has been hit harder than many states when it comes to rising delinquencies in the category of subprime home mortgage loans.”
“‘It’s a lot of people with weaker credit who put down smaller down payments on their mortgages,’ said Mike Fratantoni, senior economist for the state mortgage bankers group.”
The Daily Press. “The volume of February home sales swooned in the Victor Valley, falling 36 percent compared to the same period a year ago. Residential sale prices also declined slightly last month, falling 5.5 percent lower than February 2006, according to the Victor Valley MLS.”
“The price per square foot of a home in the High Desert jumped 27.9 percent in 2004, followed by a leap of 39.5 percent the following year before the market began to cool in the middle of 2006.”
“‘Declining affordability is driving down sales volume and home prices,’ said Janie Phillips, a broker in Apple Valley. ‘Prices have been accelerating too rapidly, and incomes have not been able to keep up, so a little price adjustment is a welcome development,’ she said.”
“Much more ominous than the decline in prices or sales volume is the dramatic rise in home foreclosures. ‘Since October, we have seen month-to-month increases in foreclosures of about 100 percent in the Victor Valley market,’ said broker Caroline McNamara.”
“‘Prior to that time, we saw little to no foreclosure activity for about two and a half years because the market was so solvent,’ said McNamara, who specializes in repossessions and foreclosures.”
“‘The drop in home values and the trend toward interest-only financing and other forms of creative lending is causing the rise in foreclosures,’ McNamara said. ‘We have been in a grossly over-inflated and over-built housing market, and we can expect to see a continuation in the correction of home prices.’”
‘The woes of sub-prime lenders, several with offices in Orange County, may make a dent in the county’s hot office market, some analysts say. Direct vacancy in Orange County — not including sublease space — is a low 7%, but new buildings expected to be completed this year could push vacancy up an additional 4 percentage points, said analyst Michael Knott of Green Street Advisors.’
‘If you get a bunch of [mortgage industry offices] coming back on the market all at once, combined with the new buildings, there is a possibility the vacancy rate could go up fairly significantly,’ Knott said. ‘For the long term, Orange County is a great market,’ he said. ‘On the short term, there could be pain.’
‘Leasing activity in Orange County has slowed lately as tenants wait to see whether rents will come down from the addition of new space, said real estate broker Greg May of Grubb & Ellis. Most of the 600,000 square feet that the owners of Ameriquest Mortgage Co. put on the market last summer has been subleased. New Century, however, might have trouble finding subtenants if it pursues a similar tack.’
‘Tenants may say that they don’t want to sublease from a mortgage company that might not stay in business,’ he said. The mortgage industry occupies more than 5 million square feet of Orange County’s office inventory of more than 74 million square feet, according to real estate brokerages.’
I have no idea what commercial rents are at in SoCal, but at $2 a foot, thats 10 million a month, 120 million a year. The idea of a lot of that going away…….ouch!
And just think that many of those mortgage offices are around Irvine where it’s about $3 sq. ft…
“‘Leasing activity in Orange County has slowed lately as tenants wait to see whether rents will come down from the addition of new space, said real estate broker Greg May of Grubb & Ellis.”
Umm… businesses usually don’t wait very long due to lost business opportunity. If there is a wait… it is because they are not certain if expansion is smart or rents currently make the business case… poor.
This bodes poorly for OC.
I’m surprised that sub-prime only occupies 5 of 74 million square feet. But other banking will cut back on other space… OC will have plenty of office space for rent in 2009.
Got popcorn?
Neil
Neil,
Have you seen how much there already is in Irvine for rent? Look at the high rises at Irvine Ctr and the 405. No companies can afford it anymore. I work for a fairly profitable medical devices company, and there is no way we would move, even with all of the growth and acquisitions. It’s just too darn expensive. The company has even had murmurings of moving out of OC due to the high building rents and personnel costs. Scary for OC.
Chuck,
You aren’t in the only company thinking of moving. My company has sold many of our warehouses off to become condos or townhomes. That doesn’t give me long term confidence…
It is too expensive. I think a few companies are getting ready to move out of LA and OC counties. Some will just fold when their rent is raised.
The other side of “easy money” is about to show its ugly face. That side of the coin has Medussa.
Chuck Ponzi, do keep us informed. I enjoy your blog (but post rarely).
Got popcorn?
Neil
It seems to me that Irvine CA and OC has to transform like Silicon Valley did over the last 40 years. High tech companies and industries came and went. Each generation of industry produced more wealth per sq ft. and eventaully was priced out. e.g. It’s too expensive for memory chip manufacturing in Santa Clara but the Valley moved on and is still producing high paying jobs. SV is home to the key knowledge workers of large, successful companies.
Martgage lending is out so what is OC’s niche? Is it corporate HQ which means they’ll take on Chicago. Is it product R&D, product design?
For good space, it’ll run even more.
New Century going out of business on top of all of the other things going on would be a fairly large impact to orange county.
That’s subprime central.
Did you see that there are 1800 employees in OC? I think that number’s a bit low, and not considering their servicing arm, but I could be wrong. I think the number is more like 2500.
Chuck Ponzi
http://www.socalbubble.com
I was contacted my a Bloomberg reporter today, he is looking for some mtg people to “rat out”, er…, give him some good dirt on the mortgage business. Anyone interested email me and I will get you in contact with him…
Send him here ! Have him read the posts. Lots of good info and commentary here. Go back in the archives. We saw this coming ! Why doesn’t he get Ben to do a survey on the future of housing and report that !
And we can remain somewhat anonymous. I’ve already got a couple of realtors and mortgage people that want to feed me my juevos.
lol
I wonder what effect impending consumer bankruptcies will have on the financial industry as a whole? I mean, if my house goes into foreclosure and I get kicked out of it and then I get sued for the deficiency balance on its subsequent sale, I’m sure as hell not going to pay it. So, I file bankruptcy and I say, well, heck, I have to declare all my debt here anyway and I may as well wipe it all out, while I’m at it! So, all those creditors have to take a hit, too. I wonder what percentage of folks out there think like I do? Talk about a ripple effect!
This link was posted here yesterday. http://www.quiggleme.com/
He mentions group trips to the Caribbean, training groups, oh yeah…and group sex offers while employed at New Century.
Without the mortgage brokers, office space in the OC will be a ghost town.
Even in LA, we now have mortgage brokers in strip malls, suburban office buildings, just about everywhere. I don’t know what we have more of, McDonald’s or businesses with the word “equity” somewhere in their names, even in the ghetto.
Looks like fallout from the subslime meltdown will be hitting office rents in the not too distant future…
Fear not…they can convert the newly available space into
‘Indoor Swap Meets.’ There is a tremendous flood of illegals in the OC.
That’s pretty funny.
If you ever find yourself in downtown el lay, take a trip down Broadway, where in the 1930’s and 40’s, movie palaces took turns outdoing one another…
Almost every last one of them houses a Hispanic swap meet nowadays, the goliath facades still intact, not much else.
Did you hear about the one on - what was it, 7th St. I think - that just got busted for a major rat infestation?
Maybe we should consider buying these 5-10K sq. ft. buildings, the smaller ones of course, and turning them into homes. Just a thought, but irony that would be!
Even in little ol’ central coast towns like Arroyo Grande and Pismo Beach, one in ten shops on the main drags tend to be realty companies, mortgage brokers, or escrow companies. Real estate is (was?) California’s favorite pasttime.
Truly the subprime loans and the exotic loans decided California was the place to be.
We don’t have this problem anywhere near what the Golden State has, err, the Leaden State.
The Krazies all went west, California is where the land ends. Ine big drain filter.
Political news
March 14, 2007, 4:49PM
Government may punish subprime lenders
By MARCY GORDON AP Business Writer
© 2007 The Associated Press
WASHINGTON — The government is preparing to punish some subprime mortgage lenders under investigation for discriminatory practices, the Bush administration’s housing secretary said Wednesday.
The Housing and Urban Development Department also has suggested that the largest mortgage companies, Fannie Mae and Freddie Mac, consider giving strapped borrowers more time to repay their loans, Alphonso Jackson said at a House hearing.
There has been an alarming spike in foreclosures, especially among homeowners who took out subprime loans. These are higher-priced loans people with tarnished credit or low incomes who are considered riskier.
“We’re doing everything in our power, in our moral persuasion, to try to keep mortgage foreclosures from occurring,” Jackson told the House Financial Services Committee. “We don’t have the power to dictate to them what they should do.”
Lawmakers are concerned that many people could lose their homes as mortgage delinquencies mount and distress grows in the market for subprime mortgages. Also, members of Congress have denounced what they say are abusive practices by some lenders that target the poor, minorities and the elderly.
“Naturally, Secretary Jackson is concerned about the state of the housing market, particularly the effect it has had on minority homeowners who have been steered into high-priced, high-risk loans,” department spokeswoman D.J. Nordquist said after the hearing.
While the economy and the housing market as a whole are strong, Jackson believes that the high-priced home loans are hurting more and more families, Nordquist said.
HUD’s Office of Fair Housing has brought several cases against mortgage lenders and insurers for predatory practices, and those enforcement efforts continue, she noted.
On Wall Street and in financial circles, there is worry that a blowup of companies that make subprime mortgage loans could have a spillover effect.
http://www.chron.com/disp/story.mpl/ap/politics/4631617.html
Isn’t Jackson the one who told his dept they could only hire vendors and contractors who contributed solely to Republicans? Why hasn’t be been fired/impeached/resignated?
because he is a republican
it starts
“minorities and women hurt worst”
utterly predictable
Aren’t women and minorities the majority?
This is what blows the velvet off my horns!!!!
All these “lawmakers” are JUST NOW acknowledging a problem and looking for opportunities to spew soothing vote-grabbing rhetoric?!
The U.S.S. America has been adrift for 6 years now with NOBODY steering, and NOW these SOBs want to come off like compassionate caring “leaders”?
This is just galling considering folks like Ben have been been predicting EXACTLY what is going down now!! Geez it’s not like this blog (and others like it) have been a secret or something.
Where were these LAWMAKERS the past few years?
Why didn’t these self grandizing fools DENOUNCE the loose lending practices and FED policy that was at the root of this debacle WHEN there still time to at least lessen the blow?
I don’t know what sound a moose makes but if I knew I would do it loudly with anger right now…
still some denial… but, getting better.
It’s still all about price. Many of these “troubled” borrowers would have been just fine if the house price had not been inflated by the credit boom. The terms of the loan are one part of the picture, but it’s the amounts of the loan that’s really killing folks. The one lady in LA had a piggyback loan that’s bigger than my first and my salary is 2x hers.
Good point. The media rarely acknowledged the existence of a housing bubble so it’s not surprising they don’t see home prices as a factor in this mess.
Darn, I just signed a new lease…
“‘That takes a whole group of purchases and stops the food chain,’ said John Fabish, president of the Sacramento chapter of the California Association of Mortgage Brokers. Fabish said removing ‘that whole tier of no-equity folks, pretty much all first-time homebuyers, from the buying pool’ can easily start a negative domino effect.”
So, can you extrapolate form this comment how calling this mess a Ponzi/Pyramid scheme was never far fetched? Take out the entry level investors (first-time homebuyers) and the music stops.
“A meltdown in the subprime mortgage lending market might mean trouble for a Sacramento-area market many believe is slowly coming out of its housing slump.”
Coming out of a housing slump? You haven’t even started your pain, Sac.
A meltdown in the subprime mortgage lending market might mean trouble for a Sacramento-area market many believe is slowly coming out of its housing slump.”
It’s amazing how the blame is now externalized onto the Wall St.
externalized onto theinternalized back to Wall St.“A meltdown in the subprime mortgage lending market might mean trouble for a Sacramento-area market many believe is slowly coming out of its housing slump.”
I just choked on my water. Where in the hell do they come up with this tripe? My gosh, they’re delusional. Their assertions couldn’t be further from the truth.
“many believe”
This sounds a lot like the “some people say” ploy used on Fox News.
“many believe”
means the reporter and his nutsack
or a bunch of REIC shills in their Objective Survey
Objective Survey?
Cripes, link didn’t work, so joke didn’t work.
http://objectiveministries.org/
Or the “critics say” ploy used by the NY Times.
I was just out in the Sacramento area and it’s nice this time of year. but, the pain hasn’t even started. I’ll hold with my prediction of a fall to 2002 prices by 2008. That would be about a 40% haircut.
I’d agree that 2002, which was still a bubble year, is a good floor for that area. I don’t see the job growth or lack inventory holding the market where it is today.
If you look at NorCal home prices, they began to rise in 1996 and continued until a slight dip in early-mid 2001. They then heated up in 2002 and took off to the sky.
My gut tells me that the 2001-2002 price levels are the floor for any market under historical interest rates and lending practices.
Don’t you all get it? Let me spell it out:
Inventory Increase + Foreclosure Increase + Sales Decrease + Pendings Decrease + Price Decrease + Subprime Implosion = “Slowly coming out of its housing slump”
Sacramento Land(ing) blog
“Slowly coming out of its housing slump….”
and rapidly moving into an all out housing meltdown.
Thanks imploder, now everyone at work thinks I’m crazy for laughing like a maniac.
Wait until the Alt-A and Prime start defaulting, the $1.0 trillion of resets hit the fan, the foreclosure and inventory tsunami flood the market,
I had to stop the posts I scared myself…
Speaking of Alt-A…
Impac Mortgage says loan deliquencies hit 6%
Impac Mortgage Holdings of Irvine said in a filing today that 6.2 percent of its loans were 60 days or more behind in payments in December, up from 3.1 percent in 2005. That translates to $1.36 billion in loans either behind or otherwise nonperforming, nearly double the year-ago total.
Some analysts warn that defaults are climbing the credit ladder, starting with subprime borrowers who have poor credit and rising to borrowers with better credit but other issues, such as not wanting to prove their income, a category known as Alt A. Impac Mortgage lends mostly to Alt A credit borrowers. These analysts are concerned good credit borrowers are next.
Within the Alt-A family is where you found the true No-Doc loan. Although subprime threw it’s underwriting guidelines out the window and started giving 100% financing to any idiot, most never offered a true No-Doc. Remember, Stated is different than No-Doc. Yes, with Stated you can pull any number out of thin air for income without it being verified, but at least they verify the employment that you’re stating the income comes from, and most subprimers at least verified assets. With the No-Doc, you leave most of the app blank. No employer on the app, no income on the app, no assets on the app, no bank accounts on the app…..nothing, nada, zip! All you needed was a 660 fico (some as low as 640) and you could go No-Doc on a purchase up to 95% LTV. Now your saying to yourself “well at least they have 5% of their own money in the deal”. Ah, here’s the beauty (or madness) of No-Doc. Assets used for down-payments are usually verified and “seasoned” to insure the lender that the money is actually coming from his/her personal savings, and not borrowed from a credit card, a friend, or god forbid a signature loan. But the true No-Doc has no asset verication whatsoever. So, the money for the 5% down could be coming from anywhere, and from what I’ve seen, it usually came from the riskiest of places. So, decent fico, no job, no money, no assets of any sort, NO PROBLEM! Scared yet? You should be, ’cause most of these babies were originated from the Alt-A sector. And I’m just touching a small part of the problem in Alt-A. S o trust me, when I say Alt-A is toast, I’m not just spouting off.
ex, now I’m starting to get scared…yikes
Holy crap!! These bastards deserve what’s coming to them. Thanks for the insight.
My friend got a NINA loan, I didn’t know such a thing existed, No Income No Assests. No job and he even bought a nice BMW right after closing, no joke! Unfrikenbelivable.
There are going to be some nice cars out there for sale on the cheap….no wait. I see there already are.
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/13/AR2007031301733.html
From the article above. Nice summation of the loan stupidity (hope it wasn’t already posted)
“One cheeky lender went so far as to advertise what it dubbed its “NINJA” loan — NINJA standing for “No Income, No Job and No Assets.”
I live in PB to, we must know the same people.
Speaking of buying cheap toys. Was looking through the local pennysaver and noticed some real high-end TVs going for cheap. One guy was selling his 60″ plasma, which could’ve gone for as high as 5-10K, dep. on when and where he bought it, for $400. Yes, you read that right, $400. Now, of course we don’t know if it works or what, but he did say it was still under warranty. Things are going to get real ugly for people this year.
Don’t you have to buy it to get a warranty?
Ever seen 500 greased pigs in a slaughterhouse holding pen heading for the same hole in the fence? Think this is getting real ugly right now and that the U.S. Real Estate market/ implosion is only the very tip of the iceberg. Just think what happens to the rest of the Global Ponzi real estate markets as things start to come unglued, let alone the Global stock markets. I really don’t think very many have started to connect the dots yet but imho the coming Global unwind will definitely be of epic proportions.
Van Gogh,
“Ever seen 500 greased pigs in a slaughterhouse holding pen heading for the same hole in the fence”
I haven’t…but I have my eyes closed and I’m trying real hard to imagine what that scene… sounds like…the audio sensation of that must be something.
Hmmm…wonder if AltA loan balances tend to be bigger than subprime, since those folks “have more money.” Even if delinquencies are running a few points behind subprime, could they end up doing more damage?
Didn’t these clowns just come out last week and say they had little exposure to subprime? Don’t bunch us in with the New Century guys! Just because we can see their building from our window, how dare you mortgage neophytes mis- categorize us! Shame on you.We aren’t subprime; we’re Alt-A! No problems here.
Less than a week later, 6% going past 60 days. Same toxic waste,different name. What slime..
I agree - we are only starting to see the head of the monster - wait till a few more months. There are tons of “investors” and property flippers that use option ARMs. They hope to rent out of a year or two while paying only the lowest payment and then sell at a substantially higher price (due to rapid appreciation). It’s a great business model if it works. But if it doesn’t - UT OH.
I know someone who bought a Florida condo conversion in March 06 and by July was wondering, not if, but how much appreciation there had been. It is negative cash flow WITH the neg am option arm (at 9.95% interest).
It probably lost a percent or two of its value regardless of the loan type. If the loan balance is going up when the value is dropping you can’t sell the thing unless you show up with a suitcase full of cash to pay off the lender.
One hopes that they don’t rent to tenants who trash their “investments.” The costs of repair and replacement can really bite.
It’s not the tenants you should be worried about. It’s the owners. Once these fools realize it’s game over and they’re going to lose all their properties to foreclosure, they’ll go in and canablize the place. I have a couple of friends who run a service to maintain foreclosed properties until the lender holding the bag can roll them. One of their jobs is trying to keep the former owners out for this reason. Many times it’s too late. The stories they tell me of going into properties and all the appliances are gone, cabinets gone, sinks, you name it.
Bought a foreclosure in the late ’80’s. It had been completely stripped. They even took the interior doors and light fixtures.
There could be an UT OH also for tenants who are renting from these investors. If the investor sees there is no upside, he/she may just pocket the rent money instead of paying the mortgage, and let the property go into foreclosure. In most states, the tenant’s lease would be wiped out by the foreclosure, and the tenant could suddenly be faced with eviction by the new owner of the property. There may be legal language that can be added to a lease, once again dependant on the state in which the property is located, that a tenant can use to avoid this potential problem.
“If the investor sees there is no upside, he/she may just pocket the rent money instead of paying the mortgage, and let the property go into foreclosure”
And that is exactly why i chose to lease a house that hasn’t been remodeled in the 20 years my landlord has owned it. I would never rent a “fully remodeled” house.
The head of the monster is the gigantic half digested stinking turd about to rip the US housing market ahole wide open. Call the doctor we are going to need stitches to contain the damage and the foul odor.
They will feel the pain in their sac.
“‘Declining affordability is driving down sales volume and home prices,’ said Janie Phillips, a broker in Apple Valley. ‘Prices have been accelerating too rapidly, and incomes have not been able to keep up, so a little price adjustment is a welcome development,’ she said.”
Tell that to the poor chump who bought last year ’cause he thought he’d be priced out forever, drives 60 - 100 miles each way through some of the most god awful traffic you’d ever want to experience, told his wife that it was only going to be tempory stop along the housing ladder ’cause in a year or two they’d cash out all that equity and move back to the big city and out of the living hell that is the “High Desert”. Yeah, I’m sure he too feels real good about how healthy declining home values are. Talk about stuck in Purgatory.
That’s nothing. My buddy bought a house LAST MONTH in Lake Elsinore for 450K and he works near LAX. His wife does not work at all. I tried to tell him not to buy but apparently his wife was more convincing. I really feel sorry for him.
And I can’t leave out this guy.
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1764914
There was a guy on that board, I think. Taco Bell Manager with 17 properties. Nicknamed himself “Pine Box Boy”. That’s how he said he’d go out if market turned.
Wonder if he got measured yet….
No, he’s looking for more credit cards.
Sweet!!
“Pine Box Boy”
LOL. I have read a few posts by that guy. Man is he ever mixed up. A few months ago, it seemed carrying costs were eating him alive, and he was upside down in every single house, just didn’t know it. Maybe I’ll look around for some recent posts of his. Of course, when things don’t go well, these “clairvoyants” tend to go MIA. Seattle Eric comes to mind.
Seattle Eric….that moron finally pulled the plug on his blog. I tried to tell him…he called me names!
“Taco Bell Manager”
I think it’s EX-Taco Bell Manager now.
I think his ashes are in an urn. Couldn’t afford the pine coffin
SeattleEric and his ilk are the Milli Vanilli of the business world…..expect to run into him in the shoe department of Wal-Mart sometime soon.
He’s a Realtor too. Talk about drinking your own Kool-Aid…
I went to high school in Lake Elsinore. Visiting my parents is a huge hassle because of traffic. Lake Elsinore is a place people run away from and your friend is a moron.
“drives 60 - 100 miles each way through some of the most god awful traffic you’d ever want to experience, told his wife that it was only going to be tempory stop along the housing ladder”
Oh my God - are you psychic? My mother lives in Victorville and you totally captured the dream that folks up there live with.
‘Honey, don’t worry…we will soon be able to trade up blah blah blah.’
It is one of the worst drives in the United States…period.
I’ve got some co-workers (we work in Rosemead, near LA) that live in the High Desert area…I don’t know how they make the drive either…and I thought my drive to the OC sucked…
On a side note, one of my co-workers who lives in Adelanto, who just closed on his house a few months ago (I know, bad move but he put a whole bunch of $$ down) actually asks my opinion on the r/e market…I guess he wants to invest in more property up there but I told him to wait as the prices will be dropping like rocks…I actually think I got through to him…he did mention around his area all the inventory building, foreclosures…etc.
The way you guys describe some of those “Inland Empire” commutes (never been there), it sounds nightmarish. What with the smog and heat, I don’t know how people do it. I would do anything and everything in my power to get the heck out.
You know, Bantering Bear, I agree. But what’s funny is that I’ve got some data on county-to-county migration from the IRS (measured by tax filing address changes from year to year) and the median income of people moving to IE from OC / LA isn’t that bad. SCAG says that people really choose to trade the bigger house / more property for the drive.
If you don’t have to go at rush hour, a drive over the mountains from Palmdale to Pasadena can be very pretty and kind of fun. But oops, I don’t have a real job.
Actually the drive AWAY from Victorville is one of my favorites. It’s the drive INTO Victorville that’s the problem.
Enjoying Seattle yet Lionel?
Not there yet, but thanks for asking, Bear. I have a friend who conveniently needed a house for the next couple of months while his is renovated. I’ll tell you in June.
How’s the housing hunt in Oregon?
Biding my time, trying to be patient. Unfortunately, I can’t say I’ll be waiting until the bottom to buy. But, since it is a distressed property I seek, I should still be able to swing a pretty solid deal. It just takes time for the right properties to show up. I am anxious to see what comes online this spring and summer. Certain properties have been on the market almost 2 years now, and something has got to give.
BanteringBear,
Where are you looking in Oregon?
my brother lived there several years ago and calls Victorville “Victimville”. it’s turning into a real s..thole.
I’m pretty impressed with the North County Times. They have been doing a lot of stories about the housing bubble lately.
Here’s a taste of the San Diego foreclosures and pre-foreclosures and the percentages of foreclosures/pre-foreclosures since BMIT started tracking the numbers from foreclosure.com late last year.
San Diego County
08/25/05: 83/3,087 (2.7%)
06/15/06: 354/4,382 (8.1%)
10/31/06: 998/4,983 (20.0%)
11/30/06: 1,304/5,245 (24.9%)
12/30/06: 1,251/4,637 (27.0%)
01/30/07: 1,475/4,760 (31.0%)
02/27/07: 1,879/5,008 (37.5%)
03/13/07: 2,468/5,072 (48.7%)
btw, stop by and check out an update on Extreme Flipper V. In short, guy buys 16 homes between 12/2003 and 5/2004. check out what he’s up to now.
BMIT
Wow, I’ve been quoting the SD foreclosure stats to friends for months, but I hadn’t picked up on the further increases in Jan & Feb. Wow wow wow. Eightfold increase in 9 months wow.
“California by far had the most subprime loans being serviced of any state, with more than 806,000.”
———————————————————————————-
This is a huge number of loans that could potentially go bust and I don’t believe for one second that the damage would be contained only in subprime! Alt A fallout is next with Prime not too far down the line in terms of risk.
It’s hard to even wrap your brain around it. It’s massive. Bail out? C’mon, get real!
Where is the bailout money going to come from to save 806,000 subprime borrowers in California? Maybe Senator Dodd is hoping the Asians will loan us the money?
I’m wondering what kind of “bail-out” could be crafted with legislation that temporarily “forgives” the NOD and foreclosure crowd and then phases them back into the mainstream so it re-sets the clock on ARM’s and the like. There are tooooo many sob stories and this is election time. They have to do something.
I agree, Alt A is next. There will be many people who get ready to refi out of that World Savings pick a payment, only to discover that not only are the values not there, but they couldn’t qualify for the fully-amortized anyway. The real pain is coming still, and its not going to make subprime look like child’s play - especially with a slowing economy. Just imagine the pressure on wages when, later this year, over a million people in the r.e. and construction fields are out looking for work.
I’ve asked this dude to comment
http://www.dallasloanguy.com/wordpress/?p=19#comments
gonna be a lot of ford f-150’s, beamers and hummers for sale….. take over payments
“gonna” imploder not look at Craigslist lately… bad imploder
Can somebody explain this? From bloomberg.com at 5:29 p.m. EDT:
“U.S. Stocks Advance as Banks, Homebuilders Help Spark a Rebound
“By Nick Baker
“March 14 (Bloomberg) — U.S. banks and homebuilders carried stocks to their second gain this week after Lehman Brothers Holdings Inc. said bad home loans won’t curtail earnings, helping erase a 136-point tumble in the Dow Jones Industrial Average.
“Countrywide Financial Corp., the biggest U.S. mortgage lender, posted its first advance in five days as investors gained confidence mortgage delinquencies pose less of a risk to the financial system than previously thought. All 16 homebuilders in Standard & Poor’s 500 indexes advanced. . . .”
http://tinyurl.com/2xc9o9
They are just oversold on interim basis. Stocks rarely go straight down or up.
Lehman Bros came out with a statement that said everything was going to be fine in sub prime and the market bought it, figuratively and literally. I posted a link about it below.
1929
“At 1 p.m. on Friday, October 25, several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor. The meeting included Thomas W. Lamont, acting head of Morgan Bank; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell, president of the National City Bank. They chose Richard Whitney, vice president of the Exchange, to act on their behalf. With the bankers’ financial resources behind him, Whitney placed a bid to purchase a large block of shares in U.S. Steel at a price well above the current market. As amazed traders watched, Whitney then placed similar bids on other “blue chip” stocks. This tactic was similar to a tactic that ended the Panic of 1907, and succeeded in halting the slide that day. In this case, however, the respite was only temporary.”
Alright, I confess to wearing my tinfoil hat and you guys know waaaay more about the stock market than I will ever know in a million lifetimes. However, with the PPT and the way the market always seems to rally, does it seem possible that some shadow gov’t group or the PPT is buying shares in the market, to keep it falsely inflated? How is it this market keeps going up or rebounding after mostly tanking for a day? Sure, we are under 12K and then in the final waning moments, BANG, back up to almost where we started the day! Even if this is not the case, even with the PPT alive, this market seems so fixed/rigged, it is too spooky to get involved in.
Any thoughts?
It’s those darn charts. You know, the ones that don’t work
I don’t believe there is any simple way to ever establish empirically whether market moves are due to purchase and sale decisions of myriad individual buyers and sellers or due to 800 lb govt gorilla intervention. Which gives the PPT good cover if they ever choose to intervene in order to shore up market confidence.
It does not take much of a kick-start to get rally monkeys to jump on board an uptick in the market; all that is needed is enough of a kick in the pants to ignite a Keynesian beauty contest rally.
“… several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor.”
The difference between then and now: The Working Group on Financial Assets did not stand ready to back up the Wall Street bankers in 1929 with the full faith and credit of the U.S. government.
Graveyard…whistle…hair stands up…knows something wicked this way comes.
Everything’s gonna be fine in California, thanks to this Selfless Savior, who may just unpop the real estate bubble by sheer force of grammar alone:
http://losangeles.craigslist.org/lac/apa/294002999.html
“Hey there, if you are in one of those situations … DON’T!”
Is he suggesting that he will be helping the foreclosee with stripping down their house before they send the jingle-mail?
It does take a certain talent to include this sequence of words in a sentence:
“…you will be left out loosing everything you got and you paid for and empty handed.”
I knew someone with a similar talent for words. He could also make farting noises with his armpit. Very talented guy.
Obviously a ‘How to Make Money in Foreclosures’ seminar jackass. Don’t they include advertisement templates in the handouts for these uneducated halfwits?
Oh man… off to Radio Shack for the new keyboard. Thanks Dude…
Wait a sec - does the “$5,000 to get out of your house” mean he’ll pay YOU $5,000 for the deed — or does it mean you pay HIM $5,000 to help you walk away. Honestly, in this environment, it’s hard to tell.
It reminds me of the Simpsons, where they visit Lionel Hutz, attorney at law, noting that his ad says:
>>> Works on commision. No money down. >> Works on commission? No, money down.
It reminds me of the Simpsons, where they visit Lionel Hutz, attorney at law, noting that his ad says:
– Works on commision. No money down. —
Hutz takes his pen out, and edits the ad to read:
– Works on commission? No, money down. –
lol
“You see, the law business was a little slow and since most of my clients end up losing their houses this [selling real-estate] is a natural move for me, Yes, the money is good. But the beauty of it is you get to stay in the house until it’s sold.”
or does it mean you pay HIM $5,000 to help you walk away. Honestly, in this environment, it’s hard to tell.
LOL.
Ah yes, a glimpse of future America:
“Are you buying it or selling it?”
“Who cares — we’re talkin’ a BILLION dollars!!!”
“Who cares — we’re talkin’ a BILLION dollars!!!”
Whats a few BILLION or even TRILLION dollars to this industry ? Everyone is getting rich, remember ? Surely they can afford that…
judging by the way he spells, just might be Casey Serin giving it another go…
Hmmm…. I found this:
$5000 Need to get rid of your Sweet house????
Hey there, if you are in one of those unsweet situations in which your sweet house is going to be taken over by your sweet bank or lending institution and you will be left out loosing everything you sweetly stole and you didn’t pay for and sweet empty handed…NOT SWEET!!
At least get something sweet out of it so you can sweetly establish your self and sweetly start stealing again and again…don’t let that unsweetly happen to you. I can sweetly help you. Honest.
I think that I have heard of this guy…his nickname is Randall the Candle.
According to the Times article, 88,660 subprime loans statewide were late in their payments during the 4th quarter of 2006.
According to Dataquick, there were 32,425 home/condo sales statewide in January.
88,660 late payments divided by three months = 29,993 per month, not that far away from the number of January sales.
And this meltdown is just getting started.
Ah, California Dreaming. On such a Winter’s day..
What a mess.
Btw: Tx, thanks for the Discussion on “MER” as a put candidate. Looked at it and bought some July 07 70 for 1.80 yesterday. Sold for 2.35 lunchtime before MER recovered some. Not bad for 5 hours of doing nothing !!
I have seen the light: I want to be stock option flipper. It makes sense. Yes, they are not making any more options. With all that demand from new immigrants, everybody will want options. Options can only go up forever. I am going to leverage everything and buy more options that I can take loans against and buy even more options. It is a good time to buy and sell options. I can write a book on it. I can run seminars. I can be rich…
Please send $25 or so to Houston Dachshund Rescue. That’s all I ask when someone makes money off my stuff. Thanks.
http://www.dachshundrescueofhouston.org/index.html
Done: Just made a donation. Didn’t know they were in Houston.
Thanks. I appreciate it. Good karma
http://www.dachshundrescueofhouston.org/
And they take paypal. Thanks TX, it was a nail biting experience for me but I owe ya!
wow tx chick i really like you, but now after your suggestion
for donations i like you even more.
true dog lover here and after 2 months of stress due to my beloved dog’s illness and major cash outlay as well she is all
good. dog lovers are my kind of people
Been there, done that. Just got home from taking my cat for a chemotherapy treatment.
I hope he/she will do well. We went through chemo with our cat about 5 years ago. We eventually did lose him, but it did buy him some extra time. Good Luck!
I love seeing money taken from the powerful (market) and given to the powerless. It’s a good thing.
Hope your cat comes through it OK. I did home dialysis on my cat last year because her kidneys were failing. I lost her in October, but the treatments gave her a little bit more time anyway.
“It is a good time to buy and sell options. I can write a book on it. I can run seminars. I can be rich…”
Sweet!!!
Apparently that CL poster specializes in foreclosures and sniffing glue.
“‘The drop in home values and the trend toward interest-only financing and other forms of creative lending is causing the rise in foreclosures,’ McNamara said. ‘We have been in a grossly over-inflated and over-built housing market, and we can expect to see a continuation in the correction of home prices.’”
McNamara for president!
Mayor Quimby: Yes there is a comet and yes it is heading for our town. (Scattered clapping) You uh, don’t need to applaud that.
“The damage is likely to spread beyond the subprime sector
- to the real estate market as a whole,
said analysts such as San Diego-based Rich Toscano and economist Christopher Thornberg.”
Wow! That sure came out of left field.
So many anecdotes today:
1. At Costco at lunch and checkout lady is planning on buying a quadplex for 700K. She was excited that she was going to be living in the 2BR and renting out the other 3. In Compton.
2. Client has decided to purchase a house that has two houses on the lot. Previous purchase of both houses $750 in Pasadena/Altadena. Now just front house is being sold for $625K and back house is $850K. He has a “friend” who is a mortgage broker/realtor who is advising him on the purchase. I laid out the scenarios we all know on this blog. He says “Steve knows more about this than you do”. I say “ok. Let’s talk about it again in two years.” I then call Steve and tell him not to put him in a neg am/IO loan. Steve says he really favors adjustable rate mortgages. I say “what about when property declines 20%” Steve tells me NO WAY. Impossible.
I give up.
Compton….she might find some “responsible” crack dealers to rent to.
lol…people still drinking the Kool-Aid…
P.S. Can you imagine living with your renters…IN COMPTON??
live in landlording in compton…….
pathway to riches
lmao
i smell a sitcom out of this one….
Or an SNL skit:
“Kill my landlord, kill my landlord, kill my landlord.”
it finished - “c-i-l-l my landlord”
Was that Mr. Robinson’s Neighborhood or just another psychotic Eddie Murphy character?
“live in landlording in compton”
I check on foreclosure.com in LA county and see quite a few duplexes, triplexes,quads going into NOD or foreclosed. Ave default prices around $700-900k. Lots of immigrants, but also native citizenry, attempted to play the landlord game by buying motel-type ratty ‘investment’ properties in LA. There is a huge no of aging 80-100 yr old duplexes, tris, quads, all over LA county, and the immigrant’investors’see the swarms of illegal immigrants needing to rent in the LA dumpzones, and attempt to get into the landlord game. Really Stupid, as you cannot make profit on these properties after the loan resets to 9-12%. Not with renting out your 1 to 3 600-700 sq ft units to dirt-poor illegals for $1000 each with you paying $3000-4000 on your unit, as that costco bagger would do in Compton.
Two years from now your client will hire you to sue Steve.
There used to be an old Fram oil filter commercial on TV, with a mechanic holding a filter in one hand and a burned up piston in the other. His motto was “You can pay me now or pay me later”.
Your client is going to pay. Later.
Yesterday I was talking to a friends room mate and learned he was a mortgage broker. Of course the subject of real estate came up and a look of fear came into his eyes. All he could say is subprime is done but everything else is too big to fall.
People are starting to realize the magnitude of the situation. Denial is still very strong but fear is starting to take hold. It won’t be long now.
On a side note while watching the news this morning they mentioned that there is now 1 realtor for every 100 people in my state. Utah is one of the few states that has had continued double digit growth for the last year. That statement made my day, I now know we’ve reached the top and its all downhill from here!
Overheard Tokyo circa 1991 “nimo biggu dzuki feiru”
Too funny. I finally got a call back on the FSBO in Pasadena. She claims that she has an offer already on the property. I said “we are not going to get into a bidding situation. Call me when the loan falls out of escrow” and hung up the phone. Have to follow my own best judgment, but client may be pissed. Oh well.
I like how you handled this. No need to be jerked around with the unlikely possibility of a “bidding situation”.
Good call on the possible bluff.
I was at an open house and there was another interested buyer. The owner and seller agent were really happy. So when asked to submit an offer, I said “I’ll let you have it for $5,000 less than what the other folks are offering” to the other buyer. The owner and seller agent went ballistics. The other buyer got the idea and winked and said “No, you can have it for $10,000 less.”
We both got kicked out. But it was fun.
Please tell me I just didn’t read about a quad going for 700k in Compton…
MIS “pinches” self really hard and prays he wakes up soon…
“the DataQuick report showed that 7,445 property owners in Los Angeles County received foreclosure notices, up an annual 113.9 percent. The peak was 21,444 notices in the first quarter of 1996.”
I find it very interesting that it took LA 3-4 yrs to set record foreclosures from what I would consider the bottom of the last RE bust - 1992-93 (after this it seemed that prices flat lined til 1998). I have a strong feeling it won’t take 4 yrs to reach record foreclosures this time around. I give LA county 12 mos to set new highs.
“It’s all over but the foreclosin’”.
…actually, the bottom was in 1996 and the recovery began in January of 1997 for Los Angeles County.
Just curious whether anyone thinks Senator Dodd can come up with a bailout that will rescue all of California’s residential RE market from the incoming tsunami tide?
I doubt it, but I DO think all those California ambulance chasers are licking their chops about now.
Every fu*ked borrower will claim mortgage fraud.
Here you go:
http://tinyurl.com/2ljmk4
“Class-action lawyers pounce in subprime crisis”
NEW YORK (Reuters) - Lawyers for investors hurt by the meltdown of mortgage lenders that cater to risky borrowers are likely to file a wave of class-action lawsuits against the lenders and possibly their auditors and bankers as well.
U.S. lawyers have already sued subprime lenders including New Century Financial Corp. and NovaStar Financial Inc. and their top executives for securities fraud, claiming they misled investors about the companies’ finances and had lax guidelines for approving mortgages for borrowers with poor credit histories.
Prominent plaintiffs’ firm Lerach Coughlin, which already has brought suits on behalf of investors in New Century and NovaStar, is looking at bringing cases against other subprime lenders, said David Walton, a partner at the San Diego-based firm.
Ha, that firm has problems of its own:
http://busmovie.typepad.com/ideoblog/2005/07/free_bill_lerac.html
These folks will have the same luck with their lawsuits that the Enron plaintiffs did.
Rescue, no, delay yes. FDR did a great job of dragging out the depression while simultaneously screwing savers and indebting future americans all the while growing and empowering the Federal Government and providing only minimal relief for those who actually needed it. Maybe Dodd has a similar plan.
And I seem to recall (from my father’s numerous rants on the subject) that the New Deal didn’t get us out of the Depression. World War II did.
I loved David Brinkley’s book on the growth of DC during WWII. It showed that the real run-up in Federal spending was WWII, not New Deal. So as much as some of us may dislike FDR’s programs (I do), we have to admit the New Deal was not a Big Deal. At least, not THEN. However, you take those same programs and run them many years forward, with people living longer and so forth, and the programs are NOW unsustainable.
Of course the New Deal didn’t work - why do you think WWII was necessary?
Debt saps/overcapacity have to be wiped off the books somehow - war is the most expedient way of doing so. 50 million dead bodies/Europe and Asia in smoking ruins and presto! The Great Depression is history.
Hitler had plenty of backing. I wonder who those in charge are propping up for WWIII?
Seriously - you really think Hitler started WWII to save the New Deal and the US economy? He didn’t give a rat’s ass about the US, and just wanted the US to keep to its isolationist ways and let him conquer Europe. It was only after 2 years of US aid to the UK and the Japanese attack on Pearl Harbor that Hitler thought it was the right move to take on the US.
Your theory sounds like a Bizarro version of “The Mouse that Roared”.
Sometimes I’m astonished by the self-importance of Americans. The US was really not a global power until it entered WWII, and might well still not be one if it had stayed out. And let’s not forget who led the country to victory.
The Great Depression was “great” because it was worldwide. WWII wiped out worldwide excess capacity (humans, factories, houses, etc).
The US was a global power after because 1) it came through WWII relatively unscathed and 2) Bretton Woods.
Ignorance is not bliss.
You’re forgetting that the economy started to recover in 1936 … but the pig men got nervous and raised the federal funds rate sharply causing a new recession in the midst of a depression.
Good move, guys, good move.
no - simple as that
My parents were rabid Democrats. But when I questioned them years ago about how much the economy had recovered prior to the beginning of 1942, they admitted that WWII was the primary driver for economic recovery.
Dodd is proposing a non-binding bailout resolution. Don’t think he can get 60 votes to override the filabuster. Stay tuned.
From their home page, Master Finacial is croaking.
“Effective March 14th, Master Financial will cease its wholesale loan origination operation including accepting new applications for mortgage loans and funding loans in its pipeline.
All loans that have an approval must close and fund by March 16th, 2007 If you have any questions regarding loans in process, please call 714-456-1000. MFI will, however, continue to service mortgage loans and maintain its customer service line for borrower inquiries, etc.
We apologize for any inconvenience this may cause you or your borrowers. It has truly been a pleasure doing business with you. “
Another one bites the dust !
WIth Impac on the radar screen of death and another one of these slimeball lenders gone, this is getting real serious, real fast. Prices will be sticky for some time, but with credit dryint/freezing/dying the market is as good as dead.
Sure, a few dolts will get some crumbs for a death mortgage, but as far as we are concerned it is end game. Just a matter of time before the prices drop at least 50%. This market is going to make gridlock in Manhattan or the 405/10 interchange in LA @ 4PM look like a picnic. Nothing is going to move for a long time a comin’!
But I couldn’t find “Master Financial” on implode-o-meter’s top 25, so I didn’t get too excited. New Century & Fremont General were the big news this week.
We had an FB on the block getting divorced and owner of two mortgages with the property down the street in full foreclosure. They just sold. We were told that someone made a crazy-ass lowball offer (Harm? are you visiting here in Sonoma?) and they FB’s took the offer. They have been asked by multiple people in the neighborhood how much they sold for and they have declined to give the amount, but have said they had to sell way short. Poor guy… but welcome to the real world of real estate. It doesn’t always go up. You can lose.
It’s been said before, but it’s worth repeating:
Whenever somebody issues a decree that prices won’t drop because sellers won’t accept an $x loss, they need to be reminded that prices are set by those who have to sell.
I say post the number once you know it.
You better believe I will!
Comp and Circumstances
good one
Rainman! Where have you been? I think of you every time I hear Red Hot Chili Peppers singing Dani California and can’t wait to hear your rewrite of the lyrics!
Hi Athena, nice to see you. I’ve been reading here lately from the back row…it’s closer to the bathrooms.
And now the new owner will lose 30% on it. Its still way, way too early to be buying.
“They have been asked by multiple people in the neighborhood how much they sold for and they have declined to give the amount…”
Smart people. They didn’t want to be lynched by their neighbors before they got out of Dodge.
Definately post the number when you know it. Someone can pull it from MLS once the sale goes through.
I’m anticipating real problems with i.e.d.’s in the so cal area…
Inland Empire Defaults, that is.
Add in a Hummer on the driveway and it’s not so far away, metaphorically, from the mess in Iraq.
Aladinsane,
You don’t know the half of it. I know San Diego, Arizona, Colorado, and Florida want the title, but the IE wil be ground zero for this mess. I know, I sold last year at just about the top of the this crazy roller coaster. Unless you live there you will never really understand.
Too much smog, heat and wind, too much traffic, no real production centers, just a lot of warehouse jobs, and a lot of people in over their heads.
It will be the IG (Inland Ghetto) before it eill ever be the Inland Empire again.
I have been following Sacramento market from 2005 Jan (looking for a 3000+ sq.ft house in East Roseville and Granite Bay) and I can say market is very bad in Sac. Right now properties priced at 2004 prices are selling and I think prices will come to 2003 summer price by end of this year after that it may be very slow bleed. I think most of the excesses happened in 2004 and 2005. People saw the market going up 20% in 2002 and 2003 and jumped into the market and one year optional ARMs became popular in 2005.
I am planning to wait till 2008 summer and buy at early 2003 prices.
I can beat you. I’ve been tracking the area since 1996. The funny money started here really in 1997 coming in from the BA. Our crazies really began in 1999. I suggest holding out for a 1997 price adjusting annually for inflation.
Agreed.
Why didn’t you buy in 1996, Gwynster?
wow………implode-o-meter now at 38.
It’s going up faster than SD inventory.
Anybody keeping good track for San Diego Inventory? What is the most efficient way to check?
bubbletracking.blogspot.com says the SD county inventory is around 18000, which is actually a bit LESS than a year ago. However, foreclosures up eight-fold since June.
OC Renter’s Bubble Markets inventory tracking.
http://bubbletracking.blogspot.com/
What I find incredible is that not even one year ago could you find a foreclosure available in California (thanks goes to creative refinancing on bubble equity and if they were any, flippers would grab them instantaneously). Now, California is looks to be the #1 state for foreclosures. If you click on California at http://countrywide-foreclosures.blogspot.com, you’ll see how long the list is. I remember when there were like 4 or 5 listings not even a year ago. Simply amazing.
Countrywide says, “Looking for a bargain on a home”?
Out of curiosity, I looked at the one and only home listed for Berkeley, CA. Price is 909k. Here is the sales history for the home from Zillow…..
06/14/2006……..$846,078
12/01/2004……..$799,000
06/02/1999……..$335,000
Nothing says bargain like a foreclosure listing at 65k above a GF’s purchase price, one year after the peak of the market.
Is there any chance CFC will NOT go in the toilet?
All the lenders are playing this game right now. Foolishly thinking they will get all of their money back, and possibly more. Stupid, greedy pigs.
Lefantome, i agree. I’m seeing foreclosure listings above the most recent purchase price. Ludicrous. For whatever reason banks seem like they want to mess around with overpriced listings. Hopefully, when things get rolling they won’t waste everyone’s time that way.
Anecdotal but a Ford dealer down the street today (San Diego) said today that this is the worst he’s ever seen sales, and he’s been doing this since the ’70s. Guess all that Equity withdrawl wasn’t unimportant after all.
That’s funny you mention that, a ‘used car’ dealer told me the same thing up here in Massachusetts. Says business is real bad. I think the ‘R’ word is upon us soon if not already.
Probably this time next year, you will be able to get pretty much anything you want in the way of the following:
cars
Sea Doo’s
Harley’s
tv’s
computers
It’ll be like one giant yard sale, only retailers will be in on the gig as well.
The Fast Money crew has a short on Harley Davidson right now.
Shilling for Herb again, eh?
Ha. That’s okay. Herb’s a hunk.
Actually, I don’t think it was Herb, was it ? I thought it was Eric Bolling. I might be wrong.
I’ll be looking for that baby grand piano in 2008…
Friend’s brother in CA quit his used car selling business in Sacto. Business was just too poor.
I can remember sitting through many a slow afternoon at the bike shop where I worked in the late 1990s. While the cobwebs were gathering on our showroom’s bikes, I saw a continuous parade of shiny new SUVs, pickup trucks, and vans passing by.
I couldn’t help thinking that the whole thing would end badly.
Fast-forward to the present. It’s a very good time to be in the bike business in Tucson. Much better than it was when I was working in that shop.
Funny, because today Lehman Bros said that the problem was contained to the sub prime sector of the mortgage industry and everything else would be fine.
pass the kool-aid, it’s a subprime thing.
“‘That takes a whole group of purchases and stops the food chain,’
The sub-prime borrowers who could only hold on to their houses for 18 months were never supposed to BE part of the food chain, brokers just put ‘em on the menu one day. And now we commence with the diarrhea and vomiting.
“I am planning to wait till 2008 summer and buy at early 2003 prices.”
I totally agree with you—I dodged a bullet last year–we were looking in Elk Grove, and this realtor insisted that I buy when the mortgage rates were low, that the prices would only rise, how he had 5-6 properties and was holding on, etc…I started reading blogs like this and got nervous, decided to hold off—damn I’m glad I did–I’m gonna rent a nice house for half the price up there and buy in 2008 after the FB’s take their reaming good and proper. Mind you, it took a month or so to get educated “out” of the typical sheeple mindset, but it was well worth it!! I gotta send Ben a little cash because blogs like this saved me thousands.
I’m seeing TONS of houses in the Sac area that were bought within the LAST 12 months and being sold now 10-30% lower than the last sales price. Hmmm.
Lehman Bros. tells the stock market that all is OK within sub prime. And like fools, the stock market listens !
http://www.bloomberg.com/apps/news?pid=20601087&sid=aI6Y2EX7rfj4&refer=home
Even **IF** everything was OK within sub prime, people don’t understand that not all is OK with the CONSUMER ! Why do you think the loans are failing ! Sheesh !
Its really funny that Lehman can forecast that it is all contained and yet they couldn’t warn the market that there was a problem to begin with !
Its really interesting to watch this all unfold.
O’Meara said he doesn’t see problems in the subprime market spreading to the rest of the housing market or hurting the U.S. economy. Defaults in so-called Alt-A mortgages — which are made to borrowers with higher credit scores than subprime yet still below prime credit — have also increased “within expectations,” he said.
“The subprime business itself is not going to create a big event in the economy,” O’Meara said. “The credit quality elsewhere is very strong.”
See that, people ? We are all worried about nothing ! The spring RE season will go ahead as planned, Hummers, Beemers, Porsches, etc. will sell by the dozens, RE agents will once again earn their commissions, people will qualify for as many mortgages as they want ! Everything is fine ! Nothing to see here, move on.
Lehman’s expansion into the home-loan market led to a 67 percent surge in fixed-income sales and trading revenue from 2003 to 2005. The firm acquired five mortgage lenders in 2003 and 2004, adding 3,300 employees, and bundled $146 billion of mortgages into bonds in 2006, a 10 percent jump from 2005.
Lehman held $2 billion of “residuals,” the most profitable mortgage securities, at the end of November. The investment bank has hedged all of the risk in those investments as well as other exposure to subprime loans, using credit-default swaps, O’Meara said.
===========================================================
Am I the only one to think that the whole mortgage market is going to fail and Lehman is going to get killed with repercussions ? There has to be a big lawsuit in there somewhere. And what happens when the CDOs fail ? Sooner or later the equity market sell off AND the mortgage credit sell off has to hit them. Any day now…
The investment bank has hedged all of the risk in those investments as well as other exposure to subprime loans, using credit-default swaps, O’Meara said.
Famous last words. See:
http://www.minyanville.com/articles/index.php?a=12253
That’s because Lehman is probably sitting on a mountain of nuclear waste that it desperately needs to unload and wants to be out through the exit before all hell breaks loose. Same way the Bear Stearns analyst upgraded NEW a few days before its collapse.
“Same way the Bear Stearns analyst upgraded NEW a few days before its collapse.”
Sorry, what did you say ? I had this big flash back to the dot com meltdown ! *shakes head* You mean an analyst recommended a company just before its market cap went to zero ? *laughs
While working out @ the gym I was reading CC for Kudlow. And one guest said 25 % haircut for house prices, at which point Kudlow almost fell out of his chair and asked the other guests, who all said yesy to a decline but not that much.
Banks will be saved by lower rates. The differential will not be passed onto consumers who will be charged a higher rate.
I say let the chips fall where they will
FL is already off 25% from peak
Shiller is slow on his feet
“To put it another way, 1 out of every 229 houses in San Diego County went through foreclosure in 2005. In 2006, 1 out of every 79 homes in San Diego County went through foreclosure.”
Its actually worse than that in San Diego, worse than 1 out of 79. I have friends that have had to refi their homes more than once to avoid missing a home payment. So that prevents the foreclosure, or more likely, delays the inevitible foreclosure so it doesn’t show up in those numbers. Just wait for 2007’s number of foreclosure, and the big hammer drop in 2008 in San Diego, that is the year there will be blood in the streets from Carlsbad to Otay.
Otay? Buckwheat, is that you?
I write reports on real estate in California every quarter. I always wonder if Otay Mesa is where Little Rascals was filmed.
Just so’s ya know…
It’s “Oh-tie” Mesa not “Oh-tay” Mesa. It’s a misamericanization of an Indian word.
–Shannon
http://tinyurl.com/39w2wa
Has some interesting numbers I haven’t seen before:
“KB Home, whose customer base is comprised of about 40 percent first-time buyers, has estimated its subprime exposure at 13 percent.
Hovnanian Enterprises Inc. assessed its exposure at 18 percent in 2006, and that has gone down to 14 percent in its fiscal first quarter. First-time buyers comprise 35 percent of Hovnanian’s customers, Rehaut said.
Beazer Homes USA Inc. has the most exposure to first-time buyers, followed by M.D.C. Holdings Inc. and KB Home. Lennar Corp. and KB have the most exposure to buyers with lower credit scores.”
“Companies with the least exposure to both of these factors are luxury builder Toll Brothers and Pulte. Only 17 percent of Pulte’s customers are first-time buyers, and 40 percent of its business is derived from retired and older buyers.”
Only 17 percent of luxury housing (Pulte’s) customers are first-time buyers! I’m not sure “only” is the right word here…..
And how about this new business rule:
“Some home builders recently began limiting their exposure to subprime customers.
KB and D.R. Horton Inc., the largest U.S. home builder, won’t begin construction of a home for a subprime buyer until the mortgage is approved.”
I see what you mean about “only” seeming like a funny word for 17% of Toll buyers being first-time buyers. However, I’m not sure their definition of “first-time buyers” is literal. It could include people who have had houses in their lives but who have been renting recently. Presumably that definition will make most of us here into “first-time buyers” even if we aren’t.
Bet they won’t ever publish a list of the percentages of new home buyers who have to use exotic mortgages to qualify even with prime credit scores. Having recently worked in the homebuilding industry in Atlanta, I can say that purchasers who opt for a fixed rate mortgage in the $400-$650 price point (middle class home in Atlanta) are VERY, VERY RARE.
Well, comparatively it is “only” 17%. Pulte now owns Del Webb, which explains their demographic.
Way off topic:
Saw my first ever Fisher yesterday, in Sequoia National Park…
A freshwater otter of sorts, kinda Mink-ish looking~
Oh, I thought you were talking about Peter Fisher ex undersecretary of the Treasury. You know the one who eliminated the 30 year bond and then feigned shock with the comment,” Well we thought that the existing bonds would be sold and not purchased by the market!” For those of you that remember the bond action during those times.
Peter Fisher and Richard Clarida. Two names that you should know if you don’t know them.
O.C. median home price drops (LAT)
The decline is the first in a decade and signifies a widening housing slowdown.
http://tinyurl.com/ywx9yd
Wow! Lykus (popular radio host here in SoCal) is talking about sub-prime, New Century and the FBs that took part in the now crumbling ponzi scheme. For those of you who have never listened to Lykus he normally talks about how guys can score chicks, relationships, etc.
This current segment he is reading an article re: problems the FB idiots have/will have paying their mortgage and blaming someone else. Quote:”I am tired of these poor saps crying boo, hoo, hoo I can’t pay my mortgage”. He basically slammed anyone who took out a teaser rate and complained they did not understand the loan docs they signed. He said he saved up 20% to buy his first home because he wanted a mortgage payment he could afford and not have to pay PMI. Frickin’ funny sht but sooooo true. He went on to say the RE market is starting it’s collapse and if you can not afford the house you better sell now and get out!!! Back to an apartment for you.
I just tuned in. Lykus has a big audience…he’ll get through to a lot of people…
Yep he does. He’s on in SF, Phoenix, SD and several other large markets. MSM radio starting to get into the act. Burn baby burn.
Now he is slamming Dodd. He says the best thing that can happen is for these people to get kicked out of their houses so they learn a hard lesson. He talks about saving for house-not instant gratification.
I love it.
Go Lykus! You rock!!
Tom Leykis is one smart guy. He was a liberal talk show host long before Air America… found he could make more money talking Leykis 101. Good for him!!! Leykis for President!
I don’t listen to free radio anymore but over a year ago he did a piece of the housing bubble and basically said live it up now, cause I have been saving up for a great 2nd home and I will buy yours out of foreclosure.
Good to hear some main stream coverage.
Long time reader. Been standing on the sidelines of this housing bubble watching in amazement for 4+ years, which just means I have horrible timing.
Lately I’ve hearing more and more comments that perhaps the federal government will step in and aid folks facing forclosure. I urge all you folks in this blog to write to your congressmen and senators and oppose any government bailout for folks facing forclosure. All that will do is waste government money and delay the housing market from achieving balance.
Of course we will. You write to yours too.
There is nothing wrong with your timing. 2003 prices were already weird. You waited this long, you can wait a year or two longer. Good luck.
http://www.reuters.com/article/reutersEdge/idUSN1426505620070314?src=031407_1607_INVESTING_comment_n_analysis
Subprime might spread and cut into GE earnings !
“People are thinking in greater terms about GE, their aggressive lending policies,” Sorrentino said. “What they’re thinking about is what is the follow-on to this? If this is the first of the dominoes to fall, where else in their portfolio could there be issues?”
But I’m sure everything is contained !
UBS analyst David Bleustein wrote in a note to clients on Wednesday that problems in subprime lending could become a 2 cent-per-share drag on GE’s profit this year. Analysts, on average, expect GE to earn $2.22 per share this year, according to Reuters Estimates.
“Although WMC has announced actions to reduce its fixed-cost infrastructure, we believe reduced volume leverage places the entire earnings amount at risk,” Bleustein wrote.
Bleustein and other analysts estimated that GE, which sells the mortgages after it issues them, might hold as much as $3 billion in mortgages on its balance sheet at any point in time. By way of comparison, GE Money ended 2006 with $190.4 billion in assets.
Lending is drying up in CA.
http://www.reuters.com/article/ousiv/idUSN1459006320070314
“Hispanics hold roughly 40 percent of mortgages in the troubled subprime mortgage market, a sector that caters to those with damaged credit or little borrowing experience, according to the Center for Responsible Lending.”
Wow — 40 percent of subprime loans are held by hispanics? Does anyone have the percentage held by blacks? It seems pretty ugly for a bunch of rich Wall Street investment bankers to set up myriad people of color for future financial ruin…
Come on GS, I did not expect you to make that statement! That’s about the natural frequency of Hispanics in the state.
Hispanics account for more than 35% of the population in CA, so why should 40% be so astonishing?
http://quickfacts.census.gov/qfd/states/06000.html
I would see your point if the writer had only been talking about CA:
“U.S. Hispanics may disproportionately feel the pain as the subprime mortgage sector implodes, shutting off the credit they had relied on to realize the American dream of owning a home.
Hispanics hold roughly 40 percent of mortgages in the troubled subprime mortgage market, a sector that caters to those with damaged credit or little borrowing experience, according to the Center for Responsible Lending.”
I’ll be damned, that’s a nationwide stat? I guess I was just subdued because we’re both from CA.
Folks, I think we are overplaying the consequences on subprime borrowers. They knew from day one, that this was not for real and how can be real when you are talking about 500k+ home when you are the fortunate one that makes $12.50 an hour + occasional overtime + Earned Income Credit at tax time. They are prepared to waether it, no big deal if you have to sleep in the car and in the morning you have to go to your hotel cleaning job.
More vulnerable are Alta A+ and prime borrowers. They have less ability to adjust (keep paying for braces and go to the soccer practice). They will be scarred for life. But this is what happens when you buy a $800k house when you only make $90k a year.
“Quick Take: Subprime Scariness
By David Meier
March 14, 2007
The news about the recent subprime disaster scares me.
I’m not alarmed by the notion that New Century Financial (Nasdaq: NEWC.PK), Accredited Home Lenders (Nasdaq: LEND), Novistar (NYSE: NFI), or any other subprime mortgage lender might go out of business. Nor that companies like Countrywide Financial (NYSE: CFC) might get hurt in the fallout. Heck, future regulatory changes to the mortgage lending business don’t worry me.
No, what frightens me to the core is the lack of critical thinking that seems to pop up over and over during this drama.”
http://www.fool.com/personal-finance/home/2007/03/14/quick-take-subprime-scariness.aspx
I clicked on your link but just get error messages. (Maybe it’s just me. ANyone else?)
Sorry - it works for me…
You don’t think this guy is trolling for buyers ?
If you are a Buyer who has been sitting on the fence for the past 14 months, this may be your time to jump. If you would like more information about the south Orange County CA real estate market, please feel free to visit our website at: Orange County CA Real Estate
***ALERT***
NEW Email:
Effective immediately, New Century Mortgage Corporation and Home123 Corporation are unable to continue the origination or funding of mortgage loans. No new loan applications are being accepted at this time.
To best serve your customers we ask that you place their loans, including those currently in our pipeline, with other lenders. Please contact your account manager immediately to request loans be sent directly back to you. We are simultaneously notifying all closing agents to cancel all closings and to return any funds and original documents to the party or parties who submitted them.
If you are unable to place your loans with other lenders, we will attempt to assist you. However, this will require each of your borrower’s consent.
Any questions or request for assistance should be directed to the account executive or account manager with whom you have been working.
We regret having to take this action, and we are hopeful that our current situation can be corrected in the near future so that we can continue to do business with you.
Top 10 subprime originators lean to left coast
By Laura Mandaro, MarketWatch
Last Update: 5:42 PM ET Mar 14, 2007
SAN FRANCISCO (MarketWatch) — The West is the best, sang a ’60’s rocker — and that sentiment also rings true among subprime mortgage originators.
For those harboring curiosity about which companies waded deepest into the now-stormy subprime mortgage market, a snapshot of the top 10 originators in the fourth quarter shows a heavy Westward slant.
Seven of the 10 are based in California, according to a ranking published by trade publication National Mortgage News. One, Washington Mutual Inc., is based in Seattle.
Of course, many of these mortgages — a class of loans made to higher-risk borrowers — financed houses in New Jersey, Minnesota and Florida. But many houses are likely to be in California, the source of the most subprime mortgages issued in 2005, which was a banner year for the mortgage market.
“House price appreciation was very fast through California, and that acts as incentive for all people across the spectrum to get a toehold into housing,” said Tony Hughes, managing director of credit risk analysis for Moody’s Economy.com.
Soaring home prices also encouraged lenders to do business with borrowers dogged by past credit problems.
“In a rising market, the prospect of lenders losing money on loans to relatively pretty poor credit-risk borrowers is mitigated by the fact that the value of collateral is rising rapidly,” he said.
But the industry is facing a severe reversal of those heady days.
Many of the most active subprime mortgage lenders have lately warned that a pick-up in late payments from their borrowers — or no payments at all — will hurt earnings.
For borrowers already stretching to make monthly payments, higher interest rates and stagnant or falling home prices removed the option of refinancing to secure lower payments — a major safety valve that had kept many mortgages in the black.
http://www.marketwatch.com/news/story/top-10-subprime-originators-slanted/story.aspx?guid=%7B100602BA%2D13D5%2D4B8C%2DBEB6%2DD5547594D449%7D
“Seven of the 10 are based in California, according to a ranking published by trade publication National Mortgage News. One, Washington Mutual Inc., is based in Seattle”.
WAKE UP AMERICA - the bubble is largely a Californian thing. It’s the land of the fleeing primadonnas - and they are getting what they deserve.
https://lounge.newcentury.com/cms/pdfs/nc.com/broker_letter.pdf
Effective immediately, New Century Mortgage Corporation and Home123 Corporation are unable to continue the origination or funding of mortgage loans. No new loan applications are being accepted at this time.
To best serve your customers we ask that you place their loans, including those currently in our pipeline, with other lenders. Please contact your account manager immediately to request loans be sent directly back to you. We are simultaneously notifying all closing agents to cancel all closings and to return any funds and original documents to the party or parties who submitted them.
If you are unable to place your loans with other lenders, we will attempt to assist you. However, this will require each of your borrower’s consent.
Any questions or request for assistance should be directed to the account executive or account manager with whom you have been working.
We regret having to take this action, and we are hopeful that our current situation can be corrected in the near future so that we can continue to do business with you.
….and we are hopeful that our current situation can be corrected in the near future so that we can continue to do business with you.
Ehh. What planet are they from again?
Does anyone have the link to Flecks latest article?
Contrarian Chronicles3/12/2007 12:00 AM ET
Next: The real estate market freeze
As a result of the collapse of the subprime mortgage market, lenders will — gasp! — once again require down payments, filling the market with unsold homes and driving down prices.
By Bill Fleckenstein
The unraveling of the housing market, the magic bullet that “fixed” our unraveled equity bubble, is the news. Slowly, the popular press is waking up to what I’ve been discussing for many months now.
Dropping like subprime flies
Essentially, the subprime mortgage industry — which lends to consumers with credit issues — is gone. Alt A lenders, those one rung up the ladder creditwise, will be next. Together, they comprise approximately 40% of the market. If you were to go down the list of what were once the top 25 subprime lenders, you’d see that only a handful are still standing at this point.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/NextTheRealEstateMarketFreeze.aspx
“Seven of the 10 are based in California”
It just gets better and better each passing day.
Maybe he meant 5 out of 8? Because FMT looks like it is about to go belly up, and NEW has already been smoked…
“The investment bank has hedged all of the risk in those investments as well as other exposure to subprime loans, using credit-default swaps, O’Meara said.”
OK. So who are the counter-parties, and how do you know they will have enough money to pay you?
In subprime mess, another dumb theory falls…….
http://www.marketwatch.com/news/story/subprime-mess-another-dumb-wall/story.aspx?guid=%7BC01F1530%2D36B0%2D411C%2D8D55%2D2127D0AE6047%7D&dist=morenews
The linked story looks very prophetic in retrospect…
———————————————————————————
Housing casts shadow on prospects for banks
By Nick Godt, MarketWatch
Last Update: 7:00 AM ET Sep 2, 2006
NEW YORK (MarketWatch) — With the $10 trillion housing market weakening fast, in defiance of the assurances of most pundits just a year ago, investors are starting to question the confidence among banks about their ability to weather a housing downturn.
Just a few months ago, homebuilders, the National Association of Realtors and most Wall Street analysts were still predicting a soft-landing in housing, in the same reassuring way they used to say last year that housing would remain strong in 2006.
But after the freshest figures - which showed sales of new homes sales plunged 21.6% in July from the year earlier, inventories of unsold homes soared and prices fell - there is little debate that the housing market is stumbling much faster than most expected.
Similarly, conventional wisdom, at least as officially voiced by banks and Wall Street analysts, has so far held that banks’ earnings would be only modestly impacted as the mortgage business continued to soften.
But “this is the most inflated housing market in the post-war era,” said Paul Kasriel, chief economist at Northern Trust. “If we’re to have a severe recession in the housing market, it would seem to me that the banking system cannot escape significant losses.”
http://www.marketwatch.com/News/Story/housing-casts-shadow-prospects-banks/story.aspx?guid=%7B4A7839E2%2DAC2D%2D4BD0%2DB069%2D1513F703B9EB%7D
GS….and the last couple of sentences contained in the article I posted is the sad part.
“These bad loans are out there — and somebody owns them, or pieces of them. The search is on for who is holding the bag, be it subprime lenders, banks, investors in collateralized debt obligations, or CDOs, investment banks, GM (GM : General Motors Corporation or maybe one of the mutual funds in your 401(K).
At the end of the day, the horrible reality is that in some way, we all own them. And it serves us right.”
We are all subprime borrowers now.
Too true………
will the USA join the ranks of subprime borrowers?
The USA already is a subprime borrower in the global market. No collateral, only paper. What’s amazing is that the rest of the world is not only accepting our paper in exchange for their goods, they’re also using our paper to buy more of our paper; i.e., US govt. securities and mortgage-backed securities!
“What’s amazing is that…”
********
Not amazing at all.
The power of Congress to tax the American people.
That’s what “the rest of the world” is most certainly counting on…
Well… here’s what I’m dealing with on my happy island of wealth and prosperity. House has been on market for a long time… 1.5 mil, nice place. Guess they want to rent it…3BR-$5300
http://losangeles.craigslist.org/lac/apa/293906560.html
Here’s the mindset in these parts… (From Ad)
“Walk to Grove, CBS, Beverly Center, Cedars and 3rd St. shops/cafes.
Parking for up to 3 cars (tandem).
Similar homes in the area renting for up to $8000/month!”
Crazy right? That’s the mtg payment! Well, I’ll guarantee that it’ll be rented in a week.
People here are idiots. I give up…
$5300. That’s probably less than the mortgage payment the owners are making, unless they are in some creative loan. I ran the place through a simple mortgage calculator. Assuming a 300k downpayment (20%), aa 30 year fixed at 5.750 comes up to the tidy sum of $7,002.00 per month. They probably think they would be doing any tenants a favor for renting “so cheap”. In Westwood, you would not believe. Someone asked me $5500 for a 3 bed condo, while a few blocks away a good house in so-so condition with 4bd was offered for lease at 4500. Go figure. Don’t worry plysat, you’ll get to see the day when this owner is foreclosed on.
They actually bought it in ‘02 for 750k. I assume they “bought up” and probably extracted some equity as well, but 5300 probably covers them. I assume they’re renting it till the market “comes back”. It’s been on the mkt for 6 months… just reduced to 1.369 mill.
What annoys me is not so much the silly rent price, but that some goofball *will* rent it and justify asking that price. Like I said… idiots.
I’m not so sure about that it’s going to be so easy to rent at that price. In Santa Monica, in a beautiful old deco building on San Vicente and about second, a property manager I know has been trying to rent a four bedroom for 3800. Many potential renters have come in at 3200 or so, but no one will touch 3800. Six months have passed, and the manager is such a twit that he won’t lower the price. Good plan, moron. You just lost 20K. The moral seems to be that there is a real cap on what you can rent a place for. Over 5000 is a ton of money to pay on a rental.
I experienced the same thing recently when I went through renting in the Ravenna area of Seattle. A house came up for 1350. In under 12 hours they’d had over 15 calls. Not BS, the guy was very nice. I didn’t even bother. Another, much nicer house came up for 1650. There was one other call and I easily got it. That’s not a gigantic difference in price, but it’s a huge gulf when one’s considering renting.
Lionel, I’m going to check out that building. I’m a total sucker for all things Deco. Maybe the guy thinks I’m nice and rents it to me. If he doesn’t, well, at least I got to see the inside of a Deco in LA.
Cass, the deal is that the owner has a bee in his bonnet about rent control in Santa Monica. So… he’s going to make up for the money he’s losing on his other properties by charging a premium on this one. His idiocy aside, it’s a truly beautiful building, and the space inside is impressive.
No pics, but here’s the listing: http://www.npr.org/templates/story/story.php?storyId=4951194
Lionel, I think the link was wrong. Something about sea turtle eggs. But don’t worry. I’m loaded with work this week, but I’ll take the time to drive by next week. I LOVE deco.
I should also point out that this neighborhood *is* pricey already. But you can get a nice 3 BR for around 3k more or less.
I should also point out that this neighborhood *is* pricey already. But you can get a nice 3 BR for around 3k more or less.
Plysat, then I’m going to start looking for a rental around there. 3K for a 3bd. That’s CHEAP (people from other parts of the country, you are allowed to laugh)
I don’t see my comment come up, but the above post was a booboo. Sorry, Cass. Here’s the Santa Monica link:
http://losangeles.craigslist.org/wst/apa/293650238.html
“then I’m going to start looking for a rental around there. 3K for a 3bd”
Yeah, they’re around… gotta hunt/wait for the good deals though. range is from maybe 27-2800, up to… well, according to the ad on CL… $8000
I’d move, hell I can afford it (which is why I’m looking at rental houses), but I’ve been in my place for years, and am paying just over 1k. I could afford to buy too,(well.. not *that* place above…) but don’t for the obvious reasons… Saving the extra dough is better for now I think…
plysat
We’ve been renting for years too, and it’s been a very good experience. Nice landlord, nice building. The problem is we have a girl and a boy, and sleeping with her little brother is beginning to get on my daughter’s nerves (on mine too, they fight too much). But going from a nice 2bd condo to any 3 bd rental is a big jump. Around here, any half decent house will not go for less than 4500, and it’s too big a jump because now we are paying 1950. In all the newer 3 bd condos, the third bedroom is little more than a closet. I really don’t get that. They are making 3 bd condos with the square footage of a regular 2bd.
Lionel, thanks for the link. I’ll check it out.
This is an article from the OC Register, which shows all the real estate related jobs in OC for 2006. It has a table with the breakdown. According to it, 17% or 259k of the overall jobs are related to real estate.
http://tinyurl.com/yuqcvk
when bears are on Kudlow why don’t they just say
EMPLOYMENT
9.5% RE in 2005
mean is 6% for the last 100 years
just the internet will crush many intermediary jobs as it has in all industries
“As the problems mount, concerns are spreading to other local companies. New Century’s landlord, Maguire Properties of Los Angeles, said Tuesday it could lose $6.5 million if New Century stops paying rent for its Irvine offices, assuming it takes up to a year to find a new tenant for the 267,000 square feet of office space.”
“Heck…Here at Happy Harry’s Subprime and Used Auto Financing, we Don’t NEED any $6.5 Million overhead.”
“Step into our alley office here and sit down my friend.”
“Lennie, GET those friggly Nutshells and Peas OFF the frigging table, We have a LIVE one here …”
Goldman Sachs sees opportunity to snap up subprime lenders at fire sale prices. Isn’t it a little bit too early in the subprime panic to be jumping in here? What do they know that the rest of the world (who are collectively dumping subprime investments) are missing here? Could this be part of a coordinated intervention to shore up the housing market?
———————————————————————————
Big players make a subprime choice
Listen to this story
Nervousness over the subprime mortgage market is causing some wild swings in the stock market. Kai Ryssdal talks with the Wall Street Journal’s Kate Kelly about the big names who are entering the fray.
http://marketplace.publicradio.org/shows/2007/03/14/PM200703142.html
“Could this be part of a coordinated intervention to shore up the housing market?”
Very possible! What investment company in their right mind would buy this junk for some other reason?
An alternate hypothesis (the one which you will read repeatedly in the financial press for the next few months) is that the subprime lending industry is undergoing a period of consolidation, which will make the industry stronger down the road. But there well may be some kind of behind-the-scenes bailout plan already in the execution phase, like perhaps a coordinated effort to drop the weak subprime lenders into a vat of acid where they will quickly vanish without a trace, and to allow strong hands to buy up the more viable subprime lenders and enjoy more market power as a consequence. This scenario is what I call a preemptive bailout; rather than allow a crisis to boil over to the point of the 1998 LTCM meltdown, and have a highly publicized (and market-destabilizing) effort to find big playas willing to provide bailout assistance, handle the whole thing preemptively behind the scenes, including making whatever public statements and various forms of market intervention are needed to keep confidence sky high.
(An alternate hypothesis is that the subprime lending industry is undergoing a period of consolidation, which will make the industry stronger down the road.)
I do get the feeling that the big boys are taking their lumps but putting everybody else out of business. But it will take a long time to recoup those lumps.
But the problems are more fundamental that even the fraud, the subprime, the suicide loans. Housing prices rose too high relative to income. Spending has been too high relative to income. Debt is too high relative to income. Some of the debt won’t be paid.
If it was a sensible investment, why would GS anoounce it before they had already reaped the crop?
This is propaganda by GS via Wall Street Whore-nal
(Ben my last 2 posts aren’t showing up for some reason).
Which gets right to my point. Why would the boyz be stepping up to the plate while things are still unraveling unless they had some kind of assurance that there is something in it for them?
LEND is up 56% today!!!
http://tinyurl.com/2gt432
I call BS. Smoke & mirrors. Psychological warfare.
BTW I’ve read the Wall Street Journal closely over the past few months. It makes more sense if you pronounce it ” Wall Street Whore-nal”
Goldman Sachs sees opportunity to snap up subprime lenders at fire sale prices. Isn’t it a little bit too early in the subprime panic to be jumping in here? What do they know that the rest of the world (who are collectively dumping subprime investments) are missing here? Could this be part of a coordinated intervention to shore up the housing market?
I call BS. Smoke & mirrors. Psychological warfare.
BTW I’ve read the Wall Street Journal closely over the past few months. It makes more sense if you pronounce it ” Wall Street Whore-nal”
I see an opportunity to snarf up the sub prime lenders at discount prices too. Shit if the government does bail out the Borrowers they are also bailing out the banks. If the G pays/ guarantees/ or pays off the mortgage the Goldman Sachs take no risk. Easy pocket change of a few hundred billion.
“Shit if the government does bail out the Borrowers they are also bailing out the banks.”
And with Big Hank at Treasury, I guess the top guys at Goldman Sachs would be in on the plan…
The Goldman folks represent everything that is unjust in the world.
I just noticed a number of homes in which offers were accepted go back on the active status in San Gabriel Valley.
Either the buyer backed out because of all the news in these few days, or they no longer qualify due to tighter lending standards.
The asking prices in SGV are still in the stratosphere. A number of the homes are vacant and obvious flips. I expect many to go into the rental market, drop dramatically in price or, either go short or foreclose.
Will the San Gabriel Valley finally correct? Its starting to look that way, but this madness has been going on so long here its just hard to believe it may be finally starting to happen.
Mr. Vincent,
I, too, have noticed lots of flips in the SG Valley. I cannot believe that people are still flipping! It’s stunning.
Oh yeah? Try taking a drive south of the 110. Still flipping ghetto houses like pancakes (or tortillas).
Gee, I’m shocked :
http://www.reuters.com/article/newsOne/idUSL1470530620070314?pageNumber=1
(This article needs to see more light…)
————————————————————————————————-
Top investor sees U.S. property crash
Wed Mar 14, 2007 12:59PM EDT
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
“You can’t believe how bad it’s going to get before it gets any better,” the prominent U.S. fund manager told Reuters by telephone from New York.
“It’s going to be a disaster for many people who don’t have a clue about what happens when a real estate bubble pops.
“It is going to be a huge mess,” said Rogers, who has put his $15 million belle epoque mansion on Manhattan’s Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
“Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it’ll be worse because we haven’t had this kind of speculative buying in U.S. history,” Rogers said.
Aye Chihuahua!
I’ve been meaning to read of few of his books. This is more motivation to do so.
uh hummm
NY City council BANS Metal Bats…California Realtors. Apprasiers and Loan Brokers MIGHT be very WISE to Ban Pitchforks, Ropes and Torches as well.
http://www.nytimes.com/2007/03/14/nyregion/14cnd-bats.html?ex=1174536000&en=b320f3d626e19d2e&ei=5053&partner=NYTHEADLINES_HP
In 2006, 1 out of every 79 homes in San Diego County went through foreclosure.”
This number seems very high to me.
IMHO the number is relatively low, in the 70’s it was ~2 out of 100.
if accurate, and they probably are …what is remarkable about these figures is that they are so high so early in the game.
Four states order New Century to stop making loans & a little too late?
Four states issued cease-and-desist orders against beleaguered Irvine-based subprime lender New Century Financial: Massachusetts, New York, New Jersey and New Hampshire.
The orders bar New Century from issuing more mortgages or taking new applications. That might seem like closing the barn door after the horses, pigs and assorted hoboes already crawled out.
But the orders could be important for some consumers &mdash those who got approved loans but never received the cash. And there are potentially thousands of people in that uncomfortable spot. In New Jersey alone, that state’s banking department says, New Century has closed but failed to fund 67 home loans.
The Massachusetts and New Jersey orders specifically require New Century to turn over all closed but unfunded mortgage applications to a qualified broker or lender. Massachusetts also is directing the company to place fees from closed-but-unfunded mortgages in an escrow account.
Lansner blog: Adjustable mortgages boosted state’s home-price jump
http://tinyurl.com/lzgbg
“On the other hand, demand from speculators and homebuyers who overstretch their financial capability may not be sustainable when market conditions change, and, therefore, may be a sign of housing bubbles. The findings of our analyses indicate that the increasing popularity of alternative financing has been one of the drivers of the housing price appreciation, not a result of it. This may suggest that the California housing market is facing a real threat of market correction in the months ahead.”
Ya think??? What do you call YOY declines in home prices in San Diego, The OC, etc. if not a correction that already took place?
I read on AOL that most of the forclosure states are in the south and midwest at 8-10%. The lowest were in the west at 2-3%. I wonder why?
Generally, unlike the West, homeowners in the South and Midwest didn’t benefit from the substantial appreciation of their properties the past few years so when they had trouble making payments they didn’t have the luxury of re-financing/cash-out to help them stay afloat.
Job losses are driving home foreclosures in the USA.
1) South was hit by the hurricanes and secondary effects on jobs. Don’t forget Ivan which devestated Pensacola.
2) Midwest is still losing manufacturing jobs.
West (or CA) has two problem areas: San Diego and Sacramento. SD lead the bubble with very high % price growth. Sac has high price growth too and lots of inventory.
The key to determining home foreclosure rates (to date) is job loss.
City to float air rights deal
Officials hope to sell 9 million square feet over Convention Center, allowing denser development.
http://tinyurl.com/2qkwkk
More Business news
Accredited adds to bad news for subprime lenders
By Mike Freeman
UNION-TRIBUNE STAFF WRITER
March 14, 2007
The mounting troubles for subprime mortgage lenders continued to pile up yesterday, with San Diego’s Accredited Home Lenders saying it may need to raise money after being forced to commit substantial cash to cover potential bad loans.
The company, which also said it would lay off an unspecified number of workers, saw its shares shed 65 percent of their value – leading a parade of companies in the sector that saw prices plunge.
Accredited shares tumbled $7.43 to close at $3.97. On the same date a year ago, Accredited’s stock traded at $47.10.
But that was before rising mortgage delinquencies sparked a meltdown for subprime lenders, which specialize in making loans to borrowers with weak credit.
More than two dozen have quit the business, put themselves up for sale or filed for bankruptcy. One of the nation’s largest, New Century Financial of Irvine, is scrambling to stay alive after bank lenders cut off funding or informed the company of their intent to do so.
New Century also said yesterday that it has received subpoenas in a criminal investigation over some accounting issues. Its shares are in the process of being kicked off the New York Stock Exchange and didn’t trade yesterday.
The crumbling foundations of subprime are rippling through the overall housing market – and raising fears of a broader economic malaise.
“It’s already having an impact on housing,” said Stan Ross, chairman of the Lusk Center for Real Estate at the University of Southern California. “A lot of people are spooked. They’re just looking at all this press coverage. They don’t quite understand it yet, and they’re getting nervous.”
Because of rising delinquencies, some lenders have begun to tweak the underwriting standards for better credit borrowers – particularly for loans that offer no down payment and incomplete proof of income, according to mortgage brokers.
Subprime loan delinquencies have soared to their highest level in four years, hitting 13.3 percent in the fourth quarter for all active subprime loans, the Mortgage Bankers Association announced yesterday.
For overall mortgage loans, including those for borrowers with good credit, the delinquency rate was 4.95 percent.
The percentage of mortgages that started the foreclosure process in the final quarter of last year rose to 0.54 percent, a record high. The previous high, 0.50 percent, occurred in the second quarter of 2002 as the economy was recovering from the blows of the 2001 recession.
Because of the surge in bad loans for weak credit borrowers, subprime lenders are facing a cash squeeze. Investors who buy subprime mortgages on the secondary market are unwilling to pay enough for them to cover the cost of originating the loans.
Moreover, secondary market investors who bought loans previously are requiring lenders to buy them back if borrowers default early in the process.
Today, those loans are coming back to lenders in droves.
“The bottom line is liquidity has dried up to next to nothing,” said Bud Leedom, publisher of the California Stock Report. “I just don’t see how these companies are going to stay afloat.”
http://www.signonsandiego.com/news/business/20070314-9999-1b14subprime.html
You know, for my money you just can’t get enough NAR, David L, etc happy talk chirp chirp. Like -”Sacramento is slowly coming out of the housing slump.” or David L.- “They are engineering a soft landing for themselves.” and Pam Whats-Her-Face in Florida - “West Palm Beach is not overbuilt, it’s undersold.” Is there a blog for all of these quotes? I mean it’s really funny/scary to read them in their context.
Roidy
David Lereah Watch Blog
Got a 40K difference in prices on Townhomes 93021 varsity park villas , new one listed at 415K versus 455K. I wonder how the owner of the 445K Townhome feels about the new listing? -10% bam!
Zillow puts the price at 411K and realtor.com has it asking 455K. what an ass. I see a similair one went for 445K Sept 2006. Ouch. Yes prices are falling just like they did in 1990.
Now this is some doom and gloom. I never bargained for a depression when I first became aware of the housing bubble. Just thought the housing market would deflate and maybe there would be a bit of a recession.
http://biz.yahoo.com/seekingalpha/070313/29355_id.html?.v=1
I have thought many times we might have a full scale depression after I found out about the sub-prime lending ,but I hope it won’t get that bad .
A good subject would be how fast does everyone think the market values are going to crash now .I have always been one that felt it was going to be a fast crash . The crash was delayed by one year because of the cash-back incentive deals along with the fraud .When I think back about all the cheerleading bogus reporting that went on from late 2005 onward I get angry . The market could of been saved from another year of bogus loans . The sub-prime mess is playing out exactly how many have predicted and the meltdown is gaining speed now . How is the REIC going to spin this one ……..Want to bet we get even more listings put on the market in the next 2 weeks because of the sub-prime news . I can just hear the spin , “Buy now before the sub-prime lenders go out of business .”
“When I think back about all the cheerleading bogus reporting that went on from late 2005 onward I get angry . The market could of been saved from another year of bogus loans.”
Not me - I’m grateful to every FB who bought (and is still buying). They were told and bought anyway. Their greed and stupidity gave me another year to save more so that I and my family have at least some chance of surviving the now-unfolding economic disaster.
We are facing a full-blown meltdown. Make sure you’re prepared - financially as well as emotionally.
crisrose ….You want the RE market to go to reasonable prices ,but I’m sure you don’t want to go into a full scale depression .I can’t help but think about the 1929 crash and how everyone was taken down in spite of being a investor in the stock market or not . I think of the unemployment and how people were standing in soup lines .
I just don’t know yet how far reaching this real estate market sub-prime lending meltdown is going to be. It might reach a point where people on this blog will want some bail-outs if it’s the lessor of two evils . Time will tell ,but as it stands now I am not in favor of bail-outs for the FB’s by tax dollars . Now if the investors in these crap loans feel that they will lose less money by rewriting some of these sub-prime loans than that might work in some cases . The problem is so huge . You never know how creative people might get in order to avoid loss .
Wiz,
The real killer here is that RE isn’t our only problem, and certainly not the biggest one at that. If it were, we might have had a chance.
Oh yeah baby. It’s on.
March 15 (Bloomberg) — Asian stocks rebounded from the biggest drop in more than a week on speculation rising U.S. mortgage delinquencies won’t derail demand in the region’s biggest export market. Canon Inc. and Hyundai Motor Co. gained.
“People have realized the U.S. is not heading for recession so there’s lots of liquidity and buyers out there,” said Simon Doyle, who helps manage $4.5 billion as a strategist at Schroder Investment Management Australia Ltd. in Sydney. “Markets are re- pricing risk at the moment. The pessimism of yesterday has given way to the optimism of today.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFa8kHXXDqW8&refer=home
Thats funny. And they even call it a rally. They dropped 500 points last night and they are up 250 tonight. Net loss 250 points. Rally on boys !
All this started with the guarantee that Lehman Bros gave to the market. *Maybe* Lehman’s earnings won’t be hit, but the rest of the market sure will be. Today’s action was nothing but denial.
Lower lows and lower highs. The trend is still down. It’s funny last year they were denying the existence of the housing bubble. Then they deny there would be subprime mortgage problems as CFC and other lenders hit 52-week highs in January of this year. Then they deny it would spill over to Alt-A. Now they are 100% sure there will be no recession. Talk about drinking the Kool-Aid.
Think about this: Even if the foreclosures are lower than expected, all of those ARMs resetting higher will take thousands of dollars out of the pockets of millions of consumers every year. Add the fact that fewer people will be able to pull even less equity out of their homes because prices have flattened or gone down, and you lose hundreds of billions of consumer dollars before the we even start to discuss foreclosures. I guess consumers will be pulling money out of their a$$es for the next few years.
The fallacious logic seems to be if Lehman is fine then subprime is fine and if subprime is fine then the builders are fine and if builders are fine then the economy is fine.
They are not paying attention to current and rapidly deteriorating houisng market conditions. Lehman maybe perfectly hedged but the vast majority of subprime and Alt A borrowers are not. It’s laughable because this thing is going to hell in a hand basket. The number of MSM housing bubble stories has grown exponentially over the last week! The jig is up!
The market is about to pull a 1982 this spring. Contrary to all the pessimists, we are about to win on seveal fronts. Watch for the tide to start turning in Iraq, and other good things to follow.
Some MEGA oil “discoveries” to be revealed this year.
And this just in! Iowa farmers report feathered appendages sprouting on swine…
No wonder Jim Rogers is so bloody pessimistic about emerging markets. There is a complete disconnect between future US housing demand and these widget producing countries. They are still manufacturing housing related products at yesteryears pace. This will end badly for a lot of people.
and every 401k 403b are still dumping $ on auto pilot
You’ve just gotta love posts on Broker’s Outpost:
DANKA: “1999 prices on homes were MUCH MUCH lower, thats why 5 percent down was a feasible thing to do….prices have gone up 300 percent in certain areas, paychecks have not…you do the math,….who will qualify full doc…not to many people…plain and simple…”
I guess that this is supposed to be an argument in favor of stated income (liar) loans and 100% financing?
My math says that house prices will need to drop.
Yes, in California. But by 2008 prices will be moving up smartly in many other areas.
Penobscotch: “WAKE UP AMERICA - the bubble is largely a Californian thing.”
“by 2008 prices will be moving up smartly in many other areas.”
Why yes, of course, all of us would agree with that. Thanks for the persuasive agrument.
“agrument” - It’s getting late, I’m tired.
Kool-Aid must be marketing a crystal ball these days.
LOL. That is too funny.
Senator Chris Dodd of Connecticut said again that he wanted legislation to bail out the flippers and FB’s. Our hard earned money will be used to pay the mortgages of some dumb SOBs who make $10/hr and thought they could afford a $400K house. This knucklehead arsewipe needs to be stopped. If not, why don’t we all go buy houses in Beverly Hills and have the government pay for the mortgage on our $1 million-dollar house.
“Senator Chris Dodd of Connecticut said again”
Look, y’all, quit complaining about it and DO something about it. WHen this first came up a month or two ago, I and a few others wrote emails and letters to Sen. Dodd and a few others. Nice, well reasoned, thoughtful letters about the unintended consequences of a FB bailout. If you feel strongly against a bail-out, you should do the same. Stop whining and do something about it.
The flip side to letting all these morons suffer and die awsome economic deaths is we’ll have a serious economic crisis where these people walk away scott free and we all suffer along with them - count me out.
We are all stuck in one economic boat. Better to allow people to use mechanisms that let them keep their home and continue to make payments then lose all that money from the economy.
It makes for great blogging to be hard-ass about loans but there are too many fools for this to be fun or funny.
I’m not so sure my 401K can take that kind of shock.
Question: Were you in favor of bailing people out of their losses during the dot-com bust?
In other words, was your reasoning back then “Better to allow people to use mechanisms that let them keep their retirement savings then lose all that money from the economy.”?
“It makes for great blogging to be hard-ass about loans but there are too many fools for this to be fun or funny.”
I don’t think it’s fun or funny (ok, I *do* sometimes think it’s funny), but how do you expect to rescue someone who couldn’t afford to put any money down, and could only qualify for a loan by using some combination of teaser rate, negative amortization, and stated income? What kind of fixed rate, fully amortizing, fully income qualified loan will they be able to afford?
Unless you are advocating that I (and other taxpayers) get the privilege of paying half of every troubled mortgage for the next 30 years (*then* the borrower will qualify!), so that your 401K won’t have to “take that kind of shock”.
That’s great – someone who in the past was only qualified to be a renter gets to keep his overpriced house, while we (the taxpayer) get to help him pay the mortgage. The American Dream.
The American Consumer - “too big to (allow to) fail”.
Anyone who hasn’t emailed, faxed, called, mailed their Congressional Representatives and Chris Dodd needs to do so NOW. That old fart is still talking about a bailout of these FB “victims”
It almost makes me wish the Republicans were back in control of Congress.
Do not most of our investments and savings depend on a significant fraction of these home buying dumbos paying off all or most of their home loans.
I have some money in insured accounts - like 6 months worth of living expenses. The rest is in an awsome 401K.
I have a selfish interest in seeing m ost of these loans paid off and if that means regulating lending industry and/or offering people some options to make payments workable, then I’m for it.
“The rest is in an awsome 401K.”
So you want the taxpayer to bail out people who really couldn’t afford to buy a house anyways (at least by lending standards of just 5 years ago), just to keep your “401k awesome”?
How about this…start a fund, get like minded individuals together and pool money (use your 401k) to pay off 50% of each of the mortgages of troubled buyers. Then maybe you can get them to qualify for an *awesome* fully ammortizing fixed rate loan, and we can all be happy.
Wait, before you do that, let me go out and buy a house first. I want in on some of that bail-out cash (thanks for paying 50% of my loan!). And my 401K will be awesome.
I have a selfish interest in not having my tax money looted by a bunch of financially incompetent FBs. Where in the Constitution does it say we have to bail people out of their own stupid choices, or steal from half the population to protect this clown’s 401K for that matter?
Jerry, let’s be real, there are very few R’s that wouldn’t trip over themselves to wh*re themselves out to FB’s if they thought that it would help them get elected.
wow, one of the best articles I have read so far.
Wow!
“Why Your Home Isn’t the Investment You Think It Is”
http://online.wsj.com/article/SB117329581356629863.html?mod=homes_left_column_hs
This article comes after several other articles in the past few months & years touting how great an invesment a house is. The Wall Street Wh0re-nal is bringing the facts to publication FAR too late for them to be of ANY use to anyone.
Already our welfare system for years has subsidized illegitimacy, now trust-fund limosine libs like Senator Dodd wants to subsidize flippers and house-hogs under the guise of saving “disadvantaged” people from their own bad choices
Is this a record number of comments?
Not yet…
Cute.
What if a lender decides that they will lose less money if they rewrite a 13% adjusted up sub-prime loan down to a 7.5 % loan in order to avoid a foreclosure .And lets say the lender re-writes the loan for that borrower for say 5 years to allow them to try to get on their feet . And lets say that the re-write of the loan is at the expense of the lender (not tax dollars ). Would anyone have a problem with lenders avoiding some foreclosure this way ?
I doubt anyone is still awake to read this, but I personally would have no problem at all with that scenario - private parties to a contract negotiating a workout to avoid a mutual loss. However, if the gov’t is going to come in and rescue all the FBs (which I highly doubt for practical reasons), what incentive will the parties have to do this?
I would be fine with that…if the bank (or the MBS investors) want to do that, let them.
However, these buyers are already defaulting because they can’t afford anything but what is currently considered a ridiculously low payment (option-arms, teaser rates, etc.) A 7.5% loan would still be a big stretch for many of them. And the banks would have to make the determination: is 7.5% enough to cover coming defaults? In other words, 7.5% might be considered throwing good money after bad, and that it makes more financial sense to foreclose, sell at a discount, and be done with it (before the other lenders catch on and try to do the same).
I’m not saying that it wouldn’t work…just that things get complicated when you are trying to price in the risks of a sub-prime buyer that probably doesn’t have any equity (or has negative equity) in the house.
However, I prefer your plan to a government bail-out.
Thanks for feed-back this late at night .
You’re welcome.
David Rosenberg says 100% chance of recession.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYtEcwn_eunw&refer=home
Housing Inventory
In a March 1 report, CreditSights Inc. said rising mortgage defaults by subprime borrowers may add more than 533,000 homes to the market. That would increase inventory of new and existing of homes by about 13 percent. The National Association of Realtors and the U.S. Commerce Department said 4.09 million homes were for sale in January.
Rosenberg estimated that subprime loans boosted home sales by at least 20 percent annually and the loss of that market might shave half a percentage point from the Gross Domestic Product.
Mish Shedlock was just on Coast to Coast. He was talking about the mortgage meltdown and how it would affect the rest of us. The conclusion was that if you have a relatively stable job, then you need to be careful with your spending. And if you have a tenuous position, then you need to be very careful. He called for a major recession very soon.
Congress may have to act on subprime loans: Dudd
More from Sen Dudd
http://www.marketwatch.com/news/story/dodd-says-more-action-may/story.aspx?guid=%7BEECEBB11%2DB706%2D4A22%2DAE7D%2D81D6E0E9BF12%7D
Saw this in my inbox this morning.
There has been much coverage and discussion in the media recently regarding the subprime segment of our industry. For these reasons, I want to take a moment to update you on Countrywide’s views of the current market environment, and to reiterate our strategic priorities for 2007.
I have previously shared with you that we expect this to be a challenging year as a result of the continued downturn in the housing and mortgage markets. Our predictions are proving to be accurate based upon the market dynamics during the first few months of this year, particularly in subprime. However, I want to emphasize again that Countrywide is extremely well-positioned to take advantage of this period of market disruption due to our experience, operating controls, strong balance sheet, and relatively low exposure to subprime.
In fact, we have been prepared for these market conditions for some time, and we are operating our business to effectively navigate through the challenges, and seize the opportunities that are arising as a result of them. However, in order for us to leverage these opportunities, it is absolutely crucial that we adapt quickly and execute flawlessly. Success this year will be dependent upon it.
As I said earlier this week in Countrywide’s monthly operational results press release, we view the long term impact of the current market dynamics as positive for both the industry and for Countrywide. We believe that the industry will benefit from more rational underwriting and pricing, as excess lending capacity is eliminated.
Our strategic priorities remain the same: 1) increasing our velocity and productivity, 2) embracing change as a necessary and ongoing tenet of our business, 3) managing our expenses prudently so that we invest our resources in the areas of our business that will fuel Countrywide’s growth, 4) managing risk with the highest level of vigilance, and 5) delivering outstanding service to our customers and business partners.
If we remain focused on these themes, we will successfully manage the changes that are impacting our industry, and exploit them to our benefit. When the market returns to a healthier growth cycle, Countrywide will be stronger and better positioned than we have ever been.
Once again, thank you for your continued commitment to Countrywide.
I think Angelo’s secretary edited this. The version I got was identical but for the penultimate paragraph:
If we remain focused on these themes, we will successfully manage the changes that are impacting our industry, and exploit them to our benefit as I have done during this period of massive insider selling. When the market returns to a healthier growth cycle, Countrywide will be stronger and better positioned than we have ever been without the extra 40,000 employees we’ve depended on to process all that paper during the past few years.