Getting “Upside Down” In Texas
The Houston Chronicle reports from Texas. “Last year, nearly 400 people who owned more than one home in the Houston area accounted for more than 1,000 foreclosures, an analysis of local data shows. That’s up from about 150 investors who were responsible for about 350 foreclosures two years earlier, according to a Houston Chronicle analysis.”
“Although it’s unclear how big a factor the novice investor is in the current market, it is clear that defaults among multiple homeowners contributed to a 44 percent increase in foreclosures in Harris, Montgomery and Fort Bend counties. Foreclosures shot up to 11,983 in 2006 from 8,300 in 2004.”
“‘Unsophisticated investors always make mistakes because they speculate instead of buying something that’s a good investment,’ said Del Walmsley, president of Lifestyles Unlimited. ‘They go out and buy anything.’”
“Condos in Houston are generally difficult to rent, noted Walmsley. Here, potential tenants can usually pay the same or less rent to live in an apartment with many amenities or even to rent a house, he said. It’s hard, he said, to charge a rent in Houston that’s high enough to cover monthly mortgage payments and maintenance dues.”
“Another reason condos sometimes end up in foreclosure is because investors try to sell them to individuals when often ‘they’re really just glorified apartments,’ said Rickey Williams, president of Homevestors WFI Properties in Houston. ‘They’re converted apartments. Would you rather go to an upgraded apartment complex or an older one that’s been turned into a condo?’”
“Large homes can also be a problem, Walmsley said. ‘Big houses aren’t going to rent,’ he said. ‘If you’re an investor and don’t know that, you’re going to load yourself on houses you can buy well below market. Problem is, they won’t rent, so they get upside down.’”
“Some can’t keep up with their homeowner association fees. At Candlelight Trails in northwest Houston, for example, the homeowners association foreclosed on 22 of its more than 240 units in 2006, according to the listing service.”
“All of those foreclosures resulted from nonpayment of monthly maintenance fees, said Shirley Gonzales, who sits on the association’s three-member board. Gonzales said many investors can’t afford the average monthly dues of $250 because they can’t find steady tenants to live in the community.”
“Many first-time investors lost their properties after getting entangled in questionable deals. The problem has become so pervasive in Houston that the FBI has created a special unit here to crack down on mortgage fraud.”
“Chris Robison said she recently filed a complaint with the FBI claiming she got lured into buying a house in Pearland and a condo downtown that were doomed investments from the start. ‘I signed the loans. I didn’t know what I was doing,’ she said. ‘Now my credit is ruined.’”
“Unfortunately, she didn’t read the loan papers thoroughly before she signed them, said Robison, who provided the Chronicle with the documents. Her loan applications, she said, state separate monthly incomes inflated by thousands of dollars and stated she would be living in the two properties.”
“‘I just trusted these people. I didn’t read anything,’ she said.”
The American Statesman. “Will Austin dodge the subprime bullet? Or will the industry’s woes rattle the region’s real estate market? Industry experts say builders will put up fewer entry-level homes in Central Texas as the pool of buyers shrinks. There will be some effect on the resale market.”
“By the end of 2006, 20 percent of active mortgages in the Bakersfield, Calif., area were subprime, according to San Francisco-based First American LoanPerformance. In Texas, McAllen had the highest rate, 26 percent. The national average is 14.7 percent. In Central Texas, however, the rate was 8.6 percent. Among large Texas cities, only Houston’s was above the national average.”
“Lenders ‘are going to look for a better credit score and more income, and that’s going to hurt the housing market,’ said Greg Hallman, a lecturer at the University of Texas. ‘The degree to which it’s going to hurt — that’s what we don’t know yet.’”
“Whatever the effect, ‘we are going to feel that in Austin’ Hallman said. ‘We are going to feel that all over.’”
“The days of aggressive zero-down financing offers and loan approvals for those with credit scores in the 500 range — a high-risk score — are gone for now. Locally, mortgage brokers and real estate agents alike are starting to see some of the signs.”
“Gary Solka, a consultant at Milestone Mortgage, said subprime mortgage holders hoping to refinance are having trouble qualifying for a loan with a lower interest rate. Those homeowners could be in deeper trouble when their adjustable-rate loans reset to a higher figure, meaning a bigger mortgage payment, Solka said.”
“Paul Borman, an agent for Avalar at Steiner Ranch, said he has started turning away prospective buyers who would have qualified for a mortgage two months ago. For example, zero move-in financing for buyers with a 620 credit score will be harder to come by, Borman said. Now, those buyers are going to need a down payment.”
“‘It’s going to take buyers out of the market,’ he said.”
“The Federal Reserve Bank of Dallas is watching the situation, but senior economist Pia Orrenius said the Texas economy is solid. ‘We have a healthy housing market in Texas as a whole relative to the nation,’ Orrenius said. ‘Austin is a little bit of an exception — it had the biggest runup in home prices — but again, the Austin economy is very healthy, with fundamental underlying strengths that are propping up home values, and none of those are expected to change.’”
“In some cases, subprime lenders have stopped doing business as a result of cease and desist orders from regulators. Regulators at the Texas Department of Savings and Mortgage Lending are watching the situation closely, Commissioner Danny Payne said.”
“Payne said the subprime troubles could be the beginning of the end for risky loan products and exotic financing.”
The Times Record News. “North Texans could have a tougher time getting mortgage loans in the future as a result of the subprime mortgage worries that are trickling through financial markets.”
“Ralph Dunkelberg III, vice president and mortgage specialist at Fidelity Bank in Wichita Falls, said the subprime fallout will affect borrowers with good credit as well as those considered poor risks. ‘Unfortunately, the subprime problem is segueing over into the mainline loan industry,’ Dunkelberg said.”
“Dunkelberg said the lending institutions from which he acquires money for local mortgages have raised credit score requirements on borrowers by 10 to 20 points.”
“Between 2004 and 2006, subprime loans accounted for about 11 percent of the mortgages issued in Wichita Falls, according to First American Loan Performance. The number of those borrowers who were 60 days or more past due on payments was about 12 percent during the same period.”
“Dunkelberg said one reason lenders made so many subprime loans is because a growing number of Americans can’t qualify for better mortgages ‘Unfortunately, we’re seeing more and more declining credit scores over the past few years,’ he said, mainly among people under age 30. ‘Many folks have great income, but their credit is bad and they owe as much as much as they make.’”
“Gail Cunningham of Consumer Credit Counseling Service said her agency has seen the impact of risky-credit families buying homes. ‘They get into buying a house with their heart, not their head,’” she said.”
“‘Lenders want to keep you in your house and keep you paying,’ Cunningham said. She said that’s especially true in a softening housing market where lenders don’t want to risk taking possession of houses that might sit on the market a long time and then sell at a loss.”
I can’t recall many of these reports on subprime percentages refering to the historical averages, which I believe were around 2%. Throw in the exotic stuff, and any of these cities could see a wipeout, IMO. After all it was just months ago we read of $400k spec condos in Galveston, etc.
But 26% in McAllen?
I HOPE ALL THESE DIP-SHITS GO RIGHT IN THE TANK. I’M GETTING REAL TIRED OF THIS POOR LITTLE ME BS. BITE THE BIG ONE, RETARDS. DARWIN WAS RIGHT.
“Chris Robison said she recently filed a complaint with the FBI claiming she got lured into buying a house in Pearland and a condo downtown that were doomed investments from the start. ‘I signed the loans. I didn’t know what I was doing,’ she said. ‘Now my credit is ruined.’”
“Unfortunately, she didn’t read the loan papers thoroughly before she signed them, said Robison, who provided the Chronicle with the documents. Her loan applications, she said, state separate monthly incomes inflated by thousands of dollars and stated she would be living in the two properties.”
“‘I just trusted these people. I didn’t read anything,’ she said.”
You. Freaking. Moron. You. Deserve. Your. Fate.
There’s some sympathy on this board for buyers who were “taken advantage of” or who “didn’t know better,” whatever that means. But I draw the line at people who don’t give a crap or make even the slightest effort to learn about what they’re getting into. She needs to learn to read what she signs, and I hope she ends up learning it the hard way.
“she got lured into buying a house”
When fishing for idiots I usually like to use 50 pound test line and “No Down” fly lure. They always take the bait.
Yeah, the term “lured” reminds me of the old excuse, “I was seduced”….no, you decided to climb into bed so stop complaining about being screwed.
Sorry; just burns my butt to hear this crap.
It’s quite a sight to see RE agents trolling for buyers by driving down the street towing deeds and photos of granite counter tops at the end of their lines…you would see the buyers breaching en masse, trying to be the one to bite the bait. I once saw an RE agent haul in a 300 pounder. It’s sad that, due to overfishing, there aren’t very many of those big “buyers” out there. A damn shame.
Fish are less intelligent than sheep
I find it more challenging to use 10lb test because they (speculators) don’t really need to be lured…they usually swim right to the boat and jump in!
The only sympathy I reserve is for the primary residence of elderly Americans who’ve been truly preyed upon. As far as I’m concern in wild-eyed speculation — all is fair. She got what she deserved. If she had profited wildly, she wouldn’t have given it back. The New Economy of Socialized Risk, Privatived Profits has reached the masses.
(1) People who have lived in one house for 30-40 years and now face skyrocketing property taxes
(2) Older folks who have been financially responsible all their lives but fall victim to shyster salesmen, due to lack of sophistication, decreased mental facilities and/or desire to sign something just to make the annoying man in the greasy hair go away (this problem goes far beyond real estate)
(3) Victims of the Kelo vs. New London ruling (not just the people in new london, but anywhere where gvt is taking advantage of this)
That’s about all I have sympathy for.
What’s going on with that New London situation? I thought that ruling was pretty awful too.
Anyone who understands that private ownership of land, not subject to the whims of the majority, is the basis for liberty thinks that ruling was pretty awful. Most just don’t “get it” yet but they will shortly.
In the New London case, the majority was strongly against it, and it happened anyway. While I do think some use of eminent domain is good, when the system gets this far out of hand, abolishing it might be the best course of action.
The New London case was a wake up call. Some woke up, some didn’t. Here in Illinois we passed new laws to make sure New London never happens here.
Maybe thse people in New London should “TAKE da Monee N run”
Why not sell at the peak…….Lots of apprication since that law suit started…they may never get this much money ever again…
We share similar sentiments as my post below is a near duplicate.
She was greedy. If she made a fortune, she would be taking all the credit for being savvy, but now that she realized that SHE made a bad decision, she is looking for a scapegoat. That is the problem with this country, no one wants to accept responsibility. That is why I am against any government bailout. The best way to stamp out this kind of problem is to let those who caused it to suffer and lose it all. That is how free markets work, right?
The hard way x2!
Trust me, there’s a special brand of stupid in Texas.
Look at those $550K houses with 1100sf in Compton, the butterfly ballots in Florida, and you’ll realize that special stupidity is spread from sea to shining sea.
She had dollar signs in her eyes when she signed those papers.
Now she is wasting the FBIs time.
You made a bad investment, live with it.
There should be no waivers for stupidity. It’s nature’s way of telling them they are losers. A bailout would be tantamount to removing the body’s ability to register pain. It is a short term relief for those getting an ass-pounding but in the long term it removes all appreciation for avoidance of the situation.
“Condos in Houston are generally difficult to rent, noted Walmsley. Here, potential tenants can usually pay the same or less rent to live in an apartment with many amenities or even to rent a house, he said. It’s hard, he said, to charge a rent in Houston that’s high enough to cover monthly mortgage payments and maintenance dues.”
That has been my opinion. My apartment has a jacuzzi, two swimming pools, tennis courts right outside the gate, a fitness room, and maintenance that is very responsive. Also allows pets. Some people have 2 dogs. There are 3 bedroom units here too. There is no way I could be convinced to rent a house, except if I was paranoid of fires caused by careless neighbors in adjoining apartment units. The amenities here are superior to most SFHs and the rent is reasonable - still in the $900s per month after a couple of years.
“It’s hard, he said, to charge a rent in Houston that’s high enough to cover monthly mortgage payments and maintenance dues.”
And that is different than the rest of the US…how? I realize that there are some places where rents are more in line with prices, but in Cali, you’re looking at a 2x monthly own vs. rent ratio. Maybe even more.
Definitely. An example that comes to mind is a house now available for rent at $1650. It is twice as large as a house on which an acquaintance of mine is paying more than $1650/mo in mortgage interest alone (never mind taxes, insurance, maintenance, mortgage principal).
Similarly, the house where I’m a tenant in Maine is twice as large as the one I sold last summer, and the purchaser of the smaller house is paying a monthly mortgage amount equal to the rent on the larger house. Again, this doesn’t even include property tax, insurance, etc.
Wow, reporting it to the FBI!
Didn’t realize being plain stupid was a federal crime, per say………………….
Geez
She committed mortgage fraud, and reports it to the FBI?
“Comment by txchicK57
2007-03-25 10:51:59
Trust me, there’s a special brand of stupid in Texas.”
I was gonna post about this. Huge article in the print business section, with a map of foreclosures. The problem appears to be in the new subdivisions with $100-$125k homes.
Zero Down + Min. Wage Job + ARM + $3,000 property taxes * 2 years = Foreclosure.
“…a map of foreclosures. The problem appears to be in the new subdivisions with $100-$125k homes.”
Wow. I wonder if those are mostly “investment” homes. Because those price points are something you never even see out west. Most people could afford the payments on those, since they would most certainly be less than renting.
I believe that most of them are “investment” houses. There are a few in my subdivision. People buy them thinking they can make money renting them out or at worst, sell and realize the gains from appreciation.
The rest I think are the zero-down ARM people who have no money saved and were living in an apartment 3 years ago. ARMs were unheard of here until just recently. Why the hell would you need an ARM when you can buy a decent house for $100k? These new subdivisions in exurban west Houston are sooooo screwed.
Lou,
How is The Woodlands looking?
Only part of Houston I think is worth living in.
What about Rice Village?
People still enduring 3 or 4 clothes changes a day?
Love that humidity!
““Chris Robison said she recently filed a complaint with the FBI claiming she got lured into buying a house in Pearland and a condo downtown that were doomed investments from the start. ‘I signed the loans. I didn’t know what I was doing,’ she said. ‘Now my credit is ruined.’”
“Unfortunately, she didn’t read the loan papers thoroughly before she signed them, said Robison…”
Is this the kind of FB that Senator Dodd, and Obama are talking about bailing out? This lady deserves nothing. Her “investment” tanked, so she starts pointing fingers instead of taking personal responsibility. The only thing that “lured” her in was the thought of easy money. I have absolutely ZERO sympathy for this woman. NONE.
I hate to sound mean, but some people are too stupid to be buying real estate. If they can’t/won’t even spend an hour finding out what they are obligating themselves to for the next THIRTY YEARS…well, I repeat..they’re too stupid to be allowed to buy.
NO bailout of any kind.
She deserves to have her credit ruined. That way no one will lend to this idiot. Why mask the problem???
And she’s going to the fbi with documents on which she (now knowingly) falsified her income and fraudulently claimed an investment property as a primary residence. Again, she deserves her fate.
She is saying oh I didnt know… then the FBI will say, well you should have known you could not afford it and you KNEW they falsified the documents and you were in on it.
This is like the drug addict going to the cops to say that the drug dealer gave her rat poisoning and she wants the crack she bought.
Both end up in jail.
HEY isaw that on COPS last night………..
some moron with the usual baseball cap on backwards and no ID…said he ripped me off $20 for my dope….i want my $20 back…. to the cops he flagged down.
This is like the woman who called 911 because Burger King messed up her order and wouldn’t let her have it her way.
I’ll also add that this is like the hooker on the corner who goes to the cops and says that her drug dealer sold her rat poisoning and she wants the cops to help her make him give her the crack she bought.
“I didn’t know what I was doing” -> “my credit is ruined”
Cause -> effect.
“I was seduced into buying too many toys with my credit cards” -> “now my credit is ruined”
Cause -> effect.
Don’t people teach the meaning of consequences and personal responsibility to their kids any more? Or are most kids coddled, protected, and bailed out by their parents, and never learn consequences?
My brother is a real piece of work. He’s 28 and lives at home. I bought him a car about a year ago and he had no payment. A nice Mazda MX6. He trades it in 3 mos later for a new Suzuki SUV at $500 a month. I said, you’re an idiot and you will lose it. Well after being behind 8 mos later by about 6 car payments, they repoed it. It’s been wrecked (he let his insurance get cancelled), the window doesn’t roll up. And it has 25k miles without a single oil change. I don’t know who to feel sorry for, the car company or my brother? LOL! He wants me to help him get a new car but I said no way. My parents aren’t helping him either. I think there should be no government bailout and to let these people, both lenders and borrowers learn their lessons.
Wow, what a story. You might consider chipping in with your folks to have an IQ test administered. He sounds like he qualifys for “moron” status
http://en.wikipedia.org/wiki/Moron_(psychology)
I’m not sure it’ll gain him any special dispensation with society but at least you’ll know to keep sharp objects and credit cards out of his reach.
Well he kept saying, they approved me for a 30k loan so I can get whatever I want (within reason but not within reason). I said, you know you have to pay that all back and when it is all said and done, you will pay way more than you should. He did it anyways because he only thought short term. When it came time to make payments, coming up with the money was pretty hard. He now says he wants a car with no car payment. It’s a shame too because that is exactly what he had other than paying me back. He still owes me about $500 left on that car and he has nothing to show for it.
And i’ll bet he lives in an area with no public transportation, and he wont hurt is pride by riding a bicycle to work….since he would be paying sky high insurance rates just to even register, and get a little scooter like the chinese delivery guys use.
oh work…whats that?
If his IQ is low enough he can qualify for SS disability benefits.
28 and lives at home. I wonder if it would help to re-instate the draft.
Vast quantities of never hired once gens x & y…
Can’t hang out at your parents forever.
Show us what you can do?
Well I said that. You live at your parents house! But he is too busy on MySpace trying to pick up as he puts it “a piece of @$$”
I’ll bet his profile has a picture of someone else, and it says that he’s a model that makes $250K a year.
There was no bailout for Enron employees there should be none for subprime (both in Houston I believe)
Only the lenders will be “bailed out”, if anything at all is even done.
I am thinking about taking a photo of all the real estate signs on the roads near my apartment in Central Texas. It would easily qualify for Ben’s slide show. If you drive around you will see the signs up everywhere. I am getting solicitations in the mail from homebuilders. I think the music has stopped (but a few folks are still dancing).
I was thru Kyle yesterday on the way to Salt Lick Barbeque outside of Driftwood. I have never seen so many ugly houses covering the hills around Kyle. Both sides of a two-laned road; it must be awful getting out of there in the mornings to commute to Austin or San Marcos or wherever those folks work.
Moved family from Davis, CA to Kyle Still working in Bay Area. Must say, hate to be apart while looking for work but quality of life for them is significantly better
Traffic is relative, I-80 sucks for hours, I-35 and Mopac much shorter
Air quality better: check /Mello-roos: uncheck/ HOA: darn check/ HOA pricing 1/12 CA !!: ok uncheck/ people say pls and thanks and look at you when you are in the stores. PITI less than a 1/3 of East Bay
TX native and had to go back, CA is a political zoo and raising kids here is toxic to them
I love the irony of the ads being placed under Ben’s ‘The Housing Bubble’ header. It changes constantly, but right now I’m seeing FOUR ads, all for subprime type loans. Nice placement Google! (or whoever the ad company is). LOL
The out of state knowitalls are still drinking the Texas koolaid.
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1763981
I don’t know much about Texas, but I know enough to see how lame-brained California speculators could get sucked in. On my last trip down there a couple of years ago, I chatted with a guy who was selling in SillyValley and was looking for investments around Austin.
What I took away from my brief trips to TX over the last few years is that it’s not part of the the same economy that CA operates in. The economics are just that different. I remember seeing class A office space (rental) in Dallas for a yearly price per square foot that would cost that much per month in Los Angeles.
So to a naive speculator from CA, everything looks cheap, and RE always goes up, right? But if you go to TX with your eyes open, it’s waaay different. And the weather would make San Bernadino proud.
Now back to opinions from people who actually know Texas - those are just my limited observations as a Californian.
“So to a naive speculator from CA, everything looks cheap, and RE always goes up, right?”
These myopic dolts could be found everywhere. They snatched up real estate in countless small towns and cities throughout most of the country, at what seemed like insanely low prices, comparing them dollar for dollar to the large markets they are familiar with. But, they never looked at local economic conditions. I laugh heartily everyday when I see homes for sale in tiny rural areas, with price tags reminiscent of the big city. These speculators find themselves pushing a product at a price for which there is no market.
It’s easy to see how individuals (especially urban Californians) can become myopic dolts when it comes to buying rural and small-town real estate. What is harder to understand is how the big builders can delude themselves so hyberbolically when it comes to building in such areas. A few builders achieve some success with this paradigm, and then everybody piles in. How can the boom to bust cycle ever be repealed if people who are supposed to be smart insist on revealing their close kinship to lemmings?
Have you seen the idiots on sdcia.com??? Anytime someone posts FACTUAL housing bubble news, they say, shouldn’t this be under the Pessismism thread????
So they have one thread for bears and every other thread is for bulls.
Next time just reply with the question about where the “facts” thread is as opposed to the “wishful thinking” thread?
Sounds like they need a Head-Up-Your-A$$ thread.
Anybody just crunching the numbers could clearly see buyers were speculating. Fortuantely, renting has been, & figures to contunue to be, cheaper.
We attempted to document this is:
“Myth #3: Rent Is Wasted Money”
http://www.viewfromsiliconvalley.com/id316.html
Coming soon: “Myth #4: Sub-prime is a small problem.”
Thanks!
If you can tolerate a constructive criticism, I think your piece is excellent except for the first six paragraphs, which have virtually nothing to do with the subject you are addressing. Make a cleaner start next time and people will pay more attention?
“Large homes can also be a problem, Walmsley said. ‘Big houses aren’t going to rent,’ he said. ‘If you’re an investor and don’t know that, you’re going to load yourself on houses you can buy well below market. Problem is, they won’t rent, so they get upside down.’”
The same principle applies to renting out a big house as the one that applies to selling a big house: Lower the rent (or sales price) to what the market will bear, and a renter (or buyer) will be found in short order.
Along the same lines, notice the idiotic assertion by Del Walmsley, “people load themselves up on houses they can buy well below market. Problem is, they can’t rent them and they get upside down.” Jerk. What is “below market” — maybe you mean “below the 2005 market value” ???
“Large homes can also be a problem, Walmsley said. ‘Big houses aren’t going to rent,’ he said.”
I can see them renting here in LA… as boarding houses. As a matter of fact this is already a reality in many parts of the city, and not just crummy parts. San Fernando Valley middle class neighborhoods it’s happening with more and more frequency.
“Aren’t you the same poster who keeps insisting that prices have never fallen in the US? Hows that working these days?”
Since records have been kept since I believe the 50’s, there has never been a calendar year when nominal prices went down for the year in total on a national basis. It happens in local markets, but not in the nation as a whole.
There is actually a chance it could happen for the first time in 2007, but I doubt it.
2006 was up over 2005:
2004 $195,200
2005 219,000
2006 221,900
The entire spreadsheet can be accessed at:
http://tinyurl.com/yrmn2p
‘The National Association of Realtors reported Friday that price of a median home sold last month dropped to $212,800, down by 1.3 percent from the same month in 2006. It marked a record seven straight months that the median home prime has fallen compared to the same period a year ago.’
http://thehousingbubbleblog.com/?p=2531#comments
Ben –
Don’t bother confronting trolls with data, which they will conveniently ignore.
Thank you, Ben, for the clarification. The first few posts from drentzel were interesting, but I am tired of him/her now. Nothing but lies.
“It happens in local markets, but not in the nation as a whole.”
The “magic” of averaging is used to mask weakness and losses.
Factor in inflation. Looks like home prices have dropped quite a bit.
Lenders ‘are going to look for a better credit score and more income, and that’s going to hurt the housing market,’ said Greg Hallman, a lecturer at the University of Texas.
This guy is a “lecturer” at a university??
Lecture me this, Professor Greg: How is ensuring buyers have the income and credit necessary to AFFORD buying a house “hurting” the housing market?
When are these morons going to admit it’s loose lending, and exotic mortgage products that have ruined the housing market? The last thing that’s needed are more of these schemes.
“When the shareholders thought of what they had got, and what they might have got, they were astounded by their own moderation.”
-Lord Clive, Director of the British East India Company after the company’s shares crashed in 1773.
The SEC is investigating Jim Cramer for his comments about Market Manipulation. He talked about how hedge funds can influence the market to do what it wants like spread rumors of bad news so the stock takes a hit and vice versa. How they manipulate it so they can hit say Apple and buy it on the cheap.
Watch the youtube video that is causing all the controversy.
http://youtube.com/watch?v=ZTt7IQB9rc0
“Now Cramer is backtracking and saying, umm I never did that at my headge fund.”
Yeah, ok Jim…. BOOOYAAAAAAAAA!
And we all thought you were a man of Genius. Now you are an idiot for going out there and talking about it : )
P.S…. I never thought he was a man of Genius.. that was pue sarcasm… You know.. those Beer commercials was it?? Man of Genius LOL
http://youtube.com/watch?v=03vLtaF4-9Y
Today, we salute you Jim Cramer LOL!
Here is another real man of Genius.
http://youtube.com/watch?v=Sn5BhnYr8WY
LOL, just go back a ways on Real Money and look at all the trash talk Cramer and Greenberg would put on there about TTWO or HANS or whatever David Rocker was short at the time and the quid pro quo was that Rocker’s firm held a large position in TSCM. None of this is housing bubble stuff though.
Yeah but it’s fun as hell. What is the connection LOL I’ll make one! How is that?
Jim is just as stupid as this woman above who is saying, I didnt know what I was signing.
LOL Yeah!! BOOYAAA!
Jim says, “I didn’t know what I was saying!”
I hope nothing happens to him. I’m glad he talked about it. I figured something like that was happening and now know more of what I need to look for.
I’m not saying he’s a genius and probably helped people lose some cash, but this is one thing I listened to pretty intently and he actually taught something to this ignorant dolt.
Speaking of stupid people…I was watching the Dodd hearings and they had 2 people (duped buyers) that would absolutely qualify as idiots. But as I was listening to them testify (as painful as it was to listen) I wondered if it was fair that they got ripped off. Does the fact that these people have a lower IQ entitle them to get screwed? It isn’t like they chose to be idiots. They were born that way, and the fact they are idiots is no fault of their own.
It just brings up some issues in my mind. In an industry like real estate, where the transaction is somewhat complicated for first timers, and super complicated for morons, isn’t it exactly an industry like this that strong regulation is needed?
I just think there needs to be some basic safeguards to protect people with lower IQ’s in industries that are ripe for fraud. It seems to me that a lot of people that are losing everything only committed one sin, and that sin was being born stupid.
Look at these boiler room operations. They call people and tell them they won $500,000, but they just need to send them the taxes of $25,000 to claim their prize. A lot of people (including seniors) fall for that one. Sure this is an extreme example, but the point is people are gullible and can get easily taken. Sometimes you need laws and safeguards to protect them for their own stupidity. Otherwise you give the criminals and ripoff artists a license to steal.
I just don’t agree these people had it coming simply because they were morons. It’s not to say they wouldn’t lose it all in some other way, but real estate is the biggest decision you can make financially. Shouldn’t basic protections be put in place?
“I just don’t agree these people had it coming simply because they were morons. It’s not to say they wouldn’t lose it all in some other way, but real estate is the biggest decision you can make financially. Shouldn’t basic protections be put in place?”
Sad to say, but basic protections USED to be in place. You know, those quaint, old fashioned notions like….do you have 20% down….how steady is your employment….are your income taxes paid for the last 3 years…do you have six months cash in the bank…are your credit cards paid off….
I think what this does show is that if you give people enough rope to hang themselves, there’s a certain percentage of the population that will do just that.
Good points, Lisa. Agree 100%.
Sad to say, but basic protections USED to be in place. You know, those quaint, old fashioned notions “like….do you have 20% down….how steady is your employment….are your income taxes paid for the last 3 years…do you have six months cash in the bank…are your credit cards paid off….”
These were to protect THE LENDER, cause they use to KEEP THE LOANS….
Mortgage Back Securities are what changed everything.
People with no ability to repay loans didn’t have to worry about getting one…. no matter what their IQ was.
“These were to protect THE LENDER, cause they use to KEEP THE LOANS….
Mortgage Back Securities are what changed everything.”
Agree 100%. But who bears ultimate reponsibility? Who then deserves to be the bagholder? The buyer? The banks who stopped giving a shit because the loans weren’t on their books? The Wall St. MBS buyers? All of the above?
If the govt. “bails out” the buyer, the banks and the MBS crowd are the ultimate beneficiaries.
Something needs to happen to revert back to sane lending standards. Not sure what that will be, though.
“Something needs to happen to revert back to sane lending standards. Not sure what that will be, though.”
Severe pain seems to work, financial pain at least.
For the truly stupid this pain must be experienced personally - and even then they may not get the message.
For others this pain may do the trick if they see someone else do the suffering.
“Who then deserves to be the bagholder? The buyer? The banks who stopped giving a shit because the loans weren’t on their books? The Wall St. MBS buyers? All of the above?”
The MBS buyers. After all, they’re the ones who underpriced the risk. Maybe getting wiped out will teach them a hard-earned lesson about taking stupid risks. If the MBS were bought by funds that should not have been taking on such risks (pension funds, money market funds, etc), then the people responsible should be made personally liable and sent to jail too.
Sure, but fraud is already illegal.
As for the sub-prime loan business, yes, there needs to be regulation, but more along the lines of assuring that people who sell mortgages have some skin in the game, rather than being allowed to flip the smelly paper to a another flipper on Wall Street who packages it into CDOs and flips it to someone else. Basic accountability.
What I don’t want to see is some effort to make people with low IQs into a protected class. That would just pass the responsibility from the fraudsters to the public treasury. How about just enforcing the laws we’ve got, like the fraud statutes? Most people would agree that Bait and Switch is fraud, and that’s pretty much what the subprime sharks did to the FBs.
So, prosecute the perpetrators, and go after them for the money, but don’t make me pay for some idiots mentally deficient actions. They weren’t dumb enough to overlook the skyrocketing housing prices. I am not gonna subsidize stupidity. Why should my tax dollars go towards helping some f***ing border jumper stay in a home which they didn’t belong in to begin with? Forget that.
Basic protection YES financial bailout NO!
People with low IQ’s are already protected against any kind of scholastic requirements: they are socially promoted through both grade school and high school, and can get some kind of vocational training at community colleges. Kindergarten might be the right place to start letting them know that they have to take some responsibility for their own advancement.
Exactly! az-lender.
Heinlein (IIRC) suggested solving a quadratic equation before the computer would let you vote.
How about calculating the total interest to be paid before you are allowed to sign for a loan?
Yes, I recall that also. That would eliminate about 90% of the population, even if the solutions had integer coefficients.
NOW do you understand why we promote Rap and Hip hop 24/7
to create “THE MORON GENERATION”
You stike a cord with me. I firmly believe in self responibility and that there should be no bailout of “homeowners”. However what do we do about the people that were duped? Am talking about the people moving from gettos, barrios, trailer parks or HUD housing to attain a piece of the American dream. Should Wall St. or realtors get rich at the expense of our underclass citizens? I don’t care about the “flippers” and their sort, but I do care about the people trying to get a leg up. I do not see much differnece between subprime lending and other hammers of the struggling…ie. payday loans and rent-to- own . There will be alot of pain from this housing collaspe, some deserved and others not. This is far different than the Tech bubble, as the people I earilier referred to did not own stock. This is just one man’s thoughts…….were am moving the price are so depressed, I will live like a king for 175,000.
“Am talking about the people moving from gettos, barrios, trailer parks or HUD housing to attain a piece of the American dream. Should Wall St. or realtors get rich at the expense of our underclass citizens?”
Yes. That’s capitalism at work, it is Darwinian. The lazy, the greedy, those who don’t bother to read loan documents, the hucksters lining up for fraudulent cash-back deals at closing–all of them, deserve to get burned. The American Dream reduced to home ownership is a marketing ploy, nothing less. It’s a travesty that America’s ideals, life,liberty and the pursuit of happiness, have been tossed aside in favor of ownership of some POS crackbox.
They should have never been able to move from HUD housing into a $500K house in the first place, so back they go to the ghetto. I used to live in the ghetto and had to work my way out while going to college. I guess that’s a silly notion these days. Now you just sneak across the border, get an FHA loan with a stolen ID and then claim that you’re a victim when you can’t pay for an overpriced home that you could not afford in the first place
“By the end of 2006, 20 percent of active mortgages in the Bakersfield, Calif.”
Speaking of Bakersfield - The bakersfield blog had a crazy couple of days after a thread which involved a realtor got a little out of hand. The blog looks like it is temporarily closed. Not sure what else happened or why.
“Chris Robison said she recently filed a complaint with the FBI claiming she got lured into buying a house in Pearland and a condo downtown that were doomed investments from the start.”
———————————————————-
wow. your investment sucks so it’s a case for the FBI? Call Elliot Ness!!!
who sold her the properties? were they muslim extremists?
OT, i need to rant about my cousin who lives in the most expensive zip code in the country (11765) and who is telling me that RE has bottomed (according to her RE agent friends). My @$$. I told her I couldn’t guarantee that prices in 11765 would decline, but I could absolutely guarantee it for CA, FL, AZ, NV. She went on and on about some friend who is “trapped as a permanent renter” because the friend “can’t afford to buy anything” … doesn’t my cousin GET it? If renting is much cheaper than buying, only speculators buy. ok rant off
How many people were glad to be priced out of the NASDAQ in March 2000? Her friend should be glad to be priced out at this point.
OT: Got this morning’s Key West Citizen. Good article:
http://www.keysnews.com/302191036558367.bsp.htm
I have to say this is one of the best names mentioned yet , Pia Orrenius,
You can’t make this stuff up.
“Last year, nearly 400 people who owned more than one home in the Houston area accounted for more than 1,000 foreclosures, an analysis of local data shows. That’s up from about 150 investors who were responsible for about 350 foreclosures two years earlier…”
10 / 4 = 2.5
3.5 / 1.5 = 2.33
Very interesting. These foreclosure/bankruptcy specialists are averaging more than two houses apiece.
Italics off?
I can’t believe somebody named their kid Pia Orrenius.
“Although it’s unclear how big a factor the novice investor is in the current market”
In Austin, this is a huge factor - there are tons of people getting into the real estate biz. They are taking out home equity loans and buying the house down the street. The funny thing is that they want to rent the newly purchased house for $2500/month - sorry guys THAT rental market does not exist. It similar to someone whom buys a Ferarri and wnats to rent it out to cover the monthly payments. Most people aren’t goignt o rent a car for $300/day - no matter how nice of a car.
I agree with your main point about RE, but, unfortunately, you are incorrect on the exotic car rental thing. If you rent an exotic in LA, LV, etc, you will have to pay $1,200++++ per day depending on the car (some have advertised a “special” of $1,800 per day for a Lamborghini - on a billboard, no less). Has anyone else in LA seen those? I used to see it where you turn on to Franklin south of the Hollywood Bowl.
Ok, enough about Cramer, but I do think Austin’s economy is not quite as robust at city booster would claim.
Austin’s problem is that it’s so dependent on tech companie, and lots of the bigger employers (Dell, AMD, Motorola) are having a really tough time right now, and it wouldn’t surprise me if all three of those companies announced layoffs in the next few months. There are a lot of small tech companies in Austin that are hiring, but they typically don’t pay salaries that would allow someone to purchase a $400 K house.
As someone that works in land development, I can tell you there is a tremendous amount of employment in home building. From permitting, to construction, to sales, it’s amazing how many new jobs are tied up in new home sales. Look at all the construction workers in the downtown area building condos.
If this industry goes south along with Tech - Austin is going to be really hurting.
Regarding the woman from TX who notified the FBI of her mortgage fraud and that her credit score is now ruined…
Let’s see, I would say that lying on legal documents and borrowing more money than she can repay is indicative of a poor credit risk. Her credit score should have never been high in the first place.
here is the rest of the article. She was scammed; she was greedy; she was stupid:
Chris Robison, 39, said she recently filed a complaint with the FBI claiming she got lured into buying a house in Pearland and a condo downtown that were doomed investments from the start.
“I signed the loans. I didn’t know what I was doing,” she said. “Now my credit is ruined.”
She said she agreed to buy two properties that others had promised to manage, rent and eventually sell for a profit that they would split. They would even make her mortgage payments.
All Robison had to do was sign the loan papers, she said. So she did.
But eventually she began to get default notices in the mail, the homes were foreclosed, and her credit score of 667 had plummeted. The homes she bought for a total of $942,500 were 100 percent financed, leaving her with thousands in monthly payments she couldn’t afford.
her credit score of 667 had plummeted
Her credit score wasn’t very high to begin with. Good grief.
I’ve commented here about selling our Dallas house in 1985 and then finding it on realtor.com in 2002 with an asking price less than our selling price 17 years earlier. We have friends who have lived in Dallas since the late ’70s, and the house they bought in the ’80s is worth no more today than what they paid. Therefore, I was totally speechless when we learned a few months ago that in 2005 they had bought a new “investment” SFH to rent out in Arlington.
These people are not dumb. At least I didn’t think they were.
She said she agreed to buy two properties that others had promised to manage, rent and eventually sell for a profit that they would split. They would even make her mortgage payments.
She must’ve been one of those suckers that P.T. Barnum talked about.