“Aggressive Pricing Strategies Persisted”: CEO
Some housing bubble news from Wall Street and Washington. “Hopes for a housing rebound this spring selling season were further diminished Thursday, as Ryland Group Inc. said lower home prices will likely drive write-downs and a quarterly loss as subprime-mortgage fears weigh heavily on the market. The Calabasas, Calif.-based home builder said it expects to post a first-quarter loss on an impairment charge of about $65 million.”
“‘At the end of the fourth quarter, we were cautiously optimistic that pricing had begun to stabilize,’ said CEO Chad Dreier. ‘However, as the first quarter progressed, it became clear that aggressive pricing strategies persisted in several markets, requiring us to write down the value of some of our assets,’ he said.”
“‘Ryland’s strategy of trying to hold pricing was likely unsustainable given the deteriorating market conditions, and was only delaying land charges,’ said analyst Daniel Oppenheim.”
From Briefing.com. “Like many other leading homebuilders, Ryland has been stung by high cancellation rates and a glut of unsold homes driving prices lower, as soft market conditions persist.”
“Preliminary sales for the quarter fell 26% year/year to 2,989 units. The company closed 2,302 units during the period, or about 54% fewer than in the same period last year, amid slowing demand and ongoing concerns about the meltdown in the sub-prime mortgage market.”
From Reuters. “The percentage of home owners with subprime mortgages who are dangerously falling behind on monthly home loan payments rose to a record high in February, according to a First American LoanPerformance report.”
“‘It’s going to get worse,’ said economist Richard DeKaser. ‘Whether delinquencies, foreclosures, what have you, there will be further bad news as the year plays on.’”
“According toFirst American LoanPerformance, 12.4 percent of all subprime borrowers were at least 60 days late on their mortgage payments in February, the highest level the mortgage research unit has recorded since it began its data series on the loans in 1989.”
“Additionally, 14.3 percent of subprime loans sold by Wall Street were at least 60 days behind on payments as of January, the highest level for securitized subprime mortgages since LoanPerformance began tracking them in 1997.”
“‘Too many lenders got too carried away,’ said Jeff Thredgold, (an) economic consultant to Zions Bank. ‘Too many borrowers got dollar signs in their eyes.’”
“‘About 5 to 10 percent of people who could have gotten loans four weeks ago could not get them today,’ said Bob Walters, chief economist for Quicken Loans. ‘They probably won’t be able to get financing in the near future and by near future I mean the next couple of years.’”
“Webster Financial Corp., one of the largest banking companies based in New England, said on Thursday it is closing a mortgage unit and will incur several first-quarter charges.”
“Net charge-offs will total $5.4 million, triple the year-earlier level, hurt by losses on Florida residential construction loans where Webster sees a ‘high probability of loss based on borrower delinquency and market deterioration.’”
The Charlotte Observer. “HSBC mortgage operations in the Fort Mill, S.C., area are taking a hit from restructurings that have closed branches and shifted work to other units.”
“Decision One, part of London banking giant HSBC Holdings Plc., makes subprime loans to borrowers, often with sketchy credit, through independent mortgage brokers. These loans carry higher interest rates than prime loans to borrowers with better credit.”
“The company closed five branches last summer and another seven last month.”
The Boston Globe. “H&R Block Mortgage Corp. said it is closing its Burlington loan office, and its only Massachusetts location, and laying off all 47 employees.”
“H&R Block Mortgage’s spokesman, Ron Iori, said the decision was part of a planned restructuring ‘to change the way we run or operate this mortgage business.’”
“H&R Block Mortgage, which has a dozen offices nationwide, also is closing the Tampa office.”
“U.S. businesses are sitting back and waiting to see how troubles in the housing and mortgage market will work out, but this caution could lead to slower economic growth.”
“The Institute for Supply Management’s purchasing manager’s index released earlier this week fell in March, showing that a factory slowdown that began last fall continues.”
“‘The slowdown is inventory-related and also related to the spill-over-housing industry woes,’ said Ken Mayland, of ClearView Economics in the Cleveland Area. He added that a declining backlog of orders is no recipe for production and payroll increases.”
“‘If businesses pull back, then we will really have a high probability of a recession, because now job growth will really sputter, housing is already sputtering and consumer spending will consequently sputter,’ said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.”
“‘Because 40 percent of home buyers last year were non-prime … borrowers, housing markets may feel some short-term pains, making it less clear whether housing construction has bottomed and how long the housing downturn may last,’ cautioned Federal Reserve Bank of Dallas President Richard Fisher on Wednesday.”
“The labor market may be wilting just as spring gets under way, with warmer weather highlighting the housing sector’s misfortune and its growing toll on the broader economy.”
“‘Everything is pointing to an increasingly rapid pace of job losses,’ said economist Richard Iley. ‘It’s primarily a housing story.’”
“An unusually warm winter may have artificially supported construction employment figures over the past few months. Skeptics now expect a painful return to earth as the true nature of the housing decline becomes more apparent.”
“‘If the labor market begins to deteriorate then it will spread into prime mortgages,’ said Thomas Higgins, chief economist at Payden & Rygel. ‘At that point, the possibility of a recession would start to rise.’”
“With the dominoes of consumer debt and business caution lining up so neatly with the housing downturn, it becomes difficult to find a source of renewed economic vigor that might prevent the whole edifice from taking a spill. In short, the risk of contagion rises.”
“‘Growth is likely to weaken yet further as housing and manufacturing recessions increasingly infect the broader economy,’ said Iley.”
The Associated Press. “Spurred by a sputtering U.S. economy, bankruptcy filings are on the rise in 2007, an increase analysts predict will continue.”
“In the first three months of 2007, business bankruptcy filings rose 60 percent and consumer filings increased by 70 percent, compared with the first three months of 2006, according to data collected by Jupiter eSources LLC.”
“‘Bankruptcies are definitely on the rise,’ said Jupiter Chief Manager Michael A. Bickford. ‘There’s no question.’” “The AACER database, which receives daily filing updates from every court in the nation, reports that overall daily filing averages have climbed by 26 percent since January. On average, 3,316 cases were filed each day last month.”
“‘It looks to me like the economy is deteriorating,’ said Bickford. ‘A prevalent factor is the increase in residential defaults on home mortgages and the subprime situation that’s going on.’”
“The American Bankruptcy Institute, which gets its information from the Administrative Office of the U.S. Courts, reports a 46 percent filing increase from January to March. Last month boasted the highest filing rate in a single month since the Bankruptcy Prevention Act and Consumer Protection Act took affect in 2005.”
“Data from the Alexandria, Va., organization shows a steady increase in filings so far in 2007, with about 50,000 cases filed in January, 55,000 in February and more than 73,000 in March.”
“ECC Capital Corp. said Wednesday that one of its units is suing a subsidiary of Bear Stearns Cos. for more than $20 million in a dispute over the sale of a residential mortgage loan portfolio.”
“Performance Credit Corp., a unit of ECC Capital, alleges that it lost more than $20 million because the loans declined in value between the time the Bear Stearns unit agreed to purchase the loans and when it actually did.”
“The purchases took place between Oct. 10, 2006, and Feb. 9, according to a filing with the Securities and Exchange Commission.”
“A new U.S. accounting rule that allows companies to change the way they value financial securities may have driven up to $20 billion worth of selling in the mortgage-backed securities market in recent weeks.”
“This accounting change has opened up a one-time chance for banks and other financial companies to clean up their balance sheets, especially those saddled with investment losses stemming from the subprime mortgage crisis, analysts said.”
“Regulators fear some companies may be trying to manipulate the standard’s adoption process to avoid recognizing earnings losses. ‘Banks could take losses without running into their income statements,’ said Walt Schmidt, manager of mortgage products and strategy at FTN Financial Capital Markets.”
‘For the first quarter ended March 31, Ryland expects to post a loss… which includes a $65 million impairment charge related to assets in Fort Myers, Phoenix, southern California, and Washington, D.C. Ryland also expects to write-off $15 million in goodwill associated with its acquisition of California homebuilder MJ Brock & Sons in 1986.’
$65 MILLLION here, $15 MILLION there…
..pretty soon you are talking about real money…
LMAO.
Before you know it, you’re misplacing a few 100M in some pet project here, a B or 2 in some failed enterpise over there. And then…You wake up and have become the US govt!
Or a couple of Trillion to bail out the end lenders from the housing bubble. (Excuse me, I mean to bail out the poor borrowers - Not).
For the Business jargon illiterate (such as myself), what exactly is an “Impairment Charge?” Is this the fine imposed by a judge when a person gets intoxicated and buys a lot of real estate they can’t unload onto some other fool?
Basically, they are writing down the value of an asset. For HBs, that usually means that the value of their unsold inventory or land is being marked down because the value on their balance sheet is too high now since the market has detiorated. However, I like your definition, too.
Is enough land still moving to even gauge its value? At least in the non-coastal SW…
Estimated home value - cost of construction = land value.
The Titanic is slipping further in the icy watery grave.
I just can’t wait until the dog days of summer, and see the FB faces dripping with sweat from worrying if their house is going to be sold.
I love it.
I just can’t wait until the dog days of summer, and see the FB faces dripping with sweat from worrying if their house is going to be sold.
I’m amazed at how *every* cities graph plotting sales by month broken down by year is on a decreasing basis from 2005 on.
We have to mobile a population for me to believe this “all real estate is local” stuff. Mortgages are national. This won’t be a regional S&L crisis… When the big boys tighten up everyone will feel it.
Summer is going to be slow. I expect a lot of frustrated Realtors ™ and mortgage brokers.
Got popcorn?
Neil
> I expect a lot of frustrated Realtors ™ and mortgage brokers.
I expect a lot frustrated former Realtors and mortgage brokers.
Yes, the last few years will go down in history as the period with temporary Realtors, temporary homeowners and temporary wealth.
They will still be Realtors, but it will be like actors/waiters - Realtors/storeClerks. I was actually going to say Kinko’s employees - but in my experience the Kinko’s workers are compotent and work fast.
“Summer is going to be slow.”
Not according to one of Coldwell Banker’s realtors. In one of today’s local papers, she was actually encouraging people to buy now and avoid the summer’s lack of selection, because (according to her cheerleading) houses are going to sell like hotcakes this spring!
Hmmmm. The point of the article seems to be that the housing troubles are spreading to the wider economy. It won’t be just the FB’s faces who are sweating, I’m afraid.
I wonder how many of our jobs are “recession-proof” (are any of them “depression-proof”)? I doubt if mine is.
I’m as guilty of schadenfreude as anyone here, but if the house of cards comes down, we’ll probably all be hurting….
Agreed.
I’ve spouted this line a thousand times here.
It will be somewhat rewarding to finally be proven “right” after all the humiliation by the housing bulls over the years.
but the end of a mania is never fun. and almost everybody gets slammed in the end.
we’ll all get hurt in one way or another:
-loss of our jobs due to recession
-loss of our investments due to secondary fall in the various markets
-loss of our $$$ and savings as they’re taxed at higher rates for a bailout, or to help rebalance the budget now that revenue is down
-friends and family in true economic strife
I have built up a pretty good cushion, but I was hoping for one more good year of returns which would make me feel a little “safer”.
The problem is that my job is not necessarily recession proof (although I’d be the last one in the company to be fired), but that my income would go down in recession.
Also, I have some very unwise family members to whom I feel responsible. Yes I know it’s their choice that put them where they are, but I also know that I cannot and will not let them starve to death. And they’re bottom of the rung Americans too… poorly educated, impoverished overall, not the greatest of jobs (the first to be fired) and multiple children.
sigh.
shadenfreude is good only until reality hits IMO
Well put House Inspector.
Well put…
If worse comes to worse… we’ll joke about it in the bread lines.
Got popcorn?
Neil
Are you my “Uncle Bob” ?
Also, I have some very unwise family members to whom I feel responsible. Yes I know it’s their choice that put them where they are, but I also know that I cannot and will not let them starve to death. And they’re bottom of the rung Americans too… poorly educated, impoverished overall, not the greatest of jobs (the first to be fired) and multiple children.
Family members have made their choices - that said, nobody in my family should starve, of course, and the children who didn’t make those choices maybe need some real help from their uncle.
Your priorities are in good order, houseinspector.
I stay where I am, presently, because I do believe my company is recession proof (toxicology lab).
Me too… healthcare services to seniors.
One of my cousin’s is in a counter-cyclical industry.
He’s looking forward to the upcoming recession.
But his industry, insurance, thrives in recessions. Depression? Not a chance.
Got popcorn?
Neil
You’ll probably be very busy antidoting all the FBs who drink poison.
You bet, pain all around. Much pain depends on how rotten the whole thing is. I think it will be a nasty, deep, short-lived recession followed by a long sluggish period. Individual pain depends on how well you have planned.
If the feds try to prevent or ‘fix’ it, a recession could be a whole lot longer, but less deep. If the whole thing is rotten to the core (i.e., hedge funds and private equity crumble), who knows.
Still, you KNOW when the MSM has economists predicting a possibility of a recession, it’s a foregone conclusion. I’m betting on Q2 to Q3 2007…….OMG! It’s Q2 2007 now!
Lawyer working for the federal government - two years in job and there are people behind me. This department had over a 100 attorneys in the “good years.” With upcoming retirements we will be below 50 soon.
But I fear for my friends whose livelihood is dependent on hedge funds and the luxury car market.
As recently as a few months ago I was looking for a new job. Not any more. I’m thinking I’ll batten down the hatches and hang on until I’m laid off.
how do rising foreclosures jive with the greatest story never told? it’s along the lines of rich’s “great story ever sold.”
I doubt they dance at all.
“An unusually warm winter may have artificially supported construction employment” — this seems a lot more plausible than various past assertions blaming slow home sales on the weather.
That’s an excellent point!
I don’t doubt warm weather boosted short term construction employment.
That said… I’m certain its only going to compress the time frame upon which they lose their jobs.
I’m into schadenfreude… But I do hate to see people who actually earn their income thrown out. Yes, I am all for “creative distruction.” But this is going to be too much too fast.
Oh well.
Got popcorn?
Neil
“short term” - exactly
The weather in Cincinnati this year has been a tale of extreams. From Oct30-Dec 20 we were consistantly 20 deg below norm - very cold. Then from Dec 20-Jan 20 we were consistantly 20 deg above norm - good beather for working outside. Then Jan20-March 15 we were again consistantly 20deg belown norm again - down right frigid. Then 3 weeks of +20 deg, unbelievable weather. Yesturday turned cold again with snow, and will stay cold for the forseeable future.
We usually get 2-week cold spells, some relief for a week, then another cold spell. but this year its been all BAD for a long time, then all GREAT for a long period. Definitely some unusual affects on home building and home buying.
We just received a visit from a banking official here in my office (near Cincinnati) to let us know that a developer of several projects in the area just went under and that they were now owners of these projects. I can tell you that the rumblings of more problem developers are starting to grow. I am afraid this is only the beginning.
I bet also due to the large number of illegals in the construction industry I would take any such employment numbers with a big grain of salt. Many of the illegals are hired by sub-contractors or sub-sub contractors and the big builders probably does not even know how many workers are on site, they just know they paid for 10 foundations to be put in and they pay when the foundations are installed. How many workers are actually on site is not something they care about nor want to know about especially if they are illegal.
“With the dominoes of consumer debt and business caution lining up so neatly with the housing downturn, it becomes difficult to find a source of renewed economic vigor that might prevent the whole edifice from taking a spill. In short, the risk of contagion rises.”
Is he saying that Goldilocks might have the mumps?
And shes biting the pillow!
They keep talking about consumer spending that may sputter. May? I think it already has.
As compared to, say, 2005, I’ve noticed lower traffic in home improvement stores and appliance stores here in Tucson. I haven’t checked too many other places. (And that’s because Slim doesn’t ascribe to the “Shop ‘Til You Drop” philosophy.)
I’d be interested in hearing what other HBB-ers have to say on this topic.
I’m convinced that the “experts” either walk around with blinders on or let their hired help rub elbows with us “commoners.” I, too, have noticed the slumping customer traffic in stores, plus how much easier it is to find a parking place in town — things that the “experts” either don’t notice or don’t mention. Their opinions are beginning to mean less and less to me. In fact, I’m finding myself more and more doing and believing in the opposite in what they say.
“I, too, have noticed the slumping customer traffic in stores, plus how much easier it is to find a parking place in town — things that the “experts” either don’t notice or don’t mention”
Charlie Brown: “What happen to Sir Greenspent’s brown box index?”
Somebody mentioned coinstar being jammed up with coins and out of action here, a few days ago…
When I was at a supermarket, I saw 2 guys, with bags of change, coinstaring it up and I thought…
Could this bag of coins be my fellow citizens “savings plan”?
“I’m convinced that the “experts” either walk around with blinders on or let their hired help rub elbows with us “commoners.””
Yesterday, LALawyer’s comment suggested that an expert can’t speak the truth without committing professional suicide.
GF manages a home improvement/garden/hardware store. She got an annual bonuses for 2004 and 2005 equal to 50% of gross annual pay. She came home last night with her bonus for 2006 - 10% of gross annual pay. Bonuses are linked directly to sales.
“Bonuses are linked directly to sales.”
It’s Spring…they need promote itulips.
From one of the articles:
Optimists point to weekly claims for unemployment benefits, which have held at relatively contained levels, as a sign that the labor market remains firmly insulated from housing.
Yet others note that homebuilders are notorious for employing workers informally, making many contractors ineligible for jobless benefits.
Challenger Gray & Christmas, an employment research and outplacement firm, says that while the national job market had so far remained relatively well-shielded from housing, conditions within the sector itself were deteriorating.
The language of construction in California is Spanish, at least on the job site. The number of cash-only jobs is very high, and when these individual are let go, no one notices but Wal-Mart.
Its also Spanish here in Colorado
I thought that article was pretty good for MSM. People here have been discussing how useless the govt employment stats are, for the very reasons mentioned here once again. This was the first time I’ve seen MSM state this obvious fact the “experts” so conveniently ignore. Mike’s double whammy comments below are right on, IMO. This is going to get fugly for a long time.
No question about it. Consumer spending has dropped. I read a very interesting article concerning the changes in the US economy which have and are taking place.
As most know, the USA (and a few other western countries) started to change from “manufacturing economies” to “service oriented economies” a few years ago.
In other words, we increasingly have stopped making things but, instead, have started switching jobs from manufacturing (which includes cars, fridges, tv’s, computers, clothing, etc.) to importing those items from places where labor is cheap (asia and south america mainly) and servicing them by making repairs, maintainance and so on. However, there could be a serious flaw in these plans.
In order to keep the ball rolling, people must continue to BUY all this imported crap (um, products). We all know the strength of the US economy is the avid (some would say rabid) consumer BUT, if the consumer stops buying this crap (um, imported products) then the economy tanks because of unemployment. The Maytag tv ads might be funny with the service guy sitting around do nothing because the product doesn’t go wrong but in real life, the Maytag man would be fired if there’s no work.
It COULD be a double whammy. Make no mistake - the real estate market is toast for MANY years to come. Even if prices decline it’s probably going to be a slow process and in most cases prices will stagnate for many years. We can forget all the graphs and crystal ball gazing concerning property. Home ownership will only become viable again when incomes reach the point where mortgages can SAFELY be paid by the average Joe Sixpack and that’s a LONG way off. So far away at this point that it’s not worth contemplating. 5 or possible 10 years or even 15 before we are even close to an even keel. That means a lot of unemployment in a variety of jobs. Construction, real estate sales, mortgage and banking, to name just a few but it gets worse.
These new service oriented jobs do not pay anywhere near what some of the old manufacturing jobs paid AND most of the service oriented jobs have limited benefits. Throw into the mix health care costs and insurance and the diminishing influence of the USA around the world and even if one cuts the most dire forecast in half it STILL doesn’t look good. However, it isn’t going to happen overnight so don’t stock up on food and ammo just yet.
I totally agree. Circa 2001/2002 everything was about outsourcing jobs. Why make money building things when you can make paper money. I dare you to go into a Wall Mart or a Costco and go up and down the merchandise isles and read the country of origin tags. China, India, Tiawan, Japan, thou less of them, etc.
They make it. They have the factories and the workers and the suppliers and all the spin offs from that.
We import it. We have the WalMarts and the low paying retail jobs. We don’t even pay for our imports with cash, we buy everything on credit !
How is this sustainable.
Look at the last 2 bubbles - dot com and housing. Dot com was all about nothing ! Internet stuff, which was all ADVERTISING. Once again a paper product. The housing bubble was all about paper products too. There was no new technology invented in the housing bubble. We didn’t cure cancer or solve global warming or increase our productivity. We spent trillions of dollars (of money we didn’t have) trying to get rich by owning a house ! My God, am I the only one that sees how stupid that was ?
Oh, I’m not agreeing about the guns and ammo part. We’ll have a recession, but there isn’t going to be a problem keeping the peace.
You won’t need guns and ammo generally, but boy am I glad I don’t live in LA or Detroit or ?? when the rec-/depr-ession hits.
We’ll have a recession, but there isn’t going to be a problem keeping the peace.
Uh, Katrina??? Circumstances *will* be similar — severely limited government services, scared & hungry people, etc.
You are spot on. A classic example of a misallocation of scarce resources into an unproductive asset. Much like the Telecom bubble of the late 90’s. Only this time, instead of producing dark fiber optic cable, the economy produced dark condos.
It wasn’t a dot com bubble that was just the public part, the real money was in the telecom bubble which was about buying far, far too much real telecommunications infastructure (a decent portion of which was manufactured in the US) in most of the world. Also the telecom bubble lasted about 6 years (from the passage of the 1994 Telecom Act to 2000). Suddenly everyone with a right of way was laying fiber and planning to take 10% of AT&T’s business (the only problem was there were 20 of em).
Not only were there 20 of them, but AT&T is still in business. Oh, and long distance carriers are a dead business model, and was insanely profitable (as the marginal cost is 0 for each minute of each phone call). Carrying data is profitable too, but the deflation in the price per bit has not kept up with the inflation in the number of bits.
How’d you like that relation back to the housing bubble??
Michael, I can only speak about the telecom bubble as a consumer. In 92-93, I was paying several hundred a month in long distance calls to my family abroad. The cost was about 90 cents per minute and you didn’t have a choice. God, was I happy when I got a “deal” that brought it down to 75 cents a minute! Now I am paying exactly 2 cents a minute for my international calls (with a calling card) and I have thousands of choices. If I bothered to look, I might find something even cheaper. If I was a little more technologically savvy, I would use skype and talk for free. If the housing bubble ends up playing out half as severely, we are in for some truly interesting times.
The worst part is that at a macro level we are financing our nearly trillion dollar trade deficit by selling off our national wealth. After all, what are our trade “partners” supposed to do with their surplus dollars? They certainly aren’t buying any manufactured goods from us. They are buying:
Commerical real estate
Corporations
Stocks
Bonds
In other words, income generating assets. At some point (which some people believe is closer than most think) they will decide that they are over exposed with dollar based assets. When that happens they will demand to be paid in something other than US dollars. That’s when the poo-poo will hit the fan for the US. The dollar will collapse, and all that cheap junk in WalMart will suddenly no longer be so cheap. On the bright side it might actually be cost effective to make our own stuff again, but that transition will be long and painful.
…”am I the only one that sees how stupid that was ?”
No. This has kept we awake many a night over the past 2-3 years.
“They have the factories and the workers and the suppliers and all the spin offs from that.”
Exactly why the USA’s days of dominance are numbered unless we change dramatically.
Here is an interesting discussion on outsourcing.
http://it.slashdot.org/article.pl?sid=07/04/05/186235&from=rss
Note that a ways down the page someone brings up the point that American workers can’t live on foreign wages because of the high cost of living here, specifically… wait for it… HOUSING ! I think he has a point !
Its fine to say that a foreign worker can live earning $50 a day whereas an American needs $100 or more per day. It isn’t JUST that the American worker is greedy. He also has a much higher cost of living.
“My God, am I the only one that sees how stupid that was ?”
Oedipus did’t “see” with clarity until he blinded himself.
1990’s wasn’t exactly glorious for home prices and consumer spending did OK along with the economy
And the helloc wasn’t even in full bloom — even illegal in some states like Texas.
But people with mediocre incomes were not running out to buy $4000 TVs. I remember when buying a $1500 projection TV was a REALLY big deal. Unlike today when half the people you know has a TV the size of Kansas.
Here in the Omaha area, still very heavy traffic in home improvement stores on the weekends. But, traffic is slowing at other retail outlets - not as many parents buying their kids American Eagle and Abercrombie stuff.
Chad,
In my universe, if I’m trying to sell my home, I’m at the hardware store every weekend so I can fix it up and make it as presentable as possible. It’s a competition between me and the other houses on the block. I want to have the best product. Maybe that attitude can only last for so long.
But then again, no matter what house you live in. It’s falling apart somehow, somewhere.
In my universe, if I’m trying to sell my home, I’m at the hardware store every weekend so I can fix it up
Unless you are the woman I overheard talking (loudly) on her cell phone with her realtor the other day. She was saying “I can’t, I don’t have money to paint the house”.
I don’t spend much time at home improvement stores because I’m a renter, but I haven’t noticed big crowds at any retail other than grocery stores for quite awhile now. This past Christmas season didn’t seem as crazy as the two or three before it, either.
Costco continues to be packed.
Is it possible that Internet purchased goods have replaced some of this foot traffic? I know I purchase more items on-line then just 3 years agao. They typically cost less and since their are no mom and pop stores left in my area I don’t care which “Bigbox Mart” I purchase from.
No doubt about it here in OC. You can go into almost any resturaunt now on a Friday / Saturday night and not have a wait. The other night I commented to a hostess that it seems slow. She replied that it was like they shut the customers off a few months ago.
Robert Congel (the developer of the planned Destiny USA megamall) outside Syracuse has announced that he may be putting all his other retail establishments up for sale. He is, of course, committed to the completion Destiny.
I think that sales announcement speaks volumes about the expectations for retail. Is the inclusion of the word “may” in the announcement a trial balloon?
“dominoes of consumer debt and business caution lining up so neatly with the housing downturn”
High flying housing market -> massive consumer debt -> crash -> business caution -> more crash
The dominoes are not lining up by chance…they were causally connected. That’s why so many of us made PREDICTIONS of how this all would play out.
arroyogrande, You are right. And Gary Shilling was publishing the predictions in Forbes about 2.5 years ago. Of course Forbes always covers its @$$ by publishing lots of commentators with diametrically opposite points of view. What’s changed is that now the wider MSM gives something like equal time to the bears instead of only quoting real-estate agents.
It’s called unbiased journalism when opposing points of view are presented and I think Forbes does a pretty good job of it. One of the publications I actually have some respect for.
“I do not interview a liar to balance the truth.” -Edward R. Murrow
This is way easier than picking the final four or fantasy football.
Ryland makes some of the ugliest homes I have ever seen. You can tell from the street that they were made with the chepaest of materials. Their houses aren’t worth the cost of the material if you ask me.
Mal investments, one key part of bubbles. The finacial disaster won’t even leave behind decent dwellings to redeem it’s self.
In the early 90’s in the South Denver suburbs a lot of home owners were left bankrupt, not by a dropping market, but by bentonite and shoddy construction. Chimneys were falling off the sides of houses, foundations were cracking, paint was diluted with up to 50% water….
A lot of this new constrution may be well found to be substandard. Even if not poorly built, a lot of it is simply too large.
There’s a community of Ryland townhomes in my city close to a railroad. Out of 30 townhomes, maybe 5 are occupied. The development was finished about two years ago. The suckers who bought at the high are screwed. I bet Ryland has cut prices by at least 25%. The development is also close to a slum full of illegal immigrants.
Out of 30 townhomes, maybe 5 are occupied.
“Great selection still available”
The development was finished about two years ago.
“Classic construction”
The suckers who bought at the high are screwed
“Well established community”
The development is also close to a slum full of illegals
“Close to Metropolitan area”
So would one say that Ryland is Toast?
There was just a story on the local ABC affiliate in Dallas about abandoned and foreclosed million dollar homes being torched in Cedar Hill, a small southern surburb. Most of these million dollar homes were financed with subprime homes. The neighborhood is mostly vacant. It seems like a huge scam as the property prices increased by 50% over the past few years. Now half-built homes and foundation slabs are everywhere with empty and burnt out McMansions. I’m shocked that there could be million dollar homes in Cedar Hill. I wonder if the FBI will get involved or if they will blow it off as usual. I feel sorry for the people who actually bought there to live.
http://tinyurl.com/3dtdk6
“Troubles in the residential sector got so bad, the city of Garland, which is a Dallas suburb, authorized a condo development project that was interrupted by the collapsed market, be set on fire. Burning it to the ground seemed to be the best choice for the 240 unfinished condos that had become eyesores and safety hazards in the twinkle of a financial cycle’s eye.”
Richard W. Fisher, President of the Federal Reserve Bank of Dallas
April 4, 2007
Paper D has video of yesterday’s speech.
In Merced, CA. they’re starting to offer unfinished concrete slabs for sale, next to finished unsold homes. The contraction in full bloom.
RE: Merced.
No sh*t?! I knew that city, and the valley in general, was going to get pounded. I just didn’t think it would come this quickly. Do you know which builder/project? Man, must suck to have been a GF that bought and moved in there.
Better an unadorned slab for a neighbor than an abandoned makeout mansion for the local teens.
“This accounting change has opened up a one-time chance for banks and other financial companies to clean up their balance sheets, especially those saddled with investment losses stemming from the subprime mortgage crisis….”
Can someone please elaborate on these changes? Is this some kind of Voodoo accounting thingy or is it legitimate?
Just reading the link in Ben’s post, it looks like a way for banks to hide their losses by charging them against the principal value of the bank rather than its current income. Thus, BofA and Citigroup and so forth will probably still report “record earnings” even if they are taking it on the chin a/c subprime defaults etc.
I hope they report those record profits to the tax authorities.
I think we may have a situation in which profits reported to shareholders are radically different than those reported for corporate income tax purposes. As in the late 1990s. Back then I knew they were either cheating the shareholders or cheating the government. They did both, as it turns out, but much more of the former than the latter!
Ah FAS 157 & FAS 159, these are the twin fixes to FAS 133. All of these changes result from the era when accounting was developed (14th century Italy) with little shops that sold goods that didn’t often change in price. A moden financial institution looks very little like those (and 90% of their balance sheet requires about 20 minutes with a bloomberg terminal to find the value this instant).
For the last several years FASB has been trying to bring the differences between book value and market value together. FAS 133 was an early attempt at that. The rules for establishing a hedge are very strict (in an attempt to prevent traders from accumulating losing positions and then calling them “a hedge” the rules were too strict though (legitimate hedges like a US company’s bond written in Yen and a Currency Swap aren’t allowed (you’d need two separate swaps to qualify) and if you had two issuances but one swap it’s not a hedge either. If you own mortgages and have swaptions (think puts on interest rates) for prepayment hedging, those aren’t allowed either.
To fix this the new rule allows companies to account for all transactions at fair value (meaning the change in the value of the instrument would run directly through earnings). But to make the transition, there has to be some method of dealing with transactions that occured in the past. The rule allows companies to choose which instruments will be fair valued at implementation, but once elected then they can’t be changed again. It’s likely that managements will elect to fair value a number of instruments that are worth more than book, which will provide a one time boost of equity (the election doesn’t flow into the period net income when the election is made, but it does get added to retained earnings). This boost could potentially be quite large.
I followed all of that–somewhere my Accounting professor is smiling. But as I noted below, I suspect that many of the banks will simply choose to hold loans, even loans that they know have gone bad, at book value–which, for mortgages, could be based off the latest appraisal (2005 vintage, of course.) That allows the bank to hide the real extent of losses on the loan, which may be considerable.
I’m sure there are rules that govern handling of bad loans, that are designed specifically to prevent that kind of hiding of losses, but I’m just as sure that there are plenty of ways around of those rules, and that banks will be exploring all of them.
I’ve been wondering for some time now what the big banks’ exposure to bad loans, and sub-prime mortgages in particular, has been, but I think we may not find out for quite some time yet.
If once they’re 90 days late you pretty much have to book them as defaulted. It’s a lot harder to get a fair reflection of a CDO (say an A tranche) that hasn’t had any payment defaults but isn’t trading for something near that in the market place.
Almost every bank I’ve ever looked at publishes some schedule of loans that are past due, but the details vary.
bluto,
Thanks, for that excellent explantion…
“But to make the transition, there has to be some method of dealing with transactions that occurred in the past. The rule allows companies to choose which instruments will be fair valued at implementation, but once elected then they can’t be changed again.”
This assumes that “corporations” stick to the rules…any evidence that this is exploited in the… real real world?
“It’s hard to argue against cynics — they always sound smarter than optimists because they have so much evidence on their side.” Molly Ivins
Well considering that you were given a golden ticket to cherry pick the good stuff in this rule, I’d think that most places will probably follow it.
In the future it would be pretty easy for an auditor/examiner to notice that a bank wasn’t adjusting the value of a 10 year vanilla swap eventhough swap rates fell 50 bp last year.
bluto,
It was the words “to make the transition” that hit me…it always seems like their is a period of “lag time” between…implementing rule changes…exploiting rule changes…and getting around to law of “unintended consequences” farther on down the road.
Of course there will be plenty of unintended consequences, this is really a fix for a pretty major one in FAS 133 (the last time FASB tried to align market and book).
Thanks for the effort bluto, but I followed almost none of that. I THINK what you said was that because of this new rule, companies taking losses in MBS can (this once) count these losses against their assets rather than their income stream. That lets them keep impressive earnings statements even though they are having big losses. In this way, shareholders are suckered into continuing to pay premium dollar for the company’s stock. But doesn’t this make the company more rickety in the long run? Or do I have it all bass-ackwards here?
What is this language you financial people speak? It seems to use English words but they are arranged in such a fashion as to completely leach meaning from the sentences for me.
Seems like voodoo to me. But, just ONE method of “BAILOUT”. IMO. And you know that if the term “one time” is used, it is total BS, designed to keep the balance sheet look good to investors, so that the stock price can stay sky high! See, killing two birds with one stone. Bailout corporations, and keep the stock market hunky dory.
It’s not a bailout, but it does have the effect of allowing banks to engineer their numbers. The effect will be to allow them to hide the full extent of their losses. A bailout would help keep the banks in good shape (albeit at tremendous expense to the taxpayer); what’s happening now is that we don’t know the full extent of the damage, and won’t know, until one day a major bank announces that they have run out of cash.
I think it may be a bit naive to think that the Fortune 500 are not already “engineering” the numbers.
Taxes and Reporting are like the buffalo herd running across the plain, nobody wants to be the white buffalo, then you stand out from the herd… So, the leaders in each industry set the tone, and the rest of the “herd” follows suit…
As long as they all look the same, nobody can find the white buffalo
LMAO,
“like the buffalo herd running across the plain…”
Why does my mind see: “Stampede!” & alot of choking dust
The problem is that modern companies usually pass insolvency long before they run out of credit to pay their immediate bills. At some level, the reason for bank examiners it to be able to shutter the bank when they become insolvent, not a half billion hole in the ground. In exchange for the insurance from the FDIC they put up with tighter regulation than regular companies.
I’m not sure how much they’ll take advantage of it. If they use the rule, it’ll hurt their capital, which won’t affect earnings, but it will still be noticed. If, on the other hand, they simply “assume” that the loans remain at book value, they don’t have to show an immediate loss of any kind that even investment analysts will notice.
I suspect that that’s what many of the investment banks will do–soak up the loans and keep them on the books at face value despite the fact that they know they’ve gone bad. That’s precisely what happened in Japan, where banks kept bad commercial loans on the books as “assets”, rather than admit that they were losses. The losses only show up very slowly in abnormally low interest income, over months and years instead of all at once.
If that happens, it will be just another way the financial sector will be trying to do everything in its power to keep up appearances and stave off the inevitable.
The key part of the fair value rule is that you get to go through your balance sheet and pick which instruments you want to fair value (even if you want to pick one instrument but not the others in the same class). You have to disclose why you picked to fair value the instruments you selected and you have to present the gains you made on the fair valued items, but everyone knows that no one reads the foot notes that closely. This is where the potential exists to write up the value of things that are more valuable than when you bought them (which doesn’t happen very often in accounting).
http://online.wsj.com/public/resources/documents/info-flash07.html?project=housingInv07-0407&w=750&h=540&ch=111111111111111111111
What can I say
http://news.yahoo.com/s/nm/20070405/bs_nm/newcentury_dc;_ylt=AnSr.IVjKttei7wxDQ.q2pG573QA
Fresh capital extended to a bankrupt borrower to help this bankrupt borrower create additional future bankrupt borrowers?
Ah, the debt spiral. God bless our new nation, Subprimerica !
rvine, California-based New Century had lined up financing commitments from CIT Group Inc. (NYSE:CIT - news) and Royal Bank of Scotland Group Plc’s (RBS.L) Greenwich Capital Financial Products Inc. unit prior to its April 2 bankruptcy filing.
Suckers!!!!
Nope. They’ll be first in line at the pay window when a plan is proposed and confirmed. The suckers are the ones who lent the company money prior to bankruptcy.
“The company collapsed amid rising homeowner defaults and many regulatory investigations.”
Failure had nothing to do with the “Business model” or being “professionally managed”
“It looks to me like the economy is deteriorating”
Yep, the HELOCS from hell have one minor flaw - they need to be paid back.
You guys are way to down on the illegals. All the illegals I know are more productive than most of the people I grew up with. They work hard as heck and send money home to family.
I hear about crime and stuff like that but the vast majority of these guys just show up and work, don’t complain and live within their means.
Hate seeing the BS mexican nationalists waving their flags in our streets. However, I’m not all about kicking them to the curb because they were not born here.
I look at it like this… If you really didn’t want them here then close the border. Period.
If they are infringing on private property or some other crap then kick them out (homeless camps in the OC/SD/SB).
Let me shar esomething with you. I lived 12 years in Mexico City. Mexicans are taught in school that the US stole the SW from Mexico and that it is still legitimately Mexican land. I read Mexican newspapers online and the pundits down there believe that the Reconquista is the way to go. As one pundit said a few years ago: “With all due respect to Uncle Sam, Los Angeles has always belonged to us.”
Also, while it is true that most illegals work hard, there are still many downsides to their presence:
They drive down wages
They seldom pay taxes but consume public services: medical care, public education for their kids, etc. In many parts of the country they even can collect food stamps and live in taxpayer subsidized housing.
You got that right. Call me a bigot if you want, but I see no positives to their presence here.
I think the employers are the problem. It seems that 30 years ago they were stuck working in the fields, which was seasonable employment that Americans really didn’t want to do. But now they do jobs that used to pay pretty well in janitorial, construction, restaurants, etc. And don’t get me started on the idiots who hire them individually to care for their kids, their elders, their homes, and their yards! If Americans really wanted to, we could stop the problem.
BTW, the Mexican press was thrilled when Villaraigosa won in LA. I expect they will do cartwheels wheel Ahnold’s hispanic successor is inaugurated some day in the furturw.
All the illegals I know have little or no education, work at low paying jobs that produce little of value and consume more taxpayer money than the taxes they pay.
The only people of value to a society are those who are well educated, with high degrees of technical, medical and scientific knowledge and skills.
Illegals have a negative impact on America. They produce crime and poverty and have zero desire to learn any skill beyond starting a leafblower.
People who are here against our immigration laws must be deported. They can apply for legal status, wait their turn and in the mean time they can obtain an education and learn English. Once they prove to me that they are of value and wish to be productive citizens of the U.S I will welcome them.
Clearview, you are testifying today! Right on!
I must say Im usually on the bandwagon round these parts, but I think you guys might have forgotten whose supposed to occupy these houses that are empty…. the immigrants are taking over, and I mean, from the yard mowed to the goods shipped and received…..
immigration isnt going to stop, its going to increase… so get ready. They can build a wall spanning Texas to California and it aint gonna stem the tide.
you best get your habla straight right quick, cuz the horde they are a comin, and by god they need housing.
you best get your habla straight right quick
No they need to get their English straight right quick.
The other day I was biatching to a store clerk about their store now attempting to teach its customers spanish, so we customers can now communicate with the new batch of illegals the store just hired. The little girl told me “It’s great to learn new things, especially languages!” I replied that I speak three languages fluently and I didn’t need her to lecture me on the joys of being multilingual. I then proceeded to ask her if it’s such a great thing to learn new languages, why can’t their new staff learn how to speak ingles?
If the economy goes into recession, no one will be needing illegals…folks will return to mowing their own lawns, etc.
Tho it would be poetic justice if some illegals moved into some shoddy housing built by illegals and it collapsed on them.
Clearview,
How is it that you know “all” these illegals? They wouldn’t by chance be the people that cut your lawn, clean your house or watch your kids?
I’m sure there are plenty of US citizens who refuse to work, living on welfare and drain social services. How do you value them as individuals?
Tell me this, if you were getting your house painted and received 3 different bids (assuming all same quality of work), 2 came in at $5K and 1 bid came in at $4K which you suspect would be painted by illegals, which bid would you take? If you really would pay the $5K then I believe you are in the small minority (no pun intended).
There are many levels of labor in our economy and illegals will dominate the lower end. And until people (read Corporations) are willing to ALWAYS pay the extra $1,000 to get their houses painted, illegals will not be leaving anytime soon.
I paint my own f#cking house. I don’t need anyone to clean or cook or paint for me.
I need someone to fix my swollen knee. No fricken border jumper is going to do that. I’m going to a well educated doctor, who I can promise you obtained his medical degree from a good med school here in the U.S.
Okay, so it’s been established that Clearview consumes absolutely nothing that has been touched by illegals, good for you.
My point is they don’t come here for the weather, it’s because at some level, there will be work ($) available to them that is unavailable back home, wherever home may be. That labor then goes up the chain until it is consumed either by products or services. Unless someone lives in a cave, I believe they are part of that chain.
I’m sure there are plenty of US citizens who refuse to work, living on welfare and drain social services.
You’ve just made a case for why we don’t need foreign citizens crashing our borders to leach some more.
“illegals will not be leaving anytime soon. ”
Don’t be too sure. They will be leaving Oklahoma, which is about to pass the toughest anti-illegal alien bill in the country.
Fed up with inaction from the feds, the states are now moving to clean up the illegal mess.
“The only people of value to a society are those who are well educated, with high degrees of technical, medical and scientific knowledge and skills.”
Who installs the brake pads on your Lexus?
“Who installs the brake pads on your Lexus?”
I don’t have a Lexus, but whoever installs the brake pads on my paid-for beater of a car, I hope it is someone who has a high degree of technical skill in automotive repair. The shop I go to is all American good old boys and they’ve been doing right by me for years. I’ve seen some of the work that the illegals have been doing on houses around here. God help us, I don’t want them touching my car.
My husband had his tires rotated on his work vehicle. When driving back to the office, one fell off and rolled past him on the highway. It wasn’t the first time the US born, local kid had made a major mistake according to others in my husband’s office, yet he still has his job. An example of pride in workmanship in America, by Americans.
I do my own automobile repair, since I own a repair shop, went to a technical high school (Don Bosco Tech in Rosemead), obtained a FAA Airframe and Powerplant certificate from Northrop Rice University in Los Angeles and have over 30 years experience in automotive and aircraft maintenance.
If you want to trust your brakes to some unskilled nitwit that’s up to you.
O.K., you got me…now for the low income family with no mechanical qualifications…can they have trust in the $49.95 brake coupon job at the local muffler shop?
To hwy50ina49dodge,
They can bring their car to me. I will use original equipment brake parts and keep the costs to a reasonable amount.
Or they can go to Midas and have their brakes fail going down the Grapevine.
LMAO… Yes, I have to ask you, since I go both ways over the Grapevine x3 a month..how come my “lifetime” brake pads always wear out?
There is no difference between manual work and mental work. They are both still “work”.
Over 50% of the real millionaires (not bogus real estate goofballs) have no college education.
“Imagination is more important than knowledge.”
Albert Einstein
“The only people of value to a society are those who are well educated, with high degrees of technical, medical and scientific knowledge and skills.”
Jeeze, Clearview, I hope you don’t really mean that you measure people’s value by their education and skills alone.
I judge people by how hard they try to be of value to society. There is no excuse for anyone not to obtain a tremendous level of skill in some advanced field of endeavor. All people have to do is apply themselves.
I have no respect for, nor do I care about, a man who’s learning curve ends at the handle of a weedwacker. I do not want that type of person immigrating into my country.
Exactly. People need to have some pride and try to excel at something. For example, my mother never had a job after she married my father, nor an education, but she was a great gardener, homemaker, and a loving mom. She never wastes a day, even now that she is elderly. Thing is, I’ll bet that a lot of the illegals have incredible skills and work incredibly hard. I bear them much less ill will than the people who hire them. If we instituted proper penalties for hiring illegals, we wouldn’t need to build a fence.
I live in Santa Barbara. I’m surrounded by thousands of illegals. I know these people.
The vast majority of illegals have zero desire, and I mean none what so ever, to obtain any kind of higher education. They could try to become knowledgeable in enginnering, medicine, computers, business. But they don’t care. They could not even be bothered to learn English.
These people will bust their asses digging ditches 12 hours a day, but will not, ever, spend even 2 hours a week taking an English class, or a math class, or do anything that involves discipline.
This country does not need unskilled labor. We need technically skilled and highly educated people. Illegals do not have “incredible skills” as you put it. They have strong backs and weak minds. They are not born like that, they choose to be that way. And I don’t want them here until they change their attitudes.
However, I’m not all about kicking them to the curb because they were not born here.
I’m not either. There’s a lot of people living here legally that weren’t born here.
I’m for kicking them to the curb because they broke our laws by entering without legal authorization.
I want them gone, because they have no right to be here.
They broke the law, they’re criminals, round ‘em up and deport them. Add hefty fines and jail time to anyone who hires an illegal.
And, let’s lose the 14th amendment…Who needs mexicans dropping babies here so they can suck up every government benefit possible.
I think the job market is poised for a housing-related slowdown too, but for different reasons than the ones I usually see here. I think a high number of people stretched to buy, started a family, and then figured they’d return to work once the youngest one starts school. This is the plan for many young families I know.
It’s the plan for many out here in No Ca. Babies became the next fashion accessory, right up there with little dogs. Everyone was having them as they were another way to compete with so and so down the block.
I hadn’t considered all the SAHM coming back into the workforce since being or having a SAHM was the new throphy thing. I think that J6P will need the little lady back at work to keep up with the mortgage adjustments. Ouch
I don’t know, Gwynster. There won’t be much disposable income available for yoga instructors by next year.
Cancellations down! Wow such a bargain, not!
http://biz.yahoo.com/ap/070405/ryland_group_mover.html?.v=1
I think they should’ve started this fine analysis with:
“And we just want to.. [ clap ] Pump.. you up!”
“‘About 5 to 10 percent of people who could have gotten loans four weeks ago could not get them today,’ said Bob Walters, chief economist for Quicken Loans. ‘They probably won’t be able to get financing in the near future and by near future I mean the next couple of years.’”
They should have never got the loans in the first place u dope!
These morons need to rent becausue it is much cheaper and they can afford it.
I would be suprised if its only 5 or 10 percent.
Wow! This sounds like a really bad combination:
An unusually warm winter may have artificially supported construction employment
Yet I’ve heard really bad weather conditions kept buyers home.
We all know about the fewer buyers and rising inventories. But how many here predicted the good-bad/bad-good weather scenario?
“due to [insert BS] the market may be experiencing {insert short/long] term [insert negative/postive] impacts in the [insert industry classification]
The risk of contagion rises
This makes it sound like a sickness. If we had taken our lumps after the dot.com bust we would not have been in this position. A recession is all that’s going to flush all the excesses out of the system. But now we have 2 times the amount of toxins to remove.
Here’s a couple of questions for some of the posters here who know a lot about bankruptcies and foreclosures. Reading the article, it looks like these two areas are going to be booming for the forseeable future.
If someone wanted to try a career change and move into either of these areas, what sort of training would be required? If you’re not an attorney or accountant, but were computer literate and worked well with the public, what type of work could you do? Would it provide a decent salary?
Inquiring minds want to know…..
You can take one of those BS paralegal courses, then your state’s “certification” in bankruptcy or real estate and you’re good to go. It won’t take long. If you are in TX, let me know and I can maybe call a few people.
Go to Monster.com. Enter “foreclosure” or “loss mitigation”. Enter your area. Click Search.
I did that today for my neice in the DFW area. She worked for Countrywide, then Saxon and now needs a job. I think she knows enough about how the mortgage biz works to learn to take care of the mess.
And this is a growth industry…
“And this is a growth industry”
This helps America feel warm & fuzzy inside.
REO-owned asset protection services — privide quick and reliable “securing” of foreclosed properties, maintenance (grass cutting, getting rid of piles of papers/mail, cleaning/cosmetic/paint where needed, and liaison with real estate folks to make sure property shows well and is well-secured.
Whatever else happens - there are going to be more of these assests out there to be maintained and protected for a year or two. Not “easy” work — but, it is something that someone with some hustle and willingness to work hard could do well with, I think.
You could probably hire a few illegals to assist and keep your expenses down
“Whatever else happens - there are going to be more of these assests out there to be maintained and protected for a year or two. ”
This was an interesting concept to me because foreclosed homes in this area, as far as I have observed, are left to sit and rot.
Yes, but imagine having conversations like this all day.
http://www.iamfacingforeclosure.com/196/negotiating-cashcall-and-lenders/
I’d do it for well into the 6 figures, I guess.
Looks like the civil rights groups are looking for a new excuse to exist.
From “BNA Daily Report for Executives,” 5 Apr 07, p. A-13.
“Housing Advocates, Civil Rights Group Seek Subprime Mortgage Foreclosure Moratorium”
A coalition of housing advocates and civil rights organizations April 4 called for a six-month moratorium on certain subprime mortgage foreclosures to give time for delinquent borrowers to work out affordable arrangements with their lenders….
Wade Henderson, president and CEO of the Leadership Conference on Civil Rights, said the groups were “calling on mortgage lenders, home servicers, and loan investors to institute an immediate six-month moratorium on certain subprime home foreclosures. The six months will be a time for the industry to work with groups such as those here and many others to establish benchmarks and to set long-term goals for easing the foreclosure crisis and to assist borrowers.”…
“What we’re asking the lenders and servicers to do is to engage in negotiations, to develop products that would allow the loans to be repaid in a timely manner,” Henderson said….
Shanna Smith, president and CEO of the National Fair Housing Alliance, said the groups would seek to use civil rights and consumer laws, as well as congressional pressure and grass-roots advocacy to urge the industry to support the moratorium…
Smith said the industry should introduce new products that allow a reduction in interest rates and to work with investors who may be willing to accept a lower return in order to help prevent borrowers from losing their homes….
The organizations calling for the six-month moratorium include the Center for Responsible Lending, National Fair Housing Alliance, National Council of La Raza, NAACP, and Leadership Conference on Civil Rights….
how come i can’t get a reduction in interest rate and payment amounts too?
This is getting riduculous…where the hell were Jesse and Al when people were taking out 600,000 dollar loans to buy a house with a 40,000 salary
> where the hell were Jesse and Al when people were taking out 600,000 dollar loans to buy a house with a 40,000 salary
Just where they always are - looking for a cut.
“Center for Responsible Lending, National Fair Housing Alliance, National Council of La Raza, NAACP, and Leadership Conference on Civil Rights….”
All the usual suspects lining up for handouts again. Give a deadbeat a handout, and they will spend their lives looking for handouts.
“to work with investors who may be willing to accept a lower return in order to help prevent borrowers from losing their homes….”
Good luck with that. Let’s see, prudent investor decides to save deadbeat FB because…why? Prudent investor would much rather see unfettered market cleanse itself, while investor’s money stays safely on the sidelines. Then when all the weak hands have been knocked out, consider buying for pennies on the dollar. That’s what makes a prudent investor prudent.
Business is business, and charity is charity.
subprime white people should get those breaks too!
If any white person receives $1 of it, they’ll all scream racism, and the MSM will back them up.
I took a look at ml-implode.com again today and I got a question: what’s with Wells Fargo?
It is a #1 subprime lender, yet its price is near all time high. In addition, skimming through their latest 10-K I discovered they hold $64 bil in junior lien mortgages (!?!), which exceeds their first-lien residential mortgages of $57 bil. The have total loans of $306 bil, so their junior-lien residentials are more than 1/5th of the total mortgage amount.
This does not look good, but evidently, “investors” disagree with me at this point.
And more — $24bil of those seconds are in CA.
But here in Cali, RE only goes up, so those junior liens are perfectly safe.
Bubblewatcher, I’m uneasy about Wells Fargo &Co. too. In fact, some time ago the LA Times ran a story on how WF was snapping up the subprime business and I believe that is one of the things that alerted me and sent me looking for more info online, where I stumbled on Ben’s blog. Wells Fargo and Citibank make me very, very uneasy.
“‘It’s going to get worse,’ said economist Richard DeKaser. ‘Whether delinquencies, foreclosures, what have you, there will be further bad news as the year plays on.’”
“what have you” = falling prices…