Bits Bucket And Craigslist Finds For May 7, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Gotta read this one…
http://seattletimes.nwsource.com/html/businesstechnology/2003696532_loan07.html
They shouln’t even be called loans. Just Free temporary money allotments. Loan would imply repayment.
Fools Gold Mortgage Lending, or…
“Pyrite Lending”
“For my clients, that is a deal killer,” Mills said. “My clients don’t have any money.”
Ok, so what in gods name are they doing buying a f’n house.
“”We didn’t do anything wrong,” Mills said of her firm. “She quit her job and now they can’t make their payments. Well, I didn’t make mine this month, either. How do you help someone like that? I wish I could help myself.”"
Beautiful! Blind leading the blind.
“It can all work, as long as nothing goes wrong, such as an illness or job loss, and if the house keeps appreciating in value. That way, even though the debt is actually growing, the home’s value grows faster, so the borrowers can still come out ahead when they sell. ”
Nicely put - just as long as the stars align every night, we’re fine. I think mortgage lending is becomming similar to craps. Big pay off as long as you’re hot.
That comment about it all working “as long as nothing goes wrong” really sums it up nicely. For the past 15 or so years, Americans have been behaving and making financial decisions as if nothing will ever go wrong. Well, the rainy day has arrived, and we’re finding out that few people have made any preparations.
BubbleViewer, that has been my point all along! This is the “new economy,” with outsourcing making 40 year careers history. Pensions are about dried up and being replaced by 401ks. This nation has been in denial for at least 15 years, true! Since the mid-1990s I have given up a lot of material possessions and focused on building wealth in equities, government bonds, cash, corporate bonds, and precious metals. I accept full responsibility for my investment decisions. I made some good ones and some bad ones, but learned quite a bit. i feel bad for my siblings because every so often they ask me for advice on 401ks, I give it to them, but they do not understand it, nor do they take the advice. They don’t save. This has been going on for more than ten years now. Their apartments are cluttered with nick nacks. My apartment is simple and uncluttered. You mostly see floor!
Its amazing how so many people just don’t “get it” regarding retirement. They have no clue on how much they need to save to retire. And many of these are people with college degrees and ample income. A former coworker (at a previpus job) went out and leased a super expensive car. I asked her how much she was saving into her 401(k). Nothing, she said, she doesn’t believe in them. This being Colorado, I wonder where she expects her nest egg to come from? The house appreciation fairy skipped us, and her mid 200K house is still worth mid 200K, so it not coming from there. I guess that she and her husband (he’s even worse about having expensive toys) will work until they drop dead.
Housing’s hyper appreciation here came in late 90’s with the telecom boom/debacle. And never came down. Don’t believe we aren’t in for a correction. Just like bandwidth, housing is going to come down here. Rocky Mtn. High, Colorado!
There have been pockets of appreciation in Colorado (especially in the Ski resorts), but at least here in Larimer county prices are about the same as in 2001. The median has gone up, but thats due to bigger new houses pulling up the median, not appreciation. Entry level houses are still in the high 100’s out here, about the same as 6 years ago.
We have not had California style appreciation out here. Houses have not doubled in price. No 500K entry level houses (except in Aspen and Vail).
Agreed on Larimer Co.. I love Ft. Collins, sure hope it can keep employment up long term to keep up with housing. However, I’ve seen 10% a year in some neighborhoods in Denver in 2004 & 2005. Golfed this weekend with a Title Closer who I have known for years and trust, she said last year and before she was doing 50 to 60 a month. This year, a good month is 20. Lack of appreciation, is not an immunity pill. and I don’t think California migration here is going to bail us out. Heard that one again over the weekend.
In Colorado, I second everything you said about Colorado’s lack of sky rocketing appreciation.
I too think that we will see some price declines (like those overpriced Denver Squares). Residential construction in Loveland and Fort Collins has come to a standstill. Even yuppie Windsor has slowed down. The big builders have pretty much pulled out leaving the mom and pops, most of who are avoiding building spec homes like the plague.
I love Ft. Collins, sure hope it can keep employment up long term to keep up with housing.
Don’t we all
HP’s Loveland Campus (now Agilent’s Campus) is a ghost town, and the ocuppy only part of their old Ft Collins campus. The hemorraghing appears to have stopped, and I doubt that the thousands of tech jobs that were lost in Larimer County will ever be replaced.
If Colorado has not appreciated over the last 6 years plus, why have we been at or near the top in foreclosures? The only thing I can think of is lack of employment and individuals juggling big time debt. I understand the lower end of the market hypothesis, but doesn’t that spread up from there? I headhunt in Denver, and from what I have seen, companies are underpaying here and not relocating in right now. Been that way since 2001. I know we are not FL, CA, DC, NY (thank the heavens) but I have to believe there is some sort of price correction coming here. No?
In Greeley its because they were selling 200K houses to people making $10/hr using NINJA loans.
I would also attribute it to an anemic job market.
I’m not saying Colorado isn’t overpriced. It is. Using traditional rules it takes 60K income to afford a 180K starter home. Problem is that the average and media wages are not there. Entry level houses should cost 120K at most. So I do see some price reductions in the future, just nothing as drastic as in the really bubblicious markets. Also, I do not expect a “California rescue”. It didn’t happen during Cali’s bubble, and won’t happen now (heck, even equity refugees need jobs).
Median prices won’t be dropping by 300k because the median is far less than 300K.
FWIW, I don’t think that high appreciation is needed for people to get in over their heads. A couple that should have stuck with a 200K house could have easily bought a 350K McMansion in Colorado with a toxic loan. I get junk mail every day from local peddlers of toxic loans.
I think retirement planning is pretty hard for most people.
You have so many things going against you. It’s not natural to plan for your retirement; it’s hard for humans to think long-term and delay gratification. I think this problem is particularly acute in the US. If you can get past yourself, you have a lot of choices to make in front of you with a lot of folks eager to separate you from your money. And then if you can get past others, you have things like career volatility which can toss your plans aside if you don’t have the liquidity to ride it out. There are so many ways to get derailed.
Housing historically has been a good savings vehicle for many because it’s a forced savings plan. It was hard to take money out of your home, and you had a regular schedule of putting money in it. It taught you to save for the downpayment; it encouraged further saving after you got in the groove. Buying a home was like training wheels for financial planning for many.
Today, financial planning is more like riding a unicycle. A small % can do it quickly like most of the folks here on this blog. But a lot of people look at it, fall a bunch of times, and figure why bother.
I can beat them up for not sticking with it as it’s something that can be learned by most. But at the same time, it seems like the barriers to entry for getting on the right path are getting higher and higher.
I wish that when I was young that someone had told me: Save 10% of your income in mutual funds. Had this been so, I would be able to retire right now. I have already been teeling this to my kids: When you get your first real job resist the urge to buy an expensive, cool car (like most of your friends will) and save at least 10% of your income. If your employer has a matching 401(k), do it! I tell them that when they are in their 40’s they will be so glad they did this, plus they will lots of fun at cocktain parties telling people that they already have hundreds of thousands stashed away in very LIQUID investments that can be turned into cash with a simple phone call.
Good for you! Lots of parents don’t bother with really beating…er…teaching fiscal responsibility to their kids. Schools from high school to college or graduate school don’t help out with the education process either which I’ve always found odd.
The earlier they start, the easier saving is because of compounding. Everyone knows that. BUT, almost as important is that if they do something stupid with their money investing-wise, they have decades to recover.
And the lessons you learn with doing something stupid with a little bit of money can pay off big after you have a lot more money. You definitely don’t want your big mistakes to come AFTER you have a good chunk of change.
Roger-Good craps analogy. At a hot craps table, even the sucker bets like the Field and the hard numbers do well!
Oh my. My mind is spinning so fast on this one, I can’t even comment.
My nomination for the dumbest people ever. Even dumber than Darwin Award winners.
A real gem there, wmbz!
“You basically had to be Scot free, no massive credit debt, which we had, and to have money in the bank, which we didn’t,” said Swartz, 31. “How do people buy houses in America anymore?”
The way your parents did, moron. By saving, sacrificing, doing without, practicing financial restraint and discipline, until you HAVE a downpayment and savings, and DON’T HAVE credit card debt for things you don’t need and can’t afford.
This couple are without a doubt the most compelling argument to date for a resumption of court-ordered sterilizations.
You mean buying a motorcycle with a credit card wasn’t a good idea?
yeah, what’s the problem anyway
Was it a Harley?
That would be nice, but since we are a somewhat civilized nation, that probably isn’t an option. Instead, we could reign in our laissez-faire system. But that would require implementing regulations and only a communist would want to do such a thing.
I hate to be a Chicken Little, but man, I have a really bad feeling our economy is about to collapse.
To be fair, my folks bought their first house in SoCal in the 60’s with a low down FHA loan. Of course the house only cost 20K, which was 2x my dad’s income (he was a tool and die maker, pretty well paid), and they had no consumer debt when they bought the house. They had 1 car, 7 years old and paid for.
These are the idiots people like me have to compete with for a house? I has thought for years that I must be such a loser that I couldn’t afford even a starter house because everyone but me was making millions. This crap burns me up.
I understand people are squeezed by economic conditions the past 20 years - we all have. But 20k in credit card debt? That completely blows my mind. These people are a paycheck away from going BK and they want a bank to trust them with 200k loan?
I have though **
thought * F… it I need coffee
Gwynster,
You’ve touched upon the psychological impact of this real estate insanity. It affected me personally. An ex-girlfriend (thankfully she’s an ex) panicked constantly about that fact that she wouldn’t be able to afford a home. I told her that she’ll be fine, considered she was about to graduate from MIT with a Master’s degree. I said, if you won’t be able to afford a home, nobody will. I had to deal with this crap constantly. This was the summer of 2005, and I told her it was a bubble, but she wouldn’t believe me.
“my folks bought their first house in SoCal in the 60’s ”
my parents did the same thing and we sold in oct. 05. this house faces the ocean. anybody want to guess what the realtor made for all his hard work?
Dan:
Did she end up buying something?
nova,
I have no idea. We broke while she was still in school. My best guess is that she hasn’t purchased a place. But she has probably continued to think she is somehow inferior because she’s a lowly renter.
repeating the same thing: these folks bet up the prices, and in doing so, priced me out. So, in the current situation they get zero compassion from my side, because they cheated me from buying a house at a reasonable price. They fully deserve it, sorry to say…
You are thinking right up my alley!
Bravo!
Associate left work early because his debit card stopped working. It somehow occurred to him that this might just possibly mean that his checking account was over drawn.
This is someone who has been laid off from steady paid work for over 4 months, and apparently doesn’t know exactly how many pennies he has left. This is mind boggling to me.
Some people just should not be allowed to breed.
If there’s one good thing I can say for the couple, at least they accept blame for the situation. In all these FB articles, it’s always everyone else’s fault… like the universe is an endless pity machine for Mr and Ms FB.
But these two, they take the blame. They seem to subscribe more to the “universe is a big ball of cotton” mentality, where mistakes happen and landings are soft. The real question is why don’t they sell? In seattle it’s still possible to get out before the tide turns.
They seem to subscribe more to the “universe is a big ball of cotton” mentality, where mistakes happen and landings are soft.
Why no? It always works for Homer Simpson
The pullback has cratered the business model for brokers like Mills. She used to write 10 to 15 loans a month. In March, she wrote two. In February? None.
“I didn’t make my own mortgage payment this month,” Mills said in April. “But nobody feels sorry for me.”
Gotta lov the gall of these blood suckers!
Front page story in the WaPo on the innerworking os New Century http://www.washingtonpost.com/wp-dyn/content/article/2007/05/06/AR2007050601402.html?hpid=topnews
wow
It’s a good article, but I can’t believe they didn’t get more good, specific stories — when I started reading, the opening paragraph, I thought this was going to be great stuff — would have been a lot better with some more specifics/instances of brokers really putting pressure on underwriters. I know there is still a great “scenes from a fast-and-loose mortgage operation” yet to be written.
COMMISSION ONLY COMMISSION ONLY COMMISSION ONLY
leads to this type of behavior…..and fraud
Houses, Mortgages cannot be sold on a commission basis anymore, That should eliminate the problem.
Completely agree.
Sad thing is, if you attend any “job fair” (you know, the kind they hold at the local Marriott), you will find that most of the “jobs” offered are commission only, no benefits sales positions. If you have a good paying job with benefits like paid vacations and holidays and health insurance that is mostly covered by your employer, then you are a member of a vanishing elite.
My goodness! Looks like we need more lengthy (and expensive) hearings in Washington to expose what went on at some of these carpet bagger sub prime mortgage broker companies. I’m shocked - shocked that this type of pressure could have happened……and what a PERFECT scenario for politicians to slither out from under their respective rocks and take full advantage of the situation in photo-ops as they ask sympathetic (or should I say pathetic) questions of tearful fb’s and look stern and thoughtful as they question the brokers. If only the politicians had known this madness was going on……give me a break.
Yeah, they’ll have to pass the “Truth in Underwriting Act”, which will require that underwriters disclose whether they were intimidated with baseball bats into approving bad loans.
Talk about a dysfunctional workplace, sheeesh!!
I wonder what would be next>? Angry brokers storm into the room tossing grenades and shooting?
“We were constantly told, ‘If you look the other way and let an additional three to four loans in a day that would mean millions more in revenue for New Century over the course of the week,’ ” Hardiman said. She added that it seemed “no one, from the top levels down to the lower levels of the office, didn’t want those loans to go through.”
This was the reason the percentage of major fraud was so high with New Century loans. I’m surprised the article didn’t even mention fraud.
Salespeople were supposed to be the “first line of defense” against fraud and bad loans, said Steve Krystofiak, president of the Mortgage Broker Association for Responsible Lending, a group that is trying to retool practices in the industry.
But salespeople worked on commission — meaning the more loans they sold, the more bonus money they received. “That’s a bad business model. It’s absolutely contradictory,”
YEAH THIS IS NO GOOD!!!!
Interest rates up?????????
http://www.cnn.com/video/player/player.html?url=/video/business/2007/05/05/vause.china.mortgage.cnn
The Chinese painted themselves in the corner. Instead of investing in their own economy, they wasted all of their USD income on our IOUs.
http://www.bloomberg.com/apps/news?pid=20601109&sid=amK25dKbMrhQ&refer=news
Kinda a lengthy super geek article. I have never borrowed from a U.S. bank so I was not aware of the info contained in the article.
“Michael Thiemann, CEO of San Diego-based hedge fund firm Investment Science Corp., likens traditional Wall Street traders to personal loan officers at U.S. banks back in the ’80s. Many of these loan officers lost their jobs when banks began assigning scores to customers based on a statistical analysis of their credit histories. In the U.S., those are known as FICO scores, after Minneapolis-based Fair Isaac Corp., which developed them.
Wall Street’s Future
Computers often did a better job of assessing risk than human loan officers, Thiemann, 50, says.
“And that is where Wall Street is going,” he says.”
isn’t a mort brokers pay based on how much premium they scam form the unsuspecting ?
otherwise 5 or 6 clicks and you don’t need the human in the middle
Yield Spread Premium (YSP)
Yield Spread Premiums: A Powerful Incentive for Equity Theft
http://www.responsiblelending.org/pdfs/ib011-YSP_Equity_Theft-0604.pdf
http://www.amazon.com/When-Genius-Failed-Long-Term-Management/dp/0375758259/ref=pd_bbs_sr_1/103-3949405-6315861?ie=UTF8&s=books&qid=1178541103&sr=8-1
all this computerized trading and modeling is based on the theory that markets are efficient, reversion to the mean, etc. Funny thing is that once every decade or so the markets go completely haywire and the fact that everyone on wall street trades on margin amplifies the fact. Letting math and physics phd’s do this goes back over 20 years and is not new.
the real test of these systems will come when we get another 1987 or 1998
Like so much, the new system works fine until somebody figures how to jigger the numbers. In the long term, the only thing that works is having corporate management that is interested in the long term. When people start worrying too much about “this quarter,” it’s only a matter of time before somebody figures out a way to rob the future for a bigger check today. It may be pumping the numbers by getting more loans by ignoring underwriting. It may be figuring out how to “cheat” tue AUS. It may be promising expensive pensions to employees and then underfunding them. Excessive focus on today ensures a bad tomorrow, as surely as night follows day.
It is interesting how some people have an innate ability to work around any system of checks and balances.
“Computers often did a better job of assessing risk than human loan officers, Thiemann, 50, says. ‘And that is where Wall Street is going,’ he says.”
And this will be their downfall. A while back James Grant said something about how investment banks and ratings agencies were now doing an “actuarial” kind of due diligence based almost solely on FICO scores and rudimentary (and apocryphal) financial data. There is no substitute for a sober loan officer looking into the eyes of a potential borrower (and into their financial statements) and scrutinizing him carefully to (try to) make sure the bank will get their money back (although this only works if the lo’s incentives are aligned properly to reinforce good standards).
In the same vein, data mining and curve fitting will set the rocket scientists on Wall Street and in Greenwich up for even bigger black swan events, because risk models are always backward looking and, contrary to the conventional wisdom, do not conform to a standard, normal distribution. And, oh yeah, cycles happen. What works on the way up doesn’t always work so well on the way down.
Interesting article. I was surprised that the notion of Computational Intractibility never entered the discussion.
http://bigpicture.typepad.com/comments/
scroll down to see charts
…”charts show how the S.& P. has performed against some other currencies, and against some alternative investments”
For those of us that are visual learners….the goldbugs will love this series
Actually, anyone who has been invested in commodities since about 1999 will be saying: “I told you so”.
Between 1999 and early 2006, RE was going gangbusters too.
3901 S Ocean Dr APT 5G, Hollywood, FL 33019
ZESTIMATE™: $333,247 What’s this?
Value Range: $296,590 - $403,229
30-day change: -$89,640 Last updated: 04/30/2007
————————————————————————–
3901 S Ocean Dr APT 5G, Hollywood, FL 33019
ZESTIMATE™: $354,380
Value Range: $315,398 - $425,256
30-day change: -$59,825 Last updated: 04/24/2007
—————————————————————————
3901 S Ocean Dr APT 5G, Hollywood, FL 33019
ZESTIMATE™: $380,667 What’s this?
Value Range: $338,794 - $456,800
30-day change: -$13,295 Last updated: 04/17/2007
——————————————————————————–
3901 S Ocean Dr APT 5G, Hollywood, FL 33019
ZESTIMATE™: $398,806 What’s this?
Value Range: $354,937 - $474,579
30-day change: -$46,684 Last updated: 03/19/2007
——————————————————
Yes, I’ve noticed this too on Zillow recently - HUGE 30-day drops in properties in GA, VA, NJ, MA. Very strange. Looks like Zillow updates their database irregularly?
Other than researching a property’s sale history, zillow’s useless.
This home (listed for $270K) is on the corner of a very busy road. Also, in June 2001, Tropical Storm Allison submerged this house. Afterwards, it just sat on that busy street corner for years until its rehab.
In the aftermath of that storm, homes nearby were bought out by the state and demolished. Anyone who knows the history of this area would never buy this house.
http://homes.realtor.com/search/searchresults.aspx?mlslid=4957131&typ=7
looks like the sopranos ran the mortgage industry — via the wapo:
Pressure at Mortgage Firm Led To Mass Approval of Bad Loans
By David Cho
Washington Post Staff Writer
Monday, May 7, 2007; Page A01
Maggie Hardiman cringed as she heard the salesmen knocking the sides of desks with a baseball bat as they walked through her office. Bang! Bang!
” ‘You cut my [expletive] deal!’ ” she recalls one man yelling at her. ” ‘You can’t do that.’ ” Bang! The bat whacked the top of her desk. As an appraiser for a company called New Century Financial, Hardiman was supposed to weed out bad mortgage applications. Most of the mortgage applications Hardiman reviewed had problems, she said.
But “you didn’t want to turn away a loan because all hell would break loose,” she recounted in interviews. When she did, her bosses often overruled her and found another appraiser to sign off on it.
Wonder if the sound of the baseball bat hitting the desk was anything remotely close to “Bada Bing”?
I was thinking more of De Niro as Al Capone in The Untouchables.
“Teamwork…”
The question is, what happened next. I’m guessing that Ms. Hardiman’s job was in almost as much peril as the brokers. In a sane business, if an underwriter was flushing to many of a brokers cr@p loans down toilet, the broker would be trouble, not the underwriter.
Jim that was the old paradigm…you and I are relics from a bygone era.
Man, this stuff sounds like boiler room script. And this is just for a mortgage approval. Imagine when the take gets into millions of dollars? No wonder no one is letting the stock market drop just yet.
oops — the link to the wapo article:
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/06/AR2007050601402.html?hpid=topnews
http://www.chicagotribune.com/business/chi-0705050112may06,1,2623428.story
DL at it again.
“Just four months ago, it looked like we were on the road to a very nice recovery,” Lereah said. “Then the subprime [mortgage] market blew up, and that has substantially inhibited lending.
“It was a monkey wrench that was thrown in; no one would have predicted it two years ago, no one.”
NO ONE!…. except people who thought that lending 500K to people that earn 40K/year is actuallty not sustainable.
But I guess that takes a PHD in economics to figure out.
OOooops.
Yes, DL, and trees grow to the sky. Certainly no one could have seen this coming.
No one except Thornberg, this blog, folks at Patrick.net, Russ Winter……
‘…no one would have predicted it two years ago…’
Words mean things. No one saw a possible glitch? I learn more from reading this blog than public school ever taught me about the real world. I think soon many others will start having a light bulb go off in their head that real estate is not coming back like the DL crowd told us it would.
CDO Market Lowlights
As of mid-March, about $36 billion of loans has been made this year, more than in the previous 10 years combined…
Fil Zucchi
May 07, 2007 10:30 am
The June edition of Bloomberg Magazine carries a piece raising several warnings about the current m.o. in the Collateralized Debt Obligations (CDO) market. These are the same kind of “issues” many of us in the ‘Ville spotted for more than two years in the subprime mortgage and housing areas, and for two years what we wrote provided a seemingly endless supply of comic relief. Until of course the whole thing came down as the house of cards that it was, and the rest, as they say, is history. So in the spirit of keeping readers laughing for the next two years (perhaps more, perhaps less), here are some of the CDO lowlights identified by Bloomberg:
CDOs are financing a record number of corporate loans to low-rated borrowers that forego standard investor protections… As of mid-March, about $36 billion of loans has been made this year, more than in the previous 10 years combined…
When you talk about no-documentation loans, you can’t have any less of an [underwriting] standard than that. Lenders lower their standards and tell themselves they can put the loans in the CDOs… like that’s somehow burying its toxic waste.
Investors need to worry a good bit about subprime delinquencies spilling over into the CDO market. The scenario where the BBB’s all blow up is a reasonably possible scenario.
The Dallas Police & Fire Pension Fund invested in its first CDO about two years ago to boost returns, according to Richard Tettament, administrator of the $3.2 bln fund. “We were beefing up our risk, and we were hoping for a greater return,” Tettament says. “We have an unfunded liability to pay off.” Tettament says he isn’t sure what type of collateral backs the CDO, though he thinks returns exceeded 20 percent last year.
Let me see if I understand the thought process in the last paragraph: if returns are low and you are trailing your hurdle rate, the solution is: jack up the risk, start hoping, avoid finding out what your higher risk investment consists of, and don’t bother finding out whether the higher risk has actually resulted in a higher return. So that’s the way to work yourself to the helm of $3.2 billion dollars!!!
If a Bloomberg piece is not enough to convince you, you might want to consider that serious concerns about current corporate lending standards have recently been echoed by the likes of the founder of the Carlyle Group, the annual IMF Global Financial Stability Report (which is being pushed by most managed care providers as a formidable substitute to Lunesta), and lastly by Blackrock’s CEO Larry Fink, who recently suggested that “standards of lending to highly-indebted companies “have deteriorated to levels that we never… dreamt we would see.”
Just boys crying wolf I suppose.
The real beauty of securitized loans is that they are virtually impossible to renegotiate. Folks in the mortgage industry are just now figuring that out.
I hope Donald Trump’s lenders securitized all his debt this time around.
Ameriquest Mortgage Sued By Ex-Employees
Lawsuit by former employees claim that mortgage company encourages lying, falsifying documents, and more…
“I was taught and encouraged to close loans without regard to the
customers’ financial ability to make payments on the loan.”
“It was a common and open practice at Ameriquest for Account Executives to forge or alter borrower information or loan documents. For example, I saw Account Executives openly engage in conduct such as altering borrowers’ W-2 Forms or pay stubs, photocopying borrower signatures and copying them onto other, unsigned documents, and similar conduct.”
(PDF file)
http://www.housingchoice.org/news%20stories/2007/Bomchill%20Declaration.pdf
how can an ex employee sue if they saw what was going on and did nothing about it?
Better-heeled failing home economics too
As more owners are unable to make higher payments, Deputy Strickland finds himself evicting people in nicer neighborhoods.
http://www.latimes.com/business/la-fi-evict6may06,0,5268127.story?page=1
“”I am renting,” she said. But she said she didn’t recognize the name of the owner on the deputy’s eviction sheet.
“You’re going to have to leave in a week,” he said. When she finally understood, her breathing became labored, as if she had gone into shock.”
It’s too bad the renters have to go thru this pain. A week’s notice…..guess due diligence will be necessary for renter’s too just to avoid this scenario.
A couple of years ago, a foreclosed man in Rialto shot himself when Strickland showed up.
I hadn’t thought of this outcome, but right after the Virginia Tech shootings, I told my wife I’m sure we’ll see (at minimum) two mortgage-related shootings. It happened with stocks…
It could have just been the shock of realizing he’d been living in Rialto?
YOU IDIOT MORON…….Your unfunded liabilities are because you didn’t hire tons of smokers recently, who would die early and not collect their full pensions like in the old days….
Yes less new smokers means lots more payouts 20 years down the road….so you need to end 20 year full pensions yesterday, and maybe even 25 years at full pension…to keep your system solvent…
But that takes guts to talk about.
==============
The Dallas Police & Fire Pension Fund invested in its first CDO about two years ago to boost returns, according to Richard Tettament, administrator of the $3.2 bln fund. “We were beefing up our risk, and we were hoping for a greater return,” Tettament says. “We have an unfunded liability to pay off.”
Remember what I said Saturday about pension fund managers, lack of knowledge and willingness to suspend disbelief:
“The Dallas Police & Fire Pension Fund invested in its first CDO about two years ago to boost returns, according to Richard Tettament, administrator of the $3.2 bln fund. “We were beefing up our risk, and we were hoping for a greater return,” Tettament says. “We have an unfunded liability to pay off.” Tettament says he isn’t sure what type of collateral backs the CDO, though he thinks returns exceeded 20 percent last year.”
Tettament says he isn’t sure what type of collateral backs the CDO, though he thinks returns exceeded 20 percent last year.
How is this guy any better than the idiot couple in the Seattle Times story? There should be some degree of personal liability attached to the responsibilities of managers of OPM esp. retirement funds. F@#king Robert Citrons of this decade.
Oops! My house collapsed!
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/07/BAGF3PMD2L1.DTL
Unreal. They paid $525,000. How can anyone square that up in their head?
That’s because it’s SF and it’s different… yes it makes zero sense to me too.
I love how a neighbor said that the owners were trying to live the “American Dream.” It look like the NAR’s hi-jacking of that term has actually convinced many people of the NAR’s definition.
“All indications are that the building was inadequately shored and braced for that work and that the shoring gave way,” Johnson said.
Doh. Maybe they can just HELOC their legal fees.
Hindenberg.
People moving out of high cost of living areas in Canada.
http://calsun.canoe.ca/News/Alberta/2007/05/07/4159859-sun.html
http://calsun.canoe.ca/News/Alberta/2007/05/07/4159860-sun.html
Calgary has now less affectionately and now more realistically been renamed “Calgreedy” and over the past 4 or 5 years has been turned from a nice quiet friendly place to a sh*thole full of carpetbaggers and speculators. The mayor there is a spendthrift mouther and i will bet since his term started a few years ago the city budget has about doubled. Won’t be long before this accident waiting to happen implodes and many many will lose a lot including likely their freedom to move around as they get hamstrung from owning their piece of the rock. One thing i have learned about Alberta though is that it will always be there and it will always have solid 6 month winters and about 4 months of black flies, mosquitos and wild winds and for that so many people are paying absurd prices for real estate all over the place. Great to see that there are at least some starting to get the drift and cutting out of the scene.
My grandparents had a farm in Okotoks, Ab., and I remember it being so far from Calgary…
Such a sleepy place way back when.
What’s it like now?
Infected by Calgary and the goings on there. Also Calgary city limits are closer and closer to Okotoks and there are a lot of commuters that live in Okotoks. Also high prices there and some crime problems as well. It used to be a beautiful little place but alas that has for the most part gone. Your grandparents farm would likely be worth a bundle today the way things have gone.
It’s long gone now, only memories remain…
I remember “Cowboy” Bill Flett’s mom had a dress store in town.
http://www.thestreet.com/pf/funds/followmoney/10355006.html
In honor of the aforementioned upside down John Henry…
John Henry’s hedge fund woke him up one midnight
It told him before the crash came, I wanna tell you- Listen boy
Said, learn baseball facts, forget about giving $90 mil to some Dominican hack, learn to pick a few non-head cases too
And take my hedge fund, it’ll do anything you tell it to
John Henry’s hedge fund had about a dozen increases
John Henry’s hedge fund has had some mighty losses too
The hedge fund got sick and people started losing money
He said, i’m not sure what i’m gonna do
Some might say he’s almost through
Then the section foreman said, hey-hedge fund hammer swinger!
I see you bought your own hedge fund, but what else can you do?
He said, i’d like to get back into the black, increase my money back, what else can I do?
(can you make a hedge fund go up again?)
Yes sir, i’ll do anything to make sure i’m not through…
I’m not used to losing what i’ve acccrued
great link txchick, this kind of thing is why I’m sticking with Berkshire
Any connection?
http://www.wcsh6.com/news/article.aspx?storyid=59310
Does it seem to anyone else like the major Wall Street homebuilder stocks are “falling in place,” or is it just me. For instance, Toll Bros stock is again off by over 1.5% so far today, but it is still at about the same level ($29-$30) where it has remained since the May 2006 swoon.
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
P.S. Is anyone buying brand new luxury McMansions these days? Or is Toll redirecting its aim at affordable housing?
Forgive me if this has already been covered…speculation on Alliance Bancorp, prime and alt-a lender, not funding loans. Is the spread of the sub-prime contagion spreading to alt-A and A loans?
http://forum.brokeroutpost.com/loans/forum/2/120856.htm
Are investors drying up in A and alt-A?
excerpts:
haiku - 05/02/2007 :
We were just told that there is a problem with something dealing with Wallstreet. And they are funding the deals on tomorrow, hopefully. That was the person’s word… hopefully. I like Alliance’s programs, but I don’t like what’s going on right now. I was shocked about this news, because they are A paper.
williamspeaking - 05/02/2007 :
I’m a big fan of rumors and witch hunts, which is what this is turning into. We DID receive an email stating no loans were funding yesterday, which was sent companywide from the president. Our branch manager told us that she did not know what was happening but that the higher ups have invested a lot of money in the company and they arent just going to walk away from it. We ARE NOT closed, in fact if youll check our rates they were updated as recently as 2:30 today. At the least that should reassure you that progress is being made. They wouldnt be accepting loans, underwriting them, coming out with updated guidelines, and new rates if they were planning on closing the doors. I completely understand the frustration of the last 2 days not being able to fund, believe me i do. I come from a retail background and i would be furious if i was in the same situation.
Please keep in mind that this is the worst market most brokers have ever dealt with since everyone jumped on the bandwagon when rates were golden and there were no worries. investor guidelines are changing everywhere as the market deteriorates, and dont be so naive as to think Alliance is the only company that will encounter issues in this time.
haiku - 05/03/2007 :
Yeah, because I just called again this morning and was told… “loan closed last week, was supposed to fund Monday, doesn’t that give you an indication that something is wrong?” Person went on to say that of course they are being affected as well, and that they will keep in touch as much as possible, and just to be cautious but patient. But I’m like, we’re not the only ones (professionals) affected. Clients are already up in arms about everything… there are multiple transactions affected by this one loan. Going A paper, you think you’re safe from all the glitches. Apparently not. williamspeaking, are you upper management? If not, I hope you are being told enough information. I’m sure there is a lot going on that only the uppers know. We all feel for Alliance, but we are also concerned about our clients and ourselves. What’s really going on?
haiku - 05/03/2007 :
Yeah, that is my issue. Multiple transactions and people wrapped up in this one deal. In all honesty, I am being as patient as possible, so are the clients. But I don’t want them to get ansy to the point that the entire thing is lost. Yes, I feel for Alliance, and I know those employees have to eat. So do we. We have clients that may be homeless due to some of these funding situations. Loans are supposed to fund when docs are sent/signed. Funder tell the title company that the funds are in transit, only to find 5 minutes after signing docs that there is a “glitch in the system” or “there are technical difficulties”. You have a possible three or four sets of docs that may get screwed up because of this.
haiku - 05/04/2007 :
I appreciate AE. At least we are being told cautionary type stuff. Last I heard was… conference calls and meetings all day. I was told it’s not just affecting west coast operations, but all of Alliance. We were previously told it was just that one office. Margin calls, investors pulling out… this is what we were told. Further, they are HOPING to hear something today. Originally, they thought funding would happen today, but are now unsure.
haiku - 05/06/2007 :
I just received an email from the client tonight stating that if they don’t fund tomorrow, they want out of ALL of the deals. There are 4 deals wrapped around this one. This pisses me off!!!
haiku - 05/07/2007 :
No funding today. Said they don’t have the capability. Said send all files
elsewhere. Don’t know if they will wind up funding.
Anybody notice that althought the Dow and S&P have been up strong all day the VIX has also gone up. Usually on days when the Indexes have tracked up strongly the VIX has retreated.
Here’s a scientist at UCSD that still doesn’t get it:
http://www.voiceofsandiego.org/articles/2007/05/07/survival/773haas.txt
A year ago she was interviewed and said:
“But she couldn’t plan for the market’s fluctuations. Soon after buying, she watched some of her neighbors’ comparable units skyrocket, selling for a profit of $50,000. But recently she’s watched them depreciate right back to her starting price.
“I’m back to ground zero,” she said. “Ironically, I’m back to my worst-case scenario.” Haas’ current research funding will end in January. Her mortgage is due to reset — to start including payments on the principal of the loan — in April. Her monthly payments will double. And Haas fears her condo will have depreciated even more by then.”
Now she has to move to a job at Harward (as Rocket Scientist??!) so she naturally decided to re-finace and rent out her condo:
“She refinanced her condo to avoid the adjustable-rate reset through ING Direct, which she called an excellent experience. “I knew higher payments were coming whether I refi’d or not,” she said.”
“But Haas said she’s glad for a few benefits in her situation:
I knew the job-end was coming, so I made sure to refi before my income evaporated. Also, since my parents had helped with the down payment, I am/was not upside-down, so no worries for appraisal or the ability to get a loan. I can see where a surprise job loss, and a higher LTV [loan-to-value ratio], could really spell trouble, fast, for other people.
Despite the silver linings she’s found, Haas said she’s “REALLY not thrilled” about becoming a long-distance landlord, or potentially a long-distance seller..”
Oh, and I nearly forgot: She’s a victim:
“While I’m still lucky to have what I do, and things will work out (I think),
the market has still put me someplace I don’t want to be”
Oh the price to pay for living in paradise
And the thing about living in “paradise” is that once you live there, you realize that its not all that different from other places, especially when you spend most of your waking hours at work, at home or in a traffic jam.
Dow on track for longest gain streak with three down days in 80 years. Has anybody noticed that whether we are discussing houses or the stock market the comparison comes back to the late 20’s or early 30’s?
From MarketWatch
http://tinyurl.com/297zpv
Fits in perfectly with the predictions in the book “The Fourth Turning” from 1997:
http://www.financialsense.com/fsu/editorials/nystrom/2007/0507.html
They state that history repeats itself in 80 year periods (four 20 year periods). I found this write-up fascinating. I think I’ll buy the book.
Yes, it’s ominous. Would love a topic on WTF the market is doing and how this relates to the housing market.
Sorry if someone already posted this. I don’t remember seeing it.
Bank of America eliminates closing costs
http://hosted.ap.org/dynamic/stories/B/BANK_OF_AMERICA_MORTGAGE?SITE=CAANR&SECTION=BUSINESS&TEMPLATE=DEFAULT