Due For A Fall
Some housing bubble news from Wall Street and Washington. The Orange County Register, “Michael Perry, CEO of IndyMac Bancorp, is stubborn when it comes to delinquent loans. He refuses to ditch them, even as they expand rapidly on the books of Pasadena-based IndyMac, which…is the largest U.S. lender in a credit category dubbed ‘Alt-A,’ which is one level above the risky subprime niche.”
“During an April 26 conference call with analysts, Perry said the company didn’t sell a single dud loan in the first three months of the year because no one wanted to pay what he thinks they’re worth. No way is IndyMac selling to a hedge fund for ‘pennies on the dollar,’ Perry said.”
“In that time, IndyMac’s sour loans and foreclosed real estate ballooned 75 percent to $324 million. ‘We are not going to fire-sell when we have the intent and ability and expertise to work through those loans and sell them ourselves,’ he said.”
“The same problems shaking up the subprime market are now emerging in the Alt-A industry.”
“‘The most creative mortgage products came out of the Alt-A business,’ said Manuel Ramirez, an analyst with Keefe Bruyette & Woods in San Francisco. Last year, 20 percent of home purchase loans were Alt-A, up from 5 percent in 2002, according to a March 12 report by Credit Suisse.”
“Ramirez said it’s ‘eerie’ how the subprime correction appears to be repeating in Alt-A. ‘Compared to subprime it’s at a snail’s pace but I think it’s real,’ Ramirez said.”
From Inman News. “LendingTree laid off about 440 workers Friday as a cost-cutting response to falling revenue and loan production.”
“‘There has been significant lender pullback or outright exit from certain segments of the mortgage lending market, particularly from the highest-margin products,’ the company reported. ‘As a result, LendingTree’s business, at both the exchange and at LendingTree Loans, is currently focused on conforming loan products, which are the most competitive from a lender’s perspective and hence the lowest margin for LendingTree.’”
“A spokeswoman for the company, Rebecca Anderson, told Inman News that loan-request volume was up 17 percent in the first quarter compared to last year, but ‘problems in the subprime market are causing spillover effects,’ including reduced margins on loans and fewer orders transmitted to exchange lenders.”
The Wall Street Journal. “Anderson said the company needs to get costs in line ‘with the current realities in the market.’”
“Mortgage lending has declined in recent months as lenders tighten standards amid a surge in defaults. Ms. Anderson said lenders are turning down more loans, and that has squeezed profit margins at LendingTree.”
National Mortgage News. “Fannie Mae plans to tighten its underwriting guidelines on certain loans especially where risk layering is involved. A spokesman confirmed to National Mortgage News that changes are coming in regard to high loan-to-value ratio mortgages and ‘very low’ downpayment loans.”
“Meanwhile, the Department of Housing and Urban Development wants to ban all downpayment ‘gift’ assistance provided to homebuyers by sellers and in some instances nonprofits working with sellers. The ban would apply only to mortgages insured by the government.”
“HUD’s proposed rule threatens dozens of nonprofit groups, including Nehemiah Corp. of Sacramento, Calif., that have doled out hundreds of millions of dollars of payment assistance to mostly low-income home buyers across the country.”
“Such groups have been controversial because many provide down-payment gifts to buyers and are then reimbursed by individual home sellers and home builders. Critics say some builders have included the cost of the gift into the price of the house, which inflates values. Critics also say these gifts lead to higher than normal foreclosure rates.”
“Supporters say down-payment gifts have served low-income home buyers better than subprime mortgages, which have even higher default rates. Scott Syphax, Nehemiah’s CEO, says the HUD rule could further crimp the ability of low-income buyers to afford a home using FHA loans.”
“‘At the very time that the collapse of subprime is killing access to the American dream, the one program that is a lifeline for working families is marching to the front of line to shut the last open door,’ Mr. Syphax said.”
The Financial Times. “Eurozone demand for house loans has dropped sharply, supporting the European Central Bank’s view that property markets are cooling, so far in an orderly manner.”
“Demand for housing loans to households ‘fell significantly’ in the first three months of this year, the ECB reported. It said that the decline was driven mainly ‘by a sharp deterioration in the assessment of housing market prospects.’”
“The survey showed a much larger number of banks reporting declining demand for house loans than reported increases, and that the difference was the largest since the survey began in 2003.”
The New York Post. “The housing market has not hit bottom yet and probably won’t until sometime in 2008. According to data gathered by the FDIC from the end of 2001 to the end of 2006: Loans secured by real estate are up 76 percent to $4.51 trillion. Residential mortgages for one- to four-family homes jumped 57.7 percent to $2.18 trillion. Home-equity loans are up 203.4 percent to $559 billion.”
“And, no surprise, foreclosures are up too. National foreclosure filings were up 47 percent last month from a year ago to 149,150, according to RealtyTrac.”
“The bigger problem is that the price of a home must ultimately correlate to what individuals can afford, notes Mark Grinis, a partner in Ernst & Young’s real estate, hospitality and construction group. ‘If prices advance significantly ahead of wages, over time there will be a price correction.’”
“And clearly, our wages have not kept up with the inflated housing prices, so we’re due for a fall. ‘The typical cycle is about four years, and we’re only a year and a half in,’ notes Grinis. ‘It will be late ‘08 before the dust settles and you can call a bottom.’”
From MarketWatch. “A spring home-selling season that’s looking like a bust and pressure from growing inventories of houses in the resale market should intensify home-price declines in the second half of 2007, Wall Street analysts say.”
“‘We think the housing downturn has decisively moved to its second act of falling prices,’ wrote Deutsche Bank in a report to clients Monday.”
“‘With the first act consisting of significant retrenchments in volumes, the second act is one with home prices falling back to more equilibrium levels after a period of breathtaking increases during the housing boom,’ Deutsche Bank said.”
“The analysts…think prices in the resale market ‘may begin to retreat in the second half of the year, as existing-home owners face a second [disappointing] spring season and as competition from a surge of resale listings increases.’”
“As existing home sellers throw in the towel, that could put more pressure on the builders of new homes to match the lower prices and remain competitive. Additionally, resale listings have risen ‘dramatically during the spring selling season’ which could further pressure prices, Deutsche Bank said.”
From Bankrate.com. “Fact or fiction: The media decide whether you buy or sell a home.”
“Sounds ridiculous, even insulting. But many real estate professionals insist there is a psychological component to buying a house, and that a lot of negative publicity about the housing market can have an effect on whether consumers will buy, sell or sit.”
“Many blame the media for the slowdown that hit the housing market in 2006. ‘What happened to us is the media,’ says Ellen Renish, regional vice president for the National Association of Realtors.”
“Stories about a real-estate ‘bubble’ and its potential to burst caused consumers to ‘not do anything,’ she says. ‘And nothing happened. The bubble stories really stopped things for three months,’ Renish says. ‘It was pretty scary.’”
“When it comes to sales, the biggest factor is ‘the local economy,’ says Dick Gaylord, president-elect of the NAR. ‘But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.”
Michael Perry ,”no one wanted to pay what he thinks they’re worth.”
Way to go Mike - you stick to your guns. Of course we will soon be reading that your company is another casualty of the bubble.
Tie that comment up with …“‘The most creative mortgage products came out of the Alt-A business,’ said Manuel Ramirez, an analyst with Keefe Bruyette & Woods in San Francisco. Last year, 20 percent of home purchase loans were Alt-A, up from 5 percent in 2002, according to a March 12 report by Credit Suisse.”
…and the future of his business is the New Century model. Deny, deny, deny…then the routine ‘We thank you for your business, but due the unforeseen and unknowable conditions…’
He sounds like the typical So. Florida house seller.
In this one instance (lender hanging onto notes), I am sympathetic to someone HBBer’s might view as The Enemy. Lender Hanging Onto Notes! What a concept. I can’t tell you how many postcards I’ve gotten, offering to buy my notes. And the offers, on the rare occasions when I’ve inquired, were absurd lowballs. Let’s say I’ve made a hundred loans. Let’s say a couple of them resulted in losses, but the losses were small fractions of the amounts owed (say 10% in each case). Since I’ve been collecting 9%-10% annually all along, I would NO WAY sell my notes for less than the principal value, i.e. book value. In fact I wouldn’t sell them for book value either, although I do have to allow prepayment without penalty.
What you need is an exposure to Wall St. The firefighters pensions funds will buy up your notes sight unseen.
But seriously, if the junk market collapses, it will seriously hit the prime market as well, methinks.
az_lender: It’s nice of you to feel sympathy for Mr. Perry. But from your descriptions of your business, your way of doing business has nothing in common with his. If all lenders behaved as you do we wouldn’t have a problem now.
Typically, note buyers are seeking cash flow constrained individuals, who are willing to accept a fire sale price on a note to meet liquidity needs. Mortgage banks essentially operate on a forward basis, using commerical paper (a cheap source of funds but one that can be pulled in a day) to finance their float loans. So when sales stop, they must use a vastly more expensive method to finance their production (LEND’s “subprime” loan was accomplished to turn the commercial paper tap back on). Indymac is willing to gamble that they can convince the bond markets that all is well before the more expensive financing is required.
The guy is trying to maintain his paycheck by keeping the ball rolling as long as possible. Here’s what Indymac will do next…
1. Restate earnings
2. Not post earnings
In the end Indymac will just blow up harder than other lenders.
shadash:
not so simple. you forgot a few steps
Here is what Indymac will do:
when the game is about up, THEN restate earnings.
1) borrow money
2) use this borrowed money to buy back shares (thus improving the P/E ratio, and improving the stock price)
3) allow Michael Perry to start unloading his stock (at the new higher price)
4) Give Mr. Perry more stock options to “keep such good talent”
5) borrow more money
6) buy more stock with more borrowed money
7) more executives cash out their stock options
9) declare BK
10) discuss how unforeseen this was
11) walk away (with all the options cashed in)
hooray
I’ve been following IndyMac’s website…whole lotta CA REOs on there.
I have money @ Indymac, is it at risk? Will FDIC cover me if / when rigor mortis sets in?
Scared in Pasadena
This little gem just came out and you haven’t already sold your stake?
Fortunately, the game is probably going to go too fast for IndyMac to do this all-too-popular dance.
Share buybacks are so interesting — Mom & Pop investors probably think they’re a good thing — rather than a cover for management to unload some stock without triggering a plunge.
IndyMac….living in a fools paradise….
Most Alt-A financial institutions will go the way of the subprimes……disappearance……
….you can already hear in the background the skuttling of the big bank crabs aways from anything to do with mortgages, period.
50 cent on the dollar
40 cents on the dollar
30 cents on the dollar
down…
down….
down…..
“Most Alt-A financial institutions will go the way of the subprimes……disappearance……”
If that happens, it’s really gonna be curtains for the housing market. Alt-A was the driver of the middle class speculator. You know, the couple making about $100k combined income with four houses, a boat, some jetskis, a hummer, vacations, massive credit card debt, et al. Don’t underestimate the number of these idiots.
Way to go Mike. The crash-and-burn ending for this particular risk hog isn’t too hard to imagine.
Oh well, I luv the smell of bacon in the morning.
This Mike Perry guy thinks he’s some tough hero like Rambo. In reality he’s a twerp in a suit. Sad thing is he has a golden parachute while the investors lose their shirts because of his stupidity.
How is it “sad” that investors (cough) who buy into a business model based on making 100% loans to people who have already proven their inability to responsibly handle their finances, get their heads handed to them? To me it’s economic Darwinism at its finest.
“Ramirez said it’s ‘eerie’ how the subprime correction appears to be repeating in Alt-A. ‘Compared to subprime it’s at a snail’s pace but I think it’s real,’ Ramirez said.”
I don’t think ‘eerie’ is the right word here. ‘Predictable’ would have been my choice.
And next is ‘This was completely without warning’. Since sub-prime is ‘contained’, in the strange world of predicting the future of real estate financing total amazement makes sense.
“‘Predictable’ would have been my choice.”
“Delightful”!
“It will be late ‘08 before the dust settles and you can call a bottom” [said a partner in Ernst & Young's real estate group]. What I’m calling in ‘08 is Dead Cat Bounce, see Credit Suisse ARM reset chart.
It is all how you define subprime and Alt-A. 100% financing is very risky regardless of credit score. Stated income especially with low or no down payment is crazy, regardless of credit score. We are going to find there is too much reliance on score, and it will prove to be less important than equity/downpayment, reserve assets, and proven income.
Sensible Lender , so true .
double bingo- I remeber trying to get a small biz loan product going w banks- they don’t care about equity as security
soon they will
‘What happened to us is the media,’ says Ellen Renish, regional vice president for the National Association of Realtors.”
Is everyone in the media is a renter, Mrs. Renish?
Ms. Renish must really be fuming at 60 Minutes’ story from last night. Another nail in the REIC coffin…
What’s interesting to me is that no one in the MSM seems to think that there is actually a positive side to falling house prices. All the spinsters moan at falling prices, but paper profits aren’t real and a price drop doesn’t really hurt someone who really never had the money. It’s only potential money, not real money (except for those happy people who are underwater). The only ones they seem concerned with are the sellers, but falling prices really help buyers, making housing more affordable. Is that bad? Methinks not. Unfortunately, the realwhores still make that 6%.
No one gets the concept of “invisible hand”. Prices go down, sales go up.
What there isn’t anymore is this ridiculous feeling of wealth that has driven people to spend way more than they actually have.
http://www.youtube.com/watch?v=JBTWAmQ4EdQ
My personal song dedication to Ms. Ellen Renish and NAR truth-makers everywhere: “Shut Up” by the Black-Eyed Peas.
“Many blame the media for the slowdown that hit the housing market in 2006. ‘What happened to us is the media,’ says Ellen Renish, regional vice president for the National Association of Realtors.”
Another moron opens their mouth!
They didn’t mind enjoying the impact of the media when the stories were positive.
I say “quit your whining and do some work for your pay!”
Then, it gets worse:
“Stories about a real-estate ‘bubble’ and its potential to burst caused consumers to ‘not do anything,’ she says. ‘And nothing happened. The bubble stories really stopped things for three months,’ Renish says. ‘It was pretty scary.’”
That was a pretty scary three months! So, glad it’s over!
ROTFLOL
Exactly what I was going to say. “Glad that’s over…now where were we?”
“Many blame the media for the slowdown that hit the housing market in 2006. ‘What happened to us is the media,’ says Ellen Renish, regional vice president for the National Association of Realtors.”
What the NAR is really trying to say here is that if they can’t keep the public “dummied-up” to such issues as affordability and irrational price inflation, then they can’t keep their little party going. Damn to hell the media that finally started warning the masses of potential danger ahead. Such irresponsible reporting should not be tolerated.
“What the NAR is really trying to say here is that if they can’t keep the public “dummied-up” to such issues as affordability and irrational price inflation, then they can’t keep their little party going.”
This seems to be the mantra I’m getting on any board I mention the pop.
“We’re not saying you’re wrong. Just please shut up.”
They know we have all the data on our side, so they have no desire to debate. They just want to keep the sheeple in the dark for as long as possible.
yes, probably many of these realtywhores still have to unload some properties to the unsuspecting public. It takes a bit more time than insider sales in the stock market …
It was heartening to see the unambiguous ny post headline….
“HARSH REALTY HOUSING SLUMP IS FAR FROM OVER”
a step forward for the MSM?
“keep the sheeple in the dark as long as possible” - even here in the sticks. Friday I went to a cocktail party where the best-known local Realtor said, “Have I got a deal for you!” and everyone laughed. I noticed, though, that he took me outside to propose the deal. Because he was afraid that what I would say about the housing mkt in general would be said in public. He knows what I think, and wanted me not to shout it out in front of a dozen people.
‘What happened to us is the media,’ says Ellen Renish, regional vice president for the National Association of Realtors.”
And here I am thinking that it was the weather’s fault. After all, wasnt that was what the NAR was blaiming it on, before they blaimed it on the media?
NAR needs a new jingle to get these sales moving, I know “Blame It On The Rain” by Milli Vanilli!
Wrong, Ellen. The media belatedly REPORTED on the fact that reality is imposing itself on the RE bubble. Saying the media caused the bubble collapse is like saying the trees waving make the wind blow.
And priests blame the media for exposing what was going on in the Catholic church.
And pedophiles blame the media for “To Catch a Predator”.
Etc.
People have a right to know that truth - even if it’s riddled in scandal/fraud (which housing certainly is).
As Chris Rock says
“they always blame the media. but when it’s midnight and I’m at an ATM, it’s not the MEDIA who I’m afraid is gonna rob me!”
When the media agrees with us, it is smart. When it disagrees with us, it is the source of all sorts of troubles.
Let me be the first to say that we here in this forum are no different. When the media is against us they are tools of the industry. When they agree with us they are enlightened albeit tardy well-meaning campaigners, and we preen in delight.
I would like to think that most here recognize that the media are tools. Tools now and tools then. The propaganda/obfuscation for their REIC advertisers has been shameful. Now, it’s impossible for them to keep the man hidden behind the curtain.
Chinese stock market frenzy http://tinyurl.com/282n6j
People never learn.
That bubble could blow the world to pieces.
I thought that U.S. interest rates, among others, were held low due to the propensity of the Chinese to save. If they go blow all of their savings, doesn’t this directly impact our ability to borrow funds cheaply?
If inflation fears kick into high gear in the global investment market, “somebody” is going to have to make sure that the l-t Treasury yields don’t fully price in the resulting inflation premium…
US debt is mostly held by the Chinese gov’t, not individuals. The speculative fever in China has been fueled by first-time individual buyers.
Either way…
KA-BOOM!
“…says Dick Gaylord, president-elect of the NAR. ‘But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.””
yep.
if they wait a year or 3
Wow, I thought that name was a joke. Time to start the Dick watch blog.
….so, you’re either implying that buyers of yesterday weren’t expecting to get a pheomenal deal
…or that there’s something wrong with expecting a phenomenal deal today?
What exactly is this man trying to say?
bet ya lots of banks are “stubborn” about sending 1099’s and REO actions too
http://tinyurl.com/2ymkc3
A further sign of bubble burst impact:
Tribune Co.’s April revenue down 3.6%
Publishing revenue plunges nearly 9%
By David B. Wilkerson, MarketWatch
Last Update: 9:55 AM ET May 14, 2007
Real estate revenue down 20%, and department and furniture stores down 7%. Also noted major weakness in ‘national campaigns’…lottsa ducks in lottsa rows.
Funny you mention this. About a year ago the newspaper was completely full of RE related ads. Last week there were very few ads. One was added by the paper, they’re looking for advertising sales reps.
ECB: “a sharp deterioration in the assessment of housing market prospects”
sounds like they are preparing to drop rates soon … what a BS!
As reported yesterday, home prices in most ‘Old’ Europe countries increased 7-10% over the last year despite slightly rising rates. Most of the ’second home’ areas around the Mediterranean, Eastern Europe etc. still have double-digit homeprice growth. That 7-10% for Old Europe may be below average for the last 10-15 years, but still huge compared to the official 1-2% CPI numbers for the Eurozone. Most banks are counting on further gains this year, for the Netherlands the biggest mortgage provider (Rabobank) said today they expect 4.5% appreciation in 2007.
The real estate market is cyclical, says Ron Phipps, broker for Phipps Realty in Warwick, R.I. “For those of us who have been doing this for a while, this is a normal cycle,” he says of the buyers-market climate. “It’s not particularly bad.”
He worries that the media amplify “minor changes.”
Can someone answer this question? At what point would falling home values trigger a massive ‘give the lenders back the keys’ for people that ‘purchased’ a home with no money down? I mean, if values on a million dollar house went down $200k (I’ve seen this happen where I’m looking in the 1.2million level-down 200k from a year ago in asking price) why would anyone stay with their crazy payments when they have no money invested? I mean, they will have a black mark on their credit, but hey…7 years black mark vs. 30 years of paying back on overpriced home…just wondering what you all think about this?
Most people don’t have an exact read on their current house value. I doubt that people will just start mailing in keys because of declining prices. It’s usually about affordability, if their mortgage resets or some other issue comes up then they consider their options.
JMHO -
What I’m witnessing is homesellers hanging on by a thread still waiting for the market to turn around, via an interest rate cut, or St. Joseph waking up on the right side of the bed, or whatever event that will get it kick-started. When the reality finally sinks in that springtime of any year is flat, sales wise, and that comps have gone from flatline to a downstroke, the folks who are barely making it will give up. Could start as early as this fall in my area. (on the lower priced end of the market).
Already seeing it here phillygal. 250K Pulte Homes south of me on the the market now for TWO springs and 6 of the 9 for sale in a two block area are empty….still want a quarter mil. for these walk townhouses and they are sitting.
For sale signs all over the neighborhoods in Oakdale and Woodbury and nothing is selling.
I think the jig is up and forclosures on a titanic scale start this fall. ARM resets start kicking in. No one believes it especially those in the finanical houses here but you can see it in the shopping centers….no one shopping.
The economy is dead on Main Street and they do not see or want to see on Wall Street.
Feels like late ‘28 or early ‘29.
“Feels like late ‘28 or early ‘29. ”
…i was pumping gas yesterday with my son. a well groomed caucasian woman came up to me and asked me if i or anyone i knew needed someone to clean my (our) house. She didn’t look homeless, appear crazy and was caucasian. she just needed a job. That was scary.
In Northeast Ohio the homebuilders do a yearly homebuilder show in a 3 county area. This year besides the houses they previewed, they still had 90% of the homes for sale that they’d previewed the year before. Years back those houses always sold during preview week.
I worked with one attorney who bought a 4-plex in Burbank, the other one a million+ dollar house in SM, in the late 80’s before the last RE crash. Both held on, made their payments all these years even though they were deeply “under water”. Some people just won’t do the hand-the-keys-back thing, because it’s embarrassing, it means you’re admitting you made an investment that failed, and if you wait long enough, it usually comes back, which it has.
I don’t think it’s a matter of home value so much as the owner’s ability to make the monthly payment or sell relatively quickly.
I think you will see alot of people ‘giving back the keys’ toward the end of the summer into the fall becuase we have seen the second straight ‘down’ spring and there are going to be alot of people who just can’t ‘hold on’ any longer.
I am betting there were alot of people hoping to get out this spring and stretched to keep making payments through the spring in hopes of selling. With alot of those hopes dashed, the owners will stop making the payment soon and live rent free, saving the monthly nut instead, for 3-4 months before moving. those people who stop making payments this springwill be turning in their keys starting in July/Aug just before school starts.
Certainly investors that has a short term plan are not going to carry the load for years ,(maybe they would of if they could of rented the properties to cover the monthly nut.)
Its goes back to being able to afford the payments long term so any RE cycle doesn’t affect you to much . When you don’t need to sell or your not relying on equity money to live on you don’t really notice the RE downturns so much if your living in a house long term and paying down the note. I went throught 2 major downturns during the course of owning my last property for 23 years .
the owners will stop making the payment soon and live rent free, saving the monthly nut instead, for 3-4 months before moving.
Most people losing their house won’t hang around to get a month or so free rent, families will need to secure a place to live, etc., others won’t be able to stand the embarrassment of the neighbors being able to see the foreclosure proceedings. The true lowlifes will hang. When my neighbor was losing his house in the early 90’s (Valencia, CA) he moved and then rented it out to some real scum for a few months.
How about that realtor in Valencia that was selling real estate he owned pursuant to a wrap-a-round mortgage ,so he was collecing the mortgage payments . When this realtor/seller ran into trouble he just started keeping the mortgage payments while the houses went into foreclosure .The new owners didn’t know until late in the game that the properties were in foreclosure .
“I don’t think it’s a matter of home value so much as the owner’s ability to make the monthly payment or sell relatively quickly.”
True, but you can’t underestimate the power of the “I don’t want to give my house away” attitude on the part of sellers. People still feel entitled to financial gains from home ownership, even if they just bought a year or two ago. The kool-aid was so strong, folks can’t imagine actually LOSING money on a house. We’re not quite there yet, but I think maybe later this year.
you can’t underestimate the power of the “I don’t want to give my house away” attitude on the part of sellers.
True, and those who can will cling to that and pull through, those who can’t will not. I think the deciding factor is how much equity you have in your home, how high your monthly payments are, etc. One of my sisters has been trying to sell the place she owns outright, but no one is offering what she wants. So, she intends to keep on living there until the right buyer comes along, but she can afford to do that because the house is paid off. I would pay a lot of money to know what percentage of people in the market at any given time are in this situation, and what percentage just has to sell because the payments have become too high. It has been said over and over in this blog that the price is set by the “must sell” properties.
My husband and I were looking at homes around the Alta Loma/Rancho Cucamonga area this weekend and could not believe just how many of these $1mil + homes were EMPTY! I just cannot believe the audacity of some of these people in the Inland Empire who think their homes are worth $1million or more. When I pulled up a sales map on Zipreality it looked like a field in spring with flowers blooming everywhere due to all the homes for sale! We actually went to a KB sales development and the sales people acted like nothing was wrong and their million plus prices were justified. I feel like I am in an episode of the Twilight Zone!! Even more wacky was when we went to a new home development in Corona. The lady there was really high on dope telling us about all these people selling their homes in Orange County and buying $700k + homes in Corona (what a craphole!). I could barely keep from laughing!! Her stupidity and ignorance was amazing (BTW.. she currently has 2 homes for sale herself!).
This time WILL be different.
Previous busts put people underwater, but not nearly as far underwater as they will be in a year or two. This group of buyers has skewed younger, and stretched their finances further than ever before.
If you were looking at working your butt off for twenty years just to get back to even, would you stick it out??
CFC to “hire” 200 salespeople
bet they’re straight 1099 w no bennies, so you can “hire 200000000 of em
http://biz.yahoo.com/rb/070514/countrywide_jobs.html?.v=1
Slightly Off Topic, but what is everyone paying for a gallon of gas?
3.07 N VA 22151
$3.29 (Minneapolis)
That’s a record for us, more than after Katrina.
I just wonder how high they will go.
3.48 here in Ventura, Ca.
$3.35 for regular in Van Nuys, CA
$3.75 in San Diego, premium though, had to have a turbo
$3.65 premium Valencia, CA - High mileage high performance European engine.
Local gas stations (in Colorado Springs) seem to be running out of plus and premium gas). I think I paid 3.27 on Sunday for 85 octane regular w/ ethanol (all that was available) in the two places that I checked.
$3.69 in Evanston, IL yesterday for regular 87!
About US$6.25 per gallon here in Hong Kong…
$3.26 a gallon, up 42 cents in a week.
They still drive like crazy, though.
Won’t slow down until 10 dollars a gallon. Economy will be dead by then, though.
$3.55 here in Marin. But it’s hit the $4 mark in parts of San Francisco, and we’re only in May.
$7 a gallon in Europe
$3.49, throughout the Central Valley in Calif.
$3.05-ish here on the cheap side of Phoenix. I here closer to $3.15 over in Scottsdale.
$3.07 Syracuse
$3.37 - $3.43 here in Detroit area. I do the books for a gas station and I’m expecting the invoice for the last load shortly. I’ll post the station’s cost when it comes in.
Cost to station for regular including all taxes was 3.2631 for load received Friday.
3.39 for regular in Portland
gas prices in OR include fullservice.
And higher state and local taxes.
And by “fullservice” he means wait 5 minutes while the meth-head attendant takes his last drag off a cig.
Don’t you hate it when the rest of the cube monkeys hear you laughing your ass off and have to poke their heads in your cube.
That mental picture was too much, glad to be out of Jersey, 100% “full service”.
$2.99 a gallon. With a fifty-mile round trip to work in a pickup that ges 10 miles per gallon, it costs me fifteen bucks just to get to work and back!
about $ 8, in Europe
Yep - my Virgin Atlantic flightcrew friend was here last week - we always like to compare petrol prices - over 1 GBP a litre back in the UK, pretty much the same as its been for the last 5 years.
Multiply by 2 - about 8 dollars a gallon.
$2.79 at Costco in Plano, TX
and the Texas legislature is about to vote on a waiving of the 20c/gallon tax during the summer driving months. That’s good. We have some of the cheapest gas in the country and it’s about to get cheaper.
$2.79 at the Sam’s Club in Plano on SpringCreek. TxChick57’s Costco and My Sam’s Club keep each other prices honest….
True, but I wish thay would not reduce the gas tax and just keep the funds in the budget. This way they will not raise taxes somewhere else….. I hear that gas up in OK is even less expensive then North Texas.
I miss Plano - now I know why. There are other things, though I do not miss, but this is one of many.
2.91 in New Jersey. Cheap compared to the rest of you.
Wow that IS cheap considering you, like Oregon, only have full-serve, right?
political history. exxon was Standard Oil of New Jersey !
$3.59 reg. $3.79 Premium in San Diego
3.48 at carlsbad costco in slam diego.
I usually take the subway, so it’s been a while since I bought gas.
04627: 2.99 regular, 3.02 “plus” (why the tiny diff? je ne sais pas)
$3.02 for regular in Maine
$3.45 in Costa Mesa, CA
Free. I siphoned a realtor’s Lexus at an open house.
LOL!
$3.59 for Premium in Burbank, CA.
“The same problems shaking up the subprime market are now emerging in the Alt-A industry.”
This is the moment we’ve been waiting for. AltA is the deer in the headlights. These folks are just as leveraged as their Subprime counterparts given the 100% financing/no doc options. Just wait for the sob stories from “well educated” upper middle class families who are financially sunk for life.
‘Just wait for the sob stories from “well educated” upper middle class families who are financially sunk for life.’
The policy alternative is to reflate the bubble, either through a resumption of sky-high housing-price inflation, or through taxpayer- or deficit-financed “Save Our Homes” legislation to help FBs weather the collapse of the high-risk tranches of the home lending industry. The political pressure to intervene must be immense!
“Just wait for the sob stories from “well educated” upper middle class families who are financially sunk for life.”
“The political pressure to intervene must be immense!”
Once the legislators find out that these specuvestors have multiple homes, the sympathy for their plight will erode. The real alligators are the multiple properties burning a hole in these speculators pockets.
“Once the legislators find out that these specuvestors have multiple homes,…”
Are you suggesting the folks bringing out all these bailout proposals are this clueless? That thought strains credulity…
“Are you suggesting the folks bringing out all these bailout proposals are this clueless?”
Why yes GS, I am!
stucco…i thought you promised ben you were going to stop the conspiracy theory bailout crap.
I said I would avoid making further partisan comments about the FHA bailout proposal, which is not a conspiracy theory, as it has been widely reported in the MSM, and I have.
Discussing (nonpartisan) political pressure for “Save our Homes” bailout programs is another topic, which is nonpartisan by nature (it could involve the private sector and the independent Fed) and also has nothing to do with conspiracy theories.
GS can say whatever he wants.
I defer to Ben’s posting guidelines, but not to agentjmf’s (sounds like a Realtwhore handle…).
Short of imposing a USSR-style command economy (and no the US does not remotely resemble this, despite what some complainers say), there is no way that any asset price - stocks, housing, whatever - can remain completely detached from its economic rate of return in the long run. The market will slaughter any attempt to maintain prices out of whack. It’s just too big to beat.
That’s all there is to it.
“The policy alternative is to reflate the bubble, either through a resumption of sky-high housing-price inflation, …”
Bernake has been visiting congress a lot lately (or has he been visiting the back of the woodshed). He is where the pressure is focused. The gov’t wants him to drop rates to buoy the economy and inflate the bubble away, especially before the 2008 elections. But, in the face of rising Chinese and European bank rates, this could trigger a brutal devaluation and perhaps out of control inflation. Thus nothing has moved yet. But there is the pressure is being applied, methinks.
“The gov’t wants him to drop rates to buoy the economy and inflate the bubble away, especially before the 2008 elections.”
I don’t see how he can lower rates when all the other central banks are raising them. We have a huge deficit to finance. If he were to lower rates, I think the dollar would really go in to the toilet, and long term rates would shoot up. The housing market would still tank.
The political pressure to intervene must be immense!
I have also heard about this thing called death. I wonder why congress hasn’t done anything to keep that from happening as well.
Saw a PBS special a couple of years ago, a medical guy saying that TECHNICALLY something like immortality is almost within reach. At least, very long lives like 200 years. I thought, oh great, just what the Social Security system needs, people on public pensions for 140 years.
They (scientists) have been saying that for a long time.
But if aging could be slowed 50% it would have interesting socioeconomic effects indeed, even beyond Social Security issues.
“But if aging could be slowed 50% it would have interesting socioeconomic effects indeed, even beyond Social Security issues.”
Actually, the main problem facing Social Security is that U.S. life expectancy in 1935 was about 65 years old, so the concept of “Old Age, Survivors and Disability Insurance” made good sense.
Given its pay-as-you-go funding mechanism and with U.S. life-expetancy creeping steadily upwards from 65 during the intervening years up to the present, Social Security morphed from an old age insurance program into a demographic financial time bomb.
about 65 years oldage 65
“…a medical guy saying that TECHNICALLY something like immortality is almost within reach. At least, very long lives like 200 years.”
When people lived to 100, they offered 40 year fixed mortgages. Bring on the 80 year fixed mortgages! The next best thing to interest only.
Actually, the main problem facing Social Security is that U.S. life expectancy in 1935 was about 65 years old
That’s because a lot of people died in childhood and young adulthood due to things like infectious diseases, accidents at work, and wars. But if people made it to middle age they were likely to live almost as long as people today.
The main problem with SS is really that people have a lot fewer children than they used to, so the number of workers per retiree is lower.
Lisa,
Those pictures of Katelyn and Logan being put out onto the streets will have everyone in an uproar. I’ll do my part by offering to buy their possessions for pennies on the dollar.
If they drank the kool-aid, how well educated can they be?
Notes from the front lines:
We were looking for houses in Westport, CT this weekend. Realtor told us houses were starting to sell and “she had multiple offers on the houses we wanted to see, but she would show them to us anyway. I passed. Not dealing with any half-assed realtors in a slow market.
Stopped in front of one of the “verbal offer” houses by ourselves. The owner came out and asked us if we were interested . Showed us the house and told us, he wanted $650k but the Realtor told him to list it at $850k. Not only does he not have an offer. No one has looked at the house in the last month!!
Prices are cracking wide open in Westport (considered the western Hamptons by current land owners, LOL). Down 18% yoy with most of the drop coming in the last 2 months.
Wow, it would be great to somehow throw that back in the realtor’s face without exposing the seller as the informant.
Perhaps the best way is to present an offer to the realtor for $650K take it or leave it, assuming you feel it’s a good deal.
i am a bit confused. Why woudl the realtor say to list at 850 if the owner knew 650 was better? Is this a game so that the buyers think that they are gettting a better % off - why risk people not even looking at the listing.
I can only guess. There are multiple houses in the area that are for sale. If this one goes at $650 they all will need to drop their prices.
$650 is still too high for me. House was $350k in 2000.
Westport is one of those towns that is suppose to be immune to any price reductions. To be fair they offer quite a bit of amenities, taxes are low and its a nice family atmosphere. Its worth a few percent for these features. Period. Once Westport goes, Greenwich won’t be far behind and those are the only two towns holding Connecticut together at this point.
She’s probably trying to unload a property of her own at $750k
Probably just the old game of getting the listing by ‘out-bidding’ the other Realtors by promising they can get the most for the seller’s house. Once the seller is under contract, they get the commission no matter how much the house sells for.
Call 60 minutes and see if they want to do a special report on this agent and her deception. It would be a nice follow up to the piece they had on last Sunday night.
Shinning the Light on these RE Crooks, Fraudsters and Shysters has the REIC and Lending Industry ALL SHOOK UP.
They’re stepping all over each other scurrying away Screaming..”Turn the Media Light OFF…I Am NOT a ROACH!”
Downpayment gifts funded by builders and non-profits working with sellers .
Looks like the down payment gifts were priced into inflating housing prices .Doesn’t help the buyers if they can’t afford the payment long term and they walk because they didn’t have “skin in the game “.
I always thought the concept of affordable housing was for the government to make sure that rentals were available for all income levels .Also that Planning Commissions would take into consideratiom differnt income levels and needs in granting permits etc. When did the concept of affordable housing mean buying people property and putting them into ownership they can’t afford .
Its one thing for the gov. to want to keep people off the streets but its another to think the home ownership is a entitlement ,especally when alot of people consider it a investment .
“Looks like the down payment gifts were priced into inflating housing prices.”
Yes — and this is one of many reasons that nobody with a credit rating and enough savings to fund a downpayment should buy a home at the moment, as the playing field is heavily tilted against you.
Exactly. The thought of risking 40 to 50K of your own money in a falling market is the problem here. Risking the banks money is a no-prob for most people. I really believe that the REIC doesn’t get this point. They see sales as sales, and have a minor appreciation for individual risk. I personally would not think of risking my money in this kind of market, but locally I watched an inflated house drop to 500K and then sell at 400K as a ‘deal’. I estimated it’s value at 300K max…but knife-catchers abound, just not me.
“The thought of risking 40 to 50K of your own money …”
Probably smarter to park it in an inflation hedge and wait out the carnage.
Way ahead of you, Stucco!
In the Reagan era, Jack Kemp had the apparently progressive idea that slums could be turned around if people were given a stake in improving the neighborhood — owners are better caretakers, that line of thinking. Unintended conseuquences have taken over.
I seriously doubt that Jack Kemp could have invisioned his progressive idea evolving into a situation where strawberry pickers earning $15,000 a year somehow qualify for loans to purchase homes that cost $500,000.
,i.
“Michael Perry, CEO of IndyMac Bancorp, is stubborn when it comes to delinquent loans. He refuses to ditch them, even as they expand rapidly on the books of Pasadena-based IndyMac,,/i.
refuses to, or can’t?
I have been submitting offers on houses to the lenders lately, regardless of the listing price. I offer 25-45% off the 2005 bubble price, 12-15 times annual rent. I submit all cash offers, 10 day inspections, 5-day closes. I am giving them 5 days to accept the offer. None of them seem to be able to respond in a timely fashion, so I do not have any conclusions for you. I can tell you that every time I turn around there is another lender with a nicer house at a lower asking price just coming on the market. Countrywide, for example, appears to be dropping prices every few weeks until they sell. This is going to get very fun, because after all “When banks compete, I win!” Thank you Lending Tree!!
Did you get a loan approval through Lending Tree?
We do not have enough accumulated savings to do more than a 50% downpayment on a San Diego home at our target price, but I am wondering about the strategy of getting pre-approved, then offering cash offers at deep discounts to list price?
We are buying all cash in a partnership. After we close we will get 10-year interest only loans with 20/20 tails. The properties will cash flow a bit in year one, more when rents increase (which may be a while). 10-year hold strategy and we hope to buy 20-30, mostly in late 08-09.
“…when rents increase (which may be a while).”
This depends on the wild card, which is the degree and timing of success in the War on Savers.
Leave some fun for the rest of us!
I don’t know Get Stucco , some lenders are pulling their prior approvals or losing funding . Not to say that you wouldn’t be solid gold and qualify for a easy to get prime rate loan .Lots of investors offer cash and than get the financing by close of escrow ,but if you can’t perform you could lose the good faith deposit .Putting a big down payment and having a short escrow on a purchase is impressive to any seller/bank (especially now ) because its likely that you will get the loan .
In a interest changing market I also put in the purchase contract a cap on what I will pay in interest rates by close of escrow and the max down payment I will let the lender demand . You should see my contracts , they are so tight I have 25 ways to get out of the deal if I don’t get the deal I wanted .
Jingle, yours is a very interesting strategy. Walking close to the edge, I call it. You are counting on the War on Savers to prevent out and out deflation (lower rents, for example). You are probably right; my response therefore would be speedier flight from US dollar. But you won’t quite be on Our Side any more, when we crow about declining rents …
Damn right, walking close to the edge. This edge is one of those California cliffs that’re always giving way and killing people, too.
It’s way too early to be thinking about anything for true investment potential.
Why would you pay 15 x annual rent? After property tax and maintanace you would be lucky to yield 5% annually — with a whole lot of risk! It can only make sense if you BELIEVE the value will go up in time. The RE bottom can only come after no-one believes this anymore. By then the annual yield will be way above 10% — i.e., junk-bond status.
“By then the annual yield will be way above 10% — i.e., junk-bond status.”
Of course, to get the yield up this high would require quite a bit more price deflation from this point forward. At some point Jingle’s lowball strategy may pay off, but I don’t think we are there yet, because the vast majority sellers don’t know what a terrible investment real estate is, and hence will not willingly drop their prices to the levels his group envisions.
Junk-bond status will arrive once it finally becomes clear that real estate is not an investment — owning property you do not live in is a liability.
Exactly. And this is one big reason why having all these empty McMansions will create a big drag on the U.S. national economy. Somebody has to pay for maintenance of empty homes; otherwise they will crumble to the ground in a few years.
“At some point Jingle’s lowball strategy may pay off, but I don’t think we are there yet, because the vast majority sellers don’t know what a terrible investment real estate is, and hence will not willingly drop their prices to the levels his group envisions.”
The reason Jingles’ strategy is not working, is because there are countless knife catchers happily paying much more than he/she is offering. I know, because I have submitted 3 lowball offers on various properties, all of which were roundly rejected, and the properties subsequently sold for a higher price. These are not premium properties mind you. There are still a lot of speculators out there. It’s going to be several years for Jingle to get those prices.
“…countless knife catchers happily paying much more than he/she is offering…”
Are they offering their own money, or borrowed? And in the latter case, is the demand coming from investors or end-users?
I personally think this is a once-in-a-lifetime opportunity for investors to catch falling knives, as housing inflation has already had its run, and has generated a huge glut of homes that nobody will want or need in a couple of years.
“During an April 26 conference call with analysts, Perry said the company didn’t sell a single dud loan in the first three months of the year because no one wanted to pay what he thinks they’re worth. No way is IndyMac selling to a hedge fund for ‘pennies on the dollar,’ Perry said.”
There is blood in the water, and the sharks are circling furiously.
Have you seen this? From WSJ:
At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%.
http://online.wsj.com/article/SB117910010258001458.html?mod=home_whats_news_us
Thanks — I missed that one. Is it buried somewhere in the bowels of today’s print edition?
Perry said the company didn’t sell a single dud loan
Do you think Perry was calling them “dud loans” when he was begging to sell them?
“Fannie Mae plans to tighten its underwriting guidelines on certain loans especially where risk layering is involved. A spokesman confirmed to National Mortgage News that changes are coming in regard to high loan-to-value ratio mortgages and ‘very low’ downpayment loans.”
Why do they need to worry about loose lending, if they don’t have to report financials? I would think it would be in their best competitive interests to keep their lending standards as loose as possible, to give them a further leg-up on competitors who have to file timelly financial reports?
“When it comes to sales, the biggest factor is ‘the local economy,’ says Dick Gaylord, president-elect of the NAR. ‘But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.”
———–
Anybody buying now is like a baseball hitter taking a giant cut at a slider in the dirt, missing spectacularly, and then running around the bases in jubilant fashion as though he had actually hit a home run.
baseball hitter taking a giant cut at a slider in the dirt, missing spectacularly, and then running around the bases in jubilant fashion as though he had actually hit a home run.
Or like when Zoolander thought he won Male Model of the year and it was actually Hansel…..
Or like when SpongeBob thought he was going to be the manager of the Krusty Krab II, and it was actually Squidward :-P.
“‘At the very time that the collapse of subprime is killing access to the American dream, the one program that is a lifeline for working families is marching to the front of line to shut the last open door,’ Mr. Syphax said.”
It’s an open door to financial ruin.
Listening to the radio here while checking. Hearing an ad (twice now within an hour) offering a 0.25% interest rate. States a payment of $104 for a $500,000 loan. Anyone else heard such an unbelievable offer. No mention verbally of it being an ARM, higher payments may apply, etc. This is on AM 770 in Albuquerque NM. Toxic loans were not as prevalent here as they were in CA. Is this a last ditch effort to find the last GF? If it was going up fast, this would sound like too good to be true. Any other thoughts?
Could be bait and switch just to get people to call . How long is the 1% good for ,one month ? Maybe some lenders know they are going to get cut soon on the programs so they are going all out to get whatever they can before their funding gets pulled .
‘The New York Post. “The housing market has not hit bottom yet and probably won’t until sometime in 2008.”‘
Currently underway is a rolling prediction of when the housing market will bottom out. Watch for it to keep rolling forward until it finally hits the target in some year past 2012.
Right, it should be completely obvious to everyone that the bottom cannot come before 2012, but they keep printing garbahj.
‘From MarketWatch. “A spring home-selling season that’s looking like a bust and pressure from growing inventories of houses in the resale market should intensify home-price declines in the second half of 2007, Wall Street analysts say.”
“‘We think the housing downturn has decisively moved to its second act of falling prices,’ wrote Deutsche Bank in a report to clients Monday.”’
Would anyone care to try and catch a falling knife?
Gas is averaging $3.25 for the lowest grade gas at most of the stations in Albuquerque.
$2.98 to $3.09 in LC
~Misstrial
More wishful thinking bottom in 2008???
Yeah Right. The massive price deflation is kicking in now.
Most of these bubble markets need to drop 50% in house prices to meet incomes.
ad with 50 year term
click!
‘What happened to us is the media,’ says Ellen Renish, regional vice president for the National Association of Realtors. And she continued: “In other words: we’re victims. We expect an immidiate bailout by Congress. Some of our members have seen their income drop over 50%. How many other honest, hardworking people would accept that? It’s only fair that we should be able to continue the lifestyle we have gotten used to in the last 4-5 years.”
On 60 minutes, Rennish was the perfect realtor, unable to clearly answer why she deserved 6% or why the MLS should not be open to all. She came up with making flyers, posting signs and making sure the house was clean. In closeup, she managed to look shifty and nervously defensive.
“Honest, hardworking”…someone should introduce this woman to hard work. Or maybe she’ll find out when she has to look for a job.
And for her info, plenty of Americans find themselves with zip income when their jobs are outsourced. Reality is gonna hit this woman hard.
“In closeup, she managed to look shifty and nervously defensive.”
And quite masculine. “That’s not a woman! That’s a man, baby.”
I didn’t see the episode but for work I was going to suggest “Pole Dancing” until you put that picture in my head.
Wait a minute, wasn’t the realtor on 60 Minutes a Deborah Arends? I think Ellen Rennish is someone else. Not dissimilar in point of view, of course.
My husband says I am crazy to think about using a company like Redfin to buy a house because the realtor selling the house will not accept the offer. He says it’s a like a big club and if you are not a member you get screwed. I say you get screwed if you use a realtor and pay them 3% to do NOTHING! I want to get that money myself and in a down market if a realtor turns down an offer they are crazy! I told him I would go to the home owner and tell them their realtor turned our offer down and it would be accepted. I am not looking to buy for at least a year or more. Probably more since I do not want to catch a falling knife! My husband says we are wasting our money renting. I told him he is nuts if he wants to buy and it is throwing money away!
Don’t take this the wrong way, but your husband’s an idiot.
Fed survey finds, “broad tightening of lending standards for non-traditional subprime mortgages”
“notable percentage of domestic banks report weaker demand for consumer loans”
Everything is fine, don’t worry:
http://www.shadowstats.com/cgi-bin/sgs/archives
“May. 12, 2007
Annual M3 Growth Accelerates to 12.8% / Retail Sales and Trade Deficit Take Hits, as PPI Booms / Fed Hints at Inflationary Recession / Comments from the U.S. central bank usually are couched in such cautious and careful language as to make a Wall Street attorney blush. Removing the regular platitudes as to likely economic expansion and inflation moderation in the coming quarters, the crux of the May 9th FOMC statement went: “Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. … the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected.” That is as close as the Fed will get to acknowledging a recessionary inflation, until well after the fact of broad market recognition. Last week’s economic reporting further moved market expectations towards the unthinkable combination of a contracting economy beset by high inflation.”
“…the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected.”
If the Committee keeps saying that without convincing follow-up action, they run the risk of becoming the messenger that sparked inflation fears.
this is good
http://www.financialarmageddon.com/2007/05/the_contagious_.html
Another good indicator..comments in your sunday real estate section from local residential realtors..”We don’t see any slowdown here.” she said as the repo man towed away her late model Lexus with the vanity tag.
A wee bit off topic, but interesting article on auto loans in yesterday’s Tribune. The scary fact to me was that 60% of auto loans in last year were more for 60 months or longer. And of course, that means negative equity.
http://www.chicagotribune.com/business/chi-0705120044may13,1,2951108.story?ctrack=3&cset=true
Only if it was 100% down. If there was a trade in they might be breaking even.
Grinis & bear it…
You made your own bed, now sleep in it.
“And clearly, our wages have not kept up with the inflated housing prices, so we’re due for a fall. ‘The typical cycle is about four years, and we’re only a year and a half in,’ notes Grinis. ‘It will be late ‘08 before the dust settles and you can call a bottom.’”
“Last week, John Hurley, Ireland’s central bank governor, said the available evidence pointed to a “soft landing in the Irish property market”. He forecast that Irish house prices would grow by at a rate in “low single figures” this year, after reaching 15 per cent last year.”
Sound familiar? Looks like they are about a year behind us.
1 in 7 houses in Ireland is empty, bringing comparisons to the potato famine of the 1800’s. Even the US is nowhere close to this.
Ireland is heading for a spectacular crash when the music stops.
http://tinyurl.com/2j9o33
“Mortgage brokers cashed in on U.S. housing bounty
LOS ANGELES (Reuters) - Money may not grow on trees but for a while it seemed to grow on houses, and Colleen Moorhead knew exactly where to turn when she needed to harvest some cash.
With a few phone calls, broker Joyce DeAngelo could put Moorhead and her husband into a new mortgage and cut them a check. They used more than $100,000 in cash they netted from the refinancing for living expenses and renovations.
Between 2001 and 2006, the Moorheads refinanced their three-bedroom San Diego home at least nine times, county records show.
But mortgage broker DeAngelo didn’t work for free. Each new loan carried up to $13,000 in fees, along with prepayment penalties, and the Moorheads fell deeper in debt.
A marginal presence in the industry 20 years ago, mortgage brokers have become the face of the $10 trillion home-loan industry, the single point of contact between a sophisticated financial world and borrowers committing to spend hundreds of thousands of dollars to buy a home. Brokers often present themselves as disinterested parties, but the industry feeds on fees from lenders and bonuses when they complete a deal.
Moorhead and her husband now owe $603,000, up from $196,000 when they started, and more than $10,000 over what their house is worth, according to one online estimate. They’re likely to lose it soon if they can’t somehow make payments greater than their monthly income. Their broker, DeAngelo, said she tried to save them from financial disaster, but her client kept wanting to refinance.
“I told her every time that she can’t keep doing this, she’s going to lose her house,” DeAngelo said, adding that she gave Moorhead tips on straightening up her finances that were mostly ignored. “She has no one else to blame.”
‘She has no one else to blame. ”
No I think some blame can go to the Dope Dealer mortgage broker that gave these people 400k in chunks and made alot of bread on these equity addicts.Im sure it took a little fancy work to get these out of control borrowers approved ,(in other words ,liar loan )
I refused to give loans to people who where becoming addicts for equity .I knew many underwriters that cut back a loan or denied it on a refinance because the underwriter saw that the borrower was getting to much debt or was playing around with credit to much . This mortgage broker should of been saying that she needs to be cut off before the bank gets a foreclosure home from this . The underwriters /mortgage makers first duty is to protect the bank or lenders from loss . Why would the mortgage broker be worried about her losing her home if she qualified ,or why would she worry if she didn’t put them on a toxic high-interest rate loan with pre-pays and high fees that would doom these borrowers . Lets just say that the mortgage broker didn’t care about the bank/lender or the borrower .
Gas is $3.15 here in Columbus, Ohio.
Gas is USD$2.90 in S.Car (29 Ameros?)
Oops, 0.29 Ameros, can’t ever get that darn conversion right…
““Stories about a real-estate ‘bubble’ and its potential to burst caused consumers to ‘not do anything,’ she says. ‘And nothing happened. The bubble stories really stopped things for three months,’ Renish says. ‘It was pretty scary.’””
Um, bubble stories have been in the MSM for a couple of years now. Why all of a sudden do bubble stories stop sales?
Answer: Because prices got so high that any amount of creative financing couldn’t make them go any higher. When prices stopped going up, people decided that there MIGHT be a bubble.
The media didn’t do it…prices did it.
Mortgage companies are all but done. If a buyer need good credit, 20% down, and qualifying income why in the world would he or she go to a mortgage company. With those criteria, why not use a bank.
“‘At the very time that the collapse of subprime is killing access to the American dream, the one program that is a lifeline for working families is marching to the front of line to shut the last open door,’ Mr. Syphax said.”
Dear mr. Syphax, forclosure is NOT the American dream.
Larenter, in most states buyers don’t pay commissions to buy a home. The seller pays it and could tack it onto the price of the house, however in better times it would not have appraised. Also can you go see the house before buying and are there home inspections and seller disclosures. No one ever said.
We are not going to fire-sell when we have the intent and ability and expertise to work through those loans and sell them ourselves,’ he said.”
Wow - he sounds uncannily like all the greedhead sellers of 2006 with their “I’m not going to give it away!” mantra in response to the market’s rejection of their ‘dream on’ asking price.
“‘At the very time that the collapse of subprime is killing access to the American dream, the one program that is a lifeline for working families is marching to the front of line to shut the last open door,’ Mr. Syphax said.”
Nothing is more sickeningly insincere than the crocodile tears shed by the likes of Sphincter Boy Syphax over the supposed denial of the American dream for working families. Him and his ilk have turning working stiffs into a vast new serf and wage-slave class for the benefit of the financial oligarchs on Wall Street. My “American dream” doesn’t include having to have two full-time wage earners to buy some grossly overpriced, illegal-alien built crapbox that’ll be falling apart long before the mortgage runs out, while some indifferent day-care kiddie kennel raises my kids because my wife and I are too tired and stressed out to devote quality time to them. No, once sanity returns and housing prices drop to historic, responsible levels, i.e. three times median income, THEN working families who live within their means will be rewarded by having a shot at a decent home that won’t turn them into serfs on the incorporated global plantation.