Lowball Offers Lose Status As “Deal-Stopping Insult”
The Tribune Star reports from Indiana. “They are sitting empty all over town. Foreclosed homes, known as REO (Real Estate Owned) properties, have become a huge part of the housing market in Terre Haute, Indiana and the country as a whole. ‘This is a national thing,’ said Cy Marlow, broker in Terre Haute. Marlow, who deals only in REO properties, already has listed 63 foreclosed properties in 2007 and sold 248 REO listings last year. The REO market ‘is huge,’ he said.”
“Sen. Evan Bayh and other senators say the Federal Reserve is ‘looking the other way as irresponsible lenders use aggressive and often abusive tactics to sell borrowers on loans they will never be able to repay.’”
“Others are pointing a finger of blame at real estate appraisers, saying they are overvaluing properties under pressure from mortgage brokers, homeowners and real estate agents.”
“Still others look elsewhere for the cause of the problem. ‘It’s not due to predatory lending. It’s not due to over appraisals,’ Marlow said. ‘I think people aren’t living within their means.’ The media bombards Americans with the message ‘buy, buy, buy,’ Marlow said.”
“And others say the problem of foreclosures is a result of the bursting of the ‘housing bubble.’ The end of the ‘bubble’ means more and more people are finding themselves owing more on their homes than the property is worth.”
“One local securities trader who deals frequently in mortgage-backed securities said he witnessed first-hand an incident where a home sold for several thousand dollars more than its asking price so that the borrowers could use the extra money to make the required down payment.”
“‘This stinks to high heaven,’ the securities broker, who asked not to be named, said. But, he added, ‘I’ll bet you it happens a lot.’”
“Practically everyone interviewed for this article agreed that historically low interest rates, which reached 1 percent by 2003, generated by the Federal Reserve helped fuel the housing bubble.”
“‘All of a sudden we had a lot of people in the [loan] market who couldn’t get there before,’ said the Terre Haute banker who asked not to be named.”
“‘Foreclosures are bad for honest Hoosiers,’ said Indiana Secretary of State Todd Rokita. ‘We’re almost in a crisis mode in our subprime market,’ Rokita said.”
The Journal Sentinel from Wisconsin. “The calendar says 2007. Home prices say it’s still 2006.”
“‘If your house was worth $300,000 last year, that’s probably what it’s worth today. But buyers may come in with a $280,000 to $285,000 offer. I tell sellers, ‘If that happens, you need to find a way to make the deal work because there’s an awful lot of inventory out there. The buyer will just go find another house,’ Dave Schmidt Jr., chairman of Greater Milwaukee Association of Realtors, said.”
“More than 14,000 properties hit the market in this year’s four months, nearly three times the 4,989 recorded sales. April, typically a banner sales month, produced just one sale more than March, 1,493, as 4,014 newly listed properties joined unsold inventory in Milwaukee, Waukesha, Washington and Ozaukee Counties.”
“Home shoppers keep pushing their market advantage on one main front: price, said Tammy Maddente, executive vice president of Wisconsin-based First Weber Group.”
“‘We’ve had a year of the media saying that the real estate market is tanking. Prices have corrected. The markdowns have been taken (and) it’s probably a fair assessment that we’re at 2005 levels. But buyers’ offers are still coming in way under asking,’ Maddente said.”
“Lowball offers, typically defined as 10% or more below asking price, have lost their historic status as a deal-stopping insult.”
“‘You have to start somewhere,’ reasoned Joseph A. Horning, president of Brookfield-based Shorewest Realtors. ‘Buyers are always looking to keep prices down. Because of such large inventory, they’re having success these days.’”
The Grand Rapids Press from Michigan. “The home on Cascade Road SE is listed for sale at $234,900, but you can name your price. Whether it is accepted or not remains to be seen.”
“The four-bedroom home on more than an acre is one of 18 foreclosure properties in West Michigan to be auctioned later this month. Troubled properties are hitting an already flooded market.”
“More than 3,000 properties joined the market last month in the Grand Rapids area, 5 percent more than April 2006, according to the Grand Rapids Association of Realtors.”
“Agent John Hilton, who specializes in selling foreclosure properties for lenders, said they are affecting the rest of the market. ‘It’s kind of forcing the retail market down,’ he said. ‘There are so many (foreclosure) properties on the market, it’s going to have an effect on price.’”
The Star Tribune from Minnesota. “Two years ago, buyers were snapping up downtown condos and townhouses as fast as they could be built.”
“Today, Todd Stutz is pondering the future of a high-profile condo project he had planned to build on a prime site near the Guthrie Theater in downtown Minneapolis. He attributes the demise of the project, which he hopes to revive in some fashion, partly to a scarcity of investors and speculators.”
“‘That has an impact on everyone’s projects,’ said Stutz. “We’re returning to more of a normal business. That speculative buyer has really [gone] away, which I think is good for the market.’”
“Tom Melchior, a multi-family real estate analyst in Minneapolis, said a flurry of purchase agreement cancellations at several projects suggests that a greater-than-expected number of the reservations were held by speculators.”
“‘We’ve all underestimated the impact of this investor market,’ he said.”
Minnesota Public Radio. “Minnesota lawmakers and the governor have approved bills addressing the mortgage foreclosure crisis.”
“‘You can bring a direct suit against the mortgage placement person. Not only can they sue them, the consumer will now have the right to get their attorney’s fees paid if they win against the mortgage broker. They will also get the right to bring an injunction against that broker so that they don’t do it to other people and they can also get their costs of investigation,’ says Rep. Joe Mullery.”
“Sherrie Pugh Sullivan, who directs the Northside Residents Redevelopment Council in north Minneapolis where foreclosures are spreading like wildfire, says 600 families came to her neighborhood non-profit seeking help because of foreclosure in 2006.”
“She says the new state laws will reduce the number of new mortgage scams. But Pugh says there are hundreds of families in her area already locked into bad mortgage deals.”
“‘We really haven’t hit the peak and so we actually think there’s potentially another three years that we’re going to see people coming through,’ Pugh says.”
everyone play lowball - in NJ 20+% off
http://njrereport.com/index.php/category/lowball/
“Lowball offers, typically defined as 10% or more below asking price, have lost their historic status as a deal-stopping insult.”
Methinks this definition of “lowball” is way off. 10% off asking might have been considered a lowball offer when it was a seller’s market, but in a buyer’s market following the huge price increases during the boom and subsequent non-reductions in price by sellers, 50% off of asking would be closer to what should be considered “lowball.”
Amen Brother Mikey. The “deal-stopping insult” has been recast as greedy, delusional buyers with their 1.5% “reductions.” I can’t wait to see more and more “insulted” greedhead sellers come crawling after the lowballers they spurned, begging piteously for that lowball offer that has since sunk by another 10% or so.
Won’t this be wonderful? They reject a ‘lowball’ offer when, in reality, it may be the only offer they get!
Cy Marlow, Realtor Noir…
“They are sitting empty all over town. Foreclosed homes, known as REO (Real Estate Owned) properties, have become a huge part of the housing market in Terre Haute, Indiana and the country as a whole. ‘This is a national thing,’ said Cy Marlow, broker in Terre Haute. Marlow, who deals only in REO properties, already has listed 63 foreclosed properties in 2007 and sold 248 REO listings last year. The REO market ‘is huge,’ he said.”
Ready for your “Big Sleep”?
What exactly is this? Is it “REO” directly after the builder builds it and can’t sell it or does a Realestate agency, i.e. All Estates, buy a home and try to sell it? How does a home become REO and what’s good or bad about that?
I think it becomes REO when a Trustee’s auction fails to produce a bid equal to what the lender will accept ( = what was owed on the property). Then the lender owns it, and can either use a real-estate agent, or try some further auctioning tactic.
A reo = real estate owned.It is bascially when the lender has went trhough the forclosure process and taken back the property from the trustor under a trust deed.The forclosure process can take months depending on the state.The homes usually end up being auctioned off at the county courthouse at the end of the whole deal.The lender will be there to create a minimum bid usually.If no one bids on the house it goes back to the lender.Under a trust deed scenario the benifiary, or the one who lent the money, tells the trustee, usually title company, to initate the forclosure process if someone is late on payments.A notice of default is created.Some states allow a redemption period where the trustor can keep the property if they bring loan up to current during the process.You can always give the property back to the bank(deed in lieu of forclosure) instead of being forclosed on.Alot of people are deadbeats and get a few months free rent while being forclosed on.A forclosure is worse on your credit report.
Once an reo the lender or bank will usually list it with a realtor on mls or have an in house person to dump the properties.
Its property that the bank/lender owns after a short sale or taking over the property by foreclosure (because of default on payments by the borrower/owner . A number of lenders than hire real estate companies to market their ” real estate owned “,REO’S
Bank owned property has to be sold and usually it sells at a lower price than the general market . The bank doesn’t want to hold the property and doesn’t live in it or doesn’t wants to rent it so they will reduce the price to move it faster .Sometimes the bank has already lost money on a property owned because the value of the market has gone below the loan amount . Many foreclosures are torn up by the borrowers that lost the property to the bank .Sometimes when there are to many foreclosures in a areas the lenders want to cut back loan amounts/appraisals because of the declining values because of foreclosures .
If you have to many foreclsures in a area it could bring down the values in that area because REO are sold at lower prices .Also the REO’s are in competition with regular listings and if you have to much of a supply of listings it brings the prices down. If a REO property remains vacant for a long time ,it sometimes needs to be boarded up because of vandalism.
If a bank/lender has to many foreclosures they could go belly up because of to much loss on loans . So, I would say REO’s are really bad and that can bring down lenders and whole neighborhoods .
We all reponded to this question at the same time .
A example of a very bad foreclosure situation is when a factory closes down and a whole town loses their jobs and they can’t find new work and whole neighborhoods go into foreclosure . The Lenders take the property back but the resale value is low and there isn’t any demand unless new jobs come into that town .
The problem with this sub-prime lending is that people are losing their homes to foreclosure because of faulty lending in that they could not afford the home mortgage payment to begin with .These people/borrowers were just betting that real estate would go up or they thought they would be priced out forever . Many speculators bought property with low downs thinking they could just flip the property to a new buyer at a good profit in a short time but they really could not afford to pay the mortgage payments long-term and they can’t rent for enough to make the payments ,so this sort of owner is going into foreclosure also .
I’m just making this long post for new people .
“Its property that the bank/lender owns after a short sale or taking over the property by foreclosure …”
I don’t think a short sale becomes REO property. As I understand it, a short sale is a sale for less than the mortgage balance, that must be approved by the lender. The property transfers directly from seller to buyer. Correct me if I’m wrong.
Your right , sorry . In the short-sale case the lender just ends up with the loss on the books .
“If a bank/lender has to many foreclosures they could go belly up because of to much loss on loans . So, I would say REO’s are really bad and that can bring down lenders and whole neighborhoods .”
The plot thickens- will it be REO -> RTC (Resolution Trust Corp)?
REO: Blame it on a friend?
“REO: Blame it on a friend?”
Except now it isn’t REO Speedwagon. It’s REO Crackwagon.
no morts for MN or MA
no morts for anyone !
“‘You can bring a direct suit against the mortgage placement person…”
Yep, lockup. All new loans will require 20% down, and will be made only to prime customers.
Another “industry” coward…
“‘This stinks to high heaven,’ the securities broker, who asked not to be named, said. But, he added, ‘I’ll bet you it happens a lot.’”
This reminds me of all the times my brothers and I, and our cronies that we grew up with, were collectively being read the riot act for some grand act of mischief that brought down the wrath of our elders during our elementary-school years. My Dad or some other adult would be furiously shaking a finger at us and bellowing, “This nonsense has got to stop — NOW!!!!” And every kid in the line-up, all equally guilty, would be nodding emphatically as if to say, “Yessir, all these OTHER miscreants really need to mend their ways….”
10% is a lowball?
Good luck!
“Lowball offers, typically defined as 10% or more below asking price, have lost their historic status as a deal-stopping insult.”
Ten percent is not a lowball offer in this market. Just getting warmed up at 10 percent.
A not to be named hick, from French Lick?
“‘All of a sudden we had a lot of people in the [loan] market who couldn’t get there before,’ said the Terre Haute banker who asked not to be named.”
Stupid buyer gets loan; doesn’t read contract; gets NOD and then foreclosure; plays victim; shyster lawyer sues loan officer and broker (llc or inc); loan officer and broker file 7; buyer ends up with zip, nada, nothing; buyer owes shyster lawyer; shyster lawyer sues buyer for his fees. hehehehehehehe
Today’s somewhat Maddening Master Of The Obvious (MMOTO)
“Home shoppers keep pushing their market advantage on one main front: price, said Tammy Maddente, executive vice president of Wisconsin-based First Weber Group.”
Related to paris, I fear…
“Agent John Hilton, who specializes in selling foreclosure properties for lenders, said they are affecting the rest of the market. ‘It’s kind of forcing the retail market down,’ he said. ‘There are so many (foreclosure) properties on the market, it’s going to have an effect on price.’”
“‘If your house was worth $300,000 last year, that’s probably what it’s worth today. …”
Pan to Aflac duck staggering out of the barber shop!
Nonetheless, you will probably only find buyers willing to pay $285,000 or less for your home. Of course, you can sell at the discounted price, knowing in your heart that it was really worth $300,000. Or better yet, invest $25,000 in home improvements, then sell for $300,000.
I know in my heart that my Enron stock is worth $100. Anyone?
If it was really worth $300k wouldn’t someone line up to buy it for that? If all you can get is $285k, well, that’s what it’s really worth now…
yep. That paragraph was just too funny to me.
Translation: If your house was worth $300k last year, it’s worth $300k today, unless of course, no one will buy it for that.
Duh, DUH! (slappin’ forehead)
BayQT~
Sounds like a Stutz Bear-Cat, to me…
“Today, Todd Stutz is pondering the future of a high-profile condo project he had planned to build on a prime site near the Guthrie Theater in downtown Minneapolis. He attributes the demise of the project, which he hopes to revive in some fashion, partly to a scarcity of investors and speculators.”
Now that’s a business plan to fund - “He attributes the demise of the project, which he hopes to revive in some fashion, partly to a scarcity of investors and speculators.”
This may be the tag line for dozens of failed projects, projects depending on Kool-Aid and moonbeams to make a credit-bubble profit. With an even ‘normal’ market, these guys are screwed, blued and tattoed.
Nevermind the need to sell to an “end-user” at some point. There aren’t investors, cuz there aren’t end-users who can afford (or want) this product.
Without even realizing it, he is admitting how much of a sham this run-up has been.
“Nevermind the need to sell to an “end-user” at some point.”
I understand now. It is the multilevel marketing approach to RE. Don’t sell to owner occupants- just recruit more specuvestors!
The first shoe has dropped. In Minnesota foreclosed homeowners can now sue the brokers who put them into their homes. It won’t be long before the screwed buyers will be allowed to sue the sellers the brokers represented.
The only people with any money or property that can be taken by millions of screwed buyers are the millions of sellers who sold the homes. They have bank accounts, cars and real estate. The thousands of brokers and real estate agents have but a fraction of the net worth of the millions of sellers. The lawyers will figure that out soon enough.
–
“She says the new state laws will reduce the number of new mortgage scams.”
One charm of our legal system is that laws to stop scam abuses, especially, financial scams, are passed AFTER most of the damage is already done. Stock options fraud and abuse is a case in point from the stock bubble.
Jas
The other problem is that the scam has to be caught. Passing a law is just blowing hot air unless you ENFORCE it. Most fraud was already illegal, they just couldn’t be bothered with it before. Given the property tax structure the states had every incentive not to see the fraud.
And what wasn’t illegal was suger coated poison. But I wouldn’t blame the real estate too much…they aren’t as a group any smarter than the FB’s they sold to, and in many cases are in fact the FB’s. The entire event is unbelieveably screwed up - so much so that the very large majority (incuding a host of analysts) just can’t see it.
–
Our “lawmakers” need to appease the People. At least they must appear to be doing something useful for the benefit of the People. That is the system we got, whether we like it or not.
Jas
The other problem is that the scam has to be caught. Passing a law is just blowing hot air unless you ENFORCE it.
Federal, State, and local law enforcement slugs can be counted on to turn a blind eye to the problem, unless goaded into some token action by a rare newspaper editorial or some such thing. However, the lawyers are a different story - they smell money, and will swarm in like monkees at a salad bar once their lobbyists buy off enough politicians to pass new legislation similar to what’s been enacted in Minnesota. The lawsuits, not the laws, will force the mortgage industry to clean up its act (somewhat).
Hoosier thinking of, Rokita?
“‘Foreclosures are bad for honest Hoosiers,’ said Indiana Secretary of State Todd Rokita. ‘We’re almost in a crisis mode in our subprime market,’ Rokita said.”
WTF? $285K on a $300K asking price is a lowball offer? On what planet do these people live?
–
Is there any harm in exaggeration? Par for the course, I would say, for real estate business.
Jas
“Lowball offers, typically defined as 10% or more below asking price, have lost their historic status as a deal-stopping insult.”
10% or more are… you kidding me?, Let’s try 35% or more as a starting point for a lowball offer. The media cracks me up.
The media is stuck in 2003 mode where a 10% above asking offer was the norm. When looked at it like that, I guess a 10% under is a lowball offer. I thank my lucky stars every day I got out of my house when I did.
DON’T like Lowballs Tammy ?
80% plus of the Houses in Wisconsin, DISPITE their “Old World Charm”, Character and other seedy REIC BS need to be HIT with a D-10 Bulldozer. These SHACKS have had the LIFE and the USE Exploited out of them by Greedy owners, LLs and RE Agents JUST like yourself since the the early 1950’s.
Let them ROT on the LOT for a WHILE ….THEN Really, Really Lowball the HELL out of them!
In lieu of too much trouble coming out of Indiana, Jones…
Today’s Kool Aide flavor:
Blueberry
Drink Up!
Here’s mainstream article, it’s really critical of broker’s, appraisers etc.. Particularly interesting was the lady who was 10 months behind on her mortgage, but couldn’t be foreclosed on because her husband is in Japan. I guess states can somewhat control this?
Also the article mentions that an audit of applications vs tax records showed that 60% of applicants increased their incomes by 50%. Ouch
http://news.yahoo.com/s/nm/20070514/bs_nm/usa_subprime_brokers_dc;_ylt=AtLboHEi4yyREq3sr0a03q5eW7oF
‘We’re almost in a crisis mode in our subprime market,’ Rokita said.”
Maybe its just a personal preference, but I’d rather deal with the crisis today than sit on the ticking time bomb that the millions of American’s sitting in properties they cannot afford represent.
There’s not a whole lot that the secretary of state can do. The SOS can assist in prosecuting things like securities fraud and deceptive practices, but if the lender is from out of state, there’s not much they can do except ban it from making loans which doesn’t do anything for those who are already hosed. For a while, Indiana led the country in foreclosure rates (I think FL and perhaps CO have since passed us) which is surprising since there was hardly any bubble here and thus none of the rampant speculation that seems to have occurred on the coasts.
Of course, a blanket statement like “there was no speculation here” isn’t entirely accurate. I’ve had a guy in my office to file BK who bought 5 rental properties and now is stuck with them because the rental market here is in the tank, the city raised property taxes, and oh by the way, the appraisals that were done on them were all wildly overinflated.
I guess we’re not much different than California or Florida after all. Well, except for the winter weather. You guys definitely have us beat there.
Being from Terre Haute, let me just say I am simply amazed that someone from somewhere else would actually read the Tribune Star! Kudos to you for doing your homework! That’s some serious digging! haha!
Lowball offers, typically defined as 10% or more below asking price, have lost their historic status as a deal-stopping insult.
Count on even LOWER “lowball” offers.
countrywide.
Click.!
A new way to polish a turd.
http://www.azcentral.com/business/articles/0513homeprices0514.html
“The wide gap between what a home is listed for and what it sells for is shrinking, which means Valley home sales could start to pick up if more buyers and sellers agree on prices.
No mention that this data is from March, showing buyers and sellers coming together. BUT, no mention of April sells bing off 10% from March. If this “meeting of the minds” is helping, why the 10% drop in April??????
More lies of course.Where do they get this bullsh@t anyway?
I can’t think of a better way than foreclosure to help persuade people to live within their means. How are they possibly going to get that message when all they hear is how they’ve been “victimized”?
How about a deep recession to cure even more ills? I really feel that the layperson still feels that real estate is the key to their financial security.
We need a return to the time when real estate isn’t the main topic at dinner parties. In fact, to a time when it isn’t even mentioned.
Off Topic
In 2000, tech companies had 12 stadium names; 10 of those companies are now bankrupt. Today, 14 stadiums have bank names.
Interesting factoid.
That is very interesting.How many do you think will be around at the end of 2008? One bubble to the next.The little guy always gets in too late as usual and loes money to the scammers.
The little guy should pay more attention.
Nothing stopped the little guy from making money in the 90s tech bubble. Nothing stopped the little guy from making money in the 00s r/e bubble either.
Don’t make this into a class warfae issue. It’s not.
Good pull. Are you also including Arenas/Coliseums?
Invesco Funds doesn’t even exsist any more! No one calls it Invesco Filed anyway, always was and will be Mile High Stadium. Get observation re: tech=banks, I can use that one.
I’m surprised that they haven’t found a new sponsor yet (maybe it was prepaid). Even the lowly Colorado Rapids stadium has a living sponsor (Dick’s Sporting Goods).
Jack Kent Cooke called his place “The Fabulous Forum”…
He was a Canadian and thought that there being boucoup ex-pats from his native and frozen land, in the city of angles, he’d clean up bigtime on The el lay Kings, with a heckova fan base.
They stayed away in droves and it led him to remark:
“Now I know why they left Canada: They hate hockey!”
“And others say the problem of foreclosures is a result of the bursting of the ‘housing bubble.’ The end of the ‘bubble’ means more and more people are finding themselves owing more on their homes than the property is worth.”
What a heaping load of BS! Owing more than your house is worth has NOTHING to do with your ability to pay the note. What kind of stupid logic is this? The only thing the “negative appreciation” does is close off the housing ATM. But again, borrowing money to purchase an asset, then borrowing from that asset to pay for that asset was NEVER a smart plan. I hate people.
” But again, borrowing money to purchase an asset, then borrowing from that asset to pay for that asset was NEVER a smart plan. I hate people. ”
I have found a new metaphorical home as this is something I would say but no one would or could understand even after a long explanation.
I wouldn’t be lowballing this early. It gives the sellers hope and we need to remove all hope. Lowballing tells them people are still interested. Nothing tells them a totally different story.
I’ll start lowballing in a year or two. But I’ll be lowballing to the banks. They will be ready then.
That’s smart. An underwater FB has no incentive to accept your lowball offer. When banks have many foreclosures in their inventory, they’ll be looking for practically any offer.
Still others look elsewhere for the cause of the problem. ‘It’s not due to predatory lending. It’s not due to over appraisals,’ Marlow said. ‘I think people aren’t living within their means.’ The media bombards Americans with the message ‘buy, buy, buy,’ Marlow said.”
Ah HA! The media created the bubble! So it’s only fair that the media should also pop it (refer to comments in earlier thread blaming the media for sidelined buyers).
Man, the blame game is far reaching.
“Practically everyone interviewed for this article agreed that historically low interest rates, which reached 1 percent by 2003, generated by the Federal Reserve helped fuel the housing bubble.”
Speaking of rates, I talked to my mortgage broker today. Nice woman, and I like to keep in touch and talk about the market in the Seattle area. She said the word on the street is that the fed may be lowering rates soon, and if they do, that’s going to kick off another boom in the northwest. I had to bite my tongue. I think it is most likely wishful thinking on her part. To her credit, business is still pretty good in her neck of the woods, so she isn’t starving yet.
It is not wishful thinking. The only reason people aren’t buying now is that rates are so high.
JimmyB:
It’s a good idea to put DOWN the crack pipe while blogging.
6% on a 30 year fixed is not high, quite the opposite.
And that’s not even knocking off the tax deduction and the rate of inflation. That 6% rate is more like 2-3% when all is said and done. Money is cheap.
Yeah–I bought my first house in 93 with a 7% rate, and thought _that_ was pretty amazingly low! People blaming the slowdown on “high rates” are smoking serious crack.
Ditto, ditto, ditto. JimmyB, rates are not high right now. Averaged 6.14 for a 30 yr fixed last week. Very low by historical standards. Based on the Fed rate, mortgage rates should already be at 7% …I don’t understand why they (mortgage rates) haven’t risen faster. My credit union is offering a special 6% CD rate and I’ve seen Money Market accts at 5%. Why anyone would be lending at 6.14 % beats the heck out of me.
“She said the word on the street is that the fed may be lowering rates soon, and if they do, that’s going to kick off another boom in the northwest.”
Oh, yeah. NOTHING stimulates the bond market/lenders more than hyperinflation and devaluation. Is the FED planning to enter the mortgage lending business? It had better- there might not be any banks, hedge funds or pension funds left…
I’m still of the opinion that Bernake will hold rates steady, stuck between pressure to drop rates from congress to stimulate the economy and pressure to raise rates from foreign central banks raising THEIR rates.
“She said the word on the street is that the fed may be lowering rates soon, and if they do, that’s going to kick off another boom in the northwest.”
1. No they’re not.
2. No, really, they’re not.
3. Besides, it wouldn’t matter even if they did. Which they won’t.
4. Are you listening? (Note that Fed Funds futures are quoted as 100 - the expected rate. The price doesn’t reach 95 (i.e., a cut from 5.25% to 5%) until January 2008.)
The entire stock market gyrates off these interest rate cut hopes as well. This much is clear. Rates will go up and rates will go down, but we will probably never see again, in our lifetimes, fed fund rates at 1%. And half point cuts here or there will not relight the real estate bond fire that ignited when rates hit there bottom.
bond fire = bonfire
And the interest rates aren’t the only factor. There was the Nasdaq stock market crash, the World Trade Center crash, and psychologically that drove everyone into real estate. Rates were at historic lows and lending standards were abandoned.
With that many Black Swans this was the real estate bubble of the millenium. A 50 basis point rate cut is not going to bring that market back.
I found this hilarious. A good read. Too bad some of the now FBers didn’t read this before signing on that suicide note.
http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/3BadReasonsToBuyAHome.aspx
The 2nd reason people aren’t buying now is that house prices are so high.
I thought it was the lousy weather.
“‘If your house was worth $300,000 last year, that’s probably what it’s worth today. But buyers may come in with a $280,000 to $285,000 offer.”
Guess what? That’s what your house is worth. Realtors aren’t doing sellers any favors by making this kind of idiotic statement.
The Fed’s quarterly loan officer survey is out.
Last quarter, 16% reported tightening mortgage standars. This quarter, they’ve broken it into prime, nontraditional, and subprime. The numbers are 15.1%, 45.5% and 56.3% respectively.
OTOH, a net 14.2% are loosening standards for credit cards.
“‘You can bring a direct suit against the mortgage placement person. Not only can they sue them, the consumer will now have the right to get their attorney’s fees paid if they win against the mortgage broker. They will also get the right to bring an injunction against that broker so that they don’t do it to other people and they can also get their costs of investigation,’ says Rep. Joe Mullery.”
TOTALLY AWESOME! Mortage brokers everywhere will be sleeping a lot less soundly once they get wind of this, and they’ll be soiling themselves once this legistlation catches on in other states, which it most assuredly will. The trial lawyers are salivating at the prospects of the veritable lottery of individual and class action lawsuits by FBs against indisputably guilty mortage brokers. The chilling effect this is going to have on the industry will be a truly beautiful thing to behold. Wait till the lawsuits start including the other villains of the unholy trinity - appraisers and realtors. Wait till all those multiplying legions of bitter FBs find a snarky lawyer to convince them, “You’re not a dumb*** - you’re a VICTIM!!!!” And the jury of their mouth-breathing peers will make the outcome of any trial a foregone conclusion.
This just gets better and better. Who wants to soar with the eagles, when you can feast with the vultures?
“This just gets better and better. Who wants to soar with the eagles, when you can feast with the vultures?”
I am TESTIFYING at the temple of Brothah Sammy! One of the most awesome posts outlining the shape of things to come.
I’m a Minnesotan, and I cheered when I read about this law. Y’see, one of my idiot relatives married an illegal immigrant who got into the mortgage biz and has been scamming his fellow immigrants with these toxic mortgages. All the while bragging what a smart, rich, successful businessman he is. Moved up to more expensive housing/neighborhoods four times in four years. Buys a new Mercedes every year.
I imagine this scum is wetting his pants at the thought of this law going into effect. I hope his former customers manage to extract every possible penny outta his hide.
FEEL the love, Brethren and Sisters!
Minnesota for Justice!