A Step In The Right Direction
Some housing bubble news from Wall Street and Washington. “Homeowners unable to pay monthly mortgage bills and facing foreclosure shouldn’t count on help from Washington this year. Regulators and lawmakers seem to be taking a wait-and-see approach as they confront the fallout from several years of lenders making too many home loans to people with inadequate credit.”
“Mark Adelson, an analyst with Nomura Securities, warns that the housing market would be hurt if some banks overzealously arrange loan workouts. ‘Lending money is not about being nice,’ Adelson said. ‘It’s a business.’”
“And though Sen. Charles Schumer wants $300 million of government money, matched dollar-for-dollar by mortgage lenders, to be channeled to community groups that help distressed homeowners avoid foreclosure, his proposal has gained little traction.”
“On the regulatory front, the Fed has scheduled a June 14 hearing about whether to take action under a 1994 law that gives it authority over deceptive mortgage practices by any lender, not just federally regulated banks.”
From Bloomberg. “New York Attorney General Andrew Cuomo, who is investigating whether mortgage brokers pressured appraisers to inflate property values, subpoenaed records from Vanderbilt Appraisal Company LLC.”
“Three appraisers and a mortgage broker have now said they received subpoenas from Cuomo.”
“Ohio Attorney General Marc Dann yesterday sued 10 real- estate companies, accusing them of improperly pressuring appraisers to inflate property values.”
“The companies, based in Ohio, California, Arizona and New York, are accused of setting specific estimated values on properties and communicating a desired price to appraisers, according to the lawsuits filed against seven mortgage brokers, two lenders and an appraiser.”
“Those sued include seven mortgage brokers, two lenders and an appraiser.Foreclosure filings in Ohio jumped 135 percent in April from a year ago, pushing the state’s rate to almost two times the national average, according to RealtyTrac.”
“States have opened investigations of mortgage brokers, lenders and appraisers as delinquencies rise across the U.S., led by subprime borrowers.”
“‘It’s a step in the right direction,’ said Jonathan Miller, a New York-based appraiser for two decades who says appraisers often face pressure from brokers and lenders. ‘Finally someone is listening.’”
“Vu Ho, a managing director of American Home Brokerage, said his company doesn’t do business in Ohio. He also said it faxes a standard form to all appraisers seeking an estimated value before it commissions a full appraisal.”
“‘We have to do a value check,’ Ho said. ‘We don’t push values.’ The other companies declined to comment.”
“The lawsuits seek at least $250,000 in civil fines, or $25,000 from each of the 10 defendants. The attorney general also asked for injunctions barring similar acts in the future and for the courts to order an unstipulated amount of refunds to consumers.”
The Daily Times. “Washington Mutual on July 20 will close its Longmont branch, which it opened 4 1/2 years ago. The Longmont branch is one of seven in Colorado that are being ‘consolidated’ as part of the company’s ‘normal course of business,’ according to spokeswoman Missy Latham.”
“The bank will close at 1 p.m. July 20, according to a note to customers taped to the door.”
“Defaults on subprime loans have hit Washington Mutual hard. In the first quarter of 2007, WaMu lost $113 million on home loans, according to the company’s financial reports. It projects that it will make $8 billion in subprime loans this year, down from $27 billion in 2006. The company also has reduced its staffing by 27 percent over the past year.”
The Birmingham Business Journal. “The national crash of the subprime mortgage-lending industry has hit Birmingham hard, a recent study found. More than half of the mortgage companies in Birmingham have closed as a result of the subprime mortgage-lending industry, revealed a study.”
From Reuters. “Few U.S. consumers expect any renewed strength in home prices until the middle of next year, though they cautiously concluded that the worst of the sector’s slump is over, a survey released on Friday showed.”
“Until that improvement takes place, a stalemate in the market is likely to prevail as buyers await further falls in prices, but sellers remain reluctant to sell after recent declines, according to the survey by Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers.”
“‘This standoff has remained largely unchanged since the start of 2007, but it is likely to gradually recede over the next year,’ Curtin said in a statement on the survey.”
“Also, Curtin said that financial institutions are likely to constrain borrowing against home equity based on smaller estimated home values that reflect market changes.”
“U.S. economic growth will pick up through the end of this year, making it unlikely the Federal Reserve will cut interest rates before 2008, according to economists surveyed by Bloomberg News this month.”
“‘Inflation numbers have been better but they may still bounce back again, and that’s why the Fed can’t cut rates,’ said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc.”
The Orange County Register. “Hopes for cheaper mortgages during a slowing housing market seem to be disappearing. Long-term rates in Orange County rose this week to their highest level in more than nine months. And more increases could be on the way.”
“John Belles, VP and sales manager with Bank of America in Brea, said higher mortgage rates are coming at the wrong time, adding more strain to a stalled housing market. Homesellers are just beginning to offer more reasonable prices, he said.”
“The busy selling season that begins in May and lasts through the summer so far hasn’t materialized, he said. ‘These next few months are going to tell all,’ he said.”
“As for what consumers should do in this market, Jeff Lazerson, president of loan brokerage Mortgage Grader in Laguna Niguel, said someone should only buy a home if they plan to live in it for at least five years. Values are slipping, and buyers should know they could take a loss if they have to sell soon after buying, he said.”
“But those looking to refinance should do so quickly, before home values erode further, he said. Belles said the same thing.”
From Smart Money. “For the last year, ever since the Fed stopped raising interest rates…virtually every major Wall Street economist has been absolutely positive that the Fed would lower rates as economic growth got slower.”
“But over the last week, one by one, all the most high-profile Wall Street doves have changed their minds.”
“Crow is what the doves are eating this week. But this is different. This is one of the biggest crows I’ve ever seen. And it’s making one heapin’ helping for the doves who are having to choke it down. The biggest serving of all is being masticated by Bill Gross, the perpetually dovish bond manager for PIMCO.”
“Yesterday he got in line behind ISI, Merrill Lynch and Goldman Sachs, all hopeless, hapless doves now spitting out crow-feathers.”
“The idea that the economy will falter, requiring the Fed to bail it out with low interest rates, has been the conventional wisdom since early 2004. Remember how the Fed kept rates at an ultra-low 1% for such a long time, and then started ratcheting them up 25 basis points at a time starting in 2003?”
“Just about when rates hit 2%, all the Wall Street economists decided that the Fed wasn’t going to raise rates anymore, because there was always some reason why the economy was going to come off the rails. High energy prices. Rising debt. Hurricane Katrina. The housing bubble. The housing bust. Subprime mortgages. It’s always been something.”
“Shares of home builders slid on Thursday, dragged down by a warning of weaker sales from Meritage Homes Corp.,h plus fears of rising interest rates.”
“‘Interest rates are part of the concern at the moment, but it seems like there are more impairments coming for this group all the time,’ said Mike McGarr, a portfolio manager and analyst at Becker Capital Management, which manages around $2.5 billion in assets.”
“McGarr said the news was unlikely to improve any time soon. ‘The fundamentals for the home builders were so good for so long,’ he said. ‘The sense is that it’s going to take the fundamentals a long time to unwind.’”
“his proposal has gained little traction.”
As will the next proposal, and the next, and the next. A lot here have been overly freaked out by all the bail-out saber-rattling. Not to worry…..about the bail-out that is. Everything else, worry hard!
Right. $300 million? The homebuilders and lenders write that much off every week.
“Defaults on subprime loans have hit Washington Mutual hard. In the first quarter of 2007, WaMu lost $113 million on home loans, according to the company’s financial reports. It projects that it will make $8 billion in subprime loans this year, down from $27 billion in 2006. The company also has reduced its staffing by 27 percent over the past year.”
Ben how long do you think WM will be able to pay a 5.2% dividend yield when those garbage ARMS and other fraudulent loans get returned to them from investors who make a case that the underwriting was negligent/fraudulent and the losses and bleeding goes on WM’s books and starts to evaporate their cash position as losses are taken on the firesales of overpriced properties takes place in the future?
Depends on how low WMU’s stock gets…
Suddenly those “fat cat” conservative bankers WaMu loves to mock in its commercials don’t look so dumb after all.
““Washington Mutual on July 20 will close its Longmont branch, which it opened 4 1/2 years ago.”
I remember when WaMu came charging into Colorado. Now they are quietly leaving with their tail between their legs.
Some how WaMu slithered out of most of Montana with out some much as a news story, at least I have not been able to find anything. They abandoned the hot Bozeman market sometime in 2005. They still have a home loan center in Missoula. Will see how long that lasts, given that Missoula home prices have stopped appreciating.
Washington politicians supposedly have a hard time distinguishing between $millions and $billions… (Remember when W said that $200b would be spent on rebuilding NOLA immediately after Katrina?)
So, Chucky Schumer, U.S Senator from New York, wants to spend $300 million taxpayer dollars to bail out stupid people who refused to control their greed.
To all the good people in the great state of New York, why are you foisting this jerk on the rest of the country?
As a Californian I’d like to apologize to the rest of the nation for our scumbag senator Barbara Boxer. Maybe the people of New York and the people of California can get together and tell their idiot senators and congresspersons to knock this socialist crap off.
You are complaining against libs. Those are fighting words man! Where’s “Kenny Babes” to defend the hand-wringing knee-jerk libs now? Silence….Especially since he knows the majority of us on Ben’s blog want no bailouts. Libs are the bailout group.
Nobody wants a bailout that I’ve met, liberal, or conservative. Even so, don’t spend too much energy on one knucklehead’s posturing to spend, er, um waste $300MM that will never pass congress–it’s a sideshow to the main event that is the actual waste of the rest of the government…
It’s like complaining that the kids are foolish for wanting to spend the family’s money on plastic toys while the parents continue to buy plasma screen TVs and Hummers.
“Nobody wants a bailout that I’ve met, liberal, or conservative.”
Thats whats funny…You can not get much more left leaning than my parents,I am pretty far to the right,what do we both agree on…No bailouts !!!
Chris
I’m a touchy-feely pinko commie liberal, and I don’t want a bailout. And I’ve already written a variety of Democrats to tell them that. In detail. Saying that all liberals want a bailout is like saying all conservatives wholeheartedly support the President. Neither one is true by a longshot.
A commie certainly would want a bailout. You want the government to seize all private enterprise. A bailout will get the government closer to seizing banking.
Wouldn’t a commie be gloating in the Schadenfreude of it all? Capitalist pigs getting roasted and all that?
Why would a commie want to bail out the pigs? Besides, Comrade Omar Omar has determined that each of you only needs 450 sq ft in “dwelling” space. The McMansions will be reappropriated and converted into communal “dwelling” quarters, while the tennis courts and pools will be repurposed for light industrial use.
isn’t it the neocons that got us into this mess in the first place? The problem with having the power is not being able to blame anyone.
why are you foisting this
jerkjoiktypo fixed.
I think “foist” s/b “first”.
“Why are you firsting this joik on the rest of the nation?”
I don’t know NNVmtgbrkr….I’m definitely one of those who was un-nerved by all the bailout talk. Hard to not be bothered when everyone and their brother jumped on the bailout train so quickly.
And I *do* think that all the people writing to politicians expressing alarm at the thought of bailouts helped to shut the pols up about this. Dodd dropped his plan pretty quickly and I think it was regular citizens voicing extreme disapproval that helped him get there. All a politician needs to hear is that your changing party affiliations to get them to sit up and take notice.
That and the fact that it is unpractical and undoable. But, then again, when did “impractical, undo-able and irrational ” ever stop any politician from going ahead with a plan? Especially lately?
So I think it’s a good thing for people to remain vigilant about this and keep contacting there representatives.
It may be a stupid idea that would never work, but when has that ever stopped them from trying anyway?
I don’t know NNVmtgbrkr….I’m definitely one of those who was un-nerved by all the bailout talk. Hard to not be bothered when everyone and their brother jumped on the bailout train so quickly.
And I *do* think that all the people writing to politicians expressing alarm at the thought of bailouts helped to shut the pols up about this. Dodd dropped his plan pretty quickly and I think it was regular citizens voicing extreme disapproval that helped him get there. All a politician needs to hear is that your changing party affiliations to get them to sit up and take notice.
That and the fact that it is unpractical and undoable. But, then again, when did “impractical, undo-able and irrational ” ever stop any politician from going ahead with a plan? Especially lately?
So I think it’s a good thing for people to remain vigilant about this and keep contacting there representatives.
It may be a stupid idea that would never work, but when has that ever stopped them from trying anyway?
“…bail-out saber-rattling.”
I am not as worried as some of my recent posts may suggest. I just wanted to make sure that the anti-bailout memes were propagated in time to have effect.
who ever voted for this a-shole better give him a call
“And though Sen. Charles Schumer wants $300 million of government money, matched dollar-for-dollar by mortgage lenders,
BTW they’ll have to build massive prision camps if they want to prossecute all the fraudsters
Nah…just put them on house arrest in one of the millions of vacant stucco “investments” nationwide.
If we ever get any useful immigration reform, there’ll be a shortage of field pickers. Let the convicted brokers pick strawberries. Real work’ll do ‘em good.
Excellent idea! And while we’re at it, let’s add Paris Hilton to the strawberry-picking chain gang.
No way, she’ll get her earrings tangled in her ankle chains.
I suggested to my secretary the other day that Paris, like a fellow lawyer’s son, have to do work-release community service washing cop cars.
Have her dress like she did in the Carl’s Jr. commercial and put in on pay-per-view. You could finance the justice system for a month on that revenue alone.
Just in case you were wondering…
Orange hatted Cal Trans workers: strictly part time
White hatted Cal Trans workers: overseers
Testify, Thomas, testify!
Nah, in NYC, they had supermodel Naomi Campbell cleaning cars or somesuch for beating up her secretary. She showed up in high heels looking great, did the work, went home.
No biggie.
NY cops don’t get starstruck. (Sometimes the judges do give lighter sentences on DUI to their buddies, you know, the “pillars” of the community, like Realtors and fellow judges, but actors don’t fall into this group.)
This is Hollyweird. Where the photographers outnumber the cops.
No problem with the prison camps, they already have a jump on building them.
http://news.pacificnews.org/news/view_article.html?article_id=eed74d9d44c30493706fe03f4c9b3a77
“if they want to prossecute all the fraudsters”
They don’t have to prosecute any of them. They just have to talk about prosecuting them. It’s not as if those who have made a living off mortgage fraud for several years running are suddenly going to rape your sister.
“Few U.S. consumers expect any renewed strength in home prices until the middle of next year, though they cautiously concluded that the worst of the sector’s slump is over, a survey released on Friday showed.”
This is the best reason I’ve heard to date to not purchase soon. Until this sentiment changes, prices will not come down for existing homes. Once it does, look out, who will want to be holding the bag? What will change the perception? Rising interest rates, increasing foreclosures, recession…
All the “contraian” investors who have purchased lately have missed this point. Most people believe prices will improve next year.
Apparently, “U.S. Consumers” have not seen the mortgage reset graph.
this is the worst idiocy I have seen. You don’t predict future market action based on survey; you base it on market fundamentals and economic laws. Beside, the survey was flawed by selection bias. All the respondents probably have special interest in the bottoming out of RE decline. So I can do a survey of all the bloggers here and the sentiment would be completely different.
Bucket of money and box of stupid again.
When those ARM’s start resetting all over this nation in the next 6-24 months….watch out….foreclosures and FB’s aplenty.
this is the worst idiocy I have seen. You don’t predict future market action based on survey; you base it on market fundamentals and economic laws.
Its one thing to poll people if they are going to buy an iPod, and quite another if they are going to buy a house.
I have friends who fit this survey group.
They own a home they cannot afford. They are trying to sell, but can’t. They don’t want to drop the price because that would be “giving the home away”.
They are thus going to hold their price steady, and try selling again next spring, since “we’re probably at the bottom now”.
Of course, that means another 10 months of mortgage payments or so… let’s say $30,000 or so.
My response: why not just drop the price $25,000 now?
blank stares.
well they would still have to pay some rent for those 10 months. You gotta account for that.
there’s always moving in with mom and dad…
“they would still have to pay some rent for those 10 months.” — You’re making the wrong assumption. Most kool-aid drinkers have already bought their new home, and are trying to sell their old home. Holding has direct cost. Although usually the mortgage is much lower on the older house.
What will probably happen is they will chase the market down, always lowering their price too little too late and never quite making that sale. It’s happened before and will happen again. If someone wants to get out, the best thing to do is price it right and dump it. I learned a long time ago, when I had my own business, that something is worth exactly what someone will pay for it.
“For the last year, ever since the Fed stopped raising interest rates…virtually every major Wall Street economist has been absolutely positive that the Fed would lower rates as economic growth got slower.”
“But over the last week, one by one, all the most high-profile Wall Street doves have changed their minds.”
Joe “Six Percenter” says, “But they have to lower rates. They’re too high for me to sell a house! Who’s looking out for me?”
To all of you who have wondered why the stock market kept going up up and up, this is the reason.
Wall St is all about CREDIT now. They are credit junkies just like Joe 6 Pack. As long as credit is cheap, the stocks fly high.
Credit is starting to get expensive (5%+ yield on 10 yr Treasury). The fed is NOT dropping rates. The so-called “Greenspan put” is in jeapordy.
this is the first dose of reality that some of these guys are seeing.
Just like Joe 6 Pack who is upside down by $100,000, who now panics as his refinance is denied, so will the hedgies start to panic as well as the LBO deals as they realize that their credit (and hence lifeblood) is up.
It also puts a nail in housing… as it removes the possibility that the Fed is going to save housing. Higher 10yr Treasury usually means higher Mortgage Rates. That said, many are based on LIBOR… oh wait, that’s going up too.
The trick now: will the Fed play the game how they are supposed to? Or will Ben Bernanke drop the Fed Funds Rate.
if he drops the FFR, the dollar is toast, stocks fly high again, housing tanks anyway, and we all know he is a dove in hawk’s clothing. Be prepared for significant inflation.
If he holds steady or (gasp) raises the FFR, then we see him for what he is: a true academician who understands monetary policy and the need for a “Volkerization” of America.
only time will tell.
Bernanke as Volcker? His writings and statements about helicopter drops say otherwise. Plus, any move to really raise rates is politically unacceptable to both parties given the extreme indebtedness of the nation and its’ sheeple. Fed will do nothing as long as possible, and don’t count on rate hikes at all, especially if the dollar holds its’ long term support line.
The Fed “PUT” has nothing to do with interest rates per se. So the above comments about it or not relevant. The “PUT” is still in place — it consist in the tacit promise that any major institution that gets itself into a market moving mistake, will be bailed out with an emergency rate cut. Nothing changes that promise.
Bernanke is to python as Volcker was to cobra. Both kill their prey — the python just does it more subtly.
> if (Bernanke) drops the FFR, the dollar is toast, stocks fly high again, housing tanks anyway, and we all know he is a dove in hawk’s clothing. Be prepared for significant inflation.
Would inflation expectation not drive up the 10y yield further and counteract stock rises? I also believe that Bernanke wants to lower rates, but he won’t if a high CPI doesn’t allow it (as skewed as CPI may be).
“Wall St is all about CREDIT now. They are credit junkies just like Joe 6 Pack. As long as credit is cheap, the stocks fly high.”
HIC, Wall street does not give a rats ass about interest rate. The only concern Wall street has is “can they make money on the interest rate differential”. All that is needed to understand the carry trade concept is a basic knowledge of foreign exchange and interest rates differentials. The current carry trade is yielding 11.15% when crossed to the Pound (LIBOR 5.78%). So the current program is borrow money in Japan and trade bonds, buy NZD (8.26%), buy AUD (6.37%), buy GBP (5.78%) sell HKD (4.39%) sell CHF (2.42%) sell (JPY0.68%). Liquidate US stock and bond positions - neutral to the trade.
The correlation between the JPY/EUD vs The S & P 500 since 2000 is 0.97….This is more than a coincidence.
JPY/EUD- what is EUD? I’m thinking this is a typo for EUR, maybe AUD.
EUU i am thinking Eurodollar
http://en.wikipedia.org/wiki/Eurodollar
‘The so-called “Greenspan put” is in jeapordy.’
Really? Why can’t they just print more ‘Green’ and ‘put’ it in the stock market?
if 6 turned out to be 9″ Jimi Hendrix
how about the reversion to 6% from the 05 peak of 9% RE & related workers
are they all happy flipping burgers ?
“Vu Ho, a managing director of American Home Brokerage, said his company doesn’t do business in Ohio. He also said it faxes a standard form to all appraisers seeking an estimated value before it commissions a full appraisal.”
“‘We have to do a value check,’ Ho said. ‘We don’t push values.’ The other companies declined to comment.”
Ummm, I call foul on this guy. With all that is available on the internet these days, you can’t comp check your subject property yourself without contacting an appraiser. That’s all the appraiser is going to do if you ask for a value check. He’ll go online, eithr through MLS or some other info provider, and look at 5 or 6 recent sales and give you a round number. I’ve been able to comp my own properties and almost always get within a couple of thousand of what the appraisal ends up being. So, the only reason you contact an appraiser for a “value check” is to feel the dude out and see what he’ll do for you. It’s the brokers way of winking at the appraiser without technically doing anything illegal. Appraisers now this so in many cases their “value checks” come back inflated.
I thought the same thing, but how could this pre-check (checking the appraiser not the property) be made illegal?
Ok, here goes (I posted this over a year ago and received the wrath of appraisers here). ELIMINATE APPRAISALS. You do not need an appraiser to establish value. If each lender would establish an in-house valuation team, you would eliminate any broker/appraiser factor. They do this anyway when they have someone in-house do what we call a “desk-review” of any given appraisal, and in many cases cutting the value as they see fit. I’m sorry, you can find most of the information you need to establish value on-line via assessors info, MLS, ect. What do you think appraisers do? Most of the appraisers I’ve known have already typed up the full appraisal before they’ve ever seen the property. Then all they do is go out and make sure the house is still standing, then take a street pic, and a front and back pic. The point is they’ve already established the valuation from their desk at home. Now some of you might be saying “what about all the fancy stuff I put into the house”. C’mon, where have you been! That stuff don’t mean sh*t. I don’t now how many times I’ve had to listen to an irate client go off about the appraiser not giving their granite countertops, fancy bathrooms, or extra landscaping extra value. IT’S THE COMPS - that’s all that matters. Like for like when it comes to footage, garage capacity, pool, busy street or corner, age. COMPS, COMPS, COMPS. All of this you can get online. As far as making sure the house is in good order, hire an inspector to make a quick inspection of the home (nothing major) to establish that the house is in typical condition for the area and send in a report to that effect. I’ll stop my rant, but do you see where I’m going with this?
Yes, I do see where you’re going. The other night my friend asked me what I thought she could get for her house, and I replied with a question: What do the comps say?
What’s your take on the appraiser who refused to give me a number until he personally inspected every room in the house? He said he wanted to make sure there were no big holes in the walls. (this was in 2003)
Phillgal,
Sounds like you had one heck of a good appraiser call upon you. Would you have preferred that the appraiser made assumptions about your property without doing an interior inspection? Did you have something to hide? Why wouldn’t you want them to see the condition and quality of finish?
No, I didn’t have anything to hide.
My house was in a zip that everyone and their mom was stampeding each other to become overleveraged to buy into. It was owner-built; I used to call it The Fortress. My schedule conflicted with the appraiser’s, that’s all.
The people who need the appraisal number are the ones holding the mortgage or guaranteeing the value of an MBS (Fannie etc.). If they want to redo the system, the system will be redone. I wanted to know how the government through rules and laws could assist a meaningful change.
I like your idea with the inspector as the person who confirms on the ground that the information in the computer about the property is indeed correct. If the inspection report is thorough, I might skip having my own inspector as housebuyer (on second thought, I might not).
I think you are confusing appraisers and inspectors. Inspectors do not estimate the ‘value’ of your property. They look for environmental hazards and property defects (termites, underground oil tanks, radon, foundation damage, etc. etc.) A good inspector is mandatory if you are buying (anything they find will result in seller remediation or price reduction), and can even protect your health. Appraisal can be done from a distance (I once worked, in the early 90s, on a project for Fannie Mae to do computerized appraisals. I heard that their interest in this project was due to the fact that they were worried about appaisal fraud).
If you know of any appraiser that had completed an appraisal prior to even doing at least a “drive by ” on a subject property, I’d say you not only have a MORAL obligation but a LEGAL obligation to report them to the state authorites. These appraisers should have their licenese’s revoked and legal action should be taken. This is totally unacceptable appraisal practices.
Yes, some of the “fancy stuff” and some of the “NOT SO FANCY STUFF”, such as new roofs, heatings systems, siding, windows, etc, does COUNT. Condition and quality of finish MOST definitely count. But what counts most of all is, LOCATION, LOCATION, LOCATION. That will never change. You can’t get determine the value of one’s location without at least driving by both the subject propery and ALL OF THE COMPS.
“Ok, here goes (I posted this over a year ago and received the wrath of appraisers here). ELIMINATE APPRAISALS. You do not need an appraiser to establish value. If each lender would establish an in-house valuation team, you would eliminate any broker/appraiser factor”
What you’ve stated above makes NO sense. For an in-house valuation would be considered an APPRAISAL. Yeah, that is what we need some suits sitting in an office in Calif making value calls on a property located in Connecticut. Now that makes a whole lot of sense.
best wishes, do you work by any chance in the appraising business? I think you are too negative to the proposal of ex-nnvmtgbrkr. You wrote yourself that LOCATION is a main factor in appraisals, and that factor is more and more analyzable by computer, including the neighbourhood and ALL of the comps. Bondholders who need to be convinced that they are not longer taken rely on appraisal and probably want appraisals to be more reproducible than today - every fact should be in the data (confirmed by an on-the-ground inspector) and then everybody should come to the same number or a very similar one.
best wishes, do you work by any chance in the appraising business? I think you are too negative to the proposal of ex-nnvmtgbrkr. You wrote yourself that LOCATION is a main factor in appraisals, and that factor is more and more analyzable by computer, including the neighbourhood and ALL of the comps. Bondholders who need to be convinced that they are not taken rely on appraisal and probably want appraisals to be more reproducible than today - every fact should be in the data (confirmed by an on-the-ground inspector) and then everybody should come to the same number or a very similar one, regardless if they sit in Calif, China or Connecticut (which is home to many MBS holding hedge funds :-)) You might be proud of your personal jugdement of market values, but as the final bondholder doesn’t know you anymore like the hometown banker did your judgement looses its weight.
““Few U.S. consumers expect any renewed strength in home prices until the middle of next year…Until that improvement takes place, a stalemate in the market is likely to prevail”
Just like last year, the mantra will be “just one more year, if I can hold out for just one more year, prices will come back”. I think that after summer ‘08, despair will FINALLY set in, but hope springs eternal until then.
Just in time for the election.
Well, in their defense… that’s what HBBr’s were doing for about 3 years here, and longer in the pre-blog days. We were right, but it took longer than we thought. So, their dreams *will* come true… in about 4 years or so.
The REO backlog will eventually settle the dust. Banks and lenders cannot hold these properties forever, and they are currently holding their collective breath praying for an uptick in prices. But I truly believe they know the game is up, and soon very soon the happy talk about ‘protecting home values’ will vanish as ‘protecting our stockholders values’ will be all that matters. We really are slowly boiling the FB frogs.
“Banks and lenders cannot hold these properties forever, and they are currently holding their collective breath praying for an uptick in prices.”
Cargo cultists…
http://en.wikipedia.org/wiki/Cargo_cult
Just like last year, the mantra will be “just one more year, if I can hold out for just one more year, prices will come back”.
They have been telling us this in Larimer County since 2001. Still no relief in sight.
I think that after summer ‘08, despair will FINALLY set in, but hope springs eternal until then.
I am amazed at how patient people have been in Larimer County. Prices haven’t gone up in 6 years, but fire sales have been few and far between. Perhaps its because foreclosures are been relatively low (especially when compare with neighboring Greeley/Weld County (the illegal alien capital of Colorado) and people have decide to stay put. But there is no doubt that to sell you need to price at 2001 prices. A couple of houses on my street took a few years to sell (at imaginary prices), but once they priced them at 2001 prices they sold.
“John Belles, VP and sales manager with Bank of America in Brea, said higher mortgage rates are coming at the wrong time, adding more strain to a stalled housing market.”
Duh. When you have such historically low rates for so long, the smart money bets on them going up *sometime* in the future, right? Or was he expecting rates, and the Goldilocks economy to stay “perfect” forever?
When things are going “perfect”, and you bet on them staying “perfect” forever, you are going against the probability curve. It’s not rocket science.
The only constant in anything is change, if he fails to accept this he will just get ran over by it which by his statement is accurate…stalled…oh really stalled you call it? And a hollow point to the face from a .357 would be a flesh wound?
They say nature abhors a vacuum. Well, markets abhor a profit. It’s true. Any time a market begins to commoditize, profit is driven inexorably towards zero.
When conditions change, you can profit for a while, until everyone else catches on. Eventually, your good or asset will sell below the cost of production/purchase cost.
This is the “intelligence” of the market … and why from the beginning capitalists–and governments–have attempted to create monopolies instead. (Monopolism/Oligarchy and Socialism–same system, different beneficiaries.)
The beneficiaries under socialism are those running the government and those who would rather not work.
Both are parasites.
Right on, Bill!
The beneficiaries under Monopolism/Oligarchy are those running the government and those who would rather not do HONEST work.
Dodd wants the Fed to go after lenders that made loans without requiring borrowers to set aside tax and insurance payments. He also wants limits on loans made without income verification, dubbed “liar loans.”
This is a classic Northeastern liberal position — the business did it, the voter didn’t.
I’ll give you an analogy. NYC has a rule that businesses are required to keep the sidewalks in front of their business, and the first 18 inches of the street after the curb, free of litter. When NYC was short of money in the early 1990s, it sent out enforcers to the local main streets. Whenever they saw someone drop litter on the sidewalk, they went running over — right past the litterer — to give the adjacent business a whopper of a ticket.
Disgusting - both of the litterer and the city.
Businesses allow sidewalks to fester while knowing they are responsible, and the city is to blame for occasional enforcement? One of the reasons this happened was a grassroots level backlash morally similar to the immigration push back we are seeing. The public at large does not accept that businesses have absolute license to ignore laws that happen to be inconvenient at the time, especially when this becomes a problem for passers by.
This story comes from around the time that NYC started to turn things around by not tolerating small offenses. Those changes have been broadly lauded and hailed as evidence of a kind of tipping point in enforcement. Zero tolerance isn’t just for street punks, it is for business scofflaws too.
You misunderstood me - what I objected to was the described reaction of the enforcers to the littering. Instead of going after the litterer, they went after the businesses, maybe, because the businesses have more money. I agree with you that businesses should not be left untouched when it comes to removal of litter, but there must be reasonable time for business to clean up, depending on the littering frequency, from once a day to much more frequently at the busy bus stop.
That is colorful stuff, but wanting the liar loans to stop is just basic common sense. At this point it amounts to turning the burner off of the mess on the stove that is boiling over.
How exactly would you propose to begin dealing with this problem while keeping precious liar loans intact? Lenders should be allowed to make nonsense loans and the borrowers should be blamed for their lack of math skills? That might not be the most effective approach at this point.
Well, of course. The litterer is obviously a poor victim of the system. And anyway, he doesn’t have any money to pay the fine, which is the whole point of the ticket.
Jerks.
no, Joiks.
The Joik store called, and they’re all out of you!!
Hey, in New York, everyone is a window washer–even the cops.
Lol, in Boston when the city’s low on funds, say hello to the rats. =) Given a choice between Park Street rats and tickets, I’d almost rather take the tickets. Those are some big, ugly rats.
Dodd wants the Fed to go after lenders that made loans without requiring borrowers to set aside tax and insurance payments.
What a big blustering moron Dodd is. After I saw too many people having trouble with escrow accounts for insurance and taxes (WaMu was one out here), I was more than happy when my mortgage lender insisted that *I* be the one to manage those things. No escrow, period.
What are we, children? If we can’t manage our own taxes and insurance ourselves, then we probably shouldn’t be buying a house.
Sure, a property tax bill can come in at many thousands of dollars of you only pay it one lump, but at least it’s expected. What about a new aircon system? Would that jackass Dodd say that people can now only buy houses if they come with a home warranty as well?
Wait, don’t answer that question…
OK, before I get too badly flamed….
What are we, children? If we can’t manage our own taxes and insurance ourselves, then we probably shouldn’t be buying a house.
I also know completely responsible adults who choose to go the escrow route. I want to make clear that I have no problem with them doing it that way if that’s what they want, and some do it simply for the ease of managing PITI with only one monthly payment.
(A side note highlighting one minor disadvantage of having escrow: This week one of these folk here was recently astounded at his new assessment. Since he never needs to pay attention to those things, he didn’t pa attention. And missed the appeal date, he thinks. Doh! When I pay my own in an annual lump, I damn sure read those notices!)
“Homeowners unable to pay monthly mortgage bills and facing foreclosure shouldn’t count on help from Washington this year. ”
Finally!!! I have been waiting for MSM to start disseminating some honest information related to the timing of any possible assistance. I get so tired to hearing that rates are going to get cut any day now, the govt. is going to allow refinances any day now, etc…. Until we are in a full blown can’t deny it recession, I don’t think the Federal Govt. will do crap. And even with a full blown recession I don’t think there will be any big buyouts or things that FBs are looking for… at most they will raise the FHA and GSE levels and allow folks to buy in at prices that were previously jumbo loans.
People Bank of China is looking to diversify its dollar portfolio.
Helicopter Ben may be out of that option.
Good luck China - you have to find someone to take those dollars. That means other US paper, US goods, metals, or oil. Oh, but don’t forget the dollar’s value will tank when you dump a trillion of them on the market all at once.
Maybe the US govt will print up a special $1,000,000,000,000 bill for China to use. With Bill Clinton on the bill - he was China’s good buddy there for a while.
Obviously, you are flame-baiting. No response necessary.
Oh this is all Bill Clinton’s fault….lol.
They never stop…bwahahaha!!
It’s the neo-con culture of personal-responsibility. Blame it on the other guy. Guess I responded anyways, can’t help myself.
Yes, the neo-cons like Az_Lender will have to face the music sooner or later, just like all those FBs out there.
Got news for AZ_Lender, but GWB has been in the White House for 7 years now, and I would like you to name one thing he’s done that you would consider an “accomplishment”.
Thanks in advance for your thoughtful response.
Not much to tout, really, other than his excellent choice of Supreme Court justices.
Hondje,
you’ve confused az_lender with az_owner.
Az_lender could not remotely be considered a neo-con.
Does anyone here know what a neo-con really is? Aren’t the they group of former liberals and leftists of a certain persuasion who took on conservative trappings, and were quite the thing some years ago?
Their influence peaked some time ago, after gradually rising in the 80s.
Hint: Neocon is not a synonym for ‘republican.’
By “liberal” I guess you mean “worked in the Nixon administration.”
Strauss has some liberal followers (not leftist–and there is a difference), some of whom are running behind trying to “save” his reputation. But make no mistake. The neo-con movement is as it has always been a rightist movement. With echos of Plato (a favorite of conservative thinkers), Strauss’ thesis was that the masses cannot think for themselves, and when they do, they elect tyrants. Thus, a small circle of elites must run the government and deceive the masses into supporting them in order to preserve liberty. This is the central tenet of neo-conservatism.
An important side note would be that most neo-cons buy into Fukuyama’s “End of History” thesis and have a firm belief in American power and the moral correctness of its use. They overreached themselves, of course.
The way they differ from typical Republicans is that they are idealists, rather than realists.
This might explain why realist conservatives might term them “liberals”, just by simile. However, their program is so radically different from the liberal program as to be laughable. For example, the more extreme liberal viewpoint since the multicultural era has been a Star Trek: The Next Generation attitude towards other people’s governments. Even if it’s tyrranical, it’s “their culture” and therefore valid. Add a dash of “all government is tyrrany” in for spice. Of course, more traditional liberals abhor this argument. The traditionals are winning in Europe now, as public anger over “honor killings” of young Asian women has grown. Dunno about the US.
Good luck China - you have to find someone to take those dollars.
Isn’t unhealthy co-dependence a wonderful thing?
That accurate observation about the People’s Bank of China is part of my logic as I keep touting foreign govt bonds. They yield more, AND the currency play will probably go against USD. Australian dollar at another multi-year high again today.
what do you like GIM ?
I wish Vanguard and the cheapies would do a foriegn / emerging bond fund
China will have a minor problem diversifying from dollars. What appears to be a difficulty is that the US government frowns on China purchasing American companies. Remember CNOOC trying to buy UNOCAL, the scare headlines “Is this a threat to America?” etc. And the difficulty when they were interested in acquiring the port control, so difficult to do that China bowed out.
Yet they just acquired 10% of Blackstone and now be able to use Blackstone’s cachet to acquire companies any where in the world.
In the commodities markets, China has purchased Brazil (food) and most of Africa (minerals). China is still buying and may own most of the Congo’s mineral resources.
In the trade figures “China imported high-tech products valued at US$60.271 billion”. These products were part of Paulson’s trip to China and many were previously classified non-exportable.
China is getting what it wants and the American people are getting Plasma TVs.
Single guy, no interest in mowing the lawn. Without considering equity loss there is no condo in the Boston MRSA that is not significantly more expensive than renting.
Prices have a long way to go.
From Ben’s OC-Register post.
“These next few months will tell all” [said a BofA sales manager].
Sure, sure. Just like Iraq. Always these next few months.
“The average rate on a 30-year fixed-rate loan with a one-point fee hit 6.235%”
Let’s see. Median income $60K, spend 1/4 of gross on housing. Mortgage payment should be under $15K/yr. Payments are $615 per month per $100K principal. Keeping in mind that property tax adds 1% or more per year, a $200K loan is ALMOST affordable. So, where in California are the $250K houses?
Ridgecrest
LMAO (former Ridgecrest resident).
Ridgecrest - a great place to focus on your bomb building
skills.
Try Trona, Borax, Red Mountain, Barstow, Mojave, and quit laughing. hehehehehehehe
‘These next few months are going to tell all,’ he said.”
I love this quote. REIC says this in Feb, March, April, May, June,..uh, yeah you get the picture.
How long will we have hear:”These next few months are make or break” or “will tell all”…etc.?
Ok, I have to share this thread from the City Data San Antonio forum. It’s priceless. I feel like I could create an FB Drinking Game and have an entertaining Friday night. Realtors claiming it’s a great time to buy? Check! People saying it’s different here? Check! Someone calling this blog stupid? Check!
And my favorite: some guy laughing at us fools for “throwing away all that rent”? CHECK CHECK CHECK.
http://www.city-data.com/forum/san-antonio/93912-help-new-should-we-rent-buy.html
(I’m Rockin’ The Tricities in that thread. A shoutout to Say What, a fellow HBBer)
From your friends at the NYT:
http://www.nytimes.com/2007/06/08/business/08home.html
One line summary: Using a realtor results in a lower sale value.
“McGarr said the news was unlikely to improve any time soon. ‘The fundamentals for the home builders were so good for so long,’ he said. ‘The sense is that it’s going to take the fundamentals a long time to unwind.’”
Fundamentals? There were fundamentals? Fundamentals unwind? Yo-yos unwind, my friend. Who is this clown?
BTW — I really like someone’s use of “chump” on an earlier thread about the whiny “market value” guy. I like the sound of the sentence: “Don’t be such a chump!” Many chumps walking around who don’t know it yet…
With new filters installed on the server shared by friends and myself, my spam mail has been nearly eliminated. Therefore, I have no way to know… has the random mortgage e-mail spam decreased or increased as of late? I remember thinking perhaps it’s possible to watch for the next bubble based on spam email.
Not sure about the email, but I can tell you the snail mail mortgage (and even HELOC) spam has slowed considerably at home
I haven’t received much mortgage/HELOC snail-mail spam since the beginning of last year. Am starting to feel neglected.
“But those looking to refinance should do so quickly, before home values erode further, he said. Belles said the same thing.”
My, what a difference a year makes. “Buy now or be priced out forever” meet your replacement.
I emailed Sen. Feinstein about the bailout. Her response:
I, for one, do NOT support federal initiatives. Let the market handle it.
There’s no way the Dems would stop a foreclosure tide that started on W’s watch to be stemmed early. They need the crisis to peak right before the election, and it probably will. Not that there’s anything they could do anyway, the problems too big. It would help if they can get some bills started — and for the Repubs to get caught publically being against them. That way they get credit for trying, the Repubs get blamed for turning a blind eye. But both will be aware of this game of chicken.
Slim’s mail recently brought a reply from Sen. Kyl (R-AZ). He assured me that there’s no pending bailout legislation “for those who cannot meet their financial obligations.”
So, best not to blow off those obligations, people!
I don’t know if you want to trust Kyl…he was the coauthor with Kennedy of the recently reamed schamnesty bill…one which never quantified either the current costs of illegal aliens or the costs associated with amnesty for 12 million. Maybe the numbers were too big.
Wow. What a slimeball. That is political talk at its best. You have to reread a couple times to realize she’s going after the “use the Federal government to put a ‘floor’ under home prices and keep ‘em lofty” tack.
All the while claiming she’s concerned about affordability.
Wow. What a non-answer. And to think this lady is supposedly a servant of the public.
The wisdom of Solomon!
t
In answer to the above, I think Clinton and BOTH OF the Bushes have created and sustained the China trade monster. Any of them can have their faces on the $1, $5, and eventually $10 trillion dollar bills it will take to pay off our foreign-held debt.
oh for crissakes, it was NIXON that started this whole China nonsense!
“The companies, based in Ohio, California, Arizona and New York, are accused of setting specific estimated values on properties and communicating a desired price to appraisers, according to the lawsuits filed against seven mortgage brokers, two lenders and an appraiser.”
Darwinian selection for dishonest appraisers: ‘Hit my number or lose my business.’