The National Housing Horror Show Is Far From Over
Some housing bubble news from Wall Street and Washington. MarketWatch, “General Electric Co. announced it is exiting the U.S. subprime-mortgage business. GE sold about 75% of its subprime portfolio during the second quarter, or $3.7 billion, resulting in a loss of $182 million for its WMC Mortgage business, the company said.”
“‘The business exit is in process,’ Chief Financial Officer Keith Sherin said. ‘We restructured the business to prepare for that exit (and) I think it was a smart move to remove the head wind and also reduce future risks.’”
From Bloomberg. “‘The mortgage industry has greatly changed since the purchase of WMC,’ Laurent Bossard, CEO of the division, said in an e-mail to employees yesterday. ‘The current subprime market environment has made a significant negative impact on the business.’”
“WMC and a unit of Washington Mutual Inc. were among four subprime lenders whose loans were behind many of the Moody’s Investors Service ratings downgrades on mortgage securities this week, the firm said yesterday.”
From Reuters. “Rating companies began a new wave of rating cuts Thursday as they reassessed the fallout from deteriorating subprime loans, drawing increased scrutiny from investors who are questioning why the agencies failed to act earlier.”
“Both S&P and Moody’s now project cumulative losses for subprime loans originated in 2006 to reach as high as 14 percent, more than double projections at the start of the year. ‘That’s a huge change in their projections and has huge implications for the market,’ said Inna Koren, an analyst at Barclays Capital.”
“Fitch Ratings also on Thursday said it may cut ratings on 19 collateralized debt obligations, and has revised its CDO rating methodology, identifying 170 U.S. subprime transactions as requiring further analysis.”
“S&P spokesman Adam Tempkin said on Thursday that the rating agency miscalculated by nearly $5 billion the amount of debt that may be affected in its review for potential ratings cuts.”
“S&P corrected the volume of residential mortgage-backed securities it placed under review for downgrade to $7.35 billion from its $12.1 billion estimate on Tuesday. ‘It was an error and we corrected it,’ Tempkin said. ‘It was human error. It is what it is.’”
“‘That doesn’t sound as if they were in charge of the credit judgments of the Western world, does it?’ asked James Grant, editor of the highly regarded Grant’s Interest Rate Observer, on S&P’s $5 billion error.”
“(Moody’s and Standard & Poor’s) should scrap every appraisal on the subprime portion of the $503 billion of CDOs sold globally in 2006, according to Mehernosh Engineer, a credit strategist at BNP Paribas SA. Because people were able to borrow money without credit checks in last year’s freewheeling mortgage market, the rating companies have no right to use inductive reasoning to predict the likely defaults on subprime CDOs.”
“‘Their models are basically unable to predict any ‘normal’ behavior due to this overriding fraud factor,’ Engineer wrote this week. ‘The right thing for the rating agencies to do for the 2006 vintage would be to withdraw all ratings.’”
The Des Moines Register. “A subprime home finance company will pay $2.3 million to Iowa homeowners to settle charges that its employees inflated appraisals and encouraged buyers to lie on loan applications.”
“Ameriquest Mortgage Co. will make the restitution as part of a nationwide $325 million settlement over its lending practices. Iowa Attorney General Tom Miller announced the settlement on Thursday, estimating that 3,800 Iowans will be eligible to receive from $119 to $1,761 each.”
From ABC7.com. “Former Ameriquest customer Constantino Martinez says he was taken advantage of. The interest on his mortgage was nearly double the going rate and property taxes were never added to his monthly payment like he was told, sending him to near foreclosure.”
“‘I feel so bad. I feel so bad, I don’t even want to remember those guys,’ Martinez said.”
“State Attorney General Jerry Brown began mailing out claim forms Thursday to about 80,000 customers of Ameriquest and its affiliates in California. $51 million is California’s share, meaning the average restitution is around $800.”
The New York Sun. “It’s clear that the national housing horror show is far from over. If anything, it’s getting gorier.”
“‘Plainly, the lackadaisical lending standards by the mortgage crowd just a few years ago are now showing up at Wall Street’s doorstep,’ wrote Raymond James Financial’s chief investment strategist, Jeffrey Saut.”
“A veteran multiregional residential real estate developer in Lake Forest, Ill., Robert Sheridan, also paints a bleak picture. ‘The housing market is getting darker and darker,’ he said. The full effects of the subprime crisis, as they relate to tighter lending standards, have yet to be felt, he adds.”
“A year from now, he figures, single-family home prices should fall 5% to 10% nationally versus current levels. He sees an even bigger drop, 10% to 20%, in condo prices, with high-end condos — those priced at $750,000 or more, vulnerable to 20% to 40% declines.”
“Mr. Sheridan believes a housing recovery is at least two years off. The bottom line on housing: Call the exterminator. The financial termites are out in full force and lots more are on the way.”
“U.S. class-action lawyers who have sued subprime mortgage lenders are now scrutinizing Wall Street banks that sold packages of risky loans to investors and credit analysts that served up top ratings on the securities.”
“Plaintiffs’ lawyers say they want to know more about the relationship between the credit rating services and investment banks that assembled complex debt structures known as collateralized debt obligations, or CDOs, tied to risky mortgages.”
“‘There’s no question that there is a careful examination going on right now of what role the rating agencies played here, what they knew and when they knew it, as well as the investment banks,’ said Gerald Silk, a partner at (a) plaintiffs’ law firm.”
“Silk’s New York-based firm represents investors who are suing bankrupt subprime lender New Century Financial Corp and Accredited Home Lenders Holding Co. The lawsuits contend that shareholders were duped about the companies’ finances.”
“While the rating services argue that they are merely offering opinion, they are involved in a lot more, said Joseph Mason, an associate professor of finance at Drexel University in Philadelphia.”
“He said they work directly with underwriters to determine the size of each tranche, or group of debt, and are active in the entire structuring of CDOs to achieve a rating target.”
“‘The rating companies view is we offer an editorial opinion,’ Mason said. ‘That’s clearly not the case. Rating companies are involved in financial engineering.’”
The Associated Press. “Lawsuits blossomed after Enron Corp.’s collapse, many targeting the energy giant’s bankers. Wall Street firms could again become the bull’s-eye for investors seeking recourse from the subprime mortgage debacle.”
“Investors ‘are going to be looking for deep pockets where they can maximize their recoveries,’ said Rick Antonoff, a New York-based lawyer with Pillsbury Winthrop Shaw Pittman, which has a group of lawyers assigned to subprime mortgage litigation.”
“Homeowners are suing lenders. Shareholders are suing collapsed mortgage companies. Investors in complex mortgage securities are starting to sue big Wall Street banks. Those investment banks are turning around and suing the mortgage companies.”
“Florida lawyer Dale Ledbetter, the plaintiffs’ lawyer, said he is working on several similar cases, adding that the subprime mortgage boom could not have happened without Wall Street’s help. ‘What people are not focusing on is the top of the pyramid,’ Ledbetter said. ‘They were doing almost no due diligence on those loans.’”
“One indication of how the lawsuits play out could be in last month’s settlement of a class-action lawsuit filed in a Tacoma, Wash., federal court against subprime lender NovaStar Financial Inc.”
“Just before the trial began, Kansas City, Mo.,-based NovaStar negotiated a $5.1 million settlement, which involved 1,600 plaintiffs who claimed the company overcharged them through fees paid to mortgage brokers. The company faces a similar lawsuit in California.”
“Ari Brown, a Seattle-based lawyer for the plaintiffs, said cash rebates to mortgage brokers, known as yield-spread premiums, were either disclosed to borrowers on the day loan documents were signed, or not at all. Such practices, which were prevalent at numerous subprime lenders, made it difficult for borrowers to dispute a loan’s terms, he alleges.”
“‘Everybody got on this gravy train,’ Brown said. ‘There was so much money to be made in subprime lending.’”
“The legal fallout will extend beyond the private sector. New York’s Andrew Cuomo and several other state attorneys general are investigating the subprime industry’s practices.”
“Marc Dann, the attorney general of Ohio, a state hit hard by foreclosures, is taking an especially aggressive approach and pursuing civil and criminal cases. Dann said he is considering a broader case against Wall Street banks, lawyers and bond-rating agencies.”
“‘We’re looking at how do we bring a case that really gets to the heart of this problem,’ Dann said. ‘This irrational market for these loans was created on Wall Street.’”
“State Attorney General Jerry Brown began mailing out claim forms Thursday to about 80,000 customers of Ameriquest and its affiliates in California. $51 million is California’s share, meaning the average restitution is around $800.”
Whew! $800 dollars will go a long way… towards this week’s mortgage payment.
What I’m surprised at is the lack of news of people moving out of bubble areas. We see it in the schools… I see in my industry a slow trickle of jobs (net) out of state… But is that it? Just a slow trickle? Yet there are so many empty homes for sale here in the south bay that I wonder, where did the people go? What about the jobs?
No stats… but there just seems to be a disconnect. A disconnect that will freak everyone out when reported.
I cannot wait until the next calculated risk posting on MEW.
Got popcorn?
Neil
Wow $800 for admitting to lying on the loan applications, should’t they go to jail or be fined instead??? Not a good thing to come for any form of morals left in this country.
ROTFL
$800 and the right to keep paying their mortgage.
For you know they won’t qualify to refinance.
Bwaa haa haaaaa ha!
And that’s 2 weeks of my rent… Ha!
Got popcorn?
Neil
Yes and once again, the only people that will make a dime off of all of this will be the lawyers.
What I don’t understand is how they get the judges to play. If I were on the bench and a law firm proposed collecting a $25 million payday for getting their “clients” a $20 off coupon (check the case against Verizon) I’d throw them out of my courtroom and dock them court costs. The judges, somehow, go along with this crap. Just who do they work for anyhow?
Just who do they work for anyhow?
Most judges started out themeselves as trial lawyers or public prosecutors. Many of them are also political appointees. I.e., mutual aid back-scratching society.
Neil, It is hard to fathom losing population, but see Gwynster’s post to the Weekend Topic section, listed below:
________
Comment by Gwynster
2007-07-13 07:25:22
Our inmigration # have dropped each year after the boom in 1998.
Sacramento County
Yr Pop est est. gain
1999 1,184,586 17,887
2000 1,230,401 45,815
2001 1,266,762 36,361
2002 1,302,102 35,340
2003 1,330,044 27,942
2004 1,350,861 20,817
2005 1,363,423 12,562
2006 1,374,724 11,301
These are estimates off datasets that run July 1 to June 30 so 2000 really reflects part of the the growth from 1999. 1999 and 2000 were the big years.
So you can see that for Sacramento Co., are well past our peak of 2000. If you work the population change from 1960 to current, I’m guessing you see a similar wave pattern over and over and could then estimate wide this last wave was and when we’re projected to possibily have a negative return.
For example, the est for 1994 was 493.
______________
No, people are definitely leaving California in full force.
While out of California visiting relatives in eastern Kansas, the new neighborhoods have plenty of new cars sporting California plates. What makes this an obvious consequence of the housing bust is that such plates were almost unseen five years ago in most of Kansas. Now it seems like they’re in every new neighborhood.
I know of four Californians moving to Kansas… (Who would have even considered that four years ago?!?). Once couple and two individuals… able to get same pay jobs in Wichita…
But what are the numbers? Its obviously happening. And yea… California population is increasing… but it seems like the job pay is declining. e.g., fewer doctors and more “doctors assistants.” Yea… I know the video game industry is going well… but is that enough to offset the banking job losses going on?
It feels like something is happening… but is that a false perception?
Got popcorn?
Neil
Watch the newspaper for this fall school enrollment. If they are pink slipping teachers then families are moving out of the area, but to the SJV or out of the state will be the question.They only have two choices, move to where they can get some form of work or where the best welfare rolls are.
Neil,
It’s definately happening, we just have a lot of data yet.
This reminds me of the out migration from rural farming communities during the 80’s. The older generation tended to be property owners and stayed behind. It was the younger population that left to seek better opportunities.
Look around you and you’ll seeing a grey wave spreading over CA. If you are in a collegetown, it looks like a aging tootsie roll - grey on the outside and youthful on the inside. This also creates a large economic divide between two groups with plenty of resentment each for the other strata to go around.
The folks who work in rural sociology (yes it’s its own sub field) knew what was happening from ancillary events but they didn’t have firm data until 3-5 years after.
damit, like an idiot I never proofread until after I post.
Should be “we just don’t have a lot of data yet.”
Check out this chart to see the relationship between California emigration to Washington (based on Drivers License Surrenders), and CA real estate prices
http://seattlebubble.com/blog/wp-content/uploads/2007/07/picture2.jpg
That is a find! Thank you.
The hysteresis of the right graph is very telling. I wish they were color coded by time in the economic cycle or CA price/income. My best interpretation is that California outflow peaks until prices crash.
Oh, the 2nd Y-axis on the left graph and Y-axis on the right… are going to soon need a new bottom scale.
I love that vertical drop: outflow stays constant while price appreciation plummets.
Got popcorn?
Neil
Neil
Jerry Brown is not prosecuting the mortgage frauds committed by
Wall Street as Marc Dann is doing.
Marc Dann for President !
A disconnect that will freak everyone out when reported.
Joseph Gobbels and his gang deceived an entire nation for 5 years.
Sure was hell to pay when those Ivan’s rolled into Berlin, though.
Human nature hasn’t changed all that much in 65 years.
800 bucks! Cool! That’s a month’s rent!
“That’s a month’s rent!”
In what part of Greenland?
I’m paying about that and I live in Hancock Park, L.A.
Yay rent control!
in the village of Cazenovia,NY….2-3 bedroom for $850. 20-30 minute commute to Syracuse. That’s a really nice location w/more homes than rentals. In fact one of the Bush cabinet members moved to DC from there.
When this amount of money is involved, anyone with a connection to the frauds and a deep pocket will be sued.
Just ask LORD Conrad Black! Lord my fat butt!
Well, the United States does not recognize peerage. Frankly, the bloody queen of England and the rest of that lot should be used as foot stools by Americans.
Besides, didn’t we fight and win a war with those turds? Everytime I turn on the tube I hear more of the UK yammering.
Enough already…some of us work in the US, pay taxes and create jobs, AND didn’t get involved in this crazy housing mess
Exeter,
Good point. I thought I was the only one who noticed this mass invasion of Brits on TV as anchors, reporters, American movie stars, et al.
What’s the deal?
What bugs me is that many local companies in my area use people with British accents to do their ads. Like that’s supposed to impress us or something…make them seem like classier companies, perhaps. Doesn’t impress me at all. I’ve been to the UK many times. Some of these accents are suspect.
“What’s the deal? ”
I haven’t a clue but family and friends notice it and aren’t liking it either. Illegal aliens, UK invasion, unfounded terror scare, hollowed out economy…. People aren’t happy.
its all being done by design to indocrinate us into a one world government. better start reading up on it. go to August Review and also infowars.com.
I saw an infomercial the other night where they were encouraging people to start making money on foreclosures. They even went so far as to say that with all the ARM resets you can expect countless opportunities in foreclosures for years to come. (Of course real estate only goes up even if foreclosures increase).
I figured out how they are going to make this last forever. I can’t freakin’ believe it. It would be a sticky retreat if everyone got into the foreclosure game like they were in the flip game.
I don’t think Lou Realtor and his buddy Joe 6P comprehend the longterm fallout effect of all the civil legal actions and government investigation against sub-prime lenders. This is going to depress house prices for a long time to come.
My former landlady bought a foreclosed property on the Pima County Courthouse steps in 1998. She wasn’t allowed to inspect it before the purchase, and lemme tell you, once she got a good look, oh, boy did she have her work cut out for her.
It took years for her to get through the list of deferred maintenance items. And did I also mention that she had to pay off the tax liens that the previous owner incurred?
In short, foreclosures aren’t all they’re cracked up to be.
Don’t buy it at auction. Buy directly from the lender after they have foreclosed. Pay for a good inspection and get the report before you make your offer. It worked for us. It can work for you.
Also, look out for homes that were built durning the boom. A lot of these homes are going to turn out to be junk. There are too many contractors that were once roofers and became house builders. Many were never very good roofers to begin with.
Carolina Bill, my landlady didn’t know the property had been foreclosed until her boyfriend and I saw the notice of auction posted on it. So much for dealing with the lender.
I think you may be right Floridanumberone. Just yesterday, two of my co-workers were talking about buying foreclosed houses & renting them out. I asked how they were going to rent them for enough to cover the mortgage payments, and was met with blank stares.
Too bad they don’t know what CDOs are…I coulda told them to wait and invest in a CDO on HSN …Then they would have at least gotten a “Genuine Diamel” ring along with it.
“Just yesterday, two of my co-workers were talking about buying foreclosed houses & renting them out. I asked how they were going to rent them for enough to cover the mortgage payments, and was met with blank stares.”
Not gonna happen. Why? Because with the ever tightening lending standards, they won’t qualify for the loans. We’re going to get to a point where lenders actually verify that borrowers have the ability to service the loan, not just sign the paperwork. That’ll kick all of these “real estate mogul” wannabes to the curb.
“We’re going to get to a point where lenders actually verify that borrowers have the ability to service the loan, not just sign the paperwork. That’ll kick all of these “real estate mogul” wannabes to the curb. ”
I hope this turns out to be the case BB.
Wall Street fiddles while Rome burns.
if there’s some kinda investment that appreciates with attorneys’ cumulative income, buy it.
need to see who makes all those fancy looking books lawyers allways have in their offices….
Even better, figure out who makes fakes shelves of books. Real books are rapidly going away because of the internet.
Good point. I’d rather see computer screens than books in my lawyer’s offices, relative to the billable time it will take to research whatever they’ll be looking up.
Hollywood barbers?
Slime futures?
Ummm… a law degree?
“While the rating services argue that they are merely offering opinion, they are involved in a lot more, said Joseph Mason, an associate professor of finance at Drexel University in Philadelphia…He said they work directly with underwriters to determine the size of each tranche, or group of debt, and are active in the entire structuring of CDOs to achieve a rating target.”
Nothing new there — for commercial mortgage backed securities. The rating agencies have always worked with the other players to structure the deals.
What seems to have occured is that some of the “innovations” in commercial real estate were applied to uneducated homeowners. By the way, the default rate of commercial mortgages is WAY HIGHER than on residential mortgages historically. And the number one predictor of whether a commercial mortage will default is — the year it was issued, and credit standards and prices paid at the time.
One of my predictions last year was that everybody would be filing a lawsuit involving this easy money cycle ,(easy to predict ).
All parties in the loan transactions are to blame including borrowers ,realtors ,mortgage brokers ,builders , appraisers ,and even Title and Escrow Companies processed transactions they knew were questionable .
I guess in the future the rating system for loan investments has to factor in the fraud factor if they are going to give out low down/no doc. loans to sub-prime borrowers . Let see …the fraud factor should account for about a 50% default rate at least .
The parties that rated the loan risk on this sub-prime junk didn’t know anything about the loan business ,or human nature for that matter . The fraudulent lending made the run-up and fake short term demand possible .No bail-outs for any of the players in this greed game .
“All parties in the loan transactions are to blame including borrowers ,realtors ,mortgage brokers ,builders , appraisers ,and even Title and Escrow Companies processed transactions they knew were questionable.”
Hey lawyers, doesn’t joint-and-several liability work like this:
The borrower is 75% responsible for the injury to the borrower, bu the borrower has no money. But the local government that recorded the mortgage is 1% responsible and can just raise taxes and cut services to pay compesation. Therefore, the local government pays.
Joint-and-several liability does work something like that. In a nutshell, if Defendant A is found bear 1% of the responsibility for the plaintiff’s injuries, and Defendant B 99% responsible, if Defendant B is insolvent then Defendant A must pay 100% of the plaintiff’s damages even though he is only 1% at fault. The law of joint and several liability and comparative negligence varies from state to state, but that is basically how it works.
However, re: your hypothetical scenario, I doubt that a local government would ever be found liable for RECORDING a mortgage. First, local governments have sovereign immunity, and the exceptions to governmental immunity are not likely applicable to the scenario mentioned above. Second, the recording of a mortgage is
what is known as a “ministerial” act, and purely ministerial acts do not generally give rise to any liability.
When a county records a mortgage it doesn’t review it or approve it for fairness, it just stamps the deed and mortgage and places it in the local property registry. The county assessor/recorder of deeds basically acts as a giant centralized filing system, it does not even read the mortgages, just collects them so that all land records are kept in one place.
Therefore, local governments are not likely to be responsible for all of the bad loans that have been made. This is not to say that the government won’t try to screw us all by enacting some taxpayer-funded bailout scheme, but the government won’t incur any liability for simply recording a toxic mortgage.
But in civil actions, the payout if you will is larger or smaller based on the status of the victim. Example A: you are 18 yrs old, single and support no one; the payout to family is small because you aren’t worth much. Example B: You are elderly, married or single; the payout is small because you aren’t worth much. Example C: You were married with two children (the worst possible case for insurance companies); bingo, you just hit the lottery. I guess in the case of housing the elderly would have the edge because they are retired and can’t recoup their losses.
Actually, it seems like very few people are actually blaming REALTORS in all this. The lending community is certainly getting the brunt, but I think REALTORS (NAR especially) as well as the incompetent, greedy flippers need to be the ones sued for falsification of documents and promoting the mass hysteria of “buy now or be priced out forever!” as fraud.
“‘Everybody got on this gravy train,’ Brown said. ‘There was so much money to be made in subprime lending.’”
…and now it’s time for the attorneys to get their piece of the action, says Mr. Brown, salivating.
“A veteran multiregional residential real estate developer in Lake Forest, Ill., Robert Sheridan, also paints a bleak picture. ‘The housing market is getting darker and darker,’ he said. The full effects of the subprime crisis, as they relate to tighter lending standards, have yet to be felt, he adds.”
Fire up the Twilight Zone theme music (do-do-do-da do-do-do-da…). I don’t see what the worry is, so long as the Fed can keep all markets afloat on a frothy sea of liquidity?
“As S&P and Moody’s work their way through the gazillions of CDOs they have assigned credit gradings to — last year’s $503 billion of new securities compared with $274 billion in 2005 and just $144 billion in 2004 — further rating cuts seem inevitable.
“If all the marbles fall, you lose it all!” went the pitch for KerPlunk, first sold by the Ideal Toy Co. in 1967 and later marketed by Mattel Inc. “You’re only sunk if they go KerPlunk!”
Those central bankers who have wondered how the brave new financial world of hedge funds and derivatives would cope in a crisis may soon have an answer. Let’s hope it’s not “KerPlunk.”
Okay which one of you guys is Gilbert? Could have given GS a hat tip on the “KerPlunk” line.
I envision it more like Jenga.
‘The housing market is getting darker and darker,’
…and then… “it went dark.”
“Thaaaaaaath’s ALL Folks”
wonder how much GE will get for the final 25% of mort biz ?
10 cents on the buck
saving the worst for last
you have to save some really good write downs as earnings are going through the roof…
got dividends?
And who or what entity is buying these dried up turds? Let me guess…. another one of those strangely named outfits born out of the credit-economy insanity like Citadel, Cerberus, Fortress etc…
Rule of thumb: the strength and viability of one of these companies is inversely proportional to the sound of its name.
I was thinking about that. Report says”
“GE sold about 75% of its subprime portfolio during the second quarter, or $3.7 billion, resulting in a loss of $182 million for its WMC Mortgage business, the company said.” ”
If it got 75c on the dollar for that 75% and gets 25c on the dollar for the last 25%, that would double the loss. So maybe pencil in another $200m of write-offs. But, in fairness, that’s insignificant for GE. So it doesn’t sound like sub-prime at least will have a significant direct effect on GE’s earnings.
If GE sold $3,700 million in face amount mortgages for a $182 million loss it indicates that the loans were sold at 95%. This seems very high so unless the loans were seasoned they were probably sold with recourse (1-year buyback period?).
wtf ? I thought that was about the standard default rate for subslime
“Both S&P and Moody’s now project cumulative losses for subprime loans originated in 2006 to reach as high as 14 percent, more than double projections at the start of the year.
“Subslime.” Love it!
that percentage is only gonna go up.
Like real estate itself, subslime default rates always go up.
That looks like actual loss rate, not default. Not sure what default rate it would take for 14% loss - 35%?
“Release the hounds!”
Bwaahahahahahahaa
This should be entertaining. Couldn’t happen to a nicer bunch.
Now that the USS Subprimbe Mortgage took a torpedo in the portside stern and went down, all of the lawyer sharks are coming in to feed on the survivors who went over the side.
Why is it whenever things like this happens the lawyers find a way to make money on it. Filing lawsuits and making vicitims out of foolish people is as American as…oh you know….apple pie.
Q: What do you call 1,000 laywers at the bottom of the ocean?
A: A good start.
Hey! If it weren’t for my attorney I never would have made it out of prison. There is no way I could have dug out by myself.
But if you were in for a drug offense then I’ll argue it was attorneys (in the form of overreaching lawmakers, all of whom are lawyers) who put you there.
For as much as everyone bitches about lawyers, the good ones sure are hard working.
Without lawyers, shits like -ex NC DA Nilfong would be runnin’ the show.
So the end comes with a rash of lawsuits…
How fitting, for a country that has lost it’s way.
bay area repos way up:
“California also had the dubious distinction of accounting for six of the nation’s top 10 metropolitan areas with the most foreclosure activity per number of households. Stockton, Merced, Modesto and Riverside-San Bernardino were Nos. 1 through 4 on the list. Vallejo-Fairfield was No. 7 and Sacramento was No. 8. Las Vegas was No. 5; Greeley, Colo., was No. 6; Detroit was No. 9 and Miami was No. 10.”
http://tinyurl.com/yserjy
All of the I/O loans made in 2002 and 2003 are now converting to amortized mortgages and the payments are doubling. With the new regulations regarding I/O loans and applicants being required to be able to pay the fully amortized amount, the people who took out these suicide loans can’t refinance or rollover one I/O loan into another one. They are stuck with payments they never could afford in the first place……..call in the lawyers….file a lawsuits…they’re victims……of their own stupidity. Maybe they should sue themselves.
“S&P corrected the volume of residential mortgage-backed securities it placed under review for downgrade to $7.35 billion from its $12.1 billion estimate on Tuesday. ‘It was an error and we corrected it,’ Tempkin said. ‘It was human error. It is what it is.’”
“‘That doesn’t sound as if they were in charge of the credit judgments of the Western world, does it?’ asked James Grant, editor of the highly regarded Grant’s Interest Rate Observer, on S&P’s $5 billion error.”
5 billion dollar error…and the guy says, “it is what it is”….!?!?
Oh, the chutzpah.
I kinda wonder if there really was $12 b that should have been written down, but then they realized what a mess that would have caused and scaled it back, blaming human error for the discrepancy.
Good thought. Learned the Merrill lesson quickly. Point is that the piper still wants his due. I would think the CS reset chart is starting to weight, and nothing looks good 6 months out. At some point (when????) a hedge fund with much shallower pockets than BearStern will reach the edge and pitch over. Who will catch him. Anyone or no one?
It must be right nice to be so brashly confident as to be able to indifferently shrug one’s shoulders over a $5b error!
Tempkin then went on to say, “… The $12B of bonds is only worth $7B anyway, so I was more right than wrong. Ask me tomorrow, it might be 6. Now let me get back to ‘rating bonds,’” he said as he pulled out his flask.
I think there is Secret Financial Emergency Services(SFEC) group made of the people who own the politicians, the politicians, in return for their services have made a deal with the SFEC that when necessary the SFEC needs to make helicopter drops to avoid mass histeria in the market. See everythings fine the market is up…ignore the man behind the curtain. Call me paranoid but if I were them, that’s what I would do. Short loss but long term gain.
Got an extra tin-foil hat on ya buddy ?
“Clearly, the experts have turned out to be dead wrong on housing. Last fall, the National Association of Realtors ran an ad campaign proclaiming, “It’s a great time to buy or sell a home.” It was followed by a slew of rosy economic forecasts suggesting the housing slump was ending and a spirited housing rebound was on the way in this year’s second half.”
The MSM may want to pick a new group of “experts”. I’ve been quietly listening to the “experts” that make up the smart mob here as well as a few other blogs and they’ve been dead right.
Blog posters have a rather strong advantage, in that we generally do not answer to constituencies when delivering our views. Independence goes very far towards eliminating bias.
The claim that things would pick up in the second half of next year (Q3 2008) were laugh-out-loud funny!
“How many Low/No-Doc loans were originated for each class of securitized loan? As it turns out, more than 80% of Alt-A, more than half of Jumbo, and 36% of Prime securitized loans (approximately 75% of all mortgages are securitized). ” These are 2006 loans.
See the Link for further info from today’s Credit Suisse report on mortgages.
http://www.itulip.com/forums/showthread.php?p=12232#post12232
OT- Does anyone have any input on the Seattle market that keeps going up? Are there some places that won’t be effected by the bust? IS this one of them?
“It’s different here”. “Everyone want to live here.” “The economy is solid here.”
Take your pick. They’re all equally wrong. Seattle is just 9-months behind the rest of the nation.
Ya, that’s kind of what thought but I am still hearing from people, news etc. that because of Boeing & Microsoft that it is stronger. But I vaguely remember Seattle going up about a year after everywhere else went nuts. It doesn’t really make any sense because Boeing & Microsoft have been there for years.
I seem to recall that Seattle’s economy was in the toilet during the 1970s. And Boeing didn’t exactly help matters back then.
Ya, it’s still frustrating to hear my friends brag about how much their houses are going up..STILL. They won’t even entertain the thought that what is happening across the nation right now might happen to them.
RE: Boeing
These schmucks are outsourcing most of the parts for the 737.
They told the news media the final assembly done in the US will be like puttin’ a puzzle together.
Somehow I get kinda queasy when I think of those wings showin’ up from Bangladesh, and unfortunately somebody
screwed up the spacing of the bolt holes, so the pieces won’t fit without some last minute improvision using super-glue.
“The National Housing Horror Show Is Far From Over”
What a great title! In fact, the show is just getting started and we need a lot Neil’s popcorn. This past weekend I visited (just for kicks) one of the new housing developments in Rancho Cucamonga/Fontucky area (Calif) and I saw at the most another pair looking at the houses. By the way, these houses are some ugly boxes that have 3 floors (it was quite a workout getting to the thrid floor). Anyway, I know some folks who bought one of these houses in Dec 2006 for something near or a bit over 700K! Talking to the sales person this weekend I told her if they would be willing to sell for 550. Her answer was pretty much, yes sign here. I said NO thanks! These houses are ugly and prices have a long way to drop.
Someone please tell me the income of Fontucky? Per family… 55k? 65k? I’m not thinking 550 is anywhere close to the bottom. 300? Nyet. It will hit 4X income. Why so high? People dreaming of moving to the coast… sigh… I wish lower…
But its all academic. The bottom is *at the earliest* 2009. Yea… I’ve posted earlier before… Later? Maybe. Let’s debate in late 2008.
Got popcorn?
Neil
Over the top….
I would suspect that a lot of the people in fontana (CA) are low middle class income levels: a lot of construction workers, real estate folks, maybe teachers, some firefighters, maybe. Anyway, I can’t for the live of me believe that people can actually afford the 500K and above homes. In fact, the family I know who about at or near 700K admitted that there was no way they could actually afford this house; he said our payments are somewhere in 4K/month and this is before the rate resets to the higher fixed rate. I just looked and thought, what in the world were you thinking when you bought the ugly box; I am pretty sure it involved some peer pressure (all my friends are buying big houses), greed, and KoolAid.
The housing market in IE (Fontana, Cucamonga, Riverside, etc) is terrible. In fact it’s been a long time since I’ve seen a SOLD sign! In Cucamonga I did see a SOLD sign but it was for one that was listed for 700K when all of the neihbors are trying to sell for near or over 900K.
Think of the peer pressure to buy as this way:
If everyone you know is buying big house with bright new cars every day, the only way to tell them you’re wealthy is either to (a) tell them; or (b) by a big house and a bright car. Since telling them is rude, if your measure of self-worth is weath, you have to go with the big house and bright car.
Likewise, if all anyone’s perspective is to burn through money and live paycheck to paycheck despite a family income larger than the median family income of the US; they’ll tend to assume everyone else is in the same boat, and therefore if they drive a beater car they must be broke. I get it all the time: how can you make so much money but drive an eight year old car? Why do you rent? You make good money! What is wrong with you? They assume I’m broke while they’re complaining about their car lease payment.
I’d be tempted to tell them it’s the alimony — that tends to get nods of sympathy.
Inventory has increased drastically in N. Fontana, as well as foreclosures. However, all the houses I looked at last year have already sold.
http://online.wsj.com/article/SB118429132937465533.html?mod=home_whats_news_us
“Mutual Funds Willing to Risk Subprime Heat
Mortgage Securities Don’t Scare Managers Seeking Big Rewards”
Not a complete list, but here are funds you don’t want to find in your 401k:
Franklin Strategic Mortgage Portfolio
Franklin Total Return Fund
Regions Morgan Keegan
Principal Investors Bond & Mortgage Securities
Schroder Enhanced Income
Fidelity Intermediate Bond Fund
Fidelity Total Bond Fund
I thought subprime was ‘contained’ and you are telling me it was contained in all these innocent-sounding mutual funds?!?
My 401k is through Principal…none of it in that particular portfolio though.
Here is a link to the holdings of that particular portfolio, if anyone is interested.
PDF warning!
What do the managers have to fear? Will they be asked to give back their millions in past salary and bonuses when their subslime-infestment funds blow to smithereens?
“There’s no question that there is a careful examination going on right now of what role the rating agencies played here, what they knew and when they knew it, as well as the investment banks,’ said Gerald Silk, a partner at (a) plaintiffs’ law firm.”
Let me translate. “Hell, IB’s, rating agencies, et al, are rolling in cash, the proverbial deep pockets, unlike these bankrupt subprime lenders who need a court order to keep the lights on and whose assets are encumbered seven times over such that we’d be fighting for table scraps, if that.”
Please . . . no righteous indignation, sir. You have your hand out too.
http://www.signonsandiego.com/news/business/20070713-1230-riskymortgages-fannie-freddie.html
Think this is important at all?
“The two companies – which together finance or guarantee more than three-quarters of all U.S. home mortgages – pump money into the mortgage market by buying home loans from lenders and then bundling them into securities for sale on Wall Street.”
They also debauch lending standards in the process, by creating the illusion that lenders need do no more due diligence than to put enough lipstick on the piggish loan documents for resale purposes.
“Their new policies, which take effect Sept. 13, call on lenders to exercise caution in making subprime loans and to evaluate more carefully borrowers’ ability to repay them.”
Dear Mr. Lender,
Would you please be so kind as to exercise more caution and to more carefully evaluate your borrowers’ ability to repay their loans? Because otherwise I might get my very sensitive feelings hurt.
With Love and Hugs,
Your Aunt Fannie
Just as visually identifying the body at the morgue provides a modicum of closure, certainly it’s important.