The Era Of Cheap And Available Credit Has Ended
A report from the New York Times. “When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent. ‘I have been in the business 20 years and I have never seen’ such a big swing in interest rates, said the broker, Bob Moulton, president of the Americana Mortgage Group in Manhasset, N.Y.”
“The investment banker’s problem was that he was taking out a so-called jumbo mortgage — a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up.”
From Newsday in New York. “Local housing prices turned in a mixed performance in June, but they continue to point to an ever-weakening market. Mona Holzman, the branch manager of June Shapiro Realty Laffey Associates in Great Neck, said that the number of closings by the office are down 13 percent from with a year ago.”
“She added that because of rising inventories, sellers should be more realistic about pricing their homes. ‘We could sell a house in a day if it’s priced right,’ she said.”
“Nesconset economist Thomas Conoscenti attributed the year-to-year declines in Queens primarily to a maxed out market in the borough and a hotter real-estate market in Brooklyn.”
“Residential inventory, a key indicator of the market’s vitality, rose to 15,185 homes in Suffolk, compared with 13,724, a year ago. In Nassau the number of houses for sale rose to 10,574, from 9,934 a year ago. In Queens, the supply on the market rose to 10,851, compared with 9,483 a year ago.”
“When Luveria Hazelwood refinanced her home with now-defunct American Home Mortgage in January, she was told her monthly mortgage payment would drop from more than $3,000 to just over $1,800.”
“But Hazelwood said she did not receive the fixed-rate mortgage she thought she was getting, but an adjustable rate one. She now is having to accept financial assistance from her six grown children to pay the $2,204 bill.”
“Hazelwood was one of four Long Island residents who testified Tuesday at an Elmont hearing on alleged predatory lending practices and the wave of foreclosures sweeping Long Island and the rest of New York.”
“‘AHM entered into this relationship without considering whether those borrowing have the ability to pay,’ said state Sen. Craig M. Johnson of Havelwood’s situation. ‘Here you have lenders not recognizing that these loans may not be good for the customers.’”
“According to a survey released by Sen. Jeff Klein in May, Long Island has the highest rate of subprime loan foreclosures in the state, with 22 percent of subprime mortgages issued in 2005 expected to end in foreclosure. ‘This is a statewide and nationwide crisis,’ Klein said.”
The New York Sun. “The Manhattan apartment market, long immune to national trends, could be cooled by the latest credit crunch and its effect on global markets, experts say.”
“With hedge funds collapsing and a stock market increasingly prone to wild swings, Wall Street bonuses, a major driver of the booming local housing market, could take a hit, especially when compared with the record awards at the end of 2006.”
“Taken with a hike in mortgage rates from wary lenders and a tightening of lending standards, the seemingly endless demand for Manhattan apartments could drop. ‘I’ve been doing this 20 years; I’ve never seen anything change this fast,’ a vice chairman for the brokerage firm Prudential Douglas Elliman who works with the high-end residential market, Dolly Lenz, said.”
“‘The high-end market is one of confidence; it’s pure, pure confidence, and the minute the confidence isn’t there, that’s when the attitude changes,’ she said.”
“In the past two to three weeks, as a number of high-profile hedge funds have collapsed and interest rates for some loans have shot up, a chilling, cautious mood seems to have hit the real estate community, even in Manhattan.”
“‘There’s been so many declines in home prices around the country,’ an economist at Yale University, Robert Shiller, said. ‘Of course it could be reversed, but the more probable outcome is that it will continue, and I don’t know that Manhattan can continue to be immune from that.’”
“Manhattan, with an average sales price of about $1.3 million, is especially prone to the spike in interest rates for jumbo mortgages, which have climbed nearly a half point in the past two weeks alone, according to Bankrate.com.”
“‘In a market like Manhattan, where so many of the potential purchases would require mortgages above the jumbo cutoff, it’s inevitable that higher mortgage rates and a higher cost of capital will impact demand,’ the senior economist at Reis Inc., Sam Chandon, said.”
Reuters reports on New York. “At the end of July, Deanna Kory had a bidding war on her hands. Three potential buyers were vying for a luxury apartment the Manhattan real estate broker was selling for a client at a $4 million asking price.”
“On July 27, the end of a week when the Standard & Poor’s 500 stock index suffer its worst one-week percentage drop since 2002, she called the winning bidder with the good news. The next day he withdrew his bid for the Upper West Side home.”
“Kory’s experience may be an early sign of weakness in the robust Manhattan market that could be vulnerable to struggling stock markets, hedge fun losses and newly cautious lenders.”
“‘I guess he called his mortgage person and found it wasn’t going to be as easy as he thought for him to get what he wanted. He got nervous and decided not to proceed,’ said Kory, senior VP of the Corcoran Group.”
“August is a slow time for real estate. Any slowdown will be difficult to detect for now, brokers said. ‘It will be much easier to tell if there’s impact a month from now,’ said Frederick Peters, president of Warburg Realty.”
The Democrat and Chronicle from New York. “Buyers appear to have gained the upper hand in the regional real estate market. New figures from the Greater Rochester Association of Realtors show that the volume of sales of existing homes slipped 1.9 percent in July from a year ago while the inventory of houses on the market continued to climb, up 2.9 percent.”
“‘The buyers recognize that at any given time there’s inventory that’s available,’ said Earl Krakower of Coldwell Bankeer Prime Properties in Pittsford. ‘They’re taking a lot longer to make decisions.’”
“Gone are the days when multiple offers are put in on a home as soon as it is listed for sale, said Armand D’Alfonso, president and chief executive of Nothnagle Realtors.”
“‘It takes a lot longer to market a home,’ D’Alfonso said. ‘The buyers have more time and more to choose from.’”
The Boston Herald from Massachusetts. “Real estate broker Francis Adams has a condo sale set to close tomorrow, but fears the lender providing the buyer’s second mortgage might go out of business by then. ‘I’ve been in real estate for 12 or 14 years and I’ve never worried before about a bank not (completing) a transaction,’ Adams said. ‘It’s scary.’”
“‘The era of cheap and available credit for everyone has ended,’ said economist John Bitner of Boston-based Eastern Bank.”
“Experts say investors will no longer put funds into risky mortgages, leaving banks with little capital to make anything other than the most conservative loans. As a result, lenders are cutting back on many types of mortgages that Massachusetts buyers relied on during the housing boom to afford the state’s high home prices.”
“‘The game is over,’ said Boston real estate broker John Ford. ‘(Banks) were just giving away money - but now, that’s stopped.’”
“For instance, Westwood mortgage broker John Brodrick estimates 70 percent of first-time home buyers he worked with during the boom years used ‘piggybacking’ to buy homes. But today, Brodrick said banks require piggybackers to have sterling credit scores.”
“Experts say borrowers, likewise, need near-perfect credit for ‘no-documentation’ loans, payment-option mortgages and other products popular during the boom years. ‘We’re going back to the basics of conventional lending,’ said Kevin Cuff of the Massachusetts Mortgage Bankers Association.”
“Eastern Bank’s Bitner, who previously predicted housing would bottom out this winter, now expects conditions to worsen until spring. He estimates median U.S. home prices will fall about 2 percent to 3 percent more by then.”
“Housing economist Karl Case of Wellesley College is even more downbeat, saying prices could drop as much as some 7 percent going forward. ‘We’ve got some ways to go before housing clears up - and taking out the subprime market doesn’t help,’ he said.”
The Eagle Tribune from Massachusetts. “Steven Calheta, an auctioneer from Irving Shectman of Pawtucket, R.I., stood outside 26-28 Washington St. on Wednesday, reading from a legal document that announced the foreclosure sale of the house behind him.”
“The only person to show up was a representative of Wells Fargo Bank, which holds the mortgage. Bank agent Bob Scanlon bid $308,466.24, and the house was sold - back to Wells Fargo.”
“Across the street, Guadalupe Martinez sat on the front steps of her ranch-style home. Four years ago, Martinez refinanced her $345,000 mortgage with Ameriquest. She got an adjustable-rate loan on her property, which has an attached, three-unit apartment building.”
“Her monthly payments started out at $1,900 a month and most of that was covered by the $1,700 monthly rent she got from her tenants. Then reality struck, and the rates started to rise. Two years ago, her monthly mortgage payment began going up in $300 increments. Her most recent bill was for $3,300 a month.”
“‘There’s no way I’m going to make that payment,’ said Martinez.”
“All over Lawrence, the Merrimack Valley, the North Shore and the rest of the country, homeowners are getting caught in the adjustable-rate mortgage bind.”
“‘I talked to Ameriquest, but they’re so mean. They have no interest in helping people,’ she said. ‘Maybe next month, I’ll have to move out.’”
“The foreclosure rate across the state is skyrocketing. In Essex County alone, the number of properties that face foreclosure auctions rose nearly 200 percent in the first six months of 2007 compared to the first six months of 2006. In that time period, 313 properties were up for auction in 2006. In 2007, the number rose to 920, according to the Warren Group.”
“Every day is a clinic in the offices of the Neighborhood Assistance Corporation of America in Lawrence. Distressed or would-be homeowners have been streaming into the offices lately to speak with the director, Nelida Machicote, hoping to get a refinancing package.”
“‘It’s gotten horrible, horrible, horrible,’ said Machicote. Under NACA guidelines, people must meet certain income-to-debt ratios, and show that they’ve at least tried to make their mortgage payments.”
“If they can’t meet those guidelines and Machicote runs out of alternatives to help the homeowner, she counsels the person that ‘it may be a blessing in disguise’ that they are losing their home.”
“‘Their house may be worth $300,000 today, but homes around theirs are selling for $200,000 or $150,000,’ she said. ‘The value is going down.’”
“She said in many cases, the best option may be just to walk away from the property.”
“Realtor Raul Ortega said many people these days are suffering from reverse sticker shock. ‘People call and want to know the value of their property,’ he said. ‘Many are shocked when told that properties similar to theirs are selling for less. The market has changed - prices are being adjusted accordingly based on the sales.’”
“For some of the people, he said, ‘the stress and worry is just not something they are willing to put up with. They just want to get out of it. They don’t have the means to keep up the property. Plus, rents are more modest by comparison.’”
“For Martinez, who may lose her home on Washington Street in Lawrence, that may be the best choice. ‘I’ve still got my job,’ she said. ‘I can go rent somewhere.’”
the mort biz of the future will be different
the “black box” will have the total commission on it.
WOW you mean you’re making 2% off my neg am -0 down loan ?
mr. fill in blanks manequin man
“Manhattan has another layer of protection: co-op boards. About two thirds of all the non-rental residential units in Manhattan are co-operative apartments.
In a co-op, the apartment building becomes a corporation. Instead of owning their individual apartments, buyers own shares in the corporations, which are governed by boards.
The boards can demand buyers put a large percentage of their own money down, often 25 to 50 percent. In addition to being asked about their current assets and income, buyers may also be asked about their career prospects.
“Most co-ops have always held a more stringent underwriting standard than even the most stringent bank,” Appelbaum said.”
these people not only check your income, they make you give them bank statments, investments and anything financial about you including doing a credit check
NYC getting a mortgage is easy, it’s the board approval that is the hard part of buying
Maybe we should have co-ops design the lending models . I would say that those co-ops would be protected projects from foreclosures and people not paying their HOA fees.
Here’s another little morsel on co-ops vs. condos. Due to the structure you’ve described, any judgement or lien against a coop “owner” impacts the building as a whole and all its “owners.”
In other words, if one owner defaults on his mortgage, the bank liens the whole building, not just the apartment in question. Same goes for a plumber or a painter whose bill is not paid - they can slap a mechanic’s lien on the whole building - no one can buy, sell or refinance until the bill is paid.
when you get a coop mortgage the co-op and the bank both sing a recognition agreement where it spells out the rights each party has in case of foreclosure. there is a standard one almost everyone signs.
the bank gets the shares, not a lien on the building
i don’t even think a mechanic’s lien applies to a whole building, at least i’ve never heard of it happening since NYC tracks the co-ops as individual units in it’s public records database
the whole point is that you can get a monopoly money mortgage, but the co-op boards serves as a buffer to make sure you have an investment in the apartment. so they won’t let you buy with $0 down and they won’t let you HELOC your place up to 95% since most co-ops have rules against it.
even if there is a 10% drop in NYC, it’s not that big a deal. nice thing about NYC is that there is a huge difference in property values here. someone who bought in 2005 in an expensive building can sell for a break even price or even a 10% loss and move to a cheaper neighborhood and buy another place with no problem
Right. That’s why in the early 1990s you had rolling defaults. One owner defaulted, shifting the cost to the other owner, which put someone else under, which shifted more costs, which put someone else under, etc. The real damage, of course, was one the sponsor of a conversion defaulted.
In any event, almost all of the new buildings are condos, which means the majority of units on the market a year from now will be condos.
condos are still a tiny part of the market and even they require 10% down and i’ve seen one in long island that wanted 20% down pre-construction
reason for the defaults in the 1990’s is that co-ops only came to the market in force in the 1980’s. the first buyers who bought from the sponsor had the right to sell with no board approval. A flipping party like Florida happened and prices crashed up to 90% in some buildings.
today there are very little sponsor units left and Fannie Mae won’t underwrite a mortgage on any co-op with a greater than 50% sponsor or investor ownership.
Condos may be a smaller portion of the housing stock, but they represent something around 50% of the housing market in NYC right now because they are the bulk of what’s being built. That’s why their volatility is so important to what happens in NYC going forward.
And that future is looking iffier and iffier by the day.
Dba, you keep singing the same song here –so I’ll keep posting my same refrain — (with a brand new jumbo-loan verse)
1. Most of apartments in NYC are co-op but most housing is not– and in the boros, the requirements to buy a co-op are often looser –and even in Manhattan, it is possible to get a 2nd mortgage on the sly for a co-op. Good piece on this:
http://www.therealdeal.net/issues/MAY_2007/1177700277.php
2. The condo market is small, but most of the new apts in the city are condo — and much of the apartment sales now are condo– and you certainly can by a condo with a risky mortgage.
2. ON WT Economists point — “That’s why in the early 1990s you had rolling defaults. One owner defaulted, shifting the cost to the other owner.” This is a point not to be overlooked, even as the shape of co-op ownership has changed. Even if a building is 100 percent owner occupied, if co-op owners stop paying maintenance, default, lose jobs, can’t sell their unit at a decent price due to a slump, it will affect the fortunes of every other owner in the building. And if you see the link above, one great point is -not all co-op buildings are managed well.
4. (New Verse) The jumbo loan problem is going to halt a lot of purchases in Manhattan and elsewhere — co-op/condo/townhouse or whatever.
Even if you could qualify for the jumbo loan, it just got that much more expensive. Most 1BR coops in Manhattan are higher than the Fannie Mae jumbo cut off.
The fact that Dolly Lenz was quoted above as saying she has not seen anything like this ever, is a sign that Manhattan is not different. It just took longer for the bubble to pop in NYC. It looks like NYC goes before SF.
“When times are good, they’ll require a big down payment, but when the market is weaker, sometimes they’ll be more flexible.”
“In the early 1990s, when a weak economy hurt the real estate market, 50 percent of his business was foreclosures, Miller said. “The majority of them were co-ops,” he said.”
Ouch! I think this refrain has broken the camel’s back.
If people can’t buy into co-ops due to jumbo loans, those who can’t sell may walk away and the rest of the tenants will be left holding the bag. As the costs get higher and higher they may lose more people and soon they won’t be asking anyone what their career aspirations are.
No one is going to be “walking away” from a million dollar plus property. That said, its hard to see how the Manhattan market can escape the negitive effects of the current conditions in the debt markets.
No one is going to be “walking away” from a million dollar plus property.
I would imagine that would depend on how much of the million dollar plus property they actually own. With the housing ATM in full swing for the last couple years, the amount may very well be negative. In that case, they shouldn’t walk, but RUN! (… and not worry about the guilty conscious. The people that lent them the money deserved to lose it, didn’t they.)
That is why I think citizens and banks of foreign countries are not going to be very interested in making loans to Americans again.
no go with co-ops
the rule is you can finance up to 80% of the value and in some cases 90%. most co-op boards won’t let you finance past 80% since every refi and HELOC requires board approval and they check how much you currently have financed
Dba, see my comments above - that isn’t always true.
it’s true in enough cases to make NYC avoid the LV or Florida event. nothing is ever 100%.
my co-op was one of the last investor friendly buildings and they just passed a rule where you have to own for two years before they let you rent it out
i know a former board president and in their building they rejected someone getting a no-doc loan. this person had a cash business and their taxes showed very little income. now they have to buy a condo or house. money they save on taxes they will spend paying the interest on a much larger mortgage.
a lot of condos are also looking to pass rules to be more like co-ops
“No one is going to walk away from a million dollar property.”
Maybe not. But what happens when that million dollar property “suddenly” is only a $500K property. Will they walk away then? What’s that hissing sound I hear?
Dba, would love to know what evidence you have for this:
“a lot of condos are also looking to pass rules to be more like co-ops”
There was nothing to keep a NYC coop owner from buying a fancy new car, or a timeshare, or a fancy Miami beach winter condo.
Oh, they might not beable to refinance, but that does not keep a coop owner from taking on more debt, debt they may not be able to afford.
the whole jumbo loan thing is through mortgage brokers. if you call wells fargo they will quote you less than 7% for a jumbo through them
everyone knows you can’t trust mortgage brokers
Because of the ‘boards’ it’s why COOPS are usually cheaper than CONDOS. This may change in the near future though…
I’m so relieved we sold our Coop Shares on 2005-10! Our board went through the buyers financials and decided the new ’shareholder’ would have to put down a year of maintenance in advance as a condition for approval (@$750/month).
Interesting Co-Op info. Closest I ever got to anything on the subject was probably from a Seinfeld episode, living on the west coast n’ all.
But it sounds like the co-ops require a bigger down payment and proof of ability to pay, so, it’s less likely that a shareholder of a co-op will walk .If a co-op owners wants out there is more equity to play with to sell out their share to a new owner also .
NYC is not immune to the bubble deflation. Still, co-ops in can be incredibly strict. This may help NYC (a little!):
First-Time Buyer: The Six Things You Need To Know Now
From the article:
“In purchasing a co-op, not only do you have to put down whatever percentage of the purchase price the co-op board requires (usually 20%), but on top of that, the rule of thumb is that they want to see 2 years mortgage + maintenance fees liquid in your bank account(s). For example, if your monthly mortgage payments PLUS your monthly maintenance fees equal $3,000/month, then you need to have $72,000 cash in your bank account…remember, hat’s NOT including the downpayment and closing costs (which are typically 1% of the purchase price). This rule varies from building to building…but again, the rule of thumb is 2 years.”
Operative word here is “can be.” Note that he is buying a place in Manhattan — there are a huge # of co-ops in brooklyn and queens that require only 10 percent down, and where boards tend to look the other way about how these units are financed.
Also, I wouldn’t be surprised to see some of these strict rules bend when owners cannot sell units, and owners are defaulting. I’d imagine first to go will be the limit on renting co-ops out.
“The high-end market is one of confidence; it’s pure, pure confidence”
Purely delusional! You got to hand it to our modern day realtor. Every event today is whitewashed and put into the marketing gargon
spinner. Pops out smelling like the fresh morning breeze.
“reverse sticker shock”
LOL…. BAHAHAHAHAHA !! Am I even shocked!
“The high-end market is one of confidence; it’s pure, pure confidence”
The quote must have been truncated or misquoted when published…it should have read:
“The high-end market is one big confidence game; it’s a pure, pure confidence game”
I dunno, I kind of agree with it. The high end market depends on the confidence of buyers that the future is looking better - and when that confidence is gone… so is the market.
At the high end, I think that’s exactly what we’re seeing. Even as the low-end has disappeared, the high-end has held up the median price in many markets. Now we are starting to see that shoe drop too.
In past lending cycles they always use to charge more for a Jumbo loan and they required a lot more down once you reached a level of a higher Jumbo loan amount . Once you reached a certain level of loan amount the borrowers are rich enough that they have the funds to put up a big down payment and carry the note . Now the upper level is beyond 11/2 million .
In recent years you had speculators and sub-prime buyers with low down payments getting into the higher end markets . Hell ,they were showing million dollar flips on FLIP THAT HOUSE T’V shows .Alot of borrowers thought if you bought a higher priced home ,your profit would be higher in a shorter amount of time .
In California , people seem to think that 800k to 1 million dollar loans are no big deal anymore .So now I would venture to say that the high end market is more like 2 million or more .
“‘I talked to Ameriquest, but they’re so mean. They have no interest in helping people,’ she said. ‘Maybe next month, I’ll have to move out.’”
Yeah but I bet you were lovin those mean bastards when they did that sweet refi for you. Love can turn on you in a second!
“Love bites” - Def Leppard
I’m beginning to wonder if anyone reads their loan docs before signing.
I know that nobody reads the entire thing, but I wonder if some of these FBs even skim the first page.
The answer is no.
When I bought in 2001, I read every line of every document I signed, and the closing took about 2 hours. The title agent, the mortgage broker, and my realtor (all 50-ish ladies) sort of looked their watches, each other and me, and my realtor said “you’re the first person I’ve ever had who’s read everything”. No surprises for me later though, and I paid it all off in a couple of years.
Yeah, some of my past mortgage signings have been a pain (not for me, for them) because I insisted on reading everything.
In fact, I insisted on having all the docos in my hand the day BEFORE signing, and with Countrywide we almost had to postpone the refi because they couldn’t/wouldn’t get them to me in time. Funny thing, once we got to the title office the next morning after receiving and reviewing it all, the docos had changed! Oh my, more delays, and more negotiations to remove their nasty changes. I was not very popular with their people, but at least their lawyer understood.
Well Done NoVA !!!!!
What if you see something you dont like in the contract? Do you line it out or just say “I cant sign this” and walk away?
Both. If they don’t agree to your changes you walk away. You’ll probably lose your earnest money though.
I’ve heard of people going into a closing with a backup mortgage lined up. If the 1st mortgage company doesn’t give you their promised terms, you sign the docs from the 2nd company.
Of course you’d have to pay the 2nd to be there as a contingency.
Yes, you leave and request your mortgage broker / loan officer change to terms you agree to. Then next time, they come to you with a mobile notary (at their charge of course).
I’ve never known the “I lined it out” excuse to hold up in court. If the docs themselves don’t say what they’re supposed to, don’t sign and get new docs.
Written notations on a contract actally carry more wait than the printed words, if I remember correctly from my BLAW classes.
Oops… Meant to say “weight.” Long day.
Same here. Even my wife was looking at me with that, “What the F are you doing?” look. Started to get hot in that room as I recall. On purpose??? Wow, bought in 01 and already paid off? Pretty darn good!
Did the same thing on every mortgage I ever signed. Found $2200 of ‘errors’ (weirdly, all in the lenders favour) on the first one. About a grand on the second one.
When it comes to putting my name on anything - I trust no-one.
Yeah, for us it was $400 in errors we needed them to fix. Grrrrr… And vannuysrenter asks, what do you do, walk away? Yeah! For us, it was easy; it was a refi. We didn’t *need* to do it that day. And I made clear that we would indeed walk away, which is what it took to get some action and get the right people making phone calls.
Now if you are in the process of the purchase, that could be a bit trickier. But that’s why I ask the mortgage firm for the docos THE DAY BEFORE. Then, if it all falls in a heap on the day of signing, I’ve got my copies to bring to court to show the judge when I ask that the lender cover my losses. If I never got around to reading it beforehand, and the nasty bits are in my preview copy as well, I imagine I might have less of an argument, though.
By the way, for what it’s worth, most troublesome lender for us was Countrywide (some good people there but some not so good); least troublesome was ING (seemed to have a lot of rookies, but all papers were correct and timely).
If one single person ever rushes me through reading something I am going to sign, I would just get up and walk out the door. If they want to write all of that legal stuff then they should also realize it takes time to at least read that legal stuff.
She’s apparently no dummy. Later on in the article, she says she’ll just walk away and rent because she still has a job. Smart woman. Serves Ameriquest just right. I think she should stay there rent free until the Sheriff comes to throw her stuff out.
It’s hard to read a legal contract & stay focused as it’s deliberately written in such detailed, dry, legalistic jargon & verse as to protect the lender to the Nth degree. I bet the pro’s LIKE it this way as it discourages the average person from even trying to understand it.
Hell, if you can understand it is a bonus, much less taking the time to patiently wade through numerous pages, under the pissy spotlight of the sharks impatiently waiting for the blood to hit the water ( your signature ) to begin feeding.
I’d venture most people just say ” fuggit, I really have no choice anyway, might as well start signing .. “.
To those with the fortitude to examine the fine print I sincerely admire your resolve.
it’s deliberately written in such detailed, dry, legalistic jargon & verse
Yes, it certainly is. And if you ever have to litigate it you will be thankful. It’s nearly impossible to write something in plain english such that both parties and the judge will agree on the true meaning of what was agreed to.
My wife does IP litigation - her office keeps a library of old dictionaries so they can go back in time and determine the definition of a word at the time it was placed into a contract.
This is not a game - get a really good lawyer to go through the documents with a fine-toothed comb. At $500 - $1000, they’re well worth it.
Stocks are up. FED continues to inject liquidity.
Blackstone tripled earnings. HA! Wonder what they will be next year (not too good I’m thinking).
Is there anything in the Fed’s mandate (aside from the Greenspan Put policy precedent) that provides scope for them to prop up the stock market when investors collectively decide it is overvalued?
Ditto for newfangled high risk bonds which the IBs have been pumping out in recent years (CDOs, MBS, CLOs, etc.). On what authority does the Fed take responsibility for propping up the value of these high-risk assets?
“these high-risk assets? ”
LOL, liabilities, more like.
I was wondering about this too. John Hussman has a good explanation for this in his weekly recap.
http://www.hussmanfunds.com
(Wonder what they will be next year)
I wonder what they will be next quarter.
Even with all the liquidity the Fed is injecting, each rally they engineer peters out. If billions of dollars can’t keep this ship afloat, we must be in big trouble.
Carlos Slim is laughing because Warren Buffet’s and Bill Gate’s values continue to shrink as Bernanke continues to cause the dollar to lose value by injecting liquidity.
Past the point of diminishing returns.
Both of those guys have enormous stashes of silver, I read.
“Both of those guys have enormous stashes of silver, I read. ”
Dunno about Gates, but not Buffett. Not anymore.
I see your point about the dollar devaluation….but Carlos Slim ain’t laughing. I don’t think he does laugh….he’s incredibly cerebral.
I HATE doing business with Carlos’ companies.
That’s because every rally is being sold - usually within a few hours. The propping up is intended to allow distribution of stock and other risk assets from the books of the I-banks to the public. After they have sufficiently cleared their books, those markets will be allowed to fall.
Well I hope they have another 38B up their sleeve for every day this week because the market has given back almost all its gains today.
Yep, all gone. Down 3.01 today.
“Four years ago, Martinez refinanced her $345,000 mortgage with Ameriquest. She got an adjustable-rate loan on her property, which has an attached, three-unit apartment building.””
Four years ago was summer 2003. Back then, if I remember correctly, you could get a mortgage for as low as 5.5%, possibly with no points. For a triplex, it might have been more but maybe not (owner occupied).
And the best part? If you got a fixed 5.5% loan back then, it would STILL be 5.5% now.
Perhaps the property was only cash flowing because of a teaser rate?
The bottom line - if you couldn’t afford a property with a historically low 5.5% mortgage, you probably shouldn’t be buying the property…because, in the long run, from *historically low* interest rates, “rates always go up”.
In late June of ‘03 I got a 30 year fixed (conforming) for 5.125%. My current PITI is $875. No matter what happens, we’re stuck in this house because: (1) the mortgage is so great; and/or (2) the imminent hyperinflation will make $875 seem like peanuts. Perhaps a gas fillup will be more than my mortgage in a couple of years…
While your mortgage payment might seem nice and reasonably, hyperinflation isn’t necessarily good for anybody.
I heard about a guy who lived through some hyperinflation in Russia. He suddenly could pay off his housing debt. The problem was he couldn’t afford anything else and soon afterward it was clear their was no incentive to do any work.
Why work? Your dollars(rubbles) will be worhtless in almost no time at all.
(this was taken from another poster on another housing blog site)
Interesting story. There won’t be any winners emerge from what we’re about to go through. Those with gold and silver will be survivors, but that’s it. I was serious about a gas fillup costing more than my mortgage. Same goes for the heating and cooling. In essence, that’s what the Russian was experiencing. Food? Oh man, we haven’t even started talking about that either.
Ironically, the organic food that we buy has been going down in price recently. Comparitively, it is not much (and in a few cases less) than conventional. Haven’t been sick in two years, either, since we switched. Of course, you all know that your Mickey D’s is going to go up a lot when they get new wages factored in, right? At least here in the Midwest, yes, burger flippers still make minimum wage. I know that is not necessarily the case in high priced areas. I saw marquis signs in Glenwood, CO, for fast food work starting above $11 hour.
Gold gold gold gold gold gold gold gold
“the imminent hyperinflation will make $875 seem like peanuts.”
ONLY if you also get WAGE INFLATION.
How’s that globalization (outsourcing, insourcing) treating you?
Got breadline?
“Perhaps a gas fillup will be more than my mortgage in a couple of years”
But they’ll probably still put a max on the gas charge of $50. Won’t that be fun?
In our state once you go above duplex you pay investor rates, even if you live there.
oh, master. “the landlord has become the renter”
Wow, acid flashback!
Did the landlords of yester year put enough into thier “Karma Banks”
Probably not! oops……..
“Plus, rents are more modest by comparison.”
understatement of the decade….I rent an apartment for 1500 in Mass. A nearby condo that is for sale in a building that looks exactly my apartment complex is for sale for 324K. The condo is 200sqft. larger than my apartment. So lets say 2000 for mortgage (zero down), about 280 a month in taxes, and 330 for HOA dues. That’s 2500. I don’t know how much upkeep would cost for a condo but I do know that you have to heat them and I get heat included. I think saving over 1000 dollars a month is more than modest.
Hobo, same story from Mass. paying 1600 for nice townhouse in desirable area. Taxes 350, hoa 400. Asking for like untis 329-349.
hey, sounds just like my old-mill place in Lowell: apts to the right, condos to the left.
the only good thing about the condos is no Sec-8 hoochie mamas with six halfwit kids from six different baby-daddies.
I rent a small house in the Bay Area for $1700. A few houses down, a house 50% bigger is listed for $850K. That’s at least $5K in mortgage. I’ve seen that house sit on the market for more than 3 months now. Now that jumbo loan rates have jumped, the buyer has to put down at least 50% in order to qualify for a conforming rate. I wonder if it’ll go into foreclosure
Sitting in a 3br/2ba 1500 sqft in Fresno (yah granted no the best of towns…) Total rental cost to rent: $1200/mo. Total cost to own: $2200+/mo. What a joke.
And its a pretty nice house in the nice part of town too.
The house next door (4br/2ba) 2200+ sqft has been for sale and vacant for 7+ months now.
Reuters reports on New York. “At the end of July, Deanna Kory had a bidding war on her hands. Three potential buyers were vying for a luxury apartment the Manhattan real estate broker was selling for a client at a $4 million asking price.”
“On July 27, the end of a week when the Standard & Poor’s 500 stock index suffer its worst one-week percentage drop since 2002, she called the winning bidder with the good news. The next day he withdrew his bid for the Upper West Side home.”
So what happened to all the Wall Street Bonus Money Realtrs were screaming about that would keep NYC prices ever growing higher.
And arent all those $4-5M deals all cash anyway?
Well Well Well looks like the rich are more cash poor after all!
I heard from a stock investment broker that he thinks his clients should get out of the stock market today and sit it out with cash in the bank. But of course, the brokerage house is forcing him to tell lies that he thinks everything is wonderful and no one should sell stock.
My guess is that this is an old story, but I don’t know how anyone could sleep knowing that his job is to give advice that he thinks is bad and the only reason is to help his company bleed money from the idiot sheeple.
New York depends on Wall Street $ and banking, the future is not so rosy for those guys.
“Four years ago, Martinez, a manager at a local Wendy’s, refinanced her $345,000 mortgage with Ameriquest. ”
and
“Her job pays $22,000 a year,”
WTF?
She super-sized the loan.
She did have three apartments she was earning a rental income on.
She must REALLY be in Glenwood, CO.
“The investment banker’s problem was that he was taking out a so-called jumbo mortgage”
Wait a minute…I thought that everyone buying in New York, West Los Angeles, San Francisco, and Seattle was a money bags hedge fund manager, quant, Googlista, Microsoftie, or Hollywood mogul with plenty of “bank”. Why would it matter if rates on jumbos are going up? Just rearrange your finances and pay cash. No problemo.
between 50% to 60% taxes, $4000 a month rents and drinks on the town it can add up
I was told by a lot of people that making over $200k is very normal in Southern California. I would always ask where are these jobs and what kind of degree do I need to do them. I still have no clue where these plentiful jobs are located. My project manager the other day was saying how $200k is not that much money to survive in this state.
Manhattan really is different, after all. It’s going to be much, much worse there.
yep. and to think that four months ago, I spent an hour trying to talk an ex-girlfriend out of buying an apt here in nyc. even sent follow-up articles cribbed from the web to better explain what I was talking about. her response? ‘yeah, but I can find just as many articles saying the opposite’. people here in manhattan really, really, really think they’re different, special and immune. you know what that spells: bloodbath.
Don’t even help ex-girlfriends. You should have let her wallow in her own stupidity.
Maybe she wasn’t an ex then.
Be glad she’s an ex.
I don’t think so. Its not going to be pretty but things are going to be a lot worse in California, Nevada and Florida.
I think demand in Manhattan is going to plummet. The big question is what will happen to supply. I think it will initially drop as people rethink plans to move. However, the supply of new multi-million dollar condos will probably exceed the demand very soon. If the Wallstreet firms have mass layoffs, things could start to get very messy.
“I think it will initially drop as people rethink plans to move.”
Although there are not an oversupply of “Pet Rocks” currently on the market, there’s a couple or them gathering dust in every attic.. and these are part of the supply .. excess inventory.. just waiting for a demand for them to appear.
I predict that Manhattan, as high-end housing, will perform much the way that high-end communities in L.A. do. They will plummet later, and probably not by the same percentage as all of the exurban crapboxes, but plummet they will. And, as you say, Manhattan is very dependent on the financial services industry. Which is just the picture of health these days.
“When Luveria Hazelwood refinanced her home with now-defunct American Home Mortgage in January, she was told her monthly mortgage payment would drop from more than $3,000 to just over $1,800.”
“But Hazelwood said she did not receive the fixed-rate mortgage she thought she was getting, but an adjustable rate one. She now is having to accept financial assistance from her six grown children to pay the $2,204 bill.”
Whoa, she had a 3k mortgage paym’t and now it is 2200. How is this now a problem? How about asking a friggin follow-up question during these interviews? Like: WTF are you complaining about?
But , but , she wants a 1k a month payment ,and maybe Uncle Sam will let her slide on the property taxes also . I say ,let her kids bail her out ,not me the taxpayer .
If she was expecting a fixed mortgage and this is just the first adjustment she could be in real trouble in a few more years.
It may be her fault, but I find myself enraged at the propaganda sent out by some mortgage brokers. They sell a “fixed” rate mortgage that resets in a few months. That’s just plain fraud, these guys should be in jail.
She was told she was getting a fixed rate of 7% and was apparently snookered into a neg am loan to boot.
You might note that in the UK, when people speak of fixed rate mortgages, it is only fixed for a specific period (e.g. two years) and then it floats like the typical mortgage. Misleading? No to them, but they’re used to it.
My friend told me that their thing thats similiar to a 30year fixed is 25 years fixed and 5 years that could change, or something weird like that. Yes he is an investment banker trying to explain it to me while we were drunk, but i remember it was something like that. But he did just close on a tiny little flat for more than I can imagine even living in the LA area.
I agree, but the excerpt led one to believe that she was doing great with her $3K/month mortgage until those bastards stuck her with an adjustable that is $2200/month and now she needs assistance from her family. Just struck me as odd.
It’s because she already bought a “Sclade” with that extra monthly nut. Now she’s strapped.
“‘It’s gotten horrible, horrible, horrible,’ said Machicote. Under NACA guidelines, people must meet certain income-to-debt ratios, and show that they’ve at least tried to make their mortgage payments.”
HAAA!!! You gotta be kidding me….this is “Horrible”? Making sure people are worthy of a house, that they can afford it? These people are functionally retarded, how do they ever do business? Just too funny!
she’s determined to help people even if it kills them..
We’ll see if her willingness to help extends to the bridge that they will consider jumping off of.
The news we watched tonight talked about the draconian “tightening” in the mortgage market. Apparently, they meant no 100% LTV anymore.
“Eastern Bank’s Bitner, who previously predicted housing would bottom out this winter, now expects conditions to worsen until spring. He estimates median U.S. home prices will fall about 2 percent to 3 percent more by then.
Housing economist Karl Case of Wellesley College is even more downbeat, saying prices could drop as much as some 7 percent going forward.”
********
I’m going with Mr. Case on this one!
I’m with Karl as well, provided that he is only talking about the drop going forward through year-end 2007.
I think Mr. Case needs to multiply that number by 4.
Cry me a river… All these idiots complaining and blaming others. READ the stupid document you’re about to sign, you moron!
And it’ll only get worse. Summer is the “hot selling” season in most states; so far it’s been awful.. just wait until October when the next wave of HELOC resets hit, hurricane warnings (or worse), liquidity dries up, etc.
These news of abuses/frauds/foreclosures today will look like fluff pieces compared to the real pain ahead… Wall Street knows it. Real investors are selling at the top. Homebuilders are dumping inventory as fast (and as cheaply) as they can. The DEMS are talking bailout; the REPS are hiding away.
Denial is not an option anymore… here comes panic!!
“Denial is not an option anymore… here comes panic!!”
Saruman: I tried to get you to aid me willingly, but you have elected the way of PAIN!!
Is that line in the book, or only in the movie?
Only in the movie, but still, one has to love the image of a doomed buyer stranded on top of their McMansion (like Gandalf trapped atop Isenguard) even as an army of collection agents swarms around them! Hehehe…
But if I am to believe all these idiots buyers, the average realtor must have powers comparable to the Voice of Saruman to sway them to make poor choices!
I hate to mention bad things that could happen. But what if California has a big quake? Its been a while since there was a big one out here. I would really hate to be in a lot of newly built stuff that “should” withstand it with the new codes, but something tells me if electric outlets arent level in these new places the building is pretty crappy.
Housing economist Karl Case of Wellesley College is even more downbeat, saying prices could drop as much as some 7 percent going forward.
Oh, Carl. In some parts, they’d call you an unrepentant optimist.
Or woefully naive.
But at least you work for school with a fat endowment …
Too bad many endowments looked to hedge funds to goose their misrable returns when Greenspan torpedoed the interest rates.
They could have gone to stocks or mutual funds, which were very cheap in 2002-2003.
He’s also a partner in the Case-Shiller index, so you have to figure he’s got plenty of data.
http://macromarkets.com/csi_housing/sp_caseshiller.asp
Interesting. I didn’t make the correction there between his name and the Case-Schiller Index.
Still: 7 percent? Does that sound plausible to anyone in these parts?
Count on the Herald to bury a real expert under a broker & a banker - but at least they called him. The CSI measures prices based on the same house being resold, & is down nationally about 1% in the last year. If this is a 1% fall, what will 7% look like?
… I meant “correlation” above, not “correction.”
I thought you meant “connection”.
I think he is talking of 7% decline in the national median price. The decline could be 30 to 40% in parts of Massachusetts.
I am seeing very different prices on MLS and Craiglist for the Boston area. Some of the Craigslist ads have 2003 (still quite inflated) prices, while the ones on MLS are 2006 absurd.
I’m not sure what timeframe he’s talking about in that snippet, however.
“For Martinez, who may lose her home on Washington Street in Lawrence, that may be the best choice. ‘I’ve still got my job,’ she said. ‘I can go rent somewhere.’”
Man. So is the REIC going to start calling its own
victimscustomers “bitter renters” too, now?“Steven Calheta, an auctioneer from Irving Shectman of Pawtucket, R.I., stood outside 26-28 Washington St. on Wednesday, reading from a legal document that announced the foreclosure sale of the house behind him.”
“The only person to show up was a representative of Wells Fargo Bank, which holds the mortgage. Bank agent Bob Scanlon bid $308,466.24, and the house was sold - back to Wells Fargo.”
Repeat this all over the country, with every bank becoming the final user…
In a game of usury gone wrong
Gosh, finally there are jobs for ex-real estate agents: “Meet the Price”!
(And no Bilbo, you CAN’T bid 6% more just because no one else bid.)
Anyone know when the next treasury auction is ? It’ll be real interesting to see who shows and what their treasury purchases look like.
That will be interesting indeed. But there could be plenty of flight to quality buying. A loss of foreign investment is more likely to be felt in…new mortgage issues.
treasurydirect.com has info (US Treasury auction site):
http://www.savingsbonds.gov/RI/OFAnnce
~Misstrial
every monday
even if china starts to diversify a little more, i think it will wreak havoc on the dollar. Today a Chinese official was quoted as saying the Chinese economy was overheating. If the US still consumes as many Chinese products as we think, then a way for them to turn down the spigot on consumer spending here is to buy less treasuries. I’m guessing interest rates would rise overnight and kill more ARM holders a lot more quickly. Me oh my..how interesting things get in such a short period of time.
Wheeeeee Doggies!
13%?!!!!!!!!! Does history repeat itself or what?
The interest rate back in 1980 on my first home was 13.75% 30-year fixed.
Let’s see how all the 30-something debt sellers like these times.
Ben,
Close… but not yet at my favorite number of 14% for the deeath of this debt delusion
“…the new rate was 13 percent”
“Ours goes to 11… I mean, 14…” Hehe…
Mine was 12% in 1981, because the seller deeded us the property under purchase contract and they held the mortgage. Real rates at banks at the highest that year was 21%.
“The market for large mortgages has suddenly dried up”
can someone explain to me why you can still get these loans at a little over 5% rate (with no money down and often even 110% or higher financing) in the Netherlands and probably in many parts of Europe, from US companies like GMAC and other international banks and financial companies?
Inertia…hard to stop a giant moving ship. We still get many ditech and capitol one subprime commercials in the mountain west. I don’t think word has gotten down to the marketing department yet, that Wall Street and China are not buying their products anymore.
Cinch
inertia and market inefficiency ..
“Gone are the days when multiple offers are put in on a home as soon as it is listed for sale, said Armand D’Alfonso, president and chief executive of Nothnagle Realtors.”
Um, I sold in Rochester in 2005 and my parents in 2004. There were no multiple offers. I have friends and family that have bought and sold since then. I have friends that currently cannot sell.
Have there ever been multiple offers/bidding in Rochester?
I can’t wait to start looking to buy again in a year or two or three. As soon as a real estate agent mentions that he has another offer on the house or a lot of interest from other buyers, my answer will be to let the others have it and I will keep looking.
That has been my standard response when they try to get the competitve bid in. I just lower my offer by 10%, and tell them that the other offer can have it. and oh, by the way, if the other offer is never converted to a sale, I can always call the Attorney General to investigate for shill bidding….
Have a nice day.
I’m more the walk away and if you contact me because this offer came through, my bidding starts new at a *lower* level. I’m not going to give a percentage… if they pull these tricks they should sweat.
I’m in no rush. Let them wonder when the next commission check is coming in or if the home will sell before the next mortgage payment.
Got popcorn?
Neil
tell the realwhore you can only buy direct and they need to step aside or rebate you 3-6%
Multiple bids, you kiddin’? Rochester has had a decling real estate market in real terms for the past 2 decades. This decline is closely linked to the death of kodak. With 7 months of winter, 9 months of grey skies, and no economic rationale to support it, i suspect rochester will be another syracuse within the decade. Sad, a nice place with great people….but no longer any real reason for the city to exist.
If the place is priced properly, there will be multiple offers, even in the Rochester area. I have had the honor of being on the losing end of two different multiple offer situations, but in the end I think I may have done myself a favor, especially after viewing this blog.
“I have had the honor of being on the losing end of two different multiple offer situations”
What ‘hood?
I could maybe see some party kids with daddy’s money upping $150k house in the Park Ave. area to $155k, but that’s it.
One in Pittsford and one in Honeoye Falls. They were both decent 160k deals for the location and sold quickly.
http://finance.yahoo.com/q?s=%5EDJI
I see 2 injections today. One at open and one at 11 I think. There will probably be another between 1:30 and 2 EST PM.
http://biz.yahoo.com/ap/070813/wall_street.html?.v=34
Stocks Rebound After Banks Add Liquidity
Monday August 13, 1:28 pm ET
By Lauren Villagran, AP Business Writer
Stocks Move Higher After Banks Add Liquidity
You can find the information over at the NY Fed..
http://www.ny.frb.org/markets/omo/dmm/temp.cfm
Only one TOMO reported today, a single day repo that wasn’t limited to MBS. If anything is notable at all, it’s that the acceptance was low.
jb
Oh good link. $52 Billion was requested? $2 Billion was granted? Ouch! And stocks are up on that? I just saw Goldman Sachs is now having to use their own money to try and bailout some of their hedge funds.
Stocks are up and down on any news, including an announcement that there is no new news.
LOL
~Misstrial
hmmm. Maybe they’ll inject 2 bil a day for the next 25 days - so no one will notice the full amount. Who said it’ll all unravel in October — It certainly looks like were headed in that direction. Big oil is connected to the now exploding bubble so get used to walking and living outta your parked car– perhaps as early as next year. Hey, the military raised the enlistment age to 42, so there’s always that (but you might end up like Tillman).
fortunately for the big speculators, the ECB is granting 80 billion per day, no questions or collateral asked. And they have promised to continue this as long as necessary. Too bad that we as ordinary EU citizens are not receiving a dime from all this free money, on the contrary - euro has tanked nearly 1% on every of the last three days thanks to these stupid ECB actions. The ECB banksters must be very proud of themselves :((
Thanks for the link. I’m confused, though. Based on the history the FED has been “injecting” at least since last July. How come it’s only become noteworthy since last Friday?
“I see 2 injections today”
Bugs: “eh Daffy, let’s see what happens to Taz when we inject him with this special liquidity carrot juice I got from Foghorn Leghorn”
Daffy: (spinning furiously, hanging on to Taz) Hey Bugs, I’m having a little bit of trouble…getting this straight jacket… onto Taz…Hellllllllllllllp!”
Doesn’t repeated application of electroshock therapy at closely-spaced points in time run the risk of making the patient go brain dead?
Kunstler:
“Sooner or later the recognition will set in that all that “boo-yah” was dreamed up. The United States swindled itself. We became a nation of such greed-crazed clowns that we committed financial suicide in an orgy of self-deception.”
http://kunstler.com/mags_diary21.html
“This slow-motion train wreck…” Jim, are you lurking?
Muggs~
Took a stroll over to your link…Gotta say Kunstler is one wild cat.
Peak oil and the crash of USA Suburbia Car Nation
Hubba, hubba!
Does anyone have a link that ranks national banks based upon their exposure to MBS?
I wish. The problem is Credit default swaps not MBS and how much some banks may have lost or gained. I am not worried about gains.
Hoz
Consider the counterparty risk in CDS. The NYT, late as usual had this to say today:
“Among today’s big fears: that commercial and investment banks, thinking they have used derivatives to lay off the risk of defaults, will discover they effectively bought insurance from hedge funds whose financial survival depends on credit from those same commercial and investment banks;”
http://online.wsj.com/article/SB118695042791895347.html?mod=todays_us_page_one
Basically, trading is CDS is like buying flood insurance from your neighbor and both your houses are located next to the river on the flood plain. There will be defaults on CDS obligations and then the REAL panic will start.
There was a link posted some months ago. Lots of discussion on which banks were most exposed. These names came up over & over:
Bank of America
Washington Mutual
Wells Fargo
there are others.
Check out this link to businessweek.com and scroll through the articles presented. May find something:
http://search.businessweek.com/Search?searchTerm=banks+MBS&resultsPerPage=20
Are Banks Selling Risk or Holding It?
“…Another tool that banks use to transfer risk is securitization, which broadens and diversifies the liquidity availability to the banks. In fact, the large banks have securitized more credit risk than they hold on their balance sheets. But securitization is no panacea—and it does not mean all risks are gone.
Indeed, investors in revolving asset classes cover only the most catastrophic levels of credit loss. In some cases, partial risk is transferred, but banks often retain speculative-grade tranches of the structures, so they will experience a portion of the credit losses that the entire pool of assets generates. Such retained interests generally make up about 3% of the assets securitized.
Banks Sell or Securitize More Loans Than They Keep
Balance-sheet loans ($B) Loans sold and securitized ($B)*
JPMorgan 427 1,494
Citigroup 679 1,356
Bank of America 706 1,145
Wachovia 428 612
Wells Fargo 319 2,552
*Two years of syndication, mortgages on which banks retained servicing, commercial paper conduits, own loans securitized.”
Businessweek
Aug 13, 2007
http://tinyurl.com/2ejv4x
Thanks Hoz! Looks like I need to add some BAC Puts to round out my financial services allocation.
Weiss puts out ratings but I don’t know the methodology or whether CDO’s and the such are taken into consideration. Some banks do stuff off balance sheet as I understand it. At any rate, here is a link to their opinion
http://www.weissratings.com/HL_Bank.asp
“August is a slow time for real estate. Any slowdown will be difficult to detect for now, brokers said. ‘It will be much easier to tell if there’s impact a month from now,’ said Frederick Peters, president of Warburg Realty.”
Here we go again with the rules changing in the middle of the game. Haven’t we heard over and over that spring and summer is THE buying season? What about having to close by end of August to get the munchkins registered for grade school? I swear, if it the rules don’t fit the scenario, change them until it does.
You’ve got to be kidding me. Here in California August and June compete to be the top sales month of the year.
Now if you’re talking Florida, yea… August is slower (due to the heat). But for the nation its prime selling season. As you noted, its to get the kids into school.
More and more people are seeing through the false information.
Got popcorn?
Neil
“More and more people are seeing through the false information.”
But not nearly as many required to incite rebellion. The koolade was distributed freely for a long time, thus a long detox is required. It still amazes that people believe the garbage put out by our Commerce Dept, NAR and Wall Street. I contend the Commerce Dept is the most flagrant, in your face liars.
I always thought August was the deadest month for a couple of reasons. The first was that a whole bunch of folks go on vacation to see sign spinners and the second reason was the house purchase could not close before school started.
I have never checked, I am sure there are sales histories for different areas going back decades. It would put proof to another fabrication if somebody has the data.
Hey Hoz, got some rough data for you: DC Metro area sales chart from 2004/2005/2006. Like I said, rough, so not many numbers, just graphs, and 2006 was anomalous, given that the slump was starting, so let’s take the previous years and a verbal summary:
Sales in January about 8,000 units, rising steeply to a peak in May at 13,xxx units. Then taper off steadily to +/- 10,000 by September. Steeper declines from there, to the lowest point in December. There’s a bit of a dip at September, probably from people pushing sales forward into August for school (I’m guessing).
But for DC anyway, August is “just another month”, and not a very bad one for sales in comparison with others.
So December and January - makes sense, Holidays.
Thanks, Nova Sideliner
Too funny….i called the manager of howard hanna (OH) and he said he expects a slowdown this in august because people are going to the park etc. Last 2 years this time it was a peak month because ‘gotta find a place before school starts’
“Going to the park”! Hee hee, tell him that those buyers are not coming back from the park even after August is over — because that park is where they will be living.
“Bob Moulton, president of the Americana Mortgage Group in Manhasset, N.Y.”
“The investment banker’s problem was ”
Wait, wait, wait. The buyer is an investment banker and he’s going through Americana Mortgage Group?????
The buzzword for the last week or two has been “jumbo mortgage.” I live in San Francisco, which declares itself the original “things are different here” city.
There is a quite a bit of wealth to go around here and people still seem to be able to pick up these expensive properties. But if the size of the mortgage apart from other factors starts play a larger role in determining interest rates, and with a modest SFH selling for $750,000 here, shouldn’t that make prices here drop quickly?
The market will stall “quickly” but prices will not fall.. because sellers will refuse to reduce prices.
Eventually prices must drop, but certainly not quickly… figure a year or more, imo.
Although SF is a proven trail blazer when it comes to nutty social innovations, it will not be a price-drop leader.
Do you guys see any risk to mainstream money market funds (like Fidelity/Vanguard/T-Rowe Price etc). I am wondering if it is worth the yield hit to go to a treasury only fund or just to buy straight t-bills.
I’d check the prospectus. A european money market just lost 26% last week because the manager had subprime CDO’s in it. I’d go for the safety of treasuries myself but I’m not a guru.
Bubble dead? Not hardlly
http://www.breitbart.com/article.php?id=D8R0A6E00&show_article=1&cat=0
Uh oh, how’s this for a scary headline:?
“Dems take on mortgage meltdown
Clinton, Dodd, Obama and Edwards offer ways to avoid future mortgage meltdowns.”
http://money.cnn.com/2007/08/09/real_estate/pols_play_subprime_blame_game/index.htm
Don’t worry, the URL says it all:
“real_estate/pols_play_subprime_blame_game”
“NEW YORK (CNNMoney.com) — In the wake of the subprime mess, Democratic presidential candidates are grabbing hold of the issue and offering their own solutions. And the problem, according to many of them, lies with the mortgage broker.
Sen. Barack Obama has introduced legislation targeting fraud and predatory lending. John Edwards, the former senator from North Carolina, has said he wants to ban certain fees, establish uniform broker licensing standards and start a national database for disciplinary infractions.
Last week, Sen. Hillary Clinton came out with a plan to address lending abuses. One of its main policy planks was to “crack down on unscrupulous brokers.”
The National Association of Mortgage Brokers (NAMB) reacted to Clinton’s statement immediately, criticizing her for singling out small business owners and calling for a wider scrutiny.”
Thank God, it looks like all we get is a lot of hot air, investigations and some blame.
D-rat strategy: Bail out Wall Street and say we did it to keep po’ folks in their homes.
Can you show us even one quote from the linked article that has anyone suggesting a bail-out? How about one quote from the article that you disagree with? Granted they should have been advocating this stuff years ago, but better late than never.
Sorry for letting the facts get in the way of your argument.
20 minutes left. Pencil slipped. Going down?
warren buffet et al are unloading..
When the elephants play soccer, it is wise to get out of their way.
yep, look out below. . . !
Well, so much for the big “federal money injection” strategy. Next!
DOW only down like 10 points?
Seems to me that something close to a flat market is what the Fed would be hoping to accomplish.
Maybe, but all of the early talk was of big gains. In essence, it sounds like all the ‘money injection’ can do is make to ride to the bottom that much slower and bumpier.
Bailout request REBUFFED!
Fannie Mae, Freddie Mac open lower after plea rejected
By Robert Schroeder
Last Update: 9:42 AM ET Aug 13, 2007
WASHINGTON (MarketWatch) — Shares of Fannie Mae (Last: 64.15-2.31-3.48%) and Freddie Mac (Last: 61.70-0.25-0.40%) opened lower Monday morning following a decision on Friday by the companies’ regulator to reject Fannie’s request to buy more home loans to prop up the sagging mortgage market. At the opening, shares of Fannie Mae were off 2.5%, to $64.77, while shares of Freddie Mac fell 2.2%, to $60.54. The companies’ regulator said it will keep Fannie’s request in mind but that the caps on its mortgage portfolio will remain for now. End of Story (One can only hope…)
http://www.marketwatch.com/news/story/fannie-mae-freddie-mac-open/story.aspx?guid=%7B9BF4E22C%2DDECD%2D4A12%2DBFB4%2D3F9430625454%7D
“The investment banker’s problem was that he was taking out a so-called jumbo mortgage — a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up.”
Brad DeLong has a good post on this here:
http://delong.typepad.com/sdj/2007/08/the-curse-of-th.html
The article itself notes that the average rate on jumbo loans is now 6.93%. If, as the article claims, the investment broker has good credit and is being offered 13% it is because there is good reason to be suspicious of his long-term ability — or willingness– to pay back the loan. Traditional reasons to be suspicious include less than two years continuous employment, less than 20% down, or a sudden, short-term ’spike’ in income (such as from an unusually large bonus). Just because lenders have been ignoring the risks for the last few years is no reason to start calling ‘calamity’ when they suddenly become aware of them again.
Anyway, those of us who bought our first houses when interest rates were 10% — or 15% — snort at the idea that we should have to worry that all the poor millionaires will go broke because they have to pay a percentage point or two more than us ordinary folks.
How large is “several?” Can it go as high as 117?
ECONOMIC REPORT
U.S. banks tightening mortgage standards, Fed says
By Greg Robb, MarketWatch
Last Update: 5:12 PM ET Aug 13, 2007
WASHINGTON (MarketWatch) — U.S. banks continued to tighten their standards for approving mortgage loans in the spring and early summer months, the Federal Reserve said Monday.
In particular, banks were making it harder for borrowers to get subprime and nontraditional mortgages. But even the borrowers with the best credit were facing tougher standards at some banks.
All told, at least a third of the banks tightened standards for mortgages, about the same percentage that tightened in the April survey. A year ago, banks were loosening credit standards for mortgages.
Although direct comparisions are impossible because the Fed has changed the way it asks the questions, the past two quarters represent the sharpest increase in the number of banks tightening up on mortgage credit since at least 1990-91.
Loose lending standards for mortgages over the past several years had inflated the housing market, but now the tightening of those standards has led to the bankruptcy of several (117 and counting! http://ml-implode.com/ ) lenders and the insolvency of some hedge funds that had invested heavily in U.S. mortgages. Worries about further repercussions have hit global financial markets in recent weeks.
http://www.marketwatch.com/news/story/trend-tighter-mortgage-standards-continues/story.aspx?guid=%7B52266A3C%2D1D06%2D4BF9%2D8D62%2DB01DA10E3588%7D