This Is Not Going To Be A Quick Turnaround
The Daily News reports from California. “Housing experts painted a grim picture of Los Angeles’ real-estate market Tuesday as City Councilman Richard Alarcon called for city, state and federal funds to help bail out city homeowners who can’t pay their mortgages. Foreclosures hit a record level in California last month and officials said 1,074 homes were foreclosed on in Los Angeles County, up more than 600 percent from last year.”
“‘We’re seeing people who borrowed $600,000 and can only afford $300,000,’ said Lori Gay, CEO of Los Angeles Neighborhood Housing Services.”
“‘Is there a fix? It’s hard to imagine the fix for people who have to pay $1,500 more a month and don’t have a way to pay it,’ said Dan Blake, director of the San Fernando Valley Research Center at California State University, Northridge.”
“‘It’s a real dilemma. People bought houses they couldn’t afford and can’t make their payments now. Does local government want to subsidize people who made an irrational purchase?’ Blake said.”
“‘There has to be some element of personal responsibility here,’ said David Wolfe, legislative director with the watchdog group Howard Jarvis Taxpayers Association. ‘Is that a good use of taxpayer dollars to, in effect, bail out people who should have known the consequences of those mortgages when they signed them?’”
“No relief is expected. ‘We’re in for another quarter of record activity,’ said John Karevoll, DataQuick’s chief analyst.”
“Leslie Appleton-Young, chief economist at the California Association of Realtors, said some adjustable loans taken out in 2005 and 2006 still have to reset, and it could result in more homeowners being unable to make their payments.”
“In fact, the market might not start rebounding until late next year. ‘We have definitely not seen the bottom yet,’ she said. ‘I know this is not going to be a quick turnaround.’”
The LA Times. “Lawmakers and lenders called on the state’s troubled home mortgage industry Tuesday to step up efforts to help financially strapped Californians avoid losing their homes to foreclosure. But they stopped well short of endorsing calls from consumer groups for a moratorium on foreclosures, now at a 20-year high.”
“‘Legislative efforts to intervene in the market are not the answer,’ said state Sen. Michael Machado, chairman of the Senate Banking, Finance and Insurance Committee. ‘They can cause befuddlement at best.’”
“Dorothy Hicks, an Oakland retiree who is fighting off a foreclosure, said she was struggling to meet a new monthly payment on a refinanced mortgage that jumped to $2,700 a month.”
“‘My credit is now in the toilet because I’ve had trouble meeting the payments,’ she said. ‘Unless I can figure out a way to get out of this mess, I’m going to lose a home I’ve lived in for almost 40 years.’”
The San Francisco Chronicle. “Homeowners and consumer advocates urged a state Senate committee to help save foreclosure victims’ homes and improve lending standards on Tuesday, the same day a study showed that foreclosure filings in California almost quadrupled in July compared with a year ago.”
“RealtyTrac.com said 39,013 California households, 1 of every 333 in the state, received a notice in July that it was in some stage of foreclosure. That was 289 percent higher than in July 2006 and gave the state the fourth-highest foreclosure rate in the nation.”
“‘Today illustrated that we’re looking at the tip of the iceberg in terms of the problems of foreclosures,’ said Sen. Machado, in an interview after the hearing. ‘In October, $50 billion in loans (will) reset as part of $1 trillion over the next year and a half.’”
“In the Bay Area…the most-affected county, Contra Costa, saw 1,271 homeowners receive notices that they were behind on their mortgages, 649 receive notices their properties would be auctioned and 389 lose their properties to foreclosures. The 2,309 total foreclosure notices in Contra Costa was up 466 percent from last July.”
The Sacramento Bee. “Regionally, banks repossessed 2,251 homes and filed default notices against 5,200 more during the three-month period in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.”
“Lenders, who have been criticized for being slow to offer alternatives to foreclosure, said they’re busy doubling and tripling ‘loss mitigation’ staffs to offer loan makeovers.”
“But industry reps acknowledged it’s harder, though not impossible, to help with subprime loans packaged on the secondary market and sold to global investors.”
“Nonprofit loan counselors were skeptical about the workout claims. ‘We don’t see them (lenders) coming to the table…a significant amount of the time,’ said Martha Lucey, CEO of Fresno-based By Design Financial Solutions.”
“Often, said Ed Delgado, a senior VP at San Francisco-based Wells Fargo, troubled borrowers are reluctant to give up cell phones and satellite TV to work out financial solutions.”
“‘Some of this behavior does fall on the consumer,’ he told the committee.”
The Orange County Register. “Orange County reported 1,560 filings, or one for every 652 households. It ranked 24 out of 55 metropolitan areas in the state. Total filings were up 166 percent from July 2006.”
“Rick Sharga for RealtyTrac, said loan servicing companies have to follow certain rules agreed to by investors. ‘In some cases they are allowed to do loan modifications and in some cases they aren’t,’ Sharga said. ‘That’s really a maddening thing for the homeowner.’”
The Times Herald. “A faltering economy is sending a chill through American Canyon’s red-hot housing market, local real estate agents said Tuesday. Out of roughly 160 homes available for resale in the city, only four sold during July.”
“It was one of the slowest months for homes sales in the past three years, said David Barker of RE/MAX Napa Valley. ‘There were only four sales in July, which is somewhat worrying because it’s usually one of the better months of the year,’ he said.”
“That marks a drastic change from what Realtors were seeing in 2004 and 2005, Barker said, when available American Canyon properties were in tight supply and home values were rising up to 20 percent a year.”
“Cori Badertscher, an independent real estate agent, said it is the worst market she has seen since relocating to American Canyon about seven years ago. Over the previous two years, she said there were typically no more than 40 homes on the market at any given time.”
“Last year, 16 homes were sold during July and 23 were sold during the same time period in 2005. Now the glut just keeps growing, with the 160 homes listed for sale in July growing to 172 as of Tuesday.”
“Erin Heeley of Prudential California Realty, said now sellers have to be patient because buyers are becoming more cautious and selective. The current housing market slowdown originated years ago when the average Bay Area home price sailed over $600,000 but the average income was around $70,000, she said.”
“‘Obviously, someone making $70,000 a year is not going to be able to afford a $650,000 house,’ she said.”
“As a result, she said many people artificially inflated their incomes with loans, which were relatively easy to get but were structured with risks that could leave payments going up while home values fell.”
“In the meantime, earlier home buyers who did get those easy loans are now losing their houses to foreclosure and can’t find a buyer offering enough to bail them out.”
“Meanwhile, many sellers keep dropping their prices to sell their homes and everyone in their neighborhood follows suit to stay competitive. ‘It’s kind of a mess,’ Heeley said. ‘I think things will keep dropping into next year then level off for a while.’”
“‘It’s really sad to see these people get foreclosed on and it makes the market even worse,’ Badertscher said. ‘Well, it’s bad for sellers. It is a buyer’s market.’”
“Such a buyer’s market, in fact, that many are forecasting what homes will be selling for next year and offering that price now, said Heeley.”
The SFC piece printed what Hicks did with the refi money.
‘Unless I can figure out a way to get out of this mess, I’m going to lose the home I’ve lived in for almost 40 years,” said Dorothy Hicks, an Oakland resident, during public comments at a hearing on the subprime mortgage crisis. Hicks refinanced her home twice to get cash for a new business and ended up with payments far beyond her means, she said. The adjustable-rate payments continue to go up.’
So if her new business was very successful, would she be running around and sharing the loot?
Of course not…socialize the risks, privatize the profits!
People like that should be laughed down when they get up in hearings to complain.
And, lets be generous and say she bought it when she was 20…Lived in it for 40 years…That makes her 60…Nice time to refi your house to start a new business right ??
Tell ya the truth, I’m embarking on a new line of business as we speak. It will NOT involve refinancing the Arizona Slim Ranch.
Instead, I’m building up slowly and paying as I go.
Nothing wrong with 60…It was the refi part of the equation that bothered me…
AZ SLIM
I hear ya loud n clear on starting yer own business with yer own cash. I did the same back in ‘92. Here’s a story for you:
Started a coin-op arcade with nothing more than my last regular paycheck of $187.67.
Bought 2 used arcade games, convinced a mall owner to let me setup for a month on credit, and plowed every penny back into the business. Ate beans n rice for awhile, but that was fine because I worked at least 15hrs a day buying more machines, scouting new locations, going to auctions, ect.
From the 2 machines I worked up to over 50, several pinballs, redemption prize machines, and more. My place was always packed becasuse I didnt rip off my customers. Even set the machines on easy so they could have a fair chance of winning.
Lose a token in a game? No problem, sorry for the inconvience, heres a few extra credits. UNHEARD of. NO ONE gave free games!
Anyway, 2 years later, while earning a modest profit . . saw the Sega / Nintendo juggernaut coming .
I liquidated early enough to clear $10,000, so I felt pretty good going from $187 to $10,000 (plus earnings) in 2 years.
My ex-wife was pissed & her relatives puzzled that I sold it all but when 99% of Tampas Coin-op folded within 2 years I was vindicated. Last trip to Tampa Lanes in Jan/2007 showed their million dollar arcade was a ghost town but they have the cash cow bowling lanes to see em thru.
Nothing like being a business owner, especially a successful one!
(no way would I give equity now on a start-up venture. had many offers from the Venture Cap boys . . . no thanks)
Good story, Aqius. What are you doing now to keep yourself occupied?
“Nothing wrong with 60…It was the refi part of the equation that bothered me… ”
It was the ARM part that bothered me. . .
My guess is she inherited it… hence why she was an idiot with the refinancing since she had no compression of its value.
Let the councilman know how you feel!
Here is his email
Councilmember.alarcon@lacity.org
and here is what I emailed him
NO BAIL OUT FOR FORECLOSURES!!!
Your kids and mine will NEVER be able to buy a home in our area if you don’t let the market self-correct. There will be people in pain, but perhaps they should have read their loan docs before they signed. There are already laws in place to convict predatory and unscrupulous lenders. Please….NO BAIL OUT!
Don’t use taxpayer money so these people can keep houses that they cannot afford!
This punishes the savers of America!
NO BAIL OUT!
Here’s mine:
“Dear Mr. Alarcon:
Being a cynical sort, I’ll make you the following proposition: I’ll be happy to support your bailout of borrowers who bought more house than they could afford, if you’ll kindly help me buy more house than I can afford.
Unsustainably inflated home prices are good for nobody. I appreciate your compassion for people who face foreclosure, but helping those individuals will not promote the general welfare. Prices will stay elevated, forcing yet another generation of buyers to overextend themselves (and pay unnecessarily elevated property tax rates). The only people who will benefit will be (1) the relatively small group of distressed homebuyers who you directly assist, and (2) realtors and mortgage brokers, whose piratical greed you will subsidize.
Better that you allow nature to take its course, and focus on minimizing the cost to those who suffer foreclosure. One thing you might to do could be to post security deposits for those people to rent housing. Their credit will have suffered dramatically (in fact, by the time a notice of default is filed, the borrower has missed several payments, wrecking his credit even before foreclosure). That will make it harder for them to be accepted as tenants. Government could legitimately help out here without having the effect of perpetuating the housing bubble.
Very truly yours,
Thomas E.”
Clearly a legal tome with cribbing from Mssrs. Jefferson and Adams. LOL Well done!
And mine!
***
Dear Councilmember,
No mortgage bailout, period.
Also, don’t forget to prosecute those who committed mortgage fraud. Uphold the law!
Hey, if you can’t crib from the greats, why crib?
Also, it’s fun to use the word “piratical.” Aarrrrrrhh….
Thomas…nice…..
Thomas did you get the link I posted last night? Do you need any other references?
Got it, thanks.
Councilmember,
Please bail me out! I’ve been renting for the past 4 years due to the outrageous housing market. Unfortunately, I was responsible and read the fine print on Sub-Prime mortgages. Maybe you can find a way to “give” me a few hundred grand so I too can enjoy “The American Dream”
What do you think?
Thank you,
James
I think Mr. Alarcon is right , we have to bail out those FBs and help them with their legalization (12 million people), maybe hire immigration lawyers for each of them. What’s next, what else … ?
ALARCON; Bail out FB’s and WE’ll bail YOU out ..of office.
It is hard to “bail out” Mr. Alarcon, it is too late, California now “is belong to Mexico” and soon will be USA…
probably bitches about how the gov’t is wasteful and how much in taxes you have to pay.
“Lawmakers and lenders called on the state’s troubled home mortgage industry Tuesday to step up efforts to help financially strapped Californians avoid losing their homes to foreclosure. But they stopped well short of endorsing calls from consumer groups for a moratorium on foreclosures, now at a 20-year high.”
They called……but nobody answered, or the phones had already been disconnected at the mortgage companys….oh well……next plan?
The best help for any of these FB’s is a moving van and a deposit on their new apartment. Everything else is a waste of funds. The loans exceed the value. The deals are not worth saving. Sheesh. Get a grip on reality everyone.
Sam Kinison: (paraphrasing) You wanna do something about world hunger? Don’t send ‘em another bite, folks. Send ‘em a u-haul and a guy who says” Hey, you know what this is? It’s saaand… You know what it’s gonna be 100 years from now? IT’S GONNA BE SAND. NOTHING GROWS IN THIS. NOTHING’S GONNA GROW IN THIS. Get your shit and your family, we’ll make one trip. We have deserts in America, we just don’t LIVE IN THEM!”
LOL saaaaand.
I loved that skit and so appropriate now.
Ok I had to go find it.
http://tinyurl.com/2g5kzp
It starts at about 4:40 though the first 4 minutes are definately worth watching too >; )
Thanks, Gwynster. I think I love you. My first question is: Are you married? Second question: are you female?
Yes and very >; )
…dammit…
“‘We’re seeing people who borrowed $600,000 and can only afford $300,000,’ said Lori Gay, CEO of Los Angeles Neighborhood Housing Services.”
“‘Is there a fix? It’s hard to imagine the fix for people who have to pay $1,500 more a month and don’t have a way to pay it.”
Apparently, the fix is for ME to live in that $300K house while my taxes subsidize the $600K house they can’t afford. Even Socialism doesn’t stoop that low!
You mean all these people had a failed lawncare business on the side too? How could that possibly happen?
/sarc off
The beauty of the stated income loan rears it’s ugly head.
Gwynster, by the looks of all the brown lawns around the neighborhoods, even people whose main business is lawncare are going to be short of work….
LOL
As pissed as I am about the bailout proposal, I just have to smile. Davis, Ca median home prices are down 17.37% yoy.
/gloat on
… all these people had a failed lawn care business on the side…” Why is that so funny? Could it be the 4 bourbon and cokes I’ve had?
The Ron Paul Libertarian Revolution needs to go down to the local level.
Interesting you don’t see wimpy economic libs like “Kenny Babes” and “David Cee” and “Jose Manolo” agreeing with this thread that is clearly opposed to bailouts, which is what the liberal econ egg heads are trying to do.
Hmmm all the liberals I know are completely opposed to a bailout. This is a huge issue in CA and if the Dems want to carry the state, they’d better be turning that bailout bus around.
I agree. Good fix. Let’s raise the taxes, and subsidize the FBs.
In California we went from $200K homes to the same home selling for over $650K. Of coarse the same people cant afford the $650K home today. But the point is the home isnt really worth that much to begin with. Again its worth at best $200K plus the inflation over the past few years.
Or minus deflation over the years.
How many people are making **less** now (esp in CA) than they were in 2000?
“‘Is there a fix? It’s hard to imagine the fix for people who have to pay $1,500 more a month and don’t have a way to pay it.”
Not hard at all. It’s called “walking”.
True. People have to walk here in California - resets increase monthly payments by too much for the average earner to pay. Back east and in the midwest, where mortgages are smaller, people should be able to tighten their belts to hang on to their houses. But they don’t seem willing to do so, from when I’m hearing. The sense of entitlement is sickening . . .
2002 is the number everyone should keep in mind because that is where prices will “softly land”. Every realty professional expects that the market will just turn around in 2008. Clearly they proven themselves to be without any credibility.
Maybe for some 02 seems reasonable… dont know why since
prices in the bay area doubled in 2 years 1999 to 2001… then took another swing up so we had nearly 3x-4x price increases.
““Erin Heeley of Prudential California Realty, said now sellers have to be patient because buyers are becoming more cautious and selective. The current housing market slowdown originated years ago when the average Bay Area home price sailed over $600,000 but the average income was around $70,000, she said.”
“‘Obviously, someone making $70,000 a year is not going to be able to afford a $650,000 house,’ she said.”
Even in Bay Area the Med Income is around 70K with homes 10x that. Far cry from 1997-98 when prices were 4x income.
If the current med income is around 70k even after 300K were unemployed and left the state. I guess we may see somewhere around 2001 prices… that being 1997-98 adjusted for inflation. Yep! 50% decline or more…
Agree, Thomas!
Same thing here (prices doubled between 1997/1998 and 2001, already. IMHO, we will see pre-2001 prices before this is over.
In some parts of San Diego County, we are already at 2003 prices…and still nothing’s moving!!!
–
DQ report for all CA counties & zipcodes for July is out:
http://www.dqnews.com/ZIPCAR.shtm
It is ugly will lot of red ink.
Jas
Sacked…
Sacramento County 1,360 $324,500 $365,000 -11.10%
Davis, Ca is down 17.37%. You have no idea how much I am gloating at this particular moment.
Jas,
Don’t take it the wrong way… but I’m already waiting for the August numbers… bwaa haa haa!
Got popcorn?
Neil
And just WAIT for the September numbers to roll out.
Roll? More like crawl.
It doesn’t matter what they do to rates or foreclosures. Buying has hit the pause button.
Not everyone, one coworker asked me today if I was ready to buy. The look on my face must have been priceless. I just pointed out that the homes I want will drop about $400,000.
He turned around, very unhappy.
Got popcorn?
Neil
–
I am sure the report of B of A buying “significant equity” in Countrywide has been posted somewhere.
It is buying $2B of convertible bonds.
Jas
“B of A…is buying $2B of [Countrywide] convertible bonds.”
CFC convertibles are unsafe at any speed — just ask any Corvair owner.
Luv,
Jen
My thought is that they are using cheap FED money to finance the deal, they will just get JOE Taxpayer to cover the loss.
What can CFC do with a lousy $2b? Pay their electric bill?
That $2B goes toward severance for all their drones. Don’t forget to load up on office supplies on your way out the door!
I read they spend 20million on internet adds each month. This effects Yahoo Google and AOL.
1/3rd of online ad revenue was coming from r/e. Unfortunately for the online ad business, just losing that ad money isn’t the end of it. Supply and demand comes into play. With r/e bidding up rates, they were making more off everyone that had to compete with r/e for space.
When the r/e space comes back to the available pool, rates for everyone else will drop.
Can you explain to me what the hell Warren is doing doubling down on CFC? He also has been buying Wells Fargo and who knows what else… How old is Warren, anyway, and should he be driving?
He wouldn’t be the first person who went from genius to moron in a short span about the time he became an octogenarian (i.e., the guy who used to have Bernanke’s job).
good one…
Don’t you guys know Buffett lost billions on a bad silver deal? He tried to short, and F’d up. He may be worth billions, but he does not always make the best decision.
Hell, that’s nothin’… Donald Trump has filed bankruptcy 3 times, has alimony payments out the ass, and he’s still a billionaire. WTF?
The CFC bailout appears to be rallying markets around the world. See, we dont really need a rate cut.
Fizzled. Cramer will probably be screaming again at the end of the day.
“Housing experts painted a grim picture of Los Angeles’ real-estate market Tuesday as City Councilman Richard Alarcon called for city, state and federal funds to help bail out city homeowners who can’t pay their mortgages.”
Doesn’t this doofus realize the money tree just burned to the ground?
They want to give Loans to people who can’t cover their existing debt from the local government coffers. You can’t teach that kind of Stupid.
Please, at least half of these LA politicians want to don a pair of mirrored sunglasses and stand on a balcony above adoring, cheering throngs of people, distributing largesse to the crowds.
LOL, maybe they can organize mass protests for their “rights” to live in a mortgage free home, in every major city across the country, that oughta go over like a lead turd.
-The LA Politicians love to bling the crowds. We are due for another celebrity arrest and Juan Six Pack will be mexerized and have a new focus for an hour.
Yesterday our wonderful budget makers finally passed a gem of a budget. It increases spending (of course) while the revenue from the last 3 months is decidedly less than the same quarter of 2006. It is doomed to fall on its face.
Soon, we will hear again from that dumbass Ted Liu from Torrance Ca trying to save the FB’s.
They just want to collect property taxes before the ville goes up in flames.
I’m sure Richard Alarcon, being on the LA City Council, is pandering to all the so-called victims, many of which are probably his constituents. Bread and circuses for the masses, that’s the ticket. Suck it up, Richard and tell your constituents to do the same.
Richard Alarcon represents Pacoima. In case you are not familiar, this is a section of the San Fernando Valley which makes Ti Juana look like Beverly Hills. We’re talking pickup trucks on the front lawns, live chickens running around weed filled front lawns, and lots of flipping as speculators headed for better deals out of the better areas of SF Valley. In other words, a totally logical setting for the decline to set into LA.
Pacoima is a bad hood… it would give Fontana and El Monte a run for the money as to who has the baddest hood. The gun fire at night puts the locals to sleep at night.
Politicians think they can always find new trees to strip the leaves from.
Tell Mr. Alaracon what you think!
Councilmember.alarcon@lacity.org
“Tell” him what I think?….Nah, I don’t think so. I let one of my Joshua trees do the talking. I’m in the mood for a Mexican shish-ka-bob!
Charles Schumer is calling for a massive bailout of the lenders in a three-pronged bailout package:
1. He wants to Fed to lower the funds rate
2. He wants Fannie/Freddie to buy more toxic moretgage debt
3. He wants taxpayers funds to help prevent FB foreclosures
http://tinyurl.com/2p4etc
I wonder if it has anything with him being from New York and collecting tons of money in donations from the Wall Street bankers. I notice Hillary Clinton is also calling for a bailout.
As a NYorker, I can attest that Schumer loves to play to the crowd–though he seems clueless that any bail-out will come out of the already over-taxed paychecks of middle-class NYers. Last week I think he wanted all the infrastructure upgraded. The week before,it was Port Security. He has the attention span of a fruit fly and zero follow thru. Hillary and Obama are both singing bail-outs. Hil’s campaign stash is Big Money–was in Martha’s Vineyard last weekend collecting, as was Obama. Neither seems to have even a marginal grip on economic issues…just pander, pander, pander. Dodd of course is a poster boy for the Street.
And of course, Hillary herself got a mansion in Chappaqua after Bill left the White House, bought and paid for by one of her long-time political supporters. Remember that little scandal.
Must be why she thinks everybody ought to get a free house.
schumer has been talking about port security for YEARS.
There is not enough money to pay for any kind of meaningful bailout anyway. The issue is amoot.
A quote from Bernanke:
“The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost,”
Just dont ever get in between Schumer and a camera. He’ll run you over.
It’s sick how both sides are owned by special interest groups and that will be the downfall of America
Bank of America to invest $2 bln In Countrywide: WSJ
http://www.marketwatch.com/news/story/bank-america-invest-2-bln/story.aspx?guid=%7B5B67D115%2D7480%2D482E%2DA43C%2D6DFE720160DC%7D
isn’t this considered incest??
You think bankers are going to let a little taboo get in the way of them making some money? They f*ck everybody, whether related or not.
Hey guys, if you are following this story you should read this right away (posted by KD from market-ticker.denninger.net).
It’s an article from Jim Cramer (I know, I know) from in the early throes of the tech bubble bust (07/00) about Exactly This situation, albeit this is a larger scale. BAC basically shorts against its acquired shares, collecting the interest difference from the discount, and gets dibs on CWs servicing if it goes BK.
Seriously, read it… if anything hearkens back to dot com days, it’s this move. There’s also the thread on yahoo where KD covers it.
So, 4 banks borrow $2 billion from the Fed discount window at 5.75%, then loan it to Countrywide are 7.25%.
I don’t get it. Why didn’t Countrywide not just go and borrow the money at 5.75%. They have a bank unit, right? Would that have made the bank unit insolvant?
Why would the banks put themselves even more “at risk” to Countrywide after last week’s $11 billion. And, wasn’t the $11 billion going to last for months? Why borrow more when you got so much last week?
And the stock price JUMPED??? on the loan?
How is it good news that a company that tapped $11 billion 5 working days ago, needed another $2 billion?
Hoz posted a short comment on BoA getting approval to buy LaSalle. I can’t find confirmation. Anyone else hear anything?
Just read in the Detroit Free Press they still have to get a hearing and an ok from the Feds. Activists in Chicago are crying about the possible loss of over 10,000 jobs from the merger in Chicago alone. It doesn’t sound like a done deal yet.
Oh, it is done!!!! You don’t put yourself on the hook for $2 billion in Countrywide losses unless you know you are getting what you want!!!
http://tinyurl.com/29ho2w
I was wrong….whoda thunk.
Thank you!!
Yep, there is is
http://www.bizjournals.com/losangeles/stories/2007/08/20/daily19.html?ana=from_rss
So, let’s track today’s events…
4 banks tap $2 billion from the discount window.
Couple hours later, FTC approves BoA buying 411 branch Chicago bank from ABN Amro…. A market that BoA has had a hard time penetrating.
Couple hours after that, BoA invests $2 billion in Countrywide.
Do they think we can’t add 1+1+1 and come up with 3? Or do they just not care? Countrywide MUST be saved, at all costs.
I just don’t get why Countrywide shares are up. Hello, they needed more cash, and that ain’t good.
Shares are up because they now have more liquidity and the chances of a BK have been reduced.
IMHO…I think that there were quite a few accounts closed this week at Countrywide Bank, and I mean quite a few as in… ALOT Babeeeeeeeeeeeeeeeeeee!
Yep, there is is
http://www.bizjournals.com/losangeles/stories/2007/08/20/daily19.html?ana=from_rss
So, let’s track today’s events…
4 banks tap $2 billion from the discount window.
Couple hours later, FTC approves BoA buying 411 branch Chicago bank from ABN Amro…. A market that BoA has had a hard time penetrating.
Couple hours after that, BoA invests $2 billion in Countrywide.
Do they think we can’t add 1+1+1 and come up with 3? Or do they just not care? Countrywide MUST be saved, at all costs.
I just don’t get why Countrywide shares are up. Hello, they needed more cash, and that ain’t good.
Darrell you are sooooo right about Doublewide. Let’s put it this way, if Doublewide goes down it is going to crater the lending business, wipe out the Dow, possibly lockup the economy for several days as everyone rarranges their deck chairs, and will begin at the very least, the severe recession, if not, the full on depression.
You see, the jig is up. Game over. Anyone who is looking can now see the emperor (the US economy) has no clothes. It has been smoke and mirrors for for at least a decade, if not more, now.
Bottom line…
Doublewide…must…be…saved…at…all…costs…!
according to the Federal Trade Commission and the Department of Justice
http://www.tijd.be/geld_beleggen/abn_amro/artikel.asp?Id=3149641
No sprecken-se Deutsche.
It’s in Dutch from a Belgian financial newspaper and it says that “according spokesmen of the Federal Trade commision and the Department of Justice it’s confirmed to Betten(dutch press agency)”
Why didn’t Countrywide not just go and borrow the money at 5.75% ??
I am not sure that Countrywide is chartered to go to the discount window ?? Someone know for sure ??
Any bank member of the FRS can hit the window.
No bank is out of the mire, yet. Countrywide has a $5.79 book share (my calculations - others report $7.50). Should Countrywide go south, there are adequate reserves to fund the $2B investment from Bank of America. The shareholders still would get nothing.
Perhaps if CFC got money at cheap rate from the Fed, it would look like Fed is bailing out CFC, it also triggered alarm on CFC condition.
Indirect, under the table help is always better.
Darrell_in _PHX: “So, 4 banks borrow $2 billion from the Fed discount window at 5.75%, then loan it to Countrywide are 7.25%.”
—————————
I believe we are seeing a little of what the banks did to South American countries as outlined in the book “Confessions of an Economic Hitman” … but done to companies here in the US and to it’s residents.
BofA may well end up owning CFC but at a steal …
BofA may well end up owning CFC but at a steal”
it does seem like that’s the idea.. smell blood in the water.. move in for the kill.
That is what I guessed was at the bottom of it — relatively small risk for a big prize.
So much for Mr. Buffett’s rumor. Now Mr. Buffett can be used for another rumor.
So much for Mr. Buffett’s rumor. Now Mr. Buffett can be used for another rumor.
New rumor….Buffett will buy all the bad loan houses in south central only…..at twice the price!
“Wasting away again in Margaritaville”, uh, oh, wrong Buffet.
Personally, I’d rather hear from Jimmy than Warren.
Warren Buffett is perhaps the smartest man alive. You would do well to listen to him.
I hear he’s having an affair with some chick named Astrid.
Oooh, I like that one……. I would just like a date, but the minute a girl looks at me - they run. An acquaintance said I should just leave my bank book on the counter at a Starbucks and I’d have plenty of dates. I’ll try that next.
I’d date you if I were single and you were in Dallas. I generally go for guys in the financial industry. Then we have something in common.
Tx, Imagine a cue ball rolling down a ski hill. C’est moi.
Hoz, I’m trying very hard not to imagine a cue ball rolling down a ski hill, but I am having no success - thanks a lot…
Rushing, if you were to see me skiing - I look like a cue ball rolling down a ski hill. “no matter which way you look at him, it is the same.”
Chuckle … as in “Hoz Cartwright.”
Hoz Cartwright was adorable…
and it’s what inside that counts
since for a lot of folks on this board, grammar counts as well lol…
I meant “…*what’s* inside..”
Oh, Hoz,
I find your mind fascinating and I couldn’t care less what you look like. How does one get in touch with you?
That affair’s been going on for YEARS. And, interestingly enough, he carried on the affair and stayed married to his wife, Susie, who is now deceased.
Actually he recently married Astrid, as I recall.
You just made my day, Slim. Really…you did.
Luv,
Jen
His wife introduced the mistress to him…she was working at a French restaurant in Omaha I think, they would sent out x-mas cards signed by all three of them. It’s good to be the King…
Oh, Piss Boy!? Piss Boy???
So perhaps it was good for Susie too, non?
whatever works for everyone…
Susie lived and died in San Francisco. I guess she didn’t like Omaha at all.
The PigMen have done it again. They turned a loan into an investment and spinned the whole wide world. CFC is soaring after hours. The PigMen are laughing. Ha! Ha! Ha!
Damn you PigMan! Damn you! Hope nobody was short.
I was. Thankfully I had also picked up a Sept call at 22.5 to protect against just such an event happening, though…
Last week I warned posters here (on three separate occasions) that the opportunity to go short was over. The stock was WAY oversold. It still is.
Thank goodness I’m a contrarian! I put $15,000 more into the stock market this past Thursday (Aug 16), and I’ve gained $1,017 on it already. Sweet. And, I’m back up to a total gain of 8.34 percent on the year! That’s up from my low of 5.71 on the plus side low a week ago.
Thanks to one and all of the bears on this board. May you continue with your doom and gloom ways. I appreciate it tremendously!
Keep buying, I have some NFI and LEND to sell to you tommorrow.
Out of roughly 160 homes available for resale in the city, only four sold during July.
So… that’s a three year and 4 month supply… and July is their busy month.
Dorothy Hicks, an Oakland retiree who is fighting off a foreclosure, said she was struggling to meet a new monthly payment on a refinanced mortgage that jumped to $2,700 a month.”
“‘My credit is now in the toilet because I’ve had trouble meeting the payments,’ she said. ‘Unless I can figure out a way to get out of this mess, I’m going to lose a home I’ve lived in for almost 40 years.’”
These stories of people who should be living in their homes mortgage free, that risked the roof over their head, still amazes me.
…and somehow, we are suppose to bail out these irresponsible people?
Don’t forget that David Lereah & Co. told everyone that keeping all that equity locked up in your house was “stupid” and “very unsophisticated”, like “stuffing money in your mattress”, et al: http://www.latimes.com/business/la-fi-homedebt28aug28,0,6044251.story?coll=la-home-headlines
And Easy Al went before the press and told everyone to go out and get the biggest jumbo option-ARM they could get their hands-on, ’cause it’s, like, way better than some boring old FRM: http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html
Not saying these people were 100% blame-free, far from it. But the bubble was hardly some random accident with no discernable cause. It was orchestrated at the highest levels of power by the banksters and their always-compliant pols.
Why though? It can’t just be short term profit if the consequence was a horrific recession.
I don’t know if it was “orchestrated”, but those in power now did not live through the great depression. I could easily see the people rationalizing that “it’s different now” (if they had conscious) and/or realizing that they’ll be on their yacht with this thing falls apart.
Maybe “orchestrated” is too strong a word. And collossal hubris and “new paradigm” thinking no doubt played a role as well. Even so, the geniuses at the Fed should have known better.
we’re supposed to care?
If you’re old and don’t trust your judgement, put your funds in a trusted relative’s hands. (My grandmother just did this.)
Anyone who does otherwise is just being silly. (Unless no relatives are trustworthy…)
This lady just lost it all… awww… here is your sign.
Sad, but no pity.
Neil
If my house was worth less than the mortgage, why would I want to get bailed out??? I’d rather walk away!!!
“Often, said Ed Delgado, a senior VP at San Francisco-based Wells Fargo, troubled borrowers are reluctant to give up cell phones and satellite TV to work out financial solutions.”
“‘Some of this behavior does fall on the consumer,’ he told the committee.”
- Hey Ed, we need our Bling here in So Cal and we don’t like your tone at all! We need our cell phones to put together hairbrained deals that satellite tv told us we were entitled to.
Why would they give up their cell phone and satelite TV? They can live rent free for 6 months (or more if the moritorium goes through), then let the bank take the house, they rent for way less than their mortgage payment, and keep the cell and satelite TV.
Why strugle to live, just so the idiot that bought the CDO, that is backed by the MBS that is loan is bundeled into, doesn’t lose his arse? Please. The foreclsoure is someone elses problem. I’m not givin’ up my cell phone for someone else’s problem. yo…. word.
In SoCal it goes a whole lot deeper than cell phones and satellite. What is Jane Chardonnay going to do when she can’t find a guy with less brains than the bank gives him credit for?
Either way, the ponzi scheme will kill the economy. If all these FB’s gave up on eating out, cell phones, cable TV, vacations, cars, movies etc, the entire economy would grind to a halt. I would rather have them dumb the houses back on the dumb lenders and MBS investors to minimize the pain to everyone else.
The nail on the head. Bam, bam.
“‘Is there a fix? It’s hard to imagine the fix for people who have to pay $1,500 more a month and don’t have a way to pay it,’ said Dan Blake”
Of course there is a fix, sell your junk and RENT.
…or rent your body and sell your organs.
do what any self respecting person would do.. work for it.
According to the FBI, $4763 is the average take from a bank robbery.
Is devoting 3 hours a month to paying your debts too much to ask?
Comic relief:
http://bakersfieldbubble.blogspot.com
Those are great, Thanks…I liked the one with Snoopy & Woodstock.
“It’s a real dilemma.”
No it’s not. They can’t afford the houses, end of story and I’m not paying extra taxes for neer-do-wells to live in houses I can only hope to aspire to. Why this has to be treated like a tragedy is beyond my feeble comprehension, no one died, you just have to move back into a rental unit not the street.
testify, Mo!
I am sick to freakin’ death of endless stories about the poor saps who can’t pay for what they signed up for. These are the genuises who couldn’t wait to buy a house they couldn’t afford so they had bragging rights about their granite counter tops and stainless stain trash compactor.
Does everyone head on down to the local government and beg when things don’t work out like they think they deserve??? Really, what percentage of these people REALLY got duped? Very small amount, I bet. The majority of these “dilemmas” stem from greed…well, that, and stupidity.
Damn…I’ll be beyond pissed off if there is a bail-out of any kind.
Catherine and Mo, you guys shouldn’t be surprised. Look at all Da Boyz on WS asking the FED for help.
Take no responisbility for yer actions, it is the aMerKin Way!
A merkin. Heheheh.
My sister-in-law went to closing expecting a 30 year fixed loan, but the mortgage company sent over paperwork for an ARM! She refused to sign and they had to reschedule closing. They put a lot of preasure on her to just sign, and when she refused they “found” the proper paperwork. She still walked and found a different lender because she didn’t trust them anymore.
People who were conned by that game may have a case, but it should be settled in criminal/civil court and paid for by the mortgage company, and should not be on the back of the tax payers (other than to enforce the law).
Not to mention they inflated the price, messed up the neighborhood, drove out the young responsible families.
A dilemma is a problem offering two possibilities, of which neither is palatable.
So as Uncle Vinnie says, “pays up or you takes your chances” - that is a dilemma.
Exactly. I’ve wanted to buy a house for a number of years, but I was not in a financial position to do so until about 3 years ago. But at that time I looked at what was going on and decided that prices were too high and it was best to wait for the bubble to burst. In the meantime, I’ve paid down debt, increased my FICO score, and saved cash for a down payment - all of the responsible things that you’re supposed to do before buying a house. Now politicians and consumer activists want to bail out those people who were irresponsible and took on more debt than they can afford. Sorry, but actions have consequences. So, for all of the borrowers, lenders, investors, etc. who engaged in reckless behavior and caused prices to rise far beyond the fundamentals, they now have to suffer the consequences of their actions.
That is pretty much my story to a “T,” WaitingInOC. I am going to go ballistic if some stupid hair-brained bailout scheme gets passed. It’s even dumber than giving carpool-lane stickers to hybrid vehicles.
Ode to Woodie Guthrie…
The loans are all in and the terms are rotten
The jet skis are parked, right out in front
They´re driving em out, below the economic border
To lose all their money and start over again
Why bother, why bother, he wondered who´d now live here
They took all the money he made in his life
His brothers and sisters come working the money trees
And they rode until the economy broke down and died
Goodbye to my house, goodbye upholstery
3 car garage how i´ll miss you, service porch y laundry room
You won´t have any credit when you sign the dotted line
All they will call you will be, Foreclosees
You forgot the verse about having to live in the Humvee! I am truly shocked.
My name is Matt Foley, I AM a motivational speaker, and I live… in a van… down by the river.
“The San Francisco Chronicle. “Homeowners and consumer advocates urged a state Senate committee to help save foreclosure victims’ homes and improve lending standards on Tuesday, the same day a study showed that foreclosure filings in California almost quadrupled in July compared with a year ago.”
Apologies in advance for what I have to say… But This is the biggest bunch of horse shit I’ve read in awhile. WHY should we be bailing out people who took out loans on homes they couldn’t afford? Even if a measure like this were passed, what does this tell people who actually had enough common sense to save their money until the craziness ended? Does that mean that I should go out and buy a Bentley and not worry about it since the government will bail me out?
Those people who bought and couldn’t afford knew it. They are NOT victims. Stop treating them as such. This is no tragedy. The best thing to do would be to allow things to happen as they SHOULD and perhaps people will learn some hard but invaluable lessons from it. There will be no bailout.
We need shirts that say “F#ck you, your mortage, and the bank you rode in on.”
Done.
http://www.cafepress.com/schecity
All profits from this shirt will be donated to Ben. Anything else you folks would like?
I’m impressed!
I just posted the following on the Daily News: “No, no a thousand times no. These people bought property hoping it would keep going up and they could retire in a couple of years. I wonder if it had gone up another 300% how happy they would be if some politician came along and said they should pay more taxes. Alcaron needs to strong arm the greedy banks, greedy realtors and greedy brokers to bail them out. Just stay the hell out of my pocket!
I read the daily news comments section, they all think the idea is crazy and are dead set against it. If only the politicians would get a clue. Folks, if you’re losing your house because of medical costs or job loss we have sympathy for you but that is as far as it goes. Anyone gambling their house for a business opportunity has to be willing to lose it.
I don’t have sympathy. Trading secured debt for easily discharged medical debt is a sure sign you’re a moron.
Some people view debt as something to be repayed, regardless of secured or unsecured. The fact that people try to spin plates while ill and falter happens to smart people with a sense of responsibility. So yeah, have some sympathy.
business is business. prioritize your investments, your income, your debt. Why is there such a thing as senior secured notes, and then junk bonds? There is no such thing amorphous “debt”. You pay high health insurance because it is unsecured debt.
And please let us not forget David Lereah, LAY and Watson saying prices never go down in California. Hello.
“In fact, the market might not start rebounding until late next year. ‘We have definitely not seen the bottom yet,’ she said. ‘I know this is not going to be a quick turnaround.’”
lets paint LAY a chart of where we were during the 1991 downturn compare to current downturn… its only the first ining and we are already seeing a deeper decline today vs 1991… we are no where near ending this correction next year or the year after that…unless she now believes prices can crash. But what would the CAR.org say to save their butts.
http://en.wikipedia.org/wiki/Image:Csipeak2back0407.JPG
My comment:
Speaking as a committed liberal Democrat, Alarcon is cordially invited to f himself. No bailouts for the irresponsible lenders and borrowers! You are HURTING affordable housing!
Hear, hear!! Testify Jimmy! I’m a social liberal but I have no compassion for irresponsible borrowers. NONE!
Extreme radical socialists checking in here. We believe in fairness, not promoting stupidity. F*** the dupes till they can’t walk! Maybe they won’t gamble away their future earnings next time…
Jimmy Jazz! I started singing the Clash song immediately! Love your name.
The above post was in response to that idiot latino politician Alcraron trying to bail the fb in Los Angeles out of thir mortgage problems.
Yeah, well, unfortunately, they heard America was the land of the free, which was mistranslated to “Everything free in America”.
land of the free houses?
I like to be in America!
Okay by me in America!
Everything free in America
For a small fee in America
From West Side Story
Thanks, Hoz, I was trying to remember that one.
Remember this Spring….the bailout talk was constant…then it went away…now the stock market is in a tailspin and the bailout talk has returned.
I can’t see that they could actually do anything to save the FB’s. The sheer dollar volume of this mess is beyond what the federal or state governments can afford. And I cannot believe all those FB’s will want a bailout package…who wants to keep paying a mortgage (regardless of the interest rate) on a house that isn’t worth anywhere near what you paid for it? Think these folks are really going to stick around and make payments for the next 3 decades??
I think that is what has all the CDO investors panicked — they know that there is no fix, only a loss that is either big or huge and is tough to price.
Has Bush yet commented on a bailout? Wasn’t his daddy in office the last time we had a RE mess … there is no excuse for this to happen twice during a Bush presidency… why wasn’t daddy offering advice to contain bubble when it really got started since he was around to see the last RE mess?
You see, I’m not political , left and right are just two arms on the same corrupted body, because I don’t think politicians are hypocritical … I think they’re doing exactly the job they were hired to do.
Who benefits from this mess in the end? Who will be making a cleaning off the repossessed homes? Follow the money and lets see who benefits in the end.
His brother Neil was running an S&L that had to be bailed out.
Right, foreclose. And Shrub had to be bailed out twice, possibly THREE times of oil and gas development businesses in Texas. It was his daddy’s rich friends that did the bailing out, as I understand it. Bush and bailout are synonomous. I’m so sick of Bush, Clinton, Bush, Clinton, aaarrrggghhh.
Our government is turning into some bizarre alternating monarchy.
Agreed. Wait til Chelsea runs against Jenna.
LOL. I thought it significant that Chelsea got the best education possible and then went to work for a hedge fund.
Bush has, in fact, commented on a bailout — at least on one particular bailout suggestion. He gave a pretty firm “hell, no” to a suggestion that the GSEs be allowed to purchase more non-conforming mortgages.
I hope they stick to that. If they can stick to their guns for a year… the market will correct itself. (Not the correction in a year, but it will be too late to change the rules.)
Got popcorn?
Neil
“A faltering economy is sending a chill through American Canyon’s red-hot housing market, local real estate agents said Tuesday. Out of roughly 160 homes available for resale in the city, only four sold during July.”
America, and no cals in particular…
I´m a little upset. The developer could have called it duck crossing, or some other insipid name that means nothing, but no!
They named it after us, and 156 houses bear witness to you not trying hard enough, to buy them.
I´m a little ashamed.
‘American Canyon’s red-hot housing market”
We sold four houses, we sold four houses! We are red-hot!
Just a quick addition here. I thought the fallout was going to be bad with all the fraud and scams taking place over the last 5 + years but the more I see this unfolding, the more I think it’s gonna be far worse than I imagined and I imagined it was gonna be BAD.
I agree, Mike. I’ve actually had a couple of conversations with realtors over the past couple of days by default (some of them pose as investors with cheap property to sell and then try to bait and switch) and they are STILL in denial. They have NO idea how bad it is going to get.
Can…we…say…DEPRESSION!
I hope not. I still think the “D” can be avoided. But the more rocks we see overturned, the scarier it gets.
But that’s ok, we’ll rob the public treasury bailing out the rich!
Got popcorn?
Neil
It was just posted on msnbc.com that 38,000 people have lost their jobs in the mortgage business since the first of the year. 21,000 in the last month alone…
The industry is attempting to prop up a market with two broken legs, a bad back and early stages of dementia….hmmmm.
I guess when you’re in a corner you look anywhere and to anyone to save you. BofA helping Countrywide….do you really think they’re just being nice?
What do you call 38,000 mortgage-related businessmen at the bottom of the sea?
A start!
a slow start…
Not enough!
As of 5 minutes ago - it was over 42,000 and rising - a lot of layoffs this evening.
A start
what do you call a bus of realtors going over a cliff? A good start. What do you call a crying shame? Five seats were empty….
A good start?
Inconsequential. 38,000 people is chicken feed.
Let me know when the number tops 1,000,000.
It’s been a slow week.
Well, they can always attend this job fair in Tucson:
http://www.tucsoncitizen.com/ss/local/60842.php
That one’s worth saving for posterity.
“‘Is there a fix? It’s hard to imagine the fix for people who have to pay $1,500 more a month and don’t have a way to pay it,’ said Dan Blake, director of the San Fernando Valley Research Center at California State University, Northridge.”
Hey Dan..best case scenario on $300k is more like $1850 per month than $1500. Now, go back to your desk, take out the HP and refigure your numbers.
Meth, crack, certain illegal opiates all make for a good (temporary) fix.
“Often, said Ed Delgado, a senior VP at San Francisco-based Wells Fargo, troubled borrowers are reluctant to give up cell phones and satellite TV to work out financial solutions.”
AARRRGGGG!… I am so sick of the give up the cell phone or give up the cable or give up the latte speaches. Yes, you do save money that way, but it ain’t gonna bailout someone who is $300k in the hole.
Don’t forget to buy in bulk
Despite the craziness in AZ, I’ve always known the bubble was far worse in California, because for us is was a two or three year fad, but for them it has been a way of life for decades - “the Sunshine Tax”, etc.
The solution for California housing is very simple. Just subtract $400,000 from the “price”, “value”, “assessment”, whatever from every CA house. The $600K San Diego house? Now $200k. The $400K south-central “gentrified” bungalow? Worth about $25k, tops (I guess there has to be a floor). Those $750K Bay area condos? Maybe $350 if you’re lucky.
Once this new reality sets in, all the forclosures and bad loans can be worked out, because the fever will have broken, and people will laugh at the insanity they once tried to preserve. Until that happens, expect more of this hysterical, desperate dreaming from local politicians that can’t imagine life without the “California mystique” in place.
Heck, with prices back to reasonable levels, the out-migration of the middle class might just reverse, as the state becomes “golden” again.
Let’s see , subtract 400k from my 250k Cali home …I come up with a negative 150 k on a house it cost me 80k to build myself with 1993 dollars ..
Keep on dreamin’ …. you might want to consider getting out of that az sun for a spell .
Ok, my method was a little crude, but seriously it seems like everything in CA has a few extra hundred thousand just “added in” for some reason. Maybe the formula should be -$400K or -50%, whatever ends up leaving some postive value.
Glad to hear you’re living reasonably in CA - you must be at least 100 miles from the coast.
I think just dividing by 3 is the more accurate method. $600K house in San Dog = $200K. $750K condo in desireable are of Frisco = $250K. $200K crack house in Compton = $65K.
I’de be quite happy if we just whacked everything 50%. Do I give a $h!t that my house will loose 200K…NOPE. As long as I don’t have to drop 800K on the new place, (with 1.9% tax)
“California ACORN, an Oakland group that works on economic justice issues for low- and middle-income communities, demanded even stronger action — an immediate freeze of foreclosures by banks and other lenders for as long as a year and passage of a state law prohibiting sheriffs from auctioning foreclosed property for at least six months.”
Is anyone else afraid that our politicians will be persuaded to pass any of these idiotic proposals? The best justice that can occur is what a free market economy will dish out. You want middle and low income justice? Let these bastards lose their house and everything else they’ve bought on credit so that those of us who are responsible with our middle-income paychecks can finally afford a middle income house!
Can someone explain to me, what the hell “economic justice” is?
economic justice = taxpayer-funded subsidies for your constituents
Economic justice = somebody else pays money which I receive
Any time an adjective gets appended to a virtue, rest assured a political agenda is being pressed.
It’s just “justice,” people. “Social justice” means nothing more nor less than “my political preferences, dressed up to make them sound like universal virtues.”
Nicely put.
Thomas — great way to summarize it.
Social Justice=Reign of Terror
Maximilian Robespierre was a fanatic who loved killing in the name of Social Justice. Be very afraid of persons that come to power on a platform of Social Justice.
Heads will roll.
That’s just the point, ACORN and groups like that hate the middle class and those of us who are “responsible”, and couldn’t care less if you are priced out forever. They are pimps and the poor and stupid are their whores.
Here in Tucson, they’ve been trying to “organize” various neighborhoods. And it’s been backfiring.
I know of at least one established association that got pretty hot and bothered about ACORN coming in and telling residents that there was no organization to represent them. (Except good ole ACORN, of course.) It even got to the point where an officer of this neighborhood association warned other associations to be on the lookout for the ACORN organizers.
In case anyone wants to educate ACORN about policies that will actually help low-income working people in the long run by making houses more affordable, you can write them at:
caacorn@acorn.org
I just did.
I don’t know what Alarcon and company are stressing about, I’m amazed prices around here are still as high as they are. Hopefully the absence of jumbo loans will speed things up around here;)
*Sigh*. LAIG, it will take TIME. Even with Jumbo rates up, even without stated income, even without zero down, it will still take TIME.
Now, if and when banks and investors start liquidating REOs at fire sale prices, things would be different. But we are not there yet.
Case-Schiller data shows LA area down on a house-by-house basis. However, we are no where near having bargain blowouts, buy one, get one free. I know you are looking to invest, but CHILL. Wait 2, 3, 5 years for your chance.
Until then, pull up a chair, sit back, prop up your feet with a nice Heferwiezen or Pinot, and take notes as this unfolds. Few people ever get this chance to observe a housing bubble burst while they are observing it. Most only get to LIVE it.
Spare me the condescending advice, I realize it takes time, and time is on my side. It’s just really bizaare how this is hitting surrounding counties so hard and LA is like, whatever.
Anyway, if these guys are calling for a bailout now, I can’t imagine what they’ll be demanding when the S really hits TF. Free mortgage payment with your monthly food stamps? LOL
I wasn’t trying to be condescending. S is currently H-ing the F (resets and NODs), fall-out about six to twelve months later (trustee sales).
It’s because the economy is LA County is in better shape than the surrounding counties.
Look at where the subprime lenders were based: Orange and Ventura. Where do the construction workers live? Riverside, Orange, and Ventura counties. Where are most of the big box stores like Home Depot? Not so many in LA county. Where has most of the recent overbuilding occurred? LA county was mostly built out a long time ago, so it’s been in Riverside, Ventura, Orange, and San Diego counties.
It’s just going to take longer for the S to hit the F in LA. The outer burbs are already getting hit, and the west side is freezing up. We’re going to get our Silent Spring this Fall it seems. I guess that would be a Frozen Fall.
[Asking] prices are high but are transactions being done at those prices? In the same numbers as say two years ago?
Case-Schiller has LA area down on a house-by-house basis…median price is still scewed by sales mix, but that too will fall.
Case-Schiller Home Price Index data (Microsoft XL file):
http://tinyurl.com/2f9gcg
Los Angeles
Feb 2006 - 267.75
Mar 2006 - 268.23
Apr 2006 - 270.44
May 2006 - 272.12
Feb 2007 - 266.63
Mar 2007 - 264.58
Apr 2007 - 263.36
May 2007 - 263.19
The peak was Sept 2006 at 273.94. Buh-bye, LA, tell San Diego I said “hi”.
Chick — that is exactly what I ask every agent I talk to. They say, “Such and such is ’selling’ for $xxx,000.” I say, “Tell me about closings.” Quiets ‘em down immediately.
Now which is it?
Alarcon
Alaracon
Alcraron
Alcatraz
Abracadabra
Just a reminder, eyeballing the Credit Suisse ARM reset graph, HALF A TRILLION $$$ in ARMs will have reset by the end of the year. We are getting near the peak of this wave of resets, during a time when sub-prime and alt-a loan programs have either been curtailed, or been eliminated completely, and even jumbo prime loans have significant price increases.
Irresistible force (wave of resets) hitting immovable object (reduction and elimination of loan products)…
For those new to THBB, the Credit Suisse report “Mortgage Liquidity Du Jour: Underestimated No More” (caution: PDF):
http://www.recharts.com/reports/CSHB031207/CSHB031207.pdf
Always good to remember fundamentals as I read political BS.
And don’t forget, those “option ARM’s” will be resetting much earlier than the graph suggests. “Owners” are almost exclusively making minimum payments.
This will end very ugly.
Got popcorn?
Neil
Yep. California hasn’t seen anything yet. The elimination of liar loans and higher cost of jumbos is going to crush all of those FBs whose loans are about to reset.
I had read this some time ago. I wonder how many fixed income portfolio managers did the same.
“He also wants legislation that requires mortgage education classes for first-time homebuyers.”
Force this on everyone who was smart enough NOT to take out a bad loan? That takes the psycho cake.
Hey, I’ll sit through an obvious class if it keeps J6P from mucking up the economy again.
Besides, I won’t shut up about sound financial decisions.
Got popcorn?
Neil
Should be taught in High School!
“‘It’s a real dilemma. People bought houses they couldn’t afford and can’t make their payments now. Does local government want to subsidize people who made an irrational purchase?’ Blake said.”
The better F@UKING NOT.
I meant THEY better …you know the rest
Help me with this one, guys. My neighbor down the street has a house that is assessed by the town for about 450K. He had it built in 2003. Nice enough house, right on the lake, not much land. Not high end by any standards. I took at look at his mortgage online and saw it is for 1.3 million. I cannot figure it out. I’m in MA by the way.
NPR had a story on today about criminal elements using flipping and refinancing as ways to make $. I have said this here for over 2 years. When the dust settles on this subprime mess, we will see that some form of organized crime has been running it.
What street and town?
Spucky? As in Spucky’s Pizza in Milton? Oh, lawdy that takes me back…
I had to look to see if it was still there and came across this:
“Sure, you can get a “slice” of pizza in Boston, but true Bostonians know it also comes by the “piece” (sometimes at places that also sell spuckies)” Never thought of that. I’ve always eaten pieces of pizza — along with a lot of aggression (apologies to John Candy).
I’m going to go get a drink at the bubblah.
Richard Alarcon’s phone number (I just gave it to his Latina desk hen):
213-473-7007
818-756-9115
Richard Alarcon’s phone number (I just gave it to his Latina desk hen):
213-473-7007
818-756-9115
Nice!
And I’ll bet she immediately picked up on the fact that:
1. You aren’t Latino/a
2. And, because of that, you’re automatically a racist.
3. Which means that whatever you say is discounted.
Happens here in Tucson all the time. Which is why a lot of us non-Latino/a types don’t bother dealing with the offices of certain local politicians.
LAY: “In fact, the market might not start rebounding until late next year. ‘We have definitely not seen the bottom yet,’ she said. ‘I know this is not going to be a quick turnaround.’”
You know it’s bad when LAY is giving up the ghost of the “souffle” and saying that the bottom isn’t for at least another year. Could this be a sign that the Realtors are going to change course and stop with their rose-colored predictions, and instead try to beat the sellers into submission?
“Could this be a sign that the Realtors are going to change course and stop with their rose-colored predictions, and instead try to beat the sellers into submission?”
In many areas, I think yes. Talked to a broker last week who was doing just that — dropping listings where the sellers will not re-price to anywhere near market after months of no lookers.
Here in the beautiful Bay Area the median price it is said is still going up….I’m still trying to figure out how so many people can work for Google…seems to be the only way anyone can really afford all of these $650,000 sh*tholes.
Reality bites really hard when it finds the soft tissue known as the gluteus maximus and there are alot of people with mortgages that have turned into a major pain in their *ss…
The google thing is old news. The early employees that made their money from the IPO are long gone.. Whats left are new employees who have to pay current prices $500/sh and watch as it turns to loses. Yes you can lose money on Stock Options.
Well, only if you’re dumb. If you have an option to buy shares of a stock (say Google at $550), and the option price is greater than the current market price of the shares ($512 today), then you would choose not to *exercise* the option. That’s why it’s called an “option”, and not an “obligation”. No exercise = no loss.
Don’t laugh, i know someone who did this _twice_ with Intel.
This is the same person who refied out of his 6% fixed into a 5yr adjustable, pulled cash out to pay the CCs off then ran the bills up again with 12k worth a cosmetic dental work and new girlfriend. He now has taken in a roommate.
I got him to be fiscally conservative when we dated. Once I broke up with him, it was like he was owed this second childhood. And they say it’s always the woman who’s stupid with money- sheesh.
Pen - Birchmeadow Road, Amesbury
1.3 mill in Amesbury does sound odd. I would be that it either includes multiple properties somehow or there is something fishy going on as you suggest.
For example, check out the house in Merrimac on the river for $899K
Hoz, or TXchick………..could you please explain what is happening in this topic from Market Ticker. I don’t understand the stocks lingo.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=1
As I rarely trade options, it appears to be a computer malfunction. The open interest in all call options went from 10K to 100K, it would have been a traders dream to be able to sell these options and buy the underlying. A trader would receive the cash (next day) and not have to meet margin for 5 business days. Since all the call boards are locked at daily volume 10,000 (in a market that trades 200) - it is an error. The contract is the September Calls in amex:SPY S&P dep receipts.
and if it’s not a computer malfunction………..what then?
The writer of those calls better hope the market crashes tomorrow!!!
It would indicate a crash was coming. A synthetic ‘put’. buy calls then short stock. A volatility play.
thanks Hoz and Wheatie…………was just trying to understand what was happening…………sure seems a BIG gamble
If it’s an expected volatility, why sell calls now? Increased volatility will only increase the value of the calls. I would imagine the bet is at least for a short-term drop. I would be interested to know if the calls were the cause of the jump up in the S&P futures.
The order supposedly was to buy calls.
Must be that one of those Investment Bank traders surfed up to good ol’ HBB and did hisself some learnin.
“California ACORN, an Oakland group that works on economic justice issues for low- and middle-income communities, demanded even stronger action — an immediate freeze of foreclosures by banks and other lenders for as long as a year and passage of a state law prohibiting sheriffs from auctioning foreclosed property for at least six months.”
Go ahead and put a timed freeze on the property. But guess what? CC debt is going to shut down things even faster and at the same time the repo man is going to go after the cars, motorcycles, boats, furniture, etc, and at the same time many are going to be out of work; I think you had better put your time and effort on where to get the losses in property taxes and the expanding wellfare rolls.
Who gives more money to politicians, banks or consumer activist groups? My guess is that the politicians will take the banks’ money and ignore ACORN.
ACORN is funded by the banks. The moritorium is to delay when they have to book the losses.
That REALLY sucks.
I just got home from a visit to north and south Carolina. I took steps to ignore reading newspapers and tv news so that I could enjoy myself. When I first started reading the above article I was pisssssssed to put it mildly but then after a pause I realized that no matter the amout of talk, there is absolutely nothing that’s gonna stem this leak because the HELOC is dead and it’s just a stone’s throw until the CC debt delivers the coup de grace. The ramifications of the millstone ‘how mucha a’mon itta gonna cost me’ is going to run far and wide.
What were you doing in NC? We just visited there to see if it would be a good place to flee to from CA.
Anyone else have good suggestions of places to run to?
I’m going to Madagascar but I wouldn’t recommend it to everyone. It’s just cause my wife has family there and we speak the language, it’s low cost, and the beautiful countryside and friendly people, etc….
Were you thinking of moving to NC? We just visited there recently for the reason of finding a place to flee to from CA. It’s pretty nice there, but not sure about the job market.
I’m always up for hearing good place to flee too… anyone?
I actually think that when things get really bad with foreclosures, the government will impose a moratorium on them. While that may seem good for those homeowners, it will also mean that no credit will be granted on those homes. so when it comes time to sell, the purchase price will be whatever the seller can come up with in cash. Obviously, that will be very little. I will wait patiently renting until that time knowing that I do not want to be a “homeowner” with a $500,000 mortgage who is still in his home (worth $100,000 now) only because of a moratorium.
I’m trying to figure out just how a moratorium would help, so please help me.
- I, The Grand Poobah, stop all evictions & foreclosure sales for 6 months. This helps the homedebtor because he isn’t thrown into the street.
Question 1. Does homedebtor have to pay the mortgage? Probably not. If he could not pay his bills before the moratorium do you think he can pay them during or after?
Question 2. What will this 6 months get the homedebtor? If he was behind on his mortgage and could not pay in full, is he expected to get a better mortgage? Exactly how will this work? How can someone who is behind on his mortgage get a better (cheaper) one?
Question 3. This will keep all those bank-owner properties off the market for a while, but won’t that just postpone the enivitable? Would the banks entertain a lot of short sales during this period by those wiht good gredit and lots of cash?
Question 4. Wouldn’t banks just stop lending for residential RE? I mean, If banks know that a moratorium can be called any time things get bad, wouldn’t they just find somewhere else to lend their money? Isn’t the other side of a ‘moral hazard?’ There are two sides to each transaction. Wouldn’t the the guy who didn’t get paid for 6-months never do business in this market place again?
Question 5. Wouldn’t Wall Street and the banks unelect any pol who kicked them in the ass like this?
I think this would throw the RE market into massive volitility and this kind of crap would simply freeze the market for 6 months, then desperate measures would set in.
I just don’t see how this would work, and, other than allowing the release of pent up hot air, I can’t see the benefits the pols see in it.
A moratorium on foreclosures would wipe out the entire concept of mortgage. Who is going to lend half a million with the risk of the government letting the borrower weasel out of paying the lender.
Go ahead. It should lower house values to whatever people can pay IN CASH. That isn’t much, say, 10,000 a house? I can buy a hell of a lot of houses with my nest egg.
Pen,
This house is nothing like the ones on the river. 1.3M might be right for the mansions on E. Broadway in Haverhill, down on the river. Did a bit more looking and this house also has a 300K HELOC on it. The 1.3M mortgage is just on the Amesbury house. The highest price in the area was about 560K. There is a lot of this funny business out there and the rubber chickens are coming home to roost.
yeah, I suspected something like that.
Even in today’s crazy market, 1.3 mill should go a long way to a substantial house on the North Shore.
“We’re seeing people who borrowed $600,000 and can only afford $300,000.”
What calculation model did you use Babe?
I’ll bet it’s more like 200k if you look at traditional 30 year fixed, 30% of income PITI and upkeep/maintenance factors.
DOC
Right, to afford a $300K loan you need at a minimum of $100K annual salary.
It should be 200K regardless (or pretty close to it). Just because the ‘teaser’ rate was low dosen’t mean that you won’t have to pay PITI in 2, 3, 5 or 7 years.
The FBs planned to get in, make a bundle, and refinance. Did they think mortgage rates would go lower than generational lows? Did they think that there would be some miracle that would have their income increase 50%? I don’t know what they thought, or if they thought about it at all.
Once you are in the market, you ride the market. If your starter house goes up 50%, your trade-up house probably went up 50%, too. Unless you move to a cheaper market or rent, once you are in, you’re in.
“Lawmakers and lenders called on the state’s troubled home mortgage industry Tuesday to step up efforts to help financially strapped Californians avoid losing their homes to foreclosure.”
The quote above indicates that the truth of the Housing Bubble, at least in CA, has reached stage #2 of the Three Basic Stages of All Truth:
1) It is laughed at.
2) It is violently opposed.
3) It is accepted as self-evident.
Since we’ve spent a few years in stage #1, I expect we’ll be languishing in stage 2 for a while, before moving on to stage 3 in a couple/few years.
I fear, however, that I’m going to have to bear a portion of the cost of stage 2 (higher taxes), since being a renter I don’t get any “mortgage interest” deduction.
That said, I hope the FBs don’t come to me looking for sympathy. The FBs can stick it where the sun don’t shine; get a cardboard box and some newspapers, grab some doughnuts out of the dumpster, work for a few months and save for a rental deposit. Count on an extra high deposit requirement due to your shot credit report.
Look what happened to Gray Davis and that was over small pickles… any kind of bailout with be met with a Typhoon of opposition. It would stink of corruption again coming from the builders and realtors trade groups.
Thanks for the best post on this thread.
You are absolutely correct. Any insistence upon a bailout by politicians will be met with their removal from office by voters.
If Hilary and Obama continue to advocate it, there will be a Republican president in 2008.
Save the Californians!!
Among the things I track is entertainment expenditures by area: This popped up from Minyanville and if…
Where’s the Water: Japanese amusement park
Youtube
http://tinyurl.com/yqvllz
It’s juat all good news to the markets worldwide. Homes appreciate, the market goes up. Credit is plentiful, the market goes up. Homes depreciate, the market goes up. Credit is tight, the market goes up. Foreclosures are low, the market goes up. Foreclosures set records, the market goes up. From all that, I can only gather that the markets always go up regardless of housing or credit. Am I missing something? (shaking head in confusion)
MerVal 2,008.50 4:01PM ET 45.74 (2.33%)
Bovespa 51,744.56 4:14PM ET 1,929.48 (3.87%)
Nikkei 225 16,293.10 9:58PM ET 392.46 (2.47%)
NZSE 50 4,088.86 9:57PM ET 55.59 (1.38%)
Straits Times 3,409.24 10:18PM ET 87.74 (2.64%)
Seoul Composite 1,812.43 10:18PM ET 52.93 (3.01%)
Taiwan Weighted 8,732.57 10:18PM ET 239.11 (2.82%)
You’re missing nothing except for the stock market itself. It’s undervalued, especially after the correction of the past two weeks. What the stock market went through for most of August is a very healthy, good sign for the immediate term. I’m very pleased. Several posters here consider me to be delusional, but that’s okay. In fact, it’s very okay. Cries of ‘The Sky Is Falling’ means Ka-ching! to someone like me. And no, I don’t short the market. Too dangerous for my taste. Too hard to come out a winner.
BTW - the stock market does NOT always go up regardless of housing or credit. But it will this time around. The housing crash as it stands presently is not large enough to derail the economy. It may be six months from now when some additional and rather large numbers of mortgages reset. But then again, it might not.
Such is life in the world of investing.
To reiterate: focus on the market itself and not all this other stuff. Your answer lies in it, not elsewhere. Understand how IT works - and importantly, understand mass psychology and behavior. So is an ability to see both sides of the same coin. So is discipline.
“In fact, the market might not start rebounding until late next year. ‘We have definitely not seen the bottom yet,’ she said. ‘I know this is not going to be a quick turnaround.’”
————————————————————————–
WOW! What an about face from Appleton-Young. Isn’t this the same shill who used to claim California RE was untouchable? I wonder if she’s motivated by her constituents lack of commission sales? Hmmmmm
Did anyone read Richard Alarcon’s press release (warning PDF file)?
http://tinyurl.com/36wyby
“Specific ideas discussed include:
call on the Federal Reserve Bank to lower the prime interest rate.”
Yeah, let’s do that one.
Hey, it almost worked for Jim Cramer
Okay, it’s time for another round of “Sleepless Exposes his Ignorance”
The fed rate is currently higher than all bond rates from 1M to 30Y. What are the consequences of this? Aside from devaluation of the dollar, is there a reason they wouldn’t want to lower rates to a level below these rates? Is this a situation that can only be resolved by the Chinese and Japanese stopping the purchase of Treasuries?
I’m probably exposing *my* ignorance here (it wouldn’t be the first time)…
By bond rates I think you mean “US Treasury” Bond Rates, the rates that the “safest” dollar denominated bonds (US Treasury Bonds) are yielding.
The federal funds rate (from which Richard Alarcon’s “prime interest rate” is derived) is the (target) rate that banks charge each other for borrowed reserves at the Fed…they are required to keep a certain amount at the Fed, so when things get tight, they may need to borrow from each other at this rate. The Fed sets a target rate (currently 5.25%) called the (nominal) Federal Funds Rate, and uses open market operations to try to achieve that rate.
The Fed has voiced reluctance to lowering the federal funds rate as a lower rate is thought to “heat up” the economy, risking inflation.
If investors stop and reverse the “flight to quality” (ie stop buying treasuries), the yield on treasuries will go up.
However, I don’t know if that answers your question…
Thanks AG,
I understand that info, but that’s about where it stops. I guess my real question is, what is the detriment to having the Fed funds rate being higher than US Treasuries?
Ben, great work as always, the solution is obvious, $600,000 homes should be $300,000. And it may happen sooner than most think…
Today, $2 Billion to four tapped out banks, thats nice.
Kinda like putting Phisohex and a bandaid on a decapitated hand.
Note: there is $400 Billion LBO ABCP already trapped in the pipeline and on the banks books.
What happens when $550 Billion (which is 50% of the ABCP market) matures in the next 90 days?
Thats almost $1 Trillion in ABCP that either gets sold or goes on the banks books.
Can you say massive extensions where possible? I can.
Can you say fire sales? I can.
Can you say BK’s and commercial bank failures? I can.
Is that a light at the end of the tunnel? Better hope the brain trust comes up with a solution and fast.
All will be told in the next 90 - 120 days.
Part of the solution that they will come up with will be a remedy that will seek to avoid the massive amount of lawsuits that could burden the court system for years .There is so much liability on so many levels regarding the great real estate ponzi scheme that it’s scary .
The only way this would turn around quick is if the average price of housing dropped by 90%, then you’d see some buyers. I recalled someone who said that housing will lose 90% of it’s value from the 2005 peak. That sounds catastrophic to many people, but I fear it could come to pass in most of the States. Look at our economy outside of finance. We still have a lot of manufacturing but it’s not enough to hold up a workforce of around 140 million. Also, I expect a lot of the manufacturing and agriculture in the USA to be mostly automated within the next 5 - 20 years. Of course, this depends on what state and area you live in. A city like NYC actually did have some of its real estate price gains based on actual wage increases. Also, I would expect cities like Boston and Seattle which actually have some type of advanced economic growth (not finance) and a high-wage job market can fare a bit better than a place like Las Vegas. Even so, NYC, probably the strongest city in the USA in my opinion, will likely see a price drop of 40% - 75% depending on the borough. A city like Las Vegas or Phoenix, or for that matter most of the hyperinflated areas, won’t be a good place at all. I would expect 70 - 90% declines in most of the areas outside of the Northeastern states and parts of the Northern west coast. In many areas, you might see housing drop so low that the value of the land is basically nothing when you factor in the likely repair and tax costs associated with dilapilated property. It’s already happened in areas like Buffalo and Cleveland. Problem is, a lot of these areas won’t recover, and God knows what happens if a majority of the housing ‘wealth’ in the USA is wiped out. I don’t think someone who just lost 75% of their house’s value is going to sit back and have a beer; it’s going to get very ugly in many states if you ask me. I feared this ever since I first paid attention to housing 7 years ago. Of course, if the derivatives markets completely crap out, we will have just as bad of problems as the housing market going south. For those who think this can’t happen, consider that many Americans work in fields heavily dependent on housing and we’re only seeing the beginning of the layoffs in the finance industry. Two, for our country’s size we don’t manufacture much of anything anymore but simply borrow money from overseas to finance (if you really want to call it that) our daily operations. Three, most Americans really don’t have much for actual money today especially since the savings rate in this country has been negative for over two years (likely longer given that much of the income in this country is in the form of HELOCS and other diabolical forms of finance). Most American households, including your “upper middle class” don’t have more than $500 in savings. That is scary. Assuming there are 120 million households in the USA, that’s maybe $60 billion. Credit card debt is around $2 trillion from what I last heard. Might we have a problem here? I don’t foresee inflation either; you can only inflate your currency so much before it becomes mathematically impossible to go higher, especially given how it’s distributed nowadays.
The major bears on this blog have pretty consistently looked for either a 50-60% drop from peak prices, or a return to “closed” prices of the years 1997-2001, depending on your particular poster.
IMO, a drop of 90% would be the result of a depression at least as bad as the Great Depression. Many of us on this board could profit beyond our wildest dreams from such a level of deflation, but I think there is a close-to-zero chance of that. Just a 50-60% drop would cause enough headache out there to last a long time — and would enable me to buy back in.
If my area goes back to 01′ prices, that’s enough for me. That’s about where we get back to house pricing meeting local economic fundementals.
Todays fundamentals or tomorrows fundamentals?
So, is this a soft landing because the last time I checked which is daily, it’s getting pretty scary out there. As soon as the market gets a breather another shoe falls we get more panic things unwind a little more, then the talking heads try to down play it and then something else happens. I have been hearing a lot of “who could have seen this coming” I cant even express how pissed I get when I hear this bull. Hopefully the financial market issues will work themselfs out and the housing market correct without taking everything down with it.
PIMCO
“…The ultimate solution, it seems to me, must not emanate from the bowels of Fed headquarters on Constitution Avenue, but from the West Wing of 1600 Pennsylvania Avenue. Fiscal, not monetary policy should be the preferred remedy, one scaling Rooseveltian proportions emblematic of the RFC, or perhaps to be more current, the RTC in the early 1990s when the government absorbed the bad debts of the failing savings and loan industry. Why is it possible to rescue corrupt S&L buccaneers in the early 1990s and provide guidance to levered Wall Street investment bankers during the 1998 LTCM crisis, yet throw 2,000,000 homeowners to the wolves in 2007? If we can bail out Chrysler, why can’t we support the American homeowner? The time has come to acknowledge that there are precedents aplenty in the long and even recent history of American policy making. This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard working Americans whose recent hours have become ones of frantic desperation. And for those who would still have them eat some Wall Street cake as opposed to Midwest meat & potatoes (The Wall Street Journal editorial page suggested they should get darn good and used to renting once again) look at it this way: your stocks and risk-oriented levered investments will spring to life like the wild flowers in Death Valley after a flash flood. And if you’re a Republican office holder, you’d win a new constituency of voters – “almost homeless homeowners” – for generations to come. Get with it Mr. President and Mr. Treasury Secretary. This is your moment to one-up Barney Frank and the Democrats. Reestablish not the RFC or the RTC, but create an RMC –Reconstruction Mortgage Corporation. If not, make some modifications in the existing FHA program, long discarded as ineffective. Write some checks, bail ‘em out, prevent a destructive housing deflation that Ben Bernanke is unable to do. After all “W”, you’re “the Decider,” aren’t you?”
William H. Gross
Managing Director
http://tinyurl.com/ytyfpf
Just by the very way this author is daring the President to make political hay from bail out ideas tells you just how wrong any bail-out would be . It’s not up to the President to bail out risk takers and in most cases these loans that are defaulting were liar loans .
It’s not often that the talking heads talk about what created the run-up in the housing market or why people were able to get loans that they didn’t qualify for . The fraud was unbelievable in the last 3 years in the credit business and that should be addressed rather than bailing out mania people .
Maybe BB is stalling to give time for more investigation of the matter ,but in the meantime you get everyone associated with the stock market or lending institutions pushing for a quick answer to a complex problem of the aftermath of a false real estate run-up, that was riddled with fraud. Haste makes waste and right now the pressure is on for the Gov. to act without decerning the cause of the homeowners screaming victimhood .This is not justice and it isn’t a proper use of taxpayers money. Usually a legal remedy is the recourse for a victim of a faulty contract or a crime .
Since when does over spending and taking on 50% more debt than a borrower can afford constitute grounds for a bail-out .
So what if it becomes a dead market where investors don’t want to fund junk paper loans anymore because they now know that Wall Street ratings were BS .Realtors and loan agents and borrowers were having a field day playing with other peoples money with liar loans and hit the mark appraisals. Wait until all the losses come in regarding cash-back and incentive schemes that kept the party going for a while . It’s clean house time because the REIC and the Wall Street loan funders have shown themselves to be nothing more than crooks .
You can’t justify this mess by saying that to much money was available ,therefore it happened . To much money went into a real estate ponzi scheme that resulted in overbuilding and a false run-up of prices by short term unstable demand by the unqualified and the speculator/flipper. To much refinance money was given to fund borrowers dream lifestyles ,using the easy money from the fake run-up in RE prices .
I’m getting sick of crooks calling for a bail-out so they can hide their sins .
Hello…. The S&L bailout was not a bailout of the borrowers. Those people still lost their investments. It was a bail out of the S&L stock holders.
LCTM did not bail out the common man… it was rich people.
This bailout would NOT stop people from walking from houses that they owe twice as much for as it is worth. It is a bailout of the holders of the mortgages.
The Asian CNBC is all rah-rah too.
They say the Chinese and Austrailians are most exposed to U.S. mortgage paper.
That’s to bad about the Austrailians because they have always liked Americans .
LOL Wiz!!!
(Unless you were being serious.)
If ANY tax money is used to bailout FB’s I’ll withhold payment of my yearly income taxes, withdraw all my money from U.S. banks and move overseas, I SWEAR TO GOD.
“Such a buyer’s market, in fact, that many are forecasting what homes will be selling for next year and offering that price now, said Heeley.”
Yesireeee. Risk is being priced into this market.
And next year they will be forcasting what the homes will be selling for a year after that and and offering that price.
let’s see if I can put this simply:
NO BAIL OUTS!
Why should those who have manipulated the market to increase home prices to well above what the average worker in Los Angeles can afford, benefit by keeping their homes by a gift of public funds. That tells me that as a future home owner in the Los Angeles area, I’m potentially facing a double whammy, 1. to try to save enough to buy into an over-inflated market, and 2. to have to pay higher taxes down the road to reimburse the public coffers for a loan that shouldn’t have been made to begin with. Mr. Alarcon, and other officials suggesting a bail-out, are way off base on this. Allow market forces to work. For those folks who chose to use their home as an investment tool, then welcome to the world of investment, but DO NOT penalize the rest of us because of your poor investment choices.