Bits Bucket And Craigslist Finds For August 31, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Primo video footage of FBs.
Auction:
The mortgage is 698K
They hope to cut loses and get 500K
Result: Can’t even get the minimum bid of 150K
Quote: “This just happens to be a bad investment.”
http://www.heraldtribune.com/article/20070830/VIDEO07/708300934/1201/REALESTATE
——————-
CraigsList:
TRAIN WRECK ** BUSTED UP ** MUST SELL TO PAY DOCTORS - pics
http://sarasota.craigslist.org/rfs/410059452.html
You see the term “gorgeous home” a lot these days. Most of them are heinous.
taste has been dumbed-down so much that I don’t doubt some actually think they are gorgeous….
Because homes were investments it refers to features and finishings. In order to maximize perceived value homes are bloated by having too much garage, too many bedrooms and bathrooms, too much confusion between the parlor and the living room and the family room and the gallery, and on and on. Then everything is covered in luxury stone and steel. Gorgeous means engorged with features and finishes. It’s a gross style for a gross age, and one day when much of this is gone there probably will be treasured examples.
“gorgeous home” today means that there are no broken windows and the front door locks.
Wow… I can’t see how anyone would spend 500k, but not even 150k?
Ouch!
Is it just me or do all condos just about look the same? And $500K for a condo on a LAKE? I thought people built cabins on a lake.
They aren’t making anymore lakes.
LOL…and they aren’t making any more land…but they ARE making lots and lots and lots and lots of condos…
they aren’t making any more land..is True
But Also TRUE is Cities change the zoning from agriculture to residential all the time adding more buildable land.
…and condos don’t grow to the sky. Oh, wait, I’m getting sooo confused… hehe
And they spent $700k!!!!!
Ten-to-one says this couple has lots of money, and the guy probably has a skill that yields a big salary. More than likely loved ones who passed away also left them millions in their will(s). Stupid is stupid, but it’s easier to be stupid when you have a load of dough, and there are lots of couples like this with loads of dough.
I just watched that clip. Where’s my trout? I’d like to smack that pair right across the kisser. No shame at all.
My sentiments exactly. What a pair of whiny mealy mouthed, limpwristed turds.
There is lots and lots of audacity these days from condo buyers. $700k for a large apartment? Almost $3/4 million.
When these condo buyers either purchased or did the refinance(s) I’m sure they felt very important to be signing papers for a large fraction of one million dollars.
You know, a million dollars is a lot of money. These condo buyers do not know the value of a dollar. MAYBE this lifetime event of grandiose stupidity will teach this pair of condo buyers, there is SOME hope.
I myself am dealing for a new Nissan for an end of model year deal. If they do not give me at least $1,000 below invoice (no trade in) then I can keep driving my old car.
And I couldn’t care less if I hurt the dealer’s feelings. Would you feel sorry for this dealer?
in pdf: http://tinyurl.com/2e25up
Go to page 21, exhibit A, top of the page.
DSC Communications stock was purchased on 6/02/98 for $921,875.
Corporate announcement of buyout by Alcatel on 6/04/98.
Stock was sold on 6/04/98 and 6/05/98 for a $523,438 profit.
Here is the SEC Litigation Release No. 19252 / June 8, 2005:
http://tinyurl.com/27jkez
I have no idea how this is going to play out in the courts, only time will tell:
http://tinyurl.com/yvzswx and
in pdf: http://tinyurl.com/299lt8
Got 10% down?
Correction:
Go to page 19, exhibit A, top of the page.
HAA!!! Oh man, this Marianne Zoll woman is a Realtor as is her husband. The condo is in preforeclosure and several months ago she was in the local paper begging people to take their homes off the market if they didn’t need to sell. She did not mention she was a bagholder in the article but I had suspected it and looked her up on our property tax site. She bought that condo from someone that had paid $200k leass only 2 months earlier in 2005. Paid $700k and didn’t get the minumum $150k bid!!!! This made my day!!!! They also bought a Mcmansion for $1.2 million around the same time…..at the peak…..
Poor thing. You mean she didn’t get the benefit of a cash/out refi for a Lexus?
Oh wait, she already has a Lexus.
Got 10% down?
BLoomberg Radio announced this morning the Bush is going to bailout anyone facing foreclosure through the FHA.
This is not good.
yep, the BAILOUT of the century. Seems like the bailout includes all the big speculators too (at least those from the US). I’m surprised that the dollar has lost just 0.5% after the news; maybe the markets smell that the ECB and BOJ will join in this super scam?
Tune in at 11 a.m. as George Bush makes his bid to seal up the title “Worst President Ever”. What a joke. Right now I hate this country. You heard me!
“Comment by NYCityBoy
2007-08-31 04:51:10
Tune in at 11 a.m. as George Bush makes his bid to seal up the title “Worst President Ever”. What a joke. Right now I hate this country. You heard me! ”
You said it NYC. As I mentioned earlier, this is not the team I want to be on (If HBBers had a country of their own, I’d be a proud citizen!). I am going to quit my job and move overseas, because I will not pay another dollar to this government for this most egriegious form of extortion. Some of you may say, it will never pass, they are just giving it lip service, etc., but even having raised the ideas shows what traitors these people are to responsible, hard-working, middle-class citizens who save their money. Do me a favor, please send me an e-mail when you have finished paying a trillion for the Iraq war, paid off the national debt, and now bailed out millions of FB’s. At that point, I will think about returning. Ben, I won’t be that far from Chiang mai, let’s get together for Pad Thai sometime….
Well, if this thing wasn’t screwd yet It will become even more so, if the Decider gets involved. His track record does proceed him and I can’t beleive no one is looking. What are we in store for if he “fixes” this like he “fixed” Iraq? Just a crying shame…
“When lies become reality you numb yourself with drugs and TV” Gorillaz
Comment by NYCityBoy
Tune in at 11 a.m. as George Bush makes his bid to seal up the title “Worst President Ever”.
I would have to say that award goes hands down to FDR! We need another do nothing President like Wilkie.
I proudly drive around with my “Worst President Ever” bumper sticker.
My snetiments exactly. i heard this news this morning and was screming about it
this is total bs. i should have bought a 800k house
it is better to be dirt poor then middle class in this country it sucks
I only wish I had went out and bought 5 spec houses that I couldn’t afford and wait for the gov’t bailout. I am steaming mad right now and will never vote for a Republican or Democrat again. I don’t know much about Ron Paul, but he sounds like the only one with common sense.
NYCB, I agree worst prez ever… but let’s look at the proposal, I think it might not be so bad.
1) Allow people who have defaulted to refinance into FHA loans and pay a higher premium. ***If they still otherwise qualify*** FHA loan limits are extremely low and these people should have been put there in the first place. FHA is not taxpayer-paid-for, but it pays for itself via premiums… like PBGC except solvent. They estimate that they can do 80,000 people this way– so it’s a well-aimed drop in the bucket.
Temporarily offering tax-forgiveness to forgiven debt by REFINANCING to a lower loan amount. This is hilarious actually, not only by screwing the lender but by *encouraging* people to bargain down the value of their house! Talk about dropping neighborhood comps in a hurry. This is not applicable to people who HELOCed to high heaven, spent the cash and walked away.
Third, identifying people who are likely to default in the future and educating them. I don’t really know what that means, so I can’t say anything about it.
I want to see the whole proposal in more detail, but this doesn’t strike me as a death-blow to common sense.
NYCB, I agree worst prez ever… but let’s look at the proposal, I think it might not be so bad
1) Allow people who have defaulted to refinance into FHA loans and pay a higher premium. ***If they still otherwise qualify*** FHA loan limits are extremely low and these people should have been put there in the first place. FHA is not taxpayer-paid-for, but it pays for itself via premiums… like PBGC except solvent. They estimate that they can do 80,000 people this way– so it’s a well-aimed drop in the bucket.
Temporarily offering tax-forgiveness to forgiven debt by REFINANCING to a lower loan amount. This is hilarious actually, not only by screwing the lender but by *encouraging* people to bargain down the value of their house! Talk about dropping neighborhood comps in a hurry. This is not applicable to people who HELOCed to high heaven, spent the cash and walked away.
Third, identifying people who are likely to default in the future and educating them. I don’t really know what that means, so I can’t say anything about it.
I want to see the whole proposal in more detail, but this doesn’t strike me as a death-blow to common sense.
Yeah, I bet that the home-moaners will be able to “qualify” with stated income loans, etc. I also bet the “temprorary” refinancing to a lower rate will be just as temporary as all government projects… in other words, they’ll have the low teaser loan forever.
Nope - they will do whatever it takes to keep housing unaffordable, keep the savers/workers punished, and make the dollar worthless.
I can excuse those who voted for “the scrub” first time out, but twice?! I see those peeling GW bumper stickers on plenty of F-150’s waiting to fill-up at the local Kwik Mart and can’t help wondering how so many fools can decide the fate of our country. A silver-spoon brat and a multi-draft deferred vice prez - what a disgrace this country has suffered.
Kerry would have been so much better (Rolling Eyes). He would be even more aggresive with a bailout scheme. The game is rigged, the winners are changed just to keep us quiet.
NYCBoy~
I’m with ya brother. If I were a younger man, I’d be headin’ to Austrailia with my children. This country’s toast.
Here’s the dirt.
http://apnews.myway.com/article/20070831/D8RC2AA00.html
How do I convince my girlfriend to leave the country with me? She won’t budge … especially because I mentioned France (not seriously, mind you, as I don’t think there are many jobs to be had there, but their culture is similar enough to the US that I wouldn’t feel so alienated and they have lots of immigrants there anyway) and she hates France even though she has never been there (whatever).
It’s not that she’s a big bigot or something … she’s German-Jewish and loves Munich (me: bleh) but she barely speaks German, which would make it tough.
She wants to “get rich,” then go overseas … I’m just not sure there’s much of a future here so how are we going to get rich first? We both make about $28K a year each, with overtime. I have a physics degree, she has two BA’s and an MS, and guess what, the boomers aren’t retiring any time soon.
It isn’t that hard to learn a foreign language … I have a cognitive disorder that makes it hard for me to decipher speech (especially of strangers) yet I’ve managed to learn French, German, Japanese, and Southern. I think she freaked when we were in Germany last year and I had to play interpreter for her a lot. Ironically, she picks up foreign words much more quickly than I do.
Is there any way I can convince her to go? Eastern Europe is still growing, and in terms of my field, Europe in general is a generation ahead of the US … and so is Asia. Our ancestors were immigrants, all of the countries I’m looking at have lots of immigrants, and, hell, people from Latin America now go to Spain instead of El Norte. Part of me wants to be a patriot and stick it out but part of me is just sick of being politically and culturally out on a limb here. (Too long in the Bible Belt, I think.)
So, any friendly advice?
NZ, CH, AU, UK. Plenty of countries out there where people speak english. But that isn’t going to help you one bit with a lady who wants to “get rich” before doing anything.
not a gator -
I wouldn’t assume French culture is similar to ours. It may seem that way if you’re just passing through, but live there a couple months, and get back to us.
If people are really serious about leaving the USA, Canada would seem the most likely prospect to me. Close, convenient, English speaking, culture very similar to ours.
And if you need to get away to a foreign speaking locale or a more diverse situation, just hop over to Montreal. Even Toronto is ethnically diverse.
I can understand why US citizens entertain thoughts of leaving, but compared to other countries, I think we have a pretty good situation.
Dear Not a Gator:
I doubt this young lady is willing to flee the wealthiest, most powerful nation in the world, where all her friends and family live, in order to humor her boyfriend. That is the type of thing that one considers alongside a husband. Just pointing it out, is all.
I picked up this book a couple of weeks ago. A great book and the first step you should take when you decide or thinking about leaving America.
Getting Out: Your Guide to Leaving America
especially because I mentioned France (not seriously, mind you, as I don’t think there are many jobs to be had there, but their culture is similar enough to the US that I wouldn’t feel so alienated and they have lots of immigrants there anyway) and she hates France even though she has never been there (whatever).
Interestingly, for 2 years running France has been rated #1 for “International LIving’s” favorite expartriate country.
Shocked the ‘ell out of me. But it was their survey.
I won’t comment on the circumstance of becoming involved with somone who “hates” things they’ve never had the opportunity to experience or gain exposure to.
Sure hope you don’t have an adventurous soul.
Personally, I’d just find a French woman. Perhaps a baronette descended from Marie Antoinette.
So when your discussing how come Americans don’t have enough money to purchase a loaf of bread because their currency is worthless, you can exclaim, What no bread?
Well, why can’t they eat cake? (With a smug expression on your face as you go back to your brandy and paper before the fireplace)
My wife and I plan to move to Germany in October. She found a job working on an American Air Force Base as a Pharmacist. Ought to be much gentler for her, as her German’s not as strong as mine (I’m 1st gen American). Note I said “wife” — BigV is correct in saying a GF isn’t going to buy into your scheme (hint, hint). Anyhow, that’s our plan for easing into our ex-pat adventure.
Hey guys, thanks for the advice. I will look up that book.
I’m not technically a “boy”, so that’s part of the reason we’re not married, but point taken. One of her issues is the fear of leaving everything to be with me and then the relationship falling apart. Which is fair, but on the other hand: that’s exactly what I did for her (left Massachusetts for Florida, with her as my sole contact, basically), and, as I’ve told her many times, I really do want to settle down. I’m 27 and all of my friends are in LTRs or married.
She’s a child of divorce and has some weird issues (gosh, this is getting so OT) but maybe I’m kidding myself about her unwillingness to commit. We’re both still young, though.
A lame-duck politician throws out a proposal and its the “bail-out of the century?” Truthfully, the candidate proposals have more chance of making it, and they are weak little programs.
Ben,
Love this blog…..I think you are looking at the wrong country. I think its a bailout for all the Chinese holders of the CDO MBS securities so they don’t either blockade Taiwan, or crash our economy by selling a chunk of the $1 trillion in US money they have.
“…..I think you are looking at the wrong country. I think its a bailout for all the Chinese holders of the CDO MBS securities ”
I think you’re onto something with that line of thinking, dj.
This is definitely a “big boy” bailout, not a “little guy” bailout. There is little chance it will come to fruition but it just shows the level of corruption and stupidity that is surrounding us.
In the near future when it get’s real bad and the campaigns get heated you will see them offer the mother of all bail-outs.
Anyone underwater gets to trade their debt obligation into a zero coupon federal bond. The Fed goes into super print mode and pays off all the hedge funds and foreign investors.
Dollars goes into a crash dive and for a change the rest of the world gets to buy tube socks from China. Pretty soon Americans start sending e-mail scams to Nigerians.
Americans are 5% of the world population but consume over 25% of the globes resources. This global market will correct itself. Get used to living a meger existance.
Fully agreed, Ben. Bloggers, note how all proposals include ambiguous language.
“President Bush / Schumer / Bernanke: How would someone who paid $750k for a house and makes $60k annually be saved with your programs?”
And for less-extreme cases, do you plan to subsidize the entire loan? What are the exact criteria? Else, will the government make one loan payment, or all 360?
Net-net: this is all pump-and-dump talk. The main actionable item in Bush’ proposal is the further tightening of lending standards, which the lenders have effectively done anyway.
“The main actionable item in Bush’ proposal is the further tightening of lending standards, which the lenders have effectively done anyway.”
Is this a fact or just your opinion.
they can pay off my mortgage too then. Just becaue I have been prudent doesn’t mean that I should labor another 5 years when I can get it paid off now! I can make myself stupid. Really! You know, like, uh,,,,, what is an ARM?
I’ve been looking for a good reason to stop paying my mortgage…
How can the government one up Teaser Rate Interest Only Neg Am Mortgages?
The only thing that I can come up with is for the government to cut everybody a check for 30% of the purchase price.
And for less-extreme cases, do you plan to subsidize the entire loan? What are the exact criteria? Else, will the government make one loan payment, or all 360?
All they have to do is provide a “mortgage hardship tax credit” allowing people to deduct their entire mortgage payment from their taxes, instead of deducting interest from taxable income. And they’ll do it too. If they pay people to have kids and to falsify business losses, why not pay people for being a house-flipping moron or an FB?
“…allowing people to deduct their entire mortgage payment from their taxes, instead of deducting interest from taxable income.”
Wouldn’t it be grand if this stupid idea inadvertently encouraged people who are sick of working anyway to just quit their jobs and stop paying the mortgage, and take a few painting jobs over the course of the year to qualify as “low income” households, in order to reap the benefits of the new short sale credit? I hope with all my heart that whatever harebrained forbearance scheme is adopted blows up royally in its creators’ face (same as the American Dream Downpayment Act did!!!).
http://www.americandreamdownpaymentassistance.com/whdochr1276.cfm
msn’s take on the story:
http://www.msnbc.msn.com/id/20524454/
I don’t see mention of direct deposit to FB bank accounts.
Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.
The best way to prevent these kinds of problems in the future is no bailouts now, bozo. Let all parties concerned - borrowers and lenders - take their lumps, and this won’t happen again.
Why would W want to make serious efforts to prevent these kind of problems in the future? His crony-capitalist base benefits greatly when the ‘little people who pay taxes’ bail out the Wall Street high rollers.
F$#@ing disgusting…….nothing more to say……it isn’t a fair world after all….why play by the rules….if greed gets a bailout?…..a slap in the face of prudence…….
here here
All hope is gone if those turds get rewarded at the expense of the prudent populice.
the war on financially responsible savers continues
even to suggest this crap is disgusting
i am really upset about this crap
It’s never been a fair world. The U.S. gave it sort of a whirl thru the 50’s/60’s, stumbled in the 70’s, then the bright boys of U. of Chicago came up with the bright ideas we’re seeing today.
I can’t find a time when The Bankers didn’t run things, didn’t skim the cream off the top. Quigley’s “Tragedy and Hope” is a lengthy but rewarding tome covering just this element of history. Nothing like it was taught where I was schooled ??
Today, the best defense I’m aware of is the internet. At no time in history has so much information been available to so many so quickly and so cheaply. If any single trend works to unseat these gluttonous pigs, the spread of the internet will be it.
rant off
Agreed, Mary, on your first paragraph.
It’s a shame, really, because a society where most were middle class instead of most being poor had a lot of good aspects.
With all due respect, the century’s not that old yet, so technically this probably is “the bailout of the century.”
One bailed-out FB or GF is too many for me. I want maximum pain inflicted since none of them had any skin the game. I want houses lost, I want 1099s filed and I want tax burdens that go on for years and years.
That’s the only way these losers will pay any real penalty for trying to scam the system. (Please, don’t give me the “predatory lender” spin. This was 99 percent greed by all parties — buyers, lenders, brokers, APPRAISERS, Wall Street.)
– Judge Smales
“How ’bout a Fresca?
“One bailed-out FB or GF is too many for me. I want maximum pain inflicted since none of them had any skin the game. I want houses lost, I want 1099s filed and I want tax burdens that go on for years and years.”
Right on, Judge!
Ditto Judge . Can’t stand the way Wall Street is reacting to not enough of a bail out so far ,in their view . Wall Street wants a entire bail out ,and nothing short of that along with a 2% rate cut will be enough for them .
I agree that it only sounds like a record bailout and that it is impossible to bailout the whole housing market. We will have to see what B&B are going to come up with today. But judging from experience in the Netherlands, one should never underestimate the influence of FHA assistance / government mortgage guarantees; it can buy an extended market years of time (and additional upside) before the day of reckoning.
LOL, these bailouts are a band aid on an amputation. Look at the video clip that Key Lime Toast posted earlier. These people could not sell this condo at 150K. They would be taking a 450K bath. How do you value this? So what if they could make their payments. If they don’t go BK, they are making payments forever!
Forever. Does that word sound familiar? Gee, maybe we are not priced out forever.
Roidy
No one I know supports any type of bailout of this mortgage mess. Now, this list runs the gamut from my Rush Limbaugh Republican father-in-law to my ex hippie friend. This bailout really helps all of the crony lenders who don’t want a bunch of FB’s handing back the keys. It really just keeps people chained to a huge mortgage.
George W Bush really IS the Worst President Ever!!!
George W Bush really IS the Worst President Ever!!!
I remember thinking to myself as he gloated over the fact
that US houseownership had risen to an all time high..you’ll live to eat those words.
Not a fookin’ clue as what was behind the record numbers and now talks of a freakin’ bail-out.
I now hang my head in shame-I voted twice for the guy.
Hey Russ, can you make a “Worst President Ever” T-shirt. I still haven’t received my “F*ck you, your mortgage, and the bank you rode in on” T-shirt, but I wouldn’t mind having another one. If you can put a picture of Shrub on it, that’d be even better.
hd74man: Don’t hang your head in shame. Your posts indicate that you’re a decent person. Probably other issues were more important to you in 2000 and 2004. Plus it’s an American tradition to hate the guy we voted for the last time! I always do.
REHobby~
Thanks for the support, brother.
As I watch the scandals emerge out of Iraq (today-US military logistic officers(!) accused of taking hundreds of thousands of $$$ bribes for the awarding of contracts. One female major committed suicide over a discovered $225k score. Heirs are protesting about returning monies from estate )-Blah…I’ve about had enough.
Funny how a Prez vote is such hard thing to admit one
made a mistake about.
I hope people don’t freak out. I mean really, we knew these type of proposals were coming. They will take forever to get through congress (during this process they will be completely eviscerated) and by the time they get signed into law, funded, and up and running the damage will be done. As far as the 1099 proposal goes, here are my thoughts from the other thread:
The vast majority FBs will never have to pay any extra taxes even without changing the rules (therefore, this rule change will be worthless). “There’s a very important exception to the debt-relief-equals-taxable-income rule. Although lenders must send 1099-C forms reporting taxable income whenever cancelled debt is $600 or more, the tax bill itself is forgiven if the homeowner is bankrupt or insolvent.” Link here
How many FBs aren’t insolvent? What real assets do they have?
Lots of them are specuvestors who bought second homes while having equity in their firsts - why should these idiots get off? They are in large part responsible for the bubble in the first place!
Yes, but…
“The officials said the administration can make the change [to FHA regulations] without congressional approval, but other details [1099 Forbearance] will require legislation.”
He’s lame-duck, but looking for things he can do which don’t require Congressional approval ( he probably can’t get Congressional approval to go to the bathroom). Unfortunately, this is just thrashing about in a manner which will eventually make matters worse. Bush goes one direction, the Dems another, the Fed a third. Boy, sure glad we have such strong hands at the helm.
/rant off.
Yes, they are all scrambling to make political hay out of this. Nothing real will happen. Ho hum, didn’t we predict this what, 2 years ago now?
Yes, Maam! And it is a non event.
Yes, just a few months ago I’d been hopping mad this a.m. too - but I’ve been reading and learning from the HBB and here’s my reformulated take on this news:
1. Lame duck must position himself better for upcoming fight over Iraq - cannot allow opposition to needle him simultaneously on a major domestic AND foreign policy issue.
2. Keeping people in homes with declining values will prove fruitless. Giving them another chance to throw good money after bad - whilst those who are liquid can move on to better investments than real estate.
3. Saving home loans is one thing - propping up consumer spending is another. Without a constantly increasing level of personal spending - the ultimate Ponzi scheme - the globalist hyper-consumer economy collapses.
4. It’s Friday.
I remember reading those predictions a long time ago. I also remember the analysis showing how quick the money would be eaten up.
How can they fill up the huge overhang of bedrooms out there? Kiddies are losing jobs and shacking up in mom and dad’s Mcmansion.
Will they somehow make those strawberry pickers earn $250k instead of $35k? I’m going to be curious how many people hold onto their 2nd, 3rd, or 4th homes. Bwaaa haaa ha.
Got popcorn?
Neil
Nah, they’ll just jam a dozen strawberry pickers in per McMansion. We’ll love that… imagine the property value declines!
I totally agree with Ben. Bush has passed hardly any of his inititives (remember SS reform??) and now he’s lame duck.
Bush seems to require a 9/11 type event or his party controlling both houses of congress to *maybe* get his proposals enacted. Geesh - save the rants for when something moves out of committee please.
I agree with Ben, Vermonter, et al. I just don’t see that I should get all worked up about The Shrub’s jibba jabba. Now, nobody loves a rant and a good fit-pitching like I do, but I think I’ll wait for more than a vague proposal.
“One of the key elements of Bush’s plan would allow homeowners with a good credit history, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting”.
Doesn’t this imply that folks have to pay market rate for fixed rate mortgages, or is that rate subsidized also?. What I am trying to figure out if someone refinancing from 1.5 teaser rate to 6.5 fixed rate is really going to be helped by this?
From what little, dated information I remember from my very brief excursion into selling real estate, the hoops one jumps for FHA approval are daunting. Down payments were very small, but payments themselves weren’t, partly due, as someone earlier mentioned, to the required PMI figuring into the total.
If I remember correctly (lemme know if it’s changed in the past couple of decades), to qualify you needed not only verifiable credit/job/minimum down, but your total monthly fixed outgo was a max of 36% of gross. That’s 36% including car payments, credit cards, child support, school loans……..anything with a duration of 3 years.
80,000 rescued? I’d be shocked if, given the spending climate, 80 survived the qualification process.
Come on now. We all knew there would be some attempt at a ‘bailout’. Do you think any politician would just let this thing go by without coming up with some stupid plan?
The fact is, any bailout, at this point, is worthless. By the time it would get through congress, signed into law, funded, and up and running the critical damage will have been done. They know that. We know that. This is simply some pretty pink lipstick on a pig…
The Dow will be up 300 points at some point today. The big boys will dump on the little guys. God bless America.
Look at it this way. It will provide yet another great short entry.
“The Dow will be up 300 points at some point today.”
Nice timing…I woke up this morning wondering if da boyz would come up with something to end on a positive note.
for the long weekend, that is.
“It will provide yet another great short entry.”
I can’t do that. My wife is out of town. I will just watch the market, instead.
I’m noticing that gold keeps going up this morning. Bye bye dollars, you are just worthless cotton now.
Gold only goes up when stocks go up. There is about a 0.9 correlation between GLD and the SPX on a 10-day basis using 15-minute charts. Gold will get hit along with every other asset class as deflation takes hold.
Gold only goes up when stocks go up
Guess you weren’t around in the 70’s, were you?
I was around for the ’70s. Maybe you just stopped reading after the first sentence. Right now, gold is just another asset class. It’s going up and down with stocks, junk bonds and other commodities. It will be necessary for gold and other commodities to fall as deflation kills speculation before normal historical relationships return. It’s abnormal, but gold is tied to the mast of the equity ship and has been for the last couple of months. That will change but I suspect that gold will have to fall quite a bit before it does.
Check the 10-day chart of the S&P with GLD overlaid. Directionally the same - almost tick for tick. Quite freakish really. Seems likely that credit expansion and contraction are driving both. Otherwise there would be no reason for this to happen as there is normally a low to negative correlation between gold and stocks.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=gld&time=&freq=
I wish the governement would stop meddling in private affairs if only to put an end to dumb conspiracy theories.
Conspiracy theorists are nothing if not adaptable.
“This is simply some pretty pink lipstick on a pig”
Exactly what I am thinking. Why would anyone refinance into a 30 year fixed on a home where they are severely upsidedown? I visited an open house in my neighhood in the Phoenix area a couple of weeks ago and found they were asking $279K for about 1750 Sq feet. I pointed out to the realtor that new homes in our outlying area are being sold at less than $100 per sq foot making this home over $100K overpriced. The realtor agreed but stated that they bought the house at the market peak and are already losing money. She said she hoped to find a buyer with all cash who loves the home and will just by it. Good luck with that plan.
This owner needs to move for some reason. Taking on a 30 year fixed loan for $100K more than the house is worth will lock this owner in forever. Suicide watch anyone?
Only a real “fool” would buy a house, even on 30 year fix loan, in a declining market. To stay in a upside down loan balance because you like the wall paper, back yard, location, family history holidays etc makes no sense either.There are “many houses” on the market and to continue to pay on a house , to stay in that house with hard earned dollars will be each home owners decision assuming there is a new loan in place. The Bush program won’t work for many as the real estate market is falling and will continue to decline for the next 3 to 5 years minium.
It’s true that Bush’s proposals will affect only a few thousand houseowners. But the psychological lift he’s given will serve to prop house prices up months longer. Can’t you see a seller who was going to lower his price after this weekend, but now will keep it high, hoping for a turnaround?
I spoke to a friend this morning who inherited a house from her mother one year ago. It’s been sitting on the market for a year, and they’ve been gradually lowering the price. It’s still priced $20K above neighborhood comps. No mortgage, very low taxes ($300/year.) I asked why they don’t lower the price $40K and get it over with. She answered that they put $30K updating it last year. Such denial and greed. These people are smart enough to know that prices won’t go up, but they just can’t bring themselves to lower the damned price. They could pocket almost $200K right away and invest it. Instead they’ll ride the prices down. Oh well.
What if the “homeowner” doesn’t want to keep the home, can they get their bailout as a lump-sum tax free payout?
/sarcasm off
Please..all talk no action..just look at Katrina victims..authorized federal dollars in the hundreds of millions so far they haven’t even spent 20% of that 2 years later..Bush Bailout will be more smoke and mirrors…
Yeah, you got that right. For anyone who enjoyed all the paperwork to get money in Katrina aid (barring the initial handout frenzy), you’ll looooove the paperwork they’ll probably set up for this FB bailout. More jobs for paper pushers, and another government bureacracy to feed.
The NPR report mentioned only something to do with taxes (no 1099 on the debt forgiveness?) and regulations on loans going forward. Not that Bloomberg reports might not be right, but not all the media info is the same.
And I agree with Ben. Let’s wait to see what he actually announces and then see if anyone likes it. The president has very little ability to rally republicans to his cause these days.
Waiving the 1099 is the only bailout I am OK with. Provided, of course, there was no fraud involved. From what I understand, most of the stated income loans made over the past few years were fraudulent.
These are all bandaid solutions that simply give pols the opportunity to show that they are “doing something.” As many have pointed out, why keep making payments on an asset with a declining value, even at a lower interest rate? Owing $500,000 on a stucco shack worth $200,000 isn’t much more palatable at 6% fixed than it is with an ARM.
NO BAIL-OUT AT ALL!!!!
These people BOUGHT houses. When you Buy something, you agree to price and terms.
The value of the house after you buy is your profit or loss. IF you AGREE to pay $500,000, then that was your deal. These people need to be forced to pay.
This will STOP all the “flipping” and houses can be places to live again.
Penalties for all greedy speculators!
Pay All that you owe!
You lose money, too bad.
I am so NOT ok with waiving debt forgiveness. In lieu of pay, why couldn’t employers just pay their employees through debt forgiveness and avoid the whole income tax hassle. No, debt forgiveness needs to be taxed.
How is the government going to squeeze blood from a rock? You think the average FB has $30k-$50k lying around to pay the IRS? Most of them don’t even have 1/10 of that amount.
25% of their paychecks for the better part of their working lives will be garnished until the amount (plus interest) is paid off. Most FBs are lucky that their lenders aren’t seeking any judgments (think Casey “Teflon” Serin). The IRS has the time, resources, and determination to collect on the debts… even if it takes a couple decades.
If I were in a Serin-esque situation, I’d flee the country with the idea of never returning (to have gotten into that situation via liar loans I would have long ago abandoned my sense of ethics).
Since when does the IRS care whether or not someone can pay what the owe? Well, they might do work-outs, but someone’s ability to pay has never stopped them from slapping insane bills with penalties and interest on people in the past.
RE: The IRS has the time, resources, and determination to collect on the debts… even if it takes a couple decades.
IF HUD/FHA had their shit together they could use the “re-fi opportunity” to flush out bogus appraiser’s and rackeering originators.
As part of qualifying they would demand to see all the old mortgage papers and hire out review specialists to go over the files to determine if-the appraisal’s meet secondary mortgage requirements and if fraud is involved
in the statements of income, employment history and asset base.
In cirucumstances where there has been, the perps get nailed with felony charges under provision of Federal RICO statutes.
Have to admit it would be a legit way of cleaning the septic pipes.
However, a few busts like this and it would be my expectation the bail-out line will quickly dissolve.
Abolish the FHA and the mortgage deduction (created by FDR as a sop to his mortgage industry buddies). They make houses unaffordable.
Right on Lou.
The Prez has got to do something or the MSM will be screaming that he “doesn’t care” a la Katrina.
Politically he cannot just sit on his hands.
Some of the banks aren’t even writing 1099s, so this proposal is exceedingly modest and will hopefully shut up the wringing hands crowd and allow the pols to say they’ve done something.
No big deal.
Yep. 80,000 people is a drop in the ocean as far as the credit crunch is concerned.
Additionally, what happens to existing FBs is less important than what happens in the future. If new buyers can’t get the suicide loans, prices come down, period.
Of course, having the FBs foreclosed on puts more inventory on the market & therefore would help prices correct more efficiently, but the end result should be about the same (lower prices & “traditional” lending standards).
NO WAY! They must pay taxes as due!!!!!
It doesn’t sound as bad as it could be:
- Market-rate FHA mortgage, only up to $417K. Thus McMansion owners ineligible.
- No below-market rates subsidized by taxpayers that I can see
- FHA has $22 billion to cover losses, theoretically all loses come from insurance paid by FHA mortgagees.
- buyer must have gone behind only after resets
- buyers will not get 1099’s, which is unfair, but at least losses will have to eaten by banks if they forgive any debt
- I don’t see this yet, but I bet 2nd homes will be ineligible.
So this would help the proverbial guy that can afford his house at 7% or whatever, but cannot afford it at the 12% it has reset to. I don’t see how it helps someone who needs a 2% teaser rate in perpetuity, or needs HELOCS every year to make his payments.
I don’t see how it helps someone who needs a 2% teaser rate in perpetuity, or needs HELOCS every year to make his payments.
Exactly… To many people have debt problems WAY beyond the Mgt. payment. No one should get their knickers in a twist just yet, what would anyone expect a politician to say. The republodems it’s all the same.
The more I think about it, this is not a bad move for Bush. He gets to appease all the people who are crying out to help the “little guy” who got “suckered” into a bad loan. When 90% of the FB’s, and 100% of the flippers complain that they get no help from this, he can trot out 100’s of low-imcome people who DID get help, and tell them to shut up.
It also covers him when he says he will veto anything larger that Congress passes.
The details get hairy.
1. What about people who could have sold at a loss?
2. You must be bankrupt if you can’t afford the mortgage payment. Do you have to declare bankruptcy to be eligible?
3. What about all these people who have put their homes into an LLC. Do they get it?
I agree, short of outright debt forgiveness there is no way to help most FB’s. And that isn’t going to happen.
Right on. Not to mention how many FB’s can actually comprehend the terms? I recall iTulip posted that 34% of people with mortgages can’t even tell if they have a fixed mortgage or ARM. Though I bet this figure has gone down with all the MSM coverage, it still speaks volumes about most peoples conceptual knowledge of personal finance.
Look out below!!
The symbolic significance of timing of this news release for the day when Bernanke is scheduled to speak should not be overlooked.
God wouldn’t it be fun if Bush’s tactic backfired and Bernanke got up and told Bush and Wall Street “Stuff it, I’m gonna save the dollar”?
This is the weekend when BB gets to choose whether to signal that the Fed is an independent CB or that it has been subsumed into the executive branch of government.
Don’t forget that BB was Bush’s economic advisor prior to becoming Chairman. IMHO, his appointment was set long before he actually took over.
I’m always amazed at how people can 1) believe that the government is run by a bunch of morons and 2) believe that the same morons are the engineers of brilliant conspiracies.
Ha. I so agree.
1) The government is run by a bunch of morons
2) The same morons are engineers of filthy, wicked, stupid and often frighteningly dangerous conspiracies, but they do them anyway because of #1.
Ya know, I’m wondering if this may be more than about bailing out their buddies. I’m wondering what would happen to all of us if investment in the U.S. ground to a halt. Is it possible that leaders and central bankers are terrified of a 1932 scenario?
I was doing my Depression reading last night. This little tidbit jumped out at me:
“…investing heavily in the future was a more optimistic step than most were willing to take. Gross investment in the (US) fell by 35 percent from 1929 to 1930 and at the same rate from 1930 to 1931. In 1932 investment in the American economy almost ceased, dropping 88 percent from the greatly deflated 1931 level and totaling only $800 million (down from $16.2 billion in 1929)”
Robert McElvaine
“The Great Depression”
copyright 1984
Another point McElvaine highlighted was Hoover tried to lead us out of the problem by remaining positive because it was the very tightening of spending habits by both individuals and the corporate world that caused the downward spiral. He explained “steps that were sensible-even necessary-for separate units in the economy weakened the economy as a whole” when all units practiced it in unison.
In other words, although saving is good, there is a point of critical mass when too many practicing that behavior for too long becomes damaging. Man have our leaders backed themselves into a corner.
CarrieAnn
Corporations quit investing in the future a long time ago. They spend any profits shrinking the company instead of growing it for the most part. They buy back stock to shrink their capital base rather than reinvesting and growing operations. They would be better off saving cash to withstand the next downturn. Unfortunately executives (sometimes under duress from private equity) have even been borrowing to fund buybacks. This increases the risk of bankruptcy in a recession geometrically.
“Corporations quit investing in the future a long time ago. ”
Well…the last crash happened because our manufacturing production #s were on fire but became over capacity. Now its housing instead of factory goods. As the story goes, productivity increases weren’t being reinvested back into the companies then either.
CarrieAnn,
Yes, you are right! Your historical view is not “outdated and wrong”. History teaches us a great deal! I keep hearing that Ben Bernanke has an excellent understanding of the 1930’s Depression. He is not an idiot (helicopters not withstanding).
What is concerning me is the fact that we should have corrected more in 2001. Much of this crap can be traced to the fact that the tech debacle in 2001 was not allowed to play itself out and “cleanse” the markets of debt problems even though Wall Street went into a 45% downturn. Now, we have a ton of paper that is of dubious value from out current debt debacles.
So, it looks like we may be in for a prolonged recession. Depression? Could this actually happen? Well, we have money in institutions that are not insured - stocks, bonds, money markets, etc. I have my money in the safest 305b investment I can find. It is still not insured just like the bank deposits were not insured in the 1930’s. If this goes as it appears to be going, I will loose my life savings and investments when my investment company goes “tits up”.
History does not repeat itself, it rhymes. This is what worries me. It seems that no matter how pessimistic we get, it always seems to be worse that we imagined.
Roidy
Thanks Roidy. I’m no heavy hitter here. But I do appreciate when people consider my comments.
RE: If this goes as it appears to be going, I will loose my life savings and investments when my investment company goes “tits up”.
Happened to scores of people in the Depression.
The fortunate ones who were wiped out retreated to Uncle Ed’s farm in the country to help milk the cows, tend the garden and wait out the storm.
Unfortunately, there very few Uncle Ed’s out there today.
A New Orleans type anarchy would be very ugly.
Bernanke’s impression of the Depression is that the money spigots weren’t opend early enough or wide enough…..hence the Helicopter Ben story.
He may be a student of the depression, but filtered thru his accademic lens, his conclusion defies belief. No, I’m not a fan of conspiracies in general, but a couple of morons - highly educated or not - sitting in a back room, coming up with a brainstorm seems to be the way the world runs. That qualifies for a conspiracy, given the benefits invariably run in a single direction: toward the monied class.
Roidy, I’m no expert on this, but others have mentioned the possibility of borrowing against a retirement account that has minimal investment alternatives, and then reinvesting the proceeds. If you’re that worried, maybe it’s worth looking into?
That is a course of action that is being considered. I don’t know the implications of being a debtor to a failed institution.
Roid
Not good at all. The Great Decider, who has utterly failed at every initiative he ever instituted EXCEPT those that require spending buckets of money we don’t have, has apparently decided. Given the track record, I feel a sudden chill and a desire to visit warmer climates outside of the country.
Oh, and by the way, I think it very likely that if there will be a time lag before the plan can get implemented, then a short “moratorium” will be placed on foreclosure sales - which will make the credit crunch even more acute for banks.
This is the prelude to the Great Depression all over again.
Read the article in the WSJ. It’s almost purely symbolic. FHA hopes to guarantee and extra 80k mortgages in 2008. That would be what, 4% of this year’s foreclosures? Zero impact in 2007 and defuses pressure something really big and stupid.
I made my financial mistakes about 5 years too early, apparently. And learned from them. But now my party wants to bail people out?? I’ve found the GOP to be rather disgusting the last few years…I’ve about had it with all of them.
Time to vote Socialist in the U.S.A. Our politicians already embrace it so why not just make it official. U.S. sucks right now — we are no different than Europe.
Agreed, we are Capitalist in name only.
Hey Chris, can I just call you Chris?…my brain disables when I try to type USccccccccccccccccccccccccccc… see what I mean…anyways I posted a response late the other night…just wanted you to know why I am the way I am…
Comment by hwy50ina49dodge
:-0
2007-08-29 22:23:48
Sorry chrisusc,
This might help explain things…
I’ve been a… U.C.L.A. fan for 43 years…
Think Lew Alcindor…
I love your posts… I forgive you, being that you …”had” …to go to USC…
I have USC issues too. I went to Michigan and have to watch USC kick our a$$es every couple of years.
hwy, that’s okay I give as good as I get…LOL Last year the Notre Dame game, it was pretty boring after ND’s lousy first-half performance. The only entertaining part was messing with the row of ND fans directly behind me.
Now on the other hand, nothing was worse than back in 1996 in Rose Bowl. My parents had gotten tickets from a UCLA football alum, so I left my crappy seat and joined them right on the 40 yr line surrounded by UCLA alums. We talked crap the whole game and with 3 minutes left (and SC comfortably ahead 38 to 21) I walked down to their car and started hearing UCLA fans cheering. By the time I walked back to my original seat (in the SC end zone section) the game was tied 38 to 38. The game went into overtime and SC ended up losing 48 to 41. Worst game ever. Even though Robinson didn’t get canned until next year, I knew then and there that his days were numbered…
REhobbyist,
don’t you mean every year. Just joking. LOL
Chris:
If they played each other every year, they would, but luckily they don’t meet very often.
REhobbyist,
I can still remember back in the day, losing regularly to you guys when Bo was your coach. Everyone feared Michigan back then.
At least Europeans have trains and public health care.
Hear, hear
I heard them talk about this bailout. It’s being called the “Stuck on Stupid Plan”.
Everyone should call, write, and email their politicians and the GOP and say that if this proposal is supported by the party or that person, not only are they losing your vote, permanently, you will personally donate money to whoever is opposing them in the next election and going forward.
After all, the only reason a lot of us tolerate Republican social intolerance is to try to keep some modicum of fiscal responsibility and free markets, but if we’re going fully socialist, TheGuru is right, we may as well go all the way!
If this ends up like the Katrina bailout, it will cost a fortune and the place will still look like a wreck after the money is pissed away.
I hope this is just another of his lies–just saying feel good things and then doing nothing of any substance.
Non-FBs are going to need to get active or they are going to get screwed huge here.
Mortgage Bailout Comic Strip
http://www.stockmania.com/2007_08_31_archive.html
Good stuff!
I didn’t see yesterday’s thread about BB’s letter to Senator Schumer until much too late to post. Actually, I don’t even know if it was discussed on the Wall Street entry. I never got there yesterday.
Look, I don’t know too much about the inner workings of the Fed, but if it functions anything like my agency, you can’t read too much into letters like that. Nobody lies, but there is a lot of ducking involved these letters. I have to write some of them. Important people like Senators and leaders of industry groups can get responses that are more detailed and are reviewed or even outlined by more senior people, but you just don’t make promises you can’t keep. You don’t make promises at all. If you have already made a decision or established a policy position, you might discuss it, but only if that decision or policy position is already well-known. Letters like that are NOT the right place to reveal anything new. That is done in a speech by a senior executive or an official press release.
A 90% reversal of the previous day’s losses on information about a letter from BB to Schumer is patently ridiculous. Nothing should have been read into it. Nothing at all.
Ahhh so true, but when you talk to the average person, like I did yesterday, it is stunning how much weight IS put into such letters. But I can’t say it’s ignorance…it’s more of a deliberate delusional state that Americans have stupified themselves with.
Danni
“when you talk to the average person, like I did yesterday”
Oh god. I hope you showered before you blogged back in.
Too bad both Main Street and Wall Street can’t be saved. Plan B: Screw Main Street and rescue Wall Street.
Central banks should not rescue fools from their folly
By Martin Wolf
Published: August 29 2007 03:00 | Last updated: August 29 2007 03:00
Sometimes a picture is worth a thousand words. The one last Wednesday showing Christopher Dodd, chairman of the US senate’s banking committee, flanked by Hank Paulson, Treasury secretary, and Ben Bernanke, governor of the Federal Reserve, was such a picture. This showed Mr Bernanke as a performer in a political circus. Mr Dodd even announced Mr Bernanke’s policies: the latter had, said Mr Dodd, told him he would use “all the tools” at his disposal to contain market turmoil and prevent it from damaging the economy. The Fed has its orders: save Main Street and rescue Wall Street.
http://www.ft.com/cms/s/1fed1c0c-55d3-11dc-b971-0000779fd2ac.html
test
Will the Fed take up the question this weekend at its annual Jackson Hole retreat of whether the ‘little people who pay taxes’ should be asked (yet again) to bail out Wall Street high rollers’ gambling losses?
Martin Wolf Takes Bernanke to the Woodshed
Aug 29 2007 2:38AM EDT
Yves Smith at Naked Capitalism submits:
Oh, I do so enjoy it when the Financial Times’ chief economics editor, the normally measured and thoughtful Martin Wolf, works himself into a lather.
Wolf blasts what he reads as the Fed’s vow of last week, uttered by Senate banking committee chairman Christopher Dodd, to keep the markets afloat (Dodd’s exact words were that Bernanke would “use all the tools at his disposal”). Traders took that as a promise that the Fed would cut rates at its regularly scheduled September meeting, although Fed officials had tried to dampen that notion. However, yesterday the Fed indicated that worsening conditions might warrant a policy response even sooner.
http://www.portfolio.com/views/blogs/market-movers/2007/08/29/martin-wolf-takes-bernanke-to-the-woodshed
I feel like bernanke has more intelligence in one nose-hair than dodd has in his entire family lineage. I remember Greenspan after resigning, gave commentary to the effect of “Whenever a Congressman asked me a question I didn’t want to answer, I would just regress into dense rhetoric that seemed to satisfy them without ever answering the question.”
I have a strong feeling that Dodd decided he had heard what he wanted to hear and reported back to the media. Sept 18… we’ll see. I still have my fingers crossed for ben.
I can’t wait to hear Bush’s ideas myself, might be good fuel for the weekend topic;-) He is beyond lame and possibly a paraplegic duck, I just don’t see anything actually being done, now the bernanke speach is what we all should watch carefully, anyone want to put forth a guess on what he will say?
I bet he repeats the “we’re monitoring the situation” line. My guess is the Fed is pushing (has successfully pushed, given Bush’s announcement today?) for a fiscal bailout, not a monetary one.
I’m sorry, can you elaborate? I’m a lowly scientist and wasn’t trained in the difference between fiscal and monetary…
A fiscal bailout borrows more money from the Chinese, a monetary bailout borrows more money from the Fed (i.e. creates more inflation).
There should be an over/under on the number of times Bush stutters. Whenever discussing something he doesn’t understand, or believe in, he stutters like a jackhammer. I would put the over/under at about 693 instances of stuttering and muttering today. He will look as confused as a chimp with a chainsaw, and just as dangerous.
coffee on the keyboard, too funny. we should start a pool, whoever gets closest to the number of stutters and grammatical errors gets the pot.
Or the number of times Bush leans on the podium all crooked-like, and then gets that I-can’t-believe-I-have-to-lecture-you look on his face. And then looks off into the hand-picked audience and does his little chuckle-giggle. I usually have to turn away and run for the blood-pressure pills.
If you get the Comedy Central channel, watch the animated show “Lil’ Bush”. It’s great for lowering the blood pressure.
438 !
And at least 1: “Homeowners, I feel your pain.”
Inasmuch as I think this is kind of rude, it is also kinda funny.
For a while now politicians have always had some kind of banner or wall behind them with some cute little saying like “jobs for tomorrow” or something like that (Hillary’s campaign spelled it “tommorrow,” lol). Any guess as to what cute little one liner might be behind W??
“Sheltering families” or some such nonsense.
The backdrop should really say “pump and dump the DOW” or “Thank you China — you’ve got our bucks.”
According to FIP, “Barclays has been forced to borrow hundreds of millions of pounds from the Bank of England’s emergency lending facility for the second time in a fortnight (two weeks), it was revealed Thursday night.”
In addition, the FT is reporting, “Barclays will provide $1.6bn in financing to bail out a structured investment vehicle it created for London-based hedge fund Cairn Capital.”
Barclay’s claims it is not facing liquidity issues. Hmmm…
there were also rumours last week regarding Barclays taking a 2 billion special loan from the BOE because of liquidity issues. On another note, this is going to hurt Barclays chances in the bidding war over Dutch bank ABNAMRO; the decline in Barclays stock value is seriously lowering the value of their takeover bid.
Don’t worry about this at all, folks. President Bush is so stupid that he has no conception of the fact that he lacks the ability to fix the housing debacle. It’s all hype similar to what we have seen from the likes of David Lereah and other blow-hard losers. The effects will be only temporary on world markets. Housing is still headed down the tubes.
The whole friggin economy is going down the tubes. JOBS JOBS JOBS. Where are we going going to create high paying jobs which can afford a mortgage. Instead of wasting time and money with bailouts, the gov’t should be fast tracking the most promising alternative energy and biotech. These seem to be two areas with which the US may be able to derive some dominance in and subsequently employ large numbers of people. Just my two cents.
“Instead of wasting time and money with bailouts, the gov’t should be fast tracking the most promising alternative energy and biotech. These seem to be two areas with which the US may be able to derive some dominance in and subsequently employ large numbers of people.”
Absolutely true, but this would be forward thinking and we are driving thru the rear view mirror. Not to mention this administrations ties to oil interests preclude any real action on this front.
Water desalination.
Comment by polly
2007-08-31 09:30:08
Water desalination
Not to pat ourselves on the back, but I am continually blown away by the intelligence displayed by the people on this blog. I work in the water industry so I know first hand there is enormous progress we could be making on the water supply front. And yes, superior advanced technology is an export!!
There is an emerging technology that uses the difference in temperature between the upper and lower layers of the ocean to drive a distillation process. If ever there were a technology screaming for investment, this is it. So, of course, people and governments are investing. In India. Namaste guys, I am out of here…
Thanks, DP.
I thought that Israel would have already blown the lid off this technology 10+ years ago. They need it for both practical and strategic reasons, as well as being a great export. Still can’t figure out why they didn’t go into it big time when they inherited all those Russian engineers in the early 90’s.
As a native of Southern India, I cannot thank you enough!
I read the order from the bankruptcy court on the Bear Stearns thing last night. They are so hosed. The judge notes in the order that he is one of the authors of chapter 15 (the cross border thing). Just try appealing that. This will be better than reality TV.
Sweet!
What does the chapter 15 cross border thing mean??
they were seeking to liquidate the funds in the Cayman Islands rather than in the U.S. It was a strategy to avoid the lawsuits bearing down on them.
I hope we get a perp-walk out of this!
Bailout details.
http://www.nytimes.com/2007/08/31/business/31home.html?hp
Nothing too bad here, yet. No 1099s for homeowners who refinance or are foreclosed without deficiency judgements. Some more bona fide owner-occupants able to refinance with FHA.
“One official said the administration’s proposals would not include a bailout of institutions that bought mortgages that have plummeted in value. ‘We are not using the b-word,’ he said, referring to the talk of bailing out lenders.”
OK, so no “privitize the profits, socialize the losses” yet. If both Republicans and Democrats are willing to play that card against each other in the election, maybe it won’t happen.
This is a 2 phase proposal.
1) Allow FHA to make 240K loans this year instead of 160K.
2) Proposal to congress to open the U.S. Treasury through the FHA. Allow people behind on payments, with poor credit, with $0 or negative equity, to refi to an FHA loan.
The number listed in this article is $500 billion to $600 billion in loans. Assume a 50% loss on that!
In short, transfer $250 billion - $300 bilion from the U.S. Treasury to the lenders that created this disaster.
We have a solvancy issue, not credit issue. Dropping interest rates will not help. The pigmen need a bailout.
“The pigmen need a bailout.”
I suspect the pigmen bailout will be buried in the details of whatever official announcement is made to ’save our homes.’ But it will be there, and it will come in the form of yet another soak-the-middle-class scam.
No bailout…
http://www.politico.com/news/stories/0807/5581.html
He will announce that he is:
[...]
Pushing Congress to pass his proposed FHA modernization bill, which would lower down payment requirements and increase loan limits, helping families with low incomes, blemished credit records or little savings. The bill was sent to Capitol Hill last year and passed the House but not the Senate.
—-
Yes, because it was the huge down payments that people paid in the past couple of years that was the problem. It must have drained them financially to the point where they couldn’t make their monthly payments.
This might be outright speculation, and I hope so. Because this proposal is the reason we are where we are.
http://www.politico.com/news/stories/0807/5581_Page2.html
and from that piece. I thought we already had one of these! LOL
– Directing the Treasury secretary to lead a President’s Working Group On Financial Markets to examine broader market issues underlying the recent mortgage problems. The working group is to including Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Christopher Cox, and Commodity Futures Trading Commission acting Chairman Walter Lukken. The group is to examine the role of credit rating agencies and how their ratings are used in lending procedures, and the ways that securitization — the repackaging and selling of assets — has changed the mortgage industry.
FHA modernization bill, which would lower down payment requirements and increase loan limits, helping families with low incomes, blemished credit records or little savings.
how do you help a blemished credit record? Ignore it? Why don’t we just assume everyone is equal even though clearly they are not in terms of credit and fiscal prudence…
Again, I’ll be the devil’s advocate here. I have a credit score barely above “subprime.” This is because my record consists of virtually no debt or credit activity since 1995. That makes me suspect and Casey Serin (pre implosion) a better risk.
The problem is that everyone wants to save money (profits) by automating loan underwriting so a person does not have to actually look at and evaluate these applications. I take issue with that.
and also, lower down payments? Right now, they’re only 3%!
The goal is: no money down, never pay off the house, keep taking the equity out to buy junk. That’s the “new” economy of the past bunch of years, and they want to keep it going.
“The goal is: no money down, never pay off the house, keep taking the equity out to buy junk. That’s the “new” economy of the past bunch of years, and they want to keep it going. ”
You have to admit it’s a great economic model… keep the Morlocks working in the caves below forever so the Eloi can play and play…
Does anyone know if FHA allows stated-income loans? Does a person have to qualify, ie. no more than 33% gross income for payment, taxes, and insurance? I’m just wondering how many FB’s will be accepted under the bail-out.
No, I don’t think so. But if they raise the loan limit, I’ll probably get one that way. I refuse to endure the proctology examination that is the current loan process. It is just like 1990 again.
I found it - no stated income accepted, payments around 30% of income or lower to qualify. FHA requires LOTS of documentation, yeah!:
http://www.fha-home-loans.com/documents_needed_fha_loans.htm
“If Applicable: Copy of Green Card or Work Permit.”
So, for a chunk of California’s sub-prime, no FHA for you!
I wonder if this action is a subtle hint to Freddie Mac and Fannie Mae stockholders, that, no, the government is not going to back up their loans. If the government is going to provide help , it will be through FHA and that’s it.
33%? I thought it was 28% for PITI, and 36% for all debt (students loans, car payments, etc.)
Just went to that link, and PITI is 29-35%.
S&P Names Sharma President Amid Ratings Criticism
“Aug. 31 (Bloomberg) — Standard & Poor’s named Deven Sharma to replace Kathleen Corbet as president after lawmakers and investors criticized the credit rating company for failing to judge the risks of securities backed by subprime mortgages.
“McGraw-Hill Cos., the parent of Standard & Poor’s, said in a statement yesterday that Corbet, 47, resigned to spend more time with her family. Her exit isn’t related to the current credit- market turmoil, Steven Weiss, a New York-based spokesman for the company, said in an interview. Sharma, 51, is executive vice president of investment services and global sales.”
I just wish they would be honest in these announcements just once. She is not going to spend more time with her family, she is going to spend more time with her lawyers to make sure she does not go to jail, with her accountant making sure she gets all of her golden parachute, rewriting her resume and maybe more time with a couple of bottles of wine if she feels bad about being fired
When I get kicked out of my CEO position, I want to PR to read,
“DrChaos left to spend more time with his bartender.”
CEO Graspeer went to spend his golden parachute on wine, women and song.
Is it too late to buy an over-priced home so somebody can bail me out?
Ohhh, you’re so “out of fashion”. It’s soon going to be past Labor Day and no one wears “bailout” past Labor Day! That when the “jump from a window or a bridge” season begins.
You’re just not chic.
Roidy
I wrote to Senator Fiengold this week, ( Wisconsin ) informing him that I and many other responsible homeowners are against any government bailout. Keyword.. RESPONSIBLE… I suggest all of us on this blog write our reps, before by accident, this government actually does something. Accidents happen!
DId it last night at about midnight when the FHA bailout was announced!
Senate staff aids read all mail addressed to the Senator without a name the Senator recognizes. A consensus is drawn from all mail that deals with a core issue, and this consensus is reported to the Senator for his perusal. Writing your politicians does make a difference, and who knows? Maybe your letter will actually be read by the Senator himself at one of those Peter Luger power lunches? Make mine scotch on the rocks waiter.
Death to Savers program coming up
bail from GOP= disgusting
LP.org anyone ?
How many months straight has the U.S. net national HH savings rate been negative by now? Are there any savers left to kill?
Trying to find a decent yield on *safe* fixed-rate investments is getting tougher by the day. The War on Savers is still in full swing.
Isn’t the search for higher yields the same thing that got us into this mess in the first place?
Most appear to keep on spending. The party appears to be just getting started. Housing crisis, schmousing crisis - who cares (sarcasm off).
Consumer Spending Rebounds in July, Helped by Strong Income Growth
http://tinyurl.com/34v3en
08:34 am : S&P futures vs fair value: +17.2. Nasdaq futures vs fair value: +22.8. July personal income rose 0.5% (consensus 0.3%) while personal spending rose 0.4% (consensus 0.3%). The more closely watched core-PCE deflator rose just 0.1% again (consensus 0.2%), which assuages inflation concerns as the year-over-year rate stays at 1.9% and within the Fed’s “comfort zone.”
Gotta love how people buy things they don’t need with money they don’t have.
i’m not worried about any bailout. here’s why: tell me if you can, when was the last time that ANY move by the government benefited J6P? i tried, and Social Security is the only thing that comes to mind. i mean really, can you think of even one thing?
Social Security screws J6P by taking 15.3% of his income and giving him a CRAPPY return on investment. Maybe the first generation of social security collectors, but not anyone who has paid in over the last 30 years.
who needs money when you have helocs and credit cards
“Consumer Spending Rebounds in July”
That’s surprising to me. I was just in Target yesterday noticing how well stocked the back to school shelves were. (School starts Wednesday locally) They had an overflowing suppy of backpacks that took up a whole wall. I did not see one empty hanger or box. Some college dorm supplies were on clearance and took up 2 sides of an aisle. More that wasn’t marked down yet took up still more aisles.
Went into TJ Maxx next and had about 50+ shirts in my daughter’s size to chose from. Usually this close to an even I’m lucky to find 2 items in her size.
Doesn’t bode well for August numbers.
of course it rebounded….for the moment. back to school crowd, maybe a couple days squeezed out at the beach before the summer’s over. no big deal. let’s see what happens in sept/oct. the bloodbath is just beginning.
It rebounded because of three things
1) The new Harry Potter book
2) The new Harry Potter Movie
3) The new Iphone from Apple
This is the entire growth in consumer spending for July.
Was in my local Walmart earlier this week the night before school started, school supply shelves were nearly bare, some families searching were heard to say, “We’ll have to go to the other Walmart.”
just visited 3 national parks, last minute trip, had no trouble getting park lodging, even with my dogs along - Yellowstone, Tetons, and Glacier - not that many people, maybe because school’s started, but when I asked locals they all said it was slower than usual…
A lot of local restaurants having money troubles, especially the upscale ones.
But traffic is still really crazy in Gainesville, so the economy isn’t in the crapper yet.
I would imagine that this government number is just as credible as the monthly job creation numbers so far this year. It is quite at odds with the comp store sales numbers reported by most retailers for the same month. Who do you trust? The government or the people actually doing the selling.
A guy is moving to South Central KY because he closed his furniture business and housing is cheaper in my area.
He was in business for about 13 years in a suburb of Chicago, but people quit buying furniture so earlier this year he closed it.
He told me that because he had an address he was told by state social workers in IL that he could get free medical insurance, food stamps, and some other help. (He said he was barely hanging on to his housing, don’t know if he was renting from a landlord or Citibank.) However, if he was homeless then he could not get anything. Can anybody else collaborate these statements? Hard to believe.
Got 10% down?
Concerning Bush’s plan to refi, one recent rescue comes to mind
- New Orleans
This is not going to do much to prop up prices.
Say you are and FB and you bought your house for 500k and it is now worth 400k. This proposal is not going to make me want to buy your house for 500k suddenly. All it does it let people stay in their house if they want. We have higher loan interest rates and people still can’t realistically afford homes as they are now priced and save money for retirement.
On CNBC they are saying this will help at most 80k families. Will they want to stay in a house that is an albatross around their neck? Doubtful.
This is an election ploy.
It would be very funny if the White House got a flood of angry phone calls today. I intend to call and ask what the President is going to do to help me afford a house at today’s current prices. He’s so willing to help people and I want some too.
This will really piss off his base who are not rich fat cats.
who ya gonna vote for, the baby-killers?
? I’m not sure what you mean.
Hey chilidoggg. This is a real estate discussion group. I hope you can find a discussion group for your politics. It doesn’t belong here.
Hellz ya I will!
–
With the Bush announcement the end of the US econo-political system got closer. And we are talking about a “free-marketer.” What would a socialist have done?
Regrettably,
Jas
A socialist would have imposed price controls on sales prices 5 years ago.
just look to Europe: a system similar to the FHA proposals is used in the Netherlands and proves to be very effective to keep home prices rising (median home price for the whole country is 8.5x median income). Mortgages up to 250K euro (soon 350K euro) are insured by a semi-gov organisation, the homeowner can never be stuck with a loss. The only problem is that because of zero risk, home prices are rising faster than the loan limit (median home price 250K; it will probably go to 350K as soon as the mortgage insurance limit is raised). So government has to come up with new subsidies and free loans every year to keep the system going. But for socialists (that includes all big parties from left to right), inventing new homeowner subsidies is a wet dream that is guaranteed to pay big dividends at the next election as homeowners are a (small) majority. I’m sure our politicians are extremely happy with the system.
my posts are getting eaten…
Yes, 6 of my last 9 posts have been eaten over a 3 day period. I guess I will stop blogging and go back to work…..sad day.
Me too - but cheer up everyone - reading the HBB drilled this into my thick skull - today’s news is just political posturing. This guy’s gotta sell Iraq to the people again - he cannot possibly allow the Dems to nip at his ankles about FBs while attempting to do so.
Mine too.
Its about time that there is some pain out there. People who held a basic need (housing) ransom deserves what they get. The homeowners with their “i’ve got mine cheap, you gotta pay in blood” attitudes are starting to take it in the can. Bring on the pain!
Bernanke just said, “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.” Stocks dropping.
Maybe he will stand up to the White House after all?
Bernanke’s comments are not exactly bull meat.
Not Fed’s responsibility to bail out stupid lenders and investors
Mortgage defaults likely to worsen
Fed will monitor and do what’s necessary to keep credit contagion from affecting the economy as a whole
Not bad
I’m liking what I’m reading….
You can be sure that quote will not be the headline of the “news” coverage. It may not make it into the text of the stories at all.
Washington Post Columnist Suggests Relieving Interest Obligations:
In today’s Wash Post, columnist Steven Pearlstein suggests that troubled borrowers’ mortgages be split into interest-bearing and non-interest bearing portions based on the amount of principle that borrowers would be able to service with their income. Pearlstein usually has great views on issues, but he has gone off the deep end with this suggestion:
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/30/AR2007083001956.html
“The Pearlstein workout process starts…with the household income of the borrower. Using standard formulas, figure out how much they can afford to pay each month toward interest and principal on a fixed-rate, 40-year mortgage. Then, adjusting for credit score, calculate how large of a mortgage those payments can support.”
“The size of this new mortgage will be smaller than the old one. After swapping the old mortgage for the new, the lender would then place a lien, or IOU, on the property, for an amount equal to the gap. The lender couldn’t collect on the lien until the house was sold or refinanced.”
“The whole industry — to say nothing of the whole economy — would benefit if house values were not further depressed by a rash of foreclosures that suddenly puts hundreds of thousands of homes back on the market.”
******
I’m going to rush out today and buy a $2,000,000 dream house. Although I can only afford the mortgage on $500,000 of principle, under Pearlstein’s plan I’ll get to live in the lap of luxury while paying the mortgage on the equivalent of a condo at today’s unsustainable prices.
His plan of dividing the principle into interest-bearing and non-interest bearing portions sounds creative in form, but in substance only reduces the interest rate on the entire loan to below market levels. We can pretend that someone is paying full interest (say 7%) on half of their principle and not paying any on the other half, but the substance is that the borrower is now effectively paying 3.5% interest on the entire loan.
And this begs the question of why people who got in over their heads should get the benefit of lower borrowing costs when responsible people don’t. Our government should not take actions - like the one Pearlstein is suggesting - that, in effect, encourage irresponsible behavior.
Finally, I also take exception to Pearlstein’s suggestion that the economy would benefit if house values don’t fall further (he says “were not further depressed” as if prices returning to levels supported by fundamentals such as rents and incomes is somehow a bad thing). Think about the big picture for a second. Sure there would be some short-term pain and losses from a pronounced drop in home prices. Banks would have write-offs and homeowners who sell and do not rebuy would lose money. But in the long-term, our economy would be dramatically better off if house prices dropped for the simple reason that we’d all be paying a lot less for housing. And that extra money we wouldn’t be paying in interest to the bank could be used to pay for entertainment, clothes, food, cars, children’s education, charitable giving, etc. To suggest that the economy is better off when everyone uses more of their income to pay for housing is nonsense.
This will also turn people more into mortgage serfs. They spend 40 years or more paying for a mortgage and then in the end the bank still grabs up more money when the place is sold. What’s the purpose of “owning” a home if in the end you don’t actually own it? Add in the government taking their piece of the pie when the place is sold and the bank talking theirs, will there be anything left for the “owner”.
What’s the purpose of “owning” a home if in the end you don’t actually own it?
I agree with your overall point, but I’ll offer some explanation of the phenomenon.
First off, if you don’t own you typically rent, and that means a landlord of some type. That landlord may not like your dog or cats, where a bank with loan has no such say on the matter.
Second, if you improve a house, when you rent - who gets the benefit? Say you really want a nice bathroom when the one the landlord provides is just ‘ok/usable’. So you get permission from landlord to improve it - but you never get your money back selling it.
“Gaining equity” is what everyone was after - not really the ‘owning’. Of course, nobody wants to take responsibility for the negative equity (gamble).
Your point is real to me. In fact, I think most HomeOwnerAssociations are just as bad if not worse than landlords. What really is the point of interest-only heavily regulated home ‘ownership’. All we have done is redefine who the landlord is.
“Your point is real to me. In fact, I think most HomeOwnerAssociations are just as bad if not worse than landlords. What really is the point of interest-only heavily regulated home ‘ownership’. All we have done is redefine who the landlord is. ”
Another reason not to live in the US, Europe, and now Canada… it’s owned by the mafia. In the backwaters of the world, what’s yours is yours, and you have the right to do what you want to with it- and defend it- as you see fit. You can build a home with your own two hands (or with help from others) in a matter of weeks or months- no mortgage, no homeowner’s association, no bank, no FB…
I love how horrified they are by the concept of lower housing prices. Because if housing prices were lower, people might be able to, you know, BUY AND OWN THEIR OWN HOMES!!! We can’t have that - there aren’t any fees from it!
County’s economic forecast still on skid
By Dean Calbreath
STAFF WRITER
August 31, 2007
Declining consumer confidence and a deteriorating job market pushed San Diego County’s economic outlook lower for the fourth month in a row, according to a report released yesterday by the Burnham-Moores Center for Real Estate at the University of San Diego.
The county’s index of leading economic indicators fell in July for the 15th time in 16 months, a string of declines broken only by a slight uptick in March. USD economist Alan Gin, who compiles the index, says the numbers indicate slow growth in the region’s economy through at least the first part of next year.
“The slow housing market remains the main influence, with fewer home sales, more foreclosures, job losses in real estate-related sectors, and lower spending as home equity declines,” Gin said.
http://www.signonsandiego.com/uniontrib/20070831/news_1b31index.html
85249 is toast, I am anxiously awaiting this weeks numbers on homes sales in your zip code. Last weeks were so “good”, I have been patiently waiting to see if it is a new trend starting.
White House info. Phone Numbers
Comments: 202-456-1111
Switchboard: 202-456-1414
FAX: 202-456-2461
Well as far as I can see Bush said absolutely nothing. At most this plan would help maybe 80,000 of the 2M or more out there losing their homes. They have to have good credit and to have never missed a house payment. How many sub-prime had good credit to start with. Plus, come on people, this is the government we’re talking about. These houses will be bought and sold 2 or 3 times before the government even figures out how they’re going to do this bail out. Just look at New Orleans. I haven’t even heard FHA mentioned in years except for recently and their loan limit is I think $362,000. That’ll eliminate a whole lot more.
Plus things are good. Bush said so. Employment is up and we’re adding new jobs every day, All the economic indicators are good. Would he lie? I did think I saw his nose growing a little during the speech.
One person assisted by the government is one too many.
“I’m from the government and I’m here to help”- that’s the message we’re getting today.
and why would the dems agree to anything that would make bush & co look good? my bet is this gets thrown around in committees until the next election. by then the hurricane will have destroyed the whole trailer park.
since we can’t have ron paul, we can settle for the next best thing - republican prez and dem houses. nothing will get accomplished
The LA Times talks about the proposed Bush bailout:
Bush to propose aid to mortgage holders
The plan includes a tax break and letting FHA insure more loans.
http://tinyurl.com/yvsa7y
“ncluded in the plan, according to the official, will be a proposal to expand the Federal Housing Administration’s ability to insure loans for people who have fallen behind on their payments and could be helped by refinancing.
The president also wants to raise the limit on the insurance premiums that the FHA can charge home buyers. That could allow the agency to insure a greater number of loans to high-risk borrowers.
In addition, Bush will propose temporarily suspending an Internal Revenue Service rule that makes a homeowner liable for taxes on any amount of mortgage debt that is forgiven by the lender, said the official, who requested anonymity because the president’s program hadn’t been formally unveiled.”
…
“The FHA doesn’t make loans but rather insures them, which means lenders of those mortgages can charge lower rates to borrowers than they otherwise might.
But the FHA currently can’t insure loans larger than $362,790, which severely limits use of the program in high-priced states such as California. Bush wants to raise that limit to $417,000.”
…
“But the White House has said it continues to oppose raising the ceiling on the total amount of loans Fannie Mae and Freddie Mac can hold in their already huge portfolios.”
—
Doesn’t sound like anything like a real bailout to me…however, ‘temporarily suspending the IRS rule’ doesn’t seem quite fair to other people in the same situation a year ago, or after the (proposed) bail-out.
To me this seems like a “look over here, we are doing *something*” sort of thing.
I’m sick of Wall Street expecting a entire bail out of bad loans . The FHA can only refinance borrowers that can afford to make the payment . Let the sub-prime lenders re-write their own junk and take their loss .
Federal Housing Administration’s ability to insure loans for people who have fallen behind on their payments and could be helped by refinancing.
This is contradictory to Bush’s speech. He said they would help people with good credit get a better more suitable loan. If they’ve fallen behind on their payments how can they have good credit. I think this bailout will help zero people in the end.
El Presidents speech reminds me of Nixon’s AG John Mitchell who once quip “watch what we do not what we say”
desertfox
I may be nuts but I’m putting on about a 33% short (index put) position here.
“I may be nuts but I’m putting on about a 33% short (index put) position here. ”
I’m at about 15% TX, I don’t trade as much as you do, but I have been debating for months whether to just liquidate the long positions I have held for years and years. I am staying hedged for now.
txchick57, you seem to know what you’re doing — I’m slightly short myself, but wondering what is making you go short right now?
does that mean you are putting a 33% short on the DOW index? please explain in more detail.
just curious.
I’m with ya, nutty.
oops “quipped”
desertfox
Just returned from a long trip to Glacier NP (part of my see America while you can plan, before gas gets too expensive). Lots happening on this blog!
If anyone’s considering buying in Montana, wait awhile. The whole state’s burning up. Worst smoke I’ve ever seen, over 1/2 million acres on fire.
Maybe they are doing what they did in Greece, ‘accidentally’ burn the forests for real estate development.
“Eye witnesses claim that several fires in the Peloponnese were started deliberately. Arsonists certainly have strong motives for starting blazes. Rising incomes have fuelled a construction boom. Demand is high for land near the sea to build second homes. Although Greek law states that builders cannot put up homes on forest land, developers are practised at getting around the rules.”
from economist.com
Mortgage Mankers say “it’s all RE investors’ / speculators’ fault, maybe we shouldn’t bail them out”:
LA Times
Speculators drive up defaults, report says
Many troubled loans belong to investors who don’t live in the homes.
http://tinyurl.com/2lpajy
“This rapid rise in delinquencies has prompted some members of Congress and consumer advocates to urge tighter regulation of the mortgage industry and aid for borrowers on the verge of losing their homes.
But the mortgage bankers group suggests that some of these borrowers might not deserve to be saved.”
…
“The discrepancy between the indexes “indicates that prices of houses financed with jumbo loans or sub-prime loans are dropping much more than houses financed with conforming loans,” said Patrick Newport, an economist with research firm Global Insight Inc.”
“Mankers” should be “Bankers”…it’s still morning here on the west coast.
actually, it’s WANKERS.
1st story I saw last night said they would also like to push for lenders to renegotiate the loans at lower values. So the FB that bought the $500K house will not get to devalue the loan and property and get their foot in the door at the new lowered value. Bet the neighbors will love that.
The Bush plan mentioned waiving the 1099 form on debt forgiveness as a way to keep people in their houses. The VP of CAR also mentioned that this would help keep people in their houses. What I don’t understand is, if I’m upside down in my house, can’t afford the mortgage reset, and now I have a way to walk away without tax consequences, why wouldn’t I walk? Seems to me that the 1099 hook was keeping people in their houses, in that they couldn’t afford to stay and couldn’t afford to leave. Now they can afford to leave?
Am I insane or rational?
I agree with you New2OC . That proposal will encourage people to walk .
I think it actually shows that he knows they are going to lose their homes, and the debt forgiveness change is just to keep the government from looking like the bad guy when it happens. I figured that they would have to do it, I just didn’t expect it to come out so soon.
Caps on Ginnie Mae / Veterans Affairs loans being eliminated (no more $417,000)…unlike Freddie and Fannie loans, Ginnie loans *are* actually guaranteed by the US Government:
LA Times
Cap on vets’ loans ending
http://tinyurl.com/2a75vn
“The Government National Mortgage Assn., known as Ginnie Mae, is eliminating the $417,000 cap on mortgages guaranteed by the Department of Veterans Affairs..The change takes effect Saturday”
I got the impression that Bush was aware of the fact that speculation and fraud lending had a huge role in the 2005 and 2006 lending .
I really don’t have a problem with a qualified buyer getting a 6.5% fixed rate by FHA in order to get out of a 13% rate on a adjustable because these borrowers should of been put on that type of program to begin with .
You have to remember the REIC was pushing adjustables because of the low down /no doc. aspect of that loan ,where they made a higher commission getting people to go on those loans .
So ,I don’t have a problem with people getting the kind of loan they should of been put into to begin with .I have a problem with fraud loans and speculators getting a bail-out . The Hud Chairman implied that the loans made between 2005 and 2006 are the problem loans . Does that mean the Gov. thinks the prices are going to bottom at 2004 levels ? I really think from 2002 onward the appreciation went off the charts beyond affordability .
I’m glad VA loans exist and glad that it is a veterans benefit that is becoming valuable again as we type. All the reasons that I can think of for removing the limit are bad, though. The only uses I can see for removing the limit are to create a fresh crop of FBs from the blue-collar veterans and to allow retired generals working for big bucks in the military-industrial-complex to score some sweet deals on the coast when they are the only people who don’t need big piles of cash to buy.
Sounds like plans are in the making…to bring… “Our Boys & Girls Home”
I believe they call this… laying the foundation for a…”retreat”
Texas Supreme Court today.
The court handed down the long awaited opinion in Lamar Homes, Inc. v. Mid-Continent Cas. Co., 05-0832 ( Tex. Aug. 31, 2007). This was a case that had been certified by the United States Court of Appeals for the Fifth Circuit. The case deals with construction defects and coverage under a CGL Policy. The court was asked to answer three questions: First, when a homebuyer sues his general contractor for defective construction and alleges only damage to or loss of use to the home itself, do such allegations allege an accident or occurrence? Second, when a homebuyer sues his contractor for construction defects and alleges only damage to or loss of use to the home itself, do such allegations allege property damage? Third, if the answers to the first two questions are yes, does article 21.55 (prompt payment of claims statute) apply to a breach of the duty to defend? The court answered all three questions YES. The first two questions were only answered with respect to the duty to defend. This case will have a dramatic effect on the insurance industry, especially with respect to the last question. Carriers will have to be very careful in determining whether a duty to defend exists or face statutory damage claims in addition to a breach of contract claim.
This email does not allow sufficient space to parse the Lamar Homes case for you. I am providing the web site address for you to review the opinion. We will be discussing this case at future seminars. The web site address is: http://www.supreme.courts.state.tx.us/historical/2007/aug/050832.htm.
A few thoughts before I R&R for a week,
There are $1T in ABCP that expires before Wednesday - there are no known banks willing to renew.
There are record number of layoffs planned for next week -early estimates are 200,000+
35% of all US hedge funds are expected to close in September. Approximately 3,300 funds will close.
The Federal Reserve has increased the money over the last 4 weeks by $38B, Foreign Central Banks have been net sellers of US Treasuries by $30B.
Bank and Financial Company asset write downs begin on Tuesday.
In the past years, there have been earnings guidance in the S&P500 for the third quarter by Aug 31. There has been little earnings guidance released by companies thus far. Expect a lot of negative earnings guidance to be released next week.
IMHO the actions by the administration regarding FHA are a good thing - provided that the lending limit is not increased. In high cost states the maximum FHA loan amount is currently $362,790 or 87% of the conforming conventional loan amount. A 417K FHA loan is currently not possible. In low cost states and areas the maximum loan amount is significantly less.
Have a great weekend all!
Have a good one!
Glossary: “ABCP” = “Asset-Backed Commercial Paper”
If time permits, I recommend reading all of Mr. Bernanke’s comments there is a lot of information that has not been mentioned in the garbage news from the MSM.
“…However, in light of recent financial developments, economic data bearing on past months or quarters may be less useful than usual for our forecasts of economic activity and inflation. Consequently, we will pay particularly close attention to the timeliest indicators, as well as information gleaned from our business and banking contacts around the country. …”
Complete text of Mr. Ben Bernanke’s speech at Jackson Hole
Aug 31, 2007
http://tinyurl.com/yqgbss
hoz, given the list you left us with, the near future looks to be very interesting, indeed. Have a great week, we’ll miss your insights and information.
Second that. Have fun, Hoz!
where did you get 35% number for hedge fund closures? A couple of dozens will close of course, but I doubt it’s even 5%, and probably less in terms of AUM.
$1 T in ABCP is also a gross overestimate, most of it is going to be renewed.
I was curious about this myself, if for no other reason than that my firm does a lot of work for hedge funds…
Multiple source have reported $244 billion in CP have gone bye bye over the last three weeks. Why would it be a shock to lose most of the rest in the next month or so? And BTW, not much AB paper has been renewed and the portion that has was rolled over on punitive terms for a few days. This leaves the issuers in a truly vulnerable position of having to come back to market every week.
RE: Hedge Funds
Dow Jones Financial News
Aug 30, 2007
http://tinyurl.com/yrz6l5
At least 2000 are at severe risk.
As for the AUM, next month will be interesting. Depends on withdrawals.
RE: ABCP is rolling over for 24 hr periods only. And there has never been a $1 Trillion dollar rollover before. \
“The latest Federal Reserve data, released Thursday, showed that the total outstanding amount of commercial paper fell $62.8 billion on a seasonally adjusted basis to $1.979 trillion as of Wednesday, from $2.042 trillion a week earlier.
That was somewhat less than the roughly $90 billion decline of the previous two weeks. The total outstanding has dropped 11% since Aug. 8.
Asset-backed commercial paper outstanding, the sector which has been hardest hit in the recent market turmoil, declined $59.4 billion to $998 billion in the week to Wednesday, after a $77.1 billion drop the prior week. ”
http://tinyurl.com/256q52
“Also, asset-backed commercial paper outstanding is being retired rather than rolled as there are so few willing buyers. Much of the underlying assets are being pulled onto bank balance sheets, tying up capacity and creating new management challenges.”
Global Financial Newswires
Aug 31, 2007
http://tinyurl.com/2nuube
This sounds somewhat promising, from the Bush speech:
“However, Bush is rejecting a wholesale bailout of borrowers and lenders alike, saying it’s not Washington’s role to provide such a backstop.
“The government’s got a role to play,” Bush said at the White House. “But it is limited.”
A bailout of lenders, Bush said, would only encourage similar situations in the future.
“It’s not the government’s job to bail out speculators or those who made the decision to buy a home they knew they could never afford,” Bush said. ”
From MarketWatch.com
sounds like he’s spending some time on this blog…
Having nothing better to do last night, I decided that there’s no better place to spend a 108 degree desert evening than in a nice air conditioned movie theatre, so I went to see Closing Escrow. Apparently a local real estate office had decided to make a night of it, because one entire row was filled with boisterous realtors who had obviously lubed up a bit before the show. Just after the opening title was a crawl informing us that “There are 1 million buyers looking for homes in the United States,” at which point one of the realtors shouted “Yeah, where are they??” I wasn’t expecting audience participation, but these people were a hoot. It ended up being kind of a Rocky Horror Picture Show for realtors.
They were quoting the NAR talking points along with the cast?
Bernanke put strike price appears to have been elevated to 13,400, just to make sure everyone knows Wall Street approved of the content of BB’s and W’s speeches…
http://www.marketwatch.com/tools/marketsummary/
I spent some time this afternoon writing to the President and my senators trying to injrect some reason regarding not bailing out the FBs and their F’d lenders. When the heck is someone going to do something for a hardworking single mother like me? I live frugally, simply, don’t have any debt except for a reasonable mortgage. God knows the last time I had a vacation. My clothes are all old, as is the car. It really pushes my buttons that I make all these sacrifices so that irresponsible people and greedy loan sharks can party. I have been on this blog for over 2 years and everything that is happening was said here first.
My former neighbor (I moved) has over 330K in loans for an ugly house that he bought for 35K in 1990. They bought very expensive vehicles, put in a pool, took trips, etc. And now I’m supposed to watch him march into a nice new mortgage and start over? Hell no! Is there any sanity left in this country?
Apparently not.
Professor W says wake up, it’s time to either leave, or start stealing like everyone else - dishonesty and irresponsibility are the hallmarks of emerging American culture… Europe gets more attractive every day by comparison…