The Pig Is Going To Go Through The Python
The Journal Gazette reports from Indiana. “Builders received nearly 37 percent fewer Allen County home construction permits last month than August 2006, according to the Home Builders Association of Fort Wayne. Media stories about the mortgage crisis and increasing foreclosures are making potential buyers skittish, said Jim Lancia, president of Lancia Homes. Lancia Homes hopes sales will rebound this month and in October, Lancia said. Otherwise, it might be a long winter for homebuilders.”
“‘We’re braced for anything though,’ he said, ‘whatever happens.’”
The Indystar. “With home foreclosures near record highs in the Indianapolis area, businesses like Indy REO that cater to the distressed property market are bustling.”
“Foreclosures are so prevalent that they make up one in five home sales in the metro area. Sales happen when lenders take title to houses after the owners fail to keep up with the mortgage payments.”
“In many Indianapolis residential areas you can count on 50 recent foreclosures within a one-mile radius, estimates Seth Payton, an urban policy analyst at Indiana University- Purdue University Indianapolis.”
“‘There are deals in every neighborhood. The market’s flooded with ‘em. It’s bad for banks but good for…people like me,’ says Michael A. Scott of Southport, who has bought three foreclosed houses this year.”
The Daily Herald from Illinois. “During 2005 and 2006, more than 30,000 people settled into homes that today stand where corn fields once did in Kane County towns. Yet mounting signs of a suburban housing slump also urge caution.”
“Aggravated by an increase of homes on the market, flat or falling prices and higher foreclosure rates, homeowners continued to buy and have faith in their investments across the Chicago region. At least, they did last year.”
“Median home values reported in suburban counties inched higher last year, posting anywhere from a 3.8 percent to a 13 percent increase from 2005, according to the Census Bureau’s American Community Survey.”
“Such confidence, a year delayed and by definition, subjective, counters evidence of a real estate rut that emerged in 2006 and could persist through 2008.”
“Appreciation among home values appears to be slowing, a trend too new to register with census research yet too evident to ignore, experts said. ‘The state we’re in is something most Realtors, myself included, have never experienced,’ said Mike Boraca, a 20-year market veteran. ‘The data will be radically different the next time it comes out.’”
“Consider this: Boraca’s office listed 217 properties in August. It had 38 showings during the entire month, down dramatically from the two or three showings a single listing typically draws in a month.”
The Capital Times from Wisconsin. “UW-Madison economist Morris Davis doesn’t want to become known as the most bearish real estate pundit out there. But considering past housing slumps and the depth of the current crisis, Davis isn’t looking for any recovery for at least another three years.”
“‘Normally these bust periods last about four years and we’re only one year into this one,’ he says.”
“Unfortunately, says Davis, things will likely get a lot worse before they get any better. That means prices will keeping falling, new construction will slow to a crawl and more people are going to lose their homes — and their jobs.”
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. ‘There is nothing wrong with (subprime) loans as long as home values increase,’ Davis says. ‘The problem comes when values are falling like they are now.’”
The Journal Sentinel from Wisconsin. “Milwaukee-based ForeclosuresWI.com reported 2,064 new foreclosure filings in August - the highest single month in its five years of operation.”
“August’s influx of new cases pushed year-to-date foreclosure filings in the Badger State to 12,955, a 27% surge from the 10,229 posted in the first eight months of 2006. Last year’s volume, in turn, was 34% higher than 2005’s.”
“What’s happening here, to a greater or lesser extent, spans the nation, said Perfecto Bobadilla, chief operating officer of American Mortgage Educators Inc. in Seattle.”
“‘The reason we have this catastrophe today - irresponsible lending. These lenders were overzealous to the point of institutionalized criminality,’ Bobadilla said. ‘It’s the lenders’ fault, and the federal government’s fault for not stopping them and of course the borrowers, who always have responsibility, too.’”
“Metro Milwaukee’s housing market in August was down a little on resales, down a lot on new construction.”
“Many customers are unwilling to bankroll a new house before snagging a buyer for their home, said Matt Moroney, executive director of Metropolitan Builders Association.”
“Home builders have faced a glut of unsold homes since the abrupt end of the nation’s heady 2001-2005 housing boom. Speculators who feverishly bought up properties during the boom abruptly departed, leaving unwanted holdings behind. Meanwhile, buyers grew skittish and postponed decisions in case prices dropped.”
“Two unmourned absences in today’s market are speculative building and quick but costly subprime loans, said high-end builder Pete Feichtmeier, president of Colby Construction Co. Inc. in Delafield. ‘Those deals are gone,’ the builder said, ‘and probably should be gone.’”
The Pioneer Press from Minnesota. “Katherine McCollum already had a full-time job, but the St. Paul mother of two had to pick up a weekend gig cleaning office buildings to make ends meet.”
“McCollum and her husband both work seven days a week now, tapping family to babysit, as they struggle to manage the $340 added to their monthly house payment since their adjustable rate mortgage first jumped last spring.”
“And the mortgage, now $1,343, isn’t done switching interest rates yet. ‘We’re struggling,’ said McCollum. ‘We’re just staying above water. It’s bad.’”
“The local stakes are high. LoanPerformance estimates that roughly 19 percent of mortgages in the 13-county Twin Cities are ARMs, and that about 29,000 of them are hitting their first reset date in the second half of this year, with another 20,000 resetting in the first half of 2008.”
“‘The pig is going to go through the python the second half of this year,’ said Robert Visini, a LoanPerformance VP.”
“Shellie Rowe, site manager at the East Side Family Center sums up her expectations for coming months in a word: ‘Pandemonium.’”
“Like North Minneapolis, parts of St. Paul’s East Side have been slammed hard by foreclosure activity, as has Frogtown.”
“Darryl Dahlheimer, program manager at Lutheran Social Services Financial Counseling in Minneapolis, said he’s bracing for years of fallout. ‘We’re not talking about a bad storm to weather out, we’re talking about complete neighborhoods potentially being gutted out with foreclosures,’ Dahlheimer said. ‘Whether it’s Richfield or Windom, you’re still talking this problem.’”
“Minnesota has already hit its own record, with 1.57 percent of outstanding mortgages - or more than 14,000 loans - now in some stage of foreclosure. That’s the highest since the Mortgage Bankers Association started its current delinquency survey in 1979.”
“McCollum said she and her husband didn’t fully understand how their mortgage worked. They refinanced in 2005 to consolidate debt, she said, and didn’t realize the loan would be an ARM until they sat down to sign the paperwork.”
“She blamed her mortgage broker for misleading them about the loan’s terms. The broker assured them they could refinance again before their interest rate changed, McCollum said.”
“They haven’t fallen behind on their mortgage, yet. She expects the mortgage will squeeze them even harder in December, when the current 8.5 percent interest rate adjusts to 9.5 percent. Their rate will continue climbing, she said, until it maxes out at 12 percent.”
“‘We have to refinance before then,’ said Katherine McCollum. ‘We’d end up losing our home.’”
FYI, in order to avoid the comment server problems, we have switched to a caching setup for the home page. The only change you should experience will be the comment count on the home page will only be updated every 60 seconds. Please let me know if you have any other problems.
An interesting fact about the loan rate reset numbers we hear is that they are for a given pool on an annual basis… but most of these loans adjust more than once per year… so we are most likely looking at much higher gross dollar resets for a given pool for a given year than we are hearing about.
“Foreclosures are so prevalent that they make up one in five home sales in the metro area. Sales happen when lenders take title to houses after the owners fail to keep up with the mortgage payments.”
I never thought of foreclosures being sales. So, in places with high foreclosures - actual home sales (where someone moves in) are even more dismal. WOW.
I asked about this before, and someone shot me down, claiming that repos are not counted as sales. But, if one reads the local rag, they are certainly counted as sales here in Tampa. I suspect they account for a large percentage of the alleged sales, and the reason for the supposedly sticky median sales price. They are priced at what the lenders bid (way more than their value), allowing them to keep them on the books as valuable assets, instead of money pits.
Media stories about the mortgage crisis and increasing foreclosures are making potential buyers skittish, said Jim Lancia, president of Lancia Homes. Lancia Homes hopes sales will rebound this month and in October, Lancia said. Otherwise, it might be a long winter for homebuilders.”
Here’s another one of those hoping people, sorry Jim my boy but hope is not gonna carry you. This will be a long winter as will the next few that follow.
“McCollum said she and her husband didn’t fully understand how their mortgage worked. They refinanced in 2005 to consolidate debt, she said, and didn’t realize the loan would be an ARM until they sat down to sign the paperwork.”
If it was a refi, then why didn’t they walk when they saw the loan was an ARM? I think they were in over their heads and grasping at straws. They knew it was an ARM. Poor, poor victims.
I didn’t catch this but you are so correct. This was not a case of someone who was ready to move from one house to another and would have had a difficult time rescheduling everything. These people were simply trying to dump their existing debt into a new loan. It would have been a snap to walk away from that deal. Why didn’t they?
Because they wern’t living within their means BEFORE the refi, they needed the cashout in a hurry. Now this could have been because of health problems or job loss but if it was, they probably would have mentioned it while scheduling this little pity party. THIS is one of the things that amazes me: the number of people who think that getting a HELOC to pay off their credit cards means that they’re living within their means. Yes, some people make more than you, perhaps that’s not fair. But unless you’re unemployed, SOMEBODY is living within your means. It’s better to live in an apartment that you can afford than to be kicke out of a house that you can’t.
Damn media!
“McCollum said she and her husband didn’t fully understand how their mortgage worked. They refinanced in 2005 to consolidate debt, she said, and didn’t realize the loan would be an ARM until they sat down to sign the paperwork.”
Is anyone else getting as sick and tired of thisy whiny excuse as I am? Same sort of thing you hear from people who are so anxious to buy a shiny new car that they’ll trade in their perfectly good old one for a huge loss, roll the upside down balance in the new loan, and pay over sticker for the new car. Invariably, after the thrill wers oof after a mnonth or two, they’ll balme the car salesman for “cheating” them.
Related….
Behold, the smartest people in the world:
http://news.yahoo.com/s/afp/20070911/od_afp/lifestylebritainhoteloffbeat
I didn’t realize until I sat down to sign the paperwork, and then I figured I had driven all that way, so what the heck, right?
Yep, I’m sick of these whiners. They knew exactly what they were doing. Last I checked it is called speculation or gambleing. I see auto sales falling off a cliff as home equity money dries up. Might see a lot of folks dumpster diveing at walmart soon.
I’m a bit concerned that if someone actually says something like that to me directly, I might not be able to speak the truth in love, that they were/are idiots.
azdude - I agree about auto sales. I’m wondering which dealerships will be out of business in the Phoenix metro in the next couple of years. I think every stand-alone (non auto mall) dealership is vunerable. Most of the Tempe and west Mesa dealerships have already moved out to south Chandler and Gilbert.
“Same sort of thing you hear from people who are so anxious to buy a shiny new car that they’ll trade in their perfectly good old one for a huge loss, roll the upside down balance in the new loan, and pay over sticker for the new car. ”
You must know my friend and his wife.
If they are truly working 7 hour days, even at minimum wage they’d be pulling in 2300/month. Chances are they’re doing a little better than minimum wage since MN economy is fine. Even after getting taxed there seems like there should be enough to get by since the mortgage is $1300. Oh wait, they have those new car payments and the credit cards and the toys.
Two people working full time seven days a week and they’re having trouble making a $1300 mortgage?
I gotta leave SoCal and buy me a big-ass house in Minnesota…
“They haven’t fallen behind on their mortgage, yet. She expects the mortgage will squeeze them even harder in December, when the current 8.5 percent interest rate adjusts to 9.5 percent. Their rate will continue climbing, she said, until it maxes out at 12 percent.”
- Kathy and her husband better ‘Batten down the Hatch’s’, because no bailout will help them. Christmas might be a little lean this year.
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. ‘There is nothing wrong with (subprime) loans as long as home values increase,’ Davis says.
Ah, economists. He left out “as long as home values increase FOREVER.” But I suppose that, technically, he is correct. He is also stupid and possessed of little common sense.
“…it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream…”
The funny thing is that when I, as a conservative, say that you shouldn’t extend credit to poor people because they can’t afford to pay it back AND it’s keeps them poor and in servatude, I’M THE BAD GUY!
this isn’t a poor thing, it’s a lending thing. nobody, rich or poor, should get a loan they can’t afford. there are a lot of people who aren’t poor who are in bad loans too. we need loans that people can afford whether they are rich or poor.
um, Christmas will miss them this year, not even going to be lean…
You know what - I would agree with an FHA loan to these people at 9% fixed. They seem to be willing to work to pay their bills. But I want to be offered a special gov’t bond paying me 8.5% to provide the liquidity.
But if their mortgage is $1,300, and interest rises 1% (from 8% to 9%), that’s only $13 payment increase. So an increase to 12% should only cost about $52/month.
That’s the way it works, isn’t it?
I hope that you are not being serious. Assume 100,000 current balance on the mortgage. At 8% interest is $8000 per year current. If interest increases to 9% this is $9000 per year. An increase of $1000 per year. This will be 83+ dollars per month. If the current balance is larger the payment will increase even more.
“McCollum said she and her husband didn’t fully understand how their mortgage worked. They refinanced in 2005 to consolidate debt, she said, and didn’t realize the loan would be an ARM until they sat down to sign the paperwork.”
Is anyone else getting as sick and tired of this whiny excuse as I am? Same sort of thing you hear from people who are so anxious to buy a shiny new car that they’ll trade in their perfectly good old one for a huge loss, roll the upside down balance in the new loan, and pay over sticker for the new car. Invariably, after the thrill wears off after a month or two, they’ll blame the car salesman for “cheating” them.
Related….
Behold, the smartest people in the world:
http://news.yahoo.com/s/afp/20070911/od_afp/lifestylebritainhoteloffbeat
Lotsa people are starting to live on cruise ships. Everything is included, (medical also) constant travel, etc.
IF the price is right, why not?
Paul
In Sausalito, north of SF
There are many houseboats, that more closely resemble houses.
When you are in one, it sures feels like a home on land…
And if you can’t trust a guy named Perfecto Bobadilla to learn ‘ya something about mortgages, who can you trust?
“They refinanced in 2005 to consolidate debt, she said, and didn’t realize the loan would be an ARM until they sat down to sign the paperwork.”
Here is what this really means.
They refinanced in 2005 because they had run up their credit cards, bought fancy cars and ate out every night. They didn’t pay enough attention during the loan process to have noticed that they were being offered an ARM, and then, when they found out, signed the loan docs anyway.
What a couple of maroons.
But remember in 2005 the consensus was that no matter what type of loan you got you’ll be in the cat bird seat as your homes value will have doubled. In 2005 there was “no way” you could go wrong in real estate. A renter would be a complete fool. Unfortunately that advice and those that believed it were two years too late to the party.
And soon to be 3 years, then 5 years, then ??? years late to the party. It just keeps on giving, doesn’t it?
Maroons - LMAO! Brother and I discussed them pushing ARMS today - both bought in 03 and both were treated like maroons because we refused ARMS. I sold this year and he still has original mortgage and house and we’re laughing all the way to the bank
Well actually, with the benefit of 20/20 hindsight, buying in ‘03 and selling this year, you might have come out ahead if you HAD gotten an ARM. Not one of these exploding teaser rates that are all the rage, but a conventional arm at a percent or two above LIBOR. But if your brother stays in his house for another five years or so, there’s no doubt that a fixed rate will have saved him money.
“What’s happening here, to a greater or lesser extent, spans the nation, said Perfecto Bobadilla, chief operating officer of American Mortgage Educators Inc. in Seattle.”
Come on, someone’s gotta be making these names up.
Or it’s the Perfecto storm in the market, maybe.
I laughed when I saw that name too. And laughed when I saw her title, CEO, and her outfit, American Mortgage Educators Inc….
“Coalition of Female Consumer Advocates as Their Relentless Efforts to Help Continue with the Kickoff of Their Nationwide Real Estate & Mortgage Awareness Educational Tour….
And her colleague, “Dr. Rosenberger is the most prestigious mortgage reduction expert in this country and the highly acclaimed author of “The SECRET that BANKS FEAR.” This financial magnum opus gives the power back to homeowners by utilizing banking principles so secretive that bankers themselves are not even aware. It has been projected as one of the quickest bestsellers with over 70% of its first print already sold. For more information on “The SECRET that BANKS FEAR” visit”.
The website is down as this organization, apparently formed in August, is already being sued for copyright infringement. Case is in Western Washington state.
So, if the bankers are not aware of them, how could they be principles? As far as fear goes, well we ALL fear what we don’t know.
Perfecto Bobadilla It’s Hebrew meaning “little pathetic one”
“little pathetic one”
A.k.a. “Ben Bernanke.”
“little pathetic one”
A.k.a. “Alan Greenspan.”
Before Ben’s even pushed on the economic accelerator the inflationary anchor appears. Oil 80 bucks/brl today. Dollar reaches record low against the Euro. Will he look at this and just throw up his hands.
Wow… I told a coworker this morning to look for $85/bbl oil in January. I didn’t want to be wrong on an underestimation!
Between the mild layoffs and tightening credit, we will have a poor Christmas sales season.
Of topic: Am I the only one who snarfed coffee when reading this thread’s title? I expect jokes in the body, but not on the front page of the HBB.
You got me Ben.
Got popcorn?
Neil
What about consumers taking one last run with the credit cards to have a nice Christmas before the you-know-what hits the fan?? Any chance of that??
That’s what I’m expecting, followed by a early 2008 rally on the “the consumers are recovering / the chicken little’s were wrong” news. Then boom boom, out goes the lights.
I’ve been thinking along the same lines, RMTM Bob — the American consumer will likely max out those credit cards before giving up the ghost.
Though I expect some kind of a pullback at Christmas, I think you’re right about the false consumer recovery post-holiday. And the Boom Boom part.
ABSOLUTELY!! Count on it.
I guess I’m in the minority. For every consumer doing an end run on the credit card, I think there will be three cutting back trying to just get by.
I’m also wondering if credit card credit might not be tightening up. One of my coworkers just found a little note in his monthly credit card bill that no credit limit extensions were being offered in the near future (in the small type). I begged him to bring it in, so lets see if its true!
Got popcorn?
Neil
I’m with ya. A lot of people get quiet when they’re scared, good adaptive strategy. By Halloween, there will be real doubts about retail this Christmas. The servers at Overstock and Ebay are gonna crash daily. If you’re in cash, nice year, a lot more free shipping than ususal, and I haven’t paid sales tax in I don’t know when.
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. ‘There is nothing wrong with (subprime) loans as long as home values increase,’ Davis says. ‘The problem comes when values are falling like they are now.’”
The subprime problem hasn’t been loans to “poor people” now has it? Even poor people couldn’t get much more than a couple of hundred thousand dollar loans.
No, the problem with subprime loans was that they were given out TOTALLY based on the expectation of rising prices to ANYONE, most often in very large amounts. The sob stories we’ve seen here over the last year or so have had a few, truly poor people, yes. But my impression is that the problem lies more with the loans to the Casey Serin types and others who had little concern about what they might do if things didn’t work out PERFECTLY for both their financial lives and the housing market.
Davis’ reasoning is feeble. Its crap like this from “experts” that continue to lead people to the wrong conclusions about the problem and, in turn, the wrong “solutions”.
“‘There are deals in every neighborhood. The market’s flooded with ‘em. It’s bad for banks but good for…people like me,’ says Michael A. Scott of Southport, who has bought three foreclosed houses this year.”
You see, we figured the ‘investors’ were out of the market. But here is someone who probably expects to cash in big time once appreciation starts happening again ‘really soon’.
This will add a few years to this bust cycle, as I keep reading about ‘investors’ picking up foreclosed homes with ‘instant equity’.
I’ll repeat again, even if some of these houses can actually cash flow, there are more houses that were built around the country than people available to occupy them, at any price.
That’s why I won’t buy for a while, ’cause I just can’t see how they cash flow, with or without so-called equity. No cash flow plus more stringent loan requirements should weed out a lot of so-called investors, but who knows.
My former landlady bought a foreclosed property on the Pima County Courthouse steps in December 1998. The property had two houses on it, and it took her years to catch up on all the repairs that the previous owner didn’t do. She also had to handle a lot of deferred maintenance.
Yes, she got a great deal on this property, but…
That’s what kills me about these Courthouse buyers. They’re literally bidding on a house they’ve usually not been inside of, especially if it’s vacant. To me that’s not investing, that’s stupidity and taking a huge risk. I thought investing (at least part of it) was about minimizing risk. Silly me.
In my landlady’s case, one of the houses wasn’t vacant. In fact, it was occupied by great tenants who stayed for almost seven more years.
Even so, she wasn’t able to do an inspection before she bought the property, and that’s how courthouse “deals” work here in AZ.
there are more houses that were built around the country than people available to occupy them, at any price.
This is a point I had to beat into my hubby’s head. So I figured, why not just show him? We toured though a dozen or so states and he figured it out all by himself. Chuckles.
How long before the bloodloss kills off such a dedicated knifecatcher? Now there WILL be some people getting rich(er) picking up property at the bottom, but that’s not happening anytime soon IMHO.
lefty prof gets to keep his job
and pitch socialism for”the poor”
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership
458
Just like that lefty George W and his American Dream no downpayment program, that the White House signed into law with much fanfare in 2003? So, did you vote for that lefty and his socialist programs for “the poor” in 2004? That’s why he still has a job.
ron paul for me
lp or bust
How many loans were made? How many have gone bad under this, particular, program?
I don’t agree with this kind of program but I’d be willing to bet the total number of loans out of this program pales in comparison to the volume of loans made to “regular” people…like Casey Serin.
If you can come up with some numbers of the actual number of loans made, even better the number of failed loans from this program, fine. Then we could see if it was a major contributor to the current problem.
I’d bet, due to typical government sluggishness, relatively few loans were ever completed. Also, since virtually anyone could get a no doc, 100% LTV loan, why would they even bother with a more restrictive 3% program through the government?
Whether I was a crook, speculator or a dope, I’d prefer to go no doc, 100% LTV….wouldn’t you?
He said poor people, not deadbeats.
And that’s the problem. I don’t think that anyone who carries a persistant ballance on their CCs are REALLY that great a risk, no matter what their income. I agree that it’s more difficult for poor people to save up a significant downpayment, but if all you can bring to the table is debt, the only way that you’re going to pay off your mortgage is if appreciation allows you to refinance, no matter what your income level.
“The quarterly Anderson Forecast by the University of California at Los Angeles … lowered its forecast for housing starts to an annual rate of about 1 million to 1.1 million, down from a range of 1.2 million to 1.3 million.”
Isn’t the housing absorption rate still down around 800,000 or less? And since this country is already overbuilt by hundreds of thousands of homes, shouldn’t the housing starts rate drop below the absorption rate at some point to reduce inventory?
I’m confused …
Last I checked, the new home inventory pile-up rate was running at 511,000 homes per year.
lol…”pile-up rate”. That is mind boggling. Wonder how well the economy will be doing when housing starts drop below 500,000?
“pile” up is right, considering most of the homes are McSH@#!T Boxes
yeah me too, but it say University of California next to the name and I’m sure they know what they are talking about after all this is basic logic, math and economics. Demand 800K(maybe)/yr, Supply 1,000K/yr + 600K existing
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. ‘There is nothing wrong with (subprime) loans as long as home values increase,’ Davis says. ‘The problem comes when values are falling like they are now.’
This has got to be one of the stupidest statements I have ever heard. This guy is supposed to be a economist? Buying property with a subprime mortgage and expecting it to appreciate is nothing more than speculating with borrowed money, similar to buying stocks on margin.
No economist or “advocate for the poor” would ever encourage poor people to buy stocks on margin, but for some reason taking out teaser rate mortgages or ARMs that depend on appreciation is considered a good thing. Combine this type of idiotic conventional wisdom with less sophisticated buyers and you have a recipe for a complete meltdown.
Maybe Davis is a “less sophisticated: economist. He sounds dumb enough to join Retsinas as Harvard, or the dolts at George Mason U.
Most economists over the last 2 years have distinguished themselves by being unable to put 2 and 2 together. As a group, they’re as clueless as FBs. Maybe they’re economists because they’re too slow-witted to make it as realtwhores.
A fundamental assumption of economics is “the consumer is rational.”
Enough said.
My assumption before reading this blog for two years; “economists are rational”.
Enough said.
“No economist or “advocate for the poor” would ever encourage poor people to buy stocks on margin, but for some reason taking out teaser rate mortgages or ARMs that depend on appreciation is considered a good thing.”
I didn’t see where he said that. did I miss something?
“No economist or “advocate for the poor” would ever encourage poor people to buy stocks on margin, but for some reason taking out teaser rate mortgages or ARMs that depend on appreciation is considered a good thing.”
I didn’t see where he said that. did I miss something?
“McCollum and her husband both work seven days a week now, tapping family to babysit, as they struggle to manage the $340 added to their monthly house payment since their adjustable rate mortgage first jumped last spring.”
Ahh, the pride of homepwnership.
They are working for $340/month or $2.65/hour (post tax). (Two people or 16 workdays, or 128 work hours…
They must wish they had gone for a skilled job.
If you are going to do a sob story, don’t do one that screams “worthless idiots!”
Got popcorn?
Neil
Translation: they couldn’t afford it to begin with, even at the lower payment.
these people cant afford to take a dump in a public toilet.
Now this is truly sad. There really are some (being the operative word) people out there that are in need of help. If we are going to do a bailout (which I’m against) let’s hope it’s for those in predicaments like this:
“This is home. I sure don’t want to lose it,” said Marshall Sims, a second-shift warehouse packer. “But my wife had open heart surgery and a bypass in the last two years. With just one income, we’re behind. We could borrow from a relative, but they’re in the same boat.”
Their financial distress was touched off by one of the classic foreclosure triggers: illness.
Fay Sims’ job as a nursing home receptionist ended when she became sick in 2004. A three-year struggle for Social Security disability benefits ensued.
“We’re so far behind now on the mortgage, on our bills, period. Pay one and the other’s in trouble,” she said.
After four missed monthly payments, the Simses said, their bank wasn’t interested in compromise. Their bank’s foreclosure action is pending.
It’s too late for them.
I’m going to sound like scrooge here, THOSE sorts of stories are the reason that we have bankrupcy protection instead of poor houses. They should be able to declare bankrupcy, get out from behind their negative net worth and rebuild their life.
“THOSE sorts of stories are the reason that we have bankrupcy protection instead of poor houses. They should be able to declare bankrupcy, get out from behind their negative net worth and rebuild their life. ”
Don’t forget, though, with the new bankrupcy laws, putting all your dept behind to be able to rebuild their lifes may not be possible.
I don’t neccessarily object to the new bankrupcy laws applied to NEW debt. But changing the laws as they apply to debt contracted for under the old laws is a HUGE government gift to the CC and mortgage companies. Even if the borrower didn’t have a firm grasp on his options if he became insolvent and unable to service the debt, you can be D*** SURE that the CC companies knew exactly under what laws the borrower could default on his debt. Making said debts more difficult to default on INSTANTLY made all the debt held by CC companies more valuable. What do you want to bet that if pressure on congress a few years from now made them consider going back to the old rules, the CC companies will whine that the damage to their balance sheets would constitute a “taking”?
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. ‘There is nothing wrong with (subprime) loans as long as home values increase,’ Davis says. ‘The problem comes when values are falling like they are now.’”
Why do I have the feeling that he was being sarcastic, and taken in the context of his conversation, his statement made sense? But, when placed in print, it came out making him sound stupid?
“extending credit to poor people is central in helping everyone realize the American dream of….
A) a home they did not earn and cannot afford
B) a new car in every garage and a garage for every American
C) a plasma tv in every room
D) jetskis for everybody.
Just change the name of the country to Consumers ‘R Us, and scrap the real American dream of life, liberty and the pursuit of happiness for some cheesy marketing gimmick. Davis sounds stupid, because what he said was stupid.
“The result of this succession of booms, in so many places has been a massive increase in national home prices over a period of nearly a decade. The boom was tempered somewhat by the fact that some cities never experienced booms. In Atlanta, Charlotte, Chicago, Cleveland, Dallas and Detroit there was no year since 1998 in which real home prices increased by 10% in a year, though even those cities showed some increases.” – Yale economist Robert J. Shiller
Oops! Sorry Bob. Not true for Chicago!
I’m seeing Chicago area appreciation since 1998 as:
1998 3.53%
1999 4.59%
2000 7.61%
2001 6.86%
2002 7.27%
2003 6.12%
2004 9.71%
2005 10.78%
2006 8.70%
So 2005 was higher than 10%. However, he did say “real” home prices, so I believe he is talking about inflation adjusted prices.
In that case, “real” 2005 appreciation was “only” 7.38%.
“During 2005 and 2006, more than 30,000 people settled into homes that today stand where corn fields once did in Kane County towns.”
To me, this is the tradgedy of the Housing Bubble. Here in the MW, where there is plenty of land to scarf up, prices rose only modestly. What the bubble did was take away a lot of farmland for housing that was not needed. Around me, there are 2 such developments where the land was cleared, the roads and sewers put in, and then … nothing. The builders went BK or stopped building. That leaves us with non-productive land - no farming, no industry, and no housing.
And this country is looking to corn-based products to solve our energy problem? Not if you keep needlessly destroying farmland !
This country will not run out of farmland in our lifetimes. Take a drive through Arkansas, Iowa, Illinois and Indiana to see what I mean. And remember, farm subsidy programs still pay lots of farmers to keep land idle.
Agreed. What we’ve run out of people who want to farm for a living. Land we still got.
got water?
We’ve run out of kids who can afford to buy farmland and work it. Plenty of Midwestern kids would like to stay in farming.
Actually we are running out. There are states out west losing land to drought so fast we can scratch the notion of exporting our way out of our trade deficit. Our manufacturing has atrophied too much, too. We don’t have the capacity to get out of this hole.
Today’s fun word:
Borasca…
definition: An unproductive mine or claim; the opposite of a bonanza.
“Consider this: Boraca’s office listed 217 properties in August. It had 38 showings during the entire month, down dramatically from the two or three showings a single listing typically draws in a month.”
“‘Normally these bust periods last about four years and we’re only one year into this one,’ he says.”
Four years is wishful thinking. I have a realtor friend who says 12 years. And it is absolutely true in my experience.
“What’s happening here, to a greater or lesser extent, spans the nation, said Perfecto Bobadilla, chief operating officer of American Mortgage Educators Inc. in Seattle.”
That ridiculous-sounding name is merely his REIC codename — an anagram of his legal name, which is probably one of the following:
A Debacle Robot Flip
A Blab Copter Foiled
A Blab Epic Foretold
A Blab Decrepit Fool
A Rabbit Coop Felled
A Barbed Ocelot Flip
A Rabbeted Loco Flip
A Prefabbed Loco Lit
A Barbed Police Loft
Imagine if the McCollums lived on the left coast?
They’d be laughing about paying $1343.00 a month…
“McCollum and her husband both work seven days a week now, tapping family to babysit, as they struggle to manage the $340 added to their monthly house payment since their adjustable rate mortgage first jumped last spring.”
“And the mortgage, now $1,343, isn’t done switching interest rates yet. ‘We’re struggling,’ said McCollum. ‘We’re just staying above water. It’s bad.’”
“UW’s Davis says it’s important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. ‘There is nothing wrong with (subprime) loans as long as home values increase,’ Davis says. ‘The problem comes when values are falling like they are now.’”
There is also nothing wrong with shooting a loaded gun straight up in the air. The problem comes when the bullet falls back to earth and hits somebody squarely in the head.
What does pig going through the python mean exactly? Sorry, from Boston, I’ve never heard that expression. I have an idea of what it means but want confirmation…
Well if you imagine trying to pass a whole cantaloupe…
Snakes like pythons and boa constrictors can kill and swallow prey much larger than themselves, including pigs and other livestock. Once dead, the prey is swallowed whole, resulting in a bizarre bulge part-way along the snake’s body, which remains visible until the dead animal is mostly digested. It may take weeks for the snake to complete the process and return to its normal shape. More details here:
http://discovermagazine.com/1994/apr/diningwiththesna362/
Feed pig into one end of a python and sometime later it will emerge out the other end as dung. As the pig is transformed into dung it makes a large bulge in the snake that takes a large amount of time to pass.
These pending loans that are due to reset nearly all at the same time are going to be like a financial pig bulge slowly moving through the economic python.
At least that’s my take on the expression.
And during the digestion period of the pig, python will be almost static at a place, as it cannot move fast with that huge load in her body. The python swallows the pig out of greed, but exposes itself in dander of attack and not being able to respond fast.
Or maybe this will happen:
http://www.msnbc.msn.com/id/9600151/
Toast you beat me to it.
Yeow!
Thanks for asking, Mass. I now have bourbon and coke on my computer screen and up my nose.
I sure hope that those folks in Wisconsin saved the cardboard boxes from their 8ft. Wal-Market artifical Christmas trees. They are going to need someplace to erect it this Christmas.
I love Wisconsin…it’s a beautiful state. Most unfortunately, the cheeseheads (as we’re fondly refer as) did not get the housing memo!
Went out this weekend to look at open houses and the prices
drum roll…………………..
Are still 04-05. Sigh.
Maybe more MSM coverage will get them thinking.
Give it the winter. Maybe by spring someone will actually want to move instead of just waiting to hit the lotto.
PLease. THink of the python. Will somone take pity, and grease up its ass?
OT but related to previous thread about Maryland.
Those Ellicott SH#$@tty people who lowered thier price from 749K to 739K or so owe how much on their house? Drum rol, trumpet fanfare, please 299K. That’s right less than 300K and want 750K or 2.5X what they owe. Look up greedy in the dictionary and see their picture.
lmao!
Captain Koons: “The way your dad looked at it, this watch was your birthright. He’d be damned if any slopes gonna put their greasy yellow hands on his boy’s birthright, so he hid it, in the one place he knew he could hide something: his ass. Five long years, he wore this watch up his ass. Then when he died of dysentery, he gave me the watch. I hid this uncomfortable piece of metal up my ass for two years. Then, after seven years, I was sent home to my family. And now, little man, I give the watch to you.”
One of my favorite movies.
“Capitalism inevitably and by virtue of the very logic of its civilization creates, educates and subsidizes a vested interest in social unrest.”
Joseph A. Schumpeter
Everyone:
This guy makes a really good case for why we need to be writing to our Congresspeople tonight. Warning fowl language.
http://market-ticker.denninger.net/
That’s going to be one fat pig in the python if we have millions of houses not getting sold!
“The Pig in the {ython” is the title of an earlier essay on the subprime mess. The dollar amount of resets in June and July 2008 will be greater than all the resets of 2007 in total