No Silver Bullet Will Prevent Prices From Falling Further
Bloomberg reports on New Jersey. “Robert Murray of Middletown, New Jersey, said he didn’t pay enough attention when he took out a five-year adjustable-rate mortgage in 2002. This month, his payments ballooned to $1,800 from $1,300. Because he makes about $90,000 a year, and hasn’t missed a payment, he said he hoped he might be a good candidate to refinance.”
“Since the value of his home has declined from the $265,000 he owes on two mortgages, Murray’s equity has vanished. If Murray were to apply for an FHA-insured refinance, he’d be out of luck. Murray borrowed more than his home is now worth, so he would have to write a check of at least $45,000 to close a refinance. He doesn’t have the cash.”
“‘I’m way upside down,’ Murray said. ‘The payments will kill me now. I don’t know what I’m going to do.’”
“About 48 percent of subprime borrowers wouldn’t qualify to refinance into a mortgage that conforms to the underwriting rules established by government-sponsored agencies, according to a report by UBS AG, Switzerland’s largest bank.”
“‘There are a number of people who have mortgage debt that’s more than the value of their house, and a lot of those people are going to walk away,’ said David Olson, president of Wholesale Access Mortgage Research & Consulting. ‘That will put more homes on the market, which already has too many.’”
“The Federal Reserve’s half-point benchmark interest rate cut yesterday will have little impact on borrowers whose mortgages are adjusting, said Ed Leamer, director of the UCLA Anderson Forecast. ‘It’s not going to alter the housing situation, or clarify defaults and delinquencies,’ Leamer said.”
“Investors seem to be looking to Washington for solutions to subprime problems that may never come, said Andrew Laperriere, a managing director at International Strategy & Investment Group. ‘There is no silver bullet from Washington that will prevent home prices from falling further,’ Laperriere said. ‘A lot of people are operating on a mistaken impression.’”
“‘The myth here is that the resets have been the driver of payment delinquencies, but the fact is if the borrower can’t afford the teaser rate payments, then they can’t afford to ever pay back the loan,’ he said.”
“For now, Murray will struggle to make his monthly payments, foregoing vacations, restaurants and perhaps parochial school for his 5-year-old daughter. He yearns for help from the government.”
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
The Star Ledger from New Jersey. “At least 8,000 of the 143,898 New Jersey borrowers who opted for subprime mortgages went into foreclosure in the first half of this year, state Division of Banking officials said yesterday.”
“Testifying before the Senate Community and Urban Affairs Committee in Trenton, state officials and lenders said another 11,000 of those borrowers are up to three months behind on their mortgage payments.”
“Of the 15,426 first-time foreclosures filed in New Jersey in the first six months of this year, 53 percent involve borrowers with adjustable rate mortgages. Nationally, the figure is 37 percent for the same period. In Newark, 12.7 percent of subprime mortgage holders are more than three months delinquent in their payments.”
“‘If anyone in this room believes that the worst is over in the subprime mortgage fiasco, you are very, very wrong,’ said Phyllis Salowe-Kaye, director of New Jersey Citizen Action. ‘A tsunami of interest rate hikes on thousands of loans is headed our way.’”
The Asbury Park Press from New Jersey. “A state official told a state Senate committee Monday that New Jersey may finally launch a $30 million rescue program for homeowners facing possible foreclosure, but hours later a state spokesman said the program was not yet ready.”
“Jerry Keelen, an official at the New Jersey Housing and Mortgage Finance Agency, told the committee the program is expected to help 150 to 200 homeowners. However, Keelen said, some 1,600 residents have already contacted the state about signing up for the program, which was initially announced in May.”
The Telegram & Gazette from Massachusetts. “Lenders filed 1,370 foreclosure notices against Worcester homeowners over an 18-month period ending in June, giving the city a foreclosure notice rate about three times higher than the state’s median rate, according to an analysis by the Massachusetts Housing Partnership.”
“The flurry of foreclosure notices was replicated in towns and cities across the state, arriving largely because homeowners who had refinanced their homes in recent years found themselves with unmanageable loans, said Clark L. Ziegler, executive director of the Massachusetts Housing Partnership.”
“‘Their loan terms were probably terms they never could’ve made,’ Mr. Ziegler said. ‘The loans were in trouble the day they were made.’”
“The analysis ranked Worcester ninth among the state’s top 10 communities with the highest foreclosure rates. Lawrence ranked first. Central Massachusetts communities on the list included Fitchburg, which was ranked fourth, and Athol, ranked seventh.”
“A common problem, housing experts said, is that homeowners refinanced multiple times with adjustable rate mortgages, sometimes with little understanding of the agreements they were signing and treating their homes like cash machines.”
“One analysis the agency did of nine homes in the Bell Hill neighborhood showed that homeowners took out high-rate loans with no down payments; agreed to adjustable rate mortgages, or ARMs, with rates going up to nearly 18 percent; and refinanced multiple times for larger and larger amounts.”
“The story is the same in other Worcester neighborhoods, according to local housing officials.”
“‘It’s pandemic,’ said Miguel A. Rivera, lending director for Worcester Community Housing Resources Inc. ‘It crosses all geographies, all stereotypes.’”
“Trouble could continue for the next two years, according to Mr. Ziegler. ARMs on about 200 more Worcester homes are scheduled to reset before the end of this year, he said. About 1,000 more ARMs reset in Worcester next year, followed by 1,000 more in 2009, he said.”
“Mortgage proceedings seem to get stuck in a bureaucracy that well-intentioned outsiders cannot alter, according to Dominick Marcigliano, executive director of the Worcester East Side Community Development Corp. Inc. ”
“The CDC recently tried to buy a foreclosed property next to its Shrewsbury Street offices, offering $320,000 to the mortgage holder only to be rebuffed, Mr. Marcigliano said. Months later, after the mortgage holder had completed its foreclosure process, including an auction that produced no bids, the CDC bought the property on the open market for the lower price of $280,000.”
“‘Once that process starts, it takes on a life of its own,’ Mr. Marcigliano said.”
The Salem News from Massachusetts. “Diane DiSanto’s small, home-redevelopment business took off as soon as she started it nearly four years ago. First, it was condo renovations in Amesbury, followed by three successful house-to-condo conversion projects in Ipswich and Beverly.”
“Then she bought two single-family homes in Beverly, sank big money into big improvements, and hit a wall. ‘We were buying property, fixing it and flipping it - that was fine,’ said DiSanto’s husband, Lou. ‘But the market tanked around the time we were finished the (Beverly) projects. I think we homeowners are in trouble.’”
“Now, a four-bedroom, white colonial on Dodge Street in Beverly, where they spent $180,000 on renovations, has languished on the market for two years.”
“Diane DiSanto has tried everything. She slashed nearly 25 percent off the original $509,000 asking price, and held an open house last weekend where people could buy on the spot, for ‘$390,000 or better offer,’ she advertised.”
“Still nothing. Now she is considering a lease-to-buy option.”
“The DiSantos of Hamilton are far from alone, according to North Shore real estate figures. ‘Considering when we had the big push a few years ago and multiple offers on properties, the time frame for selling is more lengthy,’ said Juilanna Tache, owner of Tache Real Estate in Salem.”
“Local realtors say it is a long-needed adjustment to inflated house prices, and it has improved the market for buyers.”
“‘I think the market is adjusting necessarily,’ said Steve Archer, co-owner of Keller Williams Realty in Beverly, ‘because it all starts with the first-time home buyer. They get the ball rolling. If first-time home buyers can’t afford to break into the market, then prices have to come down.’”
“The rental market may be harder to track, but anecdotally, rent prices at the large new apartment development at the old Danvers State Hospital site are, on average, $350 less per month than originally advertised. The Web site is also advertising two months free, whereas previously it had been just one month.”
“Brendan Russell and his wife moved to Boston a year ago with the idea that they would buy a house. Now, they are entering their second year of renting a home in Beverly. ‘The half-million sticker price was a big shock when we got here,’ said Russell. ‘We held off on buying and rented. Obviously, we’re renting at mortgage prices, but at least we’re not committed.’ “And they didn’t have to come up with a down payment.”
“Russell was lured to DiSanto’s open house last weekend, but said he’s still uncomfortable with an overall variance in prices. ‘You’ll see a $60,000 to $70,000 difference, and it doesn’t make any sense to me - prices vary so much,’ he said. ‘I think people are hoping the housing market is still there, but as I drive around, I see too many sale signs out.’”
“DiSanto’s other property, a few blocks away, finally sold, after 11/2 years on the market, for $385,000, which was 26 percent less than the original $519,000 asking price. ‘It sold for way under break-even price,’ Lou DiSanto said.”
“‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
Because he makes about $90,000 a year, and hasn’t missed a payment, he said he hoped he might be a good candidate to refinance.”
90 g’s a year and he can’t pay $1,800? That is truly pathetic!
Since the value of his home has declined from the $265,000 he owes on two mortgages, Murray’s equity has vanished. If Murray were to apply for an FHA-insured refinance, he’d be out of luck. Murray borrowed more than his home is now worth, so he would have to write a check of at least $45,000 to close a refinance. He doesn’t have the cash.”
“‘I’m way upside down,’ Murray said. ‘The payments will kill me now. I don’t know what I’m going to do.’”
Am i allowed an “I told you so” at this point?
Yup! Say it loud and proud.
I’m way upside down,’ Murray said. ‘The payments will kill me now”
Let the bodies hit the floor
Let the bodies hit the floor
Let the bodies hit the floor
Let the bodies hit the floor Beaten why for
Can’t take much more
One - Nothing wrong with me
Two - Nothing wrong with me
Three - Nothing wrong with me
Four - Nothing wrong with me
One - Something’s got to give
Two - Something’s got to give
Three - Something’s got to give
Now
Let the bodies hit the floor
Push me again
This is the end
Skin against skin blood and bone
You’re all by yourself but you’re not alone
You wanted in now you’re here
Driven by hate consumed by fear
Let the bodies hit the floor
-Drowning Pool
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
This ahole actually has the cajones to articulate his delusion that the FB’s who bit off more than they could chew and gambled with funny money should have been given a bucket of money for their trouble?
Whiskey, Tango, Foxtrot!!!!!! This guy needs to be slapped, and the person who slaps him should get a running start. :-/
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
I have a better idea, Bob. Keep making those payments and learn from this.
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
You got yourself into this predicament, and it’s everyone else’s problem to bail you out….why?
I bet Murray got a nice car or truck and some sweet vacations thanks to the magic of cash-out refi. Boo effing hoo.
Yeah, if he’d used all that money for cancer treatment or something the article would have mentioned it. And he probably does have plenty of credit card debt.
I’m on the same page. How the frack can someone making $90k not make the payments on a $265k home!?! Something is missing here. I agree the article would have mentioned any justifiable sob story. So where did the money go? RV? Boat? Truck? Drugs? Gambling/Sex addiction?
Or is this man like my cousin who has a pair of home theaters that are awesome! Actually, two of my cousins are like that… funny thing is one has an income three times the other and they live the same lifestyle. Hmmm…. You get one guess which one threw about the same as my life savings into non-US currency investments and which one has four credit cards maxed out.
Love my family. But we’re half sane and half not.
Got popcorn?
Neil
I think I am more ticked that he actually expects the tax payer to help him out. Give me a break.
““The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
Indeed the taxpayers will bail him out: Free public education, genuine certified teachers in fine buildings.
If an ARM reset delivers a child from parochial school, so much the better.
Oh, right - Middletown is a very nice place in Monmouth County, near Red Bank. She’s not exactly facing downtown Cleveland.
“If an ARM reset delivers a child from parochial school, so much the better.”
SAY WHAT? So I should send my kid to the crime ridden, gang and drug infested failing public school?
Sorry, but exposing a child to that is child abuse, as far as I’m concerned. And no my kid does NOT go to a parochial school.
“The Kindergarten Gangs of Middletown NJ” - tonight on Fox News Channel
5 year old crackheads with attitude!
I’d love to see a blog w/ the HBB side of these ’sob’ stories - just what these people did with the refi money, maybe their settlement papers w/ their initials right next to the ARM language, and maybe details about all the money a lot of these flippers/gamblers made from 2000-2005/6.
The ’sob story’ spin is getting so tiresome (although admittedly enjoyable still).
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
I could use some of that 62 billion too as long as the FED is going to flush it away
The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
I don’t see how M’s proposal is that different than what is done for the banks. He is solvent, but needs some nearly free money to improve his cash flow temporarily. When an individual espouses the idea, it serves to put a face where there were only faceless entities, and we see how morally bankrupting the idea is.
You beat me to it! Either the mortgage brokers are still at work fudging the numbers or he has 20 maxed out credit cards he’s paying off each month or he’s paying out support for a trophy wife who ran off with the pool boy. In which case he doesn’t deserve $90,000 a year income because he’s an idiot.
For now, Murray will struggle to make his monthly payments, foregoing vacations, restaurants and perhaps parochial school for his 5-year-old daughter…
That’s why everytime I go for a house I factor in my kids education + house payment=mortgage payment..from day one my husband and I made the decision that we wanted private school for the kids..to me..that’s my mortgage payment..the rest that is left is what I can afford for the house payment..(no credit cards, no car payments..that can wait until they grow up!)
So, he takes home about $4k/ month? $1,800 is a big chunk of that. Doesn’t mention what his tax and ins are on top of that. If he is raising kids and has a car payment he was living close to the edge at $1,300 even if there were no extraordinary CCDs.
It’s actually about $5,000.00 per month in take-home pay, and I still don’t understand why he can’t make the mortgage payment. Say the mortgage is $2,200.00 with taxes and insurance. Add in a modest car at $350.00, or even a nice car at $600.00, plus say $500.00 or even $600.00 for food for a family of four, and assume gas and transportation costs of $400.00 per month, and what do you have? $3,550.00. He’s got another $1,500.00 or so to play with. Where is that money going? Does he have a mistress?
In NJ, the RE tax probably adds 500/mo with another 200-300/mo. for insurance. Middletown is pretty close to the shore.
Lights, AC, natural gas/oil, water, sewerage, maybe trash, and a few repairs will push the monthly housing bill over 3K.
And the mortgage interest & tax deduction will drop it down closer to $2K.
I am a family lawyer so I will tell you where it is probably going. The wife found out about the mistress and so he also pays a combined spousal/child support order of $2,500 or more with 90k income. There are over two million family law orders just in Los Angeles County alone. That doesn’t leave much.
He is probably servicing a set of maxed out credit card debt. heck, by your calcs even if he wasn’t maxed out, but only had enough debt to cost him a few hundred a month he is spending everything he makes.
This is why the true cost of living is the real monkey on everyone’s back and housing costs are the biggest chunk of that. If the CPI accounted for the discrepancy between rent and own costs it would show that the US consumer is and has been in trouble for a while.
Come on man. With the monthly $500 jeans, the $800 BMW lease and $50 steaks at Morton’s every week, it’s tough out there.
Yeah, something is fishy, here. His income should be well able to support his mortgage, especially with his deductions. He must be charged to the max on some cards or have more than one car payment or SOMETHING. At any rate, yeah, wouldn’t it be groovy if the government gave us all money so we didn’t have to like, budget, or give up our vacations? I mean, it’s not like those deadbeats that we’re always putting down who get welfare or anything like that — we’re UPSCALE. We deserve this stuff!
I make $82k. I COULD swing that, by why. LOL No thanks, I’m satisfied with my 15 year 5.75% note on $84,000 for $1,176/month with including taxes with 10 years left thanks.
I make $82k. I COULD swing that, by why. LOL No thanks, I’m satisfied with my 15 year 5.75% note on $84,000 for $1,176/month with including taxes with 10 years left thanks.
I paid off my mortgage (30K back in ‘94) in four years while paying $400/month maintenance, making 1/3 of what he is making. I have no sympathy whatsoever for his wimpy yuppy a$$.
“90 g’s a year and he can’t pay $1,800? That is truly pathetic!”
Get with it TX, do the yuppie math: Latte = $6 x 10/week x 50 weeks/year = $3,000.
That’s the Americano life. Eat like a pig, talk with a big mouth yapping like a monkey, spend like an elephant taking a dump, without a penny saved for a rainy day.
What’s with all the anti-American stuff here? This nonsense goes on everywhere. The entire world is obsessed with materialism–even China has been completely infected. So many people on this blog attack Americans, or say how America is the problem, blah, blah, but we’re no worse here than anywhere else. It costs far more to live in London or Paris or Rome than it does to live in New York, and I don’t see people in those cities pinching pennies or denying themselves “luxuries” (especially expensive foods). Credit cards are available everywhere these days, and living on credit–that apparently nobody plans to pay for–is not the American Way, it’s the Terrestrial Way!
True, but how many people on this board live in London, Paris, or Rome? I’d much rather have people here comment on things they know and see everyday, rather than speculate how foreigners live.
Actually, quite a few. Also, I’ve lived in London, and write from experience. Life here is much more comfortable, though I prefer the English climate to Florida’s.
1st thing that jumped out at me, too. $90K/yr and can’t afford the payments. Readjust your priorities, get your sh*t together, get a 2nd job, get rid of all the ostentacious junk and make it work.
Maybe the reporter misheard…. nineteen thousand rather than ninety. Ninety seems a bit high for a “maintenance worker”. Or maybe he is deluded and lied to the reporter just like he did on his re-fi applications.
I lived in Middletown for many years. It has some VERY expensive areas. But also (as its name implies) a LOT of nice (really nice) areas relatively cheap by NY standards given it is only 1 hour away by train from Penn station. The schools are excellent, my daughter graduated from high school there.
In short, it is a good place to live and raise a family. And I do agree something is wrong if $90k isn’t enough to live on with that size mortgage payment there. I’d say the property taxes are probably around $5k-$6k a year plus another k or so for insurance (based on my experiences - accounting for inflation, etc).
Years ago I was making $74k and had a mortgage (PITI) of $1500 a month. Yet, I was able to save up and pay cash for a new BMW (I hate debt) while maxing out my 401k.
Granted, I was single, but the extra $16k he makes should make up for the other folks in the household.
I had an $818 payment that was $1052 with taxes and ins. On $87K a year salary I was able to make an extra $818 payment pretty often to pay my house off early.
90 G’s a year and he has no equity?
But I think one of the points here is that it’s not just the “Sub Prime” people going belly up.
It’s also the “AAA” people (high income and good credit) that also over extended!
Do these “homeowners” seeking government help, sometimes in the hundreds of thousands of dollars each, realize that by taking such money they are, in effect, getting welfare on a massive scale, and that the guy next door and across the street is paying for it? One would think they’d be mortified.
Where have you been living?! This is America 2007. They couldn’t care less where the money is coming from. It’s the same color wherever it comes from. Corporations get government welfare - they figure the tax payer feeding trough is available to everyone.
Indeed, We in America live in the land of debtoholics.They need special treatment.
Problem is when you don’t have debt..people look at you and say “How do you survive?”..I tell them “very nicely and I sleep well at night”…
Corporations get government welfare - they figure the tax payer feeding trough is available to everyone.
Actually, American corporations pay some of the highest taxes in the world - and this includes Europe.
For that matter, I hate the term tax breaks. When the government does not take your money via tax, I don’t think such a break keeping your own money.
“Murray said the Fed should do the same for borrowers. ‘If they gave us that money…”
…you’d be back asking for more inside of a year!
You make $90k/yr. and you are still a complete and utter failure - begging for charity worse than a windshield smearing drifter at the bottom of an expressway exit ramp.
Yeah, I’ve been put on high puke alert status these days. I’ve notified everybody they need to stand at least five feet away from me lest I splash them inadvertently.
Dude, they’re nihilists. They believe in nothing.
Nihilism? Must be exhausting.
Nail hits head.
Hammer hits nail on head.
Guess I wasn’t quite quick enough to correct my mangled usage. Nails hitting heads is a form of nail-on-nail violence.
Nihilists? Damn. Say what you want about the tenets of National Socialism but at least it’s an ethos!
“He yearns for help from the government.”
Same greedy little monkey. At 90k, he’s a potential welfare case. So get all the secretaries making 30k and renting to bail him out.
“If they gave us that money, we’d be able to be out of this predicament,” he said.
Is this guy Radar O’reilly? Does he hear Ben’s choppers in the distance or is it just pathetic wishful thinking on his part?
How can an a**hat like this guy be making 90K a year have the gall to be begging for handouts from the treasury? Scum sucking pigs like these need to financially slaughtered along with all the Boyz on wall street.
Let us hope that Hunter S. Thompson’s classic line “The pigs are in the tunnel” comes to bloody fruition.
C’mon, spike, be nice, his daughter has to go to parochial school.
And he still wants to go out to eat and on vacations!
What an @sshole. If he can afford such luxuries in the first place, the government should not be helping him at all.
Kids are going without health care while this idiot screams for mortgage help so HIS kids can continue going to private school.
I refuse to be nice to some hound with a 90k “maintenance” job who’s looking for a hand-out. Even money says he’s a janitor with the NYC public schools-with OT, and a tough union, those guys average just under 100k.
Besides, his daughter belongs in public school. So she can mingle with her peers…the other welfare kids. She’ll learn the ropes.
Renters are, by definition, bad people, and should be forced to bail out all of the good people home owners. Don’t you want to foster home ownership, and the “pride” that goes with it?
“Owners” : inside castle : Royalty (by divine right)
Renters : outside castle : Peasants (suckers)
Peasants work the fields, are frugal, save their coins
Royalty strokes off and collects (steals) from Peasants to pay for it.
Had enough yet?
Washington should save that silver bullet for greedy slobs like Murray. Silver bullets - not just for the Wolfman anymore.
I thought the silver price is too high these days, they will have to downgrade to silver plated zink bullets instead.
Tell you what, Murray. Why don’t you yearn in one hand and spit in the other…
We the taxpayer have also given entitlements to corporations. So why are we surprised when someone expects the same treatment? Is this not the American Way?
“Since the value of his home has declined from the $265,000 he owes on two mortgages, Murray’s equity has vanished.”
He bought in 2002 and he’s underwater? He just magically lost 5 years of appreciation? Or did the reporter miss something? Hmm.
He’s got 2 mortgages.
House was a cash cow, until the resets.
Now he wants free money from the taxpayers.
This is the new America. A bunch of theives stealing from the government with a sense of “entitlement”.
Why not, we gave out “entitlements” to lazy welfare trash for years, while others paid the bill.
For bailouts let’s eliminate:
1)speculators
2)2nd home owners
3)buyers with bad credit
4)buyers with no downpayment
5)buyers with equity loans
6)buyers whose income to home loan ratio is more than 3-3 1/2%
7)buyers who lied on their loan docs
8)buyers who can’t even qualify for the first reset
Now there’s probably 10 people left in the whole US that deserve bailing out
“Why not, we gave out “entitlements” to lazy welfare trash for years,”
Come on, most “welfare”, i.e. government hand outs go to the wealthy and corporations. Surely you have become aware of that over the past couple days.
“‘The myth here is that the resets have been the driver of payment delinquencies, but the fact is if the borrower can’t afford the teaser rate payments, then they can’t afford to ever pay back the loan,’ he said.”
I believe this is where the taxpayer-funded FHA guarantees of loans over $500K would come into play. When the low-income buyer gets foreclosed, the FHA guarantee will make the pigmen who loaned the money whole again.
The loans won’t appraise and the incomes won’t qualify. The law hasn’t passed and the FB hasn’t applied for the refi. I try not to worry about something that doesn’t exist.
Yes, but i don’t like the whole concept, or even the discussion.
YOU borrowed $100k’s under the following terms and conditions. Here is the bill. Make the payment.
Couldn’t make the “new” payment agreed to as part of the “low” starter payment? Too Bad.
It’s not my problem. Pack your bags, vacate the house and go rent something you can afford.
Or, get a refrigerator box and go live under a bridge. 90K, more than about 95% of the world’s people and he wants a hand-out. Man has neither decency nor a sense of shame.
Precisely. It’s all talk to get people elected. The FB’s will be long gone by the time some watered down version ever gets passed.
Thanks for your coolheaded judgment, Ben.
Yep, once again, no worries for bail-outs in FB land. Now, if we see the conforming loan limit rise along with a proposal to make LTV requirement rise to 125%, and then add to that a DTI requirement that exceeds 50%, then it’s time to start freaking out. But, as you and I both know, this will never happen. The FB’s will continue to rot.
It looks to me as the FED is bailing out the banks who can then afford to sit on all these upsidedown homes and wait for better times. Problem is empty homes don’t maintain themselves very well. I don’t know what they are going to do its a mess.
If you wait until after they pass the bailout bill then it’s too late.
Murray borrowed more than his home is now worth,
This is serious shit people. I remember when I was very young I asked my dad about the depression. The first thing he said(he lived through it as a boy) was that people owed more on thier houses than they were worth and alot of people just walked away from them. I wonder if this will happen again-could get very ugly.
Also I think what Bernanke did yesterday was unconscionable. A quarter point would have been one thing but he has totally lost control and buckled to pressure of banks, brokers etc. Does’nt he realize that these lower rates are what caused the mess we are in now. Sometimes a little pain is inevitable to avoid alot of pain down the road. Unfortunately we are in this mentality now where every thing must be perfect whether the times warrant it of not, we no longer have the stomach for a little inconvenience-so put the pain, debt, unemployment off until tommorrow, or in Bernankes case , the next guy(next chump).
Does’nt he realize that these lower rates are what caused the mess we are in now.
C’mon folks, he’s not stupid.
He certainly realizes that lower rates + lower standards on mortgages were giant contributors to the bubble. The underlying problem was that long-term rates came unhinged from the Fed rate. (Mortgages at +0.5% of the Fed Funds Rate? Huh? Who on earth thought that was a good return on risk?)
He can lower the rate to 0% now and it will have a minimal effect on the housing shakeout. An upside-down mortgage is still upside down no matter what the rate.
His goal is to prevent the greater economy from going down with it. Personally, I think 0.25% would have been the right number to start with, but I’m not in charge now am I?
I see the 50 bp cut as an indication that the trouble with the banks is a lot more severe than we’ve otherwise been led to believe.
Then why did they wait for a scheduled meeting rather than an intermeeting cut?
Could it be because the meeting was closer to OPTION EXPIRATION?
Maybe. But I think it’s more likely that he wanted to make a strong move on schedule. A strong move off schedule would have sent a panic message, would would have effects opposite to enhancing confidence.
The options traders know perfectly well that a fed meeting is going to happen, and they’re just asleep if they don’t price for increased volatility.
I agree. I’d not be surprised if the conversations going on behind closed doors on Wall Street and the Fed are far more alarming than what is reported. I look at the rate cut as one of two things: Balloon the stock market up as much as possible in preparation for the inevitable fall because frankly I think at this point a recession is totally unavoidable given the fact that personal debt is what drove the credit crunch to start with. That problem has not gone away. People are still very heavily in debt up to their necks.
Either that or perhaps they actually had the wishful hope that by cutting rates, the market would somehow steam through the mess unscathed.
Balloon the stock market up
I agree. I think they are quite happy to goose asset prices at this point, because there is going to be quite a few sectors experiencing deflating prices. Which is why we’re all reading Ben’s blog, no?
the market would somehow steam through the mess unscathed
I doubt it. You can’t look at the lenders, resales, new home numbers, etc, and think that’s there’s a happy ending to all of that.
Ditto - it’s a heck of a lot worse than the MSM is leading on and this dovetails with my next opinion: (please don’t blast me for it), but I also think that Cramer’s meltdown was genuine. The boy has/had a sense as to the real exposure of Wall Street to this housing house of cards. His message and tactic was very similar to someone organizing an angry mob to march down to city hall - nothing really could be accomplished by it other than trying to intimidate Helicopter Ben and influence future policy decisions.
anyone on this blog that thinks the Fed or anyone in Washington or Wall Street can make house prices levitate is sadly mistaken.
when you can’t do the math, you have no future
welcome to America circa 2007
“His goal is to prevent the greater economy from going down with it. Personally, I think 0.25% would have been the right number to start with, but I’m not in charge now am I?”
No, No, NO…that is not what he is doing. He is bailing out rich a-hole hedge fund managers and the bankster enablers who were 10x levered on CDOs and other such garbage and now are getting caught short. Borrowing short term and lending long term is a losing strategy every time…ask the North Rock execs about that one…..
who were 10x levered on CDOs
How on earth would a lower interest rate help a mortgage-backed CDO? Are you saying that buyers are now going to appear in order to bid up CDO prices?
Those holders are toast even at 0%.
A mortgage-back security with a fixed rate on it might not look marketable if the rate is too close to the going fed funds rate — there’s not enough risk premium involved.
If the fed funds rate is lowered, the risk premium is increased because the mortgage-backed security’s rate stay the same, thus making the security a bit more attractive.
I’m aware of that. My point was that the underlying securities are now viewed as highly-overrated by S&P (and perhaps even fraudulent). So the net effect is that the CDOs will be boosted by a small amount, but nothing close to what is needed for preventing loan covenants clauses from kicking in.
Those guys are done. Stick a fork in ‘em. They won’t return until somebody creates an honest ratings system.
IMHO, right now, lenders (banks) are seizing up. There modus operandi has been to lend money to FB, bundle the mortgages into MBSs and sell them, thus getting a new pile of money to lend. This takes the loans off book, and allows them to ‘pass the trash’ (aka poor and over-rated- literally- mortgage pools). They make the money not off the difference between depositors’ and mortgage interest, but instead off of the churn (selling the mortgage pools). Now that game is over because they can’t sell the mortgage pools. How do you keep the game going? You CAN convert the MBSs to cash (at 95% of par) by using them as collateral and borrowing at the discount window. This keeps the banks alive for now, and they can make a good bit of cash on the difference between the discount window rate and the mortgage rates. The big change is not the lowering interest rates- it was the shift from overnight lending to longer term lending that went into effect at the last meeting. If worse comes to worse (and I think it will…), when the banks explode, the taxpayer will be left with a big pile of MBSs that are unsalable. But for now, it will keep the party going. In this case, a lower discount rate could stimulate the banks to drop mortgage rates to try to grab at least some of the remaining mortgage action. The big question will be, how much activity is going on in the 2ndary discount window? And how long will the Fed allow banks to roll over the loans? For this to ‘work’, even in the short term, the Fed will have to implicitly agree to keep rolling over these short term loans to make them into long term loans. (Note: as long as the MBS are not marked to market, they do count as 95% of par as collateral, which is WAY more than the banks could in cash for these, now, IMHO.
FYI:
“Please Note: On August 17, 2007, the primary credit program was temporarily changed to allow primary credit loans for terms of up to 30 days, rather than overnight or for very short terms as before. These terms will remain available until the Federal Reserve determines that market liquidity has improved.”
http://www.frbdiscountwindow.org/started.cfm?genid=12&desc=Getting%20Started&url=started.cfm
Your question specifically was: How on earth would a lower interest rate help a mortgage-backed CDO? Are you saying that buyers are now going to appear in order to bid up CDO prices?
And so of course the CDO prices are helped (as I pointed out) though not to face value, so they are still in the toilet (as you pointed out). This will only be on the margins that any of these things will be saved. There is little chance that any of the riskiest tranches that are vastly, and rightly, devalued right now will recover to anything like their original pricing. Some won’t even recover if the fed rate were 0%.
buckled to pressure of banks, brokers ??
Nah……It was the big homebuilders that got the juice…..Is it any coincidence that “ALL” the major home builders had a emergency summit with T Sec Paulson just a week ago ?? The word came down the pipeline to all those Fed governors & BB that you better do something and it better be big….It kind of makes you wonder who really runs this country….
I made a nice chunk of change off of the CFC pop.
I feel dirty….
So did I. I don’t.
The Federal Reserve is OWNED by its member banks. No matter what they say, the FED will act in the best interests of its owners.
Why do you speak in the past tense? There is absolutely nothing to indicate that he will not to this again. If anything, to the contrary.
I’ve noticed a trend here.
Your pain posts for coastal markets tend to feature places on the fringe of metro areas, far from the CBD, in exurban areas. Salem and Worcester are hardly a short commute from Downtown Boston, while Asbury Park and Middletown are way out from Manhattan.
In the Midwest and South, on the other hand, the pain posts seem to come from inner-city areas, or close-in suburbs.
In Florida the pain is everywhere.
Might be indicative of the relative price declines within regions.
“Might be indicative of the relative price declines within regions.”
I was wondering about that yesterday. I regularly cruise the Tampa Bay Craigslist real estate, just to see what’s going on. On any given day, at least three or more pages of listings for sale and rentals are pretty plentiful as well. In the past couple of days, I was looking at the Jax Craigslist to help a buddy find an apartment in St. Augustine. There’s practically NOTHING available in St. Augustine and I was shocked, I tell you, shocked! I don’t know the reason for this, but I remember reading stories about how Duval County was one of the fastest growing counties in the country at the height of the bubble. So I expected to see similar things happening like in the Tampa Bay area, but no go. Weird.
ST. Augustine is a very small town.
There are plenty of listings for Jax/Jax Beach, and some for St. Augustine, also.
Very few people use Craigslist, compared to the general population. In places like Tampa, with about 2 million people regionally, the listings include the region all the way to Orlando.
Check out the number or RV’s for sale in St. Augustine. I did. There is ONE.
It’s not an anomoly in the market, it’s simply the small number of people in the area that use the site.
Thanks, diogenes. Although I must say, Jax does look thin on Craigslist, too, compared to Tampa.
Part of this is the ratio of income/housing price for a given area.
Florida is more out of whack than any other section of the country aside from the inland empire.
I saw a house for sale in Central FL yesterday that was for sale for $499,000,but they would rent it for $1500/mo. Someone’s losing a lot of money.
I live within spitting distance of Middleton and by ferry the commute is 35 minutes to the financial district and 45 to midtown. The majority of my friends in the area all commute to NYC. I can see the city from my house.
I just checked the ferry schedule and I’m short by about 10 minutes.
http://tinyurl.com/2pr8xw
Btw, nice established Miami neighbourhoods (Pinecrest, Coral Gables, South Miami to some extent) are doing fine. Reductions are perhaps 5% from the peak (mid-2006 prices), and 700k-1m houses in these areas are still selling.
Perhaps the credit crunch will kill the market in these areas as well, though after observing it for 1.5 years I start to doubt it.
The exurbs (Homestead, West Kendall etc) are indeed toast. Nothing moving over there.
Downtowns in the older cities tend to have less owner occupied, & less turnover. Plus, there’s no annexation. You could drop Boston into Indianapolis or OKC and barely make a splash.
“For now, Murray will struggle to make his monthly payments, foregoing vacations, restaurants and perhaps parochial school for his 5-year-old daughter. He yearns for help from the government.”
Hey, this is how I lead my life. No expensive vacations to Europe, no cash-out refis for toys (bet that’s why Murray is now underwater), no expensive restaurants. Yet I manage to pay my monthly mortgage payments. So why should I (i.e., people who fund the government) pay for his lifestyle?
I delved into the article a bit more and was sooooo sorry I did. Here’s a bit more…warning…may cause head to explode.
For now, Murray will struggle to make his monthly payments, foregoing vacations, restaurants and perhaps parochial school for his 5-year-old daughter. He yearns for help from the government.
The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers.
“If they gave us that money, we’d be able to be out of this predicament,” he said.
GAVE us that money!!!! Predicament!!!! Excuse me…I’ve got to put the flames in my hair out.
Leigh
He does have help from the government. It’s called public school.
How dare you suggest sacrifice at a time like this!
I have always said when my family is doing well financially the whole economy is great. I think the government should stop fooling around with interest rates and bail outs and just give me some money and watch the economy improve.
‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
The failed flippers lament. Now that we can’t ream you for every last penny, get off the sidelines and buy this POS. You don’t expect us to take a loss on a failed business venture, do you?
No kidding. I could care less if they survive. If it doesn’t make financial sense to me at your price, if I want it, I’ll buy it from your lender.
It’s really about survival for buyers, too.
Missing a falling knife contributes to non-survival.
You mean that $1000 paint job doesn’t have an “added Value” of $10,000 anymore ? What is the world coming to ?
It’s called risk honey…”Nothing in live is a sure thing!”
Quote:
#####
‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
The failed flippers lament. Now that we can’t ream you for every last penny, get off the sidelines and buy this POS. You don’t expect us to take a loss on a failed business venture, do you?
#####
I think all upside-down houses SELLER should die like a dog got run over by an 18-wheeler truck. This world has over 6 billions people so a few sellers dying out like a dog probably will help to ease the load of world over-population.
It’s not about greed anymore? OK, that’s nice. Doesn’t change a thing, though. That just means we wait for your house to show up as a REO — and the lender can lower as much as it needs to.
That’s been my plan all along. Right now an REO = 20% discount and we’ve barely got started here.
This is what I’m talkin’ about. A bank REO listed on the MLS today for $373,900. It sold in 2005 for $525,000. $150k haircut right off the top.
http://tinyurl.com/yo6ukd
Does anyone know what’s with the prices of the REO’s all ending in 900?
It is divisible by 3. Chinese good luck. Maybe they are trying to attract Chinese buyers of these POS’s.
alright guys, this is not about playing games anymore.
This is about people’s lives!
haha, oh, so now that’s not so easy, you want a level playing field?
Okay, it will get level as soon at it hits bottom. Just hold on a little longer. Another flipper caught in a tuna net!
“‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
Greed is what got you and all of the other flippers there. So how can you separate greed from the equation?
Funny how they are rich, greedy snobs on the way up and saints on the way down.
“‘I think the market is adjusting necessarily,’ said Steve Archer, co-owner of Keller Williams Realty in Beverly, ‘because it all starts with the first-time home buyer. They get the ball rolling. If first-time home buyers can’t afford to break into the market, then prices have to come down.’”
————————————————————–
Is it me or do these AssHat rea-turds attempt to talk themselves into the farce that once marginal buyers enter, prices will skyrocket again?
Giving him the benefit of the doubt, maybe he’s just saying that once prices plummet, sales numbers, not prices, will begin to pick up again. I think that is a relatively fair assumption. If he thinks prices are going to skyrocket again, he’s sniffing glue.
I don’t even think that’s going to happen. The sales numbers did not reflect that actual need for housing, they reflected the volume of trading that was the bubble. Sales number won’t be coming back either because flipping won’t be coming back and people won’t be ‘needing’ (or able to afford) multiple homes.
I agree that it will be a cold day in hell before you start seeing volume like 2004-2005. Volume has fallen by greater than half since the ‘05 peak here in Tampa. But once prices come back in line with income, I think that a return to a “normal” non-speculative sales pace will occur. Sales have almost completely dried up here.
Right, and take note of the comment by DiSanto’s husband, Lou. ‘But the market tanked around the time we were finished the (Beverly) projects. I think we homeowners are in trouble.’”
Grrr, sorry buddy, but don’t call yourself a “homeowner”. You were a speculator and a terrible one at that.
I’m very confused this morning. I’m not even going to get into BB and the FED, but will give you a couple local observations relative to the story above.
House 1) Danvers Ma. Clustered neighborhood of 40yr old capes esimated value of homes on the street 300K ish. REO at end of road with view of harbor\river. REO asking 549K. Looks like nice home approx 2500sf but way out of place in this neighborhood. Just closed for 510K.
House 2) Danvers quiet residential neighborhood. approx 1/2 acre lot. Semi run down ranch approx 2000 sf. Property totally overgrown. The property across the street is by far in the worst condition of any house I have ever seen that was still being lived in. Literally falling down. I’m thinking the REO might be a good candidate to slip through the cracks and be gotten cheap. NO WAY. Closed last month for 470K.
House 3) Peabody, Nice like new 3000sf home on small lot on a busy street. A flip not a REO. Asking 499K. I’m not really interested but a somewhat reasonable price. Sold 475K.
We make good money, have little debt but have no interest in carrying a 350-400K note. Who the heck is buying these homes?
Their initials are G.F.
Judging from what I hear from friends, etc. there’s a lot of talk similar to “the market will pick up again next spring, and this is a good time to grab a bargain”.
Two silent springs so far - I guess the third’s the charm, huh? Yes, that rationalization plays well here in Chicago too.
Someone above posted about the pain level relative to geographical area. I think that folks in FLA, LV, AZ, pretty much see the handwriting on the wall. But residents in big-city metros seem to think they are immune from a housing price freefall. Especially in these parts where people are starting to believe the “Philadelphia is the Sixth Borough” claptrap.
So, according to them, they have to seize this great buying opportunity because they’ll never again see it in their lifetime. And my friends and associates still shake their heads in pity when I tell them I’m looking for another rental, not a purchase.
Ugh! Don’t remind me about that “Philly is the sixth borough”!! Now I got to start therapy again!
6th borough: Fairfield County, CT
7th borough: North Jersey
8th borough: Long Island
9th borough: NE Penna (E. Stroudsburg area)
10th borough: Killington, Vermont
First of all, Philly ain’t even in the top ten. Now I just remembered a quote from that article…”Philly is the same as New York City, only different!”. (head exploding).
Phillygal,
I’m renting in the Philly Burbs as well. Not buying when the lease expires in the Spring. Sellers here still are in denial but I am starting to see more and more REO’s. It won’t be pretty for sellers here in the near future. It’s just taking a bit longer to play out.
Stand by for heavy rolls while the ship comes about.
The American dollar is weak today compared to many other foreign currencies. In addition, American banks offer very creative loan financing and low interest rates. As a result, many foreigners are looking to invest their money in American real estate. And don’t forget that a full 1/3 of the worlds millionaires live in the United states. There’s alot of people with alot of money out there. Got a few hours? Goggle Earth random areas of the U.S. and look at the mansions that dot this great land. Look around in the Hollywood hills if you really want to see how poverty sucks.
“….many foreigners are looking to invest their money in American real estate…”
Maybe, but not in Single family houses. LOL
We can’t even rebuild New Orleans
Just got confirmation that 1 more 400-600K home I was watching closed and 2 more are under agreement. That’s 4 closed and 2 under agreement in the last 6 or 8 weeks all in a 5 mile radius. I knew I’d have to let a few nice homes pass by but this a little disconcerting.
Tunnel vision buyers. All they know is they want the house and think they can afford the payment. And, of course, “renting is throwing money away”. I have some friends who closed a little over a month ago in a new subdivsion in Lathrop CA. He’s military and works in the SF Bay area, a brutal 1.5 hr commute each way with no traffic. His tour lasts 3 years, then he’ll get orders to what could be anywhere in the U.S. or possibly, over seas. These are very decent, hard working, intellegent people, that just seem to choose to ignore the big picture.
From what I have seen, people here want to become “homeowners” no matter what. If they can get a mortgage, they will buy a house rather than rent even if renting makes economic sense. Actually most people can’t do math anyway. So, the madness continues. “Buy now, before the prices start to rise in the spring,” is what I have started to hear during casual conversation with friends and strangers. I live in te southshore of MA.
I’m late to the party, WantsOut, so I hope you see this.
You don’t need to wonder in Mass. “who’s buying these homes.” You can just look online–Google the Mass. Registry of Deeds, and pick your county. Choose the “By Property” tab, and type in the address.
I just did this on recent purchases in Davis Square and nearby areas.
Every single one has a HUGE mortgage. One sucker only put $30K down!
In a year or two, I just might pick up all these properties at once. For cash, of course.
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
Okay, I have been in a pretty good mood lately, and my Joshua trees have been gathering dust, but along comes Murray. Time to head for the JT cache and pick myself out a beauty.
No doubt. I almost screamed at my screen when I read that one.
” Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
No, wait, the FED should give money to everyone, so we can go out and buy stuff like CNBC says to do.
I don’t totally disagree with the guy, why NOT give him and every other citizen (like ME) some money, if they can give it to Wall Street and the Banksters? Even Murray deserves it more than they do.
They didn’t just give them money, they gave them a loan backed with collateral. Last I checked there were still lots of places that will give you a loan.
And the collateral was the banks’ mortgage loan portfolio. We know how much that is worth since FBs are at the other end to support it.
Like it or not, tax payer’s own the collateral in the end. So, yes, the banks were handed some free money. Risk has been repriced! Treasury secretary wants the debt ceiling raised from about 9 trillion to 10 trillion. Fifth increase requested under this President.
The collateral only really matters, If the bank doesn’t pay back the short term, usually overnight, loan. Secondly there’s a very big difference between Agency MBS and non-Agency MBS (the Fed only accepts the former).
Cheap money isn’t free.
My understanding was the “discount window” will accept any loan documents including boat loans.
Correct. Sadly.
No, no, no! You don’t get how the system is supposed to work. If you gave gov’t money to the general unwashed population, they could actually spend some before all of the prices were inflated. You are SUPPOSED to give the money to the bankers first. Then, eventually it trickles down to the unwashed masses after prices have reset higher. Who’s side are you on, anyway?
‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
Gives it to us, hobbitses! Gives us the precious!
What the hey. We forgave 100% of Iraq debt didn’t we? Why can’t we do it here. All current mortgage holders debt will be forgiven. New mortgages closed on or after Jan 1st 2008 will be required to make full payment per terms of said contract. Who’s with me??!?
“We forgave 100% of Iraq debt didn’t we?”
Sure, our gov is really good at handing out debt forgiveness and aid (our money) abroad and benefits to illegals at home. Wanna shore up the economy? Shut down all debt forgiveness and cut off every bit of foreign aid, NOW.
It isn’t foreign aid it’s domestic aid. Look at Fig 10 pg 20. That includes Iraq debt forgiveness and reconstruction. Cutting 1% of the budget doesn’t really get anywhere. I’ve always found it odd that aside from peacniks, 90% of the compliaints are about programs in the 14% other (+foreign aid) vs the 86% of the budget that really is the cost of government. While highways, bridges to nowhere, and ketchup studies are an easy to highlight example it’s defense, social security, welfare (kindly labeled income security), medicare, and health (HHD), that are most of the real outlays.
I’d bet that that 1% goes a lot further toward furthering our nations goals, than cutting all entitlement payments by 4%.
http://fpc.state.gov/documents/organization/31987.pdf
Chart on page 22.
Wanna shore up the economy? Shut down all debt forgiveness and cut off every bit of foreign aid, NOW.
Or maybe stop spending hundreds of billions of dollars on wars without an exit strategy?
Hell, they can’t even account $9 billion dollars in Iraq — no idea where it’s gone. Poof.
Whiskey Tango Foxtrot?
(A hat tip to whoever introduced me to that fine phrase the other day.)
should be “account FOR $9 billion in Iraq …”
Well, they spend about $9B a month don’t they? And, we’ve been at it for about 54 mos., right? To a politician that’s a pretty good track record. After all, they’re only humans (who demand superhuman adoration).
Someone making 90K who can’t make a payment of 1800 is flatout stupid. I’m embarassed to say this but I have some relatives who are in a similar boat. They make 120K or so and they have total debts of around 220K, and they can’t even pay their bills on time sometimes. They work in your typical yuppie jobs but every weekend they fight and kick and scream over money yet they go out all the time (to Perkins of all places) and have run up around 50K in plastic. The people who make gobs of money but blow it out like water obviously are either completely stupid or they’re in a situation where they need to walk away from it all. I wouldn’t take these types seriously on anything.
If you make 90K a year, it should be a reasonable expectation that you are bright enough to READ WHAT YOU SIGN.
Bailouts for higher-income taxpayers. Sheesh. I may have some sympathy for some folks, but not for the likes of him.
Let’s see, he makes $90k in NJ - who wants to bet some thug public sector union has a role in him making that awfully generous wage?
We drove through a construction site yesterday morning then back through that afternoon. There was a lone “Traffic Alert Engineer” holding a SLOW sign at one end of the zone. I wondered why they didn’t put that sign in a tripod and let it sit there, unassisted? I’m fairly sure the construction company could have recouped the cost of that tripod in only two hours for what the paid that TAE.
My newphew just got a construction job that pays him $38 per hour (prevailing wage). This kid has been in the county lockup (twice) is a high school dropout and can almost spell his own name. Yes I realize his job won’t last but $38 per hour?!? Come on!!!
“That will put more homes on the market, which already has too many.”
What is “too many” homes on the market? As a potential buyer, and seeing where prices currently are, I think that there are “not enough” houses on the market. From who’s perspective are there “too many” houses for sale?
Good, point. Is he suggesting people just hold empty houses for the greater good?
Lower housing prices are better for younger generations, and worse for those who want to suck every dime out of their future. The assumption that higher asset prices are good just betrays a bias.
The same is true for stocks. High prices are better for those selling to go on cruises, worse to those saving because they diminish future returns. The stock market just got worse for me, not better.
Air force target practice.
The Fed’s generous rate cut to help FB’s was pure b.s About as true as Bush’s war to bring, “Freedom and democracy to the middle east.” The illegal invasion of Iraq was about stealing and controlling another countries oil. Nothing else. The US has almost run out of oil and oil (not God) made America a powerhouse. In order to stay ahead America needs oil and lots of it. There’s no oil in Darfur - so fu*k ‘em.
This rate cut was to help The Financial Gangsters of Wall Street. Nothing else. I can guarantee that Bernanke and one of Wall Street’s several Godfather’s, Hank Paulson, had long talks on how best to help the bankers and the Wall Street Gangsters. Then they passed the subject over to those who put together government “spin” which is then passed onto the governments publicity outlets. CBS, NBC, ABC, CNN and of course, Bush and Cheney’s favorite news outlet Faux News. The Iraq sound bite was “Freedom and Democracy,” b.s. The rate cut sound bite was, “Help for ordinary Americans,” b.s (lol) More soft brain washing.
I am going to say this one more time because it is important: the Federal Reserve is OWNED by its member banks. No matter what they say, the FED will always act in the interest of its owners. How could it do otherwise?
‘It sold for way under break-even price,’ Lou DiSanto said.”
But Lou, at least it didn’t go below market price.
“‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
Buyers don’t care. We just want rock bottom, that’s all. It’s about survival for us.
Is Diane suggesting we open up our hearts AND our pocketbooks? Is that part of the free market system now? Gee, let’s call up Wall Street and ask them if compassion and kindness are part of their workplace ethics.
Not according to Kramer. Forget the kindness and ethics. Make your money and then donate to your favorite charity.
For the tax break.
This is greed turning to fear and it’s not pretty. We’re just starting to see the turn since fear is far stronger than greed, but he hasn’t moved beyond the “bargaining” phase yet.
‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
Yes, it is still about greed but the roles have reversed. It’s the buyers opportunity now. The sellers had theirs and took great advantage of it. Buyers will now do the same.
“Sell now or be locked in forever!”
Wow!
http://www.thenation.com/blogs/notion?pid=233482
Wow is right. Savage but deserved.
not savage enough. Greedspin will be the most vilified Central Banker in the world’s history and will be second only to BB in the public’s collective distaste. There is a special place in Hell for the lying like of AG and BB.
Interesting watching Mr. Magoo being interviewed. Safe, nice questions by the person conducting the interview (in this case Leslie Stahl of CBS) made Magoo smile and sometimes almost giggle like a school girl. However, when she asked questions which he didn’t like, Magoo pouted and at times looked downright angry and pissed off that she brought up a subject he didn’t want brought up. Summary: Magoo is just another ego maniac Washington Hack who was drunk on power and now wants to ignore the (massive) problems he created. Next up: George W. Bush after he ends his term doing the same thing.
I think you are correct on both points Mike…..
Especially liked the question about writing his book in
the bathtub. (Wasted maybe a minute of airtime)
Thank God we have tough as nails reporters like
Leslie Stahl asking the questions we all want to hear.
After all, who wants to left off the “A” list of invites
to the next Greenspan dinner party / social hour?
BTW
As I write this, O.J is being sprung out jail. Anyone
want to guess the ratio of (O.J. / interest rate) TV air-time?
100:1?, 1000:1?
Edward R. Murrow must be spinning in his grave.
That “blood for oil” BS has never ceased to amaze me. But that must be why gas is only a dollar a gallon right now. That statement alone is testament to the ignorance running rampant in this country. Greenspan is full of lies, yet suddenly BFO is the truth because he says so??
Come on.
Going into Iraq was a 50-year play not a 5 year one. Saddam was about to hook up again with pre-existing French and Russian oil interests (to whom he owed billions), plus do his damnedest to screw us where-ever he could. Bush & Co. saw the chance to “take him out”, Congress gave them a blank check, and here we are.
The adoration of him was nearly universal.
Until now. The economic consequences of his rule are accumulating and even the dullest financial reporters are stumbling on crumbs of truth about Greenspan’s legendary reign. It sowed profound and dangerous imbalances in the US economy. That’s what happens when government power tips the balance in favor of capital over labor, favoring super-rich over middle class and poor, then holds it there for nearly a generation.
Recent events, whether Greenspan’s fault or not, have certainly fattened his wallet. Who would have predicted J6P would be debating financial regualtion AND monetary policy right at the moment his book was released?
His apparent “success” is now being revealed as failure and the mob is beginning to turn on him. Shows how people never change. Medieval Chinese peasant uprisings were often triggered by a flood or earthquake, which supposedly showed that the Emperor had lost the “mandate of Heaven.” I’d guess the average American comprehends the causes of the current financial meltdown about as well as those peasants understood the causes of natural disasters.
I was taught that history shows that poverty, per se, doesn’t lead to peasant revolts (think North Korea), but rather revolts occur when those peasants have seen a sudden and dramatic decline in their economic well being.
Medieval Chinese peasant uprisings were often triggered by a flood or earthquake, which supposedly showed that the Emperor had lost the “mandate of Heaven.”
Natural disasters prompted uprisings only after famines and/or universal drafts for large scale construction projects like the Great Wall and the Grand Canal (where draftees were both unpaid and had to be fed by their families or starve).
I couldn’t find Diane DiSanto on the Essex Registry website (very user friendly) in either Beverly or Hamilton (which is horse country - very very wealthy). I’m guessing the properties are just owned in an LLC or Realty Trust (in the case of an RT it would be indicative of the fact that she and Lou are morons). I did run across a youtube video of her American Idol (or some knockoff of the same) submission. I can’t play it here at work and don’t really want to but it’s out there in the intertubes for anyone looking for a chuckle.
My husband and I lease a home and are looking for something larger with some acreage. We live in the Cincinnati Metro area and you wouldn’t believe (well, yes you would) the number of “executive” homes for rent in this area. There are more one and two million dollar homes available to lease then we have ever seen before. The problem is some of these homeowners - usually on the lesser priced sub-500,000 homes - are asking inflated rents. When we delved further to find out why someone would ask almost $2000 on a 4bdrm, 2bth home (in the 5-10 yr. old range) the answer most often was that they had to cover a mortgage payment as well as maintenance, blah, blah, blah. I told my husband it sounds like these people used their homes as ATMs, are strapped to multiple mortgages, and now have to rent them out.
There are some real bargains though. In a very pricey, high end community on the East side, there are several million dollar homes for lease in the $3,000 a month range. I checked Zillow on several of them and most of these people have lived in the homes for 10+ years, accrued some equity, and probably decided to retire and move to Arizona or something. Those are the ones who can price their homes to rent.
I see a vast market of executive-style rental homes coming on the market soon. My husband and I are very patient.
Okay, here’s Slim doing the copy -n- paste from the original post:
The Salem News from Massachusetts. “Diane DiSanto’s small, home-redevelopment business took off as soon as she started it nearly four years ago. First, it was condo renovations in Amesbury, followed by three successful house-to-condo conversion projects in Ipswich and Beverly.”
“Then she bought two single-family homes in Beverly, sank big money into big improvements, and hit a wall. ‘We were buying property, fixing it and flipping it - that was fine,’ said DiSanto’s husband, Lou. ‘But the market tanked around the time we were finished the (Beverly) projects. I think we homeowners are in trouble.’”
“Now, a four-bedroom, white colonial on Dodge Street in Beverly, where they spent $180,000 on renovations, has languished on the market for two years.” “Diane DiSanto has tried everything. She slashed nearly 25 percent off the original $509,000 asking price, and held an open house last weekend where people could buy on the spot, for ‘$390,000 or better offer,’ she advertised.”
“Still nothing. Now she is considering a lease-to-buy option.”
Okay, that’s enough Control-V. Now I have a question: What’s the HBB community opinion of lease-to-buy options?
My .02, from the investor angle. In a good market investors liked them because you could cash flow a house plus sell an option to buy at top dollar, at or above retail, with a decent option payment (I got 10K when I did it once). One thing a lot of investors do is LTO to someone who has a marginal chance of exerecising the option after a year. Then if the tenant can’t option, they’re evicted and investor finds another tenant/buyer (I didn’t do that, for the record). A cold way to enhance your cash flow, in my opinion, but it’s done.
These days it would seem tougher to do the above. In ‘05 and ‘06 investors were already having to take less down to fill their house (say from 5 or 10 percent to 2-3). There might be potential buyers out there with lousy credit but a decent downpayment, however I don’t hear much about them lately. Plus rents are declining (at least around here) which doesn’t help you cash flow very good. Throw in the tighter credit requirements now, and it seems to me you’d have to rent to someone for a longer period of time before they’d qualify to cash you out.
Will a lot of people go the rent/LTO route rather than be foreclosed?? Beats me. Personally, I would LTO to someone again, but would never do it myself. Again, just my .02, your mileage may vary.
ot - Greenspan was on the Daily Show last night, very funny stuff, I thought Jon asked some great questions. He specifically mentioned the negative impact the rate cut has on people that work and save money. It was a pretty interesting exchange which then ended with Greenspan saying that if he had the ability to predict what people were feeling, he wouldn’t need his math calculations to make forecasts. My interpretation kind sucks, but that was what I can remember this morning. Did anyone see it? Thoughts?
good lord. sorry about that:
“My interpretation kind of sucks”
Stewart did pretty well, I thought. He typically asks better questions than the “real” newspersons who interview the same talking heads.
I thought the best question was (as you mentioned) rate cuts and the division between the investor class and the working, non-investor class. Greenpan looked a mildly peeved and offered up a non-answer.
I saw it and I thought that Jon was exceptionally kind to him, as he often is with elderly people (like John McCain) with whom he obviously has philosophical differences. I thought Greenspan was enjoying the interview and was amazed that he “got” the Daily Show vibe and did so well with it, but he obviously became somewhat flustered and defensive when the subject of wage-earners vs. speculative investors and monied interests came up. He tried to answer the question without answering the question, and it was pretty evident. If he’d been 30 years younger, say Bill Kristol’s age or so, I think Stewart would have painted him into a corner.
“‘Their loan terms were probably terms they never could’ve made,’ Mr. Ziegler said. ‘The loans were in trouble the day they were made.’”
Tough luck. Anyone with half a brain has known about these toxic loans for YEARS already. People took them out anyway because ALL the participants involved were BETTING on constant appreciation; the borrowers, the lenders, the agents, the brokers.
Now SCREW ‘EM ALL. It’s time to pay the piper and NO-ONE HAD EVEN BETTER SUGGEST A BAILOUT OR RELIEF FOR THESE ASS-WIPES.
I took a similar ARM that Mr. Murray took in 2002 and it had a 3 year pre-payment penalty. I waited until 2005 and re-financed to a 30-yr fixed at 5.125%. I took advantage of the low 30-yr fixed in June of 2005. The rate stayed below 5.75% throuhout 2005. I am glad I made the right decision in 2005 because I was also bombarded with 1% teaser rate interest only loan. I remember being solicited for those 1% teaser rate every week. Funny, I have not seen those letters lately.
Gee, I thought it was just me. I’m not seeing those 1% teaser rate offers either.
This story is on the front page of the Sacramento Bee today.
http://www.sacbee.com/103/story/386801.html
If this isn’t desperation, I don’t know what is.
Not to mention the ignorance.
I seem to recall reading a story saying that St. Joe statue sales were way up there. And that story ran two years ago.
I’m catholic and I don’t remember ever being taught anything like that. I know they’re selling the statues (and burial kit) at Catholic bookstores and I’m a little confused. Burying statues upside down, or right side up or whatever, borders on voodoo IMHO (I read the thing about the monks I don’t care, that’s wierd.). And placing any amount of faith on a piece of molded plastic is madness.
I don’t know any Catholics who were taught that either. All I can figure it’s almost like a “Catholic old wives tale,” kinda like your mom telling you don’t go swimming for an hour after you eat.
Probably works equally as well as saying: “Tony, Tony look around, somethings lost and can’t be found.” That supposively get St. Anthony to help you find something.
Fostering superstition is a crucial part of the huckster economy. With it, it becomes immensely easier to sucker someone into wandering into a casino - or buying a hopelessly overpriced POS.
immensely easier to sucker someone into wandering into a casino
A co-worker of mine mentioned something he had heard. something like, the total amount of money that people throw away with gambling, could pay the national debt. is that true?
As a former Jesuit Catholic, MUCH of Catholicism is akin to voodoo. That’s exactly what Martin Luther was protesting 500 years ago.
Being a retired Catholic, I wonder if they are referring to St. Joseph of Greed, or maybe St. Joseph of Stupid Loan Acceptance, or St. Joseph of Ignorance? St. Joseph please bail me out of this mess. If I had sold earlier at a profit I wouldn’t need to put you in my yard and I wouldn’t think of you even in passing. I’m an a**hat, so please help me! If all esle fails, pray.
The kit also offers the kind of practical advice any real estate agent would give: “All necessary repairs should be taken in presenting the home and a fair market value for the home should be reflected in the cost.”
Translation: St. Joseph, I beseech you. Sell my home for a LOT of money and make me richer than all of those loser buyers out there sitting on the fence. I promise… >:)
Maybe the other St. Joe, the one who gained wealth and status by going outside the lines. St. Joseph of making bags of money in the 30’s doing illegal beverage migration and becoming upper class as a result.
“About 48 percent of subprime borrowers wouldn’t qualify to refinance into a mortgage that conforms to the underwriting rules established by government-sponsored agencies, according to a report by UBS AG, Switzerland’s largest bank.
And that’s now….just wait until values continue to drop and even more of them are underwater. Congress can change the FHA loan limit to whatever they want ($700K, $1MM)….if most FB’s don’t qualify, it won’t do jack shit.
And the 10-Year TBill is soaring since yesterday’s Fed cut….closed at 4.47% yesterday and it stands at 4.56% today…that’s a 2% jump in one day.
So, for all those politicians who want to “modify” the FB’s into fixed rate mortgages, good luck with that. They’ll never be able to afford a fixed rate, or qualify for one, for that matter.
Yeah I heard that too, CNBC said the same thing this morning. One of the reporters said it’s now more expensive to buy a house than it was yesterday.
One of the reporters said it’s now more expensive to buy a house than it was yesterday.
Has nothing to do with the fact we’re scaring away European and Asian investors? Naaa…
Got popcorn?
Neil
I still have alot to learn but, is the Fed trying to crash the housing market quicker? So they can “clean house” and move on or whatever? It seems like the fed made the situation worse for fb’s, instead of better.
As predicted by this blog for a couple of years, goverment will intervene and make things worse in the process.
“About 48 percent of subprime borrowers wouldn’t qualify to refinance into a mortgage that conforms to the underwriting rules established by government-sponsored agencies, according to a report by UBS AG, Switzerland’s largest bank.”
How could they possibly know that?
The key to FHA is the down payment, IMO. The nice thing about ZERO is that no matter what you multiply it by, the answer is still zero. 200K? 0 down. 500K? 0 down. But when that 0 becomes 0.03, suddenly those down numbers increase. 200K –> 6K down. 500K –> 15K down. All of a sudden, people pay attention to the actual price rather than the price per month. This alone will cap house prices.
Wrong, there are government downpayment assistance programs to cover that.
http://www.calhfa.ca.gov/homeownership/programs/
CEO of Wells Fargo, “The noncomforming mortgage market will be back.”
You mean all the things that got us into this mess will come back to sow more problems in the future?
CEO of Wells Fargo, “The noncomforming mortgage market will be back.”
Translation: We’ve left the market!
It will be back. Back when its ok for them to demand meat in the game and appropriate credit risk. However “will be back” is circa 2009.
Got popcorn?
Neil
“‘Buyers don’t understand that it’s not about greed anymore,’ Diane said of the current market. ‘Buyers are trying to get every last penny out of it, but for a lot of sellers, it’s really about survival.’”
————————————
alternating between greed and fear, greed and fear, greed and fear…
sunrise, sunset, sunrise, sunset…..
Chuckle..
“Greed is good.” What has happened is sellers do not realize its about saving every last penny. Its not the buyer’s responsibility to take the bullet the seller has incurred. Remember the down market of the 1990’s? Time to walk or bring cash to the table. Oh… that’s curret REIC commissions. Awwww… My pity is… dang. Where did I leave it?
Got popcorn?
Neil
WTF?? Realtor: “Oh silly buyers, driving a hard bargain is so 2004. The theme now is–’we’re all in this crazy recession together, so go easy on your home seller.’ Greed is bad.”
Buyer Response: “Thank you very much, I’ll wait and buy it from the bank.”
For you finance whiz’s out there - can you explain to me how the LIBOR is tied to the Fed rate? Sorry, economics not my thing, but am curious.
Glenn Beck weighs in with Peter Schiff & Michael Panzner
http://www.youtube.com/watch?v=HTkPYnNmOBM
Sorry about the triple post. I guess I don’t understand the time lag. I don’t know how to gage when they will show up.
Noice!
http://www.ft.com/cms/s/0/31d8aba4-66b6-11dc-a218-0000779fd2ac.html
“Patrick Newport, an economist at Global Insight, said: ”The eye of the storm is just ahead.”
Noice indeed! I understand what the guy above is trying to say, but strictly speaking, it’s a bad metaphor. From my experience with Florida hurricanes, first you go through an intense period of storm, then there’s the calm of the eye and then the backside of the storm hits you. I don’t think we’ve even remotely experienced the intense part of the first half of the storm, so no calm eye yet.
We’re just seeing the outer bands at this point, IMHO.
So an across the board drop of only 15% wipes out $3T of household wealth. 15% IMHO “is in the bag” already just judging on the momentum.
“The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
at which point i will walk my ass to the steps of the federal reserve and set myself on fire.
G Beck interviews Peter Schiff and Michael Panzner
http://www.youtube.com/watch?v=HTkPYnNmOBM
http://www.youtube.com/watch?v=HTkPYnNmOBM
At least when J6P buys that new 12 mpg SUV, he will get a better interest rate. He’ll need that cash for the gas tank:
Oil will hit $100 but probably not in 2007: Pickens
http://tinyurl.com/38uno6
Now a day after this .50 rate cut things are happening just as we expected, oil-up, metals-up, and Paulson is urging congress to raise the debt ceiling again or the country will reach the current ceiling(almost 9 trillion) on Oct. 1. Is any one else seeing the impending disaster that I am, this can not end well. I think the poster that said BB is buckling to the hedge fund guys was right on-its a different world now.
Don’t raise the debt ceiling…let the government freeze up. Then those who work for a living and have a few nickles saved will be fine. The rest can cry themselves to sleep.
Is there a trick to posting links? Anybody? Anytime I try to post with a link it does not show up. Do I need to use code of some sort?
Thanks!
Hi Earnest. If it’s a really long link use the copy function after highlighting the http address. Then google tinyurl and paste it into the box. Next copy and paste into your comment.
Thanks Leighsong! I will give it a try.
i can’t even get this to post!
i can’t even get this to post!
barump barump barumpumpump…Bail out on it’s way.
http://online.wsj.com/article/SB119021077354432327.html?mod=googlenews_wsj
Lift the Fred/Fannie Caps…and coming to a house near you…a new conforming loan rate.
Reaching for Valium.
File this one under “Its different here!”
http://www.coloradoan.com/apps/pbcs.dll/article?AID=/20070919/BUSINESS/709190309
Even though the median household income has dropped 7K in Fort Collins since 2000.
Because of the FEDs actions yesterday, instead of a 2-3 year housing downturn, get ready for a slow 15 year decline much like Japan.
Way to go Bernanke.
“turning Japaneese”
free medical and job savings programs are right around the corner
Just one question…where’s the money coming from? The vanishing middle-class, the soon-to-be umemployed, or the Chinese, who may be fed up with us by now?
Lost yesterday in the Fed cut was Hilbil’s new health plan–everyone will be required to purchase health care, and show your health care card before being hired. I am not making this up.
By the time these *sshats get done screwing us over, we’ll all be too old to get 30-year mortgages! Argh!
““The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
WHAAAAAAAAAAAAAAAAAAAT? Do people really think like this. What a creepy lousy A**WIPE!!! Pay your own bills doucebag!! Man does that piss anyone else off?
The Asbury Park Press from New Jersey. “A state official told a state Senate committee Monday that New Jersey may finally launch a $30 million rescue program for homeowners facing possible foreclosure, but hours later a state spokesman said the program was not yet ready.”
“Jerry Keelen, an official at the New Jersey Housing and Mortgage Finance Agency, told the committee the program is expected to help 150 to 200 homeowners. However, Keelen said, some 1,600 residents have already contacted the state about signing up for the program, which was initially announced in May.”
I know my home state. If there is even an inkling of federal money on the table these guys will bury those bailout funds and spend it on something else….politics as usual intervening in nj.
The Federal Reserve Bank pumped $62 billion into the banking system on Aug. 9 and Aug. 10 in an effort to soothe a credit crisis. Murray said the Fed should do the same for borrowers. ‘If they gave us that money, we’d be able to be out of this predicament,’ he said.”
M’s proposal is no different than the banks’. He is solvent, but requires some liquidity for a period due to a credit crunch. With an individual espousing the argument, we are able to put a face where there were only faceless entities, and we see how morally bankrupt the idea really is.