The Housing Bubble

Class act.

http://sarasota.craigslist.org/rfs/435828115.html

If ‘ya Snooze ‘ya looze!

PS: If you decide to email me, I’m only talkin’ to people that have a firmed up mortgage approval or are ready to discuss their financial capacity ON THE PHONE WITH ME BECAUSE I’m IN FINANCE!

PPS: If ‘ya want to contract, you’ll have to have your mortgage pre-approval from your banker people (OR ME) and you’ll have to be ready to pony up $2,500 non-refundable.

PPS: The last house like this in the area recently sold after 17 days on market….so if you’re a serious buyer and you want something in this zip code, ‘ya better make it happen ’cause it’s the first “John or Jane Doe” with an earnest money check and a mortgage APPROVAL that gets this baby!

Good morning everybody and what a morning. We stopped into a little bar on Hudson Street last night. We struck up a conversation with the couple next to us. There were only 6 people in the bar. They were in the city to celebrate their anniversary, they said. Then they started to talk about real estate.

It turns out that they own land on Lake Norman in Statesville, North Carolina. That is an area I’m pretty familiar with. That was probably a really smart buy. They would like to relocate to Statesville. I’ve said time-and-again that all Yankees view the Carolinas as their paradise. I think the move to Statesville would actually be good and I told them that. Here’s where it really got good.

They started talking about Long Island. They said it’s a disaster. They told us that half of the houses around them are up for sale. They said nothing is moving. Their own house would have fetched $500,000 two years ago but would be lucky to bring in $400,000. They talked about foreclosures on the rise. The picture was bleak. And you have to remember that I did not ask a single question. I didn’t even bring up the subject of real estate.

I am wondering whether I should tell my co-worker that owns a house on Long Island what I heard last night. While having dinner last fall I almost punched his wife when she kept hounding us and telling us how stupid we were for not buying in the city. There have been no dinners with them since then. I don’t think I will tell him because he really seems to enjoy having his head lodged in his posterior. But what a way to make for a great weekend. The weather has just been beautiful and Long Island is officially crashing. (NYCityBoy wipes a tear from his eye.)

I don’t know if Ben will have a chance to sumerize the links I sent his way, but money.cnn.com has a few interesting articles up today…

I am going to try to photo this today, but I saw a house yesterday that was having a garage sale. In the front yard was a boat, kayaks, nice bicycles and… drum roll… a “For Rent” sign.

You see, South Florida is working off this totally new economic model…

I keep reading about how expensive housing is in Europe. I also read and hear from colleagues, neighbors, etc. how hard it is to find a decent job, even if you have gone to a university. My question is this: who is buying all the overpriced housing in Europe if so many people cannot afford it, yet apparently they don’t give sub-prime, no doc loans?

I’m in Cold Spring NY up the hudson river from the Big Apple. I bought 3 acres of land about 4 yrs ago. I will never sell it but am hesitant to build as it is not for my primary residence until 6 years from now. it is so beautiful so i will hold it and pay minimal taxes on the vacant land and camp out there. anyway, there are more houses on the market here in cold spring than ever! according to a real estate friend of mine. nothing is moving. every place you go a sprinkle of for sale signs. a builder guy pal o’ mine, down the street lowered his price on a house 100gs from 849 to 749 large. It is still sitting.

Here’s some results from the San Diego condo auction:

(Looks like about a 33% across the board hair cut)

http://tinyurl.com/3xmyta

Smart People Do Dumb Things

While doing some Craigslist shopping with the fetching Mrs Lip we went and looked at some bedroom furniture in south Scottsdale. We get the best furniture this way. The guy and his wife Heloc’d his old home to hilt and bought another for $1,200,000. Now 8 months later he has his old home For Sale by Owner for $735,000. This is for a 2000 sq ft, 1970s era house that has not been upgraded!

Are there tax considerations for people that loose a house after they Heloc it to the max?

If so, this crash is going to ruin a lot of people for a very long time.

Lip

Not real estate, but the grocery store.

I was doing some comparison shopping, and you wouldn’t believe how much the shelves are being cleaned out - of cheap oatmeal. The kind that comes in big cardboard “cans.” The easy prepare, pre-flavored boxes are on sale, but it is the bottom shelf that seems to be selling the most. And not just at the lower end supermarket. Trader Joe’s is fairly inexpensive when you look at comperable items, but it carries a higher end stock.

People are cutting back.

I went on a drive yesterday in upper NH to leaf peep. We went through a town called Berlin during the drive. The whole area was sporting “for sale” signs. Every town we went through had plenty of for sale signs as well although not to the extent that Berlin had.
However, while we have been seeing some “price reduced” signs around, a quick look at MLS listings is showing very high pricing continues.
I pulled up listings in the Jackson and North Conway area of NH and was amazed to see how high the land prices are. Seeing land going for 100K/acre for lots and smaller parcels (1-5 acres) and 30-50K for larger parcels depending on view,etc. Inventory seems high but I don’t see or hear about any panic setting in for this area. Perhaps everyone is expecting higher sales in the winter when the skiers show up? Anyone with knowledge of this area please jump in with your observations because it is a bit baffling. I was expecting to see lots of price reduced action in this area and I’m mainly sensing just a slowdown to date.

Can These Mortgages Be Saved?
By Gretchen Morgenson
NY Times — Sep. 30, 2007
http://tinyurl.com/2×4q6r

ON Christmas Eve two years ago, as Shannon Rivas-Spivey wrapped gifts for her two young sons, she was interrupted by a knock at her door. Standing on her front steps in Somers Point, N.J., was a man from the Atlantic County sheriff’s office, delivering foreclosure papers on the three-bedroom home that she and her fiancé, Harold Spivey, had owned for almost 10 years.

The visit was unwelcome, but not a surprise. Ms. Rivas-Spivey had been battling foreclosure for over a month, ever since the Countrywide Financial Corporation , the huge lender that services her loan, charged her escrow account for flood insurance she did not need and could not afford to pay. During the months it took to have Countrywide fix the error, she said, she fell behind on the loan.

Now the sheriff’s office had come calling. “It totally destroyed our Christmas,” she said. “I feel like a failure. I let my sons down, I let my dogs down. It’s senseless.”

There are two sides to every story, of course. Countrywide disputes Ms. Rivas-Spivey’s contention that billing her for unnecessary flood insurance essentially forced her into foreclosure. It said it has worked extensively with her to rescue her loan from default but that its efforts have failed.

Such painful, personal and financially damaging tugs of war between lenders and borrowers are likely to continue for quite some time. As the home mortgage boom of recent years continues to deflate, hundreds of thousands of borrowers are facing escalating monthly bills on adjustable-rate loans that are either in foreclosure or near it. In August, according to RealtyTrac, a home loan database, foreclosure filings across the country — default notices, auction sales notices and bank repossessions — soared to almost 244,000, up 36 percent from the previous month and more than double the number in August 2006.

Someone facing 5 foreclosures…

http://creditboards.com/forums/index.php?showtopic=287451

Can Florida get any more ugly? Yes!

http://www.sptimes.com/2007/09/30/Pasco/Heads_turn_at_tall_lo.shtml

Credit Crisis Could Dash Hopes for a Fall Rally
By Paul J. Lim
NY Times - Sep. 30, 2007
http://tinyurl.com/2la84k

AFTER suffering through a nerve-racking third quarter, when market volatility soared but stock prices didn’t, investors are counting on a little help from the calendar.

It is no secret that stocks have had a knack for rallying in the final three months of the year. Since 1945, fourth quarters have been the best time to be in the market, with the Standard & Poor’s 500-stock index posting average gains of 4.1 percent. And in four of the last six years, end-of-the-year rallies have more than made up for downright disappointing third quarters, like the one we just experienced.

But before you bank on another fall turnaround, it is important to note that recent seasonal surges in stock prices have been prompted by better-than-expected news about the economy or corporate profit growth.

Last year, there was good news on both fronts. In the fourth quarter of 2006, Wall Street turned decidedly bullish after investors saw that corporate profit growth and the domestic economy were clearly on the verge of reaccelerating. Not surprisingly, the S.& P. 500 jumped more than 6 percent in that quarter, which kept the third-longest bull market in modern history alive and kicking.

But heading into the final three months of this year, it is looking less and less likely that investors will enjoy a similar catalyst.

I work with educators, and I sincerely believe that they consist of the most mentally challenged group of any large profession you can name. The social maturity level of most of these people is the same as a 15 year old. That’s why they teach high school. They can relate perfectly with the students.
I have been told repeatedly about how foolish I was to sell in 2005 by my financially astute colleagues. Just 5 days ago, a fellow worker sincerely told me to buy right away because this little anomaly downward would soon be over. In a conversation two years ago, my principal confidently asserted that real estate has never gone down in California history. But watch out, I’m beginning to see signs of these mental giants are beginning to wake up, and when that happens we California condors are going to come off the endangered species list.

Finally a bailout idea I like: Let predatory subprime lenders eat the forbearance costs, and leave the U.S. taxpayer alone. This bill would drive a stake through the heart of predatory subprime lending, by taking the profits out of the practice. There are a couple of drawbacks, though, including that it is not clear how the Congressmen who support it would get a campaign contribution cut from the lending industry out of this deal. Is that perchance why Senator Dodd’s name is not mentioned in support of it?

Interesting that CFC is the first lender mentioned in this piece. Not sure if the writer meant to hint they were engaged in predatory subprime lending, or their mention is merely incidental?

Relief bill would let court alter mortgages
By Al Yoon
REUTERS
September 30, 2007

NEW YORK – Bankruptcy courts would be allowed to alter mortgages written by “predatory lenders” in moves that could save 600,000 Americans from foreclosure, according to the author of a bill that has been introduced in the House of Representatives.

The legislation would repeal a provision that prohibits a bankruptcy court from modifying a home’s first mortgage, according to Rep. Brad Miller, a North Carolina Democrat, who sponsored the bill along with Democrat Linda Sanchez of California.

The bill is co-sponsored by Rep. Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee.

Delinquencies and foreclosures have soared as the U.S. housing market soured in the past two years, putting the spotlight on ways to modify loans that are resetting to higher interest rates. Some 5 million adjustable-rate mortgages are slated to reset over the next 18 months, and loan modifications are still “few and far between,” Miller said in an interview.

“Everyone will know what will happen in bankruptcy, so the fact that bankruptcy is an option would lead to negotiations” between the borrower and lender ahead of that event, he said.

Countrywide Financial Corp, which as the nation’s No. 1 mortgage lender has provided one in five home loans this year, said it has provided assistance on some 35,000 mortgages this year, including modifying terms on 17,000 loans.

But a report by Moody’s Investors Service found that lenders eased borrowing terms on just 1 percent of subprime mortgages with interest rates that reset in January, April and July.

http://www.signonsandiego.com/uniontrib/20070930/news_1h30loans.html

The bottom rung of the ladder is slammed too! I am in the process of appraising a subsidized housing project. This is a project that bases your rent on your income. It is really quite a nice project. Three month waiting list which could easily be 6 months but people simply will not register for that time period. Afterall who has 6 months to plan ahead in this job market in Florida.

I was told there is another project with the caveat you must be a farm worker. Plenty of vacancies but the waiting list from the project I am working on will not transfer due to job requirement. Agriculture is a big lobby. Oh, by the way, you do not have to prove you are legal.

The good news: Mortgages are plentiful for buyers with good credit who are willing to take out loans their permanent incomes will support.

More bad news (at least for those who make their living by selling homes): As long as sellers (at least the kind in the banking biz) are holding out hope for bailouts, they have little incentive to lower their prices to levels where they will find buyers.

NATION’S HOUSING
KENNETH HARNEY
Mortgages are plentiful, but credit standards are higher
September 30, 2007

WASHINGTON – The term “mortgage meltdown” has become so commonplace – on TV, in headlines and even casual conversations – that you might assume that this is a tough time to get a mortgage.

But the reality is starkly different: Mortgage money is plentiful, the majority of mortgage products remain relatively unaffected by troubles in the subprime segment, and interest rates for 30-year fixed-rate loans remain in the low 6 percent range for people with reasonably good – not necessarily perfect – credit backgrounds. Even interest rates on jumbo loans – those over $417,000 – have fallen after spiking this summer.

The main change over the past several months, in the words of Ted Grose, president of Los Angeles-based 1st Mortgage Advisors Inc., is that “the products and underwriting that allowed people to buy houses they couldn’t afford have disappeared.”

http://www.signonsandiego.com/uniontrib/20070930/news_1h30harney.html

Warning for entrepreneurs who are thinking of buying up vacant homes to start a marijuana-growing business: Make sure you keep up the appearance that you are an owner-occupant.

Police arrest real estate agent in raids on pot-growing homes
ASSOCIATED PRESS
September 30, 2007

ELK GROVE – A real estate agent has ties to nearly half of 21 raided pot houses, according to a database of properties sold in the area.

Authorities arrested Vivian Hoang, 34, in coordinated raids in Sacramento, Elk Grove and Galt. She owned two of the houses and sold eight while working at Elite Realty of Elk Grove, according to Metrolist Services.
…
Hoang left Elite Realty more than a month ago, said former co-worker Gus Chaveste who described Hoang as “very nice, humble lady.”

“It was a big shocker to us,” Chaveste said.

http://www.signonsandiego.com/uniontrib/20070930/news_1h30agent.html

Calbreath rocks on at the SD Union Tribune!

Rating the real cost of inflation

The fedaral government says that inflation is under control at 2% to 3% a year — with prices up 15 percent since 2002 — but some key prices have risen much faster, and critics charge that the government is undercounting the pace of inflation

By Dean Calbreath
STAFF WRITER

If you’re like the average American, when you fill your car up at the gas pump, you’re paying 84 percent more than you were in 2000, for an average price rise of 12 percent per year, according to the latest data from the U.S. Bureau of Labor Statistics.

http://www.signonsandiego.com/uniontrib/20070930/news_1b30inflate.html

What a despicable piece of **** of a company (Countrywide). From the NYT article posted above:

The employee, who was granted anonymity because he feared that Countrywide might retaliate against him, said it took a full day for him to reach the right department at Countrywide for loan workouts. Even he had difficulty reaching the right HOPE Team member, he said.

Such efforts may soon become more difficult. At an investor conference on Sept. 18, Angelo R. Mozilo, Countrywide’s chief executive, said the company would be hiring more staff members to do home-retention and loss-mitigation work. Those employees, however, will be based in India.

I don’t know about you all but I’d throw the keys on the countertop before I’d try to “work things out” with someone in another freaking country reading a script on the phone.

I would argue the BB rate cut has much more to do with bailing out Wall Street than the housing market. The stock market must keep on always going up, or else the sheeple with 401(K) contributions hard wired to Wall Street will start worrying about the economy. Everyone knows that the economy must be doing well if the stock market is going up.

DEAN CALBREATH
Fed rate cut is becoming ‘Bernanke conundrum’
September 30, 2007

When the Federal Reserve lowered interest rates this month, critics complained that Fed Chairman Ben Bernanke was bailing out homeowners who should never have taken out all those wacky no-down-payment, no-documentation, no-fixed-rate mortgage loans.

Have no fear, friends.

Bernanke’s rate cut has not drastically slashed mortgage rates. In fact, for the most reliable loans – 30-year fixed-rate mortgages – rates actually went up in the past two weeks instead of down.

That’s right. The average rate for a 30-year mortgage rose from 6.31 percent on Sept. 18, when Bernanke cut the federal funds rate, to 6.42 percent last week. And it will likely get even pricier if the Fed cuts rates further.

“People had expectations that what the Fed was doing would help turn the housing market around, but we’re not getting any kind of bump from the rate cut,” said T.J. Knowles, a mortgage broker with CalBrokers in San Diego.

http://www.signonsandiego.com/uniontrib/20070930/news_1b30dean.html

Fossil fuel originated from plants and animals living in a pristine ecosystem. Ergo fossil fuels are green, just like ethanol.

Advanced biofuels
Ethanol, schmethanol
Sep 27th 2007 | EMERYVILLE, REDWOOD CITY AND SAN CARLOS, CALIFORNIA
From The Economist print edition

Everyone seems to think that ethanol is a good way to make cars greener. Everyone is wrong

SOMETIMES you do things simply because you know how to. People have known how to make ethanol since the dawn of civilisation, if not before. Take some sugary liquid. Add yeast. Wait. They have also known for a thousand years how to get that ethanol out of the formerly sugary liquid and into a more or less pure form. You heat it up, catch the vapour that emanates, and cool that vapour down until it liquefies.

The result burns. And when Henry Ford was experimenting with car engines a century ago, he tried ethanol out as a fuel. But he rejected it—and for good reason. The amount of heat you get from burning a litre of ethanol is a third less than that from a litre of petrol. What is more, it absorbs water from the atmosphere. Unless it is mixed with some other fuel, such as petrol, the result is corrosion that can wreck an engine’s seals in a couple of years. So why is ethanol suddenly back in fashion? That is the question many biotechnologists in America have recently asked themselves.

The obvious answer is that, being derived from plants, ethanol is “green”. :-)

http://economist.com/science/displaystory.cfm?story_id=9861379

http://www.ronpaul2008.com/

History has been made! In just five days, Ron Paul supporters - the forgotten voters of the productive middle and working classes - raised ONE MILLION DOLLARS - double the original goal - for their candidate. This is a truly astonishing show of commitment and support.

The political elites and their media border collies have tried to ignore and marginalize Ron Paul, while the GOP Establishment apparachiks tried to bar him from the debates. After all, Dr. Paul has committed the cardinal sin of showing up the GOP front-runners [thanks to lavish funding from special interests] as Hollow Men and empty suits, devoid of ideals or convictions. These bankers’ errand boys and their wire-pullers in the financial oligarchy must feel a spike of cold fear as word of Ron Paul’s feat - and the dedication of his army of grass-roots supporters - breaks through the media blackout and dismissiveness of our political “elites.”

Those who helped bring about this breakthrough can rightly feel an enormous sense of pride and solidarity with other fed-up citizens who haven’t forgotten that this nation was conceived as a Constitutional Republic. For the moral cowards who observe from the sidelines, while refusing to lift a finger to halt our national march down the road to ruin, please stand aside for your betters who are out making the Ron Paul revolution.

RON PAUL IN 2008!

Hi all! Boy do I miss my daily dose of the HBB. Stupid work has blocked me from it (and tons of other sites) due to a recent virus that shut us down.

Anyway, I was talking to someone last night who I’ve always thought was pretty financially savvy. His take on real estate goes like this. My parents are going to put their house on the market in January or so (they’re moving to a retirement community). He said, “That should be a nice $400K for them, eh?” Maybe. I think that’s overpriced, but people are still stupid here. I said, “Even if they got $300K for it, they paid $75K for it about 30 years ago so not a bad investment.” He said they should hold onto it and rent so that in “5 years from now it’d be worth $250K or so more”. It’s already overpriced at $400K, but in 5 years it’ll sell for $650K? What?!

We had a little “discussion” about that and he was impossible to sway (always been that way - I would love to see a debate between he and TxChick because I think she’d mop the floor with him). He said that housing will stay strong (after just a slight dip) because “foreigners will come in and buy everything up”. He has no worry whatsoever about a recession in this country. And said he was worried two years ago, but that was unfounded so now he’s optimistic about everything. I told him he was just premature 2 years ago. Again, no swaying him.

Very frustrating to talk to people who are of the mindset like this. If he’s right, I will be living off food stamps in the not-too-distant future because my salary sure as hell can’t keep up with his financial theories.

Diary of a mad realtor or what? I think its fake but its a funny read.
http://marvelousbend.wordpress.com/

Here’s a pricing report from southern Nevada, if anyone’s interested. Mrs. LVrenter and I went driving around the Green Valley area of Las Vegas/Henderson yesterday to survey the carnage. Here is what we found: 10-15% reductions in established resale neighborhoods from peak. Deeper discounts in the newer flipper areas on the outside edges of civilization. Terrible stucco-boxness and zero lot line-ness in those hoods as well. Prices $200-$225 a square foot (don’t scoff, Californians, we’re cheaper but that’s still too high). Waiting for 125-150 a square foot before we budge. LV out.

Looks like this story was not picked up outside of Gainesville, so here goes:

Kemp blasts capital gains tax

Following a presentation predicting further declines in the housing market in the coming years, former HUD secretary and Republican congressman Jack Kemp told a gathering of real estate professionals and students Friday that the long view looks better - with one caveat.

Kemp was the keynote speaker at the University of Florida Real Estate Trends and Strategies Conference hosted by the UF Bergstrom Center for Real Estate Studies.

What got me was this part:

Back then, Kemp said he saw opportunity. His solution was to cut taxes to create investment capital that would grow the economy and create more tax revenue. He helped author the Kemp-Roth tax cut of 1982 and is credited as one of the architects of “Reaganomics,” also known as “trickle-down” economics, a description he disputes.

“It wasn’t trickle-down economics, it was Niagara Falls,” he said, saying the nation was then “awash in capital formation.”

More like a Niagara Falls of fraud.

Just like this time.

Deregulation + loosening credit + tax breaks for specuvestors = giant taxpayer bailout

How about that S&L bailout, Kemp?

Can anyone comment on former Treasury Secretary Lawrence Summers’ relationship to the GSEs, for whose bailout measures he has been lobbying behind the scenes? It sounds to me like he is in the same club as some of the GSE playas…

Thursday, September 27, 2007 - 9:46 AM HAST
Steve Case and partners creating new credit card
Pacific Business News (Honolulu)

The lucrative business of credit cards and payment networks is drawing a powerful team to create a new credit card and Internet-based payment network that promises to save merchants billions of dollars on the cost of accepting credit cards.

Specifically, the new RevolutionCard will carry merchant fees that are 75 percent less than traditional payment networks.

Chalk this one up to the list of challenges facing Visa USA, MasterCard (NYSE: MA) and American Express. (NYSE: AXP)

Steve Case, former AOL CEO who runs his own investment firm, Revolution LLC, unveiled Revolution Money this week. The new company will offer a credit card and a free money exchange service that will compete against eBay’s (Nasdaq: EBAY) Paypal. Hawaii-born Case is a graduate of Punahou School whose Hawaii investments include ownership of Kauai’s Grove Farm Co. Inc. and a majority interest in Maui Land & Pineapple Inc.

“Traditional, and even online, incumbents have been charging what adds up to billions of dollars of fees every year that ultimately comes out of consumers’ pockets,” said Case.

Revolution Money, formerly GratisCardInc, raised $50 million in a second round financing. Former AOL executive Ted Leonsis, who was chairman of GratisCard, will continue in that role.

The financing was led by Citigroup Inc., (NYSE: C) Morgan Stanley (NYSE: MS) and Deutsche Bank as well as Leonsis and Revolution. Citi is also making a lending commitment so Revolution Money can extend credit to prime, or creditworthy, customers.

Revolution Money’s board includes former Charles Schwab (Nasdaq: SCHW) CEO David Pottruck, former JP Morgan (NYSE: JPM) Vice Chairman David Golden, former U.S. Treasury Secretary Lawrence Summers, former Fannie Mae (NYSE: FNM) CEO Franklin Raines, and former MasterCard International President and CEO Russell Hogg. His son, Jason Hogg, is co-founder and CEO of Revolution Money.

http://www.bizjournals.com/pacific/stories/2007/09/24/daily31.html

Apologies if already posted. The Baltimore Sun on incentives…

http://www.baltimoresun.com/business/bal-te.bz.incentive30sep30,0,7834627.story?page=1&coll=bal_news_local_baltimore_city_promo

Beware neoclassical economics fundamentalists who suggest that women scientists are genetically inferior or that shipping more toxic waste to third world countries would make trade more efficient.

Is Summers per chance working as a consultant for the subsidized mortgage securitization GSEs these days? Doing so would make his behind-the-scenes lobbying efforts on behalf of a GSE-engineered bailout more efficient.

Beware moral hazard fundamentalists
By Lawrence Summers
Published: September 23 2007 19:35 | Last updated: September 23 2007 19:35

Central to every policy discussion in response to a financial crisis or the prospect of a crisis is the concept of moral hazard. Unfortunately, there is great confusion in many quarters about the circumstances when moral hazard is, and is not, a problem. The world has at least as much to fear from a moral hazard fundamentalism that precludes actions that would enhance confidence and stability as it does from moral hazard itself.

http://www.ft.com/cms/s/0/5ffd2606-69e8-11dc-a571-0000779fd2ac.html

Benny and the Inkjets

Fleckenstein
http://tinyurl.com/2cpoq8

Haven’t these folks heard of the proposal to increase the FHA loan ceiling above $417K? The picture is much worse than they suggest.

Home » Opinion » Letters to the Editor
Speculative lenders don’t deserve bailout
Published Sunday, September 30, 2007
…
We can understand helping those who have invested a reasonable down payment (15 percent or more) in homes they are living in. However, by allowing the FHA (with its dismal record) to insure subprime mortgages (up to $417,000) with little or no down payment, we are guaranteeing that the speculative lenders of those mortgages will not lose their money.

http://www.islandpacket.com/opinion/letters/story/42118.html

Home mortgage crisis requires some serious remedies
…
Some politicians are recommending a federal bailout of deceptive, predatory lenders. Just as in the disastrous savings-and-loan bailout of the 1990s, they don’t deserve it. Taxpayers, most of whom had nothing to do with creating this mess, shouldn’t have to pay to clean it up.

A bailout only encourages this kind of bad business behavior.

Aggressive regulatory reforms are needed to reduce lending excesses and monitor investors and businesses that have turned home ownership into just another way to make a profit for themselves.

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20070930/A_OPINION01/709300307/-1/A_OPINION06

The closing sentence in this piece is utterly on target, in a most ironic sense: The subprime market was completely up to the task of self-destructing on its own, with only the slightest bit of help from the invisible hand.

Economic View
Six Fingers of Blame in the Mortgage Mess
By ALAN S. BLINDER
Published: September 30, 2007

SOMETHING went badly wrong in the subprime mortgage market. In fact, several things did. And now quite a few homeowners, investors and financial institutions are feeling the pain. So far, harried policy makers have understandably focused on crisis management, on getting out of this mess. But soon the nation will turn to recrimination — to good old-fashioned finger-pointing.
…
We don’t have to destroy the subprime market in order to save it.

http://www.nytimes.com/2007/09/30/business/30view.html?ref=business

JOURNAL
EDITORS’ PICKS
UBS to Report Big Loss Tied To Credit Woes
By JASON SINGER, CARRICK MOLLENKAMP and RANDALL SMITH
September 30, 2007 9:27 p.m.

Swiss banking giant UBS AG, which recently ousted its chief executive in the wake of losses at an in-house hedge fund and defections of top investment bankers, plans to write down as much as 4 billion Swiss francs, or $3.41 billion, in assets, including securities tied to U.S. subprime mortgages.

http://online.wsj.com/article/SB119118330836544000.html?mod=mktw

If you believe anyone telling you prices are stabilizing, or even showing signs of stabilizing, you are either on drugs or you have the IQ of a green mango. Prices are now in total free fall, with buyers and competing builders in complete control. The latter is more of the driving force in prices than buyers are now. Here’s a perfect example…

http://www.treasure-coast.us/weeklyupdate09-23-07