The Sink Is Blocked And We Need Drano
Newsday reports from New York. “To give an idea of the state of the home builders’ business these days, Ira Tane has switched from Model A to Model B. The big difference is that not only is Model B smaller, 2,000 square feet smaller, but the lower price means it’s the one selling nowadays in Long Island’s new-home market.”
“‘I would like to build that 5,000-square-foot house, but my business sense tells me that I am going to be better off building a smaller house for less money and leaving potential profit on the table just to be able to move forward. I can’t retire on one house,’ said Tane, founder of Benchmark Home Builders in Huntington Station.”
“What’s happened in the new-home construction industry parallels the recent slowdowns in the real estate and lending markets. To take advantage of the hot market, some builders invested in McMansions.”
“‘Building a five-bedroom home that’s 5,000 square feet, you make a lot more money than a two-bedroom town house that’s 1,200 square feet,’ said Jim Morgo, Suffolk County commissioner for economic development and workforce housing.”
“Until last year, Contempri Homes president Dominick Pedulla Jr. was chasing land for sale. Now, the Malverne company is getting calls from builders and real estate agents trying to dump land to him because they don’t want to risk constructing a home no one will buy.”
“‘People are going to have to lose money to get out of these properties,’ he predicted.”
“East Meadow-based businessman Steve Klar’s offer of a free, new Mercedes-Benz with a new house didn’t work as well as he’d thought it would. So many potential buyers come back for repeat visits with the same news — ‘I’d buy it in a minute if I could just sell my house,’ they’d tell him.”
“‘The sink is blocked,’ Klar said, ‘and we need Drano.’”
“It’s not going to be easy riding the change in fortune. ‘When people have been eating caviar for a long time,’ Morgo said, ‘it’s hard for them to get used to beans.’”
The New York Times. “Although the wave of foreclosures is national in scope, no borough in New York has been harder hit than Queens. The Johnson sisters thought they were safe; their father paid off the house before he died in 1995. But hard times began five years later, when their mother, who had only limited health insurance, took out a loan on the house to help pay for her double-bypass surgery.”
“She died the next year, and three years ago, in 2004, Lisa Johnson decided to refinance the mortgage. To this day, she does not understand exactly what happened, but somehow the refinanced mortgage ended up costing the family $2,700 a month.”
“The sisters could not handle the payments. They defaulted on the mortgage last fall. ‘Sometimes,’ Lisa Johnson said ruefully, ‘ignorance can get you in a lot of trouble.’”
The Boston Herald from Massachusetts. “Many Boston homeowners now facing foreclosure bought their properties less than a year ago, a Herald review found, raising questions as to the legitimacy of many of those sales. About 1,770 Boston residents were handed foreclosure notices by their lender over the past year.”
“More than a third of those homeowners received notices just months after buying their homes, statistics compiled by local housing researcher John Anderson show.”
“‘One of the complaints that is increasingly prevalent is that so-called straw buyers engage in fraudulent transactions designed, in one form or another, to strip equity from a property,’ said Amie Breton, a spokeswoman for Attorney General Martha Coakley.”
“‘These mortgages were bad even before the ink dried on the mortgage application,’ Anderson said.”
“Jennifer Stone is one of those buyers, claiming she was duped into taking out an expensive, high-interest mortgage she couldn’t afford to pay. She is now facing foreclosure after buying a $480,000 two-family home last spring in Dorchester.”
“She decided to drop out of the Section 8 rental subsidy program and become a homeowner after attending a seminar at a Dorchester church. But Stone’s dream turned bitter the day of the closing, when she was told the $2,500-a-month payment she and her partner were promised, turned out instead to be close to $4,000.”
“‘It’s kind of like feeling you have lost everything,’ Stone said.”
The Herald Mail from Pennsylvania. “The land rush that began in 2002, when the number of residential lots approved nearly doubled to 2,116, slowed dramatically this year as the housing market cooled nationally.”
“What customers want to buy also has shifted with the changing market. ‘With the market conditions, we’re trying to find a price point that will sell,’ developer L. Ray Rachuba said. (He) talked about basic, starter houses as being a forgotten market.”
“Rachuba cut lot prices in half in the Antietam Commons development in southern Franklin County’s Washington Township. He also bought Mill Creek Acres in Chambersburg from Ryan Homes, dropped the asking price of each house $40,000 and offered closing assistance.”
“Developers accustomed to getting 18 percent to 20 percent profit now are looking at 7 percent or 8 percent, Rachuba said.”
“‘I’m just as guilty as anyone for overpaying for land and trying to maximize (a return),’ he said. ‘We forgot, I guess, that pull for a 350- or 400-thousand-dollar house is only so strong.’”
The Asbury Park Press from New Jersey. “There are signs of life at Hawkins Ridge, a Kara Homes development in Jackson. (At) several other former Kara Homes developments, now owned by Maplewood, which bought Kara out of bankruptcy..the new company is injecting more than $90 million in operating and construction cash into the projects.”
“Maplewood is willing to take into account the deposits that were given to Kara, essentially discounting a house, said Lakewood developer Glen Fishman, one of the investors of Maplewood. Maplewood does not have access to the deposits given to Kara, money that, unless it was bonded, is gone. In many cases, the deposits represented 10 percent of a home’s purchase price.”
“‘We are giving these homeowners who endured a tremendous amount of pain in this bankruptcy basically a 10 percent discount on a house,’ Fishman said.”
“Janak Goyal said he is moving forward on his contract to buy a $1.3 million home at Buckley Estates in Marlboro. He had given a $210,000 deposit to Kara, an amount that Maplewood will assume, and had expected to move in in September 2005.”
“‘I have no choice,’ Goyal said. ‘If you don’t sign, you are an unsecured creditor and you get 9 cents on the dollar.’”
“But some work performed by Kara, which he didn’t like, won’t be changed, he said. Plus, he still has to pay the same price for the house, even though he won’t be able to sell his current home for the same price had he sold it in 2005, when the market was healthier, Goyal said.”
“‘I am losing anyway,’ he said.”
The Baltimore Sun from Maryland. “Samantha Stoney bought her house in Canton for a lot less than the sellers had originally hoped to get, but the good deal didn’t end with the $243,000 price. They covered most of her closing costs, too, a $10,000 incentive.”
“Originally listed at $300,000…the $10,000 toward closing costs ‘really made a big difference,’ she said. ‘I didn’t have to negotiate anything,’ said Stoney. ‘I probably wouldn’t even have asked for quite that much.’”
“In effect, the sellers received $233,000. But that’s not what got recorded in the home sales statistics.”
“Amid a deepening housing slump, givebacks have become increasingly common, even expected as a matter of course here and nationwide, economists and real estate agents say. And because they’re unmeasured, they mask an erosion in housing prices.”
“These discounts are so widespread that some economists think that prices in the Baltimore area - up about 2 percent so far this year, according to official numbers - have really declined.”
“‘They’ve probably been falling since late last year or early this year,’ said economist Mark Zandi.”
“Local real estate agents say homeowner givebacks are typically worth 2 percent to 5 percent of the home’s selling price, significant cash. Five percent of a $400,000 home is $20,000. Some homebuilders, meanwhile, are advertising incentives of up to $100,000.”
“And it doesn’t look as if sellers will be able to stop soon. In the Baltimore metro area, the number of unsold homes on the multiple listing service hit its highest level on record last month, just over 20,000.”
“Sales were down 17 percent from last August - and nearly 40 percent from August 2005, the end of the housing boom.”
“Builders are offering incentives, said Metrostudy’s Kenneth Wenhold, to compete against all the older homes for sale and to grab a bigger piece of the new-home market while the grabbing’s good. ‘What they’re basically doing is slitting the other builders’ throats in an attempt to capture market share,’ Wenhold said.”
“At Ovation, a luxury condo project in Columbia, Ryland is covering a year’s worth of pricey condo fees. To bring attention to its Church Hill Hunt community in Queen Anne’s County, it promises buyers help in selling their current homes.”
“‘The people making money in real estate today are not the ones selling it; they’re the ones buying it,’ said Earl Robinson, VP of sales and marketing with Ryland, who estimated the value of the company’s incentives at ‘upwards of $100,000′ in some communities.”
$ink or $wim
“‘It’s kind of like feeling you have lost everything,’ Stone said.”
you didn’t have anything.
“She decided to drop out of the Section 8 rental subsidy program and become a homeowner after attending a seminar at a Dorchester church. But Stone’s dream turned bitter the day of the closing, when she was told the $2,500-a-month payment she and her partner were promised, turned out instead to be close to $4,000.”
Uhhh… dropping out of Section 8 rental subsidy and taking a mortgage on a $480K house? wtf?
That must have been some seminar.
close italics
And, she signed anyways. And expected what? To win the lottery?
Unless she’s physically disabled, why not get up and walk away?
Greed.
Just incredible, from Section 8 one month to a 480k house the next! What a country!
My jaw dropped when I saw that too. From section 8 to a 480K house is one big freakin’ leap of faith, no matter what church you attend.
It’s a fraud deal…… period.
no matter what church you attend
Scammers long ago realized that all you have to do is call yourself a Christian and 30% of America will believe anything you say.
Write “Church” on the door of a casino and have a guy stand outside holding a bible telling all that walk by that God told him that this is ok and enough people would fall for it to make it a profitable venture. Scammers pretending to be preachers have been leaching money from the pockets of naive Americans for decades.
What happened to the critical thinking?
1) Why did the church allow such a seminar to be associated with them in the first place?
2) Why didn’t Ms. Stone evaluate any claims independently?
Why the hell is she on section 8 when her and her “partner” earn $66K combined? Because she files as single with three children? I can’t stand this bull. This household earns as much as my parents (living in the same state) and yet they deserve housing subsidy from the state. How about moving to a lower cost of living area and supporting yourself without government aid. Damn leaches.
There is something very wrong here…
And her “church” is in on it too! The only Scamster that ever spoke at my [Synagogue] is congresswoman Anna Eshoo, and she didn’t try to sell us anything like that!
Dorchester is on the cheaper side. Last Census indicated it was a minority, low-income, and immigrant area, for the most part. (There are some more expensive homes there.)
The SFH’s and even attached housing tend to be ridiculously high as compared to rent. There have been periods where the purchase prices hit the floor. Those who held on or even bought when things looked bleakest have made out like bandits since.
Still, what kind of nudnik signs up for $4k a month?!
BTW, not getting married for tax reasons is an old, old tune in Massachusetts. Very typically done to keep Medicaid benefits. I know a couple in Florida who did the same thing … 19 years before they finally married.
Kinda silly.
Well, consider that she and her (female) partner have only been able to get married for three years, and that’s only because they’re in Massachusetts. Anywhere else in the country won’t let them get married.
“That must have been some seminar”
Ha!
The Big Rock Candy Mountain…
“And it doesn’t look as if sellers will be able to stop soon. In the Baltimore metro area, the number of unsold homes on the multiple listing service hit its highest level on record last month, just over 20,000.”
you can’t even give me a house for free…not worth risking my life.
Well, some parts of Baltimore City are not too terrible. It depends on where you are looking. But you are right, in some parts of that city, I’d not take a free house either, certainly not if I had to actually live there.
closing italic for de
I read somewhere today that inventory is at the highest level since 1989.
Well, in real dollars the 1980s housing price bubble peaked in 1987, then prices were flat in nominal dollars (falling in real dollars) until 1989, as sellers held out for prices buyers could not afford and volume plunged.
The big nominal price drops followed in 1990 and 1991, as a recession hit.
So, does 2005 (the real price peak) equal 1987, did 2006 (the delusional “there is no bubble year”) equal 1988, and does 2007 equal 1989? I’ve seen this movie before, although I expected the pictures would fly by at a higher speed.
Damn good analysis. I would say ‘yes’ to your question. After revisions and inflation adjustment, we’ll be looking back at the last two quarters of this year as the beginnning of the recession. Hence, it’s safe to assume we’re already in one.
If your analysis is correct, then both the price adjustments and the ultimate bottom must be a greater % decline as interest rates were Rising and the exotic mtges weren’t a factor back then and the Bond Vigilantes looked after inflation in the bond market (i.e. high rates for mtges).
Today we have ‘full employment’, the Fed LOWERING rates (or trying to) and the 10 yr bond is at a laughably low yield while inflation is ignored.
sorry, forgot to add the old Mark Twain maxim “History does not repeat itself, but often rhymes.” (paraphrased)
So build in some leeway in your model!
“But Stone’s dream turned bitter the day of the closing, when she was told the $2,500-a-month payment she and her partner were promised, turned out instead to be close to $4,000.”
Why didn’t she just cancel? In Florida buyers of large ticket items have three days to change their minds.
This woman sounds retarded.
Or maybe just Stoned.
From yesterday’s CA thread:
We all have dreams…to be in a house we can call our home! but, when we are like puppets and was told you can have this piece of chocolate for a penny, we all got trapped and bought into what we thought a deal!!!! To all those who thinks and judged those people who have gotten tangle up into a mess….wait for your turn, because it will come your way!”
Instructive, to those of us who are not like puppets.
Wow ,just because people are stupid greedy goofs ,that means the ones that were not taken in will get it one day .Did I read the quote wrong or is that what this author is saying ?
Maybe this author is talking about the fact that the taxpayers will pay for the mania and people who don’t deserve it will pay for the folly of others ……?
I think she was saying we shouldn’t gloat if we didn’t get taken in because karma is a biatch.
Karma is a biatch, and that is why I stay on her good side, by being a moron and/or puppet as little of the time as possible. Besides, isn’t wishing for future doom to others bad karma?
Life is hard, it’s even harder when your STUPID!
John Wayne quote
They probably told her at closing that her payments would be $4000, but she would just die if she couldn’t get that house. It would ruin all her dreams.
“The people making money in real estate today are not the ones selling it; they’re the ones buying it,’ said Earl Robinson, VP of sales and marketing with Ryland”
Spoken with a straight face, as only a true VP of sales and marketing could do.
Is this the same as when the local mall says I can save buy buying more?
If he means making fake money just like the paper profits that are now evaporating then maybe those who “buy” his line of BS can “make” some.
Is it just me or does anyone else wonder why such transparent transparent deception is not seen for what it is by more people? And why doesn’t the MSM call these liars on such statements? Just wondering.
And why doesn’t the MSM call these liars on such statements? Just wondering.
Simple. The MSM have to sell commercial time. Some of their biggest customers are RE agents and new home builders. Wouldn’t want to upset your customer with bad pub.
“It’s not going to be easy riding the change in fortune. ‘When people have been eating caviar for a long time,’ Morgo said, ‘it’s hard for them to get used to beans.’”
These quotes are really disturbing. Who TF are these people? Who has been used to eating caviar for so long? The sense of entitlement and greed: two essential elements of the housing bubble.
‘Sometimes,’ Lisa Johnson said ruefully, ‘ignorance can get you in a lot of trouble.’”
Ignorance, another necessary ingredient of the mania.
I had no idea that so many Americans have derailed off the Common Sense train, not to mention the Have Some Idea of Your Station in Life Local. What in God’s name is happening to our country?
Is it the contrail sh!t that they’re dusting us with (according to Art Bell)?
Seriously, I just read yesterday’s Cali thread and now these quotes have me believing a lot of our nation’s citizens are simply delusional, or just plain stupid.
I’m wondering the same re the stock market participants. Already the DOW is up to almost 14.
Seems like the maniacs went from the housing market into the stock market.
~Misstrial
“I’m wondering the same re the stock market participants. ”
This is only anecdotal but investor friends I know suffer from a commn foible: Because these people have made money from their investments the past several years, they consider themselves pretty savvy. Any contrarian information is often argued as being from a less than valid source when balanced against their intelligence. I often find these people will never argue underlying economic facts. They only answer that they’ve been very successful in the past and don’t see any reason why that should change.
“This is only anecdotal but investor friends I know suffer from a commn foible: Because these people have made money from their investments the past several years, they consider themselves pretty savvy. Any contrarian information is often argued as being from a less than valid source when balanced against their intelligence. I often find these people will never argue underlying economic facts. They only answer that they’ve been very successful in the past and don’t see any reason why that should change.”
Succinct way to describe this phenomenon, I completely agree with you, CarrieAnn.
~Misstrial
Don’t waste your time on these people - they are simply intellectually dishonest.
Yeah, I’m a genius because my portfolio went up - I don’t know why or what may affect its performance and I have no way to wiegh that kind of information
objectively because I am too stupid and lazy, but, hey look at my statements -I’m a F*ing Genius!!!!!!!!!!
You will never find out about their losers, losses or ultimate performance. They crow about winners and justify their luck by effectively arguing .”so good, so far.”
THEY DESERVE TO LOSE EVERY PENNY THEY HAVE RISKED.
Dang them ,dang them ,
They ought to take a rope and hang them
High from the highest treeeeeeeeeeeee
Really ,there was a lot of promotion of real estate using fuzzy math and myths .It didn’t help matters that lenders would go on anything and anybody . Easy money was a dream for the REIC .Can you imagine salespeople and builders being able to say anything they wanted without being challenged ,in fact getting the support of the media ,with financing to fund a mania of anything goes .Borrowers actually believed that they could just refinance down the road or sell and the objective was to just get in on the sure bet investment of real estate .Stupid and delusional the citizens were …..but where does that put the lenders who are actually going to take the loss of this mess …if it isn’t the tax payers ?
“Is it the contrail sh!t that they’re dusting us with”
LOL, phillygal, I was just wondering about that over the weekend. I had read about it and sort of brushed it off, but then was pondering the mass insanity, weather changes, widespread health difficulties, etc. Of course, they didn’t have chemtrails during the tulip bubble, South Seas bubble, etc. But then again, I do think there’s something to that chemtrail business, although what it is, I’m not sure.
Living in the Southern part of the US, I’m a little concerned about that dengue fever, especially since the bro’ has had it, because he works part of the year in the Caribbean.
“The mosquitoes that carry dengue are thriving in expanded urban slums scattered with water-collecting trash and old tires. Experts say dengue is approaching record levels this year as many countries enter their wettest months.”
That’s in Latin America, but in the Southern part of the US, could become a problem as the bust unfolds, in areas of abandoned homes, slums, run down trailer parks, squatter areas, etc.
i remember art bell when he was pure politics.. name of the show was Coast to Coast but had just the one transmitter in Vegas.
One night, after hanging up on yet another nutcase he commented “If i wanted this phone ringing off the hook 24/7 I’d switch the topic to flying saucers.”
And, he did.. and really went ‘coast to coast’.
You are seeing the real problem - these pathetic delusional folks are the same people driving on the streets and voting. Come on - you have seen them for years and seen what utter chaos they create by living in their own little worlds. Ignorance is bliss to them.
All you needed then was EZ Al and his just give ‘em the money policies, and boy, every delusional pea-brain went out and joined the mania. What foreign foe has ever done as much damage to the country as Al Greenspan and friends?
well, you needed Greed, Sense of Entitlement and Ignorance to cause this multiyear bubble, but only the sharp point of FEAR is required to pop it and quickly.
BB and the Fed know it and they are going to BLOW IT BIG TIME.
It’s the excess of the 80’s all over again.
You really don’t want to know what Model C looks like…
“To give an idea of the state of the home builders’ business these days, Ira Tane has switched from Model A to Model B. The big difference is that not only is Model B smaller, 2,000 square feet smaller, but the lower price means it’s the one selling nowadays in Long Island’s new-home market.”
Model T will be next!
“In effect, the sellers received $233,000. But that’s not what got recorded in the home sales statistics.”
I worked for several years in the software department of a major title company where we developed many of the comps searches used by appraisers and realtors. If we cannot trust the underlying data, these are useless!
Which also why all those banks and hedge fund which was buying up RE paper went wrong. They believed their computer screens when the underlying data of liar loans made that data wrong.
Is this legal?
Wretched Exce$$
“‘Building a five-bedroom home that’s 5,000 square feet, you make a lot more money than a two-bedroom town house that’s 1,200 square feet,’ said Jim Morgo, Suffolk County commissioner for economic development and workforce housing.”
“…leaving potential profit on the table…” ??
Suppose many tables are breaking into pieces these days with the weight of those potential profits.
Loosely translated, “potential” is a French word that means, you haven’t done a damned thing yet…
So what I dont get is that if the builders had 20% margin and that isnt working anymore. Why not take 7%
Also I got confused with the comp stuff paying closing costs. Why not just lower the price of the home.
“Why not just lower the price of the home.”
Because the buyer does not even have the cash for closing, much less a downpayment.
Believe me, it was a lot higher than 20% in many bubble areas. 10% has historically been the reasonable take by good custom builders…
I used to work in marketing for new construction. Our builders considered a 20% margin chump change.
hmm.. 7%.
get involved in a 300K house deal of any sort.. to make a whole 21K in profit? No way.
Because the realtor gets to make 6% commission on that down payment.
Oh yeah, whilst on the Baltimore topic, anecdotal from Western Maryland:
Incorrigible flipper friends of mine bought a place in Hagerstown about a year ago for just over $300k. That was almost the peak there. Within six months, the builder was selling the exact same unit for $250k and less. Ouch!
Then turn to this summer, when the builder had already realised that the prices were too high, so new units are slightly smaller and going for $199k. Double ouch! Oh, did I mention half price options?
These friends now want to move because his job moved back here to the Northern Virginia part of DC metro area. Move? Sell?? NO CHANCE! They owe $286k on the house, and have no savings and two big car payments. To sell with agent commission they need to get a sale at $305k just to keep from bringing money (they do not have) to table. Their neighbour can’t even sell his place for $250k. $305k is completely impossible.
They are becoming depressed with the hellish 130-mile daily round trip down I-70, I-270, and the Beltway, as they run their new cars into the ground. I cannot even consider telling them “I told you so”. Poor, stupid flippers.
“….and two big car payments;”
“….as they run their new cars into the ground.”
Wouldn’t happen to be lease cars, would they???
One more thing, its impossible for me to feel sorry for flippers who couldn’t even do the math on a calculator for their daily commute distance.
Amazing story, thank you for posting it.
~Misstrial
Not sure what were they thinking (not thinking at all?). Hagerstown is at least one hour away from DC (assuming no traffic).
The good news is it seems like they are at least paying down their principal. Maybe they can move after 2 or 3 years. If this is an interest-only or option ARMs, then they are screwed.
What they were thinking at the time is this: After losing a pile of money on their previously flip as the market staggered in 2006, buying way out as far as Hagerstown was the only way they could afford a place on their incomes and minimal down payment.
Their further thinking/wishing is that they would buy this place for $300k, and sell it a year or two later for $350k. Seriously. More like “seriously oops”.
And yes, they are paying down their principal. Lucky for them, their loan is through the builder, so it’s a more or less standard 80/15 fixed rate. In three years from now, they will owe “only” $267k. Unfortunately, that’s way off from anything they can sell for. They get down to $250k in 2013. Maybe they can sell it them for that price. That’s a lot of years of painful commuting.
My heart does not bleed. Though they are both quite ignorant (IMHO) of financial matters, they are not the innocent homeowner caught up in the market. They flipped, and flipped, and bought new cars, and specifically avoided renting even in their last failed flip, and they were and still are looking for easy money.
Hagerstown an hour? It has got to be much more than that. I think Frederick is about an hour and Hagerspatch is further away. Whatever.
I think he said his commute was usually 1:45 hours each way, sometimes up to 2:30 hours one way on bad days like Friday PM. Misery. Good thing he loves his (expensive) truck’s sound system. Problem he’s found lately is that he can’t switch to any job in Hagerstown because the pay cut in comparison with a DC salary would decimate his finances, so he’s doomed to this commute for a long time.
walk away, destroy his credit and move on like everybody else.
Principle on a 30yr loan would probably be paid down 10-15k after 5 years. They’re going to be there a long time.
Well someone had to be the flippers so someone else (brains intact) became the millionaires.
hellish 130-mile daily round trip down I-70, I-270, and the Beltway
They can take the MARC Traing from Frederick to DC and then bus or metro rail.
MARC train from Frederick?! So he takes 30+ minutes to drive to the MARC station, then wait for the train, then it’s 1:30 hours to get to DC! Then Metro into Virginia. Unfortunately for him, he works in McLean and not near any Metro stops. Hell on earth. Cars, trains, buses… all morning long. Maybe he can stick a boat segment in there for good measure.
You have just given us a prime and concise example of economic behaviour without regard to reasonable risk that is rampant today. I am therefore further persuaded by each and every anecdote that a substantial repricing is coming because these are MAIN STREET STORIES meaning this is happening all over the country.
Only the Fed could decry housing as a ‘local’ and thru their meddling and negligence (think FNM, tax deductions, etc.) make it not only ‘national’, but a national crisis.
You are now depending on an incompetent Fed and deadbeats to revive or even save the housing market. Good Luck.
MARC Train goes to Frederick and martinsburg, WV. Have him check out that option, combined with bus or Metro.
http://www.mtamaryland.com/services/marc/schedulesSystemMaps/marcTrainSystemMap.cfm
Note my response above about how long it would take him. Let me tell you, I have taken trains+buses before, and that kind of commuting stinks. Add a drive onto it as well? No way. There are many times when public transport is just impractical, and this is one of those times.
Also note that MARC doesn’t cater to someone who might have to work overtime because you get stranded in DC if you can’t get out of work and to Union Station by 6:30 PM. I just checked the schedule:
So he somehow gets to a Metro station via bus. Then Orange Line from VA into DC, then swap over and change to Red Line to get to Union Station — and he BETTER be there before 6:30 PM (last departure of the evening) which gets him to Frederick at 8 PM. Ugh! Then he gets home to wife and kids at… 8:40 PM? I’m guessing THREE HOURS each way if he uses public transport!
MARC is just an option. For me 30 min. on the train beats 30 minutes in traffic. But to each his own. He can try to get another job in the DC area that’s closet to MARC or Metro stops without a pay cut.
The last Martinsburg, WV train leaves DC at 7:15 PM. Also, Martinsburg is closer to Hagerstown, and I believe it has fre e parking.
He can also try to negotiate a work-from-home on Fridays arrangement or a M-TH 10-hour work schedule.
No, no, no. Martinsburg is 30 minutes from his house, only 10 minutes closer to his house than Frederick, and that pokey slow MARC train takes EVEN LONGER from Martinsburg — two hours to DC!!! Did you even do the math here? Can you say total of 6+ hours round trip w/ Metro on it? So anyway, MARC certainly is an option, but it’s a very poor option.
Now if he could telecommute, sure, but some jobs (like his) require hands-on and being there. All this negotiating work-from-home and 4-day weeks is a somewhat special case. Most employers I’ve dealt with will have nothing to do with that for the average worker. Sounds nice when we read about it in a magazine, but then again, his lovely, overpriced house sounded nice as well.
The problem he has, as is obvious, is that with a job he wants to keep down near DC, he was a complete idiot to buy a place so far out that he has to subject himself to these commutes, be it hours on car/train/bus, or marginally less in just a car.
Yes, he was an idiot, but what’s done is done. I figured that since he was a friend of yours, you’d run some commuting options by him in case he hadn’t already considered the commuter train.
I take the MARC to DC, although from a much closer location, and I can’t even imagine going back to driving that stretch.
In your friend’s situation, in the short term, and assuming the house can’t be dumped, I’d rather ride the MARC where I can at least relax rather than deal with the commute. I imagine the fatigue of driving 2.5 hrs will at some point affect his work performance and marriage.
“It’s not going to be easy riding the change in fortune. ‘When people have been eating caviar for a long time,’ Morgo said, ‘it’s hard for them to get used to beans.’”
I prefer beans to caviar. That way I can fart in the faces of all the caviar eaters!
Caviar eaters can fart too. It just smells fishy….
Even though I’ve been places that have served it, I never ate it. It just looks disgusting and gross to me.
” She paid off the $15,000 home in full, but six years ago, she refinanced it to pay for new oak cabinets and other items for the kitchen.
In 2004, she and her husband, who works as a handyman at a Manhattan apartment building, fell behind on the payments of $1,800 a month. ”
What no pictures? I want to see what kind of a kitchen $1,800 a month buys.
Finally! After reading this blog for YEARS, there’s SOMEONE I feel SORRY for!
But this feeling comes with a feeling of danger. Real sob-stories like the sisters above will be used as the anecdotal evidence by Hillary Clinton to bail out EVERYONE who can’t pay his mortgage, including the folks who got I/O mortgages in 2004 (when 30-year-fixeds were 5.5%) and who re-fied three times to buy Hummers, Plasma TVs, and Granite Countertops.
Is it a real sob story? It could be, but this caught my eye:
Southeastern Queens, with its tree-lined streets, tidy front yards, and minivans and Cadillacs parked in garages and in front of houses, does not outwardly appear troubled.
There was never a mention of them living frugally. The article would have noted if they weren’t taking trips due to their practical lifestyle.
Better to get the home into the system and prices down to affordable.
Got popcorn?
Neil
Southeastern Queens is mostly minority areas…off the Van Wyck on the way to JFK Airport. St. Albans, Queens Village Cambria heights, Hollis, Springfield Gardens. You need to take a bus to a subway, and hard to live without a car in those areas.
Its not the cars that bother me. I expect that. Its how they pointed out it was “Cadillacs.” Mini-Vans are practical, so that’s ok. I’ve seen people lose a home over driving too uneconomical of a car. The first friend I saw go bankrupt did so because he had to have a ‘cool ride.’ So I’m a bit attuned to this.
Neil
Yeah, there was an article in GQ last year about how in Los Angeled some people’s monthly car lease payment exceeded their monthly rental - when asked why, to a man (or woman) they all cited ‘image’ as the priority. (quote: “In L.A., you are what you drive!”)
We’ll see how you feel about that car in a couple of months when its repo’d.
What a bunch of losers - no self confidence and immmeasurably low self esteem.
Its not the cars that bother me. I expect that. Its how they pointed out it was “Cadillacs.”
Youngstown OH is about 25 miles north of us. The poorer they are the bigger the cadillac. Mostly older boat size ones. We used to joke that you can live in you car, but you can’t drive your house.
A real sob story? Selling your house to pay for a heart operation sounds like exactly what your plan needs to be if you don’t (or can’t) save enough money to have a decent retirement nest egg.
I know “selling the house” is a main feature of several (ill-conceived) retirement plans by friends of mine who expect to pay for everything in retirement with nothing more than their “housing investment”.
Just a headsup for everyone that knows about my Mortgage friend who is underwater.
She is closing 2 loans a month now and is officially on what she calls a “spending restriction.”
I guess all those trips to Vegas and NYC aren’t going to be happening anytime soon. I guess when it rains it pours.
Any stories from you all with friends who were in the lending / RE industry?
Tom, is this the one with the houses in MiraBay? If so, good luck to her.
Not to hijack the Middle Atlantic thread, but we haven’t had all that much rain here in FLA during this “rainy” season. Even the weatherman was commenting yesterday that they are hoping for a little more rain before the “dry” season, which is typically November through May. If it keeps going this way, some of the FLA developments may not make it through the dry season.
Palmy,
Wasn’t there some voice in the wilderness, warning about the Florida drought 6 months ago?
Hey, aladinsane, I already capitulated to you on this one. Point taken.
It’s been raining buckets here in Palm Beach County. From what I’ve read in the Palm Beach Post, however, it doesn’t provide much drought relief when it rains along the east coast because the runoff is not captured in Lake Ogrechobee.
San Diego will be Ground Zero for the California drought, as if Tijuana-adjacent didn’t have enough problems real estate-wise and local government-wise…
Is there some connection between droughts and “great depressions?” Dust Bowl anyone?
The whole south, east of TX & LA, is in a drought with large parts of TN, AL & N GA in hundred year drought conditions
http://tinyurl.com/25bswj
But, we do have water underground in some areas. I saw a special on Death Valley and it seems there is some huge aquifer underneath the desert there. Weird. I never understand stuff like that. You’d think the area would be verdant, with all that water underneath the ground.
It’s kind of like northwest Texas, with unbelievable amounts of water underground, but so far underground that tree roots can’t get to it.
A lot of aquifers in this country are many thousands of feet down, out of reach of anything but wells. I grew up in a place where our municipal well was down into one of those aquifers: 3900 feet (more or less). The aquifer was fed in a state north of us and migrated hundreds of miles southwards and downwards.
The High Sierra had zero snow, after late April this year…
The previous 2 years were bountiful, and natural springs continue to flow 24/7, albeit slowly.
This year was a rather amazing year for fisherman in the backcountry.
A friend pulled a 23 inch, 5 pound brook trout out of a river that has never yielded anything that size, the standard bigger trout usually is about 11 inches and weighs less than a pound.
Lots of trout resorting to cannibalism, as there wasn’t much to feed on, and the big fellas had no place to hide.
Shoot, don’t know what happened to the other post, but aladinsane, I conceded you were right a few months back.
She has 2 houses in Mira bay and some Condo in Channelside she can’t get rid of. She also has a few more houses in Apollo Beach. She lined up overnight and won a lottery to buy these albatrosses.
I remember when they had that lottery. She could have made out if she’d flipped the contracts, some people did that. Camped out and made anywhere from $14,000 to $30,000, is what I heard, back in 2001, 2002.
Incredible. The Russian Roulette of housing
“‘What they’re basically doing is slitting the other builders’ throats in an attempt to capture market share,’ Wenhold said.”
Grabbing market share when margins are positive is noteworthy. However, grabbing market share when margins are negative and sliding into the abyss is like claiming to be the greatest fool.
No. The builders have fixed (or sunk) costs. Ignore house construction costs for a moment. If they bought land for 100k and sell it for 80k they are better off than if they wait (by keeping prices high) and sell it for 50k.
You make a good tactical point for minimizing losses in the short run.
However, the way to larger market share in the current housing environment is by lowering price more than competitors. In response, competitors will lower price more than you. In the end, the one with the largest market share has the largest losses because each additional unit contributes larger and larger negative margins.
IOWs, when prices bottom, the competitor with the largest market share also has the largest losses. So, claiming the largest market share is like claiming greatest fool status. If margins were positive and increasing and you had the greatest market share, then making the largest market share claim would be noteworthy.
“The sisters could not handle the payments. They defaulted on the mortgage last fall. ‘Sometimes,’ Lisa Johnson said ruefully, ‘ignorance can get you in a lot of trouble.’”
I don’t feel sorry for them. Sounds like the ol’, grown kids living with mommy and daddy thing again. “What, they didn’t leave us a paid -off house??”
Numbers that I have seen for (straight-up payment, non-insurance) bypass surgeries range from $20k to $75k for complicated ones. Even a messy heart valve replacement I saw a cost of $87k. A house in Queens can’t be worth less than that, can it, even with negative amortisation over a couple of years? Where’s the rest of the money?
Why didn’t they just sell the house off as soon as they realised they were in trouble and move to rental digs? Big mistake, if so. Surely they could not have blown the entire equity in a paid-off Queens house on a heart bypass operation alone.
Read carefully: it appears that the refinance causing trouble was 4 years after the mother’s surgery. In press stories about housing-bubble victims “refinance” is doublespeak for ELHACW (extremely-large-house-ATM-cash-withdrawal). Perhaps they were swindled by the mortgage broker and the reporter decided not to print that? But it seems the connection to the cost of the mother’s surgery (that was not a financial strain for 4 years) is mainly there to create sympathy, without it the story could not be published. (Even NYT journalism is now more about manipulating your emotions than objective reporting.)
“Even NYT journalism is now more about manipulating your emotions than objective reporting”
Agreed, the NYTimes on it’s RE pages is still happily pushing stories on multi-million dollar vacation estates, while the news section is pushing anecdotal sob stories with little analysis, or critical questions by the reporter.
On mortgage and immigration stories, the NYTimes editorial bias is unmistakeable, it’s not even subtle. These sob stories are the smoke to promote more rate cuts to help their Wall St. constituency. And oh, the poor immigrants, to help their corporate pals.
“‘Building a five-bedroom home that’s 5,000 square feet, you make a lot more money than a two-bedroom town house that’s 1,200 square feet,”
“(He) talked about basic, starter houses as being a forgotten market.””
The basic center hall colonial house circa 1980 is ~2100 square feet, plenty big. What do you need 5000 sq ft for?
And I thought the new starter homes were “attached product.”
Sorry, those older center hall colonias were all 4/2.5.
You need 5,000 square feet so you can have the huge custom kitchen where you can open up the delivery pizza and Chinese food cartons and put it on the dish so you can eat it in front of the TV ignoring your huge dinning room which you never use.
Builders don’t want to build 1200-2000 sf because of several reasons:
1)Lots on expensive houses can be marked up a lot more than on a cheaper house
2)The expensive extras have a lot more profit margin than formica, etc.
3)Three car garages aren’t that much more to build than a two, but they can mark them up a lot more.
Had to do it, a rather smug manager ( large tract well known big builder) two years ago told my wife and i stand here and if we get time a sales assoc will tell you if we have any lots left and the price increase then walked away. Well Sat we went back to see if the gal was still there and yes she was only this time she was the sales rep and as polite as a southern bell. May we help you she said and i said, “the lots you have left, do we have to stand here and get permission to discuss them?” With a puzzled look she said, no of course not we have all day to discuss your needs.
‘What they’re basically doing is slitting the other builders’ throats in an attempt to capture market share,’ Wenhold said.”
Arrright!? GO! Yes! Oh, wait…that was meant figuratively. Damn.
LOL…
…we find the defendant not guilty by reason of financial sanity, Your Honor..
“She decided to drop out of the Section 8 rental subsidy program and become a homeowner after attending a seminar at a Dorchester church. But Stone’s dream turned bitter the day of the closing, when she was told the $2,500-a-month payment she and her partner were promised, turned out instead to be close to $4,000.”
“‘It’s kind of like feeling you have lost everything,’ Stone said.”
I bet she put no money down, in which case she actually lost nothing. Boo hoo.
I hope and pray she doesn’t get her section 8 back…THAT would be Fair Justice.
You mean you hope the LL didn’t get the Sec. 8 back.
Section 8: welfare for slumlords.
Just read on another blog that WaMu is now making all mortgage brokers give proof of FULL DISCLOSURE to the buyer and that the buyer sign that they understand not only the kind of loan they are getting but how MUCH in commission the broker will receive and that they understand what the broker is being paid…ABOUT TIME!!!…gee…where did that finally come from???
mortgageBrokerVersion2007 = travelAgentVersion1999
Here is a copy..a little long..of what has been sent to the Florida Mortgage Brokers…and probably everywhere else..
The Florida Association of Mortgage Brokers offers guidance on how to comply
with the changes to FS494 regarding disclosing the exact dollar amount of yield spread premium to the customer.
Dear Member,
On October 1, 2007, significant changes to FS494 will become effective that will impact every licensee regarding the type and timing of disclosures made to the consumer.
The FAMB has received countless inquiries from licensees, both members and non-members, asking how best to meet the new disclosure requirements. Specifically, the greatest
concerns have focused on the actual form of disclosure. Many of our members expressed concern that this would force a new “broker-only” YSP disclosure, again
highlighting our wholesale earnings and resulting in an “un-level playing field”. Others were concerned this change would require a new mortgage brokerage agreement to be signed, which in essence, could open the renegotiation of our fees.
We are pleased to report that we have met with the Office of Financial Regulation to gain a better understanding of their expectations with regard to the new disclosure
requirements. The following highlights the major changes and offers some suggestions on how you can remain compliant under the new statutes.
1. Mortgage Brokerage Agreement:
Any fee paid to the mortgage brokerage business, by the lender (YSP), must be stated as a maximum dollar amount. Further, the mortgage brokerage agreement must be signed by the business and the borrower within three business days of application. We recommend all licensed mortgage brokers review their current agreements to ensure the proper language is present. You may no longer
disclose your YSP as a percentage range. We have confirmed that both EllieMae and Calyx have modified their respective Mortgage Broker Contracts to reflect this
change.
2. Disclosure of exact YSP to the Borrower once known:
According to the revisions to FS494.0038 (2) “The exact amount of any payment of any kind by the lender to the mortgage brokerage business must be disclosed in writing to the borrower within 3 business days after the
mortgage brokerage business is made aware of the exact amount of the payment from the lender but not less than 3 business days before the execution of the closing or settlement statement. The licensee bears the
burden of proving such notification was provided to the borrower. “
I know I had posted a couple of weeks ago how the brokers were all in talk about how they were going to make 7 points on the FHA or as some were calling it “the new subprime.” Well I hope that people will look at how much $$ the broker is REALLY making off of them as ask themselves, “Is this guy giving me the best loan for me or for him?”
Mortgage brokers are a big rip off. A large bank in our area charges $1400 flat fee to get a loan. I doesn’t matter if your house is $10,000 or $1,000,000. It’s still the same transaction regardless of price. Percentages are nothing but a rip off. A lot of banks have a flat fee. This bank even paid it’s loan officers by commission. If they wanted to make more money they had to process more loans. However the lending standards were fairly strict, even through all this sub-prime.
Thought you would all find this interesting…
The Florida Association of Mortgage Brokers offers guidance on how to comply
with the changes to FS494 regarding disclosing the exact dollar amount of yield spread premium to the customer.
Dear Member,
On October 1, 2007, significant changes to FS494 will become effective that will impact every licensee regarding the type and timing of disclosures made to the consumer.
The FAMB has received countless inquiries from licensees, both members and non-members, asking how best to meet the new disclosure requirements. Specifically, the greatest
concerns have focused on the actual form of disclosure. Many of our members expressed concern that this would force a new “broker-only” YSP disclosure, again
highlighting our wholesale earnings and resulting in an “un-level playing field”. Others were concerned this change would require a new mortgage brokerage agreement to be signed, which in essence, could open the renegotiation of our fees.
We are pleased to report that we have met with the Office of Financial Regulation to gain a better understanding of their expectations with regard to the new disclosure
requirements. The following highlights the major changes and offers some suggestions on how you can remain compliant under the new statutes.
1. Mortgage Brokerage Agreement:
Any fee paid to the mortgage brokerage business, by the lender (YSP), must be stated as a maximum dollar amount. Further, the mortgage brokerage agreement must be signed by the business and the borrower within three business days of application. We recommend all licensed mortgage brokers review their current agreements to ensure the proper language is present. You may no longer
disclose your YSP as a percentage range. We have confirmed that both EllieMae and Calyx have modified their respective Mortgage Broker Contracts to reflect this
change.
2. Disclosure of exact YSP to the Borrower once known:
According to the revisions to FS494.0038 (2) “The exact amount of any payment of any kind by the lender to the mortgage brokerage business must be disclosed in writing to the borrower within 3 business days after the
mortgage brokerage business is made aware of the exact amount of the payment from the lender but not less than 3 business days before the execution of the closing or settlement statement. The licensee bears the
burden of proving such notification was provided to the borrower. “
Sorry if it gets posted twice…disappeared on me…
How does one “chase” land, doesn’t it generally stay put?
“Until last year, Contempri Homes president Dominick Pedulla Jr. was chasing land for sale.
Appearantly the markets find this whole housing and banking crises a nonissue. Idon’t quite understand why all is well when all is not well, but I don’t see how an expected 1/4 decline in prime is such a market mover. Even the hinterlands of Upstate NY are starting to feelthe effects of this housing mess, but little or no concern seems to register with the populace as a whole. Housong shmousing, who cares, seems to be the market call.
Stocks Break Through 14,000 on Rate Cut Hopes
http://finance.yahoo.com/
Stocks Break Through 14,000 on Rate Cut Hopes
Ah, ya just gotta love it. This’ll be another “14,000, We Hardly Knew Ye”. The last orgy before the tank. I gotta say, in a way I admire the buggers for keeping things proppped up and rigged for so long, it’s awesome, but not in a good way.
Stock market is the new bubble and it hasn’t even waited for all the air to go out of the last bubble.
NEW YORK (MarketWatch) — U.S. stocks on Monday traded higher, pushing the Dow to a record high, with cheer over Wall Street’s third-quarter performance dampened only slightly by a steep drop in profit forecast by Citigroup, the nation’s largest financial services firm.
Move along folks, nothing to see here lets keep it moving along please, sir keep it moving please, thank you.
The comment that the reason the stock market was going higher was because “they are being transparent and getting all of the dirty laundry out now”. This market is soo untrustworthy right now. When there is indications the market should drop - i.e. Citigroup profits to fall by 60%. WTF! Nope market hits all time high???
Has anyone seen the auction results for Sacramento this weekend?
Soon, they’ll be giving away houses with the purchase of every new car…
“East Meadow-based businessman Steve Klar’s offer of a free, new Mercedes-Benz with a new house didn’t work as well as he’d thought it would. So many potential buyers come back for repeat visits with the same news — ‘I’d buy it in a minute if I could just sell my house,’ they’d tell him.”
test
i am in need of a home my parents are as well would you please help us we are looseing are home we want to go to killeen texas and we are in need of a home wont you please help us i have two boys as well 14/15