The Obvious Solution Is A Significant Fall In Prices
Some housing bubble news from Wall Street and Washington. Reuters, “GMAC reported a $1.6 billion third-quarter loss on Thursday, as housing and capital market disruptions caused losses to hemorrhage at its home lending unit. Results reflected a $2.26 billion loss in GMAC’s Residential Capital LLC, or ResCap, mortgage unit, including a $1.81 billion operating loss and a $455 million goodwill write-down.”
“Moody’s on Thursday downgraded GMAC and ResCap’s debt ratings deeper into ‘junk’ territory, saying ResCap may need more capital to keep operating normally.”
“‘The third-quarter financial performance of ResCap is a major disappointment,’ GMAC CEO Eric Feldstein said in a statement. ‘Weakness in the housing market and mortgage industry continues to prevail.’”
“Like many lenders, ResCap has struggled as falling home prices and rising interest rates have made it tougher for many homeowners to keep up with their mortgage payments.”
“Credit Suisse said third-quarter profit at its investment bank was all but wiped out by writedowns…of over 2.2 billion Swiss francs ($1.9 billion) in leveraged loan commitments, residential mortgages and collateralized debt obligations.”
“‘The extreme market conditions that characterized the third quarter affected many of our businesses,”‘ CEO Brady Dougan said in a statement on Thursday. ‘It is too early to predict when all of the affected markets will return to normal levels.’”
“Chief Financial Officer Renato Fassbind left open the possibility of Credit Suisse having to make further valuation changes, which may include writedowns to its credit markets exposure, cautioning that ‘fair value accounting is subject to market developments.’”
From Bloomberg. “Radian Group Inc., the third-biggest U.S. mortgage insurer, reported a loss of $703.9 million, the largest yet in an industry roiled by claims from failed home loans.”
“The worst U.S. housing slump in 16 years deepened as homeowners with private mortgage insurance defaulted on 22 percent more loans in September than a year earlier, according to an industry trade group.”
“‘Radian has higher exposure to some of the riskiest product lines, including second liens, which may continue to add to losses in the quarters ahead,’ Andrew Brill, an analyst at Goldman Sachs said today. ‘Major risks remain.’”
“‘Mortgage insurance credit losses will continue to impact our results for the foreseeable future,’ CEO S.A. Ibrahim said in the statement.”
“Credit-default swaps tied to Radian soared 123 basis points to 835 basis points, the widest level in 11 weeks, according to CMA Datavision in New York. The derivatives are used to speculate on the company’s ability to repay its debt, or hedge against the risk it won’t. They rise as investor confidence deteriorates.”
From Business Week. “An exotic form of bond insurance could be the next hidden hazard to blow up in the global credit minefield. An obscure company called ACA Capital might spark the explosion.”
“Now the crisis is spreading from Wall Street, which has taken $35 billion in subprime-related write-downs and lost more than $220 billion in stock value, to a less well known corner of the financial world, that of the bond insurers.”
“These firms sell insurance to banks and other major investors for bonds backed by mortgages and the complicated investments that hold the bonds, known as collateralized debt obligations [CDOs].”
“Anxiety has focused on ACA Capital, a small player with big exposure to CDOs.”
“A New York company with less than $500 million in annual revenue, ACA has just $326 million in capital for potential payouts if the CDOs it insures go bad. Yet it has sold coverage worth nearly $16 billion, with most policies written for CDOs created in the past couple of years.”
“Those are especially problematic vintages because lending standards grew so lax in 2006 and 2007. Many believe the subprime debacle has yet to run its course.”
“‘There was a perception that the worst was over,” says Timothy M. Ghriskey, a co-founder of the $250 million Solaris Asset Management. ‘But there’s no question this is going to go on for a while.’”
From Forbes Financial. “The US financial sector will still see ‘considerable’ write-downs in the coming 6-12 months, Pimco managing director Bill Gross told Boersen-Zeitung.”
“‘Oxygen is the enemy of bacteria, and sub-prime loans as well as other debt need fresh air and must be exposed to pricing by the market,’ Gross said. ‘Keeping loans in the books only delays this painful process.’”
“U.S. home foreclosures doubled in the third quarter from a year earlier as subprime borrowers failed to make higher payments on adjustable-rate mortgages, RealtyTrac Inc. said”
“California, Florida and Ohio accounted for 44 percent of the total, and Nevada had the highest foreclosure rate at one for every 61 households. Forty-five of 50 states had increases.”
“Foreclosure filings in the third quarter increased 30 percent from the previous three months.”
“California, with some of the most expensive U.S. homes, had 148,147 filings on 94,772 properties, a 36 percent increase from the second quarter and a nearly four-fold jump from a year ago, RealtyTrac said. Florida, where speculators bet on rising home prices, had 86,465 filings on 60,992 properties, up 50 percent from the second quarter and more than double a year ago.”
From CNBC. “I know a lot of you don’t like the foreclosure reports offered by RealtyTrac because of the methodology involved. RealtyTrac counts ‘foreclosure filings,’ which include default notices, auction sale notices and bank repossessions, so one property could ostensibly get several hits.”
“But you all should know that in the 2007 mid-year report, RealtyTrac started a new data string, a count of ‘unique addresses in some stage of foreclosure. This new metric only counts a property once, even if there were multiple foreclosure actions filed against the property during the time period covered by the report.’”
The Associated Press. “New York Attorney General Andrew Cuomo said Thursday a major real estate appraisal company colluded with the nation’s largest savings and loan companies to inflate the values of homes, contributing to the subprime mortgage crisis.”
“‘This is a case we believe is indicative of an industry-wide problem,’ Cuomo said in a news conference.”
“Cuomo announced a lawsuit against eAppraiseIT that accuses the First American Corp. subsidiary of caving in to pressure from Washington Mutual to use a list of ‘proven appraisers’ who he claims inflated home appraisals.”
“He also released e-mails that he said show executives were aware they were violating federal regulations. ‘These blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market,’ Cuomo said in a statement. ‘By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion.’”
From KATV 7. “For the second time in two months the Federal Reserve has lowered interest rates. However, if you’re looking to buy a house, experts say the federal interest rate cut doesn’t mean you’ll get a lower mortgage rate.”
“One local mortgage broker says rates actually rose just a bit Wednesday, but a local realtor says housing prices are dropping. So, even though you’re getting a higher-rate mortgage, you could also potentially pay below market-value on your next home.”
“Meantime, you’ve probably seen a few more ‘For Sale’ signs in your neighborhood lately. Realtor Joanne Homeyer explains her theory on why. ‘A lot of it, I feel like, is the bad publicity,’ Homeyer said.”
“Lender Jim Carroll says a cut from the Federal Reserve doesn’t mean you’ll save on your 30-year fixed-rate loan. ‘In the grand scheme of things we do not have a direct relationship with a Fed cut lowering our rates,’ he said.”
“Central banks, lauded as near infallible pilots of the monetary economy in recent years, are facing uncomfortable doubts about their collective grip on credit markets, interest rate structures and inflation”
“The net result is that market inflation expectations, crucial in assessing investor confidence in central banks keeping a lid on inflation over time, are now rising.”
“‘The Fed’s forecasting record is in tatters, the dollar is in tatters and inflation expectations are ticking up,’ said Nick Parsons, chief market strategist at nabCapital in London. ‘They are now in danger of losing control of every part of the yield curve from overnight out to 10-years.’”
“‘Losing control of Libor may be unfortunate, but losing control of official rates is potentially disastrous,’ he said.”
“Whether he carries part of the blame or not, former Fed chief Alan Greenspan said this month he believes central banks, including the Fed, have struggled for years to influence long-term rates central to the pivotal housing boom and bust.”
“‘Central banks have essentially lost control of markets beyond 3, 4, 5 years out,’ Greenspan said.”
“Even if you believe the leading central banks are still in charge Thomas Mayer, chief European economist at Deutsche Bank, says the dilemma they face is that ‘there is no nice, middle way.’”
“Helping debtors repay is one thing, but if inflation erodes the value of those repayments, creditors will demand a price that will lead to higher borrowing costs.”
“‘If financial markets wake up to rising inflation — then we have a problem,’ said Mayer.”
From Timberline Magazine. “The housing correction continues: Both total starts and single family starts are off 31% from year ago levels (September 2006). Inventories of new homes for sale remain at 8.2 months supply (August) while existing homes have a 10 month supply. The total inventory is 529,000 new homes and 4.56 million existing homes – that’s 5.1 million homes for sale – about double the typical inventory over the past decade.”
“To date, new home prices are coming down faster than existing homes, probably because there is more incentive (inventory carrying cost) for the builders to unload bloated inventories. ”
“A common problem, however, is that many of the potential buyers of new homes are owners of existing homes and in most cases; they need to find a buyer for their home before they buy a new home. That means existing home prices have to come down quite a bit.”
“The message to me is that the builders are really trying their best to lower inventories; by lowering prices and offering other incentives; however, until existing homes prices show more of a downward correction (thus improving affordability), the overall housing market won’t pick up much momentum in my opinion. ”
“Existing homes represent about 85% of the housing market, and because the inventory overhang is greatest there (10 months versus 8 months for new homes – and many of these ‘existing homes’ are newly bought (speculation), but now vacant, thus competing directly with ‘new homes’), the overall housing market won’t reverse course until the problems ( prices are too high) in the ‘resale market’ are fixed.”
“Prices are still too high in many regions of the country, particularly when factoring in higher interest rates and tighter lending standards which reduces the potential pool of buyers.”
“The ‘obvious solution’ is a significant fall (10% or more) in prices for existing homes - will it happen - and will it adversely affect the rest of the economy, is the 64,000 dollar question. Personally, I believe the economy is strong enough to absorb the recession in the housing market and further fall in existing home prices.”
The obvious solution indeed. Saving up a downpayment is the other obvious solution.
From MSNBC “rates on 15-year fixed-rate mortgages, a popular choice for refinancing, averaged 5.91 percent, down from 5.99 percent last week” according to Freddie Mac. So if houses are affordable and possible buyers have a decent credit record and savings, interest rates are not the problem. That rate is LOW.
I’ll be a first time home buyer. I would love to go 15 instead of 30 yr fixed and if it means saving for a years more, then I’m all for it. That possibility alone will sideline me as a buyer for a while.
Just make sure you’re not tripping on acid when you read the mortgage contract : )
Bwhahaha Hey now - There ain’t a thang wrong with citric acid fermentation!
Speaking of tripping and delllusional people….
http://tinyurl.com/yqz8g4
Sounds like a lot of them will be taking paycuts shortly.
Yep, when folks scale back, Ins is often “extra”.
What kills that the person who is completely clueless about simple ass sociology is home schooling her children. Luckily it sounds like she’ll be forced back to full time work and those kids can be saved from mom.
Gwynster,
Don’t worry too much about the kids — their future Econ 101 teachers were busy flipping houses, too.
It probably makes reading all the closing papers a lot more entertaining.
Gwynster, IMO best move you could make if you are planning on staying in the home 5-7 years. Do yourself a favor and run a monthly amortization chart for both and compare.
As much as it pisses me off to be staying in CA, UC has made both Mr. Gwynster and I offers we can’t refuse so well here for a long time, probably until we retire. We had been hoping to get out of CA but oh well. If I wasn’t going to staying for 7+ yrs, I wouldn’t even consider buying.
Well, duh. Who in US buys houses on 15 year fixed?!?!?! Shit, I bet i could find someone to underwrite 12 month loan on a 1,000,000 house with 500,000 down for high fours if I looked hard enough.
I did it. Paid it off in 10.
WT Economist,
I’ll second that motion. The only reason to pay off a house in 30 years is that the currency is devaluing … oh, wait a minute … it is.
Still, I’d rather pay off the house well before retirement age. I’ll bet that there are quite a few on this board that are on 15 yr mortgages or better.
I would doubt we are alone.
We have a 15yr too - but then we nderstand the dif. between “own” and “owe”.
A few exceptions just prove the point…
These mortgages have always been available. They are not popular because buyers want to buy the BIGGEST house they can squeeze the payment for.
I definitely agree with Evil Capitalist on the overwhelming majority of people. The norm used to be 7 year mortgages. Can you imagine what you would be able to purchase on a 7 year mortgage?
Ah, but think of it this way: if 7-year mortgages were normal, think of how cheap housing would be?
I bought my house in Sunnyvale 17 years ago on a 15-year fixed. It’s paid up now. And I bought my property in Windermere, FL for 100% down. (That’s a 0-year fixed).
It’s CHEAPER in the long run to do this! The question is really, why would anyone get a 30-year mortgage? (And why would ANYONE get an adjustable-rate mortgage when 15-year fixed ones could be had in 2005 at 5.5%)
Bravo!
We’re stuck in bubble central (central valley) or we would be looking at a 10 yr. with a freakishly large down. Running the numbers based on our hit rate (the inflation based price from 1997), we’ll go either 15 or 10 yr. Thanks for reminding me to check the rates on the shorter durations.
Can’t you get a 30-year fixed but make payments as if it were a 15-year mortgage? This gives you the flexibility to cut back to the lower 30-year payment if a crisis comes along. The interest rate might be slightly higher if you do it that way, but you could think of it as a cheap insurance policy.
Me. Refinanced from a 30 to a 15 and then to a 10. I have 6 years left.
We got a 15 yr fixed and paid it off in 13 1/2yrs. The interest saved between a 15 and a 30 is unbelievable. If I had to get a 30, I might as well rent. The interest is a killer.
your forgetting the depreciating dollar.
Borrow as much as you can now, and pay it off with toilet paper in 10years.
You pay a LOT more over 30 years than you do over 15. (And that’s why the 40 and 50 year mortgages are ripoffs! Your payments go down a small amount, but you pay it for 10 or 20 more years.)
If you’re eligiable for the Mort. Interest Deduction, and you have a low rate, say 5.5%, it may make sense to pay it off over 15 years. Otherwise, just get rid of the mortgage as soon as you can.
We have a 15-year fixed at 4.625%. IMO, that should be the maximum term that RE lenders offer, along with a 20% downpayment requirement for all potential borrowers expect veterans.
A.P.R.il Fools Day to all…
Looks like somebody is pranking with the system?
“Meantime, you’ve probably seen a few more ‘For Sale’ signs in your neighborhood lately. Realtor Joanne Homeyer explains her theory on why. ‘A lot of it, I feel like, is the bad publicity,’ Homeyer said.”
- At first I hesitated when I read Joan’s statment….but now I get it. Everything is A-OK, the media just got carried away whit itself.
Yeah, haven’t you heard? Just put on a happy face and go buy a house. Pay no attention to the plummeting prices because nobody likes a party pooper. Buck up, get out there, and go help feed a realtor!
Nowhere is Joanne Homeyer taken to task for using the discredited term “market value.”
Nowhere is Joanne Homeyer taken to task for using the discredited term “market value.”
Plus the woman should not even be allowed to have the word “home” in her name.
She is homeyer than thou.
Was it Will Rogers that said: “I only know what I read in the papers”
* Consumer Spending Slows in September- AP
* Exxon Mobil 3Q Profit Falls- AP
* Chrysler to Cut Up to 12,000 Jobs- AP
* Foreclosure Filings Soar in 3rd Quarter- AP
* Credit Suisse Cuts Profits
Tom Sawyer: “not just anybody can paint a fence…no siree”
That Chrysler number was on CNN money then dissappeared, no where to be found.
On the bright side, according to someone on the HGTV site, because a person’s husband changed jobs from a mechanic to a ins salesman and quadrupled their income, everyone in America is changing jobs and making bucks. I just can’t decide how much to bitch slap this ignorant chick or if it’s even worth it.
Regardless, that’s 12,000 people going from decent paying jobs to unemployment or porrly paying service positions - ouch.
http://www.freep.com/apps/pbcs.dll/article?AID=/20071101/BUSINESS01/71101021
I hope they’re saving money, because if she thinks commissioned jobs only go up in income, she’s in for a big surprise. Just talk to a realtor, mortgage broker, car salesman, or someone on Wall Street. She has a lot to learn about how quickly life can turn around and slap you in the face.
It’s not worth it, she’s a twit.
Will Rogers also said… “You can’t break a man that don’t borrow”.
RE: Chrysler to Cut Up to 12,000 Jobs- AP
Rented a Dodge Avenger for the Mustang p-51 airshow in OH.
With 10k miles on the odo, the engine was vibrating strangely and the A/C vents wouldn’t work.
Whatta POS.
No wonder Benz had to pay somebody to take the operation off their hands.
“[F]ormer Fed chief Alan Greenspan said this month he believes central banks, including the Fed, have struggled for years to influence long-term rates central to the pivotal housing boom and bust.”
It was the short end, Comrade , the short end.
Well, here’s the response I got from the young Vietmamese girl who I wrote to yesterday responding to her Craigslist ad (for those of you who didn’t see the post - she wanted a mentor/ partner to hold her hand while she wades into the waters of DFW real estate “investing” armed only with a home study course). I told her to read this blog for two weeks to complete her education prior to attempting this. Of course, she refused. The get rich quick carrot is just too much to resist, all evidence to the contrary that it ain’t happening any more:
Hi,
Well the investing I am wanting to do requires no money. Basically I’ll be a wholesaler. Finding distressed properties and motivated sellers and buying the properties way below market. And then assigning these to rehabbers, landlords, etc. They would provide the cash for the buy. I’m not going to be working with financing that much. Mainly working with cash buyers. I also have an inactive real estate license which I plan on activating. But I do appreciate you looking out.
Thank you,
seeing Asians buying here too
She’s Vietnamese - likely intelligent, educated, motivated, and with a big extended family/acquaintance group. She’ll probably be OK.
She’s Vietnamese - likely intelligent, educated, motivated, and with a big extended family/acquaintance group. She’ll probably be OK.
I’m sorry but that EQUALS shady. Like many around here, I would LOVE to know where they get their monies from….they seem to have plenty of it…all the one’s I see around her are driving $50K and up Benz, Beemers, etc. My wife and I make almost $200K a year combined and we wouldn’t consider buying such cars given the debt and payments we’d have to make. So what gives? PLUS…they have top notch homes in top notch areas…San Marino, Pasadena, etc….
I’m sorry but are we doing something wrong?
I know a lot of them. Look into every ghetto. They are the ones selling forties.
Westminster, CA (AKA Little Saigon)……you’ll find a $hit load of them!
That would be Garden Grove, CA.
“That would be Garden Grove, CA. ”
You will notice you can go to a restaurant (yummy pho, spring rolls, etc) or buy groceries at midnight in Garden Grove. Those people work about 20 hours a day. I am not materialistic, but I wouldn’t begrudge them their (tax-free) monetary rewards.
Many immigrants from 3rd world countries are the absolute upper crust of their home society. They are either wealthy, motivated, or academically talented (just visit any tech company) and found a way to get a better life. Similarly, a few years ago outsourcing was the rage and the first companies in India, etc. did fine. Later reports were that local employees were either unqualified or undermotivated–the first movers got the best talent.
(On another tangent, the superficial appearance of wealth has nothing to do with immigrants. A huge percentage of new luxury cars are leased. We all know about the joke of ‘home ownership’ in recent years, so that requires no explanation. Some people have always valued a nice facade at the expense of savings, retirement, etc.)
RE: A huge percentage of new luxury cars are leased. We all know about the joke of ‘home ownership’ in recent years, so that requires no explanation. Some people have always valued a nice facade at the expense of savings, retirement, etc.)
BINGO, J.
A few years ago outsourcing was the rage and the first companies in India, etc. did fine. Later reports were that local employees were either unqualified or undermotivated–the first movers got the best talent.
Word.
A lot of the tech support people I deal with in India are barely intelligible — and I’ve lived in a few English-speaking countries so I can understand a wider range of accents than the average American — and not technically sharp.
Another case of the corporate shiny plastic sheeple jumping on a trend that made sense at first — hiring top-notch Indian techs cheap — and riding it mindlessly beyond the point where it makes no sense anymore. Labor costs in India for experienced IT people are now not that far below Western levels.
Sounds like a straw buyer to me. If she signs anything, she’s on the hook, but doesn’t know it.
Its my understanding they have a large extended family and money and housing is pooled, but could be wrong.
N: I’m sorry but that EQUALS shady. Like many around here, I would LOVE to know where they get their monies from….they seem to have plenty of it…all the one’s I see around her are driving $50K and up Benz, Beemers, etc. My wife and I make almost $200K a year combined and we wouldn’t consider buying such cars given the debt and payments we’d have to make. So what gives? PLUS…they have top notch homes in top notch areas…San Marino, Pasadena, etc….
I’m sorry but are we doing something wrong?
I think you’ll find that Asians tend to focus on buying tangible items and skimping on service-related products. Another way of saying this is that they tend to bring lunch to work and not go to Starbucks for coffee or eat out at fancy restaurants. (Another way of saying this is that they live like 1950’s American families - frugally - but with 21st century salaries). Spread that out over an entire family, and you’ve got at least a thousand bucks worth of monthly discretionary expenses that can go towards buying nice cars or homes.
the middle easterners/asians have access to ethnic loan sharks or pool their family resources to buy/start their own businesses.Notice all the mom n pop motels?
upside is fast off-book capital. downside is the loansharks will not kill you, they prefer to keep you in debt for the rest of yer life.
(contrary to the stupid Sopranos show, the real mafia/yakuza/tongs/ dont kill everyone, especially people who have ability to make more money. relatives, however, are targets for non-lethal pain and keep the golden goose from flying away)
had a young middle eastern dude jump off a bridge last year or so here in N. CA.
he was despondent over a failed car lot. shady financing? who knows fer sure but where does a new, young, immigrant get huge amounts of money? govt grants arent that generous . . .
One thing is for sure, it doesn’t pay to be an honest person in the USA. After reading about the history of this country, it’s amazing how it got a reputation of being such a stand-up place…the whole place is built on deception, corruption, laundering, slave labor, covert wars, etc…and here we are preaching to others that they should be more like us…lol.
Doublecheck the book category: sounds like fantasy, not history.
one loud noise and the herd wants to stampede..
Funny how Vietnamese got morphed into Middle Eastern/Asian.
Who’s doing the preaching? People who make $200K a year who clearly hate the country and are jealous of others who seem to live better on much less, perhaps? The whole place is built on deception and corruption? Those are cowardly words - easy to write if you think you’re preaching to the choir, but ones that would get you decked by half the country if you said it to their face. That’s a funny kind of history book you’ve been reading.
Frank…
Uhh…re-learn your history…you know nothing about it…apparently.
Shorter Paul in Jax:
Half the country would react violently to what you are saying; that proves it isn’t true. Don’t you know MURKA is perfect and without flaw in every way, and pointing out any faults is deserving of physical abuse.
Nozferat,
your generalizations are simple-minded. As an HB-1 visa holder, why don’t you stop goofing off on the job and actually do some work.
PIJ: The whole place is built on deception and corruption? Those are cowardly words - easy to write if you think you’re preaching to the choir, but ones that would get you decked by half the country if you said it to their face.
I beg to differ. Americans tend to be pretty blase about what’s said about Uncle Sam. In contrast, I bet if you went to Nozferat’s home country and made negative remarks about it, you’d be beaten up or worse. While visiting China, I was asked about 9/11. I made some general remarks about how it was a horrific event the likes of which - as a New Yorker - I hope never to see firsthand again. The Chinese at the table then said that we had it coming. I made some comments about how China had done some pretty nasty things to its neighbors (including Tibet and Yunnan) without anything like 9/11 happening to it. The whole atmosphere at the table changed. It was like the temperature in the room had dropped ten degrees. Generally, foreigners can dish out the insults, but can’t take it. Americans just shrug it off.
Paul:
Lot’s of assumptions regarding jealousy and visa status…looks like people here take personally to comments that hit it on the nail.
As I have said before, learn your history…then come back to the blog and post again. Cowardly? What does that have to do with history? Man..some of eloquent crap people say here is quite amazing if not only to dodge the subject head on.
Asians generally have extended family members who help each other out. For example, in order to finance my businesses (two gas stations and three motels), I rely upon the financing from my family members and my community. Once I have given this money back, it gets recycled again and again to help other people out. Today, I am pretty well off, thus I contribute about 2.5% of my money into this pool so other family members can be helped out. If I relied upon traditional means of financing (i.e. commercial loans from banks), then my profit margins would be slim and chances of business failure pretty high.
You can lead a horse to water…..
Ugh… another one of these people that put houses under contract, then try to resll the contract, then drop out when they can’t.
Finding the distressed properties is the easy part. The hard part is finding buyers on the back end.
She thinks she’s going to get rich doing the easy part?
My thought exactly. She’s going about trying to make money in residential real estate a good way now, try to take advantage of distress without putting up any money, unfortunately, that’s damn near impossible today.
Which is why the “experts” wrote a book about it and made money off the book sales rather than pursue the business plan on their own.
Exactly and that’s what I said to her in response to the email I posted. You just can’t convince people there isn’t EZ money still out there if you just know the “SECRET!”
Did she say who her “mentor” was, or who gave the course???
Point is..people like her completely ruin the market….they destroy the chances for others to get a home and buy it at a price that would otherwise be reasonable. I’m SO SICK of people like her getting in the way of others to do the right thing…I.E. buy a home for what it’s meant to be used for…a F R E A K I NG home.
Point is people like her ruin the market for everyone else….whoever replied to her should give her a piece of their mind…not advice.
Once she talks to the 500th seller, or looks at the 500th house, or both, and hasn’t made a dime, she might start rethinking the road to riches.
It’s doable, I’ve flipped a few myself, but it’s a major slog to get up to speed. It’s work, just like any other business.
i read it yesterday and it looked like a scam to me .. still does.
I agree. A scam is the easiest way to make moneys.
House down the street from me has been for sale for over 6 months. Price reduced a couple times…. Total discount of about 5%. ($270K to $255K)
The realtor’s for sale sign is still out front. Yesterday a giant trash bin showed up out front. Gonna remodel instead of lower the price?
In this environment, they should lower the price and punch a few holes in the wall. Target the sucker buying group. Suckers will take one look at the holes, conclude it’s a fixer-upper, and think they are getting a deal. People are shopping for deals.
Probably just sprucing up for when the market recovers next spring, heh, heh.
The realtor’s for sale sign is still out front. Yesterday a giant trash bin showed up out front. Gonna remodel instead of lower the price?
Gonna remodel and then still have to lower the price, losing the total cost of the remodel plus however more the market drops while they’re screwing around.
“A New York company with less than $500 million in annual revenue, ACA has just $326 million in capital for potential payouts if the CDOs it insures go bad. Yet it has sold coverage worth nearly $16 billion, with most policies written for CDOs created in the past couple of years.”
Oh dear.
The Chairman for ACA is a managing Director at Bear Stearns in the private Equity Group. Bear is one of ACA’s largest customers and as you know, many of those Bear Stearn funds tied to CDOs blew up. This is a total conflict of interest. Why isn’t the SEC investigating? If you were a shareholder in ACA, wouldn’t you be pissed? I bet they gave Bear some “cheap” insurance on that toxic crap.
Not to worry its all priced into the model. :>)
The FDIC’s reserves cover about 1.6% of its obligations. The “oh dear” is that its obligations are in the trillions versus billions.
Is that the argument for ‘too big to fail?’
2 percent of their coverage needs to go bad to wipe them out. Move along folks, nothing to see here.
–
There is a tiny little problem with “Significant Fall In Prices” — with every 2% drop in price approx. 1M homes go under water (not a linear relationship). If prices fall 10% from here at least 5M more homes will be under the water. Even if 2M “owners” walk away that would lead to collapse of several more financial institutions. More of the bigger and bigger ones. Just imagine what 20 drop from here would mean.
Jas
If housing falls to its fundamental level, especially if it is chasing a plunging fundamental (average income), isn’t your nightmare 20% scenario just a tad conservative?
“There is a tiny little problem with “Significant Fall In Prices” — with every 2% drop in price approx. 1M homes go under water (not a linear relationship). If prices fall 10% from here at least 5M more homes will be under the water. Even if 2M “owners” walk away that would lead to collapse of several more financial institutions. More of the bigger and bigger ones. Just imagine what 20 drop from here would mean.”
Actually what you are describing is a linear relationship. Go back to school.
“‘Oxygen is the enemy of bacteria, and sub-prime loans as well as other debt need fresh air and must be exposed to pricing by the market,’ Gross said. ‘Keeping loans in the books only delays this painful process.’”
Wrong concept: Kill the body and bacteria mulitply & survive for a few weeks…or…Keep the body alive with oxygen, dwelling deep in gastrointestinal region, and the bacteria can live for… YEARS!
is seepage different than contagion ? msm
U.S. manufacturing grew in October at the weakest pace since March, suggesting that ongoing troubles in the housing and credit markets have seeped into the industrial sector.
I am sure everyone is aware of all the wildfires that we have had the last few years. We had them in the Carolinas, Florida, Georgia, California… you get the idea. I think a reason for a lot of these being so severe is that we had a policy of putting out any fires. Fires have their purpose. Would you rather have a bunch of small fires or would you rather have all the “fuel” build up over time and when you do have that big fire it becomes uncontained? They should let nature work.
That is essentially what the FED is doing. By not allowing or always attempting to prevent a recession (not letting free markets aka nature take it’s course), they put out the small fires. There are no controlled burns. What do you think eventually happens? You end up with something so severe that we end up looking back and wished that we had those short term fires rather than those big raging ones. I guess we are so short-term focused that they take the approach, “we’ll cross that bridge when we get there.”
Well, we’re about to cross a LOTof bridges and it isn’t going to be pretty.
Good analogy. I say, let it burn.
The more the Govt. tries to fix it, the worse it will get. Lowering interest will not at this point stimulate housing sales.
Economics 101: A house (condo, whatever) is a comodity that has a use. It is occupied by a household, single person, married couple, whatever. Creation of households occurs by the population in a locale aging and their kids leaving home and by people moving in. The number of households creates the demand.
There will not be enough household generation to burn up the existing inventory for years. Speculators and easy money created a false demand and builders responded.
There is way to avoid the pain here. Just let the market fall.
Household de-generation: When extended family, disenfranchised in a failing economy, move in with relatives.
That too, but that is usually temporary. Another problem is when the death rate starts to catch up with the household creation rate. When the Baby Boomers start dying, there will be more property to absorb.
We have problems with Social Security because it was always assumed that the population would increase. Well, it has, but not at historical rates. So, in the future we have less paychecks from which to draw increasing benefits. This is made worse by the fact that people live a lot longer.
That one factor, seniors/baby boomers living longer may in fact help housing demand because the “vacancy by death” rate will be lower.
We have a long term RE problem here, that may take decades to fix.This particular bubble is not related to anything but easy money and speculation, but it may very well be that before we fully recover from this, the lower new household creation numbers may begin to negatively effect net household creation, id this is not already happening. This RE market could easily be depressed until 2010 and beyond because of this Bubble but if boomers retire at 62, that would begin in 2008. By 2012 boomer retirement will be ramping up and the overall economy will feel the effects. The presant RE problem was casued by factors in the RE market itself. The other bubbles have had external causes.
We could segway from this speculative bubble, right into a long term RE depression caused by the economic drag of retireing boomers.
Presantly, In many markets there is one house for every 15 or 20 households. Thats is historically high. The only factor that will eat up the presant inventory glut is net positive household creation. It will be a long time before hoards of speculators snap up RE. Us oldtimers will be plodding like we always do, flipping houses.
My whole point is overall net demand, in the foreseeable future is going to continue to be down, forcing prices to historic lows.
No one knows what the real value of a house is, in virtually any market. No, it is not a good time to buy. It is possible for housing prices to fall to 25% or less than the 2005 peak. I’ve been saying 50% off the 2005 peak, but I am not so confident in that number any more. The more this drags on, the worse it looks.
Well, As we can see today, the Market actually has the same concerns we did right after the Fed cut the rate, which is that -oh crap- inflation. In my opinion, the Fed shouldn’t have cut the rates, but they should have left the question lingering as to whether they would cut the rates in the future. As it stands now, they cut and that’s that. No more. That’s probably worse than if they hadn’t cut at all.
Credit card debt is another biggie. 900 Billion worth of it too, which is nothing to scoff at. Gas prices, which as a result of inflation is going to get worse. Commodities like food, water, grain, etc etc… all going through the roof.
if we’re talking about letting the recession burn, I think we’re now in it, regardless of what the Fed did/Didn’t do. All I can say is that times like these are ripe for shopping around the stocks. Regardless of what the economy does, 100 years of the market shows 7 out of 10 years as being up years. So if it falls, then look at it as an opportunity to get some of those stocks that were a bit too high a week ago.
I agree. They might as well raise taxes because higher gas, food, energy just means more money out of the consumers pockets. Oh, well they can use credit cards but don’t they have to pay that back eventually? Oh, maybe they could get a new credit card and just play the balance transfer game.
err.. they don’t need to raise taxes. Many taxes (gas, sales, etc) are linked to the higher prices that the inflation will bring. So automatically, the higher the inflation, the bigger the gov coffers.
Correct. Inflation is a tax to benefit the government and banks.
It’s a tax on the middle class.
The rich make more loaning money and on investments while the middle class pay more for goods and to borrow money.
Reverse Robbinhood tax the poor middle and uppermiddle class to give to the rich.
“Meantime, you’ve probably seen a few more ‘For Sale’ signs in your neighborhood lately. Realtor Joanne Homeyer explains her theory on why. ‘A lot of it, I feel like, is the bad publicity,’ Homeyer said.”
******
This is getting old.
But I have to point it out again:
The REIC locally had no problem when the LNAA (aka SF Chronicle - see below) was reporting 20% annual house price gains.
As if it were “magic” - it was just happening and all was good.
No complaints were heard from the bubble skeptics…
[LNAA = Lamest major city Newspaper in All of America]
“[R]ates actually rose just a bit Wednesday, but a local realtor says housing prices are dropping. So, even though you’re getting a higher-rate mortgage, you could also potentially pay below market-value on your next home.”
What happened to realtors and others who were arguing prices would not drop because the Fed would lower interest rates to save housing? How is that assumption working?
MM, that is funny! I just envisioned somebody looking at a house in the IE to commute to LA. Aint gonna happen again. Outliers are going to get crushed.
“…If financial markets wake up to rising inflation — then we have a problem,’ said Mayer.”
rewrite:
“If financial markets wake up to rising inflation — then… HOUSTON…we have a problem,’
Riddle me this Batman:
How many… $650,000 3b 2bth SFH will sell at 14%+ interest rates?
hwy,
650K for 30 years @ 14% is….
$7,701.67. Ouch, that is just the loan. Add in all the bells and whistles of HOA, Mello Roos, maintenance and utilities, and upgrades, etc. I’ll bid 8,500/month.
NO SALE!
I did $48k @ 14.125% in early ‘81.
Hurt like a mutha!
From KATV 7. “For the second time in two months the Federal Reserve has lowered interest rates. However, if you’re looking to buy a house, experts say the federal interest rate cut doesn’t mean you’ll get a lower mortgage rate.”
“One local mortgage broker says rates actually rose just a bit Wednesday, but a local realtor says housing prices are dropping. So, even though you’re getting a higher-rate mortgage, you could also potentially pay below market-value on your next home.”
*********
Of course it doesn’t mean you are going to get a lower rate. Think about it. Mr. Foreign Investor who nows sees the dollar dropping in value from lower interest rates says, “I need a higher rate to cover my potential devaluation. So instead of me lending you the money at 5%, I think I need 7% to offset the inflation.”
Many people just don’t get it. ARMs and exotic toxic mortgages is what got us into this mess. By lowering rates, the FED is helping them out to refinance into more toxic loans. So while long term loans where principal is paid go up, toxic loans drop. Do you think you will pay down your principal with that? Who would throw their money away on rent when they could rent from the bank AND pay taxes. All they are doing is delaying the enevitable while causing massive inflation and making everyone suffer. If you are a senior and you vote, you better vote for someone who will put responsible people in at the FED or get rid of them altogether.
Another thing that bugged me about that quote, is the old “below market-value” meme. Once again, media folks, if a seller sells his house at a given price to a willing buyer, then that price IS THE FAIR MARKET PRICE! The house doesn’t sell “below” market price unless there was charity, coercion, a government subsidy or something else shady going on.
I generally agree, however, I would argue that real estate is one product that you can actually buy at below market price.
Consider an unmarketed property where the seller knows the buyer, and the buyer is able to offer some intangibles that are not reflected in price (like comfort that the deal will close in a short timeframe, the ability to avoid paying a commission to a selling broker, avoiding needing to deal with a broker, I’ve seen some corporate sellers that wanted a quiet and quick transaction, etc.). It is certainly possible that with a more robust marketing effort, the property would have yielded a higher price–thus, a below market transaction.
I see deals all the time that had they been widely marketed, would have yielded a higher price.
Back to the beginning though–if the building is on the market, the price achieved is a market price, by definition.
If the property has not been marketed, you may be able to purchase the property at a below market price (or above market price, depending on how informed you are).
Better vote. Yeah right. Like you’ll ever be offered a choice. All you’re gonna get is Skull and Bones vs Skull and Bones.
I’m proud to say that nobody I have ever voted for has ever won. And now I’m not voting anymore.
This country has been at war my entire life. WWII, Korea, Viet Nam, Panama, Persian Gulf I, Yugoslavia, Afganistan, Iraq…
I wish the Amish were running this country. How come I knew and most everyone here knew that this Exotic Toxic Mortgage thing was a scam but it didn’t dawn on Allen G. until 2006? A two year old could run this country better than these elite idiots.
Well said. Don’t think many anywhere could summarize this as well as you.
It’s not about running the country well, but running it for the benefit of the elites. We are the proles, it’s for us to spend spend spend. And get paid less less less.
“…So, even though you’re getting a higher-rate mortgage, you could also potentially pay below market-value on your next home.”
this is the mass ass-backward spin i’ve ever heard. the correct statement is:
“So, even though you’re paying slightly less (catching a falling knife) for your POShack, your paying more for a higher-rate mortgage.”
“…Central banks, lauded as near infallible pilots of the monetary economy in recent years, are facing uncomfortable doubts about their collective grip on credit markets, interest rate structures and inflation”
“déjà vu” 2 of 2:
“Economic implosion derived from illiquid assets alchemized by the credit expansion of global central banks using irrational exuberance to sustain a financial catastrophe of their own creation.”
Funny article kinda.. Just the title made me laugh.
“Stock Investors Fear End to Rate Cuts”
Awwww, mad the FED might take the only drug away that got you high? Now it is time to sober up and face the real world and with that comes lots of problems. No rose colored glasses. This is how it is. Larry Kudlow and Jim Cramer might just be in rehab really soon after this latest binge.
http://biz.yahoo.com/ap/071101/wall_street.html
“‘The Fed’s forecasting record is in tatters, the dollar is in tatters and inflation expectations are ticking up,’ said Nick Parsons, chief market strategist at nabCapital in London. ‘They are now in danger of losing control of every part of the yield curve from overnight out to 10-years.’”
Mr. Parsons is wrong. The Federal Reserve’s Forecasting is excellent, the problem is that they do not follow their internal reports.
Stellar reports:
Is the US Bankrupt?
Scenarios For the Next Recession
Credit Scoring and Its Effects on the Availability and Affordability of Credit
Practices of the Consumer Credit Industry in Soliciting and Extending Credit and their Effects on Consumer Debt and Insolvency
Truth in Lending Act and the Real Estate Settlement Procedures Act
The list is long.
What do you think falls faster… CFC stock price or housing values?
CFC is going under and Bank of America is going to lose 2 Billion. CFC will sell off the Servicing Business or spin it off. Countrywide bank will probably be given to BofA and the rest of Countrywide implodes and Mozillo might finally go to jail like the Enron guys. That is, if he doesn’t die of skin cancer first.
Well… if CFC goes down soon then HELOC the house and sink the cash into CFC puts.
What sweet irony this would be. HELOC a cool mil and make tens of millions as old tan man gets his head handed to him.
Sweet justice, I say!
Nice idea, but don’t you mean CFC shorts?
I mean puts.
http://delayedquotes.cboe.com/options/options_chain.html?ASSET_CLASS=STO&ID_OSI=87262&ID_NOTATION=259523
Yes.
I suggest that everyone interested read the entire article about Cuomo’s suit against the managment company for fraud. This is the biggest event coming out of all this mess I have seen. From here will come many many criminal endictments as well as the first clear trail from the money to the field to the government regulators. This is a huge thing and from it a lot of pain and good will come. Thank goodness someone has seen the light finally. And no, EAppraiseiT was not a client I worked for as an appraiser. In fact, I would suggest that those people on that list are toast.
It is certainly interesting to speculate as to when, and by whom, WAMU gets sued. Sooner or later someone will squeal.
I can’t wait to see those emails.
RE: EAppraiseiT was not a client I worked for as an appraiser. In fact, I would suggest that those people on that list are toast.
DD~
Once the rackeetering methodology behind EAppraiseIT is exposed to grand juries and subsequently to the general public, there are gonna be a lot of other bucket shops number hitters hittin’ the skids.
As you note-this is only the beginning.
How about this idea. The American standard of living is going down. And the Fed has concluded that it is better to have it go down by having people pissed off when they go shopping due to higher prices than pissed off at work because their pay is cut.
Or laid off but businesses might lay off regardless because they have bills they have to pay. Rising energy, taxes, healthcare costs in a slowing economy kills. Jobs are lost regardless but everyone takes a paycut via inflation.
That’s right….Americans have been living off the backs of the rest of the world for too long and enough is enough. Wealth of a nation is now measured in how well the country’s corporations are doing…not how well the people are doing.
It’s time to face reality for people in this country and given how sheltered everyone is here, it’s going to a be one BIG whining trip.
Forget supersize. Can we start saying, “Would you like to downsize those fries?”
Do you want a fry with that?
Here’s the conundrum: the American economy runs on businesses being able to pay their employees less and less (covered up by inflation, thanks Fed!) while at the same time, they must buy more and more. Since this doesn’t work in a normal economy, we get…cheap credit! That’s only a short term fix, because it cannibalizes future spending. Then you need even more cheap credit!
That’s why most Americans are deep in debt. It will crash, there is no doubt.
?? can anyone relate the 1 in 95 foreclosure rate to the 1990’s or depression ?
tia
“But you all should know that in the 2007 mid-year report, RealtyTrac started a new data string, a count of ‘unique addresses in some stage of foreclosure. This new metric only counts a property once, even if there were multiple foreclosure actions filed against the property during the time period covered by the report.”
So let me guess. The next thing we will see is someome comparing the old metric (which apparently can count a home multiple times) with the new metric (with will count a home only once). Hey look, a decrease in foreclosure actvity just like that.
While the previous method certainly seems odd, at least you had apples to apples when comparing across time.
Krakatoa, west of Wall Street
DOW down 280 pts, yippeeeeee!
TIme to buy.
seriously?
Time to buy will be when the down breaks 10K on the way down…
when the down = when the dow
What happens when curbs are lifted?
October 1929 all over again!
A New York company with less than $500 million in annual revenue, ACA has just $326 million in capital for potential payouts if the CDOs it insures go bad. Yet it has sold coverage worth nearly $16 billion, with most policies written for CDOs created in the past couple of years.”
“Those are especially problematic vintages because lending standards grew so lax in 2006 and 2007. Many believe the subprime debacle has yet to run its course.”
Honey, I just wrecked the car. Don’t worry I call our insurance Company. Who do we have it with? ACA.
This going to get interesting.
Today’s Master Of The Obvious (MOTO)
“New York Attorney General Andrew Cuomo said Thursday a major real estate appraisal company colluded with the nation’s largest savings and loan companies to inflate the values of homes, contributing to the subprime mortgage crisis.”
“‘This is a case we believe is indicative of an industry-wide problem,’ Cuomo said in a news conference.”
We’re probably looking at the making of Senator Cuomo.
Governor Cuomo II.
It’s NOT obvious that the collusion was intentional. If true, this is huge. It would mean the bubble was not the result of individual greed and self-delusion, but of intentional fraud by the largest financial companies (WaMu? yeep)
it might also mean a bailout for FBs .. proving in court that, after all, it wasn’t their fault. Contracts voided?
that’s what i smell..
Interesting distinction, from a legalese standpoint. If “everyone was doing it” –essentially cooperating as a group to inflate prices by only hiring hit-the-numbers appraisers and refusing to hire honest appraisers (a de-facto blacklist)– but there’s no obvious smoking gun (Enron-style “f–k grandma” recorded phone conversation), does this still constitute “collusion”? At what point does individual responsibility end and collective responsibility begin?
I’m sure that during the bubble, the vast majority of rank-n-file loan peddlers “got the memo” about hitting those numbers to maximize sales, commissions and bank profits –risk be damned. The only question is, how much of that “understanding” was the result of simple competitive peer pressure (wanting to be office “top producer”), wink-wink, nudge-nudge, off-the-record tactics by management, or blatantly explicit directives and real-life blacklisting? This should be fun to watch as it develops.
RE: It’s NOT obvious that the collusion was intentional.
Guess you weren’t runnin’ an appraisal company the last few years.
The whole system has been running on collusion.
New York Sues Real Estate Appraisal Firm
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/01/AR2007110101231.html?hpid=moreheadlines
classic case of the media at work:
The sky-high price of oil is taking a toll on Exxon Mobil.
On Thursday, the giant energy company, said profits fell 10.3% to $9.4 billion, or $1.70 a share, from $10.5 billion, or $1.77 a share, for the year-ago period. Meanwhile, sales edged up 2.7% to $102.3 billion, from $99.6 billion. The results were well shy of Wall Street’s call–analysts were expecting profits of $1.75 a share on sales of $113.0 billion
so they only made 9.4 billion..wish my net “fell” to that much..
10% margins at that volume isn’t too bad.
The company would have done better if it liquidated and invested the proceeds in US Treasuries. A horrible return on assets.
“‘If financial markets wake up to rising inflation — then we have a problem,’ said Mayer.”
It’s called capital flight, baby! The fed is done. The markets will punish them severely if they try it again too soon.
“Meantime, you’ve probably seen a few more ‘For Sale’ signs in your neighborhood lately. Realtor Joanne Homeyer explains her theory on why. ‘A lot of it, I feel like, is the bad publicity,’ Homeyer said.”
“Bad publicity.” Yeah, that’s the ticket. It’s all the Media’s fault. Except it’s not. Your would-be buyers can’t get loans and your sellers are refusing to lower their prices. THAT’s why there are so many “for sale” signs. Even the most optimistic publicity will not change that.
Just a wild thought I had:
If I were a gigantic foreign bank like HSBC, UBS , et. al.
And I was facing huge losses in dollar denominated assets.
I would be inclined to throwing the dollar under a bus.
I imagine some CEO of a Euro bank making a statement next year:
“Last Qtr I lost 1 billion euros on asset “X” this Qtr we are proud to annouce it is only 50,000,000 euros. At least I’m not doing as bad as Citibank that lost 6 billion dollars on asset “X” with tha same position”
A currently overpriced home in London, Ireland or Spain is instantly priced to market because the pound, euro, even the swiss franc went up in value. Their housing problems are diminshed and their losses are nominally falling with the dollar.
Goody for them. I think HeloBen is under the delussion that he runs the ECB.
“Like many lenders, ResCap has struggled as falling home prices and rising interest rates have made it tougher for many homeowners to keep up with their mortgage payments.”
Can somebody please enlighten me as to how this has anything to do with a homedebtor going to work, earning a paycheck, and writing a check to the creditor?
My thought exactly. Falling home prices and interest rates do not make it tougher for someone to meet the obligation they made at a past time. ResCap is struggling because in the past they made poor decisions on loaning to people who don’t have the ethical fortitude to pay the loan back!
Bond and hedge fund insurers at risk…
and I start to wonder about mutual fund insurers…
Many have begun to think of their ‘treasury funds’ or ‘MM funds’ as safe…
But if the fund families start to get in trouble, and their commercial insurers get in trouble, how much of those funds will depositors actually get to redeem?
Another thing to get my blood boiling…did anyone see this article in the NY Times:
“A Rate Cut, But a Sense It Stops Here”
“…Housing downturns have preceded 8 of the last 10 recessions, and this year’s downward spiral is shaping up to be the deepest in history.”
WHAT????!!!!!
We were told so many times 2 years ago, 1 year ago, and at all times before the credit mess became big news that “we won’t see a popping of a so-called housing bubble because we are not in a recession”, and “house prices will stay high (on a permanently high plateau) because you need a recession in order to get falling house prices”.
Now, here is the NYTimes saying that housing downturns have PRECEDED 8 of the last 10 recessions, instead of being caused by them. “Analysts” were quoted as the source.
So we had “experts” telling us for years that house prices would stay high, as you need a recession to knock down prices, and we were in a “Goldilocks” economy, and now you have the NYTimes and “analysts” saying that housing downturns *precede* recessions, showing that not only don’t you need a recession to knock down home prices, but that you have a good correlation of having a recession after house prices start falling.
I’m coming to realize that most “economic experts” just make things up.
I’m coming to realize that most “economic experts” just make things up.
maybe they are gettting kick backs from the NAR to make those statements.
From the Fed:
“today’s action should help forestall some of the adverse effects on the broader economy…some inflation risks remain…the upside risks to inflation roughly balance the downside risks to growth”
My take on what they are saying: “Look, we could be in real trouble here, on both inflation and a recession…all we can do is try to minimize both. We are going to attempt to ‘thread the needle’ here, but we are offering no guarantees that we’ll get through unscathed. We’ve done all we can do for now. Good luck.”
What they are saying is…okay Wall Street, you’re going to give you this one since you already priced it in. Please, please, oh please, don’t price in the next one.
Yesterday, Wall Street started working on pricing in the next one.
Someone at treasury must have gottn on the phone to someone and told them to have Exxon report suck numbers, have Citi downgraded with some big scary numbers, and then sell, because Wall Street seems to have gotten the message and backed out the “pricing in” of the next one they were working on.
Does this mean that the 1,000-year mortgage is just around the corner?
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/30/AR2007103002222.html?hpid=features1&hpv=national
Doug, I just couldn’t help but run the numbers on this one.
100K for 30 years @ 6% = 600/month
100K for 1000 years @ 6% = 500/month
Wow, I save a whole 100 inflated worthless dollars/month for 970 years, or if you like, 11,640 monthly payments.
Golly, where do I sign up for this great investment scheme, Beav?
All three indicies falling off the table today
I guess someone is going for vacation after all…
Another Swiss miss…
“Credit Suisse said third-quarter profit at its investment bank was all but wiped out by writedowns…of over 2.2 billion Swiss francs ($1.9 billion) in leveraged loan commitments, residential mortgages and collateralized debt obligations.”
“‘The extreme market conditions that characterized the third quarter affected many of our businesses,”‘ CEO Brady Dougan said in a statement on Thursday. ‘It is too early to predict when all of the affected markets will return to normal levels.’”
OK, my housing puts are on fire. CFC, PMI, MTG and even FNM and FRE are dropping like a rock! Now the markets are onto the reality that the credit derivitives are dead and the finance industry will not recover from this anytime soon. I’m looking to buy the secondary puts, companies that will go down when consumer discretionary ends. So far I’ve gone into fru-fru nonsense that nobody needs but women are told to want like BBBY and CAKE. Any other ideas of what will go down fast when single income households have all their credit maxxed out and then suddenly have their entire paychecks swallowed up by adjusting mortgages?
“‘This is a case we believe is indicative of an industry-wide problem,’ Cuomo said in a news conference.”
If your a realtor, RE appraiser or mortgage broker who did business in Florida, California, Arizona and Nevada and violated the laws, you will be caught! It may take some time, but more and more of these cases will start showing up in the news as time progresses. If these groups of business people think times are tough now in the realestate market, just wait until you are caught!!!