This Is A Hard Landing For California
The Sacramento Bee reports from California. “If you bought a house in the Sacramento area last year, chances are your annual income came to about $80,000. But your loan application said you earned a good deal more. A Bee computer analysis of more than 61,000 Sacramento-area mortgages over two years reveals striking discrepancies – gaps as high as 25 percent – between what homebuyers earned and what was listed on their loan applications.”
“‘Wall Street was looking for (stated income loans) and all of us were working very hard to be competitive in the marketplace,’ said Mark Kemp, Countrywide executive VP for Northern California, Nevada and Hawaii. Kemp said Countrywide has stopped making such loans.”
“‘I don’t want pity,’ said Natomas resident Rose Marie Reyes, who’s losing her home after getting a no-doc refinance loan. ‘I want people to know…they really should watch what they’re getting themselves into.’”
“Reyes said she didn’t realize until later, while meeting with a credit counselor, that her lender had ‘poofed’ up her income.”
“The California Association of Mortgage Brokers defends the industry’s conduct and says borrowers took the lead on pumping up their reported incomes.”
“‘I have turned down many clients who have told me they make ‘this’ amount of money,’ said Jon Kaempfer, a member of the association’s board. ‘Well, I don’t believe them and I turn them down – I don’t believe you’re making $12,000 a month raking leaves.’”
“South Sacramentan O’Lester Williams, who refinanced his Valley Hi home this year, said Caliber Lending inflated his $3,600 monthly income to $6,475 without him realizing it. ‘They boosted up my income, and I didn’t catch it until later,’ said Williams, 79. ‘I had been looking at five dozen papers and you can miss one line. That’s what I did – I missed that line.’”
“Williams is struggling to keep up with his pay-option loan, which lets him choose his monthly payment in a range from $1,486 to $3,724.”
“His credit counselor…said loans of this type typically mean a profit of at least $15,000 for a company. ‘There was a lot of money made on that one,’ Himes said.”
“Reyes stayed afloat the first two years. She even survived six months of unemployment by tapping into savings and getting help from family. But when her loan reset in January and the monthly payments shot up from $2,381 to $3,161, Reyes was sunk. Hit with a default notice and the threat of foreclosure, she started packing.”
“‘It’s a sad thing to say,’ she said, standing in a living room filled with cardboard boxes, ‘but walking away from this home will be a relief.’”
The San Francisco Chronicle. “If you want to see how the housing bust is affecting business in the Bay Area, there’s no better place to look than Fairfield.”
“Housing in this bustling Solano County city is in an outright depression. Home prices are plummeting, buyers are running for cover and, in September and October, not a single home building permit was issued, the first time that’s happened in the memory of city officials.”
“With the mortgage market in crisis and buyers not to be found, housing in Fairfield is flat on its back. The median home price in the city fell to $400,000 in October from $510,250 the year before, a 23.6 percent free-fall, according to DataQuick.”
“The number of sales fell to 83 from 174 in October 2006, down 52.3 percent. And in the months of July, August and September, 129 Fairfield homes were lost to foreclosure, compared with 15 in the third quarter of 2006.”
“In the building industry, ‘the bust came in and it’s rolled over everybody,’ said Kevin Cerkoney, president of Compu-Tech Lumber Products. Compu-Tech’s sales are down about 60 percent from their peak.”
“Developers have moved beyond free stainless steel appliances and granite countertops to lure buyers and are now offering something less trendy but perhaps more welcome - deep discounts.”
“The credit crunch has shrunk the pool of potential buyers in a market that was already struggling with excess inventory and developers are pushing to clear their books by the end of the year. That has sent new home prices in the Bay Area down by as much as 20 percent from their highs two years ago, according to Joseph Perkins, chief executive of the Home Builders Association of Northern California.”
“Builders, from national publicly traded companies to smaller regional players, dangle price cuts of as much as $150,000 on some projects in the far reaches of the Bay Area.”
“‘There is a massive amount of inventory sitting out there that is not being sold, particularly out in the East Bay,’ said Christopher Thornberg, a principal at the consulting firm Beacon Economics. ‘You’re talking total meltdown.’”
“Some are reluctant to commit because they are afraid that after they close, prices could continue to fall, said Ashley Cook, marketing manager for the Shea Homes’s Northern California group. ‘Obviously, one of the concerns about buying right now is what if prices do continue to go down,’ she said.”
“Perkins said that this downturn in the new-home market is as bad as anything that members of his group have seen over the last 50 years. ‘This is not a soft landing we’ve had,’ he said. ‘This is a hard landing.’”
“That means developers have to do what it takes to get homes sold, even if it isn’t pretty.”
“‘They’ve got to get that standing inventory off the books,’ Perkins said. ‘Lenders want to see it off the books and, for public companies, investors and Wall Street, want to see it off the books. That pressure is the reason you see those full-page ads offering all sorts of incentives.’”
The Reporter. “Working families and local business owners didn’t need to see sheriff’s deputies and the ‘repo man’ taking everything away from a Vacaville auto dealership on Wednesday to comprehend the down-home impact of the nation’s economic malaise.”
“The busted housing market has taken its toll on real estate agents, mortgage brokers, home furnishers and construction workers who live and ply their trades here. Hundreds of homeowners are in foreclosure, and nearly every owner has seen the value of his or her property decline.”
“This very afternoon in north Vacaville, a builder is auctioning off 18 homes in an upscale neighborhood, a result of its inability to attract buyers for the high-end houses that recently were selling for as much as $900,000.”
“It’s quite possible that today’s bidders won’t go much above $500,000 or $600,000, a situation that infuriates neighbors who were charged top dollar when they bought in a few months ago.”
The Recordnet. “When Jose and Mary Florendo moved to Lathrop, they rented out their three-bedroom, two-bath previous residence in Stockton. The payments they received, however, were not enough to cover the mortgage. And they couldn’t afford to refinance because of the housing downturn. The Florendos’ previous home is in foreclosure.”
“The Florendos’ previous home is in foreclosure. Jose Florendo, a member of St. Gertrude’s Catholic Church, said he has sought God’s solace during this difficult time.”
“‘I’ve kept quiet, because I didn’t want others to know,’ Florendo said. ‘But I’ve kept in touch with God by praying and going to church. Hopefully, soon we’ll be able to start over again.’”
“The situation of the Florendos and hundreds of others in San Joaquin County spurs a healthy debate in religious circles about whether people of faith should have engaged in the housing gamble that has led to a record number of foreclosures in the county.”
From KSBY. “Home foreclosures on the Central Coast have hit their highest number in over a decade. According to Realtytrac.com, over 850 homes in Santa Barbara and San Luis Obispo counties are in pre-foreclosure. 260 homes are up for auction. 760 bank-owned homes are for sale.”
“Potential buyers hopped on a tour bus Saturday and got a glimpse of some of the bank-owned properties available in San Luis Obispo County.”
“Saturday, real estate broker Dick Keenan led a group of about 30 potential buyers on a tour of available foreclosed properties. ‘The benefit of buying a real estate owned home is that it’s not emotional. It’s all dollars and cents and the opportunities we’re seeing now are the best they’ve been in ten years,’ said Keenan.”
“The number of houses selling on the Central Coast is almost half of what it was two years ago. ‘It was so hot before a couple years ago, right now it’s so dead I’m not seeing the houses move like they were before,’ said Paso Robles resident Brian Henninger.”
“According to Keenan, banks are accepting extremely low offers. ‘What they’re taking is sometimes mind-boggling meaning that the market may be drifting down even quicker than some of us realtors expect them to,’ said Keenan.”
“The glut of foreclosed properties is causing problems for those wanting to sell their homes. ‘It’s a good buyer market right now but as far as selling… good luck,’ said Henninger. ”
The Press Enterprise. “Residents of Copper Canyon in Murrieta watched in astonishment as a group of investors snapped up homes in their middle-income community last year, paying $50,000 to $100,000 more than the sellers wanted.”
“Today, the front yards are browning, overgrown with weeds. Many of the houses are empty. Owners have put up for-sale signs to lure buyers before the houses are auctioned on the courthouse steps or seized by lenders. Many are in foreclosure.”
“The U.S. Securities and Exchange Commission and the Riverside County district attorney’s office are investigating Pacific Wealth and the men behind it. Investors who have lost an estimated $200 million in cash and equity have joined in five lawsuits that allege fraud and unfair business practices.”
“Starting in 2004, when home values in the Temecula-Murrieta area were climbing an average of 30 percent compared with a year earlier, Pacific Wealth associates recruited in California, Arizona, Texas, Oregon, Colorado, Illinois and possibly other states.”
“Investors bought houses with the understanding that the homes would be rented out and, when the time was right, sold for a huge profit or refinanced to raise money for other investments. They said they were promised financial independence within three years if they followed investment instructions without question.”
“Investors received no contracts and no financial statements from Pacific Wealth to verify the nature of the investments or to show what had happened to their money.”
“Some couples bought 10 or more homes, assured that Pacific Wealth would cover the difference if the rent collected fell short of covering monthly payments.”
“Pacific Wealth’s scheme depended on investors with big dreams but little skepticism, appraisers willing to value houses at more than the listed prices, lenders who didn’t check appraisals or verify the accuracy of mortgage applications, and a slow response by the authorities to complaints about suspicious deals.”
“Many investors wonder now how they could have been so gullible.”
“The house at 23876 Cloverleaf Way in Murrieta was among those purchased for more than the asking price. It was listed for sale Aug. 17, 2005, for $630,000. On Jan. 9, 2006, the price was lowered to $620,000 and two days later to $610,000.”
“Then on Feb. 2, 2006, after the house had been listed for more than five months, the price was raised to $715,000 with the notation that a sale was pending. On June 2, 2006, the house sold for $700,000.”
“After discarding all the Stonewood sales in the neighborhood, “Comparable houses in March 2006 were selling for between $560,000 and $570,000. The Stonewood investor who bought the house, currently is trying to sell it for $440,000 to avoid foreclosure.”
“Law enforcement showed little interest in the situation, said Vicki Carpenter, past president of the Inland Valley Association of Realtors. ‘They said they didn’t see anything illegal. They couldn’t identify a victim, and no one else was complaining,’ she said.”
“That the lenders have not sued Pacific Wealth’s real estate arm, Stonewood Consulting Inc., ’says to me the lenders didn’t have a problem with these loans,’ said Scott Grossman, Stonewood’s attorney. ‘We had a very hot real estate market. The market runs wild, loans get made, and a certain amount don’t pan out,’ he said.”
The Press Enterprise did a great job of getting many of the details in that bizarre ‘investment club’ storty.
Indeed, they did a great job.
I’m in shock! So many people and not one signed contract from an investment club!
I’m telling you, ever time I think I’ve heard the worst, ya come along a take my breath away AGAIN!
At least I sleep well at night!
Best,
Leigh
You haven’t heard the worst yet, trust me. Not even close.
I know Ex.
I read waaaaaaaaaaay too much for my own good.
I posted late last night that hubby and I live on retired USAF checks. I wonder how well that will play out in the near future.
We do have contingency plans, and are uping them daily!
Best,
Leigh
Leigh, I only have 2 points:
1. If the leaders of this country had any morals at all (I’m sorry, I can’t even write that without giggling), the citizens of this country who serve in our military would be treated as kings. So your retirement checks would be in no danger, and
b. I hate to here that you’re married!
Smiles. (Thank You)!
Sweeny, that’s very sweet, I am humbled.
Take heart, for he is my true beloved.
Best Always,
Leigh
“Some couples bought 10 or more homes, assured that Pacific Wealth would cover the difference if the rent collected fell short of covering monthly payments.”
There is a potential lesson for central bankers to learn from this story:
A high rate of asset price inflation does not create any wealth effect. Rather, it provides encouragement for ponzi schemes like this one which generate phantom demand to drive bubble pricing skyward until the ultimate simultaneous collapse of myriad ponzi schemes into a pile of financial wreckage.
Thus far I have seen little in the Fed’s response to the aftermath of the housing mania to indicate they get it.
Not every one of Ben’s posts brings “ponzi” to mind, but this one certainly did. “Pacific Wealth” my patootie. Whenever I hear or read any phrase like “wealth management,” I want to throw up. Someone on this board was saying Broke is the New Black. Debt is the New Wealth. Stupidity is the New Sophistication. Obfuscation is the New Governance, but maybe it was the old governance too.
Hi Az!
Perhaps the Universe will exact balance?
The new black? = Greed dies and honesty lives?
Yes, she will exact!
Best,
Leigh
Oh they understand Greenspan’s continued lowering of rates has put the US in a situation where a recession the size of the Great Depression may result. They are just too arrogant to recognize their intervention by continuing to lower interest rates only prolongs the inevitable (making the final conclusion worse) and destroys the dollar. The best result would to be to raise rates 50 basis points, and let the banks, brokers and borrowers that got us into this mess take their hits. It’s too far out of control to fix with band-aids. We need to let the market collapse. Radical surgury is the only chance of survival. I dont have sympathy for ppl that bought houses to flip, or buyers that bought more than they could afford, or Wall Street types that hocked worthless paper. Ppl like us informed them of the risk. Attempting to screw ppl for a fast buck has consequences. Sometimes good. Sometimes bad.
When housing is overvalued by as much as 50% there is no such thing as a soft landing. The inevitable conclusion is financial ruin for millions.
The laws of karma always come around to bite you in the butt. Sometimes, it takes longer than expected, but don’t be fooled into thinking it’s not right around the corner. I agree, it’s not like they weren’t warned.
Test
I have little sympathy for get-rich-quickers. Especially those who sit in Church (!) and conspire to find wayw to get-rich-quick.
And the reporter *almost* got something right:
Real estate experts say it’s likely that the scheme had unintended victims, too. The homes purchased at artificially inflated prices also pushed up the prices of nearby homes, increasing the likelihood that other buyers overpaid and now have houses worth less than their mortgages. And, when the investors’ houses went into foreclosure, that further depressed neighborhood property values in an already declining market.
If you paid to much for a house, you have to accept some responsibility. But the truly innocent victims are those who had existing houses who had property tax go up because of these phony valuations. I
I should add that the MSM seems to have this awful bias that home prices going down == Bad. Since when is the price of a necessity like housing becoming more affordable BAD? Comments like this reflect who has the main stream media in their pockets.
Well that is because house prices aren’t suppose to go down. At least not down in nominal terms. Sadly, this is more a perception than a rule. Just read post yesterday citing how the house prices on a street in Amsterdam is poised to break their peak after adjusting for inflation. The peak was in 1736. So a few down years might not be so bad compared to a few down centuries or even down decades as the Japanese had/have.
“A Bee computer analysis of more than 61,000 Sacramento-area mortgages over two years reveals striking discrepancies – gaps as high as 25 percent – between what homebuyers earned and what was listed on their loan applications.”
Sounds like a problem that could easily be fixed — just raise the GSE conforming limit by fifty percent or so, or short that, just guarantee GSE-securitized debt up to $1m. NOT!
The only thing that surprises me this far is how the fraud has been so well contained in the whole California housing scam. I guess everyone has a vested interest in keeping it flying.
Anyone want to guess what property taxes will be in 3 years? San Diego among others will be toast. Look for 50% raise in water, sewer,trash fees and public library opened only on Monday, Wednesday and Friday. City officials “cost of living” salary up 10% . Taxpayers got to keep them happy as there are only a few people who are qualified to do their jobs.
“Look for 50% raise in water, sewer,trash fees”
You must have recieved my new water bill. One person $180.00. $50.00 is start up fee plus trash and sewer. Most of it is a water leak in the watering system. Im on it with propery manager. Left note for gardeners. Turned off rainbird water timer. Fingers crossed.
I had a leak in my system. Usually a valve…. If so, just turnig off the timer won’t do a bit of good.
Not hard to figure out which zone. Area around one or more of the heads will be soggy. On the top of the zones is a black cylendar (the cylenoid) that the wires go into. It will have an “on/off” lever on it. Manually turn on and off zones until the zone with soggy heads comes on…. that’s your bad valve.
Now turn off the main valve that leads to the electronic sprinkler valves. Disconnect the wires and screw the cylenoind out (like twisting it to turn in on manually, but just keep twsting util it is all the way out).
Go to a hardware store and buy a new cylenoid… should be about $6.
Go home, screw the new cylenoid in and re-hook up the wires.(positive/neg doesn’t matter).
It is a five minute fix plus the time to drive to and from the store.
Hey, I agree we are hosed. What’s new? But our trash is one thing they can’t raise, as a matter of fact it’s in the City Charter that they can’t even charge for trash.
“everyone has a vested interest in keeping it flying”
everyone except us chickens
I recon there are a good many folks who lied on their applications in order to qualify (driving up prices for those of us who refused to break the law). Many of these people will simply allow their home to foreclose after seeing their values plumet, even though they could skimp on luxuries and do without in order to meet their obligations. I would like to see a definite policy of investigating each foreclosure with an eye to fraud and subsequent prosecution for any person who lied on their application by overstating their incomes. Many are way to far gone for this policy to do much for, but for those on the fence it may encourage them to stick it out rather than sticking it to the rest of us, possibly reducing foreclosure activity in many areas, and definitely sending a message to anyone else planning on qualalying that doing so is not a good idea.
GH - I like your idea. It may be best for the individual to walk away, but it will end up hurting everyone. My particular gripe is the folks that refied, got big bucks tax free and now want to walk away with all the toys. Sell the crap, get extra job and pay your debts.
What you said!!
If FBs do skimp on luxuries or do without, that money goes where? To some lender who is as culpable as the FB in most cases.
But if they foreclose and rent a place, the money can go to businesses of various sorts, keeping them open and preserving jobs.
there’s more than one way of “sticking it to the rest of us”.
Don’t agree, Joey. Unless a lender actually doctored the application or there was identity theft involved, the FB has to take the rap. No one forced them to buy houses or take loans at all. No one forced them to not check carefully their applications and correct. Lastly, no one forced them not to look at the one page that lays out the loan and payments or to question and get IN WRITING the terms of the loan.
I recently asked a regional manager for a mortgage wholesaler what percentage of the loans they did over the last 5 years involved lies or fraud. His answer: 25 to 50 percent.
“I would like to see a definite policy of investigating each foreclosure with an eye to fraud and subsequent prosecution for any person who lied on their application by overstating their incomes”
You expect politicians to support this??? Dream on.
“Reyes said she didn’t realize until later, while meeting with a credit counselor, that her lender had ‘poofed’ up her income.”
“South Sacramentan O’Lester Williams, who refinanced his Valley Hi home this year, said Caliber Lending inflated his $3,600 monthly income to $6,475 without him realizing it. ‘They boosted up my income, and I didn’t catch it until later,’ said Williams, 79. ‘I had been looking at five dozen papers and you can miss one line. That’s what I did – I missed that line.’”
Wait a sec… In the first case, I assume the lady is working. She should 1) know her income and 2) know the amount of $ of the loan. Multiply income by 2.5. Is that greater than the loan on her home? Also is her mortgage payment FIXED? If the answer to the two questions is no, it is HER OWN FRIGGING FAULT.
Number 2 - the 79 year old man. WTF? How many years of loan did he take out? 10? 30? He probably won’t be around. At 79 you would be better off paying cash or at least have the entire purchase amount in cash and get a 5 year loan with some trust set up to pay off the loan with the estate.
I do not feel sorry at all for any of these “little people.”
Let them suffer. It’s their fault. I’m tired of hand wringing libs pointing the finger all the time to lenders when some common sense is in order. Buying a house requires a clear mind and knowing what you are doing. If you cannot handle dozens of pages of documents, you either have a real estate attorney handle it or you continue renting.
Good grief! Reality is tough!
These people and the 61,000 others in Sacramento are mostly liars. America is a cheating society from the President (any political party) on down to the janitor. The best solution to handle these bozos is let the free market punish them, and get government out of the way. The free market forces people to be honest. You cannot disobey reality for long. Nnature’s laws will get you in the end. Lazy fat cheating Americans…
“The free market forces people to be honest.”
The free market has many benefits, but this is not one of them.
Where the free market does indeed force people to be honest are places where people can know of and about each other, places where one’s reputation carries some weight. Small communities come to mind; Large cities do not.
On Wall Street the free market works well; A man’s word is his bond. If a Wall Streeter acquires a unsaviory reputation then he is screwed because the word will get out and nobody on Wall Street will do business with him (Mesoulum Ricklis is a good example of this). In this sense Wall Street acts as a small town.
That doesn’t mean Wall Streeters won’t screw others who don’t work on the street. That’s something else altogether.
“Mesoulum Ricklis” should be “Meshulam Riklis”.
As long as the law is actually inforced, then there’s no problem with the market. You commit fraud, you get busted. But the way it is now is like exceeding 65mph on the freeway. When 90% of the people do it, 99% of them are going to get away with it. Perhaps it says as much about the appropriateness of the law in question as it does about the morals of the people breaking it?
In that case I’d set the threshold higher and the punishment harsher for the few that you’re able to carry through the system.
Not all of us Bill.
Perhaps the greed bubble will burst and reverse.
Laws of the Universe, she will exact balance.
While I would argue that a lot of people who are now playing stupid either looked the other way or were willing participants in the scam. On the other hand - I am sure there are plenty of cases where lenders took advantage of less sophisticated buyers and put them into products with exorbitant fees. In most cases the lenders don’t care whether or not the buyer gets foreclosed down the road - their commission checks are already cashed and the mortgage has been bundled in MBS tranches then peddled by Wall Street.
yeah, but they still knew the price of the house they were buying. if you cant afford it in the first place, how can that be fraud by the lender? the lender dident tell them to go look at the house they did. this is where i agree with bill.
I disagree. We’ve had a number of lenders telling us we could afford amounts that well exceeded anything I could calculate. They assured us that everything would work out and they knew what they were doing. Seriously some hard selling going on.
I’m a natural cynical and skeptical & laughed at these morons, but not everyone is willing to do that.
Our society encourages people to “respect” those who are supposed to know more than we do — we are not to question what they say, or we might come across as “know-it-alls” & “difficult” to deal with.
Just saying, the lenders KNEW what they were doing, while the borrowers often didn’t (had little/no experience with the lending process).
And the paperwork should be pared back to about 5 pages, MAX!
Please forgive my poor typing skills!!!
“Just saying, the lenders KNEW what they were doing, while the borrowers often didn’t (had little/no experience with the lending process).”
While that may be true, I can’t help believing if these “inexperienced” borrowers had any serious skin in the transaction, i.e., a serious down payment of 10k or more (that they actually earned through the sweat of their labor)–there’s no freaking way they wouldn’t have sought some help to decipher the fine print.
Bottom line? I believe most of these “inexperienced” a**hats DID NOT PUT ANY OF THEIR OWN HARD-EARNED MONEY DOWN and that’s why they threw caution to the wind.
The only thing more stupid than these dolts signing without thinking first–IMO is being “saved” from the valuable lesson learned from such bad fiscal moves by other taxpayers.
DOC
The only thing more stupid than these dolts signing without thinking first–IMO is being “saved” from the valuable lesson learned from such bad fiscal moves by other taxpayers.
————————
On this, we agree 100%!
No one “put them into products.” They wanted to buy, they wanted the cheap monthly payments and they were willing to do whatever it took to do so. You can walk away from a bad loan before you sign - we did twice.
“how many years of loan did he take out?” says bill in MD, about a 79-yo man.
I have often made 10-yr or 15-yr loans to people in their 70’s. My theory was, the value was in the property. Of course I am not talking about I/O ARM neg-am 125%LTV BS. I am talking about maybe 65% LTV fixed-rate amortizing mortgages. If I get stuck with the property, I’ll deal with it. As usual, the problem in the larger market goes back to the securitizers, the ratings agencies, the nincompoop investors, and like that. When I last checked a couple of days ago, the usual “none of my clients is in default” bragadoccio was still true. At this time their median age is somewhere between 63 and 66.
Hi Az,
My grams teaches me daily on the prudence of money.
The 90 year old gal can kick our butts on the best deal!
That lady puts the *F* in frugal!
I am my gram’s grandaughter.
Leigh
Not sure if this was posted already:
“The House on Thursday passed a broad mortgage act that includes protections for renters. The House act, which the lending industry has opposed, would require new owners to continue the leases of tenants for up to six months after foreclosure.
Senator Christopher J. Dodd, Democrat of Connecticut, who introduced similar legislation in the Senate, said in a statement, “A foreclosure doesn’t differentiate between a homeowner and a renter residing in a defaulting property.” Currently, most state or local laws do not provide this protection.
In a statement, the White House said it opposed a number of provisions in the House mortgage bill.”
I’m sure they did. Just another shining example of why I won’t be voting Republican in this election…or any future elections.
Once again Dodd seems to be on the right side of the debate.
“The House act, which the lending industry has opposed, would require new owners to continue the leases of tenants for up to six months after foreclosure.”
If this bill becomes law, we can expect rather funny consequences. All houses about to be foreclosed will be rented out for one dollar per month
but what are the “number of provisions ” that are objectionable? Is one of them the allocation of several billion dollars of pork to some special interest? They always load up these bills with putrid crap..
good point, joey.
But let’s not be redundant. Crap is, by definition, putrid.
Unless it’s God’s or the Decider’s.
some things piss me off to the point that i lose my sense of smell.’
If the day ever comes that i see govt as a fountain of wisdom and beg them to solve my problems, a head of the banking committee / presidential candidate is not one of the politicians I would look to for solutions..
But crap is not, by definition, something that is in a state of putrefaction.
crap’s origin is the chaff from wheat.. as in separate the wheat from the chaff.
Yes, but always remember, and don’t ever forget, that the putridity of a substance is directly proportional to it’s chaffiness.
Oh stop it.
Chaff does not putrify.
Kick out the dead beats. When I buy a house at foreclosure, I immediately give the tenants notice, especially if they have kiddies or pets. If they want to stay I usually raise the rent, new credit reports ect. Signed Simon Legree.
Hmm.
Oh man, I can see it now. If your landlord is facing foreclosure, ask them if they’d be willing to sign a new lease with a $1,000 up-front payment and $1 monthly rents. That house would be un-sellable for 6 months!
“Senator Christopher J. Dodd, Democrat of Connecticut…”
Dodd does only what’s good for Dodd.
and nearly every owner has seen the value of his or her property decline.”
- Comrade Yun (Larry) has made it clear that all real estate is ‘local’ (loco?). Here in Ca, he is correct - it is all bad.
“It’s quite possible that today’s bidders won’t go much above $500,000 or $600,000, a situation that infuriates neighbors who were charged top dollar when they bought in a few months ago.”
Who “were charged” top dollar? No, who were willing to pay top dollar. So just who should they be infuriated with?
The builder had to sell, but they didn’t have to buy. Buyers always set RE prices. Always.
Yeah Yogurt. No one forced anyone to buy anything at any price. They were all willing accomplices.
But, the more they overpaid, the more price velocity they created, and therefor, the more they would make when they sold in 2 years…. Come on guys, Real Estate only goes up, and how much you overpay by sets the rate of that increase.
Get with the times and stop using 1990’s logic like affordability and comparison of cost of buying to cost of renting.
Sheesh.
I don’t know if anyone posted this yet, but:
http://www.nytimes.com/2007/11/18/us/18renters.html
“In the foreclosure crisis of 2007, thousands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages — a large but little noticed class of casualties….
…“Renting a house, I should have rights like everybody else,” she said. “I paid my rent. That should entitle me to some security, right?” She added, “I hate the fact that I’m put in the position where I may not have a choice of where my kids go to school.”
Moral to the story: Rent in large apartment complexes owned by corporations. Do not rent from small landlords. Simple rule.
Oh, sure. You’ll be well taken care of in the “Enron Arms Apartments”.
I get prospective tenants telling me the opposite story, like waiting for months for simple repairs, substandard workmanship, nutty policies, and abusive resident managers in large, corporate-owned apartment complexes.
Not to mention the people who got kicked out of their apartments a couple of years ago in many large corporate complexes, because the large corporate owner decided to convert to condos. So the tenants who did not move immediately were subjected to construction activity in the hallways and neighboring units until they fled in disarray. This happened a lot in my area, particularly in Marina Del Rey.
What tenants really should look for is stable owners of whatever size. Recent changes in ownership should be a red flag. Also be suspicious of duplexes, triplexes, and four-plexes, as they tend to be operated by amateurs. That said, if you find a four-plex that has been in the same hands for at least one RE cycle, it’s probably not a bed bet.
Additionally, a local owner/LL is more likely to know his/her tenants on a more personal level & not raise rents. Large, corporately-run buildings are run like any other business — maximize profits at the “customer’s” expense.
That’s ridiculous.
Let’s stir the pot here…
Why not give renters who are kicked out of foreclosed property the right to recover the difference between their old and new monthly rent for the duration of their original rental agreement, plus in-market packing and moving fees, plus return of all deposits. (Assume similar rental: no. of bathrooms, sq. ft., etc. No free upgrades.) Give the mortgage holder 60 days to cough up the compensation, or else the renter gets the title to the foreclosed home.
*That* would not only protect renters, but get all that REO sold in a hurry!
Those ARE the remedies (except for title to the house) breaching a written lease. (But not for an unwritten month-to-monh.) The tenant simply needs to sue the landlord who lost the house in foreclosure and garnish theirwages to collect.
Much simpler to run a credit check on a prospective landlord. Also call the registrar of deeds, have them pull the copy of the mortgage on record and makesure it is not an ARM or option AMR or other weird thing that is going to explode.
That’s ridiculous.
Huh? I get the fastest response for maintenance issues from corporationed-owned complexes than from small landlords. I had a small landlord before. Had lots of times with broken swamp cooler on the weekend when landlord was out of town. With large corporate apartments I get pools, jacuzzi, a reasonable workout room, tennis courts, etc. With a small landlord, who mows the lawn?
Explain yourself.
So you had one bad landlord; that doesn’t make the entire group of small landlords bad. I live in a house and have no interest in living in a corporately owned apartment, where they raise your rent every six months. If something breaks at the house I rent, I get it repaired and take the difference out of the rent. The corporate apartments send an idiot over to slap a band-aid on the problem and it never gets repaired correctly. Who cares about a 12 x 12 “fitness room” with two stationary bicycles and a nautilus machine, I’m a member of a gym. And whether you believe it or not, my landlord mows the grass.
comprende?
I think part of the disagreement here comes from the differences in how “corporate owned” apartments are run in the South & East coast vs. West –esp. in CA.
In CA, most corporate owned apartment buildings are shabby, poorly maintained, expensive affairs with few amenities. The owners typically angle to squeeze tenants for every last nickel and pull all sorts of shady crap (noted in other posts above) to get their way. Non-flipper privately owned houses, townhomes or duplexes are the way to go here (I’m living in a well maintained rented house owned by a couple that bought the place 35 years ago).
When I lived in Atlanta, I was astonished to see how the best deals for renters were usually in corporate owned apartment and townhome complexes. They were (compared to CA) impeccably maintained, rich in amenities (as Bill noted), and often cheaper than comparable privately rented homes.
There is a huge difference between what makes sense to rent in CA vs. other parts of the country.
Not only does the renter get evicted because someone else f**ked up, but they potentially lose their deposit and last month’s rent payment. Is it possible to put the deposit and last in an escrow account? Has anyone who rents out there done this?
Yes you can do so. In fact that should be done as standard practice. Just insist that an escrow clause be in the lease and an escrow set up with a bank.
This “what about the renters?” story sounded like a way of saying “foreclosures hurt everyone” which would be used to rationalize a bail out of the banks. In reality, foreclosures help future buyers because the real prices are restored by this process.
“The California Association of Mortgage Brokers defends the industry’s conduct and says borrowers took the lead on pumping up their reported incomes.”
What a heaping steaming pile of BULLSH!T. These industry insiders are rotten to the core. Disgusting.
“These industry insiders are rotten to the core. ”
I agree. Most people don’t really want to fill out paperwork and rely on the expertise of the professionals.
I would go blurry reading all those pages and I bet they are all tinkered with.
Lets end the fraud now!
I call BS. Laziness is not an excuse. We read every single page of our application and corrected items. We also read the one-page that laid out the terms of the loan. Again, people had a choice and they chose greed over integrity.
BS only for Americans. Illegals should get a free pass. Many cannot read, or only read Spanish. Those who know English may have thought this is how Americans do business…by lying. Anyways, for illegals, their experience is that laws are made to be ignored, so why should they be held accountable now. Besides, they are all hardworking, family people, and middle class taxpayers should be happy to pick up the tab for the costs of abandoned properties and unpaid property taxes.
I call BS on this attitude. Yes, greedy and dishonest Americans should suffer, not not illegals. Most cannot speak English, many cannot read, and they cannot be expected to be responsible for hundreds of thousands of dollars. They did not cross the desert to be in debt. Besides, if their experience in America is that the law doesn’t matter, why should a few lies on their mortgage apps strike them as unusual. Let middle class American taxpayers pick up the slack for the illegals’ foreclosed homes and unpaid property taxes. After all, illegals are hard-working family people and are doing jobs Americans won’t do. Homeowners and taxpayers should be pleased to carry the burden.
Say what - how did you get there pal? And why did you want to go there? WTF? As Ben would say - waste of bandwidth.
spike66 is being sarcastic here, folks. Wasn’t that obvious enough?
I appreciate that you added “steaming” to your pile of bullsh!t. It’s an often neglected touch.
Personally, I enjoyed the “heaping” adjective more than the “steaming”.
But you’re right about the “often neglected” part.
Have a friend who has been doing the hiring for two sales positions for a local company. We were there Saturday looking at a car for my son. He pointed to the stack of apps he had sitting on the table and told my son “if I see anything involved in real estate I throw it in the no chance pile – they’re all parasites and we don’t need any parasites…”. I think many of them are going to find changing jobs very difficult. To say the sullied their reputation would be an understatement. Everyone has pretty much figured out all they cared about was their paycheck – the thought of what they were doing to another rarely, if ever, entered their minds.
Karma can be rather intense when your on the wrong side.
“This Is A Hard Landing For California”
No, this is a full blown crash. It’s a 747 losing all of it’s engines, and plummeting straight down, landing on top of granite.
It’s a big old jetliner, 6 miles high…
With a sudden lack of buying pressure, in the main cabin~
Its a 747 into San Onofre…
And lookie there… A Tsunami wave!
“Ladies and gentlemen, put your head between your legs and kiss your equity goodbye.”
And the oxygen masks come down with a credit card swipe reader on them…
Seriously, what bank isn’t going to be abused by the California defaults? It will be the dog whimpering back to its basket afraid to come out and play.
Got popcorn?
Neil
Excellent humor !!!
But David Lereah and the MSM promised it would be a “soft landing”. Where are they when we need them? NOT!
Right like you men are promised if you just buy that hot sports car all the blond plastic bimbos will flock to your door oozing “oh baby baby.”
Go to Scottsdale AZ…. that is EXACTLY what happens to guys that can appear rich. This is why the blond, plastic bimbos get so ANGRY when they find out that the future sugar daddy they just put out for, is really just a thrity-thousand-aire.
Bantering you are right. About 18 months ago, Credit Suisse forecast a “hard landing for real estate,” saying it might take several years to evolve. That was an appropriate description of what will happen to RE nationally; in the case of Calif, “crash” is more accurate. In somebody’s technical universe, I think “HL” means 40% off, “crash” means 60% off.
if flared properly and with enough granite it could come out ok…i prefer the helicopter losing all of its blades at altitude analogy
yours,
crush
“The situation of the Florendos and hundreds of others in San Joaquin County spurs a healthy debate in religious circles about whether people of faith should have engaged in the housing gamble that has led to a record number of foreclosures in the county.”
Speaking of religious circles, this reminds me, didn’t I just see a post a few days ago about mortgage fraud and where it’s highest? And one poster named Utah, then gave a situation that is presently being investigated as an example, along with Nevada, Georgia, I think California as fraud-heavy states.
But I know that that is impossible, because people in Utah are very righteous.
No offense to religious folks out there, but in my business dealings the most unethical people have been the born-agains and evangelicals. They have a holier-than-thou attitude which they feel excludes them from secular laws.
A man of faith (a reverand), stole $24,000 worth of business equipment from my father in the 1970s. Ever since, I have been very suspicious of people who hide behind religion to do their deeds.
It strikes me funny, knowing people personally in a religion who are very outgoing in their conversational topics (about sex) and go to confession once a week to get absolved of all their sins they accumulated up to that week.
Morality based on reason is my guide. It is objective.
One potential business client asked me over the phone if I was a Christian. It creeped me out–it’s none of his business–but I let it slide. Told him I was raised Protestant but wasn’t a Christian with a capital “C”. Then he inquired about my hair color.
OMG!
“Then he inquired about my hair color.”
tee hee.
You should have asked him if he was a Catholic priest.
Yes all. We now have “Christian” business directories and jobs that require you to be a Christian to apply for.
The Universe, she will exact balance!
As an atheist, I too use reason as my guide… however, I can’t call it objective. You can use logic to access the likely outcomes of various moral norms. However, there is a value attached to possible intended effect and unintended side-effects. You have to use human judgement to access the relative values of those effects.
In the engineering business it’s the same. Say it’s a church design. You get the scope of work, do your design and then after the fact they want to change the whole building around because suddenly the entire congregation has morphed into engineers. Then they proceed to accuse every contractor on the job of gouging them.
Then they’re incredulous when you tell them the redesign will require an additional fee, as if we’re suppose to do it for free because its a church.
One thing i’ve noticed about houses of worship in America, is…
On the outside looking in, they oftentimes have the most liberal looking architecture, from an appearance sake.
On the inside looking out, they oftentimes have the most conservative viewpoint of the world, from an appearance sake.
Woman gave middle-aged daughter power of attorney while she was undergoing serious medical care. Daughter transferred mother’s life savings to her own 401K. Mother recovers and wants money back. Daughter refuses. 2nd (and honest daughter) brings her to me for help.
I demand that nasty daughter return the money. She refuses although admitting hre mother’s version of events.
I give her 24 hours to have her a** in my office with a bank cashier check for the money or I give her mother’s statement to the police for the filing of felony grand larceny.
Bad daughter flounces into my office, hands over the check, announces that I was ‘being nasty” and that she would ‘pray for me.” I tell her to get her lying stealing a** out of my office - she was contaminiating it.
Thieving daughter was a born-again Evangelical and an officer in her wacko fundamentalist church.
Hear someone say “I’m a good Christian”, then look to your wallet.
Hear someone say “I’m a good Christian”, then look to your wallet.
Sadly true. I have my religion, but you have to get to know me a bit before I’ll talk about it. Those that announce it are usually using it to sell something. Be your religion by example.
That said, I’m proud to live in a country with true freedom of religion. Even if that freedom means scam artists abuse the sheeple.
Neil
This is my church, these are my sheeple …
Be your religion by example.
————————
Love it, Neil!
She probably felt she was entitled to the money. I bet she believes the saying : God helps those who help themselves.
Her church probably practices “Prosperity Gospel” aka “Prayer of Jabez”, about as warped an interpretation of Christianity as there ever was.
One thing I’ve learned about Mormons is they are straight up, honest, caring people…to other Mormons. If you aren’t Mormon, watch yourself around them.
I’ve worked among many. There are some who are liars and bend the rules. There are some who are ogres. One I worked with disowned his teenage daughter who had a child out of wedlock. Also they protect their own. They don’t work on weekends. The management system can be driven by several levels of Mormons. In that work environment, it made us non-Mormons suspicious. But we had to be much better than the Mormons who did not work on weekends in order to be kept on the same par. A woman I know was verbally abused by the Church of LDS in that small community I lived in. Her husband was the real abuser. Groups can be very cruel, especially groups driven by subjective philosophies (religion).
“There are some who are ogres.”
Shrek: Ogres are like onions.
Donkey: They stink?
Shrek: No.
Donkey: Oh, they make you cry.
Shrek: No.
Donkey: Oh, you leave em out in the sun, they get all brown, start sproutin’ little white hairs.
Shrek: NO. Layers. Onions have layers. Ogres have layers. Onions have layers. You get it? We both have layers.
[sighs]
Donkey: Oh, you both have layers. Oh. You know, not everybody like onions.
Donkey: Whoa. Look at that. Who’d wanna live in a place like that?
Shrek: That would be my home.
Donkey: Oh and it is LOVELY. You know, you’re really quite a decorator. It’s amazing what you’ve done with such a modest budget. I like that boulder. That is a NICE boulder!
Donkey: I just know, before this is over, I’m gonna need a whole lot of serious therapy. Look at my eye twitchin’.
C’mon, there are all kinds of Mormons, just as there are all kinds of Baptists, Catholics, Muslims, atheists and bacon-lovers.
I’ve met good and bad in each.
You’re from Utah : )
Off Topic (I’m very sorry) but people may miss this one in the morning column. http://biz.yahoo.com/ap/071118/opec.html
I just read that article before I came to this board..Nice !!
This isn’t good. I’ve read many accounts claiming that we invaded Iraq because Saddam Hussein was contemplating a switch to Euros. Adding oil to fire, so to speak…
I have it on good authority that the real reason we invaded Iraq was George’s need to avenge the (non) actions of his wimpy father.
I mean, what the hell did his dad know. He was only a WWII hero and ex-director of the CIA.
Hell, Lil’ George can’t even spell CIA , but he is the “Great Decider”.
And don’t you forget it.
this is not good.
I would suspect aggresive speculation into the currencies resulting in intense volatility in the markets…
Gosh, riding the dollar down and then jumping into the Euro…
With enemies this crafty, who needs friends?
It’s funny how vilified Mahmoud Ahmadinejad is in the U.S. press, when it seems to me that he speaks the truth, much more so than the U.S. leaders.
Of course the dollar is a worthless piece of paper. Where did people ever get it into their crazy heads that a piece of paper is worth as much as the real thing? And I was told we aren’t allowed to invest in gold or silver as part of our retirement 401k because it is “too speculative.” That’s like saying you’re safer swimming 50 miles out in the ocean than you are standing on solid land.
‘Is it possible for us to witness a world without America and Zionism?’ But you had best know that this slogan and this goal are attainable, and surely can be achieved.
The press can probably do without Ahmedinejad’s “truth”…
So far, you, Ahmedinejad, Hugo Chavez, a super model and some rappers are on the worthless-dollar bandwagon .. now we wait for the shoeshine boy.
Joey
I ask you this: How much does it cost the U.S. government to produce a $1 paper bill? How much does it cost the U.S. government to produce a $100 bill?
I have used Friedman’s monetary policy to my advantage for two decades but eventually the piper must be paid. The Austrians are right in the end.
It is currently against my best interest to talk someone out of the idea that the dollar is worthless.
Although I have always had a serious streak of altruism in me, i’ve learned to keep it in check.
Cool. You did not answer my questions. So that says a lot.
If I may ask a coupel questions..
The dollar is a worthless piece of paper. Is the yen, the euro, the brit pound any different? All are fiat currencies.
Can one worthless piece of paper be worth more than another worthless piece of paper?
Did the pounding gold took last week have any relationship to the falling dollar or the rising price of oil?
The gold bugs around here have been unusually quiet this week..
Dollars are worthless toilet paper.. and yet a lump of shiny metal supposedly has some innate value.. you can’t even wipe your butt with gold.
All those other currencies are in trouble too. The Euro is partially backed by gold at least. These economies have the monetary policies and private central banks that create bank profits out of thin air. It’s a license to steal, in other words. This system works fine as long as the subjects, er, citizens are complacent. And most people are complacent. It can only last so long.
Gold was $35 per ounce in 1970. In 1980 as high as $850, then crashed. But look, it never again dropped to the double digits but reached its lowest at $270 or so in the late 1990s.
Gold could go up to $2000 ($800, priced in 1980 dollars) and drop down to 1/3 of that, or $667 per ounce 15 years past the $2000 peak, if it follows the same cyclic pattern of the last commodity bull market. But $667 is not bad.
hmm.. now i need some time to parse your response to see if you actually answered any of my questions..
“Can one worthless piece of paper be worth more than another worthless piece of paper?”
No. But those other countries are probably not in as serious debt as us. But they are in debt.
“Did the pounding gold took last week have any relationship to the falling dollar or the rising price of oil?
The gold bugs around here have been unusually quiet this week.”
Last week there was profit-taking in precious metals. I do not deny that the prices of metals are cyclic. Eventually PMs will crash. But commodity bulls are typically 20 years. We are only 6 years into the commodity bull market. Actually, oil fell along with gold last week. We are going to run out of cheap oil. Fact. Ask yourself what that will do to the price of gold? The economy will have a severe recession as people have to spend more money on oil and oil-based products and spend less on other products. Wage inflation will have to start at that time. The next head of the Federal Reserve will have to do a Paul Volcker and put an end to inflation by driving interest rates to double digit. That will be the death of the commodity bull. But I don’t see that happening soon. Bernanke is too new on the job. There is no general sentiment for raising interest rates. They should be raised substantially, but most Americans are FBs or stock investors. It is political suicide to raise the interest rates to the amount they have to be raised to counteract the credit bubble.
joey,
First of all, no.
You are not allowed to ask any questions if you can’t spell the word “kuppal.”
Secondly, although I have never attempted to wipe my butt with a hunk of gold, I agree with your basic premise that dollar bills will be worth more than gold when armageddon arrives.
Not only can you wipe with ‘em, you can burn ‘em for heating and cooking.
heh.. it’s funny how people think gold has value in an armageddon situation.
lets see.. it can fill teeth. Add Self-dentistry to the list of survival skills..
Gold is a good conductor. Ok, remember to leave room for setting up a computer chip factory in the family cave.
but there’s no question that it’s value as jewelry will survive.
Trade 300 pounds of beef in exchange for an ounce of the gold? 15 cases of whiskey? A crate of ammo? Sure..
Hmm, but how many of us really have our dollar-denominated assets in actual paper bills? Isn’t it more like, we’ve got a bank or brokerage statement saying we are “worth” this many dollars or that many dollars? Good luck even getting the proceeds in $1 bills! unless you do it soon, of course.
bill.. We are going to run out of cheap oil. Fact. Ask yourself what that will do to the price of gold?
OK.. lets assume oil / energy is truely precious and high priced. Do any of the uses for gold have a high enough priority to allot energy to them and drive the gold price up?
trucking requires oil .. heating and electricity generation.. food.. In otherwords, industries, products and commodities that are energy-dependent and are directly affected by high energy prices will experience a rise in cost. These are not luxuries. They are basic necessities.
Gold’s price is not connected to the dollar.. it’s not connected to the price of oil. If we are not on a gold standard, gold is nothing but a another speculative commodity like soy beans and OJ, imo. (OJ requires energy to produce so it will rise in price).
Of course some market forces, like activity in high tech industries which use the metal do affect gold’s price, but i don’t see why energy alone directly relates to high gold price.
On the value of Gold in crazy times…
If a currency is in collapse, it may very well be isolated for a period of time. It is all about _timing_.
If you are trying to cross into Canada or Mexico… A 1oz Gold Coin may be worth a lot more than the $800 worth of USD to someone. As someone on the other side… what are they going to have to do, exchange it back.
Economic collapse of a currency can happen, and nothing to say it will be the end of the world, but it may very well be unpleasant for months or years. it is all a matter of time if you need to “go outside the USA” in a real hurry during that unpleasant time.
Plus, frankly, our cash is really held back buy the low value of our highest printed bill. $100 really isn’t enough. Not at today’s low values. There is indeed a 200 Euro and 500 Euro note.
A 1 oz gold coin is a lot more sturdy than $750 worth of USD, and a lot easier to conceal.
Got ca$h? Check.
Got guns? Check.
Ammo? Check.
Hubby with sweeeeeeeeeet butt? Check.
One lucky lady
“It’s funny how vilified Mahmoud Ahmadinejad is in the U.S. press, when it seems to me that he speaks the truth, much more so than the U.S. leaders”
Truth? This is the guy who says that the Holocaust is a myth, that there are no gay people in Iran, etc ……
Exactly.
I like this line a lot…
“According to Keenan, banks are accepting extremely low offers. ‘What they’re taking is sometimes mind-boggling meaning that the market may be drifting down even quicker than some of us realtors expect them to,’ said Keenan.”
Mind-boggling to a realtor, perhaps.
“Reyes said she didn’t realize until later, while meeting with a credit counselor, that her lender had ‘poofed’ up her income.”
I don’t believe this story, not for a minute. I just don’t. I don’t care how deaf dumb & blind this woman was during her meeting with the lender. Unless she was in a coma, she HAD to have seen the figures stating income because it shows up in several places.
Nice try Ms. Reyes.
What ??? Do you mean I can’t repay my million $$ loan on $50K a year? I had no idea, honestly! It’s all my lenders fault ‘cos I’m stupid and mathematically challenged.
I don’t know what the loan agents told these people ,but you would have to be pretty stupid if you thought the teaser rate was a fixed rate for very long ,and I find it hard to believe that these people did not know their income was inflated . Someone had to tell these borrowers what to inflate their income to ,so you can’t tell me that someone from the real estate business didn’t lend a helping hand in that fraudulent inflation of income .
Maybe loan agents changed borrowers loan applications, but that doesn’t explain the fact that the borrower over bought to begin with . You mean to tell me that the borrower just happened to buy a home 30 to 50% higher than they could afford long term ,and they just happened to run into a loan agent that changed their honest loan applications ? It doesn’t add up .The realtors ,the borrower ,and the loan agents knew what they were doing . I’m sure there are some cases of people being mislead ,and apparently many borrowers were given false information on the nature of the loan ,or borrowers just didn’t ask or read the loan documents .
The borrowers thought they could sell or refinance and come out ahead .The REIC was selling real estate based on real estate going up, so the loan or the price of the house didn’t matter for alot of these people ,especially the ones that didn’t put any money down .
When we got our first mortgage in 1995, we put down nearly 30% of the purchase price. And still they required our most recent paycheck stubs, 1040, bank statements, etc. When did the lenders lose their standards, and their minds?
when investors begged for high yield mortgage backed securities.. if they have a heartbeat, lend them money on a home.. the more, the better.
But your closing costs were low and interest rate was low. If you were willing to pay 3 points, have an ARM that could jump to 15%, and a prepay penalty equal to 6 months of interest if you paid off within 2 years, they would have loaned you money without the down and without the
In short, you wanted to own a house. These toxic loans were for people that were gambling with other peoples’ money… If they got 10% appreciation a year for 2 years, they cash out with major profits. If they get some apprecation but not enough, they cash out refi and let it ride. If they didn’t get appreciation, they walked.
The Sacramento Bee reports from California. “If you bought a house in the Sacramento area last year, chances are your annual income came to about $80,000. But your loan application said you earned a good deal more. A Bee computer analysis of more than 61,000 Sacramento-area mortgages over two years reveals striking discrepancies – gaps as high as 25 percent – between what homebuyers earned and what was listed on their loan applications.”
The IRS (and the CA Tax board) needs to go after these folks! Clearly, they’re understating their income to the tax authorities. The choice should be clear:
1.) Admit to lying to the IRS, pay the back taxes, and penalties, and face criminal prosecution
2.) Admit to mortgate fraud, and face criminal procecution.
Sadly, what will happen is
3) Lawmakers will call them victims, give them a big hug, and tax me more so they can “afford” their homes
Reuven I hate it when you are correct like that!!
“Pacific Wealth’s scheme depended on investors with big dreams but little skepticism,…
No, it depended on stupid people, really, really stupid people.
Stupid? Really? If you’re broke, with a horrid credit score already, why not gamble with other peoples’ money? Blood from a turnip….
The only real risk is going to jail, but the govt. doesn’t want to admit the level of fraud that has been occuring because then the bottom would REALLY drop out!
test..italics off I hope.
OT-Harry S. Dent is calling for house prices on average to drop about 50% over the next few years, to about 1999-2000 levels.
links ? thx
Yes, please: Links? In 2000 he predicts that the Fall of 2009 will be the stock market peak in the U.S. then a severe depression afterward. That’s in his books. Umm…he predicted the Dow to go to 20,000 or 30,000 by 2009 but did not anticipate Islam’s wage of war against the U.S (9/11).
yep, this Dent guy is one of those loonies that keep predicting doom and gloom and stuff with the angle that one day he just maybe right. If he’s wrong, he’ll just reset the prediction, and keep selling he’s books and stuff until he is right, in which case he really cashes in on the talk show circuit. The guy is complete idiot. If there was never a great depression in this country, would these guys be predicting the return of the dark ages?
I do however expect homes to go down 40% from peak, and condos 40-60% from peak.
Its about affortability, credit score, and cash in bank account with home buyers now!
I keep trying to post it and it doesn’t come up. Ben?
This guy’s also been talking about oil peaking at $115, then crashing back down to less than $10 per barrel. Shock and awe!
“The California Association of Mortgage Brokers defends the industry’s conduct and says borrowers took the lead on pumping up their reported incomes.”
This is hogwash. How can this industry association possibly know what transpired behind closed doors between their constituents and their customers. Did they have tape recorders running in order to observe who said what?
BTW, this is the same industry association which is lobbying Congress to raise the GSE limits. I wonder how much money they are sending into Schumer’s, Dodd’s and other politicians’ pockets to pursue the cause?
How were buyers to know just how much to inflate thier incomes, or how best to do it, without the brokers telling them this info.
I’m not saying that buyers are blameless, just saying brokers are CERTAINLY not blameless. It was a conspiracy of buyers, brokers, appraisers, Realtors, Wall Street big boys, and ratings agencies.. permitted by the politicians and law enforcement agencies that chose to ignore it.
I have a client who is a fraud investigator for the FBI. A couple of years ago I was discussing fraudulent mortgage applications with him and my frustration with the fact that brokers were getting away with murder. He says that when the fraud investigations start there will be plenty and various types of evidence against the brokers. They aren’t that bright and do things like have a bunch of different borrowers start the exact same income (whatever the magical number is to qualify) on loan after loan. Hard to say you had nothing to do with fraud when 95 different applicants all put down the same figures. And yes, according to him they can prosecute on this. Plus the idiots leave a paper trail that screams their guilt. I’ve seen copies of e-mails telling a client what amount to put down to qualify for the loan. Whoops. So while I don’t expect a lot to go to jail I certainly expect some of the worst to.
And although the borrower is guilty, some of the fraud that mortgage brokers know is fraud may not seem like fraud to the borrower. I.e. I had a client whose girlfriend had bad credit so she was not on the loan, but the broker told him to add her salary to his income as she would be living in the house. Now, we know this is fraud, but since a breakup is not something he would be thinking about it would make perfect sense to him or other fb’s. And of course, there’s no ignoring that he was still allowed to get a loan that was over six times this exaggerated number!
Ready for more inflation and a dollar worth a dime:
Bond Market to Bernanke: Recession Threat Means More Rate Cuts
http://tinyurl.com/24twke
While the record low dollar and the fastest inflation in 14 months give policy makers reasons to keep the target rate for overnight loans between banks at 4.5 percent, traders expect 3.75 percent early in 2008. Interest-rate futures on the Chicago Board of Trade show the Fed will cut borrowing costs in December and again in the first quarter, as the worst housing slump since 1991 deepens and retailers including J.C. Penney Co. and Macy’s Inc. forecast slumping sales.
Why do the markets encourage inflationary and dollar destroying policies?
Cramer may be a nut, but he certainly has connections. For weeks he’s been saying, “The Fed is not done cutting. They don’t know it yet, but they are not done cutting”.
I’m reminded of the saying, oww the bank $500K and they own you. Owe them $500 million and you own the the bank.
The markets believe they own the Fed. All indications so far say that they are correct.
“I’m reminded of the saying, oww the bank $500K and they own you. Owe them $500 million and you own the the bank.”
I wish I could borrow $500 million from the bank…and own them. Then, as they called for the late payment, I could ever so politely tell them to go pound sand. Not fond of bankers lately.
Isn’t the bond market just anticipating rather than *encouraging* inflationary policies? They know that the fed will cut rates in an attempt to avoid a recession… impact on the dollar be damned.
No, I don’t think so. They think that if they bid down bonds and create a preception that Fed will ease, it will create a preception that stocks are were they are based on belief the Fed will ease. The Fed will then HAVE to cut to avoide a mass sell off of bonds, stocks, unwinding of the carry trade, a run on brogerage accounts and money markets… on and on.
I think the fat cats know their institutions are toast if the Fed does not cut (not them personally as they are likely highly diversified, just their too big to fail banks, brokerages, etc.). So really, they have nothing to lose in this game of chicken.
The Fed has been begging them not to price in the next cut, and they’ve done it anyway.
Now we see who owns whom.
“When we got our first mortgage in 1995, we put down nearly 30% of the purchase price. And still they required our most recent paycheck stubs, 1040, bank statements, etc. When did the lenders lose their standards, and their minds?”
No Kidding! That’s where we’re heading back to… I’m seeing it everyday. People simply don’t have the cash to buy right now as the lending standards have tightened.
Private OPEC meeting “accidentally” broadcast. Iran and Venezuela wanted out of US dollars. Saudi Arabia said even the mention of them discussing this would cause the dollar to fall further.
The dollar is toast.
http://observer.guardian.co.uk/world/story/0,,2212899,00.html
Interesting take. Gold up $7.00 8:48 EST to $793.10 Oil up $0.72 to $94.57. We’ll see. It’s an incentive for me to go to my apartment clubhouse early tomorrow morning to watch CNBC while working out.
Who went to the party in Rewood City last night. Please give a report.Pretty please with sugar on it!
Hey, bill, you don’t happen to be buddies with TxChick, do ya?
If not, you two should get together. It sounds like you are as unproductive as she is.
Although, she does at least rescue greyhounds or something.
If I was unproductive then I would not be working out in the early morning. And no, I am certainly not friends with TxChick by any means.
Aw, I was just kiddin’. You’re obviously very intelligent, as is TxChick.
I’m just jealous.
But that’s the problem…. now the Fed has already put it’s balls on the line and suggested “no further rate cuts”. Will they rescue the dollar or the banks? Cut the rate, save the banking system — but sacrifice the dollar.
Part of me wants to say “no way, will they ever let banks collapse.” But will they? Would they?
Thanks to the OPEC operative who failed to “kill the cable,” he makes my overblown AUD position safe for another little while. I know nothing about Forex, but have had to gamble like everyone else. (Those who remain in USD are also gambling!)
I know nothing about Forex, but have had to gamble like everyone else.
————-
Exactly!
“The glut of foreclosed properties is causing problems for those wanting to sell their homes. ‘It’s a good buyer market right now but as far as selling… good luck,’ said Henninger. ”
==================
hahahahaha
How bout just getting house prices down to affordable levels?
Why is this so bad?
Bad for the banks realtorwhores and dopey sellers but it must happen to get house prices down to normal levels.
“Many investors wonder now how they could have been so gullible.”
When investors see other folks getting high returns greediness clouds their rational thinking; it’s why the scammers stoke the flames — chumming for the suckers!
Exactly right !!!
OT but shocking. Citibank is valuing my San Diego condo 43% BELOW 2004 prices!! In nominal dollars no less!!
I got my mortgage statement today, which said “Did you know that you have equity, about $XXX.”
Well total value = equity + loan balance. I did the math and the value of my place came up 43% BELOW what condos sold for in my complex in 2004.
Tell me Citi doesn’t know we’re in for a blood bath.
Well, at least they think you still HAVE equity. My guess is, you are not El Pato Donald, you are El Tio Rico MacPato!
lol
And that equity might be fleeting.
Good to hear you bought low.
Got popcorn?
Neil
AKA Scrooge McDuck!
Summing all this crap up, the bottom line is Americans are screwing over Americans every day. So much for “United We Stand”.
You have a far greater chance that your fellow American will screw you than any terrorist will. A far greater chance!
“You have a far greater chance that your fellow American will screw you ”
Usually because you are trying to work an angle yourself. Trying to take a shortcut, like this “investment club” makes you SOOOOO voulnerable to being screwed…. Trying to prove you are better than others, by buying stuff you can’t afford, you just screw yourself.
“You have a far greater chance that your fellow American will screw you than any terrorist will. A far greater chance!”
+1
I wonder how many small business startups, self employed, etc. were financed by HELOCs which are running out and drying up. How many little mom and pop places will go under without home equity line of credit access. So many people’s dream is to be self employed and many saw home equity gains as the brass ring to grab onto. Add a serious retail slowdown or recession to the credit crisis. The small business is now in the position of having to repay the debt out of even slimmer profits instead of being able to subsidize business and living expenses by borrowing. I predict a lot of dog grooming and candle making shops will go under. And how many new RE agents have been living off of HELOCs “just until they can get established in the business?”
I haven’t seen it mentioned anywhere, but there has to be a huge number of “shadow” marginally employed that will become unemployed as the tide recedes. Like mobile car detailers. Life coaches.
The life coaches will be ok, they can coach themselves.
Wow..Chinese take axe to speculators…shuts off all bank loans for 2 months.
http://online.wsj.com/article/SB119542008187297217.html?mod=MKTW
I posted this yesterday:
Please Help.
Kind of O.T.-Need your opinion:
House came on the market Thursday night-$999,000 (Major Fixed Needs 400K to 500K work to make nice or $100K to make it livable)
By Friday afternoon, it had 3 offers (I believe the agent).
We went to look at it today and agent could have sold tickets to see this house.
House across the street sold for $1,695,000 but was all fixed up and 500 Sq. Ft. bigger. with a simming pool and much better view.
I am thinking of offer $1,000,000.
Five years ago, these houses were going for $650,000.00.
What is your opinion.
Thanks in advance.
(Glendale, CA)
You may not have had any replies… as your message reeks like a troll. Maybe you are serious, but if you had done much reading of the comments on this blog… nobody would agree with your purchase.
Even if you got it for $500,000 - very unlikely in today’s market (sellers are still holding onto the wishing price)…. you still take a risk.
What exactly is the square feet?
Are you paying cash on this $1,000,000.00 price or you pre-approved with a solid loan?
Lie down until the urge to buy goes away.
“Five years ago these houses were going for $650000.”
Who knows, maybe on that street the falling knife is defying gravity - how long ago did that larger, better house sell? The upscale neighborhood I follow had comps that sold in feb and mar of this year that wouldn’t come close to that price now.
Funny! — You should make t-shirts of that one to sell on Cafe Press and send the profit to HBB.
If we go back to 2001 prices than $650,000 will be too high. Remember, when prices correct they usually correct below where they should and that is the prime buying opportunity. It is way to early to buy (well except for Frank Abagnale who need to buy several houses for the coming population boom!)
There will be lots of buying opportunities soon. And be aware that I am biased because the thought of buying a million dollar home just floors me. And a million dollar fixer upper is beyond me.
So keep us updated but really, really consider how you will feel about this house if it is worth $650,000 in five years?
By Friday afternoon, it had 3 offers (I believe the agent).
We went to look at it today and agent could have sold tickets to see this house.
C’mon, guys, did you actually READ what the troll said? This statement alone should have given this post away as an obvious phoney.
Harm:
Why would I waste my time in asking a question on this board if it was not true?
If there is anyone on this board who knows or lives in this city, I will be more than happy to give out the address.
By the way, agent has absolutely no reason to lie.
It is not in her interest to lie.
This is a probate and the heirs want to sell because they want the money.
When I was there, someone asked the agent to represent them in the offer and the agent refused.
No lie. Why don’t you get a life?
“It is not in her interest to lie.”
Wow, is this a new rule for agents?
I had thought that the higher the sale price, the more BOTH agents (buyer’s and seller’s) make in commission…and I had thought that making more in commission was “in her interest”.
My bad.
Well, in front of me and and my wife, she turned them down.
These are sealed bids and they will be opened on Tuesday.
I may take my offer tomorrow.
I am still thinking about it.
Outstanding.
Remember, you can never pay too much for a house and real estate always goes up. Get on the ladder now before you are priced out forever!
Just be sure to come back in a couple of years and let us know how that turned out.
“I am thinking of offer $1,000,000.”
How much are you bringing in a year? $1M is a big chunk of change, even with inflation.
Ask them to get rid of the simming pool. I don’t know how often you “sim”, but I think you can to it on a computer for much lower cost.
This house has no pool, only room for one.
My daughters love to some and so if anything, I would most probably install one.
(The comperable I used has a pool)
East bay shows some real sign.
Pittsburg/Baypoint used to host 500k+ single family homes. Now KB homes , Shea and others are advertiseing for 300’s. Same story in Brentwood,Antioch and Oakley
Stopped at a yard sale today on the morning jog. They tried to sell me an excercise bike for $350. Told me that they planned to put their house on the market for 1.1 million.
I gave the guy a look. Trophy wife, two princess La Verne, CA daughters who have never been denied anything, he himself, 45, 6′2″, 240 with a coronary five years off.
I said, “you know, the market is going down.”
He replied, “a little.”
My answer, “a lot” and jogged off.
I think we’re giving these guys something to think about.
I do feel bad thinking about his princesses feeling the icy winds of the real world though. sort of, well maybe, ok, no not really.
I have a lot of family and friends living in Glendora (pride of the Foothills-LOL), Morgan Ranch and Country Club area where prices have sank tremendously. However, the few people whom I know in La Verne say it is holding up pretty good.
I don’t think so, but I really don’t know.
However, the few people whom I know in La Verne say it is holding up pretty good.
Yeah, uh-huh, whatever. Wish in one hand, shit in the other and see which fills up first.
Yes, I agree with libertas. Take a vacation for, oh, the next three years, and use the money you would have spent on the house.
Don’t be shy, treat yourself - 5 star all the way. A lengthy cruise may be an option.
Come back, and buy the house for $300,000.
Simple, really.
Directed to experimentgonebad at 21:23. Dang!
We have gone to Hawaii twice in six months (make sure you stay at the Kahala Resort-In Diamond Head).
We went to Cabo, Las Vegas, San Francisco, and everytime we came back, prices have gone higher.
Mayber after we come back from Atlantis in February it will be cheaper (LOL).
From the HK Standard>>>>
Six more hard years tipped for subprime fallout
Benjamin Scent…Monday, November 19, 2007
The US subprime crisis will continue for years to come and America may be facing a permanent decline as an economic power, famed investment guru Jim Rogers said over the weekend. “The situation is going to continue to deteriorate,” he said in Hong Kong.
“When you have a bubble, it normally takes years to work out all the ramifications.” The subprime crisis is not over, Rogers said. “I think we have a long way to go before it’s finished,” he said later at a conference. “When you have a bubble like this, it usually takes five to six years to clean it up.”
Rogers said not many people have lost their houses yet despite a credit bubble that allowed Americans to buy a house with no down payment - a situation unprecedented in US history. But he said many will lose their homes before the crisis is over. “Inflation’s going to get much worse. You are going to have more people losing money. You’re going to have more bankruptcies,” he said.
Forgive me for coming to this late, but…
“They were straining to make the payments on their adjustable-rate mortgage…the couple decided to become investors…after the couple had started investing…Stonewood Consulting Inc., found the couple investment homes to buy”
WHAT????!!!!
What cash money did they actually INVEST? They could barely pay their own adjustable rate mortgage…are we supposed to believe that they had a cash hoard of investment money hidden in their mattress?
Investment = buy assets you don’t need by borrowing more money than you can ever pay back. If the assets go up, you’re rich. If the assets go down, you stiff the bank and the Fed will drop interest rates to the point that the banks survive.
The investment is actually one of time in signing the documents. Who put money down? Buy 5 homes at 1% teaser rates with no money down. If it goes up, sell. If it goes down, walk away and sue for fraud cause you didnt understand the documents. The brokers just wanted the commissions, and the bankers already had a buyer wanting to do a securitization and sell certificates of participate to Asia. Who is hurt? Clearly a victimless crime right?
While I agree with those who want to prosecute the ones who committed mortgage fraud, where do you expect to actually put these criminals??? Our law enforcement officers are overworked and underpaid…Our prisons are at or very near capacity…our legal system is ultra slow…seriously, sounds great in a sound bite but reality is there isnt room for the white collar criminals…so, here’s your choice, do you want law enforcement locking up the guy who murdered your neighbor or the one who defrauded him and caused him to lose his house?
Couldn’t we just let non-violent drug offenders go free and jail the white collar criminals? True, they broke the law and some of them sold to kids (what about the children?!), but not most. At least the dopers. With all the talk of cholesterol on the blog earlier, we need someone to consume all the Nutty Bars. Mmmm… Nutty Bars.
“Yes, as through this world I’ve wandered
I’ve seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
And as through your life you travel,
Yes, as through your life you roam,
You won’t never see an outlaw
Drive a family from their home.”
I predict a resurgence in Woody Guthrie type songs before this thing is over.
MrBubble
nice…
Fred…
Regarding your comment “I recently asked a regional manager for a mortgage wholesaler what percentage of the loans they did over the last 5 years involved lies or fraud. His answer: 25 to 50 percent.”
Did it take a post-mortum review by the RM from the mortgage wholesaler to figure this out or was it just a gut estimate? The estimate seems ridiculously high and reeks of collusion and proactive enablement of application fraud. Crazy numbers!