A Crisis Of Confidence, Supervision And Regulation
Some housing bubble news from Wall Street and Washington. CNN Money, “The biggest plunge in new home prices in 37 years was not enough to revive October sales, according to the government’s latest reading. The Census Bureau’s latest report also sharply cut back on its earlier estimates for sales in August and September. Also depressing sales and prices was a record 191,000 completed new homes on the market that have not yet been sold.”
“The report showed that the median price of a new home sold in October plunged 13 percent from year-earlier levels to $217,800. It was most severe year-over-year drop since September 1970.”
“And the price figure may actually be underestimating how the bottom has fallen out of prices in recent months. Most builders are trying to support prices by offering to cover closing costs or adding free extra features on new homes.”
From MarketWatch. ” Sales rose 1.7% to a seasonally adjusted annual rate of 728,000 last month from a revised 716,000 in September, which was a 11-year low. September’s sales pace had originally been reported as 770,000. August’s sales were also revised sharply lower to 717,000, down from 735,000 estimated a month ago and from 795,000 estimated in the first release.”
“Sales are down 23.5% in the past year, a vivid reflection of the carnage in the home-building industry.”
The New York Times. “E*Trade Financial, the Internet bank and brokerage, said Thursday it would receive a $2.5 billion cash infusion from a group led by Mr. Griffin’s firm, Citadel Investment Group. With Thursday’s deal, Citadel will pick up E*Trade’s collection of asset-backed securities.”
“This portfolio includes collateralized debt obligations, which are complex bundles of debt whose value has slumped because of the recent rise in mortgage defaults.”
“Citadel is getting E*Trade’s portfolio for a cut-rate price: It is paying $800 million for assets that had a book value of $3 billion. E*Trade said Thursday it is taking a $2.2 billion haircut on the transaction.”
From ABC Money UK. “LBBW, Germany’s biggest public sector bank, is faces possible writedowns of more than 800 mln eur related to credit turmoil, Financial Times Deutschland reported.”
From Bloomberg. “KfW Group, which organized the bailout of IKB Deutsche Industriebank AG over subprime losses, said an agreement was reached with German banking associations to cover the lender’s remaining risks of about $520 million.”
“The additional risks stem from guarantees given by IKB to other banks providing cash lines to its affiliate Rhineland Funding Capital Corp., which invested in subprime assets, KfW said today.”
“The agreement brings total possible losses to be covered by KfW and German banking associations at IKB and Rhineland Funding to about 6.15 billion euros ($9.1 billion).”
“Four IKB management board members, including CEO Stefan Ortseifen, were relieved of their duties this year as an audit by PricewaterhouseCoopers found the crisis was a result of ‘flawed’ risk management.”
The Gazette. “The Caisse de dépôt et placement du Québec has $13.2 billion in asset-backed commercial paper, its president revealed yesterday. Of that total, $1 billion is invested in subprime mortgages, Henri-Paul Rousseau told the Quebec National Assembly’s finance committee, and, at the worst, the Caisse could write off $500 million in losses on the investment.”
“‘It is a lot of money,’ Rousseau admitted.”
“François Legault, the Parti Québécois finance critic, suggested Rousseau was low-balling the potential loss, saying the $12.2 billion Rousseau considers safe is not immune to loss. Legault said the commercial paper holdings of the Caisse resemble those of the National Bank of Canada, which has announced a potential loss of 25 per cent, calculating that the Caisse could lose $3.3 billion, not $500 million, as Rousseau projected.”
From Thisismoney. “Insurer Catlin came through the hurricane season unscathed, except for Hurricane Subprime. It is writing 86% off the value of its subprime related securities, slashing them from £41m to £6m.”
“This will heighten fears of hits to other insurers, coming soon after a shock £500m credit crisis loss at reinsurance giant Swiss Re. Catlin has a £2.8bn investment portfolio, of which £51m was hit by the US mortgage meltdown. It sold the best of these for £10m, but thinks the rest are worth only 14p in the pound.”
“Numis analyst Richard Gradidge says: ‘It depends how far this crisis spreads’.”
Caribbean Net News. “Catlin said…most of its subprime-related assets are collateralised debt obligations. The insurer said it did not expect to be hit hard by claims resulting from the subprime crisis, saying it had largely pulled out of providing liability cover for financial institutions and the executives of major firms.”
From Reuters. “French bank Credit Agricole doesn’t expect the full extent of the subprime mortgage crisis to be clear before April, its managing director Georges Pauget told La Tribune newspaper on Thursday.”
“‘We will not have a clear view on the deterioration before April, or the middle of next year, because large packages of risky loans issued in 2006 are expected to mature,’ Pauget said.”
“‘The problems of the crisis are essentially problems of transmission. There is a responsibility of the American public authorities regarding the treatment of the subprime problem,’ he said. ‘In my view, the maturity of the loans needs to be extended, the interest rates need to be stabilized, and there needs to be a mechanism to share the losses between the banks and the authorities,’ he added.”
From The Age. “Reserve Bank assistant governor Guy Debelle has compared the subprime credit crisis with the junk-bond collapse in the 1980s and blamed lazy investors who ignored basic risk management.”
“Dr Debelle told the Australian Securitisation Forum that investors had not asked enough questions about why different products rated with similar risk of default paid substantially different returns.”
“‘In theory, securitisation has allowed risk to be packaged and sold to meet the preferences of investors,’ De Debelle said. ‘However, the true nature and correlation of some of those risks has only become apparent to investors in recent months.’”
“Ira Kalish, director of global economics at Deloitte Research, said the worst was yet to come. He predicted that next March would have the most resets on variable-rate mortgages and, subsequently, the most defaults with securities that were backed by the mortgages.”
“‘Unfortunately, we are going to see more resets in adjustable-rate mortgages, likely more defaults on these mortgages and more problems for the securities that are backed up by these mortgages,’ Dr Kalish said.”
“‘The credit crunch is not over, there’s still trouble ahead. We don’t even know where that trouble lies. We don’t know who is holding that stuff (the adjustable-rate mortgages),’ Kalish said. ‘We keep hearing surprises from banks that on a weekly basis increase by billions of dollars the amount that they have to write off.’”
“Dr Debelle said fallout from the failing loans had created a ‘lemon’ effect, with all securitised products — regardless of quality — being sold at cut rates.”
The San Francisco Chronicle. “Here’s more evidence that you can’t call the mortgage crisis a subprime problem. On Tuesday, Wells Fargo said it will set aside $1.4 billion for home-equity loans it expects to go bad in 2008 and 2009. What it didn’t say in its news release was that these are not loans to borrowers with subprime credit scores.”
“‘This was a prime portfolio,’ Wells Fargo spokesman Chris Hammond says.”
“The average FICO credit score for all Wells Fargo home-equity loans is 750, well into prime territory. What probably made these loans risky was not the credit score, but other features, such as no income documentation and high loan-to-value ratios.”
“One mortgage broker forwarded a flyer he received from Wells Fargo, ‘A Guaranteed Home Run With Your Borrowers.’ The flyer, dated February 2006, promoted ‘newly enhanced’ guidelines for stated-income/stated-asset borrowers, who are people unable or unwilling to document their income or assets.”
“Wells says these loans ‘reflect a combination of the most recently originated vintages, with the highest combined loan-to-value ratios, that do not have the added protection of being behind a Wells Fargo first mortgage.’”
“Wells said Tuesday that it will no longer originate home-equity loans through brokers with combined loan-to-value ratios of 90 percent or higher or that are not behind a Wells Fargo first mortgage.”
“‘This is, of course, akin to saying that the barn door will be closed now that the horse is in the pasture and over the hill,’ writes Dick Bove, an analyst with Punk Ziegel & Co. ‘What is particularly disappointing about this incident is that observers of this company never expected Wells to be making these types of loans in the first place. The most damaging part of the company’s revelation is that this company’s underwriting standards may be weaker than thought.’”
“Trading in a benchmark credit derivatives index suggests eight of the 125 companies in the index may default, a situation that ‘is certainly conceivable’ if the economy deteriorates significantly, Wachovia Corp. analysts said.”
“The Markit CDX North America Investment Grade Index, used to speculate on the creditworthiness of companies including mortgage lender Countrywide Financial Corp. and homebuilder Lennar Corp., is trading at levels that imply at least eight defaults in the next five years, Wachovia Securities analysts led by Richard Gordon, wrote in a report yesterday.”
“‘Out of those 125 credits, there are four homebuilders and a number of lenders and insurers with significant mortgage exposure,’ the analysts wrote.”
“Securities firms and banks sold ‘too many lottery tickets’ tied to U.S. mortgages and failed to look closely enough at their growing risks, the head of the Securities and Exchange Commission’s market regulation division said Wednesday.”
“Financial companies had ‘a significant risk-management failure’ on so-called super-senior classes of collateralized debt obligations made up of asset-backed bonds, according to the text of remarks Erik R. Sirri made at a conference.”
“The CDO classes were ‘a perfect structure to lull even sophisticated traders and risk managers into a state approaching complacency,’ Sirri said.”
“The cost of borrowing in euros for a month rose by a record and loans in dollars climbed the most in more than a decade as banks sought funds to cover their commitments through to the start of 2008 amid a credit squeeze.”
“The London interbank offered rate that banks charge each other for euro loans due after the end of the year jumped 64 basis points to 4.81 percent, the highest since May 2001, the British Bankers’ Association said.”
“The rate for dollars jumped 40 basis points to 5.23 percent, the highest since Sept. 18, when the Federal Reserve cut the target rate for overnight loans for the first time in 4 1/2 years.”
“‘The increases we’ve seen in borrowing costs cannot be simply explained away by year-end pressures; this is a full-on credit crisis,’ said Stuart Thomson, who helps oversee $46 billion in bonds in Glasgow, Scotland. ‘There’s no end in sight either. It’s a really unpleasant picture.’”
“The money market liquidity crunch, which began in August after the U.S. subprime mortgage fallout, is deepening further as banks pay a higher premium for cash to meet funding requirements around the Christmas and New Year period, typically the time banks close their books.”
“That rise of around 65 basis points marked the biggest jump at the daily fixing since early 1995, according to Reuters charts, and higher than any increase seen in the run-up to the ‘Y2K’ scramble for liquidity at the 1999-2000 millennium crossover.”
“UBS said liquidity tensions, which have been apparent in unsecured interbank lending, are reaching the secured, collateralised market as the spread widened between rates in euro repo and the European Central Bank’s long term financing operation.”
“Goldman Sachs said money market tensions stemmed from banks aiming to shore up their balance sheets before year-end in the face of pressure on capital ratios.”
“‘While a year-end effect in the money market is typical, it is exacerbated this year due to deterioration in capital ratios arising from U.S. subprime and other credit market losses,’ the bank said in a note to clients.”
“The liquidity squeeze persists even as central banks pledge to inject more liquidity to prevent a financial system seizure.”
“‘Money market pressures are likely to escalate towards year-end…Central bank actions are less likely to alter these trends before year-end. Liquidity operations can help smooth out spikes in spreads, but it is doubtful this will stop long-dated money spreads from trending wider,’ Goldman said.”
The Union Network International. “The global economy is just at the beginning of a financial crisis, UNI General Secretary Philip Jennings told a meeting of the UNI-Europa Finance Committee, meeting in Nyon, Switzerland.”
“‘We have a crisis of confidence, supervision and regulation,’ he told representatives of Europe’s finance trade unions. ‘We have to raise question marks against the financial markets and the global economy.’”
“The Committee agreed to set up a study to look at how regulations and supervision can be improved to help restore confidence in a global financial system that has been shaken by a subprime crisis, a credit crisis, fears of a recession in the USA, and a growing number of job losses in the finance sector.”
Miny reported E-Trades’ mark to market .27 on the dollar. At least they are trading.
Prices here in Ventura are dropping upto 30+% compared with previous sales in 2005-6. Alot of foreclosures and brown lawns along joshua trees protuding from used house salespersons.
For the latest on the portland housing market check out the Portland Housing Blog.
http://www.portlandhousing.blogspot.com
article in this mornings South Fl rag stated that cities all over FL were bailing on their Investment portfolios due to No value.. and that is creating a “run on the bank”.
Neil pass the popcorn.
Florida freezes $15 bln fund as subprime crisis hits
MarketWatch Pulse News Bullet - November 29, 2007 2:16PM EST
SAN FRANCISCO (MarketWatch) — Florida halted withdrawals from a $15 billion local government fund on Thursday after concerns about subprime-mortgage-related losses prompted investors to pull roughly $10 billion out of the fund in recent weeks. The State Board of Administration met today and voted to immediately freeze withdrawals, spokesman Michael McCauley said.
Mad — to me, that is a biggie, biggie, biggie. Maybe not Bear-Stearns-July quality, but wow should it set local governments in other states on fire. I’m tempted to go to some local commission meetings just to listen to the babbling about this one.
First thing I thought of was the old saw posted here long ago and periodically resurrected:
“Don’t panic. But if you are going to panic, be the first to panic.”
Katy bar the door on this one.
Yes it is big. By comparison, in terms of municipal finance, the Bob Citron Orange County debacle was only about a $2 billion loss. And of course we don’t know how many other municipalities have similar exposures to alt-a and subprime. Those that do may not even be aware of it yet.
http://southflorida.bizjournals.com/southflorida/stories/2007/11/26/daily37.html?jst=b_ln_hl
“Bock said the SBA plans to bring in outside consultants to look at options for increasing the liquidity of the fund.”
I hear AG is available, maybe he could drop by and add to the pontification, for a fee of course.
So what exactly is this fund? I guess it’s used for various state-funded institutions - e.g. for college tuition at UF? Or is it something more retail - e.g. a state credit union money market fund?
Take notice FBs! That half mill. McMansion is worth $135K. Suck it up. No BS around that; 73% haircut!
well said !!!
‘Citadel is getting E*Trade’s portfolio for a cut-rate price: It is paying $800 million for assets that had a book value of $3 billion. E*Trade said Thursday it is taking a $2.2 billion haircut on the transaction.’
For the poster who called this a bail-out. And the rest of the money was for 12% notes and stock.
‘There is a responsibility of the American public authorities regarding the treatment of the subprime problem,’ he said. ‘In my view, the maturity of the loans needs to be extended, the interest rates need to be stabilized, and there needs to be a mechanism to share the losses between the banks and the authorities,’ he added’
Yeah, Frenchie, good luck getting congress to talk people into bailing you out!
Yeah, really. The failure of the authorities had a lot to do with campaign contributions and an ideology of deregulation. Privitize the profits, socialize the losses hasn’t done France any good.
Freedom Toast, Freedom Press, Freedom Onion Soup, Freedom Roast Coffee, Freedom Poodles, Freedom Dressing, Freedom Kisses…
Did I miss any?
Freedom maid outfit.
Freedom poodles have a real ring to them.
American Maid was certainly one of the more competent heroes in The City. Spoon!
When I finally do buy a house I will get a Freedom Poodle and no LL can tell me otherwise.
Freedom Vanilla Ice Cream (Just had some yesterday)
Freedom fries and freedom tickler.
Freedom Nails
Freedom Toast.
Le Freedom Tickler?
Freedom Twist… its an old hairstyle.french twist.
Or was that a dance ???lol.
duh car
Freedom Fries, Freedom Connection, Freedom Open
How could I forget?
Viva la Freedom Revolution!
Freedom Letter, aka Steely Dan
France is trying to get out of its economic doldrum malaise, thus the riots.
Norway is reeling as well.
So take a system that has worked very well for the majority since WW2 and replace it with one that works for a priveleged few and one that has been a proven failure here in the USA and call it good.
Yup…. that makes sense.
“there needs to be a mechanism to share the losses between the banks and the authorities”
By public authorities, he means the US Government, which means us, the US taxpayers. So he’s saying there needs to be a mechanism for us to share the losses incurred by his losing investment strategy. I suspect he wouldn’t have been so eager to share the gains had it worked out differently. Gee, thanks. But I think I’ll pass.
Le bagholders
By public authorities, he means the US Government, which means us, the US taxpayers
We call them chumps.
I got that off short at $6 at the open and took a nice 20% gain on it. People are just idiots.
The French aside, how will the rest of the world feel about buying our debt?
Welcome to the Wide World of Shorts
I’m your host, aladinsane McKay…
Today we travel to Germany, to witness the Black Forest of Debt
Look! they’re wearing lederhosenlosses…
“The agreement brings total possible losses to be covered by KfW and German banking associations at IKB and Rhineland Funding to about 6.15 billion euros ($9.1 billion).”
Twas a Category 7, bankruptcy Hurricane…
“Insurer Catlin came through the hurricane season unscathed, except for Hurricane Subprime. It is writing 86% off the value of its subprime related securities, slashing them from £41m to £6m.”
Credit tsunami:
Writedowns in dollars and pounds
Bankruptcy, ahoy!
Leave it to the Aussies to get to the heart of the matter:
From The Age. “Reserve Bank assistant governor Guy Debelle has compared the subprime credit crisis with the junk-bond collapse in the 1980s and blamed lazy investors who ignored basic risk management.”
Good on ya, Aussies!
I think you have it backwards its was the govmint that caused the junk bond market collaspe
They went after Michael Milkin, and when they took him out there was no one who knew anything about junk bonds to replace him…THAT is what caused the bonds to collaspe.
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Milken was indicted on 98 counts of racketeering and securities fraud in 1989 as the result of an insider trading investigation. After a plea bargain, Milken pled guilty to six securities and reporting violations. He was sentenced to ten years in prison, but was released after less than two years. He then launched a public relations campaign to highlight his role as a financial innovator, particularly with regard to popularizing higher-risk alternative investments. He also devoted much time and money to charity over the past three decades.
Absurd argument. If no one other than MM knew anything about junk bonds, what the he1l were they doing trading in these bonds?
MM was a crook. They should have taken all his money away too.
Who are you gonna eulogize next? Craxy Eddie Antar?
But you have to admit, at least MM really is doing some good with his money & from what I understand, has always been very generous, WRT charity.
Milken was a ruthless player, truly a vulture of the “greed is good” variety. Like many of his kind, jail, cancer and going bald changed his ‘tude. Plus, the feds left much of his fortune intact, which certainly helps.
‘1980s and blamed lazy investors who ignored basic risk management.”
- I sense a ‘bailout’ coming … after all, you can’t allow investors to learn a lesson.
RE: “Reserve Bank assistant governor Guy Debelle has compared the subprime credit crisis with the junk-bond collapse in the 1980s and blamed lazy investors who ignored basic risk management.”
Now here’s your aristocratic “Let them eat cake” analysis.
Sorry, Mr. Debelle, this isn’t about Michael Milken and his crowd.
What this is debacle is all about is the doubling of the cost of one of life’s basic prerequisites; which is putting a roof over your head;
via the machinations of a bunch of crooks to which the government turned a blind eye.
How much are you getting paid, anyway?
Thinking about the lack of confidence in banks and money markets, over the last couple of days some folks have talked about 100% reserve banking. You pay a fee and the bank or other service keeps your money secure.
Is the fee the equivalent of a negative interest rate?
I find that frightening, but not inconceivable. Talk about interest rates pointing to deflation….
The big problem with corporate banking/investing is that the person lending/handling YOUR money has none of HIS money in the game. The exception would be guys like Buffet and Gates who are IN their game and let you tag along.
Which means that YOU are the one adding leverage to their investments.
Not at all. You’re investing your money and taking your gains. If it were leverage they would pay you an interest rate and they would accept the gains and/or losses.
Like my 401k, none of the BOD who governs said K have any of their money in it, thus very very few funds to choose from,AND a sweetheart deal with JP Morgan that just keeps making moving “MY” $ around, painful and more expensive.
WHEN are the sheeple going to finally tell the HAVES to stop taking.
100% reserve banking is the only honest kind of lending. The bank becomes the property management company that connects savers (lenders) with borrowers (renters of your money). If you want an interest rate of return on your money then you have to put it in a CD (because you cannot draw on your account while the bank has the money lent out to someone else).
So, you pay a fee for on-demand accounts and they pay you interest when you lend the bank your money for a specified period of time. The bank is not allowed to lend others money it doesn’t have, namely, it cannot create value out of thin air and lend on it.
So if there is high demand for loans from the bank, then the bank would have to raise the rate they pay savers in order to get the money to lend out to others. Interest rates are then set at the market rate for money. The more savings there is the lower the rates.
But that’s not innovative.
The Union Network International. “The global economy is just at the beginning of a financial crisis….
- I can’t help but think that the USA is the ‘Tip of the Spear’ on this disaster.
Then I wonder what the housing market would be like had we of battled our way out of the 911 recession that we were in. The country would probably entering a golden period had the Fed acted correctly …. no Juan sixpacks buying 500k houses.
The entire dang thing even affects those who bought within their means, overheard today, “it is getting harder to cover everything, mtg is only half and the taxes ins etc keep going up”
The guy’s salary hasn’t increased…but all our overhead does?
Then I wonder what the housing market would be like had we of battled our way out of the 911 recession that we were in. The country would probably entering a golden period had the Fed acted correctly …. no Juan sixpacks buying 500k houses.
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That needs to be repeated. Couldn’t agree more!!!
Producers 1968: Sell 25,000% of a play, hoping it’s a failure. Lose it all when it’s a surprise hit.
Producers 2007: Sell 25,000% of the future. Lose it all when it turns to $hit.
“Securities firms and banks sold ‘too many lottery tickets’ tied to U.S. mortgages and failed to look closely enough at their growing risks, the head of the Securities and Exchange Commission’s market regulation division said Wednesday.”
Carnage Asada…
“Sales are down 23.5% in the past year, a vivid reflection of the carnage in the home-building industry.”
I just find it astounding to read all of this ‘we didn’t know and we are finding a surprise loss’ stories, no matter the source, who, etc. Anybody that had a half an ounce of common sense would have known better than to give Juan or Joe Sixpack $500K on an undocumented income/asset basis. Most of these folks couldn’t come up with $500 rent money or $2000 to buy a beater car/truck. Yet, somehow, somebody thought they could pay $6000 or more a month in mortgage payments. It is only because they were tossing it down the river to some schmuck who they knew would be left holding the Gary Watts bag. Also, anyone with a half a brain should have been able to figure out that the 20% a year party would end soon.
And despite the continuing parade of “surprises” The gasbags on CNBC are proclaiming this meltdown no where as severe as the S&L crisis
So, why is it that we, a ragtag group of people who hail from all walks of life, more clued-in than all of these “experts”? How did we end up with such wisdom?
Slim, I don’t think we have ’such wisdom’. I believe this blog simply arrived at a place called common sense, at a level that in any other time might have been called average. That the isolated elites of finance cannot get close to that point says volumes as to the future extent of this uncontainable problem.
Beautiful verbage. When reading this, think of Rod Serling at the beginning of Twilight Zone. Classic.
“I believe this blog simply arrived at a place called common sense, at a level that in any other time might have been called average. That the isolated elites of finance cannot get close to that point says volumes as to the future extent of this uncontainable problem”
Ben, you should copy this, maybe tune it a little, and then put it at the top of the website and put below it, “Look out, there’s an ARM resetting up ahead! You’ve just entered, The Housing Bubble Blog”.
Here, here! Tis a great quote.
Have to finally chime in after several days of lurking.
The REASON and ONLY REASON we saw what they didn’t is…
VESTED INTEREST!
All these a$$holez, like Dylan Rat (again) and Maria Bartihole, didn’t want to see it because booming everything is what keeps the filet mignon and lobster served with caviar and Dom Pergnon flowing every night at dinner. You see a busted economy means no shoppers, which means less stores, less ads and less bloated salaries.
The sad part of it all is the lack of transparency in the whole industry. When one looks at the entire state of the economy in the US, I look back at the last 25 years and just wonder, “Where did my country go.”
To paraphrase from Pat Buchanan, whether you like him or not, “I didn’t leave the country, the country left me.”
Even guys like Buffet, who have made billions, made it by just being a holding company. And even then, is Geico insurance that reliable? Do they payout when called to the carpet? I am only asking because I don’t have, nor do I know anyone, who has that insurance. My point is that where did all the production go? Even service isn’t bad, if it really provides something to someone, say a truly needy medical procedure or auto repair.
Heck, I don’t even have enough energy for a rant. I am just so disgusted by it all. I see a country where a stock market just keeps going up and down, up and down, etc. etc., ad infinitum. The reality is this thing is only starting, yet TPTB and da boyz act like we can shrug this off.
Again, I ask, Where did my country go? What the he77 happened the last 25 years?
I get that same feeling.
Hard work and sacrifice have been out of style for a while.
People have been on autopilot for a while and are not thinking.
What the hell are we going to do with all the Mexicans?
Are they going to be Americans or are they going to be a problem?
I’m in a big company and learning the electronics the hard, slow old way and taking my time.
Meanwhile if you want to “get ahead” get your MBA, take up bungie around assignments and “network. So we get a bunch of half qualified guys doing corporate climbing. That is going to work out long term… oye vey.
Right James like the Mexicans are really the problem. Again - Central Banks, Fed, Government all the monkeys involved in mortgages and realty, big business that wants cheap labor, big business that outsources as much as possible - it’s them are really causing the entire economy to crumble. I’m not saying illegal immigration is not a problem, but I’ll trade a hard working humble illegal for 10 of those snide, snob, elites anytime. As long as they can get enough people to look down the foodchain and blame the bottom, they can keep raping and pillaging at the top.
reply to OCDan:
What happened to your country?
Reaganomics
When one looks at the entire state of the economy in the US, I look back at the last 25 years and just wonder, “Where did my country go.” … To paraphrase from Pat Buchanan, whether you like him or not, “I didn’t leave the country, the country left me.”
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rAmen brotah !
(future expat Approves this Message)
“How did we end up with such wisdom?”
http://www.randomhouse.com/features/wisdomofcrowds/
Bah beat me to it!
“The Wisdom of Crowds” only works with open, frank discussion (as on this blog). Codes of silence, kiss-up/kick-down corporate culture and top-down management lead to the perils of group-think.
I think one reason we saw it and they didn’t is that most of us are in the 20-80% percentiles for income and either owned a home or were thinking of owning one some time in the future. Yes, we have some basic financial common sense but we also understand what the average person makes and what an average person can reasonably afford.
Without even considering the complex financial causes of the bubble, we were down to earth enough to see that things just didn’t add up.
I think for some of the financial elites, affordability statistics are just another statistic to plug into their models.
I have a lot better idea of where we’re at in housing because at the basic level it doesn’t take some complicated economic analysis. It’s right there in front of me. I know we all need a place to live, I know what it costs to rent, I know what the average person should be able to afford, and I know what the average person was paying. I see people living 50 miles from the city center and claiming we’re running out of land. I know that that makes no sense.
Now, if you’re talking about stocks, bonds, gold, etc., it’s a little harder. We don’t all “need” gold or stocks and the average person does not need to buy or rent xxxx amount of these. It’s a little more theoretical….
I think we have “wisdom” because we are less likely to look at realities around through the eyes of the crowd - call a spade a spade!
s
Other friend told me 5 yrs ago in TX that she would only buy a property/home if it was within HER income budget IN CASE something happened to her husbands income.
Smart woman.
How many times can you f*ck things up and still be considered an “expert”? Sure, you can screw up 3 out of 5 times in baseball and you’re an expert hitter. But this isn’t baseball!
Those financial elites are also salesmen, and they are obviously very good salespeople. As a matter of fact, they are still selling. They make money by getting others to buy their product. Their products are equities, bonds, real estate (none of which are calculated in the CPI), and ratings.
As for their benevolence, allow me to create money/counterfiet, and I will certainly be glad to give back a portion of that to the needy, especially if I can achieve a tax break.
When enough folks realize how the monetary system works, there will be meaningful change. If enough folks don’t, standby for the next enormous expansion of credit/era of counterfeiting.
S&L crisis, exactly. I talked about this at 2005, and people said nah we’ve learnt our lessons.
The truth is, when you are working in the financial services and you don’t put your own money in, you don’t care whether the stock you recommended/the mortgage back security you sold/the mortgage you sold/the insurance you sold will come back to bite the dumb ass who buy from you. You collect your fat bonus and god knows you may be unemployed/your company BK next year. As long as you are keeping up with the herd/competition.
Ask Michael Milken if he cares those buying his junk bonds flew out of a window some time later.
Never mind a lot of those hard working REs who are now unemployed have been feasting on toxic loans. When they are making 200k and flipping houses like crazy, ethics never matter.
Wow. I am amazed at how fast the banking is unravelling worldwide. Articles like these are going to make it harder for WS and banking in the USA to massage the numbers. The onion is getting peeled faster.
They can only hide and massage the unemployment for so long which will start another leg down.
So, just to answer my own ? WS just manipulates the mkt and when it goes up…then it goes down..
When will it not be able to be “Handled” ?
For a humorous and very appropriate book (I just started reading it):
“A NATION OF COUNTERFEITERS
Capitalists, Con Men, and the Making of the United States
STEPHEN MIHM”
Listen to a short interview with Stephen Mihm
Host: Chris Gondek | Producer: Heron & Crane
“Few of us question the slips of green paper that come and go in our purses, pockets, and wallets. Yet confidence in the money supply is a recent phenomenon: prior to the Civil War, the United States did not have a single, national currency. Instead, countless banks issued paper money in a bewildering variety of denominations and designs–more than ten thousand different kinds by 1860. Counterfeiters flourished amid this anarchy, putting vast quantities of bogus bills into circulation.”
“Their success, Stephen Mihm reveals, is more than an entertaining tale of criminal enterprise: it is the story of the rise of a country defined by a freewheeling brand of capitalism over which the federal government exercised little control. It was an era when responsibility for the country’s currency remained in the hands of capitalists for whom “making money” was as much a literal as a figurative undertaking.”
“Mihm’s witty tale brims with colorful characters: shady bankers, corrupt cops, charismatic criminals, and brilliant engravers. Based on prodigious research, it ranges far and wide, from New York City’s criminal underworld to the gold fields of California and the battlefields of the Civil War. We learn how the federal government issued greenbacks for the first time and began dismantling the older monetary system and the counterfeit economy it sustained.”
Which begs the question is it easier to counterfeit and put into circulation the Euro over the US dollar?
Counterfeit is best defeated when an individual can immediately recognize that “something isn’t right” and when it is difficult to duplicate the same effects. Technically, the easiest way to counterfeit is to increment a number in a computer somewhere. This is what banks do EVERY day.
Remember, to be successful a counterfeit only has to fool the man on the street. I know some countries make money out of plastic that includes clear sections. This is VERY difficult for an average individual with a computer, scanner, printer, and bleached dollar bills to duplicate.
OT… Fla. suspends funds!
http://www.orlandosentinel.com/news/local/state/orl-bk-statefund112907,0,5698387.story?coll=orl_sports_football_jaguars_util
This is going to be interesting! Alot of local government workers should not sleep well tonight.
Oops, didn’t see your post and double posted below.
Florida is fcked five ways to Sunday. Florida sure didn’t scimp when they bought their ticket to the housing crisis—opting for the All-Inclusive Full-on VIP package.
I wonder how they define “temporarily.” When the halt is stopped do they think the municipalities will just say “oh, never mind”??
Kinda like those sun-bleached “temporary” buildings on your local high school campus?
Hahaha!!! Boy does that bring back some memories……
I just wonder how many different active voting groups got pi$$ed off by this move. This can’t be a good sign.
Hee, hee, hee. My county’s school district got their money out!!!!!
Let the FL county vs. FL county battles begin.
“The average FICO credit score for all Wells Fargo home-equity loans is 750, well into prime territory.”
No way can that number be correct… No doubt this is more than a subprime problem, but that’s just too far above the average FICO to be plausible.
Thoughts?
Sure the FICO scales were changes last year from a top score of 850 to a new top score of 1000.
FICO and VantageScore use two different ranges. The classic FICO scale runs from 300 to 850, while the VantageScore starts at 501 and runs to 990. The bureaus say the VantageScore range is more “intuitive,” because it breaks down like an elementary-school report card:
* 901-990 equals “A” credit
* 801-900 equals “B” credit
* 701-800 equals “C” credit
* 601-700 equals “D” credit
* 501-600 equals “F” credit
What’s this about the change in the FICO top to 1000? I just looked at FairIsaac’s website and it still shows 850 as the top?
There are three major consumer credit rating agencies.
Equifax
Experian
Transunion
To avoid confusion a year ago the banks switched to a combine that is called the Vantage score. So when somebody says my score is a 750, it is important to really know the scale. It could be ‘A’ paper or ‘C’ paper. Banks can report on any scale they choose without any consistency.
Transunion 700
Equifax 800
Vantage 750
average score 750
however 1/3 is subprime.
If 750 is subprime, I’m hosed.
Wells Fargo is one of the good guys in this. I do not own stock, and I work for a rival company. However, they are still considered one of the most sound and well-managed companies in the country, and I very much respect them. Historically, they do not loan to anyone other than Prime, and often they do not approve loans to anyone under 800. They really do not care about anyone with less than 100K on deposit, and they are extremely tight with money, as far as salaries and bonuses.
All true about WFB save for the “prime lending only” part. THey have (had?) quite a big non-prime operation in their Wells Fargo Financial operations. I’m sure it was very well managed, particularly compared to the New Century’s and the CFCs in this world, but end-of-day, yes, even “prime” people seemingly don’t have $ to pay back their loans. No amount of good management can mitigated this fact once the money has been let out.
Maybe that’s why…Warren Buffett has them as an investment
WFC has been a lot more responsible than all but Northern, but their Loan Loss reserves are subpar (trust in FICOs?). A bigger wake up call is going to happen. WFC has a huge exposure to the most volatile market in the US.
“The flyer, dated February 2006, promoted “newly enhanced” guidelines for stated-income/stated-asset borrowers”
Good guys or no, it seems that they were playing the “stated income” (aka “liar loans”) game just like the other boys. A high FICO wasn’t a solution if you allowed your borrowers to lie about how much they could afford.
good point
I think the article is correct. Back in 2001 I purchased a house in CA and used WF, 800K home put 20% down but when it came to the close they didn’t want my check instead they had a 80/20 loan arranged and never bothered to discuss with me. They provided an immediate 160K home equity line. Now at the time I was a little confused by all this and said screw it and just paid of the equity line bill when it came in the mail. The odd part about all this is that they made me jump through hoops to prove were I got the money for my downpayment, since I was not selling my other house at that time. This was also from a inside Wells Fargo loan officer so much of this talk about these being outside broker transactions is a huge lie. My guess is that the loan officer made a few extra bucks off this type of loan and they dumped the 1st off and keep the equity line since it had a higher rate. All just a guess
Akron
looks like an interesting book / thanks
“Sales rose 1.7% … from a revised 716,000 in September…. September’s sales pace had originally been reported as 770,000. August’s sales were also revised sharply lower to 717,000, down from 735,000 estimated a month ago and from 795,000 estimated in the first release.”
Wash. Rinse. Repeat.
With revisions like these, NAR can pronounce the flattening of sales (code for bottom) each and every month for years. Unlike Dorothy, they really can ignore the man behind the curtain.
The Not Ready For Sub-Prime Time Players…
“Here’s more evidence that you can’t call the mortgage crisis a subprime problem. On Tuesday, Wells Fargo said it will set aside $1.4 billion for home-equity loans it expects to go bad in 2008 and 2009. What it didn’t say in its news release was that these are not loans to borrowers with subprime credit scores.”
“‘This was a prime portfolio,’ Wells Fargo spokesman Chris Hammond says.”
“This was a prime portfolio”
Well, it looks like the straight A student has been cheating all along, and should have been at the back of the class with the dimwits. Damn.
Another confession that they don’t know what the hell they are doing but sure enjoyed those loan fees and bonus payouts.
They just confessed that they are done. Stick a fork in them.
“For want of a nail the shoe was lost”
http://www.reuters.com/article/companyNewsAndPR/idUSN2860940920071128
And so it begins.
Just another $68B that has to appear on balance sheets.
Time to buy some Merrill.
But it’s still an “A” right?
“Sales rose 1.7% to a seasonally adjusted annual rate of 728,000 last month from a revised 716,000 in September, which was a 11-year low. September’s sales pace had originally been reported as 770,000.”
So for the record, October sales fell 5.5% from the initially-reported September level? That sounds like a pretty hefty drop!
I guess the homebuilders have not heard of gain or loss accounting, at least as it might pertain to their sales figures?
And the month before that…
And the month before that…
And the month before that…
Jay Leno: Exactly! Exactly!
Do any of our poster-bloggers out there have a chart or list posted that shows, for the past couple of years or so, the initial reported numbers and % change, net to the revised actual numbers and % change?
I guess counting sold houses is a very complex process. Then there’s the tabulation and finally the reporting to the central office. Yup, I can see why they were off 54,000 from last month.
I think they add one sold house at a time, and sometimes they are not sure. That is why they take a couple of months to revise, even then nobody is sure, because sometimes the govt worker person who does the adding takes time off to run personal errands.
“‘We have a crisis of confidence, supervision and regulation,’ he told representatives of Europe’s finance trade unions. ‘We have to raise question marks against the financial markets and the global economy.’”
Linus: “Detective Snoopy is holding up a sign with a question mark on it.”
Salley: “What is he asking Linus?”
Snoopy: (turning the sign around)
Linus: “All it says is: cui bono? (Who benefited)
Lucy: That stupid beagle! What does that mean anyways?
Linus: This is what it means Lucy: …
“Who benefits?” An adage in criminal investigation which suggests that considering who would benefit from an unwelcome event is likely to reveal who is responsible for that event (cf. cui prodest). Also the motto of the Crime Syndicate of America, a fictional supervillain group.”
Lucy: “Oh, I knew that.”
At Ben’s HBB…it gets better…every thread posting!
Red Alert!!!
Florida state investment fund (SBA) suspends redemptions…
“Florida today suspended withdrawals from a state investment fund after cities, counties and school boards — fearful of the fund’s financial stability — withdrew $3.5 billion in just one day.
The State Board of Administration — the governor, attorney general and chief financial officers — voted unanimously to at least temporarily halt a run on the fund, which has reported withdrawls totalling $10 billion in the past several weeks. That’s more than one-third of the fund’s assets of $28 billion.
Local governments fear they could lose their money because the state invested it in funds backed by loans to homeowners with questionable credit — the same loans that have triggered an international credit crunch.”
http://www.orlandosentinel.com/news/local/state/orl-bk-statefund112907,0,5698387.story?coll=orl_tab01_layout
Nov. 29 (Bloomberg) — Florida officials voted at a special meeting to suspend withdrawals from an investment pool for schools and local governments after redemptions reduced assets by 44 percent in the past month.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aS7OvNkZ4fq8&refer=home
Robbing Peter to pay Paul raised as a solution by Florida officials:
“raised the possibility of having the state pension fund shoulder the risk of some of the troubled securities with a credit-default swap, through which the retirement fund would guarantee the debt in exchange for an insurance premium. Sink immediately rejected the idea.
“We would, in effect, be bailing out one fund, to which we have no legal obligation, with the star fund of Florida, our pension fund,” she said. “I think we have to be very careful about transferring this risk into our pension fund.””
“I think we have to be very careful about transferring this risk into our pension fund.”
Ah, the mark of a sleazy politician. The words should have been, “No way will I endorse a plan to transfer this risk to our pension fund.” Ain’t no “very careful” about it.
Venture to say that this isn’t the only city/state etc that may not have Pensions anymore.
Can you just hear the anger squealing in a yr when the “public” or future pensioners get FULL knowledge of that bit of Retirement whimsy..
Hellooooo Walmart.
Begs the question, what investments are in the Florida pension fund?
And yes, public pensions, though promised, are underfunded in almost every city in the country. And to make up for the underfunding, many have invested in mortgage-backed securities for the “extra yield”. Yup, gonna be a lot of noise on this one.
Pound’ed down to 14 Percent, value-wise.
“This will heighten fears of hits to other insurers, coming soon after a shock £500m credit crisis loss at reinsurance giant Swiss Re. Catlin has a £2.8bn investment portfolio, of which £51m was hit by the US mortgage meltdown. It sold the best of these for £10m, but thinks the rest are worth only 14p in the pound.”
Don’t let that bubble die…!?
Although the market is trying to make housing affordable again, perhaps others are working to maintain bubble prices.
Here’s an e-mail I received today here in the heart of the Alt-A Bay Area:
“[Market Research Company] is putting together a research study that consists of homebuyers and serious intenders. The Study will be a phone interview and will pay qualified respondents $XXX for YY minutes of their time. Please note that, if chosen, your phone number will be provided to our client for use in this project only.
If you are interested, answer the questions below and return the e-mail with your phone number and the best time to reach you.
Thank you.
================================================================
Will you need a new mortgage for a new home or refinance (with no cash out) in the next two years? y/n
Have you obtained a mortgage in the last two years? y/n
When you obtain (or did obtain) your mortgage what percent of the purchase price (or appraised value) will/did you use as a down payment or starting equity? __
What is your FICO/Credit Score?
750 or higher
690 – 749
640 – 689
600 – 639
600 or lower
What is your household income?
$250,000 or more
$200-250,000
$150-200,000
$100-150,000
$50-100,000
$50,000 or lower
With an Option ARM mortgage, you have the Option to pay even less than the interest owed on your mortgage (thus increasing the amount of your loan.) This is called negative amortization.
Do you currently have or have you ever had an Option ARM Mortgage? y/n
Are you currently considering an Option ARM mortgage for a pending home purchase or refinance? y/n
§ Would you be interested in an option that allows you to pay even less than the lowest payment on an Option ARM? y/n
§ Would you be interested in a mortgage that offers the lowest available monthly payments even if it meant that your loan balance increases? y/n
§ If there were a loan that allowed you to skip monthly payments would you pay a little more in finance charges to have this feature? y/n
Here are just a few examples of why this kind of mortgage might make sense:
You want to stretch into the most home you can afford for family, commute time, neighborhood or home appreciation reasons
You want to ‘skip’ a starter home to avoid moving again in a couple of years
You need to free up cash to pay for a renovation
You need to free up cash for a specific expense like college tuition or a new baby or to pay off credit card debt more quickly
Your mortgage is adjusting, creating higher payments, and you want to restart with a new loan that makes your payments as low as possible.
Are you in a situation where this kind of mortgage could help you? y/n Please describe briefly:
Thank you for your time.”
Comment by jim A
2007-11-29 11:08:06
‘American Maid was certainly one of the more competent heroes in The City. Spoon!’
American Maid is my idol.
And I think it’s more like ‘SpooooooooooooooooooooNNNNN!!”. See, an exuberant howling crescendo sort of delivery. At least, that’s how I do it.
Awesome show. We should do a HBB spoof on the bubble based on the Tick. The housing bubble version’s airhead character would be “Die Flederhaus” (as in - Deflator House). Perhaps Bernanke could play that role. Ben Jones would be The Tick of course. We’ll have to think about Arthur, and let you ladies fight over who’s American Maid.
The setting would of course be The City. Since all real estate is local - The City is the only place where the housing bubble really happens.
(of course - The City really is every city in America)
found this on Russ Winters Blog:
“…the petroshieks are indeed smarter than they appear; so too their advisors (goldman et al) and the DC backroom boys.
We are witnessing a most elaborate unfurling of the most devilish plan ever concocted….global feudalism.
FC (ficticious capital) held by “the planners” beneficiaries is and will continue to be converted into tangible assets at the expense of everyone else…we’re all aunt millie and there’s no escape….only relative degrees of living “standards”. ”
Global Feudalism has taken over freedom, it is now FEE-DOM.
Fee-dom Fries, anyone?
“Citadel is getting E*Trade’s portfolio for a cut-rate price: It is paying $800 million for assets that had a book value of $3 billion. E*Trade said Thursday it is taking a $2.2 billion haircut on the transaction.”
I paid $22 once for a haircut, but never $2,200 Million.
“…The insurer said it did not expect to be hit hard by claims resulting from the subprime crisis, saying it had largely pulled out of providing liability cover for financial institutions and the executives of major firms.”
Salley: “Linus, Snoopy is holding up another question mark sign.”
Snoopy: ( turning the sign around )
Linus: “it says: Vescere bracis meis? I’ll have to look that one up Salley.”
Salley: “…Well?”
Linus: “it translates thus: “Eat my shorts!”
Snoopy:
“Financial companies had ‘a significant risk-management failure’ on so-called super-senior classes of collateralized debt obligations made up of asset-backed bonds, according to the text of remarks Erik R. Sirri made at a conference.”
“The CDO classes were ‘a perfect structure to lull even sophisticated traders and risk managers into a state approaching complacency,’ Sirri said.”
Complacency and/or Larceny?
I posted this elsewhere but I am in Florida and this is important to the subject-it is still going on. Regulators my foot.
Fraud from the getgo- As an appraiser I have seen a lot of fraud but for the first time I am in at the beginning. I have been asked to appraise a number of condos and I know them well as they I drive past them in my PUD everyday. In fact I lived in one as an apartment.
They converted about 2 years ago and sales have been dead slow. Suddenyl I got these appraisals in and there are 2 people buying a bunch of them. How about that.
After my shock wore off I began to review the contracts and noticed that the sales price was at least $50 per square higher than anything I had seen in my area. The contract stipulates that 2 commissions are to be paid. 1 of $12,000 and 1 of $37,000 to brokers in far flung places. Whoa-now that is the business I want to being.
As part of the research effort I pulled the sales in the project and found that suddenly this year units started selling for over $50,000 more than last. Huh?….it seems that apartment dwellers living 200 miles from here are buying investment condos like crazy.
Next step was to pull the developers site. He has none. That is weird. Craigs list has a place for me to go tho. I pull it up and it is under a brokers name whose address is the same as the sales office in my project.
Clearly the first line is this- 21% of sale to be given back to the buyer to use as you see fit. Back to the contract I go. 21% of the purchase price adds up to the exact amount of the 2 commissions. Wow!
I begain to look thru the mortgages already closed on the units sold this year and everyone is 100% financing for the full $240,000. Do you think the lenders knew about this commission part? It is in the contract surely they read it. BS….my guess is there are 2 sets of contracts. Here is the rub. The appraiser was given thsi contract and should have deducted the usurious part of the commission to adjust for favorable financing which would kill the deal altogether and bring the units to market. Isn’t that marked to market? Same thing as Wall Street right? Sh*t…well folks I am going to do my job and appraise them as I was sked to do. Then I am going to contact every lender who has made a loan in this place and alert them to their exposure.
I thought about the authorities and I am investigaing the channels to got thru to actually get someone’s real attention. Those condo sles figures you see out there. Most are bogus. Believe me this is just one of many. I will keep you posted.
Does Paladin still post here?
..
I wondered the same thing about Paladin the other day.
I hope he/she is not at the bottom of San Francisco bay wearing concrete shoes.
I would be very careful in trumpeting fraud and alerting authorities. You never know who is involved in these master schemes.
Stories like the one above posted by Dimedropped are certain to become commonplace here in FL…..as the rotten layers get peeled back and the skeletons of fraud are exposed.
..
“Does Paladin still post here?”
No, at least not with that screen name (and likely just “no.”) I suspect that he bit off too much relative to the press of his everyday life. And it is possible he became frustrated at the disinterest of authorities in blatant fraud cases. More than thirty years ago, when I believed that nailing people for illegal drugs was a worthy national priority, I tried to turn in someone who I was certain to be a big-time dealer. Could not find anyone who cared.
Fortunately, I think that mortgage fraud is going to piss off more and more average people who realize that one way or the other they will pay for part of the damage. I hope that public interest in catching these people is on the increase. Sooner or later, I’m convince that it will be.
RE: I think that mortgage fraud is going to piss off more and more average people who realize that one way or the other they will pay for part of the damage.
Nobody sure seemed to give a rats azz about the $500 billion ponied up for the S&L bail-out in ‘90/’91.
Most of the dim-wits in this country are more focused on whether Britney is running around with or without her panties on.
Hold on - Britney showed her cooter again? Link?
does NBC follow your posts?
LOL
you dogg you
lol
Public interest in catching these people will increase until they realize that it will cause their home values to drop faster. The longer these fraudulent transactions take place, the more exposure banks have, the less exposure developers have, and the more time passes, giving more of a chance for inflation to catch up with already inflated home prices, softening the blow to values and the psyche of the American consumer.
We’re either going to have a bit downward hit, and then back to “normal” inflation of prices relatively quickly, or a long drawn out, painful correction, with real prices falling over a long period of time.
In any event, the net result would likely be the same 10-15 years from now. The question for those who can make a difference is what causes the least pain during the next 10-15 years? I’m not sure I know the answer. If you believe in the resiliency of the US, you would say take the hit now, everybody tighten their belts for 4-5 years, and get on with business on the other side of the chasm.
Otherwise we’re Japan part 2, and by the time we get out of the funk 15 years from now, close to a generation will have passed and everyone will have forgetten what a “normal” economy looks like.
Dime — great work. I applaud and admire your efforts to at least bring this to the attention of lenders and authorities. Have you thought contacting Todd Ulrich at Channel 9? He is the best investigative reporter in our area, thought I believe there is also a very good one at another channel.
Here’s his Web site, with a link for e-mail to him. If it were me, I’d “drop the dime” on these people by this means. When Todd investigates stuff, authorities take notice.
http://www.wftv.com/station/1874505/detail.html
Go get ‘em!
Dime,
I’m with Chip on this one…this is where high-profile TV pays off.
Once it airs, then the government entities who collect paychecks to investigate this stuff have to get off their duffs and do something. As for contacting the US Attorney, with the state of the Justice department, and the political cronyism there, I think it might be dangerous to you personally to be on their list as a “troublemaker”.
RE: As for contacting the US Attorney, with the state of the Justice department, and the political cronyism there, I think it might be dangerous to you personally to be on their list as a “troublemaker”.
I agree with S66.
Personally, I’d just do the assignment, cross your t’s, dot the i’s, state your number, and move on.
Being a crusader in all this just isn’t worth it. Hell, I knew guys who whistle-blew on bogus appraisals and ended up with defamation suits filed against them.
The high honcho’s have been made aware of the fraud and corruption for years now, and have done nothing more than turn a blind eye.
Why put your head in the chopping bloke, when you really don’t know what’s behind everything.
US attorney in your area
Local and State prosecutors
FBI (why not? they might have a task force)
Write letters to your federal and state senators and reps and ask where you should report it - if anyone is on the ball, they might have a name for you
RE: I am going to do my job and appraise them as I was sked to do.
Doing your appraisal job correctly? NO SOUP FOR YOU!
DD-Your story demonstrates to the blog readership the importance of having the P&S contract in your appraisal request package as a means to verify and document, as opposed to the perception that it serves to merely facilitate the rubber stamping of the sales price.
I agree that you have to be careful about alerting anyone, you never know who is involved. Worry about your personal safety. Let the lenders take a bath. They very much deserve it. Unless most of the lenders go bankrupt, the housing market is not going to properly crash.
Write a book and make $
Publish in time for next Christmas.
Gee the scum do it in gov, why not some honest person tell all and get $
Waste deep in big muddy of bad finance…
“One mortgage broker forwarded a flyer he received from Wells Fargo, ‘A Guaranteed Home Run With Your Borrowers.’ The flyer, dated February 2006, promoted ‘newly enhanced’ guidelines for stated-income/stated-asset borrowers, who are people unable or unwilling to document their income or assets.”
Lemon-aide
“Dr Debelle said fallout from the failing loans had created a ‘lemon’ effect, with all securitised products — regardless of quality — being sold at cut rates.”
If true, then I would definitely pick up some loans that were made over 10 years ago, had a consistent payment history, and never been refinanced for a deep discount….
I suspect, however, that most loans made the last few years are not of high quality no matter what the credit rating states.
Hoz…..or others.
Can the following be factual?
“$6.5 trillion in MEWs over the last four years.
1/3rd of that is (roughly) HELOCs.
Most of E*Trade’s portfolio was HELOCs.
They marked the entire thing to market at 30% of face value.
Apply this discount to the whole, and you have a $1.5 trillion direct loss on HELOC paper across the system.
“Subprime” is a $100 billion problem eh?
Yeah, ok.
Anyone holding HELOC paper is going to be skullf**ked by a Stallion. It is unavoidable; the common equity in the banks and other institutions holding this crap is GONE.
Worse, $1.5 trillion worth of direct losses means $22.5 trillion in lost credit in the system. The Fed is powerless to do anything about this - deflation is absolutely assured; remember, we’re talking about this damage ONLY from HELOCs - we haven’t even gotten to the ALT-A negative-am mess yet!
Equity markets are ignoring the significance of this news.
“Short bus” riders? That’s being charitable.
The Equity Markets are currently displaying an IQ smaller than your SHOE SIZE!”
RE: deflation is absolutely assured;
Values of used Harley-Davidson’s are crashing like a stone.
4 years ago all the mid-age crisis johnny-come-latelys were ponying up $3500 to $5k over MSRP to score a sled.
Now the market’s glutted with used machines.
But just wait until January/February comes and that $350.00 bike payment gets used fillin’ the fuel-oil tank.
Got cash?
The good news for savers is that 80/20 loans will not be around for a while, putting those of us with 20% in the bank on VERY strong negotiating terms with anyone who needs a certainty of close. Who the hell would want to lend that top 20% when home prices are falling even 1% per year, let alone 4%?
Hiking out to see the ancient ones…
adios
Via con cash.
At this point I have greater worries than whether home prices will drop and how far down they’ll go. That’s because my substantial cash savings are in dollars and THAT is going down FOR SURE.
Let’s face it; This whole RE debacle is just the tip of the iceberg. The current administration has decided to implement 3rd-World practices such as issuing FALSE STATS, DEBASING the currency and MANIPULATING the stock market. The dollars credibility has gone down the tube and it will take YEARS for it to restore some semblance of respect. In the meantime, for the 2 or 3 of you out there who might actually hold REAL CASH, I urge you to consider what the whole rest of the world is doing; DUMP YOUR DOLLARS and buy EURO.
What’s so special about the Euro.. it’s just another “fiat” currency. Europe has to deal with it’s own credit troubles and it’s RE bubble deflation.
and i have my doubts that the Euro will even survive the global economic troubles to come.. the European Union itself may not make it..
I’m all in Vanguard treasurey money mkt now…is that even safe?
I think the Euro has had its day. The Canadian loonie (natural resource economy) looks very good now that it dropped back to parity with the US dollar. The Swedish krona (balanced economy) is also attractive. If you can take risk, try the Aussie (another natural resource economy). Also, consider the swissie (very strong FX reserve position). By the way, I believe that you can invest in all four with the Rydex currency ETFs (not sure about the Aussie).
I see the Terminator is going out to Riverside to trump up interest in his plan that isn’t really his or a plan for bailouts in CA. Lot’s of “have to keep people in their homes” and “have to keep the loans from resetting.” What a F-ing sham. There are days I regret I didn’t jump on the bandwagon in 2000, like cheat and steal to buy 100% financing no doc, sell in 04 at fat profit, and take the money and run. I particularly resent those that had the chance, did it and then blew all the money or bought something outrageous without plowing the profits back in and now want to walk away.
“The report showed that the median price of a new home sold in October plunged 13 percent from year-earlier levels to $217,800. It was most severe year-over-year drop since September 1970.”
Funny how in 2005, real estate always went up, as there had never supposedly been a decline in year-over-year price levels. Now that prices are falling, it seems there are lots of examples (at least going back to 1970, not to mention the 1930s) of past years when real estate prices dropped.
Yeah I’ve noticed that too.
It all depends on the length of the statistics-quoter’s memory. Conveniently changed as the need arises.