If They Get 25 Percent, They’ll Be In Hog Heaven
The News Press reports from Florida. “The National Credit Union Administration is auctioning $26 million worth of bad debt on houses built in Cape Coral and Lehigh Acres, likely the first in a wave of houses that experts say could drive down the market with fire-sale prices. Current values of the houses weren’t available but since December 2005, when the median price of an existing single-family home in Lee County reached an all-time high of $322,300, the price has fallen 26 percent to $239,300 in October, according to FAR.”
“As a result, bidders will likely demand a deep discount in the price of the debt, Naples-based real estate consultant Michael Timmerman said. ‘Some of them could be 30 to 40 percent off what the construction cost was’ depending on what the houses are worth now at today’s much lower prices.”
“Fort Myers-based real estate broker Ed Bonkowski was even more pessimistic about how much the bad debt will fetch.”
“‘If they get 25 percent, they’ll be in hog heaven,’ said Bonkowski, who helped the federal Resolution Trust Corp. sell thousands of properties in the early ’90s when many savings and loan associations went down because of bad debt. ‘The institutional guys will be in at 10 cents on the dollar.’”
“NCUA spokesman John McKechnie wouldn’t say exactly what his agency would accept in the way of bids, but Bonkowski said he won’t bid on behalf of his clients until later batches are auctioned off.”
“‘They’re going to be shocked at what the public will pay’ for the properties and lower bids likely will be accepted in later auctions, Bonkowski said.”
“Steve Koffman, of Sunbelt Realty, said the homes that will be pouring onto the market ‘are going to make it difficult for us as a county to try to absorb the excess inventory’ with about 15,000 houses already listed for sale.”
“Timmerman said the NCUA will have to be careful not to release too many houses onto the market too fast and crash prices, lengthening an already painful slowdown in housing here.”
“But the results are hard to calculate, he said. Releasing a lot of houses onto the market ‘may spur people to say, ‘Now’s the time to go ahead and buy things,’ and people may jump in,’ he said. ‘The flip side’s that they could say, ‘Let’s just wait’ for even lower prices.’”
The Herald Tribune. “Foreclosure activity in Southwest Florida gathered momentum during October, with month-to-month foreclosure filings rising 93 percent.”
“George Huhn, a Venice real estate agent, knows the foreclosure process intimately: he works with local banks on the process. But Huhn is now losing his own home to a repossession by Sarasota-based Century Bank, one of area banks for which he has worked.”
“‘I got behind in my payments and the bank, a local lender, has not been able to come to an agreement on a workout that would be workable for either one of us,’ Huhn said.”
“‘A nonperforming loan older than 90 days goes from being an asset on the bank’s balance sheet to a liability that has to be charged against earnings,’ Huhn said. ‘Banks are preparing to file year-end financial statements and are facing disclosures about foreclosures ‘that have unpleasant consequences for their stockholders,’ Huhn said.”
“Also pushing the foreclosures now is the holiday season. ‘Banks won’t foreclose during the Christmas season,’ he said. ‘It’s bad publicity. No one wants to be seen dragging Christmas trees onto the curb after a family has been foreclosed upon in December. But after New Year’s, the gloves come off again.’”
“Until recently, lenders were ‘dragging their feet’ when a Horizon Realty agent made a presentation on why the bank should accept an offer at less than the loan amount, said Matthew Augustyniak, Horizon’s CEO. ‘Now they are realizing, the offers that are on the table, they better start taking them,’ Augustyniak said. ‘They’ve got to get it off their desks.’”
The Orlando Sentinel. “Homes throughout Central Florida continued to lose value in the third quarter, including the best homes in good neighborhoods, according to federal survey.”
“Beth Goldstein, a former top sales agent, is now running a Nature’s Table cafe in her church. She said Thursday that she got out of real estate, after seven years in the leading Coldwell Banker sales office in Florida, because sales were so slow, relative to previous years, that she decided to gamble on a restaurant franchise as a better revenue producer.”
“‘I think we’re going to see this [local] correction run for another three to five years,’ Goldstein said. ‘I tell my friends, ‘I don’t think we’ve hit bottom.’ I hate to say it, but I tell them if they are thinking of buying, to wait. There’s such a glut.’”
“Active Realtors contend that economists who repeat their statistics of declining sales and journalists who disseminate those reports are a major factor in the ongoing slump, said Ken Bennett, Central Florida regional manager for Watson Realty Corp.”
“‘Not too many economists know what’s going on,’ he said. ‘They just tend to focus on the gloomers and doomers.’”
“Bennett, who oversees a sales area from Walt Disney World to Daytona Beach, concedes that housing prices are lower than they were earlier this year, and in many cases are down by 15 to 25 percent from a year ago in parts of Central Florida.”
“‘That is a phenomenon. I’ve never seen it,’ Bennett said. ‘But all that means is, it’s a good time to buy, a good time to invest. You can buy for less.’”
“Goldstein, who was among the top 14 percent of agents for three straight years, said she also thought investor psychology was the main problem. She said she and other Realtors were told repeatedly by their managers to ‘focus on the positive,’ regardless of the market. ‘But you could see it crumbling around you.’”
The Palm Beach Post. “Gov. Charlie Crist and other state leaders Thursday temporarily halted all further withdrawals from a state-run investment pool in hopes of keeping the fund from becoming the latest casualty of the ever-expanding maw of the subprime mortgage meltdown.”
“Local governments…had pulled nearly $13.5 billion from the pool in the past two weeks, including $3.7 billion on Thursday morning. The withdrawals were a reaction to news that a fraction of the fund’s investment portfolio was downgraded because of the mortgage crisis.”
“If the pace of recent withdrawals had continued, the state board could have been forced to sell the pool’s troubled securities at a deep discount and left some governments with the losses. ‘What happens to the participants who have the last $2 billion in the pool?’ said state Chief Financial Officer Alex Sink . ‘They get zero.’”
“Sink, who requested the emergency board meeting Thursday, said the remaining investors should help decide the next step so ‘the pain can be shared. The people who got their 31/2 billion today are lucky,’ she said. ‘Is that fair?’”
“‘I’ve been told to pull all my money from SBA as soon as I can and to never use them again,’ said Port St. Lucie Finance Director Marcie Dedert. Port St. Lucie has $426 million remaining in the investment fund, the largest balance of any Florida city.”
“Dedert, whose most recent deposit into the pool was Wednesday, said she has only about $30 million on hand to pay the city’s bills and is liquidating all available accounts. She said she hoped the state would let the city make some withdrawals to pay employees and make debt payments.”
“‘All our excess cash is there,’ she said. ‘I’m robbing Peter to pay Paul.’”
The Sun Sentinel. “In an effort to halt what one official called ‘an investment world version of a run on the bank,’ state officials froze withdrawals Thursday from a $27 billion investment fund that local governments drained by almost half during the past two weeks.”
“‘It is certainly unprecedented, and there is a nervousness out there that we’ve never seen before,’ Broward County Commissioner John Rodstrom said.”
“The Broward County School District began withdrawing money on Nov. 15 and removed more than $384 million from the fund, district treasurer Henry Robinson said.”
“‘We smelled a rat,’ Robinson said.”
“‘We’re fiduciaries, we’re investment professionals and we know what we’re doing,’ said SBA Executive Director Coleman Stipanovich. ‘We do not have direct exposure to sub-prime mortgages.’”
“Though the state may not have direct exposure to sub-prime mortgages, its own Nov. 9 report describes how the commercial paper into which it placed some public revenues was backed by residential mortgages that were downgraded by Standard and Poor’s, which said it had not rated the fund.”
“The state’s action to freeze public revenues was a surprise to some South Florida finance managers. ‘Folks have always thought the SBA was a safe investment. Some thought it was backed by the state, but that’s not the case and they are subject to market risk,’ Broward County Commissioner Rodstrom said.”
The News Journal. “The Volusia County school district withdrew $265 million for deposit into U.S. Treasury secured money-market accounts, according to a statement from Robert Moll, deputy superintendent for financial services.”
“‘We can make payroll, but the fact is the purpose of that system is to help us move our money in and out and at any given time — 24 hours a day,’ said Wayne Blanton, executive director of the Florida School Boards Association. ‘Right now they have frozen that ability.’”
“‘We’ve got every dime of our cash in that pool,’ said Hal Wilson, chief financial officer for Jefferson County schools. ‘What were they thinking?’”
“He is now short $850,000 for today’s payroll and spent Thursday afternoon alternately pleading with state officials for relief and negotiating with a local bank to cover the overdraft. Wilson’s only other option: leave the small county’s 220 teachers and staff without money to pay their own bills.”
“Cape Coral took out $120 million a month ago, leaving only $200.99 still in the fund. ‘I already knew that something like this was going to happen,’ said Cape Coral finances director Mark Mason.”
The Daily Business Review. “PB Capital has come to the rescue of South Florida real estate investor Morris Stoltz II on a Boca Raton condo conversion that got caught up in the housing recession.”
“PB Capital, part of Germany’s Deutsche Postbank, bought overdue loans from two lenders Nov. 20 and filed a $107 million foreclosure suit against Stoltz’s Mizner Court on Nov. 21.”
“Both sides went to Palm Beach Circuit Court on Tuesday asking for permission to transfer the 30-acre property to PB Capital by year-end in one of the South Florida’s largest foreclosures of the residential downturn.”
“‘In a market like this a lot of times holding the mortgage is more valuable than holding the real estate,’ said David Dabby, president of Coral Gables-based real estate research firm Dabby Group. ‘With the agreement, the developer gets his chance to get out, the previous lenders probably took a loss to get out and PB becomes the new owner,’ he said.”
‘he price has fallen 26 percent to $239,300 in October, according to FAR.’ ‘Some of them could be 30 to 40 percent off what the construction cost was’ depending on what the houses are worth now at today’s much lower prices.’
‘If they get 25 percent, they’ll be in hog heaven,’ said Bonkowski, who helped the federal Resolution Trust Corp. sell thousands of properties in the early ’90s when many savings and loan associations went down because of bad debt. ‘The institutional guys will be in at 10 cents on the dollar.’
So with the retail price now off by a quarter or more, and REO’s piling up, maybe some of those posters that dismissed talk of large declines can begin to see how a housing bust works.
“maybe some of those posters that dismissed talk of large declines can begin to see how a housing bust works”
Forget the posters here. They’re already seeing it. It’s the twenty and thirty somethings on Main Street that need to see another one of these…… as an adult that is.
We had people posting here that 30% down was ridiculous, less than a year ago.
I do recall that. I also remember flat out being called a liar in 2005 for what I remember in back in the late 80’s and early 90’s when RE took a 45%-50% dump in New England.
Looked at a brand new open house a couple weeks ago. List $535,000 2600 sq ft. Realtor showing it leans in and whispers “I know I can get the builder down to $525,000 on this one.” I ran straight to the bathroom mirror and checked to see if “STUPID” was written on my forehead. It wasn’t.
LOL
If that house is in Florida, I’d offer half that and not consider it an “investment.”
One of my uncles has several properties down there including his winter vacation home.
He does not call It Sunny Florida anymore, he’s bleeding badly and now calls it the “Southern Wreck”
In NYC they are saying that right now on Curbed and Brownstoner.
Off topic to this thread but CNBC was talking about the high-end housing market. They showed a Miami home going for $18,900,000. I thought of making an offer.
They also showed that Andrew Lloyd Weber has his 5th Ave apartment up for $22,500,000. They said he could have gotten $30,000,000 for it last year. That is a 25% haircut but CNBC seemed like they were trying to say the high-end is just fine. Where is the “New York City won’t fall because it’s so special crowd now?” I bet ALW wishes he had that extra $7,5000,000 or at least his heirs do.
“We had people posting here that 30% down was ridiculous, less than a year ago.”
Ben, I still believe that. In many areas we have to go much lower. 30% is just drunk talk, sweet sweet drunk talk.
“‘If they get 25 percent, they’ll be in hog heaven,’ said Bonkowski, who helped the federal Resolution Trust Corp. sell thousands of properties in the early ’90s when many savings and loan associations went down because of bad debt. ‘The institutional guys will be in at 10 cents on the dollar.’”
Yup…it’s “Makin Bacon” time AGAIN..Let the slaughter begin and send them ALL to “Hog Heaven”
The other much bigger shoe about to drop. If the reaction by institutional managers to a ‘preception’ of falling value at the Florida SBA are any clue, once the REO’s start rolling out nobody will want to left as last man out the door. Reactions to the year-end accountings by these REO holders will be telling.
I expect a repeat of ‘Trading Places’ scene where Don Ameche is screaming ‘Turn those machines back on!’
>>>>> I expect a repeat of ‘Trading Places’ scene where Don Ameche is screaming ‘Turn those machines back on!’
This made my day !!!
http://www.youtube.com/watch?v=n6cZUCa6Kyk
Turn those machines back on…
I was just thinking about that movie the other day, in relation to all this — I think we’re going to be seeing a lot of guys in this cycle like the Dan Ackroyd character — made by circumstance, undone by same.
It’s days like these…
Oh, the humanity!
So glad to be a bitter renter…
We write our rent check and realize it’s just another expense for living. It’s not emotional moment and it’s not a status symbol. Life is simple, unless you complicate it.
I’m even more removed from you from any emotions — i have my bill pay service zap my rent to my landlord. No big deal, no emotional attachment. When Things break, I don’t freak out as “its Jim’s problem” or rather, I just call the plumber/applicance store, have them muck around and then deduct the 100 to 200 bucks or so from the above payment.
Yawn. Nothing to it
Oh yeah, if i owned the house, i would be paying twice as much every month plus i’d have to pay for things that break
“Gov. Charlie Crist and other state leaders Thursday temporarily halted all further withdrawals from a state-run investment pool in hopes of keeping the fund from becoming the latest casualty of the ever-expanding maw of the subprime mortgage meltdown.”
I heard that pool is tainted with the West Palm Beach virus of denial…
Good one.
some jerk puts all the countys money at risk. i mean what in the world were they thinking. what happened to public trust/service. more like diservice. next time choose either red or black….what a moron.
‘What were they thinking?’”
Even a poor fool like me knows not to put all my eggs in one basket, I really should start charging myself high fees to make myself feel better !
The Ponzi scheme comes full circle.
I hope Palmy can get some photos or stories of any local politicos swan diving off the Skyway bridge over the fund meltdown.
then again, these good ol boys/gals would probably just get a DUI on the drive over to the bridge & end up in the news like Bob Hite. (always liked that anchor - what a shame to end a career like that, but at least he is a stand-up guy about it all and isnt whining like Paris H.)
the bid was 26% on cdo’s etc the other day……
wow ,containment scks
Those govt jobs don’t look so great now, huh? Some crow, flat?
This stuff with the Fla. fund is sick. This Jeb appointee was trying to get the state to bail the fund out of its losses. Of course, many of these local gov’t’s will have to bail themselves out to pay their employees … I see layoffs in our future …
PS … Gainesville takes 5% off the top of my “salary” for their pension fund. Dunno if it went there, but I’ve already written it off. As long as I have my Roths, I’ll be okay.
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
Thanks for the reminder, Crispy.
Ron Shuffield said that!
“Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that ‘South Florida is working off of a totally new economic model than any of us have ever experienced in the past.’ He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely.”
New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
Anyone contacted him lately with a copy of that quote?
Maybe you can catch up to him at one of his AA meetings.
Well if by “indefinitely” he meant about 15 months, then he was spot on.
Doh. 3 months to bubble peak, not 15 months.
“South Florida,’’ he said, ‘’is working off of a totally new economic model than any of us have ever experienced in the past”
I’m afraid this half of the quote is more true than ever. We have never seen this before.
“We have never seen this before.”??
Maybe not in our lifetimes, but history is a good teacher.
Check the archives for South Florida 1926.
It was even crazier then, but when it crashed it went into the memories of the living for a very long time………..
NCUA ?
ccc
wpa
hmmmmmmmm
“Timmerman said the NCUA will have to be careful not to release too many houses onto the market too fast and crash prices, lengthening an already painful slowdown in housing here.”
No… You’d prefer chinese water torture.
You’re going down 50% minimum and it’s gonna be painful for all you koolade drinkers regardless how quickly or slowly you get there.
You’re going down 50% minimum and it’s gonna be painful for all you koolade drinkers regardless how quickly or slowly you get there.
They are slowing the 50% decline so it never happens… by causing inflation to go up 50%. Might take 3 years to inflate 50%, but they are working on it.
“Dedert, whose most recent deposit into the pool was Wednesday, said she has only about $30 million on hand to pay the city’s bills and is liquidating all available accounts. She said she hoped the state would let the city make some withdrawals to pay employees and make debt payments.”
“‘All our excess cash is there,’ she said. ‘I’m robbing Peter to pay Paul.’”
And yet the REIC still touts a “V” recovery rather than a plunge with a long “L”. That sentence says a lot. Cities are in financial peril due to over-investing in stuff that ended up being mortgage related. Once the states pass their laws banning such investment… it will be 50 to 80 years before such a bubble can happen again. (Yes, there will always be RE bubbles, but it will be a long time until one of this magnitude happens again.)
Got popcorn?
Neil
Neil you live in Orange county I believe how much popcorn you wanna bet they go bankrupt again. And I want heirloom seed popcorn. This is going to get so bad I’m going to grow my own.
Munch munch..
Visit Florida’s Gold toast area…
It’s credit crunchy
Bring popcorn…
it will be 50 to 80 years before such a bubble can happen again.
Never underestimate the power of greed, and the short-term, selective memory of your average Howmuchamonth debt-slave. We had a pretty bad RE downturn here in the early 1990s, and tons of people I know who lived through it have completely forgotten it ever happened.
The only thing we learn from history is that we learn nothing from history.
Finally some recognizition of real price breaks in the media. Let’s hope the 40-50% drop occurs sooner rather than later so we can all get back to normal lives. I have seen a major shift in attitudes this month. Most lay ppl that I talked to still thought prices were going up and they were entitled to top dollar just last month. This month most ppl are aware we are going down. Hopefully this will shut the door on the last wave of “investors” that didnt know the bubble burst, and buying will stop until prices are reasonable again.
I havent seen many new episodes of Flip This House advertised. It would be great to see some new shows with names like Short-Sale Mommas, Foreclose on This House, and So You Think This House is Still Worth What?
Just thinking that …where are all the new Flip shows?
Guess new titles are necessary..
Get a Roomie?
Make Room for Mom/Dad?
Take in a Family?
Extreme Home makeover..Do over?
Redo childhood BDR?
“My House Is Only Worth WHAT??”
Homies in the ‘Hood
Flip that Burger
Guess Who’s Coming to Live with Us?
Flipper says “Bomb, Pa”?
How about “where are they now” - starting with the chippy, chirpy real estate agents.
Just got a note from a realtor I know inviting me to a party at her office at which I can buy jewelry, crafts, and other holiday gifts. This is not a mom ‘n’ pop operation either, but a major MA real estate firm.
“How about “where are they now” - starting with the chippy, chirpy real estate agents.”
But if the drop happens sooner rather than later, we won’t be visiting Ben’s blog………….then how will I pass my time at work…………:-) ?
Nonsense, Ben’s blog has a life of at least 7 years in front of it, unless Ben himself gets bored with it. Maybe before that he’ll be promoting himself for AZ State Treasurer or some such thing. Hey, I’d vote for that.
This month most ppl are aware we are going down.
Last nite it was the lead story on ABC news with George S.
I looked at BF and intoned…”What did I tell you?”
heh heh
It’s official to lay ppl cause it’s on the evening news.
About a dozen entities here pulled their STIP money out in the last 2 days.
Another day, another bad acronym…
STIP Poker, anybody?
These school/city fund managers are generally fairly buttoned-down green eyeshade types. They were hired expressly because they do not put their pool funds at risk. When their perception of the risk margin exceeded their confort level, they moved. Now. This is not good, as bank runs destory many many things. Especially future confidence.
Future confidence is held up, by the shills at CNBC and Fox News.
Isn’t it amazing that STIP was invested in some non-liquid assets including $90million in a company that is going bankrupt, yet they only paid contributors a yield of 4.37% ??!! Why wouldn’t you just put money in Treasuries if the the return is so poor?
Bad STIPulations.
http://articles.moneycentral.msn.com/Investing/SuperModels/GettingRichOffTheSubprimeMess.aspx?>1=10621
Hedge Fund MGR gets wealthy off of real estate mess.
Mike Burry. There’s a name to remember, to add to my list of financial gurus.
“‘We’re fiduciaries, we’re investment professionals and we know what we’re doing,’ said SBA Executive Director Coleman Stipanovich.”
Omigod…….heads up.
“‘We do not have direct exposure to sub-prime mortgages.’”
Doubtless ‘direct’ is the key word here.
Some Norwegians were thinking the same thing - just the other day.
Don’t forget the Algerian bank either.
“Battle of Algiers” is a heckova film…
recommended
Grocery store bagger
Paper or plastic?
Gold…
O…M…G!
It just keeps getting worse for Florida. Twenty-five cents on the dollar? Ten cents on the dollar? Holy $hit!
I’ve said it before, I don’t think the nation is going into depression, but certain states will meet the criteria (over 25% unemployment):
Michigan
Florida
Arizona? (Much later)
Florida is screwed. No one rode the RE Pony as hard. No other state has as far to fall. (Well… maybe Spain… but its an argument of degrees, not the real final effect.)
Got popcorn?
Neil
“Florida is screwed. No one rode the RE Pony as hard”
Plus anything any Bush touches turns to ka-ka.
Florida started out as a mosquito infested swamp populated by alligators. Maybe it’ll end up that way too after this mess is over.
Were it not for government transfer payments (that didn’t exist during the great depression) Michigan would be dang close to being in a depression now. I don’t know how many people in MI are on permanent welfare but if they were counted as unemployed the rate would probably be close to 25%.
RE: Holy $hit!
Man, the situtations concerning the FL state investment defy credulity! It’s just fookin unbelieveable.
And things will only get worse.
Famous last words-everything’s contained.
Famous last words-everything’s contained.
That is really quite true.
Septic Tanks and Cesspools are containers.
Mmmm…query: Are Vanguard treasury funds fairly safe?
Just askin!
would like to know as well. What fund do folks recommend for cash equivalents?
Vanguard Treasury MM accounts are virtually 100% treasuries. The Prime MM fund dumped all the SIV’s and related crap in the last 2 quarters. I stil don’t trust the regular MM account - go for the treasuries if you want safety. And, BTW, a guaranteed 5-10% loss in purchasing power per year, because that plus 4% interest equals about the creation of money and credit by the Fed. Yes, the Fed/govt is devaluing the dollar that much per year, despite their bleatings about inflation is under control.
You can look their assets up online - go to the Vanguard web site and root around for the latest quarterly reports.
And, BTW, a guaranteed 5-10% loss in purchasing power per year,
well…goes without saying. Next move, I dunno.
precious metals, uranium or oil I guess. Even real estate, though it’s been badly inflated the past 4-6 years - at least you can live there. All the other fiat currencies have the same intrinsic value of the dollar, which is zero.
Read Paul Krugmans Blog
NYtimes.
Although Vanguard might be 100% treasuries, you are not. You just have a money market account from a commercial company which, if it goes bust, and its insurer as well, the government owes you nothing.
Why not just buy treasury securities directly from the government- there are $0.0 fees.
So the UHS can’t make his house payments and is foreclosed on- check out the picture- there’s a CORVETTE parked in his driveway.
And Paulson wants to bail this lot out … the mind boggles.
“‘That is a phenomenon. I’ve never seen it,’ Bennett said. ‘But all that means is, it’s a good time to buy . . . ’”
REAL ESTATE AGENT LICENSE TEST: Mutliple Choice
1) The buyer asks when to purchase. You should reply;
a) When your financially secure
b) If you can shoe-horn 5 renters as a backup
c) it’s a great time to buy
2) The buyer has just declared Bankruptcy, has 11 kids, is a single mother on public assistance & has a terminal illness. Your advice?
a) get your personal affairs in order
b) spend every last dime on beer, cigarettes & lottery tickets
c) now is a great time to buy
3. The Feds are raiding your corporate office & your branch manager has locked himself in his office with a large bottle of whiskey & a shotgun. Do you .. ??
a) help the receptionist shred files
b) have one last afternooner w/receptionist for old times sake
c) tell prospect on phone its a great time to buy
4) Your newlywed nephew has a lot of cash from gifts from relatives, and is eager to buy thier first new home. They come to you with faith on getting a good deal. Do you . ..
a) show them houses in their price range
b) show them houses in your price range
c) steer them only to houses in their upper price range & a little beyond, while advising its a great time to buy
TEST ENDS. SUBMIT WITH YEARLY DUES FOR REVIEW.
( I actually saw #4 on a house flipper episode. greedy snotty old relative agent only showed a trusting newlywed couple upper limit houses. what a self serving bitch!)
R
O
F
L
M
A
O
!!!!!!!!!!!!!
This test is so true. When I sold real estate I had many clients that I had to tell them they were not in a financial position to buy right then. Some of them I worked with for 2 or 3 years helping them straighten out their credit, pay off bills, and sell things that were keeping them from qualifying for a loan. Almost all of them eventually bought a house from me and not one of them ever lost their home after buying it. In the meantime they sent me many more clients that did qualify to buy. I guess some agents don’t get that you only get repeat business if you are open and honest. Of course I didn’t make as much money as top producers, but you know what, I could sleep at night.
Ann Arbor, Mich.-based Huron River Area Credit Union racked up the debt making construction loans to build low-end houses in the real estate boom that ended in early 2006. The average loan balance on the 100 houses is $261,000 and the average value of the houses was $360,000 when the loan was made.
Obviously this is some new meaning of the word low-end of which I was not previously aware.
These are low-end houses in Southwest Florida. 75% off of the loan value might just about make sense.
Russell, this is Ann Arbor — where everything costs a whole lot more. And why would that be? Well, because it’s Ann Arbor, that’s why.
BTW, I can recall being taken to the local Wal-K-Whatever Mart before I headed off to school in Ann Arbor back in the seventies. My mother’s reasoning was that it would be cheaper to buy pens, notebooks, and other school supplies at home than in…
…Ann Arbor
Boy, was she right about that one. The prices there absolutely amazed me. In fact, they still do.
Lots of east coast money ends up in Ann Arbor and they think everything there is cheap compared to NYC,LI, NJ.
No, this is from the article that Ben linked to. The credit union is (was?) in Ann Arbor, but the homes are in Southwest Florida.
I stand corrected.
Southwesternmost 3 counties of Florida are overwhelmingly midwestern, especially Michigan, so this makes sense. Some genius with a bank in Michigan and a developer in Florida. Southeastern 3 counties are overwhelmingly northeastern and international.
BTW, [quoting] “Even if the median price of a single-family home in Miami, now $393,000, falls by 20%, the price on that house would still be about $20,000 higher than it was at the end of 2004.”
“Local governments…had pulled nearly $13.5 billion from the pool in the past two weeks, including $3.7 billion on Thursday morning. The withdrawals were a reaction to news that a fraction of the fund’s investment portfolio was downgraded because of the mortgage crisis.”
“If the pace of recent withdrawals had continued, the state board could have been forced to sell the pool’s troubled securities at a deep discount and left some governments with the losses. ‘What happens to the participants who have the last $2 billion in the pool?’ said state Chief Financial Officer Alex Sink . ‘They get zero.’”
——————
Imagine a game of musical chairs, where ten paunchy, greying adults walk around nine chairs, stumbling, sweating and eyeballing each other nervously. But in this game the music will never be allowed to stop, and each player doesn’t really know for sure if one of the chairs is within thier grasp, or if they will squeezed out and left with nothing. This game goes on forever, and a deep grove is worn in the floor from the endless circling.
Ol’ Sink might wish he hadn’t said that about the $2 billion, ’cause when they allow withdrawals again, I doubt anybody will want to risk being part of that.
Just a technical correction — Alex Sink is a woman.
But every so often one of the players wises up, grabs a chair, and sits down in a corner. That is what happened with this fund. Hence why they had to stop the music but declare no one else could sit down.
Got popcorn?
Neil
This is a very large event. When J6P fund managers decide enmass that the jig is up, a real herd change has occurred. I really think we should remember and concentrate on this. It is important.
Ahhh… but the ones who didn’t panic first stand to be screwed royally. Let’s say, hypothetically, that the batch who cut and ran took 50% of the asset “value” with them. I believe that what they got was 50% of the BOOK value. That is the elephant. What is freaking out the pols is that the remaining 50% isn’t worth ANYWHERE NEAR the balance that is on the books. If they try to pick the pensions’ pockets, there will be riots in the streets. They are screwed because they stuck with mark-to-model and the fellas who got out first knew it.
Sorry Chip,
This is a State Fund, used by local governments.
Can you say “TAXPAYER BAILOUT”??
You don’t think those government employees are going to loose their pension money, do you ?
delta lost theirs etc..
Another statement that gets my goat.
“the bank and I couldn’t agree on a workout schedule that benifitted both of us”.
Like a FB has some choice in the matter.
Urgh, I’m starting to get really pissed off.
Like in Borat where Borat tries to haggle the hotel room price.
Borat: “How muc is the room?”
Manager: “That’s $115 per night.”
Borat: “We’ll call it 85.”
Manager: “Actually, we’ll call it 115.”
LOL
How about this workout schedule…….
MAKE YOUR DANG PAYMENTS.
As a lender who has often done “workout” schedules on notes that I held personally, there is only one structure that has worked well for me. It goes like this: borrower skips some pre-agreed number of payments (usually 1 or 2 or 3). Interest for that period is added to the principal value of the loan, which in every case ends up lower than the original value of the loan, but higher than the presently amortized value. At the end of the pre-arranged period, borrower resumes paying THE USUAL monthly payment. The result of skipping 3 payments might be to add 6 to 12 months to the length of the mortgage, but the borrower doesn’t care, and neither do I. Obviously this type of workout cannot apply to any I/O neg-am BS mortgage, but I never write those anyway.
“The institutional guys will be in at 10 cents on the dollar.”
March of Dimes…
Demand shifts in
Supply shifts out
Price a waterpark slide
OT
Google Bernanke and then read the wiki description (from the google page). LMAO!
From gold to paper to plastics
Credit melts down
Pushing on plasticity
OMG! It only says that in the ‘cached’ version…but still VERY AMUSING!!
It sounds like the FLA public schools are struggling to make payroll. this can’t be good.
Gov’t will come looking for money at the worst possible time…recession. Oh, there’s such a very long way to go here.
During the Depression of the 30’s, average wages declined to about 60% of their prior levels, contrarily, Government wages increases over the period to 104%.
Government workers are “entitled” to their pay and benefits.
Us other folks, well, we can just fend for ourselves.
“Dedert, whose most recent deposit into the pool was Wednesday, said she has only about $30 million on hand to pay the city’s bills and is liquidating all available accounts. She said she hoped the state would let the city make some withdrawals to pay employees and make debt payments.”
Why was she running into the burning theater?
It’s often discussed on this blog who the victims are (if any). I am of the opinion that people who went to work and then found out with no warning that they might not get paid are some of the few true victims that we’ve seen so far.
“Cape Coral took out $120 million a month ago, leaving only $200.99 still in the fund. ‘I already knew that something like this was going to happen,’ said Cape Coral finances director Mark Mason.”
And some WERE aware. I expect that $200.99 was left in expressly to cover an accounting fee. Now that is keeping your eye on the ball. This boy deserves a raise.
Question: could there be clawbacks?
Sure he knew. That is because his “city” was ground zero in the Lee County RE meltdown. People were paying ridiculous prices in an area that I wouldn’t let my kids go into unarmed. And they’re 3 1/2.
Looks like the rural districts, away from bubble, may end up getting hurt the worst, either too ignorant or too gentlemanly to demand out of the riskiest pools.
I know nothing about Florida real estate beyond what I read in this blog (and maybe a few other spots) — but it seems to me that Cape Coral/Lee County seems to be the most-screwed or derided (in terms of real estate) area that comes up.
Just curious from some Florida experts — what’s made this area particuarly lousy? (Or, alternately — am I off-base with this outsider perception). Just looking for some deeper background here — admittedly morbidly curious.
Cape Coral land was bought in large tracts for practically nothing way back in the ’50s or ’60s, subdivided into very tiny lots (40 feet wide), and sold by boiler-room operations to unsuspecting Yankees who never laid eyes on their property. Even today much of it is just a grid of narrow streets (some paved, most not), with “canals” (alligator-attracting drainage ditches) at the back of each lot. Every now and then there’s a house, or remnants of a house, or maybe a trailer. And this goes on for mile after mile.
Ah yes - I just went on ebay and found a couple lots for sale. Yeah - I can see how this scam was constructed — and how it’ll take a loooong while to unwind.
“remants of a house” which is OK since no one would want to be there after dark.
And it was sold AGAIN to unsuspecting Yankees who never laid eyes on the property. Sold a home on the river close to the bridge about 5 years ago to a family from Germany for $650K (90% profit). Used to use it for band practice. Even though the houses were right on top of each other, no one complained about the noise.
Look at it on Google earth, Mapquest, etc. Also Lehigh Acres - same kind of thing.
Here’s an interesting link too, on Lehigh Acres:
http://tinyurl.com/ynlh4j
Crist almighty!
Who does he think he is…
Our governator,
(aka) Mr. Freeze, perhaps?
ZAP! POW! THUNK! BOFF!
“Gov. Charlie Crist and other state leaders Thursday temporarily halted all further withdrawals from a state-run investment pool in hopes of keeping the fund from becoming the latest casualty of the ever-expanding maw of the subprime mortgage meltdown.”
I am f’ng pissed. I have worked my butt off to have good credit and now these people that got low teaser rates are going to get a break. Does that mean that the house flippers in Florida and California who got 3.5 percent teaser loans are going to get 3.5 percent extended for 7 years? My bank Wells Fargo is apparently going along with this sham. This is the problem with bailing people out….they will come to expect that in the future. I doubt this will help all that much because many of the idiots who took out these loans will be too stupid to fill out all the Government paperwork that will be necessary…but still the Government is in effect conspiring to prop up housing prices. The faster they let them return to normal ratios, the better for future generations. I am so sick of irresponsibility being rewarded. I am going to write Wells Fargo a letter asking for a reduction on my fixed rate mortgage which is 6.25. I think I deserve at least 3.5 fixed for 7 years and then they can return it to 6.25.
“Does that mean that the house flippers in Florida and California who got 3.5 percent teaser loans are going to get 3.5 percent extended for 7 years?”
Fortunately, no. If the low/teaser rate is extended, feel confident that the loan will have or incur a negative-amortization feature that will add to the principal the difference between the teaser interest and current-market interest. All it does is extend the pain — reminds me of the old Mafia movies where the extortionists bleed the shopkeeper to death a drop at a time.
This is just a stalling tactic. The PTB are doing anything they can to spread this disaster out over time. I don’t think the public will be fooled for long, though. Once they figure out that they are throwing even more good money after bad, and that their house never will be worth what they owe on it, they’ll resume walking away from the properties. In damage-control mode, all the lenders care about is that it doesn’t happen all at once.
All it does is extend the pain — reminds me of the old Mafia movies where the extortionists bleed the shopkeeper to death a drop at a time.
The banksters do not exist to extend a lifeline to FBs. (Or any of us for that matter.)
here’s the thing.
You are the lender. You know certain people are going to be unable to make payments very soon. You will have to foreclose and deal with another REO. (actually hundreds)
If all it takes is a temporary rate freeze, why not forestall that ugly scenario for a year or so.. “help” the FBs stay and pay? Meanwhile, your loans are paying off if not 100% then 95% or so..
But i agree with Chip. The FBs won’t be fooled for long.
I wouldn’t worry about it, there’s another party (creditors of the MBSs) on the opposite side of that trade that will be pissed and mortgage rates will go through the roof. How many of these FBs who will be getting a break will want to continue making payments on that 7 year extended 3.5% loan for $350,000 when they lose their job and their house value falls to $120,000? Not many. Per Ludwig Von Mises, there is no way to prevent the ultimate collapse, even this 7 year extension won’t last anywhere near that long. A year from now tops these FBs that were given a ‘break’ will be pleading to be released from that ball and chain of a break.
re-post from the other thread:
“I am going to write Wells Fargo a letter asking for a reduction on my fixed rate mortgage which is 6.25. I think I deserve at least 3.5 fixed for 7 years and then they can return it to 6.25.”
Remember, we’re heading into an election year, and politicians have to appear as though they’re doing SOMETHING. But you’re right, anyone who bought responsibly, bought and sold, or chose not to buy at all, ought to be furious at this.
Over on CNBC’s RE blog, their poll is coming in at around 80% against this ridiculous scheme.
And the URL (for the CNBC RE blog) is?
http://www.cnbc.com/id/16561378/site/14081545/
Awesome idea. Even though I only have 10 years left on a 15 year mortgage at 5.75%, I’ll ask for the 3.5% deal. LOL
I’d be thrilled if I could fill out an application and receive a granite doorknob or something.
Even us Bitter Renters should get some bones thrown our way.
“Cape Coral took out $120 million a month ago, leaving only $200.99 still in the fund. ‘I already knew that something like this was going to happen,’ said Cape Coral finances director Mark Mason.”
Pirates of the Floridean…
Wow… I can’t believe what I’m reading…amazing and it’s still early in the downturn.
I agree, and the MSM is tap dancing on the deck of the Titanic.
Been a while since I have posted on here… year or so ago…
Newer towhome community I have watched since ‘04… peaked in ‘05 with sales in the $415k range… Currently a foreclosure for sale for $229k… been on the market for over a month at that asking price…
Other newer townhome communities down similar amounts (~40-50%)…
Inventory however is still hovering around record numbers…
Forgot to add that this is in NW Florida panhandle area… between Panama City and Pensacola…
Hi Destin!
Sold digs in Niceville in June. The gentleman who purchase it now has a make me move flag on Zillow, advertising it as a one owner home–wonder if he ever moved into the house?!
I’d love to say I miss it, but it would not be truthful!
Smiles,
Leigh
destinsm, I do remember. Been awhile. Welcome back.
“Active Realtors contend that economists who repeat their statistics of declining sales and journalists who disseminate those reports are a major factor in the ongoing slump, said Ken Bennett, Central Florida regional manager for Watson Realty Corp.”
Those damn journalists have a lot of gall reporting the truth!
Orlando: /sniffle on
“Well, it WAS different here, you know.”
/sniffle off
Destin and the panhandle were a disaster with every other house for sale when I went last March. I can only imagine that prices have fallen 10-20 percent. They wanted $400K for houses that sold for $150K in 2000. With the insurance and property tax crisis, those houses are going nowhere.
“They wanted $400K for houses that sold for $150K in 2000.”
You have just described pricing of EVERY coastal town in the State of Florida, 1999-2005.
Start a Naples or Cape Sabal and work your way north to the Panhandle, you’ll get the same story.
Yeah, ‘Green eye shades’ of poker games. Most people have no idea what has been going on with these huge public monies honey pots. This is
only one example.
All these wanna bes and quotas as financial wizards pumped out by univs. One more way the univ.-don’t-really-know-how-to-do-anything-crowd who have been ruining this country big time.
A brand new twist, or is it? (wrong thread, or is it?)
http://bangkok.craigslist.co.th/rfs/491084552.html
OMG. Do you think that’s for real? Wow.
Just got back from a home-hunting trip in St. Pete. Ended up with a lease on a brand-new and beautiful townhome in Carillon Park with a monthly rent that is FAR less than what it would cost to buy one at wish prices. Prices still have a long way to go.
Good move. Did you lease from the developer, or an FB?
Probably an FB, but through a Property Manager.
Might be prudent to run a credit check on your landlord, and to search online for his/her other financial vulnerabilities. If your landlord is under 30, I recommend you have Plan B in mind. The good news from all this is that many of us will have the rental rates of a lifetime, relatively. The bad news is that some renters will have landlords who go belly-up before the renters want to move. Final score: renters win, but that is small consolation to the minority who have to make a surprise move. Forewarned is forearmed.
Thanks for the advice! How do you go about performing a credit check on someone without their SS number? We have family close by, so plan B is to shack up with them in an emergency.
“‘We smelled a rat,’ Robinson said.”
Suddenly the air is rife with the aroma of rodent feces.
“George Huhn, a Venice real estate agent, knows the foreclosure process intimately: he works with local banks on the process. But Huhn is now losing his own home to a repossession by Sarasota-based Century Bank, one of area banks for which he has worked.”
New from k-tel
Do-it-yourself repossession
(as seen on tv)
Sorry for the OT post but I think this is big deal….
U.S., Banks Near A Plan to Freeze Subprime Rates
The parties are developing standard criteria that would determine eligibility.
the criteria .. lets imagine what the conditions will be. I see only one:
A comprehensive inquiry shows the borrower can maintain current payments indefinately, but is on the edge, and a rate hike will cause foreclosure (which the banks sure don’t want).
..everyone else.. those who can afford the hike and those who will go under anyway, are all SOL.
“Top Treasury officials fear that unless creditors agree to relax the terms on many of those mortgages, borrowers will default at a higher pace.”
[... when what we really want them to do is default at a slower pace.]
Guess we’ve had enough “surges” for one year.
“NCUA spokesman John McKechnie wouldn’t say exactly what his agency would accept in the way of bids, but Bonkowski said he won’t bid on behalf of his clients until later batches are auctioned off.”
NCUAlar Bomb…
tick,tick,tick,tick,tick,tick
“‘If they get 25 percent, they’ll be in hog heaven,’ said Bonkowski, who helped the federal Resolution Trust Corp. sell thousands of properties in the early ’90s when many savings and loan associations went down because of bad debt. ‘The institutional guys will be in at 10 cents on the dollar.’”
There’re a lot of REOs on the market here in Miami. Went through the trouble looking up the original sales prices. Most of them are now being offered at 35-70% of what they sold for 2 years ago. Yes, I said offered, not sold. Lovely piece of slum property just a few blocks down from where I live was sold for $425K in 9/2005, WTF??? Came on as REO for $200K about 2 month ago. Now they cut it to $180K, still no takers. 1500sqft, build 1925, 5000 sqft lot, “handyman special”. Not too bad a shape but needs new roof, paint and some serious updating. They might get $80K for it if they’re lucky.
At this point I feel confident enough to tell everybody that talks to me about buying a house “DO NOT DO IT UNTIL 2010 or you will catch a falling knife!!!”.
And give them all the info I have and resources to look into… While doing it, I kind of feel I’m saving their financial future. Hopefully they will not think I’ve gone nuts and to my surprise all of them do listen!
I’ve done it 2 years ago, but nobody listen and I’ve got treated me like a loser. Major change in attitude in my tiny sample.
I just feel that if we are more informed about this, we should let everybody that’s not know. It might save young people enough money to retire earlier, for example.
“Gov. Charlie Crist and other state leaders Thursday temporarily halted all further withdrawals from a state-run investment pool in hopes of keeping the fund from becoming the latest casualty of the ever-expanding maw of the subprime mortgage meltdown.”
S.T.I.P., It’s the Razor’s Edge
This is what I thought Ken Bennett, Central Florida regional manager for Watson Realty Corp. saying:
“‘Not too many realtors know what’s going on,’ he said. ‘They just tend to focus on the cheerleading and positive spin to fool potential buyers.’”
Ken Bennett, you really need to stop the BS and talk to one of your own, “Beth Goldstein, a former top sales agent, who got out of real estate, after seven years in the leading Coldwell Banker sales office in Florida, because sales were so slow.
‘focus on the positive,’ regardless of the market. ‘But you could see it crumbling around you.’”
To all of the realtors and mortgage brokers: tell that positive spin to the people who are losing their houses and having their world crumble underneath them! I’m certain they will have a positive remark for you!!