Cajoling, Shame And Persuasion In California
ABC News reports from California. “Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the upscale community of Fairfield, Calif., northeast of San Francisco. He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”
“‘It’s pretty devastating, especially when you owe more than that,’ Lowry said. ‘It’s tough to swallow.’”
“Lowry is sure his home will continue to lose even more value. ‘I know for a fact it will,’ he told ABC News.”
The Orange County Register. “In a week where we’ve been reminded by S&P Case-Shiller, Realtors and federal house trackers that recent months have been painful, DataQuick today tells us that this month won’t likely be any better. Mid-November O.C. home-buying stats show extremely slow sales counts and pricing that’s roughly 8% below a year ago.”
“For the 22 business days ended Nov. 14…three South County ZIPs appear in the top 10 rankings of neighborhoods with the worst yearly declines in sales activity in O.C.: Irvine 92620, sales down 76.0%. Ladera Ranch 92694, down 73.8%. Irvine 92602, down 67.5%.”
From KFSN TV. “In new rankings released Thursday, Merced moved to the top spot in foreclosure rates at nearly seven times the national average. Stockton and Modesto are second and third on the list.”
“‘I think it’s disgraceful,’ said Sean-Pierre Wilson, resident.” “Wilson says he won’t even consider buying a house right now, especially when the center for responsible lending says California can expect to lose 180-k homes.”
“‘Forty or 50 homes open and then no one’s buying. The other side of that is people are also trying to auction homes just to get a return on their investment,’ said Wilson.”
“In California, one in 88 homes is at threat of being foreclosed. In Merced, for sale signs on one side of the street and empty lots on the other side of the street are all too familiar sights.”
The Mercury News. “Lawmakers unveiled five proposed laws and asked Gov. Arnold Schwarzenegger, who also has been vocal about the impact of the mortgage crisis on the state, to call a special legislative session so the measures can be adopted more quickly.”
“But lawmakers conceded there is little that can be done to help those who already have lost their homes to foreclosure - or those facing it - other than to use the bully pulpit.”
“‘We believe we can shine the spotlight on what lenders are doing,’ said Assemblyman Ted Lieu, the chairman of the Assembly Banking and Finance Committee. ‘We can’t rewrite these contracts. It will be through cajoling, shame and persuasion.’”
“‘If we think we’re in trouble now,’ said Assembly Speaker Fabian Núñez, ‘let’s wait to see what happens in the next four or five years. We need to keep this from escalating.’”
“Lenders are sending 2,000 foreclosure notices a week in California, and that number will more than double beginning next year.”
“The California Association of Mortgage Brokers said it applauded the lawmakers for addressing the foreclosures but urged a balanced approach.”
“‘While we strongly support the goal of consumer protection,’ said Pete Ogilvie, president of the group, ‘CAMB urges legislative leadership to work with lenders, brokers and consumer groups to ensure that reform measures preserve the ability for families to obtain suitable financing to purchase the home of their dreams.’”
The San Francisco Chronicle. “The number of foreclosures in San Francisco makes up just 2 percent of foreclosures in the Bay Area, city leaders estimate, and Mayor Gavin Newsom said city residents have ‘been fortunate to date.’”
“But, he warned, ‘It could hit here, and if it does it’s going to hit very acutely and very immediately and that’s why we want to be prepared.’”
“A coalition of city leaders…called on major subprime lenders Thursday to change the way they do business with homeowners on the brink of foreclosure. Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, said today’s deadline isn’t realistic. City leaders mailed letters to banks outlining the requests last week.”
“‘It’s an unreasonable demand. Anything this extensive and far reaching would require a lot of deliberation by any company,’ he said, but also noted that many lenders have already instituted such programs.”
“San Francisco officials conceded Thursday that they can only hope institutions comply with their request.”
“John Eller, head organizer at the Association of Community Organizations for Reform Now in San Francisco, called it ‘a good first step. We know (the agreements are) toothless right now because they’re just calling on the lenders to do the right thing,’ he said.”
The Sacramento Bee. “Not everyone believes that Gov. Arnold Schwarzenegger’s pact with mortgage lenders to help troubled subprime borrowers will dampen the impact of California’s foreclosure crisis. So far, no other major lenders have joined Schwarzenegger, the Governor’s Office confirmed. Four of eight big lenders brought to the table declined to join the pact.”
“One for whom it comes too late is Desiree Reno of Sacramento. She had a loan serviced by HomEq. ‘What really upset me was the day after they auctioned my house, I saw that they were going to help all these people when they could have helped me,’ she said.”
“Last year, subprime borrowers accounted for 27 percent of home loans in El Dorado, Placer, Sacramento and Yolo counties, and 32 percent in Yuba and Sutter counties, according to a Bee analysis.”
“Some doubt that freezing subprime loan rates for those who can’t afford higher payments will make a dent. Thousands of 2006’s subprime borrowers are already defaulting before their loans reset, said economist Chris Thornberg.”
“‘It’s not the mortgage that’s the problem,’ he said. ‘A lot of people bought houses they just can’t afford.’”
“Thornberg said there really isn’t much anyone can do. Falling home values are aggravating a foreclosure problem that’s likely to worsen, he said. Values will fall, he said, until most people can afford homes again.”
“Jeff Tarbell, managing partner of Sacramento-based Comstock Mortgage, also doesn’t see much practical impact from the governor’s announcement. Tarbell said it takes time to verify that a subprime borrower can’t make higher payments – and lenders don’t have the staff.”
“Tarbell wants a freeze on rate resets – at least temporarily – across the country to allow the real estate market to stabilize.”
“‘We’ve got to stop the pricing decline,’ he said.”
The Bakerfield Californian. “Carl Cole, former managing broker of now-defunct Crisp & Cole Real Estate, counted his first two foreclosures Thursday, trustee’s deeds recorded with the county show.”
“They are so far the only foreclosures in the Cole family, but just a pair among more than 100 defaulted and foreclosed properties associated with the former company’s employees, family members and associates, according to an ongoing Californian tally.”
“Lenders took a hit when the homes were auctioned off last week, records indicate, a situation now common in the current real estate market.”
“Cole borrowed more than $1 million total against the two homes in January 2006, property records show, while banks repossessed them last week for a total $722,325.”
“As of Thursday, 102 troubled properties with more than $62.3 million in total loans can be pegged to former Crisp & Cole associates, according to The Californian’s ongoing tally. Of those, at least 57 have so far foreclosed.”
“On Monday, the Seven Oaks mansion of Cole’s former partner, David Crisp, is scheduled for the auction block. Two previous auctions were postponed.”
“Federal investigators are currently looking into Crisp & Cole operations for possible mortgage fraud after a federal raid of 13 Bakersfield sites Sept. 12.”
‘Lenders are sending 2,000 foreclosure notices a week in California, and that number will more than double beginning next year.’
But….it’s coming from such a low base…
‘We’ve got to stop the pricing decline,’ he said.’
Even with all the borrowing fraud, ridiculous speculation, apprasisal fraud, etc, and YEARS of whining about affordable housing, and we are somehow supposed to preserve these prices?
I guess we will have to be content with watching these clowns run around with their hands in the air while sanity returns. Meanwhile, only one guy in this post makes any sense:
‘It’s not the mortgage that’s the problem,’ he said. ‘A lot of people bought houses they just can’t afford.’
‘Thornberg said there really isn’t much anyone can do. Falling home values are aggravating a foreclosure problem that’s likely to worsen, he said. Values will fall, he said, until most people can afford homes again.’
What’s so bad about that?
Nothing’s wrong with that, Ben. It’s just that there are all sorts of asshats and asslejacks that stand to lose big $$$ if asset prices fall.
Yeah, like this guy maybe:
“Tarbell wants a freeze on rate resets – at least temporarily – across the country to allow the real estate market to stabilize.”
“‘We’ve got to stop the pricing decline,’ he said.”
Like heck we do!!!
a mandated rate freeze won’t stop prices declining.. it’d be like passing out bailing buckets to the passengers on the Titanic.
And to add insult to injury, the buckets got holes in them.
Freeze on rates! This is good for the bankers/ Wall St boys to keep the loans current for Christmas bonuses but for the home debt slave to continue paying for the next 3 to 7 years, [whatever the time freeze] on a upside/underwater loan is insanity, crazy! Why help the same banks, who is the last 1970’s credit crash/inflation these same banks/lenders were charging 25 % to 29% interest charges for loans on credit cards and 18% mortgages. The smart home owner in name only will “walk away”, rent, restore there credit[dont' worry within 3 months new credit cards will arrive in the mail] but the wise ones will refuse, build their credit and come back in 7 to 10 years and buy the a house for 50% of todays asking price. There will be disgrace for the public will know how the Wall St boys/banks with Washington DC in their pockets[tossed out heretoforth lending guides] , failed supervision, SEC a joke, etc hooked millions of home buyers in to sucker loans. Hope they all have a Merry Christmas while they are shopping for their gifts.
This Tarbell guy is clueless. If you don’t want prices to fall, why not just as for a price freeze? It’s about as stupid and unlikely to happen.
What we really need is a way to make the pricing decline run faster so that this mess can get cleaned up in my lifetime.
Amen!
Didn’t they learn anything from Japan?
“We’ve got to stop the pricing decline.” I wonder how much property this guy has invested in?
These damn fools will muck it up so badly that it will be the death of a thousand cuts. Take a situation that is on it’s natural course of correction and Bam!
Thor,
I don’t know how much property he has, but in the Inland Empire there is a huge realty company called “Tarbell, Realtors.” They have billboards all over the freeways with photos of employees who look like they are from the depths of San Bernardino. I’ll be very happy to see all the RE advertising disappear. It’s shifted, but not gone.
CCC
Another anecdotal story…
When I was last in the I.E. and Tijuana-adjacent, 85% of the billboards were real estate related.
Who picks up the slack for these?
Thanks, Cap’n Crunch. I notice that Jeff Tarbell hosts a radio program, “Talkin’ Money with Jeff Tarbell” - “a one hour, fun and light-hearted approach to finance, real estate, and money.”
http://www.atmmortgage.com/radioshow.asp
It’s probably getting harder to maintain fun & light-hearted approach.
The billboards are just another of the littler bubbles that will end up popping as well.
A lot of smaller financial bubbles will be hardly noticeable, but if all of the sudden Highway 15 has a lot of blank canvasses up high, people are going to take notice.
remember the commercials in the 2000 super bowl? pets.com and all those others? last I checked the pets.com puppet is helping bankrupt folks get 35% car loans.
” don’t know how much property he has, but in the Inland Empire there is a huge realty company called “Tarbell, Realtors”
Tarbell is a big name in the realtor business out here in LA area as well. About as well known to folks out here as century 21.
“but if all of the sudden Highway 15 has a lot of blank canvasses up high, people are going to take notice. ”
The worst aspect of those signs is the stupid faces of the realtors and realty companies spashed on those signs . Kinda like faces of Mao splashed up all over Red China when he was the head Honcho there.
They’ll notice all right when the see what the local spray paint artists are up too- won’t be balnk canvases too long……….
Tarbell wants a freeze on rate resets – at least temporarily – across the country to allow the real estate market to stabilize
The very first lecture of my freshman economics class was about why price controls never stabilize markets, but work to exacerbate imbalances.
Yeah, freezing rates will stabilize the market alright.
At zero sales.
“‘We’ve got to stop the pricing decline,’ he said.”
I’m fairly certain that SOMEONE on the Titanic at some time said…
“We’ve got to STOP the ice water”
Some are becoming schizophrenic these days. What Tarbell wants is to introduce partial socialism to rescue capitalism.
I know. Can you believe it? Why can’t these people just let market forces work. It will be over much faster. Yes, more painful but for a shorter time.
For the same reason they won’t let market forces work on Wall Street.
Where have we seen this before…
oh yea. 1929. Yikes!
They must have just discovered that PAIN HURTS and that’s why all the sellers and shills are CRYING
owie, owie, owie !!!
All of these efforts won’t matter. The primary reason why people bought at the top using no doc, nothing down, variable rate mortgages with teaser rates was because they expected prices to INCREASE.
Since the primary reason why they got in is no longer operative, what possible program could be offered to these people to hang onto something that now epitomizes the exact OPPOSITE of their reason for buying in the first place?
Everyone can see prices are going down, with no end in sight. You’re 15-20% upside down now and there is no demand. You bought expecting riches from this decision and now its leading to your ruin. Who, in these circumstances, is going to find the will (much less a way) to “tough it out”? Remember, these are people who only bought because it was “easy” and “obviously” the right thing to do.
What’s the easy and obvious thing to do NOW?
There is absolutely zero tolerance for pain at any level of American society. The politicians know this.
Interesting, when it suits them, it is all about market forces, but when it doesn’t suit their bonuses/political goals suddenly it becomes “we must adjust this”.
So, since we aren’t in on the BONUS scam etc and have no political goals ie: presidency/senatorship/congressional hack..then finally let the market Free Market take over.
Well, they were all very happy to let market forces work when prices were exploding. But now the market is dangerous, see? We need breaks while headed downhill. I have a feeling, however, that once the locomotive gets going at 100 mph, it is a mite too late to start installing a de novo breaking system.
” Thousands of 2006’s subprime borrowers are already defaulting before their loans reset, said economist Chris Thornberg.”
Besides, what’s all this tinkering going to do to mortgage rates and down payments over the long haul. Instead of planning for tomorrow they’re fiaxted on the rump end of yesterday’s boom - punishing the smart money to presumably help dumb money.
As part of this bailout we should figure out a way FORCE FB’s to stay in their houses as long as they have the ability to pay. Can’t sell, can’t mail in the keys, can’t take a job somewhere else if you can’t pay the house off or you go jail. Ha, they’re already in jail!
I like that idea, PTB!!
After all, they should have to pay something for all the pain they are causing us (responsible HBBers & the like) to endure (with a much longer, more miserable recession/depression).
The bubble bursting is the best thing to ever happen to California, Florida, and many other parts of the nation, even though painful for many.
But California and the speculators has been the absolute WORST. People crowding into suburbs and using their equity like there was no tomorrow. Thinking they were so smart back in 2004 when all that happened was their getting lucky.
The banks that allowed this foolishnes, are suffering, the people who coudlnt take a sober view of what they were doing when they bought a house over the last 18 mos. are also among the hardest hit.
And then a group of jackals that I dont feel one bit of pity for, the Real Estate sales industry, whose sales associates pressured customers and delivered their shitty advice unti they are numb, hopefully the worst of them are long gone!
“thinking they were so smart back in 2004 when all that happened was their getting lucky”
– Getting lucky or unlucky may be most of what happens to any of us, but these people definitely participated in creating their own BAD luck if they didn’t see the necessary end of the mania. Some may have timed their final exit perfectly; those who exited a year or two early timed it well enough; those who are jamming the exit doors now have to get VERY lucky to get out at all.
We see that happening in any bubble. The ones who join the bandwagon and start making short term gains think they are so smart and the bubble will go up forever, even pricing out other investors.
Hah!
The reality is: It is never different this time! Everything works in cycles. Those stupid buyers!
This isn’t really a bailout. The government isn’t proposing to step in and buy up all defaulting or soon-to-be defaulting loans with your tax dollars, are they? They are merely “persuading” servicers/lenders to modify the terms of the loans to avoid a massive foreclosure epidemic the likes of which this country has never seen, probably worse than during the GD. Who in Yahweh’s name could not see that intervention along these lines was an absolute certainty if things were looking dire? Easy call.
I see loan modifications as a way to “split the baby” and allow everyone some measure of satisfaction. Prices are still going to come down to a point where homes are affordable without the exotic financing - modifications may slow the process a bit but the fact is exotic financing is gone and prices are coming down. Those who receive mods avoid the payment spikes that were going to blow them up. Servicers get nice fees for the paperwork on all the mods. Investors avoid massive losses due to foreclosures and keep an income stream flowing. The govt. can prance about and say “look what we have accomplished”. So who is the big loser here?
“So who is the big loser here?”
All of humanity. Changing the rules in the middle of the game is never right, fair or ethical. The high risk investors should lose their asses, and the sheeple who entered into mortgage agreements which they could never dream of affording should be tossed back into the renter group with a credit score of 2.
I agree on the bit about changing the rules. On the other hand, orderly lines to the exits save lots more people than a mob trying to get through all at once.
Even though it’s not right to change the rules, the end result will be severely tightened credit going forward. Who will want to invest in mortgages if the terms can be changed as often as credit cards?
In my mind, there are no good choices. A more liberal leaning administration may have wanted far more rigorous interference rather than an interest rate freeze. The best choice is to leave well enough alone but if we can’t have that, the prospect isn’t the absolute worst that springs to mind.
Us.
We’ve been waiting for our ever-extolled free market to get in here and work its black magic for years. Now our dark chickens are finally coming home to roost, and what do we get? Some state-sponsored chicken-hawk fairy flying around crowing about a new bailout plan that will send us chicken littles back to Hell where we came from.
Not without a fight, we don’t. This is where we dig our heels in.
Us.
We’ve been waiting for our ever-extolled free market to get in here and work its black magic for years. Now our dark chickens are finally coming home to roost, and what do we get? Some state-sponsored chicken-hawk fairy flying around crowing about a new bailout plan that will send us chicken littles back to He ll where we came from.
Not without a fight, we don’t. This is where we dig our heels in.
Us.
We’ve been waiting for our ever-extolled free market to get in here and work its black magic for years. Now our dark chickens are finally coming home to roost, and what do we get? Some state-sponsored chicken-hawk fairy flying around crowing about a new bailout plan that will send us chicken littles back to H.e.l.l. where we came from.
Not without a fight, we don’t. This is where we dig our heels in.
I agree with this particular post of yours Big V but not the one immediately above it and not the one below this.
LOL
Us.
We’ve been waiting for our ever-extolled free market to get in here and work its black magic for years. Now our dark chickens are finally coming home to roost, and what do we get. Some state-sponsored chicken-hawk fairy flying around crowing about a new bailout plan that will send us chicken littles back to HeII where we came from.
Not without a fight, we don’t. This is where we dig our heels in.
Hell.
pppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppp
Us. We’ve been waiting for our ever-extolled free market to get in here and work its black magic for years. Now our dark chickens are finally coming home to roost, and what do we get? Some state-sponsored chicken hawk fairy flying around crowing about a new bailout plan that will send us chicken littles back to Hell where we came from.
Not without a fight, we don’t. This is where we dig our heels in.
pppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppp
Sorry y’all, I knew what I was doing was wrong, but I could not help it.
Holy smokes, Big V, no more coffee for you!
Somewhat off topic, but has anyone seen updated foreclosure info on California? The dataquick info is about a month old, and I was wondering if anyone had seen stuff more recent?
People pay lip service to the “market” when prices are rising, but when prices start to fall they want to somebody to rig it for them. The market goes both ways…get used to it.
It looks like this blog has been abandoned, but I thought it would be good for the soul to express an opinion. I look back to 2000 when it appeared that the housing market was just starting to wind up. This was about the same time that the economy started to see some signs of life as well. If someone was making $65,000 dollars a year in 2000 and that person bought a home for $250,000 with a 20% down payment, they could afford it. In 2006 you had the same person making $80,000 a year buying a home for $1,000,000 and this they could not afford. Now we have an economy that is worse than it was in 2000, more unemployment and the average person is not making much more now than they were in 2000. Where are the home prices going you ask? Down, way down. I would guess that you will see a home that was selling for $250,000 in 2000 selling for $375,000-425,000 very soon.
The bank programs of a couple years ago are gone, most people have lived beyond their means and have nothing more to take out of their homes. You are about to see more foreclosures in the market place which will drive down prices as people scramble to sell their homes first. The million dollar home is going to become much more rare in the next six months. As for homes in the lower price range, they have already taken a big hit and will probably not see much more. The middle price range is getting there but I would guess they have another 20-25% to drop. High end, 1,200,000 and up…hang on boys, it is going to be a rough ride until 2011.
Irvine 92620, sales down 76.0%. Ladera Ranch 92694, down 73.8%. Irvine 92602, down 67.5%
Oh, this is just a flesh wound.
“In new rankings released Thursday, Merced nudged Stockton to take top spot”.
Sounds like Casey Kasem makes a return with “American Top 40 Foreclosures”.
More like Casey Serin.
Then it would be top 40 “hits”
i think reporters must all use the same lemming-like template terminology when writing a story. Just read a SF Chron piece on Yoshi’s Jazz Club and sure enough the phrase ” snapped up tickets ” was there.
JEZUZ H CHRIST !!! I mean, talk about lazy-azz writing. No original structure, just use a few well-worn phrases, send it off to the editor & voila ! Collect another check for the new IPOD.
You should join forces with my husband. He writes e-mails to reporters all the time regarding their sloppy, cliche writing.
friend skipped the Sales mtg this am.. too much bs.
“In new rankings released Thursday, Merced moved to the top spot in foreclosure rates at nearly seven times the national average. Stockton and Modesto are second and third on the list.”
Merced, my home town. Modesto is about 40 miles northwest; Stockton 70 miles. Given the average household income for the region, home prices should be about 175K. They hit 375K 18 months ago, and stand at 300K now. There really is no bottom in the valley.
No way. The MIRAGE effect is driving us Silicon Valley grunts out over the Altamont pass and that should give a nice lift to house prices in Modesto and Stockton plus Tracy, Lathrop, Manteca and Lodi. Just wait for the spring bounce.
Merced has the new UC campus. You should see people camping out at the sales offices after the Super Bowl.
Real Estate goes only *up*.
I don’t know what you guys are talking about. If you have questions, you should be asking Pat Vredevoogd Coombs or Dick Gaylord, not doomsayers like Chris Thornberg.
Mark to Merced
LOL that’s great. I’m adopting this.
Speaking of Merced, I work at UC and recently saw a report from the president’s office on real estate as related to faculty hiring. UCOP has four years of survey data from 1988 to 2006 on faculty perceptions of housing prices and how it and university hiring policies (such as the subsidized loan) affected their decision to sign on. Interesting study.
Main conclusions:
Faculty, like everyone, complain about high housing costs.
Faculty feel entitled (ranked themselves as a buyer) to buy a house.
In 2006, those faculty members who bought homes, had a median sales price of about $800,000.
Rents (as measured by those faculty members who rent and filled out the survey) have increased 35% from 1996 to 2006.
Faculty salaries have also increased, surprise, 35% from 1996 to 2006.
Housing around UC campuses increased something ridiculous, like 300% from 1996 to 2006.
*MOST INTERESTINGLY* Faculty generally rated affordability of the mortgage similar to 2001. There was some exchange from being “very satisfied” with affordability in 2001 to “somewhat satisfied,” but beyond that not much else. I would have expected a huge shift to the “very dissatisfied.” This really surprised me, and makes me wonder if our faculty got funny-money loans, too, that are going to reset in 2008…stay tuned! This could be a crisis for UC.
Yeah - I worked at 2 UC campuses and the public should be outraged at all the special deals for upper management. Special loan programs with great rates, the outrageous relocation packages including 50% of one year’s salary on top of all the actual expenses, jobs found for spouses or partners or kids. But then cry poor about staff salaries and give insulting 1.5% raise that more than gets wiped out by increased medical premiums. And cry poor and keep charging the students more and more. It’s a total sham.
I’ve got a different take on that. Frankly, the administrators’ salaries are not super competitive compared to other universities. Relocation packages and signing bonuses are practiced in all top businesses; if you’ve got mad skills, ask for it!
On the other hand, I totally agree about how staff has been shafted from 2001 to 2005. No raises for that long was really tough–and we should look forward to it again during this recessionary period.
I also agree that students are being asked to cough up a lot of dough compared to even 10 years ago. I don’t really understand the dynamics behind the inflation in this industry for student fees. If anyone “gets” it, I’d love to read more.
CCC
Capt: the tuition and fees inflation directly relates to the increase in private student loans. They have become huge. IMHO it’s sort of like the housing bubbles - they’re making lots of loans available to anyone because you can’t even get rid of student loans in bankruptcy.
As for pay/benefits for top Admin at UC - it’s not private industry and there should be no expectation of the same salary and benefits - I bet you could find plenty of people that could and would do the job for a reasonable salary. Also, as far as I’ve seen staff does the huge bulk of the work anyway.
As for pay/benefits for top Admin at UC - it’s not private industry and there should be no expectation of the same salary and benefits - I bet you could find plenty of people that could and would do the job for a reasonable salary.
———————-
I think the executive at both the private & public levels are extremely over-compensated. Agree that there are PLENTY of people who could do the job even better than current execs; but they just haven’t “networked” enough.
They like the sheeple to continue believing the myth that well-paid executives are somehow super-human and have almost mystical powers that the “sheeple” couldn’t possibly understand.
I’ve known some of these people. They are no different than the rest of us (especially many on this blog). Not smarter, not more imaginative, not better able to project into the future and understand the ramifications of today’s actions. They are simply better-connected.
Re the fees, I still don’t “get” it. Yeah, private student loans are more available. And I understand if more credit is extended then prices rise. So I would expect private tuition to rise because of competition in the marketplace for a limited number of seats at prestigious universities. But at state universities, especially Cal States and some UCs, there are empty seats…yet fees still rose precipitously. Are they just extracting from the consumer because they can? Offset other budgetary shortfalls?
I guess we’ll just have to agree to disagree on the exec salaries. I’m a big proponent of the free market; if they can negotiate it, then presumably it’s worthwhile for both parties.
Another UC employee here>; ) UC faculty and top admin have seed money loans available to them as part of any recruitment or retention negotitations. These are loans far below the market at 3% approx. Even the most crazily priced home becomes psuedo-affordable with mortgage terms like that. These deals are not available to staffers. They are also given priority on UC sponsored housing developments where a staffer could purchase but only if no other faculty member wants a below market priced home. - yep, fat chance of that happening.
The perks are UC awful. Right now the big issue is why can’t faculty all go out buy new Iphones and have the campus pick up the cost. Now I love my faculty to pieces but I also have keep them in line. I expect to see massive audits coming our way soon.
As to escalating fee schedules, I’d love to see numbers on the ratio of foreign students vs CA resident students. Resident fees are far less then US and foreign fees and often people will move into the state for a year so they can claim CA resident, get the degree, and flee back home. The way to combat that loss of income is to raise fees which also reduces the number of CA student rolls, leaving more space for the higher yeilding foreign students. Sure we have to fill so many CA slots as required my the Leg., but I’d still like a gander at those stats.
Empty seats at UC - besides maybe merced and riverside - where are the empty seats?
My objection to exec pay at UC is they don’t do the work to warrant it, UC claims to be so poor they can’t give decent raises to all the rest of staff, they cry poor so they raise fees on students, and it’s all mostly on the taxpayers bill.
Are they just extracting from the consumer because they can? Offset other budgetary shortfalls?
Yes and yes. Combined with easy credit (and parents who will HELOC their lives away so junior goes to college), noone right now is questioning the cost of a “must have” college education.
The end “consumers” are ideal - what do 18 year olds that have never left home know about loans? There is a reason that CC companies love them. I remember signing on the dotted line for my student loans - they were an abstract notion, to be paid “someday”. On the other hand, I did everything in my power to reduce the amount of husband’s loans, many of which we incurred once we started living on our own.
Between private and public loans a traditional college age student could amass a debt of $100K without ever running a household, which can never be “washed away” by bankruptcy.
Until the credit dries up and we have more savvy consumers, college education costs will continue to rise.
Gwynn: And the raise in the meal allowances - that’s completely crazy. Then they have their special retirement funds. It’s completely crazy and unfair. And what exactly do most of top management do except make and attend meetings and assign work to staff? If the public really knew what was going on they would be outraged.
To reply to Gwynster: I don’t know which department you’re in, but I’ve been faculty at two different UC campuses and have never known any faculty to get a favorable home loan or a deal on a house. I got $1000 for my second move - nothing for the first. Pay for my own phone - it’s not legal for a department to provide a phone for faculty. The departments give research support - lots of it - to attract faculty who are likely to attract more moneys.
It takes an incredible amount of hard work and ability to get a faculty position. Once in one, it takes more of both to stay in it.
If you think it’s such a cakewalk, why don’t you become one?
Merced is Spanish for ‘Mercy’. It is short for El Río de Nuestra Señora de la Merced (The River of Our Lady of Mercy). Mark to Mercy. How very appropriate.
When I used to live there I used to suggest we call the town No quarter to discourage people coming out of state looking for cheap plaves to live and welfare benefits.
HA!
Mark to Model. Mark to nonsense. None of us could have forseen all this bailout frenzy. We were hoping for the big JT. Did any of you ever dream our bubble would never burst? Im crabby about this crap. Can we please end this week on a more bearish outlook for our precious bubble?
Name a bailout plan that will actually work, and I’ll start to worry. Every time some new bail-out plan comes down the pike everyone starts to worry that somehow housing will be salvaged. Think it through people.
Thanks for the words of encouragement. Now prove it to us reasons why this latest horror will not get started. I’m curious how we don’t worry about this latest fiasco.
What more evidence do you need than what’s staring you in the face? Prices are crashing everywhere, foreclosures looking like they’re just getting started to wreak havoc, inventories through the roof for this time of year, lenders tightening credit requirements on almost a daily basis, reports now staring to pour in from every corner of the country that job losses will not be contained to housing,……..shall I continue? You know, I expected all the nervous Nellies 18 months ago when nothing was breaking. But now the whole thing is crumbling down and you guys are frwaking out more than ever.
Ok lets say its too late for a bunch of people. But what if hollywood stars start doing those benefit shows to save the homeowner?
LOL
I don’t think housing will be salvaged, but I worry some a$$hat politico will succeed in siphoning yet more money from me to the unworthy, and specifically to the dip$hits that caused this.
Now that’s a legimate concern.
Agree, athena!
I don’t care much what they do, as long as it’s contained within the lending/banking system.
Once the rest of us have to pay for it via inflation/dollar devaluation, higher taxes, fewer services, recession, etc. — then it becomes OUR problem and certainly something to worry about.
I’m pretty sure it’s because there is an acronym gap…
Up to now, we’ve been content with 3 and 4 letter acronyms that mean nothing.
A think a well thought out 5 letter acronym, or even a clumsy 6 letter one, would bamboozle the booboise, better.
“Cole borrowed more than $1 million total against the two homes in January 2006, property records show, while banks repossessed them last week for a total $722,325.”
“As of Thursday, 102 troubled properties with more than $62.3 million in total loans can be pegged to former Crisp & Cole associates, according to The Californian’s ongoing tally. Of those, at least 57 have so far foreclosed.”
“On Monday, the Seven Oaks mansion of Cole’s former partner, David Crisp, is scheduled for the auction block. Two previous auctions were postponed.”
Oh boy. I know someone here who is going to have a martini as soon as he reads this!
it was posted 15 minutes ago and still no-show .. i’m worried.. ya think he’s sick? got in an accident maybe?
LOL!!
I am a little busy cooking up some crow for the locals. I have made more batches of this lately than I care to admit…
Sipping one right now.
Be sure and get pictures. You might want to hire a big donkey to go crap in the front yard.
Why just one donkey?
Oh man, I haven’t laughed that hard in a while. Beer came out my nose. Thanks AZ_Slim!
LMFAO!!!
Early Xmas for you crispy&cole.
“‘It’s not the mortgage that’s the problem,’ he said. ‘A lot of people bought houses they just can’t afford.’”
The end.
“On Monday, the Seven Oaks mansion of Cole’s former partner, David Crisp, is scheduled for the auction block.”
____________________________________________
If at first you don’t succeed, failure may be your style.
Quentin Crisp
“Lowry is sure his home will continue to lose even more value. ‘I know for a fact it will,’ he told ABC News.”
The herd has changed direction and the sheeple will follow. As we approach majority recognizing these prices will continue to fall, is there a possibility we could fall below 2001 prices?
Interesting side note. In most areas prices need to fall about 40% to be brought in line with historical rent/mortgage ratios. These models, however, assume standard 3-5% appreciation. If we remove this apprecition assumption, what is reasonable? A 50% drop? 60%?
These models, however, assume standard 3-5% appreciation. If we remove this apprecition assumption, what is reasonable? A 50% drop? 60%?
Don’t bet on it.
The two main reasons are: 1) real estate is bought by rank amateurs who refuse to cut their losses–”sticky on the downside” and 2) politicians love to pander to homeowners by generating plans to help them (buy votes).
I think a 30%-35% drop (of sticker price) with a LONG period of stagnation is most realistic.
True. A 30% drop with 5 years of stagnation is approximately an inflation adjusted 50% drop.
5 years of stagnation in home prices andin wages is not much of a drop. However we can anticipate a 2% annual increase in incomes over the next few years unless the Indian and Chinese laborers price themselves out of the labor market.
While it is true that sellers that dont have sell result in sticky prices, what about banks that are stuck with 1000s of foreclosures on their books and have credit and liquidity issues, as well as the need for capital reserves. Will prices be so sticky then?
The two main reasons are: 1) real estate is bought by rank amateurs who refuse to cut their losses–”sticky on the downside”
The only problem with this that may in fact allow for price declines unprecedented by downturns of the previous 50 years is the sheer numbers of people plain and simple buying houses they could not afford.
This wasn’t contained just to sub-prime territory, but full frontal prime borrowers were guilty of partaking of the whole bowl of kool-aid that real estate only goes up,… and marched into the easy money parade. A LOT of borrowers simply can’t afford the house that owns them, and they will only be sticky on the way down while they can afford it. When the tide goes out we will see who was swimming nekkid.
John,
It doesn’t matter what the sellers want to do, if the money isnt’ there to pay their wishing prices, the prices will fall.
Here’s how I see it: assume everyone now has to bring 10-20% downpayments to the table. They can get a loan for the rest (with PMI required for anything more than 80%) — and their DTI ratios can be no more than 28% front-end & 33% back-end. They must PROVE that their incomes are steady and have stable job histories. They also need to show that they’d have 6 months reserves (PITI payments) AFTER the deal goes through.
Now realize that most people who really wanted to buy in the past few years already have.
What would prices look like under this scenario? IMHO, that’s where they will go…IF we don’t experience a recession & credit markets remain fairly liquid.
Yeah, my prediction is 50%. It’s based on the home cost to income ratio that remained largely unchanged from 1890 to 1990. The only significant deviation was between world wars, and the drop was ~40%. Currently we are plus 80% from the ratio. If we lost half that, we would experience about the same drop we did between the wars. Reasonable. Except that housing picked back up to the correct ratio after the early 1900s drop. Perhaps this time we will fall back to the correct ratio. I won’t cry if we do.
Changes in tax law materially affected what the “correct” ratio should be. Large cap-gains exclusion for primary residence gave a permanent skew in favor of ownership (vs renting). So the “correct” ratio of home cost to income may be a little higher now than it was through most of the 20th century. Even if I’m right about that, we have a long way down to adjust to the “correct” ratio.
From the chart that was posted the other day (taken from Robert Shiller’s book), prices were 199% of 1890 prices, adjusted for inflation. Nothing like that has ever even come close to happening before.
Sorry, I screwd up my post.
Prices in 2006 were 199% of prices in 1890, adjusted for inflation.
Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the upscale community of Fairfield, Calif., northeast of San Francisco. He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”
No offense to all those fine folks living in the nice little town of Fairfield but I normally don’t hear Fairfield referred to as an upscale community (it has some nice parts but isn’t exactly an enclave of the wealthy). I love the fact that he bought at the TOP of the market then states his house went up another 30% in six whole weeks but has tanked over 45% of highs with no end in sight. Guess he should have flipped his house after six weeks and walked away with $150K.
“we’ve gotta stop this pricing decline” he said.
What else did he say?
Did he mention how that project about bringing the Pacific ocean to Denver was going?
Or summer skiing in Phoenix?
skiing in phoenix.. how fun..I always wanted to wear a sweater in the summer time. Outdoors. Who is working on that?
Lex Luthor
Didn’t you just love it when he set the atom bomb on the San Andreas Fault? Damn that Superman! Thwarted again. Hit him with kryptomite SFgal.
I always wanted to wear a sweater in the summer time. Outdoors. Who is working on that?
Turn down your temperature in your house. I want to see beautiful women in bikinis around the pool in summer. That’s a big reason for liking Phoenix.
And just where were they when all the stock was ‘foreclosed’ on during the tech bubble burst? Why weren’t they bailing folks out of the margin calls they couldn’t meet?
Can we get another round of applause for those lawmakers?
Can the CAMB make any more self serving comments?
Can we replace the word “dreams” with “reality/affordability”?
….
“The California Association of Mortgage Brokers said it applauded the lawmakers for addressing the foreclosures but urged a balanced approach.”
“‘While we strongly support the goal of consumer protection,’ said Pete Ogilvie, president of the group, ‘CAMB urges legislative leadership to work with lenders, brokers and consumer groups to ensure that reform measures preserve the ability for families to obtain suitable financing to purchase the home of their dreams.’”
They just want to make sure that creative loans can continue to happen. Actually, I’m not averse to that idea, as long as SOME fundamentals are still there.
Couldn’t mortgage brokers be replaced by a web site that has various payment options outlined in the format of, get this, an amortization table? I just don’t understand how complex it really needs to be. Look at any airline website for a travel route. They give you the option of basing the priority listing on time/schedule or price. Hell, they even let you choose your seat. Would you like an aisle seat (3/27 arm), exit row (30 year fixed), or a seat right next to the lavatory (neg am). If any tom, dick gaylord, or harry can book an airline flight, why can’t they do the same for financing an asset? Mortgage brokers need to go the same way as that other pre 1980’s job profession, travel agents.
I checked out the E-loan web site and it essentially has what I’m looking for. Why would anyone go to a stand alone broker in some strip mall when all the information is parsed for you and right at your OWN fingertips? Are people that lazy? Se habla espanol?
Money for nothing and your chicks/porn/loan for free?
As long as investor appetite for creative loans is where it’s at now, you’re not going to see creative financing, period!
Well said. Heck, they have to do something to reduce the risk for conventional loans. Can we say large down payment required? Yep.
Got popcorn?
Neil
Its interesting that some loan brokers are still advertising zero down loans, but the FICO has to be above 700. I personally don’t necessarily see the correlation.
potential — I’ve said it before and I’ll say it again. Down payment is everything. “Creditworthiness” is nothing. Or almost nothing. People with a lot of skin in the game try very hard to keep their homes.
No. All of the fundamentals should be there. As I said in my previous post (which I think will show up about 5 times in about 3 hours), “This is where we dig our heels in”.
When Kelley Lowry’s house went up $200k in six weeks, was he demonstrating at the mortgage lender or builder, demanding THEIR money back? I want one of those too, the never depreciating asset, insured at the expense of others, many who cannot afford the asset!
How, exactly, is the government going to bale these people out? Are the banks, already weakened by bad debt, supposed to absorb the effects of lower returns on ARMs? As if Citibank, etc. are flush with cash right now! In all likelihood, this would be a recipe for bank failures as well.
Maybe Fannie and Freddie? Nope. They are nearly bust. All they need to be pushed over the edge is more liabilities (that is, if they are not toast already, given optimistic projections about forclosures).
What about the tax payer? Lets have the government write us a check for our taxes! Oh, no that won’t work, will it?
The really sad thing is that, of the three options, paying ourselves (with bad bills) is likely the one we will end up choosing. Shame on us. One thing about macroeconomics, you get what you ask for.
Rational expectations
upscale community of Fairfield, Calif
WT?
There’s a Budweiser plant in Fairfield…
low-end beer, low-end place.
It’s still a pretty nice place, but the fact is, the past 10 years espc., quite a number of low-income folks have moved to Fairfield.
Define low-income. I’m neither a computer engineer or financial-industry type so I probably fit this category. Who else makes the big bucks?
“Tarbell wants a freeze on rate resets – at least temporarily – across the country to allow the real estate market to stabilize.”
“‘We’ve got to stop the pricing decline,’ he said.”
Translation - “We’ve got to keep prices from falling to a level where the average person can afford a simple house.”
F**king idiot!
BTW, when did these people try to stop house prices from reaching such unsustainable levels? I forgot, they never did! You can’t stop a free market from learning from its mistakes.
One more thing, in regard to “The other side of that is people are also trying to auction homes just to get a return on their investment,’ said Wilson.”. Houses are NOT investments, they are places to live. They are parcels of land with a structure built upon it, nothing more! If people didn’t treat their houses like investments in the first place, we never would have succumbed to this idiocy!
We freeze the rate resets and the financial institutions who lent the money are screwed. However, borrowers are kept in their homes until the rates reset again, when they default on the loans and get to screw the lenders a second time.
OR
We keep the rate resets and the borrowers default screwing themselves and the banks.
I agree with TXchick….just let the market do it’s thing. Borrowers and lenders are going to get it in the end, so why not just get it over with?
Yup. The line is that we have to bail people out because they are losing their “American Dream”. The American Dream deserves a bailout. However, out of the other side of their collective mouth, we hear the more truthful statement that houses are investments for most. Do investments deserve a bailout? I think not.
When the FED lowered the interest rates to 1% in 2002, it did not stop the tech bubble burst. It’s not working, it’s useless, this thing is coming down, nothing can stop it!
“‘We’ve got to stop the pricing decline,’ he said.”
We’ve also got to get a DeLorean with a Flex Capacitor that can send us baccckkkkkkkkk to the future!!!!!!!!!!!!!!!!!
It’s a FLUX Capacitor. Don’t you know anything about physics?
“ABC News reports from California. “Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the upscale community of Fairfield, Calif., northeast of San Francisco. He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”
Well this is what happens when people turn shelter into a speculative venture or as a substitute for a savings account(s).
http://www.irvinehousingblog.com/2007/06/25/houses-should-not-be-a-commodity/?ref=patrick.net
The last column should be called ‘depressed public’ or even, and I hate to say this ’suicidal public’.
Just like Vegas.. if you start winning, you stop and close out and go home. Gotta make that decision.
I dunno, guess they thought the rising price of homes was going to set them freeeeeeeeeeee?
I’m with you DD - that’s why I always walk out a winner. So many people get greedy or think they’re on a lucky streak and plow it all back in and more. Idiots.
Luck can set you freeeeeeeee, but only if combined with a certain amount of hard work and a whole lot of patience.
He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”
“‘It’s pretty devastating, especially when you owe more than that,’ Lowry said. ‘It’s tough to swallow.’”
Not to worry there Bud, you have the spring bounce coming and prices will shoot right back up…. NOT!
He paid $580,000 and six weeks later took out a $150,000 HELOC after the home appraised for $750,000. The HELOC was used to supplement his income so he could afford the home. /sarcasm off
And exactly what made the home worth almost 200K more in just 6 weeks apart from the fact a loan company demanded it be worth that for the purpose of making what amounts to a fraudulent loan.
If he really, truly believed his house was worth 200K more in 6 weeks, then he would have sold it! Not many people make 200K in 6 weeks, and he should have jumped at the opportunity. It’s not our fault he didn’t.
Exactly.
My gosh. Immediatly SOLD.
dimwit.
Prices going up, it is “let the market work” Prices going down, it is “we have to fix this” Hmm might that crow be ordered in cajun style? Just to augment the burning sound of careers and lives going up in mortgage smoke? Just wondering.
exactly, as long as it works for Pols, fine.. then it doesn’t, must fix.
oh brutha
Herr arty ex-pat Austrian strongman leader,
Your loaning glass is half empty.
“Not everyone believes that Gov. Arnold Schwarzenegger’s pact with mortgage lenders to help troubled subprime borrowers will dampen the impact of California’s foreclosure crisis. So far, no other major lenders have joined Schwarzenegger, the Governor’s Office confirmed. Four of eight big lenders brought to the table declined to join the pact.”
The Governator is an optimist. The glass isn’t 95% empty, it’s 5% full.
So far, no other major lenders have joined Schwarzenegger, the Governor’s Office confirmed. Four of eight big lenders brought to the table declined to join the pact.”
Governator: Thats ok……..Vee don’t neeed those other four lenders…. or this, that, and the other. I vill close down their evil empires in Calyfornya……for goods.
ve make remake of dis loans, yes?
Ya Vo herr Alad……BTW….vun of my favorite actors vas Sgt Shultz in Hogans heros…..he taught me english good….no? He vas a ‘crack up’ as u say.
‘Four of eight big lenders brought to the table declined to join the pact.”
Thanks for the first chuckle today bottomfisher.
….zay are nussing but aazzholes anyway.
“You’re a funny man Sully. I like you. That’s why I’ll kill you last.”
The other four said they were actually doing this before Schwarzenegger even asked. So much for that.
Love politicians. The same clowns that two years ago were whining about housing affordability are now trying to prop up the crazy high values for all the FB’s.
And they don’t realize that they’re pissing off the rest of us that didn’t buy what we couldn’t afford.
The “rest of us” are probably few in numbers. Where is Galt’s Gulch?
One of the big stories on the Nasdaq site today was about
“a report that a bailout plan is in the works for subprime borrowers”
This is complete and total B.S. What the hell? Un Fcking believable.
“You come to a point in your life when you really don’t care what people think about you, you just care what you think about yourself.”
Evel Knievel
Rest in peace, thrillseeker
What he did was nothing. Try short selling in this market.
I hear you, Tx!
I reached that point several years ago, upon realizing how few people really cared.
I was just barely into double digits in the early 70’s, when Evel became a real living hero, just when they were in short supply…
What bone did he break this time?
rest in peace or pieces.
Nah, that wasn’t nice. but sick sense of humor/speciality.
Played golf with Evel at Buck Owens tournament in the middle 70’s. Always had the best looking chicks even though he was tatooed ugly and walked with two canes.Couldn’t play worth a damn but a good guy.
Governator: Did you see me riding when I was fighting liquid man? I think I’m better than Evel.
“You see, you can’t please everyone, so ya got to please yourself.”
- Rick Nelson (Garden Party
Now they’re giving away MINI Coopers if you buy a loft in LA — Link.
Great, now they’ve corrupted the car I drive - damn real estate scumbags!!!!
By the way, I love how they tell you you get a “Free” MINI Cooper w/ every loft purchase, but then reveal you get a paid 3 year lease - so, I guess I don’t get a “Free” car, merely the right to drive it for three years by paying too much for a loft - what a deal!!!
ABC News reports from California. “Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the **upscale** community of Fairfield, Calif., northeast of San Francisco.
I kid you not, I spit my coffee out when I came up the world “Upscale”!
I like the way they locate it relative “San Francisco” when it’s actually MUCH closer to Oakland.
Closer yet to those other two cities that just ooze upscale - Vacaville and Vallejo.
If I recall, there’s a really nice country-club neighborhood just west of Fairfield, up in the hills.
Fairfield proper is a little valley dump of a place. But it does have the Jelly Belly factory.
Jelly Belly factory?
well then, it must be upscale.
lol
—Uh Oh…
Nov. 30 (Bloomberg) — Moody’s Investors Service said $64.9 billion of debt sold by Citigroup Inc.’s structured investment vehicles was cut or placed on review for a downgrade as part of a review of $130 billion of SIV debt.
The ratings company surveyed 20 SIVs since Nov. 7 and expanded its review after noticing “significant additional deterioration” in asset values, according to a statement today. Links Finance Corp., a SIV sponsored by Bank of Montreal with $19.1 billion of debt, may have its ratings cut, Moody’s said.
SIVs, which sell short-term debt to buy longer-term, higher- yielding assets, were shut out of the short-term market as losses on subprime mortgage securities prompted investors to retreat from all but the safest of securities. Unable to finance themselves, SIVs have begun winding down or are being bailed out by their sponsors.
Raining like hell here in San Diego. No landlord construction, no dogs barking at each other, no landlord’s kid shrieking. Ahhh, that’s what I’m talkin’ about.
Hmmmm…, from the Bloomberg article: “Citigroup, the largest U.S. bank by assets, provided $7.6 billion of emergency financing to the seven SIVs it runs earlier this month after they were unable to repay maturing debt.”
That number sounds vaguely familiar…
Wonder if they’re gonna need this every month for awhile…
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 tell everybody that doesn’t know. It might save young people enough money to retire earlier, for example. Ok, i sound like a RE crash preacher now.
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!!!”.
Yep. munch munch munch
The show has begun.
Got popcorn?
Neil
We should all be preaching whenever there is an opportunity. If they’re willing to learn, then who are we to deprive them of the knowledge?
One of our residents recently rented a house. Her military husband sold his house in New Mexico and moved here to join her yesterday, and found a “for sale” sign in front. They called the property manager, who said that she is no longer the property manager and the house is being foreclosed. They then called the real estate agent, asked her what they should do, and she said “Make an offer!”
The resident said that they’re thinking of making an offer. The asking price is $320K. She asked me if it would be insulting to offer $250K. I told her that the days of insulting offers are over, but that I would be insulted if they offered anymore than $200K. They are paying $1200/month rent.
A Foreclosure named Desiree
“One for whom it comes too late is Desiree Reno of Sacramento. She had a loan serviced by HomEq. ‘What really upset me was the day after they auctioned my house, I saw that they were going to help all these people when they could have helped me,’ she said.”
“No fair! I had to pull the arrow out of my chest before they came up with a way to keep it in there for everyone else!”
Moral hazards??? We don’t need no stinking moral hazards!
Excuse me for asking such a dumb question, but exactly when did this tidal wave of economic anti-intellectualism completely submerge rational policy? I would have asked a Captain of Industry or Wizard of Finance, but they all seem to have vanished; along with all the money, jobs, and accountability…
Raptured away to the nether regions of the time and space continuum…
They went the way of the vanishing honey bees.
i think it went away along with the statesmen who might’ve made it a goal to maybe avoid rekindling Cold War with Russkis and China…
I am so spitting mad reading blogs and comments praising the freeze. All the same old sob stories about people “forced” to take loans and pay high prices. And how the hell are they going to decide who can afford the reset? What is the criteria? People that ran up credit cards buying crap, people with houses full of electronics and closets busting with faux designer crap, people with luxury cars and gas guzzling SUVs, people who played nouveau riche and now can’t pay their bills, people that are saying they have savings and retirement funds but don’t think they should have to use them to pay their mortgages, people who made plenty of bucks working in the realty & mortgage business but saved nothing. They should get a fix? And what about those that had a decent mortgage but chose to refy or heloc and spend like there’s no tomorrow. Does this bailout include failed flippers and speculators that have managed to keep up the payments, but can’t make the reset? Does it include 2nd homes? And lastly (because I think I may explode) who will decide - the same stupid underwriters that made the bad loans to begin with? I need a drink - it must be 5 pm somewhere.
“Raining like hell here in San Diego”
This rain is two years late.
“Does this bailout include failed flippers and speculators that have managed to keep up the payments, but can’t make the reset? Does it include 2nd homes?”
We are all seething with you Mr are they crazy. Someone here make it go away.
I wouldn’t worry about it. The majority won’t even qualify. The institutions can then pat themselves on the back if they ’save’, lets say, 20 homes and in CA. our Gov. can say the Repubs came through in a pinch……………..:-)
One and a half hrs to go.
Start early!
Clink!
FWIW 1) High probability the bailout won’t happen (because the damn deciders rarely decide, and it’s to big). 2) On the chance I’m wrong, I am am often, the bailout will be across the board. Simply because it’s too large and they do not have the resources to do it on case by case.
Let’s hope for 1.
Leigh
I have a bad feeling on this one, Leigh. I think they think they have enough public support to screw the banks and I’m deeply disturbed it could be across the board. Time for another drink.
I like the comments praising the freeze. These comments give false hope to the FBs, encouraging them to dig deep and keep paying their mortgage payments.
The system needs liquidity; I am pleased that the FBs, the folks that participated in making this mess, are encouraged to supply it.
If they bail out the FBs, I’m sticking the govt for the losses I’ve had in the stock market.
If the govt is guaranteeing against losses incurred by speculating, it’s only “fair” that they treat all of us gamblers the same, right?
I hear a class-action lawsuit. Anybody in?
OT, but had to post … from the WaPo real estate chat:
I’m a 36-year-old single mother of three, I own a 20-year-old ranch house on a dusty, garbage-strewn acre. I earn $34,000 a year managing flower sales at a food store and selling clothes on the side. I bought my house in 2005 for $385,000. By taking out a first and second mortgage, I was able to buy it for no money down.
At first, my ex-boyfriend helped make mortgage payments, but his construction jobs dried up. I have not paid anything for months on the $76,426 second mortgage serviced by Citigroup, and I have also fallen behind on my $308,000 first mortgage, serviced by a unit of Bear Stearns Cos.
I’m afraid I’m going to lose it.
Are there programs for me?
Ouch. Those payments have got to be through the roof for someone making $34,000.
Well we can safely say she won’t be bailed out, can’t we?
“‘It’s not the mortgage that’s the problem,’ he said. ‘A lot of people bought houses they just can’t afford.’”
Bingo. As maddening as all the bailout talk was today, this really sums up the bottom line. Period. We’re in election mode, so there’s going to be a lot of political babble, but it won’t change much.
Gear 36-yearold Mothe of 3,
Have you considered a rewarding in the US Army as a Finance Specialist handing out no-bid contracts in Iraq ?
Hugs,
A Patriot and a Taxpayer
“a 20-year-old ranch house on a dusty, garbage-strewn acre.”
yes, there is a program…foreclosure.
At first, my ex-boyfriend helped make mortgage payments, but his construction jobs dried up.
Which means she’s scamming welfare/AFDC by not getting married while her bf works off-the-books. I also wonder if she reports the income from “selling clothes on the side”
Since when is being an illegitimate parent something to be proud of?
She’s asking for “programs” because that’s how she’s been living her entier life. She feels entitled! I have a better idea: Let’s take her kids away and put them in an orphanage. Then make her work for a living and rent a room in a flophouse she can afford.
I should add, why does she live on a “garbage strewn” acre if her boyfriend can’t find construction work? Surely he now has plenty of time to clean the garbage off her lot!
Reuven, the boyfreind is an x. We don’t know that he’s the dad, but he probably is, since he was helping pay the mortgage.
Since when is being an illegitimate parent something to be proud of?
What makes you more of a legitimate human being than her kids, and your parents more legitimate parents than her?
Other than your personal judgment, i.e.?
I didn’t call her kids illegitimate! And my parents were more legitimate. They’re still married after 55 years, and despite not being high earners, saved a great deal of money.
Because of my parents good example, at age 45, I have zero debt (even mortgage paid off) and live well within my means.
Uh, reuven?
Not to disparage the sentiment, but things have changed a little bit since Richard Nixon resigned. You might want to update your rhetoric?
Oh yeah? The ones being foreclosed on are angry? How about the people who bought the mortgage papers and were frauded by them?
Shouldn’t this people be angry and demanded that those borrowed money through liar loans and those brokeraged the loans be put into jail? Last I thought faulsifying document is fraud and could land you in jail?
So how does it feel that your life savings are blown to pieces by those AAA+ papers? Not as bad as those who lied and borrowed 100%, and then live in the house your money paid for for a couple of years paying artificially low rent eh?
rick, you are Canadian (”eh”)? …loan fraud is now so common that people aren’t even embarrassed about it. Just this morning, a cousin of mine told me she had qualified for a re-fi. How? - by naming a job and an employer that are actually her son’s job and employer. True, her son lives in the house with her and will help her pay the mtg. I wonder how they believed that a woman over 70 has a job working on engines. Maybe the small-biz employer is in on the fraud.
“Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the upscale community of Fairfield, Calif., northeast of San Francisco. He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”
cue realtor saying you’re going to have to ride this market out.
What about the banks, the lending institutions?
Just imagine how this is affecting them. We hear a lot of sob stories, soap opera melodrama about Losses, Big Losses, Megalosses and foreclosure on an individual level.
I have a hunch the banks are bankrupt right now. Because everything is coming down, like a very powerful tide which is sinking by the day.
And what about FNMA, FMAC, the lending institutions?
They must all be white-knuckling it right now. They’re sitting in the board room, trying to figure out what to do. They have big sweat stains under their arms, as their shaking hand reaches out for a bottle of Aqua Fina (or tequila as the case may be).
They are finished, in my opinion.
I`m inclined to agree, but I`d like to elicit an opinion from my learned friend, Hoz. Hoz, are you there?
It seems the brilliant minds who run our economy - bankers, Bernanke and Godfather Paulson of Wall Street, are meeting (yet again!) to work out a plan for the FB’s who are finding themselves about to be homeless as their mortgages reset.
The plan is for the Financial Gangsters of the USA (Banks and Wall Street) with the help of their minion (Bernanke of the Fed) to freeze the resets.
Mmmmmm. Let me see what my response would be to that happening, if I were a FB. Oh, yes:
“Honey, don’t worry about the resets at the moment. They are going to freeze them so we will be paying the same rates we got when we signed up for sub-prime. Great isn’t it! Here we were about to be foreclosed and now we can stay in the house for another 6 months which gives us more time to unload it onto a Greater Fool! Even better, we can carry on collecting rents on those other 3 sub-prime properties we bought. Is this a great country or what?!”
I am totally stunned as to how these clowns that run the finances of the USA ever get into positions of power. Truth is (sadly) the USA’s way of life has only been possible because of the Fed and their over-worked printing machines. Here’s the problem America - there are a couple of countries out there (Russia, China and India for instance) who have some very smart cookies in the financial world who didn’t get where they are thru the Old Boys Network. They are smart enough to make the people who run the US economy (and the British economy come to that) look like Ronald McDonald on a bad day. This does NOT bode well for my grandchildrens future.
No, the gurus in Russia, China, and India are not that smart. The first is perenially poorer than we will ever be, and the last two are living in government-sponsored bubbles that will send them back to last Wednesday when it pops.
“In new rankings released Thursday, Merced moved to the top spot in foreclosure rates at nearly seven times the national average. Stockton and Modesto are second and third on the list.”
Welcome to the inaugural running of the Subprime Derby
And they’re off…
Merced jumps out to an easy lead, a few lengths ahead of Stockton, which is just ahead of Modesto, the other contestants are far behind in payments also, but ahead of the top trio, if that makes any sense?
Cole Miner
“Cole borrowed more than $1 million total against the two homes in January 2006, property records show, while banks repossessed them last week for a total $722,325.
Good Grief! A coal miner! Maybe in 2006 I should have asked for a loan of $4,000,000 on a Manhattan Beach house (software engineering consultant)! Then by now they’d be repossessed for $3,100,000 perhaps! But then I could still brag that I had a $4,000,000 house, by golly! LOL
To bloggers in Valencia/Santa Clarita:
I have been getting the following e-mail from Lennar:
Homesite #99
Scenic-View Homesite
Was: $684,900 Is: $599,000
Versatile floor plan
2,756 sq. ft.
4 spacious bedrooms
2.5 luxurious baths
Gated community
Immediate move-in
So here is my reply:
How about $480,000 for lot #99? I am a qualified and serious buyer. You can ask Patrick at your lending arm. We can do this deal now or wait next year for maybe a lesser price.
Zounds! What if they take you up on it?
Falling sharp-edged-thingy n’ all that.
-d
Careful..
wouldn’t want to be that damsel on that turning wheel while the daggers fly..
what was their life expectancy anyway?
are you crazy? You should have quoted $350 for that..
I just got a reply that they have a ton of interest on that property so a $120K off an already reduced price is a hard-sell. Told them nicely to ignore my offer.
Figured the $480K price is about the same expense as my rent of a 3br, 3bath house of $2700 per month. Getting trigger happy with all of the news Ben has been posting.
I’d happily sell you my house, if you’re willing to move to Palmdale. A tad under $300k for a 7yo 2154sqft. I know, I know, but I liked it, the area, and worked locally, but have moved into Colorado. Never HELOC’d, so I joyfully can’t count myself as a FB. But this entire thing is putting the screws to me. We just had our SECOND set of buyers fall out. Guy lost his job this time. Overall, we’ve been 8 months on market and seen $100k of imaginary equity disappear from our first list price. Things are bad and getting worse.
Ah man, sorry to hear you lost two buyers already but it sounds like you are being a lot more realistic with the price than the people on the West side of L.A. where I am (usually a minimum $800K for a pre-War stucco box that needs new EVERYTHING).
GonetoCO,
Palmdale is too far. That will double our commute (wife and I work at UCLA). Not saying that Valencia is heaven but I’d rather move to Austin than move to Palmdale. Nothing personal, just my preference.
How many hours does it take you to get to UCLA from Valencia? It’s stunning what people in LA are putting up with now. I hope you end up with an affordable house in WLA, formerlahomeowner, when this thing finally sorts itself out.
Consider renting in Marina Del Rey. Cheaper than buying and you get upscale surroundings.
So much interest that they’re sending out cold e-mails. That’s hot!
My husband and I put a bid of $450,000 on one of the houses 3 weeks ago(they turned us down). I guess they still have not found the greater fool!! And our bid was STILL TOO MUCH!!
Are you talking about RiverVillage? I thought my $480K offer was low enough. How about we beat each other’s offer to the downside, like a reverse auction.
My next offer is $430K. Do I hear $420K? Going once, twice… Number 3 bidder is offering $410K. Going once, twice…
Yes, I am speaking of RiverVillage. I say we are generous and offer them $350k - one house for you and one for me!! Plus the houses are right across from the recreation center! Can you imagine the traffic and noise? Also, they put cheap A@@ carpet in the houses which needs to be replaced before moving in. The houses are designed to sell due to the kitchen - don’t even have a formal dining room! Nor do they landscape the backyards! If someone pays what they are asking they are NUTS!
They have “a ton of interest” on these houses! No wonder they’ve been sitting unsold since June 2007.
I hear you about the carpets. OK, I’ll wait for $350K.
I see two (declined) offers.
There’s your “ton of interest.”
Plus, who here in Santa Clarita will be able to qualify if they are willing to pay $599k? Most of the people I see out here live far beyond their means and cannot qualify now (thankfully!). I have a really cool realtor here who told me to wait 2 years. She and her husband (who retired from UPS - young) have a paid off house and cars. She did not sweat submitting the offer. She’s the first realtor I’ve actually liked!
This is like a 500 piece jigsaw puzzle, and we are just beginning to make out an image of what it is, but a bunch of pieces are missing.
Mortgage bubble is a tip of the iceberg.
Additionally, there’s your corporate ABS, the Yen carry trade, the M&A equity convertibles, the credit swaps, the government debt, etc.
Name a type a credit given out in the last 10 years and it’s turning to sh!!.
The subsequent long-term repercussions of this run far deeper than real estate.
Let’s remember, the post 9/11 Fred action only covered the tech meltdown by creating a bigger bubble somewhere else.
But no one can prevent the Götterdämmerung.
formerlahomeowner,
$174 per sq ft? LOL. This is Tijuana.
$174 per sq ft is a decent offer. Are you comparing Valencia to Tijuana? Come on! It’s not Westwood/Brentwood but it’s neither Tijuana.
freeze rates? we don’t need none of that stuff here. what we need to do is freeze the prices right where they are. yeah, pass a law that nobody is allowed to reduce the price of their house below the highest appraisal it ever attained.
that’ll fix those greedy bloggers.
“‘We believe we can shine the spotlight on what lenders are doing,’ said Assemblyman Ted Lieu, the chairman of the Assembly Banking and Finance Committee. ‘We can’t rewrite these contracts. It will be through cajoling, shame and persuasion.’”
Sure. Blame the lenders now, Mr. Lieu. Where were you when the abuses were occuring in light of day right in front of your face and everybody knew about it? What were you doing then, Lieu, lining your pockets with your own RE equity?
I despise these finger-pointing accomplices more than the criminals themselves.
“cajoling, shame and persuasion”
I don’t know why the owners of the notes should feel any shame.
I don’t feel any shame. I suppose I might feel shame if my borrowers were in default. It would mean I had been stupid to lend to them. I would not approach it by reducing the contractual interest rate. If a few months’ grace would not solve the problem, I would, hmm, what would I do, hmm, well I guess I would, like, FORECLOSE.
I am hearing the same comment over and over - no complaints while prices go up due to fraud/speculation/etc and whining when they go down. There is a clear effort to rescue banks that took on this risk, willingly paying chucklehead suits 200k per year to manage their risk who simply ignored everyone screaming “look - this is a bubble”
I think the real discussion should be about what we should do as a community. We need to make it clear to our politicians that they are out of a job if they support artifical inflation of this bubble. I am sending a check and will vote for the first politician who stands up and says “I am sorry for folks who will be hurt by this market, similar to those who lost in the stock market bubble, but it is inappropriate to interfere when we did nothing on the upside of this bubble”
Most folks feel as we do here, it is time to let the politicians know that we are watching carefully their actions and we will replace them if they fail us. We also realize that the drop will be painful in terms of revenues, etc but it is better than a long drawn out pain.
So - how do we best act as a united, vocal group?
Sign a petition?
sign a petition (already done online, IIRC) & march on Washington & Wall Street?
Seriously, what can we do? Maybe we could buy a half-hour infomercial & run that over & over?
Any ideas?
Post LINK
On wknd nuts/bolts.. POST LINK to Petition
What is the link to the petition?
Here’s the link. Not sure if it was sent to the right parties, but it made its rounds on the blogosphere.
http://www.petitiononline.com/bailout/petition.html
This bubble ripple far and wide - it is not just home owner - but the investor that bought these bonds in CDO, SIV. An example is Florida
http://www.bloomberg.com/apps/news?pid=20601087&sid=abF6L4aqneR0&refer=home
it is not the home owner is feelign the pain - the county government - probably your local school, gov is buying these “safe” bonds
SF officials and Mayor Newsom are speaking out their arses. There’s this big push here to make the city affordable for families (we have the lowest % of households with children of any major US city), and the city is bleeding teachers, cops, etc. because regular folks can’t afford half a million bucks for a fixer-upper in a questionable neighborhood.
You can’t have it both ways - if we want to keep the quality of life and culture of the city (artists, families, middle class people) then prices must come down.
Sick of hearing about this bail-out stuff.
Hey, how about a moratorium on all rent increases - cuz rents in SF have gone through the roof in the last few months.
That would make it fair.
Freezing the low starter rates, OK how many low starter rate ARM loans will be availible in the future when the lender figures it can be frozen for 3-5 years ? House prices will fall regardless of the freezing unless the loan is made transferable.
Of course if the homeowner gets the low rate fixed for 5 years he can then turn it into a rental and cash flow positive ?
No way. If they really do fix rates for all these butt hairs (which they won’t), then the glut of rentals will just come back and he will barely cover his minimum payment with the rent, just like it is today.
I don’t remember who coined the term “asshat”, but that person is a genius.
The housing bubble is starting to ripple to the investors - the folks that buy these CDO, SIV are your local county government agencies, school districts, etc. For example - Florida - the run for the bank has started, and a lot of investors will loose money.
http://www.bloomberg.com/apps/news?pid=20601087&sid=abF6L4aqneR0&refer=home
is an example of how this housing bubble is starting to look very scary.
So…how is 1 out of 88 houses in foreclosure a crisis anyways?
I can just picture it: Freeze subprime rates for the FB burger flippers in $600,000 houses and expect responsible savers who can only qualify for traditional 20/80 30-year mortgage to want to move in next door to a burger flipper? It would take a $200,000 income (”guaranteed” to be stable or increasing for the life of the mortgage) to buy the $600,000 house next door after a $100,000 down payment.
Rational renters with high incomes are asking themselves “why would I want to move in a subsidized FB neighborhood full of low income people when I can rent in an upper middle class apartment complex away from the riff raff?”