It’s Really Changed Drastically In California
The Sierra Sun reports from California. “Realtors are not the only ones suffering from the slipping demand for new homes. Local contractors and builders are shifting their work strategies to soften the impact the ongoing slump in the California housing market has had on the region’s building trades. ‘The fact is that you can find a contractor and get materials for less,’ said Tony Reid, president of Truckee Tahoe Lumber Company.”
“President Mark Tanner of the Contractors Association of Truckee Tahoe said he often receives ‘three phone calls a day’ from contractors and foremen who are looking for work — people who are ‘very reputable.’ He has also been contacted by architects searching for jobs.”
“‘Three years ago, everyone was so busy and their pricing was accordingly,’ Tanner said. ‘Now, to some degree, people are willing to take work just to make ends meet.’”
“It’s the homes built on speculation without a guaranteed buyer that are hurting the region’s builders the most, Tanner said. Several spec-home contractors have stopped new construction altogether because the market is so congested, he said.”
“‘Back in 2004 and 2005, we didn’t need to do anything. Business was pouring out the door,’ said Mike Bernard of Mountain Home Design. ‘Now we’re knocking on doors to advertise this company.’”
“Paz Knoke, owner of A Clean Sweep, said her home-cleaning company has seen a surge in business from foreclosed homes that are being prepared for sale. Since September, Knoke has cleaned nine foreclosed homes.”
“‘It’s good but it’s bad, because we can see the hardship of the families,’ Knoke said. ‘We can see that people just got up and left.’”
The Contra Costa Times. “Dannice Fuller is a realistic real estate agent. Seeing that her client wanted a quick sale, she asked her to drop the price to $417,000, or the conforming loan limit for federally sponsored loans, and open up the East Oakland property to nearly every buyer on the market.”
“‘A lot of people can’t get approved for a jumbo loan,’ said Fuller, an agent in Richmond. ‘So now the house is competitively priced.’”
“Christopher Thornberg, an economist and principal with Beacon Economics, said that the act of agents pricing homes near the conforming loan limit is just another marketing tactic in a tough market. ‘They’re trying to find any hole they can to generate business,’ he said.”
“It was precisely these tactics that caused the market to tank in the first place, he said. ‘They say in places where prices are collapsing, ‘Oh, no, not at this price point,’ or ‘I think things have bottomed out,’ whatever it takes to make a commission,’ Thornberg said.”
“Right now, about 1,050 homes are listed at less than $417,000 in Oakley, Brentwood and Antioch, said Bryce Ellsworth, a real estate broker in Brentwood, so there’s some stiff competition.”
“‘A house he recently sold in Brentwood went for $420,000; he had two offers right around $417,000. ‘But it was 2,900 square feet and in good condition … with a pool,’ he said. ‘But we would like to see the limit raised to reflect the region.’”
The San Francisco Chronicle. “The UCLA forecast says the slowdown will be longer and more severe than it previously projected, in part because the housing slump is destroying more financial jobs than expected. It now sees the loss of approximately 74,000 construction jobs and 25,000 financial jobs during the downturn.”
“‘Real estate is worse than the official numbers suggest, especially on the finance side of things,’ Anderson Forecast economist Ryan Ratcliff said.”
“In the Bay Area, construction and finance jobs have been evaporating for some time.”
“As housing sales slowed, ‘we’ve had to scale back on staff,’ said Sherry Mar, manager of Placer Title Co. in Alameda. The office has shrunk to four employees from seven a few years ago, and ‘the present staff could handle a bit more volume,’ she said.”
The Sacramento Bee. “Long one of the fastest growing districts in the nation, the Elk Grove Unified School District may see a decline in enrollment next school year.”
“School officials, who sounded the warning bell at Tuesday night’s board meeting, blame the housing slump for the potential decline – the district’s first since it formed in 1959.”
“‘It’s the first time anyone of us can remember ‘declining enrollment’ being in our vocabulary in this district,’ board member Priscilla Cox said.”
The Union Tribune. “Analysts at Wall Street investment firms and think tanks are debating whether the economy is slipping into recession, but that debate seems purely academic in many parts of San Diego County.”
“‘People aren’t spending like they used to. It’s really changed drastically,’ said Lauren Tammariello, owner of Bacio Boutique in Escondido.”
“Erlinda Avena, who heads the San Diego Home Loan Counseling and Education Center, said her offices have been flooded with people who can’t make their mortgage payments. ‘There is a ripple effect of people losing their homes, losing their cars and not having access to credit,’ Avena said.”
“‘I don’t think San Diego is immune at all,’ said James Hamilton, an economist at the University of California San Diego. ‘Because of the high home prices here, we’re quite vulnerable.’”
The North County Times. “Local and national economies are either Wile E. Coyote, suspended mid-air off the cliff’s edge and about to take a devastating tumble, or a mountain climber with a firm grip on that cliff, ready to climb slowly to safety, according to a UCLA economic forecast released Wednesday.”
“Although a precipitous drop in home sales and prices has historically foretold a recession, the UCLA report predicts this housing crisis is different. ‘In previous housing downturns, we see an increase in foreclosures because people have lost their jobs,’ said Jerry Nickelsburg, an economist who wrote part of the UCLA forecast.”
“Instead, many people are losing their homes because of interest-rate resets or because they have mortgages they could not afford, Nickelsburg said.”
“Marney Cox, chief economist for the San Diego Association of Governments, said California’s superheated housing market has worsened the impact of its downfall. ‘California housing rose so high it was at a lofty peak to begin with, and so you’re going to see a rapid drop from that peak,’ Cox said.”
The Press Enterprise. “Survival will be the goal of home builders in Riverside and San Bernardino counties next year, as they lower prices further to clear unsold inventories of completed houses and woo buyers who demand bargains.”
“‘It looks like 2008 will be a rough year,’ said John Young, founder and president of Upland-based Young Homes.”
“He said builders already have cut prices by about 25 percent and will continue to struggle with unsold inventory, high rates of cancelled sales and a tightening of mortgage lending practices.”
“The Bush administration will unveil its methadone plan for the mortgage crisis today. Is this simply prolonging the pain?”
“‘You’re just giving the junkie more dope,’ says Christopher Whalen, managing partner with Institutional Risk Analytics, a consulting firm.”
“‘Some people who would qualify for this supposed assistance are probably better off defaulting,’ says Whalen. ‘The redefault rate for mortgages that are changed or modified is 30 to 40 percent. These banks continue to extract as much cash out of the borrower as they can, then they do default.’”
“If they paid an inflated price, can barely make the payments and now owe more than their house is worth, ‘Are we really helping them?’ he asks.”
From CNBC. “I went on ‘The Call’ with news from a Lehman Bros. report suggesting that the housing downturn will be worse in California than the rest of the country (duh), and that it will be worse than the downturn of the early ’90s (uh-oh).”
“I lived through that downturn, as the defense industry disappeared, the S&L crisis dumped inventory into the market, and the Northridge earthquake convinced some homeowners to just walk away. I bought a house in 1992, and by 1994 it was worth a third less. It did not return to its original value until 1999. It’s up 150 percent in value since.”
“A lot of people lost their homes in the ’90s, but most of them weren’t 110 percent financed in houses that they couldn’t afford to buy in the first place. So the next couple of years are not going to be good, and any bailout plan is going to end up in court, meaning the people who will come out ahead will be the lawyers.”
“My story also showed that far from Wall Street, people on Main Street are really angry. I mean, really angry. The angriest are those who are about to lose their homes.”
“We interviewed one woman named Lolita Lierdo, who says her mortgage is worth $570,000, but she can only sell the house for $400,000. If the bank lets her do that, the IRS considers that $170,000 forgiven debt as income, which must be taxed. YIKES!”
“Some of you responded: From Pat G., a loan officer in Maryland: ‘Cry me a river!!! These individuals who are crying the blues are the same individuals who would have told me right up front - if you can’t get me into that house, someone else will.’”
“From Craig T: ‘Please explain again how Lolita Lierdo is a victim? I don’t care WHAT the mortgage people told her - her mortgage is $570k?? Is she kidding? Did she ever think she could handle a loan that size? Right. Because every single one of these jokers was just ‘reaching for their American Dream.’ Because home ownership is a ‘right’…Well, surprise! SOMETIMES YOU LOSE MONEY IN SPECULATION! It’s no different than the internet slaughter that took place in 2000 - a game of hot potato with the last sucker holding the bag.’”
“Mark T. : ‘I am in So Cal and short sales is almost all we do…I do not believe the media knows just how bad this is.’”
“From Clint G: ‘OH GIVE ME A BREAK! I just love this stuff when everyone jumps on the band wagon and then they all want to be bailed out.’”
The Times Delta. “The president of the National Association of Realtors told local real estate professionals Wednesday that real estate is on everyone’s radar screen as foreclosures dominate industry news.”
“Still, Dick Gaylord told an audience at the Visalia Convention Center that he’s ‘never been more confident’ in the market. ‘Real estate has always been the best way Americans built wealth and it will always be,’ Gaylord said.”
“He had flown in on a private jet, courtesy of local developer Andy Mangano, to attend the association’s annual luncheon.”
“‘The problem is there has been a tremendous appreciation [in property values] over the past five or 10 years and now people have a misperception of real estate as an investment,’ he said. ‘They think it’s a short-term investment and it’s not.’”
“‘A house he recently sold in Brentwood went for $420,000; he had two offers right around $417,000. ‘But it was 2,900 square feet and in good condition … with a pool,’ he said. ‘But we would like to see the limit raised to reflect the region.’”
- Anyone can get the conforming $417k loan - just bring the rest of the amount in cash!
That region?
Out in the hot, flat, hell of the outer reaches of the Alt-A Bay Area?
The limit should be dropping - just as the house prices are…
417K pricing = “Near Jumbo for Dumbos” strategy
Where are all the people who said ” Prices will never go down here. Not here, Its different here.”
Where is the water for all of these pools in the west coast coming from?
Got 10% down?
Regretfully, I must admit that I voted for Bush. Now I believe he is an idiot! Lets bail out a few people that bought a home knowing they couldnt make the payments as interest rates reset. When an individual signs up for this type of loan, he must intitial that he understands his monthly payment will rise. All Bush is doing, is allowing these people that cannot manage their money to have a little more crack in the pipe and continue their careless lifestyle until they finally foreclose. No doubt we will be taxed for providing a separate bail out fund for these people. I am sooooo angry.
It took you until now to believe GW is an idiot?
‘The fact is that you can find a contractor and get materials for less,’
This is true in some parts of CA, however, anecdotally, in the “nicer” parts of LA it’s still virtually impossible to get good contractors. Everyone’s still busy busy busy. Go figure…
the UCLA report predicts this housing crisis is different. ‘In previous housing downturns, we see an increase in foreclosures because people have lost their jobs,’ said Jerry Nickelsburg, an economist who wrote part of the UCLA forecast.”
“Instead, many people are losing their homes because of interest-rate resets or because they have mortgages they could not afford, Nickelsburg said.”
Hey! Mr. UCLA economist, the difference this time is that the housing market tanks, people lose their jobs, the housing market tanks again. That spells RECESSION….
UCLA projections for housing and the economy for 2007 were only 100% wrong…why should we them to guess any better this time?
“…why should we them to guess any better this time?”
Because they are not reminding us they were 100% wrong last time? In fact, they are rather conspicuously avoiding this unpleasant subject.
“Instead, many people are losing their homes because of interest-rate resets or because they have mortgages they could not afford, Nickelsburg said.”
meanwhile, in the COMMIEWEALTH of MASSACHUSETTS, the increase in foreclosures has been attibuted to falling home values, rather than increased unemployment or increases in mtge rates (ARMs or other products)..according to the following quote from the Boston Globe: “The recent spike in home foreclosures in Massachusetts is caused primarily by falling housing prices, and not by rising mortgage payments, according to research released yesterday by the Federal Reserve Bank of Boston.”
This tells me at least two things:
1 - People were cash out refi’ing to keep up… rinse-lather-repeat..
2 - The “bailout” plan isn’t going to save these folks, if higher rates truly aren’t the cause of the foreclosures.
Bottom line as I see it (and the rest of you folks): as long as the price to income numbers are so stretched, things are not going to improve.
“People were cash out refi’ing to keep up… rinse-lather-repeat..”
Good job bringing this up. Nothing the govt tries will turn on the equity tap again, which is how Greenspan made himself look like a wizard 6 years ago (although now people are starting to wize up to his little trick). The economy is hosed, no doubt about it.
UCLA was wrong in the late 1980’s as well. I remember how UCLA predicted home prices would rise to 450K in S. CA by 1995 and only 10% of the population would be able to afford homes. I remember because thats when I bought my Townhome. Back then it was buy or be taxed on your gain.
Prudential predicted a crash they were right. UCLA wrong.
“… in the ‘nicer’ parts of LA it’s still virtually impossible to get good contractors. Everyone’s still busy busy busy.”
******
Anecdotally, this is also true in “nicer” neighborhoods of the Alt-A Bay Area, as many have decided not to buy in the move up (or down) market, but have instead hunkered down with a re-model effort.
When I ask why, it’s the “I couldn’t buy the same house today - never mind a more expensive one!”
Unless house prices drop quickly in the next couple years, this could go on for a long time.
Well that’s just great news. We’ll have more people taking perfectly fine homes and making them too big, too fancy and even more expensive.
plysat - I think it would be useful if you could report back here about what it is, exactly, that they are busy at.
Those bottoms don’t scratch themselves, you know.
not a clue, all I know is my buddy, who lives in the “bird streets” above Sunset, says he can’t find anyone who doesn’t give him a 3-4 week wait time. Concrete and interior finishing… Again, just an anecdote…
Bay Area still holding up fairly well. I am surprised as other parts of CA has tanked badly. Have seen some areas down 10% or so. Silicon Valley still doing ok.
Most people in silicon valley have been there for 20 years. It’s the areas that are over an hour commute away that will feel it first, those are the people “new” to the area.
If you bought 10 years ago and weren’t stupid enough to “take cash out of your home” you’re fine.
Actually, I believe that many $1M homes were bought in Silicon Valley using the Option ARM, which allowed 0-5% down — so I’m expecting the area to take a bath — it may take longer than everywhere else, but tank it will………..
Option ARM’s aren’t covered in the “plan”.
Hurray for that! It’s late in the day, so I may have to ask tomorrow — has anyone seen any limit as to the amount of mortgage to which this new dictate will apply? didn’t see $417K anywhere. Is it $1M? $5M? $20M?
If you bought 10 years ago and weren’t stupid enough to “take cash out of your home” you’re fine.
For Now. HA HA HA HA are we having fun yet?
–
The devil is in the details. Median price could be very misleading due to change in the mix (relatively more sales high-end areas as well as larger homes being sold).
Median Listing Price for SFH for Santa Clara Co. peaked at $898K in March 2006. Right now (today!) it is $675k!!!!!!
Date Med. SFH LP
03/18/06 $898,000
03/25/06 $898,000
04/01/06 $895,000
05/07/06 $882,000
06/04/06 $860,000
07/01/06 $849,000
08/05/06 $839,000
09/02/06 $819,000
09/30/06 $809,950
11/02/06 $799,000
12/02/06 $785,000
01/01/07 $760,000
02/03/07 $769,950
03/03/07 $779,888
03/31/07 $778,000
04/28/07 $769,900
06/02/07 $750,000
06/30/07 $749,000
08/04/07 $729,000
09/01/07 $719,000
09/30/07 $718,500
11/03/07 $699,000
12/01/07 $679,950
12/06/07 $675,000
Jas
Jas - thanks for the stats. That’s as consistent a downtrend as I’ve seen so far. I’m sorry that you seem to attract flames on the blog, some bordering on vitriolic. Perhaps because there are so many miles on my odometer, I’m satisfied with picking the best from what each poster writes and value that as a separate “data set.” Anyway, thanks for the numbers.
Let’s do the math, shall we?
(675/898)^(1/1.75)-1 = -15%
Down 15%.
Only 35% more (down) to go…
Jack, it’s already down more than 24%. You forgot that you put in that exponent with an aim to calculating an annual rate of depreciation (-15% per year is correct). If you are expecting only a 50% decline, half of it has already happened.
“‘You’re just giving the junkie more dope,’ says Christopher Whalen, managing partner with Institutional Risk Analytics, a consulting firm.”
“‘Some people who would qualify for this supposed assistance are probably better off defaulting,’ says Whalen. ‘The redefault rate for mortgages that are changed or modified is 30 to 40 percent. These banks continue to extract as much cash out of the borrower as they can, then they do default.’”
“If they paid an inflated price, can barely make the payments and now owe more than their house is worth, ‘Are we really helping them?’ he asks.”
______________________________________________________________
The end.
Would be interesting to have the Gov garnish wages and make the payments for them if FB’s take the bait.
Sorry, more likely the govt will garnish YOUR wages to make the payments for them. Welcome to Red America!
Welcome to Red America!
Courtesy of the Bush administration and the GOP.
If only John Edwards was in charge, there would be no bailout. LOL
Keep drinking the Kool-Aid
‘Welcome to Red America!’
If this bailout scheme is even moderately applicable, the secondary markets will completely lose interest in any loan other than fixed with 80% LTV. This will remove 70% of potential buyers from the pool in California at a time when inventories are at an all time high and send house prices plummeting even faster than the current 2%/month decline. This, in turn, will spark MORE foreclosures than were delayed by the ill conceived bail out!
Extending the crash will also INTENSIFY it. Also, somehow the part about the taxpayers footing the bill won’t come out until after the election and the republicans will somehow rewrite history to make it the fault of whomever wins in 2008. I love it.
“Welcome to Red America!”
Be glad it isn’t a Blue America, a quote from Hillary Clinton.
Sen. Hillary Clinton (D., N.Y.) yesterday addressed the Nasdaq and said of the Paulson plan: “Although the administration is finally giving the foreclosure crisis the attention it deserves, it seems that President Bush is going to give struggling homeowners far less than they need.”
I believe her plan called for foreclosures to stop for the next five years. Imagine what these people would do if they knew the bank couldn’t touch them for five years.
–
Did I misread somewhere about the limited govt., especially, the limited federal govt., being the cornerstone of the founding principles?
Jas
That’s why the government is designed for gridlock. People in power are not naturally prone to limit themselves.
I’d also expect that someone out there is gearing up to bring “da plan” to court. I can’t image that all these upper level talks (and that’s all they are at this point) about changing mortgages is going to go down without getting some lawyers involved.
At last their hypocrisy is exposed – that is; the current crop of “neo-con” elites who’ve relentlessly preached the supremacy of markets as the best arbitrator of scarce resources. The most miraculous thing that occurred today is that they have suddenly reversed their course and blasphemed their “free market” religion. Government is now the only force that can prevent competing market forces from reeking havoc on themselves, the market, the economy and their “innocent” victims. Mark your calendars - Dec 6th, 2007 the day the Neo-Cons surrendered to save their political a$$ets.
“Instead, many people are losing their homes because of interest-rate resets or because they have mortgages they could not afford”
Which is it?
“Several spec-home contractors have stopped new construction altogether because the market is so congested”
GOOD!
BAD!
builders should continue to build. Built until everyone gets a house for dirt cheap.
One of my wish is that, after this whole thing collapse, house will become a commodity, and people on average pay 10 to 15% of their take home pay. Imagine that!
Wishful thinking….maybe not
Cinch
I swear they (press) read this blog. I read tons of material, and I’ve never seen the likes of such plagiarism!
Imitation is the best form of flattery…smile for the camera…Ben!
Sasssssssy!
Leigh
I’m pretty sure one of the tenets of the plan is that the house has to be worth more than the mortgage.
Question.
Let’s say buyer according to any of these government plans pays at lower introductory payment which really never covers much of loan principle. Could a family getting their rate fixed find at end of 5 years if they can last that long see their lender has added a balloon payment of 5 years worth of principle to original loan.
Or for certain original loan is now 5 years higher than it was when they first got it and they won’t be much better off even if property values do go up in next five years. which they won’t.
Just a thought.
I love how everyone just assumes this plan is a given. We don’t even know how investors are going to react to our new socialistic plan. Who to say it won’t be a massive F-U! We know one thing, their reaction will be a big F-U to lending any more money. Another thing is that if you look at the plan, only a sliver of folks are going to be affected. Even if was a larger portion, would keeping people in their homes make home prices recover? Foreclosures obviously are helping the market plunge quicker, but even without them the market would plunge. Do you remember that little thing called affordability? Without easy money, the market will reach it’s proper equilibrium again. It’s just a question of time.
Wells has already sent out a press release that they are on board.
For what? Is Wells on board to make easy money available for people to start buying again? Not a chance. So what if Wells decides to loose some money by keeping a few folks in homes that they can’t afford, that won’t appreciate, and that they’ll walk away from once they see that the “plan” really did nothing but keep them in a painful situation. Yesterdays easy money is gone, and it’s about to get worse. What investor in CDO’s or any other debt instrument would want to touch anything in the States right now? Bye-bye mortgage industry!
Wells must think that by being first to jump in they would be first to receive government assistance if the Opies (John Edwards’) of this world get their way. I’m not saying that will happen but you certainly can bet Wells is hoping that the Federal Government will start handing out Krugerrands to all of the scumbag bankers. This is not altruism. This is pragmatism.
Let’s see what Gross at PIMCO has to say. Sounds like he has a bunch of CDOs. Freezing the interest rate reduces the value of the paper (tranche). French for slice.Good lunch PIMCO.
‘I love how everyone just assumes this plan is a given.’
Right, for days I’ve posted quotes, stats, explainations bringing up all kinds of questions. And not only that, these companies have been doing loan mods for months. But let some politician get involved and all of a sudden its cry-baby time. ‘Oh, there’s a mean FB under my bed, make him go away. I want my dolly (and free health care).’ Geeze.
I hear ya Ben. WAKE UP PEOPLE! Think it through.
Human nature being what it is — many of us are waiting for prices to fall before buying, so inherent in this bailout is the fear that prices just stabilized for 5 years.
OK, its irrational, but again its human nature……..
I’m at least somewhat awake. But I can’t think the plan through. It makes little or no sense, unless it either is meant to be a band-aide on a gunshot wound, or there is more to it than meets the eye, such as measures to ensure that prices don’t correct back to fundamental market equilibrium at affordable price levels.
Everyone knows that deflation is to BB as Kryptonite is to Superman, so I am guessing there might be some other politically-unpalatable (and hence unannounced) provisions to somehow offset the strong fundamental pull of housing price deflation on the rest of the economy. I have no idea what way, shape or form these would take — I am just aware of the political imperative to make sure that real estate starts always going up again if at all possible.
Bill Gross of PIMCO wants low rates to inflate housing again. Werid that a bond guy wants inflation ?
“Bill Gross of PIMCO wants low rates to inflate housing again. Werid that a bond guy wants inflation ?”
And to think, there were actually a few people on this blog a few months ago who idolized Bill Gross. Told ya he was a fraud!
Who freezes rates? Remember the thing in Cleveland recently where Deutsebank couldn’t prove they held title on the properties, they’d been sliced and diced so many times. How do you freeze the rates on mortgages that have been SIV’d across the planet? It’s all window dressing designed to make the mob perceive something is being done. The avalanche is rolling, anything they try to throw in its way will be pummeled.
The problem is, if people do not make let their voices be heard, Congress and the next President will institute a taxpayer funded bailout to save their banker buddies. Just because something is stupid and unworkable does not mean that the government will not do it. The recent illegal immigrant amnesty deal was only defeated because people flooded their government representatives with faxes, letters, emails, and phone calls. Polls showed that 80% of Americans are against amnesty, yet Congress was almost able to ram it down our throats.
Polls showed that 80% of Americans are against amnesty, yet Congress was almost able to ram it down our throats.
They were but now it’s DOA. That issue was refreshing and a positive sign to me that our democracy was still functional. It will probably have to happen again in order to make it clear that we’re not interested in bailing out investment bankers and flippers.
Democracy by definition is messy and requires effort by it’s citizens - the moment when Congress doesn’t respond angry letters is the one that will worry me.
http://www.numbersusa.com/index
The sheeple bitched and moaned about the Establishment’s proposed amnesty for illegals, but the people who actually DID something about it - and defeated the measure - were activists like Roy Beck of NumbersUSA, whose grassroots organization routed the huge pro-immigration lobby - this time. Even with this group, only a tiny minority - 8% - actually put their money where their mouth is. Until America’s productive, and dwindling, middle and working classes get off their backsides and start actively supporting people like Roy Beck, we are going to continue to face out-of-control immigration.
I know this is OT, but for many years France had a wide open door policy on immigration. These people are now rioting and firing shotguns at the French police. And there is nowhere to send these people, since they are now second gen and French citizens.
France has guns?
It is really apparent the more you read about this plan, the more you realize that it really is a fraud that will amount to nothing.
http://www.nytimes.com/2007/12/07/business/07mortgage.html?hp
“Talk about moral hazard,” remarked Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee. “We’ve all told people, don’t go any more deeply into debt. Now we’re saying that people who go more deeply into debt will have an advantage over people who don’t go more deeply into debt.”
Some Wall Street analysts were equally unenthusiastic. “This plan only really amounts to a set of recommendations for lenders that is sure to meet some resistance from investors” in the mortgage-backed securities, wrote Paul Ashworth, an economist at Capital Economics.
Indeed, there were rumblings of rebellion among some institutional investors. “Why would anybody in his right financial mind agree to a five-year price freeze, especially when we’re staring in the face of possible inflation?” asked Roger W. Kirby, managing partner at Kirby McInerney, which has represented investors in class-action lawsuits over securities. “Mr. Paulson has overestimated the generosity of people on Wall Street.”
On another note what has happened to CNBC? From what I could see today they couldn’t find anyone who was against this idiotic idea. Their main commentators have been doing nothing but calling for Fed Rate cuts and bailouts of one sort of another for months. Is there any one on that station that believes in free markets any more?
I want my dolly (and free health care).
A pony. You forgot a pony.
I’d like to slow the process down, after giving this considerable thought. Yes, I’m impatient to buy a house, at a good price. But I don’t want the economy to go bad so quickly that everything goes to hell along with it. I mean, I”m going to need some financing myself, unless I buy in some area that costs less than $200k.
This plan is just going to squeeze a little more juice out of the really, really stupid ones. Kind of like the lottery ticket scam.
I like to think of the lotto as a voluntary tax system paralleling the existing state income tax. So if you do not think you paid enough state income tax then you can always buy lotto tickets to “pay your fair share”.
What no cash out refinancing on the rate freeze ? But its Christmas and I never learned how to read.
Hello Ex…
I’ve been wrong more times than I care to count…so take it for what it’s worth…
Much to LARGE.
They (govt, bankers, investors…think SIVs) cannot come to a consensus.
As Sir Hoz pointedly says, “200 years of contractual law” wiped out.
Again, this is the motherlode.
Time (to search each record), money to fund said ridiculously unqualified home borrower, and qualified brainiacs to sort this out?
These…er…people, with agendas of their own, refuse to believe that the sucking sound they are hearing is the air in their ears is the same air competing with the air trying to get out of da butts, for the said are in the same place.
Madness, sheer madness I say!
Ya just can’t make this stuff up!
Leigh
Forgot to say “rant off”
Some politicians want to include a provision in the law that would prohibit the investors in the junk from suing.
Peacefully, I say, consensus?
Leigh
Yea, it’s going to be interesting to see what the terms of the loans are…it’s also going to be interesting to see if Congress raises the FHA limits. I doubt they go to a million as Bernarke suggested but I can see 750k. If Bernarke drops the rate by half a point and Congress raise the FHA limit. It’s going to be interesting to see how this all pans out.
Your still going to need 20%+ down, have a DTI of 38% or below, fully qualify with REAL income, have additional money in the bank for reserves (we’re talking 6 months PITI), and FICO scores over 680. Now, I’ve just described about 2% of the population. The only way you increase that figure is by adhusting home prices down to fundamentally acceptable levels. We’ve got a long way to go.
I’m sorry, a correction is needed. Due to current developments, expect a 50% downpayment minimum.
Right now I am considering making a loan to an investor who is putting down only 23%. It would be 10% for 10 years; in other words, a speedy amortization has an effect similar to asking a greater downpayment. By the end of the third year, the sum of the actual payments is nearly half the original loan amount (although the loan balance remains much higher than that). Thus, depreciation would have to be very rapid to hurt me as lender.
Um, no. With FHA all you need is an appraiser who will say that the house is worth 3% more than the mortgage. FHA only requires 3% down and the seller can “give” you that.
And many of these Fbs are underwater. It won’t appraise.
Ben, If FHA is involved I wouldn’t bank on that appraisal theory especially if certain FB’s are classified as “victims” with special needs.
LOL. You think the appraisals that follow won’t be rigged too? The Wall Street Gangsters want to dump the bad loans. They don’t care how it happens. All these “requirements” will be relaxed, and “special” appraisers will be used to determine the “future” value of the homes. They will get appraised. Trust me.
‘ Trust me.’
Yeah, sure. You say it, and it’s so.
“You think the appraisals that follow won’t be rigged too?”
And that’s just it, isn’t. It’s come to everyone understanding that this house of cards is a complete sham. We all know it’s a fraud. So, question is how does this nation survive on the road it’s on. It doesn’t, and history proves it. If it plays out like some of you hand wringers fear, we all get a big dose of Joshua tree. Although, I might be spared because if it comes to that i’ll find another corner of the world to live in. Good luck with that socialism.
No investor will believe the appraisals it will have to be funded by the Government and I think this government is broke? FNMA and FMAC sure don’t sound too healthy. Will cash rich foriegn buyers keep lending if the government changes the interest rate they expected ? No.
Watch and learn. The fix is in.
‘Watch and learn. The fix is in.’
Did you find your Dolly?
cactus-
http://tinyurl.com/3dl7ho
expect more of the same to fix that little problem you speak of
No, I don’t know if I’m still on the big drop wagon. A drop yes, big… eh maybe not. Remember who we are dealing with here “FHA”. If FHA is truly going to be involved that’s a significant development. I hate to diagree with you and Ben. But what exactly is “FHA Secured” that Bush mentioned. As you know dp and reserves can be met with a gift letter, I’m sure you’ve gotten a few gardners approved with a DL and a few bank statements long before the mania occured. Watching the congressional hearings so far on this new and approved FHA I haven’t heard anything in regard to 20%. But I have heard plenty of 0% and 3% down. If they take the Title 1 approach to appraisals in regards to all the new “victims”. You have a floor, confidence is restored within a short period of time and the party begins all over. Not in a mania way but back to normalcy. Especially if Bernarke drops .50 on the 11th. I keyed in on this watching some insider connected Mortgage Bankers who you know are primarily responsible for getting the FHA loan product to market. They were licking their chops as only someone who has made a lot of money doing FHA loans can. They can make their money on the back, as you know they don’t have to disclose YSP.
You shuffle enough under this new FHA program it may be a win for the big guys. The MBS holders are muffled because instead of losing 30% or more on their holding they are getting yield untill they are paid off. You also have a situation where Wall Street or Banks that are holding won’t get innundated any further with foreclosures allowing them to sell off for minor discounts to the Carlton Sheets junkies instead of a fire sale. Combine all that with it being an election year. Where the need to please is high…
I’m just saying…it’s going to be interesting to watch going forward
“Not in a mania way but back to normalcy”
Dude, you just said it all in that little statement. We have to get back to normalcy. Economies are like nature. Eventually, you will attain balance. And history proves that. We can argue this BS forever, but the bottom line is that affordability will return to healthy and acceptable levels. It has to. Someone on this thread said that homes in Fresno should be priced at 130-150K, and they will be. Unless folks in the AG areas start doubling and tripling their income, housing will return to were it should be. You can’t ask for a return to normalcy when homes are still priced far beyond median incomes. The only other outcome is a destruction of our economy and the nation as we know it.
Really, there is two choices only in this mess. The govt lets the free market work this out, we have some pain but recover, or, the govt intervenes and destroys capitalism as we know it. There is no third solution where the PTB re-inflate a dead asset bubble. That’s not the way this one plays out. If our govt stays on the path it’s currently taking, you may want to consider citizenship in another domain, cause this one is screwed and absolutely no one wins!
God damn, its like you are talking about rape in cold clinical terms.
Who are you and what have you done with Ben Jones??????
After all this, Ben, you think appraisers are honest?
“You can’t ask for a return to normalcy when homes are still priced far beyond medium incomes.”
This “normalcy” you speak of will be reduced in price if a recession reduces medium incomes.
It very well could result that prices of houses go WAY below the trendline.
It won’t be long before the newspapers and Oprah and MSM pick up on the fact that this plan does nothing for the FB who is struggling with an upside down mortgage as prices fall further and price recovery is unforeseeable.
They will also realize that in 5 years, their new rate could be.. what.. 14% or more? Is this something to struggle and hang in there for ?
At that point most of the very few who qualify will be convinced the best strategy is to mail in the keys. Nothing is stopping them.
Who is helped by the plan, who is not, who is a bagholder, etc., will be moot points if the FBs don’t participate.
Appraisers are being forced to be realistic. They are an industry, you know.
The only parties that are “forcing” appraisers to be honest are the parties that find themselves holding the credit risk bag. In the case of an FHA insured mortgage, the bag holder is FHA. Do you have any reason to believe that FHA will be “forcing” appraisers to be honest?
They’re already talking about lowering the down payments for FHA from a paltry 3% to 0%. Should a person who is unable to save 3% down for a house be able to borrow hundreds of thousands of dollars insured by US taxpayers?
The only thing these “housing” programs are doing is making houses more expensive and shifting the risk of mortgages onto taxpayers. Get rid of FHA/Fannie/Freddie and anything else that puts taxpayers at risk for the benefit of the REIC. I’m sick of subsidizing these billionaires.
Yea, Ex you know I understand what you and Ben are saying and deep down I want to agree… I’m all for letting the free market reign but that’s not what was sold to John Q. Public today.
The mere mention of F.H.A. sent my warning system into red alert. I think the public is being sold a new “normalcy”. It seems the payback for the sins of Wall Street was placed squarely on the back of the taxpayer today. But we will see, hopefully you and Ben are right. After reading that piece about the hotshot in the boiler room that txchick posted below who’s probably feeding off an ad budget that would probably finance a small country. You realize the ramification of just how much bad paper has been sold and to whom. There’s too much at risk. Too much off the book accounting by Wall Street. The losses would be too huge and too widespread. No politico has the stomach for that. There’s no other play for the talking heads but too socialize the loss, and it seems on some levels John Q. Public is asking for it, as it has been said a slippery slope indeed. We will see what the days ahead will bring. Let’s hope I’m wrong.
Oh yea, and I agree mortgage brokering as you and I know it is probably toast. But the Mortgage banker will survive and thrive from this.
Hi mort_fin!
Credit risk bag = SIVs, CDOs, MBS, ASMS…blah
The BIG loosers. ok.
FHA = $417 (that’s all I can see in my crystal ball).
Appraisers = I dont’ want to go to jail, especially now that I have a free get out of jail card. (and I’m regulated, even though I turned a blind eye, because those mean brokers made me do it!)
Appraisers = Hard comps + many hours of work = a few good men to get the job done! (or women, pardon).
Yeah, it’s gonna be clean, don’t cha know it! Remember, E-appaiser (whatever) is no longer in vogue!
My couple of cents!
Leigh
..parties that are “forcing” appraisers to be honest..
then there’s the law .. FBI seems to be pretty indignant about mortgage fraud these days..
Of course if this is one huge gubbermint conspiracy to pillage the country and enslave citizens for the sake of the evil corporatists, the FBI, other law enforcement and the Courts are certainly in on the scam.. and all will turn a blind eye.. right?
Why would Bernanke bother raising the FHA limit to $750K or even above $417K if a vanishingly small percentage of the populace qualifies going forward for those size loans? It seems pointless to make rules that apply to almost nobody.
The old metric (prior to 2000) was that for every mile from the Bay Area region into the Central Valley, median home prices dropped $1,000. Is the reverse true? Namely that with Central Valley prices in basic free-fall and heading for a less-than-200K median, will BA prices in time fall to around 400K median? Personally, I think it’s in the bag. (Thank you, Gary)
Median prices in the Central Valley, especially around Fresno and Merced counties should be no more than $120k to $130k.
I truly wonder, in this day and age, how many young couples could save $25,000 for a 20 percent downpayment (hopefully before they reach retirement age). It seems the system is gamed to get young people in debt as soon as possible, especially via student loans, so that they literally never are “in the black.”
$25K is not so hard to save in maybe 5 years or so.. The question is are they willing to “suffer” the saver’s lifestyle for 5 years.. Few do it.
she asked her to drop the price to $417,000, or the conforming loan limit for federally sponsored loans, and open up the East Oakland property to nearly every buyer on the market.”
“‘A lot of people can’t get approved for a jumbo loan,’ said Fuller, an agent in Richmond. ‘So now the house is competitively priced.’”
Somehow her logic is lost on me!!! I guess that’s why she sells RE. Worst of all, she gets the right to vote.
An excellent illustration of how these “innocent victims” have all learned to play the system like a violin. And how the “homeownership”-promoting GSEs have created a monster moral hazard. And why Congress should lower the limit (to say, no more than 3X median area incomes), not raise it.
http://sfbay.craigslist.org/sby/rfs/496447779.html
3032 Vin Grande Ct, San Jose, CA (Santa Clara County)
This smells fishy. Also, a question for the experts. Although Zillow shows only a couple of “sale” transactions in about 10 years, Property shark shows a ton of activity. Is there any magic accounting involved?
Wait a couple of years, price will come down to $500k. Interest rates will drop anyway c/o the Feds, so why pay their 6%?
“He said builders already have cut prices by about 25 percent and will continue to struggle with unsold inventory, high rates of cancelled sales and a tightening of mortgage lending practices”
Ha! You think you’ve seen tight, you ain’t seen nothing yet. The message that being sent with the latest “plan” is that contractual agreements mean squat! Yeah, that’ll loosen money up. Noboby get’s a loan in ‘08! Bush just found a quicker way to the bottom.
I just watched Paulson on the Lehrer report. (I’m in PA now.) All you westerners should watch too, when it comes on in your area. Paulson was careful to say that the executive branch will do nothing to make ex-post-facto alterations to existing mortgage contracts and that the whole business had to do with servicers and investors being unable to handle the volume of loan-modification appications on a case-by-case basis. He also said there is a bill in Congress to amend the bankruptcy law; another commentator explained that the bill in Congress would give a BK judge the authority to force modification of an existing mortgage contract.
And then the lender raises it middle finger to the BK judge and everyone ends up back in court. Great solution!!
Yeah baby, yeah!
Great catch,
Leigh
Nope - the lender ends up in contempt of court and is cooling their heels in the custody of the US Marshals until they come back in and say “Yes Judge” and do exactly as ordered.
the whole business had to do with servicers and investors being unable to handle the volume of loan-modification appications on a case-by-case basis
There are many days when I have too much to do. Could I get the government’s help on that?
BK judge the authority to force modification of an existing mortgage contract.
Nice one - hand the issue off to the judges. It’s “activism” when Congress/President doesn’t agree with judiciary system but it seems like a handy place to send crap no one wants to deal with.
“There are many days when I have too much to do. Could I get the government’s help on that?”
*****
Yes - great idea.
I was so busy at the end of last month that all kinds of things could have slipped; it would have been nice to have the government arrange for me to meet my obligations another time.
Preferably for five years.
“the whole business had to do with servicers and investors being unable to handle the volume of loan-modification appications on a case-by-case basis”
Did he describe how he was going to determine if a family can afford a reset, other than using a case by case basis? The plan is either a front for something else going on (FHA expansion, local government bailouts with tax free bonds), or a complete crock…I’m hoping for the “crock” option.
He has a little problem with altering existing contracts–the U.S. Constitution. But note that the White House is violating the antitrust laws by helping lenders keep prices artificially high.
– Are we emulating Japan? Starting around 1990, Japanese banks kept bad loans on their books, which prevented them from making new loans. This led to a decadelong economic malaise.
“The concept of forcing (U.S.) banks to keep bad loans on their books violates every precept of regulation in American banking. Bad loans must be taken off the books to allow good loans to be made. Forcing banks to keep bad, low-return loans on the books is something that the banking regulators have never done,” writes Dick Bove, a bank analyst with Punk Ziegel. “Bad loans must go bad.”
Good point…
No, excellent point. You are watching the breakdown of system that used to work when capitalism and free markets ruled the day. Now the system is hosed! I hope you’re just selling homes, income, and not working on the lending side of things, because the lending industry is doomed.
LOL… Semi Retired, mostly small cap lending and would rather volunteer for the joshua tree treatment before I went back to selling houses and getting between the Tweedle Dee’s and Tweedle Dum’s of the world. Although getting back into the R.E.O. arena is temping. I’m getting pulled in on home lending side, it’s getting depressing already and I’m thinking about shutting down and taking the semi off the retired and go work on my golf game.
You’re a golfer?……..okay, I’ll take the gloves off.
Are we emulating Japan? yes it looks like it doesn’t it ?
afaik, nobody is forcing banks to keep bad loans..
Nobody, except that if they acknowledged that the market value of a lot of this stuff is basically zero, then they would have to admit that they (the banks) are already insolvent.
ok.. well, should banks be forced to offload bad loans? Forced to keep them?
Which is the worse of the two evils?
True enough…but I think they are being encouraged to do so by a silent hand.
Suppose we stay this silent hand and let banks go under.. or even force the issue.
What is the downside of bank insolvency.. i’m afraid that i can’t picture it…
“What is the downside of bank insolvency.. i’m afraid that i can’t picture it…”
I’ll get back to you on that question after I finish cleaning my guns…
Ha!
Keep mine shiny! Like new! My babies!
Got gun (or Neil’s popcorn)?
Yeeeeeeeeees!
Leigh
“SOMETIMES YOU LOSE MONEY IN SPECULATION! It’s no different than the internet slaughter that took place in 2000 - a game of hot potato with the last sucker holding the bag.’”
Gosh I love that hot potato qoute!
Let us all recall that people weren’t investing in RE, they were SPECULATING.
Investing = To commit (money or capital) in order to gain a financial return. (I guess 100% loans are not investments)
Speculating = to engage in any business transaction involving considerable risk or the chance of large gains, esp. to buy and sell commodities, stocks, etc., in the expectation of a quick or very large profit.
Now do we see the difference?
Where can I get a Christopher Thornberg Action Figure? He’s my hero!
Let me know if they are selling his action figures
P.S: As an alumni of Clemson University, makes me even prouder. (Thornberg spent some time at Clemson, per his vitae)
I want a “housing bubble tee shirt” I should check on Ebay and if I can’t find one maybe I can make one. I just need to make a stencil I guess. Could be fun to wear it to Home Depot and open houses.
If Ben doesn’t mind, we should all get “Housing Bubble Blog” tee shirts (slightly different from just “Housing Bubble”) — encouraging the world to join our daily read/rant.
Graphics illustrator at you free disposal~although, Kunabear might want the gig! (and darn qualified!)
Amazing President Bush! He appoints the founder of Ameriquest as the ambassador to the Netherlands. Has Alan Greenspan push interest rates too low causing a housing bubble. To top it off, now trying to help Wall Street and the bankers limit losses on their balance sheets with this plan.
All of Wall Street and the Big Banks should salute this great man. It helps to have friends in high places. Don’t worry, RE market forces will prevail over this dumb plan. This make sales volume drop even more.
“The best you can do for your family is to call 1-800-995- HOPE,” Bush said. “That is 1-800-995-H-O-P-E.”
Within minutes, the White House press office issued a correction. The number is 1-888-995-HOPE. CNN reported that the 800-number connects to the Freedom Christian Academy in Texas.
Bloomberg (Benevolent Politics)
“If they paid an inflated price, can barely make the payments and now owe more than their house is worth, ‘Are we really helping them?’ he asks.”
Chris Whalen (Reality)
OMG!!
(went out today, and had fun too)!
OMG!! NO HE DIDN’T!!!!!!
“The best you can do for your family is to call 1-800-995- HOPE,’’ Bush said. “That is 1-800-995-H-O-P-E.’’
Within minutes, the White House press office issued a correction. The number is 1-888-995-HOPE. CNN reported that the 800-number connects to the Freedom Christian Academy in Texas.”
Good night Irene!
OK. Now this is why I say it’s too LARGE.
First, his buttness doesn’t even look at the teleprompter (or can’t read, worse yet, employs one…my goose would have been cooked if I made that kind of mistake…omg).
OMG…shut my face…I’m done.
You just can’t MAKE this stuff up!
Leigh
On the surface it looks like things are holding up well here in Salinas. But I took an hour and a half around the neighborhood yesterday and noticed:
1) In 2004 all the lawns were green and well manicured. Today most (70%) look like they are not watered on a regular schedule, are turning brown, and growing weeds.
2) In 2004 any SFH going on the rental market wouldn’t last an hour especially if it had 4-5 bedrooms (accommodate multifamily). Yesterday I saw three one of which has been listed for over three months.
3) Houses with for sale signs (RE) have been removed for the holiday season and probably in hopes that 2008 will be better, but more for sale by owner signs and more for rent signs.
4) Vacant houses sitting growing weeds waiting out foreclosure. On house that went to auction last month had a crew in cleaning, patching and painting.
5) One house up for sale 2 years ago is still for sale with a different RE office once again. Gone are the Mercedes, BMW’s that used to be parked in the driveway. Three weeks ago I saw a moving van in the driveway. Now a Chev pickup is parked in the driveway. But have no fear, they aren’t ‘just going to give it away’.
Salinas is still holding up! With Tracy, Modesto and other cow towns hit badly, surprised that Salinas is still holding up.
The lettuce industry is keeping prices up- eat more salad!
Salinas is close to Monterey. That’s why it’s still holding up
A year ago, there were zero homes/condos for sale for under $400k in San Jose. Go look at the listings now…..admittedly, not houses, but even condos are a start.
Morro Bay same thing. There’s a small condo for $225K, seller getting restive as it’s already fallen out of escrow twice. And several other listings under $400K.
From what I’ve seen the Salinas prices have dropped pretty sharply. A lot of stuff in North Salinas used to be in the high $600K/$700K range at the peak of the bubble is now going for mid-$500K range. I’ve seen a few under $500K, and one at $400K.
“Gripped by drought, America’s West is rethinking how it uses water”
“A FEW warning signs and a rickety pier are all that remain of Overton Beach’s once-busy lakeside marina. The boats have been gone since February, towed more than 30 miles (50km) to where they are in less danger of running aground. Fish-cleaning stations are now hundreds of yards from the receding shoreline. At the local rangers’ station, a placard describes the Lost City, an ancient Indian settlement drowned when the Hoover Dam was built in the 1930s. That city is no longer lost: so low has the surface of Lake Mead fallen that it is re-emerging from the water.”
http://www.economist.com/world/na/displaystory.cfm?story_id=10259055
““Still, Dick Gaylord told an audience at the Visalia Convention Center that he’s ‘never been more confident’ in the market. ‘Real estate has always been the best way Americans built wealth and it will always be,’ Gaylord said.””
How can this be said to an audience in the Central Valley while keeping a straight face? Seriously folks- the bubble is lofty in Socal and the Bay Area, but it was just insane what happened to prices in places like Visalia, Fresno, Bakersfield, Merced, etc. These are places where people buy homes for shelter, not an investment. What favor does it do for anyone to maintain a market where starter homes go for $200k and up- way up. This in a place where the average Joe (or Juan) pulls in $35k a year.
As far as i’m concerned…
Every buyer of a new home in past 4 years in the Central Valley, is a potential flight risk…
We keep hearing about Dick Gaylord on this blog. I’m convinced that childhood torment, due to his name, have led him to hate society and aim to torment as many people as possible. e.g., he’s probably a living parody of a bad “Batman villan.”
Got popcorn?
Neil
Since I’m a Batman fan, love the comic books, he could possibly be the alter ego of Dick Grayson.
Since I’m a Batman fan, love the comic books, Dick Grayson’s alter ego must be Dick Gaylord.
Sorry if this turns out to be a double post.
‘We keep hearing about Dick Gaylord on this blog.’
Even his parents hated him.
“Still, Dick Gaylord told an audience at the Visalia Convention Center that he’s ‘never been more confident’ in the market. ‘Real estate has always been the best way Americans built wealth and it will always be,’ Gaylord said.”
Is Dick out there “snapping up” houses and making full price offers so he doesn’t get out bid ?
Instead of trying to write a novel, to all you hand wringers who are fretting over the new “plan”, please explain why you’re worried that this will do anything to turn the housing demise around. As you post, we’ll shoot down your theories and help you appreciate that your worries are phantoms and nothing more. Again, why do you think this plan will change anything?………I’m waiting…….
FDR sure made hay with all his “programs” he didn’t just stop with one failed plan either, he kept failing. The worry is that the “plan” and the subsequent sequels could make this thing drag on for a decade, and bankrupt multiple levels of government.
Never happen, and FDR didn’t tackle a problem like this one. They were different times back then. People were willing to sacrifice for the good of others. Not so today.
Not to mention the fact that his “greatest” plan is due to explode here fairly soon. Some generation or another ends up paying the price for socialist ponzi schemes, looks like were the lucky winners this time. Dammit, I had 80 years to avoid a depression but here it comes, right in the middle of my would-be prime earning years…
It’s not that they will save the housing bubble that scares me. I fear that they will destroy the USD and the entire economy in a failed attempt to resuce the housing bubble. Look at what Heli-Ben has done to the USD already. FHLB/Fannie/Freddie are in danger of collapse now from buying tons of toxic crap from DoubleWide and CitiWank et al.
OK, I’ll bite. The plan pisses me off for a few reasons. One, it is a complete waste of time, but will prolong the agony by giving some false hope. And I’m not just talking about FBs. Secondly, its another stupid attempt to game and twist the system. Give it up already and let the bubble die the ugly death it so richly deserves. Third, Paulson is a waste of flesh and he should be doing a lot more to shore up the economy and the dollar. Instead, he’s putting together some lameass plan that will destroy any shred of confidence that’s left. In other words, he’s trying to basically do a bogus Goldman Sachs type deal on the US. Paul O’Neil tried to tell shrub his economic policies and the Iraq war would be ruinous to the economy. As a result, he had to resign because he wouldn’t play along.
And what really pisses me off is evil, stupid people actually thinking they’re decent and bright and acting like they’ve come up with something that is in actuality a big dud.
It is a big dud. And as far as slow it down, I don’t think so. By keeping a few housed borrowers in their homes the govt has single handedly destroyed the lending industry. It was hosed before, now it’s ruined. If anyone here was planning on buying next year, you better have cash. Oh, and one more thing, wait ’til you see what this will do for rates on new loans in ‘08. It’s gonna be bad.
Man, with the nice run the home builders have put on recently and the coming lack of mortgage liquidity, I might have to buy back the puts I sold a bit ago!
OK ex, I get it now. Ignore my post from five minutes ago. I wasn’t thinking about the negative effects of the “bailout” on lending that would more than negate the psychological effects on sellers. Now I’m happy again. I think I’ll log off while I’m ahead. Thank you.
Stated much more eloquently than I ever could.
I think it will give FBs a new past time as they try to do anything to be able to fit into the mod window. It’ll look something like the financial death spiral of twister.
The best part will be the ones who think they’ll late pay on a few CCs to bring down their score enough to qualify, which will cause their CC rates to reset. This will wipe out any gains from the bailout mod as they pay higher finance charges on everything else they default anyways.
I’m not going to go look for a house for sale until a comfortable time after those five years. I figure housing values will continue to fall the next few years. If they stay flat, sales will certainly stay flat until wages catch up. At this rate it will be 30 years before houses revert to the proper Shiller value. I am betting on home values to drop 50% from the 2006 peak by 2012. FBs bailed out by Bush will be stuck in houses worth half what they gambled on. They will be overpaying. I anticipate a $600,000 house sold in 2006 to be worth $300,000 in 2012. I think $500,000 will get me a $1,000,000 house in 2006 prices if I buy it in 2012. I want to avoid the riff raff and will go seek out a house selling for 1/6 of my net worth. There will probably not be a real estate bubble with the magnitude of the 2001-2007 period for another 50 years. So I won’t want to consider real estate an investment.
nnv, I am not worried that it will turn the housing bust around. I am worried that it will deprive me of the opportunity to make any new loans at all. Because I will NOT make any new loans at all, if I suspect that the contracts can be retroactively nullified. In a minor way, I could also be worried that the “plan” could encourage one or more of my borrowers to stop running scared. As I post very often, not a single one of them is late. This is in contrast to past years, when usually a few of them were late from time to time. My interpretation of their new-found promptness is, they’ve been reading in the newspaper about the waves of foreclosures, and they misinterpret this to mean I am anxious to take their lots and their trailers. I’m not; but I’m enjoying their punctilious new behavior, so I wouldn’t want them expecting any kind of loan modifications from a BK judge. A bunch of them have filed BK in the past with no effect at all on the secured debt (which I own).
A well founded fear. As I’ve already posted, such “plans” hose the lending industry.
My worry is that old slippery slope. Once this doesn’t work, what’s next. They’ve set the bar by suggesting to the public that the government, should, can and will fix this.
phantom worries:
I suppose that I would be pissed if I did not have access to the “teazer freezer” rate had I gong long the I did……perhaps my “30% down double Oh six vintage” 15% fixed at say 5.75% should be FROZEN at lets say 3.0% for another 5 YEARS…and IM MAKING DOUBLE PAYMENTS because Im not an idiot…..
now, explain why sanity should take a little break….its only 5 years….
thanks for coming out.
I got 100 sh FXP gettin sold tomorrow.
“gong long the I did”
thats bonghit for, “gone long, when I did”…
lol……..CSCO 27, DEC 7 double oh seven.
CSCO 34, FEB 12 double oh eight.
thats the last freebie.
The plan is lame. I worry the FED will lower interest rates as low as a few years ago 1%. War on savers part 2. But we will see.
“… why do you think this plan will change anything?……I’m waiting…..”
The plan won’t work in a practical manner but it might work in a psychological manner. It will look as if the government is “doing something”. This “doing something” will give hope to the FBs and will encourage them to hang on to their houses and keep up with the mortgage payments.
After it is revealed that the plan sucks then another plan will be discussed and it too will keep the FBs hope alive. And on and on it will go until enough time is bought and enough FB money is bled into the system to keep the system from total collapse.
Maybe.
I think that is indeed the philosophy. It might even work, if a substantial fraction of the loans we are talking about are self-amortizing. I have a few FB acquaintances in I/O ARMs (not “option”). If their resets were postponed, it would do nothing to prop up the system. What DOES help to prop up the system is that slowing down the rate of depreciation keeps the amortizing loans from becoming submerged as well.
Az_
Ah! The lightbulb moment.
Slowing down the rate of depreciation keeps the amortiziation going…effing brilliant.
I’m not being sarcastic, seriously, we need to send you to Washington!
Oh, but wait. That kind of common sense will fry their teeny brains.
Dang,
Leigh
The amortization of the loans will add FB skin to the game.
Even though the houses may be underwater the FBs nibbling away at the mortgage will give a psychological lift to their morale that they are making progress by building equity.
The rate on increase in value of this equity may lose ground to the rate of decline of the houses market value but this fact can be endured by the FB if they perceive that the bottom is near.
This is why I say the NAR and their MSM shills (at this point in the cycle, the downward slope part) are our friends; their constant positive spin of events give hope to the FBs and hope to the knifecatchers. This hope translates to money flowing into the system and will act to keep the system functioning.
How’s this, ex? Perhaps there were a bunch of house sellers who were planning to lower their prices, given that it’s December and they’ve been on the market for months. But then these idiots see the president talking about bailing out foreclosures, and the Dow industrials rising 400 points in two days as a result. They think, “see, things are going to get better in January.” No price reductions this month. I think it will prolong the agony. Now please argue with me - every counterargument improves my mood.
I don’t think most of us think this plan will work, but that isn’t the reason I am pissed about it. I see a government that doesn’t give a shit if people have health care. In fact, any time universal health care is mentioned the right-wingers play the “socialized medicine” card. These guys always preached the free market. And now they mobilize to assist people that gambled on real estate and lost?
I’m not worried it will work. I’m pissed these assclowns even tried. At least with Clinton, I can see a pattern. She was leading the charge for universal health care in 1993. I think she’s just wrong on this bailout issue. But to see the right-wingers coming up with this infuriates me.
Conservatives…my ass.
Also, don’t think for one second it stops here. Tax relief, credit relief. This is going to go on and on. How do I tell my kids to play by the rules when the asshole next door that drives a brand new car, has all the gadgets, and bought a house they cannot afford (with a shiny new fixed teaser rate) just got bailed by the government?
What do I tell them? Play by the rules? Save for a down payment?
And wait until the next speculative boom starts. You don’t think a lot of people are reading this shit and taking notes? It will probably even be a selling point for loan brokers. Don’t worry Mrs. Smith. You can afford this no doc, no down, suicide loan. Last time something bad happened the government fixed it. You are fine.
And don’t even get me started with unintended consequences.
Bottom line: don’t confuse our being pissed off with any expectation the plan to actually work.
“Dannice Fuller is a realistic real estate agent. Seeing that her client wanted a quick sale, she asked her to drop the price to $417,000, or the conforming loan limit for federally sponsored loans, and open up the East Oakland property to nearly every buyer on the market.”
Mason-Dixon Line for California Real Estate…
$417,000
“Mason-Dixon Line for California Real Estate…
$417,000″
Exactly. LOL! Look for a lot more homes in Cali at that figure.
Exactly. LOL! Look for a lot more homes in Cali at that figure.
LOL! But think about this, as that becomes the ‘Mason-Dixon’ line, more and more sellers will drop to 417k. Thus, as 3 bedroom homes crowd that level, the old 2 bedroom bungalos drop further. Then the 4 bedroom homes drop to 417k… then its the nice 4 bedroom homes…
‘The great squish down’ has begun.
Got popcorn?
Neil
That’s right Neil. I’ve been seeing beach-proximate listings of actual houses (not condos or 800-sf shacks) in the $450-$500K neighborhood, much lower than before. At $450K, someone with a decent downpayment can get Fannie or Freddie to cough up the rest. I am still in the wait-and-see mode, but I agree the medium-quality residences are now sporting prices that were limited a few years ago to PsOS.
I call it The Line in the Sand
“The UCLA forecast says the slowdown will be longer and more severe than it previously projected, in part because the housing slump is destroying more financial jobs than expected….”
Oh, my! Is that crow they’re eating?
Yeah, crow as in Brandon Lee, the pissed off Crow. Revenge is a muther…..
“Paz Knoke, owner of A Clean Sweep, said her home-cleaning company has seen a surge in business from foreclosed homes that are being prepared for sale. Since September, Knoke has cleaned nine foreclosed homes.”
WOW. I mean WOW. A real surge in business. Nine houses in 3 months. But then again maybe that translates into a nice profit of $3000 per house. Just how long does it take to clean a house?
“Just how long does it take to clean a house?”
Figure 2 hours for bathrooms and Kitchen. 2-3 hours for steam rug cleaning. Add another hour if the fridge needs cleaning. Add more time if things are being moved out of the house that were abandoned.
you forgot..cleaning the fecal matter off of the walls, the cat piss out of the hard wood floors, cleaning the mold out of everywhere, the piles of trash out of everywhere, the spit off of the windows, and so on..
I could see it taking 100 hours to get a trashed house clean.
A friend of mine recently called a “clean up after pets” company, because a member of his family had died and left a mess on the hands of a landlord. My friend thought he and his family should help with the clean-up, but the quote from the pets-clean company was … SIX thousand dollars for a 2BR apartment. Gosharootie. My friend told the landlord to keep the security deposit and the extra month’s rent but that he and the family felt that was enough.
“Still, Dick Gaylord told an audience at the Visalia Convention Center that he’s ‘never been more confident’ in the market.”
Don’t let it end like this. Tell them I said something.
~~ Pancho Villa, Mexican revolutionary, d. 1923
Just say no to placebo drugs…
“The Bush administration will unveil its methadone plan for the mortgage crisis today. Is this simply prolonging the pain?”
“‘You’re just giving the junkie more dope,’ says Christopher Whalen, managing partner with Institutional Risk Analytics, a consulting firm.”
OT- hey ex-nnvmtgbrkr this is for you
Reply to: sale-500442362@craigslist.org
Date: 2007-12-06, 5:43AM MST
2-3 1/2′ Joshua trees. Dug yesterday. Need planted ASAP. Call, don’t e-mail if you want one. They do not last long on the market. Hard to find.
Growing Toward the Light Landscapes, LLC
ROC lic#219622
Steven Kennard
1381 North Roadrunner Rd.
Apache Junction, AZ 85219
(602)541-1212
* Location: aj
* it’s NOT ok to contact this poster with services or other commercial interests
PostingID: 500442362
Wonder where he digs ‘em from. Prescott is pretty far from AJ.
“We interviewed one woman named Lolita Lierdo, who says her mortgage is worth $570,000, but she can only sell the house for $400,000. If the bank lets her do that, the IRS considers that $170,000 forgiven debt as income, which must be taxed. YIKES!”
“Don’t 1099 me, bro’! Aaaaggghhh—!!”
Can I interest you in our new taser-rate introductory painment plan?
don’t 1099 me, bro’
hahahahahahah, snort, hahahahah, snort..
damn, there goes another pair of Jockey’s…
Possibly the funniest comment I’ve ever read on this blog…
That would be funny. But I heard GB say today that he was working on changing that. Something about “when your losing your house, the last thing you need is a taxable event”
Well, if they did that then they may as well allow anyone who sells at a loss to write it off - even if the house is paid off.
“Long one of the fastest growing districts in the nation, the Elk Grove Unified School District may see a decline in enrollment next school year.”
Wash and repeat for most of our school districts in the Sacramento area, even prized Davis. Just like housing, school districts followed the “build it and they will come” model which failed them. There is this strange parasitic love triangle that goes something like this:
affordable housing > expanding school district > housing price inflation > contracting school district > housing price deflation… yada yada yada. Some people got out at the third step and did well and some are still in the game at the 6th step and hoping they can last long enough to ride the school funding merry-go-around again.
Also applicable to the “white” flight suburbs around LA. Affordable middle class housing is driving the middle class out of the northern LA suburbs. Our school, after many, many years of overcrowding is seeing declines in enrollment. Additionally, this past year is the first year in a long time that the district hasn’t done any new-hire teachers. The school is anticipating losing a position or two next year.
“‘The problem is there has been a tremendous appreciation [in property values] over the past five or 10 years and now people have a misperception of real estate as an investment,’ he said. ‘They think it’s a short-term investment and it’s not.’”
Correctomundo Dick!
Everybody is buried deep, long-term
“‘In previous housing downturns, we see an increase in foreclosures because people have lost their jobs,’ said Jerry Nickelsburg, an economist who wrote part of the UCLA forecast.” “Instead, many people are losing their homes because of interest-rate resets or because they have mortgages they could not afford, Nickelsburg said.”
Just wait until they start losing their jobs.
Yes. The economy outside wall street and real estate industry is doing ok, rates are low, etc. This is the best of times. The worst is around the bend. I am surprised how bad its getting so quickly, and the recession hasnt even hit yet. What a freaking mess.
So, Tim, I guess you believe the employment numbers. If so, I got some stuff I want to sell you.
I’m a cynic. I don’t believe anything I read or hear, especially if the drafter had an interest in the outcome, but I can tell you they will be higher next year. My wall street buddies are scared s*tless. Its madness right now.
The corporate profits have been in decline for two consecutive quarters.
The sales are up becuse there’s a lot of cheap credit is still floating around but the costs are up as well.
Diminishing profits will lead to layoffs and the subsequent rise in unemployment.
Whcih in turn will lead to a whole lot of more trouble …
It almost seems like the UCLA folks think that employers are just going to keep people on the payrolls for the sheer heck of it - for several years.
Wondering when the UCLA Anderson Forecast group will start laying people off!
Hard to find.
Harder to remove!
JUST CALLED the HOPE Number and gave them a piece of my mind!
I asked who is paying for this 888 number and employees - TAX PAYER FUNDED!
PAULSON IS A LIAR!
You call the real one, or the Christian school? I was gonna call both. Both sound fun.
LOL!
The real #. Some credit counseling in NJ (sounded like an Indian)
“Well I promised that damn, loan guy I would pay da bank like 8% and we signed the documents and cht, but Bush say i dont have to no mo. How do I get out of paying what I promised, I got other things I want do with my money? I love you guys. I cant decide on vegas or getting myself a second home, prices coming down you know.”
I am trying to call again, but I keep getting a voice mail.
If anyone gets through ask them about the $500 I lost in Vegas about 6 years ago. See if they will give that back to me.
My wife was asking me this morning if Hank and Hillary could see their way to freezing payments on her graduate student loans.
Please ask them about that, too.
Hank and Hilary? You mean Hank and GW.
I’m putting in a request for the $1.4 million education I got with the .com fiasco back in 2000/2001 (dumb is not any way to go through life).
“I’m putting in a request for the $1.4 million education I got with the .com fiasco back in 2000/2001 (dumb is not any way to go through life). ”
Hey, that should be my quote.
Keep calling. Even if it’s for 30 seconds, that’s 30 seconds they are not bailing out a FB.
‘Keep calling. Even if it’s for 30 seconds, that’s 30 seconds they are not bailing out a FB.’
Aaaah, like when OJ had that toll-free # for his bok or something a few years back. Media leaked out that folks should flood the phonelines for a denial-of-service overload.
–
“‘It’s the first time anyone of us can remember ‘declining enrollment’ being in our vocabulary…”
Next year people will have declining prices of overall goods and services in their vocabulary. I know, last time that happened was in 1955 and that too briefly. This time we will have long enough for people to remember and talk about. But for the Housing Bubble we might have had deflation during 2004. It was the housing related debt and spending that kept the CPI growing. Growth in the household debt is the most important variable in economic growth and inflation.
Jas
Just ran into a delightfully declining gasoline price (not that we haven’t seen that before) in Delaware
“‘I don’t think San Diego is immune at all,’ said James Hamilton, an economist at the University of California San Diego. ‘Because of the high home prices here, we’re quite vulnerable.’”
_____________________________________________________________
The most important thing to consider in regards to Tijuana-adjacent…
Before this bubble, houses in San Diego sold for around 2/3rds of what a comparable house in L.A. did.
This gave Diegans more whacks at their atm houses, which eventually became as expensive as the upstate models.
Add in the fact that a bushel-basket full of new homes and condos were built, and whadya got?
tick tick tick tick tick tick tick tick tick tick tick tick tick boom.
bada boom?
Please, can someone direct me to a single web page or article or even a hard copy article or statement by someone in the lending industry who is willing to admit that the one true and only way out of this mess is to first acknowledge the unsubstantiated difference between the average income vs. the median house price - which should (you’d think) allow for the acknowledgment by the general public that the only one true way out of this mess is for a massive correction in housing prices?
“HELLLO! Homeowners wanting to sell! Please lower your price or go peddle your crazy elsewhere.”
And, yes, I am speaking from the point of view of someone who earns over $100,000 a year and still cannot afford a decent house in SoCal.
This might help you some - it was posted earlier today:
“One final thought. How can any of this get repaired unless home values stabilize? And how will that happen? In Northern California, a household income of $90,000 per year could legitimately pay the minimum monthly payment on an Option ARM on a million home for the past several years. Most Option ARMs allowed zero to 5% down. Therefore, given the average income of the Bay Area, most families could buy that million dollar home. A home seller had a vast pool of available buyers.
Now, with all the exotic programs gone, a household income of $175,000 is needed to buy that same home, which is about 10% of the Bay Area households. And, inventories are up 500%. So, in a nutshell we have 90% fewer qualified buyers for five-times the number of homes. To get housing moving again in Northern California, either all the exotic programs must come back, everyone must get a 100% raise or home prices have to fall 50%. None, except the last sound remotely possible.”
http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
Thank you. That last paragraph, especially is what I’ve been trying to get straight in my head and explain to people for the last five years who still continue to ask my husband and I, “So, when are you guys going to buy?” Jeez. I’ve given up trying to explain to them what I myself didn’t bother to educate myself on until this year. Man, ignorance was bliss.
Thanks for the link.
And, yes, I am speaking from the point of view of someone who earns over $100,000 a year and still cannot afford a decent house in SoCal.
I wasn’t earning that much on bonds but now that interest rates are down and going lower I’m getting plowed.
I may be a sucker, but if a home came on the market here in West L.A. (Marina Del Rey) for 417K I’d snap it up.
Wow - I used to live at Marina and you couldn’t pay me to live there again. The traffic is miserable and they’re ruining it with all the upscale BS. Used to take nearly 40 mins to get to UCLA from there.
Used to live on Trolley Way.Early 60’s. Played V ball out in front of the house (duplex).To room mates. Great times with the stews. Rent $450/mo for a 3 bed/2 bath unit. Can those times come back again?
Pismo, don’t know if you’ll see this since this thread is old, but I used to live on Montreal St. on the corner (so on Trolleyway) while in college and law school (most of the ’90s). Also lived in a 3/2 duplex with a couple of roommates. Good times!
Is it possible that the institutions that are on board with the freezing of rates just paying their fair share of PR lip-service?
it’s possible.. And beyond PR, i kinda like the idea that my banks will be onboard the program.. it (supposedly) means fewer foreclosures for them and makes them seem healthier.
I like Daniel Gross’ comment at Slate: “It’s not a finger in the dike, it’s throwing a sandbag in the Mississippi.”
Yo, torture is legal and slow is the way to go. Some FB’s I know got it comin’.
Daniel Gross is great! Love his column. His columns are what I seek out @ Slate.
Cinch
I know, I know, it really shouldn’t matter. It’s just a name after all, but I STILL can’t get over that they elected a guy named Dick Gaylord to be their leader. You just can’t make this stuff up. I mean, what’s next? Al Wayslyon is their next Economist?
This needs to be reposted here for the Cali specific comments and for commentary by Mr. Joshua Tree
http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
Good article, he’s selling to the street or is in somewhere that is… Also confims my thoughts. Housing Market meet the PPT. They are trying to privatize the risk and socialize the loss. We’ll see if it works.
Great stuff. I’d say more ’cause there’s so much in that article to comment on, but I’m out the door.
It’s so simple. I kind of like ‘ol Herb.
Seconds? As in HELOC? As in ATM = pulling out the paper equity?
Not once, not twice, not thrice, but quadro?
Hmmm…I heard this some…where…be…fore…
Ah yes! ‘Tisn’t this the very event that lead to the BIG bada boom?
Dang,
They don’t make enough aspirin for this, gotta go tend to my very own whittlebark!
Thank you for the link Tx!
Leigh
OT: when I bought a car the other day the finance guy said he hadn’t seen credit like mine in 3 years. My question is this: should I freeze my credit? Does having a high score make me a more likely target? And lastly, does anyone have advice or experience regarding freezes?
I pay for a monitoring service, which may be a waste of money, but at least alerts me when credit is applied for in my name. With an 800 fico I am sure my wife and I are prime targets… I have heard there are a lot of fees surrounding the locking of credit reports.
–
“the UCLA report predicts this housing crisis is different.”
We knew that it is different this time defense will be coming from recession deniers.
” ‘In previous housing downturns, we see an increase in foreclosures because people have lost their jobs,’ said Jerry Nickelsburg, an economist who wrote part of the UCLA forecast.”
Losing homes without job losses is worse than losing home due to job losses, isn’t it? Job losses are coming too in case that matters.
Jas
Let’s see - according to UCLA people will lose their houses but not their jobs. So those people will all become renters then? Guess we don’t realtors, brokers, appraisers, the NAR etc. then huh?
Now that the bailout Genie is out of the bottle, the next step is to radically increase the amount of loans that can be government insured. Then all these bad loans can be successfully pawned off on the public.
And that is what I’ve been saying from the beginning. The plan was ALWAYS to stick the public with the Wall Street losses. This is awesome. Wall Street makes huge profits when the getting is good, and the public gets the massive losses when things go south.
Oh well. I guess the next shoe to drop is massive cuts to the social programs. Can’t pay for silly things like social security and medicare anymore. Not with the Wall Street Gangsters around.
This country is a friggin joke. A very bad one.
Oh well. I guess the next shoe to drop is massive cuts to the social programs. Can’t pay for silly things like social security and medicare anymore. Not with the Wall Street Gangsters around.
We couldn’t afford them before this happened. The coffers are empty - the government might be able to spit at the forest fire, but that’s about it.
Wall Street may want a bailout, but I don’t see it happening. If anything these bailout plans seem like that are to make nervous big donors feel like something is “happening”. Plus, if most of the public does not want any sort of bailout there’s still enough will to keep the public’s wallet zipped. Wall Street doesn’t garner that much sympathy and I suspect all this focus on FBs is because the politicians know they are walking a fine line.
Why can’t we afford them? After all, most western countries offer these programs and I don’t see them collapsing. Oh yeah, $2 Trillion for Iraq. I forgot.
If you don’t think the Wall Street bailout is happening, you need to look closer. The appetite for loans below $417k is fine. No problem getting a conforming loan. The jumbos are the problem. Anything that isn’t government guaranteed is dead. Meanwhile the gangsters on Wall Street got caught with a boat load of crap. How do they take this crap and pawn it on the public (i.e. get bailed out)?
Simple. All they have to do is create a special program to take these loans people have and make them FHA insured. Trust me, that is the next step.
Once they have increased the limits to be able to swallow all the bad loans, they will have the mortgage lenders refi every FB into these products. Wall Street and investors get made whole (I can’t wait to see the bogus appraisals!) and the public gets the shaft. Then, using the old GOP Starve the Beast plan, social programs get cut big time.
Anyone that thinks these guys are going to be selective about who gets bailed isn’t paying attention. The rules announced today will be relaxed, scammed, ignored, you name it. This was all a show. I would bet ANYTHING that this becomes a trillion dollar bailout.
Okay, what’s the next game Wall Street can rig? I want to get in early this time.
Why can’t we afford them? After all, most western countries offer these programs and I don’t see them collapsing. Oh yeah, $2 Trillion for Iraq. I forgot.
Umm…other western countries can’t afford them either. I don’t want to get too much into it because it’s not a subject Ben prefers to have on his blog but there’s a demographics intertwined with economic problem on the near horizon. Simply put, there will not be enough young workers to support the systems as we have them now. We are running trillions of dollars of deficits now - the coffers are truly empty as much as the government likes to pretend it isn’t.
Europe has way bigger problems with over promising entitlements than we do. For that reason, I’m having a hard time understanding the current love affair with the Euro, other than at first glance it looks better than the dollar.
This seems like the most direct way to bail out lenders, and will actually have the secondary effect of being welcomed and approved by the public as a program to help out the little guy. It will be spoon-fed with sound-bites and happy stories to the general public, until they believe in the opposite of what they probably should. Sometimes it is almost painful to be able to foresee and foretell these things, and not make ca$h like mad, baby. What is the proper positioning now? Foreign currencies, agriculture etf’s? Those are my leanings now.
Aren’t Wall Street bonuses a social program? I saw a tassle-shoe buying some Kettle One and Pirate Booty with his tax payer coupons, I mean his C-note.
Careful there, or you will be labeled a hand-wringer…
I am guessing you are right about the guarantees, though. The bad loans will be pawned off on an unsuspecting American public in incremental steps. The steps can be timed for moments when the panic seems particularly intractable.
Bingo. Well, except for the hand-wringer part.
Of course the government plans on pawning off these bad loans to government backed loans in the future . The Powers needed a quick bail out plan (-the freeze- ),until they could pass the junk to the taxpayers .
“Still, Dick Gaylord told an audience at the Visalia Convention Center that he’s ‘never been more confident’ in the market. ‘Real estate has ALWAYS been the best way Americans built wealth and it will AlWAYS be,’ Gaylord said.”
“You keep using that word. I do not think it means what you think it means” Inigo Montoya; Princess Bride
I got a call from Good Morning America this evening. They are doing a segment on the old petition started by someone on this forum regarding bailouts. Here is the link: http://www.petitiononline.com/bailout/petition.html
The segment runs tomorrow but I’m betting if the signatures increased overnight that would add some visibility to how the regular joe feels bout this.
BTW I am not the petition author. I’m one of the first 100 signators.
Well I just added it to my piddly blog FWIW.
Signed already. Thanks, Novasold.
just signed it FWIW
Just signed the petition
Just got back from Best Buy. That place is dead. After Black Friday, they haven’t had much to cheer about. It’s going to be bad for retail this season.
Best Buy wouldn’t let me return a DVD on Black Friday. Said they needed the service desk to help check people out. Wasn’t that crowded. Went back the following week and it was dead - got my money and never looked back.
Which chain is more disgusting - Home Depot or Best Buy? They both need to go bye bye.
Reality and La-La Land don’t mix.
Thursday, December 6, 2007
Realtors adapt as red-hot market cools
Reduced price sign in front of house
Not long ago a broker could sell a house without trying very hard. But times have really changed. Lisa Napoli explores the new reality for realtors in the once red-hot market known as Greater Los Angeles.
…
Southern California real estate titan Fred Sands shocked a recent gathering of the California Association of Realtors. He said brokers who aren’t making sales have to face reality:
FRED SANDS: Leave the business.
Realtor Brock Harris is in it for the long haul. But for now he’s learning what it means to wait. Take this two-bedroom fixer he’s listed in trendy Echo Park. It’s been on the market for five months. The price has been slashed $50,000 to $399,000. Still, no one will bite.
HARRIS: This is the kind of thing that a first-time buyer in the last five years … they would have been fighting for this.
Finding buyers now isn’t easy. And when you do, they may have trouble getting financing. But Fred Sands says this doesn’t mean the real estate business is dead. Just sobering up.
SANDS: People can still buy homes. They have to be able to afford them. It’s the old fashioned way.
In Los Angeles, I’m Lisa Napoli for Marketplace.
http://marketplace.publicradio.org/display/web/2007/12/06/real_estate/
Update from Portland, OR:
Every time I’m out driving around, it seems there are more and more ‘For Sale’ signs. In some areas, it seems that every 4th house is for sale. Also on street corners, there are clusters of signs, lots of white signs with a red arrow, pointing down the street. “This way” “Open House”, and “New Price” you don’t see very many “Reduced Price”….yet…..
Also, there are lots of ‘For Rent’ signs appearing together with the for sale sign. Everywhere you look, it seems.
And at night, neighborhoods are mysteriously dark with lots of empty houses. The yards look like crap because there have been some really bad storms lately. Lots of branches, leaves, twigs all over the place. A lot of junk on the roofs, too.
Flipper properties, I assume.
Adding more debt to the mountain
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNTeJEotOD8E&refer=home
I wish they would cut the tax on the money I earn going to work to 15% like those Hedge Fund managers.
Deja-Vu all over again:
In Home Building & Loan Association v. Blaisdell 290 U.S. 398 (1934), the Supreme Court upheld a Minnesota law that temporarily restricted the ability of mortgage holders to foreclose. The law was enacted to prevent mass foreclosures during a time of economic hardship. The kind of contract modification of the Minnesota law was exactly the kind that the Framers intended to prohibit through the Contracts Clause of the U.S. Constitution. However, Chief Justice Marshall famously said in McCulloch v. Maryland, “It is a constitution we are expounding.” By this, he meant that the constitution is a living document and must adapt to the times. This statement is also interpreted to mean that the “framers’ intent is not controlling.” The Supreme Court held that this law was a valid exercise of the state’s Police Power. It found that the temporary nature of the contract modification and the emergency of the situation justified the law.
I need to vent…. I’m upset. I can’t say pis sed so much as depressed.
So, here is the deal. My SIL that bought a house 4 years ago for $147K, and a bankruptcy and 3 cash out refi’s later owes $247K on a sub-prime I/O ARM that started at 8% and next Oct would jump to 11+% has found a new way to scam the system….
She’s buying a new home, then will walk from the existing home. Of course, this requires her to get a lease on the existing house that would cover the full house payment ITI (I/O so no P). But her payments have to be $1800 a month and no way could she rent her house for more than $1200. So, how is she going to find someone to rent her house for $1800 a month that doesn’t mind having the house foreclosed out from under them.
FRAUD!!!! Obviously! My guess is that she’s going to get someone to give her a chunk of cash under the table and sign the lease, in excahnge the person will get to live in the house for free until the foreclosure completes.
ARGGGGGG!!!!!!!
Again, I’m not so much angry as just depressed. We’re doomed.
We’re doomed if we/you do nothing. Find out what the deal is… and rat her out. Could probably do it anonymously. Not easy, but it’s the right thing to do… right?
Rat her out to whom? The government doesn’t care! This state has 2 people to investigate more then 400 complaints and 80 active investigations against mortgage brokers.
If they won’t go after the growers or pushers, they sure as heck won’t waste their time going after the users.
The new home builder? They don’t care. They are getting a house off their books.
The existing note holder? That loan has been sliced and diced and resliced and rediced.
I would have NO IDEA who to rat her out to.
Tell her how you feel. Try (as hard as it may be) not to judge.
Best Always,
Leigh
I wonder how overseas investors feel, who will not see their investments pay out, after the gov changes the rules half way through the game.
imo, anyone who thinks they are losing a couple grand or more would probably hire an attorney to fight it..
But then there’s the problem of proving you’re actually suffering a loss.. there have to be actual damages.
If the paper an investor is holding is already worthless, which could be true, there is no loss. Nothing from nothing is nothing..
And if the plan actually improves the value of securities an investor is holding, which is debatable, there’s no reason to sue in the first place.
the same way American’s who bought property in Mexico felt when the Mexican government invalidated all their property deeds.