December 7, 2007

Foreclosures Become The Norm In California

Inside Bay Area reports from California. “Quakes from the housing market’s downturn continued to shake San Mateo County in November, as home sales sagged nearly 30 percent, a new report revealed Thursday. The growing inventory of unsold homes on the Peninsula pushed home sales down to their poorest November in at least 10 years, real estate agents said.”

“Meanwhile, the median price of a single-family home countywide remained on a roller-coaster ride, falling more than $100,000 to $922,500 in November compared to October. Still, the median price was up 5 percent from November 2006.”

“‘Those Google kids are skewing it, buying $3 million and $4 million properties,’ said Geoffrey Craighead, president of the San Mateo County Association of Realtors.”

“Foreclosures tripled in the third quarter in San Mateo County compared to the same period in 2006.”

“Some of the county’s lower-income cities were hit hardest by median price declines between November and November 2006. They included East Palo Alto, which fell 32 percent to $412,500; South San Francisco, which slipped 14 percent to $650,500; San Bruno, which slid 16 percent to $632,450; and Daly City, which fell 11 percent to $655,000.”

The Daily Pilot. “Chapman University President James Doti, in a slide presentation before about 2,000 people, said the United States economy was clearly headed for a slump next year and that the figures for the current year were more discouraging than the university predicted last December.”

“Doti, like the UCI panelists, devoted much of his talk to the housing market. Reckless borrowing by homeowners, he said, had contributed partly to a massive drop in home equity over the last year.”

“‘People are kind of borrowed to the hilt,’ Doti said.”

The New York Times. “When Jirina Koy heard that President Bush was announcing a freeze yesterday on mortgage interest rates, the Stockton, Calif., homeowner felt a flicker of hope.”

“It was quickly extinguished. After calling a nonprofit housing assistance center, Ms. Koy learned that her mortgage, for all the trouble it was causing her, was not likely to be one of those qualifying for relief. Mortgage experts say there will be many borrowers like Ms. Koy.”

“She has a so-called option loan, which gives her the choice of how much to pay every month. Heavy in debt, she usually chooses the minimum. ‘I got all these calls from brokers all the time — ‘You could pay off debt, pay off the car loan, make extra money every month, blah blah,’ she said. She took out $60,000.”

“Jason Bosch, president of Home Center Realty in California’s hard-hit Riverside County, was pessimistic. ‘We were selling $300,000 homes to people who could only afford $175,000 homes,’ he said. ‘Even if you freeze their payments, they still can’t handle it.’”

The Merced Sun Star. “It’s the time of year for glad tidings, and that’s what the latest figures on Merced’s housing affordability show. But when it comes to other real estate numbers, the data lean more toward lumps of coal.”

“Which city led the country in dropping home values? You guessed it: Merced. Prices here slid 13 percent from the third quarter of 2006 to the third quarter of 2007. Prices in Merced dropped 5.37 percent from the second to third quarter.”

“In October, the period for which monthly numbers are available, Merced County’s median home price was at $250,000, down 26.7 percent from the October 2006 price of $341,000, according to DataQuick.”

“Scott Oliver, president of the Merced County Association of Realtors, cast the plummeting prices in a favorable light. With prices moving back to where they were before the boom of 2004 and 2005, Merced is returning to a ‘normal market,’ said Oliver.”

“Lately he’s seen buyers making offers about $20,000 below the asking price, whereas last year buyers were putting in bids up to $75,000 below what sellers were asking, said Oliver.”

“Don Gray, president of Merced chapter of the Central California Building Industry Association, says builders are cautiously optimistic that their business will pick up in 2009. But with local homes now selling for $100 per square foot, which Gray calls a ‘phenomenal price,’ he’s curious about why more folks aren’t jumping back into the market.”

“‘We’re surprised that there’s not more interest right now and there’s not more people buying homes,’ said Gray.”

“As recently as 1999, the percentage of affordable homes on the market in Merced was at 67.4 percent. Since then, the figure has dropped steadily, reaching an all-time low in 2005, at the height of the housing boom. Back then, Merced ranked as the least-affordable smaller city in the country. Today, Merced is ninth on that list.”

The Bakersfield Californian. “Kern properties foreclosed last month totaled 412, by far the most in a single month since the county began tracking filings in 1995, trustee’s deeds filed with the Kern County Recorder’s office indicate.”

“Likewise, 985 default notices were sent to property owners in November, a number that also sets a new monthly record.”

“The filings were up from October, when 372 foreclosures and 945 defaults set new records at the time. Year-over-year foreclosures more than quadrupled and defaults more than doubled.”

The Voice of San Diego. “In July 2005, a one-bedroom, one-bathroom condo in the Park Boulevard West building in downtown San Diego sold for $417,500. The unit, No. 1203, was repossessed when the owner failed to make mortgage payments. It sold again last month, this time for $268,000 — a 35 percent price drop.”

“The game of real estate pricing is built on a foundation of comparable sales, known as ‘comps.’ So when those comps slide, so do prices in general. And when there’s not much, except height and sometimes a view, to distinguish one one-bedroom, one-bath unit from another in the same building, foreclosures are expected to affect prices especially hard in some buildings in downtown San Diego.”

“Of the 46 units that closed escrow between Nov. 1 and Dec. 4, nearly one-quarter were either bank-owned or short sales.”

“‘They are the ultra-motivated seller,’ said Peter Dennehy, VP with the Sullivan Group Realty Advisors. ‘As more and more foreclosures have started to come on the market — when you have 10 units (in foreclosure) in a building instead of one, you’re more than likely to cut your prices lower.’”

“‘There are very few buildings that have none,’ said Jim Abbott, a longtime downtown Realtor. ‘There’s even one in Meridian, which is unheard of.’”

“In the first 10 months of 2007, 449 different houses or condos in the downtown San Diego ZIP code, 92101, were in one of the three stages of foreclosure, according to RealtyTrac. The neighborhood’s rate of foreclosure was one for every 23 homes.”

“Of the 46 units in all of 92101 that closed escrow between Nov. 1 and Dec. 4, 11 were either bank-owned or short sales, where homeowners negotiate with the lender to sell their home for less than they owe on the mortgage. That’s nearly one-quarter of the sales in the month sold in such circumstances.”

“Foreclosure isn’t the most significant source of downward pressure on prices in downtown, Dennehy said. ‘Prices have already been coming down,’ he said. ‘Now it’s just another shoe dropping. Some buildings have had many whammies. Pretty much every building has something going on.’”

“Savvy buyers and their agents look at the low end, usually foreclosures, and make offers below the most recent sale. And even if there were a buyer willing to pay top dollar for a unit, lenders won’t issue a loan for more than a unit’s appraised value, which slips with every lowered price.”

“‘It’s where the market is going,’ said Brenda Crann, a real estate agent who focuses on selling units for lenders. She said she and her co-workers expect to be ‘flooded with more bank-owned properties’ in January.’”

“As foreclosures become the norm, constituting nearly a quarter of the sales in a month like in downtown last month, prices will fall further in some places, Dennehy said.”

“‘People don’t look at the market. They look at the individual building,’ he said. ‘You’re not going to pay more than you have to. The value of something is what somebody’s willing to pay for it. That becomes the new price.’”

The Sacramento Bee. “A new town house project in West Sacramento is biting the dust. After selling just 11 of its 34 three-story units, according to Hanley Wood, owners of Harriet Lane are putting it on the auction block.”

“The project had a claim to fame and a 2005 mention in the New York Times as one of the nation’s first factory-built town house projects. Sales then started at $339,000 to $359,000. Opening bids now: $169,000 and $179,000.”




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145 Comments »

Comment by sf jack
2007-12-07 13:56:37

“‘Those Google kids are skewing it, buying $3 million and $4 million properties,’ said Geoffrey Craighead, president of the San Mateo County Association of Realtors.”

*******

See - the Google kids are saving us - just like all the local realtors said they would!

Except they are only saving the median and not the actual market.

Comment by Rally Mitigation Team Member Bob
2007-12-07 14:23:28

If you read the article itself, you’ll see it’s trying to make the point that higher-end sales are skewing the median higher. There’s no talk of anything being “saved.”

Comment by sf jack
2007-12-07 14:48:43

Rally Bob -

I’m talking specifically about local realtors and associated bubble cheerleaders here in the Alt-A Bay Area. Those who have been promoting the idea that Google and Web 2.0 beneficiaries are going to keep the housing market charging right along.

The article shows that recent skewing of the median is “saving” it from dropping, thereby giving opportunity for such persons’ nonsensical claims that all is OK.

 
 
Comment by SanFranciscoBayAreaGal
2007-12-07 14:54:26

Went to school with a couple of the Craigheads. Nice people.

 
Comment by Rintoul
2007-12-07 15:07:23

How many of these “kids” are buying $3-4M houses, anywho..? In any case, mebbe they ain’t as smart as they’re given credit for being…

Comment by ChrisChris
2007-12-07 15:17:14

Some are smart. Then there are those who over bid by a couple of million.

Comment by CArefugee
2007-12-07 20:55:35

I’ve heard of bidding wars still going on in Laguna Beach on properties over $1.5k. Who are these fools?

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Comment by jbunniii
2007-12-07 23:20:55

At least Laguna Beach is an attractive place, unlike, say, most of the San Francisco peninsula. I’ve never understood why ugly shacks in faded blue-collar towns like San Mateo, South San Francisco, or even Google’s own Mountain View should command higher prices on average than comparable houses in SoCal beach towns. There aren’t THAT many wealthy Google employees to sustain such high prices - maybe a couple thousand total? That’s a drop in the bay.

 
 
 
Comment by Jas Jain
2007-12-07 15:17:39


They think that GOOG is rising because they are smart. “Genius is rising prices.”

One bubble (rising local Scams) helping the other bubble (high-end housing).

Jas

 
Comment by deejayoh
2007-12-07 15:26:06

No, but they are as rich! When you come into sudden wealth, it’s easy to confuse being lucky with being smart. Happens all the time.

 
Comment by Lettuce Picker
2007-12-07 18:32:05

The only smart person in this transaction is the one receiving the 2-3 mil cash…

It’s ironic how techies used to being on the bleeding edge of everything are scrambling for 30+ year old obsolete housing stock…

 
 
Comment by ThomasPS
2007-12-07 16:07:05

When google went public … some sellers jacked their prices by 35%… no other reason than greed!

Comment by yogurt
2007-12-07 20:20:54

Sellers can ask for anything they want. The house will only sell for what a buyer is willing to pay.

Buyers always set RE prices.

 
 
 
Comment by Tim
2007-12-07 13:59:19

“Jason Bosch, president of Home Center Realty in California’s hard-hit Riverside County, was pessimistic. ‘We were selling $300,000 homes to people who could only afford $175,000 homes,’ he said. ‘Even if you freeze their payments, they still can’t handle it.’”

While it is no doubt true, if I was hired as his legal counsel, I would have required him to word it differently. I smile as these ppl go out of business. Top to bottom. Fraud on fraud on fraud.

BOOOOM!!!!!!!!!!! Dont come knocking on my door looking for any handouts.

Comment by John Law
2007-12-07 14:14:33

the inflated appraisals, fraud and lax lending standards ended and just caused a massive shift in the demand curve to the left, correct?

Comment by Tim
2007-12-07 14:52:10

Lax lending standards are done, but Bush’s plan requires appraisals. Thus, the circus continues.

 
 
Comment by beelzebubble
2007-12-07 14:24:30

Mr. Bosch just explained why this proposed bailout will be about as helpful as opening an umbrella in a hurrican.

Comment by beelzebubble
2007-12-07 16:08:02

er, hurricane.

 
Comment by Thomas
2007-12-07 19:02:52

“hurrican”

You’re not from southern Utah, are you?

 
 
Comment by Blacque Jacques Shellacque
2007-12-07 15:19:00

‘We were selling $300,000 homes to people who could only afford $175,000 homes,’ he said. ‘Even if you freeze their payments, they still can’t handle it.’

The question that needs to be asked of him is, “why then, did you keep on doing it?”

Comment by Mike G
2007-12-07 16:07:05

“It is difficult to convince a man of something if his paycheck depends on his not understanding it.”

Comment by Housing Wizard
2007-12-07 16:49:25

My statement is that the builder’s agents in this development are fraudulent ,or I guess all those low income liar borrowers just knew how to get those loans through without any help from their friends in the industry .

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Comment by fries with that?
2007-12-07 17:31:26

Jason Bosh’s statement about freezing people’s payments doesn’t go far enough.

How about, “Even if you eliminate their payments, they still can’t handle it.”

I think this CNN video demonstrates my point:

http://tinyurl.com/3bxfyn

Comment by SGA
2007-12-07 23:14:33

A new concept in the US - the negative millionaire.

 
 
 
Comment by mrktMaven FL
2007-12-07 13:59:36

“It [hope] was quickly extinguished. After calling a nonprofit housing assistance center, Ms. Koy learned that her mortgage, for all the trouble it was causing her, was not likely to be one of those qualifying for relief….”

Wash. Rinse. Repeat. The carnage continues.

Comment by John Law
2007-12-07 14:11:42

the bailout is nothing more than giving wall street confidence for a few days or weeks. the problem is simply too big.

Comment by Gwynster
2007-12-07 16:18:23

I’d say it was about year end spending and xmas revenues. We need people to keep spending through Dec 24th because 2007 income forecasts require it. Firms are already reconfiguring income projections for next year but they still need 07 to end in the black or just slightly in the red.

The bailout proposal was a happy face bandaid on a sucking chest wound.

 
 
Comment by Lisa
2007-12-07 14:36:43

“It [hope] was quickly extinguished. After calling a nonprofit housing assistance center, Ms. Koy learned that her mortgage, for all the trouble it was causing her, was not likely to be one of those qualifying for relief….”

Does anyone know what % of ARM’s are pay-option?? If most of them are, absolutely, hardly any subprime borrower will qualify for the bailout, combined with all the other criteria.

Comment by Leighsong
 
Comment by AnnScott
2007-12-07 16:50:38

I did read that the option-ARMs are not considered subprime.

For some reason, I had never focused on the definition of ’subprime’ and just assumed that what I call TFS (Too F–king Scary) loans were all classed as subprime because of the unconventional terms.

I consider TFS loans to include 2/28, 3/27, 80/20 piggybacks, hybrid-ARM and option ARM - and assumed that no one who had the credit rating, downpayment and income to get a safe conventional fixed would have taken one of those. Apparently the industry classifies the ’subprime’ loans solely on the basis of credit scores without regard to the TFS factor of the loan. Subprimes also fall into 2 groups - fixed and TFS loans that are the 2/28 and 3/27 loans and piggybacks. It seems that hybrid-ARMs and option-ARMs were not sold to those lower on the credit rating scale.

What is truly staggering is that the hybrid-ARM and option ARMs are the TFS loans for the borrowers with the better credit scores or the Alt-A and prime borrowers. Those loans typically do a reset at 3 or 5 years. Some even have a piggyback. A few have come due for reset this year but the big wave is coming in 2009.

Prime fixed rate loans are 63.1% of the loans out there and have a 17.6% default rate.

Prime adjustable (including the hybrids and options) are 14.5% of the loans and already have a default rate of 18.7% - and the huge crest of resets has not yet hit.

Subprime fixed are 6.3% of loans with a default rate of 12%
Subprime adjustable are 6.8% of loans with a default rate of 43%

VA/FHA are 9.3% of loans with a 8.7% default rate (and they did and do apply the conservative income/debt rations which are far below the 50%/????% ratios used in the TFS loans.

Here are some sources:

http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/

http://online.wsj.com/article/SB119696216000715924.html?mod=hpp_us_whats_news

It also mentioned that “75% of Option ARM borrowers make the minimum monthly payment. Eighty percent-plus are stated income/asset. Average combined loan-to-value are at or above 90%. The majority done in the past few years have second mortgages behind them.”

WOW!! And what happens when rates reset and they have to pay principal and all the interest?

 
Comment by AnnScott
2007-12-07 17:14:17

Apparently, option-ARMs (neg-ARMS or whatever they are called) are NOT considered subprime loans.
For some reason, I had never focused on the definition of ’subprime’ and just assumed that what I call TFS(Too F—king Scary) loans were all classed as subprime because of the unconventional terms.
I consider TFS loans to include 2/28, 3/27, 80/20 piggybacks, hybrid-ARM and option ARM - and assumed that no one who had the credit rating, downpayment and income to get a safe conventional fixed would have taken one of those. Apparently the industry classifies the ’subprime’ loans solely on the basis of credit scores without regard to the TFS factor of the loan. Subprimes also fall into 2 groups - fixed and TFS loans that are the 2/28 and 3/27 loans and piggybacks. It seems that hybrid-ARMs and option-ARMs were not sold to those lower on the credit rating scale.
What is truly staggering is that the hybrid-ARM and option ARMs are the TFS loans for the borrowers with the better credit scores or the Alt-A and prime borrowers. Those loans typically do a reset at 3 or 5 years. Some even have a piggyback. A few have come due for reset this year but the big wave is coming in 2009.
Prime fixed rate loans are 63.1% of the loans out there and have a 17.6% default rate.
Prime adjustable (including the hybrids and options) are 14.5% of the loans and already have a default rate of 18.7% - and the big wave has not yet hit.
Subprime fixed are 6.3% of loans with a default rate of 12%
Subprime adjustable are 6.8% of loans with a default rate of 43%
VA/FHA are 9.3% of loans with a 8.7% default rate (and they did and do apply the conservative income/debt rations which are far below the 50%/?%ratios used in the TFS loans.
The option ARMs explosion has yet to happen but is staggeringly frightening (in terms of the credit market.) “75% of Option ARM borrowers make the minimum monthly payment. Eighty percent-plus are stated income/asset. Average combined loan-to-value are at or above 90%. The majority done in the past few years have second mortgages behind them.” The negative amortization of the excess and unpaid interest can add to the principal until it hits up to 125% of value. And if there is also a 2nd…….. What happens when these people who are making the minimum interest payment thus adding to the loan suddenly have to come up with all interest and principal????

http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/

http://online.wsj.com/article/SB119696216000715924.html?mod=hpp_us_whats_news

 
 
 
Comment by IUnknown
2007-12-07 14:05:16

“Some of the county’s lower-income cities were hit hardest by median price declines between November and November 2006. They included East Palo Alto, which fell 32 percent to $412,500; South San Francisco, which slipped 14 percent to $650,500; San Bruno, which slid 16 percent to $632,450; and Daly City, which fell 11 percent to $655,000.”

Geeez, “low-income” means a city where the median is $400,000 to $700,000? Even the poor are richer than me!

Comment by rms
2007-12-07 18:37:35

“They included East Palo Alto, which fell 32 percent to $412,500…”

Only $412,500 in EPA? Time for Fannie and Freddie to do the right thing.

 
 
Comment by Not Mssing It
2007-12-07 14:05:23

“‘Those Google kids are skewing it, buying $3 million and $4 million properties,’ said Geoffrey Craighead, president of the San Mateo County Association of Realtors.”

Easy come easy go as they say

 
Comment by John Law
2007-12-07 14:10:05

The real estate mess spreads to commercial.

Property derivatives prices tumble
By David Oakley and Jim Pickard Thu Dec 6, 10:00 PM ET
Property derivatives prices have fallen sharply in the past few months as confidence in the underlying market wanes.

The most dramatic turnround has been in UK commercial property derivatives, in which one-year forward prices have fallen to all-time lows. US commercial property derivatives have also fallen sharply as the underlying market weakens.

http://news.yahoo.com/s/ft/20071207/bs_ft/fto120620072212577176

“The turn in the market was swift. As recently as late June, Douglas M. Poutasse, executive director of the National Council of Real Estate Investment Fiduciaries, said: “It doesn’t get any better than it’s been.”

The trouble first emerged from the residential real estate market. Wall Street investors were big buyers of investment portfolios consisting of subprime and other lower-quality home mortgages. When homeowners began defaulting on their loans this year, those investors were left holding investments worth substantially less. Facing losses, the investment community abruptly stopping pumping new funds into the lending market.

The credit shortage spread to the larger commercial loan market, and suddenly a source of capital from Wall Street that had fueled the buying frenzy in office buildings had also evaporated.

“It’s just stopped,” said Michael Fascitelli, president of Vornado Realty Trust, which is increasingly investing in Boston properties.

http://www.boston.com/business/globe/articles/2007/12/07/long_drop/?page=2

Comment by John Law
2007-12-07 14:27:09

“The trouble first emerged from the residential real estate market.”

The US housing market is contained to planet earth.

 
 
Comment by mrktMaven FL
2007-12-07 14:10:30

A lot of FBs will not suddenly become un-f@cked as a result of the plan. Instead, they are likely to stay in a permanent state of f@ckedness.

 
Comment by SaladSD
2007-12-07 14:12:00

Just checked on the 2,600 sf bubble property I “adopted” here in Encinitas (north coastal San Diego County). Though resisting price reductions for the past 2 months, the realtor finally dropped the price from $924,950 to the low, low “below market” of $899,876. All from the previous Zillow high of $984,876.

Comment by CArefugee
2007-12-07 21:03:52

I can see that MLS relisting now: “Just reduced a full $25,000! Below market! Hurry! Won’t last long!
And — What’s with the last three digits being “876″? I’ve seen this in many other listings. Something new at a real estate CE seminar to entice buyers to stale listings?

 
 
Comment by DC_Too
2007-12-07 14:12:08

Gotta love that New York Times! Happy to pee on markets far, far away, but oh no, New York is different!

Let’s keep an eye on the LA Times, who will likely bring us an update on what is really going on in New York.

Comment by combotechie
2007-12-07 14:41:15

This makes sense if you think about it.
A newspaper doesn’t want to trash its local RE market and piss of its local RE advertisers so instead it spends its energies trashing somebody else’s market.

Comment by DC_Too
2007-12-07 14:55:31

My point exactly. If you wanna know what is going on in your home market, read the other guy’s paper.

 
 
Comment by are they crazy
2007-12-07 19:35:14

For quite a while, the NYT has had much better articles on CA than LA Times not just RE.

 
 
Comment by Frank Giovinazzi
2007-12-07 14:13:28

If I walked into that condo and saw all those lockboxes hanging there, I would say, “ten cents on the dollar,” and walk out.

Those condos will sell for 50-75K, before it’s done.

The joke is that all those marketing lines about “fun-filled downtown condo living” will actually be true at bottom prices.

Comment by Rally Mitigation Team Member Bob
2007-12-07 14:34:03

Yeah, it will loads of fun after these urban areas all go back to hell like they were a couple of decades ago, and you have to step over the heroin addicts on the way through and out the lobby door. Wheeee!

 
Comment by James
2007-12-07 14:37:03

Those fun filled building became slums in NYC. Government makes a few units public housing or section 8 and poof its a project house slum.

Comment by ric
2007-12-07 15:14:00

Can you cook crack using pergraniteel?

 
 
Comment by Devildog
2007-12-07 14:53:17

If it gets bad enough on the downside we’ll see the reverse effect of the intrinsic value disconnect. Prices will fall to the amount of cash people have on hand. And with pensions and investment funds going up in smoke every day that cash pile is getting smaller and smaller. The Fed litterally cannot print off enough new money to keep even with the amount disappearing.

My guess is at the very bottom those condos will either be bulldosed or go for far less that $50k.

 
 
Comment by Marty
2007-12-07 14:15:37

Hi guys,

The government does not specify that they need any agreement from the investors. This is because if a loan is approved for this program it is taken private by the bank, and sold to FHA who would probably be paying a full price. Now, technically this is not a loss. It’s the FHA buying a bunch of securities and putting them on their books.

Step-by-step case, someone calls the 1800 number and explains, ‘I have such and such loan.’ If the loan confronts to the criteria set, then the 1800 help person alerts the FHA or a new and coming GSE. It tells them, this and this loan from this and this bank is eligible. The FHA entity goes out and purchase the specific loan from the bank, hence taking it private. They then control the loan and can do whatever they want, such as freeze the rate. Since full price was paid and the loan was sold, investors don’t really have anything to do. They just get money back.

And none are questioning which value of the property is considered when applying. If the last appraisal value is, there will be quite a few eligible loans around. Besides, just as the banks has been letting people sell for less instead of foreclosing, maybe they plan to do the same so the loan conforms to the government requirements just as they do many times for Fannie and Freddie loans. If they do it fast they can probably lose only as much as prices have currently fallen.

Marty

Comment by Ben Jones
2007-12-07 14:08:00

Pretty simplistic and no links. Next.

Comment by simplesimon
2007-12-07 14:21:18

wow, that simple…never thought of it that way except…who funds fha?

 
 
Comment by flatffplan
2007-12-07 14:14:33

FHA, private ?
oh contrair

Comment by Marty
2007-12-07 14:33:07

I am not sure about the whole private stuff… maybe I did pull this part off my ass ;)

 
 
Comment by sw
2007-12-07 14:17:40

You have no idea what you are talking about. Do a quick search if you want to know how the plan really works. Marty is pulling stuff out of his ass.

Comment by are they crazy
2007-12-07 15:16:56

Who is this Marty and how did he all of the sudden become so prominent on the blog? Is he the same one that’s headed to jail shortly?

Comment by desmo
2007-12-07 16:08:30
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Comment by BanteringBear
2007-12-07 18:02:48

LOL @ are they crazy

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Comment by Lionel
2007-12-07 19:59:01

Who is this Marty and how did he all of the sudden become so prominent on the blog? Is he the same one that’s headed to jail shortly?

Well, apparently he can pull stuff out of his ass, which is a pretty special talent.

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Comment by mrktMaven FL
2007-12-07 14:20:54

Wave a magic wand and all the FBs dissappear, right?

 
Comment by simplesimon
2007-12-07 14:26:03

and i think marty drank some kool aide at a sales seminar.

 
Comment by Inland Empire
2007-12-07 14:31:38

That’s nuts! I don’t believe it! Tell me Marty is lying!

 
Comment by Rally Mitigation Team Member Bob
2007-12-07 14:36:43

Is this the same Marty who’s soon going to jail for six months? Will you be allowed to post from there?

Comment by Lionel
2007-12-07 20:00:15

Is this the same Marty who’s soon going to jail for six months? Will you be allowed to post from there?

Unfortunately, then he might actually have to be pulling things out of his ass.

 
 
Comment by Wilson
2007-12-07 14:59:00

Ben,
Is there any truth in this? Thanks,
Wilson

Comment by Rally Mitigation Team Member Bob
2007-12-07 15:14:31

“Ben, Is there any truth in this?”

Ever heard of Google?

 
 
Comment by plysat
2007-12-07 16:08:59

Hey Marty? uhh… Wrong.

 
 
Comment by edgewaterjohn
2007-12-07 14:16:20

“Sales then started at $339,000 to $359,000. Opening bids now: $169,000 and $179,000.”

Multi-family new construction is very scary. Those first 11 buyers ought to love this. Why would anyone make a loan at a bldg that was say, only 25% sold nowadays? A prudent lender should expect more of this.

Comment by scdave
2007-12-07 14:27:07

The item I picked up was “factory-built” on these townhomes….San Jose allowed a project with this crap…Modular has came a long way…I have seen some very nice stuff in the mid west….But, when you start making it multi story it becomes much more difficult to maintain quality control with finish…Nothing is straight…This project in San Jose was just god awful….If we have another big earthquake, these townhomes are going to turn into pretzels….

Comment by Inland Empire
2007-12-07 14:36:25

Are you referring the town homes next to the Georgetown Development? Next to the railroads tracks near downtown San Jose, I thought those modular town homes were crap! I think they were going for 550K and up when I left in 2006.

Comment by scdave
2007-12-07 14:57:59

I.E…Yes that was the one….Pretty ugly eh…

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Comment by Inland Empire
2007-12-07 15:20:57

It looked horrible! Something that you’d see in back woods of Alabama. Stacking mobile home on top of mobile home, I couldn’t believe that the city allowed it.

 
Comment by Mo Money
2007-12-07 16:12:56

They allowed it because it was cheap, to provide housing for disabled, poor etc.

 
Comment by sfbayqt
2007-12-07 21:49:43

Is this what you guys are talking about? I googled around a bit and found:

http://www.cahillpark.com/gallery.html
http://www.siliconvalleylofts.com/Downtown+San+Jose/Cahill+Park.htm

The prices haven’t changed much, IE. They’re asking ridiculous money for these, too…$599,950 - $620k. (As Leigh says)…Whiskey-Tango-Foxtrot!

BayQT~

 
 
 
 
 
Comment by North GA Dave
2007-12-07 14:18:25

“‘We were selling $300,000 homes to people who could only afford $175,000 homes,’”

I think he meant to say ” We were selling $175,000 homes for $300,000″.

Comment by BanteringBear
2007-12-07 15:34:49

“We were selling $175,000 homes for $300,000, to people who could only afford $175,000 homes″.

There.

 
 
Comment by stanleyjohnson
2007-12-07 14:19:00

mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 was 951,242
9/15/06 was 955,352
12/1/06 was 925,170
12/2/06 was 915,258
1/01/07 was 857,760
1/20/07 was 900,302
2/14/07 was 932,055
4/21/07 was 1,148,456
4/27/07 was 1,171,189
5/11/07 was 1,192,290
5/18/07 was 1,202,413
5/25/07 was 1,238,121
6/14/07 was 1,256,361
7/28/07 was 1,300,943
8/27/07 was 1,365,670
9/24/07 was 1,405,798
12/07/07 today 1,345,525
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk

However accurate these numbers are they are going down not up. Perhaps in another 60 days things will change however if you have to sell you have to sell and these numbers don’t show that. at least to me.

Comment by Frank Giovinazzi
2007-12-07 14:28:37

The inventory aspect was covered in the executive summary of the Moody’s Mortgage Meltdown report:

Awash in Inventory

The housing market’s most fundamental problem is it is awash in unsold inventory. According to the Census Bureau, as of the third quarter of 2007 there was close to 2.1 million vacant unsold homes that were for sale, equal to 2.6% of the stock of owner-occupied homes. Even a well-functioning housing market has a substantial amount of inventory. But in the quarter-century between the early 1980s and mid-2000s, the vacancy rate was an unwavering near 1.7%. The difference between the current over 2.6% vacancy rate and the 1.7% rate that consistently prevailed prior to the recent boom provides a good estimate of the amount of excess inventory in the market—it currently totals nearly 750,000 homes (see Chart 1-4). This is far and away the highest level of excess inventory in the post-World War II period.

 
Comment by Rental Watch
2007-12-07 14:45:36

The number of “have to sells” goes up every day, and thus the listing increases. The number of “really, really need to sell, like, yesterday, at any price” goes up as well (as the “have to sells” run out of money), but not as fast as people entering the picture.

There is a lot of silent desperation out there that will become more vocal with time.

 
Comment by NYCityBoy
2007-12-07 15:00:07

Stanley, I watch my hometown listings through Zip. They are at 212 listings currently. They were at 226 a few weeks ago. There should be less than 100 listings this close to Christmas. That number, and all of the numbers on Zip, will soar in February. The fact that it has only dropped to 1,345,000 at this time of the year cries “desperation” from every orifice.

 
Comment by Steve W
2007-12-07 15:18:52

Holiday time, not surprising to see it go down. Especially in the cold weather climes. It will go up again–by next spring it may be even uglier.

Comment by potential buyer
2007-12-07 16:36:11

That, plus REs pull them off, so they can put them back on and act like they are ‘new listings’.

 
 
Comment by Professor Bear
2007-12-07 15:36:59

12/2/06 was 915,258
12/07/07 today 1,345,525

Increase from 12/2/06 to 12/07/07 was 430,267 = 47 percent.

You have to seasonally adjust your figures to properly interpret them.

 
 
Comment by zeropointzero
2007-12-07 14:21:19

“Of the 46 units in all of 92101 that closed escrow between Nov. 1 and Dec. 4, 11 were either bank-owned or short sales”

I was just thinking about what kind of inventory would be coming on the market in recent days — gotta be REOs, or people trying to get a short sale, or folks who are pricing to get the hell out, or someone who simply has to relocate. All stuff with built-in pricing pressures, fighting with lannguishing new construction. Then, in spring, when supposedly smarter sellers put their homes on the market, that inventory meets all the forlorn crap that people couldn’t unload from Dec. to Feb.

And then she looked at me with those big brown eyes, and said “you ain’t seen nothing yet”

 
Comment by Hoz
2007-12-07 14:40:56

“Some of the county’s lower-income cities were hit hardest by median price declines between November and November 2006. They included East Palo Alto, which fell 32 percent to $412,500; South San Francisco, which slipped 14 percent to $650,500; San Bruno, which slid 16 percent to $632,450; and Daly City, which fell 11 percent to $655,000.”

Not being currently familiar with prices in these areas, I am stunned. So I looked up average rentals. In January 2007, the average rent was $1074 for a 3bdrm in Daly City. All I remember of Daly City was I wanted to get through it as fast as possible - the Cow Palace was fun. I guess it has been gentrified.

Comment by BanteringBear
2007-12-07 18:12:39

You don’t want to drive through East Palo Alto without a gun, much less at night, heaven forbid get out of the car. I’m convinced that the prices in these areas were driven purely by fraud.

Comment by SanFranciscoBayAreaGal
2007-12-07 20:35:03

Bantering Bear,

EPA has changed some what. A lot of the area has become gentrified. Some big stores, hotels, etc. have set up shop in EPA.

Comment by BanteringBear
2007-12-07 21:02:45

Thanks for the clarification. I haven’t been there for a while. Still, I’m a little suspicious.

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Comment by Tracy
2007-12-07 22:58:39

You are right to be suspicious. The big box stores are along 101. The rest of EPA is still the hood.

 
 
 
Comment by Bloz
2007-12-08 03:15:42

I don’t know, I’ve ridden a bicycle through there - on the back streets during the day. That said, I used to ride a bike to Humbodlt Park in Chicago back in the early 80s when cop cars got burnt every summer. ;-)

 
 
 
Comment by Otto
2007-12-07 14:46:49

“the value of something is what someone’s willing to pay for it”.
Oh so that’s how it works. Thanks for clearing that up mate.
All this time I’ve been thinking the value of a house is determined by the seller’s asking price.
Strange world we live in.

Comment by Leighsong
2007-12-07 15:35:49

Gee…where have I heard this before?

“‘People don’t look at the market. They look at the individual building,’ he said. ‘You’re not going to pay more than you have to. The value of something is what somebody’s willing to pay for it. That becomes the new price.’”

Alright you lurkers, you’re officially outed!

Smiles,
Leigh

 
Comment by HARM
2007-12-07 17:35:58

“The value of something is what somebody’s willing to pay for it.”

This should be tattooed on the forehead of every FB, flopper and MSM talking head.

 
Comment by 01/20/2009 end of an error
2007-12-08 08:44:44

No it is worth what someone will lend you to buy it.

 
 
Comment by Norcal Ray
2007-12-07 14:48:58

The Sacramento Bee. “A new town house project in West Sacramento is biting the dust. After selling just 11 of its 34 three-story units, according to Hanley Wood, owners of Harriet Lane are putting it on the auction block.”

“The project had a claim to fame and a 2005 mention in the New York Times as one of the nation’s first factory-built town house projects. Sales then started at $339,000 to $359,000. Opening bids now: $169,000 and $179,000.”

Hooray for affordable housing ! We need prices to come down to where the average Joe can buy a place without paying 50% of his income to mortgage payments.

Comment by CArefugee
2007-12-07 21:10:32

Where was this factory? In China?

Comment by BanteringBear
2007-12-07 21:19:28

Lead paint and all.

 
 
 
Comment by txchick57
2007-12-07 14:50:17

That job report today probably took the 50 bps cut off the table. Bombs away.

Comment by Neil
2007-12-07 14:56:58

I wish the cut was off the table… it does make it tough for the FOMC to spin the story though… It will be interesting to see how they spin the tale.

Got popcorn?
Neil

 
Comment by Hoz
2007-12-07 14:58:15

I think the job report was so horrible that I would not be surprised by a 50bps cut. 33,000 manufacturing jobs cut and 30,000 new government jobs.

 
Comment by scdave
2007-12-07 15:00:42

Did you see where 30+ % of the job creation came from ??…You got it…Freakin Goverment….Grrrrrrrrrrrrr…..

Comment by scdave
2007-12-07 15:01:50

Beat me to it Hoz….

Comment by Hoz
2007-12-07 15:05:20

LOL
There is no ‘beat me to it’; there are only facts! And if they get posted a 1000 times, so be it. It does not matter where or when the facts get posted.

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Comment by txchick57
2007-12-07 15:09:53

Barry Ritholz, Mr. BLS, sez:

The survey was weak enough to allow the Fed to cut, but the 50 basis point slash that so many have been begging for is now likely off the table. According to the Fed Funds Futures, rate cut odds for a 50 bps cut next week have fallen to 28%, vs. 50% as of last week.

 
Comment by Hoz
2007-12-07 15:24:13

Tx, my fair young lass - the problems facing the Federal Reserve may cause them to make a 75bps cut. The insolvency crisis is getting worse and the Federal Reserve must make an attempt at restoring some trading market into commercial papers. In theory I agree with you, the futures are generally correct, but the losses keep growing.

If you go to the Federal Reserves site and do a DIY on chances of recession with the figures the fed uses, the odds of a recession have jumped to 35% from 13%. The chance of a recession is low (per the Federal Reserve), but the magnitude of the jump is huge.

from the Federal Reserve

“The slope of the Treasury yield curve has often been cited as a leading economic indicator, with inversion of the curve being thought of as a harbinger of a recession. In this paper, I consider a number of probit models using the yield curve to forecast recessions. Models that use both the level of the federal funds rate and the term spread give better in-sample fit, and better out-of-sample predictive performance, than models with the term spread alone. There is some evidence that controlling for a term premium proxy as well may also help. I discuss the implications of the current shape of the yield curve in the light of these results, and report results of some tests for structural stability and an evaluation of out-of-sample predictive performance.”

As made easy to apply by Political Calculations:
http://tinyurl.com/qkqb2

 
 
 
Comment by Michael Emmel
2007-12-07 16:20:37

Wait till all the tax problems from the bubble and slowing economy start showing up and you will see all these government jobs evaporate.

 
 
Comment by edgewaterjohn
2007-12-07 15:26:46

If “our boy” only goes .25 - it’s gonna leave mark. Too much ‘good’ news all at once.

Comment by txchick57
2007-12-07 15:38:18

it was a good trade last month. Why not a twofer.

 
 
Comment by auger-inn
2007-12-07 18:59:53

I think we need to turn to THE authoritative source in order to determine the next FED move. Let’s ask the guy who “does this for a living”! Hedgefund analyst, you out there? :)

Comment by txchick57
2007-12-07 19:58:35

Nah, they let him out for a couple of days of good time but he’s gone now.

 
 
 
Comment by flat
2007-12-07 14:50:26

commercial- how fast is it dropping in your area ?
N VA turning hard - the pols are ven backing off a new tax they dreamed up

Comment by scdave
2007-12-07 15:49:04

Commercial is still very strong here but financing is becoming a issiue…Higher debt service coverage and tougher expense & vacancy ratios…bottom line is lower LTV’s….

 
Comment by socaljettech
2007-12-07 19:56:47

Here in Signal Hill, CA I drive through a fairly large industrial area on my way to work and I gotta say there are LOTS of vacancies- another good one is Westminster Mall near here- scary vacant. My wife and I counted 15 empty stores there this summer- haven’t been back yet this winter to see the carnage.

 
 
Comment by txchick57
2007-12-07 14:51:47

Hey Crispy: Where is little Greaseball living these days? Is he a bitter renter now?

 
Comment by Neil
2007-12-07 14:55:02

The growing inventory of unsold homes on the Peninsula pushed home sales down to their poorest November in at least 10 years, real estate agents said.”

Uh… WHAT?!? More inventory means fewer buyers? What is it about the REIC that prevents them from understanding that their are fewer buyers and thus the inventory is growing. Its not the other way around.

Time for a road trip with a Joshua tree…

Except, first… my dinner is in Pasadena on Saturday. Click on my name for more information.

Got popcorn?
Neil

 
Comment by Blacque Jacques Shellacque
2007-12-07 15:07:23

Foreclosures Become The Norm In California

Yes, YES, YES!!!!!

 
Comment by Hoz
2007-12-07 15:08:52

“We do not think it is hyperbolic to say that the sanctity of such contracts, entered into in good faith, is at the cornerstone of capitalism,” Deutsche Bank AG analysts Karen Weaver, Katie Reeves and Ying Shen, based in New York, said in a note to clients today. “And if we are to in anyway devalue that sanctity, we face a far greater liquidity crunch than the one in which we currently find ourselves.”

Bloomberg

Comment by Frank Giovinazzi
2007-12-07 15:18:15

“the sanctity of such contracts, entered into in good faith”

Written without irony, I’m sure.

 
Comment by turnoutthelights
2007-12-07 15:35:44

An implosion of treasuries? Can you say RISK premium.

 
Comment by txchick57
2007-12-07 15:46:18

yah, the Paul camp should love this one

Comment by Neil
2007-12-07 16:02:25

“And if we are to in anyway devalue that sanctity, we face a far greater liquidity crunch than the one in which we currently find ourselves.’’

Wow. That statement has quite a bit of force behind it. I’m… floored. How do you top that?

‘If you Vant to mess with Uoos, Vie Mussen haben die Panzers Advance!’ ;)

Ok, enough bad hoogan’s heros… But I think the US was just put on notice…

Got popcorn?
Neil

Comment by txchick57
2007-12-07 16:22:11

No. A big honkin greek pizza.

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Comment by Rintoul
2007-12-07 15:09:25

“‘People are kind of borrowed to the hilt,’ Doti said.” - Meet our new King of the Obvious!

 
Comment by sleepless_near_seattle
2007-12-07 15:19:43

“Quakes from the housing market’s downturn continued to shake San Mateo County in November, as home sales sagged nearly 30 percent, a new report revealed Thursday….Countywide, sales slid to 290 homes in November compared to 405 in November 2006, according to the report from Samcar.”

YOW! When I first read that first part in Ben’s cut-n-paste, I thought they meant November, 2007 as compared to October, 2007 which didn’t really surprise me. But the 30% number is Y-O-Y! Gonna be a chilly winter!

 
Comment by simplesimon
2007-12-07 15:24:49

A former Delta executive, who spoke on condition of anonymity, was also taken aback by the bankruptcy filing.

“I am surprised because it’s such a well-run company,” said the former executive, who worked at Delta for several years before being laid off a few months ago. “They were not by any stretch of the imagination a company that took risks. That was evident in their product line-up. But I’m not surprised that the market forces were bigger than they were. Unfortunately, they were not operating in a vacuum.”

and as i told a relative…its about the business model. If your whole existence is based on an extraordinary market..your doomed and quite maybe belong doomed. doesn’t any company have a bizness model for a downturn or a rainy day…i think its an important lesson. what do the executives really do at all these meeting then.

Comment by Leighsong
2007-12-07 15:47:02

I’ve worked with private and military sector.

Any meeting I attended, I demanded an agenda, a insured it was followed. (I was the mean facilitator…LOL).

Personally facilitated dozens of Strategic Plans/Business Plans.

I took away their toys and made them work!

Ya just can’t make this stuff up!
Leigh

 
Comment by BanteringBear
2007-12-07 18:08:11

Is there truly any business model that guarantees success? I’m certainly not under the impression there is. Business is about risk.

 
 
Comment by Jas Jain
2007-12-07 15:30:04


“They included East Palo Alto, which fell 32 percent to $412,500…”

Yes, East Palo Alto, so close and yet so far from the hot housing market of Palo Alto.

It is simply a marvel how cleverly Americans maintain segregation between haves and have-nots. That is what freedom and equality of educational opportunity is all about.

Jas

Comment by turnoutthelights
2007-12-07 15:39:27

Jas, about 2 years ago the SF Chron ran stories of genteelization of East Palo Alto. Day late and the ‘hood short.

 
Comment by jbunniii
2007-12-07 23:41:16

Palo Alto has some neighborhoods that are fairly ghetto, too. They still command a hefty rental premium compared with East Palo Alto, primarily because of the school district I assume.

BTW, I didn’t realize until recently that East Palo Alto isn’t even in the same COUNTY as Palo Alto.

 
 
Comment by Professor Bear
2007-12-07 15:31:32

“Chapman University President James Doti, in a slide presentation before about 2,000 people, said the United States economy was clearly headed for a slump next year…”

Glad to hear we are merely headed for a slump and not a recession.

Comment by Dan
2007-12-07 23:43:57

It’s only a “recession” because of the Great “Depression”, which is like a cataclismic hurricane of sorts that had its names retired - Andrew, Katrina, etc.

Watch it being renamed into a Great American Slump.

 
 
Comment by aladinsane
2007-12-07 15:38:30

“Jason Bosch, president of Home Center Realty in California’s hard-hit Riverside County, was pessimistic. ‘We were selling $300,000 homes to people who could only afford $175,000 homes,’ he said. ‘Even if you freeze their payments, they still can’t handle it.’”

$hip of Fools…

http://www.historyforkids.org/learn/people/pictures/boschfools.jpg

 
Comment by turnoutthelights
2007-12-07 15:47:52

“As recently as 1999, the percentage of affordable homes on the market in Merced was at 67.4 percent. Since then, the figure has dropped steadily, reaching an all-time low in 2005, at the height of the housing boom. Back then, Merced ranked as the least-affordable smaller city in the country. Today, Merced is ninth on that list.”

That ‘all time low’ was 2.5%. Today it’s 7.2%. Whoopee! In any case, homes sold like hotcakes even then. And it’s raining today, which means a mean fog in a day or two. December RE sales just ended.

 
Comment by aladinsane
2007-12-07 15:52:43

“The game of real estate pricing is built on a foundation of comparable sales, known as ‘comps.’ So when those comps slide, so do prices in general. And when there’s not much, except height and sometimes a view, to distinguish one one-bedroom, one-bath unit from another in the same building, foreclosures are expected to affect prices especially hard in some buildings in downtown San Diego.”

In a weird twist of name, the word Comps means complimentary—the casino term for free services.

Comment by Midwesterner
2007-12-07 16:38:01

actually in the RE world it is for comparables

 
 
Comment by are they crazy
2007-12-07 16:03:01

And the beat goes on. Here’s where the taxpayers get screwed - IRS says huge amount of fraud in RE partnerships. The criminals run everything up and then to add insult to injury, don’t pay their taxes. http://tiny.cc/bNUpF

Comment by Vermonter
2007-12-07 16:31:06

LOL - if you were the type of person to organize fraud, why in the world would it occur to you to pay taxes on it??

 
 
Comment by Hoz
2007-12-07 16:12:42

Details of the Hope plan

(these items are particularly interesting, because it means it is only to help those that have the greatest potential losses to banks.)

“Segment 2 (the heart of the program—streamlined/fast track modification) – includes current loans where borrower is unlikely to be able to refinance into any available product

* “Current” means not more than 30 days delinquent and not more than 1 X 60 days delinquent in last 12 months under OTS or not more than 1 x 90 days delinquent under the MBA calculation method
* LTV > 97% - Current loans with LTV greater than 97% are deemed to be ineligible for refinance under other products so would be deemed to be within Segment 2 (LTV/CLTV determined on information at origination; also if LTV is below 97%, servicer “may” obtain updated home value by AVM, etc.
* Not FHA Secure Qualified -Current loans that don’t otherwise satisfy FHA Secure requirements are also deemed within Segment 2 unless servicer can determine they qualify for some other product without performing an underwriting analysis
* Servicer is to determine for these borrowers: (1) owner occupancy based “solely” on borrower’s representations at origin [note many of whom actually made gross misrepresentations] and on other information known by or readily available to servicer; (2) FICO score change since origination
o If FICO is 660 or current FICO is 10% or more higher than at origination, borrower considered to have FAILED the FICO test and then servicer uses a more detailed analysis to determine borrower’s current income/debts
o Servicer must determine if payment after reset will go up by EITHER (1) more than 10% if meets FICO test; or (2) if failed FICO test, an amount that servicer determines borrower cannot afford
o Servicer has option to conduct more detailed DTI analysis instead of using the above tests.
o Borrowers falling within Segment 2 would be eligible for modification that freezes the interest rate at the pre-reset rate for 5 years
o This streamlined option is NOT exclusive and does NOT prevent servicer from conducting a more individual indept analysis consistent with applicable servicing standard in the transaction documents to determine if a LONGER TERM modification would be appropriate
o Servicer may make following presumptions if loan falls into Segment 2:
+ Borrower is able to repay under the modification based on current payment history prior to reset date
+ Borrower is willing to pay under the modification based on (a) an agreement to the modification after being contacted; or (b) if borrower’s affirmative agreement isn’t obtained [many don't respond to mailings of the modification docs] by the payment of 2 payments under the modified loan after being notified of the terms
+ Borrower is unable to pay and default is reasonable foreseeable after the scheduled reset based on size of payment increase if meets FICO test or based on current income if fails FICO test
+ The modification maximizes the net present value of the recoveries for the trust and is in investors’ best interest IN THE AGGREGRATE as refinancing options not likely and borrower can/will pay under the modified loan.”
American Banker
http://tinyurl.com/ysserj

Comment by Hoz
2007-12-07 16:21:44

Forgot to include this:

# Applies to first lien owner occupied residential adjustable rate loans (ARMS) with initial fixed rate for 36 months or less
# Must be originated between 1/1/05 and 7/31/07 and included in securitized pools with reset date between 1/1/08 and 7/31/10

Comment by Vermonter
2007-12-07 16:34:21

Have we located the 10 people yet that will qualify for the fast track bailout?

Comment by SoBay
2007-12-07 17:08:47

Question?

- For SoCal will there be a Spanish Translation?

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Comment by Mike G
2007-12-07 16:45:13

Affordability went from 67.4% to 2.5%? In a cr_phole like Merced? Yikes.
And almost nobody thought this was an unsustainable trend. Or at least, they were making too much money pretending it would last forever.

Comment by BanteringBear
2007-12-07 21:16:04

Yeah, that fact should elicit some fear. This thing got WAAAAY out of control. I’ve never been a fan of a lot of regulation, but apparently Wall Street and the lenders need babysitting.

 
 
Comment by RayW
2007-12-07 17:27:17

I’ve traveled past the point of “Don’t give a sh*t” and I’m moving on to “Laughing my *ss off”.

Now that the Dow has regained some of what I lost when I failed to bail at 14,000…..GERONIMO! Rolling my IRA into 6 month CD’s. I’d rather risk only getting 4% than losing 20%.

Things are going to start getting really, really ugly. And if you think it’s bad now….let’s have a nice quake to knock a few houses on the penninsula down to see how quickly deflation can really get going. It’s like it’s 1989 all over again, we just haven’t had the quake yet.

Comment by pismoclam
2007-12-07 21:52:17

Sorry I have to leave you Lucille. Monk is coming on in seven minutes.

 
 
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