January 24, 2008

The Problem Has Been Prices Are Too High

The Contra Costa Times reports from California. “As home prices slipped and selling a home to get out of financial trouble became harder to do, more homeowners in the Bay Area and statewide found themselves facing foreclosure in the final months of 2007, pushing the already record-breaking number of distressed homeowners even higher.”

“‘We’re probably in for more of the same, more increases,’ in foreclosure activity in 2008, said DataQuick’s John Karevoll. ‘We’re still seeing the main driver of foreclosure activity, which is price declines, and we do not know when those price declines will level off.’”

“In Santa Clara County, 2,162 homeowners received default notices in the fourth quarter, up 147 percent from a year earlier, and up 31 percent from the third quarter of 2007. The county certainly has pockets that have been deeply affected, such as San Jose’s Eastside, where many buyers bought at the top of the market in 2005 with no money down using risky adjustable-rate loans.”

The Santa Cruz Sentinel. “The number of struggling borrowers has tripled in Santa Cruz County compared to two years ago, according to the Santa Cruz Record. Last year, 993 homeowners received default notices, the first sign of trouble, compared to 452 in 2006 and 333 in 2005.”

“Another trend: a higher percentage of borrowers who defaulted on payments had their property go into foreclosure. Last year, the number of properties in foreclosure reached 506, compared to 146 in 2006 and 109 in 2005.”

“A total of 44 default notices were posted for one week in January, which is about double the activity from last year.”

“The following week, a total of 23 properties were sold at foreclosure auctions. If that pace were to continue, more than 1,000 homes would be lost to foreclosure this year.”

“In Monterey County, a total of 1,020 homes were sold in foreclosure auctions last year. That represents about a third of the 3,070 borrowers who received default notices that year.”

“Foreclosure activity is picking up speed there this year, with 116 default notices and 53 homes sold last week.”

The Appeal Democrat. “Yuba, Sutter and Colusa counties default notices more than doubled from the previous quarter. Yuba County led the three counties in total with 302 default notices, followed by Sutter County with 210 and Colusa County with 65.”

“Dave Richardson, a Dobbins resident who owned a Sacramento lending business for a number of years, pointed to depreciation. He added that interest rates rose though 2006, and that some loans should not have been made whatever the rate.”

“‘If you owe $300,000 and it’s worth $250,000, you might want to walk away,’ said Richardson.”

From Fox 6 San Diego. “The numbers are in for foreclosures in 2007 and they are grim. Foreclosures jumped 353% in 2007. Add to that, defaults which are often the first stage for foreclosures. They’ve jumped 100% over the prior year.”

“For homeowners who bought in 2005 or later, 48% now have negative equity so the incentive for many will be to allow their homes to default.”

“A jump in the number of delinquent property tax payments prompted San Diego County Treasurer-Tax Collector Dan McAllister Wednesday to send out more than 71,000 reminder notices to property owners. Those who missed the deadline will incur a 10 percent late fee.”

“‘We are not quite certain why the dramatic jump in delinquencies has occurred. But to be on the safe side, we will vigorously pursue these tax collections,’ McAllister said.”

The Press Enterprise. “Foreclosures soared to new records in Riverside and San Bernardino counties in the last month of 2007, with an increasing number of homeowners hard-pressed by mortgages resetting at higher rates and declining home values.”

“In the fourth quarter, lenders sent 9,913 notices of default to homeowners in Riverside County, which was up almost 119 percent from a year earlier and reached a record high for the fourth consecutive quarter, DataQuick reported.”

“DataQuick analyst John Karevoll said the two-county Inland region has the highest mortgage-default rate in Southern California, whether looking at the portion of all mortgages that default or the number of failing mortgages compared with total households.”

“Lisa Jarman, a counselor at the Fair Housing Council of Riverside County, said homeowners on the verge of foreclosure are having difficulty negotiating with their lenders for loan modifications that they can handle.”

” A lot of homeowners got their homes based on stated income and their income was overstated on the loan applications, Jarman said.”

“She said sometimes even with a lower interest rate, they could not afford to make the monthly payments on a fixed-rate mortgage, especially if they are required to repay previous missed payments.”

The Desert Sun. “Foreclosures reached a 20-year high in California at the end of 2007 as more homeowners fell behind on their mortgage payments.”

“Coachella Valley information was not available Tuesday, but Diane Busch, president of the local Women’s Council of Realtors, said the desert is ’seeing a lot more of this.’”

“Broker Lorenzo Lombardelli expects to see the trend continue for the ‘next reasonable amount of time.’ Many are buyers who qualified for 100 percent or exotic financing for homes that might have been out of their price range with a conventional mortgage.”

“‘But the problem was they really didn’t qualify to make the payment or buy in that price range,’ Lombardelli said.”

“Buyers thought the houses would appraise at a higher rate, allowing them to sell for a profit or refinance at a better rate. ‘When adjustable rates kicked in and escalated, they found themselves in a situation where they couldn’t come up with the new adjusted mortgage prices,’ Busch said.”

From Reuters. “Borrowers with mortgages for more than their homes are now worth will not be helped by lower interest rates — and refinancing will not be an option amid sliding home prices, which are fueling California’s foreclosure surge, according to DataQuick.”

“The median price paid for a California home fell to $402,000 by the end of 2007 from its March peak of $484,000, according to DataQuick.”

“‘With today’s depreciation, an increasing number of homeowners find themselves owing more on a property than its market value, setting the stage for default if there is mortgage payment shock, a job loss or the owner needs to move,’ said Marshall Prentice, DataQuick’s president.”

“The Fed’s rate cut will have little effect on home prices but may help forestall or minimize a recession by helping to prevent job losses that would send foreclosures soaring even higher, said Stephen Cauley, director of research at the Ziman Center for Real Estate at the UCLA Anderson School.”

“‘The one thing that could make this housing thing really explode is for unemployment to go up a lot,’ Cauley said.”

From The Sun. “Robert Villalvazo gets an earful of gossip every day, but Tuesday’s news kept his ears tingling. ‘They’re worried about if they’re going to lose their jobs,’ the manager of Big W Barber Shop in Upland said of his customers.”

“An economic downturn has already hit San Bernardino and Riverside counties, with skyrocketing foreclosures and job layoffs at the forefront. Recent employment reports have shown a declining level of job creation for some time. In fact, some economists speculate that when 2007 numbers are firmed up, the two-county area might register a significant loss in jobs.”

“Villalvazo is seeing this firsthand. His barbershop gets more customers when people are looking for jobs.”

“‘They’re going to apply for jobs,’ he said of the rise in customers wanting haircuts. ‘We had a lot of people this last December versus the December before. We have a lot of people looking for jobs.’”

The Daily Bulletin. “Permit numbers released this week by the Construction Industry Research Board showed what pretty much everyone had known all along: The year 2007 wasn’t a particularly good one for San Bernardino and Riverside counties, with the total value of permits pulled down by about 40 percent in Riverside County and nearly 30 percent in San Bernardino County.”

“‘People spent most of last year pulling back from new projects,’ said Jack Kyser, chief economist at the L.A. County Economic Development Corp. ‘There were a lot of projects already in the pipeline and more and more unsold inventory as the year went on.’”

“L.A. County slipped only from $10.64 billion in 2006 to $10.6 billion last year. ‘There were a lot of multifamily, condo and loft projects in the downtown area last year,’ Kyser said. ‘We’ll have to wait and see what happens in 2008.’”

The Modesto Bee. “Sen. Barbara Boxer has released a 15-point plan she thinks will help stop foreclosures in California. ‘Time is not our friend,’ Boxer said during a telephone press conference Wednesday afternoon. ‘We are in a crisis, and we need to stop the bleeding.’”

“Boxer expressed concern about the 8,000 homes lost to foreclosure last year in Stanislaus, San Joaquin and Merced counties. ‘What you have is a vicious cycle because as values go down, it doesn’t pay for people to stay in their homes (or try to avoid foreclosure),’ Boxer said.”

The Union. “Real estate prices in Nevada County fell for the ninth straight month in December, plunging nearly 16 percent to a median price of $420,000, according to Dataquick. In an emergency move on, Federal Reserve Chairman Ben Bernanke cut the central bank’s discounted lending rate to banks by three-quarters of a point, to 3.5 percent, in an effort to stave off recession.”

“Despite the lower rates, it could be ‘a little too early’ to know what effects the declining interest rates could have on the local housing market, said Judy Barley, VP of California Land Title of Nevada County.”

“‘Interest rates have never been the problem, because interest rates have been reasonable the last couple of years,’ Barley said. ‘The problem has been prices are too high, and now prices are falling, and sellers still want the gold, and … buyers keep thinking it’s going to go lower, so they wait it out.’”




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168 Comments »

Comment by Ben Jones
2008-01-24 16:08:56

I kept waiting for the used house sellers in CA to put out their existing homes report, but I guess they are putting the finishing touches on it. If it comes out shortly. I’ll update this report.

Comment by Jas Jain
2008-01-24 16:31:31


I think they post around 10:00 A.M. So, most liekly tomorrow morning.

The DataQuick numbers for December (Counties and Cities) were ugly:

http://www.dqnews.com/ZIPCAR.shtm

Jas

Comment by jcclimber
2008-01-24 17:16:34

And why are the barber’s customers going out to look for jobs? Were they sitting on their butts at home up until now? Who was paying for that until now?

Comment by tresho
2008-01-24 17:21:23

The article seems to suggest the barber’s customers have recently lost their jobs or are looking for a new job before losing their present one.

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Comment by Faster Pussycat, Sell Sell
2008-01-24 17:31:02

They got a haircut?

I crack me up sometimes.

 
Comment by DrChaos
2008-01-24 18:12:50

you need a good haircut to get a new job.

 
 
 
Comment by peter m
2008-01-24 17:47:40

“The DataQuick numbers for December (Counties and Cities) were ugly”

I have pored over the LA stats and as i had long predicted the bottom -rung ghettoburgs are taking a beating. If U have been thru such slimy hoods as Inglewood, Lennox, Pomona, Pacoima, La Puente ,wilimington, Scentral, Sgate, Compton, North and central Long beach, norwalk, lynwood, East LA , and seen just how decayed and run down these areas are U would have shaken your head in disbelief when many 2/1’s, 3/2.s in ghettoland were going for $450,000-600,000 at height of LA RE bubble mania in 2006-early 2007. Lots of fraud in LA ghettos and now the fraudsters have fled the coop and left carcasses of decaying, rotten, half finished or trashed out rented homes to rot in foreclosure, thus furthering the decaying process already long underway in these inner slumburgs.

Comment by CHILIDOGGG
2008-01-24 18:25:10

El Monte wants its props.

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Comment by peter m
2008-01-24 22:16:49

List of LA County’s Crapburgs, gangvilles,third world districts, whatever. Notice the price reductions.
Do not think anyone on this blog will buy in these areas anytime soon. From dataquick LA City charts, dec 07

COMPTON 48 $378,250 $407,000 -7.06%
BELL 4 $418,500 $475,000 -11.89%
HUNTINGTON PARK 10 $397,500 $485,000 -18.04%
INGLEWOOD 20 $408,000 $501,500 -18.64%
LYNWOOD 6 $315,000 $475,000 -33.68%
MAYWOOD 5 $300,000 $409,500 -26.74%

NORWALK 34 $388,500 $475,000 -18.21%
PACOIMA 26 $415,000 $495,000 -16.16%
PANORAMA CITY 23 $340,000 $440,000 -22.73%
PARAMOUNT 14 $340,000 $417,500 -18.56%
POMONA 53 $350,000 $414,000 -15.46%

SAN FERNANDO 6 $390,000 $510,000 -23.53%
SOUTH GATE 19 $390,000 $490,000 -20.41%
SUN VALLEY 4 $365,500 $514,000 -28.89%
WILMINGTON 5 $410,000 $465,000 -11.83%

there are at least an equal number of LA City zips, largely located in SCentral and in the inner Ring surrounding Dwtn ,which were not included in the city chart but which match the above areas for wretchedness & neighborhood decay.

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Comment by Lovintheburstingbubble
2008-01-24 22:20:39

Since these figures include the homes purchased back by the banks - means there is not much other activity imho.

 
Comment by MustangSal
2008-01-24 23:04:51

Remember these figures include all the houses that the banks have to buy back. The media and news don’t report this fact.

 
 
Comment by oc-ed
2008-01-25 08:25:01

They probably ran out of whiteout.

 
 
Comment by Wilson
2008-01-24 16:11:45

Guys,
Is this raising of the Loan Limit in the Stimulus package going to keep home prices higher? Or will it have no effect? I saw some of the comments on the last post, but does anyone have a in-depth analysis of this?
Thanks,
Wilson

Comment by Ben Jones
2008-01-24 16:16:20

In light of recent developments, I suggest you buy a house right away. No, make that two. All the fundamental reasons showing the housing bubble is and will continue to deflate have been negated by those masterful beings on Capital Hill.

BTW, has this thing even been to senate?

Comment by Frank Hague
2008-01-24 16:38:51

Secretary Paulson has said that the Bush Administration is against raising the limit, so it may be stripped out in the Senate version. From the below article it looks like that even if it does pass that the capital constraints imposed on Fannie/Freddie would hinder the buying of a large amount of Jumbos.

http://tinyurl.com/2vfwv4

Michael Cosgrove, a spokesman for McLean, Va.-based Freddie Mac, said the change “would be in the best interest of the economy and consumers,” but noted that extra capital the company is required to hold on its books “creates a significant challenge for Freddie Mac as we continue to operate under severe capital constraints.”

Comment by James
2008-01-24 18:07:47

I don’t really understand the capital constraints problems they are having. My fear is the banks will offer loans with some cash back to make them current and sell then to the GSE. So the bad debt gets moved to the GSE. The less ethical banks could make these into time bombs. Put the cash back into escrow and use it to make payments for a year or two. Then it defaults.

I think unless the banks can transfer the risk to the GSE they really can’t start the bubble again. Not sure how much of an effect this will make.

Seems like without wages increasing this will just lead to a different rate of deflation.

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Comment by AKron
2008-01-24 19:05:38

“I don’t really understand the capital constraints problems they are having. ”

They are operating under strict limits (enforced by Office of Federal Housing Enterprise Oversight) due to severe mismanagement. For instance, see

http://www.mortgagenewsdaily.com/8152006_Fannie_Freddie.asp

Also, as far as lifting limits, the conforming loan limits have always been higher (about 150% of the level in most places) in Alaska, putting the limit well above the price of the vast majority of houses up here, and our market is locking up just like everywhere else. Thus I don’t think that raising the limits will have any effect.

Note also that Fannie and Freddie have both failed to file their financial reports on time. They must have a special dispensation from the SEC… :|

 
 
 
Comment by Mr Vincent
2008-01-24 16:49:07

“BTW, has this thing even been to senate? ”

Nope! Oh what a great idea, raise the loan limit so that people can get in even deeper with a purchase.

Of course, this may help some who already have a big mortgage and want to refi to a lower rate.

Comment by jcclimber
2008-01-24 16:56:24

I was expecting this to happen. I am surprised that their helicopter has so little money in it, actually. I suppose they can always run a series of helicopters as they pump up the money supply to avoid the meltdown a little bit longer.

At least until the “Most Important Election Ever” TM is over later this year.

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Comment by reuven
2008-01-24 17:26:06

Nope! Oh what a great idea, raise the loan limit so that people can get in even deeper with a purchase.

What’s even more amazing is that since house prices have DROPPED, you’d think someone would propose LOWERING the limit. That would be my recommendation, but of course nobody ever asks me. You’d think someone who actually pays the bills for the government would have more of a say, but we’re in the minority.

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Comment by peter m
2008-01-24 19:31:06

“Nope! Oh what a great idea, raise the loan limit so that people can get in even deeper with a purchase.”

This might slow the rate of RE bubble decline and keep house prices obscene in some of the pricy Westside parts of LA but won’t do jack for the rest of LA county. This raising the loan limit will only prop up the few wealthy westside and Southbay enclaves but the rest of LA is already in the toilet.

Anyone looking for affordable westside housing in the near future just got shafted. Better start thinking about looking in Some more ‘affordable ‘area of LA which has not yet been completely ghettoized such as Downey, carson, Burbank, Lakewood, Glendale, la mirada, cerritos, ect. If U have unlimited gas money and time to burn on freeways Palmdale and Santa Clarita looking good.

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Comment by Joe Schmoe
2008-01-24 21:07:02

I have to respectfully disagree. If a young professional couple, the kind of people who are attracted to the Westside, earns $200,000 -$250,000 per year, they can’t afford to buy a $1.5mm starter home there. (And most people don’t make that much — the 30-something worker bees on the business side of the entertainment industry don’t, and most of the doctors and lawyers don’t either; only a handful of people in their 30’s are neurosurgeons or junior partners at big law firms. The number of non-celebrities in their 30’s who are earning, say, $400,000 per year can probably be counted on the thumb of one hand.) And if the 30-somethings can’t buy the starter homes, the 40- or 50-something who currently owns it won’t be able to “trade up” to a $2.5mm place in the hills.

The Westside also requires people to pay for private school, since the professionals who reside in the area will never send their kids to the ghetto schools of the LAUSD. Those private schools are awfully expensive — Harvard/Westlake is something like $25k/yr/child! If you’ve got two kids, private school tuition will take a significant bite out of your purchasing power.

None of this has anything to do with mortgage availability. Even if a bank will give our young couple a mortgage for $1.5mm at a very favorable interest rate, they’ve still got to be able to service the mortgage — and at these prices they can’t, it’s simply impossible.

There are other issues, too. For example, $1.5mm gets you an 1,800 sq ft 3/2 starter home in a typical Westside area code like 90024, the residential area right next to Century City. We’re not talking about Bel Air, Malibu, or Beverly Hills here, just a 40’s/50’s suburban section of the city of LA. You don’t get a mansion. Not even a McMansion. A crappy little ranch house that would cost you $70,000 in Texas or Ohio. And it’s on an ordinary-looking street — no ocean views to be had — in an area where you can’t send your kids to public school. I don’t know about you, but if I were in a position to actually afford that house, I wouldn’t buy it. I am in a position to buy a 2/1 condo in Westwood — but I’m not buying one.

In short, Westside prices are ridiculously inflated relative to incomes. The same goes for every other desirable area of LA — Santa Monica, Malibu, Beverly Hills, Studio City, Sherman Oaks, Pasadena, San Marino, the beach communities, etc., etc. — the list goes on and on. Houses in every single one of those communities were selling for 1/3 of their current prices in 2000 — and I fully expect them to return to that level.

 
Comment by jbunniii
2008-01-25 00:03:49

Palmdale isn’t completely ghettoized??

 
 
 
Comment by cactus
2008-01-24 19:09:24

“In light of recent developments, I suggest you buy a house right away. No, make that two.”

Just don’t use any of your own money to buy it that way you can bail out if the prices don’t go up. That ain’t working thats the way you do it Housing for nothing and the payments for freeeeeeeeeeeeeeeee.

Comment by peter m
2008-01-24 19:35:03

That ain’t working thats the way you do it Housing for nothing and the payments for freeeeeeeeeeeeeeeee.

I Rather like the original lyrics “Money for nothing, chicks for free”

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Comment by Mike G
2008-01-24 22:09:11

I want my
I want my
I want my no-doc ARM

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Comment by IEFencesitter
2008-01-24 16:22:22

All it means is a buyer can qualify for a larger loan at the preferred conforming interest rate, if i”m not mistaken. You still have to have willing and able buyers with good credit and money to put down. Willing being the key, as most people I know are waiting it out much longer. Too much uncertainty.

Comment by ex-nnvmtgbrkr
2008-01-24 16:29:36

Hey, fencesitter gets it - what’s wrong with the rest of you?

Comment by dc21
2008-01-24 16:54:40

ex-nnvmtgbrkr

I agree higher conforming limit won’t make a bit of difference on dropping prices or lack of demand. Question - At the margins will it allow some to re-finance to stay in their homes rather than face foreclosure? i.e. I have crappy credit can’t refinance my $600K home because there is no secondary market but will now be able to since the US Taxpayer will be buying the note. While that would reduce inventory it doesn’t really seem to be that big of a game changer as there is already such a glut that should force prices to equilibrium. It seems to be just another way to trap folks into a depreciating asset.

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Comment by ex-nnvmtgbrkr
2008-01-24 17:20:59

No one with bad credit should even try. That’s the thing, conforming loans mean GOOD CREDIT, and I mean really good. Sorry to give you the bad news.

 
Comment by dc21
2008-01-24 17:27:37

Bad news? That’s the best thing I have heard all day.

 
Comment by JohnF
2008-01-24 20:42:21

Just wait till the Feds realize raising the limit didn’t work….there will be major pressure on Fannie/Freddie to start lowering their requirements to help out the poor homeowners……

 
Comment by Pondering the Mess
2008-01-25 10:33:02

Exactly. This is step 1. Step 2 will be to drop the lending standards. Step 3 will be to find some way to make it harder to rent: maybe a “renter’s tax” for “UnAmerikan behavior” for not consuming beyond one’s means. Then, we’ll have socialized housing for all, where the only way to get a house is if the government gives you one since you’ll never be able to afford it on your own. Nice!

 
 
Comment by crispy&cole
2008-01-24 17:44:35

UGH!

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Comment by Mike
2008-01-24 16:51:24

Don’t forget the “no doc” money-free-for-all has gone and it ain’t coming back. The bankers have poopy pants at the moment and they are not in the giving mood.

Not only do you have to have good credit, you will need a fat deposit AND the income to sustain mortgage payments. Anyone walking in to buy a $400,000 property with a FICO score of 500 or even 600, a few late payments, car payments, and patchy work record and $200 deposit - will be shown the door.

At the moment, we are in the “honey moon stage” of this bail out. Nobody has had time to think. Soon that stage will pass and people will start to look back at what the 10 year + greed period has done to thousands and thousands of people. The $600 and $1200 gift (of your own money) by politicians is because we are in an election year. If they thought you would vote for them, they would let you sleep with their 12 year old daughter. That “gift” is either going to pasy for extra energy bills or food bills or a dozen other things which need to be paid for before the majority of consumers go out and buy that 52″ HD flat screen.

This isn’t 1989 and Bahgdad Ben Bernanke’s b.s about no inflation is just that. B.S.

Bottom line: If they dropped the interest rates to 2% and gave everyone another $2,000 it wouldn’t make any difference. Buying property for the next 2 or 3 or even 5 years will be the kiss of financial death.

Comment by Big V
2008-01-24 17:23:01

That gift of my own money isn’t even going to me. I have too much income (but still can’t afford to buy my own house). This is so unfair that I’m fuming.

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Comment by reuven
2008-01-24 17:28:43

I have one goal for 2008! To extract $1200 + $300/child from someone who got the check. Not sure how I’ll do it, but I have 11 months to think of some way to dupe just one person.

 
Comment by Faster Pussycat, Sell Sell
2008-01-24 17:40:37

Amen, sister!

Just to be even my goal is 2x the amount. I’ll aim for May (just to be a little more ambitious than Mr. & Mrs JT.)

 
Comment by reuven
2008-01-24 17:58:36

I’m realizing something from our initial reaction to this confiscation and transfer of wealth from the taxpaying class to the freeloading class: it’s extremely divisive!

It’s very obvious when folks (group “A”) making more than a certain amount get zero, and folks making under (group “B”) that amount get $1200 that all the government is doing is taking money from “A” and handing it to “B”. And since people in group B outnumber group A by a factor of 5, then it’s as if we’re writing checks for $1200 out to five families.

Usually the government doesn’t make it so obvious when they reach into my pocket to steal some money. But this bailout plan is explicit!

Those tax preperation programs should have a little animation that shows a little video clip–for each $1200 of taxes you pay–of J6P going down to BestBuy and buying a Plasma, or (more likely) putting a downpayment on a new Hummer

 
Comment by cactus
2008-01-24 18:34:01

I guess the Government wants to give the money to people who will spend it = low income will spend it while higher incomes tend to save it. For some reason the government preferes to get its savings from overseas investors and keep the Home Grown broke. Buying overseas electronics isn’t very effective so the Government would rather the poor spend it on Medical and food. Is anything made in the USA anymore besides drugs and food ?

 
Comment by reuven
2008-01-24 18:37:13

Is anything made in the USA anymore besides drugs and food ?

Condotels!

 
Comment by Faster Pussycat, Sell Sell
 
Comment by peter m
2008-01-24 19:49:19

“guess the Government wants to give the money to people who will spend it = low income will spend it while higher incomes tend to save it. ”

It is an observable fact that the poor tend to spend almost their entire disposable income. This may be because they have very little to spend in the first Place.
And yes, there is quite a bit of wealth transfers from the gov’t/taxpayers into poor communities, or gov’t subsidies if U will.

If u want to really make money in a recession open up a liquor store or salvage auto repair/garage in South LA.

Added benefit: tax avoidance.

 
Comment by Sailor
2008-01-24 20:06:52

Keeping the home grown broke and handing out freebee’s is how they keep themselves in office or get elected. There are a hell of a lot more people out there that will vote for free hand outs rather than financial security.

 
Comment by reuven
2008-01-24 20:34:32

There are a hell of a lot more people out there that will vote for free hand outs rather than financial security.

And this is a tremendous threat to Democracy! In fact, there’s something immoral about sending checks to J6P…it’s like buying votes.

We also need to fix our tax system so that EVERYONE, even people making only $1000/year, pays taxes! With nearly half the population paying little or no taxes (the “lucky duckies” described by the Wall Street Journal), America’s in big trouble.

 
Comment by SiO2
2008-01-25 10:19:39

Every wageearner pays SS tax. about 7.5%, plus about 1.5% for medicare. The employer pays the same, so some claim that the tax on salary is actually ~18%. Not totally true but not totally false either.
SS in fact is regressive, if you make over ~90k you don’t pay any more ss tax. So if you make 180k your effective rate is ~3.75%. But when you retire you get the same as the 90k earner too.
so, even the $1k per year folks pay taxes.
I would hardly consider myself lucky if I made $1k per year. I guess WSJ folks feel differently.

 
Comment by reuven
2008-01-25 11:43:46

Every wageearner pays SS tax. about 7.5%, plus about 1.5% for medicare. The employer pays the same, so some claim that the tax on salary is actually ~18%. Not totally true but not totally false either.

As a business owner, I’m well I’m well aware of the SS tax. You need to temper it with the fact that:

SS pays out a LOT of money to people who have not paid anywhere near the maximum into it. I’ve paid the maximum social security tax every year since 1984. (For example a woman who has worked for a few years can go to an SSD office, say “BOO HOO! I’M Depressed” and collect SSDI for the rest of her life. Think I could get away with that?)

People who have saved money and have income in their retirement years are TAXED on their Social Security income. So they receive less in the end than your typical “lucky ducky”

I do agree it is a bit unfair. For example the lefties/homosexuals/environmentalists who idolize Steve Jobs like to point out that he only takes a salary of $1/year. You know why he does that? So he only has to pay $0.16 in SS tax each year! The rest of his income is from backdated stock options, taxed at 15%

 
 
Comment by aNYCdj
2008-01-24 17:40:21

Hmmmm maybe give everybody $2000 and it can only be used to pay down a credit card that is nearly maxed out, AND the credit limit goes down by $2000 as well.

That means a $40-60 a month saving each and every month for ever…. And to those who have zero cc debt…you get a $2000 gift for being FRUGAL!

What do you think?
——————————
Bottom line: If they dropped the interest rates to 2% and gave everyone another $2,000 it wouldn’t make any difference. Buying property for the next 2 or 3 or even 5 years will be the kiss of financial death.

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Comment by Lane from s.c.
2008-01-24 19:15:56

I`m buying Dub`s with my money!!! yea! Or I might spend it on loto tickets.
Lane

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Comment by Backstage
2008-01-24 16:55:12

It also requires a willing lender. Tightening credit and increasing standards (not to mention frightened lenders) will make it more difficult to get a loan.

My credit card company raised the limit on my card by $2,500. I have no intention of using that increase, so it’s a pointless gesture. Same goes for raising the loan limit.

Comment by GH
2008-01-24 18:46:00

I noted Citi seems to regularly raise our limit by several thousand at a time. No wonder they are having problems.

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Comment by Brandon
2008-01-24 16:26:32

How is it going to help if income does not increase? Washington is so focused on supporting home prices and keeping people in homes they can’t afford that they have appeared to have lost sight of income. Someday, oneday home prices will recouple with income.

Comment by ex-nnvmtgbrkr
2008-01-24 16:45:36

ANd now that Fannie and Freddie are under the microscope, lending standards for conforming loans will remain way tight. No mortgage lates, lots of money down, lots of money in the bank, and you better be able to document that income. That’s right, you will actually be forced to afford the home. Oh the humanity!

Comment by jcclimber
2008-01-24 17:11:16

What microscope? That microscope can always have the light turned off in a second if it might save a politician’s a$$.

Think of how this would play out in a free market. Then think about how it would play out in a semi-socialist market.

I leave it up to you which one you think is more likely to happen in the modern day Amerika….

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Comment by ex-nnvmtgbrkr
2008-01-24 16:28:24

Okay, I’m getting sick of this, but here goes again. Will it keep home prices up? No. Will it save the housing bubble? Absolutely not! The only thing you need to know to reason it out yourself is that raising the loan limit means that more people would qualify for a lower rate, that is, todays conforming rate. Who cares?!! So the guy looking at a 700K house can get 5.5% instead of 6.5%. He still has to qualify for insanely tight lending standandards. Also, ask yourself this - Why haven’t the millions upon millions of Americans who have been well within these limits for some time now been salvaged? It’ll mean just about as much as it does for the guy looking at the 300K house as it does for the guy looking at the 700K house. It doesn’t mean a darn thing in the grand picture of the housing bubble. The reason why so many of you bought into it was that for a long time last year the REI was placing the blame on too low of loan limits for all their problems, instead of calling out the real problem, that is that prices were too high.

Comment by Jimmy Jazz
2008-01-24 16:45:53

Isn’t is really a trojan horse, to let lenders dump their existing toxic jumbos onto the GSEs? Or am I misreading the plan?

Comment by Big V
2008-01-24 17:33:23

Spot on, Jimmy Jazz.

I forwarded a paper to Barbara Boxer and Dianne Feinstein about this problem quite some time ago. I think I have that paper saved on my home computer. Shoot, I wish I could remember who it was by. It was written well before the bubble popped, and argued cogently, with actual data, that increasing F-word portfolio limits could cripple the US economy. The same applies to increasing loan amount limits. The system just cannot tolerate any more risk. Unfortunately, I’m afraid our beloved senators are far too busy to read academic papers and digest data. They need to receive a quick breakdown from who? A lobbyist! That’s why these guys don’t even realize that this whole plan is really for the benefit of bankers, and to the detriment of the average US citizen.

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Comment by HARM
2008-01-24 18:23:42

Bingo! Give the man his prize ;-).

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Comment by cactus
2008-01-24 18:38:27

Thats what I think is going on.

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Comment by jetson_boy
2008-01-24 16:50:05

Well, my anecdotal take on this is that as for me and my wife, who make an income that puts us in the top 5% of the earning populace in the Bay Area is that if we were to put 100k down on a house here, we would qualify for a house of around 450-500k. As of yet, most 500k homes here are absolute crap not worth the effort to repair. Most are still around 600k or more. So if lending standards have crimped the ability of the upper 5% to buy, then the other 95% is priced out beyond recognition. Getting back to us, the scenario I pointed out is if we WANTED to buy. Given the almost daily reports of tumbling values- 6% in just a month, we’d be idiots to even consider buying. Everyone else knows it too.

So no- I see little reasoning that this dandy piece of legislation would really help the situation, especially in California. But it does invite the future potential for much of the same that landed Financials in the same shape that they are now.

 
Comment by dc21
2008-01-24 17:05:35

PS - Want to take bets on if next year they will extend (or make permanent) the new conforming loan limit?

Comment by cactus
2008-01-24 18:43:33

The Government keeps printing money like this and next year they will have bigger problems to worry about IMO

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Comment by ex-nnvmtgbrkr
2008-01-24 16:40:10

“Borrowers with mortgages for more than their homes are now worth will not be helped by lower interest rates — and refinancing will not be an option amid sliding home prices, which are fueling California’s foreclosure surge, according to DataQuick.”

So IndyMac reports today that locks exceeded an all time high set in 2004. The only problem is that in ‘04 folks actually had the equity to qualify. Today? Nope. All these locks are soon to be cancelled locks when the appraisal hits the loan agents desk. To add insult to the injury, IndyMac loses money on cancelled locks. So much for all those suckers who bought up the stock today.

 
Comment by Paul in Jax
2008-01-24 17:16:15

Aologies if this has been posted:

“January 24, 2008

STATEMENT OF OFHEO DIRECTOR
JAMES B. LOCKHART ON CONFORMING LOAN LIMIT INCREASE

We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.

Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.
###

OFHEO’s mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac.”

Comment by Professor Bear
2008-01-24 18:33:37

And the GSEs’ mission is (drumroll please): To provide affordable housing, now defined as extending to a price of $730,000 in a coastal bubble market near you.

Comment by ex-nnvmtgbrkr
2008-01-24 18:42:30

you guys are hopeless

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Comment by Ben Jones
2008-01-24 18:50:47

No, some of these people want to have their hand held and told nothing bad will ever happen to them. They want a perfect ending and a free house. Ain’t gonna happen, IMO. The you know what hasn’t even started to hit the fan. If you think a few congress blathers are bad, watch the obituaries.

 
 
 
 
Comment by Big V
2008-01-24 17:16:58

If the regulator (what’s his name again?) agrees to increase the loan limit, then down payment sizes for gigantic loans will experience downward pressure (since the bank can pass the risk off to one of the F-word GSEs), so it may be possible for people to resume purchases of $700,000 houses with a mere 5% down (only $35k).

However, F-word loans require documentation of income, so the borrower still can’t take on more than the upper debt:income ratio, whatever that may be. I’m just worried that the F-words will start doing full-on subprime loans, thereby respiking the punch bowl with the final dose of alcohol that will prove to be fatal to our economy.

I am definitely AGAINST raising the GSE limits; I hope our dear regulator agrees.

Comment by ex-nnvmtgbrkr
2008-01-24 18:46:35

LMAO!!!! What FB has 35K? Back in the glory days of loose lending I had to wait ’til Friday to pull a VOD ’cause that’s when my borrower deposited his paycheck and could show SOMETHING in the bank. 35K……..that’s hilarious!

 
Comment by GH
2008-01-25 05:26:34

The only thing that will save house prices is the return of no doc option loans in areas like CA amd FL

I called the top in 2003 and was off by a huge amount and 2 years. Why? A bad assumption on my part was that incomes mattered relative to the size of the loan, but with no docs, income no longer mattered at all, thus the bubble continued to inflate by as much as another 100% in some areas. The same flawed logic on the otherside, seems to also be ignoring the simple fact that income now does matter!

 
 
 
Comment by sleepless_near_seattle
2008-01-24 16:13:28

Gee, what a surprise. Only 1 in 5 will do what the gov’t had hoped….

Poll: What will you do with your tax rebate?:
http://money.cnn.com/POLLSERVER/results/37384.html

Comment by Ben Jones
2008-01-24 16:26:24

I haven’t decided, but I have a hankering for barley, hops, yeast and water.

Comment by Arizona Slim
2008-01-24 16:34:30

Okay, everyone, let’s buy a round for Ben.

Comment by Faster Pussycat, Sell Sell
2008-01-24 16:59:35

A round of beer and popcorn for everyone on the blog!

(JT-show in progress.)

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Comment by txchick57
2008-01-24 16:59:35
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Comment by Faster Pussycat, Sell Sell
2008-01-24 17:02:05

Madre de dios!

Me, me, me, me, me.

I want one of those.

 
Comment by Not Mssing It
2008-01-24 17:09:44

Can I rent a room. I hate my house!

http://www.exitmundi.nl/oilproblem_migrantmother.jpg

 
Comment by Ben Jones
2008-01-24 17:12:57

‘Dia said…$11.4mi in WYOMING??? for that price it better have ALOT more than 5 acres. is that a sears-roebuck stove i see in the kitchen??????’

I don’t know, but those couches look like motel 6 to me.

 
Comment by spike66
2008-01-24 17:22:33

“If you aren’t a fan of this style it can all be a bit much”

Gee, ya think? Perfect for that scrap-booking mogul. That cheesy furniture in the breakfast room looks like it was salvaged from a downmarket conference room.

 
Comment by reuven
2008-01-24 17:31:04

Ben should REQUIRE any of the freeloaders who will be receiving MY MONEY to donate it to TheHousingBubbleBlog.com

 
Comment by Talon
2008-01-24 19:30:32

Very Wright-ish, and like most of his creations more art than architecture. Looks like a bunch of leaks waiting to happen…

 
 
 
 
Comment by ex-nnvmtgbrkr
2008-01-24 16:35:27

A bag of Joshua tree seeds. I see a high demand for JTs in the coming years.

Comment by Faster Pussycat, Sell Sell
2008-01-24 17:12:57

Road trip, no?

Save the money for the gas and vittles.

Comment by tresho
2008-01-24 17:25:41

I kind of like the looks of Joshua trees. Maybe someone could start selling Bonsai versions.

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Comment by cactus
2008-01-24 18:49:36

sedum multiceps the miniature Joshua tree

 
 
 
 
Comment by turnoutthelights
2008-01-24 16:39:31

Actually, it’s seems a higher percentage than 20% ‘will do what the government hoped’. IMO this is about liquidity for the financials, as the desire of the consumer to spend is still strong.
Paying down debt is simply a great way to bail out the banks without calling it a bailout - and it frees up loan limits to keep the cards swiping. A real sweet twofer, if it’s delaying the pain is the game.

Comment by Ben Jones
2008-01-24 16:57:42

delay?

‘Sales of existing homes fell in December, closing out a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years. The median home price dropped for the entire year, the first time that has occurred in four decades. For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982.’

Comment by hwy50ina49dodge
2008-01-24 17:10:24

“…the biggest drop since a 17.7 percent plunge in 1982″

Interest rate on my assumed VA loan in 1982: 15.5% for a $26,500 loan.

As long as “they” keep the interest rates low…and it requires x2 incomes to qualify…house prices will stay in the “high tide” range. ;-)

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Comment by Nightowlsix
2008-01-24 21:12:30

Let’s not forget it’s only the best stuff that’s selling…and these prices aren’t normalized for square footage…
Good times!

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Comment by Brandon
2008-01-24 16:49:48

We’re gonna pay down some debt and toss a little in savings…..and buy diapers, lots of diapers.

For those in California (especially the San Joaquin Valley), it may be a good time to open up a temporary custom wheel business or maybe buy a bulk lot of car stereos and subwoofers to sell at the flea market in June and July.

 
Comment by CasaTostada
2008-01-24 16:55:43

I’m finally going to start the do-it-yourself candle store in the basement of a downtown loft. $600 should buy a few wicks.

Comment by PopGoesBend
2008-01-24 17:11:52

Between the wife and I we should be able to buy a couple of houses in Cleveland.

Comment by spike66
2008-01-24 17:25:25

You could get a whole city block in Detroit.

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Comment by pismoclam
2008-01-24 17:39:20

Besides the candles, you should bake doggie biscuits. Corner two sub-markets.

Comment by Faster Pussycat, Sell Sell
2008-01-24 17:49:44

Doggie cupcakes, as well (with a doggie spa on the side.)

Not making this up!

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Comment by Pondering the Mess
2008-01-25 10:41:01

A wheelbarrow might be a good investment, so we can haul around the money needed to buy food.

Well, it’s all digital these days - maybe a bigger wallet for all the “free money” we’ll be getting? Gotta have room for the eventual $10 coins, etc.

 
 
Comment by combotechie
2008-01-24 17:43:57

I’m gonna buy Cleveland.

Comment by sleepless_near_seattle
2008-01-25 00:18:19

Sorry, I already called dibs.

 
 
Comment by FP
2008-01-24 18:07:57

I’m not sure if I’m qualified? Joint filing=250-300K a year? What do I get?

Comment by Brandon
2008-01-24 18:26:12

A thank you card?

 
Comment by DAVID
2008-01-24 18:46:46

Make less money!

Comment by edgewaterjohn
2008-01-24 20:23:57

Even Josef Stalin knew that rewarding failure wasn’t how to increase productivity! Silly career politicians.

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Comment by spike66
2008-01-24 21:14:12

“rewarding failure wasn’t how to increase productivity!”

Say what? We’re ‘merkans, and that’s how we roll. You got a problem with that?

 
 
 
Comment by AnonyRuss
2008-01-24 23:18:35

The phase-out limit for a married couple is $174K.

 
 
Comment by SD Native
2008-01-24 23:49:00

I’m buying Euros.

 
 
Comment by Sobay
2008-01-24 16:19:03

“Foreclosures soared to new records in Riverside and San Bernardino counties in the last month of 2007, with an increasing number of homeowners hard-pressed by mortgages resetting at higher rates and declining home values.”

“In the fourth quarter, lenders sent 9,913 notices of default to homeowners in Riverside County, which was up almost 119 percent from a year earlier and reached a record high for the fourth consecutive quarter, DataQuick reported.”

- As the Inland Empire marches toward becoming the # 1 area for forclosures in the United States, I am feeling a little sadness.
I only rejoiced last year at their mighty demised because of the showboating by there leaders, “We are the Center of the Universe’.

 
Comment by Bots
2008-01-24 16:26:04

“Villalvazo is seeing this firsthand. His barbershop gets more customers when people are looking for jobs.”

“‘They’re going to apply for jobs,’ he said of the rise in customers wanting haircuts. ‘We had a lot of people this last December versus the December before. We have a lot of people looking for jobs.’”

Maybe it’s time for the return of the Flowbee!
These things sold like hot cakes during the early 90’s meltdown.
http://www.flowbee.com/

Comment by Ben Jones
Comment by Arizona Slim
2008-01-24 16:37:16

I just checked the library. Quite a few copies in stock.

BTW, if anyone thinks that this is an easy way to make money, he/she truly is a dummy.

Comment by Earl The Vagabond
2008-01-25 21:48:05

Call the NAR. They’ve already got a GREAT plan!!

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Comment by Hoz
2008-01-24 16:31:46

“They’re worried about if they’re going to lose their jobs.”

Bank of the West is laying off 46 employees on Jan. 31 at 1977 Saturn St. in Monterey Park.
Cadence Design Systems Inc. is laying off 84 employees on Feb. 4 at 2655 Seely Ave. in San Jose.
Centinela Freeman Regional Medical Center is laying off 202 employees on Jan. 31 at 333 No. Prairie in Inglewood.
Construction Metals Inc. is closing down and laying off 102 employees on Feb. 8 at 12968 Santa Ana Ave. in Fontana.
Countrywide is laying off 73 employees on Feb. 3 at 8501 and 8511 Fallbrook Ave. in Canoga Park.
Fresno Bee is laying off 58 employees on Jan. 21 at 1626 E. St. in Fresno.
Giant Merchandising Inc. is closing down and laying off 120 employees on Feb. 5 at 5655 Union Pacific Ave. in East Los Angeles.
IAP World Services Inc. started laying off 248 employees on Jan. 18 at 7000 East Ave. in Livermore (see Lawrence Livermore below).
Kmart Corp. is closing down and laying off 90 employees on Jan. 17 at 1739 S. Victoria Ave. in Ventura.
Lasco Bathware is laying off 149 employees on Jan. 11 at 3261 and 3255 E. Miraloma Ave in Anaheim.
Lawrence Livermore National Security LLC started laying off 248 employees on Jan. 18 at 7000 East Ave. in Livermore (see IAP notice above).
Long Beach Acceptance Corp. is laying off 135 employees on Feb. 1 at 500 North State College Blvd., Suite 350 in Orange.
Marvell Semiconductor Inc is laying off 4 employees on Jan. 27 at 890 Glenn Dr. in Folsom, another 4 at 10955 Vista Sorrento Parkway, Suite 200, in San Diego, another 10 at 26880 Aliso Viejo Parkway, Suite 100 in Aliso Viejo, and 51 employees at 5488 Marvell Lane in Santa Clara.
Oldcastle Precast Inc. is closing down and laying off 33 employees on Jan. 23 at 1495 8th St. in Colton.
Optical Communication Products Inc. is closing down and laying off 130 employees on Jan. 29 at 6101 Variel Ave. in Woodland Hills.
· Option One Mortgage is laying off 157 employees on Feb. 2 at 6501 Irvine Center Dr. in Irvine and another 160 at 3 Ada in Irvine.
Reliant Manufacturing LLC is closing down and started laying off 54 employees on Jan. 14 at 7390 Lincoln Way in Garden Grove.
Resmae Mortgage Corp. started laying off 182 employees on Jan. 5 at 6 Point Dr. in Brea.
SBMC Mortgage is closing down and laying off 46 employees on Feb. 7 at 14761 Califa St. in Van Nuys.
Scan Health Plan started laying off 33 employees on Jan. 18 at 1770 Iowa Ave., Suite 110 in Riverside, another 33 employees at 2401 E. Katella Ave., #125 in Anaheim, another 41 at 2501 Cherry Ave., #200 in Los Angeles, another 51 at 3800 Kilroy Airport Way, #100 in Long Beach, and 33 at 500 N. Central Ave., #350 in Glendale.
Sierra Cedar Products LLC is closing down and laying off 66 employees on Feb. 3 at 1401 Melody Road in Olivehurst.
Target is closing down and laying off 133 employees on Feb. 2 at 1363 West Henderson Ave. in Porterville.
The Vons Companies Inc. is closing down and laying off 74 employees on Jan. 27 at 2100 White Lane in Bakersfield.
Veolia Transportation Services Inc. is laying off 82 employees on Jan. 31 at 14663 Keswick St. in Van Nuys. Also, Veolia Transportation Services Inc. is closing down and laying off 82 employees on Jan. 31 at 5733 Sheila St. in Commerce.

As well they should be.

Comment by sweeny texas
2008-01-24 17:03:41

Hoz, I don’t know where you get your information, but the government says that initial jobless claims are dropping like Mike Tyson after a Buster Douglas uppercut.

And the economy is fixin’ to shoot to the moon as soon as I get my $600 check. Jobs will suddenly be created, gas prices will plummet, and I might even get laid…

Comment by Hoz
2008-01-24 17:14:32

Dang it, you are a lot luckier than me! Girls look at me and run.

MAs filed with the State of Cliffornia

Comment by Paul in Jax
2008-01-24 19:48:25

As a beauty I am not a star,
There are others more handsome by far,
But my face I don’t mind it
For I am behind it,
It’s the people in front get the jar!

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Comment by hwy50ina49dodge
2008-01-24 17:24:42

“Option One Mortgage is laying off 157 employees on Feb. 2 at 6501 Irvine Center Dr. in Irvine and another 160 at 3 Ada in Irvine.”

How many of these workers, especially in Irvine… need their income to help pay the mortgage?…most likely… 98%… of these workers require that income…unemployment is rising and the so is the ability to qualify for a home loan…the future looks bright from here on out for the next 7-9 years.

Comment by aNYCdj
2008-01-24 17:49:11

Would YOU like to hire a Mortgage Fraud worker for YOUR company?

Something to think about, “falsifying documents and making the numbers work” is not a legitimate job skill to put on a resume.

Not to mention you might get a sheriff at your reception desk with a warrant for that “perfect employee” you recently hired!

Comment by HOLD out in LA
2008-01-25 12:10:53

You forget the the OC Sheriff has a warrant for himself.

What a county……….

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Comment by Mike
2008-01-24 18:18:13

Fear not, the Federal government will do what they’ve being doing since 9/11 to cook the unemployment numbers. That is, hire more government employees (think Homeland Security) and print more money to pay for them. Not one single number coming from government can be taken at face value these anymore. They numbers are fudged, cooked, put through a strainer, moved from column “A” to column “B”, spread out to make them look less horrific, etc and after being sanitized, fed to the media shills of the American tv networks who question nothing - just in case they get struck off the White House Xmas party or some such similar event.

Comment by Dennis
2008-01-24 23:20:33

The whole networks CNBC,CNN are all in the governments pockets to talk the economy up as well as the stock market. Hell ,most of the people that report have never seen down markets until last month. Young inexperienced art majors reporting business and economics is a joke. They believe what ever they are told without thinking if it makes common sence.

 
 
Comment by Neil
2008-01-24 19:52:59

Hoz,

How do you look up these reports? Can they be found for other states? e.g., FL, VA, and TX?

Thanks in advance,
Neil

 
 
 
Comment by Jas Jain
2008-01-24 16:41:38


“Sen. Barbara Boxer has released a 15-point plan she thinks will help stop foreclosures in California. ‘Time is not our friend,’ Boxer said during a telephone press conference Wednesday afternoon. ‘We are in a crisis, and we need to stop the bleeding.’”

Come on, Barbara, the Federal govt. should buy all the foreclosures and put them in some trust to sell/rent later. This way you get rid of lot of unwanted inventory.

You got to stop this bleeding (falling prices), Barbara, and have a program to raise home prices by 5% a year with a govt. program to pay 10% of the purchase price to all first-time buyers. If you need more ideas feel free to call on me.

Jas

Comment by Big V
2008-01-24 18:08:37

Is that a hint of sarcasm I detect, Jas?

Comment by Faster Pussycat, Sell Sell
2008-01-24 18:45:24

If only Jas could learn to channel his anger into sarcasm, all together we could learn how to give the word snarky a whole new meaning!

 
 
Comment by Mike
2008-01-24 18:31:33

Jas.
Save your breath. I e-mailed Boxer concerning the scams which are starting to appear in reverse mortgages. Many of the carpet baggers who were responsible for much of the mortgage scams over the last several years, are now switching their attention to reverse mortgages and are targeting the elderly. If you read some of the mortgage broker blogs, you will find many mortgage brokers asking their fellow scum bag crooks how to get in on reverse mortgage growth.

The result of my e-mail, which simply pointed out what the trend is starting to look like, did get a form e-mail response. “Thank you for drawing my attention to this matter, blah-blah, yada-yada….”

End result? In about 5 years time, you can expect to see Barbara Boxer and some of the other political whores, holding hearings in Washington, looking concerned and shocked, as a parade of ripped off, destitute, homeless old people relate how they were “conned” by a mortgage broker who told the equivalent of, “Just sign here and don’t worry. Your property will keep going up so it doesn’t matter how much cash to draw out.”

I have heard that some of the commissions/fees for arranging these reverse mortgages are $15,000 on a property valued at $150,000.

 
Comment by cactus
2008-01-24 18:56:31

Boxer needs to figure out how to tax China, Korea etc. because American workers are broke.

 
 
Comment by turnoutthelights
2008-01-24 16:45:38

Boxer expressed concern about the 8,000 homes lost to foreclosure last year in Stanislaus, San Joaquin and Merced counties.
I’m sure she had an aid had to point out just where the hell the Central Valley is on a map. She only draws about 30-40% of the vote no matter who runs against her. Of course, she could be using the valley as an idea test-bed, ‘cus the Bay Area will damn sure appreciate her help in a year.

Comment by Brandon
2008-01-24 16:54:47

Too funny- I do know she has been to Fresno at least once. I participated in a counter protest at Fresno St. in the 90s when she was campaigning for office- this was during the “Barbara Bouncer” days.

 
 
Comment by Mr Vincent
2008-01-24 16:46:12

“Boxer expressed concern about the 8,000 homes lost to foreclosure last year in Stanislaus, San Joaquin and Merced counties.”

Sh*t happens Ms. Boxer! You have not done anything for Cali since you came into office, why change now.

Comment by Sobay
2008-01-24 16:54:40

Ms. Boxer will try to ride to the rescue again!!
This is the M.O. for Boxer and Feinstein, they blow a lot of smoke at every issue and move on to the next liberal item.

They will want to give Ca Drivers Licenses to illegals with a gov’t bailout check.

 
Comment by Jas Jain
2008-01-24 17:06:38


“Sh*t happens Ms. Boxer!”

And it is her job to spread the sh*t on some stupids to the rest via govt. programs and policies. No?

Jas

 
 
Comment by Jas Jain
2008-01-24 16:47:58


My forecast for Dec SFH median price of CA is 484k, down 19% from the peak in Apr-07, or decline at an annual rate of 27.1%. The YoY decline in median price would be 14.7%.

Jas

 
Comment by wmbz
2008-01-24 16:50:51

The Modesto Bee. “Sen. Barbara Boxer has released a 15-point plan she thinks will help stop foreclosures in California.

15 points! Not nearly enough! We’ll need at least 100 points or more, now go back and put your thinking caps on. Time is not on your side… of course it sure is on our side.

Comment by spike66
2008-01-24 17:29:32

I’m trying to envision Boxer with a thinking cap on her pointy little head.

Comment by Faster Pussycat, Sell Sell
2008-01-24 17:42:18

Dunce cap?

Comment by aqius
2008-01-25 01:03:16

I’m going to raise a boombox high overhead while wearing a long tan overcoat (ode to john cusack) at boxers next public appearance blasting out the stones : Tiiiiiiiiiime - is on my side.

(look for me in the paper as her security monitors the tall guy in ovecoat acting oddly . . . and shoots me full of lead as I reach upwards. the tape will probably show them sceaming GUN, GUN, while the young cutting edge urban professionals around me yell DONT TASE ME, DUDE !! )

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Comment by smf
2008-01-24 16:57:42

“She said sometimes even with a lower interest rate, they could not afford to make the monthly payments on a fixed-rate mortgage, especially if they are required to repay previous missed payments.”

Nooooo, reeeaallly?

A lot went so over their heads, that the only way that their ‘investment’ would end was thru foreclosure.

There are no loans available that will even come close to saving a lot of the FBers.

Comment by Brandon
2008-01-24 17:42:18

You mean income is needed to pay for a house? I thought you can just refi and get more cash!

Comment by Pondering the Mess
2008-01-25 10:44:04

As I’ve been told so many times here in Maryland, the land of the Silent Bubble, “incomes no longer matter!” Right…

 
 
 
Comment by Big V
2008-01-24 17:01:44

“We’re still seeing the main driver of foreclosure activity, which is price declines, and we do not know when those price declines will level off.”

While it seems easy to blame foreclosures on price declines, it is most logical to place blame on previous price increases. Because monthly payments are based on the price at the time of sale, those prices must be the culprit, and price declines should be welcomed by those who do not wish foreclosures to plague us forever.

In other words, if a home buyer can procure his home at a lower price, she is much less likely to default later.

Comment by Big V
2008-01-24 17:03:06

Oops! Looks like our home buyer got a sex change with his HELOC.

Comment by SD Native
2008-01-25 00:01:25

as long as s/he doesnt get it out of the country, we need to keep the spending on those sex changes in US dammit!

Good thing CA is about to pass those new Indian gaming compacts, I know a ton of low income people who will be cashing their $600 checks to play some slots.

How long do you think before we have the Congressional testimony on where these checks really went, like after Katrina, I say 6 months

 
 
 
Comment by NoSingleOne
2008-01-24 17:02:54

“The problem has been prices are too high, and now prices are falling, and sellers still want the gold, and … buyers keep thinking it’s going to go lower, so they wait it out.”

I think that about sums it up. The only thing I have to add is that many of the sellers have the taint of crooks, and buyers don’t want to reward them for their greed.

Comment by Faster Pussycat, Sell Sell
2008-01-24 17:28:24

Meanwhile, the buyers want gold, eh?

 
 
Comment by Jas Jain
2008-01-24 17:20:00


“While it seems easy to blame foreclosures on price declines, it is most logical to place blame on previous price increases.”

How come price increases in 2002, 2003, 2004, and 2005 didn’t lead to price declines in 2006 except in some areas? The proximate cause of huge rise in foreclosures is the price decline.

One could make bad mortgage loans even without price increases in recent past and that is an invitation to foreclosures. It was the bad lending practices that are behind the extraordinary increase in foreclosures in CA.

Jas

Comment by Big V
2008-01-24 18:16:51

What I meant is that most of these foreclosure “victims” would not be defaulting today if they had not made such huge purchases to begin with. People normally foreclose due to job loss, but in this case, people are still making the same income that they were making at the time of purchase. The reason they can’t make their payment today is that the price of their house was too high to begin with. Declining house prices do not cause monthly payments to go up.

 
 
Comment by Cliss
2008-01-24 17:28:49

“‘Interest rates have never been the problem, because interest rates have been reasonable the last couple of years,’ Barley said. ”

And yet - the Fed lowers interest rates and prays to God that it will solve the problem. Well, I think it’s kinda clear: it won’t.

Comment by Faster Pussycat, Sell Sell
2008-01-24 17:38:07

That’s how the “bread and circuses” strategy works!

Comment by txchick57
Comment by Faster Pussycat, Sell Sell
2008-01-24 18:02:31

Why are you doing this to me? Just to send my blood pressure through the roof?

Incidentally, if they didn’t know this, what else do they not know, huh?

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Comment by Faster Pussycat, Sell Sell
2008-01-24 18:10:57

He’s flat-out lying.

Why?

For a “linear” product (think stocks or futures), it’s flat out hard to lose $5M (yep, million) without someone noticing. A billion is out of the question. Not possible.

Even for simpler “non-linear” products (think basic options), it’s really hard to lose, say $25M without anyone noticing. Again, $1B is out of the question.

Even if it were the most complex of complex products, $1B is hard. $7B is really really hard.

A single trader? Fuggedaboutit. Ain’t happenin’.

And the probability of that roiling the world markets. Exceedingly unlikely.

No matter how bad your trading systems are, and how bad your risk management is, and how bad your actual management is, this is just bulls**t.

All of this press is aimed at the “average guy” (who couldn’t tell a million from a billion from a trillion to save his sorry patootie.)

However, they claim it is a plain-vanilla equity trader.

Moi, having great trouble believing this deja-moo (as in, we’ve seen this bulls**t before!)

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Comment by Faster Pussycat, Sell Sell
2008-01-24 18:40:26

Incidentally, who’s going to make the exceedingly obvious argument: If they didn’t even know this, and they staked the future of the US economy on this, then what else do they not know?

Poo-inducingly-scary!

 
Comment by Professor Bear
2008-01-24 20:25:17

How many other financial disasters are playing out at the moment behind the veil of official secrecy that the Fed “does not know about”?

 
 
Comment by cactus
2008-01-24 19:03:08

And I thought it was the US housing bubble Recession that the FED was trying to bail out? Ah Shucks.

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Comment by ouden mallon
2008-01-24 18:06:41

“She said sometimes even with a lower interest rate, they could not afford to make the monthly payments on a fixed-rate mortgage, especially if they are required to repay previous missed payments.”

Oh..my..god! You can’t be serious…dude…like you are so cruel…like you want me to repay those missed payments???? Can’t we all just get along…

 
Comment by reuven
2008-01-24 18:46:37

“Lisa Jarman, a counselor at the Fair Housing Council of Riverside County, said homeowners on the verge of foreclosure are having difficulty negotiating with their lenders for loan modifications that they can handle.”

” A lot of homeowners got their homes based on stated income and their income was overstated on the loan applications, Jarman said.”

Well then, shouldn’t they be brought up on charges? I see only two possibilities:

1. Prosecute them for filling out a fraudulent mortgage application

or

2. Make sure that they’ve paid income tax on their stated income! And make them pay penalties if they haven’t

Instead we choose option #3

3. Give them a GREAT BIG HUG, a check for $1200 + $300 for every kid they can pop out, PLUS tens of thousands of dollars in tax breaks on forgiven debt.

Comment by cactus
2008-01-24 19:17:05

What was that word “Moral Hazard” oh yea

This will not end well. For every dollar the government spends on this we get deeper in debt and the dollar will fall ending up costing us more in INFLATION no matter what lying Ben Bernake says about US consumers won’t notice it because they spend in dollars and not in Euros etc. If I was a country with a strong currency maybe I would just buy up the entire US wheat crop on the futures market and let BEN BERNAKE eat cake made of dollar bills.

Comment by Big V
2008-01-24 20:59:03

HA!

 
 
 
Comment by aladinsane
2008-01-24 19:32:24

“A jump in the number of delinquent property tax payments prompted San Diego County Treasurer-Tax Collector Dan McAllister Wednesday to send out more than 71,000 reminder notices to property owners. Those who missed the deadline will incur a 10 percent late fee.”

“‘We are not quite certain why the dramatic jump in delinquencies has occurred. But to be on the safe side, we will vigorously pursue these tax collections,’ McAllister said.”

Wonderama how you are gonna collect from debt people, McAllister?

(let’s see how old some of you are?)

Comment by SDGreg
2008-01-25 04:16:30

He’s the same genius that decided if properties recently sold too low, he would assess them higher at the supposedly true market price. I’m guessing he wasn’t doing the same for properties that sold too high due to fraud not too long ago or for the valuations of all those properties influenced by the fraudulent transactions.

 
 
Comment by ugh
2008-01-24 20:01:06

So that Duggar family with what, 20 kids or so gets the equivalent of the Albanian GDP as a handout?

What will they spend it on?

 
Comment by txchick57
Comment by Bronco
2008-01-24 21:32:50

He’s a good man…

 
 
Comment by Jonathan
2008-01-24 22:56:30

The greedy b@$t@rd$ all the way down the ladder got what was coming to them. I make 6 digit income and I can’t really afford a house in LA. Now thats nuts!

 
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