The Market Is Taking A Beating Day After Day
The Union Leader reports from New Hampshire. “Difficulties in the housing market have spelled trouble for a still unfinished development near MerchantsAuto.com Stadium. A broker working for Chinburg Builders said the company has sold just 14 of the 24 luxury townhouses it has built just south of the stadium and has not made a sale since June 2007. Last Friday, she said, the company slashed starting prices on the remaining townhouses from $349,900 to $249,900.”
“‘We are doing absolutely everything we can to sell these and market these, what with the challenges in the current market,’ said the broker, Maura McLaughlin.”
“The lag in sales has delayed the company’s owner, Eric Chinburg, from continuing construction on a property that was supposed to hold 45 townhouses and a trio of mid-rise residential buildings. It has also put the city in a difficult spot. Tax revenues from Chinburg’s development are needed to pay for the $27.5 million baseball stadium.”
“Alderman Ted Gatsas, an early opponent of the stadium deal…reminded his colleagues, ‘I warned everybody about this deal.’”
“Alderman At-Large Mike Lopez called the situation unfortunate. ‘We went into the deal thinking it would be productive, and unfortunately the economy went south,’ he said. ‘I don’t think anyone is to blame for it.’”
The Boston Globe from Massachusetts. “Benigna Alarcon hoped that reducing her mortgage payment by $700 per month would be enough to save her Chelsea home from foreclosure. But she still can’t afford the $1,971 payment. Now two months behind on payments, Alarcon said she must either sell her home or risk foreclosure.”
“‘I don’t want to lose my house,’ said Alarcon. ‘I spent everything I had [saved] to buy it.’”
“Alarcon’s dilemma is shared by hundreds of local homeowners. Foreclosures tripled across the North region in 2007, rising to 1,040 last year from 361 in 2006, according to The Warren Group.”
“Abandoned homes, many of them boarded up, have cast a long shadow over the urban housing market.”
“‘It’s tragic when you see it,’ said Mayor Edward J. Clancy Jr. of Lynn, remarking about the Highlands, one of Lynn’s oldest and poorest neighborhoods. ‘People got into deals that looked too good to be true. . . And then they were left with nothing.’”
“Foreclosures, which also tripled during the month of January across Massachusetts, are expected to continue at a high rate, further weakening the housing market, a specialist said.”
“‘From what we’ve seen, they’re going to be as high as they’ve ever been,’ said Tim Warren, CEO of The Warren Group. ‘Unfortunately, because real estate prices have dropped, these distressed properties just aren’t worth what they were.’”
“After renting an apartment in Chelsea for 16 years, Alarcon bought a house for about $330,000 four years ago. She used $35,000, her life savings, as a down payment. She received an adjustable rate mortgage from a local bank, but it was not considered a subprime loan.”
“The mortgage payment first was $2,000 per month. After two years, the interest rate adjusted, and the payment climbed to $2,300. It then adjusted again, hitting $2,700 last year, she said.”
“At the same time, business at her restaurant also declined, greatly reducing her salary, she said…She sees little hope in reversing her misfortune. ‘I saved for 20 years to buy a house,’ Alarcon said. ‘Now I have nothing.’”
The Berkshire Eagle from Massachusetts. “The continuing influx of second-homers, and more realistic pricing for year-round residents, form a local silver lining for the nation’s grim housing crisis. ‘There are certainly more foreclosures than I’ve ever seen,’ said Maureen Phillips, a long-time mortgage loan officer at Greylock Federal Credit Union.”
“At the Lenox-based Century 21-Franklin Street firm, owner Bob Romeo believes the real-estate slowdown had its initial and greatest impact on the second-home sector. ‘A significant number of those folks look at the purchase of a Berkshire home as an investment; when they see it declining in value, they don’t buy,’ Romeo maintained.”
“In his view, the sharp increase in the number of condo units on the market — more than 200 countywide — doesn’t help. ‘They’re targeting the second-home buyer. Sales have not come to a screeching halt but they’re darned slow and it takes work to move them,’ he observed.”
“‘Agents are trying to be very realistic with sellers,’ emphasized Sandra Carroll, CEO of the Berkshire County Board of Realtors, in contrast with the tendency to ’shoot for the moon’ during the height of the mid-decade boom.”
“Lance Vermeulen’s Egremont-based real-estate firm recently opened a second office in Great Barrington. He acknowledged a ’slowing in the market, somewhat of a correction but not a dramatic change, that has built up the inventory of unsold homes — in June 2005, it was like a curtain dropped on the market, the beginning of the end of the boom.’”
“With adjustments bringing more $350,000 properties down to $300,000 or less, he said he has sold ‘plenty of houses’ to area residents.”
“Nationally, he conceded, the real-estate market is ‘taking a beating day after day, but anytime now somebody’s going to come along and say, ‘Now’s a good time to buy.’”
“In Berkshire County, he said, ‘We’re close to the bottom, not that the bottom was that far from the top.’”
The Eagle Tribune from Massachusetts. “In the early 1990s, a wave of foreclosures swept the city and arson quickly followed, sending weary firefighters racing from one suspicious blaze to the next.”
“Now, with more than 750 properties foreclosed or in the process of being foreclosed, and possibly hundreds more threatened, city leaders are taking action to protect neighborhoods all over Lawrence from another epidemic of arson.”
“A ‘bank responsibility ordinance’ adopted Tuesday by the City Council puts responsibility for the upkeep of foreclosed properties right on the new owners — the lenders themselves.”
“How banks will respond is unclear. Many lenders are national or international banks, and officials researching the matter have already run into some roadblocks, including ’secretive’ bank employees who didn’t want to give their last names, said fire Capt. William Lannon.”
“Unlike years past, foreclosures these days aren’t limited to certain neighborhoods. ‘The last time it was mostly the Arlington District. But now it’s all through the city,’ said Lannon, a member of a foreclosure task force organized nine months ago by Sullivan. ‘You name it,’ Lannon said. ‘They are all over the city.’”
“Above all, Lannon said he would hate to see a repeat of the 1990s. ‘We became the arson capital of the world,’ he said. ‘Lawrence doesn’t deserve that moniker.’”
The New York Sun. “After years of sustained growth marked by grandiose, ambitious plans for the city, the real estate development industry is displaying troubling symptoms.”
“The number of citywide building permits is expected to drop, public and private funding for projects is drying up, and a stream of multibillion-dollar plans is coming in over budget and behind schedule, with many designs being scaled back or scrapped altogether.”
“A shortage of federal housing subsidies and ongoing litigation from resident groups is threatening Bruce Ratner’s $4 billion Atlantic Yards project near downtown Brooklyn. The list of public and private projects on hold seems to grow on a weekly basis.”
“The president of the Real Estate Board of New York, Steven Spinola, said widespread concern in the real estate community has — so far — fallen short of ‘panic.’”
“‘I don’t know if they are collapsing,’ Mr. Spinola, a former deputy mayor for economic development, said. ‘There is clearly concern among our members, which is probably more than I feel. Four months ago people believed that if they had a project, that the financing would be available even if they had to put more equity in, or maybe the costs might be slightly higher. A month ago there was a concern that the financial institutions would not want to finance anything.’”
“The chairman of the Singer & Bassuk Organization, Andrew Singer, has already seen a marked change in financing structures from even just a year ago, when a developer could obtain between 90% and 95% of the costs of a project from available financing. He said today that figure is down to around 70%.”
“‘That is not a bad thing,’ he said. ‘It means that those projects that go ahead are with the developers that are the most substantial. It is a de-leveraging of the real estate business in general. The high leveraging has created this bubble. It hasn’t burst yet. Whether the air gets let out or it comes crashing down remains to be seen,’ he said.”
The Brooklyn Eagle from New York. “Construction of market-rate condominiums and below-market apartments has fallen far short of earlier predictions. The Eagle researched progress on the 58 projects in some stage of development listed with the Downtown Brooklyn Partnership.”
“Of the 5,285 market-rate condominiums planned, roughly 1,400 have come on the market, including buildings completed during the peak of the boom years. Based on various real estate databases, half are still for sale.”
“‘The challenge with residential today is not only related to the credit market,’ said Downtown Brooklyn Partnership President Joe Chan. ‘I think there’s also an increasing mindfulness to the total amount of product on the market right now, particularly on the condominium side.’”
“Other projects listed with the Partnership are stalled, like John Catsimatidis’ Myrtle Avenue project with 360 condos; were killed. ‘Unfortunately, the banks are out of business,’ and not just for developers, said Catsimatidis. ‘Six months ago a person could walk into a bank and put a $50,000 down payment [on a $800,000 condo] and get the mortgage.’”
“‘Now the banks are strictly following the old rules of [20 percent down],’ he said. ‘Brooklyn buyers don’t necessarily have $160,000 to put down.’”
“‘With 800 units coming on the market probably within the next year, I think buyers are going to be really fussy,’ said Halstead Property Director of Marketing William Ross.”
Actually it’s fairly easy to calculate the total loss associated with the subprime mess. take 1 trillion lent out from the banks and so the banks can recoup about 30%. so the total amount would be around 700 billion lost. some have estimated 600 billion. i think this is low. taking into account the adjustable ARM with prime borrowers, the amount is more and mind blowing. haha.
Except that calculation doesn’t even come close to describing the scope of the problem in financial terms: We’re talking about pension funds, hedge funds, municipal funds, sovereign funds and the like — all buying CDO’s and every other flavor of paper with massive amounts of leverage. There are no firewalls in the financial world as we like to pretend.
Anyone still calling this a “subprime” problem is grossly understating the issue. The “problems” are with our banking system as a whole, the representation of value and risk, and the absolute necessity (not just the expectation) of outsized returns.
Our social spending and our government itself operate on an expectation of positive market performance. The “markets” in America are not great pools of “risk capital”. They are America as we know it. They tank: we tank. Pensioners go hungry, Social Security vanishes, local governments go belly up, banks collapse, and lives are destroyed.
Should it be this way? Hell no. But that’s the system we live in. It can’t ever be allowed to fail — and boy is it failing.
My beef is how we should shore up or help the problem areas . IMHO if loans are bad and the market prices are inflated ,you can’t make that good ,at least in the short term . This idea of just saving the banks and lenders by maintaining bad loans (at the taxpayers expense or loss),isn’t a good one IMHO .
I’m a homeowner that is going to lose 100k of money I put down on a house because of this meltdown ,but I can’t change that ,so I just keep making my fixed rate payments I can afford ,as I should . it will take years for my equity to come back and if I keep making my payments I might pay down some equity .I don’t expect the government to come along and pay for my loss in the short term .Only a long period of time will bring back any equity that I loss .
I just think money would be better spent shoring up the economy by creating jobs based on something other than inflating assets like real estate .
“Alderman Ted Gatsas, an early opponent of the stadium deal…reminded his colleagues, ‘I warned everybody about this deal.’”
A person after my own heart, especially if, when he said it, he leaped to his feet, assumed an exaggerated tragi-comical facial expression and then went right into a sassy little dance with bum wiggles and dramatic loud fake boo-hoos. And of course, the hearty laughing.
Saying ‘I told you so’, is one of the pleasures of my life. And I get to do it a looooooooooot.
RE: Saying ‘I told you so’, is one of the pleasures of my life. And I get to do it a looooooooooot.
“sassy little dance with bum wiggles”?
Hmmm…I might be willing to pay in hard currency so as to watch your performance.
HD, the one dancing is Alderman Gatsas, not Olygal. I bet you really DON’T want to watch that bum wiggle. LOL
You’re thinking of a different dance I do, usually at parties, if there’s enough beer. The ‘Dance of I-Told-You-So’ is free, and the subject rarely appreciates it, so it’s different in that way.
RE: You’re thinking of a different dance I do, usually at parties…
That’s the one I want!
I don’t like the “I told you so dance “,because usually when I say ‘I told you so”, than I get hit up to loan money and bail out the party hanging their head low . I rather like the “Your going to do what I say dance better . “
I’m not a fan of Gatsis who rigged the state education funding formula to heavily benefit Manchester. Downtown Manchester, has been desperate for some kind of downtown draw for a long time and a minor league ball park was tried. $350K is asking a lot in a so-so downtown. I think that $250K is a lot too. It should be interesting to see if they sell.
A coworker came into my office just before I was about to leave today. His wife just finished her Phd and they were planning to buy this year. I’ve been sending him charts for a few days and he told me that they’re thinking of putting off their purchase for a while and about how much space you can get for a few thousand a month in rent.
This guy is very smart and probably well-paid. I assume that his wife will get a good job in Cambridge and that they will be able to stash away a good downpayment for the future.
Boo hoo hoo. “I saved for 20 years,” and all I have is $35,000? But I expect to make house payments of $2K/mo.???
No wonder her restaurant is failing. This woman is an idiot!
What the hell high school did she graduate from–Brockton?
Wait, wait… I know: Me’fo’!
Even worse, she took a ARM instead of a fixed, which she qualified for with her 10% down.
Hey, let’s face it here, with regard to this situation.
Everyone and their mother in eastern Mass/Boston in 2005 was talking about housing and how everyone was a genius for being a house owner.
Some “geniuses” even used ARM’s to rent their places from the bank and it looked like the thing to do.
That all ended - crash, bang, boom!
And some people who couldn’t think for themselves got hurt, or are getting hurt, or will be hurt.
That’s life!
“I saved for 20 years,” and all I have is $35,000? But I expect to make house payments of $2K/mo.???
That also struck me as ghetto mentality. you managed to save LESS THAN $2000 per year for most of your adult life. That’s less than $200 per month.
But you think you belong in a $330,000 house???
You belong in a $30,000 house. Move to Detroit. There are plenty of those there.
However, thanks to people like you that are now whining everywhere, YOU caused a huge spike in prices for everyone by “buying” something you could never afford in the first place. YOU should have said, “i don’t have that kind of money”, and the lender should have shown you the door out of his office.
We all know the realities of this BOOM gone Bust.
Right ,her mistake was she still bought a house that was to expensive (I guess she felt she waited enough years ). I respect the
fact that she saved that money for a down payment ,but as usual you have to be able to afford the payment you get into without counting on appreciation .This borrower might of been one of those that thought they would get priced out of the market .This is why I really resent that homes were sold on the false premise that you had to buy or get priced out of the market forever .In fact ,I call this sort of practice “fear selling” . We all saw the Chief Economist of the CAR state ,”People could not afford not to buy “.
What are you going to do when financial advice and the public spin was all based on financial premises that were false ,while the sales people pushed the urgency and greed and fear buttons ?
I know when I took a ethics class in business we covered the section on “fear selling” being a no no ,and many Realtors Codes expressly cover this practice of fear selling or buying as being a no no .But in general the jest of most sales ploys are to stress urgency ,so the buyers will buy . I would like our society to get away from items being sold on urgency premises and look to products being sold on the value of the product or the features of the product .
“I saved for 20 years to buy a house. Now I have nothing.”
If she had bought the house, things wouldn’t be so bad for her. Instead, she rented several hundred grand from the bank.
Bad decision.
This is why they never should have cut compulsory Home Ec classes! (I’m of the opinion that everybody should have to take Home Ec AND shop. And I mean the OLD Home Ec, not a fart around class where you machine sew scrunchies and bake chocolate chip cookies.)
Preach it, Not. Let’s bring back home ec and shop — on steroids!
Wouldn’t it be cool if you could start out in jr. high on AutoCAD? And not just because your friend’s father leaves his computer running at home w/out a password? Heh.
There is a terrible need for personal finance in schools. Heck, if they had a personal finance class, teen pregnancies would probably go down. My late high school math teacher (she died suddenly a few years ago…why is that all the good eggs die and I’m still around? gack, I sound like a Slav…) once taught a personal finance class to the remedial math students, before the county school board put an end to it. She had parents come in and tell her it was the best class their kids had ever taken. It was simple stuff, interest rates, balancing a checkbook, that kind of stuff. What half of home ec used to be, the other half being how to do household work so you can be frugal–prepare your own meals, sew/repair clothes, clean things, economize.
Women’s movement helped kill home ec: we have careers now, we’ll just pay someone to do this stuff for us. Yeah, now you’re broke. What losers, I was a kid in the ’80’s and I could see through that crock. People get married later now, so guess what? Boys AND girls need to know this stuff. Duh! No wonder we have college kids now taking out loans to cover LIVING EXPENSES. OMG WTF.
Heck, we thought college was outrageous when I was going through, and we only had loans on tuition. I didn’t personally know anyone who was living off campus and eating out on loans, but I guess that changed quick. Hmm, EFF down to 1%, maybe? When I started, the Subsidized Staffords were at 8.6%!
When I was at the U of U, I took a personal finance class from an Econ prof there. The guy was high up in their department so he carried some clout.
He asked the class how many of them owned homes. About a third raised their hands (yes, in college, don’t GET me going on that one). Then the professor proceeded to map out why buying isn’t always so brilliant. This was in 2004-2005 when Utah was getting its first taste of fake-flation and easy riches. I’m sure it went past all the idiot students’ heads as they said “this guy doesn’t know what he’s talking about. Yeah he’s got a PhD in this, and all the numbers add up, but my neighbor said Real Estate always goes up and he bought a boat and he’s only25 blahblahblahblahblah.”
An added bonus was when the professor talked about how Utah leads the nation in personal bankruptcy every year and attributed it to the fact that LDS church members pay their tithing without doing the math and expect God to make up the difference. The fact that the prof was a Mormon himself made it all that much sweeter to hear. I’m a Mormon too, but I love my coffee if you get my drift. Anyway, I freaking loved that class.
Sorry to bring Utah into the middle of another region’s day in the HBB sun, but Utah has middle child syndrome and needs more attention.
“I’m a Mormon too, but I love my coffee if you get my drift.”
Lol, I was raised Catholic; I can relate.
Btw, that “Mormon tea” is strong stuff… no coffee ever kept me up like that for 36 hrs!
“Utah has middle child syndrome and needs more attention.”
Maybe so, but it’s not going to like the kind of attention it receives when the housing reality hits, Utah’s still relying on the Force to save it, because it’s different in the City of Part-Time Saints.
Nice to meet a rational Mormon (drinks coffee), who contributed an insightful post.
Lost - Yep. I probably don’t even need to talk about Utah on here for attention. We’ll get our fair share soon enough. They say “Utah’s different.” Yeah, it is. Different in that we’re dumber with our money than the other 49 states. Again, I can tease because I’m here. No offense to my people.
Wipeout - Nice to meet you too.
BTW, SLC, you live in one of the nicer cities in the U.S., IMO. I’m in SE Utah, but I get up your way once in awhile. Lots of interesting billboards along I-15 (UTForeclosure.com, etc.).
“There is a terrible need for personal finance in schools. Heck, if they had a personal finance class, teen pregnancies would probably go down.”
You clearly don’t understand they these leaches understand economics much more clearly than you think they do. Having children as teenagers provided early retirement to MILLIONS of “underprividged” folks. You and I go to WORK to pay taxes to pay for their WIC, Govt. housing, child support, medical expenses,etc, etc.
They quit High School and went straight on support. They will have taken more than you and I will get back from SS over their lifetimes…..And the more “children”, the more money.
You clearly haven’t been paying attention to how the US govt. has worked over the past 30 years.
Additionally, if you are Married, you will lose benefits because the “baby daddy” is supposed to be fleeced to make payments. Witness the rise in non-married, and indeterminate fatherhood in America. Wake up.
Well, I’m 43 but I must have had “new” home ec. We made chocolate chip cookies, constructed a shopping list, and I made something, a skirt I think. We also walked up and down stairs with books on our heads and had a visit from the Mary Kay lady to tell us about manicures. I took two hours of PE the next year to avoid home ec altogether.
I don’t know ,I think a lot of people who bought during the big housing mania knew all about financing ,to the point they took advantage of the fact that the stupid banks were giving out money to gamble without them putting any money down .
The gamblers thought that the toxic teaser rate loans were the best way to go ,given their intent of short term ownership . The gamblers figured ,or were sold on the fact, that they were just going to take the money and run and why not have a teaser rate to keep payments down until they gained their equity or than moved up the property ladder chain ,or dumped their flip.
The question should be ,why did the public think that this ponzi-scheme wouldn’t crash and burn when they ran out of greater fools or ran out of people who could qualify for the increase in prices .I just don’t buy the fact that the bulk of the people didn’t know that they were getting a adjustable rate mortgage . Let me put it this way . I think the blind spot of most people was that they didn’t factor in the possible fact that real estate might not appreciate or might go down (based on supply and demand , people qualifying ,local economics etc.)
I think people should be trained to look at a investment from the standpoint of how viable is it in a down market ,not how viable it is during a up market . Lenders use to underwrite loans based on people qualifying on re-pay ability without relying on appreciation to bail them out and requiring a down payment in case property values went down the buyer wouldn’t walk because of their skin in the game .If the buyer did walk ,or lost their job ,the lender had the down payment to cover the foreclosure .
What do you do when false premises (like real estate always goes up ) gets a popular acceptance and lenders even start lending based on that absurd premise ?
One of the statements that Mozillo made to Congress today was words to the effect that the problem was that people didn’t have appreciation to solve their foreclosures problems and in the past a sale or refinance would usually solve a problem a borrower had with a loan .
Now Mozillo,who has been around for 40 years, knows darn well that in the past foreclosures were solved by the fact that the lender had a down payment that protected the lender from loss of a foreclosure ,and people didn’t need to refinance to be able to afford their payment because they had to qualify.
I would like to know when we are going to have Senate or Congress hearings on why lenders made loans based on real estate going up and totally disregarded underwriting or fraud prevention .
I contend that if the new basis of RE lending was based on “real estate always goes up “,therefore people will not walk on their mortgage ,than I want to know when the memo went out and when the secondary market people accepted that premise. Otherwise, I think Mozillo has a lot of explaining to do . Mr Mozillo ,who sold ,and is still attempting to sell loans to us taxpayers , is saying in so many words that his Companies mandate was to foster the American Dream of Home Ownership . Doesn’t this cop out avoid the real truth of what Mr. Mozillo did . Mr Mozillo sold fraudulent time bomb loans to the secondary market to pump up his Company stock ,so he could sell million of dollars worth of stock at a high ,before TSHIF…….IMHO of course .
“‘I don’t want to lose my house,’ said Alarcon. ‘I spent everything I had [saved] to buy it.’”
This is precisely why I’d like to see the NAR, CAR and all of them ripped from one side to the other and rot in hell.. yes, this woman is an adult, but what she did not know when she bought her home (almost certainly) was how rigged the market was with fraud and false hype for the quick buck by a chosen few..
In a rational market where the old lending standards applied, that house would have been in the 200’s and when her job went south, she would have been able to sell without losing everything.
So, although she is an idiot, I agree that the scumbags do deserve blame here. This woman, though an idiot, acted in good faith.
The mtg brkr, appraiser, and realtwhores walked off scott-free. But maybe the stupid bank will have to eat a nice big steaming loss when it’s all over.
In other words, I take no pleasure, whatsoever, from her plight.. And yes, she’s more of a victim than a contributor of the grandest fraud laced, pozi scheme perpetrated on the American public in our history..
Vegas is rigged as are the lottos, horseracing, etc. in that the odds are very heavily stacked against the participants. Preach this fact all you want and you won’t change a thing. People are destined to do what they are going to do.
Alarcon sounds like one of these people.
Disagree with your contention.. Homebuying and the real estate market wasn’t rigged until it became difficult for the Wall Street thugs to make a buck.. they need to do something to release prices from wages and all the hell that has come with it..
When RE became rigged it did no good to point this out to the soon-to-be FBs. The mania that possesed them overruled all points of logic.
My guess is Alarcon was one of these people.
Maybe so, but I doubt the disclosures to her addressed historic home prices as they relate to wages or the fact the leading indicators were pointing to a big slow down in housing and house prices or that her home could actually fall (significantly) in value.. Hell, I’ve yet to hear the NAR or the CAR admit a bubble completely or that there is, in fact, a relationship between home prices and wages, despite the fact that one has always existed
She should have done her homework, done her own thinking, instead of relying on information from a heavily biased source.
The saying “Don’t ask your barber if you need a haircut” fits well here.
“I doubt the disclosures to her addressed historic home prices as they relate to wages or the fact the leading indicators were pointing to a big slow down.”
Does the new car salesman tell you how much your car’s value will drop the minute you drive it off the lot?
what planet are you living on waaahoo.. nobody goes into car buying thinking their asset will appreciate in value or if you don’t buy one now, you may never be able to.. your analogies still stink..
But the thing is…she didn’t HAVE to buy. So she had been renting for 16 years. I’ve been renting for 17. Should I spend my life savings to buy a house that I won’t be able to afford in the long run? Did she not understand how an adjustable rate goes? If you don’t know that an adjustable rate will eventually adjust, well then you probably have no business mortgage shopping. I’m sick of all this. Yes, the lenders are creeps. Hell yes, realtors are creeps. But at the end of the day, it’s not rocket science to figure out that adjustable means adjustable. Buyers really oughta understand the terms of their loan.
Yeah, the MSM keeps on trawling out these ‘victims’, and the first thing you find out is that they didn’t a) read the paperwork and/or b) get a lawyer to do it for them.
Or even put finger to calculator to find out what their adjustable rate might go to.
Not that they were helped out in any useful way by the people lending them the money…but come on… surely your own sense of self-preservation would make you check and double-check the terms and agreements before you signed the friggin document. You sign the papers, you make your choice.
Call me old fashioned - I even read the ‘Terms and Agreements’ in full for registering for free stuff online. Its turned my ‘Everest’ of spam in to a more manageable “Mt Whitney’ simply by turning off the inevitable ‘free email alerts’, that all T&As seems to have embedded in them.
it’s not the terms necessarily that the buyers don’t understand, it’s the market as a whole.. how’s it was rigged and inflated and the realities of the leading indicators when many of these FB’s bought that they didn’t know… I’m an ex-eastcoaster myself.. you’re still jaded and I understand.. been there myself..
I didn’t understand jack squat about the real estate market until I found this blog. I knew the basics (well, the “old fashioned” basics): 1) Save 20% for downpayment, 2) Obtain a fixed rate loan, 3) Be sure to factor in taxes, insurance and utilities when figuring out your monthly pay out.
But what I DID know is this…prices were comPLETEly out of whack. I was getting more and more upset every minute. No way would I ever be able to get a place of my own. I was downright depressed.
So…being a person who believes in doing homework on whatever subject is near and dear to you…I Googled “high real estate prices” or “why can’t i afford a home” etc. In doing that, I found this blog. I then realized I wasn’t crazy. In fact, I was one of the rational thinkers.
So if someone as naive as I could find the resources to learn what was truly going on, then anyone could. While most people on here are market whizzes or financial geniuses, I am a simple person who works hard, saves hard, stays out of debt, follows the rules so to speak. My point being you didn’t have to be a market expert to find the truth.
Jaded? Yup. I won’t stop being jaded until prices are once again affordable. I see nothing wrong with that.
ec, remember, you are the market; at least a good part of it. Folks like yourself and a few million others are the only thing which will, hopefully, pull us out of this economic death spiral at some point in the future. No matter what part of the country you are in, no outsider equity locust, snowbirds, boomers, whaterver you want to call them will arrive on a green horse to save the day.
You don’t really have to know anything about the market. You have to know how much you can afford & if you don’t like what’s available in that range, keep renting. I think there have been a lot of people not liking what’s in their price range, so they say, “what the hell, I’ll stretch to get something better because hey, I deserve it.”
It’s my job to know how much I can afford & there are a lot of resources available to help do that (library, internet, Dave Ramsey, etc.) Also, she co-owns a restaurant, so she already needed to know something about managing money.
I also believe the NAR is a pack of liars and the best thing that could happen to this country is that they go away because of bad publicity & law suits.
If everyone stuck to the 3xs income should be your MAXIMUM house price rule, this shat wouldn’t have happened.
Just looked at the “The Wall Street Journal Guide to Understanding Personal Finance” copyright 1992 and they said “As a rule you can afford to buy a home that costs UP TO 2.5 times your annual income.”
Eastcoaster,
We all know the TRUTH. Everyone knew the rates would adjust, and being at the lowest rate in about 45 years, then there was only one way to go. UP.
But, REALTORS told them that prices were going up 20-30% per year. IF you didn’t get in on the “appreciation”, then you were a loser.
That is what drives manias……GREED and FEAR.
It worked.
But don’t try to cry to me now that your plan failed.
You took the gamble with some very bad advice from the National Association of Realturds.
“It’s a great time to buy”, don’t ya know.
She’s certainly not the problem folks… and not everyone reads the HBB or has the foresight of many on this blog.. She was the target of the Wall Street Thugs and the massive herd of sleezebags like Leslie-Appleton-Young..
Dude, Thugs are not a problem if you stay out of dark alleys. Your opinion implies that this “victim” had the right to trust other people to be honest. Based on what? I guarantee you she double checks the food delivered to her restaurant when it arrives, and keeps an eye on the tip jar.
First of all pal, I ain’t your dude.. okay, dude.. And that “thug” in the alley is a more honest “thug” than the thugs that are at the heart of this mess on Wall Street walking around in $2000 suits … yes, that’s my view, and I stand by it because I havn’t been wrong yet on this one.. Anyone being asked to put out that kind of money should have expectations that the parties involved realize the stakes involved and that all is on the surface, esp as it relates to imaginary (stated income - no doc) competing buyers, appraisals and especially risk…
“Anyone being asked to put out that kind of money should have expectations that the parties involved realize the stakes involved and that all is on the surface.”
Why? If anything the more money on the line the less expectation one should have that the counterparties will be honest.
You don’t make sense.
And no one “asked” her to put out that kind of money.
And no one “asked” her to put out that kind of money.
My sentiments exactly.
And no one “asked” her to put out that kind of money.
She put 10% down on a house after saving for almost 20 years. The ARM choice was dumb, but, why jump on this one. She’s losing her house and she wasn’t committing fraud, or expecting a million dollar home straight out of college. She took poor advice and now she’s paying the price. That’s not enough for you?
Replace “put out that kind of money” with “buy a house you really couldn’t afford” and it’ll make more sense. I don’t care what your downpayment is if the home is too much for you. You just don’t buy until you really, truly can afford to (IMO). Not based on what “might” happen (i.e. the house “might” appreciate 20% in a year). But based on reality (i.e. my salary is $XX,XXX so I can actually afford something $XX,XXX times 3). Can’t find it? Rent.
Anyone being asked to put out that kind of money should know what they could afford to pay and what they couldn’t.
The ultimate power to just say “No!” resided with them.
Well then, I suspect a single woman, like Ms Alarcon, trying to make it in this world and set a financial footing for herself is an easier sales job than you or I… that certainly doesn’t mean she’s frivolous or an idiot.. she’s just a better / easier target for the thugs.. just as she would be for the other thug in the alley..
She’s not single.
She lives with her husband, who makes deliveries for the restaurant, and her sister, who cleans houses. Her 21-year-old son is unemployed, she said.
I’d tell my bum of a son to get his butt off my couch and get a job to pay me some rent.
And I’m a single woman - a single mother in fact - trying to make it in this world. May possibly have the lowest salary on this blog. And yet…I’m not foolish enough to pull the trigger on an overpriced home. It comes down to looking out for #1 in this world.
Yes, eastcoaster, exactly. We ALL heard the RE hype during the bubble. And a lot of us got grief from our family and friends when we refused to jump on the bandwagon.
I didn’t sell during the bubble (so I didn’t profit from it) and you won’t hear me whinging about it. No one forced anyone to do anything.
You make your choices and you live with them.
I’m okay with that philosophy so long as the playing field is level and we’ve got full, honest disclosure about all things related to the transaction.. you seem to think that has existed during the bubble.. I respectfully disagree COMPLETELY with that notion..
I posted yesterday about the contributions of the RE machine to society.. well, this thread reminds me that I missed a few.. the hummer comes to mind… and to that I’ll add the real pisser.. yes.. “The new dog eat dog world, so deal with it” mentality and mindset is another contribution of the failed / sleazy RE industry..
“so long as the playing field is level”
The playing field is rarely, if ever, level,in life or in finance. One participant has better info, deeper pockets, better
instincts, hires better lawyers, or flat out, is smarter and tougher. Such is life. I suppose you mean that buyers should read their mortgage docs and understand the meaning of the word “adjustable” before they put down their life savings, but buying involves risk. There’s no guarantee that your house will maintain its value, relative to the price you paid, or that your neighborhood demographics won’t change, or that your property taxes won’t rise, or your insurance rates increase. But if you start by refusing to understand the meaning of the word “adjustable” then there’s not much that will help you.
‘Six months ago a person could walk into a bank and put a $50,000 down payment [on a $800,000 condo] and get the mortgage.’ Now the banks are strictly following the old rules of [20 percent down],’ he said. ‘Brooklyn buyers don’t necessarily have $160,000 to put down.’”
If they insist on building $800,000 condos, they insist on building for a very small demographic. That demographic wants to live in Manhattan or a tony suburb, not Brooklyn. Young people flocked to Brooklyn because they could afford to live and raise a family here, not because it was Greenwich, CT.
“With 800 units coming on the market probably within the next year, I think buyers are going to be really fussy.”
Those who can afford $800,000 condos tend to be fussy people. Build some $300,000 two- or three-bedroom condos, and you’ll be able to sell to the less fussy people who live in Brooklyn and would like to be able to stay.
Again, it never ceases to amaze me that these “savvy business men and women”, whether they work for the construction or finance industries, really believed that J6P could afford an 800k home.
It isn’t an $800K home. It’s a $400K home they have been selling for $800K.
I savvy that these industrial-grade morons have killed the word “savvy” for a generation.
‘S too bad; there aren’t too many words left in wide American usage that come from Portuguese.
I savvy that these industrial-grade morons have killed the word “savvy” for a generation.
The only person who should be using the word savvy is Johnny Depp as Captain Jack Sparrow… someone on this board posted this not too long ago and I’m still laughing about it.
A co-worker of mine just bought a place in San Diego County for around $350K with 5% down. He has a good managerial job and credit, but 20% is not the rule yet.
I gave up trying to talk him out of it. He could afford the place and did not care if it went up or down, which is actually a pretty good attitude towards real estate in general.
That happens to be my attitude about most things bought for reasons other than investment reasons. The cars I buy greatly depreciate in value, for example, but I don’t care.
I expect my paid-for house to drop a couple of hundred thousand dollars in market value before all this nonsense is over with, but, again, I don’t care.
I hear reports of Realtors jumping off the roofs of their Lexus’ in despair over lack of sales.
LOL! And I’m glad I finished my drink before I read that comment.
There are $600-800k condos being built in Tucson right now. We local yokels are wondering who will buy them.
…………Rich baby-boomers who are flocking to the south in search of warm retirement places.
Didn’t you get the word on this from the N.A.R.??
They will be coming for years, so you should buy up all the available inventory because there is going to be a shortage as all the retirees move south. This is just the beginning of the tide. The baby-boomers are rich from buying tech stocks in the 90’s. They have credit and can afford 2 or 3 houses………
That mentality is still the current ethos, but i sense a change of mood is slowly getting hold. Herds are hard to move when a stampede is happening. Moo.
From the Berkshire Eagle article—-
“At the Lenox-based Century 21-Franklin Street firm, owner Bob Romeo believes the real-estate slowdown had its initial and greatest impact on the second-home sector. ‘A significant number of those folks look at the purchase of a Berkshire home as an investment; when they see it declining in value, they don’t buy,’ Romeo maintained.”
This 2nd/vaction house investment scheme is exactly the first leg that needs to be kicked out from the RE scam and it’s happening by the real-tards own admission. The retirement/2nd house dreamers have slowed to a trickle in New England at it is these same turds who will bear the losses associated with the bust. These metro scammers are in for a suprise in a big big way.
“Nationally, he conceded, the real-estate market is ‘taking a beating day after day, but anytime now somebody’s going to come along and say, ‘Now’s a good time to buy.’”
“In Berkshire County, he said, ‘We’re close to the bottom, not that the bottom was that far from the top.’”
REALTARD ILLOGIC and DENIAL.
“Prices didn’t go up that much so they won’t fall that much” yet prices are were up 200-400% depending on areas so they don’t have far to fall? I want to choke these bastards.
RE: REALTARD ILLOGIC and DENIAL.
I thought the same thing, E.
How ignorant can a published media source be to quote this idiot when he has virutally no data to back up his statement.
Makes ya tired.
No, no, no. He didn’t mean “Prices didn’t go up that much.” He meant “Prices have only gone down a little, and now they’ll stop. This is as far as the market will fall.”
“She used $35,000, her life savings, as a down payment. She received an adjustable rate mortgage from a local bank, but it was not considered a subprime loan”
I don’t get it. Savings is kindof hard to build. It takes sacrifice. Every $1k in my savings account represents a vacation I opted out of taking, or a piece of crappy furniture I chose to live with instead of replace. Every dollar of my “life savings” has a meaning to me, it has a story. It represents the time I spent at my job earning it, and it represents the luxury I did not spend it on.
My heightened sensitivity to how much money $x REALLY is, has caused me to truly evaluate the value of a home. When it’s your money, you question every dollar of an asking price.
For her to save that much and not do the research we all did that a.) saved our butts and b.) led us to this blog. Very few HBB’ers agreed to ARMs I’d assume, becuase they did their homework. It breaks my heart for her, but COME on (channeling GOB from Arrested Development). You save your whole life but skip the research? Sigh.
I carpool with engineers and finance majors with master degrees in their fields and they don’t really get it either because of the effectiveness of the NAR’s sales job to swallow their juice..
Greed is a powerful force. It can easily blind those who should know better.
yes, that’s certainly true.. however, I sense fear more than greed in my discussions w/these educated people.. fear of never being able to own a home.. that fear has waned for certain over the past year, but they still have this uneasy sense that someone will be lighting the home price inflation fuse again soon..
I think it doesn’t have so much to do with ‘research’ as a drop in income because of consumers cutting back. Read the operative parts:
““Benigna Alarcon hoped that reducing her mortgage payment by $700 per month would be enough to save her Chelsea home from foreclosure. But she still can’t afford the $1,971 payment. Now two months behind on payments, Alarcon said she must either sell her home or risk foreclosure.”
NOTE: mortgage had started out at $2000 and had not been a problem. See the sentence which reads “The mortgage payment first was $2,000 per month. After two years, the interest rate adjusted”
Then read the last sentence: “business at her restaurant also declined, greatly reducing her salary, she said…She sees little hope in reversing her misfortune.”
She saved for the downpayment. Check.
She put down close to 10%. Check.
Has no problem paying the $2000 mortgage for 2 years. Check.
Mortgage reset twice bumping up to $2700 but she refinanced it and got it back down to $1971 (the range she had been able to pay.) Check.
Business drops off at her restaurant.
She can not make the mortgage because of a loss of business.
That is NOT the samething as ‘not doing the research.’
That is her business is in trouble because people can not afford to eat out and spend money because they are broke.
So for all the news stories and comments you read hear about stores closing and restaurants disappearing because housheolds cannot afford to shop or spend, you now know the ending for the store and restaurant owners. They lose their homes because they do no have enough income to pay their bills.
That, boys and girsl, is called a ‘downward spiral’. It can affect even those who ‘did the research’ when their business loses customers and goes under, or their employer starts cutting back because the employer’s customers are cutting back because they are losing customers……..
Where do you think people got the money from to go out to dinner, to go on vacation, to take the dog to the groomer, to buy the car (even a used car), to get the computer repaired, to upgrade the IT at their business…….? Spending has exceeded income. When spending has tobe cut to not exceed income, businesses of ALL kinds lose customers. The businesses then have to cut employees, cut wages and, at times, close. That means even HBBers can lose their job, have their incomes cut and, for all their ‘research on the housing market’, be at risk of losingtheir car, getting evicted and not paying their bills.
Good points. I think every time I read about an adjustable loan, it just blows my mind. Even if it’s not greed driven. Outside the ARM twilight zone, a $350k property COSTS about 2200/month, roughly depending on your rate (which might lower if you bring money to the table). If you want a smaller payment, you find a cheaper place. Period.
But cashflow problems (especially as an entrepreneur, yikes) hurt those holding 30yfx’s too. Very very true.
I work for a massive company (you know who we are, I promise) but my husband works for a 10-man startup in the travel industry. There’s no saying it can’t happen to us, andwe know that. I’m very glad we have very few financial obligations.
Let’s see. See saves 35K over 16 years. 35K/16 = 2187.5. She manages to save a measly 2200 per year but thinks she can make a $2000 a month loan payment plus all the other obligations such as taxes, insurance and repairs. She probably puts more research into buying a new pair of shoes at the mall than into buying a house. If you can only save about $200 per month over the last 16 years you have absolutely no business buying a $330K house. None what so ever!
Have you ever priced rents in Massachusetts? I have when I was doing research on ESS (economic self-sufficency) data.
A one bedroom in the Boston area STARTS at $1100+ (at least for an area where you wil not get mugged.) 2 bedrooms are 50-60% more (and that would be $1600-1800 easily.) Try the Cape. Those rents are insane - $2000 or more for a2 bedroom apartment.
It all depends on the area. Massachusetts is a very high cost state even for renting. In that state, a $2000 nut would not be “insane.” With some interest deductions, it would bring it in line, if not easily below, with the rental prices for a 2-3 bedroom apartment (and renting house in that state is even more.)
RE: Massachusetts is a very high cost state
The RE drones are still tryin’ to peddle 1BDRM/no closet 650SF converted condo’s for $390k.
And that’s with no parking!
Some single gal was on the edge of purchase. Her reason-it’s close to a lot of clubs and restaurants.
People are brain-dead.
I forgot to add that most small business oweners tend to plow as much of their profits as they can back into their business. (And they call what they pay themselves a ’salary.’) Presumably she did the same to ‘grow’ her business.
Maybe, maybe not. The problem is with these type of stories if we just don’t have enough information to know whether she was actually making prudent decisions or not.
“She probably puts more research into buying a new pair of shoes at the mall than into buying a house.”
And your basing this conclusion on what? That she had a bad outcome, and bad outcomes only happen to “bad” people? I love this blog, but sometimes people are just as irrational in the other direction as the “sheeple” they criticize. She saved, she bought a house she could afford based on her income at the time, and then her income decline–something that could happen to you, me or anybody else. Not everybody loses out because they’re “stupid, lazy, didn’t do their research, listented to Suzanne, had it coming,” etc.
Do the proper research and you will discover most restaurants are destined to fail.
Change the word “restaurants” to “small business” and you have described the world of ‘be your own boss, start a business.”
Recognizing this fact should have given her pause before she commited future income from such an iffy business to buying a house, or anything else.
So because she had an “iffy” small business, she shouldn’t have committed her future income to buying a house or anything else? Not even renting a place to live?Medical care/insurance? Transportation? All of these purchases typically require some commitment of future income. Additionally, I think saving for 15 years does amount to “pause.” Her choice may well have been stupid, but I’m not sure it was hasty.
Because she has an iffy business there is no way she could forcast what her future income would be.
Commiting a few thousands of dollars of future income to transportation or insurance is not in the same cagtagory as commiting hundreds of thousands of dollars toward financing a house, especially when such financing comes cursed with adjustable rates.
I hope to hell when I buy, I don’t buy anywhere near someone like you..
Nonsense. I would be the best neighbor you could ever have.
My brother did everything right. Bought low, fixed mortgage, reasonable low payments. But lo and behold, sh;t happens.
He owns two businesses that are service and repair orientated that he works very hard at and things are slowing. Normally not a problem, he’s been through difficult slow times before and has always prepared for the lows. But his 7 month old baby has been born with a deformed heart. They had insurance that covered a lot but not all. He’s already, after spending all his reserves, 50k in the hole. Now, my sweet, red headed nephew is going for heart surgery on Tuesday. My brother is talking about taking whatever equity he can out of the house IF he can. And this is only the beginning. Surgeons already know he’ll need a transplant by the time he’s school age.
my brother reminds me of a lot of the posters on this blog. Sensible, prudent, and generally a skeptic of the so called easy money. It can happen to anyone.
One of my new clients is a bankruptcy attorney. As one would expect, her practice is quite busy these days.
I asked her what would happen once the economy improves — wouldn’t things slow down for her? No, she replied, adding, “Life happens.”
wow, danni, that is indeed quite a story with an genuine unexpected turn. Through no fault of their own, this family has incurred some substantial medical debts. It’s this type of situation that I dont mind one bit chipping-in some extra $$, by whatever means, to help through the rough patch, as it seems they tried to be responsible with their lives.
( hoping yer bro & family will end up ok, Danni. best of luck to you and yours . . . )
What I find amazing of them is they ask for nothing and are normally uncomfortable with the idea of outside help. I had to convince them to let me ask family and friends, who feel powerless to do anything, to make meals for their other 5 kids while they are occupied at the hospital in the Bronx. They finally conceded, which is why it’s on my mind right now….I’m preparing a calender for days that meals will be provided.
If you have a chance to think a positive thought on Tues., March 11th, send it to Luke, aka the fighting irish.
Danni,
Please, please, please ask your brother to talk to the hospital about their charity care/financial assitance policy. Some of the hospitals have a special category of assistance for people they consider “medically indigent.” This is for people who aren’t poor but can’t handle their spectacularly high medical bills. Non-profit hospitals do this (financial assistance in general, not a medically indigent program specifically) to fulfill their obligation to provide “community benefit” which allows them to be tax exempt. Being tax exempt saves them huge amounts of money (especially in real estate taxes). They owe the community this service.
It is hard to ask for help. Really hard. But please ask him to try.
I don’t think that the posters here are hostile toward people that run into real bad luck that has nothing to do with greed or gambling on a real estate investments or buying more house than they could afford . There are victims and there are fake victims that are really people belly-aching because their RE gamble didn’t pay off .
I also think that help should be given to people who suffer a unexpected medical emergency ,especially with children .Many insurance policies these days don’t cover everything on serious surgery ,so that’s another issue .
You’ve got my prayers.
Bullseye on this one! Finally a reasoned look at what has become a kneejerk reaction, thank you.
“Business drops off at her restaurant. She can not make the mortgage because of a loss of business. That is NOT the samething as ‘not doing the research.’”
NO but is is one of those things like job loss, death of a spose, etc.. that need to be figured in the equation.
That said I do feel very sorry for her. She’s probably very hard working honest business person. But maybe not the sharpest person around.
Well said, you captured the much bigger problem with all of these defaults and resets. I’ll bet for 20% of the homeowner population the Heloc was their spending money. Now that its gone can a recession not be far behind?
You said this way better than I did above.
I mentioned in an earlier thread that I think critical thinking and formal debate should be taught in school. I don’t think many people ever learned how to think for themselves. So if the person in the suit is telling you that everything will be fine, you accept their authority.
I attended a broad range of schools growing up. Some schools work to make kids who are engaged, thoughtful citizens. Others are babysitters. Most of us here are critical in our thinking, and we’re lucky.
That doesn’t have to mean we bail her out. I would just rather kick around the lending institutions and regulators.
“You save your whole life but skip the research? Sigh.” You said this way better than I did above.
I mentioned in an earlier thread that I think critical thinking and formal debate should be taught in school. I don’t think many people ever learned how to think for themselves. So if the person in the suit is telling you that everything will be fine, you accept their authority.
I attended a broad range of schools growing up. Some schools work to make kids who are engaged, thoughtful citizens. Others are babysitters. Most of us here are critical in our thinking, and we’re lucky.
That doesn’t have to mean we bail her out. I would just rather kick around the lending institutions and regulators.
sorry for the double post. I was relying to SLC, but I didn’t realize how fast the comments all go up.
danni, best of luck to your brother and his family.
I had a complete freakout this morning. Got a call from a verification group asking if I had signed a certain appraisal in 2006. For the life of me I could not find the darn file. Finally I resorted to a backup on a seperate disk. There it was.
I pulled it up and was mortified at the value. How in the hell did I sign that? Then I realized that the report was about two years ago. Crazy times. I recall thinking during those times that we were going to see a drastic change. Well, here it is.
I went on the county site where they show the latest picture of the property. Apparently it burned.
Lord I hate the past few years.
I feel for you man. When the world goes wrong, it’s hard to keep your head together.
RE: I pulled it up and was mortified at the value. How in the hell did I sign that? Then I realized that the report was about two years ago. Crazy times. I recall thinking during those times that we were going to see a drastic change. Well, here it is.
Lord I hate the past few years.
Exactly the reason why I closed my doors and packed up shop in 2002.
No way was I gonna have my name at the bottom of reports
reflecting an out of control market based on crooked origination and massive flagrant rubber stamping.
The search for scapegoats will only be increasing as everything falls into the abyss.
Count disorganized, lowly appraisers as the easiest to hang.
I hear ya HD- If I was few years younger I would have done the same. Too old to drop out. All I can do now is keep doing the pain and keep reporting the truth. The REO field is a much better fit as I am now asked to do what I have done most of my career. Working with lawyers and lenders on the way down.
“Lord I hate the past few years.”
Then you will LOVE this exchange on Broker’s Outpost…just goes to show that there are still quite a few “buttpopes” (to quote JeffK) in the mortgage business:
http://forum.brokeroutpost.com/loans/forum/topic.asp?TOPIC_ID=206692&whichpage=1
Subject: I got Served from an Appraiser!!!.
“So WAMU lets me know they wont subordinate over 80%LTV or some ungodly low number, and I’m sitting there wondering how can this day get worse…. Ding, i get mail and from a lawyer respresting some appraiser that didn’t get paid.
Story,Got a guy out in a nice area, but not populated. Guy built 600k house and is retiring, and he says lets use the lady that appraised me for my construction loan. Okay I call her get her fax and send an order out of Calyx point. She calls and says, I always collect at the door and that is what i want to do here because i don’t want to worry about not getting paid. I said great do whatever you want, If you do bill us you get paid when we close. Citimortgage is the lender, they get the appraisal, with comps 10 - 30 miles away (not neccessarily a killer not what i like though) and she comares it to all homes with electricity while ours is Solar. Citi calls and says secondary market wont go for it, your loan is dead, dont bother getting another appraisal, we kill loans not close loans. (okay i made that last part up).
I tell the appraiser, who DID NOT collect at door but billed me b/c the borrower asked her to. Now i get this damn collections letter and she is being unreasonable, i even offered $250 to split the difference.
Do i have a leg to stand on? The order did not say bill my company, and I hate this lady now and want to see her not get one red penny.”
And, later…
“I said that to her to let her know I would not pay unless the loan closed, the vlaue was at 60% I wasn’t pushing that, you do just love assuming the worst about every broker……”
Hmmmm, you (appraiser) get paid when the loan closes…and they wonder why appraisers shouldn’t be ‘hired’ by the loan officer.
Ah, I just love those professional, highly trained loan officers…
Deep doo-doo…
When the Fools say things are bad…you know it’s gettin’ really bad. And if they saying declines of 30%-it’ll be 50/60%.
Hold on to your fookin’ Fool hats.
http://www.fool.com/m.asp?i=2471869&u=240494791
“‘I don’t want to lose my house,’ said Alarcon. ‘I spent everything I had [saved] to buy it.’”
Hey Benigna, ever heard this one: “Don’t put all of your eggs in one basket”?
Thanks.
Who else is thrown off by her name being Benigna? Isn’t that a cognate word-form of our English “Benign” or something? Sounds like she’s got it bad enough.
old song from kidhood tv show. One benigna, two benigna, three benigna four… or something like that. The benigna splits, iirc
sohonyc said : “Anyone still calling this a “subprime” problem is grossly understating the issue. The “problems” are with our banking system as a whole, the representation of value and risk, and the absolute necessity (not just the expectation) of outsized returns”
Hm, I’m thinking saying this problem is restricted to our banks is understating as well. This is a cultural crisis.
I keep hearing the words of Mr. Potter “a discontented, lazy rabble instead of a thrifty working class.” “starry-eyed dreamers like Peter Bailey (who) stir ‘em up and fill their head with a lot of impossible ideas.”
We went from saving about 10% of our income 20 some years ago to spending it all and then some. I was in Ross the other day, 6 figure income, but, I know how to make the most of it, standing behind this red-neck woman with a coach purse, even worse, a filthy coach purse…sorry, a $1k purse can’t buy you class!
So, now we will get a culural adjustment. The era of spending more than you make is over. Hm, maybe savers will be cool now?
$1k for a PURSE?
“$1k for a PURSE? ”
that’s nothing…i know a girl that bought a $750 wallet.
We need the Potters and Scrooges - that’s the truth - too bad it hurts too many feelings.
“‘From what we’ve seen, they’re going to be as high as they’ve ever been,’ said Tim Warren, CEO of The Warren Group. ‘Unfortunately, because real estate prices have dropped, these distressed properties just aren’t worth what they were.’”
***********
In the last sentence, what Tim Warren meant to say was:
“Unfortunately, because real estate prices rose so high because of the Fed funny money policies, these awful properties just aren’t worth what they were…”
‘I don’t think anyone is to blame for it.’
One of the biggest lessons I teach my kids is that “it’s OK to make mistakes, as long as you”:
1. Tried your best to avoid them.
2. Admit you made a mistake and LEARN from it.
One of the biggest problems I have with many adults is that they never want to admit they even made a mistake. “Who could have known?” “No one saw it coming.” “No one is to blame for this.” How can you learn from your mistake if you never admit that you made a mistake?
I hate this “no one is to blame” mindset, and I believe it’s one of the major problems we have as a (western) society.
Fess up, say you’re sorry, and LEARN from it. If my kids can do it, I should be able to expect adults to do it.
If I’m not mistaken (ha!), doesn’t Bill Clinton have a problem with this? And how about our current adminstration?
It appears to me that not taking responsibility has become a national pastime since the late 1990’s.
Political leaders, corporate leaders and on and on…
Shock, Denial, Anger, Bargaining, Testing, Acceptance.
It seems pretty clear to me that the vast majority of people are in or close to the Anger phase of this downturn (the rest are still in Denial). While the government has clearly moved into Bargaining mode. When they finally put the regulation in place that will force everything that is off sheet, back on we will have reached acceptance.
As a “western” society?
Go work with some Asian’s, its the same problem, in fact, maybe worse, since many function off of collective face saving, so not only will no one actually take the blame, no one will even point it out.
I think it’s a human issue…would be curious to see a society or culture that embraces blame.
Will you take the blame for not writing “asians” when you shoulda? Or is that your elementary school teachers’ fault?
‘I don’t think anyone is to blame for it.’
How many times will I have hear that this year, from bank and hedge fund managers to city councilmen…
A nod to Jimmy B.:
Wasting away in HBBer-ville…
Trying to grow some Joshua trees.
Some people say that there’s a lender to blame
But I think
He!!, it could be FBs fault.
‘Brooklyn buyers don’t necessarily have $160,000 to put down.’
hahahahahahahahahahahahahahahahahahahahahahahahahaha
What say you. PPT at 3 pm? Or a huge rush to get out, so you aren’t in over the weekend while “news” occurs. Since all the news is bad news.
PPT will try their best, but W is speaking, and lately that’s been a market downer.
Martin Feldsteins’ solution for the mortgage market:
http://online.wsj.com/article/SB120485260049218269.html?mod=opinion_main_commentaries
Essentially he wants government loans at teaser rates to existing homeowners.
“The government loans would not add to the budget deficit or to the net debt of the nation. Gross government debt would rise by the amount of the new government lending, but this would be balanced by the asset value of those loans.”
Assuming housing values do not fall.
Is he a member of the same political party that proposed cutting off welfare recipients after five years and letting them starve? No wonder he doesn’t want to admit that his is proposing to shift most of the loss in housing values onto the government’s books prior to default.
What is a Joshua Tree-can someone please explain this reference? I keep seeing it on here, have no idea what that means!
It’s a punishment involving an orifice; much more sever than a slap across the face with a trout.
“sever” = severe
It’s not the kind of tree you’d want to get close to, let alone smacked by:
http://en.wikipedia.org/wiki/Joshua_tree
Awww … we’re still attracting n00bies. That’s so cute.
It’s best inserted stem first.
Thanks for the warning. I’ll keep my stern away from the J-Trees.
I hate that damn tree.
This blog is full of self-righteousness today.. too bad… as I noted earlier, the “dog it dog and screw you pal world” is yet another contribution of the sleazy RE industry… anyone who finds pleasure in what’s happened to this woman needs to leave this blog and go for a walk and smile and talk with a few neighbors..
Well, you don’t have to come here.
While I agree that that bee-yatch doesn’t deserve the full brunt of our wrath, we are sick of the reporters blowing sunshine up our @ss. In any case, we like our schadenfreude.
I imagine Mozilla thinks the same of all the FB’s out there who are loosing there homes. I’m smart, I deserve all of the $$$ I got from selling with inside info and creating a system designed to screw the uneducated misguided masses.
measton…. isn’t that what everyone wanted? You know…. rugged individualism and personal responsibility?
I blame the Mozillo’s as well as the borrowers /real estate agents /Wall Street ,etc. The lenders as well as the liar loan borrowers seemed to have a pact with each other that the lender would close their eyes to the fact they submitted a fake loan application or didn’t qualify in return for the fee income and a bogus loan that would be passed to the secondary market .The borrowers didn’t have to come up with any money down ,so the bank was giving them the opportunity to get in on the appreciation of the RE mania,or buy a bigger house, or whatever ,or have low payments until you flipped that house ,or refinance again etc.
The bank was relying on real estate going up as well as the borrowers were . The loan investors in the secondary market were the greatest victims of fraud with the AAA ratings and the pretty loan packages riddled with fraud .The secondary market lenders are also the parties that are the ones really losing the money for most part . The lenders for most part were just the go-betweens that sold off all this junk paper .(I should say that many of the bad loans were the result of commissioned sales people loan originators and their Realtor buddies sitting up the bad loan packages ). I challenge anybody that can say that these loan originators stayed within the guidelines of the loan programs ,but rather they made the loans look like they conformed to the loan guidelines ).This doesn’t excuse Wall Street from quality control on what they were getting .
Walls Street set up the premises of the faulty loans to begin with and the crazy models of risks with the AAA ratings and they were seeking a place to put money from all over the world with higher yields than Greenspans low Fed rates were yielding on CD’s and savings rates . These Wall Street market makers made their money on the commissions from selling all these loans to the final victims .
Sure there are some borrowers that in good faith just bought to get a home and put a down payment down that are now up-side down because they have loss their down payment . The borrowers that didn’t have any down payment didn’t lose any earned funds .
But I agree with you that borrowers were caught up in a mania and a belief that “real estate goes up” and they believed that the lenders would not of loaned to them if the lenders didn’t have that belief also . Certainly that was the theme song that the Realtors chanted to the public during the boom .
I think many borrowers just didn’t care what kind of loan they went on or if they inflated their income for loan purpose because at the time you have to get how the product was sold by the industry . This is not normal for borrowers to not care what kind of loan they get . Realtors pushed these toxic loans because they knew the loan originators could push a borrower through without any skin in the game and without even needing to qualify .
Now if you were a Realtor,how many borrowers can you find who can’t qualify with no money to put down verses a borrower who could qualify and had a 20% down payment to put down . The borrowers were promised that they could just refinance the toxic loan they agreed to go on and that was the loan they qualified for (not really). “Buy now or be priced out forever ,Real Estate always goes up ,refinance your loan after your equity builds and you can get a better loan ,you can’t afford not to buy ,let your house make money for you ,buy now while the interest rates are low ,don’t be a loser renter and waste your money on rent , plan your retirement with home ownership , go for the gusto and flip that condo ,invest in the next great real estate investment spot ,etc etc etc.”
Heck ,we all know what happened ,but do you give the borrowers a pass because they were gambling on mania myths and were lead around by the nose by the market makers and shakers .Do you excuse their greed or their fear and desire to not be priced out forever . Do you look at them as people who were brainwashed ?
I look at the housing boom like a ugly hurricane that came into town (or maybe like katrina ). The hurricane created a lot of destruction ,damage, and loss. Acceptance of that hurricane ,is the first step in re-building . I will never excuse what guys like Mozilla did .