Higher Scrutiny Because The Market Is Going Down
Some housing bubble news from Wall Street and Washington. Bloomberg, “HSH Nordbank AG, Germany’s only state- owned bank that’s partially held by private investors, said profit fell last year on subprime-related losses. The company booked writedowns and provisions on debt investments of about 1.1 billion euros, including 563 million euros linked to U.S. subprime. About 202 million euros of that sum is related to North Street, U.S. mortgage investments it bought from UBS AG, Europe’s biggest bank by assets.”
“HSH Nordbank has about 2 billion euros in U.S. subprime investments and has put two off-balance-sheet investment vehicles, Poseidon and Carrera, onto its own accounts, spokesman Rune Hoffmann said today. The 2007 writedowns were based on prices in mid-February, he added.”
From Reuters. “Countrywide Financial Corp shares fell on Monday following reports it was being investigated by the Federal Bureau of Investigation for possible securities fraud.”
“The largest U.S. mortgage lender is being investigated for whether it misrepresented its financial condition and the quality of its loans in securities filings, the Wall Street Journal and the New York Times said over the weekend, citing people with knowledge of the case.”
National Mortgage News. “A ’scratch and dent’ executive told us recently that several Street firms, including Bear Stearns, Credit Suisse, Lehman Brothers and Morgan Stanley, are using the scratch-and-dent market to unload their nonperforming and subperforming loans.”
“More intelligence on investment bankers using contract underwriters Bohan and Clayton: ‘All the Wall Street firms used Clayton and Bohan…They never looked at all loans, mostly a sampling, which was never greater than 10%, more like 2% to 5%. Only CitiFinancial, when I was at Argent, reviewed more than 10% of Argent and Ameriquest’s loans, and it was usually around 50%.’ The source requested that his name not be used.”
The Atlanta Journal Constitution. “In the fall of 2005, well before the mortgage meltdown hit, Roland Arnall, the founder of California-based Ameriquest Mortgage, was trying to become an ambassador. But some in the U.S. Senate questioned whether Arnall was the right choice.”
“Attorneys general in states across the nation had accused Ameriquest of predatory mortgage lending practices that left thousands of consumers with troubled home loans. With the pressure on, Arnall’s company agreed early in 2006 to a $325 million settlement with the states. Within a few weeks, the Senate blessed Arnall’s nomination.”
“As it turns out, it did very little to ease the huge financial hit experienced by thousands of Americans still trapped in Ameriquest loans. For Georgians who qualified and agreed not to sue the mortgage company, checks that averaged $1,000 began arriving late last year.”
“In 2004 David and Kelly Andronica…went through with a refinance with Ameriquest. They thought everything was fine until Kelly put in a call to the company to find out why their property taxes had not been paid.”
“Kelly said the customer service agent asked her to verify some figures from her loan application, including an annual income for Kelly in excess of $60,000. ‘I haven’t made that much money in my entire life,’ said Kelly.”
“But the Andronicas were to find worse news. They discovered they had signed for an adjustable-rate mortgage instead of the 30-year fixed rate they say they wanted. And, the appraisal Ameriquest ordered significantly overstated the home’s value.”
“Jason Farmer, who supervised the higher appraisal, said in an interview that he stood by all the home values determined by his Blue Ridge-based company. However, he said that his company stopped doing business with Ameriquest because the lender tried to inappropriately influence appraisals.”
“‘Ameriquest was particularly bad about pressure for values,’ Farmer said. ‘A lot of times they would stipulate, ‘Well, we are looking at at least this value.’”
“Iowa Attorney General Tom Miller acknowledged that the $325 million didn’t come close to covering most consumers’ losses. ‘To fully compensate them, it probably would have taken billions,’ Miller said. ‘There was no way to get that out of the company.’”
“Miller also would have liked to have ordered massive changes in mortgages like the Andronicas’. But that wasn’t possible.”
“‘Ameriquest had sold the loans to secondary market investors, as did almost all subprime lenders at the time,’ said Iowa Assistant Attorney General Patrick Madigan. ‘As much as we would have liked to require Ameriquest to modify the loans, legally it was not an option available to us.’”
The Washington Post. “Appraisers are looking for signs that values are headed lower. Lenders need to know if a home worth $400,000 today might be on its way to a value of only $360,000. They want assurance that borrowers will have enough cash invested in the home to keep them from walking out on the debt.”
“‘There is higher scrutiny because the market is going down,’ said James Loizou, co-owner of Suburban Appraisers & Consultants in Fairfax.”
“Loan underwriters are being more demanding. They want information on comparable home sales, homes still on the market, those under contract, closed sales, foreclosures and incentives offered by home builders. They may even want info about homes that didn’t sell and were taken off the market.”
“‘Frankly, those are fair questions,’ Loizou said. ‘It just makes more work.’”
“If there are foreclosures nearby, or home builders offering deep discounts, or desperate sellers setting their asking prices 10 percent lower than the most recent closed sale, your appraised value will be lower.”
“One problem is that some neighborhoods haven’t had many sales over the past six months or so. When that happens, appraisers have to look for something similar in other neighborhoods.”
From USA Today. “Lender and loan servicer Dennis Lauria says his deepest losses are from borrowers who owe more than their homes are worth and simply mail in the keys, rather than try to work out a new payment plan.”
“‘I can’t get you to pay if you’ve got no skin in the game,’ says Lauria, senior VP of Popular Mortgage Servicing in Cherry Hill, N.J., who says 14% of his customers with subprime loans are in default.”
“Even some homeowners who can afford to pay their mortgages are defaulting, Lauria says, because their house might have lost 30% of its value, and they figure it will be a long time before it’s worth what they paid for it.”
“‘They say, ‘If I play my cards right, I can live here free for 12 months, maybe longer’ before the lender can foreclose, Lauria says. ‘Our challenge isn’t contacting the borrower. I can talk to them, but they stick their tongue out at me.’”
“Martin Goodman, president of Residential Capital in San Diego, says making contact is only one challenge. The other is persuading delinquent borrowers to tell the truth about their financial condition. He suspects at least 90% of borrowers don’t explain the real reason they are falling behind on their payments out of fear it might accelerate their foreclosure.”
“‘Everybody’s grandmother is dying. Everybody’s kid is having surgery,’ Goodman says. ‘I’d rather somebody say, ‘We mismanaged our debt. This is what we make, and this is what we can afford.’”
“As home prices fall from coast to coast, 8.8 million homeowners will have mortgage balances equal to or greater than the value of their property by the end of the month, Moody’s Economy.com. predicts. That could come as a shock to consumers who thought property values would always rise, and it helps explain the attitudes lenders are seeing among their troubled customers, Goodman says.”
“‘If you buy a car and it depreciates,’ Goodman says, ‘you don’t expect the automobile dealer to write off your loan. There’s a sense of entitlement (among homeowners) that is just unbelievable.’”
“In New Jersey, Lauria said he sent the FHA about 3,000 of his company’s delinquent loans to see how many could be refinanced under the FHASecure program. The answer: 61.”
“The options the companies can offer are tightly constrained by their contracts with investors who buy and sell pools of loans that are packaged as bonds.”
“But Lauria doesn’t believe every homeowner who can’t pay their mortgage can or should be saved. ‘One-third of people who are delinquent should be in foreclosure. It’s the best alternative,’ he says. ‘They don’t have the money. They shouldn’t have (gotten the loan) to begin with.’”
“And that’s why, he says, he doesn’t blame some of them for walking away from their homes.”
The Miami Herald. “Frustrated homeowners packed a Keep Your Home seminar organized by County Commissioner Barbara Jordan to discuss possible solutions to the mortgage crisis. ‘It’s so sad that the room is packed,’ said Jordan, whose District One includes Miami Gardens and Opa-locka.”
“According to 2007 statistics from the Miami-Dade County Clerk’s office, some 26,392 homeowners have faced foreclosure in the county, among 86,465 in the state. Since the beginning of 2008, about 3,000 have been foreclosed.”
“‘Many constituents were calling, trying to find out how to get their property taxes paid and what they could do to save their homes,’ Jordan said. ‘Their incomes are not growing; they are being forced to make hard decisions, and families just can’t keep up.’”
“An Opa-locka resident who would only give her first name, Angie, came to the seminar because she said her situation was overwhelming. ‘They are about to take my home,’ she said. ‘I got in this situation with balloon payments. My interest rate increased to 11.9 percent and I fell so far behind that I wanted to know my options.’”
“Phillip Giollei, community outreach manager at Washington Mutual, (who) was among panelists, said one key requirement was for homeowners to provide full and complete disclosure of their circumstances. ‘The mortgage company is not there to judge,’ he said. ‘I don’t want to set you up to fail.’”
“Giollei’s suggestions included repayment plans and loan modification. For those who must sell their homes, Giollei talked about the proper channel to list properties for sale, pre-foreclosure sales options and the possibility of a deed-in-lieu of foreclosure — a voluntary sign-over of the deed to the lender to avoid foreclosure.”
“Debra Johnson-King, a HUD-certified credit counselor based in Miami Gardens, suggested credit counseling alternatives and offered some words of hope for homeowners. ‘This, too, shall pass,’ she said. ‘I am here to help you keep a roof over your head.’”
“Johnson-King said sometimes people would have no choice but give up their homes.”
“‘Sometimes you have to just let go,’ she said. And she urged homeowners in trouble to get rid of pride and take action. ‘Credit may be messed up but that’s all right, because we will deal with it,’ she said.”
“Jordan hoped residents left the seminar with options. ‘I want them to have hope,’ she said. ‘I want them to know whom to call, where to go and to make good decisions as to hold or cut their losses, move on, rent and try again.’”
The Calgary Herald. “The subprime meltdown marks the final chapter in the financial sector’s golden age of the past 25 years, Bank Credit Analyst says. Banks are facing far leaner times and so are their shareholders, the Montreal-based research firm warns in a new report.”
“‘The blow-up in the markets for subprime paper and other structured products represents a watershed event in the financial markets,’ said Martin Barnes, managing editor of Bank Credit Analysis.”
“Although Canadians may have been preoccupied with their own equity bull market this decade, the financial markets’ golden age was already drawing to a close south of the border, Barnes argues.”
“Stock market gains came to a screeching halt with the bursting of the technology bubble in 2000. The financial sector turned its attention to securitization and creating complex financial instruments instead. This allowed it to generate fees, shifted default risk off its balance sheet and freed up capital to originate more loans.”
“The value of pooled securities; mortgage-backed and other asset-backed securities, overtook that of outstanding bank loans in 2001. The market value of derivative contracts surged to $11 trillion US by June 2007 from $2.6 trillion in June 2000.”
“The subprime securitization market has now also come to a halt. While the securitization model itself isn’t dead, it will no longer be a source of easy fees, Barnes said. The market will become much more discriminating; regulators will clamp down.”
“The financial sector will likely shrink back to a more normal share of the rest of the economy.”
“‘Financial shares will likely lead the next equity market upleg, but any outperformance will be fleeting. The financial sector’s share of corporate profits and market capitalization is set to shrink significantly in the coming years,’ Barnes said.”
just read that lehman is firing 5% of total work force. that’s great news for those of us waiting for manhattan prices to crash!
That is just a start. It is going to be ugly on Wall Street.
You know, there is no excuse for these masters of the universe not to have big bucks saved up. They all know that employment opportunities on Wall Street don’t always go up. The last downturn just wasn’t that long ago.
Of course they don’t always go up. But real estate does.
The support staff, of course, aren’t masters of the universe and should not necessarily been able to save up big bucks out of their much more modest salaries. However, they too probably should have known that a job loss was possible.
The support staff gets hurt in mass layoffs like this. They don’t make much, as Wall Street prefers to make their minority quotas in this area, and in some firms, like Morgan Stanley, are not eligible for even the most modest bonus, say 500. Wall Street banks all start layoffs at the same time, on a rolling basis, so it’s hard for folks to line up a new job when the layoffs start. They may well have been aware of what was coming, but there are few places hiring in mass numbers here in NYC>
You know in some ways it is poetic justice. These are the f’ers who cheer when a manufacturing company lays off staff by driving price higher.
‘In the fall of 2005, well before the mortgage meltdown hit…Arnall’s company agreed early in 2006 to a $325 million settlement with the states. Within a few weeks, the Senate blessed Arnall’s nomination.’
I remember this moment well. I was putting the final touches on the Friday desk clearing post and this came across the wires. They announced it after the stock markets had closed and apparently reporters are at the bars. And it worked. Nobody picked up on it and the rest was history.
If the Iowa AG wants to say they didn’t have a better alternative, that will have to do. But why the press game? Why the play-along by the big press (yes you WSJ, NYT ) and why the @#**# was this guy made ambassador?
I thought corruption and cronyism was SOP with our current government. You can buy anything for a price now.
Mo…. We presume you to mean GOP.
Current govt? Everything has a price now?
It’s just the way govt works. Anywhere on earth and anytime since the stone ages.
OT, but interesting. Spitzer, once the prosecutor of Wall Street, and now governor of NY, just announced that he is involved in a Washington prostitution ring–not as a prosecutor, as a player.
Press conference tomorrow.
The hypocrisy takes my breath away.
Governors don’t get popped for soliciting prostitution unless theres a lot of concensus that he needs to go.. (or to be de-fanged and de-clawed).
Ding ding ding. We have a winner! joeyinCalif takes the prize.
For goodness sakes, Marion Barry was caught smoking crack with a crack ho on freaking video tape and still got re-elected in D.C. You would think paying $5000 for a hooker in D.C would get you the key to the city!
He stepped on too many toes but he should have known better. They were watching him closely. I don’t feel any sympathy for him, just his family.
Do you think it was coincidence that the Feds investigated the very prostitution ring that Spitzer patronized? Hmmmm…..
No coincidence at all…just think, the feds have wiretapped all americans so why wouldn’t they tap someone who had marked them and hounded the repubs and corp moneychangers?
He may have “done it” but I believe he was set up.
Desertdweller, is that sarcasm? How do you set up a guy with a prostitute? Did they send Feds in to yank his pants off? There’s no setup there, just a standard pol. (Kennedy, Clinton, Packwood, Craig, Foley, Condit…) As for wiretapping all Americans, that’s not happening. I get that people are freaked out about the Patriot Act, but lying (or deluding yourself) about what it actually says makes you seem like a nutjob. No, there are no wiretaps on your phone. There are none on mine. The American public is not being collectively wiretapped. There were no wiretaps on Eliot Spitzer’s phone without a regular search warrant. FISA courts don’t deal with regular vice cases, and they do deal with wiretapping or surveilling people on US soil suspected of terrorism. There are no jackboots, we’re not in a police state, freedom is not dead.
There are enough real conspiracies out there. Don’t get distracted by the fake ones!
“No, there are no wiretaps on your phone.”
PU-LEEEEZ GET A GRIP. Email, voice and data is VACUUMED by “carnivore” and it’s been around a long time. The technology has been in place since 97 and the terrorist boogeyman is all it took to fire it up. But if you’re still not convinced, go ahead and make a few international calls and use a few of those favorite NSA screened words and do the same with email. Your first visit by the feds will be from the IRS.
The terrorist boogeyman or the government boogeyman? It seems that both sides are paranoid beyond reason. There are 300 million people in this country. Who can listen to all those conversations and read all those emails? I’ve sent plenty of emails with the word bomb or explode in them and have never been visited by anyone.
What this “terrorist boogeyman” talk? The Twin Towers no longer exist. That’s not a “boogeyman,” that’s reality.
For many the twin towers were some abstract landmark, something to pose near for photos. In reality, it was an office building where 50,000 people worked each day. The square footage of office space lost on 9-11, is greater than all the office space in Cincinnati combined. Not to mention the lives lost, and the trillions of dollars lost.
So please stow your “terrorist boogeyman” talk.
Thats right. BOOGEYMAN. Spell it. And you can stop the sanctimonious terrorist pandering to me. 9/11 happened in my backyard, I was there. Don’t be yammering to me how real it was.
Let’s not forget Newt Gingrich. He was dallying around in DC while his second wife Marianne was helping with fundraisers for the American Red Cross in Atlanta.
Let’s face it, power breeds what it breeds. I have worked for and with multi-millionaires for 30 years. Sadly I am hard pressed to think of one who didn’t stray or pay for a high-priced call girl at some point. Maybe there were a couple who didn’t, but I am not sure. Politics makes it all so much more simple than a businessman.
People fail on the sex thing so often. I had much prefer they fail on that than sending 1000s of people to their death for a misguided war. Heck I can stand it they lie about the sex thing. It is a knee jerk reaction especially when there is a spouse and children, but to dupe the American people on matters of life and death. Please…
“I have worked for and with multi-millionaires for 30 years. Sadly I am hard pressed to think of one who didn’t stray or pay for a high-priced call girl at some point.”
That’s just sad. Not really surprised, but still….that’s just sad.
RE: You can buy anything for a price now.
E. Spitzer’s (Client 9) honey’s rate was $5500.00 per hour!
Wheee doggies!
Wonder what’s included in that charge?
Inquiring minds want to know.
“Wonder what’s included in that charge?”
Apparently not keeping her mouth shut.
LOL!
You can read the details in the NY Times. The complaint is there.
and Spitzer needed to bring cash to the transaction. They wouldn’t accept his “credit”. LOL
I would say he’s been around the world a few times for that price. Now that’s what I would call our tax dollars hard at work.
Wheee doggies!
Yes, doggie style is included, however, barking and yelping is only available for an additional fee.
At least he wasn’t hitting on underage senate page boys or using a ‘wide stance’ in the airport toilet.
“At least he wasn’t hitting on underage senate page boys or using a ‘wide stance’ in the airport toilet.”
Heh, yeah, you got, SteveH….any of our resident GOP NAMBLA members care to set the record straight…?
LMAO.
I’d be more afraid my wife would find out what I paid, as opposed to the service I patronized, if the charge was $5500.
She’d probably get a limitless ATM moved into our bedroom as punishment.
Mom told me last night that Bob Brinker said that the Fed cuts meant that LIBOR would soon be coming down. She admitted that he didn’t say that the two were actually legally connected, but insisted that he said the two were economically linked so that LIBOR would be down soon and provide relief for those with adjustible rate debt.
So, is there any such argument? At all? Even a little one? I don’t see why the London Interbank Rate should have to follow the Fed rate. Help me learned financial folks.
Brinker missed the boat on this one, so I can see why he might be grasping at straws.
Brinker should have packed it in years ago. He’s an insufferable index tracking failure. Just let it go Bob.
Go to the light Bob! There is peace in the light!
And no, the FED rate shouldn’t affect LIBOR, but in this messed up stupid world finance economy it certainly does these days. Many adjustable rates are tied to the LIBOR, so our problems become theirs and their problems become ours. One giant Cluster****.
The only economic link is the fact that the Europeans have massive credit issues as well because their banks bought so much toxic MBS crap with American mortages tied to the LIBOR. It’s been well documented that the spread between LIBOR and the FED rate has been too great as well, so our friends the central bankers of the world have taken it upon themselves to slash LIBOR over the last few months. Liquidity injections so big Angelina Jolie’s lips couldn’t even handle them.
There are a whole lotta asses in the fire right now and I wanna see ‘em nice red and toasty once this is all through.
The spread between LIBOR and central bank rates is very high right now. Here is a link from Satyajit Das’ Blog talking about it:
http://www.wilmott.com/blogs/satyajitdas/index.cfm/2008/2/12/Better-TED-Than-Dead–The-Tale-of-Interbank-Rates
The central banks are now realizing the limited effect they really have on interest rates.
You think it is just an assertion that LIBOR has to go back to its traditional relationship with central bank rates even though this is a very non-traditional lending environment? That sounds about right. But I doubt it will convince my mother…
In my opinion, most of the “troubles” are related to automatic rate resets, as opposed to people with just floating ARM’s. With the automatics, they go up almost regardless of changes in interest rates - it was built into the loan to begin with.
There’s also the issue that they probably couldn’t afford the loan in the first place…..all these problems started well before rates started to rise. If Mom thinks all this is due to LIBOR rates going up, she is sorely mistaken.
“She admitted that he didn’t say that the two were actually legally connected, but insisted that he said the two were economically linked so that LIBOR would be down soon and provide relief for those with adjustible rate debt.”
When you’re talking about FBs who went from 2% teasers up, up, up to 10% or so, a small drop in LIBOR isn’t going to save their house. Most could only “afford” the house at 2%.
Think of the two this way, Fed Funds is the wholesale price for money, its monopolistically set by the Fed. Banks can basically borrow all the funds they want at Fed Funds (subject to other limitations such as deposit restrictions and capital). LIBOR is the base rate for the retail price of money, it’s set in a fairly competitive market (because it’s not too expensive (not cheap either) but cheap on the scale of a large bank) to set up a new banking institution. So competition brings the two more or less in line, except when too many banks are capital constrained.
“In New Jersey, Lauria said he sent the FHA about 3,000 of his company’s delinquent loans to see how many could be refinanced under the FHASecure program. The answer: 61.”
Oh. My. God.
Is there anyone out there who STILL thinks all this incessant din of bail-out talk will result in a bail-out? 61 out of 3 freakin’ THOUSAND borrowers qualified for refinancing?!
Sweet Mother of Pearl. This is gonna hurt.
And that is just now. Wait until a few more of them are a) out of work and b) upside down on the mortgage. 2% will look good. As a matter of fact, unless they speed through that paper work, they might be able to refinance the 61 they think they have now.
might = might not
Sorry.
FHASecure is but a tiny, insignificant cog in the great, “not-a-bailout” machinery at work.
Phase 1 : Congress raised the GSE (Fannie and Freddie) conforming loan limit from $417,000 to $729,000.
Phase 2 : Congress directs OFHEO to lift portfolio caps on the GSEs (which were placed there because of GSE “accounting irregularities” and concerns about the GSE’s size/share of market).
Next up…
Phase 3 : Eliminating all qualifying “standards” on the type of mortagages the GSEs can buy: allowing no-docs/NINJAs, neg-ams, I/Os, option ARMs and assorted hybrids.
Phase 4 : Congress making implicit GSE guarantee explicit, and taxpayers assuming/liquidating the portfolios of the soon-to-be bankrupt GSEs (RTC, part II).
Will all this “save housing” in the end? No, but the not-a-bailout programs are not designed to “save housing”. They’re designed to save banksters at our expense, while *appearing* to be “doing something” about the politically unpopular mass foreclosures and falling prices.
I just agree 100% Harm with your Phase 3 and Phase 4 . The powers would have to do it in phases like your described . I don’t know if they are going to announce it or not when they start to go the easy underwriting route . To me this master plan in Phases has been so obvious ,and it’s always been a deal of how to make the taxpayers pay for part of the losses . This really sucks ,and I just wonder if the public can stop this unproductive course of action that is a transfer of the bag-holders of high risk junk or worthless loans .
I am afraid you are correct, I wish you weren’t…….
In case you didn’t know, Phase III came in 2005. Dig deeper into their balance sheets and you will see the GSEs already have plenty of Alt-A garbage on their books.
Sources? I was under the (possibly mistaken) impression that the GSEs currently don’t do no-docs.
sure, in stages is best, so the doomed frogs wont jump out of the slowly warming pot before they are cooked.
RE: 61 out of 3 freakin’ THOUSAND borrowers qualified for refinancing?!
Sweet Mother of Pearl. This is gonna hurt.
O Bama Boy will save the day.
It’s just gonna take a little tweakin’ of FHA/HUD underwriting standards.
See HARM’s post on the evolution of current government legislation.
Olympia gal: 61 out of 3000 This is gonna hurt
it is
Appraisers are looking for signs that values are headed lower. Lenders need to know if a home worth $400,000 today might be on its way to a value of only $360,000.
Try “$800,000 on it’s way to a value of only $300,000″ and you have a fairly accurate picture of CA and other hyper-bubble markets. Of course, Fed’s repeated attempts to monetize real losses via general inflation can buffer the nominal drop somewhat –just as it did during the last HB bust in the early-90s. However, precisely *how much* it will buffer the fall depends on how bad the recession will be (i.e., high unemployment = weak consumer demand = producers powerless to raise prices). Mighty “interesting” times we live in.
You know, you are essentially making a case that banks might require a 50% or more downpayment at some point.
Wow.
This is already happening to some extent. Wells Fargo requires a 20% down now, and with many homes in areas like SF and Marin still hovering around 800k, that’s a 200k down payment. That’s for a so-so, boring, unglorified 1960’s home too.
This is a self-destructing machine with the market eating itself from the inside out. Prices are still too high but dropping, yet banks now require more and more of a down payment. This essentially keeps buyers out permanently.
It used to be that income inflation followed price inflation because workers (unions) could demand a pay increase to match inflation.
Now, price inflation does not equal wage inflation, which means a decrease in purchasing power. I’ve quit trying to understand why people keep assuming that price inflation in consumables will translate to housing. True cost of housing will always be linked to wage inflation.
Carlsbad Renter,
You’re missing my point. General inflation in (non-RE) consumables –or wages– does not “translate” to housing directly, it just *masks* nominal drops in housing prices (making them look smaller than they really are). Most people do not think of purchasing power in real inflation-adjusted terms. They think in nominal terms. Any large, fast, nominal price drops look & feel “bad” to Joe Howmuchamonth. OTOH, if prices remain relatively flat, while the cost of everything else doubles over several years (not that hard to do even with high single-digit inflation), Joe is satisfied he has not “lost” any money.
The Fed has chosen the path of least political resistance: higher (but not hyper) inflation, until a large chunk of the HB is monetized. This actually worked pretty well in the early-mid 90’s, and there’s little reason to think it won’t happen again.
Just for fun I visited a new tract in the Carmel Valley area of San Diego yesterday. 2,000 sq feet on average 4,500 sq. ft lots was going for the high 700k range, and the 2,400 sq. ft model was priced in the the mid 800k range. That’s almost $400/sq ft for the 2 smaller models. Seems outrageous to me.
Was the article about WAMU’s board of directors voting to still pay executive bonuses despite their inept bungling of the subprime market posted ?
couple days ago… fairly heated discussion. Seems like everyone except me thinks bonus’ should be withheld.
I don’t remember this discussion. Not that it would happen, but why are you against withholding of their bonuses?
well, various reasons, one of which is WAMU stock was worth just $2 a share a couple decades ago, when the current CEO took over. He took the stock from there to near $50 a share. Then the entire financial sector collapsed and down they all tumbled.
Is he inept? No.. he obviously has the brains and knows what to do. Should shareholders (who, if they read the prospectus, knew the compensations before they bought into the company) punish him? What top-notch person will take his place (when the threat of no-bonus or pay-cuts or low pay looms in the darkness) if they dump him? Must a CEO be perfect, and that includes being lucky about 100% of his guesstimates?
Better the devil you know than the one you don’t, imo.
I don’t know how much compensation Killinger or any of the other WAMU execs made in 03, 04, 05, 06, or 07, but I’m willing to bet they were well-compensated each of those years for the successes they had. I don’t know of many professions or jobs that rates and compensates people based on the cherrypicking of their successes, while weeding out their failures, and *colossal* failures at that… so yeah, I’ll lean to the side of not paying 1 red cent in bonuses to any of those yahoos.
Washington Mutual changed the rules recently to the detriment of shareholders. The comp rules for WAMU were not in place 1 year ago or even 2 months ago. The reason that WAMU got away with this is the SEC changed rules about 6 weeks ago making it more difficult for activist investors to place motions before the shareholders. If you buy any stock at this time, your shareholder voice has never counted for so little.
Compensation is now paid on position instead of performance.
Maybe Joey is a CEO of a big Corporation .
just a shareholder..
When i don’t like the managment or the way a company is run, i don’t complain or try to change their rules, or get the notion that I know how to run the company better than the pros… I just get out.
Joey,
sorry if I dont’ share your sentiment. If something goes wrong with a company that I partially own, I try to fix it. It doesn’t get swept under the rug. This is what is the problem with lack of accountability… people think they can get away with anything. Management is beholden to the board of directors who is beholden to shareholders. Sooner or later, shareholders turn and feed on the young of management through the board of directors if management doesn’t do what shareholders ask.
Good point, though.
Chuck Ponzi
Regarding the comment that people don’t walk away from auto loans when their car depreciates below the balance, they certainly would if the auto loan was written as a non-recourse loan that could be satisfied by handing over the keys. Companies that write auto loans are apparently too clever to make that mistake.
People do indeed walk away from auto loans. Used to live down the street from a church whose parking lot was used as a “dropoff point” by those who tired of making car payment.
Oops. Should have said “payments.”
Hummers and Escalades will simbolize the excess and “Beverly Hills” riches of this generation. To buy a use one of these is to run the risk of being stereotype as a $30K millionaire. Wonder how much it will cost to fill these beasts up come summer peak gasoline price?
Cinch
Absolutely. There is job security in being a repo man.
We have a repo-er or two among our ranks, don’t we?
Except you have to deal with alot of angry nasty people on a daily basis.
Plus, car salesmen don’t goad people into purchases with fear mongering, such as “buy now and be priced out forever” or “you can always refinance.” Can someone just tell the REIC to STFU with all the “surprise” about people walking away from their houses?
It ain’t illegal and it ain’t surprising.
Reap what you sow.
Casa,
So true. I never thought of it that way? Car sales guys have given up on creating urgency to close the sale oh… about 15 years ago. I’m not defending them but the dealerships finally figured out the real gold is in the service dept. so it’s seems most have dropped the high pressure tactics. Who would have ever thought they would have more credibility than used home salesman?
Non-recourse loans were voted into law (not written into contracts) as a way to keep lenders from getting too stupid and predatory.
Guess that didn’t work.
Who`s brilliant idea was it to make sex a crime?
Lol. Some kind of sex that FB’s partake of.
Maybe Countrywide/WAMU/BoA should start allowing you to roll over the part remaining on your house loan when you house is sold into the new house. Car dealers have successfully been doing this for years.
That’s an interesting point. I seem to remember someone a long while back mentioning Australian mortgages where they aren’t tied to a specific property, but rather, to an individual(s) and follows people around from house to house. It would act as a savings account if it were ever paid off, but otherwise would function like a simple-interest mortgage. I suppose differing state laws would make this unfeasible in the US w/ recourse/non-recourse laws, but it may help to prevent the next mother of all real estate bubbles in the distant future when this one starts becoming foggy in sheeples’ long-term memories.
Looks like Elliot Spitzer isn’t ever going to run for president of the United States. Please see front page of New York Times.
If you have something to say, just say it.
he got nailed being involved in a prostitution ring today.
at least we know he is not a girly man
Perhaps, but (my own observations) I would say men who use prostitutes are generally not very manly.
Busted buying a hooker. Dumb move for a smart guy.
Add him to the wall of shame next to Larry Craig, Mark Foley and Ted Haggard.
Except Larry Wide Stance Craig is still a senator, hasn’t quit yet..don’t think he will..
I say STAY Spitzer. Well, at least he didn’t lie about it, or try to hide his mistake like the republicans have/do.
Right, Spitzer didn’t “lie about it” he just waited until the NY Times ran a story, and then came forward honestly.
Please.
McGreevey was “honest” too, after the Bergen County Record ran a story.
So much “honesty” so little time…
He’s a democrat. can you spell clinton?
And Larry Craig, Mark Foley and Ted Haggard is a small sample of a never ending list of republicans. Your point?
I commented on that in the bits bucket. Can one you guys tell me if it’s really worth it? Years and years of work down the drain. For that???????
cannot believe he did not resign. god complex.
Faux News says he’s going to resign tonight.
Incredibly stupid move on Spitzer’s part, especially since he’s supposed to be a straight arrow, anti-corruption guy.
His presidential aspirations are over. But he shouldn’t resign.
Apparently he’s a bit kinky, according to the complaint printed in the NYT.
That explains it. His spice would not give full measure.
“linked to prostitution ring”. wonder if there is more to this.
Hmmm. Gives a whole new dimension to the term FB.
“I commented on that in the bits bucket. Can one you guys tell me if it’s really worth it? Years and years of work down the drain.”
Not worth it to me, not because of years of work down the drain. But Mrs. Sixpack would be hurt, and I believe the dissappointment would never leave the eyes of the little sixpacks.
Plus, she can really swing a rolling pin.
Methinks that the FISA bill has alot to do with the wiretapping and protection of the phone co’s that would show the gov is wiretapping NOT Terrorists, but dems that the repubs want to unseat/throw out.
Wait wait wait… we Will see.
I believe the dissappointment would never leave the eyes of the little sixpacks
awww, this is funny…and touching. (not sarcastic)
That is why one might consider going to Las Vegas environs. lol
RE: Busted buying a hooker
Her rate was $5500.00 per hour.
Probably on par to what his wife’s divorce lawyer will be charging him to pay.
Instead of trying to bailout the bond insurers, he has bigger things to worry about….
BWAHAHAHAHA
I agree that it is sad. I confess that I had been looking forward to the day he ran for president. That having been said, I consider personal transgressions to be fair game for someone running for office. All the BS (including from dems about BC) that personal transgressions don’t matter for a politician ignores the fact that lying to your loved ones is the worst type of transgression. Oh well.
Would a good family man wouldn’t even run for office, because doing so requires sacrifices from your family? I sure don’t mind that my husband lacks political aspirations.
Also, people tsk tsk theses guys but then want to know the juicy details. Personally, I would be happy if they did a competent job and I never had to hear about their private lives because…ick.
Agreed, I’m sqeaky clean morally speaking and I would never run for office of my own volition.
I knew those unwarranted wiretaps would expose some politicians sooner or later.
I bet Hillary & Obama never use an unencrypted phone.
i’m guessing with democrats in the white house, we’ll see these taps expose some republicans. i thought these taps had to do with terrorism, not harmless activities between consenting adults.
What he said.
I predict big things for Cuomo, if he avoids this kind of crap.
I hope he doesn’t agonize about making up his mind. Y’know, like his father did back in the 1980s when he was contemplating a run for the White House.
Yeah I kinda liked him, though politically I’ve done a 180 since then. Still respect the guy.
In the middle of a fiscal crisis, with severe long term problems and inequities unaddressed in the last easy money budget last year, with next year’s budget due in two weeks and the economy melting down by the say, this.
He didn’t just screw a hooker.
He helped himself to a very pretty maid.
New term for FBs: “One Diamond Whores at the Emporers Club”.
Me thinks you give way too much credit to the vast majority of FBs.
You guys don’t get why its risky for a politician ,or a party in power to be doing anything illegal . The issue is how black-mailable a party becomes if someone has something on him which might compromise the National Security or make that party do something that isn’t in the best interest of Country or State or City they have power in .
Nobody likes to get into someones private sex life ,but its how much that party has left themselves at risk of blackmail or even not performing their job in a objective manner . Thats why the guy has to resign immediately .
Now that his secret’s out, wouldn’t that make Spitzer less “blackmail-able”, thus safer? It’s not the pols we already *know* about that are dangerous –it’s the ones that haven’t been exposed yet.
Harm,your exactly right about now hes actually less blacmail-able ,but than the issue is about him falling by the wayside again and than being blackmail-able again .
Can you imagine what a man would do to keep a secret from coming out ,not only for his own family life ,but his career . The point is that it is stupid to put yourself in that position if your a politician or ppublic figure or law enforcer ,and there are many other jobs in which a person is at risk for their acts .
We have seen many public figures get nailed on what they do behind closed doors . While I don’t think you can expect people to be perfect ,authority figures and persons in senestive jobs are held to a higher standard ,especially officers of the courts or lawyers .I don’t know why the FBI was taping him ,but he was stupid not to think that could happen .
You pay for being stupid in life .
“‘They say, ‘If I play my cards right, I can live here free for 12 months, maybe longer’ before the lender can foreclose, Lauria says. ‘Our challenge isn’t contacting the borrower. I can talk to them, but they stick their tongue out at me.’”
The above paragraph requires a profound response.
“Har..Har!”
“… I can talk to them, but they stick their tongue out at me.’”
Funny!
Reminded me of our girl when she was 6 or 7 years old. We’d scold her for something or the other mischief that she did. She’d look contrite until we turned our back. The insolent tongue would stick out when she thought we weren’t looking. It was infuriating at the time. Seems so funny now.
But the fact that they can only re-write 61 out of 3 thousand loans shows just how much those borrowers never wanted the house for anything other than a equity appreciation investment .
Once people commit loan fraud ,and you combine that with a bad motive for buying the house to begin ,without skin in the game ,they don’t want to talk . Some of these people couldn’t carry even a no-interest loan . What is shocking is what the apparent % is of borrowers that have no desire to have a re-write .
wow! will he make a public statement next to his wife?
It worked for David Vitter…. at least publicly. The old hag even lied for him.
I don’t get it… when these high profile politicos get caught with their hand in the cookie jar, the dutiful wives stand by stoically when the losers do their public mea culpa.
I’d be standing right behind my guy too, with my foot all the way up his azz.
Ooh my kind of girl. Would you then assist him off the porch?
If there is reincarnation I would wish to come back as a southern religious minister. “I still have faith in my man,” she said sexlessly.
I’m with you philly. Take for instance James McGreavy’s public announcement that he was gay along with all those details of the affair. As the wife, I’d be home fantasizing about some sort of physical demise for publicly embarrassing me ; ) , not standing next to him like he was some Teflon demi-god.
And on Valentine’s Day eve, too. You could tell she was livid - especially since she obviously didn’t marry him for his looks - and you can just tell that he has bad breath, too.
What’s next, Ken Starr picked up late at night driving around in a dress and makeup?
Well, Hoover.. Starr…wait, wait, wait..
LOL@I’d be standing right behind my guy too, with my foot all the way up his azz.
Not only wouldn’t I be appearing at any press conferences, my husband wouldn’t be either–he’d be too busy trying to catch the first thing smoking out of NJ before word got back to me . . .
I can understand staying together for the kids, “appearances”, money even, but at some point a woman’s got to have some self-respect.
“at some point a woman’s got to have some self-respect.”
Spitzer as a superdelegate is committed to Hillary, and is a close confidant. She sure can pick ‘em.
RE: Spitzer as a superdelegate is committed to Hillary, and is a close confidant. She sure can pick ‘em.
LMAO!
Priceless!
I don’t get it… when these high profile politicos get caught with their hand in the cookie jar, the dutiful wives stand by stoically when the losers do their public mea culpa.
I’m sure that the Mrs. doesn’t want the gravy train to end either. For all we know most of them have affairs as well. But if his career ends in disgrace, well, there go the cars, mansion, servants, wardrobe, etc.
RE: But if his career ends in disgrace, well, there go the cars, mansion, servants, wardrobe, etc.
Hmmm…wonder how Mrs. Nilfong is doing these days. I think hubby’s lawsuits were up to $180 mil.
Phillygal,
Not only would my foot be up his azz, he would be missing some of his family jewels.
ot-sorry ben
ny gov spitzer invlolved in prostitution ring-
http://cityroom.blogs.nytimes.com/2008/03/10/what-is-the-fallout-for-spitzer/
this is the tough on white collar crime guy
“An Opa-locka resident who would only give her first name, Angie, came to the seminar because she said her situation was overwhelming. ‘They are about to take my home,’ she said. ‘I got in this situation with balloon payments. My interest rate increased to 11.9 percent and I fell so far behind that I wanted to know my options.’”
Hmm, pack the car… move from Opa-Locka to Cackalacky
Opa-Locka dupedee do, I’ve got another foreclosure for you…
“There is higher scrutiny because the market is going down,’ said James Loizou, co-owner of Suburban Appraisers & Consultants in Fairfax.”
Were I an appraiser, I’d just get the year 2000 comps and adjust upward for wage growth.
And beyond RE comps, we are headed for year 2000 economic levels in most, if not all, categories, imo.
According to BLS that’s about 18%. In real terms, 0% to some negative number.
Beautifully said WT. 2000 it is!
In Colorado even 2000 prices are too high. The boom started in the 90’s here and was about over by 2000. I’d recommend ‘95 prices.
Climber that would work better for San Diego.
‘95 prices would be 180K for a cute place a few blocks from the beach.
Bought Toluca Lake, CA in 84 125k
went up up up $370 in 88
went down down down to $210 by ‘96-’97.Sold
Went up up up up up 2005 $975k. Darn.
Down to 675k now, so far.
Always buy low, seem to sell . um too soon. darn.
Point is, it did go down. So will this, and hopefully in my current nabe.
not in SW colorado. Prices have more than doubled since 2000.
3PM update… No PPT today.. The boyz are too busy surfing the Emperors Club website.
LMFAO!!!!!!!!!!!!!!!!!!!!!!
Well, you gotta admit it, the site does have an attractive design:
http://www.theemperorsclub.com/
Kevin Klein works there? I remember when he was an actor.
RE: “Loan underwriters are being more demanding. They want information on comparable home sales, homes still on the market, those under contract, closed sales, foreclosures and incentives offered by home builders. They may even want info about homes that didn’t sell and were taken off the market.”
“‘Frankly, those are fair questions,’ Loizou said. ‘It just makes more work
LMAO…Hope you’re charging for all that extra work, Loizou. Should be collecting a $1000+ for a full narrative, ’cause that’s what those POS underwriter’s are asking for.
My guess is you’re a newbie doin’ it all for a $150.00 fee split, which what the lenders were payin’ 20 years ago.
You’ll be burned out and broke in a year.
Mayor Antonio Villaraigosa, Clinton, Spitzer each a democrat and each cheating on their wives.
What does that tell you? Wives of Democrats are butt ugly or Democrats are unfaithful?
And it would have been a bigger joy to see #8 on that list was Bill O’reilly or Larry Kuntlow.
“What does that tell you? Wives of Democrats are butt ugly or Democrats are unfaithful?”
Tells me about the same as certain republicans trying to bugger pageboys or cruise for sex in mens rooms. Men are horndogs regardless of age, sexual orientation, or political party.
Is that you Mrs. Larry Craig?
I guess when John McCain took up with the current Cindy McCain while previously married to wife #1 that was OK??
Not trying to make a case for Reps or Dems on this issue since I agree with Mo Money’s post, but I believe John McCain was already separated and going through his divorce when he met Cindy McCain.
Bullcr*p, that is classic McCain media manipulation.
Eh…. whatever. I don’t really care either way. I voted Ron Paul, not that it did much good.
Good old Ron Paul, married 51 years to the same fine woman. Another reason I admire the man.
Lets not forget Warren Buffet…..wife and Girl friend
Le’ts not forget good ole Newt Gringich. Cheated twice on two of his wives. Doesn’t matter if your a Demo or Repub, just keep your pants zipped.
Rant on:
What is this with these politicians that have their wives with them while confessing in front of the cameras. The picture of Mrs. Spitzer, she is devastated. Can’t the politician just stand up there and take the heat without humilating the wife?
Rant off
Let’s not le’ts. Arrrgh.
Stanly, I can’t forward that to Larry’s friend with that spelling. Can you rewrite that last part? It’s a funny line though.
“One problem is that some neighborhoods haven’t had many sales over the past six months or so. When that happens, appraisers have to look for something similar in other neighborhoods.”
I was walking the dog around the neighborhood today and, after seeing all the homes for sale (5 - 10 in the community), was thinking along the same lines, but wholly opposite. That is, when I was a kid, on the street that I grew up on, maybe a single home went up for sale every 5 or so years.
Ostriches, did you grow up on the same street I did?
We lived for 10 years in the same house… from 2 years before I was born to when I was 8. Collins on one side and Dolls on the other… the whole time. Lacy next to Collins. Gilberts next to the dolls. Mustow next to them. Next to them was the Bigfords… they moved out when I was about 7. The only people on the street to move out before us…. they sold to a black family… OH the scandal that caused back in ‘74.
“I can’t get you to pay, if you’ve got no skin in the game”
MBA 101: Never make a deal with a man who has nothing to lose.
Too bad that course isn’t being taught anymore, at least not at the Ivy Leagues
I just got a telemarketing call on my cellphone in SPANISH!
Oddly enough the ATM’s in San Jose start with a spanish splash screen, you have to choose english.
I get it now. Make way for the Amero.
I’ve had that happen before as well.
Whenever someone calls here in Spanish, I talk back in English. And, oh, do I talk back!
BTW, back in my college days, I did a summer abroad in Spain. And, get this, I had to know enough Spanish to get through a business phone call before I actually made one. That’s because the Spanish national telephone system didn’t offer a “For English, Press One” option.
I learned a bit of Spanish for such occasions. Next time you get a Spanish speaker on the phone, try “mi pene esta en tu boca” - it’s a great icebreaker!
Denial continues in St. Louis. Made an offer of 138k on a 170k listing (1000 sq. ft. brick bunglaow) that has been on the market since last fall without a single offer. They decided not to counter offer. Unreal. The people moved out of state and the house just sits…
My buyer’s agent just emailed me and in her words: “the seller was offended”. I almost fell out of my chair laughing.
A blogger here in Chicago posted his real estate experience today. He’s been trying to sell his dad’s condo for 16 months. He had it listed for $400K. He’s accepting a $300K offer. His agent told him the buyers insisted he pay the transfer tax. If he did not, the buyers were going to withdraw their offer.
Ow.
Just put in an offer next month and every month after that but just lower your offer by a few K each time. They might get the point in a few months. If nothing else, it would be cheap laughs. (place pinky finger to corner of mouth and insert Dr. Evil laugh here ->* )
I don’t really even care. I don’t mind renting and I’m early anyway.
Smithers:
Be sure the Gulfsream V is gassed up and ready to go @ a moment’s notice, on a runaway near you…
Sincerely, Le Tan Orange
“Countrywide Financial Corp shares fell on Monday following reports it was being investigated by the Federal Bureau of Investigation for possible securities fraud.”
“The largest U.S. mortgage lender is being investigated for whether it misrepresented its financial condition and the quality of its loans in securities filings, the Wall Street Journal and the New York Times said over the weekend, citing people with knowledge of the case.”
Thanks for the laugh lad. Smithers! LOL
The scratch & dent state of America.
Sad, isn’t it?
What are you doing letting a politician into the emperor’s club?
Have you no respect!
The song in my head today is:
Sky Pilot,,,,,,,how high can you fly?
You never ever ever reach the sky.
Inflation, how high can you climb?
Martin Goodman, president of Residential Capital in San Diego, says making contact is only one challenge. The other is persuading delinquent borrowers to tell the truth about their financial condition.
That is why lenders have for decades required tax returns, bank statements, a credit report, employer verification, and a substantial downpayment. Did they honestly think that Americans had become more honest, such that these provisions were not required anymore?