Turning Their Backs On Investments Gone Bad
Some housing bubble news from Wall Street and Washington. Staten Island Advance, “Rep. Vito Fossella has an idea on how to jump-start the moribund housing market: Give folks a $10,000 break on their federal taxes if they buy a home. Fossella pushed his bill during a press conference yesterday in front of George and Margaret Brodbeck’s home in Great Kills, a well-kept four-bedroom that the couple has had on and off the market for the last year.”
“After 36 years on Katan Avenue, Mrs. Brodbeck said she was looking to downsize and move closer to her mother in Dongan Hills. She thought selling would be easy.”
“‘We were accustomed to homes in this area selling very quickly. Mentally, I thought I’d be leaving immediately. I was very, very surprised,’ she said of the lack of buyers.”
“The house is back on the market now for $579,000.”
“‘This legislation would help folks like George and Margaret, as well as millions of other buyers and sellers across America,’ Fossella said.”
“Fossella said the House is currently considering a $7,000 tax credit for people who meet certain income limits and purchase foreclosed homes. ‘It clearly is not reflective of what will work here on Staten Island,’ he said.”
“He pointed to a 40 percent drop in home sales over the past seven months and a 400 percent spike here in foreclosures during the first quarter.”
“‘Anything that will jump-start the market for us and customers and clients is certainly important,’ said Dawn Carpenter, president of the Staten Island Board of Realtors.”
The New York Times. “The Bush administration and Democratic leaders in Congress are counting on the Federal Housing Administration to rescue hundreds of thousands of homeowners from foreclosure by helping them refinance from risky subprime loans to stable government-backed mortgages.”
“But the F.H.A., the government agency that insures home loans for many first-time, minority and lower-income buyers, is grappling with financial woes of its own.”
“Housing officials say the agency will face a deficit for the first time in its 74-year history, starting in the fiscal year that begins in October. And they blame a rapidly growing and increasingly troubled sector of the F.H.A.’s mortgage portfolio, known as the seller-financed down payment loan program, which has suffered from high delinquency and foreclosure rates in recent years.”
“The nonprofit companies say they actually helped make the F.H.A. competitive by providing down payment assistance, attracting home buyers to the F.H.A. who might have gone elsewhere.”
“‘All we do is give them the down payment money to get them over that obstacle so they can start enjoying the benefits of homeownership,’ said Ann Ashburn, president of AmeriDream of Gaithersburg, Md.”
From CNN Money. “Housing counselors are often the last and best line of defense for borrowers facing foreclosure, and the $15 billion housing rescue bill now before the Senate allocates $100 million for foreclosure prevention counseling.”
“But most housing advocates agree that cash isn’t the biggest obstacle to achieving this goal - lender cooperation is. ‘The counselors are working as hard as they can,’ said Jim Carr, chief operating officer for a non-profit neighborhood advocacy group, ‘but the servicers are not cooperating.’”
“Only about a quarter of the borrowers helped by members of the Hope Now alliance - the coalition of lenders, investors and community groups spearheaded by the Treasury Department to fight the foreclosure crisis - have actually had the terms of their mortgages made more affordable.”
“The rest of the 1.1 million borrowers Hope Now has helped were simply given extra time to make up their missed payments.”
From Your 4 State in Maryland. “You’ve heard a lot about the troubled housing market, but there’s always another side to the story. Buyers in our area are getting great deals, especially on foreclosed homes.”
“‘It’s a fabulous time with a lot of foreclosures. Probably one third of the houses I showed were foreclosures,’ says Cynthia Moler, a realtor with Coldwell Banker.”
“The market may take some adjusting from sellers, but it’s ideal for buyers. The Senate is now debating a bill that would give a $7,000 tax credit to anyone who buys a foreclosed home.”
“Realtor Jeff Matthews recalls one of his previous deals. He says, ‘I had it listed about a year ago for about $329,000 and it went to foreclosure. I saw it on the market last week for $239,000.”
“Moler adds, ‘Before, it was a terrible thing to be in foreclosure. How embarrassing. But now, it seems to be happening to everyone.’”
“That means many of the houses are in desirable areas. ‘A lot of the properties that are in foreclosure or are getting ready to be in foreclosure are in fantastic neighborhoods, some of the best neighborhoods in our town,’ Moler says.”
The Boston Globe. “On April 16, Housing For All, a nonprofit organization that promotes the development of affordable housing, will cosponsor another forum, ‘Foreclosures in Metro West: Exploring Federal, State, and Local Efforts to Address the Crisis.’”
“‘Part of our mission is to wake Framingham up to how serious the issue is,’ said executive director Chris Ross. ‘There are things that town government needs to look at.’”
“The South Middlesex Opportunity Council, a Framingham-based social service agency, can offer small loans to homeowners in a temporary pinch. If a homeowner already owes several thousand dollars, the agency usually refers them to legal services, according to Ozzy Diagne, director of its Housing Services Center.”
“The agency also can help sell a property quickly before foreclosure or negotiate a deal with the lender to prevent its seizure, he said, but most residents aren’t aware of their options.”
“‘Faced with foreclosure, they usually just pack and leave,’ Diagne said.”
The Idaho Mountain Express. “Because of its affluence, the Blaine County economy is buffered to some degree from the national economic engine, but there’s no doubt the nationwide real estate crunch is hitting home.”
“In the first three months of 2008, seven Blaine County properties were foreclosed, according to Sun Valley Title Co. It’s a statistic that builds dramatically on three years of steadily climbing figures. In all of 2005 there were three. In 2006 the number jumped to five, and in 2007 there were 12.”
“Sun Valley Title Co. Manager Cassie Jones said that for people with no equity in their homes, sometimes it’s cheaper to pay rent, and those who took too much of a risk to buy a home are turning their backs on their investments gone bad.”
“‘One of the problems: People are just walking away from homes,’ Jones said. ‘The government is trying to do things, give longer grace periods. It’s just a whole vicious cycle that starts here and who knows when it stops?’”
The Mail Tribune from Oregon. “As the nation’s subprime mortgage crisis comes to a head, more houses are being abandoned in Medford, real estate agents and city officials say. Foreclosures have skyrocketed, and more than 750 Jackson County property owners defaulted on mortgage payments in 2007.”
“Garbage bags, children’s toys, lawn care equipment and beer bottles are strewn about this east Medford house, valued at $453,000. Inside there’s a piano; outside, there’s a swimming pool filled with murky green water. There’s so much junk the city has posted notice that the accumulation is unlawful.”
“But there’s no one home to clean it up. Unable to make mortgage payments, the homeowners walked away.”
“Dave Myers, an agent in Medford, is marketing the abandoned east Medford house, but he doesn’t know the owners’ story. Myers, who has been marketing foreclosed property for banks for 10 years, said since October 2006, the number of default notices that have been filed in Medford has jumped from three or four per week to 30 or 40 per week.”
“‘There are probably a couple hundred (houses), I would say, that have reverted back to the bank,’ he said. ‘It happens on all income levels,’ he said, adding that house values in foreclosures he handles range from $85,000 to $650,000.”
“On the other side of town, the city finally had to board up the windows of an abandoned house because of vandalism. The West Eighth Street house has a real market value of $178,000. City officials say the homeowners walked away from the little house, probably because of foreclosure.”
The Daily Star. “The increase in foreclosures has been seen across New York state and the nation, said Philip Lentz, director of communications for the State of New York Mortgage Association, which helps low- and moderate-income families become homeowners.”
“Patrick O’Rourke, a housing counselor with Quaranta Housing Services Center, part of Opportunities for Chenango in Norwich, said too often someone in financial trouble doesn’t make his mortgage a priority and ignores mail about delinquencies, thinking the problem will go away.”
“When someone arrives in a shiny new truck to discuss missed mortgage payments, O’Rourke said, he asks if that person wants to live in his or her vehicle.”
“O’Rourke added that he repeats an adage he heard many years ago: ‘Even if you have to eat dirt, make your mortgage payment.’”
From The Day in Connecticut. “A typical homeowner in New London County has lost $22,000 in equity over the past year, according to figures released Monday.”
“Fairfield County, which had driven much of the real estate splurge statewide over the past few years, saw sales down more than 28 percent in February and median prices off nearly 7 percent. In the stratospheric world of Fairfield County real estate, this meant a drop of nearly $40,000 in median prices, to a still-amazing $517,250.”
“‘In both Connecticut and in neighboring Massachusetts, sales began to drop in late 2005,’ said Timothy Warren, CEO of The Warren Group, in a statement. ‘In Massachusetts, prices began to follow in 2006. But in Connecticut, it has taken until now to see the declining sales catch up with the prices.’”
“Vincent Valvo, group publisher for The Warren Group, said the lower end of the market, which represented about 30 percent of all loans in 2006, was hit hard by the subprime mortgage meltdown, to the point that many potential homeowners have nowhere to turn for loans.”
“‘That’s a reflection of the complete evisceration of the subprime and low-documentation segment of the market,’ Valvo said. ‘A big chunk of the market isn’t buying anymore.’”
“Still, Valvo said increases in home prices of 10 to 15 percent were unsustainable, a result of irrational exuberance, and he, for one, thinks that is a good thing.”
“‘That’s not going to happen in the next 10 years, and how would our salaries keep up without it leading to rampant inflation?’ he said. ‘We really ought to be grateful.’”
From The Sun. “The value of Britain’s homes slumped by a staggering £100 billion last month, shock figures revealed yesterday.”
“Lib Dem spokesman Vince Cable said: ‘The Government is only just waking up to the problem, despite the fact it has been warned for years that there were great economic dangers from the bubble in the housing market, linked to exceptionally high levels of personal borrowing. For too long this Government did nothing.’”
“‘There will be an epidemic of repossessions unless the Government forces lenders to moderate the process by offering shared ownership and payment holidays to keep people in their homes,’ Cable said.”
“Halifax recently calculated that the UK’s housing stock was worth £4trillion, meaning last month’s fall wiped off £100 billion of value, said banking analyst Bruce Packard.”
“He added: ‘It’s bad news for all those estate agents who assure me house prices will always go up because Britain is an overcrowded island.’”
From Aftenposten. “More than 140 Norwegian building firms have filed for bankruptcy so far this year. Concerns are growing that Norway’s building boom of the past several years is quickly turning to bust.”
“The amount of building bankruptcies is up 30 percent over last year. Most of them are linked to customers’ inability or unwillingness to pay their bills.”
“‘It was difficult to draw in the money, especially from the private market,’ said Petter Håkelien, who led a company that filed for bankruptcy just before Easter. His firm, which specialized in building garages and homes, had 20 employees and annual turnover of about NOK 15 million (NOK 3 million).”
“He told Aftenposten that he thinks others in the field will be forced to go out of business as well. ‘I predict that 2008 is going to a real downturn for many of them,’ he said. ‘Everything we earned during the good times has been eaten up by price hikes and higher pay for workers.’”
“New statistics also show a fall in new home sales of as much as 20- to 30 percent. Prices in both the new and resale home markets have also been showing signs of slippage.”
“Håkelien told Aftenposten that he thinks the ‘large and well-established’ firms will survive, even though ‘the good times are definitely over.’ After 25 years in the business himself, he said he’s thinking about finding a completely different line of work.”
“The nonprofit companies say they actually helped make the F.H.A. competitive by providing down payment assistance, attracting home buyers to the F.H.A. who might have gone elsewhere.”
“‘All we do is give them the down payment money to get them over that obstacle so they can start enjoying the benefits of homeownership,’ said Ann Ashburn, president of AmeriDream of Gaithersburg, Md.”
Yeah, great idea. Encourage yet more people to buy houses without putting any of their own money on the line. It has worked so well thus far.
And who exactly does this help? Ultimately don’t prices just go up because of this new “demand,” thus requiring more “incentives,” thus creating higher prices, thus…..?
Ahh, the benefits of homeownership. We moved in to find there was only tar paper between our house and the rain. Cost $2400 (we have a small house). The water heater sprung a leak just as mom was coming to visit cost $700. We had an annual “checkup” on our furnace, the tecnhician said “there is no way I’m touching that thing”. I asked him how urgent it was to replace it and he said “do you have a CO alarm?” me: “yes” tech: ” within a few days” - new furnace cost $2500. New paint job $2400, new gutters $900.
It’s only been 7 years. I’m not complaining, for most of this we didn’t even have to dip into savings and we now have 2x the savings we did before we moved in. There is a reason you should buy below your means.
Downpayment “assistance” is a farce of the worst kind. You only build equity if you can afford the house.
Yep, isn’t that the truth. The last 3 years I’ve paid $1000 to replace a back fence, $300 on a new electric outlet, $5500 for a new heat pump, $500 to repair the roof after a storm, another $500 to remove a dead tree. I did paint my house - cost me $300 for paint and materials but still far cheaper than have someone else do it. It takes money just to stand still (so to speak).
Very true. I have a buddy with a great saying… He asks, “When do you make $ with real estate?” Most answer, when you sell it. But that is not correct. You make your money when you buy it… You HAVE to buy it for a resonable price if you ever want to make $.
Housing here must fall 50% before it becomes affordable.
Not to harsh on your buddy or anything but this is true of ALL investments.
You make money when you buy not when you sell.
I should add, again, that my grandmother owns her house free and clear, but she is LOSING equity. She can’t afford the house, it’s decaying before our very eyes. The kids and grand kids chip in every few years for a new paint job and misc repairs, but we can’t afford it either.
Homeownership is not a magic path to wealth.
I used to tell people that a house is nothing but a box of wood sitting in the rain slowly rotting away.
9 out of 10 are offended by my comment
The one that agrees is usually old, experience and who owns their house without a mortgage.
Put away your prejudice, take out your lawn chair and sit quietly in front of your house and observe. You’ll see what I see, but you have to trust me.
Cinch
Of course I’m preaching to the choir here.
I’ve seen this with my parents. They paid $76k for their house about 30 years ago and went for quite some time without putting a tremendous amount of work into it. Over the past year they have had to spend around $40k doing various repairs, maintenance, replacement of old appliances etc. A house is nothing more than an expense, it is certainly no pathway to wealth.
And it’s a time pit on top of it. When we had our house, it seemed every non paid for work minute was spent on that thing. There was the inside maintenance and then outside - garden fall cleanup deck chores, etc. Then there’s the money spent on tools and materials.
UNLESS… my father was a bricklayer and a carpenter, and his brother was an electrician…all the tools he used in the basement was to make $$$ with when he had no other work. Neighbors always asked him to fix or build things. Boy that DeWalt saw was noisy as heck, and no one used ear protection 30+ years ago
=====================================
A house is nothing more than an expense, it is certainly no pathway to wealth.
It’s funny when you talk to people about, say, a house they’ve inherited from their parents or something and they say “they bought it in 1920 for $40k!” and are astonished at how much it’s “worth” now. What they don’t know is exactly what the return on all the money involved really was… Keep in mind I’m in San Diego, too - so multiple all insanity by at least a factor of 3.
A house is really only a way to sell a piece of land.
Repost:
That little “obstacle” is a LAW, that sellers can’t give money directly to buyers.
And Ameridream doesn’t “give” anyone ANYTHING. They are merely a conduit between buyer and seller which slices off a small amount for themselves.
Cut my taxes some more! I don’t want to subsidize any buyers with tax credits. If anything, give them to me. Give me my money back. We pay our fixed 5% mtg and didn’t believe that idiot Greenspan when he told us to get ARMs.
The GAO in 2005 reported that the down payment assistance programs had double the foreclosure rate of other FHA loans, and 3 years later they are still available. Pretty amazing. The link to the GAO report is http://www.gao.gov/new.items/d0624.pd
The smaller the downpayment, the more likley people are to walk away due to having no equity.
No. Skin. In. The. Game.
“It happens on all income levels,’ he said, adding that house values in foreclosures he handles range from $85,000 to $650,000.”
$650,000…. Think about it. For a damn shack. Think about sitting down at closing and signing for 650k but thousands did it. I recall when I bought my first house in 1994 for the princely sum of 94,000. I was shaking like a queer eatin’ a hotdog when I signed those contracts. I was petrified at the total amount of 250k I knew I would be on the hook for for the next 30 years. For a 650k shack at 6%=$3900/month, taxes, insurance and maintenance excluded. Insane.
That’s probably because you envisioned that you would pay back that $94k, with interest, instead of selling it to the next greater fool for a profit a few years down the line, or walking away if that didn’t work out.
First home purchase 1984 $138K with 20% down on an ARM starting at 17.5%. (Volcker days) The verifications, the loops to homeownership, the responsibility sent the other half to the ER for stress. During this bubble, no biggie, just walk. I agree, $650K is a lot of money to most of us sane folks.
Ex, back then, that was a princely sum. Today, it’s worth much less. Ask all the HELOCers who blasted through twice that or more in a few months or less.
Those bailouts make me want to stay in NW PA forever because no way am I paying over $50k for a house that used to be $50k before the bubble and bailouts.
How can you stay there forever……you aren’t there yet!!!!
When they put 0% down and took exotic financing, they were essentally renting and gambling with the bank’s money. If house prices kept going up, sell for profit or HELOC the “free” money. If house prices went down(which they are now) they simply walk away and rent, no big deal.
That is why there should never be less than 20% down and no suicide loans!
“shaking like a queer eatin’ a hotdog ”
???????????????
Old New England expression. My apologies.
Lol….which derives from………what???
I think exeter meant to write “shaking like a queer eatin’ a chilidogg”
I was shaking like a queer eatin’ a hotdog
you’re an idiot…why don’t you just say a Jew looking in an oven.
keep your ignorant shit to yourself.
I apologized. Get over it Cupcake.
lol
Now you are resorting to insults and profanity? Neither of you men are funny.
Congress is totally clueless.
A seven to ten grand “credit” is not going to be enough incentive to get us popcorn eaters to buy, when house proces are dropping $7-10,000 A MONTH in some markets.
Almost as useful as a $600 tax rebate is to people with 50Gs in credit card debt, or a couple hundred grand upside down on their house.
“Rep. Vito Fossella has an idea on how to jump-start the moribund housing market: Give folks a $10,000 break on their federal taxes if they buy a home. Fossella pushed his bill during a press conference yesterday…”
******
How about a credit to those who chose to stay away from the house buying racket over the last three years?
Where’s the reward for rational behavior anymore…?
“Where’s the reward for rational behavior anymore…? ”
Always lookin for a handout.
I’m in the mood for a handout of my own today. I say people should be freed of all Federal tax payments for a year if they’ve paid ten or more years of mortgage payments on time and have a FICO score of 820 or higher.
WTF, I want some of the action now.
And he’s a Republican!
I may be a liberal Democrat, but propping up this housing market is the last thing they should do.
‘Where’s the reward for rational behavior anymore’…?
Those days are long in the rear view. I have been painfully learning though the years, that all I was taught by my parents as youngster… Work like you own the company and one day you will, always save more than you earn, there is no such thing as a free lunch, treat others as you want to be treated, etc… Has been turned on it’s ear over the last twenty, thirty years or so. One day though!
You have obviously not been clued in to the “new paradigm”
Paying your bills is so 1930s……..
I have an idea that is guaranteed to work - continue to lower the damn prices!
How about lower income tax rates for everyone across the board? No, that would be much too fair.
Yes, that’s PRECISELY what we need! More REIC-engineered tax love! Write off your mort. int! Write off your property taxes! Write off mort. int. on your SECOND home! Pay NO capital gains on profits of up to 500K!
In addition to all THAT we want to introduce a $7K c-r-e-d-i-t? (Note: that’s credit *not deduction) I can’t believe we’re even entertaining this? How can we POSSIBLY bend over backwards any further!? Oh this has to stop.
How long will that $7k credit last? If forever then house prices will be $7k higher permanently. If that $7k credit expires in the future, house prices will drop an extra $7k, it’s that simple.
RE: Almost as useful as a $600 tax rebate is to people with 50Gs in credit card debt,
It is laughable isn’t it?
Complete and total political ineptness.
USA, no more Numba #1, GI!
“After 36 years on Katan Avenue, Mrs. Brodbeck said she was looking to downsize and move closer to her mother in Dongan Hills. She thought selling would be easy.”…“The house is back on the market now for $579,000.”
Mother: “Dear are you going to move closer to me”?
Daughter: “Yes mother but I have greedy buyer wanting me to throw in the window coverings. People are just shameful!”
staten island is hell on earth
be warned
Isn’t Staten Island where the Fresh Kills landfill is?
“When someone arrives in a shiny new truck to discuss missed mortgage payments, O’Rourke said, he asks if that person wants to live in his or her vehicle.”
“O’Rourke added that he repeats an adage he heard many years ago: ‘Even if you have to eat dirt, make your mortgage payment.’”
ROTF; Just rent. Maybe you can eat real food again.
“Even if you have to eat dirt, make your mortgage payment.”
I automatically translated this in my head to say “Bend over, indentured servant-for-life, and keep making those payments you can’t afford for the benefit of a privileged few.”
Go figure.
Yeah, I’d advise those in non-recourse states to walk away and make the mortgage co. eat sh*t, rather than stay and eat dirt.
i used to think that, too, but now i realize the mortgage co isn’t going to be eating the poo, it’s gonna be you and me, the taxpayers. or actually our grandkids.
Many years ago that is exactly how people looked at it. That was the decent thing to do. But that was a very different country from today. This country is a shadow of its former self. Hardly recognize it anymore.
Maybe this implosion will change people. I doubt it, but maybe.
Well, you used to have to see your lender at church/grocery store/softball games. Now your debt is split up amongst tons of different investors in places you have never and will never be.
“O’Rourke added that he repeats an adage he heard many years ago: ‘Even if you have to eat dirt, make your mortgage payment.’”
Worst. Advice. Ever.
That advice makes sense when you have equity. If not, though, why hamstring yourself financially for the next decade? Walk away, rent something you can afford, and you’ll be way better off.
http://www.nypost.com/seven/04092008/business/passing_the_gas_105674.htm
passing the gas @ nymex
i know one of the defendants Al demicoli and he wanted my friend a nymex seat holder to execute trades for him thankfully he did nothing of the sort
Brits are cooked. Gordon Brown might be the one national leader who makes Bush look competent. His claim to fame is selling a huge amount of British gold at the absolute rock bottom some years ago, costing the country billions. Heck of a job, Gordy.
“‘One of the problems: People are just walking away from homes,’ Jones said. ‘The government is trying to do things, give longer grace periods. It’s just a whole vicious cycle that starts here and who knows when it stops?’”
Enough with the carrots - how about trying a stick? Consider penalizing people who walk away from their mortgages, at least if it’s a recourse mortgage. Expedite the legal process to make it easier for lenders to sue deadbeat borrowers, and give it some teeth so that wages will be garnished. States with no-recourse laws on the books should consider repealing them.
Enough with bribing the deadbeats already! At the end of the day, they’re the ones who decided to renege on their obligations.
Why? It’s a good thing that people are walking. The more people abandon their houses the faster prices will drop, the sooner things will normalize. For the banks, serves them right! If you’re giving money to a bunch of deadbeats, that’s exactly what you can reasonbly expect to happen. No bailouts for those idiots either! Now maybe they’ll learn an expensive lesson and return to the good old days with 20+% down payment to keep the shysters at bay and the jingle mail away.
States with no-recourse laws on the books should consider repealing them.
No! No-recourse laws protect buyers by discouraging lenders from loaning more than a property is really worth.
If lenders in no-recourse states want protection against walkaways they can demand - dare I say it - a down payment.
I second that
The lenders are getting what they deserve. Unfortunately the Pension funds and others who bought these MB securities after Moody’s and others sprinkled glitter on them are getting screwed. Some buyers got away with murder but I suspect most have taken a beating financially and with regard to their credit.
jbunniii,
It’s the mortgage contract…if the borrower fails to make the specified payments, the lender can seize the property. So, they can’t make the payment and walk, while the lender now owns the property. They’re not deadbeats…walking away is just a business decision. And the more who exercise their right to walk, the better.
The market will clear, and all the pols best efforts to put a “floor” under housing prices will be for naught, and affordability will return to the marketplace.
I agree and hopefully the lenders’ pain will lead to borrowers’ inability to qualify (down payments, high credit scores) for quite a while in the future. I don’t want to compete with these idiots for a house again.
spike66,
I think jbunniii* was saying we’re now creating an environment where the FB’s expectations are “what have you done for me lately?” More borrowers than any of us EVER suspected seemed to be well dialed into the possibility that they’ll get free relief. There was a great NPR article about a NorCal family basically squatting and “weighing their options” to see which was the most advantageous for them?
Hey Dinor,
If you subsitute ibanks for FBs, every word of your post still makes perfect sense. I especially remember Lewis, CEO of Bank of America bleating a few months ago, that their “models” never predicted this gamesmanship from FBs. I might be more inclined to take a harsher line towards the FBs until you see fatcats being bailed by Fed actions, without so much as having to surrender their bonuses. March was the payout for 2007 bonuses, and all the fatcats got theirs.
Gamesmanship…if that’s the play,then let the peasants have a shot at it themselves.
I agree, but the banks were so stupid, not only didn’t they make sure the asset was worth the loan, not only didn’t they make sure the borrower could pay the note, they didn’t even verify that the borrower had ANY OTHER ASSETS! Ha ha ha ha ha.
You can’t get blood from a turnip. The banks are screwed. I say that as a person with about 40% of my net work in banks and money market funds. I’m screwed too, but at least I can pay my mortgage, my dad has a farm he owns free and clear, and my back surgery was successful, so I can look forward to working till I’m 80. It could be worse.
American Gothic horror show…
“Garbage bags, children’s toys, lawn care equipment and beer bottles are strewn about this east Medford house, valued at $453,000. Inside there’s a piano; outside, there’s a swimming pool filled with murky green water. There’s so much junk the city has posted notice that the accumulation is unlawful.”
“But there’s no one home to clean it up. Unable to make mortgage payments, the homeowners walked away.”
We will see more and more of this. People are just going to take whatever they need, i.e the cars and their empty wallets, and bail to wherever to start over. While there is no honor in it doing that, it serves the banks right.
Screw the huck, er, I mean, banksters. They get what they deserve. What did these meatballs on WS think? Sure, let’s lend someone or some family, who/which earns 40-50-60-75K, 700K for 30 years. Just where did you think this was going to end up? With interest, you would be paying 1.75 million. Good luck with that.
Forget eBay, we will have so many ownerless gargae sales, it won’t be funny!
It just goes to show how much craptastic sh!t we have in this country. I bet almost all of it was made in China.
How sad!
“ownerless garage sales” LOL
Is that anything like a “five finger discount”? Dan, your’s is a question I’ve asked for years. So many of these loans were so off the mark even of the borrower gave 80% of his after tax income toward the mortgage he still wouldn’t live long enough to pay off the loan?
It’s especially acute for borrowers that were already in their late 40’s and 50’s signing up for 30 yr. mortgages. At some point they should have been asking themselves (with limited time left in the work force) if this was the best use of their income in the later stages of your working life. Or was that all just a bit much to ask?
“Lib Dem spokesman Vince Cable said: ‘The Government is only just waking up to the problem, despite the fact it has been warned for years that there were great economic dangers from the bubble in the housing market, linked to exceptionally high levels of personal borrowing. For too long this Government did nothing.’”
“‘There will be an epidemic of repossessions unless the Government forces lenders to moderate the process by offering shared ownership and payment holidays to keep people in their homes,’ Cable said.”
******
Eh, a little late to the game over there?
Oh, well. Get used to it.
And an “epidemic of repossessions” really doesn’t sound so bad after all.
SF, my first thoughts, exactly. Where was this guy in 2003? Yeah, probably getting some kickbacks, er, I mean, political contributions from his local REIC or banksters. Accepted the money with a wink and a nod.
Sure, close the barn down after the horses and every other animal has run out. What a moroon.
‘There will be an epidemic of repossessions unless the Government forces lenders to moderate the process by offering shared ownership and payment holidays to keep people in their homes,’ Cable said.”
‘Unless Government FORCES’… yep that’s where we are headed, going to be fun fun watching these loser officials getting involved in private contracts. I’d laugh if it wasn’t so sad, that anyone wants to allow Government to manage any more of their life. Very short sighted, and a horrible direction to head in.
“Give folks a $10,000 break on their federal taxes if they buy a home.”
How about a $10,000 break for those of us who keep paying our mortgages ?
Sounds good to me! I’d like one of those, please.
House or no house, just give me my 10k. I have groceries to buy.
How bout you just lower the damn price? why go screaming to congress to give tax breaks? doesn’t anyone understand supply and demand anymore?
is the $7,000 tax break for each year? who would be dumb enough to not ask for a lower price and pay interest on the higher price for the next 30 years?
“Moler adds, ‘Before, it was a terrible thing to be in foreclosure. How embarrassing. But now, it seems to be happening to everyone.’”
I wonder what Cynthia’s tone-of-voice was when she made this statement?
Giddy, maybe? With the prospect that she might actually be able to sell a few houses now…
“The Bush administration and Democratic leaders in Congress are counting on the Federal Housing Administration to rescue hundreds of thousands of homeowners from foreclosure by helping them refinance from risky subprime loans to stable government-backed mortgages.”
This was always the plan as I have said on many occasions. Stick the public with the massive losses. Every time they refinance someone out of their current loan and into something “government-backed”, the private sector gets bailed out at our expense. Taxes are going to have to rise and dramatically, and inflation is going right up with it.
I hope this falls apart but I doubt it. We are all paying the price for the gamblers. Meanwhile, homeless people and millions without insurance are screwed. Just today I got a call from a client. She has cancer in her chest area, and evidently the operation is considered “elective”. How is cancer ever “elective”? The sad thing is this woman just last year made a comment to me about socialized medicine and how it was bad. I didn’t say anything since she IS my client, but today I made it damn clear that profit has no business in health care. You never want a company forced to decide between your health and the bottom line. But just about every other country has figured this out - and they have far less expensive costs to boot! Nice lady. Very sad. She had to put up her home as collateral. I was shocked.
I have expressed this thought to my wife. Like my stepdad, the family is not to go broke keeping me alive or my health. When I am 85, God-willing, if I need 22 pills a day to stay alive, I will just down the 35 advil and go to sleep forever. Health and pharma in this country are outta control. Besides, I wonder how much of the crap they do/push works? Why bust the family to keep so old cudger around. It isn’t like you are giving me back health when I was 21 and full of vim and vigor. Crimineys, let nature do its work!
Recently read Sharon Brownlee’s book Overtreated: Why Too Much Medicine is Making Us Sicker and Poorer. According to this book, only 15% of current American medical practice is based on valid evidence.
“…..down the 35 Advil……”
Make sure you get the generic drug.
Sorta like the mouse to the eagle in “The last Great Act of Defiance”
OC Dan, I don’t want the gov. messing with my health care. Just let me have my viagra, my flomax and any other drugs of choice and I’ll be just fine. No quitting for me!
OCDan -
The problem is that when you get to that age, you may not be able to make that fateful decision. My last remaining grandparent is 85 and on her way out. However, she is a burden to the family with her constant alarms and trips to the hospital fearing she is about to die. This woman, 10 years ago, would have said the same thing as you. However, the really advanced aged seem to regress into a child-like helpless mode where they would not think of doing themselves in. They are not afraid to spend every last dime to get a few more minutes. Waste. It is not like she is pleasant to be around anymore (cue the politically correct responses).
Not me. However, I may face the same conundrum. I certainly do not want to feed a very corrupt medical/pharma system with a lifetime of savings. Hopefully I will figure out the onset of dementia early!
Odd that: I can’t think why explaining to Grandma that you’d like her to kill herself so you can have her money isn’t working…
It’s one thing to think you’d rather be dead than old, but I’ve noticed that most of the old feel differently.
‘This was always the plan as I have said on many occasions.’
You may be paying something, but I’m not. My bank account is still the same. My taxes haven’t gone up. My foreign currency hedge is working well. Play the victim if you want, but don’t try and lump me in. Prices for the real estate I want are getting thousands of dollars cheaper every month.
So you’re saying it’s fine if the financial system (and probably more) of the U.S. is wrecked, as long as you make out OK?
Say it ain’t so Ben.
I’ve been making out pretty well via hedges as well - but I know that my future and my kids future looks more grim every day, as the US gov. gets deeper and deeper into debt. That’s what all these tax breaks, FHA assistance, etc. mean.
I know you don’t believe in a big bailout, but death by a thousand cuts isn’t any better. That’s what’s happening.
‘as long as you make out OK?’
I’ve tried to educate people with my FREE money and metals blog and this one and the foreclosure blog. Everyone must take steps to protect them selves. This country’s economy was put on a destructive path years ago. Did you not see the $54 trillion dollar figure I posted yesterday? I had that on my metals blog when the Fed published it years ago.
It bears repeating; after the Texas bust, some cried in their beer and other were more constructive. It’s each persons choice. But if you have an idea of what’s coming, who do you have to blame?
Any recommendations on what currency would be appropriate for an Everbank CD?
Its more than just the USA, the crazy lending went on in Europe, the Orient, and now in Canada, too, right? I’m realizing that our national/regional politics really aren’t influential, here, because its a global problem! Currencies everywhere will be affected. Paid-for assets are all you’ll have to depend upon, ’cause you’ll still have taxes and utilities, plus food and fuel, to keep you busy paying out from your nestegg. Get as self-sufficient as you can. All those imported foodstuffs will soon cost you more than you now pay!
Why should you have a “foreign currency hedge”? Because you can. Many people do not earn enough or have adequate savings to have a foreign currency hedge. Sorry sir, I think your logic is wrong.
This is currently a bailout by creating lower interest rates that borrowing institutions pay you for the use of your money. The currency hedge is needed because this action is further destroying the dollar at the expense of a few institutions. Multiplying the 3/4 of Americans that do not have savings or currency hedges and these people are supporting this current bailout.
To date the interest rate bailout is $720B at 3% interest discount. This will continue to get larger every passing day and ,to further make matters worse to assist the bailout, taxes will be increased so those of you that profited from currency translations will have to pay tax on a screwed up government policy. The same applies to metals (PM or others), the metal has not increased in weight, but the bailout has caused the price to rise. Pay your taxes on the sale. A bogus profit as the result of incompetent government.
I call this a bailout of the street since the street’s firms are the only beneficiaries of these policies.
‘Many people do not earn enough or have adequate savings to have a foreign currency hedge.’
I set up my first account with Everbank using just a few thousand bucks. Not much in the way of fees, etc. I bought my first gold coin when I was 19.
The market sets rates, not the Fed. And right now, nobody has a good explanation as to why rates aren’t higher. I’ve traveled a bit and people in this country are the only ones who think all they need to do is sit still and they should get rich. This is a lazy attitude toward money. I suggest those that are constantly looking for a reason they aren’t getting ahead are happy to find one.
Bail-out? Please, I see nothing but a REIC getting wiped out, every single week. Prices plummeting, tens of thousands in default. What do you want? I’ll say it again, those looking for a perfect ending are going to be disappointed.
I do not wish to see a perfect ending, Goldilocks got eaten!
But there are financial maneuvers that are effectively a bailout without calling it a bailout.
The average salary in a fortune 500 company last year was $35,000/yr (2006). Pretty rough to do any savings or investing when the staples in life are rising at 20%/yr. The Federal Reserve sets Fed Fund rates, the banks that got in trouble doing short borrowing and long lending are the beneficiaries of the Federal Reserves actions. The individuals that have CDs that a year ago pd 5% and now pay 4% are subsidizing this action. The dollar is getting hammered by smart individuals that notice the discrepancy between purchasing power parity in currency transactions. You happen to be one of the smart people.
Houses are not an asset, houses are a liability. They are a desirable liability. They will continue to go down in price. So I do agree with you on most points. Your most excellent comments, your keen perception and wry sense of humor (which is seemingly being tested lately) constantly give me pause for thought.
People in general panic about the economy. The advice for anyone investing is simple: Diversify. Buy small, medium, and large cap. Buy international.Buy BRIC funds. Buy fortune 500-like GE,IBM, etc etc; US companies that do well overseas. Buy ‘Sin’ stocks like beer, cigarette, and tobacco companies.Buy Healthcare for all the old farts that are about to retire. Buy Water companies, ag companies, buy energy companies.
In other words, if people want to make money, they they’re going to have to think like salespeople and think about what consumers want and what they are buying. Nobody can guess the market, but if you spread it out over enough corners, you’ll do fine.
Bottom line: The stock market does well 7 out of 10 years and it has done so for the better part of 100 years. Invest and do so for the long term.
I say this yet most of my money is in cash and CD’s. Just mentioning what I probably SHOULD be doing.
“The stock market does well 7 out of 10 years”
Tell that to the investors in the stock market in 1928 or 1929 - 30 years later got back to par. A few bad years wipes out the profit for the next 30 years.
The last decade has seen a negative return in the S&P500, not very smart to hold and wait. This is not to belittle the stock market, but there is no single one plan that is idiot proof. I am still looking for it, it is the holy grail of investing.
Houses are not an asset, houses are a liability.
WRONG!!
A house can be a great asset, so can land, or rentals. The mortgage is a liability. Try not to confuse the two. Keep reading here, you will learn to block and tackle soon.
Many people do not earn enough or have adequate savings to have a foreign currency hedge.
Why do I walk around on my feet, many people don’t have legs. Why do I read something every day to educate myself a little more, many people are too busy watching American idol to read.
I don’t believe in all the hedge fund stuff, and I could be wrong, and If I am I’ll just get along the best I can, but saying someone else is wrong because they do something that others “can’t” do is just asinine victim mentality.
Huh? lol
From Ben:
“You may be paying something, but I’m not. My bank account is still the same. My taxes haven’t gone up.”
I think the worry stems from the taxes we pay now and how they’re being used, or how they might be used in the future. Granted my taxes haven’t gone up, but the whole reason I pay them is based on the expectation of future availability via Social Security, etc. If that’s not around, why exactly are wep aying taxes? Not far from anarchy at that point.
Got Ammo?
If profit has no place in health care, then don’t expect providing health care will be anyones agenda. What, you going to force Doctors to perform services at gunpoint? That will be some fantastic care I’m sure.
Remember, Guns don’t kill people, Doctors do. hehehehehehe
“We were accustomed to homes in this area selling very quickly. Mentally, I thought I’d be leaving immediately. I was very, very surprised,’ she said of the lack of buyers.”
If you want to sell quickly, lower your asking price, and accept a lower price when a deal comes through.
“‘Anything that will jump-start the market for us and customers and clients is certainly important,’ said Dawn Carpenter, president of the Staten Island Board of Realtors.””
Do you want to “jump start” the market? LOWER YOUR PRICE?
It’s not rocket science people.
rocket science it is for these mopes
let them rot and starve these dirtwads they are
staten island realtor=lowest life form
Had to go to Tucson’s east side this morning. Since the weather hadn’t yet changed to rain mode, I hopped on the bike and headed out for a nice little ride.
Since I’ve ridden this particular route for, oh, 21 years, I decided to make things interesting by counting the “For Sale” signs along the way. I’ll admit that I got distracted and stopped counting on the outbound leg. But on the homebound leg, my counter was on the job. In just over 7 miles, I counted 20 “For Sale” signs. One had a “Foreclosure” rider below it, and another was offered by a local agency that specializes in foreclosures.
So, there you have it. A small snapshot, to be sure. But 10% of the sales being foreclosures? Ouch.
Why bother riding 7 miles, when I can look outside my house on a street with 20 houses. 9 For Sale signs, and probably 5 more houses wanting to be put up for sale but for whatever reason no signs.
Cinch
http://www.arborday.org/media/zones_akhi.cfm
It appears that Anchorage is in zone 5. Kodiak and Juneau are zone 6-7 depending where. So it’s just as cold as NW PA with Anchorage being much colder. I am not bashing Alaska, ive been there in the summer and the mountains are oh so beautiful! But the winters are as bad or worse than Oil City temperature wise. If you think I won’t be able to handle Oil City winters, then I also won’t be able to handle Alaskan winters save for zone 8(extreme south)
For those saying Alaska has mild winters, I suggest you back up your claims. 98% of Alaska gets very, very cold. My friend found it ironic you bash Pennsylvania winters and think I shouldn’t relocate to that state but have nothing to complain about Alaskan winters?
Bye,
This is the last time I’m going to offer this advice: Arthur Nebraska. It’s everything you’re looking for, trust me.
All talk and no frozen…
Who are you addressing your comment to?
I have never bashed a PA winter or winter anywhere else. In Alaska, for the cost of gorgeous and not overly baking summers we pay the price with cold winters. For 19 hour long summer days, we pay with 19 hour long winter nights.
I would say that Anchorage has mildER winters than it used to, but certainly in line with temperatures you’d expect on the northern tier of the US or in the mountains. No one should move here and not expect ice, snow, and arctic temperatures for at least a month or two.
However, I have always said that there is a lot more to a place than just the weather (having grown up in Southern California, I should know). It’s no coincidence most of places hit hardest by the housing bubble are in the sunbelt.
“‘It’s a fabulous time with a lot of foreclosures. Probably one third of the houses I showed were foreclosures,’ says Cynthia Moler, a realtor with Coldwell Banker.”
What a stupid bimbo.. these sorts of comments sicken me, these people have no class, shame, cooth, brains, and anything else you care to add.
Diplomacy?
Disgusting.This whole post could be summarized as “new bailout plans”. It sort of scares me because every politician seems to be jumping on the ” Save the homeowners” bandwagon.
No, they’re jumping on the ‘let me buy your vote with taxpayer money’ bandwagon.
JUST THE FACTS…
http://www.zillow.com/HomeDetails.htm?zprop=32352879
1750 sq.ft., assessed value 23K, built in 1970. I smell a ‘I want my 500k deduction or else’ all over this.
I will offer 100K, not a penny more. That house is a literally a 2-story box.
Good grief!
570K!
Anyone who buys that deserves to financially die forever. OTOH, if that seller gets that price, more power to him/her. Only a fool would buy, though.
50 X 99 is an over sized lot? Thats what they call a patio home in my neck of the woods.
I L-O-V-E NYC and would never expect real estate to compare to the rest of the country, but there is no freaking way I would pay that much money to live in a crackerbox on Staten Island, even if I was a millionaire.
Great observation. It goes hand-in-glove with what Ben was saying. “Just sit where you’re at and let the money come to you!” I looked at the comps on the same page and it looks like this seller has lots of company? Absolutely nothing “special” about those homes? I will say though I’ve looked a lot lately in LV and million dollar homes are starting to look a LOT more like… well, million dollar homes! ( Heated swimming pools, fantastic landscaping, huge lots/acreage, everything top notch ) Well good luck on S.I! If that’s all the more 1/2 a mil. buys I’ll gladly rent thanks.
But she’s ready to retire and live closer to mom so I suppose she IS… “entitled” to the money! Why would you grudge her that?
4 beds, 1.5 baths, 1,768 sq ft - $600K - Well, he better not pack any of his belongings because he’s in absolutely no danger of selling that crap box any time in his lifetime. What a hoot. I think for anything over half a million bucks, I need at least 5 bathrooms and 5000 sqft - oh, yeah, and maybe some character.
Rep. Vito Fossella has an idea on how to jump-start the moribund housing market
I have an easier, and cheaper solution. DO NOTHING! It’s guarunteed to work and won’t cost taxpayers another cent!
I went on a payment holiday once, to the Bahamas…
“‘There will be an epidemic of repossessions unless the Government forces lenders to moderate the process by offering shared ownership and payment holidays to keep people in their homes,’ Cable said.”
I have the cure:
“The cure for capitalism’s failing would require that a government would have to rise above the interests of one class alone.”
Robert Heilbroner
Norway had a housing bubble?
“More than 140 Norwegian building firms have filed for bankruptcy so far this year. Concerns are growing that Norway’s building boom of the past several years is quickly turning to bust.”
They’re not making any more Fjords!
“‘This legislation would help folks like George and Margaret, as well as millions of other buyers and sellers across America,’ Fossella said.”
Give me a break. We have to help George and Margaret become 579-thousandnaires because they own some shack on Staten Island.