Taking Away The Comfort Zone In California
The Wall Street Journal reports on California. “While tighter lending standards have cut off all but the most credit-worthy borrowers from auto loans and home loans, many people are turning to credit cards and tapping more of their home-equity lines of credit to dig themselves in deeper. Theresa Leick of San Juan Capistrano, Calif., a loan processor, pulled $21,000 from her available home-equity line of credit in February to park in a certificate of deposit.”
“‘I’m fattening my reserves in case I have to go look for more work,’ says Ms. Leick, who says she is concerned about losing her income because she works in the mortgage business. She says she would have preferred not to have tapped her home-equity line, ‘but if the bank takes away my comfort zone, that will make me lose sleep at night.’”
“For the past several years, William Jordan, president of a financial-planning firm in Laguna Hills, Calif., has been advising clients to pull equity of their homes and put the money into safe, liquid accounts so they have access to the money. He recently advised one of his clients, Matilda Compean of La Mirada, Calif., to refinance her mortgage and take out cash after she was having trouble making ends meet.”
“The 54-year-old client-services manager began working extra hours last fall to help pay for higher household expenses, such as gas, and to save money to buy a car for her daughter, who had recently totaled her car. So, in January, she refinanced her mortgage and pulled out $60,000 in equity to purchase the automobile and set aside an emergency cash cushion.”
“Doing so, says Ms. Compean, ‘just gave me a lot of room to breathe. I was at my wit’s end. I just kept thinking things would get better.’”
National Public Radio. “Amber Barbosa didn’t graduate college. But she did get an education — by working for the now infamous subprime lender New Century Mortgage Corp.A few years later, she struck out on her own as a mortgage broker. ‘In 2006, I made close to $500,000,’ she says. Not bad for a 28-year-old with no college degree.”
“By then Barbosa, who was living outside of San Francisco, had a nice boat, a 27-foot Bayliner. She had several houses, a Mercedes and a Cadillac. ‘I was riding around in my ‘07 Escalade,’ she says. ‘God, I had three properties at the time — one right on the water with ocean access, another property worth $800,000.’”
“Barbosa says a lot of homeowners just wanted to take cash out of their homes and make a low payment — even if the rate on their loans would eventually adjust much higher.”
“She says she explained all the loan terms to them: ‘They knew about the adjustments and fees.’ But she says, ‘They just wanted their money and they wanted the deal to close. Whatever we would say to them, they would take the loan anyway.’”
“Anthony Narag worked as a loan officer for several different mortgage brokerage outfits in Southern California. He says everybody in the industry knew there was fraud all over the place: ‘It’s almost like baseball with steroids. They knew about it, but they didn’t do anything about it.’”
“According to Narag, an account executive from the now bankrupt lender New Century told brokers like him not to worry about a supporting letter from a certified public accountant.”
“‘He would tell people, ‘I have a CPA in my back pocket if you need one,’ Narag says. Narag says he also observed brokers printing fake bank statements or other income documents, and that there was a black market for these items.”
“Everybody — including the lenders and banks buying these loans — looked the other way, Narang says, because the money was so good.”
The San Gariel Valley Tribune. “Southern California’s housing market has weathered a severe downturn over the past year, with heavy price declines, tightened credit standards and scores of home foreclosures.”
“In West Covina, Master Remodelers is holding its own, despite the fact that business isn’t what it was a year ago. VP of sales Steve Kyne aid many homeowners who were looking to move up to a bigger house have opted instead to remodel or expand.”
“‘The last couple of clients we’ve done have put their house on the market but haven’t been able to find a buyer,’ he said. ‘And the economics of expanding, versus putting the house on the market and moving … there are just so many good reasons not to move.’”
“Gerald and Elsa Baca are going to have Master Remodelers renovate their 1,250-square-foot La Puente home by adding another 450 square feet. The couple had initially wanted to sell and move to a bigger home. But they couldn’t find a buyer.”
“‘Our house was on the market for nine months and our asking price dropped $50,000 but we couldn’t get a nibble,’ Baca said. ‘It’s frustrating to know that we missed the bubble. With the market declining and the subprime loans going away, that took a lot of buyers out of the market.’”
The Marin Independent Journal. “For the first time in more than a decade, the economy has supplanted transportation as the No. 1 worry of North Bay residents, according to a new poll. Among North Bay residents, 20 percent said the economy is the top concern, compared with 22 percent in the Bay Area as a whole.”
“Sixty-four percent of North Bay respondents described economic conditions in the Bay Area as bad, and 49 percent said they expect economic conditions to get worse over the next 12 months. Only 15 percent of North Bay residents said they expect economic conditions to improve over the next year.”
“Cynthia Murray, CEO of the North Bay Leadership Council and a former Marin County supervisor, said a Marin County survey released in November 2007 evidenced no economic trepidation. ‘For that to be the No. 1 issue, when it wasn’t on the radar screen in November, is fascinating,’ Murray said.”
“‘A big area of concern right now,’ Murray said, ‘is how much of this is perception and how much is reality. Businesses are sitting on more cash than they have had in a long time, but they’re not spending it.’”
“Jim Wunderman, the Bay Area Council’s CEO, sees the survey results as a ‘wake-up call.’ ‘If we don’t start talking about an environment where jobs can be front and center and do it quickly,’ Wunderman said, ‘we could be in for a world of hurt.’”
The San Francisco Chronicle. “Given the mortgage crisis, the flood of foreclosures and soaring fuel prices, it is not surprising that the economy was rated the region’s top problem, said Steve Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.”
“‘This (poll) says what’s been on people’s minds,’ he said, ‘and they’ve been inundated with stories about the economy, about the mortgage crisis and about foreclosures.’”
“While transportation dropped from its usual position as the top problem, officials said that doesn’t mean gridlock has lessened. Residents are just more worried these days about having a job to get to than they are about how long it will take to get there.”
“‘The concerns people have day to day about their mobility are so strong that it takes a really strong (issue) to knock it off the top of their list,’ said Randy Rentschler, spokesman for the Metropolitan Transportation Commission. ‘And this is a serious issue.’”
“Like 15 percent of those surveyed, Joshua Dilworth, 32, of San Francisco, considers the high cost of housing the Bay Area’s biggest challenge.”
“‘It’s a huge issue,’ said Dilworth, who owns a home with his wife in the Excelsior district, ‘but I don’t know if it’s anything that can be dealt with because it’s an issue of supply and demand, and there are people willing to pay the high prices.’”
The Appeal Democrat. “Erma Olivio snaps out her resume and rattles off a long list of work skills to anyone who’ll listen. As the last attendees of Wednesday’s job fair at the Yuba-Sutter Fairgrounds wander out, Olivio stays on to chat with recruiters.”
“The 45-year-old Live Oak resident could be a poster child for the nation’s — and the region’s — flagging economy. Olivio was laid off Nov. 29 after the patio-cover maker she worked for in Sacramento saw several months of plummeting sales. She has been unable to find another job that pays enough to keep up with her mortgage payments.”
“‘First, the savings goes,’ she says. ‘Then, it’s the credit card — mine is maxed.’”
“Olivio says she is coming to terms with the fact that she could soon lose at least one of her two homes. The value of the house she lives in has decreased by roughly a third since she bought it two years ago. And she recently had to lower the rent on another property she owns in order to keep it occupied.”
“‘I’m in a situation,’ she says. ‘There’s not much out there, and the money’s gotta come in.’”
“Her brother moved in with her recently to help out financially, and to allow them both to save on expenses. But then the brother also was laid off from his job.”
“‘I’m scared,’ Olivio says, finally taking her stack of job applications and heading out the door. ‘But I can’t cry about it anymore. I’m a survivor and I can’t give up.’”
“Yuba-Sutter’s unemployment rate weighed in at 12.2 percent — the third highest among U.S. metro areas. High jobless figures help out Sam Steadman, a staffing and training manager, in his near-constant search for qualified workers.”
“‘There are a lot good candidates,’ he says, ‘It’s kind of like buying a house right now: You can just about pick whatever you want.’”
The North Coast Journal. “The Redwood Curtain wasn’t thick enough to insulate Raul Merezko from the country’s subprime mortgage crisis.”
“According to public documents obtained from the Humboldt County Recorder’s Office, Merezko, chosen at random from a list of over 80 individuals who have lost their homes for nonpayment since Jan. 1, 2007, bought his home in a nice neighborhood in Eureka for around $180,000 in October 2004.”
“Shortly thereafter, he took out two loans with Southern California-based Long Beach Mortgage Company. Merezko took out two adjustable-rate rider loans, one for $136,000 and another for $34,000, which meant he didn’t have to put any money down on the house.”
“According to realtor Dean Kessler, it was a golden time for homebuyers with little or no credit: ‘Basically you just had to fog a mirror and you could get a loan,’ he said.”
“A little over a year passed before Merezko decided to refinance, again with Long Beach, and this time for $238,500. On Oct. 17, 2007, three years almost to the day after he purchased his home, Merezko received a notice of default. He was behind in mortgage payments to the tune of $11,429.74.”
“Finally, in February of this year, his house sold for far below market value in what Kessler described as an ‘extreme short sale.’ A group of local investors picked up the property for $113,000.”
“Some contend that Humboldt County has weathered the national housing slump better than other parts of California. Humboldt State University economics professor Erick Eschker disagrees.”
“‘Anybody who says that there’s a Redwood Curtain, that we’re special, that we’re immune — they’re lying,’ he said.”
“In March of last year, Eschker presented a ‘County Outlook’ for 2008. In that presentation, he compared housing prices in various California cities (Redding, Sacramento, San Francisco, San Jose, Santa Rosa, Los Angeles and San Diego) to Humboldt County between 2002 and 2008.”
“‘The way that prices were rising in L.A. and Sacramento,’ he said, ‘we have the same pattern here, and so the question is what’s going to happen with Humboldt County? Well everybody who’s making price predictions for those areas is predicting further price declines. … We shared the same upswing with them and it looks like we’ve entered the same downswing [as well].’”
“Granted, not every notice of default results in a completed foreclosure, but the data that Eschker has gathered indicates that notices of default tend to peak slightly before trustee’s deeds (the final document in the foreclosure process) do.”
“That means that in light of the 19-year high in notices of default the county is experiencing now, Eschker predicts that trustee’s deeds will soon surpass their late-’90s peak.”
“The real problem, according to Dan Johnson, president of Danco Builders, is the lack of jobs in the county. The market for first-time homebuyers is nonexistent, he said, but houses in the $450,000-$600,000 range are selling.”
It’s nice to see professor Eschker get some vindication. He’s posted here a couple of times, I believe.
I’ve mentioned how when the bust came to Texas, the concern soon shifted from oil and RE prices to creating jobs. IMO, this is starting to be very apparent in California. Notice how in Sacramento, the county is already trying to get people building houses, merely for the jobs. And the over-supply be damned.
Rich Toscano did a time line on a UHS quote I posted yesterday:
‘Our favorite housing cheerleader, Chuck Smiar, is back in the news again today with another attempt to scare real estate fence sitters into action. After issuing a warning to hesitating homebuyers that they were “in for a surprise” back in December, Chuck had this to say in a North County Times piece earlier today: ‘There’s a lot of buyers sitting on the fence waiting for the bottom. And I think if they don’t jump in soon, they’re going to be sorry.’
‘this latest assertion fits right in with his increasingly well-established track record of making statements that, in addition to having little basis in reality, seem pretty clearly intended to frighten people into buying homes.’
‘The accompanying graph displays Chuck’s prior suggestions overlaid with San Diego home prices (as measured by the Case-Shiller home price index through January and then approximated using single family size-adjusted median prices for February and March). The timeline pretty much says it all.’
That timeline should be on the front page of every newpaper and on the 6 o’clock news…for a week straight.
(shudders at memory of Paris Hilton’s jail time dominating newscasts for well over a week).
haha now thats pretty funny
I would definitely be sorry to jump into this current market. The guy that bought my house 2 years ago has lost over six figures easily. I say that because he bought my house in cash.
“Some contend that Humboldt County has weathered the national housing slump better than other parts of California. Humboldt State University economics professor Erick Eschker disagrees.”
“‘Anybody who says that there’s a Redwood Curtain, that we’re special, that we’re immune — they’re lying,’ he said.”
Even so, the lastest statistics in Humboldt county show RISING prices. Although this could certainly be a blip on a very slow downward trend, what I’ve been finding in my casual appearances at open houses and keen eye on the MLS is that properties are actually selling faster now than they have since 2005. Very disappointing considering the rest of California is losing equity faster than Paris Hilton removes her bra on a Saturday night.
http://www.harealtors.com/properties.php
Jeebus, the median is the most discredited statistic in real estate. Take 20% off and you are probably close. California is crashing and everybody knows it.
You give “everybody” too much credit…
True…it is definitely the higher end properties that are selling and pushing the median higher; also the really low end flop houses sell…just like these REALTORS investment group bought as a foreclosure. Still, when median prices are dropping 20-30% in almost every other community in California, and Humboldt has only fallen 10%, it is very disconcerting.
It definitely will fall much much more…I’m just surprised how resilient Humboldt DOES seem to be, compared to the rest of the state.
Just as the Danco builder guy said the NorthCoast article quoted earlier, prices have “only fallen by 5 percent in Eureka,” and that isn’t far off the truth, based on living here the last several years and watching how all this is unfolding. Let me tell you, I am amazed that Sonoma county has dropped from $630K down to $415K, but Humboldt has only fallen from about $340K to $317K. Not much of a drop considering the carnage in San Diego, Sonoma, and elsewhere. But I’m waiting and hoping:)
median price isn’t really a good measure. how much has average price per square foot fallen? does your area have a very small sample size of sales where one high sale will really skew the average sale price??
When all is said and done, it will make no difference that Humboldt was 6 months behind San Diego in it’s descent.
“pulled $21,000 from her available home-equity line of credit in February to park in a certificate of deposit.”
i am not a financial sophisticate but that seems to be a really dumb move. IF i could put money into a financial investment guaranteeing 10 % return even then i would think hard about pulling heloc money. Cd’s are paying about same as the lowest current heloc rates anyway, maybe at most 1% more. If CD is a sort of emergency fund then just use the heloc itself. Baffling!
I hate using heloc anyway though i have a substantial amt of it available. Heloc’s are necessary only in dire, dire emergencies like medical but that’s it. If U need to take a fancy vacation use savings earned from work. If u cannot afford a fancy vacation then go on cheap camping trip in a $20 site, sleep on ground or in tent , be close to nature, & do cheap day hikes. Maximum benefits in exercise, getting lean and burning off urban stress instead of fattening yourself like a pig in some 5-star resort.
Anthony,
The northern CA coast is probably viewed as a nice place to downsize/retire to. Thus those in high priced SF and LA who are smart enough to price low enough to get out and move to your area will tend to prop up prices - at least for a while.
As time goes on this price support will diminish. But it can easily account for what you are seeing now.
I agree with this CharlesH person, Anthony. Who would leave Humboldt, if they didn’t have to? Only a moron. But take cheer, I urge you–because 1.) Even morons have to pay bills, and 2.) Reality will intrude, yea verily, even in Humboldt.
Hahahaha! That’s the funny parts!
Ooooooh, think of a Humboldt that is less moron-ful. I’m gettin’ chills of joy just contemplating the possibility.
“Gerald and Elsa Baca are going to have Master Remodelers renovate their 1,250-square-foot La Puente home by adding another 450 square feet. The couple had initially wanted to sell and move to a bigger home. But they couldn’t find a buyer”
Do you know why they cannot find a buyer? because la Puente is a gang-infested third-world dump. It is located in the eastern butt- end section of the city of industry industrial corridor, a gritty, grimy mostly industrialized valley & a region of cheap tacky lquor stores, gritty taco eateries, auto shops, strip clubs, run down slimy ghettos, and lots of immigrant-laden sweatshop processing factories. Plus traffic along the 60 fwy corridor is a constant mess with tons of big-rigs spewing exhaust out into the valley. Adding another room addition will not increase the value of their shack by a penny. They may however rent it out to an illegal or illegals , as there is a vast market out there for undocumented tenants.
Baca in Japanese means stupid. Baca Baca Baca!!!!
peter m - I always enjoy your colorful characterizations of the Southland. You should seriously consider writing a tourist guide for the region.
“peter m - I always enjoy your colorful characterizations of the Southland. You should seriously consider writing a tourist guide for the region”
If I did so i would drive tourists out of LA. I can actually provide a reasonable description of all the areas of La worth visiting and best ways to get to those places but i would be quite honest and blunt about the numerous drawbacks of LA as a place to visit. Malibu coast quite difficult to access even for most LA residents. Santa Monica, Venice, and South Bay beaches quite inaccessible to most tourists and most of these beachside communities not set up as tourist draws ,though Venice has an edgy funky attractiveness.
Hollywood is a joke- tawdry and ragged if u stray a block off the main tourist drag.
Disneyland general area is dull and over- moteled. Unversial studios is oK for tourists but difficult to access except by special tour buses or taxi. La dwtn has few sights worth visiting and plenty of bad stuff to scare off tourists.
IE has nothing worth visiting. OC is safe and clean but rather dull and homogenized except maybe laguna beach area. Huntington beach has nice, clean accessible beachs but is rather dull and unscenic otherwise.
The best parts of LA are out of the basin, out in the deserts, mountains and the beachs past Ventura. Santa barbara is more attractive as a tourist town . San Diego probably has better sights, parks, and beaches than LA region.
No kidding! I work with “everybody.” There are 3 people seriously considering buying NOW, becuase “it won’t go much lower,” and one who did buy a (approx.) 335,000 foreclosure in Santee (AKA Klan-Tee). I even received a phone call from my mom concerned that we would be priced out forever in the very near future. ARGH! Is there no stopping this madness?!? I advised mom of the the next wave of arm re-sets and stated that I don’t think we are at the bottom QUITE yet!
ARM re-set chart:
http://www.bubbleinfo.com/statistics-2007/2007/3/15/arm-reset-schedule.html
Stars End
I have to admit, I’ve lived in California for most of my adult life but had never heard of “Santee” before tonight. But clearly a foreclosure in Santee is worth $335k, the same price that a modest bungalow in Santa Monica fetched in the mid 1990s and likely will again within five years.
No, jbunnii.
Santee is where the San Diego rednecks live. The ones who talk with a drawl, even though drawls have been out of style on the coast for, what, about 150 years now? Stars End isn’t joking when he says Santee is nick-named “Klantee”. Now, I get treated quite nicely when I visit that town. However, anybody other than a Brady relative such as myself might not fare so well.
PS
I used to know a Santee resident who had a palm tree in his front yard. He had to water the tree to keep it alive, and his water bill was $200/month. No joke.
“But clearly a foreclosure in Santee is worth $335k”…um no it isn’t and it ain’t no Santa Monica….But nevermind go out and buy a place there. It’s east of San Diego off the 8. They get to watch the hills burn behind their homes every couple of years and gee they are sort of close to the Coors Amphitheater. That must count for something, right?
Your sarcasm detector no workee.
I have a theory about this: If Humboldt has a bunch of homes at the lower end selling faster than the ones at the higher end, and prices are dropping at the lower end but stubbornly elevated for the rich folks, wouldn’t that mask a price drop overall?
I mean to say that cheaper homes would move off the MLS faster while the overpriced turkeys would stay on, accumulating like rotten eggs in the basket and leading to an artificial glut of high priced homes. This could be one reason why the CAR can report rising median prices even though the stuff that’s actually selling is dropping in price.
Just out of curiosity, does anyone know how they compute median housing prices for a particular month or year?
Yes. The same phenomenon can be observed on craigslist, where the FB houses with ridiculous asking rents just keep reappearing day after day until they are finally foreclosed upon. Meanwhile, those with reasonable asking rents disappear within a week. This pattern makes it appear as if rents are skyrocketing, when they are actually rising at about 25% of inflation.
OMG!! Quick, everyone run to Humboldt and buy, buy, buy before we’re priced out forever!!
Humboldt………who gives a sh*t?
The wife and I went for a nice drive last night; several of the houses here in Eureka that have been on the market for many months are now adorned with “Sale Pending” signs. My wife is a member of Soroptimist International and in her weekly meetings are a bunch of realtors; of course they always put the best spin on things, but they admit that sales are happening faster now than in the last couple of years. I get so angry every time my wife reports back on this…and she is a big believer in the bubble like me.
2nd round of knife catchers. Grab popcorn. Laugh.
Anthony, maybe it’s just me, but your concern sounds an awful lot like a sales pitch. Are we workin’ the ‘ol bull in bears clothing thing here?
Ex, don’t bet on it. I’ve been talking here since late 2005 (probably longer than you). I’m just perturbed at how slow things are moving around here. I wish I could say we were participating in the 30% drop in the rest of California, but we are not. The equity locusts from SoCal keep coming and keep buying. It just pisses me off.
Equity locusts from *SoCal*? Most people I knew in SoCal were baffled when I moved to the Bay Area (”dude, it’s cold up there!”). They whine when they get a bit of marine layer (June gloom) and they think a great place to vacation or own a second home is Las Vegas or Phoenix. I cannot imagine any of them surviving a move to the North Coast!
our local suburban rag of a newspaper is claiming–yep, of course–that we’re different here. On the front page.
oh holy crap, I think I’ll go lie down now.
Jean, what area?
BayQT~
National Public Radio. “Amber Barbosa didn’t graduate college. But she did get an education — by working for the now infamous subprime lender New Century Mortgage Corp.A few years later, she struck out on her own as a mortgage broker. ‘In 2006, I made close to $500,000,’ she says. Not bad for a 28-year-old with no college degree.”
“By then Barbosa, who was living outside of San Francisco, had a nice boat, a 27-foot Bayliner. She had several houses, a Mercedes and a Cadillac. ‘I was riding around in my ‘07 Escalade,’ she says. ‘God, I had three properties at the time — one right on the water with ocean access, another property worth $800,000.’”
Congratulations, Amber. News Flash for you: Your money, your success, your boat and your properties came at other people’s expense.
The housing bubble was a criminal operations from the start. To succeed, it needed the complicity of literally hundreds of thousands of people in the real estate and banking industries. People like Amber who would just assume that a 28-year-old bimbo like herself deserved all she was getting. God forbid someone should ask the question: Here I am, a 28-year-old with no advanced education or specialized training or experience, and I’m living the life of a freakin’ Pharaoh! What’s going on here? Why is this happening? Am I being used for some other end?
You’re a real role model, Amber. Keep up the good work.
Good points. Nice marshmallow job NPR.
What a dim bulb - she had the chance of a lifetime to set herself up for the rest of her life. She squandered the money and squandered her chances.
Not unlike many sports stars.
and strippers
‘and strippers’
Except your average stripper is smarter than this ‘Amber’ is.
“Except your average stripper is smarter than this ‘Amber’ is.”
I once knew a stripper by that name. Other favorite names of strippers are Mercedes, Candy, Mandi, Crystal,
Sammi, Cher, Sunny, and other funky stage names .
You sure do know alot of strippers. I’m jealous
“You sure do know alot of strippers. I’m jealous ”
Quite a few of those strippers have more talent, looks and humility than Britney, Paris and other shallow airhead hollywood hoes. In a different incarnation Paris just might have passed as a exotic in an inglewood tawdry strip joint.
NPR’s ‘news’ has degenerated into a series of poorly-researched editorials. I stopped listening (and donating) about a year ago. I’m not sure there is any journalistic integrity left in America, outside the blogs.
What is really sad is she could have REALLY cashed in.
-She made 500K, one year
-She had what, 3 properties?
-She had the boat
-She had the Escalade. Benz, and Caddy
-Gawd only knows what else, vacay, jewelry, etc.
This woman easily had 2 mil in assets at the height of the bubble, but instead of putting into a home somewhere cheap and living off the interest of the rest of the money, she bought the above.
Well, easy come, easy go.
Still mind-blowing though. Should have moved to flyover area and got a job that paid for the groceries and healthcare. She would have been all set.
How do you know she doesn’t have 500K in cash/investments? Also you have to admire her ambition to build up an extensive network of RE agents to drive business her way. All 20-somethings should be so industrious.
Yes that’s what she was “industrious”. I can thuink of another few pronouns um criminal, avarous, selfish, fraudulant, self absorbed, did I say criminal and fraudulant?
It says in the article that she has lost everything. I’m assuming that “everything” incudes the cash.
“It says in the article that she has lost everything. I’m assuming that “everything” incudes the cash. ”
lazily-acquired and/or dishonest gains rarely last. Lack of discipline coupled with greed and unseasoned/shallow character always ends up with the same result for these folks.
When I meet people like this, I always picture the perplexed looking dumbass standing over a smooth running engine with a nice big wrench in hand. We all know what happens next.
DOC
“lazily-acquired and/or dishonest gains rarely last. Lack of discipline coupled with greed and unseasoned/shallow character always ends up with the same result for these folks.”
That was a pretty insightful vignette.
lol
Instant ‘millionaires’ become instant BK pretty quickly.
Ghad… An extra $500k would have made such a difference to me an my wife.
Now… how many people did she make unemployed?
Got Popcorn?
Neil
This is absolutely true. Those who win large amounts of money with no effort don’t know how to save. They have the mentality that it’s not their money so they waste it. Those who work hard for money understand the value of a dollar. Like me for example, I don’t own a car or any fancy toys. I do buy scented candles from time to time but it’s cheap when it’s 50%+ off
Anyone know about the “and dont be stingy on the mustard” NY Lotto winner who was made famous by a NY Lotto commercial after a huge pay day. Well, he’s BK now. Spent it all, gave it away…etc.
Most people who suddenly strike it rich will squander it as fast as they receive $$ it. This Barbosa gal is a perfect example.
I actually know several people who built up their fortune by being frugal and smart. It the end they probably spend 1 million dollars a year on things BUT they usually make three times as much on interest revenue alone based on the money and investmests they built through the years. A great example on how your money is working for you.
You’re just envious.
Yes, I’ve been longing for a lobotomy all my life.
“I’d rather have a bottle in front of me than a frontal lobotomy.”
anon
I’ve seen that quote credited to Dorothy Parker, but she is one of those clever people that people tend to credit with even more witticisms than she is responsible for.
I know I had read this some where before and recovered it.
Go ahead and get a lobotomy. It will make you a better trader.
“…Each of the patients had a lesion in one of three regions of the brain that are central to the processing of emotions: the amygdala, the orbitofrontal cortex, or the right insular cortex. The researchers presented the patients with a series of fifty-fifty gambles, in which they stood to win a dollar-fifty or lose a dollar. This is the type of gamble that people often reject, owing to loss aversion, but the patients with lesions accepted the bets more than eighty per cent of the time, and they ended up making significantly more money than a control group made up of people who had no brain damage. “Clearly, having frontal damage undermines the over-all quality of decision-making,” Loewenstein, Camerer, and Drazen Prelec, a psychologist at M.I.T.’s Sloan School of Management, wrote in the March, 2005, issue of the Journal of Economic Literature. “But there are situations in which frontal damage can result in superior decisions.”…
Annals of Economics
Mind Games
What neuroeconomics tells us about money and the brain.
by John Cassidy
September 18, 2006
The New Yorker
http://tinyurl.com/45e234
A very nice 6 page article.
Otto: Lobotomy? Isn’t that for loonies?
Parnell: Not at all. Friend of mine had one. Designer of the neutron bomb. You ever hear of the neutron bomb? Destroys people - leaves buildings standing. Fits in a suitcase. It’s so small, no one knows it’s there until - BLAMMO. Eyes melt, skin explodes, everybody dead. So immoral, working on the thing can drive you mad. That’s what happened to this friend of mine. So he had a lobotomy. Now he’s well again.
Why would people tend to reject a bet that would, if given enough time, turn you into a millionaire?
Big V,
People are afraid of taking losses. This is crucial to understanding the mentality of homeowners not lowering prices in this market.
People are stupid about the best financial decision. Even when explained in terms that a 5th grader should understand, the average person will not opt for the best economic opportunity. The end result is inefficiency in the markets (stock, commodity, housing, currency etc.). One persons inefficiency is another’s opportunity.
So, they are not smarter than a 5th grader…
…with drain bramage.
Damn, I’m a legend in my own mind.
Freedom Lover:
Did you read the article? She’s 28 and has to start over. She has no skills, no money, no assets, and presumably no sugar daddy to cover the difference. If she were really smart, she would make sure to keep a sugar daddy on the line, just in case.
She probably has a wealthy Daddy who will withdrawal home equity to get her new life coach business going.
Big V has just validated my ‘make prostitution legal’ argument.
It’s an exchange of goods and services, which could be taxed, regulated, and made safe by modern legislation.
Case in point: The Mustang Ranch near Reno.
If a woman can spend $500 on a hand bag, there is absoutely no reason in God’s green earth we men can’t go shopping for a $300 per hour hooker.
At some point, we’ll get back to actually being fair. But this, time… fair to men.
Um, hey auction heaven:
Women are human beings. You can’t rent them, although you can have a shallow relationship with one.
Huh… So I guess Rent-A-Man is isn’t selling convenience. They’re selling shallow relationships!
More bang for your buck!
Mike
envious of someone who “lost everything?” my goal isn’t to lose everything.
And these are precisely the people that our dutiful Congress wishes to bailout. Funny they never seem to hear about these types of people during their deliberations. BTW, I wrote a nice email to Congressman Bunning thanking him for at least asking tough questions. I’ve been emailing Barney, Dodd, and Schumer weekly scolding them about their actions; alas, it is pointless, but it does make me feel a little better.
That isn’t true. So far most of the legislation is for principal reduction in cases that aren’t all that stretched. That’s why so few are taking that money.
THIS is how scams work..hire the dumbest people you can find on the front lines. They would never hire me,or i would be telling them NO this mortgage is too expensive for you…and be fired.
———————————-
People like Amber who would just assume that a 28-year-old bimbo like herself deserved all she was getting.
“Amber Barbosa didn’t graduate college. But she did get an education — by working for the now infamous subprime lender New Century Mortgage Corp.A few years later, she struck out on her own as a mortgage broker. ‘In 2006, I made close to $500,000,’ she says. Not bad for a 28-year-old with no college degree.”
And Barney Frank wants the US taxpayer to clean up the financial mess created by the likes of this ditz.
It’s a moral outrage.
“NPR checked the property records, and Barbosa really did own those houses. Since the crash of the housing market, though, she says she has pretty much lost everything. ”
I have no pity for someone who made $500k in 2006 and has absolutely nothing to show for it. That is unfathomable to me…
Same here.
I’m all for folks without college degrees finding ways to make good money, even great money, but to see someone like her pi$$ it all away the way she did just drives me insane.
Or even if they don’t have a degree. They could have some sort of really great talent. But her? No.
she was just like a drug dealer, they live large for a while but when it’s over. It’s all gone in no time at all.
Do you have any evidence for that? Serious attempts to study drug dealers have shown that they make so little money that they usually live with their parents. Loan slinging is quite a bit more serious than street drugs.
I have a college degree and I did not make 500k this year. Or last year. Or even before that. It’s late and I’m reading this and I am feeling really stupid for not taking advantage of this opportunity.
If I’d have known, i could have been somebody.
I could have been a mortgage broker.
Seriously, I feel very stupid.
Shoot, I could float Lost 200k for that ranch in Utah, I could afford a space in a parking garage, a rhinestone tiara and a palace in Oil City.
i have squandered my opportunities.
Seriously, I feel very stupid.
Sure, you could have made some *big* money during the bubble… if you don’t happen to be troubled by something called a “conscience”.
You could have royally f**ked over friends, family and acquaintances, all in the pursuit of Almighty Fat Stacks. You could have committed numerous acts of mortgage fraud, lied, misled and shafted people daily. And not just the stupid and greedy (there’s no such thing as being *selectively* dishonest in sales), but also the decent, honest customers.
Personally, I prefer being able to look myself in the mirror vs. having a fortune acquired by criminal activity (and that’s probably why I’m not rich).
It’s astounding that lenders continue to offer equity loans to borrowers who clearly have the attitude that if things don’t work out, they can always default.
Then again, since the Fed seems willing to accept such loans as collateral, maybe it’s not so astounding after all.
Pardon my lack of sophistication, but when the Fed trades good debt for bad debt, how is that different from stealing from the Treasury?
I’ve got a whole bunch of IOU’s written on post-its that I’d be willing to trade for real dollars. I’m sure someone could make a killing selling my IOUs on the derivatives market.
C’mon, such a bargain…anyone? anyone?
What the Fed does with FR notes is entirely its business, and nothing to do with the real US government nor the treasury. If you are sick of being forced to use the Federal Reserve Note system, stand up and do something about it. I personally have advocated a return to US dollars my entire adult life.
What do you recommend I do? I get paid in greenbacks. I would love to get paid with treasury notes, but not sure how to do it…
What the Fed does with FR notes is entirely its business, and nothing to do with the real US government nor the treasury.
Haven’t you heard that the Fed considers asking the Treasury to issue more debt that the government need, because the Fed’s balance sheet is turning to sh**. But go ahead, believe all you want.
I thought they were lending Treasuries.
Man, we ain’t even seen the begnning of this yet. IMO, the last 12 months have just been “loser” fall-out. Now, you take all these middle to upper middle-classers that we read about in these articles who’ve been living on borrowed time through credit cards and HELOC extraction and throw ‘em the mix, well sir we’ve now entered into Phase 2 of the housing bust. These knobs have been living like recovery is right around the corner for some time now, which explains why they’ve leveraged themselves to levels of insanity. They’re thinking they’ll play catch-up once the next around-the-corner boom hits. Rude awakenings galore!!
Ex, I think you nailed it. We have two phase two’s in the hood that will splash in one to two years.
Yup. That’s why I’m saying that we just closed out the 3rd inning, and we’re warming up for the 4th. We’ll be in the 7th when the upper crust starts getting it.
This game is a double header. The second game will probably go extra innings. It will be quite a while before they turn out the lights. (Don Meredith singing in the background: “turn out the lights, the parties over…”)
I think you’re right. ” Loser fallout ” first and now moving on to “it can’t happen here its different” The FED and government have blown all their effort on the first half and will be shooting blanks in the second half.
The ammo they are shooting takes six to nine months to really hit hit the target. By the time the second half starts, it will be too late to do anything. They may shoot some blanks just to look like they’re doing something, but the game will be over except for the formalities.
The maddening thing is that banks really should manage their own risks. Because they are lending other people’s money by selling bad loans as commercial paper, they obviously have thrown caution to the wind and cannot be trusted. Who’s to say that this bailout money is helping shore up solvency (as it is supposed to be) and not just provide the illusion of short term liquidity?
If there is no run on the banks, then they will get a false sense of safety and can start lending money unwisely again in the short-term markets and will wind up speculating again.
I think that the Fed should have done what the UK did to Northern Rock and nationalize the bank, then liquidate the assets at a fire sale. Let Wall Street take the risk AND the losses, not the taxpayers. After all, they started this mess…
I couldn’t agree more. Hopefully a well deserved depression will weed out the fools and change regulations in a hurry when the gubbermint realizes the mess they created.
I just think we have to refocus on the public. They have to be educated about budgeting, debt, basic economics, civics, etc. Most of them hoped to get rich quick and participated in the bubble willingly You also won’t get them to pressure government or the Fed if they don’t even understand what’s going on. There’s not one person on this blog that couldn’t have bought most any house they wanted with liar and exotic loans yet most everyone resisted. You just knew it wasn’t a good deal in the long run. I don’t see why I should feel sorry for anyone that didn’t. Nobody has ever been forced to buy a house.
I would argue that you’ve got it backwards. The classic bank bailout IS supposed to shore up short term liquidity. If they’re insolvent, they’re supposed to liquidated, and the assets used to repay the FDIC for bailing out depositors.
“For the past several years, William Jordan… has been advising clients to pull equity of their homes and put the money into safe, liquid accounts so they have access to the money. He recently advised … Matilda Compean …to refinance her mortgage and take out cash after she was having trouble making ends meet.”
This is a financial adviser? She would have done better by seeing a BK attorney. No reputable financial adviser would have a person strip equity from a home. That is backwards.
“This is a financial adviser? She would have done better by seeing a BK attorney. No reputable financial adviser would have a person strip equity from a home”.
You’ve obviously never read one of Ric Edelman’s books. I wonder whatever happened to that guy anyway?
Ric Edelman has a weekend talk show here in the DC-area, I believe. He is constantly flacking his most recent book. The last commercial I heard he was saying that the stock market would probably be up substantially after the current down market subsides…based on historical averages.
I just googled him. I rarely listen to the radio or watch TV and he does not make it in the financial journals I peruse. What a goof ball and this sells? We are doomed.
I like Suze Orman better. But they’re all a bit Disneyfied.
I have read Ms. Orman, she does have reasonable goals and plans. Although she was late to the housing bubble and credit insolvency crisis, lately she has been giving sensible advice in her columns. “Walk away”.
Yes, Suze Orman is a conservative advisor. The only thing I don’t like about her advice is that she is constantly selling insurance. You end up spending more $$ on insurance than you ever would have on an actual emergency, even if your luck were the worst ever.
It wasn’t that long ago that Orman was advocating that buying a house was the ultimate in creating wealth. Go figure. She and Cramer with his “buy bear stearns” idiocy is the stuff the media is made of. That being said, look for an article about my clients in the SD Union Tribune in the next few weeks.
Doubly so in California where, as I understand it a first lien for primary residence is non-recourse, but a re-finance or second lien converts it to recourse. Of course, I probably don’t understand it.
I heard that recommended a lot over the years at real estate investor meetings, the idea being making yourself appear less sue-able by a tenant attorney who might be fishing for assets. Then park it somewhere safe.
This is worse than criminal, is financial stupidity to the max!
The ’safe’ investment she is advocating return about 5% per year, tops 10%. But the HELOC charges more than 5% per year. So this safe investments return less interest than what it takes to service their HELOC debt!
That is just moronic. Yes, I charge you 10% interest for a loan that gives you 5% back…yeah…idiots…
Implicit in this strategy is an assumption that the loan quite likely will not be paid back.
The advice really should boil down to this:
1. Pull out all the equity available.
2. Put the proceeds in a Swiss bank account.
3. Flee the country immediately to Argentina, Chile, or Uruguay.
Exactly. Most sheeple consider a HELOC to be “free” money, they either assume house prices go up forever or they don’t have to pay it back till they die, by then it’s a moot point, the bank can take the house back, a dead man doesn’t care. Some are starting to assume the bailouts will take care of the mess they created. Could they be correct?
How can it be “FREE” if you’re paying interest on it? That’s what boggles my mind.
The CD is traceable. They’ll freeze her account, then she’ll still owe back-interest, which will come out of her paycheck.
I hope so, those fools need to be punished. If it’s a recourse loan, they can go after her other assets. She may just declare bankrupty then. Would this cost her job?
I never got you have to pay back the Heloc ? in Ca it was not uncommon to use Helco to pay property taxes. “It was the biggest no brainer since the $$$$ ” and I forget how the ad line ended, used to be on the radio all the time in Cali. KNX1070 shill radio of LA
“Everybody — including the lenders and banks buying these loans — looked the other way, Narang says, because the money was so good.”
__________________________________________________________
Now I, and hopefully everybody else, will be looking the other way as lenders and banks lose money for their shareholders. Bonuses for financial employees? Not this year, maybe not next year. Oh, your stock purchase plans and options are underwater? Join the club. Reality is setting in and be thankful if you still have a job at the end of summer.
“Bonuses for financial employees? Not this year…”
Yes there will be large bonus this year. And in some banks that will show an annual loss the bonus will be larger than last years. Fact of life in Wall Street. The logic will be “Without Mr (insert name here)’s brilliant plans, our great financial institution would have lost even more money.” This will be written in banker speak to make it seem like they actually know what they are doing.
Seen this story before. Trust me, the bonus pool money, which everybody thought was safe, will be used to keep the company afloat through this rough patch. Employees will whine about the injustice, but then look around and see all the rest of their financial buddies without jobs. A demoralized workforce is just around the corner and they will learn that “Gratitude, not attitude” becomes the new company motto.
Time will tell my friend. Seen it both ways. It has been a long time since a bonus was halved.
Hey maybe they could give all the foreclosed houses away as bonus this year. Solve 2 problems.
“Hey maybe they could give all the foreclosed houses away as bonus this year. Solve 2 problems.”
I love it Hoz! All bonus payments in marked to model McCrap paper distributed to the skim meisters.
You’re both right, I think. The top dogs and the well-liked and well-connected will be just fine with the usual bonus pool. As in we need joe blow and john schmoe whose skill and integrity enabled us to have the third smallest write-downs in the third quarter…or words to that effect. The carnage is among the plankton,who are being laid off in rolling RIFs, mid level, support departments, and anyone whose political alliances at the firm on on the wrong side of the fence. Large numbers of those being dumped on the sidewalk, at Morgan Stanley, were not even bonus eligible to start with. Oh and salary caps and reduced benefits for the surviving plankton. Hey, if they’re scared, they won’t say squat, and where are they gonna go for another job anyways…everybody lays off at the same time. So it goes.
Why would anyone think of taking on more debt at a higher rate than they would get by saving that money, esp. against the house.
Okay, that 3% student loan pays for itself if you are earning 4-5% on the CD against it.
In this case, I know those HELOCS were running 8, 9, 10%+ and people are socking it away for a raining day.
Come on!
Here is what you do. Cut all your unnecessary costs. Start saving. I know it is a new idea, but save! Ask the family for help. You might get lucky and get a gift at best, lower interest rates and more time, at worst.
However, taking out 60K at 10% against the house to sock away at 4-5% makes no sense at all.
Smartest. Person. Of. The. Day.
It makes complete sense if the house goes totally under water, you have no income and finally defalut on the HELOC after you skip town for … well… where is it difficult to locate you and you can live on cash? Mexico, Canada?
Makes total sense.
Exactly.
She can’t hide the money in a CD. Your scenario only works if she buries the $$ in a hole in the ground.
I agree, IMO, it’s implied that the house is probably going to be foreclosed on anyway, and with all the news about HELOCs getting cut off, why not grab the last of the line while the stupid bank keeps the spiggot on? Parking the booty in a CD is a really dumb idea though.
Aw, Dan, cut them a break. After all, cutting costs and saving are to-o-o-o ha-a-a-ard.
Exactly. Most sheeple consider a HELOC to be “free” money, they either assume house prices go up forever or they don’t have to pay it back till they die, by then it’s a moot point, the bank can take the house back, a dead man doesn’t care. Some are starting to assume the bailouts will take care of the mess they created. Could they be correct? (repeat, very important post)
There’s something in this. Certainly the “financial advisors” (make that financial products salesmen) have tried to mark as passe the idea that owning your house free and clear should be part of how you save for retirement. House payments forever is more their idea.
“So, in January, she refinanced her mortgage and pulled out $60,000 in equity to purchase the automobile and set aside an emergency cash cushion.”
It seems the vast majority of these Sob stories have tidbits like these: obvious signs of people making rather poor financial decisions. What? Your daughter totaled her first car and you HAVE to but her another? Say it ain’t so…
“Theresa Leick of San Juan Capistrano, Calif., a loan processor, pulled $21,000 from her available home-equity line of credit in February to park in a certificate of deposit.”
This is not smart. I’m sure she’s paying more on that HELOC than she can get in a CD. CDs aren’t protected in bankruptcy, are they?
All the mission bells will ring
The chapel choir will sing
The happiness you’ll bring
Will live in my memory
When the swallows come back to Capistrano
That’s the day I pray that you’ll come back to me
Hoz
That song is a bit before my time, but it is the heart of south orange county and a lovely area.
I liked your Vanguard ideas.
Does you ever get that sinking feeling when your stocks go down?
I never heard my mom complain when her home’s value went down.
Why all the chaos now?
Test Test
Just be grateful you did not hear me singing.
“Does you ever get that sinking feeling when your stocks go down?”
I know that song also.
“I’m on my way’ but my hands are tied
I’ll try and try some more, until I’m free
Know what to do, but the chosen few
Stand in the way, they’ll never leave
I have got this sinking feeling
Buried in the pit of my gut
I have got this sinking feeling
I can feel it up in my throat.”
You do not know fear until a stock you are long opens down 50 points. Teledyne
I’m sure she’s paying more on that HELOC than she can get in a CD. CDs aren’t protected in bankruptcy, are they?
No, but the HELOC spigot is about to be cut off, and she probably has no savings–so the goal is to get money out now while she can, so she has a cash cushion for what she knows is an impending financial disaster. Assuming California is a no-recourse state, once the house goes into foreclosure, she has the cash, and the bank can’t recover the deficiency from the “equity” she stripped. Assuming she can keep up with the rest of her debt and avoid bankruptcy until the cash runs out, her little scam should work well . . .
HELOCs are recourse. They will take it from her.
Assuming it’s still there.
Then they’ll get it from her pay check.
Assuming that’s still there.
Don’t forget, she spent part of that $$$ to buy her daughter a car. Not the smartest thing, borrowing for a depreciating asset, especially one that you don’t even own.
The real scenario? Get all you can, park the $$$$ in your kid’s name, and BK out of the house and HELOC.
Have to say my financial advisors would blanch white and scream NO NO NO if I had approached them with that scenario. But then, I’ve got a bunch of stodgy bank people who are extremely grumpy at holding more than a minute fraction of one’s wealth in property. Yah, I think I’ll stick with my 4.5% munis bought way back when kicking off a nice income stream….
“The 54-year-old client-services manager began working extra hours last fall to help pay for higher household expenses, such as gas, and to save money to buy a car for her daughter, who had recently totaled her car.”
I have a better idea. Maybe you can go ahead and let your daughter work to buy herself a new car. Then maybe she won’t total it.
And you’re telling me there was no insurance money ?
No shit. Sometimes, I wish I were a reporter just so *I* could ask these types of questions.
Olivio says she is coming to terms with the fact that she could soon lose at least one of her two homes.
What gets me is the reporter doesn’t address why exactly someone working at a patio-covering company owns two houses, as if its just normal for everyone to own 2 or more houses.
Because no one, okay a few, in this country ever ask the hard questions.
Because the reporter has to be PC and doesn’t want to say, “You dopey buyer. You work here and should be renting.” The PC police would be out in force.
You see, we are so soft in this country. Easy way for everything. No more common sense. It’s all been thrown out the window or under the bus, whatever you like.
How many of these stories do we have to read? I love this blog, but it is always the same. Some nitwit wanna-be Trump buys 10 homes and is an asst. manager at MickeyD’s. Criminey, that is just a joke.
Again, if anyone calls them on it, that person is labelled jealous, non-loving, whatever you like.
Hard love went out the window a long time again.
It isn’t about being able to afford things in life. It is about how we feel about owning them and how others see us with them.
Well very soon the only things you will want is canned soup and a fire.
It is coming and Neil’s got popcorn is soon to be Got Job? or Got food?
The resets have begun again, look at the charts for this year. There is no way in he!! that Wall Street can survive another August like last year, which is coming as all the resets make their way through the system in the next 4-5 months.
If the Fed bails these boneheads out again, you can kiss the entire US economy goodbye.
Therefore, despite the inflation, I would argue, get out of debt. Don’t be tied to anyone unnecessarily. Also, a good supply of food and water or access to both would not be a bad idea either.
I know most of you think I am alarmist, but just remember this…
If I have $100 and it doubles I have $200, but if that $200 loses just 50% I have only the original $100. So what is my point, you ask? When the rainy day comes it will hurt ALOT AND TAKE AWAY YEARS AND YEARS’ WORTH OF GROWTH!
Remember it is easier to destroy than create.
Rant off.
Going home for the day, now. See ya’ all tomorrow!
And shouldn’t selling the excess house have been the “first step” when she lost her job?
“Amber Barbosa didn’t graduate college. But she did get an education — by working for the now infamous subprime lender New Century Mortgage Corp.A few years later, she struck out on her own as a mortgage broker. ‘In 2006, I made close to $500,000,’ she says. Not bad for a 28-year-old with no college degree.”
And the difference between this and all the stories we’ve ever heard about drug dealers is?
Oooh. Pick me, I know:
Amber was hustling LEGALLY!
“Everybody — including the lenders and banks buying these loans — looked the other way, Narang says, because the money was so good.”
And what is the difference between Narang’s activities and those of a child-porn peddler?
It seems quite obvious that today’s CA story has divided us on the issue of sweet lil’ Amber and the equity extraction.
I for one am sticking with my analysis. You guys who think Amber has 500K stashed and would agree with taking 100-300K in equity, defaulting, and then running to Canada or Mexico are more reasons why this bubble got so enormous. Also, I question your ethics since someone has to pay for this craptastic sh!tload of money!
You guys who think Amber has 500K stashed and would agree with taking 100-300K in equity, defaulting, and then running to Canada or Mexico are more reasons why this bubble got so enormous
BS, people only behaved rationally - the banks threw free money at them and options to strike rich in appreciation game, and they quite rationally took it. So, the real reason for the bubble was that lenders behaved totally dumb and now deserve everything coming their way.
BS, to you!
Look at all the illegal cash-back deals. People getting 200K at closing. Where have you been?
DO NOT LAY THIS ALL AT THE FEET OF THE FED AND LENDERS.
Buyers and sellers played along too.
I’m with you, OC. None of the public was forced to do any of it from buying a house they couldn’t afford to extracting all the equity, tax free and blowing it. We all could have done it, but most of us here chose not to.
She doesn’t have it stashed. She can’t think that far ahead. She won’t go to Canada or Mexico. Mexico is stinky and Canada is cold. She’s better off here.
The Housing ATM used to fuel L.A./O.C.
Loans that were to be paid back on the 12th of never…
“For the past several years, William Jordan, president of a financial-planning firm in Laguna Hills, Calif., has been advising clients to pull equity of their homes and put the money into safe, liquid accounts so they have access to the money. He recently advised one of his clients, Matilda Compean of La Mirada, Calif., to refinance her mortgage and take out cash after she was having trouble making ends meet.”
” many people are turning to credit cards and tapping more of their home-equity lines of credit to dig themselves in deeper. Theresa Leick of San Juan Capistrano, Calif., a loan processor, pulled $21,000 from her available home-equity line of credit in February to park in a certificate of deposit.”
“‘I’m fattening my reserves in case I have to go look for more work,’ says Ms. Leick, who says she is concerned about losing her income because she works in the mortgage business. She says she would have preferred not to have tapped her home-equity line, ‘but if the bank takes away my comfort zone, that will make me lose sleep at night.’””
HELOC is almost free money. If the gubbermint bails them out then it’s free money free of taxes too. Do you think there will be mass forgiveness of principles? If so, it’s stealing money from all the savers and tax payers and handing it over to the FB’s. Some of them buy another house for 2/3 the price then let the HELOCed house go back to the bank. Almost the same as forgiving the principle. Still others bought the house for 1/3 of what it’s worth and the HELOC is selling the house to the bank before the bogus equity evaporates.
When this madness is over, expect thousands upon of thousands of HELOC houses to be auctioned off for pennies on the dollar. No bank in their right mind should offer HELOCs in this market!
No reason to forgive HELOCs. Accounts will be attached; pay will be withheld; The Piper will have his day. Don’t worry Bye, the bailouts will have a temporarily positive effect, ending on a decidedly note.
“Sour” note.
“‘It’s a huge issue,’ said Dilworth, who owns a home with his wife in the Excelsior district, ‘but I don’t know if it’s anything that can be dealt with because it’s an issue of supply and demand, and there are people willing to pay the high prices.’”
Dilworth?
“You can delegate personal duties, but you can’t delegate the responsibility for values. It’s our signatures on the documents.”
Deborah Dilworth
“You can delegate personal duties, but you can’t delegate the responsibility for values. It’s our signatures on the documents.”
Deborah Dilworth
apologize if this is a repost. Just to pretty a quote to omit.
Dilworthless.
Nilworth…
‘extreme short sale.’
This is my new favorite phrase.
Hello Barney, how do we help these folks?
Should we give them an extreme bailout to go with their extreme loan?
Pass the brownies.
“Yuba-Sutter’s unemployment rate weighed in at 12.2 percent — the third highest among U.S. metro areas. High jobless figures help out Sam Steadman, a staffing and training manager, in his near-constant search for qualified workers.”
Isn’t that higher than the national unemployment rate during the Great Depression?
The Big D unemployment rate went up to 25%.
Unemployment during the Great Depression (according to our govt.) was in the neighborhood of 25%. Who knows what formula was used for that stat.
The current unemployment stats are life/death computer modeling, and BS. 5%+ is hogwash.
I looked at a house in Saratoga CA on the weekend. It got 9 offers yesterday! I don’t know the final price but it was over asking. (which of course is not that meaningful, since the asking was obviously low - if I listed my car for $5 I’d get multiple offers too.) Nonetheless there is obviously demand for houses in saratoga. So still waiting for the crash to hit the above-median towns around here. Maybe these people will realise that they can’t afford these houses, I guess they didn’t get the memo yet.
OTOH, poorly situated houses even in good towns linger. A house on Monojera in Los Gatos has been on the market since December, reduced now from 1.399 to 1.24. A perfectly nice house about 2400 sqft but the location is not that good. At the end of a long road which goes under the 85 freeway, so kind of loud, and not that convenient.
Sounds like “river noise”.
Give me crickets and give me birds but don’t let me hear cars, trucks, motorcycles or sirens.
Realtor called me today and he said the same thing. Mulitple offers on houses, great time to buy, market is in the up and up. Geez. I just flat out told him that he was wrong then and he is still wrong now. He took it like a champ.
One summer in the early 90’s I worked for a landscaper in Saratoga/Los Gatos. Back then you could still get a very nice home for around $300k. There is still demand there–but as the price drops on the valley’s east side, it will flow through to the west side.
By the way, I’m having trouble with my magic 8 ball. It looks like it’s starting to fog up from the inside… It’s starting to affect my thinking…
How do you know it got 9 offers?
my agent talked to the selling agent.
it is true that she could be lying. but historically, when she told me something like this, the house did actually sell for more than asking when the sale was recorded.
Perhaps the selling agent bought the house to preserve the illusion of multiple offers
You should ask to see copies of all the offers. Real-estate agents lie all the time. Besides, who cares how many offers she got? Of course she will get multiple offers if she prices below market. I’m sure they got less for it this year than they would have last year, and next year the market price will be lower still.
“I looked at a house in Saratoga CA on the weekend. It got 9 offers yesterday!” and then later “…the house did actually sell for more than asking when the sale was recorded.”
Sorry, please explain. Looked at last weekend, sold and recorded. Just does not make reasonable sense to me.
“but historically, when she told me something like this, the house did actually sell for more than asking when the sale was recorded.”
Sorry for my unclear note. I did not see the selling price for this house yet, as it has not recorded yet. As Hoz noted, it’s not reasonable to happen that fast. What I meant was, in the past, when my agent told me that a house sold with multiple offers (including higher than my offer), I could later verify that the house did in fact sell for more than the asking price and more than my offer.
I have not verified in this particular case, but I have no reason to doubt that it is the case and I’ll know when it shows up in the SJ Mercury News in a month.
Gracias Senor Silicon Dioxide
Trusting the San Jose Mercury News. That is brave.
I just read this again and it was pretty whiny. so let me flame myself a bit.
I’m just annoyed, everywhere in the US seems to be crashing except for the swath of land from Los Gatos through Saratoga and Los Altos to Palo Alto. very strange.
Take heart, Mr Sand. The areas where I want to buy haven’t gone down yet either. Those of us that are looking to buy really good properties at a great price just have to be patient. And have lots of dry powder ready when the time comes.
A glance at Redfin’s nifty mapping features tells the story; only about 8 listings per square mile.
This is primo property that has always been ~very~ unaffordable for the first-time buyer (sans IPO winnings).
BTW, it won’t be a memo that heralds unaffordability, it will be resetting prime ARMS. Think “2010″.
The San Francisco Chronicle. “Given the mortgage crisis, the flood of foreclosures and soaring fuel prices, it is not surprising that the economy was rated the region’s top problem, said Steve Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.”
Is this a joke? Are people really getting paid to continuously study the economy of Palo Alto?
he studies the ca economy and lives in pa
Anabolic Loanoids
“Anthony Narag worked as a loan officer for several different mortgage brokerage outfits in Southern California. He says everybody in the industry knew there was fraud all over the place: ‘It’s almost like baseball with steroids. They knew about it, but they didn’t do anything about it.’”
Or:
Steeroids
Any one ??-
Do we know of any study, or research to see the parallel of the current real estate market in the US/San Diego - versus that of Japan/Tokyo/Yokohama…? It should be interesting to see the similarity. As such, the housing price in Japan is still down and has not come out of the water for the last 15 YEARS - I need to capitalize YEARS for all of us to see the magnitude of this current market.
If I were an investor today - I would short all the financials institutions and bank stocks.
We have not seen any thing yet, THIS IS ONLY A START.
“For the past several years, William Jordan, president of a financial-planning firm in Laguna Hills, Calif., has been advising clients to pull equity of their homes and put the money into safe, liquid accounts so they have access to the money. He recently advised one of his clients, Matilda Compean of La Mirada, Calif., to refinance her mortgage and take out cash after she was having trouble making ends meet.”
I work in the financial industry and this has to be the worst financial advice I have ever heard. Hopefully, he has a professional association which will strip his designation. It’s like telling a heroine addict to stock up on his smack before the drug dealers are locked up in a police sweep… Incredible…
“‘I’m fattening my reserves in case I have to go look for more work,’ says Ms. Leick, who says she is concerned about losing her income because she works in the mortgage business. She says she would have preferred not to have tapped her home-equity line, ‘but if the bank takes away my comfort zone, that will make me lose sleep at night.’”
I suppose there’s some reason why she hasn’t SAVED any money, despite having worked in an overpaid, booming industry?
“Finally, in February of this year, his house sold for far below MARKET VALUE in what Kessler described as an ‘extreme short sale.’ A group of local investors picked up the property for $113,000.”
“You keep using that word. I do not think it means what you think it means” Inigo Montoya, Princess Bride
Folks, I’m here to tell you that when the “economy” is the #1 concern in Marin County vice transportation or the wine selection or the limited color options in the latest Lexus or BMW series, then we’re all in for some serious hell… say it ain’t so !!
“‘Anybody who says that there’s a Redwood Curtain, that we’re special, that we’re immune — they’re lying,’ he said.”
My sentiments exactly.
“The bottom line is that this administration is the owner of the worst jobs record since Herbert Hoover.” (Senator Charles Schumer, Press Release, March 7, 2008)
Key Labor Market Statistics in 1996 and 2008
1. U.S. Unemployment Rate
5.5% March 1996
5.1% March 2008
2. Number of Long-Term Unemployed
1.33 million March 1996
1.28 million March 2008
3. Average Weeks Unemployed
17.3 weeks March 1996
16.2 weeks March 2008
4. Median Weeks Unemployed
8.3 weeks March 1996
8.1 weeks March 2008
5. Not in Labor Force because discouraged over job prospects
451,000 March 1996
401,000 March 2008
6. Democrats calling for Extended Unemployment Benefits?
No March 1996
Yes March 2008
7. President’s Party Affiliation
Democrat March 1996
Republican March 2008
Now that the Democrats unanimously agree along with most of the MSM that the economy is in catastrophic condition, the worst in modern times; since the Great Depression, according to at least Shumer, the ball is indeed rolling to hand over billions of $$$ to every clown who somehow mismanaged their personal finances.
Of course for the Democrats, the FACTS are meaningless - by several key measures, the economy is BETTER than in the Clinton era - but facts like that don’t square with the hard wired notion in Democrats that EVERYTHING during the BUSH era was the WORST ever known. But I’m not here to applaud Bush. I’m here to tell you that the Democrats going into money giveaway orgasm ought to REALLY get interesting in 6 months or so, when the DEPRESSION economics begin to take hold. It is WHEN joblessness doubles and doubles again, not IF. It is WHEN you have food and fuel riots in the cities, not IF.
It is WHEN the “Homeland Security” measures are used to relocate American indigent and dissidents to “camps”, not IF. Anyone who thought recently that, wow, things are getting nasty out there; rest assured, these ARE the good old days. “Joblessness” is about to climb skyward. Hard times, Depression times, are gathering and swirling like a Category Five big red disc on your T.V. screen, headed for your hometown; and all the busses are parked in neat rows, the drivers laid off, out looking for work, work that just disappeared in the haze of budget cuts.
Got savings - you’ll need ‘em
by several key measures, the economy is BETTER than in the Clinton era
Such as?
Key Labor Market Statistics in 1996 and 2008
1. U.S. Unemployment Rate
5.5% March 1996
5.1% March 2008
2. Number of Long-Term Unemployed
1.33 million March 1996
1.28 million March 2008
3. Average Weeks Unemployed
17.3 weeks March 1996
16.2 weeks March 2008
4. Median Weeks Unemployed
8.3 weeks March 1996
8.1 weeks March 2008
5. Not in Labor Force because discouraged over job prospects
451,000 March 1996
401,000 March 2008
The March 2008 US unemployment rate is 5.1%. These numbers don’t look right.
Straight Talk Express derails:
McCain, in Shift, Asks Government To Step Up in Housing Crisis
By LAURA MECKLER and ELIZABETH HOLMES
April 11, 2008
http://online.wsj.com/article/SB120787102559206453.html?mod=hpp_us_whats_news
John McCain called for an aggressive federal government role aimed at stabilizing the housing market, rejecting a largely hands-off approach he outlined two weeks ago.
The likely Republican presidential nominee’s prescription included a heavy dose of policy more typically associated with Democrats, as he sought to show voters he understands their economic pain. Most significantly, he urged the federal government to guarantee new mortgages for homeowners at risk of foreclosure.
The plan “offers every deserving American family or homeowner the opportunity to trade a burdensome mortgage for a manageable loan,” he told New York-area small-business owners Thursday.
The plan’s price tag is estimated at anywhere between $3 billion and $10 billion.