Disgruntled, Angry Owners And The Virtual Casino
Some housing bubble news from Wall Street and Washington. MarketWatch, “Housing starts plunged in March to the lowest level in 17 years. Home starts by U.S. home builders plunged 11.9% to a seasonally adjusted annual rate of 947,000 in March, the Commerce Department reported Wednesday. Starts were down 36.5% compared with March 2007. Read full government report. Also, building permits dropped 5.8% to 927,000 in March, 40.9% below the same month a year ago.”
“‘This report, while painful, implies healing in the sector,’ because at least builders aren’t digging a deeper hole, wrote economist Robert Brusca.”
“Last month’s single-family starts dropped 5.7% to a seasonally adjusted annual rate of 680,000 homes.”
The Commerce Department, March 26, 2008. “Sales of new one-family houses in February 2008 were at a seasonally adjusted annual rate of 590,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.8 percent (±15.0%)* below the revised January rate of 601,000 and is 29.8 percent (±9.6%) below the February 2007 estimate of 840,000.”
“The seasonally adjusted estimate of new houses for sale at the end of February was 471,000. This represents a supply of 9.8 months at the current sales rate.”
From CNBC.com. “RealtyTrac said there were 234,685 foreclosure findings in March, up 5 percent from February and 57 percent from March 2007.”
“The report, found, though, that the rate of increase for auction notices far trailed those for default notices and bank repossessions, showing the escalation of a recent trend for homeowners.”
“‘On a year-over-year basis, default notices were up nearly 57 percent and bank repossessions were up nearly 129 percent, but auction notices were up only 32 percent, indicating that more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender,’ James J. Saccacio, RealtyTrac CEO, said.”
“With no equity in their homes and no particular desire to meet their financial commitments, folks are just leaving the keys in the mailbox.”
“I stood in front of a foreclosed home on a sunny corner in West Palm Beach, Florida today. The abandoned house was empty and worn, its overgrown lawn covered in trash, a sorry sight in an otherwise well-kept neighborhood.”
“I don’t know the particular story of that particular house, but I do know that plenty of folks are leaving homes like it behind, and leaving a financial mess along with it.”
From Reuters. “JPMorgan Chase, fresh from scooping up a rival investment bank, Bear Stearns, saw earnings drop 50 percent in the first quarter as it was hurt badly by market turmoil and heavy credit losses.”
“The bank also set aside $5.1 billion to strengthen its reserves by $2.5 billion and to account for $2.6 billion in losses in its loan portfolio.”
“Mortgage and credit card losses have ballooned, especially in areas like Arizona and Florida where housing values have plummeted and foreclosures have risen. Bank executives set aside more than $1.1 billion to cover future home equity loan losses. But they are expected to continue to rise.”
From Bloomberg. “JPMorgan Chase & Co. CEO Jamie Dimon said he expects U.S. home prices to drop as much as 9 percent this year as even borrowers with the best credit are having difficulty keeping up their mortgage payments.”
“‘Real estate is getting worse,’ Dimon said in a conference call today with investors. ‘Home prices we still expect to go down.’”
The Associated Press. “Washington Mutual, the nation’s largest savings and loan, said Tuesday it lost more than $1.1 billion in the first quarter as the struggling economy and flagging real estate values pummeled the bank’s borrowers.”
“Washington Mutual said it needed to set aside $3.5 billion to cover bad loans in its $250 billion portfolio during the first quarter. The bank set aside less than half as much to cover bad loans in the year-ago period.”
The Street.com. “Washington Mutual director Mary Pugh has resigned, the company said Tuesday at an annual shareholder meeting marked by investor anger over the company’s alleged missteps in the housing and credit crises.”
“CtW Investment Group, an activist pension fund investor, and other activist investors had called on shareholders to withhold votes for Pugh, chairwoman of the bank’s finance committee and a director since 1999, and fellow Director James Stever.”
“CtW alleges that as heads of WaMu’s committees responsible for risk management oversight and compensation plan design, the two directors ‘bear responsibility for Washington Mutual’s failure to recognize and act in a timely manner on the risks to shareholder value presented by the housing bubble,’ it said in a March letter to other WaMu shareholders that was also released to the public.”
“In addition, CtW alleged that the two directors played a part in ‘attempting to insulate executive bonuses from the consequences of this risk management failure.’”
“Standard & Poor’s on Tuesday said it may cut $57.1 billion of subprime-related debt due to continuing delinquencies and a worsening outlook, the rating company said.”
“‘Today’s rating actions incorporate our most recent economic assumptions and reflect our expectation of further defaults and losses on the underlying mortgage loans,’ S&P said in a statement.”
“S&P said it is reviewing loss expectation for more than 17 percent of U.S. subprime debt deals issued in the first half of 2007, due to the latest delinquency trends, loan risks and deterioration in the rating firm’s macroeconomic outlook.”
“The Securities and Exchange Commission will soon propose more rules to police credit rating agencies, SEC Chairman Christopher Cox said on Wednesday.”
“Credit raters have been criticized by investors, regulators and lawmakers in recent months for contributing to the U.S. subprime mortgage meltdown by issuing inaccurate ratings on products backed by subprime mortgages, and for lowering ratings too slowly after the products performed poorly.”
“‘We will shortly propose additional rules building on the lessons learned from the subprime market turmoil,’ Cox said. New rules would affect rating companies such as Moody’s Corp and McGraw-Hill Cos Inc’s Standard & Poor’s.”
The Buffalo News. “M&T Bank Corp. CEO Robert G. Wilmers, citing ‘the extraordinary time in which we find ourselves,’ called Tuesday for the re-establishment, in modern form, of a Depression-era government agency to rescue 3 million mortgage borrowers who are behind on their loans.”
“Speaking to more than 200 executives, employees and shareholders at M&T’s annual meeting, the widely respected chairman of the Buffalo-based bank said the nation is facing a ‘crisis of confidence in the financial services industry.’”
“Critics say the government should not help people who stretched to buy more than they could afford, speculated on property as investors, or lied on their loan applications.”
“‘The toughest problem — one that didn’t seem to be an issue in the 30s — was the extent that people got into mortgages they shouldn’t have gotten into and don’t deserve help,’ said Bert Ely, a regulatory consultant in Alexandria, Va. ‘There’s real concern that the people that would be helped out in this program were the ones that were least responsible financially.’”
“Wilmers noted that where commercial and savings banks held 71 percent of all private loans in 1978, that has now fallen to just one-third of more than $18.7 trillion in credit. That’s a result of the slicing, dicing and repackaging of loans by Wall Street and the involvement of new players like mortgage brokers and hedge funds.”
“‘Over an extended period of time, a great many extremely smart and sophisticated people conspired — without intending to do so — to put our overall financial system at serious risk,’ Wilmers said. ‘All the elements were put in place to turn our financial markets into a virtual casino.’”
The Columbus Dispatch. “The foreclosures keep coming, which means more vacancies, which mean more thefts. March was the worst month in memory for Franklin County, with 906 foreclosures. January had 904.”
“The average foreclosed home stays vacant for five months nationwide, said Tom Popik, who designed a national survey for Campbell Communications in Washington, D.C. During that five months, half of those homes sustain some kind of damage.”
“Some, he said, is at the hands of angry owners who damage their homes when they lose them to foreclosure.”
“For now, real-estate agents and investors are stuck. Some board up the houses, which angers the neighbors. Most try to make friends with the neighbors, hoping they will keep watch on the property.”
“Some have even tried paying the neighbors to watch, said Dave Zehala, executive director of the Columbus Real Estate Investors Association. But the thefts continue. ‘It’s a significant problem,’ he said.”
The Union Tribune. “In Encanto, where the median price of a resale home slid nearly 38 percent last quarter compared with a year earlier, foreclosure sales have been on the rise, said real estate agent Steve Lemack. Making matters worse, many disgruntled owners who have lost their homes have stripped them clean, depressing prices further, he said.”
“‘We had one house where the bank offered the tenants $2,500 relocation assistance, but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. They even dug up the trees in the backyard,’ Lemack said.”
“‘I could’ve sold it for $250,000, but we sold it for $200,000. So when other agents get comps, they use lowball comparisons to push properties down further,’ he said.”
and this w only 2 month till the 2nd half when we’re to be boomin again
http://biz.yahoo.com/ap/080416/fed_economy.html
Stimulus man…. The $125 billion is going to replace the $500 billion people were getting from their house…. Don’t you know nutin’?
Tuesday for the re-establishment, in modern form, of a Depression-era government agency to rescue 3 million mortgage borrowers who are behind on their loans.”
how many welfare housing agencies and programs are there now ?
20-50- one hundred ?
“re-establishment…”
this fool is a bank president who directly caused this mess to occur.
Apparently too stupid to have andy shame !!!
“When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” ~P.J. O’Rourke
but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. They even dug up the trees in the backyard,’ Lemack said.”
It’s interesting how these “owners” have the energy to perpetrate all this damage, but they couldn’t summon up the mental focus it took to read through their loan documents or do a simple affordability calculation ahead of time.
And what did they ever own but a mortgage they couldn’t pay off…
They didn’t have the energy to buckle down and sell the place, or take a second job, or rent out a room either.
Wrote Thomas Hobbes:
“All mankind [is in] a perpetual and restless desire for power… that [stops] only in death.” Consequently, giving power to the individual would create a dangerous situation that would start a “war of every man against every man” and make life “solitary, poor, nasty, brutish, and short.”
Thomas Hobbes: A short biography
And they are such incredible morons that they never figured out the $2500 check was more then they would ever get for all the stuff they stole.
They don’t care–the goal is to “punish” the bank for taking away “their” house. Generally, the kind of people who take on $500k $0 down ARMs based on $60k household incomes tend to rely more on emotion than reason in their decision-making.
The FB’s were definitely trying to destroy the value of the property so the bank would get less money back. Not even the landscape was spared. How much does a dug-up tree sell for on the black market?
I doubt if they can sell a lot of what they take–do salvage yards even want the ripped up plastic baseboard from a tyvek McMansion? They’ll probably just drag it with them to their parents’ basement as a reminder of how they were “defrauded” and “wronged.” It’ll reinforce their sense of victimhood.
Ah, but it was the granite counters that drove them to it. They can recycle them into headstones.
Virtual casino baby… virtual casino!
Lose the bet, try to snag a few chips as you walk from the table.
That’s why there is no point in trying to bail out the FB’s . Would any of these FB’s admit that they took the house because of the no down payment and the prospect of making easy money .
It’s interesting how these “owners” have the energy to perpetrate all this damage, but they couldn’t summon up the mental focus it took to read through their loan documents or do a simple affordability calculation ahead of time.
That’s a silly comment, Phillgal.
What do you mean doing a check on “affordability”?
NO one cared about affordability. They were interested in their “appreciation”. Their Realtor(tm) told them if they didn’t buy the most expensive house they could “get in”, then they would loose out on the housing boom. Remember? The David Lereah Housing Boom that won’t bust. Everybody was buying to get in on the easy unearned income. Bid Wars were going on.
That’s the definition of a mania.
The government should have stopped it.
Instead, our idiot President took credit for “more people owning homes than ever in the history of America.”
And, remember, when the bill comes due, you can just refinance or cash out your equity.
How could you lose???
“the bank offered the tenants $2,500 relocation assistance”
“Tenants”? Freudian slip? Effectively these folks were just renting a house from the bank with no damage deposit or credit check required.
Graves only need to be 6 feet deep…
“‘This report, while painful, implies healing in the sector,’ because at least builders aren’t digging a deeper hole, wrote economist Robert Brusca.”
Standard 6ft grave depths are a luxury made possible by a functioning civilization :-).
Soon there will be pull carts rolling through the streets, “Bring out the keys….”
For the next 500 years kids will be singing:
“Ring around the dead debt.
Pocket full of posers.
Mortgage, mortgage. All burn down.”
without understanding what it is about.
brilliant
Absolutely brilliant.
Gonna teach that to everyone in my family under age 8
I recently saw on the PBS channel, that this child’s song referred to the “black plague” in Europe, what 12th-13th century. The poseys referred to the marks on the body before death.
Just something I heard and had no idea as a kid when we sang it.
How did it go?
Ring around the rosey
A pocket full of poseys
Ashes, ashes, we all fall down.
is that it?
That’s the Americanized version. The “real” version goes:
Ring-a-ring of Roses
A pocketful of posies
A-Tishoo, A-Tishoo
We all fall down
‘Last month’s single-family starts dropped 5.7% to a seasonally adjusted annual rate of 680,000 homes. The Commerce Department, March 26, 2008. Sales of new one-family houses in February 2008 were at a seasonally adjusted annual rate of 590,000′
‘RealtyTrac said there were 234,685 foreclosure findings in March, up 5 percent from February and 57 percent from March 2007′
As long as I have been doing this I have pointed out how much overbuilding has been going on. And it continues with the added problem of hundreds of thousands of forecloures.
Wake up Washington and MSM! These guys will continue to flood the market until prices fall, and anything you do to slow that will only cause more foreclosures.
More foreclosures means more crises down the road, and more crises means more opportunities for pols to show the voters how much they are doing to fix problems. Makes perfect sense to me…
“‘This report, while painful, implies healing in the sector,’ because at least builders aren’t digging a deeper hole, wrote economist Robert Brusca.”
Wait… what were the sales????? If they are still building more than they are selling, then they are still digging a deeper hole!
Falling starts is NOT enough. We need starts WAY below sales.
For the last year, new has been undercutting existing sales, casuing the jump in defaults. FINALLY, I think we’re seeing the houses that have gone through default, through foreclosure, through REO, and are NOW being dumped onto the market at a loss. FINALLY, the foreclosures are undercutting new.
I go back to info I got sent from a used house sales person last week.
“There was one big surprise this month- there was a marked increase in sales in Queen Creek and Maricopa:
QC-Maricopa
Active 2,990
Sold 337 +68.8% YOY.
8.8 months of inventory
The following is a breakdown for Queen Creek sales:
80% are lender-owned or short sales, 15% new build and 5% owner occupied.
I’m assuming Queen Creek was one of the worst markets in greater Phoenix metro?
This is the third market now where I’ve heard of massive volume increases recently–primarily buying foreclosures from banks. All coincidentally are considered among the worst in the world. The other two were Modesto/Stockton and in So Cal…Inland.
The common factor–home prices in those places have fallen to a point where they can be purchased by regular people based on their actual incomes and the new underwriting criteria from lenders. The other common factor–they are driven by foreclosure sales.
“I’m assuming Queen Creek was one of the worst markets in greater Phoenix metro?”
Ding, ding, ding… we have a winner.
Go as far south and east as you can go and still be considered “PHX metro” and you have found Queen Creek.
If there is a worse place, it would have to be Maricopa…
What about Florence? Now, there’s a crummy place!
Collidge
Can anyone else comment? From where I sit, the worst markets in at least three locales (No. and So. Cal. and AZ) have had volume bursts due to banks getting realistic with pricing on their REO or soon-to-be REO. The first important step to clearing the foreclosure inventory (and beginning to set a new floor on prices).
Anyone seeing this development in other bubbly places? The worst market in Vegas metro? The worst market in FL?
Anyone care to chime in?
“Only” 90,000 more houses started than new houses sold. Oh, I guess we should let them subtract whatever number of unsold new houses have been torched, bulldozed, or irreparably trashed.
On the topic of the MSM, I would like to report that I saw a SMALL GLIMMER of hope that they may come out of their clueless fog and start actually doing their job(at least the journalistic sector of the MSM) this morning.
It was either on Good morning America or the today show this morning. The headline for a particular segment was “High fuel and food costs create record inflation.”
I just about fainted.
Even though the Fed may stick their head in the sand and pretend that two of the fastest inflating items somehow magically “don’t count”….(we’ll give it a new name - how about “CORE inflation?”), at least this one MSM outlet isn’t letting them get away with it.
They put it front and center. Core inflation my ass. When NECESSITIES increase dramatically in price, *THAT* should be called core inflation, not plasma screens and game consoles.
At this point I will support ANY politician that challenges the Fed and other government entities that take actions that devalue the dollar.
If we don’t stop that shite like yesterday, NONE of the other issues will matter, as we will have turned into zimbabwe.
I gotta give the MSM credit for doing the right thing on that one for a change.
Seriously. The reason for excluding those items is their volatility.
Guess what, we can get rid of the volatility…make the measure a 2-year running average. How will that do to take the volatility out?
I guess nobody on the staff there realizes that fuel is not used in calculating inflation?
I REALLY hope not. I really hope someone in the media is finally giving the finger to the Fed and their BS and instead presenting the reality(what a concept) if real inflation as seen by the very people they depend on to be their audience.
Still selfish, but a good move on their part, and good for the people too.
That’s my hope anyway.
“‘We will shortly propose additional rules building on the lessons learned from the subprime market turmoil,’ Cox said. New rules would affect rating companies such as Moody’s Corp and McGraw-Hill Cos Inc’s Standard & Poor’s.”
Translation:
We wont get caught flatfooted when the next real estate bubble shows up, in 2043.
Mistranslated Aladin - the correct translation is
We will go back to no ratings and the businesses will be able to keep all assets at level 3 in the future.
Sir Hoz, I so pray that was sarcasm.
Worst. Idea. Ever.
Level 3,
Leigh
“Critics say the government should not help people who stretched to buy more than they could afford, speculated on property as investors, or lied on their loan applications.”
Well geez…who else is left?
Regular readers of this blog?
HELOCers, cash-out refi-ers, REIC who have seen their incomes sliced and diced…..
Strawberry picker that bought a $750K house… no help for you.
Tech worker that bought for $300K, then HELOCed to $500K… We must save him.
Really, the HELOCs and cash-outs are a big issue in these bailout suggestions. No one talks about them, but they are the loans most at risk — and thus the most likely to generate investment losses for the rich and their institutions.
And, the most likely to still be held by the banks. They largly packaged up and sold off the firsts. Those are now the problem of the insurance companies, pension funds, bond funds, etc… But the HELOCs and 2nds are still held by the banks.
They must not be allowed to fail.
Which is too bad…because in my view, cash-out refi’s are the ones who LEAST deserve to be bailed out.
oxide,
Very true. Hard for someone that bought pre/early bubble and then tapped repeatedly trying to claim they’re a victim. WT Economist is further accurate to say these are among the most vulnerable!
I can remember, not too long ago, when my credit union had veritable HELOC fiestas in its lobby. The friendly table-sitters would ask me if I wanted info, but as Nancy Reagan was wont to remind us about drugs, I just said no.
“Making matters worse, many disgruntled owners who have lost their homes have stripped them clean, depressing prices further, he said.”
Is a $7000 hair-of-the-dog tax credit for those buying foreclosed homes sufficient to offset the cost of renovating an interior which has been stripped clean?
If it’s going to be a rental then it may pencil out since the repairs and new appliances are deductable or depreciation assets.
No. We just had a buyer cancel a deal because the MIA FB poured cement mix down all 4 toilets.
In another property, the tenants knocked out several walls in the basement, prompting a $1,250 trashout estimate.
Several BPOs we have done feature homes with multiple illegal and/or unpermited bathrooms, kitchens, etc. In many cases these must be removed before a bank will issue a new mortgage for any buyer. Then there are the cases of missing copper pipe, which I would say is about 25% of vacant homes.
I have been in several foreclosed homes that are failed flips — with tools and supplies in the corner and 7-11 coffee cups on the counter, it always feels like they were abducted by aliens.
Bottom line, most of the foreclosures I have been in need $10K to $20K worth of work to make them habitable.
“Bottom line, most of the foreclosures I have been in need $10K to $20K worth of work to make them habitable.”
But this is also true of older housing stock that hasn’t been trashed by Angry ex-owner. I usually put at least a new bathroom in.
That’s a right-on estimate, Frank.
My former landlady bought a foreclosed property with two houses on it. Even though she was quite the handywoman, I’m sure that the materials cost was right in the $10-$20k range. And that was back in the late 1990s.
For the life of me, I don’t understand how stripping a home isn’t flat out criminal behavior. A mortgaged home is completely the property of the lendor, once the occupant has stopped making their contractually agreed upon payments. In most of these cases the occupant never had any equity in the home to begin with.
I don’t see how this is any less criminal than if I were to go into my neighbors house and strip it of all the fixtures, wiring, etc. These people should be sent to jail IMO.
Are there loopholes in the laws, or in the lending/title contracts and documentation, that I’m missing here? If there is, expect to see new contract wording in loan documents in the future to address this.
Maybe they have no documentation on who the former owner was?
IIRC the property is “owned” by the mortgagor i.e. the buyer, who gives a loan to the mortgagee, the lender. The buyer has the right of possession, and taking that away requires adjudication. What they are liable for is waste, which is a property tort that has to be litigated, and probably most the lenders (mortgagees) don’t have the time to deal with it.
oops, I meant the buyer gives a lien to the mortgagee…makes little sense without that!
Maybe they have no documentation on who the lender is?
I’ve got an idea for the lenders -
For all the interest-only and neg-am loans, they should charge a $5000 security deposit. The “homeowner” is really only renting anyway…
‘Ian Shepherdson, chief U.S. economist at High Frequency Economics, noted that single-family starts have fallen 61% since their peak in the summer of 2005 and said there is no sign at all that it is coming to an end.
“In short, truly calamitous,” Shepherdson said.’
Nice summary of the homebuilding industry situation.
…and yet the builders were up again…Guess the bottom is in..Woohoo ! “your driving fast towards that brick wall aint’ ya?? “
“‘We had one house where the bank offered the tenants $2,500 relocation assistance, but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. They even dug up the trees in the backyard,’ Lemack said.”
These banks need to come after these people and arrest them.
Ah…but for the layoffs, er…downsizing…er…incompetence of loaning to bum heads.
But I digress,
Leigh
Agreed. We really need to put the hammer down on these clueless, penniless monsters./sarcasm off
“CtW alleges that as heads of WaMu’s committees responsible for risk management oversight and compensation plan design, the two directors ‘bear responsibility for Washington Mutual’s failure to recognize and act in a timely manner on the risks to shareholder value presented by the housing bubble,’ it said in a March letter to other WaMu shareholders that was also released to the public.”
“In addition, CtW alleged that the two directors played a part in ‘attempting to insulate executive bonuses from the consequences of this risk management failure.’”
This is EXACTLY what is wrong with the model of CEO pay in this country. They are much more concerned about their bonuses than they are with competently running the company.
I hope the shareholders string them up by their thumbs as they are stripped naked and publically whipped. Did the White House not learn anything from Enron? This behavior has GOT to stop!
Right. But you know what? The shareholders are in a way culpable as well, as is the whole non-sensical principle of limited liability for shareholders, which essentially encourages people to put up capital, roll the dice, and willfully turn a blind eye to how profits are made.
The only thing almost all shareholders can do is to not have the stock. The CEO and board of directors can, in general, do anything they want.
That is how executive irresponsibility has become the norm - no consequences for screwing up.
Robert Toll - We’re in deep doo doo.
Yeah, CEO speak. Sigh
Must laugh or will cause serious eye leaking mania!
Leigh
All I know is that I’m ANGRY, BITTER, and I’m gonna cling to my GUNS and GOD.
And my beer, if the f’n hops will stop going up in price.
Half of Coors’s hops are sourced from New Zealand. It’s those oil prices again.
I don’t drink Coors. But, alas, all of my faves are going up in price too. Sigh…
Hey you can make moonshine
Just grow so corn in your backyard.
vm,
I pray you cling to all that matters - and then acceptance.
One person can make a difference.
Best,
Leigh
“The Securities and Exchange Commission will soon propose more rules to police credit rating agencies, SEC Chairman Christopher Cox said on Wednesday…‘We will shortly propose additional rules building on the lessons learned from the subprime market turmoil,’ Cox said. New rules would affect rating companies such as Moody’s Corp and McGraw-Hill Cos Inc’s Standard & Poor’s.”
So the SEC won’t let me be
Or let me be me, so let me see
They try to put me down on CNBC
But it feels so empty, without me
Moody’s back, back again
Moody’s back, tell a friend…
(apologies to Eminem)
“‘We had one house where the bank offered the tenants $2,500 relocation assistance, but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. They even dug up the trees in the backyard,’ Lemack said.”
“‘I could’ve sold it for $250,000, but we sold it for $200,000. So when other agents get comps, they use lowball comparisons to push properties down further,’ he said.”
So cry me a river. There was no problem when cash back at closing and phony appraisals were pushing comps higher. $200K is still too high, stripped or not.
Don’t get your reasoning SDGreg - so you think it’s ok for the bank to take a loss solely on damage perpetrated by the FB? $200K is too high for a house where? You can’t even get a trashed fixer for that in any part of LA.
I’m not okay with the loss to the lender from the damage. If the lender did something improper, take them to court. Don’t trash the property.
My criticism was the lamenting that it would set the comps lower. There was no criticism when comps were set too high due to fraud/phony appraisals, etc., only when comps are set lower than desired. It’s hard to argue that this house will set the comps “too low” as comps are going lower anyway. At most, it merely speeds up the timing a little.
That house is in the hood. That houses are routinely being stripped in that neighborhood does say something about that neighborhood in this case.
I suspect you’d find that houses in that neighborhood were going for well under $200K in ‘99 and ‘00. Note the per capita income for the area of under $15K:
http://www.sandiego-mls.com/real-estate-guide/encanto.asp
Plunk down $200K for an aging, stripped house in that neighborhood? No way.
When did rank and file average Americans turn into such vindictive people, anyway?
“‘We had one house where the bank offered the tenants $2,500 relocation assistance, but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. They even dug up the trees in the backyard,’ Lemack said.”
I had one place where they even thought to take the light bulbs out of the recessed fixtures.
Read your US history books, or watch HBO’s John Adams. Hell has no fury like a jilted American. (or any other countryman, for that matter)
In previous housing bubbles, I can’t remember Americans being wantonly destructive, as they are now…
They were exactly as vindictive in the early 90’s.
Wait till you hear the stories of stuffing cheap shrimp in between the paperboard walls, and stinking up the place so bad that you had to do a gut.
or behind the switchplates and I heard it was canned tuna. llol
This behavior isn’t totally new. Believe I have posted before, I bought an REO condo in Glendale CA in 1994, where FB’s had stolen the stove and ripped up half the kitchen floor. (Modest damage compared to what is described here, I grant you.) It would indeed be interesting if banks starting pressing criminal charges, but before you wish for this, keep in mind how much of your taxes already go to paying prison guards!
I have always believed, people that commit crimes/vandalism against property should be order to pay restitution, no matter how long it takes.
Debtor’s prison?
Grams tells me back in the day, kept many people honest?
Leigh
M&T Bank Corp. CEO Robert G. Wilmers, citing ‘the extraordinary time in which we find ourselves,’ called Tuesday for the re-establishment, in modern form, of a Depression-era government agency to rescue 3 million mortgage borrowers who are behind on their loans.”
Again, once senses desperation. Damn the currency. Damn the future. Sell the Social Security Trust Fund. Just get us through this year!
We can’t even eat our seed corn, as it’s been turned into gas.
Not exactly, we can still drink the product of our seed corn. I’m sipping on a similar beverage right now.
Great, lets do just that as long as it is funded with the bonus checks and excessive pay of banks and hedge funds. Hmm, do I hear Crickets ?
Ooooh yeah M&T Bank Corp. CEO Robert G. Wilmers.
And we can call that socialized collection agency “The Federal Taxpayer Save our Banks, Profits and A$$E$ Agency”
One of M&T Bank’s major shareholders is Warren Buffett.
And at this point, it’s not just the bank losses, I believe the financial wizards are getting a sense that the social fabric is beginning to shred a tad and it’s making them nervous. Wachovia yesterday on their conference call had the CEO dumbfounded by walkaways…same as Lewis at BOA. CC delinquencies are rising, as are student loans…none of it predicted by their models.
Having never met Joe or Jane Average, the big boyz are shocked that the peons are kicking back.
“Having never met Joe or Jane Average, the big boyz are shocked that the peons are kicking back.”
And I’m loving every second of it. It’s so friggin about time!
Buffett lost the other day. Normally I would think nothing of this. (Up one day, down another in this crazy thing called markets).
THEN, he fired…er….resigned Joseph Brandon.
Dang, if Buffett’s proposed replacement is *retired* what the hey is going on?
What’s going on (sorry Marvin),
Leigh
Oh, mercy mercy me
Oh, things ain’t what they used to be
No, no
Where did all the blue sky go?
What trust fund?!? - does it really exist?
Ha! Shall we exchange meaningless treasuries for meaningless mortgages?
Funny, I don’t remember all of these bank presidents and politicians talking about higher taxes on windfall REIC profits when home prices were going up 20% a year. Weren’t those extraordinary times by any reasonable measure?
http://money.cnn.com/2008/04/16/news/economy/housing_starts_march/index.htm?postversion=2008041609
“These figures confirm that the housing market is still groping for a bottom,” said Mike Larson, a real estate analyst for research firm Weiss Research.
———————–
My wife accuses me of doing this all the time to her figure. I never realized it was an economic thing. Thanks for the visual Mike!
I used to have a boss who did the same thing.
Er…grope you?
I shan’t have the image in my mind! (Less she was da boss?)
Leigh
Crude-oil futures gain more than $1 to surpass $115 after data showing a surprising drop in U.S. crude inventories and fresh lows for the U.S. dollar.
WASHINGTON - The country’s economic health deteriorated further in the early spring as shoppers buckled under the strains of the housing and credit debacles and a weaker employment climate.
“‘Real estate is getting worse,’ Dimon said in a conference call today with investors. ‘Home prices we still expect to go down.’”
HOWEVER: U.S. stocks rally as upbeat results from Intel, J.P. Morgan Chase and Coca-Cola, as well as in-line data on inflation, help lift sentiment.
Weeeee spinning is fun.
Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!
My favorite!
Ya just can’t make this stuff up!
Leigh
“So when other agents get comps, they use lowball comparisons to push properties down further,’ he said.”
The seller has a choice not to sell it at a certain price. we’ve seen that for the last two years.
Market seems to be way up on all this news though, doesn’t it?
lure in the fools and sell off again, SOP for the crooks on wall street.
Front page of CFO magazine: Many Employees are Raiding their 401k Plans. Umm, wonder why?
Welcome to Great Depression 2.0.
I compare the current situation to the doomed Titanic, listing downward as the engineers struggle to keep the lights/power gloing as long as possible.
the effect then is the same as now; the steerage/3rd class, and 2nd class passengers were mostly sacrificed while the 1st class/elite piled into the lifeboats right away.
just replace “engineers” with “bankers”, & “steerage/2nd class” with “poor/middle class consumers”, and “1st class/elite” with …. well, that particular comparison hasn’t changed much now, has it ?!
OK. I’ve just about had it now..
Let’s just do the bailout, get it over with and move on.
I know that’s crazy, but here’s my thoughts..
Not that I’m in favor of a bailout..
First..bailout with lenders having to write down the loans, which the FBs will still end up defaulting on,
Then..lenders respond with crazy tight lending standards with loans only going to the best of the best borrowers with tons of money to put down.
Then,..home prices really take a hit..more defaults, jingle mail, etc.
Then, we (HBBers) get to be the only real buyers, as virtually all of the mouth breathers are cleared from the fence/sidelines.
Any thoughts?
Disagree. Just because some of us may feel impatient for the correction to play out doesn’t mean we want to waste our (or anyone else’s) tax dollars in this way. It’s a question of principle if nothing else - not one dime should be given to the deadbeats who dug themselves into the hole they’re in. They will never learn financial discipline if we bail them out.
A campus-wide email just came across the wire at our university from an administrative assistant in an academic department, asking us to consider donating money to help a staff member. Here’s the email, redacted:
Well that didn’t work the way I planned. Here’s the email:
I have just received notice that we have a fellow staff member in dire need of some financial assistance. Their hours have been reduced by 50% and both adult members have cashed in their retirement savings to assist in paying bills and mortgage. Since this is the 20th week of hour reduction for the family they have been unable to come up with the total amount of their last month’s mortgage payment in order to qualify for interest only payments and are in desperate need of some financial assistance in order to make this happen. If you can assist them it would be dearly appreciated! Please contact XXXXXXXX. Thank you for considering any amount to donate to help your fellow co-worker!
I might offer to help pay for a bus pass for a person in such a situation. If the response was, “but they already have a car” then I would know that they had not done all they could to reduce their expenses, and would be suitably offended at the implication that I should help to pay for that car.
So why did you redact? I would have sent it. Really obnoxious, especially when you know there is almost always some irredeemably stupid reason for these situations.
In my opinion, the stock market is coked out.
And just like a coke whore, it will seize on any piece of news that isn’t horrible to rally on.
It doesn’t have to make any sense, whatsoever.
Just like in 1929.
“The writedowns ‘weren’t as bad as expected.’ Yeah, that makes sense. Sure. Coke whore logic, right there.
A poster on this blog yesterday pointed out that Chase was defaulting on purchases with student loans.
That’s your headline, right there, Wall Street.
That’s where these ‘writedowns that aren’t as bad as expected’ are taking us.
Wall Street needs Narcotics Anonymous, if you ask me.
I wouldn’t put my money anywhere near that bunch of lunatics. Not even close. The market is too obviously manipulated by either the powers that be, or hysteria to be taken seriously. Way too risky.
I’m not saying I’d put my money under a mattress, but I sure as heck would buy gold… and store it somewhere safe.
These people are simply out of control.
I’d call it ‘Psychotic Optimism’, to coin a phrase.
Just like back in 1929.
It will be up again tomorrow on the IBM news.
It may be up all summer now.
I sure wish they’d ask ME to go on CNBC.
I’d LOVE to talk to Erin Burnett. I’d take her Psychotic Optimism and eat it for lunch. I’d be sarcastic, too.
“So, Auction Heaven, what do think of today’s rally? Do you think we’ve seen a bottom, here? Don’t you? Everyone else has? Come on, be with us, live like us… drink the Kool-aid!”
“Why Erin, I think you’ve hit the nail on the head. I think it’s all over, and now we can all get back to buying stuff we can’t afford. In fact, since the market rallied so much today, I think we can probably go ahead and ask Mr. Bernanke to raise the Fed Funds rate. Given your exhuberance, don’t you think it would be a good idea? If it’s all over, let’s have Mr. Bernanke take the rate up to say, oh, 5%? You would agree, wouldn’t you, Erin?”
Now that would make for some interesting television.
Freaking cheerleaders.
The only two people on that channel who have brains in their heads are Rick Santelli and Becky Quick. The rest are nothing but blabbering shills.
Joe Kernin seems to be ok.
He has his moments.. He shills, shills, shills… then gets frustrated and just starts mocking all the shills.
I do get a kick out of watching Rick S.
Auction Heaven, this is your thread today!
Remember Alcoholics Anonymous? One of its two co-founders, Bill Wilson, was a Wall Streeter.
I remember when people were walking away from homes on Long Island in the 70s. People were taking stoves and pipes just like now.
But the REAL DAMAGE came when the local teenagers took over and made them into PARTY HOUSES. The banks would board them up and the kids would tear open a wall in the back, they preferred boarded up because the neighbors couldnot see what was going on inside. Of course these houses were selling for about 20 grand new in the late 60s. Nope no inflation here, move along
Were there any government programs to forgive mortgage debt during the Great Depression? I never heard of any. Instead, I think we had lots of foreclosures (a la “Grapes of Wrath”). It’s ironic how some people who hate welfare programs suddenly support them. But I’m not even sure such a program ever existed. Anyway, the amount of money involved would be staggering.