It Is Irrelevant What They Paid Or What They Owe
The Union Leader reports from New Hampshire. “As the number of foreclosures in New Hampshire continues to climb, housing advocates are seeing a disturbing trend: The mortgage crisis is spreading to prime borrowers. Just more than 6 percent of mortgages in New Hampshire are delinquent, according to the latest survey by the Mortgage Bankers Association. For the first time since 1992, that’s comparable to the national rate. There were more than 18,000 mortgage loans in New Hampshire with payments past due as of the fourth quarter of last year. Of those, 10,710 were prime loans, 6,390 subprime loans.”
“Robert Tourigny, executive director of NeighborWorks Greater Manchester, said his agency has seen an ‘alarming’ increase in calls from homeowners seeking help not because of adjustable-rate loans, but because loss of income is making it difficult to keep up with their payments.”
“‘Those, I think, are what’s really troubling, because that’s a sign of the tough economy,’ Tourigny said. ‘If you don’t have the ability to pay, it doesn’t matter what your interest rate is.’”
The Beverly Citizen from Massachusetts. “When the real estate market changes, so do real estate agents. That’s the logic with a recent course from the Massachusetts Association of Realtors designed to help Realtors with foreclosure sales, short sales and selling properties at auction or those banks own.”
“Marilyn Jarvis is president of the North Shore Association of Realtors and she took the course. As a real estate agent for the past 25 years, ‘I’ve worked through changing markets in the past,’ Jarvis said.”
“Many situations she has dealt with in the past year have ‘positively been more stressful’ than sales in 2003 and 2004, for example, when the market was supercharged.”
“‘Many times they realize the interest-rate adjustment is coming and realize between the mortgage and taxes they can’t afford it,’ she said.’
“Increasingly, sellers are realizing they need to price their home based on the current market, something that was a little tougher when the market first began to soften. ‘People are starting to realize it is irrelevant what they paid for the property or what they owe,’ she said.”
The Enterprise from Massachusetts. “Thomas Fitzgerald is happy with the new home he bought two years ago, but not about the vacant houses that surround it. ‘My neighborhood is going to hell,’ said Fitzgerald, who lives in the city’s north section.”
“Recently, an elderly neighbor around the corner was shot and wounded. ‘A week after the shooting, police took homeless people out of the house on the corner,’ Fitzgerald said. ‘Then, across the street, I saw kids kicking the door in and down the hill. Kids broke in and took all the plumbing out.’”
“All three houses were vacant amid the surge of foreclosures in the city. City officials estimate there are 700 vacant houses in Brockton, with some 400 of them left empty by foreclosures.”
“The vacant houses lurk throughout the city. They include single- and multi-family dwellings. ‘It’s everywhere, there’s no neighborhood that hasn’t experienced them,’ said Carol DeLorey, a non-voting member of the Brockton Housing Partnership, a coalition of 13 local lending institutions established to address the foreclosure crisis. ‘It’s progressively getting worse,’ DeLorey said.”
“The abandoned structures, often owned by out-of-city lenders, often attract vagrants, vandals and thieves. ‘Scavengers are having a blast,’ said Fire Chief Kenneth Galligan.”
From WBUR.com in Massachusetts. “The latest home sales numbers show that the Massachusetts housing market is still declining. The state has lost 3,000 construction jobs over the past year. And many of those who still have work are getting less of it. WBUR’s Business and Technology Reporter Curt Nickisch rides along with one asphalt and concrete contractor who’s hitting the pavement…to find more jobs.”
“Adrian Morgado is wearing a T-shirt that says Morgado Construction, the name of the small concrete and asphalt paving company he runs in New Bedford. He bought this truck four years ago when business was as blazing as its red paint job.”
“ADRIAN MORGADO: ‘It was amazing, there was all these condominiums being built. Non-stop. Every day, paving. Every morning, I knew my schedule.’”
“Dawn to dusk. Money was good. Morgado hired a crew ten strong, and there was more than enough work for them close to home. Today it’s different. Now Morgado’s heavy work boot rides the gas pedal, rumbling his truck down a Cape Cod highway on $4-a-gallon diesel. He has to drive much further now just to give estimates for paving jobs.”
The Telegram in Massachusetts. “Worcester County saw a 34 percent drop in sales for March, from 530 in March 2007 to 350 last month, the data shows. Condominium sales in Worcester County were down 40 percent in March from the year before, and down 37 percent for the quarter, the Warren Group data shows.”
“The state data marks the second-steepest price drop since The Warren Group began recording prices in 1987, according to CEO Timothy M. Warren Jr.”
“‘The Bay State’s housing market is looking a lot like it did at the end of 1990, when December prices fell 11 percent compared to the same month the year before,’ Mr. Warren said in a statement. ‘That was the low point of the ’90s housing crisis. Afterward, prices began to fall by smaller percentages and by 1993, they were level.’”
“‘But that downturn was fueled by the banking failures in the 1980s, while this one has more to do with the staggering number of foreclosures facing Massachusetts homeowners,’ he said.”
The Boston Herald from Massachusetts. “‘The market is in decline - and it’s accelerating downward,’ said Warren of the Warren Group, which yesterday reported that median house-sale prices dropped to $304,000 in March. That’s down 10.6 percent from March 2007, trailing only an 11 percent drop between December 1989 and December 1990 as the worst 12-month pullback on record.”
“Massachusetts Association of Realtors President Susan Renfrew said she can’t predict when real estate will bottom out. ‘I think we’re still working through a market correction,’ Renfrew said.”
“But Warren, who previously predicted housing would hit bottom some time this year, now expects the tough times to continue into 2009. ‘We may see things improve a year from now, but I don’t really think things are going to turn around this year,’ he said.”
The Boston Globe. “Home sellers in Massachusetts are slashing prices at double-digit rates to close deals, but there is no evidence the lower prices will end a housing slump now entering its third year.”
“Some of Boston’s more popular suburbs had dramatic price drops for single-family homes in the first quarter of 2008 - prices were down 19 percent in Acton, 23 percent in Westford, and 31 percent in Sudbury - compared with the same three-month period last year.”
“‘It’s a self-reinforcing cycle where prices drop and people stay out of the market because prices drop, and that makes prices drop even more,’ said Patrick Newport, an economist for a Waltham economic consulting firm. ‘There’s potential for prices to drop even more than they did in the 1990s.’”
“That housing slump lasted 3 1/2 years and, by the end, prices had fallen 10.2 percent from the market’s previous top.”
“Real estate agents said the only way sellers in many communities can attract buyers is by cutting their listing prices. But the sharp drop in the number of sales indicates these price cuts have been either too small, or too few, to close many deals.”
“‘The offers don’t come together. A buyer and seller might stale mate over $10,000 or $15,000, and you go back to square one. We’re seeing a lot of that,’ said Michael Clancy, an agent in Weymouth.”
“Condo developers are increasingly turning to auctions to unload units, both in Boston and the suburbs. Next month, 25 units at the upscale Concord Commons development will be auctioned, while the owners of the Residences at Peabody Crossing will auction 18 condos.”
“The Peabody project’s developer, Town & Country Homes of New England Inc., set minimum prices for various units in the $200,000 range. Some of the units that already sold at Peabody Crossing went for more than twice that, said Sue Hawkes, CEO of Velocity Marketing, which is handling the auction.”
“The developer ‘was hoping there’d be a good spring market like everybody else and realism set in,’ Hawkes said. The company was ‘more comfortable moving on and selling the property he has before there is further potential erosion’ in prices, she said.”
“Thomas Skahen’s firm recently dropped the prices sharply for 36 condos in Holden. ‘We’re still not getting any activity,’ he said.”
From Bloomberg. “Home prices in the Hamptons, where rich and famous New Yorkers spend summers by the sea, fell in the first quarter as Wall Street job cuts and an economic slowdown took a toll on buyers.”
“The median price declined 7.1 percent to $882,500 and the number of sales dipped 29 percent from the last three months of 2007, according to a survey by appraisal firm Miller Samuel Inc.”
“‘If you don’t price it properly you’re going to sit,’ said Prudential Douglas Elliman CEO Dottie Herman, who owns a second home in Southampton. ‘Price matters in this market. You’re dealing with more inventory so there are more choices for buyers. Sometimes people will look at houses and if it’s not priced right it will help sell someone else’s who is.’”
“The availability of mortgage financing drove down sales in the Hamptons, said Judi Desiderio, CEO of Town & Country Real Estate in East Hampton, New York.”
“‘Every market in the country is affected by that,’ Desiderio said. ‘Unless you have sterling credit and can put one- third down and own everything else you have and can prove it, they’re going to give you a hard time.’”
The Pocono Record from Pennsylvania. “New housing permits are on a steep downward slide in Monroe County, and may have yet to hit bottom. ‘I would certainly think we would be lower than last year, possibly by more than 50 percent. The downward trend was pretty clear,’ said John Woodling, director of the Monroe County Planning Commission.”
“Peter G. Gallagher, Pocono Builders Association president, cautioned against year-to-year comparisons. ‘It’s hard to compare to the last few years. We had banner years,’ he said.”
“Gallagher noted that the nation’s attention on the sagging home market has changed the way consumers approach the buying process. ‘We have seen somewhat of a shift in our business and of those I talk to in the association. People are looking for concessions — like free items. However, we all know that nothing is free,’ he said.”
“Jim Mathiesen, general manager of Target Homes in East Stroudsburg, said his company is finding new ways to compete in what he describes as a slower market.”
“‘We continue to sell homes, but not at the same rate as in 2005 and 2006. And the market is not as strong as it was last year,’ he said. ‘Builders have to work harder and offer more value for the customer to get them interested in the purchase. For example, we are offering free granite kitchen counter upgrades and to help with closing costs.’”
“But still, there’s optimism in the market. According to Gallagher, ‘It’s a great time to buy. Mortgage rates are down, property prices are down, and if they wait to long, they may end up buying when it’s going back up.’”
The Wall Street Journal. “As the growth in subprime mortgage delinquencies appears to be slowing, lenders are seeing a rapid rise in defaults on a type of mortgage that gives consumers with good credit several different monthly-payment options.”
“These mortgages, which are sometimes known as ‘pick-a-pay’ or payment-option mortgages but are generically called option adjustable-rate mortgages, are turning out, in some cases, to be even more caustic than subprime loans, in part because the loan balance and the monthly payments on some loans is growing even as home prices are falling.”
“On Tuesday, Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due, up from 5.7% at the end of December and 1% a year earlier. Countrywide also reported that it had charged off $125 million of these loans in the first quarter, compared with $35 million a quarter earlier.”
“Some borrowers say they weren’t suited for these loans or that the terms were poorly disclosed. Edward Marini, a 63-year-old disabled Vietnam veteran, took out a $280,000 option ARM from Countrywide Financial when he refinanced the mortgage on his 2,000-square-foot home in Little Egg Harbor, N.J., in 2005, pulling out cash to pay off some debts.”
“‘The way I understood it was that I would have a really low payment for five years,’ says Mr. Marini.”
“Mr. Marini recently received a note from Countrywide that his payment, now about $1,300 a month, would jump to about $3,800 next year, well above his $3,250 a month in disability payments. Mr. Marini, who owes more than his home is worth, says he was turned down by Countrywide for a refinance and, more recently, for a loan modification.”
“‘I didn’t think they would even pull this kind of stuff on someone who is on a fixed income,’ he says.”
‘the sharp drop in the number of sales indicates these price cuts have been either too small, or too few, to close many deals.’
‘The offers don’t come together. A buyer and seller might stale mate over $10,000 or $15,000, and you go back to square one. We’re seeing a lot of that,’ said Michael Clancy, an agent in Weymouth.’
Well maybe that’s because the REIC and the press in Massachusetts has been telling the public how special and different they were. Prices fall anyway and you guys will starve due to your ignorance of affordability.
One thing to note: this bust is already worse than the last and the same in California, Arizona, Nevada, etc. IMO, it’s because this was the biggest housing bubble in history.
Get ready Washington, Oregon and Canada.
Storm warnings ought to be posted for Manhattan, as well.
There has been no morning in the last three weeks during the weekdays where I have not seen a moving truck on my street.
It’s not “typical moving season” either. That’s more June-July.
Isn’t the get-out-of-town -in-the-middle-of-the-night like the Colts more apt for this situation?
Mixed neighborhood. Some buildings/brownstones are rentals. Others are co-ops.
Haven’t observed a pattern of whether it’s rentals or “owned” places.
Manhattan would be greatly helped if more buildings were condos instead of co-ops. A lot of people won’t be able to sell because their “board” won’t approve the buyer or the price!
Condos have been on the leading edge of the bubble in Manhattan. Co-ops won’t allow stupid financing. Condo financing is limited only by what the loan originator will allow. Mnahattan would have been much better served if no condos had ever been built at all.
Yeah, but the co-op’s have loaded up the corporation on “cheap” ARM’s that are going to blow the powderkeg sky-high. The insiders have fled naturally.
There was a serious amount of speculation in the brownstones too. Not all co-ops are as conservative as the image you are portraying above.
“‘I didn’t think they would even pull this kind of stuff on someone who is on a fixed income,’ he says.”
Flounder, you can’t spend your whole life worrying about your mistakes!
In Orygun [area; Intel hi-tech campuses everywhere], we are renting in a relatively new [accomodate Intel] complex–lots of moving trucks—talked to couple guys–Intel sending them back to New Mexico–
Elsewhere on the planet–small town in Wa. [ no Intel in sight]—been watching home for two years—checked records and construction loan due end of sept. ‘08.–checked records after sept. and found the loan was extended by lender to feb.2010. Lender is AAA Weiss rated.
Dear Mr. Homedebtor.
I don’t care jack$h!t that you paid $XXX for your house. Irrelevant to me.
Cash buyer.
My offer is $XX (1/10). Take it or leave it.
“free trade” is finally affecting the housing prices. would you takea chinese offer for your house….I give you 100,000 yuan…takea it or leavea it….so solly.
“Robert Tourigny, executive director of NeighborWorks Greater Manchester, said his agency has seen an ‘alarming’ increase in calls from homeowners seeking help not because of adjustable-rate loans, but because loss of income is making it difficult to keep up with their payments.”
“‘Those, I think, are what’s really troubling, because that’s a sign of the tough economy,’ Tourigny said. ‘If you don’t have the ability to pay, it doesn’t matter what your interest rate is.’”
So there you have it…is the recession “official” yet? It doesn’t matter what your interest rate is: you will still lose your house.
Are you listening, Mr. Bernanke?
It wasn’t so long ago that it didn’t matter what your interest rate was, because housing values always go up faster so you’d never lose your house.
The recession will be official when the economy meets traditional definitions of recession. Even though growth is slowing and expected to turn to a crawl, we haven’t had negative growth yet. A recession is two or more quarters of negative growth.
I expect the recession will come in late 2008 as rising oil prices cause companies to retract, trimming workforce, etc. I also expect that while it won’t be happy-fun time in the economy, the economy will eventually level itself because investor confidence is still there. People will still believe in Coca-Cola, Wal-Mart, etc.
We do have negative growth.
PRICE INFLATION is NOT growth. The government has been gaming the numbers for so long now that they can’t tell the truth.
If I took in $100,000 in sales last year and $110,000 in sales this year, they say this is “growth”.
However, if cost of goods increased by $20,000, I still have higher sales, though I made less money.
Is this growth?
I doubt its actually due to ‘loss of income’ for most of them. Even as ‘prime’ borrowers, they flat out can’t afford the reset from their ARM.
“Increasingly, sellers are realizing they need to price their home based on the current market, something that was a little tougher when the market first began to soften. ‘People are starting to realize it is irrelevant what they paid for the property or what they owe,’ she said
Oh…do I LOVE that last statement.
Hold the cupcakes, hold the squirrels. My lowball offer IS good for 24 hours, it is final and will be contingent to review by my RE attorney.
“My lowball offer IS good for 24 hours, it is final and will be contingent to review by my RE attorney.”
And if you don’t accept, subsequent offers will be
And if you don’t accept, subsequent offers will be ten percent less.
(post got chopped)
“It Is Irrelevant What They Paid Or What They Owe”
A bit late to post in this, but Ben’s thread title is perfect. Absolutely perfect.
Scavenger Hunting…
“The abandoned structures, often owned by out-of-city lenders, often attract vagrants, vandals and thieves. ‘Scavengers are having a blast,’ said Fire Chief Kenneth Galligan.”
Here’s a modest proposal: Bulldoze these houses and turn the vacant lots into community gardens. Get people back to growing their own food the way they did during World War II.
According to Wikipedia, “Amid regular rationing of canned food in Britain, a poster campaign (’Plant more in ‘44!’) encouraged the planting of Victory Gardens by nearly 20 million Americans. These gardens produced up to 40 percent of all the vegetable produce consumed nationally.”
I say wire them with explosives so the Scavengers have a REAL blast !
O.K, THAT was out of line!
Develop agricultural or wild land, build houses, bulldoze said houses, plant gardens in the vacant lots. What a productive society we live in. Should have just let the land be.
“Should have just let the land be.”
But that would violate the American spirit. Reminds me of the time I was admiring the view of the Everglades from an overlook, when I overheard the person standing next me say that it was a shame that all of that land was going to waste.
Bulldoze the houses and plant the scavengers in the vacant lots
RE: Bulldoze these houses and turn the vacant lots into community gardens. Get people back to growing their own food the way they did during World War II.
Phfffffftttttttt….
American’s are so fat and lazy today, they couldn’t bend over to pull a turnip if their lives depended upon it.
This article on small plot farming was originally published in WSJ, but I can’t find the original link:
Green Acres II: When Neighbors Become Farmers
Thanks for this article. There are a lot of good ideas here. I have a giant vegetable garden plot (left by the previous owner) that, if fully planted and worked, could feed our entire village. Last year, I planted three rows for me and my husband and sowed a cover crop on the rest of the plot. I’ve been thinking about sharing it with others who have the time and desire to garden, but don’t have the space. Maybe setting up a community garden, with shares, would be the solution.
“The abandoned structures, often owned by out-of-city lenders, often attract vagrants, vandals and thieves. ‘Scavengers are having a blast,’ said Fire Chief Kenneth Galligan.”
Now I feel a Cher song coming:
“I was born in the wagon of a travellin’ show
My mama used to dance for the money they’d throw
Papa would do whatever he could
Preach a little gospel, sell a couple bottles of Doctor Good
Chorus
Gypsys, tramps, and thieves
We’d hear it from the people of the town
They’d call us Gypsys, tramps, and thieves
But every night all the men would come around
And lay their money down
Picked up a boy just south of Mobile
Gave him a ride, filled him with a hot meal
I was sixteen, he was twenty-one
Rode with us to Memphis
And papa woulda shot him if he knew what he’d done
Chorus
I never had schoolin’ but he taught me well
With his smooth southern style
Three months later I’m a gal in trouble
And I haven’t seen him for a while, uh-huh
I haven’t seen him for a while, uh-huh
She was born in the wagon of a travellin’ show
Her mama had to dance for the money they’d throw
Grandpa’d do whatever he could
Preach a little gospel, sell a couple bottles of Doctor Good
Chorus”
RE: “I was born in the wagon of a travellin’ show
At least they didn’t have to fill the wagon up with $4.00 per gallon Mobil High Test.
50 miles to a bale of hay sounds pretty good right about now.
I dunno . . . the way the economy is going the price of hay could double soon.
Brockton was filled with abandoned property before the boon, and now its going back to that way. Brockton is a great town to invest in boxing champ futures, but not in real estate. Its piss-poor depressed economically.
I got some looks when I told people I had moved into Malden , city 1 mile north of Boston that has two subway stops and a decent low to middle class blue collar population. But Brockton? You couldn’t pay me to commute north to Boston in that traffic hellhole, or live in that crack-infested, welfare-check-cashing city.
Yeah, I was humoring myself w/the visual of Brocton types in a pastoral scene.
“Bulldoze these houses and turn the vacant lots into community gardens. Get people back to growing their own food the way they did during World War II.” That’s ok, AZ. I kind of figured you’d never been there. It’s not exactly a destination hotspot!
RE: You couldn’t pay me to commute north to Boston in that traffic hellhole, or live in that crack-infested, welfare-check-cashing city.
Aptly, described.
“Some borrowers say they weren’t suited for these loans or that the terms were poorly disclosed. Edward Marini, a 63-year-old disabled Vietnam veteran, took out a $280,000 option ARM from Countrywide Financial when he refinanced the mortgage on his 2,000-square-foot home in Little Egg Harbor, N.J., in 2005, pulling out cash to pay off some debts.”
“‘The way I understood it was that I would have a really low payment for five years,’ says Mr. Marini.”
“Mr. Marini recently received a note from Countrywide that his payment, now about $1,300 a month, would jump to about $3,800 next year, well above his $3,250 a month in disability payments. Mr. Marini, who owes more than his home is worth, says he was turned down by Countrywide for a refinance and, more recently, for a loan modification.”
Uhh . . . okay. Let’s say that the terms were as he claims to have understood them–that he would have a “really low payment for five years,” and then they would re-set. Would he have been in any better position to pay $550 above his entire income in mortgage payments alone in 2010 than he is today?
COLA
I’ve reviewed more than a few DI plans, and I haven’t seen any that had COLAs generous enough to make this feasible. I just can’t see what his plan was other than, as Polly said, to be dead in 5 years.
These people continuously astonish me with their decision making.
Yeah, they made decisions all right.
They decided to ignore reality in the past and then lie about it to the media today.
They are all a bunch of freakin’ liars. Nearly every one of them.
Some, yes, maybe they were too stupid to understand the terms. But only a very few didn’t know they would be on the hook for much larger payments in the future… and hoping / wishing that future would never come.
I’ve been reading and seeing this here for three years now - and I’m really sick and tired of all the bullshit LIARS.
LIARS.
What the heck, he’s just following fearless leader, “the decider”.
What the heck, he’s just our following fearless leader, “the decider”.
But “people are the best judges of what to do with their own money” says W.
If he believed that, he’d let me opt the f#ck out of SS entirely. What he really said was “people need to let me have a golden contract to hand to whichever WS firm offers to blow me the hardest, longest, and sloppiest.”
now that’s hilarious….
so.. Bush proposes partially privatizing SS… everyone and his retired momma goes against him tooth and claw.. and you blame Bush because it was ony partial. Thanks for the chuckle..
How do you “partially” privatize something? Either it’s private or not.
How do you “partially” privatize something?
Plan I: Up to two percent of taxable wages could be diverted from FICA and voluntarily placed by workers into private accounts for investment in stocks, bonds, and/or mutual funds.
Plan II: Up to four percent of taxable wages, up to a maximum of $1000, could be diverted from FICA and voluntarily placed by workers into private accounts for investment.
Plan III: One percent of wages on top of FICA, and 2.5 percent diverted from FICA up to a maximum of $1000, could be voluntarily placed by workers into private accounts for investment
http://en.wikipedia.org/wiki/Social_Security_debate_(United_States)
You mean ‘placed into accounts at the firm that’s giving the biggest political kickbacks to W’s party to be managed at exorbanite fees in the tax payer’s name.’
If he’d proposed letting use never pay another dime into SS in exchange for never using it, I’d have jumped at it. And THAT would be letting us manage our money.
sfbubblebuyer .. you know that the reality is that SS is untouchable.
To say that Bush contradicts himself because he doesn’t totally eliminate SS, while at the same time saying we know best how to spend our money is a mighty weak argument..
The guy does have genuine faults but your example isn’t one of them.
As far as directing those privatized funds to particular firms who happen to gain from it, it’s no skin off your nose.. unless you don’t like compound interest.. or don’t like capitalism.. or don’t own stock and therefore are free to hate the big, evil corporations.
Unlike Ron Paul, Bush isn’t God.. so I don’t expect him to magically reincarnate the world into the way we want it..
Plan I: Up to two percent of taxable wages could be diverted from FICA and voluntarily placed by workers into private accounts for investment in stocks, bonds, and/or mutual funds.
Plan II: Up to four percent of taxable wages, up to a maximum of $1000, could be diverted from FICA and voluntarily placed by workers into private accounts for investment.
Plan III: One percent of wages on top of FICA, and 2.5 percent diverted from FICA up to a maximum of $1000, could be voluntarily placed by workers into private accounts for investment
None of that sounds like “privatization”. It’s my wages, I earned it. Just because govt gives me some option on what to do with the money they took from me doesn’t make it a private decision.
I’m don’t want to start a debate on whether SS is good or bad or whatever, but if govt forces you to pick one of two options on how SS is implemented, that’s not a private(ized) choice. It is a public(ized) set of options. Private would be when I choose (privately) to do what I want with my money, including the possibility that I don’t plan for my retirement at all. You may consider that to be politically not viable or even distasteful or whatever, but that is private. The other stuff is just variations on public control.
hmm.. lemme let you in on something. Govt forces a whole sh*tload of stuff on us.. is this news to you? ..is it mildly unacceptable?
Maybe it’s intollerable. If so, here’s your chance to make a personal, private decision to stay or leave (as far as i know we are still permitted to leave) ..and follow through on it.. or stop complaining.
Isn’t the whole problem that people were spending other people’s (the banks) money?
Lucky for us Hillary, who knows that government is actually the best judge of how to spend our money, will soon take his place.
I don’t think that J6P is much better at spending money wisely.
The Bush proposal is sheer genius, but most Americans are fools. Can’t blame the man for that.
The Bush proposal is sheer genius, but most Americans are fools. Can’t blame the man for that…
Most humans are fools. Period.
Please do not give elevated status to the rest of the human race which it does not possess.
“Please do not give elevated status to the rest of the human race which it does not possess. ”
Ha! Like that.
Maybe he thought he would be dead by then?
But seriously, I don’t get it when older people can’t see a few years into the future. It is one thing when a 17 year olds make huge committments against their futures by taking out student loans. They have been told their whole lives that college is the way to success and not all teenagers are going to figure out that becoming an indentured servant to your loans four years later is a bad idea. But this guy has lived through economic downturns. Surely he knows that real estate doesn’t always go up.
I hope paying off the bills was worth giving up the house.
I’d like to know what “some debts” were. Journalists NEVER ASK this question!!! And if these debts were incurred for frivolous purchases, should we feel at all sorry for this guy?
Yep, the stories give just enough info - ‘disabled Vietnam Vet’ - to open his story of rapacious abuse at the hands of a bank.
No details on why a 63 year old needs to refinance to the tune of 280K (with cash back) to pay off debts. These stories are what they are - weakly written and poorly researched current events fillers.
yaa…. This sob story was way over the edge. Like he didn’t know what the risks were. You rolled the dice dumbass. There….
Now can we reel in the HELOC/reverse mortgage scam before the banks own everything?
Good think he lives in Little (nest) Egg Harbor, NJ. He’ll feel right at home after the foreclosure.
think=thing
Farewell to ARM’s…
“On Tuesday, Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due, up from 5.7% at the end of December and 1% a year earlier. Countrywide also reported that it had charged off $125 million of these loans in the first quarter, compared with $35 million a quarter earlier.”
$125 Million is only about 250 California homes. That’s actually not as bad as I was thinking it was gonna be.
They don’t charge off the entire mortgage balance, so you’re not looking at the right number of homes. They just write the loan balance down to the “new” value (charge it off). Plus, I guarantee you they are not recognizing all their losses yet, they’ll drag it out and continue taking charge-offs for the next couple of years.
I think your trying to say they only take off the precent change.
So if its 10% in foreclosure they are writing down by some percentage of that using a market value. So say they assume the loss is 10% of the loan balance then its this 10%*10% or 1% loss. They are not marking down the amount the rest of the borrowers are underwater and surely not marking the foreclosure sales to market.
I don’t know the details of course would be nice if someone would post exactly how these losses are calculated but you can be sure they are underestimated.
“‘But that downturn was fueled by the banking failures in the 1980s, while this one has more to do with the staggering number of foreclosures facing Massachusetts homeowners,’ he said.”
Huh? This one was caused by reckless debt-leverage. Foreclosure is a result, not a cause. Also he limited the cause to “foreclosures facing Massachusetts homeowners.” He needs to read the paper or turn on the TV sometime. The debt ponzi scheme and fall-out therefrom are global problems, and Massachursetts doesnt come close to the list of hardest hit areas.
“Edward Marini … refinanced … in 2005, pulling out cash to pay off some debts. … ‘I didn’t think they would even pull this kind of stuff on someone who is on a fixed income,’ he says.”
Mr. Marini “they” didn’t pull anything. You were the one who pulled the plug on yourself by borrowing more money than you could afford to repay.
‘I didn’t think they would even pull this kind of stuff on someone who is on a fixed income,’
Old dude, they would pull this kind of stuff on someone with NO income . . . don’t act surprised that scam artists target the elderly, it’s been happening for years.
Looks to me like the scam artists include disabled dumba$$es who borrow money they KNOW they can’t pay back.
J6P can’t be trusted to look out for his own interests. This is why we have the DEA overseeing prescription drugs and why the government licenses professions from barbers to auto mechanics. Hopefully when this guy votes for his legislators that he remembers that Wall St banks and mortgage lenders need oversight as well.
I hope the day comes when people like this aren’t allowed to vote at all. Mental defectives who are too incompetent to run their own lives have no right to vote on how to run the government.
Just as I’m angered when the MSM brings up a bank robber’s distant military past I’m equally distraught when they bring up “the service” when trying to portray victim status.
A lot of posters here wore the uniform, some even proudly ( my former division officer once asked “Who’s Navy are you IN son!?” ) but Ed’s service has NO bearing on today’s “story”. Sorry.
Fixed income may be the high privilege of the future. Many seniors who saved are seeing incomes decline as their CDs and Treasury notes mature. Not to mention the working stiffs who lose their jobs. As for tux-junc’s comment, Right On.
az_lender,
Oh, as things come full circle? Remember, crappy yields in mmkts and cd’s are what drove elderly investors toward MBS paper to begin with! To have critical mass to live off a 2% yield is pretty impresive! But let’s face facts, most of us wouldn’t be able to do that. That’s another reason we all cringed when the loosening cycle began anew.
Are you listening, Mr. Bernanke?
Mr. Bernake is too busy listening to the Wall St thieves than to those of us here in the trenches that know the real scoop. Mr. Bernake, are you feeding the squirrels or do you care about the real economy? Of course, I already know the answer.
“Recently, an elderly neighbor around the corner was shot and wounded. ‘A week after the shooting, police took homeless people out of the house on the corner,’ Fitzgerald said. ‘Then, across the street, I saw kids kicking the door in and down the hill. Kids broke in and took all the plumbing out.’”
It’s not foreclosures that cause a neighborhood to go to pot, it’s vermin like those kids. Give them time and it won’t just be unoccupied houses they’re breaking into.
You know, I doubt a single FB whose home now sits empty regrets his duplicity in the squatters that now assault his former neighborhood. One of the real costs of this national bout with greed and envy is the creeping incivility that infects the larger social contract. There are many forms of prositution.
if they wait to long, they may end up buying when it’s going back up
That would scare me, how again? I would think that would be ideal. Not that it’s going to happen for a good long while.
Jessie Livermore said the easiest thing to do was to buy on the rise, to show a profit right from the start.
He was referring to stocks but such investment advice is applicable everywhere.
He also said he NEVER bought on declines.
FWIW.
Jessie Livermore! Hero of the shorters!
I visited one of the condos in a converted building (exposed brick and such) in downtown New Bedford four years ago. It was downtown, cost 275K, and was surrounded by the typical New England working class, i.e. depressed-looking and old-feeling neighborhoods. Oh, the whaling museum was a couple of blocks away. I remember thinking, this is crazy, and it was a milestone in the decision to remain an interested observer.
Hey sagesse, there you are! What country are you currently in?
Spent a few days in Banff: a mountain town without RE offices, RE signs and second homes because it is in a National Park. What a difference in the overall flair, they even provide accommodation to the workers.
Waiting for a flight in “we are booming here” Calgary. You know, the oilsands, lots of manly men in work boots and big trucks. Feels kind of feverish though. How much oilsand does it take to make a gallon of gas?
Jeez, last time we heard from you I think you were in Bangkok or somewhere…
“Increasingly, sellers are realizing they need to price their home based on the current market, something that was a little tougher when the market first began to soften. ‘People are starting to realize it is irrelevant what they paid for the property or what they owe,’ she said.”
I’m glad to hear that sellers in Mass. are waking up to reality. It seems to be taking a little more time in California. Sellers with ordinary middle class homes with ordinary little yards are still trying to get half a milllion for them in the Sacramento area. And a lot of bank owned homes, IMO, are still WAY over-priced. Some of those homes might be selling for all I know. But anyone who buys now I’m pretty sure will only feel screwed in a couple of years, maybe even be the last wave of forclosures. I would expect that people who bought their homes ten or more years ago and can easily underprice their homes and still make a profit, would do so. But so far I don’t see a lot of that.
And it’s funny that people are backing out of deals over $10-15k. We were on the wrong end when we both bought (in 03) and sold (last month). It is a miserable feeling when you’re in the wrong side of the transaction both times, and the other person determines the terms of the sale. When buying, the sellers were not willing to make certain fixes for us, though they were making a huge profit off us. In selling, we not only took an offer than was 15% lower than the appraisal, but we had to pay $5k in the buyer’s closing cost, and spend over $1000 in fixes that we should have insisted that the previous owners do for us. It was a hard lesson. But I’m just glad we sold before the house was worth even less. I never want to be on the wrong side of a home transaction again.
Congrats on getting out when you did. Someday you’ll look back and see how little you really paid to get out compared to what it could’ve been and be very happy.
Congratulations on being smart and unloading the house before it became more of a burden.
The realtor’s fee and the closing costs are nightmares for a short term homeowner.
If you buy a home for 200k today and sell it for 200k tomorrow, but have to pay realtors fee and closing costs, you lose about 11%.
IMO there are a lot of people who never added that into their calculation. If you lose11% on transaction costs and have to lower the price by 10%, you’re probably toast.
I would expect that people who bought their homes ten or more years ago and can easily underprice their homes and still make a profit, would do so.
It could be a lot of long-time owners levered up against the equity the market supposedly said their house had. HELOC-ed to da max.
NEVER underestimate the blinding power of greed!
I met a 75 year old man who put a 1960s 3/2 on the market here a couple of months ago for 600K, and he bought it 10 years ago for about 170K with a VA loan. He honestly thought he was “giving it away”.
He looked like he was in bad shape. I doubt he will live long enough to burn through 430K in equity anyway.
And how many of these home owners resisted HELOC madness ?
And in general if someone has been in the same place for ten years the probability is they are not moving soon. I’m not saying they won’t but I believe that most homes bought and sold are buy people that live in them less than seven years. The number of homes sold by longer term owners drops off dramatically after that.
So you can see that most of the churn in real estate was mobile people selling to mobile people. So homes had a underlying ponzi scheme going for decades boosting the values. Now that this has come to a halt your right that the only people that can sell are those least likely too and even less likely to pay inflated prices if the sell and buy.
Overall the bubble has done a massive selection of the fittest for people who are more interested in the shelter value of a house vs renting and plan to stay for a long time.
“But still, there’s optimism in the market. According to Gallagher, ‘It’s a great time to buy. Mortgage rates are down, property prices are down, and if they wait to long, they may end up buying when it’s going back up.’”
To any of you lurkers from the Real Estate Industrial Complex:
Good advice is short in demand these days but consider these words a favor from me. Your attempt to instill a sense of urgency to boost sales doesn’t work when demand is shrinking. In fact, it has the opposite effect on potential buyers. We see this ploy as deceptive and desperate. Oh…. you guys didn’t know you look desperate? Apparently, Mr. Gallagher and your other business associates haven’t realized it yet. Wrap your greedy skulls around this fact, adjust your attitudes or the market will do it for you.
Sincerely,
The Market
I think I’ve figured it out. At annual RE association meetings, the assesmbled brain-trust looks over the room and picks the stupidest, most lacky-fied moron available to be their president.
Now I ask you, how stupid do you have to be to warn propective buyers that by waiting, you will suffer the curse of purchasing as home prices are rising? Then you attempt to sell this as a bad thing??? I really love this stuff, Ben.
Last weekend I was in an open house in Miami. Small 1930’s 2/2 on about 1200qsft in a decent n’hood for $450,000.
Me: How much?
6percenter: $450,000
Me: Not much house of the money. Ya think prices will come down some more? (…just to see what this douche had to say about it)
6percenter: Not really. We pretty much have hit bottom now. People can’t sell for less than what they owe.
Me: Ever heard about a short sale?
6percenter: Uh?
Me: That’s what I thought. Good luck with it.
“People can’t sell for less than what they owe.”
The response to this gem of wisdom is “I don’t have to buy it from you. I can always buy it from the bank. They don’t owe anything on the house.”
“People can’t sell for less than what they owe.”
If that’s the case, you have approx. $1 trillion of houses right now that can’t be sold. (Actually, I heard an industry estimate of $750 billion of houses with loan value > house value, so I tacked on a little, to make it a more accurate estimate.)
How many expect this number to decrease in the next 12 months?
LOL… I wonder how many people think that way. If they want to cut their losses they can’t afford NOT to ask for less than they owe.
Real estate markets are different. Most sellers in my area are still turning down offers that will let them walk away scot-free, from what I hear. They still think we’ve finally bottomed, and are angry when buyer’s can’t see it.
“Real estate markets are different.”
That one is remarkably similar to words in NAR’s national ad campaign that states “every market is different”. You need to step up and explain your words.
I would really like to see some news articles where they interview various sellers and just get their stories. Like would a lot of them be “We’ve been getting offers, but they’re $50k less than what we’re offering. And we’re already priced $15k below appraisal.”
Maybe a lot of them have the same mindset we had when we first put our house up. We knew the market was headed down, but we didn’t realize until we got our first official offer that the things were already worse than we thought.
I’m not sure why people call you a kool-aid drinker when the meltdown isn’t happening at the same rate in every market. Look at the Case-Shiller index: Not every city has the same percentage drop. Some will be worse than others, but no one can predict how bad it will be.
I’m saying that the breakdown in prices is happening at different rates around the country. As much as I’d like to see Alaska and the Pacific NW tumble as far and as fast as California/Nevada/Florida already has, it only just began in the last 6-8 months in Anchorage…so there is a lot more denial up here. I think we are about a year behind California when it comes to the sellers dropping prices 20-30% in just a few months.
But this is evident on any national chart of foreclosure rates, such as the one we’ve all seen published by the Fed recently…I can repost the link if you want.
My state will tumble when the Option ARMs reset. HELOCers are already failing, and there wasn’t as much subprime lending here as there was in Cali. This was due to our real estate crash 20 years ago after the pipeline got built, which until now was the largest drop in RE prices in the history of the USA…apparently lenders were somewhat more conservative, but only until about 2006. I also suspect that a lot of prime property got bought out by speculators in the late 80’s and their mortgages are mostly paid off now.
From what I see in CA, certain cities had massive new development in the last 3-6 years. The town where we just sold had several pockets of new developments. There were just a few foreclosures last year, but since the beginning of the year it got smacked hard with foreclosures and developers who were desperate to unload brand new inventory. Lincoln got hit particularly hard since during the bubble it exploded from a tiny nowhere town to a pretty well populated commuter town. North Natomas, same thing. It’s like a whole new town sprouted up. Places like Roseville, Folsom, and El Dorado Hills, which have had a lot of new (and pricey) homes should follow soon.
The road to hell was paved, with not so-good intentions.
“Thomas Fitzgerald is happy with the new home he bought two years ago, but not about the vacant houses that surround it. ‘My neighborhood is going to hell,’ said Fitzgerald, who lives in the city’s north section.”
Ben you could have titled this thread, “Light Dawns on Marble Head!” a popular Boston area saying for those that finally grasp a concept!
The Fed just cut the interest rate. What type of intervention by the government, if any, could realistically change the direction of what is taking place with the housing market? Is there anything they could do?
Anyone savvy with the workings of economics? So many people lost their homes after the last big rate cuts. Would there have been more?
Also aren’t these rate cuts contributing to rising prices of rice around the world? I saw this article on Market Oracle: http://www.marketoracle.co.uk/Article4521.html “Bail Out Homeowners (or) Feed the Poor”
Stan, simply put - no. Besides, if the housing market is so out of whack that world records are being set for foreclosures, defaults, walk-aways, price drops and overall affordibility, who in their right mind would want to prolong such a mess?
Oh yeah, it’s the goberment…
Well, I would imagine they would not try to prolong it, but somehow stimulate the economy (same idea as the GW rebate checks). I do not think the GW checks are really going to make much of a difference, though I do not know much about economics. I am also guessing lower rates means it is cheaper to borrow $ to invest in developing business, education, purchasing stuff, and real estate. My question is, how much lower would the fed have to drop the rates before it would change the current perception of the housing market?
Thanks.
Buying a house is so much more than rates. I bought my first house in the mid-’80’s at something like 11.5%. But I only paid 87K for 3000 sf.
Without the fantasy belief of millions of J6P’s that buying house is the way to instant wealth, and without the suicide loan products to enable them, it ain’t gonna happen.
Besides, rates are lower than inflation at this point. In my mind the only thing these lower rates will do for housing is create in sellers the false belief that the boom is back, making them less willing to deal.
I’m now short gymboree, fannie and freddie. Anyone else?
I’m short north carolina.
I’m long North Dakota.
New England runs on imported Middle East oil.
$100 million(!) is currently in arrears to public utility providers in Mazzland alone.
So what’s next winter going to bring? $6.00 per gallon fuel oil?
Watch for the beginnings of a mass exodus of low & middle class people to the middle south & south-west beginning this summer.
You need money to move. Plus those with a steady job will be unlikely to quit and move somewhere without a job waiting.
They’ll just turn down the thermostat and put on a sweater.
Travel to poor areas in the third world when it’s cold and go in a store or government office. Most people will still be wearing their coats. People will put their coats on in November and take them off in May. The entire family will sleep in the warm room. They will shower once a week. People will move into multiunit apartments which are much easier to heat. I think what we are about to see is a collapse in demand for oil due to poverty.
U.S. demand for gasoline and oil is falling slightly. Worldwide, demand for oil is currently climbing 1-1.5% annually, similar to population growth (87mm bbl/day is approx. worldwide demand). Greater demand for the benefits of oil is offset by greater efficiencies. Supply is tight.
“Travel to poor areas in the third world when it’s cold and go in a store or government office. Most people will still be wearing their coats. People will put their coats on in November and take them off in May.”
Conversely, does that mean that come summertime in Texas folks will get to sit around their office in shorts and a tank top?
The Hamptons have only begun to fall. Wait until the Bear Stearns debacle truly finds its way into the housing numbers.
Reminds me of a comment a friend of mine said about Vermont in winter: “you could always tell the out-of-state lawyers who would show up at the courthouse dressed in suits and “proper business attire.” The local lawyers would show up dressed like lumberjacks as so did the judges. Anyone who doesn’t dress for the weather in winter in Vermont was considered automatically a fool.”