Quite Happy To Walk Away From A Speculative Venture
The Concord Monitor reports from New Hampshire. “When Louise and Bob Cloutier walked into their dream home on Buck Street in Pembroke, there was an old mattress in the living room and mold lining the insulation on the front-porch windows. The couple got the deal from Bert Cox, a real estate investor in Concord who bought the home for $100,000 from someone facing foreclosure.”
“The previous owner owed nearly $240,000 on the mortgage and simply could not pay it back. Cox persuaded the bank to let him buy it for $100,000 and let the borrowers walk away, rather than foreclosing on the property and ruining their credit.”
“‘The truth is, the house wouldn’t have brought $50,000 at a foreclosure auction,’ he said.”
“Just a few years ago, when houses appreciated overnight and sold within days, many investors bought inexpensive houses, hired a crew to fix them up as quickly as possible, and resold them for more money than they had paid. Now, Cox said, many of the good deals are bank-owned properties that have been foreclosed on.”
“A successful short sale can require hours on the phone with a mortgage lender. An investor must demonstrate to the bank that the homeowner can’t pay back his mortgage, that there is a buyer lined up, and that the house is worth what the buyer is offering.”
“‘It’s amazing that you’ll go in to see someone, and they’re quite happy to walk away from their house,’ said Richard Dale-Mesaros, an investor from Campton. ‘Usually, the main goal is to be able to get out from under their house without having to bring money to the closing, and to repair their credit.’”
The Newburyport News from Massachusetts. “While each new month seems to paint a grimmer picture of the Bay State’s real estate market, Greater Newburyport is bucking the trend and faring better than average. Longtime local agent Jerry Lischke says the sky is not falling as much as confusing data and misleading numbers point in that direction.”
“‘Beware of narrow statistics. Their basis will always be misleading if you take a snapshot of one month,’ Lischke said. ‘This is housing. In the years between 1996 and 2005, people played the real estate market like a speculative venture. It’s not, it’s long-term capital.’”
“Lischke said the monthly release of the latest trends reflecting ‘normal’ transactions only helps the banks, which do not want any of the loans they have written to be labeled as ‘bad,’ and the assessors, who use the data to make homes look more valuable, therefore, charging more taxes for a city or town.”
“‘It’s just inaccurate comparing anything from 2007 to 2008,’ Lischke said.”
The Telegram from Massachusetts. “New England’s economy will see slow growth in the second half of the year, but will lag behind the nation as a whole due to the ongoing housing slump and slower job growth and per capita income growth. That was the forecast given by a panel of economists and speakers at yesterday’s New England Economic Partnership’s Spring Economic Outlook Conference, held at the Federal Reserve Bank of Boston.”
“‘The expectations in the housing market is that it will not stabilize until the second half of 2009, and we won’t see any state with housing prices where they were at their peak, in 2006, at any time in the forecast,’ said Ross Gittell, an economics professor at the University of New Hampshire.”
“‘This is actually the largest peak-to-trough decline in housing starts to occur in nearly 50 years,’ said Eric S. Rosengren, the bank’s CEO.”
“Particularly hard-hit by the foreclosure situation is the multifamily market, he said. In 2006 and 2007, multifamily properties accounted for 28.4 percent of the foreclosures, even though they constituted only 10.8 percent of the residential purchases since 1990, he said.”
The Associated Press on Massachusetts. “When Osman and Rose Bangura bought a two-family home three years ago at the peak of a housing boom, they saw a good investment in the $400,000 Colonial.”
“For a couple years, they lived upstairs while rent from a downstairs tenant helped cut hundreds of dollars off the monthly payment.”
“But, like many owners of southern New England’s nearly 320,000 two- and three-family homes, the Banguras ran into trouble. Their monthly payment on a pair of adjustable rate mortgages jumped from about $2,900 last summer to nearly $4,200 - out of reach for a couple with $50,000 in annual income, supplemented by $1,150 in monthly rent from their tenant, a single mother of two children.”
“‘We are praying we will be able to keep it until the home crisis starts getting better, and maybe we’ll be able to refinance the loans,’ said Osman Bangura, who juggles two jobs and has managed to stave off foreclosure so far with the help of a local nonprofit.”
“Massachusetts, home to 220,000 two-families and three-families often known as ‘triple-deckers,’ has seen the steepest decline among the three southern New England states where such homes make up significant portions of the overall housing stock.”
“Last year, more of those homes in Massachusetts had foreclosure petitions filed against their owners than were sold.”
“And while sales of single-family homes in New England’s most populous state fell 10 percent last year, two-family home sales dropped 35 percent, and an even sharper 43 percent for three-families.”
The Boston Herald from Massachusetts. “An Old Town Trolley gave prospective home buyers a first look at what may be their next homes yesterday during a sightseeing tour of foreclosed properties in Dorchester and Roxbury that city officials want to restore to life.”
“The Department of Neighborhood Development sponsored the trolley tour, which visited 47 properties on 29 streets, including condo units, single, two- and three-family homes and mixed-use buildings.”
“‘What happened in the past is that people wanted to buy houses, they were so anxious to buy a home they got bad mortgages, bad advice and what this is all about is giving good advice and helping them through the process,’ said Boston Mayor Thomas M. Menino, who greeted prospective home buyers aboard the trolley before it departed from City Hall Plaza.”
“This is awesome,’ said Mezfin Clary of Mattapan. ‘I’m a first-time home buyer and I’d like to have something that I can live in and supplement my income.’”
Bloomberg on New York. “The foreclosure tour, mobile proof of the U.S. housing bust, has rolled into the New York City market. For $75, prospective buyers on the Long Island version last month got velour banquettes, a supply of potato chips and Reese’s Peanut Butter Cups and visits to eight foreclosed homes, with a general contractor and home inspector in tow.”
“The white bus pulled up to a small home in East Meadow, Long Island. The driveway was cracked, and the vinyl siding sagged. ‘You have some mold issues; you can definitely assume some water issues,’ said Dean Miller, a broker on the tour. Then again, he said, the asking price for the 1951 Cape Cod was $312,900, down from $457,101 in February.”
“Foreclosures are scattered across otherwise healthy neighborhoods, offering New Yorkers a chance to move up to a house they wouldn’t ordinarily be able to afford. The East Meadow home is a 45- minute commute from Manhattan.”
“Some of the tourists said they’d be ready to buy the same day. ‘If the right house comes along, you really don’t need 20 days — at the right price,’ said Brian Cacioppo, a 24-year-old salesman shopping for his first home with Courtnie Harrison, 28. Buying a foreclosed home could give them some cash for improvements, he said.”
“‘With a foreclosure, it’s selling for lower than it’s worth and the equity is already in the house,’ Cacioppo said.”
“Prices are still high, said Liliana Martinovich, who wants to move closer to her son’s school in Garden City. She said she’ll wait for prices to fall further before buying.”
“‘It seems like it’s going to get worse before it gets better with all these Wall Street layoffs,’ said Melissa Cohn, president of Manhattan Mortgages, a mortgage broker active in Long Island. New York City, where financial services are the largest private employer, expects to lose 59,000 jobs by the middle of next year, according to the City’s Independent Budget Office.”
The New York Times. “It seemed somehow fitting that a recent tour of foreclosed homes in Nassau County was held on a bus that, with leopard-print sofas, a wood- and mirror-paneled ceiling and a wet bar, looked as if it was headed for Atlantic City rather than for New Hyde Park.”
“Many of those who had lost ownership of homes on the tour route may well have gambled on rising real estate values.”
“‘It’s hard to believe that someone paid more than $500,000 for this house just a couple of years ago,’ said Joan Toomey, a passenger on the tour, about the first house on the tour, on Bedford Avenue in New Hyde Park.”
“The house sold for $550,000 in 2006, according to information provided to passengers by David Farrell, owner of the Mineola real estate firm where the tour started. The asking price for the house, which is owned by the U.S. Bank National Association, a subsidiary of U.S. Bancorp of Cincinnati, is $320,000.”
“When prices were rising, ‘people thought it was going to stay like that forever, and it didn’t,’ said Connie Lassandro, the director of housing and homeless services in Nassau County, which runs a counseling program for people facing foreclosure. ‘The rug was pulled out from under them.’”
“In Nassau in April, there were 502 foreclosure filings, more than double the number in April 2007, according to RealtyTrac. In Suffolk County, foreclosure filings increased by 43 percent, to 734, compared with April of last year.”
The Buffalo News from New York. “Bankers are cautioning state lawmakers and regulators not to go too far in passing legislation to address the mortgage crisis and lending abuses, lest they unwittingly increase the cost of borrowing for consumers.”
“‘We’re worried there will be legislation that will make it more difficult and more expensive to extend credit in New York state,’ said Mark Czarnecki, president of M&T Bank Corp.”
“In particular, they’re not objecting to the imposition of new requirements or the prohibition of certain practices on so-called ‘non-traditional’ mortgage loans - such as high-cost subprime loans to borrowers with bad credit.”
“But they are concerned about how those loans are defined, to make sure traditional prime loans aren’t accidentally included if the threshold is set too low.”
“Also, they are firmly against a suggested one-year moratorium on foreclosures. That bill passed the Assembly early this month, and is pending in the Senate Judiciary Committee.”
“New York already has the longest foreclosure process in the country - averaging 445 days. That’s designed to protect homeowners by giving plenty of time to work out alternatives. Extending it by another 365 days, bankers said, would make it harder for banks to keep homes occupied and prevent abandoned properties from becoming derelict.”
“‘We pride ourselves on taking care of the houses in foreclosure. We’ll do anything to keep somebody in the house,’ Czarnecki said. ‘Put another year in foreclosure, and bad things tend to happen.’”
The Pocono Record from Pennsylvania. “Congress has enacted several bills to help struggling homeowners, Congressman Paul Kanjorski said Saturday, but owners themselves have to take timely proactive steps to keep their homes.”
“Up to 2 million Americans could lose their homes this year, though federal and private partnerships might save 500,000 owners from foreclosure, Kanjorski said during a forum sponsored by the Pocono Mountains Association of Realtors and Pocono Builder’s Association.”
“‘Probably some in this room aren’t going to make it,’ he told dozens of attendees. ‘That doesn’t mean your life is over.’”
“Kanjorski said some buyers and lenders have only themselves to blame for their predicament. Some buyers bought much larger homes than they could afford. He said 16 percent of subprime loans guaranteed by one property insurance company went into foreclosure without a single mortgage payment made by the buyer.”
“‘My question is: Where was everybody’s brains?’ he asked. ‘Where were the regulators? And the regulators could say, ‘Where was the president? Where was the Congress, the governor, the state Legislature?’”
‘My question is: Where was everybody’s brains?’ he asked. ‘Where were the regulators? And the regulators could say, ‘Where was the president? Where was the Congress, the governor, the state Legislature?’
Once again, congress, it was a mania. A popular delusion. Like tulips, and internet stocks. There is no backward-looking explanation that will make sense. And not understanding what really happened is why you guys are not correctly assessing what needs to happen now. Prices not only will fall, they must fall if the economy is ever to recover. And any steps to prevent or slow that only make things worse.
Of course, we have guys like this who contributed to the media hysteria and now want the government to try and paper over his mistakes. From the Telegram article:
‘Mark Zandi, chief economist for Moody’s Economy.com, told the conference that despite the forecast for slow job growth, the region’s nonfinancial businesses have generally strong finances and will be able to weather the current economic downturn.’
‘He also pointed out that the region has not seen significant job layoffs.’
‘I do think it would be helpful if the administration and Congress stepped forward with efforts to stem the decline in the housing market,’ Mr. Zandi said.’
If you’ve got a mortgage, a layoff is pretty significant. Espically for the Boston region, where a mobile worker can easily get the same salary and a cheaper cost of living most everywhere else.
Meanwhile the homers claim that the culture of Mass will keep people here. Right. When you’re faced with both a husband and wife having to work a job full time just to afford a very run-down basic 3bed/1bath house that costs $1200 a month to heat in the winter; that culture is looking pretty negotiable (and I’d add, there are almost as many rednecks in North Carolina as Massachusetts, so a Mazzhole moving south won’t feel over their head).
So it doesn’t matter how many layoffs occur - there could be job growth at the entry level, but it is the 5-10 year vetrans that are leaving. My employer can hire with the best of them, keep ‘em for 2-3 years, and then the churn happens as they start to look to get a house or have kids. They soon realize they can get the same salary (or even a 15% bump) going to North Carolina or Texas…so they do. So you take their “experienced” salary and replace it with an entry-level salary. And my employer just can’t figure out why everyone is leaving, and our numbers look good - everything but the annual turnover…
At least Michigan and Wisconson seem to get why they’re doomed and are actively trying to save themselves. Mass seems to just hold on to the “Secret” way of doing things: Just keep thinking everything is allright, maybe it will turn out that way.
This sort of scenario is part of a bigger picture, which is the general erosion of the middle class combined with then shifting of former industrial hot spots to new regions where business is more conducive.
The way I see it, if you were to draw a red line through Ohio, just about everything above it are states that are undergoing a transformation and falling increasingly into economic decay. The reasons for this are complex. But I’d say part of of it has to do with the degradation of the middle class as a result of corporate penny-pinching ( moving manufacturing to cheaper areas with less unions) and so on, which in turn creates a two-tier social structure. SF Bay Area is a perfect example of this where as of now, there is essentially no middle class to speak of. You’re either filthy rich, or you’re just making it ( or you do like many here and rent cheap and save big)
When an area such as the Northeast or the West Coast develop a two-tier social structure, you get problems such as the ones they have now- a pinching and squeezing of the middle class to the point where the populace simply moves away. That they’re moving to other places likely means that once the economies mature and the population reaches the saturation point, the process will be repeated and another migration elsewhere will occur. The amount of people moving to NC and so on is alarming.
If the US retains the development patterns that it has now, we’re ultimately doomed to eliminate the middle class.No Democracy without a middle class survives for very long.
moving manufacturing to cheaper areas with less unions
You ever work in a hard core union shop? It ain’t just saving pennies having no union to deal with…
Michigan? Wisconsin? Know why they are doomed? Doing something about it?
What are you smoking, man? Whatever it is, don’t bogart it. Pass it over here.
Those in Michigan or Wisconsin that will admit it know they are doomed. That does not include anyone with the authority to make structural changes, such as anyone in government.
RE: Mass seems to just hold on to the “Secret” way of doing things:
Mazz is the Land of Ted Kennedy.
It’s old, old money, political cronyism, and big unions whose enormous profiteering put the finanical interests involved in the construction of the Seabrook nuclear power plant into bankruptcy in the early 80’s and in the 21st century; looted the Big Dig for $12 billion in overruns.
There’s scads of dirty money stashed away here to weather any sort of financial apolcalypse.
However, if you haven’t “grown-up” here and been part of “the system” like purchasing a house in the 70’s for beans, you’ll always be a financial second-rater and outsider.
Almost forgot: Where was our “maestro” Fed chairman? Or better yet…where was his mind? Here is a recent example of his ramblings in pursuit of saving his legacy:
Greenspan: Bubbles Are a Necessary Part of Innovation
Greenspan claims the…“advances in home financing” would not have evolved as fast without our recent housing boom. It’s a tough argument to buy.
http://seekingalpha.com/article/79309-greenspan-bubbles-are-a-necessary-part-of-innovation#comment-177752
Hi Ben,
Sent this to you in email last night:
Washington Post: “Villians in the Mortgage Mess? Start at Wall Street. Keep Going”
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/30/AR2008053002568.html?sid=ST2008053002739
Banks and mortgage lenders. They hardly needed persuading to get on the bandwagon. Lenders had just gone through wildly profitable 2003, when falling interest rates ignited a boom in refinancing — and refinancing fees — among prime borrowers. Wondering how to keep it going, lenders realized that they could expand it into the subprime market by qualifying borrowers with loans carrying a low teaser rate — in the 8 to 9 percent range for a subprime loan — then refinance them into another loan before unaffordable higher interest rates in the double digits kicked in. And if they could steer unsuspecting prime borrowers into subprime loans, they could even inflate the subprime market itself. So lenders paid mortgage brokers a kickback for steering borrowers into higher-priced loans.
Lenders also slashed downpayment requirements from 10 percent to 5 percent and even to zero. They quoted monthly payment figures that didn’t include taxes and insurance to dupe borrowers into believing that their payments would be lower if they refinanced. If lenders didn’t evaluate borrowers’ credit at all, they could deem them a higher risk and charge more. Brokers and bank officers often didn’t bother to tell borrowers that providing income and job verification would lower the loan’s cost considerably. In fact, a majority of subprime customers — 61 percent in 2006, by one count — could have qualified for less expensive conventional loans.
The White House. A few sounded the alarm early on. In 2000, during the final months of the Clinton administration, Treasury official Gary Gensler, while commending banks for making more prime loans to people and communities that had been underserved, noted that subprime lending had also expanded, with some troubling accompanying trends, including a worrying increase in foreclosures.
Eight months later, George W. Bush became president. The new administration paid no attention to the developing crisis. On the contrary. In 2001, the Department of Housing and Urban Development barred class-action suits on complaints about kickbacks that brokers receive to steer borrowers into pricier loans. At the same time, Bush, heralding the subprime market for opening doors to home ownership, said that it didn’t need more rules. (He should have talked to his dad, who, as vice president under Ronald Reagan, saw the same mistake being made during the S&L scandal.)
BayQT~
BayQT, I think that the source of the problem can be identified as the repeal of Glass-Steagall #2 on 12th November, 1999.
This was done under the hand of Clinton I, under significant lobbying and pressure from his appointee, Alan Greenspan.
Removal of the legislative separation of commercial and investment banking (which was imposed by Glass-Steagall following the Great Depression in 1935, and way back then identified as one of the causes!) has primed the pump for the credit debacle of the Noughties.
Bush II was asleep at the wheel, but don’t forget the pernicious influence of Greenspan.
I would think they should overshoot on the way down and swiftly…take the bubble’s starch right out of the equation.
“The previous owner owed nearly $240,000 on the mortgage and simply could not pay it back. Cox persuaded the bank to let him buy it for $100,000 and let the borrowers walk away, rather than foreclosing on the property and ruining their credit.”
_______________________________________________________________
How many $140,000 Loser Loans are banks sitting on?
Too many…
I just went through the mental exercise of buying a foreclosure at “historic” prices and fixing it up and I posted about it here a few days ago. It seems that some of these homes are in such bad condition that the repair costs still don’t make it worth it, because the final cost winds up being the same as purchasing a new home at overinflated prices.
I suspect that many of these foreclosures won’t be worth the money until they are priced mainly for the land and the foundation. In the meantime, the blight they cause will drag down everyone else’s property values.
Scrape Value = Value of Land + Value of Foundation + Value of Utilities - Cost to Demolish - Cost to Haul Debris.
Not sure I’d include foundation and utilities in there. I’ve never done such a thing, but I would imagine if you’re scrapping a house and rebuilding, the foundation and utilities would require a near-total rework.
Maybe not if you rebuild the exact same house that was torn down - but how many people actually do such a thing? Even if you are doing something like that - most teardowns have outdated (i.e. not up to current code) utilities and foundations such that you’d probably want to replace them anyway.
The foundation is pretty darn useless if you’re tearing down the whole structure and replacing it with something that is not identical. And odds are it won’t meet code if you were to re-use it. Probably cheaper to just demo it and build a new one than to try and selectively demo it anyway…Anyway, why keep a 100-year old irregular stone foundation that isn’t quite deep enough to put in a full height basement when you can demo the whole thing, dig down another two feet, and put in a foundation that allows selling the property for far more money.
And of course, while you’re doing that you’re going to trash the utilities unless you’re very careful. And probably take out a few trees too.
So, there is no real value in the foundation unless there is some copper pipe in the basement…
Cox persuaded the bank to let him buy it for $100,000 and let the borrowers walk away, rather than foreclosing on the property and ruining their credit.”
“‘The truth is, the house wouldn’t have brought $50,000 at a foreclosure auction,’ he (Cox) said.”
This Cox fellow doesn’t appear to be too bright. Or am I missing something?
He’s just another 49 card deck, in a house of cards…
Ben left out that he sold it to the Cloutiers for $135,000. Crazy like a fox…
You would be correct based on that statement alone. However, if I read the article correctly, he paid 100K and then flipped it for 135K to a future FB who put another 45K into it.
Wonder if they read his comment.
This Cox fellow doesn’t appear to be too bright. Or am I missing something?
All he’s saying is he sees an ineffecient market that can be exploited. House would fetch $50K at auction, where professionals would need to factor in profit margin, carrying costs, and risk of loss to the calculation. In most cases, an FB will only factor the cost based on personal budget and the value of shelter (should be comparable rents, but that seems to have gone out of style). Two very different calculations from the two types of buyers, hence the discrepancy and potential for exploitation and profit.
Brings to mind a saying, something about what happens when you swim with sharks…
The saddest thing about the Concord Monitor story is that it shows how many people there out there who are still willing to be the greater fool. Here’s a house that the ultimate buyers (the Cloutiers) could have purchased at a foreclosure auction for $50,000, but the real estate investor pays $100,000 and sells it to the Cloutiers for $135,000 (which Ben unfortunately omitted from the posting), who then put another $45,000 to make it habitable. The mere fact that there are people out there willing to pay 2.66x auction value — and that there are still flippers out there willing to take advantage of them is … to say the least, unfortunate. As PT Barnum so famously said…
The mere fact that there are people out there willing to pay 2.66x auction value — and that there are still flippers out there willing to take advantage of them is … to say the least, unfortunate. As PT Barnum so famously said…
“Life is hard. It’s even harder when you’re stupid.”
—John Wayne
He said 16 percent of subprime loans guaranteed by one property insurance company went into foreclosure without a single mortgage payment made by the buyer.”
This is an interesting statistic. I wonder if it’s typical.
What shocks me is with all these handout and forgiveness bills being proposed and passed by state and fed legislatures, few of them have any provisions to weed out the most egregious abusers.
Personally, anyone who put no money down and only payed i/o or a teaser should also be ruled out. They had no skin in the game and aren’t losing anything if forced to move because they can’t afford an interest rate adjustment. Yet I’ve never seen any provision in any forgiveness/handount/aid bill that excludes these folks.
You would think people who never even made ONE payment shouldn’t get tax forgiveness for forgiven mortgage debt, but they will if it was their primary residence.
why give anyone anything ?
Well, of course, that’s what I think. But lawmakers (both Dems and Repubs) seem determine to give my money away to get-rich-quickers and schemers. At least they can have SOME guidelines.
That indicates a 16+% fraud rate for the subject loans which tells me that a certain insurance company has zero risk control.
And there is no question that if no mortgage payments were made that a straw buyer took the property off the hands of a seller for a price and the appraisal is bogus .
Why is there any acceptance at all of Lenders having this kind of early default rate ? When did it become OK for Lenders to breach their duty to underwrite loans ? The lenders got their commissions for handling the loan and paperwork ,yet they have no duty to underwrite the loans in a prudent manner ? A lender has no duty to control their commissioned sales people and prevent fraud?
If any other industry was this incompetent and fraudulent they would be closed down .
http://www.boston.com/news/local/articles/2008/06/01/home_prices_see_sharp_decline/
Ben, I emailed you this before I saw the whole Northeast thread.
Boxford, is very high end.
Having a tough time this morning.
I emailed this to you Ben, before I saw the Norhteast thread.
I posted a link to this article but it didn’t seem to get posted?
Anyway, here you go from yesterday’s Boston Globe. Boxford is very high end.
Home prices see sharp decline
Home prices across the northern suburbs posted sharp declines from January to April, with double-digit percentage drops recorded in several communities compared with the same period last year, according to statistics released last week by The Warren Group, a Boston-based publisher of real estate data.
more stories like thisCities, particularly urban centers hit hard by the subprime mortgage crisis, had the biggest drops in the median price of a single-family home for the first four months of the year. Lynn, the largest city in Essex County, had a 10 percent decline, to $210,000, compared with $265,000 for the period from January to April 2007, the data shows. In Chelsea, which does not have a large inventory of single-family homes, prices fell 33 percent, to $220,000, from $330,000 in 2007. Everett’s median price fell 23 percent, to $260,000, from $340,000 a year ago. Haverhill saw prices fall to $270,000 from $320,000 a year ago.
Small towns, where not as many houses hit the market, also posted eye-popping drops. In Boxford, the median price of a single-family home dropped 31 percent, to $594,500, from $857,500 for the first four months of last year. Georgetown’s prices dropped 27.5 percent, to $352,500, from $398,500 last year. Merrimac’s median price fell 33.8 percent, to $288,3000, from $436,125 last year, the data show.
The steep drops come as the median home price in Massachusetts declined 12 percent for the month of April, to $305,000, compared with $346,750 in April 2007. The decline was the steepest since The Warren Group started recording real estate prices in 1987, worse than the housing slump of the early ’90s.
“But the early ’90s price declines weren’t as dramatic as the drops we’re seeing now,” Timothy Warren Jr., chief executive of The Warren Group, said in a prepared statement. “Let’s hope that these lower prices bring buyers back to the market, so this slump will have a shorter duration.”
75 bucks for the foreclosure tour? for chips and reeses?
A fool and his/her money are soon parted…
Gas and the Realtor (TM) ’s time must be getting more expensive these days.
It is the short bus, for a R.E.ason…
Which will be the first short bus tour to impose a fuel surcharge?
A three hour tour, a three hour tour…
…with a general contractor and home inspector in tow.”
I guess the money paid for those guys attendance.. the salesman’s probably splitting the take with them.
“How much do you think this will cost to fix?”
“Aw, that aint gonna cost hardly nothin..
“How much will fixing it increase the value of the house?”
“It will add substantially to the value!”
…unbiased, professional opinions..
are most short s sales kinda squirley ?
I see low prices ,but the deals get fkd up along the way
the folks with money make the deals. if you ain’t got no money you ain’t making no deal or you are going to get an atrocious deal. yo booty! cash is king.
Hey,TaxMe…
Squirrely, yes. A little story from Central Calif. Yes, as others point out, we overpay for everything. And these numbers are large hereabouts, so I hope I don’t get flamed.
Short sale saga (short version) with somewhat rounded numbers:
Lakefront home sold three years ago for $1.3 million. Five years prev., it was $800,000. Borrower in default. It is a “lovely home,” cept’n it has been partially stripped of fixtures, inside and out, the mature landscaping is dead, swimming pool full of pollywogs and so on. But you can fish from the back yard (lake, not the pool). I offer $700,000. Seller wants out so of course doesn’t care. I submit a file of paperwork (financial), that includes about everything except three years of tax returns. Bank has a short sale office and a foreclosure office. They foreclosed on it and then sent it back to “short sale” for disposal. Real estate agent said there were better cash offers. I said fine, take one. They didn’t. Take one or have one, I don’t know. In order to save face, the short sale office wanted me to rewrite offer for $900,000, then inventory the damage and repairs and come up with something in the eights. That came from someone in “loss mitigation.”
What they didn’t do:
— Give me M&Ms or Reeces.
–Make a proper counteroffer.
– Consider that their holding the property would cost X thousands of dollars monthly.
– Anything that would give the impression that the $1.3 million previous was a “bad” loan.
So when I didn’t bite at the nine, the bank turned around and listed it through their REO dept. at $795,000. I have lost enthusiasm.
Oh, another thing. While I had made the original offer subject to the usual inspections (whether the hot water heater is there I still could not hazard a guess), they wanted to send out an “appraiser” to value the property. “Our” appraiser, they said.
I told them I had already put a value on the property and it was worth what a buyer was willing to pay. 90-day old comps hereabouts are useless; REO sales are crushing median sales prices at an accelerating rate.
There also was a “short sale specialist” involved in some of the discussions, whom I was never introduced to. My brother, a decent businessman, said I might have done it the bank’s way… backed it out after subtracting for repairs. “Makes them look better,” he said, and reduces water cooler talk.
To my knowledge, no rep of the bank - and this property is a large drain on their non-performing asset portfolio (to use the econ-jargon), ever visited the property during weeks of negotiations.
The home was 5,000 square feet. No, my tribe does not need that much space.
The house I live in - somewhat modest - is fine by comparison. Less than half that size, and we don’t use bunkbeds.
I will pause and reconsider the next time I nibble at what looks like a discounted “short sale” property. Too many headaches, and as many on the board have pointed out, I need to wear gloves when I get these ideas.
Falling cutlery and all that.
tx
I’m seeing low prices that the bank tries to negotiate upward after hooking a fish
lame action
yep. all this happy-talk reporting of eager banks selling off foreclosed homes for pennies on the dollar? show me. prove it!
here in Sacramento it aint happening to the buyers advantage. it’s a buyer’s logistical nightmare as the lenders/banks stonewall & drag their feet on the new offers. you KNOW there are whole depts of obsolete workers dedicated to staying employed, so why make any process easy when the false veneer of complication props it up?
COVER YER ASS is the name of the game now. banks are between a shareholders rock & a regulators hard spot trying to offload the foreclosures:
price too low & the bank’s greybeards/investors scream ” DONT GIVE EM AWAY YOU DAMN FOOL “!
price too high to sell results in regulators chewing out the bank honchos to ” SELL THE NON-PERFORMERS ALREADY “.
meanwhile everyone in the food chain is scrambling to stay relevent to the process. no choice now but to justify that narrow specialized job you have as long as possible. (” Workout Specialist”.)
and all the employees in the bank will help each other out because it might be THEIR AZZ on the chopping block tomorrow . . . so stick together while you can.
much like the buggy whip makers felt last century.
it’s all so hilarious. perpetual rat race played by materialistic fools chasing an evershrinking piece of cheese.
When both of my “shift” keys, broke, at least I could still use the “CAPS LOCK” key.
Still, it slowed me down a bit.
Hysterical. Stick to your guns. Thanx for this post!
‘I do think it would be helpful if the administration and Congress stepped forward with efforts to stem the decline in the housing market,’ Mr. Zandi said.’
I have a young nephew who likes to play this game where he blames me for all his misfortunes, e.g., he drops ketchup on himself while we’re eating out and then says with a grin, “That’s all your fault, you made me do it.” My part of the game is to say, “I’m a very powerful person, aren’t I?”
Mr. Zandi, I hate to tell you this, but you’ve been conned if you believe that the PTB have the power to stem the housing tide. It’s all a game, their power is but an illusion. Man the lifeboats.
It’s not the decline in market values that is the problem, it is the number of people who bought homes they cannot afford, and the fact that a huge proportion of GDP is now wrapped up in overinflated housing. Geez.
I wonder if he realizes that he’s not doing any favors for Moody’s already dubious reputation?
One side note - you’re confusing “the administration and Congress” with the PTB. They are related, but not one and the same.
That being said - you’re right that neither have the power to stem this tide. What they do have though is the power to push all the weaker people out of the way as they run for higher ground. Then when the tide recedes, they’ll be the ones left standing. IMO that’s a good metaphor for things like this - e.g. what happened during the Great Depression (what may soon be known as GD I) and to some extent what happened during other downturns like the Panic of 1907.
What they do have though is the power to push all the weaker people out of the way as they run for higher ground. Then when the tide recedes, they’ll be the ones left standing.
Well said, and (unfortunately) very true. There will be no general “bailout” for Joe & Jane Specuvestor. However, there are/will be plenty for BS, Shittybank, Tan-man, etc. Can’t allow the Haves and Have-even-mores to pay for their own mistakes, now can we?
Oh yes,
Push away, just remember, push too hard, revolutions are known to start.
Yes very true. And, I might add, a very good reason why the second amendment was enacted - to keep the pushers from pushing too hard.
The problem is - revolutions are usually aimed at overthrowing the politicians in office, not at the true PTB. (Thus the “That Be” part of “Powers That Be”)
Think Animal Farm.
Sen. Kennedy also thinks the south is better since his surgery is going to be performed in NC as opposed to Taxachussets.
The smart money has forever left high tax jurisdictions for lower ones.
Whoa! You mean Boston’s many hospitals aren’t going to be what saves Ted Kennedy? If not him, how can they save the local economy?
Oh yeah, that’s right. They can’t.
Oh the humanity!!!
actually, it is going to be at Duke, which is in KY.
Duke’s still in North Carolina..unless they sold it and moved since yesterday
Thinking of Paducah?
Yep, Duke Medical Center is in Durham, N.C. One of the best cancer treatment facilities there is.
i was thinkin that teddy had a drinkin and runnin around problem. I wonder if there are any nurses there name Mary Jo?
RE: i was thinkin that teddy had a drinkin and runnin around problem. I wonder if there are any nurses there name Mary Jo?
You speak blasphemy.
This is a revered governmental leader who has done so much for so many!
(snicker)
This is the attempted bailout and shuffle the crap period.
From the big banks, lenders and funds to the house flippers and investors. They’re attempting to use phony accounting, statistics and spin to plug the hole while they send SOS messages to the Fed and stear the 3rd class steerage crowd away from the few remaing lifeboats while they plan their escape.
“Bankers, Hedge Funds and Flippers First”
“Women and children…Good Luck”
“Joe6Pack…It’s Every man for HIMSELF”
Nice use of Titanic metaphor, but I’d move flippers from the first to the second group (unless they are rich, politically well connected types that “matter” to the PTB). Also, don’t forget the saver-renters & taxpayers. We’re the ones group #1 is robbing to purchase lifeboats for themselves.
–
“‘My question is: Where was everybody’s brains?’ he asked. ‘Where were the regulators? And the regulators could say, ‘Where was the president? Where was the Congress, the governor, the state Legislature?’”
They were all safely in Crooks’ pockets! Promoting artificial growth!!
Now, what are you gonna do about dat? More importantly, what CAN you do about dat?
Houston, we have a fundamental problem.
Jas
I want to know why we are not conducting investigations on Congress/Senate ,the Regulators ,the Lenders ,Wall Street loan fund providers ,Rating Agencies ,the Feds ,Senator Dodds , the Real Estate Industry ,builders , commissioned sales people and fraudulent buyers ,and on and on.
Why the free pass on all these players in the biggest real estate Ponzi-scheme since the 1920’s.
Funny thing about something that is fake ,you can’t make it real .The kind of price crashes that are taking place Nation-wide are so extreme that it requires a investigation before these game-players are allowed to mess up things more by their cover-their -a-s policies that seem to be penalizing the wrong parties .
Are we a Nation of Law and Order where the Rule of Law is respected ,or will the cover-up continue and set the stage for more corruption and wasted tax dollars where Justice can never prevail .Do the players get a pass because it was the Great Mania and you can’t be expected to prevent fraud , or not commit fraud ,or do your job during a mania? Are there exceptions in law whereby if something is to big Justice and proper remedies goes out the window?
–
“Do the players get a pass because…”
Because the Housing Bubble was Necessary in order to revive the economy in 2003 for the 2004 election. Bush’s re-election depended on it and, more importantly, Greenspan’s reappointment depended on it.
What the two most powerful men in America want badly can’t be prevented can it?
If system weren’t purposely corrupt, both positions would be for a single 6-year term. Period. The first Roman dictator, appointed by the Senate, gave up voluntarily after 6 years! The system is designed with great opportunity for corrupt men (and women these days).
Jas
Problem is, when the nation’s supreme “police” (lawmakers, executive & federal ‘regulators’) are themselves all on the take and in the pockets of the REIC, to what higher authority can you appeal? God?
Perhaps it’s time to hit the ‘ol government “reset” button, 1776-style.
I have a sharp pitch fork & torch at the ready, just waiting for the signal.
–
“I have a sharp pitch fork & torch at the ready, just waiting for the signal.”
GO.
Jas
The additional problem is that all of the political parties are on the same take or they would be making hay by attacking the opposing party on all this corruption . Time for the public to get enraged ,before its to late . Vote them all out ,it’s time for a purge .
The people do have power but they aren’t taking the power because they are so brainwashed by the media and special interest groups . The powers are throwing crumbs to the people while they are throwing loafs of bread to the corrupt .
And the government has smart bombs, cluster bombs, AC-130 gunships, unmanned drones, surveillance satellites and echelon waiting for you to get the signal, at which point you and the rest of the “freedom fighters” will be exterminated.
RE: And the government has smart bombs, cluster bombs, AC-130 gunships, unmanned drones, surveillance satellites and echelon waiting for you to get the signal, at which point you and the rest of the “freedom fighters” will be exterminated.
And everybody thinks the Nazi’s were an aberration.
Wall Street concocts a new wide to hide its losses, turning them into gains (at least on the books).
http://www.bloomberg.com/apps/news?pid=20601109&sid=a2ppBYA0ELaU&refer=home
New risk models , new accounting rules ,lawmakers making rules of avoidance so investors can feel secure ,and the party and cover-up continues .
I used to believe that the good guys always came out on top in my comic book fueled childhood world view. Now it seems like the world belongs to the crooks, and the good guys get punished.
This is so unbelievable. The consumer equivalent of this would be: “CC companies are writing off my debt as uncollectable–and I can list that as income on my next loan application!” Crazy!
When I read crap like this it just makes me want to go out and buy all the gold I can.
“‘With a foreclosure, it’s selling for lower than it’s worth and the equity is already in the house,’ Cacioppo said.”
Yep, ‘the equity is already in the house’!!!!
And this is why the game will go on for quite a while! Until this mind-set is beaten down and buried there is no sense to even look into buying a house.
Hard to believe there are so many Morons left who think things sell for less than they are worth and that the bank is going to give them equity for free. But then again he’s a 24 year old salesman ripe for the plucking.
“the equity is already in the house” - the knife catcher’s credo.
“Until this mind-set is beaten down and buried ” — yes, it’s a ‘buy the dips’ mindset which has worked miraculously in the boom market of the last 6 years, but that’s all about to change and much has changed already.
A lot of herd speculators are about to learn a painful and humiliating lesson about pyramid schemes.
“Some of the tourists said they’d be ready to buy the same day. ‘If the right house comes along, you really don’t need 20 days — at the right price,’ said Brian Cacioppo, a 24-year-old salesman shopping for his first home with Courtnie Harrison, 28. Buying a foreclosed home could give them some cash for improvements, he said.”
“‘With a foreclosure, it’s selling for lower than it’s worth and the equity is already in the house,’ Cacioppo said.”
Enjoy your built-in equity. Can Joshua Trees grow in Nassau County, LI? Too bad that he will probably be turned down for financing and will not get to demonstrate his financial acumen to Miss Courtnie.
At least he is young and will get to experience his 1st bankruptcy early in life.
“Buying a foreclosed home could give them some cash for improvements, he said”
This guy’s thinking is SOOOOO 2006.
Knife, meet catcher. Catcher, meet knife.
JTs won’t grow there. But bramble bushes do. Nothing like a close encounter with blackberries while they’re growing…
I was doing OK today until I read the AP article with this bit.
“For a couple years, they lived upstairs while rent from a downstairs tenant helped cut hundreds of dollars off the monthly payment.”
“But, like many owners of southern New England’s nearly 320,000 two- and three-family homes, the Banguras ran into trouble. Their monthly payment on a pair of adjustable rate mortgages jumped from about $2,900 last summer to nearly $4,200 - out of reach for a couple with $50,000 in annual income, supplemented by $1,150 in monthly rent from their tenant, a single mother of two children.”
You absolute imbeciles! You couldn’t afford the loan… at the teaser rate… on your own income? And you not only wanted the loan, but the bank gave it to you.
What happens if you don’t get a tenant? Or if the tenant doesn’t pay the rent at the rate you need, or not on time, or any of the other dozens of problems with being landlords.
What happens to your tenant now that you’re defaulting?
Their monthly payment on a pair of adjustable rate mortgages jumped from about $2,900 last summer to nearly $4,200 - out of reach for a couple with $50,000 in annual income, supplemented by $1,150 in monthly rent from their tenant, a single mother of two children.”
$2900 less $1150 ($1750) is out of reach for a couple with a $50,000 annual income, let alone $4200. No wonder this country is so screwed up.
I recall once when I flew into Boston (Logan). The car rental shuttle driver (an African immigrant) couldn’t stop talking about his real estate investments. I kept thinking “how can a guy who probably get paid $10/hr buy all that property?”. This of course was before I found the hbb and learned all about the wonderful worlds of flipping and subprimes.
The mania is not yet ended. People still seem to think it’s normal and rational to buy mold-infested houses for hundreds of thousands of dollars. Others seem to be taking second jobs to handle mortgage payments of $4,000.00 per month.
Sooner or laterthe cold, harsh light of reality will reveal ugly truths. Expectations will be severely diminished.
“The mania is not yet ended.”
I know. This is just not changing. Think about it! This has been going on for - what? - 2 years. No change. Same stories.
It’s just too big to fix.
Roidy
It is funny. When we high tailed out of California over 10 years ago many friends thought we were nuts (not everyone though). Its always shocking to go back visiting and see what a POS 500K buys back in our old stomping grounds. Comparable stuff out here goes for about 160K.
Weee doggies!
Fuel oil man just left 186 gallons of Araab Bunker C at my mother’s here on the northshore of Mazzland.
$4.59 per gallon for a whopping total of $865.00
Hell, ‘taint even heatin’ season.
Easy, $6.00 next October or $1650.00 to fill your av. 275 gallon tank.
Abandon hope all ye who enter here!
How long will the 186 gallons last once Jack Frost shows up?
How well do unemployed mortgage brokers and used-house salespeople burn? Plenty of those around.
RE: How long will the 186 gallons last once Jack Frost shows up?
My mother’s house is roughly 2500SF of 1958 construction vintage.
The furnace never shuts off.
“The furnace never shuts off.”
Oh my word…… HDman, this fuel oil thing is getting funnier by the day… How these people plan to fund heating these gargantuan eco-abortion houses is truely a mystery to me.
She should do what an old friend of mine’s family did, living up in Maine, when they had a major income loss while trying to heat a large house in the early ’80s.
During the winters, they all (4 people) moved into the living room, dining area and kitchen, while closing off the rest of the house from any heating - disconnected the heat ducts entirely. They even added some 1″ styrofoam insulation to the ceilings and walls where they could, and sealed up the windows as tight as possible. They cut their oil heat bill by 80% (I’m sure the electric got cheaper too) and were able to keep their house.
Bunk beds for the kids, sofa bed for the parents, old sheets and blankets hung up for privacy. No showers tho - only a half-bath off the kitchen. They sponge-bathed out of the kitchen sink, one at a time. They’d drained the rest of the house so the pipes wouldn’t freeze up.
It wasn’t fun, but they made it okay. I have a feeling we’ll be seeing quite a bit of this as early as this coming winter. I know all my friends in Maine are already fretting about how much their heating oil and propane will cost.
Wouldn’t those cold interior walls sweat and grow mold & mildew???
I respect the cutting-back-to-get-through impulse and action, but I think I’d rather fire up a wood-stove and try to keep the whole-house furnace from kicking on at all.