Foreclosures Are The Name Of The Game In California
The Press Enterprise reports from California. “Three years ago when Jeffrey Homes set out to build Villa de Madrid, a 98-unit condominium project in Hemet, Inland home prices were breaking records monthly. Condominiums were welcomed by local builders as the only way left to provide affordable homes to first-time buyers. Since then, condominiums and town houses have been on the leading edge of a plummeting housing market.”
“At the time, new single-family homes were selling in the $350,000 range. Today, the company would have to price the condos below $200,000 to sell, and that’s less than they paid to build them, said Jeff Holbrook, chief financial officer for Jeffrey Homes.”
“So Jeffrey Homes stopped construction earlier this year after finishing the first 20 high-end condos at Villa de Madrid, Holbrook said, adding that the company will rent the completed units to defray the cost of keeping them.”
“Among the condo buyers with regrets is Candy Canlas, 30, who bought a small, one-bedroom condo in Corona two years ago for $194,000. Since then its value has dropped about $24,000, according to current sales prices.”
“‘When I got it, I thought it was a little expensive. But it was the only thing I could afford and so I went for it,’ said Canlas, who works as a nanny.”
“Canlas said now she feels trapped because she can’t sell the condo to recover her down payment and pay off her mortgage. If she had to do it over, she said, she would have rented.”
“‘I don’t think any builder of a condo project ever thought they would face a market where it is no more expensive, if not cheaper, to buy a single-family detached house,’ said Borre Winckel, executive officer of the Riverside County chapter of the Building Industry Association of Southern California.”
“‘We see foreclosures going for $220,000 for a three-bedroom, single-family detached home in the Corona area,’ said Christine Cordova, a sales agent at the project.”
“Mick Pattinson, CEO of Barratt American, said his company was building about 140 condominiums and town houses in French Valley, but shut that project down at the end of 2007 after building only the models because the homes couldn’t be sold at prices high enough to break even.”
“‘Foreclosures are the name of the game right now. It is what people are buying,’ Pattinson said. ‘It is impossible to compete with foreclosures.’”
The Sacramento Bee. “Robert Winward of Sacramento bought a house in the Rosemont neighborhood in June 2005 with an adjustable-rate loan that quickly threatened to hike his payments. ‘I could have refinanced a couple of times,’ he said. ‘But what stopped me from doing it was that it would have cost about $15,000.’”
“When his penalty period ended, he was unable to sell and unable to refinance, he said. Winward is one of the luckier borrowers. His lender recently froze his interest rate at its original level for five years.”
“Did he know he had a prepayment penalty in 2005? ‘I didn’t understand exactly what it meant,’ he said. ‘When we bought, we were very naive.’”
“When Carol Wallace sold her Sun City Roseville home two years ago, she got an expensive reminder from her lender. She owed $5,964. Why? She had paid off her adjustable-rate mortgage early.”
“The lender offered to waive it, Wallace said, if she’d buy another house with one of their loans. But here was the point: She had cancer and didn’t intend to buy again. She had to pay up.”
“Two years later, still ill, Wallace still fumes. ‘It’s written in my paperwork when I die to remind my kids,’ she said. ‘It says if there’s a class action lawsuit, to remember me, to get my $6,000.’”
The Orange County Register. “A steady trickle of customers descended on IndyMac branches throughout Orange County on Saturday as word got out that federal regulators seized the bank late Friday.”
“Most customers who went to local branches Saturday asked about CDs. Many had opened CDs as recently as last week because the bank had been paying some of the highest rates around to attract new deposits.”
“Lisa Vargas of Tustin complained about a list of annoyances that had happened. Her husband went to the bank Friday afternoon, after the bank was closed. He went to the ATM to get cash, but he didn’t get any money, and the machine ate his card. When he brought his wife back to the bank later that evening, the ATM ate her card, too.”
“Then, when Vargas went to the Wells Fargo Bank on Saturday morning to deposit an IndyMac cashiers check she had gotten earlier in the week, she was told there would be a six-day hold on the money, even if the check was being honored by IndyMac. The couple still has one CD at IndyMac.”
“‘Our money is all locked up,’ she said.”
“‘My wife called me 20 minutes ago,’ said Carl Lapidus of Laguna Woods, outside the Laguna Woods branch on Paseo de Valencia. ‘I just opened two CDs and just began direct deposit of my Social Security last week, and there’s no information about what’s going to happen.’”
“Hundreds of IndyMac customers lined up at branches throughout Orange County this morning - some before dawn - waiting for the bank to open for the first time since it was taken over by federal regulators Friday.”
“Carrie Lee staked out the first place in line at the Laguna Woods branch, arriving at 4:45 a.m. ‘It was very dark and I thought, ‘Maybe I’ll come back at 6′, but then I decided to just stay,’ she said. ‘I just want my money.’”
“By the 9 a.m. opening time, more than 100 people - many retirees from nearby Leisure World - had lined up. Many, like Frank Van Wickle of Laguna Woods, who arrived just before 6 a.m., brought lawn chairs.”
“‘I feel very stupid for rolling over my CD just two weeks ago when they had all these people here pulling their money out,’ he said. ‘But (bank officials) assured me everything was all right.’”
The San Gabriel Valley Tribune. “Hundreds of people lined up outside the Pasadena branch of the new IndyMac Federal Bank early on Monday, with some fearing they would lose thousands of dollars of their savings.”
“After waiting two hours to get into the Pasadena branch, Sandra Valles, 64, of Los Angeles still was not close to the front of a line the stretched around the building. She had $150,000 in a certificate of deposit account and wanted to find out how much was insured.”
“‘Mostly, I’m looking for information,’ she said. ‘I have relatives on the account, so I don’t know how much the government will guarantee.’”
“Bank officials on Sunday said money at the bank was safe and urged customers not to rush to branches for withdrawls. Many customers, however, chose not to take that advice. Char Marshall of Cupertino flew to the Los Angeles area last night to withdraw her money, she said.”
“Louie Vasquez, 36, of Duarte said he was tired of hearing bad news about IndyMac and was withdrawing all of his money. ‘I’ve had enough,’ he said. ‘If it’s going down, it’s a gamble to leave it in. It’s like going to Vegas.’”
From Reuters. “‘I didn’t think anything like this would happen,’ said retired teacher Charles Tengeri from Pasadena, who was first to emerge from the branch after withdrawing $171,000 — about two-thirds of his life savings. ‘I withdrew as much as I could. I know it’s going to take a little time.’”
“‘I have $360,000 in this bank, and I was misled by this bank,’ said Robert Clark, a Glendale resident. ‘I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don’t know what to do. I really don’t know what to do.’”
“Jitesh Patel, a doctor from Burbank, said he took a day off from work to withdraw his money from IndyMac. ‘We have money we are afraid we are going to lose,’ he said. ‘I wish we were a little more savvy.’”
“Tengeri said he was originally attracted to IndyMac because of the high interest rates it offered on deposits. Asked if the thrift’s collapse would disturb his retirement, the 70-year-old said: ‘Very much.’”
“There was no shortgage of ambition at IndyMac Bancorp Inc. And there’s no arguing that the bank achieved success. Last year, it ranked as the second-largest independent mortgage lender in the nation.”
“‘I think they were overtaken by events,’ said Paul Gray, a former Claremont Graduate University professor who co-authored a paper on IndyMac’s innovative use of computer technology. ‘They made some assumptions about the nature of the market … and they were wrong. They got caught up in the bubble and assumed it would go on forever.’”
“During its boom time, the bank functioned primarily as a major Alt-A lender, making loans to people who are just below the level of prime borrowers but with better credit than those who could only land subprime loans.”
“Alt-A loans are considered to be more secure than subprime loans, but they’ve nonetheless become troublesome over the past year due to a high volume of defaults. ‘They were basically given to anyone who could fog a mirror,’ said Norman Cox, a regional VP with Coldwell Banker Town & Country in Covina and Claremont.”
“The bank was particularly effective with its use of eMITS, a Web-based automated mortgage underwriting system whose decision engine was referred to as the ‘brain’ Gray said.”
“‘They invested in the concept of very quick turnover on loan applications,’ Gray explained. ‘They realized that when a loan application comes in, there are only a few parameters that are really looked at - credit rating, employment status, things like that. And using eMITS, that could all be turned around pretty quickly.’”
“‘They were very much an innovator in technology,’ he said. ‘They understood that technology could actually change the dynamics of things. And everyone in the industry followed suit.’”
“Once a mortgage applicant’s data was submitted to eMITS, IndyMac was able to change the loan decision time ‘from three weeks to under a minute,’ according to Gray.”
“Former IndyMac Chairman and CEO Michael W. Perry acknowledged the banking industry’s looming problems and the mistakes from which they spawned.”
“‘Speculators often lied about homes being owner-occupied and lenders got caught up in the housing frenzy,’ Perry said. ‘We got too carried away and loosened our guidelines too far.’”
“Rick Wartzman, director of the Drucker Institute at Claremont Graduate University, said many players in the financial industry were out of control before the subprime meltdown occurred.”
“‘There was some terrible management, terrible oversight and a lot of greed,’ he said, ‘and that’s a pretty powerful cocktail for disaster. A lot of those people in the mortgage business really violated Peter Drucker’s first responsibility for any professional - do no harm.’”
“The sad part, according to Wartzman, is that the credit pendulum has now overcorrected to the point where many will not be able to claim a piece of the American Dream.”
“‘The notion of making credit more available to a segment of the society that is effectively locked out of the system is not a terrible thing,’ he said. ‘This was not a terrible idea gone bad…but a good idea gone bad.’”
“Jitesh Patel, a doctor from Burbank, said he took a day off from work to withdraw his money from IndyMac. ‘We have money we are afraid we are going to lose,’ he said. ‘I wish we were a little more savvy.’”
more savvy.. yeah.. that’s the ticket.
Even if nothing else good comes of it, these first couple of bank failures should get people primed to do a little research and learn the rules as far as they and their deposits are concerned.
hey ben.. i know a mid-day has been proposed, but howzabout a ‘bits’ or “circular file” at the end of the day so we don’t need to scroll down and wrestle with what has been of late 500+ posts.
California’s Richard Russell
Dow Theory Letters
Jul 14, 2008
Extracted from the Jul 11, 2008 edition of Richard’s Remarks
“Dow vs. Gold — The ratio between the Dow and gold has hit a new low. Today, one share of the Dow will buy only 11.44 ounces of gold — that’s down from 43.75 ounces back in July 1999. In other words, since mid-1999 the Dow has lost 73.8% of its value in terms of real money — gold. Talk about a silent and insidious stock bear market, you’re looking at one.”
“What am I thinking about these bright summer days? I’m thinking, as usual, about a long list of things, but one item I’ve been zeroing in on is the 50% Principle as it applies to the current stock market.
The 50% Principle works like this — We have the Dow low of 7286 recorded in October 2002. And we have the record Dow high of 14164 recorded in October 2007. The 50% or halfway level between Dow 7286 and Dow 14164 comes in at 10725.
As of today’s close, the Dow was just 375 points above the 10725 halfway level. The 50% Principle tells us that if the Dow closes decisively below 10725, then there is a good chance the Dow will continue down to test the level from which the entire advance started — that level is 7286.
And I wonder to myself — what would happen if the Dow breaks below 10725 and then declines to the 7286 area? My immediate thought is — disaster. And probably a severe recession or even a depression. Remember, the Dow is only 375 points away from the halfway or 50% level.”
and my post deserves to be hijacked by a gold bug because.. ?
“Today, one share of the Dow will buy only 11.44 ounces of gold — that’s down from 43.75 ounces back in July 1999. In other words, since mid-1999 the Dow has lost 73.8% of its value in terms of real money — gold. Talk about a silent and insidious stock bear market, you’re looking at one.”
Clearly it is time to take some of the shiny yellow metal off the table and buy stocks.
When one share of the Dow will buy only 1 ounce of gold it will be time to take all of the shiny yellow metal off the table and buy stocks.
In 1933, the Dow was around $36 with gold officically $35 an ounce.
In 1980, the Dow was around $850 with gold at about $850 an ounce.
Even if the dow/gold ratio just goes to 2 to 1 or 3 to 1, it’s still a huge move down in stocks relative to gold.
Check out the gold/dow ratio on the web!
Gold as an investment
http://en.wikipedia.org/wiki/Gold_as_an_investment#Gold_versus_stocks
Clearly it is NOT that time. How can you call yourself a bear?
Do you see the public clamoring to get INTO Gold? NO! Also, I’m with Peter Schiff - in that he expects the Dow / Gold ratio to be 1:1. Where they meet, who knows, but either way, Gold is going MUCH HIGHER in the next few years.
Dow 5000 / Gold 5000 - sounds about right to me…..
Professor Bear writes:
Clearly it is time to take some of the shiny yellow metal off the table and buy stocks.
Rules, smules. FDIC has around $50 billion or so and IndyMac is going to use up, what?, about $11 billion. How far do you think that $50 billion is going to go?
Where do you get that? The FDIC doesn’t buy the failed bank with money from their fund.
man.. i don’t wanna type everything off the frikin FDIC pages.. can’t people do a little research?
When a bank goes below FDIC cash reserves and other things, the FDIC has several options. One is to take over it’s management. Another is to offer all or some of that bank’s business to other, healthy banks.
The time may come when there are no banks healthy enough to absorb some of the failed bank’s accounts. In that case, the FDIC will use it’s reserves.
there were over 2,700 bank failures from 1983 to 1993.. and yet no depositor lost a penny of insured deposits. I assure you the FDIC had no where near enough money to cover all that.
Indymacs failure will cost about $32B. When the debacle finally settles in 3, 4 years with luck, the total bank failures will pale the RTC taxpayer funded bailout. Then where is the money from? We are still paying for that bailout.
The Federal Home Loan Banks got first dibs at the moneys. Indymac appears to have been leveraged around 13:1.
The 12 FHLBs are privately capitalized by banks that own the stock. They are worth over $1T and get no taxpayer assistance.
I imagine they could handle a $32B loss if it came to that… but of course the $32B is IndyMac’s total assets.
At the risk of putting words in Hoz’ mouth, I believe he is trying to tell you that he believes that Imac’s liabilities outweigh their assets.
You stated that 32B is the total of assets. If liabilities are just 2:1 vs. assets then you are looking at 32B cost. At 13:1?…
And where in my post did I say all that?
FDIC has around $50 billion or so and IndyMac is going to use up, what?, about $11 billion. How far do you think that $50 billion is going to go?
Were you not thinking that the FDIC’s $50B (or is it 54) insurance fund was expected to cover deposits from any and all bank failures? .. that the $50B would soon run out?
Indymac is not going to use up $11B.. it’ll probably “use up” a few thousand bucks or whatever salaries are paid to the FDIC’s number crunchers, plus pizza and soft drinks, until the bank is sold off.
I myself am grateful for my thirst/hunger for knowledge and the truth that had let me to this blog, and others including the implode- O meter site.
There is no excuse for ignorance as the information is right there at your fingertips. But, sadly many of them baby-boomers with no internet “savvy” but their adult children would have been and they should have been on alert for their parents, if not for their own selfish gains.
I knew about IndyMac’s problems ahead of the game and got out on July 01, 2008, with our savings intact.
For the ones that are not as eager to realize the truth or decided to ignore and pass off facts as untrue or to “radical” as I have been accused of over the last three years there is NO excuse for ignorance, the information is right there at your finger-tips.
I remember this past Sept, an economist (65 years old) with his Ph D (friends husband) laughed in my face when I said that property in Fort Pierce would crash at least 50%. He was and still is holding a condo there and combined with this other properties (Lauderdale by the Sea and Wellington) has over a million dollars in mortgages, He is completely underwater now and he had just started to go into his semi-retirement.
He is now requesting his wife to go back to work after 20 years of staying at home getting her toe nails painted and drinking wine. Fat chance of her finding employment, there are not to many jobs available for 46 year old ex- models who have socked on as many pounds.
Not too late for the wife to go back and get her PhD…
Ah, the proverbial “leg shaver” as my husband dubs these women of leisure. They aren’t looking so good these days. Saw one step out of her Armada today wearing a fuggly t-shirt and baggy mom shorts. No Juicy Couture for chrissakes!
“Did he know he had a prepayment penalty in 2005? ‘I didn’t understand exactly what it meant,’ he said. ‘When we bought, we were very naive.’”
what do you think “Pre” and “Penalty” mean dumba$$ ?
Ugh! And if he didn’t know, why didn’t he just ASK? I can picture it now…the lender, broker, agent…all snickering in the corner as this guy signs his life away.
BayQT~
Yeah, ask the guy that said there were no problems with the bank.
That must have been the same guy who assured him that prices would go up forever, he could refi, don’t worry about it.
“The bank was particularly effective with its use of eMITS, a Web-based automated mortgage underwriting system whose decision engine was referred to as the ‘brain’ Gray said.”
And the “brain” said nothing can go wrong…go wrong..go wrong..go wrong…
they forgot to mention that it was the brain of an earwig…
I must admit that I have never bought a home. I have never filled out a mortgage application, nor sat at a closing, so I am basing this all on gut feeling….but I think it would be a very emotional, confusing and exciting time in ones life.
That being said, I also believe that most of the people that read and post on this blog are far more intelligent than the average Joe and Jill. I don’t know if the pre-payment penalty is in writing before closing or not. I don’t even know if it is ever mentioned, but after reading these articles and blogs, I am fairly certain that anyone with any future concerns was told that all they had to do was sell or refinance if they ever ran into any trouble. I doubt they were told that they would be adding a pre-payment penalty to their new mortgage or that housing prices could actually go down. But they were sure as shit told by every expert out there that if they didn’t buy now they would be priced out forever.
Personally I think that any mortgage with a prepayment penalty should be excluded from any bailout program, so that they banks get their punishment as well as the FBers.
Ken–buying a house is all of those things you mentioned. I thought I was way ahead of the game when I bought in 2001, in retrospect, I realize I made a few good decisions, got lucky on a few others, and was 100% clueless on the rest. If we ever have a weekend topic of HBBer mistakes that were made, I’ll confess.
Here’s the deal: Buying a house is scary, exciting and confusing all at the same time. And I do understand where the guy is coming from (not knowing what a pre-payment penalty was). But wouldn’t you think that if you read those words and parsed it out that it would raise a red flag? Possibly? At least enough of a red flag to ask a question? He certainly knew what refinancing was…knew he could have refinanced a couple of times, he says.
We are also talking about 2005. In 2005 I had already figured it out and was here looking for like minds. So, suppose this guy doesn’t do internet research? There’s other media: newspapers, magazines, TV…I just found a USA Today article from Nov. 2005 saying that the market was cooling. Everyone was covering some aspect of this market. Yet, none of it raised an eyebrow for this guy (and others)? Probably not. He just wanted *in*…now. Well, he certainly got what he asked for. But he didn’t check for the what-ifs. He may shop like that, but I don’t. Case in point, I’ve been researching LCD TVs for months….I want to understand what I am buying so that I will know what I’m buying and no one has to *sell* me anything.
What’s been said before, there is blame to around to all involved. In my book, this guy gets to eat some of the blame.
BayQT~
I honestly believe that most people feel that something so slanted in favor of the banks wouldn’t be legal. And in all honesty most of what these banks were pushing on people should have been illegal.
The whole thing was nothing more than a government encouraged and sponsored ponzi scheme. I am not saying that the dumbass that signed the mortgage papers doesn’t deserve to feel some pain. They do, and most of them will to some extent. But the cards were stacked against them, and those who knew better did nothing to help them see the light. Oh no, they encouraged and cheered these people on their way to the meat grinder. Not a good example of governance or regulatory over-sight in my opinion, and it was mostly all preventable.
“Robert Winward of Sacramento bought a house in the Rosemont neighborhood in June 2005 with an adjustable-rate loan that quickly threatened to hike his payments. ‘I could have refinanced a couple of times,’ he said. ‘But what stopped me from doing it was that it would have cost about $15,000.’”
“When his penalty period ended, he was unable to sell and unable to refinance, he said. Winward is one of the luckier borrowers. His lender recently froze his interest rate at its original level for five years.”
He doesn’t know how fortunate he was. If he still has the original purchase-price loan, it’s non-recourse. If he’d re-fi’d, he’d be in a recourse situation. If he were to eventually walk away with a recourse loan, the lender could go after him for any deficiency and the IRS could tax him on any forgiven debt. None of that happens with a non-recourse loan.
Locking in his current interest rate helps some for five years, but then what? He’s paying that rate on principal that is too high and on a depreciating piece of property. In five years, interest rates could be much higher than now and the property worth much less. Then what? In the interim, he’s spent much more on this house than what he could have spent renting.
Does that loan modification change the loan from non-recourse to recourse? If so, it’s a slick move by the lender with little upside and potentially big downsides for the borrower.
“‘…I didn’t think anything like this would happen,’ said retired teacher Charles Tengeri from Pasadena, who was first to emerge from the branch after withdrawing $171,000 — about two-thirds of his life savings. ‘I withdrew as much as I could. I know it’s going to take a little time….’”
I watched a guy here on local news just about in tears because he came out of the bank 50k short, he was trying to save for a house…He couldn’t understand why he should take the hit for people being irresponsible on their housing purchase…he was just about in tears…the funny thing about the guy is even though he took that kind of loss he was still trying to be politically correct by not calling FB’ers fools on camera…he actually took the time to re-word his statement…I felt kind of bad for him…
and this is why I split up my deposits between banks.
There will be the time when even all the FDIC money is gone.
Saw a guy on the news this afternoon — not too bright, but he had the right idea. Anyway, he had split his life savings across several accounts at IndyMac, and thought his $260k (or whatever) was safe, as each account was under the $100k limit.
Alas, that’s not how it works: 1 person per bank, and so he was screwed on all of his deposits at Indymac > $100k (I think he gets 50¢ on the dollar above $100k).
I don’t think the goldbugs will share your empathy. With stories like these circulating, 1000 dollar gold is in the bag!
(nope, I ain’t a goldbug……though I don’t deny owning some)
I understand what you’re saying but hate to see a guy get taken out like that…he couldn’t afford a home… he knew it , so he opted to save for it (go figure) then because a lot of folks got greedy and the piper requested his due he takes a huge hit…I mean think about it…how many guys who are responsible for the destruction of that bank do you figure took a 50k hit…How many 100%’ers took a 50k hit…it just seemed like a bad deal…the good guy lost…
Yep. That sucks and I feel really bad for the guy, particularly since he sounds like one of us.
It’s all rigged, and not in favor of the good guys.
he didn’t lose anything yet.. the FDIC will get around to liquidating the failed bank’s holdings and assets and use the proceeds to pay off any deposits above the insured limit. I’m not positive, but i do believe those depositors will get paid before anyone else does.
See my post and Hoz’ 13:1 ratio above.
I read an article yesterday where someone said people who had money in high yield CDs were “investors” and shouldn’t be covered by FDIC insurance.
You must walk me through this, why does he lose the $50K? You mean to say if your deposit is over 100K, you don’t get your money back over that amount, ever? That other person withdrew $171,000 from her savings account, according to the news item above.
His words not mine, don’t know the entire details and it be speculation on my part to try and give you an answer…the guy was just about in tears, he didn’t seem to think he was going to see that 50k again…read the article again the guy who withdrew 171k had 360 there…
It’s 100K insurance per person, if you have more than one person on the account the coverage increases. It’s very possible that there will be large losses for some people.
You get 100K + 50% of the amount above 100K. The person who got $171K probably got 240K in the bank.
This really sucks. They’re entitled to whine.
It’s easy to identify banks in trouble, just look at their abnormally high yield CD rates. If it’s too good to be true …
Yep.
Leigh
Everybody should be clear on this. You do NOT get more than $100,000 FDIC insurance simply by putting more names on an account. Your wife can open her own account for $100,000, you can have a joint account for another $100,000 and you can also open insured IRA accounts…but if you have more than $100,000 to invest you are not the small saver FDIC insurance is intended to protect and had better do some serious research on investment risks and returns. An INDYMAC teller or your sister-in-law does not count as serious research.
going to run out of “good guys” after this is over
turn them all bad “moral hazard”
That’s when the PTB change the rules again and everyone but the royal class gets taken to the cleaners. Heck, it may be happening right now.
i dunno.. $1,000 gold resulted in a scary little 15% slide the last time it happened.
Whatever happens in gold, it’s going to be volatile. I’ve only been watching it closely for the last couple of years but it seems to me to move in price ranges/blocks rather than keeping plateaus in prices. (I think about it that way, too.)
Unlike the last time, we’re currently supporting $900+. If we play around for a while in the high $900s and then break to $1000, it might support that without the 15% slide. (Then again, I think $2000 for an ounce gold is not out of the question before we finish feeling the pain of the housing bubble, so take that as you may..;) )
I’d need some powerful incentive before I’d pay $1,200.. 15.. $1,900 for an oz of au. Thumb screws or The Rack might do it.
Just got off the phone with perhaps the largest retail dealer in Gold bullion in L.A.
It’s a one-way street, all buyers and precious few sellers, he related.
Fear is rampant, like nothing he’s ever seen before…
What makes it even more interesting is, some of his wholesalers further up the food chain are afraid of keeping any money in banks presently, one of which has simply stopped doing business, the risk to reward ratio being heavily out of kilter and the likelihood of more banks going bk, a real possibility, so his feet are up on the stove.
Oh, goody! There you are, Vermontergal! I been missing you. I been in Utarr visiting my family for about 2 weeks, without internet because it’s all primitive and all, and also because I hurt my bum falling off a horse, and so I didn’t feel like sitting down in a chair, which is where internet is.
Anyway, I’m glad to see your name. Now, I’m going to go read what you said.
Okay, I read what you posted, and that’s wise talk. However, what do you mean ‘last time’? Aren’t you 34 or something? What ‘last time’ with gold? Like from history books?
Okay, I read what you posted, and that’s wise talk. However, what do you mean ‘last time’? Aren’t you 34 or something? What ‘last time’ with gold? Like from history books?
Hey Olympiagal!!!
I am the ripe old age of 34. By last time, I meant that gold was $830 or $850 and broke out all the way to $1000. That wasn’t going to last… or at least in retrospect, it wasn’t going to last.
Hope the Utarr visit went well. I don’t like riding horses too much. They sway an awful lot.
More like cash is in the mattress.
“Once a mortgage applicant’s data was submitted to eMITS, IndyMac was able to change the loan decision time ‘from three weeks to under a minute,’ according to Gray.”
Sounds like the banks thought that underwriters were a replaceable part of the lending process. If anything, they’ve proved their worth a hundred times over. Hopefully they SMITe eMITS.
Why didn’t they just use a rubber stamp that said “Approved” on it ? Or do you have to have an expensive computer program to say yes to everything ?
No, you need the computer to figure out the highest YSP so you can max your fees.
Good one.
They wasted all that money on a computer program.
“…Hopefully they SMITe eMITS…”
Actually I don’t see this happening …as they say here the genie is out of the bottle…especially after the mess some appraisers made…I see some things tweaked…but getting rid of it and actually hiring people…no that has become un-american…
“…Rick Wartzman, director of the Drucker Institute at Claremont Graduate University, said many players in the financial industry were out of control before the subprime meltdown occurred.”
“‘There was some terrible management, terrible oversight and a lot of greed,’ he said, ‘and that’s a pretty powerful cocktail for disaster. A lot of those people in the mortgage business really violated Peter Drucker’s first responsibility for any professional - do no harm.’”
“The sad part, according to Wartzman, is that the credit pendulum has now overcorrected to the point where many will not be able to claim a piece of the American Dream.”
“‘The notion of making credit more available to a segment of the society that is effectively locked out of the system is not a terrible thing,’ he said. ‘This was not a terrible idea gone bad…but a good idea gone bad….’”
Here’s the perfect example of someone who is totally clueless about his surrounding and hasn’t learned a thing about this debacle…and to think he’s actually in charge of educating someone’s child
overcorrected to the point where many will not be able to claim a piece of the American Dream.
WTF is this clown talking about? I don’t think overcorrection means what he thinks it means.
If an overcorrection does occur, it won’t be for a while, but regardless it will bring more people CLOSER to achieving the “American Dream”. Maybe he’s a shill for the GSEs, where their mission of promoting affordability (American Dream) means doing everything possible to prop up prices.
Have not practiced the strike threw feature. Dang, that would be handy. Shucks, I’ll give it a rewording attempt!
“…Rick Wartzman, director of the Drucker Institute at Claremont Graduate University, said many players in the financial industry were out of control before the subprime meltdown occurred.”
“‘There was some terrible management, terrible oversight and a lot of greed,’ he said, ‘and that’s a pretty powerful cocktail for disaster. A lot of those people in the mortgage business really violated Peter Drucker’s
http://www.brainyquote.com/quotes/authors/p/peter_drucker.html (HA)!
first responsibility for any professional - do no harm.’”(primum succurrere)
“The sad part, according to Wartzman, is has now overcorrected
“‘The notion is not a terrible thing,’ he said.
Hmmm…let’s see if I typed the strike correctly, if not, my apologies.
Leigh
“‘We see foreclosures going for $220,000 for a three-bedroom, single-family detached home in the Corona area,’ said Christine Cordova, a sales agent at the project.”
Hey! Where’s that chump poster I went a few rounds with about 18 months ago who claimed Corona wasn’t really like the rest of the IE, and that prices would never drop below 350K again? How’s that JT feel, dude? I tried to warn ya!
If you ever get access to MLS for the IE take a look…it’s really scary the way prices have sunk…400k units at the 190 and 180k mark and the party hasn’t started…
What’s keeping you busy down there these days?
Commercial guys getting religion trying to save their asses…a few local banks have taken to calling around trying to get owners to fix and lock in for five…most want 10+…most now believe 5 will put you in the middle of a shit storm…don’t see a flip up for at least 10 years…might as well build equity the old fashion way…
I remember trying to buy a house in 2001 and all the realtards given me attitude because I asked questions. This was at new home locations. I wonder if they still think they are above having to answer any questions.
“…During its boom time, the bank functioned primarily as a major Alt-A lender, making loans to people who are just below the level of prime borrowers but with better credit than those who could only land subprime loans…”
This is a funny statement…I distinctly remember them giving a loan to anyone with a pulse…there was no such distinction as Alt/A or Subprime…fog a mirror have loan
“The sad part, according to Wartzman, is that the credit pendulum has now overcorrected to the point where many will not be able to claim a piece of the American Dream.”
So, reverting back to traditional lending standards is over-correcting? And they’re still calling this fiasco of debt The American Dream?? Grrrr……
People without jobs, savings, or financial responsibility should be allowed to buy a house…..don’t you get it?
Hearing the daily wailing and gnashing of teeth by pundits who are horrified that people must now have money to buy things is most amusing.
Dear SEC:
I write to remind you of you fiduciary, indeed, moral responsibility
to restore my American dream, inasmuch as I purchased shares of Fronteir Oil Co. In April 2008. Little did I know the shares would lose 50 percent of their value. Why, they ain’t making any more oil!
I did not understand the fine print about past performance. Now
I can’t get my money out! I am entitled to me made whole! You have a duty to write me a check to cover losses outside my control.
Yours truly,
Milkcrate
Anytown, USA
“There was no shortgage of ambition at IndyMac Bancorp Inc. And there’s no arguing that the bank achieved success. Last year, it ranked as the second-largest independent mortgage lender in the nation.”
Brings to mind ’successful’ investment banking CEOs who pocketed record high bonuses, just before their firms imploded.
And what’s wrong with that?
They were successful technically, right?
I guess it depends in part upon whether they manage to stay out of jail for the next several years.
I seem to recall the heads of Fannie Mae and Fannie Mac pulling in some pretty hefty bonuses even as they had to admit they had no idea what their earnings were. I’m sure they will be richly awarded for the latest Debacle.
lots of people think the fed will be soft on the GSEs this time around.. i kinda doubt it.
I think they’ll get scrutiny up the ying yang from now on.
heads of Fannie and Freddy have been making record bonuses for the last decade - the system is so crooked. Private gains, public losses. We need a regime change - take the power back.
“‘When I got it, I thought it was a little expensive. But it was the only thing I could afford and so I went for it,’ said Canlas, who works as a nanny.”
The only thing you could afford, huh? One wonders if this ginch did even cursury research on the advantages of renting vs. buying.
Look at the bright side, at least now she’s not “paying someone else’s mortgage” and “throwing her money away” by renting….
The only thing you could afford, huh?
I guess she couldn’t afford not to go into debt.
“‘The notion of making credit more available to a segment of the society that is effectively locked out of the system is not a terrible thing,’ he said. ‘This was not a terrible idea gone bad…but a good idea gone bad.’”
WRONG!
I see this is a bad idea from the start, which any sane person could tell was going to go bad.
ONCE AGAIN…
What part of lending 500-700K to families make, at best and liberally, 100K was a good idea?
For most people, anything more than 300K is not going to work, UNLESS you have a huge down payment.
Especially if you have anywhere from 500-600 addition /month w/impounds.
You don’t need to be Einstein to know the math NEVER did and NEVER will work out.
Which is why I almost threw my monster sized coffee cup at the plasma a few days back when Cramer went on about how we needed home appreciation again. WTF?!! Did we learn nothing here? We need WAGE INFLATION, MR Cramer. Say it over and over again until you get it. Blow another bubble in housing via credit and we end up right back on our a$$es.
Watching Cramer is waste of a plasma TV. My TV is only hooked up to a DVD player. Much more peaceful and less risk of hot beverages ruining an expensive electronic device.
Recession-Plagued Nation Demands New Bubble To Invest In
July 14, 2008 | Issue 44•29
WASHINGTON—A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.
“What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future,” said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. “We are in a crisis, and that crisis demands an unviable short-term solution.”…
http://www.theonion.com/content/news/recession_plagued_nation_demands
As Mr. Barry Ritholtz wrote “If it wasn’t so sad, it would be hysterical . . .” I think in actuality it should read, If it wasn’t so true, it would be hysterical…
oops supposed to be in bits bucket. sorry
Yeah.. A wage bubble.. Wouldn’t that be nice… And this time it goes into the savings account I SWEAR!
Did you consider giving a talk at Princeton about this phenomenon?
I think you might be chased out of the temple for heresy.
Hmmmm, which well-known U.S. government official hails from Princeton? It’s the guy whose name rhymes with “panky” — as in, Bernanke-panky.
“‘They were very much an innovator in technology,’ he said. ‘They understood that technology could actually change the dynamics of things. And everyone in the industry followed suit.’”
The only thing they innovated was loans to anyone that could fog a mirror and that technology was always there.
The key word that has given me a bad feeling for a while now is the use and overuse of the word “Innovation” being used by the likes of greenspam, heli ben, and of course just plain retard paulson.
I keep hearing Financial Innovation buy the pig men, and it brings me back to the good ole days of every dot com had some innovation. Useful or not.
I have to ask - calex? Did you have something to do with that software?
He’s missing the y
Maybe.. I just did what I was told and took my money to another bank.
LOL.
The innovation they were talking about was approving loans faster so they could make commissions and fees even faster, not screening out potential deadbeats.
OK - I’ll bite - I’m not getting the argument. The innovation of using technology to score applications and make a decision isn’t necessarily a bad idea, if the standards are set appropriately. I don’t care if a monkey is able to score an app - it’s the standards and requirements that make a difference. Just because lenders lowered standards to fogging a mirror, doesn’t mean the technology was to blame. Someone submitted the info - they’re the ones that knew the math didn’t work or helped applicants enhance their answers.
Citing Wikipedia, “Garbage In, Garbage Out (abbreviated to GIGO) is a phrase in the field of computer science or ICT. It is used primarily to call attention to the fact that computers will unquestioningly process the most nonsensical of input data and produce nonsensical output. It was most popular in the early days of computing, but applies even more today, when powerful computers can spew out mountains of erroneous information in a short time. The actual term “Garbage in, Garbage out”, coined as a teaching mantra by George Fuechsel, an IBM 305 RAMAC technician/instructor in New York, soon contracted to the acronym GIGO. Early programmers were required to test virtually each program step and cautioned not to expect that the resulting program would “do the right thing” when given imperfect input. The underlying principle was probably cited by Charles Babbage, inventor of the first programmable device who said:
On two occasions I have been asked,—”Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?” [...] I am not able rightly to comprehend the kind of confusion of ideas that could provoke such a question.[1]“
A buddy of mine works in a recording studio -
has worked on movies like Shrek, Chicken Run, Lion King II, Kung Fu Panda etc. so he hears what the big boys are thinking. Says people in Hollywood are threatening to strike over the right for producers to aire 5 minute clips of any movie they want for free. It will cut deep into writers profits.
Needless to say, LA doesn’t need another Hollywood strike.
Could Hollywood coup de grâce itself?
3 hollywood strikes and you’re out? We need another Hollywood strike as much as we need a new and improved version of Hollywood Squares.
“…automated mortgage underwriting system whose decision engine was referred to as the ‘brain’”
Question is… whose brain? …Mike Tyson’s?
Pinky and the Brain ?
Unfortunately the brain had a lobotomy a long time ago…
Thath ludicrouth
I’m stunned at these stories of people keeping more than $100K in a bank. Who would do such a think, other than people with $tens of millions?
I guess I’ve grown up in the era when anything, even a Treasury Direct account from the Fed, paid more than a bank account or CD. Banks are for transactions, and you don’t need more than $100K for transactions.
I thought everyone caught out by this would be a business or government losing their payroll.
Yeah, I thought that too. Every bank has pretty clear signage about the $100K limit.
I have several friends whose parents have quite a bit of money in IRAs at National City, but won’t move it, because they have banked there for decades. Even though the bank that they have the money in has changed names four or five times the Manager/tellers have made a point of getting to know them anytime a change in personnel occured.
They have been assured that Nat City is very well capitalized, so there is no need to worry.
With just these four friends they could probably lose 4-5 millilon dollars if Nat City goes under. Today their stock price was $3.45 a share. How secure would you be? The crazy thing is that every last friend seems to think that I am over-reacting and everything will be fine. It isn’t like it is the depression afterall, and besides there are penalties to cashing out an IRA early.
Yes, it is time to be concerned. Maybe the right time to investigate how to transfer custody of an IRA from one bank to another.
I don’t think NCC is going to fail immediately. IMB carried on for a couple months at $2.00 before failing. DSL looks like it will be next to fail at $1.30. I would guess that WM is also in deeper trouple than NCC because NCC only loses $100k on a typical Cleveland mortgage while WM loses $400k on a typical Seattle mortgage.
This could be a taste of things to come, your money being “locked up”
When the Argentina Peso lost 2/3rds of it’s value almost overnight in 2002, bank customers weren’t allowed ATM access to their accounts, and were able to pull out a small amount (30 Pesos = $10) a day.
______________________________________________________________
“Lisa Vargas of Tustin complained about a list of annoyances that had happened. Her husband went to the bank Friday afternoon, after the bank was closed. He went to the ATM to get cash, but he didn’t get any money, and the machine ate his card. When he brought his wife back to the bank later that evening, the ATM ate her card, too.”
“Then, when Vargas went to the Wells Fargo Bank on Saturday morning to deposit an IndyMac cashiers check she had gotten earlier in the week, she was told there would be a six-day hold on the money, even if the check was being honored by IndyMac. The couple still has one CD at IndyMac.”
“‘Our money is all locked up,’ she said.”
That could never happen here. The smallest amount the ATM will dispense is $20.
just got back from Europe - the dollar feels like the peso….
I feel your pain. In London the prices look high if read in $, then they double!
Ouch!
Believe it or not, some CU ATM’s dispense $5 (probably not in CA though since everyone is so rich)
OK THAT’S IT I’M BUYIN’ 100 SKF RIGHT NOW WHO’S WITH ME?!
“Three years ago when Jeffrey Homes set out to build Villa de Madrid, a 98-unit condominium project in Hemet, …
Hold that right there! Hemet? A project named Villa De Madrid? I’m ROTFLMFAO! Could just as well be in Barstow!
Do I hear Needles?
“Pray for me, I drive in Hemet”
bumper sticker from back in the day, when blue hairs ruled the roads.
‘blue hairs’
Don’t you mean ‘cottontops’?
Bumper sticker: If you lived in your car you’d be home now!! hehehehehehehe
C’MON MEN AND TXCHICK!! LOCK AND LOAD!!
The Orange County Register. “A steady trickle of customers descended on IndyMac branches throughout Orange County on Saturday as word got out that federal regulators seized the bank late Friday.”
“Most customers who went to local branches Saturday asked about CDs. Many had opened CDs as recently as last week because the bank had been paying some of the highest rates around to attract new deposits.”
Just saw Chris Thornberg on the local CBS news…
“The O.C.” = Oh, Crap
If the branches were closed on Saturday, who did the people who went to the branches on Saturday ask about CD’s? “Excuse me glass door with a FDIC notice tacked on it, can I withdraw my CD please?”
“The bank was particularly effective with its use of eMITS, a Web-based automated mortgage underwriting system whose decision engine was referred to as the ‘brain’ Gray said.”
________________________________________________________________
HAL: I know I’ve made some very poor decisions recently, but I can give you my complete assurance that my work will be back to normal. I’ve still got the greatest enthusiasm and confidence in the mission. And I want to help you.
“Rick Wartzman, director of the Drucker Institute at Claremont Graduate University, said many players in the financial industry were out of control before the subprime meltdown occurred.”
“‘There was some terrible management, terrible oversight and a lot of greed,’ he said, ‘and that’s a pretty powerful cocktail for disaster. A lot of those people in the mortgage business really violated Peter Drucker’s first responsibility for any professional - do no harm.’”
_______________________________________________________________
Molotov Cocktails are on the house…
http://www.urbandictionary.com/define.php?term=molotov+cocktail
‘But (bank officials) assured me everything was all right.’
LOL! I want to be there the day bank officials yell “getcher money out now she’s gonna blow!!!”
I posted this on the wrong thread, and now I’m afraid it’s lost forever:
Dr. Senator Feinstein:
A few months ago, I sent you a whitepaper detailing the dangers of the continuing relationship between Fannie Mae/Freddie Mac and the US taxpayer. The whitepaper revealed that the agencies (while deemed “too big to fail”) were actually too big to bail, since their at-risk debt load exceeds the current US national debt (which is huge). I extended to you the proposition that increasing GSE limits to $1,000,000.00 per house loan might introduce more risk to their balance sheets than they could handle. I backed up that proposition by reminding you that the median household income in the nation is only about $40,000/year, and the median household income in California is only about $50,000/year. That should support a median house price of $120,000 nationally, and $150,000 in California.
I also suggested that it might be unwise to place so much trust in a pair of companies that had been caught committing fraud, with one of them being caught again a short while later. I also questioned the SEC’s decision not to delist the corporations at that time, which was called for by the SEC’s own rules.
Despite the obvious carnage that would ensue from your decision, you sent me a response explaining that you supported raising GSE limits. I am curious as to why you thought it was OK to sell out America’s future. You had all the information you needed to make the right decision. I know because I provided it to you. As long as you are still a senator, I beseech you to shift your thinking towards long-term economic health instead of short-term, socialistic fixes that only serve to prop up an unhealthy business climate.