A Spectacular Downward Spiral In California
ABC 7 News reports from California. “More than 1,600 foreclosure notices went out in the Bay Area in the first quarter of this year and a quarter of them came from Contra Costa County. That’s a 140 percent increase in foreclosure activity in just one year. Misery had a lot of company on a Friday night in Antioch, where homeowners tried to negotiate their way out of foreclosure and keep a roof over their heads.”
“‘So what I’m here to do is ask Washington Mutual to seek a return on my investment,’ said Gary Robinson, an Antioch Homeowner.
“A few years ago, Gary Robinson bought this home in Antioch for about $700,000 using an interest-only loan and an adjustable rate. ‘My mortgage is at $5,000 dollars. It went from $2,000 to $5,000 and the house is worth 60 to 50 percent less,’ said Robinson.”
“‘Here basically, the brokers were writing down whatever numbers they thought would help people get the loan without any regard to how much they were actually making,’ said Noah Zinner, Bay Area Legal Aid.”
The Monterey County Herald. “It was the summer of 2005. Homes were selling fast in Monterey County, fueled by easy credit and the sense of euphoria within the real estate industry, which had not seen such success since the 1980s. Among those caught up in it was one young couple.”
“After visiting an open house one Sunday, they met a Realtor and were coaxed into making a full-price offer. Before they knew it, they were in contract to purchase an 863-square- foot, two-bedroom house for $609,000.”
“Their Realtor referred them to a mortgage representative, who took their application and suggested they go with the ’stated income’ format. They recall the phrase he used: ‘Your incomes need to match the home you are buying.’ Apparently theirs did not, so he raised the income numbers by 40 percent.”
“Within a year, our couple’s payment increased by $898, a 26 percent hit to their pocketbooks. By September 2006 they were distraught with rising payments. A friend referred them to a local mortgage broker who was touting a terrific 1 percent payment program. It was too good to be true, but they took the bait and refinanced with the infamous ‘option ARM’ loan. For the grand finale, she saddled our couple with a three-year prepayment penalty.”
“Today, their combined loan balance is over $600,000 and their home is worth well under $500,000. They are making the minimum payments because they cannot refinance. They have called their lender seeking relief, however, none has been offered. They cannot sell due to market conditions and may be forced to walk away from the property, as so many others have chosen to do.”
From NBC 11. “California and the Central Valley will be and has been hit especially hard, NBC11’s Mike Luery reported. Terry Towne is going through tough times. The home he bought had been valued at $565,000 just three years ago. Now it is worth less than $300,000, Luery reported.”
“Towne said his mortgage payments have grown by $900 a month, forcing him, his wife, and his three children to move out. ‘I told the two oldest ones, they asked ‘Why are we moving?,’ and I said ‘Because mommy and daddy can’t afford to pay for this house anymore.’ It’s just costing too much money.’”
“Terry is not alone. His real estate agent Jacque McBurney has 23 ‘distressed properties’ she is trying to sell. ‘These guys have put money down and they’ve lost all their savings for a down payment to get into a dream home and now their dream home is gone,’ she said.”
The Union Democrat. “Dozens of homes in Tuolumne and Calaveras counties have reverted back to banks as the result of foreclosures so far this year, according to real estate records.”
“In the last year, Tammy Ennis survived the end of a troubled marriage, losing a job and the financial strains of being a single mother. In February, she lost her home in foreclosure. Ennis and her three sons had to move out of the Sonora home she had owned for about seven years.”
“‘I’ve had my weak moments,’ she said. ‘One of them was when I found out I was going to lose my house and my job at the same time.’”
“It was just a couple of weeks later that she found a place in Jamestown, with the help of friends. The three-bedroom, one-bath portion of the house she is renting for $800 a month is half the size and half the monthly payment of the Sonora house she lost in February.”
“It was hard, she said. She had been trying for several months to find a place where her musician sons would be able to practice their drums and electric guitars. They have their own punk rock band.”
“‘That was my top priority,’ she said. ‘They have to be able to do their thing.’”
Bay Area Newsgroup. “Employers jettisoned 6,800 jobs in the East Bay in June, state labor officials reported Friday. The East Bay has lost 18,500 jobs in 2008. More than 10,000 of those jobs vanished in the past two months. The job losses in the East Bay were so severe that they accounted for more than half of all jobs lost in California last month. Statewide, 12,800 jobs were lost in June, the state’s Employment Development Department reported.”
“‘The East Bay is being pummelled,’ said Christopher Thornberg, a partner with Beacon Economics. ‘The whole state is in recession and so is the East Bay.’”
“‘It’s difficult to find work, very much so,’ said Shuandra Plute, a Pleasanton resident who has considerable experience in the mortgage industry.”
“Plute loved the years she spent in the mortgage business. ‘The pay was fantastic, but there is nothing left here,’ Plute said. ‘I know more friends who are unemployed in the mortgage business than are employed. The industry is not hiring. It’s pretty much find a job wherever I can now.’”
“Some East Bay residents are finding work in the real estate industry, but partly because of the misfortunes that have devastated the housing market. Concord resident Kristina Markovic sought work for a month before she landed a job with a real estate appraiser in Walnut Creek.”
“‘There are so many foreclosures that there is a lot of business for appraisers,’ said Markovic.”
From KSBY 6. “Loan officers at San Luis Capital in San Luis Obispo are holding on as the finance world rides out some tough times. ‘People with strong income and down payments and strong credit: it’s really not that difficult to get loans. We’ve kinda gotten back to underwriting like we used to 10 years ago,’ said Chris Orsini, a senior loan officer for the mortgage bank.”
“But the numbers of loans coming in are nosediving, and business is down compared to this time last year. ‘Personally, really, I’ve had to make some sacrifices at home. Expenses - you know, really had to tighten the belt,’ said Orsini.”
“‘Our business is down about 35 percent from originations from last year, in ‘05 and ‘06, which were still the promising years,’ said Chad van Til, owner of San Luis Capital.”
The Mercury News. “Santa Cruz County’s median home price fell to $600,000 in June, a $157,000 drop compared to the same month last year, according to statistics released Thursday. The statistics show that median-home prices haven’t been this low since 2004.”
“‘There’s almost no discretionary buying or selling activity going on,’ said DataQuick spokesman John Karevoll. ‘It’s all scraping the bottom: foreclosure resales, lots of distress sales.’”
The Modesto Bee. “Home sales in June continued the trend of recent months, with median prices dropping but the number of sales rising in the Northern San Joaquin Valley. Stanislaus County’s median fell to $201,000 last month, down 6.5 percent from May and 41.4 percent from June 2007, DataQuick reported.”
“In Merced County, the median price slipped to $160,000 last month, 44.8 percent less than a year earlier. The number of sales rose 63.1 percent. San Joaquin County’s median was at $227,000 last month, down 42.8 percent from June 2007. The number of homes sold was up 74.3 percent.”
“Turlock real estate agent Larry Rumbeck said the latest report shows prices continuing to get more in line with what home buyers make. ‘With the incomes we have in the valley, those are affordable (mortgage) payments,’ he said. He characterized the boom years as a ‘false economy.’”
“Stanislaus County’s median peaked at $392,000 in December 2005. The collapse since then has put many construction and real estate people out of work. Many recent buyers have faced foreclosure as their monthly payments reset and their home values dropped below their loan balances.”
“DataQuick analyst John Karevoll said 70 percent of California housing is ‘on hold’ and the other 30 percent is in what he called ‘a spectacular downward spiral.’”
“‘Foreclosed properties are dragging everything down, and it’s this vortex,’ Karevoll said.”
The Bakersfield Californian. “Residents of the Windermere tract and Castle & Cooke agree the community offers unique living in Bakersfield. Economic factors are prompting design changes, and the city’s Planning Commission approved the developer’s proposed tweaks at its meeting Thursday.”
“The developer’s ‘new urbanism’ concept is a tough sell in the housing market and a drag on the company’s finances. Castle & Cooke has sold 12 homes in two years. ‘With that rate, it will take us 40 years to build out Windermere,’ said spokeswoman Darlene Mohlke.”
The North County Times. “During a foreclosure workshop held last weekend in Murrieta, more than 350 residents sought information and advice on keeping foreclosure signs off their front lawns.”
“Of about 20 banks and lenders who were asked to participate in the workshop, only one, Washington Mutual, came to the event. The empty seats frustrated council members. ‘It’s going to take effort on everyone’s part to solve the problem,’ Councilwoman Kelly Bennett said. ‘(The lenders) are in our community by the fact that they are lending on properties in this town, and they need to be at the table next time.’”
“John Sini, a Realtor in Murrieta, who has lenders in his office, said he received an e-mail from the city inviting him to the workshop, but he had other arrangements for the day. While he agreed that some communications among the different parties invested in the housing market could be useful, homeowners won’t get anywhere until they actually contact their lenders.”
“‘Everybody’s in the same boat,’ Sini said. ‘And one entity is not going to be willing to compensate enough to satisfy the other. It’s going to all boil down to how open their bank is to modifying their terms.’”
The Desert Sun. “At a time when housing sales are down 13.3 percent from the year before, foreclosures and short sales are drawing multiple offers, many from first-time buyers who are trying to get into the market.”
“‘It’s a reality that this is where a good percentage of sales are coming from, just because of the price reductions,’ said Greg Berkemer, executive VP of the California Desert Association of Realtors. ‘For some agents, this is all they do. For some agents, this is all they’ve ever done.’”
“In June, 1,198 Coachella Valley properties were in some stage of foreclosure, according to RealtyTrac.”
“Windermere Real Estate listed more than 80 bank-owned properties and foreclosures in a recent Desert Sun advertisement, with prices starting at $24,900 in Salton City and $39,900 in Desert Hot Springs.”
“Banks also aren’t as open to dealing with a ‘laundry list’ of buyer demands, Berkemer said. ‘The seller is already writing a check to get out of the house,’ he said. ‘They’re probably not inclined to replace the carpet and the pool. They want to get out. What you see is what you’re getting.’”
From KABC 7. “Many would agree when it comes to foreclosures in the Southland, the Inland Empire may have been hit the worst. In some neighborhoods it seems like for every owned house, right next door there’s a foreclosure. And dead grass, lockboxes, and ‘for sale’ signs are some of the very things driving property values down.”
“‘It’s affecting the values here in Sierra Lakes,’ said Sam Suarez. “I think they’ve gone down — our house two years ago was 560, they’re down to 3, like the low 3s.’”
“Tarbell realtor Deeann Parra said the number of buyers has jumped 30 percent. ‘Pretty much the ‘03-’04 prices are back, which means the buyers who lost out in ‘05-’06-’07, they’ve now come back out of the woodwork,’ said Parra.”
“‘You’ve got a lot of people that were cut out of the housing market because prices were crazy,’ said housing expert John Husing. ‘People were buying houses not to live in, but as an asset to ‘flip’ and make money and all the rest of that. That could only go on so long, and it collapsed, so now’s the time when you’re able to go out and find houses, that you can actually afford the real prices they should have been selling all along.’”
“‘So what I’m here to do is ask Washington Mutual to seek a return on my investment,’ said Gary Robinson, an Antioch Homeowner.
Grow up dude, your house lost 50% of it’s value, there is no way to get a return for WAMU on that other than you paying the mortgage you agreed to.
Amazing how many folks want someone else to pay for their mistakes. Sounds to me this fellow made his ‘investment’ in hopes of future profit, instead of a roof over his head.
He is singlehandedly the best argument in favor of issuing “breeding licenses”.
You mean he’s the argument for denying a breeding license.
I suspect–I hope–that there was more to Robinson’s quote than just that sentence. It doesn’t even make sense on its face. If that’s all there is, then Robinson is a cretin, but our almost-infallible MSM (such as ABC 7) does occasionally get things wrong.
“You mean he’s the argument for denying a breeding license.”
Haha. Beautiful
It’s the parents of this piece of work who should have been denied the license.
What’s amazing to me is the fact that a naive, touchy feely American public will buy into articles like this. The liberal media knows it and take a wild guess who will end up footing the bill for all these ignorant home buyers who will just walk away and wait for the credit to clear?
I mean an 863 sq. ft. house for $609,000??? They would have been much better off moving to an area of the country where homes were much more reasonably priced, PERIOD.
Gary must have been coddled a wee bit too long as a child. WAMU, i.e. mommy, isn’t going to always be there to clean up after your mistakes, bad investment choices, or ignorance. I would hate to see what he does if a layoff happened. I hear cries of “Why me?”, “I thought we were doing well”, “What do you mean the business model has changed?”. Good night and good luck gary, you’ll need it.
Gary Robinson is a idiot. He should just walk and STFU already. Did he put anything down? What has he invested? Nothing. The bank is the only one who has anything invested and they made a bad bet on Gary.
You’ve got it all wrong…if he’d made a profit he’d be giving that to wamu..yeah right.
Thanks to Ben and this blog I bought puts on both WaMu and DSL last year. Didn’t buy leaps however so it’s ordinary income. Should have also done the same on Fannie and Freddie but I was afraid that the stupid Congress and Treasury would bail them out. Could have bought calls on Monday but had brown on my neck. Why pay more taxes to support the illegals and the welfare queens as well as homeless.
What if you’re a homeless, illegal, welfare queen?
Congratulations on DSL and WaMu.
You had no choice on DSL as there were no LEAPs readily available last year. If you wanted to reduce taxes you should have shorted them.
Your misunderstanding of basic finance is further exhibited in not exploiting your knowledge that Fannie was going to rise last week.
Yes, you would have to pay taxes, but now you won’t get that money. It is gone forever. You blew a perfectly good chance to make money (If only I had your foresight).
Maybe a little less time frothing about homeless people, and a little more time spent thinking rationally about money would be beneficial to your pocketbook.
Oliver
“A few years ago, Gary Robinson bought this home in Antioch for about $700,000 using an interest-only loan and an adjustable rate. ‘My mortgage is at $5,000 dollars. It went from $2,000 to $5,000 and the house is worth 60 to 50 percent less,’ said Robinson.”
“‘Here basically, the brokers were writing down whatever numbers they thought would help people get the loan without any regard to how much they were actually making,’ said Noah Zinner, Bay Area Legal Aid.”
*****
“… brokers were writing down whatever numbers they thought would help people get the loan without any regard to how much they were actually making…”
Hmmm… in the Alt-A Bay Area?
Why… of course!
And people were more than happy to go along with it.
From the Monterey Herald article;
“Should the couple have known better about misrepresenting their incomes? Yes. But when a mortgage professional told them everyone is doing it and not to worry, many buyers went along because they wanted so badly to own a home. The government recognizes this and rightly places the blame on the lender. ”
Misrepresenting? Let’s call it what it is, LYING.And isn’t lying on a mortgage application a crime?
Oh come on , we are talking about a buyer who wanted a 700k home who could of settled for a 400k home . So what is this nonsense that they wanted so badly to own a home . Good lord ,the spin out there to hide the real truth of the Ponzi -schemes,
Buy a more expensive house and you will make more appreciate and let a higher priced house put more money in your pocket .
Um, Housing Wizard, when you use punctuation, you don’t need to put a space in front of it every time.
Otherwise , it looks like hell to read .
OK .
LOL!
It’s only the “Bay Area” because Real Estate agents keep expanding the Bay Area. For Antioch to be the “Bay Area”, it would need to move about 50 miles west.
“‘So what I’m here to do is ask Washington Mutual to seek a return on my investment,’ said Gary Robinson, an Antioch Homeowner.
Is this guy mentally retarded? Does he have any idea how stupid he sounds? Not only does he want to keep the house he can’t afford, he wants to make “a return” on it as well!
“Banks also aren’t as open to dealing with a ‘laundry list’ of buyer demands, Berkemer said. ‘The seller is already writing a check to get out of the house,’ he said. ‘They’re probably not inclined to replace the carpet and the pool. They want to get out. What you see is what you’re getting.’”
Understandable. But how willing are these banks to negotiate on the price? Not much if they are drinking the “bottom-is-near” Kool Aid. It seems like they aren’t too interested….yet.
“‘Foreclosed properties are dragging everything down, and it’s this vortex,’ Karevoll said.”
Let us give an example from La Jolla…
http://www.sdlookup.com/MLS-080050471-1539_Nautilus_La_Jolla_Ca_92037
Sales History
Date Price Held Return Annual
01/29/1998 $532,000 11y 1m 24% 2%
12/30/1986 $430,000 n/a - -
PPSF is about 40% below most listing prices. Someone tapped a pretty good slice of equity if the bank is now trying to sell for $1.1 million. I would consider this at a price of $725K, especially as they claim it is best to tear down. I’ll straddle on over and check it out for Big V.
Sometimes I’m just astounded by what when on in lending during the mania .
A couple goes into a bank and applies for a 700k stated income loan and they think a stated income loans means you state what income is needed to get a 700k loan ,even if it means you have to state 40% more than you really make .Lets get real here . First ,who told this couple that they could afford a 700k loan ,and what real estate agent was showing them 700k
properties ? Second , what crook loan agent figured out what figure had to be stated to qualify and put that figure down with the full approval of
the borrower .
Didn’t that couple get a feeling that they might be committing fraud ,and didn’t that couple shake in the booths at buying such a expensive home
that really required them making 40% more than they really made . And these are the foreclosures of America . These are the bail-outs that our tax dollars should pay for when the Corporate financial sector of this economy decided that not underwriting loans or preventing fraud was a good model for lending .
This loan application ,and all the parties involved with it ,was a crime ,and that is it .They all perceived that real estate would go up and cover the crime . Manias bring out the worst in people .
ya know.. there are times when we have to have the guts to see ourselves as a whole.. as a interdependent community of people and businesses.. and act responsibly.
When a drunk train engineer goes off the cliff, he alone is apparently at fault for the disaster. But the community’s choice of intoxication laws, possibly the police force’s or courts inaction or ineptitude might share some guilt..
In any case, a lot of innocent people suffer.. the passengers, their families.. the little town they came from lost financially as well.
What should we do in such a case.
We might try to prosecute the engineer, and make him pay all damages, but he’s dead and couldn’t afford it anyway..
What, if anything, should we do about the victims.. every thing from newly minted orphans to the town’s businesses that suffered losses. Should we, as a society, support them?
We (tax payers) are not legally bound to pay for damages caused by the engineer, but should we? Will paying ultimately make life better for everyone in the long run?
If we learn from the experience (monetary pain is an efficient teacher) we’ll change whatever needs to be changed in order to avoid a repeat of the incident and, imo, paying for our society’s mistakes is the way to go.
joey,
That’s a pretty damning indictment of our president, drunk with power…
Drunk or sober, blaming the Pres of the USA for anything that happens anywhere on this planet is as easy as falling down…
Actually, he is a DRY DRUNK.
The train Company is going to get their ass handed to them when all the lawsuits come in and the insurance Company that insured the
stupid train company gets the bill and they will try to squeeze out of it .
The lawsuits will go on for years and everyone will try to transfer blame . The real victims ,won’t get anything from the State ,unless their lawyers can prove that there was some liability on the part of the government . If there is any money left after all the lawyers fight it out for years ,than maybe some of the victim might get some compensation .
Joey ,how can you say that people who had nothing to do with the
fraud and contractual bad lending should pay anything toward
the mishaps of the real estate and lending business or the borrowers
who over-extended themselves or committed fraud out of greed . I’m not my brothers keeper when he decides to commit fraud for gain during a housing mania .
If the borrowers believe that they were hoodwinked into committing fraud or buying something they couldn’t afford ,than let them prove it in the courts .
So any mania that hits the main stream that causes people to lose money ,I’m suppose to gleefully hand over hard earn tax dollars to bail out the financial sector of Corporate America because they chose to give loans to unable borrowers , who ended up not paying them .
Tax dollars should go to something that is more constructive than bailing out greedy mistakes or criminal behavior .
If I use your example of the train going of the cliff , the housing bail-outs would be the same as the engineer surviving the train disaster and expecting compensation of 10 million dollars because
he needs money to survive because the accident caused him damage to his income flow .
..how can you say that people who had nothing to do with the fraud and contractual bad lending should pay anything..
believe me.. it aint easy to say.. The only reason i say it is that i think doing so will prevent a worse evil(s) and benefit us all down the road. There may be some element in faith involved, but i feel pretty confident i’m correct in theory.
—-
Theres another thing that’s been stuck in my craw for a while.. this notion that by tax payers covering losses, losses are socialized while gains were privatized.
Who exactly gained from the housing boom?
Did I, who had no active participation gain anything?
Did my city have more tax revenues and were services i used better funded? (yup)
Did almost every sort of businesses around me multiply or expand and hire more people, improving my job market? (yup)
If i sold property of almost ANY sort during boom years, did I receive more than i may have without the flush boom times with all the HELOC money floating around looking to be spent? (yup)
Did anyone who sold RE in the last 5 years reap a windfall? (no question about it)
I’m sure there are hundreds of similar examples that show we all benefitted from the bubble.. that gains were in fact socialized.
of course we will now lose most of those gains, but that doesn’t mean we gained nothing.
I had nothing to do with the bubble and I’m paying dearly. Interest rates are being held down to prop up housing, causing me to get less on my savings, and the dollar is being weakened.
It seems that Congresses solution to 3 bedroom houses being bought and sold for $1M is to make $1M worth only about $250,000.
Reuven .. i don’t know you from Adam but I want to play a game.
Tell me anything about yourself.. one thing.. maybe two if you feel generous (or cocky).
I win if i can figure out how the bubble benefited you in some way, based on the information you provide. You win if I can’t.
Very interesting theory Joey . Lets see
The economy went into a slump in 2000. Greenspan lowered the rates and continued to lower them which sparked interest in
purchasing big purchase items such as real estate because the interest rates were low . The real estate
market reaches a dead end quickly based on prices going up ,so the industry keeps it going by
allowing fraud on loan application and crazy loan products to continue the ponzi scheme so people could pull money to buy products from Corporate America ,and get rich quick ,while Wall Street Boys and the lenders and RE agents could get rich on the Ponzi schemes .And in the end ,the borrowers get stuck holding the debt because of the easy money , but now they refuse to pay ,because they never could ,and it was based on a asset that was a fake value.
Ok,so thats what happen ,right . And all the bystanders that
were priced out of the market ,or all the people that were cheated on property taxes by the fake value ,and all the people that have loss money that were the innocent ones ,and all the people who are taxed now by inflation ,and all the innocent ones who got bilked by the crime wave that only made a certain select rich ……has social and economic redeeming value in your mind .
Your talking about a seven year period of time in which the boom produced false wealth ,in which now that false wealth has to be paid ,and the taxpayers should pay for the ride they got ,doesn’t matter if they didn’t benefit from the boom or not ,and in spite of it making the cost of living go up overall during that period as well as now ,and in spite of it being a crime wave. And now the price has to be paid for the fake market ,which could set this economy back for years ,or even throw us into strange forms of government ,and it had a social redeeming value ? The fact that it might be a Black Swan event that might take us down financially ,or alter the American way of life forever or take down middle America ,while the rich get richer ,has social redeeming value ? But never ask the real masterminds of the ponzi-schemes or the gamblers or the fraudsters or the responsible parties to pay ,or maybe go to jail . Just throw the joy ride of 7 years on the backs of any new bag-holders it can be pawned off on ,never mind that it isn’t just ,and it delayed Americans for 7 years from facing their real economic situation of Corporate America selling them out to Globalism .
Just let me say Joey ….I don’t think the short term joy ride
was worth it .
i agree with most things you said, especially the last part about the joy ride not being worth it.
Here’s the thing tho.. the party is over. A few people got hurt, arrested, robbed, pregnant, killed, etc. But that’s all water under the bridge. Now we have to recover. “We” meaning all of us.. our whole economy.
I’m selfish.. i want us to do whatever helps and protects me.
Is “bailing out” my bank going to help or hurt me? How about helping the small company or huge corporation that pays me every week, or from which money eventually reaches me?
If the guy I work for can’t borrow working capital, might I lose my job? Are bailouts and my job actually related?
Whatever methods we use to fix the damage will have wide spread, serious consequences. All i’m hoping is that we carefully consider the methods and consequences with an open mind and an eye towards the future before we try to ‘fix’ things.
I don’t even want to get into the potentials for govt intrusion and debilitating regulatory powers that the economy might get shackled with if we jump the gun..
A friend once told me “You gotta be smarter than the thing you’re trying to fix”. Well, we can think ahead and the thing we’re trying to fix can’t. We should take advantage of this. Focus on tommorow instead of yesterday.
Lets be careful so we might suffer the least amount of pain possible. This economy is not totally fried.. yet. We are quite capable of making things worse.
Joey,
I don’t know you either but let’s establish a few things.
There is no tooth fairy……..
Pinocchio has wooden nuts…….
The gubmint and Wall Street rigged this game..
I applaud you for wanting the greater good.
If I had to guess, I would say you are well under 30 years of age.
Youth generally = Idealism
Let me give you an elders (45) perspective.
We have been fleeced by professionals.
They knew what they were doing when they were doing it. They knew they could skim all the profits, fees , and commisions on the way up because, wink..wink, the GSE’s were backed by US.
So forgive me if I don’t shed a tear for Imelda the lettuce picker, and the Wall Street con artists.
Joey, there are guys riding around in their 100 million dollar yachts because of this.
Mike
$100 million yachts?? I’m uncontrollably jealous! You say wall street and govt rigged the game? I’m uncontrollably angry as well!
To hell with formulating a sensible recovery.. grab your pitchforks and torches and follow me!
–
mike.. i expect that around 99.99% of the population will be mired in thoughts similar to yours.. stuck in the past and unable to view the current situation objectively.
But ,that’s just it joey ,what is a sensible recovery ? I’m all for constructive action also that creates the least amount of harm .
Unlike the housing boom ,I like everything to be done in a
thoughtful and orderly and law abiding way .
When you see all the spin from the politicians ,which so far has ended up being just a “blank check ” thrown at the problem ,without accountability ,you have to conclude that the taxpayers
are being set up to take on a % of the faulty debt . If you like the inflation and the erosion in your buying power because of the chosen course of actions by the bail-out team of Paulson and
BB ,and the politicians ,than I need to talk to you in five years after the full impact of who gets the bail-outs and who doesn’t is fully realized . Trying to save bad paper ,or spending money on bailing out the fraudsters doesn’t seem very constructive to me .The money can be put to better use
as the hard times unfold .
joey,
Feel free to send all your money so the Wall Street firms can be bailed out.
Those are the very same firms, BTW, who scoffed at those who were trying to warn about a bubble years ago. The same firms who blocked any kind of regulation that might have put an end to their financial orgy.
I’m about as liberal as they come WRT helping those who can’t help themselves. Wall Street does NOT qualify. The world would be a much better place without them.
I’d like to see debtor’s prison make a comeback. Hell, there are a lot of public works projects that could be done by these folks that might even save us some money on taxes. It would cut down on the number of jobless since half the population would be facing prison and we’d have a cheap source of labor that spoke english. A win-win, if you will!
You may be kidding, but this actually makes sense. Not a true debtors prison, but prison time for people who lied on a mortgage application. Obviously, some basis needs to be found in existing fraud law that allows for a conviction with a prision sentence.
There are about 2,000,000 mortgages “in trouble”. Let’s say 50% of them had some degree of fraud on the part of the buyer. That’s 1,000,000 people.
At 40K/year to incarcerate someone, it would cost only $40 Billion to put 1,000,000 people in jail for a year. That’s a lot cheaper than the Dodd/Frank giveaway program.
And you know what? Faced with jail time, a lot of people will start making good on their contractual obligations!
People who lied about a stated income should get a choice: Either pay income taxes on your stated income, or go to jail. I think that’s entirely reasonable.
In reality, we wouldn’t have to put 1,000,000 people in jail. If the US government simply made and publicized 5,000 convictions around the country for mortgage fraud, a lot more people would be willing to come to terms with the shady deals they were a part of.
Love the idea of putting these fraudsters in jail, and **making them work** their way out.
I’d like to see a $20/day “wage” that would go to a fund to help fund the FDIC, SIPC and PBGC. If there’s anything left over, we can bail out the municipal govts that are sure to fail in the next few years.
The lying scum can work on infrastructure projects and rehabbing foreclosed properties (the cost of which is paid when the house sells, and the govt will have first position liens for all expenses incurred).
Great idea, auger!
Joey’s argument is interesting.
That we allegedly “privatize gain and socialize loss” is a pithy oversimplification, but as a rhetorical point, it ain’t at all bad. He’s saying that actually, though, the bubble gains were not really privatized, and that others in our society outside of the REIC and homeowners and flippers did benefit from the bubble–via increased employment prospects, for example. Therefore, they should be there to help pick up the pieces.
I think the key is that the gains to the non-REIC, non-job seeking, non-HELOC’ing crowd (I was a HELOC’er, but am well within a solid income-debt ratio) were indirect and ancillary. They did not compare to the windfall gain directly realized by the seller in 2005 who sold at premium price to a house full of Mexicans who had obtained exotic financing, only to default in 2007
[True story from my neighborhood. No special claim to virtue for myself here-had I been interested in selling in 2005, I would have gladly taken outsize proceeds from anyone save, perhaps, crack-dealing Bulgarian midgets].
Gains that are ancillary and indirect are simply qualitatively different from gains that are direct and outsize. It’s a little OT, but let’s extend the argument to a different arena.
Remember the crisis about 20 years back about requiring helmet usage on motorcycles? Cyclists argued vehemently that if they crashed and were injured, they were the ones who bore the risk of injury. In kind of a bizarre riff on Roe v. Wade, they argued that it was their body, and they had the right to choose what to do with it.
But in fact, society at large bears many costs when a motorcyclist gets injured and spends six months in the hospital in a coma. And when “society at large” bears costs, it means that the rest of us bear them individually. It got to the point where we decided, as a society, that the profound ancillary costs to society outweighed the rider’s direct “freedom” interest to go without a helmet.
Another example closer to home. Some people on this blog smoke. They reject any idea that government should prevent them from doing so, or proselytize them to refrain. “It’s my body, and government should just butt on out”; “If I get cancer, I’m the one who suffers, so lay off”.
But in truth, a person who deliberately inhales smoke and tar numerous times a day, deliberately jeopardizing their health, does not just affect him or herself. Were that person to present himself at an emergency room with a wracking cough symptomatic of emphysema, society would not be permitted to turn them away. When he or she undergoes a tracheotomy at age 67 funded by Medicare, the rest of us pay, indirectly.
The reasonably likely health effects of smoking do create substantial indirect social costs–medical costs, foster care costs for the children left behind by the dead smoker, criminal justice system costs incurred because the children of the smoker grew up without a parent–because of that individual’s decision to smoke. We relieve the individual who presents himself at the hospital ER from some of the consequences of his or her poor decision, by continuing to extend medical care to him.
So far, our society has reined in the non-helmet wearing motorcycle riders, but has left the smokers free to continue in their ways (albeit, their heavily taxed ways). At what point does the larger social interest in a problem, arising out of indirect and ancillary consequences, justify a coercive approach to behavior, as well as require society to relieve the individual of the some of the downside of his or her decision?
It is an oversimplification to say that we have privatized gain and socialized loss in the bubble context. Larger society gained, in some indirect ways, from the bubble and, in truth, the flippers and the lying homeowners (with exceptions) suffered the most direct consequences of the loss. But it contains a solid kernel of truth.
“At what point does the larger social interest in a problem, arising out of indirect and ancillary consequences, justify a coercive approach to behavior, as well as require society to relieve the individual of the some of the downside of his or her decision?”
It never does. Just about every classical liberal/libertarian around states that increases in freedom involve proportional increases in responsibility - which is something Americans in general haven’t been willing to own up to in recent years. If you have chosen to be a smoker, I fully believe that you should be allowed to make that choice; after all, it is your own body, and what do you have any greater right or title to than your own person? However, the flip side of that arrangement is that you should not be allowed to burden anyone else with the consequences of your own decisions. If you smoke and get lung cancer, it is not my responsibility to help you out - I don’t smoke, I didn’t take that risk, and it is certainly not my responsibility to relieve you of the “risk burden” you took on by yourself.
That’s the reason why the idea of “privatizing gain and socializing risk” that you describe is so dangerous. Separating the consequences of risk from the people who take on that risk only encourages moral hazard, and it is the one factor that contributed more than anything else to the current housing debacle.
Many years ago, in my college days, I circulated some petitions in California for propositions to raise taxes on cigarettes. The point of the tax was to fund the healthcare costs of smokers.
At the time, I was a smoker and gladly voted to increase the taxes. The proposition passed, but for some reason, they used that money for more ad campaigns instead of healthcare costs for smokers.
Smokers pay far more than their fair share in taxes. If these taxes were used to fund their healthcare costs, I imagine there would still be a surplus.
Additionally, what about people who play competitive sports? Ride bicycles on the street? Drink alcohol? Take Tylenol or other pain-relieving drugs that cause liver damage?
Let’s be honest, almost ALL of us do something that can cause harm to our bodies. Where do you choose to draw the line? Is it where other people’s rights/freedoms intersect with yours?
I know this was not your point, but I can’t resist responding to a mistaken assumption.
How is riding bicycles on the street dangerous? It’s the cars that are dangerous, not the bikes. People who drive responsibly mitigate that danger. What we need for the streets is a strict liability law on those who drive the heavier, more dangerous vehicle, not a tax on the victims.
I think I need a hug
Lets see.
Didn’t get more work, lost alot of pay, lost vacation time, lost many other benefits. Town got more crowded, but amenities of valley didn’t improve. No more cops/firemen or EMTs. Takes as much time to get seen in hospital now as before the bubble. Costs went up, copays went up. Taxes went up. Costs at restaurants went up.Nope, didn’t see an improvement via bubble directly or indirectly.
Yep ,and on top of everything else ,everybody gets to look at the vacant houses now and the brown lawns ,and the damage to homes by the angry walk-a-way ex-homeowners is another outright criminal waste going on .
The fact that a small % of homeowners cashed out and gained
by selling at the peak doesn’t have anything to do with the
overall damage and loss that most people are suffering . People refinanced their homes ,thinking they were wealthy by appreciation of real estate ,and spent ,spent ,spent . So the Corporations benefited by that purchase . But someone has to pay because the debt is owed on those purchases . So if the debtor who bought the junk doesn’t pay and walks ,than that bill ends up being part of the loss of the entire defaults .The debtors still get the item they purchased ,but they never really pay for it .
So,you can say that some bubble money bought a car ,or a trip ,or a weekend in Vegas ,that stimulated the economy , but it hasn’t been totally paid for yet .Now maybe the debtor even sells the car and gets some money ,but still turns around and doesn’t pay the debt ,which was transferred to his home mortgage . So,right ,you got a bunch of people running around that bought junk on equity money ,but will never pay for it .So,the banks are saying pay for my losses and
my debtors breach on paying for a item they got .
It’s a very strange way of stimulating the economy when it’s based on credit that won’t be paid by the debtor .
“It was hard, she said. She had been trying for several months to find a place where her musician sons would be able to practice their drums and electric guitars. They have their own punk rock band.”
“‘That was my top priority,’ she said. ‘They have to be able to do their thing.’”
Speaking of hard-to-rent: I just saw a TV news segment where the number of pets in animal shelters has had a HUGE explosion, despite a decrease in the number of adoptions. It was blamed on the fact that more people are renting, and can’t keep their pets…nor can they really afford them or take care of them if they are working two jobs.
“It was hard, she said. She had been trying for several months to find a place where her musician sons would be able to practice their drums and electric guitars. They have their own punk rock band.”
“‘That was my top priority,’ she said. ‘They have to be able to do their thing.’”
Honey, just hand them the car keys and a box of condoms and they’ll go do a new, cheaper thing. And you’ll get some peace and quiet around the house, too. Win-win.
I have three daughters….two in high school, one in her 20’s.
They are already being hit on every day by the “Yo, whatz up?” crowd, rolling down the road with 4-5 friends in a crapped out hooptie, who think that if they hit on everything in sight, that some dumb-ass girl/woman will just tear her clothes off, and start “bumping uglies” with them.
It’s gotten bad enough that it’s at the point where the 20-something is getting a concealed carry permit. “Mr. Glock”, “Mr. Colt” or “Mr. Browning Hi-power” may be coming for Christmas this year.
Your advice sucks……..don’t take it personal.
I was thinking more along the lines of them getting a job to help pay the rent, but your idea works too!
Ya know, the whole thing about shelter populations dramatically increasing because the morons who are losing their homes ‘can’t’ afford to take care of little fluffy REALLY pisses me off! We’ve been renters since 2001. We came out of the military with a whole bunch of pets including livestock and I am proud to say that we’ve never had to rehome an animal due to a living situation. People are so bloody mentally lazy! Where there’s a will, there’s a way and if you really truly love your pets (and didn’t acquire them to match the curtains), you’ll figure out a way!
‘People with strong income and down payments and strong credit: it’s really not that difficult to get loans. We’ve kinda gotten back to underwriting like we used to 10 years ago,’ said Chris Orsini, a senior loan officer for the mortgage bank.”
Say it isn’t so. What about the other 80% of the population who yearns for the American Dream? Do you want to subject them to delayed gratification and a lifetime of increased disposable income? If people aren’t up in debt to their eyeballs, what do they have to live for? Waking up from this decade long dream has left me blase.
“‘There’s almost no discretionary buying or selling activity going on,’ said DataQuick spokesman John Karevoll. ‘It’s all scraping the bottom: foreclosure resales, lots of distress sales.’”
Aren’t the buyers of these distressed sales making discretionary purchases?
If I could, I would make it a law that those thinking of buying a house or condo, reads this blog first before signing ANYTHING. The latest idiot out there is Alexis McGee President of Foreclosures.com. Her July forecast states that property has bottomed out…..but it seems she figures there will be 1 million foreclosures by the end of the year. Is she a “mole” for the NAR? The moron even links property to the stock market! Maybe Alexis can enlighten us and tell us what the stock market has to do with foreclosures? I suppose it’s the usual, “There has never been a better time to buy,” b.s. Anything to draw the suckers in. “The stock market is recovering so you had better buy a house now.”
“During a foreclosure workshop held last weekend in Murrieta, more than 350 residents sought information and advice on keeping foreclosure signs off their front lawns.”
“Of about 20 banks and lenders who were asked to participate in the workshop, only one, Washington Mutual, came to the event. The empty seats frustrated council members. ‘It’s going to take effort on everyone’s part to solve the problem,’ Councilwoman Kelly Bennett said. ‘(The lenders) are in our community by the fact that they are lending on properties in this town, and they need to be at the table next time.’”
_______________________________________________________________
Perhaps the other 19 banks & lenders were at a naked short sales colony that weekend?
Councilwoman Kelly Bennett said. ‘(The lenders) are in our community by the fact that they are lending on properties in this town, and they need to be at the table next time.’
Why Kelly? Why do they need to be at the table next time? We recently had a City councilwoman here in Columbia,S.C. state ‘if’ housing becomes a problem here then ‘we’ will need to act as a community. Whatever the hell that means. So do ‘we’ get to act as a community in all of the past humongous RE profits that have been made? Oh no, sorry taxpayer lowlife you’re sh!t out of luck!
“After visiting an open house one Sunday, they met a Realtor and were coaxed into making a full-price offer. Before they knew it, they were in contract to purchase an 863-square- foot, two-bedroom house for $609,000.”
Before they knew it?????
ha ha ha
In 2005, a Realtor I was using wrote up a full price offer and shoved it in front of my face to sign based on nothing more than I said it was the best house I had seen that day. Not once did I do anything to suggest I wanted to make an offer. She told me that there were 5 other offers on the way, that the house was worth 50k more, and that it was appreciating at a rate of 20% per year. It wasnt that hard to tell her to F off among other things. I no longer get a yearly Christmas card from her, but I push forward with my life one day at a time.
Tim, I admire you for ’struggling’ through after losing that RE agent as a “friend”. You are a brave soul. hehe
Into the Valley of Debt, rode the 1,600…
“More than 1,600 foreclosure notices went out in the Bay Area in the first quarter of this year and a quarter of them came from Contra Costa County. That’s a 140 percent increase in foreclosure activity in just one year. Misery had a lot of company on a Friday night in Antioch, where homeowners tried to negotiate their way out of foreclosure and keep a roof over their heads.”
“Someone had blunder’d.”
Booms on the right of them and Booms on the left of them
Cannon to right of them,
Cannon to left of them,
Cannon in front of them
Volley’d and thunder’d;
Storm’d at with shot and shell,
Boldly they rode and well,
Into the jaws of Death,
Into the mouth of Hell
Rode the six hundred
Can you get to that valley a little faster there???
You’ve got it all wrong…
Why, Gary would have given Wamu a check, if the value had increased…Yeah, Right.
“‘You’ve got a lot of people that were cut out of the housing market because prices were crazy,’ said housing expert John Husing. ‘People were buying houses not to live in, but as an asset to ‘flip’ and make money and all the rest of that…”
If the prices were ‘crazy’ and the buyers were paying those ‘crazy’ prices, isn’t there a potential ‘temporary insanity’ defense strategy available to these ‘flipped out’ buyers?
Bankruptcy lawyers take note! ;~)
I brought this up years ago ,but I called it the “Mania Defense “. I don’t think a defense like that really holds water . You hear a lot of CEO’s of Loan Companies saying things like ,” Everybody else was lending easy money ,so we wanted our market share also .” One of the CEO’s of a major Lender said in so many words that his Company was sub-prime lending because that is what the people wanted ,the “American Dream” .
I guess you can come up with a number of excuses for people acting as
they did during the boom times ,but it comes down to if it was legally excusable . it just seems to me that dollar signs were in many people’s eyes ,so they were willing to do things that they might normally not do .
I agree with your ‘herd mentality’ analysis, but it was only symptomatic of an aggressive, well-funded, deceptive marketing campaign by the REIC combined with a compliant and collusive FED to maintain ‘insanely’ low interest rates for an over-extended period.
We need to start at the enabling sources of this bubble to reveal and prosecute those manipulators.
Get a loan, little doggies~
LOL While a “the bartender got me drunk” defense will get no sympathy from a jury, a “the bar owner got me drunk by giving me a one-night-only unlimited bar tab at 0% interest w/no payments for 90 days” might work…
Alad insane! Get a loan little doggies. Gotta love your stuff, how does your spouse put up with these tidbits? !!
montana jim …LOL …good one
When I bought my house during the boom ,not one real estate agent said to me “real estate always goes up ,and this investment can’t lose”,or anything like that .When I bought my house I wasn’t even thinking about future appreciation or anything like that . All I was doing was looking for a house that
suited my needs that I could afford and live a long time in . I didn’t have anyone trying to talk me into going on a teaser rate adjustable loan that I could refinance later .I was aware of a lot of loan ads on TV and I knew the home programs were popular ,but I was not paying attention really at the time .
When I found out later how loan products were sold and what the real estate and loan industry was doing , I’m telling you my whole being just sank with immediate oh no ,tell me this isn’t true .
My point is that I really wasn’t subjected to any brainwashing
by the industry , but I know a lot of people were . I’m pretty pissed that it was a fake value market that was created by faulty/fraudulent lending and unable buyers driving up the prices .
On Bill Moyers Journal last night they featured the housing meltdown in Cleveland and discussed the ongoing credit crisis with journalist William Grieder, who thinks we’re not witnessing a temporary financial hiccup, but rather at the dawn of “Wall Street’s great deflation.”
http://www.pbs.org/moyers/journal/07182008/profile2.html
Bill Moyers? PBS? Grieder who writes for The Nation? Gee no political bias there.
You’ll be pleased to note that my very right-wing BIL was watching this segment of Bill Moyers last night (to my amazement) and nodding in agreement. So, keep an open mind. Grieder pointed fingers mainly at the FED, but the GOPs and DEMs got their lumps equally.
I think ex-WA is one of those sheep who bug out their eyes and shout “LIBERAL!!!” whenever anyone challenges his daily pablum of White House propaganda and Rush Limbaugh comedy skits with the truth.
Wake up ex-WA, it wasn’t a hit piece, as a matter of fact it was spot on. This isn’t about being partisan, it is about the financial overlords of our country basically running rampant with no regulatory oversight.
Well, it was pretty good until he talked about nationalization. But Greiger did mention letting the investors take their losses.
“Santa Cruz County’s median home price fell to $600,000 in June, a $157,000 drop compared to the same month last year, according to statistics released Thursday. The statistics show that median-home prices haven’t been this low since 2004.”
*****
That’s a four year round trip.
Let’s think about the last year. $157,000 down…
That’s $0.30 a minute, $18 an hour, $430 a day or $3010 a week.
$3010 a week! In Bernanke Bucks, no less.
In 2005 or so, I recall talking with South Bay friends when their house was going up $8,000 a month.
How about going down $3011 a week!!
The Monterey County DQ numbers for May are incredibly ugly. Countywide the median is down 42% YoY for May. Salinas -41%, Seaside -46%, King City -59%, Soledad -60%. The bottom has completely dropped out, and I don’t see any end to it yet.
Those numbers spell “ass-pounding” to me! Criminy, I’m surprised we don’t have a youtube of those towns singing the “pig song” (think deliverance) in 3 part harmony by now. That’s just fantastic!
Can you say Joshua Tree?
You mean, in due time, shortly, soon, I might buy a house on the 17 Mile Drive?
Or are the prices still a tad too steep?
Alas, the Pebble Beach and Carmel prices are holding steady in the multi-million range. They’re kinda wacky places. While Salinas, King City, and Seaside home prices have to have some relation to local or within-commuting-distance wages, Carmel and Pebble Beach and Carmel Valley are more or less national markets, not unlike Aspen. Most of the houses in Carmel are owned by out-of-towners who use them for weekend getaways. You can set off a nuke on winter weekdays and not hurt anyone.
King City may be the worst speed trap ever. It seems that this would-be seller didn’t get the memo: unusual contemporary with Salinas Valley views [craigslist monterey]
http://www.reuters.com/article/newsOne/idUSL1958925720080719
LONDON (Reuters) - Citigroup chairman Win Bischoff has warned that house prices in Britain and the United States are likely to keep falling for another two years.
The chairman of one of the world’s most powerful banks told the BBC in an interview that he expects it will take two years for the markets to stabilise.
He also said he expected the credit crunch could continue through until 2009.
Bischoff told the BBC that there would be redundancies at the bank, which employs 12,000 people in Britain, and warned that some of them would be compulsory.
No further details were released of the interview which is due to be broadcast later on Saturday on the BBC News Channel (Reporting by Paul Majendie, Editing by Jon Boyle)
Seven year cycle. 2005 to 2012. ‘three or four more years to go’ , but it different here. hehehehehehehe
“After visiting an open house one Sunday, they met a Realtor and were coaxed into making a full-price offer. Before they knew it, they were in contract to purchase an 863-square- foot, two-bedroom house for $609,000.”
How does one get their mind around something like this, you’re basically paying for the lot on a deal like this…
Out of all my years in the business I could never under the mindset of someone who would pay over 100k for something like irregardless of the area…if it was attached to 10 acres… yea sure but a standard SFR lot less than a acre no frigging way…under any circumstance
“Tarbell realtor Deeann Parra said the number of buyers has jumped 30 percent. ‘Pretty much the ‘03-’04 prices are back, which means the buyers who lost out in ‘05-’06-’07, they’ve now come back out of the woodwork,’ said Parra.”
Pathetic, Parra, just pathetic.
Losing out on depreciation can be emotionally devastating.
Now Shoe Pavilion is shutting stores. Darn, I kind of liked that place.
In San Jose, from the grapevine:
-Lenders are not foreclosing, either don’t want them on the book yet, or waiting to dump the loans to tax payers when the foreclosure bill comes out. So the situation is actually much worse.
-RE/loan industry is telling FBs to make no payment for 2 months, then negotiate with the banks. Many successful stories, so FBs are now expecting banks to lower balance/payment.
-Banks are giving 3K to 5K cash for occupants to move out and leave the place undamaged.
“-Lenders are not foreclosing, either don’t want them on the book yet, or are waiting to dump the loans to taxpayers when the foreclosure bill comes out. So the situation is actually much worse.”
That sounds about right. Keep bad loans off the books and they won’t have to be written down and thus counted against earnings. That’s what Wells Fargo and many other banks are doing.
A good case for cash is made here, IMO; cash and cash equivilents such as T-bills and savings bonds, and the mattress. Almost anywhere but in the banks.
“Keep bad loans off the books” should read “Keep bad loans from being reflected on the books”.
An alternative to dumping junk loans onto taxpayers is to dump them onto gullible investors. This could be easily done by:
1. Creating a company out of thin air and then selling the junk debt to this company after loaning the company the money to pay for it.
2. Dress the company up with a hefty dividend yield (which is in reality a return of the investor’s own capital) and then hire boiler room yaks to market its shares to the public. The proceeds of the sale of shares are used to pay off the loan.
I ran into one of these companies after the Texas oil bust. The ten percent dividend yield it offered sounded very attractive until I analyzed the financials and discovered that it was the investor who was paying out the dividend, not the company.
The company’s book value took a hit every time a dividend was paid out and the market price of the stock followed suit. As the stock price fell the amount of the dividend paid out also fell, but they both fell at the same rate thus the dividend yield remained more-or-less the same.
The book value relentlessly approached zero, as did the stock price, as did the dividend.
Friend of mine is getting married, trying to buy a house in Santa Clarita Valley (barf) against my better (I think) advice. She says they’ve been bidding on houses that have already been foreclosed, but there are multiple offers and have been selling in the 680K range. Who has that kind of money for a house over there, or more likely, where are they getting that kind of loan in this market?
Give her the Link to HBB as an engagement present.
The loans are still out there in some variation if you have the FICO…
[S]aid housing expert John Husing, ‘People were buying houses not to live in, but as an asset to ‘flip’ and make money…”
Ya think?
These guys have put money down and they’ve lost all their savings for a down payment to get into a dream home and now their dream home is gone,’
Question: What happens when you wake up from a dream - “REALITY”, get over it. I dream all the time but when I awake I do not go around poor mouthing looking for my fairy godmother (US gov).
Hi All Bay Area Bloggers!!
There is going to be a get together on Saturday, July 26th - 3pm at the 3rd Ave Sports Bar and Grill in San Mateo. We will be gather to air our feelings regarding the current housing environment and how our “government” is going to save us!! We are also going to be planning some fun outings in the Bay area. It’s going to be GREAT fun!! Please feel free to email me at - bayareabubble@gmail.com if you have any questions.
This is a link to some reviews of the bar: http://www.yelp.com/biz/third-avenue-sports-bar-and-grill-san-mateo
San Diegans need a re-up party too.
We also need to:
” gather to air our feelings regarding the current housing environment and how our “government” is going to save us”
My girlfriend’s son is buying a 225K home near phoenix.
It’s being built now.
I told her it’s the worst time to buy a new home.
Rent children, don’t buy!
Yes we do!
BTW, we just went to a fantastic Japanese restaurant in Solana Beach…Nobu.
We’ve been looking for a new Japanese/sushi place since Kurando was sold (O’side).
THE BEST Japanese food we’ve ever had!!!! Must try the black cod, even if you don’t like fish, you’ll just want to live there and eat this for the rest of your lives!!!
Nobu it is.
Gary Robinson bought this home in Antioch for about $700,000 using an interest-only loan and an adjustable rate. ‘My mortgage is at $5,000 dollars. It went from $2,000 to $5,000
In ancient history (1997) I remember looking at houses out in Antioch for about $70,000. Guess where this one is going.
OK Gary, so just pay them their $700,000 and be done with it.
“After visiting an open house one Sunday, they met a Realtor and were coaxed into making a full-price offer. Before they knew it, they were in contract to purchase an 863-square- foot, two-bedroom house for $609,000.”
Oh my gosh! We were just out looking at houses, and now we’ve committed to repay three-fifths of a million dollars for a shack! How the heck did that happen?
Told you not to eat those home made brownies.
Hi SD RE Bear!
(sorry about the phone dying, BTW)
CA renter can you help arrange a party for the sd crowd?
We should shadow the bay area one just for fun.
I can certainly try!
I just love mortgage brokers..”waiting for things to return back…”
What? Back to the days of earning 15-20K a month without even burning a brain cell! Guess they never heard of a U in economic times….
Yeah..mortgage guys…go in line behind the dot com wishers…
They can still make it just not as easy now…they actually have to work for it now…that may be a big adjustment for the newbies in the biz…
“So what I’m here to do is ask Washington Mutual to seek a return on my investment,’ said Gary Robinson, an Antioch Homeowner.”
Huh?!
I don’t care anymore. Let these people have house loans again after they default on these, even if the value of the currency takes a hard hit. I’ll try and deal with the inflation.
“Their Realtor referred them to a mortgage representative, who took their application and suggested they go with the ’stated income’ format. They recall the phrase he used: ‘Your incomes need to match the home you are buying.’ Apparently theirs did not, so he raised the income numbers by 40 percent.”
Wouldn’t it be nice if you could ask your mortgage broker for a 40 percent raise, and he could summarily grant it?
Professor Bear , Your quote is evidence of how the industry was selling loans and how borrowers were willing to do it .What a gamble a borrower was taking in purchasing something that required 40% more income to really afford .It’s just nuts .
But ,that is why I can’t get any sympathy going for people who were
willing to buy twice the house they could afford ,or a industry that encouraged them to do it . This is just absurd and criminal that the loan industry and borrowers were just putting down any figure on loan applications that was required for the loan request ,with intent to just pass those loans to the secondary market .
Okay, so we went down to Morgan Hill to check some houses out - as we didn’t know the area and someone else said they were thinking of buying there as houses were cheaper there than the area we are in (Mountain View/Los Altos).
Question for those that might know - why are the houses in Morgan Hill so darn expensive?
It’s a pretty hefty commute to Mountain View and yes you can buy a bit more for your money, but there wasn’t that much of a benefit that I could see. There was a ton of new development that they wanted $1.1+ for and for that kind of money (which I can’t afford) I could get a nice place with a better school district in Mountain View/Los Altos.
Also, who can afford these houses? What jobs do they have?
Ask yourself this question; do you want to spend $ for gas to commute to SV to work with gas prices keep going up. I know couple who bought Prius and commute to SV to work but is it really worth the sanity to wake up early in the morning to fight the traffics on 101.
Builder can ask for the 1.1 but are you as a consumer willing to pay 1.1?
I won’t.