A Nail In The Coffin In California
The LA Daily News reports from California. “For weeks, mortgage banker Ben Marsh has been swamped with questions from clients worried about losing their homes in this bad economy. ‘What should I do? What should I do?’ they have asked Marsh, who has offered up several options, including renting out a room to help cover the mortgage. ‘Now I’m following my own advice. I figure an ounce of prevention is better than a pound of cure.’”
“Marsh is looking for a boarder to rent a bedroom that has a plasma TV and stereo surround sound in his spacious three-story home in the hillsides above Woodland Hills and Calabasas; the home includes a baby grand piano and other musical instruments, a Jacuzzi and a gym. All for $1,000 a month. ‘Times are tough, and I’m not closing the 12 to 15 loans a month I used to,’ said the single man in his 30s. ‘So I figured that before things get too bad, I’d take some steps to keep them from getting bad.’”
“‘We’ve seen an upsurge in homeowners renting out rooms in their homes. It’s a sign of the times,’ said Mark Verge, owner of Westside Rentals, which also places roommates. ‘I was recently in our Valley office, and a 62-year-old woman walked in looking to share her home with a roommate, and (there was) another homeowner who said, ‘I’ve never done this before, but I’m looking to rent out a room in my house to help me with my mortgage.”‘
“Renting out rooms is also a humbling experience for many of these homeowners, who don’t want relatives, friends and neighbors to know they have rented out rooms to strangers or that they have financial problems. Many of the homeowners advertising for boarders on the Internet confirmed they were taking that step because of the hard times today, but most were reluctant to be identified in this story.”
“‘It was hard enough coming to grips with renting out a room in our home,’ said a Northridge homeowner who would only identify himself as Jeff. ‘I don’t think I’m ready to announce to the world that I need help paying my mortgage.’”
National Public Radio. “As California continues to struggle with big economic problems, Gov. Arnold Schwarzenegger has proposed a list of measures intended to help — including a 90-day freeze on pending home foreclosures. Sammy Montiel lives in a two-story home in Beaumont, Calif. He bought the house just before he was deployed to Iraq last March with his National Guard unit. He came back in June, so he has lived in the house for only six months — and now he can no longer afford to make the monthly mortgage payments.”
“‘Since I’ve been out — nothing but struggling since then,’ Montiel says. ‘I didn’t imagine I’d face this when I came back home. I didn’t want to face this.’”
“‘The economy is really, really bad, and a lot of people just left like my neighbors — they just left and the other people across the street are, you know, going into foreclosures and short sales,’ Edith Montiel says.”
“Norm Miller, a real estate economist at the University of San Diego, says the governor’s proposed foreclosure freeze isn’t a good solution. He says it would just delay the inevitable correction the market needs to make if it is to recover. And, he says, if the government steps in and unilaterally lowers interest rates on existing contracts, it’s going to be hard to find buyers for California mortgages.”
“‘If there’s the risk that California does things independently of the rest of the country, then we eliminate the demand for buying mortgages from California, and that means our interest rates for mortgages would climb dramatically,’ Miller says.”
The Santa Cruz Sentinel. “Gretchen Regenhardt, attorney with California Rural Legal Assistance in Santa Cruz, was skeptical ‘Any program that is voluntary for the banks is just that and may not happen,’ she said. ‘Many, many households … are in so far over their heads that a 30 percent reduction in their monthly payments would not be enough. This is generally true for zero-down purchases and those loans that started out with the tiny teaser interest rates and have risen as high as 12 percent or 18 percent after a year or two.’”
“Watsonville City Councilman-elect Emilio Martinez investigated allegations of mortgage fraud as a private investigator. Such fraud, he predicted almost two years ago, would result in a foreclosure epidemic and a recession. ‘We can’t rescue property owners whose property is upside down, bought the home with no money down, and the value of their home continues to drop,’ Martinez said. ‘People will continue to walk away from these homes.’”
“Seb Frey, a real estate agent in Capitola, said the governor’s proposals might help enough homeowners to slow the foreclosure rate but there could be unintended consequences. ‘A key part of the problem is that many owners are looking at their houses being worth less than half, in many cases, of what they paid for them and having little interest in making payments until they are again above water,’ he said.”
“Tighter lending standards, while a good idea, will limit the buyer pool, he noted. ‘These various initiatives are going to lessen the immediate pain from the foreclosure mess, but will have an adverse effect of slowing a complete recovery, that is, putting off normal, healthy home price appreciation somewhat further off in the future,’ he said.”
The Legal Newsline. “It’s been called a bailout and a boondoggle, a market correction and a rescue plan, a savior and a swindle. But the impact of the recent $700 million given by Congress to strengthen the country’s lending institutions remains completely unclear, leading financial analysts say.”
“Despite the attention, recent foreclosure data shows that foreclosures continue at record levels. A disturbing trend came out of Massachusetts, the first state to pass legislation designed to stall foreclosures, this past month. After seeing a sharp decline in foreclosures in the three months following the legislation, foreclosure rates skyrocketed in September.”
“Freezing foreclosures continues as the popular buzz word, but the step of reworking loans is falling by the wayside, according to many of the leading activists touting the urgent need for relief to beleaguered homeowners. ‘How is the bailout going to work?’ asked Robert Gnaizda, general counsel for the Greenlining Institute. ‘Not at all.’”
“Bank of America bought Countrywide Financial Corp in July. Countrywide is the subject of many lawsuits for its predatory lending practices, including allegations that employees were given bonuses for selling customers more risky and expensive loans. But the settlement did not address the role of investors, who bought interest in bundled mortgages from institutions like Countrywide.”
“‘Many investors are saying they don’t agree to loan modification unless you demonstrate fraud,’ Gnaizda said. ‘But even in the recent Bank of America settlement, the company is not admitting to a pattern of fraud. Bank of America will not want to sully its reputation, nor its acquisition of Countrywide. They can’t make loan modifications without investor approval, and the investors won’t agree.’”
The Oakland Tribune. “With the 10th-highest foreclosure rate in the nation, Oakland has demonstrated that it’s in pretty bad shape. The next challenge will be meeting deadlines to prove why the city needs the most help. The Federal Housing and Economic Recovery Act provided nearly $4 billion to state and local governments to buy and rehabilitate foreclosed homes. Of that money, Oakland was allocated $8.2 million. By Dec. 1, it must propose its solutions for helping residents affected by the subprime loan crisis.”
“Oakland also is competing with other cities ranked among the top 10 in foreclosures, including Stockton, Bakersfield, Sacramento and Fresno, for a share of the state’s pot of money. In the past three years, about one in four single-family homes in Oakland has experienced a foreclosure filing. According to RealtyTrac, the city to date has nearly 16,000 properties with foreclosure filings.”
“While Council member Desley Brooks (Eastmont-Seminary) says she thinks the federal money will be put to good use, it simply is not enough. The funds also do not help to keep families from losing their homes. ‘This amount won’t even begin to make a dent in the problem,’ she said. ‘People are squatting in the (vacant) properties, engaging in illegal conduct in addition to the blight that results due to lack of maintenance.’”
The Dallas Morning News. “The severity of the nation’s economic downturn will hang on when the U.S. home market comes back, a top housing economist said Friday. ‘The depth of the recession will be dependent upon whether we have a housing market recovery,’ said Lawrence Yun, chief economist with the National Association of Realtors. ‘If we have a housing market recovery, that will begin to get the economy going.’”
“But if the nationwide home market continues to sputter, Mr. Yun fears, ‘we may be seeing a recessionary condition we have not seen for 30 years.’”
“The Realtors – who are meeting in Florida this weekend – are forecasting a 5 percent to 6 percent rise in nationwide pre-owned home sales in 2009. Real estate agents are grumbling that the billions of tax dollars spent to bail out troubled banks and failing Wall Street firms haven’t helped the housing market.”
“‘Right now, being a Realtor means you are a nonprofit organization. When is this going to get down to Main Street?,’ one attendee asked James B. Lockhart, chairman of the Federal Housing Finance Agency. Solving the housing sector’s problems and loosening the credit markets will take time, he told a crowded hall.”
“‘A lot of dumb things were done over the last two or three years by a lot of people,’ he said.”
The Bakersfield Californian. “A second Bakersfield appraiser who performed work for the former Crisp & Cole Real Estate company has been accused of wrongdoing by state regulators, who want to revoke or suspend his license. The accusation is being handled by the state Attorney General’s office. It details six counts of creating ‘misleading and inaccurate’ reports involving four properties. Two of the appraisals in the accusation…had been done for Crisp & Cole’s mortgage arm.”
The Press Enterprise. “The father and mother-in-law of two leaders of an alleged Riverside County-based investment group that bilked scores of homeowners in multiple states were charged this week with federal crimes that could lead to prison terms. Dow Duncan and Joetta Zimmer…were arrested Thursday on charges of making false statements to lenders on mortgage applications to purchase homes for themselves.”
“Court documents that the U.S. attorney filed this week in the U.S. Central District Court in Riverside say that Zimmer and Duncan on separate occasions inflated their income and assets and falsified their employment history on mortgage applications with Washington Mutual Bank to purchase houses in the La Cresta neighborhood of Murrieta in which they falsely stated they intended to live.”
“Duncan is the father of James B. Duncan, and Zimmer is the mother-in-law of Hendrix Montecastro, two of three leaders of a network of companies…whom the Securities and Exchange Commission has accused of defrauding at least 95 investors of more than $11 million and forcing many of them into foreclosure.”
“Separately, the U.S. attorney submitted a complaint asking for the indictment of Duncan for making false statements in order to qualify for two mortgages totaling $1.8 million from Washington Mutual to buy a house to live in. According to the complaint, Duncan, the owner of a construction company, said on his mortgage application that he had monthly income of $60,000 when his federal tax return showed it was less than $3,400 in 2006 and less than $2,600 in 2007.’
“Richard Ackerman, the Temecula lawyer who has filed investor lawsuits for damages in Riverside County Superior Court, said Duncan and Zimmer were relatively minor players in the alleged investment scheme and he expects more indictments will be coming. ‘It is a shot over the bow,’ Ackerman said. ‘Mr. Duncan and Mr. Montecastro ought to see from this that if the U.S. attorney’s office is aiming at people this low in the totem pole, the people at the top are in really big trouble.’”
The Contra Costa Times. “A law enforcement task force is investigating thousands of Bay Area homeowners, mortgage agents, investors and others who may have committed mortgage fraud, the latest fallout from a housing bubble that wrecked the finances of countless people. Federal, state, and local investigators who make up the 30-member task force have begun to probe as many as 11,000 cases involving people who may have committed fraud during the residential real estate frenzy, said Assistant U.S. Attorney Susan Badger. She heads the task force on behalf of the U.S. attorney’s office in San Francisco.”
“Some local mortgage agents say at least one-third — and perhaps one-half — of the home loans that were written in the East Bay at the height of the housing bubble were loans with fraudulent documentation about income and debt of borrowers.”
“‘The crimes run the gamut,’ Badger said. ‘The task force is looking at crimes committed by people from the top down and from the bottom up. There were a whole lot of participants in this. There is a whole array of culpability from people who turned a blind eye or committed out-and-out fraud.’”
“‘”There was an explosion of speculative fever with all the new homes being built in the East Bay and the Central Valley,’ said George Duarte, broker-owner of a Fremont-based mortgage brokerage. ‘It just got extreme and it was wrong.’”
“What typically happened, executives said, is that an individual seeking a mortgage often could obtain a loan that obliged the borrower to simply state income or debt levels without any verification that the information was accurate. These were known as stated income, or limited documentation, or no documentation, loans. ‘It was a pretty common practice at the time,’ said Don Morton, a broker with Danville-based Empire Realty Associates. ‘We used to call them liar’s loans. People would do whatever it took to get the loans approved.’”
“A better group of targets, said Robert Gnaizda, Greenlining Institute general counsel, would be executives of companies such as World Savings and Countrywide. ‘The prosecutors should go after the CEO or other top executives of Countrywide, or they should go after Washington Mutual officials, or Wachovia officials, or World Savings or Golden West officials. The World Savings executives reside in the Bay Area. The prosecutors should at least investigate them.’”
“Gnaizda said he was referring to former executives at Golden West but not to the CEOs Herbert and Marion Sandler. ‘World Savings was the most liberal in pushing these loan programs,’ Duarte said.”
“‘There are a lot of active investigations,’ Badger said. ‘Charges are imminent.’”
The North County Times. “Regulators shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday. The co-founder and chairman of parent Franklin Bank Corp., Lewis Ranieri, is credited with inventing mortgage-backed securities two decades ago, but apparently was unable to save his own company from getting ensnared in the home-loan bust.”
“The bank’s failure is a bitter irony because it is the mortgage securitization business of which Ranieri is known as a pioneer _ the repackaging of home loans as bonds that are sold to investors _ that was at the heart of the mortgage and credit crises. Last spring, the audit committee of the company’s board found in an investigation certain weaknesses in accounting, disclosure and other issues relating to residential real estate loans.”
The Voice of San Diego. “To pay off its debts for its deluxe new City Hall, police station and other facilities built this decade, Chula Vista counted on receiving building fees for 600 housing units a year, a total of about $5.3 million. Inspired by gangbusters development within its boundaries, the city built a lavish, sprawling new public center, paying for it partly with the development-related cash already burning a hole in its pocket. The rest it financed with bonds, pledging to pay off those loans with fees from the future building permits.”
“But the struggling city has received only 20 permits so far this year, four months into the new fiscal year. City officials thought they were being conservative when they took out bonds based on the receipt of 600 housing permits. They considered it a bar that would be easily cleared for years to come, especially in light of the thousands of houses built there several years in a row.”
“‘Six hundred permits didn’t seem unreasonable,’ said Maria Kachadoorian, finance director for the city. ‘No one knew that the housing market was going to crash as far as it did.’”
The Union Tribune. “The cap on single-family home loans in San Diego County that can be purchased by government-sponsored Fannie Mae and Freddie Mac will be reduced in January from $697,500 to $546,250. The Federal Housing Finance Agency announced yesterday that it is replacing temporary caps that expire on Dec. 31.”
“Lowering the limit is expected to place downward pressure on home prices, which have declined sharply since the median home price here peaked at $517,500 in November 2005. The median in September was $328,000, down nearly 37 percent from the peak, according to the MDA DataQuick research firm.”
“‘I think that this is basically continuing the credit squeeze,’ said Dave McDonald, president of the local chapter of the California Association of Mortgage Brokers. ‘It’s a nail in the coffin, as far as options for buyers and sellers’ of homes exceeding the new limit.”
‘Seb Frey, a real estate agent in Capitola, said the governor’s proposals might help enough homeowners to slow the foreclosure rate but there could be unintended consequences. ‘A key part of the problem is that many owners are looking at their houses being worth less than half, in many cases, of what they paid for them and having little interest in making payments.’
From the DMN piece:
‘But Mr. Yun sees signs of a bounce-back in some hard-hit home markets in Florida and California where sales are beginning to rise. ‘The current conditions look like from the home sales point of view we have hit bottom – but not on prices,” he told thousands of real estate agents. “In many parts of the country, home prices have fallen, and people are taking advantage of those low prices.’
“Once the bottom is clearly established, people will respond even in a stronger way. And even small increases in home values will provide a boost to the economy, Mr. Yun said. “One percent of home price growth translates into about $200 billion in wealth across the country,” he said.’
OK, Washington, keep listening to crackheads like Yun and you’ll get the ‘unintended consequences’ mentioned several times in this post alone. What some of these people are trying to do is turn back the clock on 20 years of foolish policy at the Fed and congress. Ain’t gonna happen. No group in the world can sustain the largest finacial mania in the history of man, and the things being tried and suggested will only create a bigger and longer lasting bust.
Can’t say you weren’t warned!
“One percent of home price growth translates into about $200 billion in wealth across the country,”
Lets see. That would mean that the average RE growth of the last few years of the boom would have inflated the ‘weath across the country’ by about $40 trillion. Yun never thought of that as a bubble? Why would anyone listen to a man with so little credibility? Right,…this is America, land of the sucker.
“That would mean that the average RE growth of the last few years of the boom would have inflated the ‘wealth across the country’ by about $40 trillion.”
What? If he is saying 1% is equal to $200 billion he is implying that the value of residential real estate in the U.S. is about $20 trillion. It’s not that difficult to calculate. What the moron didn’t mention is that for every 1% that prices go down that is $200 billion lost in “wealth”.
Nationwide we are down about 20%, on average, so that is about $4 trillion that is impersonating a fart in the wind. Add that to the trillions that have vanished in the stock market. That is some serious psychological damage. I hope it will last. That is the only way we can start to recover from this disaster.
“The suspense is terrible,..I hope it will last.”
Gene Wilder as Willy Wonka
new york: 200% growth would be 40t, correct?
Enough foreclosure moratoriums and forced rewriting of principal amounts and the only way to buy a house will be full-on dope deal terms: a briefcase full of cash on the table at closing. Why would lenders agree to lend in a state in which the terms of the loan can be rewritten so politicians can stay in office?
I found out that my co-worker’s sister in California was finally foreclosed out of her house in California. She lived for free for over a year. She paid off other bills. Plus the bank volunteered to “pay” her to leave quietly. She couldn’t believe it. She got a check for being a deadbeat, on top of all the free rent. In all fairness, I hope she gets a yeast infection. There has to be some justice, no matter how minor.
Well the ‘Schrub’ and now Hussein want to give more cash to the losers and dead beats with another Stimulous package. Helicopter Ben can throw money out the window again. Better buy I bonds. Hehehehehehe
HEY! I need those subs for my truck…don’t f*** with my stimulus pack!
The severity of the nation’s economic downturn will hang on when the U.S. home market comes back, a top housing economist said Friday. ‘The depth of the recession will be dependent upon whether we have a housing market recovery,’ said Lawrence Yun…”
Err . . . is Yun and “a top housing economist” one and the same person?? It should be obvious to everyone who reads anything he says that his reasoning skills are completely backwards.
“Capitola” rhymes to much with “Payola” in my book!
“”A key part of the problem is that many owners are looking at their houses being worth less than half, in many cases, of what they paid for them and having little interest in making payments until they are again above water,” he said.”
At least this RE agent can see the light.
Sweeeeeeet post Ben….
No group in the world can sustain the largest finacial mania in the history of man, and the things being tried and suggested will only create a bigger and longer lasting bust.
——————
Exactly, Ben!!!
You’ve been sounding the alarm for years now. Let’s see if they choose to listen to those who were right, or those who misled everyone with their hype.
You’d think they would have learned by now, but they keep seeking advice from the same people who brought us this problem in the first place.
Unreal.
Interesting tidbit about FNMA lowering loan cap for SD at the end of the year. Some TV item had led me to believe that in no case would Fannie/Freddie caps be actually lowered. Right, let’s see Yun’s “bounceback” in the face of the lowering cap. Actually PTB seem NOT to be trying to sustain the largest financial mania in the history of man…they are just pretending.
I agree that a cretain amount is pretending. But some of it is these clown bumping into the limits of their power to stop the unstoppable. Read the UT report on the caps; it was pressure from less bubbly states legislatures that forced the caps back down.
And maybe someone should point out to the CA governer that this moratorium policy has already been tried and has failed - THIS YEAR!
‘Despite the attention, recent foreclosure data shows that foreclosures continue at record levels. A disturbing trend came out of Massachusetts, the first state to pass legislation designed to stall foreclosures, this past month. After seeing a sharp decline in foreclosures in the three months following the legislation, foreclosure rates skyrocketed in September.’
And here’s where the ‘cram down’ people have been lead into a fantasy world:
‘Many investors are saying they don’t agree to loan modification unless you demonstrate fraud,’ Gnaizda said. ‘But even in the recent Bank of America settlement, the company is not admitting to a pattern of fraud. Bank of America will not want to sully its reputation, nor its acquisition of Countrywide. They can’t make loan modifications without investor approval, and the investors won’t agree.’
I took a couple of RE law and business law courses. Suggesting that hundreds of years of precident can be wiped away by legislation is and always has been a joke.
I see the government fiddling around (accidentally or intentionally), pretending to work out a “plan” with the banks, Congress, whoever, until the problem eventually takes care of itself.
The problem is, that between the banks, government, investors, and mortgage holders, everyone has a veto. So you end up with a situation similar to the UN Security Council.
“I see the government fiddling around (accidentally or intentionally), pretending to work out a ‘plan’ with the banks.”
That’s what I see. This “fiddling around” buys time and offers hope to the FBs.
As long as the FBs have hope they’ll try to keep up with their house payments. If they lose all hope then they’re sure to walk.
It matters little whether moratoriums are likely to fail. It matters much to give the appearance to homeowners that politicians are “doing something” to save them from the mortgage crisis. If it doesn’t work, they can always chalk it up to “worse than expected” economic conditions going forward.
“…it was pressure from less bubbly states legislatures that forced the caps back down.”
I pointed out long ago that raising the caps for wealthy coastal states created the potential for an implicit reverse-Robin-Hood subsidy from less wealthy states to those with the most expensive housing in places where ‘everyone wants to live.’ It is a move in the direction of fairness that the less bubbly states were given fair consideration.
I have brought that up, too. The congress dopes in my home state should have been screaming bloody murder about subsidizing Boston, California, New York City, etc. That is not fair. I guess they would scream bloody murder, if they could figure out who their senator is going to be. Pretty sad that my home state is second only to Florida when it comes to f—ing up elections. I will never forget the night I watched in horror as Jesse Ventura became our governor. HORROR! I need another drink. Maybe I can forget that horror for a while. I still suffer from PTSD.
Have you tried Cipro for that PTSD ?
The cap at 729K is absolutely nuts. The only people who should even consider homes in that price range make 250K a year. 1/4 of a MILLION dollars. These people need government subsidy? Come on, FNM has done enough to distort the housing market already. The last thing we need is to INCREASE the limits. In fact, if this was at all logical, the limits should be decreased as home prices fall, not increased!
Affordability is NOT obtained through credit generation! That’s the thing that the govt, and many bankers/Wall Streeters seem to think. Credit generation, over the long term, destroys affordability (look at housing and college for 2 perfect examples), exactly the opposite of the GSE’s stated goals.
“The cap at 729K is absolutely nuts. The only people who should even consider homes in that price range make 250K a year. 1/4 of a MILLION dollars. These people need government subsidy?”
Who do you think is paying for these government subsidies? And why shouldn’t they share in the benefits? The cap should be either zero or infinity. I would argue that loans should not be subsidized at all. One of the things that caused the housing bubble was underpriced loans, so let’s stop underpricing loans as a first step on the way back to sanity.
How do you feel about mortgage interest deductions as a gov’t subsidy?
The same. Either all interest should be deductible, or none of it. I do not support the idea of favoring one sort of loan over another through subsidies.
The reason they shouldn’t “share in the subsidy” is for the same reason that you can’t collect welfare making 100K a year. This is a subsidy to make homes “affordable”, not to reduce the interest rates for rich people.
My problem isn’t so much with the idea of FNM/FRE (although I’m not at all a fan), but with the idea that a 729K is a “middle class” home that needs a government subsidy. It’s a rich person’s home, plain and simple. If we want to reword the charter of the 2 GSE to read “make mortgages affordable” that’s fine. However, as it’s currently written, they are designed to make homes affordable to the middle class. This is totally at odds with their actions, both by making homes more expensive (by lowering effective interest rates) and by subsiding homes that are totally out of the reach of the “middle class” and firmly into the realm of “the rich”.
I totally agree about interest, btw, it’s insane that MTG interest is a special “type” of interest. It’s also encourages extremely risky (and stupid) behavior (like HELOC to pay off CC bills).
I agree that $729K should not be a middle class home at the moment, but when the next round of inflation kicks in, who knows? That’s one problem with fixed dollar limits in an environment of variable currency and varying markets. Around here, $729K is a smallish 2 bedroom condo, thanks to the bubble. In farm country, it might be a nice house. I don’t think there exists a correct number nationally or even regionally.
But I’m basically opposed to the subsidization of loans, and more generally, to tinkering with the economy in general. People compensate, the tinkering eventually gets gamed, and we get unintended consequences such as the recent housing bubble.
Now to talk my own book for a minute. Landlords (real ones) exist to supply housing, at a profit, to people who cannot afford or do not wish to purchase housing. From my POV, it is unnecessary and counterproductive for government to subsidize loans that allow people with no savings to speculate in real estate. And when it’s my tax money that the government spends on those subsidies, not only are they wasting my money, but they’re not helping the FBs that they purport to help, and they are not building stable neighborhoods; in fact they are ultimately impoverishing the FBs and disrupting or destroying neighborhoods. And I’m still out the money that I could have spent improving my property, providing better service, providing more housing, or investing elsewhere.
Fran Freddiecorn must die.
(rant off)
I totally agree about interest, btw, it’s insane that MTG interest is a special “type” of interest. It’s also encourages extremely risky (and stupid) behavior (like HELOC to pay off CC bills).
How about it being totally insane that there are no taxes on gains from sales of a SFH under 250K single homeownership or 500K dual homeownership as long as you own the home for 2 years.
I believe this was another one of those incentives to encourage risky behavior which we should do away with.
No point in subsidising the “middle class”. Once the average person qualifies, the subsidy is only going to home builders, real estate agents, and morgtage bankers. Why subsidise these clowns? If you must subsidise somebody at least keep it limited to levels affordable by new home owners starting up on below median incomes.
Home run!!!! (Caution: .pdf link)
Changing the Rules: State Mortgage Foreclosure
Moratoria During the Great Depression
David C. Wheelock
From PDF: “However, over the longer run, foreclosure moratoria
and other changes in mortgage laws may
have made loans costlier or more difficult to
obtain. Critics argued that foreclosure moratoria
induce lenders to restrict the supply of loans and
raise interest rates to compensate for the possibility
that their right to foreclose on delinquent
loans or to collect deficiency judgments will be
constrained.”
Future homebuyers will be the ones paying the price for the foreclosure bailouts today by way of tigher credit restrictions and higher interest rates.
Future homebuyers will be the ones paying the price for the foreclosure bailouts today by way of tigher credit restrictions and higher interest rates…
———————–
…making them less able to afford high prices, so prices will drop and housing will become more affordable!
I LOVE high interest rates!!!!
“A disturbing trend came out of Massachusetts, the first state to pass legislation designed to stall foreclosures, this past month. After seeing a sharp decline in foreclosures in the three months following the legislation, foreclosure rates skyrocketed in September.’
That’s what I”m expecting in California. I’ve been checking homes on Trulia for months now in the Sac and Placer areas. EArlier this year I would see new foreclosures come up every week. For a few months now there have been very very few. At some point in the next month or so I expect the foreclosures to start showing back up with a vengance.
Doesn’t this reduction in NODs have to do with the new posting requirements???
The LegalNewsline article is a gem. Here is a juicy passage:
‘Each of the analysts said whatever market corrections come from Congress in the coming months will provide some help to a specific group of people - those with troubled home loans. Those that have already lost their homes and those that have continued to be in good standing on their loans will likely not see any redress.
“There won’t be any retroactive relief, which is why people need to hang on as long as possible,” Navarro said. “Yes, the responsible borrowers are going to get relatively reamed here.”
“The government in these types of situations is not concerned with ‘fairness,’ whatever that word may mean,” Efremidze said. “There will be winners and losers in any case. The focus is on resolving the crisis.”
Efremidze said people who have made their mortgages won’t likely default now and run the risk of ruining their credit.’
CLICK!
Sounds like if you’re a “responsible lender”, the sensible thing to do is to stop paying your mortgage immediately.
Hey lender - off topic — where does one learn about the ins and outs of buying and selling of mobile homes? Upsides and downsides? Are there entities that you trust more so than others? Care to provide some info?
Thanks.
Count the number of axles under the frame when they move it on the road. The more axles, the better built it is.
(Mobile Home Transporter Old Wives Tale)
If my previous posts didn’t take, here again. To Bay area HBBers. Please remember at tonight’s gathering and know I am with you in spirit. If I still lived there, I would come. But this bubble was a big factor in actually leaving California. I will love to hear details of the gathering and love reading the Bay area and all of California posts. Have a wonderful time there at the Oakland place.
“‘Many investors are saying they don’t agree to loan modification unless you demonstrate fraud,’ Gnaizda said.
Well, I should think that demonstrating fraud would be surpassingly easy. What’s that one statistic that just boggles my noggin every single time I hear it–where someone did a study based on actual tax returns of mortgage buyers and found that almost 90% of applicants for stated-income loans lied about getting more income than they did, and about 50% of those applicants lied to the tune of DOUBLING their income.
Did I get that right? I think I did. I ought to stitch it out in a pretty cross-stitch sampler and hang it on my kitchen wall.
How else do you wind up with median home prices at 10X the median incomes? There’s simply no way for that to happen without massive fraud (and on a scale that simply boggles the mind). Without that, it’s impossible.
“How else do you wind up with median home prices at 10X the median incomes? There’s simply no way for that to happen without massive fraud (and on a scale that simply boggles the mind). Without that, it’s impossible.”
Absolutely, and goes to my point of foreclosures driving the market. Under traditional lending standards, buyers can’t “afford” the wishing prices of owner-occupied houses.
When I bought in ‘96, banks would not loan you more than 3x gross annual income. Period. And that was with full documentation and no debt and savings in the bank.
What we’re seeing now is bubble prices being bitch slapped by conventional lending. So, the majority of sales are foreclosures. I’m hoping that by 2009, folks understand this is the market, not their 10% off peak wishing price.
But would YOU like to be the Bank President admitting we wrote and sold fraudulent loans?
————————————————-
Well, I should think that demonstrating fraud would be surpassingly easy.
I think the IRS ought to throw these guys in jail and enforce BACK TAXES on the “stated incomes”. If you claimed an income of $150K for many years but only really earned $50K, then the IRS should PRESUME GUILT of having cheated on the taxes of income of $100K per year.
That’s surprises me, coming from you DennisN. It’s a little like biting the hand that fed you, wouldn’t you say? After all, you wouldn’t be partying in Sandpoint with the $650k you got for your $100k San Jose sh!tbox without “these guys” who you think should be “thrown in jail”.
I think they are talking about fraud on the part of the mortgage originator, not on the part of the borrower. Almost everybody agrees that a fradulent borrower should get stuck.
Here in the Bay Area, the 2008 cap was $729K. Under the tighter lending standards, that’s affordable for a HH earning $243K, and in the more expensive counties, that’s still a POS or a condominium.
No wonder sales are being driven by foreclosures. That’s the real market, as those aggressively discounted homes are more in line with actual local incomes, versus the still insane prices from owner occupied inventory.
See my above post. People making 1/4 of a million dollars a year need a govt subsidy? Come on!!
They also don’t deserve to carry a quarter million deluded and lazy parasites on their backs.
I, like most everyone else here, is sad to see the financial hurt this bubble has caused individuals, the country, and world as a whole. I was screaming inside since 2004 and was reading Patrick.net and HBB when it started. Back then, I thought I was the only one and wondered how everyone afforded the outrageous prices I wasn’t willing to pay. Well, we all know how and the sad results as a whole. I thank everyone on the site for the great comradarie. And special thank you to Ben for hosting this. I hope you are successful and this site is documented for years to come as the best history of this event that will be remembered for decades and centuries.
‘And special thank you to Ben for hosting this. I hope you are successful and this site is documented for years to come as the best history of this event that will be remembered for decades and centuries.’
Me, too. I love this blog. It’s the only one I look at. I hope that Ben becomes so rich that he can wipe his bum on dollar bills*, and have teams of adorable maidens push him around his castle in wheelbarrows. Wheelbarrows with cushions and little satchels for candy and beer hanging on the sides, and also the maidens sing prettily and dance, and the castle has beautiful tulips outside all around the moat.
*After the notes are washed and ironed by the adorable maidens, so as not to besmirch the Ben Bum. I was just reading an article about microbiota, and Sweet Baby Jeebus! Dollar bills are just screamingly filthy, it turns out. I’m never going to kiss my money again. *wipes the Olylips off*
Oly - you should take a tip from the Mafia and launder your money
I never understood why a gangster would want to go to the launderete but I think you just explained it to me. Just put it in your dollars that you want to kiss into your washing machine.
Adjust it to the Benanke rinse. Puts an extra spin to the economy is good look.
“Some local mortgage agents say at least one-third — and perhaps one-half — of the home loans that were written in the East Bay at the height of the housing bubble were loans with fraudulent documentation about income and debt of borrowers.”
*****
For those of you who believe that house buying at the height of the bubble (or even much earlier) was always “cleaner” in Alt-A Bay Area locales such as Marin, the City or in Berkeley…
I would suggest considering that thought again.
“Some local mortgage agents say at least one-third — and perhaps one-half — of the home loans that were written in the East Bay at the height of the housing bubble were loans with fraudulent documentation about income and debt of borrowers.”
This wil be one of the few growth areas of this depressed economy- RE Attorneys, bk firms, foreclosure specialists , FBI fraud investigaters, divorce attornies, credit card scam companies, Bank foreclosure paperwork firms,ect.
I say that 1/2 of all loans made in LA county during RE boom had some type of fraud elements .
Taking on a boarder makes sense if the extra income makes the financial equation balance properly. I prefer somebody to make ends meet if they can, it just seems right. On the other hand cashing in 401(k)s, savings, etc. to keep a house seems like the most foolhardy plan ever. Very short-sighted thinking, but I guess that’s why most FBs get into these situations - they don’t have thinking skills. Maybe a course on “sunk cost” and “good money after bad” somewhere around middle school would help. One of the problems with today’s educational system is that it teaches kids how to work for others and be somebody else’s leverage. Part of a kid’s educational experience should be about how to own and run a business.
Agree 100%, Michael (and one of many reasons why we homeschool).
“For those of you who believe that house buying at the height of the bubble (or even much earlier) was always “cleaner” in Alt-A Bay Area locales such as Marin, the City or in Berkeley…”
I remember the Chronicle ran an article in 2005 or 2006, that 70%-75% of BA home purchases were being made with adjustable loan products. And this was at a time when fixed rates were at all time lows. So I, for one, never thought these locales were clean. In fact, the more expensive counties saw the most leverage (75-80% ARMs), as folks stretched to get in and went the “no questions asked” route for mortgage financing.
“‘We’ve seen an upsurge in homeowners renting out rooms in their homes. It’s a sign of the times,’ said Mark Verge, owner of Westside Rentals, which also places roommates. ‘I was recently in our Valley office, and a 62-year-old woman walked in looking to share her home with a roommate, and (there was) another homeowner who said, ‘I’ve never done this before, but I’m looking to rent out a room in my house to help me with my mortgage.”‘
These room renters doubtless would have had no problem getting a loan to buy a McMansion of their own circa 2005. Got demand destruction?
Might be good for construction workers - well, carpenters at least. Someone has to convert those McMansions into rooming houses. Maybe add a few more walls and doors, pave the lawn for extra parking space and reduced water consumption, etc.
It might even be worthwhile to beef up some existing walls to cut noise transmission. The walls between adjacent units in apartment buildings are double-studded with extra wallboard for that reason.
“Might be good for construction workers - well, carpenters at least. Someone has to convert those McMansions into rooming houses. Maybe add a few more walls and doors, pave the lawn for extra parking space and reduced water consumption, etc.”
there might well be a small cottage growth industry in doing upgrades and room additions of existing macmansions to convert them intopboarding homes. With lots of underemployed or UE contractors and deflation in building materials now might be a good time to upgrade that home and let out a room or two.
i would like to do this on my own home thou it is rather small at 1800 sq ft and has only one bathroom. Not much to work with as far as space expansion except adding second story on top of existing structure. I know lots of folks have done this or are doing this but in this depressed economic climate taking on more debt for home remodeling is asking for trouble.
i will sit on it and think it through. No hurry as US/CA will be in depressed mode for 2 more years and home rebuilt costs will remain cheap for some time.
“The cap on single-family home loans in San Diego County that can be purchased by government-sponsored Fannie Mae and Freddie Mac will be reduced in January from $697,500 to $546,250. The Federal Housing Finance Agency announced yesterday that it is replacing temporary caps that expire on Dec. 31.”
That $546,250 still sounds mighty high for a cap on ‘affordable’ housing, especially in light of the decline in the median SD home sale price from $517K at the bubble top to the recently reported median sale price of $328K.
‘A key part of the problem is that many owners are looking at their houses being worth less than half, in many cases, of what they paid for them and having little interest in making payments until they are again above water,’
I get it. If you own, you’re just throwing money away!
Got endogenous feedback?
‘The
depth of the recessionseverity of the housing market bust will be dependent uponwhether we have a housing market recoverythe depth of the recession,’You’re making me dizzy… oh so dizzy… my head is spinning… like a whirpool it never ends…
BINGO, PB!!!
Speaking of California, prices are in fact falling all around here…the Valley, Inglewood, central LA, basically it seems everywhere except Santa Monica/Venice, unfortunately. Anyway, though, I don’t know if anyone else feels this way, but with this new sort of socialist/police state trend our country and state (of California) is following, I’m not so sure I even want to buy real estate anymore.
Real estate is just too easily confiscated, taxed or “liened” by a bankrupt gov’t, and too hard to pack up into a van and leave the country with. Besides, do I really want to make a longterm investment in a country where we have these left wing minorities with no understanding of economics running the show? Not to mention crooked white guys looting what’s left of the public treasury before they make their exit?
Last night, went for a walk, saw a truck slowly circulating our neighborhood with a huge picture of a safe on it, it said “Safes Installed”, I guess that’s the new bubble.
“I’m not so sure I even want to buy real estate anymore. ”
Looks like you have been converted from the dark side.
Short term socialist/police state, yeah. But I agree that it’s a good idea to stay out of something that could anchor you to a socialist area and make you a slave to the politicians and tax recipients.
California is otherwise great. It could be great from a distance in capitalist-friendly states such as New Hampshre though. Or from the perspective of a California renter solely in municipal bonds!
Yes and it’s great from the perspective of Montana too. I grew up in LA and love California. When I was a kid I hated all the boring eucalyptus trees everywhere. Now I love them and even bought a book about them written by some Cali botanist.
I think about California all the time, here in Montana.
I love Eucalyptus. Though some of the most beautiful, like Eucalyptus macrocarpa, need a frost free environment, many like Eucalyptus pauciflora thrive in freezing conditions. I have grown several here in western WA, with Eucalyptus urnigera being one of my faves. Awesome trees, and fast growing. Some argue that there is a stand of Eucalyptus regnans in a canyon in Tasmania which contains trees taller than the Coast Redwood (Sequoia sempervirens).
If there is such a stand, fercrissake don’t tell Gunn.
Looks like we have debtor prison afterall: Your house payments.
RE: Real estate is just too easily confiscated, taxed or “liened” by a bankrupt gov’t, and too hard to pack up into a van and leave the country with.
Bingo LAIGirl.
The immobility of real estate will be like a large, dead, stinkin’ albatross as the economy moves underground to a cash and barter system.
Non-owners will be operating out of post office box numbers, so the income revenue agents can’t pin down whereabouts.
House owner’s will not have the luxury. They are totally stuck, with their house serving as the perfect target upon which to attach taxation liens.
Watch for residential property taxes to virtually explode as the bills for all the lavish public employee retirements come due, plus the escalating local cost of community infrastructure as state aid collapses.
Also there are better ways to reduce ones AGI than to have mortgage interest deductions. Not saying those mortgate interest deductions are bad. Eventually they will be good to add to your tax avoidance plan when the last strawberry picker left the $700,000 per house neighborhood. If I had to live among strawberry pickers and hamburger flippers, it’s better to rent than to own. In general, people who earn low incomes and do not advance to high incomes (honestly earned) are where they are for a big reason. I take exception to good school teachers who are underpaid. I just do not like the culture of those who lack the gumption to advance in legal ways.
I’m already watching our sales taxes here in LA going up to 10.25, now our already-outrageous income taxes apparently aren’t enough for the Messiah…if he actually tries requiring young people to “donate their labor”, I’m out of this country, I just can’t stand around and watch our once-free country go fascist while I sit around looking for real estate bargains.
Heard that`the newchimp removed info touting his civilian youth corps from his website. Anyone remember the details? Sounds like changes by Chavez to me.
VT isn’t nearly as bad as CA but I’ve had some serious thoughts about if I want to be tied to real estate here ever again.
Ownership here means documenting every scrap of income (including anyone in your household, related or not) your so they can adjust property taxes. The complexity rivals that of the state income tax, which feels more and more like filing out the Fed forms every year.
In my lifetime, I’ve seen the sales tax rise from 4% (I remember learning how to calculate decimals based on the VT sales tax) to 6% and 7%. The state has also added seemingly endless services, including mandatory funding for a pre-K program just 2 years ago. Not surprisingly, the budget is now a sea of red.
Again, nothing as extreme as LA but the trend is not good.
‘if he actually tries requiring young people to “donate their labor”, I’m out of this country, I just can’t stand around and watch our once-free country go fascist while I sit around looking for real estate bargains.’
Okay, bye-bye.
Don’t let any of this silly ‘community spirit’ crap impede your search for money.
requiring young people to “donate their labor”,
Work should be compensated. Get some of the lard-asses out in the fields and orchards doing some picking. Combines physical fitness with jobs and cuts back on the need for guest workers. Heck, even O’Bama’s Auntie Zeituni gets a stipend for being a “public health advocate” in Mass and she’s not even a US citizen. Has anyone suggested that Auntie Zeituni should “donate her labor”?
Work should be not only compensated, but VOLUNTARY.
And anyway, how fast do you think those three months of free labor turns into three months (or more) of commie indoctrination? Olympiagal, hope you and your comrades enjoy the coming socialist paradise here in the USSA, as for me, I think I’ll go out and buy some more au and get my dual citizenship plans in order.
LAIG,
Here’s where I’m looking:
http://laestanciadecafayate.com/
65 degrees West, 26 degrees South
While we’re on the subject of labor, I think it’s high time we overhauled the prison system, and started using inmates for the good of society. It makes no sense to allow healthy, FREE labor to sit in a cell and watch TV all day.
Don’t let any of this silly ‘community spirit’ crap impede your search for money.
This is the first I’ve heard of this so maybe I’m misinterpretting something, but when did forced, unpaid labor quit being called slavery and started to be called “community spirit”?
I’ll just call it a win if out new Pres. can compel some of our lazy, layabout brats to work at all…preferably in a fast food joint or in retail/labor etc. For minimun wage to start…after that, they might exhibit some respect for the dollar, teamwork, and for an existence that is not entirely focused on themselves.
The “voluntary” part can some after the wage earning part. Time permitting.
out=our
come=some
Report in San Luis County that the fast food industry is getting more educated workers - they can actually speak and understand English !!! hehehehehehe
Nov. 8 (Bloomberg) — “LAInvestorGirl”, the last remaining bull on income property in California, has officially capitulated today. The news was broken on the The Housing Bubble Blog, a time-honored Ben Jones publication. Analyst reaction was somewhat mixed, but SM_Landlord commented: “I can now see the bottom of the market using my hacked feed from the Hubble Space telescope.” Another analyst, “Bill in Los Angeles”, reiterated his recommendation to buy municipal bonds, apparently since the financial condition of California municipalities is now well secured.
In related stories, confiscatory taxation is expect to support ongoing government profligacy, there is a new bull market in home security devices including guns and safes, and Home Depot is having a close-out sale on duct tape with only a light side.
~~~
Nice one. But I buy Arizona municipal bonds for now since that’s my permanent residence. Alas, California taxes my AZ bond gains
Also the bonds are in a mutual fund that’s mostly AAA and AA and diversifies in other state municipal bond funds. Yields are higher lately but of course, so is the risk.
I am aiming for risk neutral investing anyway. So I’m not 100% into anything.
Very cute.
For the record, I’m not capitulating on real estate for economic reasons. I can now find properties all over the place that will cash flow just fine. At this point, it’s political.
“To pay off its debts for its deluxe new City Hall, police station and other facilities built this decade, Chula Vista counted on receiving building fees for 600 housing units a year, the city built a lavish, sprawling new public center.”
AD: Available For Lease in sunny Chula Wana CA… new lavish public center….. complete with Kool Aid stand.
Renting out rooms - In high property tax states, such as New Jersey, this has been commonplace for quite some time. Or high priced areas such as Santa Barbara. A sister of mine, when in her 20s and 30s used to rent a room in a large house shared by other room renters there in SB.
I’ve ALWAYS lived with roommates.
Rented rooms from other owners, rented out rooms in my (owned) house, rented houses with multiple roommates.
Just S.O.P. in So Cal, no?
“‘Six hundred permits didn’t seem unreasonable,’ said Maria Kachadoorian, finance director for the city. ‘No one knew that the housing market was going to crash as far as it did.’”
As it did? Past tense? This moron thinks a hurricane passed by and went away.
No one? HBBers knew that the housing market would crash as hard as it is currently doing and will continue to do so for another 4+ years.
Maria, you ain’t seen nothin’ yet. Next wave of REOs from the layoffs and contraction in credit is gonna blow your mind. The housing market is just gettin’ warmed up for the real crash. However, the massive helicopter drops of worthless US Treasury notes will absorb some of the crash in monetary terms. But relative to hard goods/needs, housing still has another 20-80% to go, depending on location, IMO.
PortlandHomedebtor
Legal Newsline: the recent $700 million given by Congress
It’s amazing how often people including supposedly-professional reporters, etc., get this wrong. People really don’t know the difference between a million and a billion.
People can’t imagine what that kind of money is, it’s too abstract.
Renting out rooms is a sign of the times - I predicted that “household formation” would drop like a rock, as people continue to live with parents, relatives or friends. . .I have been tracking “Reduced Rent” on Craigslist for San Diego - last January 2008 there were about 55-60 listings a day that stated “reduced rent or reduced deposit” now it is averaging 145-155 a day. . .nothing like a little recession to reduce rents as well as home prices.
Renting out wives and daughters can’t be far behind.
Hey! There you are, sammy! I been missing you. And look, you’re full of good ideas, too. It’s like old times.
“Many of the homeowners advertising for boarders on the Internet confirmed they were taking that step because of the hard times today, but most were reluctant to be identified in this story.”
* * *
PATTY: Honey, this one looks pretty good. Let’s email him and give him the address so he can come take a look at the room. Looks like he wants us to email him directly instead of using the craigslist reply thingy.
DRAKE: Okay, give me the email address and I’ll type it in.
PATTY: You ready?
DRAKE: Uh-huh.
PATTY: Okay, here it is: Carter underscore Hayes at Pacific Heights dot com.
* * *
Luv,
Jen
Haven’t thought of that movie in several years.Scared me when the cat dissappeared.Another reason for credit reports!!!
“‘A lot of dumb things were done over the last two or three years by a lot of people,’ he said.”
Ah yes. When everybody is responsible, nobody is accountable. We’re hearing the same refrain from all the villains of the piece: The NAR, the mortgage brokers, the appraisers, the banksters…the degree of moral bankrupcy in all of these organizations and their members is so all-pervasive that we haven’t seen the slightest hint of the emergence of internal reformers. Can anyone name a single, solitary NAR minion who has stood up and publically blasted the likes of Lawrence Yun and the other Housing Bubble cheerleaders? Instead, the discredited “There’s never been a better time to buy” NAR propaganda mantra drones on relentlessly, like a Kim Jong-IL speech over the PA system in a North Korean prison camp.
Here is a brilliant piece of irony:
“While Council member Desley Brooks (Eastmont-Seminary) says she thinks the federal money will be put to good use, it simply is not enough. The funds also do not help to keep families from losing their homes. ‘This amount won’t even begin to make a dent in the problem,’ she said. ‘People are squatting in the (vacant) properties, engaging in illegal conduct in addition to the blight that results due to lack of maintenance.’”
She is crying for more money to keep families on their homes, and in the next sentence she wants to get rid of people (sqautters) living in their homes. presumably the “homeowners” are good neighbors and the squatters arent. But there is no evidence that the homeowners put a single dollar of their own money into the property. and a homewoner in foreclosure who would take advantage of 90 day moratorium to live expense free; well thats the same as a squatter as far as i am concerned.
Final Reminder:
Let’s meet up at LJ Quinn’s Lighthouse Pub in Oakland tonight at 7 PM.
Address
51 Embarcadero Cv
Oakland, CA 94606
Phone Number
(510) 536-2050
Website
quinnslighthouse dot com
See you guys,
Big V
“If the government steps in and unilaterally lowers interest rates on existing contracts, it’s going to be hard to find buyers for California mortgages.”
Actually, at this point I’m not sure anything that is done to the old mortgages will affect the new ones. New mortgages will be issued under circumstances that allow them to be repaid, at interest rates that attract savers, no matter if the old ones are unilaterally adjusted or not.
As far as I’m concerned, the reasons not to invest in mortgage bonds are:
1) You might get some of the old crap loans mixed in with new loans.
2) You might get new loans with the old fraud still in them.
3) The rates are still low.
On the roadtrip tales…
We drove through Lake Tahoe and South LT had quite a few empty retail businesses on Hwy 50, especially around the “Y”.
I never miss a chance to pass Basque gastronomic, and there’s a couple of decent ones in Gardnerville, Nv., so we drove through Minden on the way there, and saw so many foo foo McMansions and dumb retail businesses that sprung up in the past few years, shocking really…
While dining @ the Overland Basque restaurant, there was just one other table, a couple of gentlemen talking about how crummy business is, and I like to listen in as much as the next guy, so my wife and I were chewing on lunner, and the older gentleman said to his companion “My wife and daughter flew to New Zealand last year to look for property, and my wife was set to move if McCain won the election”
My wife flashed me an all-knowing smile, inbetween lamb-chop bites.
You have no idea how many people told me this very same thing (including me to my husband).
Here’s to the 2009 CORRECTION! Let the mayhem and correction begin.
Let all the bastards and crooks and stupid people pay the price for being indulgent, greedy, and fraudulent.
Let the hard working, honest people who saved, lived within their means, and admitted to seeing what was coming prosper.
Let the losers who now want to be bailed out because they couldn’t sit down for 20 minutes and read a 10 page contract lose their homes, their yachts, their 8 passenger SUVs…and NEVER be able to buy another home again. EVER.
Let the CEOs with huge bailouts get put in jail or burn through that magic cash of theirs so they can end up working at a Starbucks.
Let the fraudulent mortgage brokers, slimy real estate agents, and scam artist appraisers hit the ground so hard they’ll taste the dirt they are selling.
Let the Wall Street crooks lose everything they’ve got and enjoy looking at their $20K a month condos from the street corner in their new cardboard boxes.
Let the Big 3 who’ve screwed us for decades making absolute garbage SUVs and gas guzzlers completely implode due to their irresponsible, crooked, and pathetically run business models….perhaps then the workers will end up in something more useful like wind, solar, or geothermal (please….no one should, even for a minute, buy this crap that the world will end because GM and Ford aren’t around…what a joke).
Let all the idiots and morons who CLAIM they didn’t see this coming and now want handouts, be able to develop such clarity of vision that they’ll be able to see the massive economic freight train they built, come barreling down over them from a mile away….then they won’t complain about not seeing what’s coming.
MOST OF ALL:
Let the environment and this beautiful, precious planet regain her composure and have a breather thanks to the inadvertent fact that we pathetic, stupid humans are consuming less, polluting less, and wasting less….for now.
Perhaps this global “crisis” is what we’ll look back on in 50 years and say that we accidentally saved our own asses….because I know we can’t do it when we try.
Have a good day.
Absolutely brilliant. Couldn’t agree more.
“Regulators shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday. The co-founder and chairman of parent Franklin Bank Corp., Lewis Ranieri, is credited with inventing mortgage-backed securities two decades ago, but apparently was unable to save his own company from getting ensnared in the home-loan bust.”
=====================================================
“There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government.”
“And whether you’re an honest man, or whether you’re a thief, Depends on whose solicitor has given me my brief.”
“In the affairs of this world, men are saved not by faith, but by the want of it.”
Benjamin Franklin
Very amusing the way the FDIC is only taking over a series of piddly little banks each Friday, so as to stay within their limited bank foreclosure budget. I guess the large banks that are just as insolvent will be dealt with totally behind the scenes.
….
The Legal Newsline. “It’s been called a bailout and a boondoggle, a market correction and a rescue plan, a savior and a swindle. But the impact of the recent $700 million given by Congress to strengthen the country’s lending institutions remains completely unclear, leading financial analysts say.”
….
It’s 700 billion, not 700 million.
700 billion is 700,000 million.
By the way, this year bonus for the Wall Street banks that created
this mess and being bailed out is 70 billion:
http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking
Financial workers at Wall Street’s top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.
Who called it a swindle? I like that description the best.
Financial Times
AIG in talks with Fed over new bail-out
By Francesco Guerrera in New York
Published: November 8 2008 00:36 | Last updated: November 8 2008 00:36
AIG is asking the US government for a new bail-out less than two months after the Federal Reserve came to the rescue of the stricken insurer with an $85bn loan, according to people close to the situation.
AIG’s executives were on Friday night locked in negotiations with the authorities over a plan that could involve a debt-for-equity swap and the government’s purchase of troubled mortgage-backed securities from the insurer.
I always thought that the short terms loans that the Feds were giving banks would eventually never be paid and end up becoming a bail out . If anybody bought Paulson BS of buying bad loans from banks and that was a potential win for the taxpayers ,they needed to have their heads
examine .
As I have said many times ,these Bail-Outs are the biggest obstruction of
Justice that I have ever seen . Bail-out crime just because its to big
to fall . Bailing out fraudulent buyers are another area that will end up
being wasted motion and expense .
During the Great Depression ,based on the article that PB provided
above ,the bail outs did not involve forgiving the principal balance .
Lowering rate ,stalling payments ,Freezing foreclosures ,limits on loan recourse on deficiencies , renting until the borrowers could resume loan payments , Government loan programs ,but usually not principal balance reduction bail outs .
The fact that during the Great Depression the powers did not resort to principal balance reduction to market price of property was not employed was because the powers at that time were aware that that
was not a viable option .
The fact that many lender loan investors won’t re-write loans I think is just a bluff because of expecting a bail out of some sort of bail out from the Feds/Paulson ,or they are waiting for the Feds to take over the loans at current loan value by a new refinancing .
During the Great Depression ,the Stock market crash caused unemployment and Bank failures, which cause the inability of people to pay their notes . This current 2008 crash was caused by the Bankers themselves making loans to people who were not qualified or fraudulent
or overpaying because of a mania . Even in the case of the the Great Depression ,the Banks did not provide relief for parties that had no
chance to make to loan good . The silly part of this bail out is that we are trying to bail out short term speculators who have no ties to the property . During the Great Depression ,many people lived on farms and the need to keep their home involved the fact that this was how they made their living also . So the relief that was extended during the
Great Depression was a Social benefit in more ways than bailing out a
speculator who goes back to renting . During the Great Depression the Government would let the people rent out their farms
because they could continue to make income in working the farm ,and taking the farm from them would be taking a house and a job . So,big different to the current day relief requests from speculators or liar loan borrowers .
.
If these guys prove to be right (and I have every reason to believe they will), then it is way too early to buy a home at this point. What they did not mention is most important of all: You cannot sustain anything like bubble-era valuations with conservative (e.g. 30-year fixed) lending.
Got popcorn?
With the bailout already approved and with hundreds of thousands likely to get radically improved home loans, the path taken has already been decided. Navarro said that while it may be necessary, he isn’t pleased.
“This bailout is going to save a lot of speculators who deserve to go down the drain,” Navarro said. “An alternative would to have let the whole house of cards tumble. The upside is to return housing prices to affordable prices and not rewarding moral hazard behavior.”
But that type of chaos, according to Efremidze is not consistent with American policy. While talk of the evils of socialism became pretty popular in the closing days of the presidential election, adjusting the market is not anything new to the world’s bastion of capitalism, analysts agreed.
“The marketplace is never in a vacuum, it is always under some sort of regulation, either the right type or wrong,” said Efremidze. “The marketplace would not exist without rules of the game. People will not go to market, if it does not have rules or if the rules are not enforced. Sometimes we learn that old rules are no longer working and we need to change the rules to the better.”
Those corrections, Kyser said, will be a return of financial sanity discard in recent years. Home loans in the future will look much like the past - 20 percent down, 30-year fixed-rate loans and solid credit histories with proven income required, Kyser said.
“You’ll see a much more conservative lending industry,” he predicted.
The Money Masters (.com) needs to be studied by all of us regarding ultimately solving our financial problems.
I submit that a government mandate (federal) Act of Congress can be immediately passed that would instantly mark all single family owner-occupied home loans to zero percent, for the remaining loan term. In the case that the loans were made from private lenders, the government would instantly refinance the loan at zero percent, 30 years term, instantly paying back the private lender.
Loan payments would thus be $278.00 per month per $100,000.00 Doing the math, a $400,000.00 home loan would cost $1,112.00 per month, plus property tax, and insurance.
Housing prices would instantly stabilize, strict underwriting going forward would rule the marketplace. Homeowners who are losing their jobs will instantly be able to find work, at lower pay scales, knowing they can safely stay in their homes. Many small restaurants, dry cleaners, coffee shops, etc., will again see customers in their stores. This is a “bottom up bail-out”!
This is completely doable, our congress can lead the way, this eliminates the bankers’ bailout as our only hope, allowing the politicians, and bankers to figure out their “bailouts”, without destroying our nations’ overwhelmingly good folks.
This simple solution will immediately stop almost all the foreclosures, instantly stop all the panic in our nation.
All Collateralized Debt Obligations (CDO) will immediately stop almost all loss of principle value, losing only the interest rate of return, All Credit Default Swaps (CDS) will immediately stop almost all losses, as no more defaults on the underlying loans are occurring.
Our country can then begin the process of stopping the current system, the Federal Reserve, and fractional lending will be overturned. Common sense is the way out of all this mess.
We can then as a nation of good folks, begin to save money, and become more productive lacking taking on new debts at alarming rates. Buying items when we have the money saved, large down payments on homes will be the rule, also on cars, boats, etc.
There are other ideas that can help renters, and small business owners, but starting with this one Act of Congress, we will be on our way to healing from this financial mess. Send this to your congressional representative, get involved with a simple letter.
“said Maria Kachadoorian, finance director for the city. ‘No one knew that the housing market was going to crash as far as it did.’”
No Ma’am, you didn’t. Everyone on this blog did. You’d think they would have minimum standards to hire these people.
Why such a complex plan to solve something that is solving itself?
The risk is that the people really getting spanked will use some of the money at stake to corrupt the system at large and ruin it forever.
Burn, baby, burn.
Won’t it be nice when we can all afford a nice house. I don’t mean a 3000 square foot mcmansion with granite countertops and and in-ground pool. I mean 1700 square feet for a family of four. A monthly mortgage payment that is only one-quarter of gross income. A shelter which won’t drive people into default.
Or, we could have another Yun bubble and just do lots of cocaine until it all blows up again.
Santa Cruz: Chart says home prices are down again 31% in October YoY, but they refuse to say that in the article.
http://www.santacruzsentinel.com/localnews/ci_10966082