A Sense Of Desperation In California
Bloomberg reports from California. “It has taken Susan Erb just three years to see the value of her Merced, California, home plunge by more than half to $350,000. Next month, her mortgage payment jumps 20 percent to $3,321 and she knows she can’t afford it. Her bank won’t rework the loan unless she stops paying altogether. ‘Now I know how people feel when I go knocking on their door,’ said Erb, a real estate agent who works for a company that notifies residents in foreclosed properties that they must vacate. ‘I’m in their shoes.’”
“Merced, the epicenter of the U.S. foreclosure crisis, demonstrates the steep challenges President Barack Obama will face in trying to stem defaults. One in 59 housing units in the Merced metropolitan area received a foreclosure filing in January, the highest rate in the U.S., according to RealtyTrac.”
“For-sale signs are everywhere and a building boom fueled by subprime mortgages has been brought to a standstill. Just 18 construction permits were issued last year. In 2005, there were 1,427. Median home prices in Merced rose from $150,000 in January 2002 to a peak $382,750 in December 2005, according to MDA DataQuick. In December 2008, the median stood at $120,500, down 52 percent from a year earlier, as four out of five resales involved properties that had been foreclosed on in the prior 12 months.”
“‘There were a lot of young families and first-time buyers with not a particularly high income, so it was perfect ground for subprime lending,’ said Jeff Michael of the University of the Pacific’s Eberhardt School of Business in Stockton. ‘You had people streaming in from the Bay Area. This was their chance to get in.’”
“The Obama plan probably can’t help Merced residents Bountay and Khamtanh Rattanavongsa, who walked away from their adjustable-rate home loan last year and were foreclosed upon after monthly payments jumped to $3,500 from $1,800. They’re now renting a house constructed by Kimball Hill Homes, the homebuilder that filed for Chapter 11 bankruptcy protection in December. Across the street, wooden frames of partially built two-story homes, with no windows or doors, are clustered in a former cattle pasture.”
“Khamtanh, a retired school aide, came to the U.S. from Laos in 1978 with her husband, who works as a custodian. Their son lives with them and helps pay the $1,500 rent. ‘I loved my house, I never thought I’d lose it,’ Rattanavongsa said. ‘Now I have no credit. I’ve got nothing.’”
The Tribune. “About four years ago, R.W. Hertel and Sons’ real estate empire was expanding with no apparent end in sight. Flush with profits from roughly 1,000 homes built in San Luis Obispo, Santa Barbara and Ventura counties, partners Ronald W. Hertel and Robert Fowler had a fleet of jets, a yacht, a Camarillo golf course and plans to build hundreds more homes in Atascadero, Santa Margarita, Pismo Beach, Central and Northern California, Oregon and Arizona.”
“Now the company has dissolved, its partnership split. Hertel and Fowler are buried under millions of dollars of debt and foreclosures, and their home-building company, R.W. Hertel and Sons, has been forced into an involuntary Chapter 7 bankruptcy.”
“‘These were jet-setting developers who unfortunately crashed,’ said Vance Rose, who worked with R.W. Hertel and Sons as a winemaker in one of its endeavors.”
“Such stories of failure in the home-building industry have become increasingly common. The National Association of Home Builders estimates that more than 20,000 residential developers across the country have shut down in the last two years. Local builder Rick Loughead, whose family-run company has built more than 1,000 homes in Avila Beach alone and who owns the upscale Dolphin Bay resort in Pismo Beach, described the builder’s situation overall as ‘horrible.’”
“‘Across the board, everyone is crashing,’ he said. ‘There may be some who had a lot of equity in property, but no one is going to be able to keep going on forever.’”
“A former Hertel business partner, Rob Rossi…describes Hertel and Fowler as having an entrepreneurial nature. They took educated risks and ramped up a fairly large building organization from almost nothing in fairly short order, Rossi said. But any builder caught with unsold inventory in this downturn has ‘taken a big hit,’ he said.”
“‘None of us could have seen just how significant and strange it’s been,’ Rossi said. ‘And it’s hardly over. I predict a continued significant decline in housing values.’”
“Fowler ran the operations of the company. Now, he says that R.W. Hertel and Sons, the company that ran the partners’ building operations, ‘is pretty much cooked.’ ‘We’re responsible for our debts, but at this point unfortunately it would take another lifetime to repay them,’ he said. ‘If I knew then what I know now, I would have liquidated everything in 2005 as fast as I could.’”
The North County Times. “Even as sales of foreclosures roared back to life at the end of last year, sales of brand-new homes went comatose. Across San Diego County, one of the nation’s largest with 3 million people and 1 million homes, just 15 new houses sold in December, according to a report released Tuesday by the California Building Industry Association.”
“The fourth quarter numbers, the lowest on record dating to 1988, were of little surprise to local analysts, but spelled trouble for builders in 2009. ‘You’re going to see more failures,’ said Sherman Harmer, former president of the Building Industry Association of San Diego. ‘This is my 40th year in homebuilding, and this is the worst that I’ve ever seen.’”
The LA Times. “Was it the real estate downturn, or were people misled into a risky investment scheme? That’s the question at the center of a lawsuit filed Tuesday that accuses Orange County real estate lender Dan J. Harkey of bilking dozens of investors out of more than $15 million.”
“The lawsuit accuses Dan Harkey of using slick marketing techniques to attract investors in short-term, high-interest loans to real estate developers. It contends that Harkey exaggerated the value of the properties used as collateral by borrowers, making the individual investments appear much safer than they were.”
“The allegations center on a little-known and lightly regulated segment of the real estate industry known as ‘hard-money’ lenders. These lenders often provide financing for high-risk projects that banks won’t touch, such as speculative housing developments. Wealthy individuals looking for outsized returns often provide the investment capital.”
“Harkey said he had been involved in real estate financing for more than 30 years. The Harkeys own a multimillion-dollar home in a gated Dana Point neighborhood. Their car collection includes a Bentley, a Porsche and two Mercedes Benzes, according to Department of Motor Vehicles records. The lead plaintiff in the lawsuit is retired Orange County attorney Lloyd Charton, who said he was owed more than $1 million.”
“‘He scammed us,’ Charton said. ‘The representations that Dan Harkey made about the safety of the loans were untrue. He was bringing in new money to pay off investors on the same loan, and that’s a Ponzi scheme.’”
From The Signal. “The Valley Industrial Association’s message to the city of Santa Clarita - get going on affordable housing. A letter prodding city officials to provide more affordable housing to help stabilize the local economy was drafted by members of the association and delivered to the city Feb. 6.”
“The association’s letter blames community perception for the sparse number of rental units. The ownership-to-rental ratio in Santa Clarita is 80 to 20 compared to 65 to 35 nationally. The community perception is that rental properties attract crime and trouble.”
“Erin Moore-Lay, Santa Clarita housing program coordinator, hammered home a factor in the preference for home ownership. ‘It’s part of the American Dream to own a home. When loans are made available to buy as easy as they were available, people choose to buy,’ she said.”
The LA Daily News. “Exacerbating Los Angeles County government’s worsening financial situation, its property tax revenues are expected to dip for the first time since the mid-1990s, officials said Tuesday. ‘Our county’s fiscal situation … continues to decline,’ CEO Bill Fujioka told the Board of Supervisors.”
“After years of healthy increases in the assessed value of properties in the county, Assessor Rick Auerbach said the $1.1 trillion assessment roll is projected to drop 1 percent this year. Since 1980, the only other times the assessment roll dropped into negative territory were in 1996, when it dropped 0.2 percent, and in 1995, when it fell 1.7 percent.”
“‘For the first time in 13 years, the county will be expecting less property tax revenues than the previous year,’ Auerbach said. ‘When you look at it over the period since 1980, we’ve had an average of a 7.1 percent increase each year in the assessment roll.’”
“Amid the housing slowdown, Auerbach’s office has reviewed hundreds of thousands of homes and condos and lowered assessments on many, reducing the amount of property taxes property owners pay. He expects to review about 500,000 more properties this year to determine whether the assessed values need to be lowered.”
The Press Enterprise. “Public school enrollment in Riverside and San Bernardino counties dropped by more than 8,700 students this year as the region suffered from a housing crisis and high unemployment rates, preliminary estimates show. The slump in the housing market and the region’s high foreclosure rate are largely to blame, Riverside County Superintendent Kenn Young said earlier this month.”
“It’s a mystery, however, where the students are now. School officials said they collect information when students transfer to a new school but don’t attempt to determine how many go to other parts of the state and how many leave California entirely. Young said he thinks many families caught in tough circumstances moved in with other family members, often in the communities they left behind in Los Angeles and Orange counties. Officials in LA and Orange counties said preliminary estimates for 2008-09 show an enrollment increase.”
“Other Inland students left the state entirely, and some immigrants moved back to their homelands, mainly Mexico and Asian countries, Young said.”
“Those who bought their first homes in the past few years, many of them young families with children, are the people most likely to have lost their homes to foreclosure, said Hans Johnson, a demographer with the Public Policy Institute of California. ‘Those are the people who are most vulnerable to the foreclosure crisis because we know how in many cases they were stretching themselves to be able to afford the house,’ Johnson said.”
“In December 2007, Michael Vosganian put a home on Wells Drive in Woodland Hills on the market for $1.55 million. Vosganian’s decision to sell the vacant rental property coincided with the start of the recession - which at that time had not been officially declared. ‘I think it was probably the worst time to sell the house,’ Vosganian said during a recent interview. ‘But when we first put it on the market, there were some comments that the higher-end homes were still doing pretty good.’”
“Vosganian bought the Wells Drive property for about $1 million in early 2006, just as the last boom market was peaking. He owns seven other rental properties, including one he bought in the 1960s for $19,400. Vosganian has rejected two offers because they were too low, said his Realtor, Ruth Garriette.”
“Vosganian has also dropped the price three times, and is now asking $1.18 million. He’s also willing to lease it again - $3,400 a month for just the main house or $4,450 with the guest house included.
Despite the difficulties in selling - or even leasing - a high-end house, Vosganian is not giving up on residential real estate.”
“‘I feel that real estate is the engine that drives California,’ Vosganian said. ‘If you want my opinion, now is the best time to buy.’”
“After graduating last summer from California State University, Northridge, Joey Rispaud put three goals on his agenda: Marry his fiance, buy a home and start a family. He’s done all three. ‘I accomplished all the goals I wanted to accomplish in becoming an adult,’ said Rispaud, 27, a manager at the TGI Friday’s in Woodland Hills.”
“Rispaud and his bride, Diana, paid $279,000 for a two-bedroom, two-bath townhome in Saugus, a short sale put together by his wife’s mother, Anita Levy, an agent in Santa Clarita. The couple moved in on Dec. 8. They are paying about $2,000 a month for their mortgage - just a little more than what they were paying for the two-bedroom apartment they’d been renting in Reseda.”
“They bought the house the old-fashioned way: They saved enough to put down a 3.5 percent deposit, and secured a 6 percent fixed-rate loan. ‘We could easily have gotten a $600,000 or a $700,000 home at a zero-percent interest rate for five years, but there was no way I could afford that (kind) of house,’ he said. ‘One way or another we were going to get stuck.’”
“Of course, there was a lot of second-guessing from friends who would drop by Friday’s and tell Rispaud he was an ‘idiot’ for not taking the real estate bait as housing prices soared. ‘Now they are upside-down or bankrupt. It worked out for my wife and I really well,’ he said. ‘It’s a piece of the American dream.’”
The Press Democrat. “Repeatedly shut out in attempts to buy a home for $300,000 or less, Joseph McCormick bid up the price on the next house. Paying $284,000 — $9,000 over the asking price — was still a good deal for the Rohnert Park home, which sold for nearly twice that amount three years earlier.”
“The strategy worked, leaving the first-time buyer relieved to finally land a house after a sometimes frustrating seven months in the most competitive end of Sonoma County’s housing market. ‘It was difficult. I wasn’t losing hope, but I was starting to second-guess myself,’ said McCormick. ‘It’s a good feeling once you’re in. I figured I’m very lucky.’”
“‘They’re coming out in droves because they know there’s no waiting any longer for prices to bottom out. There’s definitely more buyers than inventory. Anything under $300,000 — it’s gone,’ said Logan Adams, associate broker in Santa Rosa. Adams represents banks selling foreclosed homes. Last month, he had eight such homes — all priced under $300,000 — sell after one day on the market.”
“‘Banks price them aggressively to get them off the books. They want them to sell fast,’ Adams said.”
“Agents said several strategies can help buyers stay in the game at the hot end of the county’s housing market: Start your house hunt on the Internet. Eliminate any properties that have a pending sale, and be ready to tour homes the same day they come on the market. Get pre-approval from a lender. That enables you to make an offer immediately.”
“Make offers ahead of the weekend. Many buyers look at homes on Saturdays and Sundays and make offers on Mondays. Offer at least the asking price and consider going over by a modest amount.”
“‘We have to work very fast in this market because if you don’t, you lose,’ said Theresa Teuma, owner of Legend Real Estate, in Santa Rosa.”
“During his search for a home priced $300,000 or less, McCormick was beaten out by investors and others making large down payments. He increasingly felt a sense of desperation.”
“‘We even made offers without looking at a home,’ he said.”
‘when we first put it on the market, there were some comments that the higher-end homes were still doing pretty good’
I wonder where he heard that?
‘We have to work very fast in this market because if you don’t, you lose,’ said Theresa Teuma, owner of Legend Real Estate, in Santa Rosa’
BTW, I have to drive all day to do a bid on some foreclosure work. You guys be good and I’ll check in as often as I can via wireless.
Well the thing is, that was somewhat true in the beginning of the bubble bursting. And if he’d tried to sell for “around 1million” he wouldn’t be vastly underwater now. But instead he thought that he’d “earned” ~550k for owning the house for less than two years. The level of self-entitlement and delusion is stunning.
After graduating last summer from California State University, Northridge, he put three goals on his agenda: Marry his fiance, buy a home and start a family.
He’s done all three.
“I accomplished all the goals I wanted to accomplish in becoming an adult,” said Rispaud, 27, a manager at the TGI Friday’s in Woodland Hills.
LMAO, How about a 4th goal, get a job?
The text you quoted says he’s a manager at a TGI Fridays. That’s a job.
Being a restaurant manager is honest work. However, whether he is actually earning the 93K/year needed to sustain a $279K house is the real question. I doubt Fridays pays that much.
Friday’s has closed several locations in the North Texas area in the past few months.
And here in the Bay Area, several TGIF’s were closed back in Dec.
TGIF?
PAFII (Put A Fork In It)
The chain voted “biggest ripoff” by Consumer Reports readers.
I didn’t go in there for 18 months after they refused to swap my friend’s cheesecake from the set menu for a scoop of ice cream … even though the one scoop of cheap vanilla ice cream definitely cost less than the cheesecake (this was early 2007, I think). Ridiculous corporate mindset.
Nevertheless, they are better managed than some chains I could mention. They may be a ripoff but they have kept up with the times. Other chains lost their way and went belly-up.
TGIF closed in Palm Desert mid last yr. Prime location, poof.
He did it the old fashioned way with 3.5 percent down. 20 percent would be the old fashioned way.
“Merced, the epicenter of the U.S. foreclosure crisis, demonstrates the steep challenges President Barack Obama will face in trying to stem defaults. One in 59 housing units in the Merced metropolitan area received a foreclosure filing in January, the highest rate in the U.S., according to RealtyTrac.”
How many epicenters does the U.S. foreclosure crisis have?
I think there at least 20 in california alone.I thought stockton was the epicenter?
Well that’s why it’s an epicenter, and not the center: there’s more than one.
You made me look up “epicenter”!!
thanks..
Last night on TV, the “epicenter” of the US foreclosure crisis was identified as…the whole state of California. Hmm, that’s a pretty broad epicenter. I guess if one looks at it from a point of view outside our solar system, Calif is a pinpoint.
In a magnitude 8.0+ quake, the entire state of California gets a pretty good shaking.
How many epicenters does the U.S. foreclosure crisis have?
In addition to multiple epicenters, there’s also:
12 Ground Zeros
19 Poster Children
72 Fallout Zones
88 Black Holes
192 Smoking Radioactive Dung Heaps
… and a partridge in a pear tree!
“The Obama plan probably can’t help Merced residents Bountay and Khamtanh Rattanavongsa, who walked away from their adjustable-rate home loan last year and were foreclosed upon after monthly payments jumped to $3,500 from $1,800.”
PROBABLY? Are there actually people who expect the taxpayers to put them back into houses they walked away from a year ago?
RE: Flush with profits from roughly 1,000 homes built in San Luis Obispo, Santa Barbara and Ventura counties, partners Ronald W. Hertel and Robert Fowler had a fleet of jets, a yacht, a Camarillo golf course and plans to build hundreds more homes
Are there actually people who expect the taxpayers to put them back into houses they walked away from a year ago?
Are there jet-setting, scum-bag, builders who expect taxypayer to KEEP them in the life to which they’ve been accustomed?
Pelosi and Co., “the Enablers”, never met a campaign money shake-down candidate they couldn’t bail out with somebody else’s money.
Naw, they’re waiting for FPSS’s Candy Crappin’ Unicorn to come and wipe their credit clean so they can “start over”.
I find it so gratifying to have started a meme.
You love me; you reaaaaaaaally love me.
We tolerate you. We really tolerate you.
ROTFLMAO
I should’ve seen that one coming a mile away!!!!!!
I bet this is nothing compared to atrocities of the Khmer Rouge in Cambodia they walked away from 30 years ago.
Um…Cambodia and Laos are two neighboring but different countries. Both communist, but the Pathet Lao were never as brutal and genocidal as the Khmer Rouge.
“Across San Diego County, one of the nation’s largest with 3 million people and 1 million homes, just 15 new houses sold in December, according to a report released Tuesday by the California Building Industry Association.”
O-M-G
That’s incredible.
Unreal.
In the words of Calvin and Hobbes:
Kablooie!
The story inside (C+H) called: Hamster Huey and the Gooey Kablooie.
Calvin and Hobbs: the best comic strip ever.
Yeah, I got that complete set in hardcover when it came out three (?) years ago.
Loved the present. My peeps know me and my tastes.
FPSS,
My sister gave me the complete set in hardcover of Calvin and Hobbes for Christmas.
They knew how much I loved Calvin & Hobbes. I do miss that comic strip.
I knew there was a reason why I like you so much
Sammy,
Agrees 100%. Calvin and Hobbes is and was the best comic strip ever.
The third volume is simply the best. It was never written for children. It’s like one long lyric poem.
I prefer Mister Boffo and Herman.
FPSS,
Have you seen the comic strip Lio? Reminds me of Calvin & Hobbes.
Nope. Will check out.
hey, don’t knock kiddies…mine love C&H, even the third volume, and have since they’ve been able to read. The volumes are quite popular with the brighter kiddie-set, actually, just fyi
I know! They sold that many?
“Step right up! Get yer’ fresh knife-catchers here!”
Yep, there are at least 15 utter and complete imbeciles left in SD county.
Trust me, there are waaaay more imbeciles than that here. They are still buying over priced used houses.
SD might have one more pr of knifecatchers..will update on beau’s daughter’s shortsale purchase in Rancho Bernardo…praying the bank takes so long that she sees the appraisal go down and opts out.
I don’t like calling bottoms, but that’s probably going to be the low mark as far as sales are concerned (not prices). It can only go up, one would think.
Can you have negative sales? I’m thinking if you include cancellations of sales that were booked in previous months the answer is yes.
I was wondering about negative builds: destruction of existing homes by plowing under those in dis-repair, ghost developments, etc.
They reported negative sales of downtown Chicago condos today due to developers lying about previous sales.
It’s more economical to buy (short sale,foreclosed) used houses than new. Get with the program builders. BTW, what happened to 20% down , 30 yr. mtgs? So 1970’s eh?
No wonder housing starts are reported as the lowest in recorded history. Some builders finally got the message that to stay in biz they must not only build but also sell.
“‘These were jet-setting developers who unfortunately crashed,’ said Vance Rose, who worked with R.W. Hertel and Sons as a winemaker in one of its endeavors.”
“They took educated risks and ramped up a fairly large building organization from almost nothing in fairly short order, Rossi said”.
“Unfortunately crashed”? They got what the deserved, they were deaf,dumb & blind to what was coming their way, so down in a ball of flames they go. Just they way the real world works!
“as a winemaker in one of it’s endeavors”
Here we go w/ the “private label” thing again? All these years we’ve been told that the reason CA’s were affluent while the rest of us languished was b/c of their boundless ‘creativity’!
Well then why is it that the minute they enjoy the slightest success ( they ALL gravitate toward the exact-same-identical symbols of wealth!? )
Vines are pretty just for the landscaping value. I have 4 cab and 3 merlot vines planted on a trellis across my northern border fence - lots of sun and good drainage there.
And spiders?
…educated risks…
I’m not sure I would put those two words together to describe this fiasco.
“‘These were jet-setting developers who unfortunately crashed,’ said Vance Rose
Ya mean building all these homes in pristine farmland, burning the air with their fleet of jets with no regard for the environment, that’s unfortunate? not to me. the hyperconsumption of the past 15 years has thankfully come to an end.
From the first article: “U.S. homeowners lost an estimated $3.3 trillion in house value last year, real estate valuation service Zillow said.”
Does Obama really think that somehow $75 billion is going to register even a blip on the radar? Or is he intentionally wasting $75 billion knowing that it won’t make a damned bit of difference?
I think he’s too smart to believe the former, so the latter means that he is merely corrupt, not stupid.
jbunniii,
I’m -not- in any way doubting the validity of your statement ( and I happen to agree whole-heartedly ) but I’m not sure what purpose any of it serves at ‘this’ point?
Obviously as a country we’ve -again- decided to take the easiest of the available options at the time ( in this particular instance Print & Bail ) so I’m done chipping my teeth over it.
We, along with a select few others have made as big and as public a stink about this as was humanly possible -prior- to it’s passing. ( Hat tip to Michelle Malkin for her Suck. It. Up. campaign ) All we can do now is engage in CIVIL disobedience and t-r-y to live with it.
Sure would be nice if this kind of outrage and civil disobedience was practiced while the banks were having their bad loan orgy, but anyone questioning the basis of Junior’s prosperity boom was clearly unpatriotic.
The solution to this problem will be painful whether they put money into it or not.
Obama’s big mistake is that he thinks that the housing market can be saved. Most of the economists in the world seem to think the same thing…which goes to show they were stupid going up, and even stupider going down.
I think there’s a 3rd option (and I’m a repub, so don’t think label me an Obama supporter; I most certainly am not). The money being spent now is simply a show, make the people think that govt is doing something, maybe (as a side effect) help a few people with their problems.
I think that the administration is smart enough to know that there’s nothing that can be done to save this market (other then let it correct). But that’s NOT at all popular, so they make a show of it, throw some money around, and placate the masses. Until they start directly injecting trillions into the housing market (through something like massive downpayment assistance, principal writedowns to 1/2 or 1/3rd the current amount, etc) there’s simply nothing that will stop this train from gaining speed. They know that, and I think that they are taking the right path (let it crash). However, the people must be placated, that’s what these programs are designed to do (IMHO).
Shhhh. You can’t let on that you know more than the sheeple. They will come for you. Blend in and watch Fox news and you might get a free flatscreen hd out of it.
You’re gonna get a flatscreen tee-vee for cheap because what on earth are they gonna do with all the cr@pola without dropping the price?
Oh, and if the tee-vee producers don’t produce, they got no income. Chindian or American, you gotta eat, baby!
Congress critters and state and local politicians are more likely the real targets being placated (since the people will figure out all too quickly how far that much money will go and they will not be pleased when they find out about the qualifications to get help), but I think your basics are correct.
Maybe jobs will appear — you know, needing more brokers to work with those mortgages? Snort!
I agree with Michael Fink. Putting on the right show is not so much “corrupt” as…Required. Jamie Dimon’s instant approval of the plan was interesting. The commentator asked him why people wouldn’t just walk away if they’re underwater. He said most people who are underwater are paying anyway. He said people have an obligation to pay their debts. He said “we” (who?) should teach the American people that you don’t just walk away from your obligations.
Laugh if you will, but this is exactly the right course for a lender: make it POSSIBLE for people to “meet their obligations,” and they will usually want to do so.
The real change is the provision that people who are underwater can re-fi anyway. This is the Great American Lenders’ Relief Package, keep the underwater folks paying longer. However, no FB is legally forced to take advantage (??) of this great offer. It remains to be seen how many will do so.
“Jamie Dimon’s instant approval of the plan was interesting. The commentator asked him why people wouldn’t just walk away if they’re underwater. He said most people who are underwater are paying anyway. He said people have an obligation to pay their debts. He said “we” (who?) should teach the American people that you don’t just walk away from your obligations.”
Jamie Dimon, one of the Masters of the Screwniverse, is going to tell us all about it. LOL, the American people should only get the sort of fire sale prices and goobermint backing Jamie got when he bought Bear Stearns.
He said “we” (who?) should teach the American people that you don’t just walk away from your obligations.”
Unless you’re protected by corporate LLC liability, in which case, bonus away!
Or unless you’re one of Obama’s political hacks…in which case, you never pay the IRS.
RE: the latter means that he is merely corrupt, not stupid.
“WE HAVE BEGUN THE ESSENTIAL WORK OF KEEPING THE AMERICAN DREAM ALIVE IN OUR TIME”
-B. O’BAMA
Kinda like the sign WORK MAKES YOU FREE hanging at the front gate to Auschwitz.
“Arbeit Macht Frei”! Wunderbar!
have you noticed when you say it aloud it sounds like:
OUR BUTTS ARE FRIED
I’m thinking of the Great Appeaser Chamberlain’s claim of “We have secured peace in our time” after signing a cravenly sellout deal with Hitler.
We all know how that turned out.
Chamberlain did the right thing. The U.K. was woefully unprepared for German military then. Even after a big rearmament they just barely —- *barely* —- escaped annihilation.
It’s just another damn pocket stuffing excercise. I vote corrupt.
He’s not a smart man, but he plays one on TV.
Why was the stimulus after 9/11 okay and this one not? Both were lame attempts at avoiding the inevitable. That crash would have happened without the terrorists anyway…Greenspan had to keep the Ponzi scheme going though.
I agree though, while it may help some people, it won’t help enough to actually matter. No one likes watching good money get thrown after bad.
No, jbunii. He’s doing “something” so that, when the economy finally recovers, he can say “Look, it worked. I saved the economy.”
Just politics.
“It has taken Susan Erb just three years to see the value of her Merced, California, home plunge by more than half to $350,000.
OK correct me if I’m wrong here, but doesn’t it seem like that decimal place is two digits too far to the right for Merced?
I was thinkging the same thing.so that would mean she paid 750k in merced.That is simply nuts.You can probably buy 10 homes for that now.
People bought houses in MERCED for 700k?
The Taj Mahal wouldn’t be worth 700k if it was relocated to Merced. Nothing like those brown 115 degree days in July or the tule fogs in the winter. Ugh. Anyone able to honestly afford a 700k home should be living on the coast and keeping tabs on their farm manager over the phone.
“They bought the house the old-fashioned way: They saved enough to put down a 3.5 percent deposit, and secured a 6 percent fixed-rate loan.”
A 3.5% deposit is the “old-fashioned way”?
I guess that is an fha loan.i thought 20% was the old fashioned way?
i thought 20% was the old fashioned way?
That’s what I thought too. I guess after years of “no money down” and “cash back at closing,” ANY down payment is considered the “old fashioned way.” Or, maybe I’m just plain old . . .
WTF. That one slipped by me! 3.5%, and that’s a “good” loan? Maybe 3.5%, 2X income, 760 FICO would be a “good” loan (actually, I’d call that “decent”, not good), but I’d bet big money that’s not the term of this loan. Probably more like 4-5X income, 650 FICO, and most likely in a crashing market. I wouldn’t touch that loan with a 10 foot pole.
Now package a bunch of THOSE babies into a security! EEsh.
You just insulted 10-foot poles.
Vosganian has also dropped the price three times, and is now asking $1.18 million. He’s also willing to lease it again - $3,400 a month for just the main house or $4,450 with the guest house included.
O ha ha ha! Even with the optimistic $4,450 assumption, he’s trying to sell the property at 265 times monthly rent! And that assumes he gets his “wishing rent” in this economy.
What a shock this guy is going to have when he realizes that his 4,500/mo puts his home value firmly between 500-600K. And, as the above poster mentioned, that’s using a very optimistic rental price! This home is still overpriced by close to 2X. That’s not going to be a happy day when this moron realizes that.
“partners Ronald W. Hertel and Robert Fowler had a fleet of jets, a yacht, a Camarillo golf course”……
“The Harkeys own a multimillion-dollar home in a gated Dana Point neighborhood. Their car collection includes a Bentley, a Porsche and two Mercedes Benzes, according to Department of Motor Vehicles records.”
What’s the matter with people nowadays?? Am I the only one who would be content with a 100K house, a good used truck and maybe a 4 or 6 seat puddle jumper, and bank the difference??
Sheesh.
RE: “The Harkeys own a multimillion-dollar home in a gated Dana Point neighborhood. Their car collection includes a Bentley, a Porsche and two Mercedes Benzes, according to Department of Motor Vehicles records.”
What’s the matter with people nowadays?? Am I the only one who would be content with a 100K house, a good used truck and maybe a 4 or 6 seat puddle jumper, and bank the difference??
“Greed is good”
-Gordon Gekko
I bet he really needs those gates on his community now.
It seems like it must be a lot of work for these people to manage their lives. Even if they have ‘people’ I can’t imagine all the hassle with having so much stuff.
Flush with profits from roughly 1,000 homes built in San Luis Obispo, Santa Barbara and Ventura counties, partners Ronald W. Hertel and Robert Fowler had a fleet of jets, a yacht, a Camarillo golf course and plans to build hundreds more homes in Atascadero, Santa Margarita, Pismo Beach, Central and Northern California, Oregon and Arizona.”
“Now the company has dissolved, its partnership split. Hertel and Fowler are buried under millions of dollars of debt and foreclosures, and their home-building company, R.W. Hertel and Sons, has been forced into an involuntary Chapter 7 bankruptcy.”
“‘These were jet-setting developers who
unfortunatelyfortunately crashed,’ said Vance Rose, who worked with R.W. Hertel and Sons as a winemaker in one of its endeavors.”There –all fixed!
I shed no tears for greedy pigs who wanted to “get rich quick” and lost it all, after driving prices sky-high on people who merely wanted basic shelter for their families to live in, like me.
HARM,
Perfect! Knew you could do it. On Sunday night 60 Minutes featured Daniel Sadek ( of “Redline” movie fame, oh and he ran QuickLoanFunding w/ a 4th Grade education ) They’re ALL getting what they deserve.
I agree HARM. Furthermore, good riddance to the snobbery, I mean winery. If I had a dollar for every one of those that’s sprouted up during this credit bubble, I’d have a nice chunk of change. All this fake wealth was disgusting.
But it’s OK for me to be greedy, right? Just wanna make sure.
Am I the only one who would be content with a 100K house, a good used truck and maybe a 4 or 6 seat puddle jumper, and bank the difference??
i’m with ya all the way..by the way what’s a puddle jumper?
Small, propeller airplane.
Not to beat a dead horse… but…. house prices in Southern California bear no relationship to reality. The majority bought houses that they could only afford with so called “creative financing”. I distinctly remember everyone smugly tell me how housing only goes up because it’s Los Angeles. No one cared about the remote possibility of not being able to afford payments because they would simply sell for a huge profit.
I resent my tax dollars being used to bail out people who made bad decisions. Where was the government when house prices kept riding the speculative wave? Oh yeah, Alan Greenspan told everyone that it would be prudent to take out an Adjustable Rate Mortgage.
Seriously, should tax dollars go to propping up those overpriced houses on the Westside??? Why doesn’t the government believe in letting the market correct its excesses?
Unfortunately…the system is rigged against those that play by the rules.
L.A, Don’t bet too much money on the “bailout” having any impact here in SoCal primetime.
We’re all jumbo loans my friend. Even the condo mkt. Unless I’m mistaken the 75b doesn’t apply here.
You are correct. This plan doesn’t do anything to stop the correction underway here in L.A. It just annoys me to hear the same sob story about poor people losing their homes.
Look, I have compassion for the GM employee who was pink slipped. However, I have no compassion for all of the out of work Financial Advisors, Flippers and Contractors who bought houses and butchered them with an excess of Home Depot “improvements”.
I’m just waiting for a reasonably priced house to buy!!! (which means that it is still horribly overpriced as compared to the rest of the country!)
“Seriously, should tax dollars go to propping up those overpriced houses”
I agree. I want house and condo prices to keep falling. Then maybe at some point this 50 year old will finally be able to get out of an apartment.
I heard this all the time, too…including on this board, where Californians were telling everyone else they didn’t know squat. Blathering on and on about having two houses - one on each coast…about how brilliant they were about selling out at astronomical prices…and then heading elsewhere in the country to ruin local economies upon their arrival.
Thanks a lot, jerks. May you suffer for years.
They bought the house the old-fashioned way: They saved enough to put down a 3.5 percent deposit, and secured a 6 percent fixed-rate loan.
Sounds like his lender is still drinking the urine - that 3.5% deposit was probably underwater within a month at the rate prices are declining.
I thought the “old-fashioned” way was a 20% downpayment!
Old fashioned as in 2003?
83 and 97 it was always 20% down, guess we all missed that in between phase..
Indeed, 20% is the old fashioned way. It’s what I had to scratch up 32 years ago to get into my one and only home. The bank also looked up my butt with a flashlight re income, debt, payments, etc.
They had this outdated notion about wanting to be paid back.
Yeah, that’s a disaster waiting to happen. 3.5% isn’t close to enough to put down on a home in this type of environment. 10% would be the min I would consider (as a lender) and then only <2.5X income and 720+ FICO. Anything less is just throwing the money down the crapper.
“I thought the “old-fashioned” way was a 20% downpayment!”
That is “old-fashioned”. Are you like a dinosaur or somethin’ ?
“Make offers ahead of the weekend. Many buyers look at homes on Saturdays and Sundays and make offers on Mondays. Offer at least the asking price and consider going over by a modest amount.”
OK, they (Realtards) want this bidding war to start all over again?
“‘We have to work very fast in this market because if you don’t, you lose,’ said Theresa Teuma, owner of Legend Real Estate, in Santa Rosa.”
“During his search for a home priced $300,000 or less, McCormick was beaten out by investors and others making large down payments. He increasingly felt a sense of desperation.”
“‘We even made offers without looking at a home,’ he said.”
So is that the sound of the MACHINE trying to start up again? I think the fuel tank is empty, the engine is blown, the tires are bald, and yet they are marketing it as a luxury vehicle! Boy do people need to wake up and smell the SH!T these REAL ESTATE professionals are spewing.
OK, they (Realtards) want this bidding war to start all over again?
The Realtors ™ will pertent bidding wars are the norm! Ugh…
This is nothing but… night soil.
Mr. McCormick sounds like the sucker.
I bet you similar homes in the area are going for sub $250k by summer. The foreclosure tsunami has only begun. What’s the local income? Rent? I bet you $300k is at least 30% over sustainable market price today. ugh…
Got Popcorn?
Neil
“‘We even made offers without looking at a home,’ he said.”
Fill in the blank: A _____ and his money are soon parted
Too many people are really, really dumb. Sigh.
I’ll fill it in for ya. Here’s what follows the capital A:
sshat
Ben - did you miss this one?
“Homeowner’s Rallying Cry: Produce the Note”
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/02/17/national/a120919S63.DTL&type=realestate
Habeus notus?
From Redfin in my neighborhood in LA:
SFH in my zip code:
Sold June 21 1994: $295,000
Sold Sep 9 1994: $265,000
Sold May 10 2000: $410,000
Sold october 16, 2006: $1,250,000
Sold August 8 2008: $569,500
Now a bank-owned foreclosure listed at $649,900
My question for the bank: is there any reason why the price shouldn’t be the 1994 price adjusted for inflation? Which by my calculation is about $425,000.
If it foreclosed at $569,500, then how in the world did the bank come up with $649,900 as their new asking price? Shouldn’t they be asking for something lower?
$569K was probably the outstanding loan balance.
“‘I feel that real estate is the engine that drives California,’ Vosganian said. ‘If you want my opinion, now is the best time to buy.’”
then why are you selling?
He’s not selling… he’s sharing opportunities with the less fortunate. It’s - like - charity and stuff.
Well, then why doesn’t he give out MAPS? There are people everywhere who want to buy good houses, but they can’t find them because they don’t have any maps. They are uneducated. He should help them! It’s also a problem in the surf industry because people have to find the good surf spots, but it’s too hard without an agent to drive them there. If he really wants to charitably help these unfortunate people, he should hand-mark the maps with the surf spots and give them out. If you drive a man to a house, then he may view it today, but if you mark the spot for him on a MAP, then he may view it forever.
OK Ben I’ll promise to be good as I contain my rage at MAKING AN OFFER SIGHT UNSEEN….
/seething rage suppressed/
It happened here in Boise back in 2006. The realtor who was the property manager for the rental that I leased back then told me horror stories. One was about an investor from Sacto who wired him $400K and told him to “buy him 3 houses as an investment”. The realtor asked him “what kind of houses?” The reply was, “you know, just some houses”. Not only didn’t he want to visit and inspect the houses, he didn’t even want to specify neighborhood or specifications.
Good Lord. It’s like the degenerate gambler (Philip Seymour Hoffman — love that guy) in a show called Owning Mahowny. He picks up the phone and immediately tells his bookie to place all his bets on the home teams in the American League and all the away teams in the National League. The bookie asks, what the hell, you don’t even know who’s playing…
Same thing here. Please tell me that this is not a nation of degenerate, completely addicted, addled GAMBLERS.
Nice call. You want an even more depressing PSH film? Love Liza. Good gravy.
I wish I could.
A nice example of the depth of the local mania in my neighborhood and how the crash is going:
SFH in my zip code:
Sold June 21 1994: $295,000
Sold Sep 9 1994: $265,000
Sold May 10 2000: $410,000
Sold october 16, 2006: $1,250,000
Sold August 8 2008: $569,500
Now a bank-owned foreclosure listed at $649,900
My question for the bank: is there any reason why the price shouldn’t be the 1994 price adjusted for inflation? Which by my calculation is about $425,000.
Headline: ‘Obama Plan Unveiled, Plan calls for More Plans’.
Reason #1 why Slim wouldn’t last a day in a government job.
LOL! Yes it ‘does’ seem to be the order of the day? Lost a post there but I’ve made a promise to myself not to get too bent out of shape over Stim/Tarp/Bail etc.
Ever watch a baseball game where a ‘relief’ pitcher comes in all the way from the bullpen, warms up some MORE on the mound and then serves up a kiss me pitch that results in 3 -more- runs? ( You find yourself wondering why he didn’t walk in closer and deliver it underhand? ) We’re ‘there’, but again I’ve lost about as much sleep as I’m gonna’ over this!
I looked on The Onion, but couldn’t find the story.
Obama Plan Unveiled, Plan calls for More Plans
“We need to have a meeting to discuss how to avoid spending so much time in meetings”
From the Associated Press:
“PHOENIX – President Barack Obama’s plan to tackle the foreclosure crisis will spend $75 billion in an effort to prevent up to 9 million Americans from losing their homes.”
OK. Simple division suggests that the Federal Government somehow spending $8,333.33 per house is the plan.
According to Zillow and some other sources, many people’s homes “lost” $8,333.33 per month, every month, this last year alone. ($100,000 drop in market value over the year).
This doesn’t sound like “tackling” the housing “crisis”. It sounds more like flushing $75 Billion down the toilet into the sewer of corruption.
And here I was, thinking the housing “crisis” was that house prices had become wildly inflated, leading to gross overbuilding, and speculative excess…
“And here I was, thinking the housing “crisis” was that house prices had become wildly inflated, leading to gross overbuilding, and speculative excess…”
Oh, Cobalt, there you go with that thinky-stuff again. When will you learn that modern-day America is all about feelings?
What’s your EQ? Lol.
I know I lost $100,000 but I feel that was wrong. Give me money.
“Give me money” LOL!
O…k, any particular amount? Or should I should start handing it over and you let me know when you’ve seen enough?
Just give me all you have. If I have any left over I’ll give it back to you!
My EQ test result tells me that emotionally I am correct in my feelings. Gimmie gimmie gimmie!
“My EQ test result” LOL!
Yeah I’ve had to sit through those seminars too. “A lot of people have very high IQ’s but have terrible… EQ’s!” Belongs right up there with “The Secret”.
Speaking of frauds the Mortgage Fraud Blog had some pretty bold accusations posted against our good friend and financial advisor “Rich Dad”. Can anyone confirm that in the MSM? Just curious.
“there you go with that thinky-stuff again. When will you learn that modern-day America is all about feelings”
Feelings… wo oh oh feelings…
i think I’m gonna be sad,
i think it’s today, yeah
Just call it the “Mortgage Brokers Employment and Circle-Jerk Act of 2009″.
XGS, in response to you post earlier in bits, were you referring to a 4 or a 5?
The of course, will not be helping anyone that does not have a mortgage on their house.
From the AP:
The plan, to be announced Wednesday, would:
_Remove restrictions on Fannie Mae and Freddie Mac that prohibit the institutions, both taken over by the government last year, from refinancing mortgages they own or have guaranteed when more is owed on a home than it is worth. The White House says this could reduce monthly payments for up to 5 million homeowners.
_Create incentives for lenders to modify subprime loans at risk of default or foreclosure. For lenders that agree to reduce rates to levels borrowers can afford, the government will make up part of the difference between the old monthly payment and the new payment. Participating lenders also will be required to cut payments to no more than 31 percent of a borrower’s income. Up to 4 million homeowners could benefit.
_Keep mortgage rates low for millions of middle-class families seeking new mortgages. Using money already approved by Congress for this purpose, the Treasury Department and the Federal Reserve will continue to buy Fannie and Freddie mortgage-backed securities to maintain stability and liquidity in the marketplace. The department, through its existing authority, will provide up to $200 billion in capital for this purpose.
_Pursue reforms to help families avoid foreclosure. The administration will continue to support changing bankruptcy rules so judges can reduce mortgages on primary homes to their fair market value, as long as the borrower sticks to a court-ordered repayment plan. As part of the $787 billion stimulus package that Obama signed into law on Tuesday, the administration will award $2 billion in competitive grants to communities experimenting with innovative ways to prevent foreclosures.
‘Tuesday, the administration will award $2 billion in competitive grants to communities experimenting with innovative ways to prevent foreclosures’.
Free beer (yes, Colt 45) if you choose not to walk away. -Do I get all or just part of the 2 billion?
Vote for Oat Willie - FREE PIZZA!
I’ve read a little bit more about the program and this is another one of those that are designed for people who are only underwater to the point where the chimney is still visible. If you’re really underwater, you’re as screwed as ever.
“For lenders that agree to reduce rates to levels borrowers can afford, the government will make up part of the difference between the old monthly payment and the new payment.”
This is the part that torks me off. Its a blatant payoff to the reckless at the expense of the prudent.
“. The administration will continue to support changing bankruptcy rules so judges can reduce mortgages on primary homes to their fair market value, as long as the borrower sticks to a court-ordered repayment plan.”
This is the only part that brings some consolation as all home prices will fall as they should.
“This is the part that torks me off. Its a blatant payoff to the reckless at the expense of the prudent”
Yes, it is exactly that. This is the fundamental issue I have with the mentality of “capitalism bad, socialism good”. Once the fear of consequences is removed, greed and corruption are left unchecked.
but the lending institution must absorb the other part of the write-down - so it loses, moreover it has to record the loss. On the other hand if the modified mortgage performs than it is a straight-up asset! If it doesn’t agree then the lending institution must squeeze as much out of the underwater borrower and keep the non-performing mortgage on the books for as long as possible - there seems to be a definite downside to not agreeing. Sounds like a plan to smoke out the lending institutions?
as far as not being perfect justice - well no it isn’t
The part that really torqued me was when Ben Bernanke first launched his rate-cutting campaign back in 2007. That was the point of no return. Bailouts became a certainty. An infuriating absurdity.
_Remove restrictions on Fannie Mae and Freddie Mac that prohibit … refinancing mortgages they own or have guaranteed when more is owed on a home than it is worth.
“Okie-dokie Mr. & Ms. FB. Your house is worth $130k, and here’s your shiny new loan for $458k@6.5% for 60 YEARS!!!”
“AH hahahahah ah ah, urp, goo goo ca choob!”
It’s too bad that the situation in Merced occured when California is bankrupt. Otherwise this would be a great opportunity for the UC system to go in and buy up en bloc foreclosed houses around the new UC Merced campus for married/grad student housing. We already know they will end up spending the taxpayers’ money on campus housing anyway - they could have bought up the foreclosures for less than the cost of construction.
That UC Merced campus is, how do I put this, not so nice. Before I left California I had a chance to tour it. The student housing is so shoddily built I’ll be surprised if they don’t have to tear it down in ten years. The entire campus is a victim of the housing bubble and McMansion style construction. Looks nice. Won’t last.
I still don’t see why (1) the UC system thought they needed another general campus and (2) why they thought it should go into Merced.
There is lots of room for expansion at Davis, Irvine, and Riverside IIUC.
Any why Merced of all places? There is no base of industry, medicine, government, or other things who would benefit from having a UC campus nearby.
Politics. Despite the frustration of the underfunded other campuses, the Governor at the time sold UCMerced as an engine of economic growth. You know, if you build it, they will come. Totally stupid. I think it was Gray Davis who pushed it, but it might’ve been Pete Wilson, or even someone before him. Any way you slice it, a bad idea.
IAT
“The National Association of Home Builders estimates that more than 20,000 residential developers across the country have shut down in the last two years.”
Let’s see, ummmm. 20,000 fewer developers = a huge drop in membership dues. Which would result in less money for political contributions, thereby rendering the NAHB an ineffectual force in American politics going forward.
This will probably affect the NAR the same way.
Hope this brightens everyone’s day. Sure puts a smile on my face.
We can hope, god can we hope. The sooner the RE scum get off the teat of Washington, the better off we all are. Hopefully someone in Washington will realize the cold truth, that we don’t need a single home built in this country for 5+ years, and marginalize the requests/pleas from an industry that blew itself up.
Hopefully someone in Washington will realize the cold truth, that we don’t need a single home built in this country for 5+ years, and marginalize the requests/pleas from an industry that blew itself up.
Well I agree that you need fewer homes than you have now but I’m guessing that there are a million houses in the far-suburbs that should be torn down today reducing the costs of transportation and servicing but new housing must be built in the city centres which can be serviced more efficiently.
First post eaten..
We can hope, god can we hope. The sooner the RE scum get off the teat of Washington, the better off we all are. Hopefully someone in Washington will realize the cold truth, that we don’t need a single home built in this country for 5+ years, and marginalize the requests/pleas from an industry that blew itself up.
You’re not alone, Michael. The HBB Post Eater snarfed two of mine.
Real Estate Refugee,
Right,
What do you call 20,000 Residential Developers at the bottom of the sea?
A good start!
I think it’s safe to say that they’ve been more or less marginalized of their own accord. No one is listening to them and their whiney blues now. I think that goes -double- for NAR.
‘Hope this brightens everyone’s day. Sure puts a smile on my face.’
Oh, laws yes, me, too. My smile edges are about to meet in the back of my head!
Is Obama plan aims to help people or banks to collect the debt…?
Both!
One of the goals is wrapped up in the other.
Beauty.
from a marketing standpoint, that is.
gal,
In some ways, perhaps this helps everyone. See my comments above.
-Homeowners get lower payments.
-Banks get made whole.
-Potential buyers get lower home prices.
Then again, my head is swimming from all these plans, so perhaps they’ve merely succeeded in confusing me.
“-Potential buyers get lower home prices.”
Fewer foreclosures & short-sales actually means that potential buys have LONGER to wait to get lower home prices.
They’ll still get there. It will just take longer. And IMHO it will be more painful due to how long and drawn out it is.
I don’t think it will work, you can’t play with economy. First Mr. Greenspan artificially raised prices,we are the witnesses what happenned. Now they want artificially to keep prices up. It will come back again and hurt more severly then they think… homowners will loose their houses anyway… the only winners will be the Madoffs and alike…
You think Madoff won? He will go to jail for a good long time, or be whacked before he can go. He did not win. Winning for him would have been to die of a heart attack before being found out.
Madoffs always win, he won for many years and now he in his 70’s. He did what he could for his dynasty…what do you think happened to $50 billion?…Madoffs never die, they are still there, in the MARKETS of U.S. …be aware…
OK, you win. The 50B is safely tucked away in a Swiss numbered account for future generations to use to live high on the hog. I can’t hardly think of a single 70 year old egocentric high living SOB who WOULDN’T take the fall to secure the family’s position in the top 0.01% of society.
I’ll tell you what though, I’ll keep an open mind and review this again once in a while in case you and I are both wrong.
Dear dude, I think your guess is little narrow, I wouldn’t say that it is only family’s interest but little larger group of interest might be, who knows… there is a war going on somewhere in the world…
I still think gal is aladinsane.
“Fewer foreclosures & short-sales actually means that potential buys have LONGER to wait to get lower home prices.”
The way I read it, if the principal is reduced to current market value, ALL comparable homes are now worth that price.
Immediate mark-to-market.
Problem is, demand will outstrip supply because you’ll have a bunch of people living in houses they can only afford with government help. Problems
1)If there is appreciation, the subsidized homeowner keeps it. Taxpayers get nothing.
2)Those who took the risks and pushed prices higher in their desperation win the game of musical chairs, while they sit in houses and tighten supply for others.
3)Reducing the foreclosure danger today creates moral hazard tomorrow, meaning a future run-up can be expected far sooner than if people learned their lesson through foreclosure.
In other words, this is bad bad bad. Even if few get the benefit today, all will expect it in the future.
IAT
“‘We have to work very fast in this market because if you don’t, you lose,’ said Theresa Teuma, owner of Legend Real Estate, in Santa Rosa.”
what a stupid bitch
There are basically two types of people in America right now: Those who have recently lost their job, and those who are afraid they are going to lose theirs any day now.
I don’t see either group waiting in lines all night to buy houses or taking part in lotteries just for the right to put a financial noose around their neck.
There is a third type not large enough to affect the stats…
15 people bought new homes in SD county last month! Morons, each and every one.
For the goldbugs out there…. I would be terrified of having 870 metric TONS of gold come on the market at once…
What would happen if all of a sudden 30688347.031 oz came on the market?
Just asking because Eastern Europe happens to be sitting on that tonnage, and could try to ease the pain a bit by selling its stock of gold Ingots…
Ah good point. I’m not a goldbug, but from what I can gather, many hoarders would be quite happy if the price collapsed from a dumping of product on the market if they could acquire more at a lower price. For some it is not the dollar price that matters as much as the weight on the scale. I’d like to see all governments dump all their gold in toto into an open transparent market, mostly out of curiousity as to the effect. I can speculate upon many potential outcomes.
Of course you know that none of that “official” gold will ever see a transaction in which the public could directly participate.
Well if DZZ goes to 15, I’ll take my chances on a few shares for a trade.
I wouldn’t stay awake at night worrying about it.
The Press Democrat. “Repeatedly shut out in attempts to buy a home for $300,000 or less, Joseph McCormick bid up the price on the next house. Paying $284,000 — $9,000 over the asking price — was still a good deal for the Rohnert Park home, which sold for nearly twice that amount three years earlier.”
“The strategy worked, leaving the first-time buyer relieved to finally land a house after a sometimes frustrating seven months in the most competitive end of Sonoma County’s housing market. ‘It was difficult. I wasn’t losing hope, but I was starting to second-guess myself,’ said McCormick. ‘It’s a good feeling once you’re in. I figured I’m very lucky.’”
“‘They’re coming out in droves because they know there’s no waiting any longer for prices to bottom out. There’s definitely more buyers than inventory. Anything under $300,000 — it’s gone,’ said Logan Adams, associate broker in Santa Rosa. Adams represents banks selling foreclosed homes. Last month, he had eight such homes — all priced under $300,000 — sell after one day on the market.”
“‘Banks price them aggressively to get them off the books. They want them to sell fast,’ Adams said.”
“Agents said several strategies can help buyers stay in the game at the hot end of the county’s housing market: Start your house hunt on the Internet. Eliminate any properties that have a pending sale, and be ready to tour homes the same day they come on the market. Get pre-approval from a lender. That enables you to make an offer immediately.”
“Make offers ahead of the weekend. Many buyers look at homes on Saturdays and Sundays and make offers on Mondays. Offer at least the asking price and consider going over by a modest amount.”
“‘We have to work very fast in this market because if you don’t, you lose,’ said Theresa Teuma, owner of Legend Real Estate, in Santa Rosa.”
“During his search for a home priced $300,000 or less, McCormick was beaten out by investors and others making large down payments. He increasingly felt a sense of desperation.”
Wow, could they pack any more Bubble-peak vintage cliches in this “news article”? And who was the copy editor, David Lereah?
I don’t live that far from Sonoma, and I can tell you that this area is *far* from a market bottom. Houses are no longer at high-on-crack prices, they’re merely at ridiculous levels. Price-income multiples are still at least 6:1, while the price:rent ratio is close to 200:1. Better than 2006, yes, but still far from a bottom.
Falling knife-catchers of the Bay, unite! You have nothing to lose but your shirts!
The Sonoma County RE Shills are indeed still at their delusional games. Prices still have a long way to fall, and they ARE falling. There is absolutely no “rush” to “get in.” As all the biggest fools are still crawling all over each other like desperate crabs in a bucket trying to get OUT from under the albatross of a mortgage that is killing them.
re: bubble peak cliches
The scenario described in the article is just a replay of the manufactured urgency that was a big part of the problem in the first place…
I think you should be snapping up those cliches!
After all, they literally aren’t making any new cliches!
You’re greedy and trying to keep us from buying a home in your market so we don’t compete with you!!! Hehehehehehe
LOL!! thank you for making me giggle. :^)
in case you arent familiar with sonoma county. its a small step up from the central valley, but its not a highly desireable area either and there has been lots of new homes built in the last 10 years. The median price in 1999 was $150,000 and this is probably where it is heading back to. Keep this in mind when reading about locking in the 300,000 price. Its going to 150,000 in 2 years.
Might agree with you on where the median price is going, but “small step up from central valley”? Puhleeze. Here in Petaluma: great climate - not 100 degrees in the summer or 35 in the winter; attractive historic downtown; 30 min from Golden Gate Bridge/SF, Point Reyes, Sonoma coast, Napa valley; *in* the Sonoma wine country; great cycling and motorcycling from my doorstep; great food with much locally-produced cheese, bread, produce; Mendocino National Forest and Mendocino coast an hour and a half up the road. It’s not perfect, but it’s a great place to live. Now stay away.
No no, shhhh.
It’s horrible in Sonoma, awful, terrible. Miserable place to live. Don’t even visit. You’d hate it.
“None of us could have seen just how significant and strange it’s been,” Rossi said.
WRONG. Anybody reading this Housing Bubble Blog saw the real estate meltdown coming waaaaaaay in advance.
“Fowler ran the operations of the company. Now, he says that R.W. Hertel and Sons, the company that ran the partners’ building operations, ‘is pretty much cooked.’ ‘We’re responsible for our debts, but at this point unfortunately it would take another lifetime to repay them,’ he said. ‘If I knew then what I know now, I would have liquidated everything in 2005 as fast as I could.’”
Anyone reading this blog could’ve told you what was going on and even given you the numbers in 2005. My question is - would you have listened?
Anyone reading this blog could’ve told you what was going on and even given you the numbers in 2005. My question is - would you have listened?
Very few could or would. One of my friends/ex-coworkers showed conviction and sold in Victorville, CA.
For Christmas last year he gave me an incredibly nice bottle of wine as a ‘thank you’ for our conversations over the years. More that nice… He had to step off that cliff; I voiced an opinion, he took action. He even undersold the last comp by $20k.
Oh… he never moved. He’s still renting at less than his previous mortgage with the money in safe investments (T-bills or CD’s at multiple banks… I forget which). Its going to make his move to Colorado next year really easy.
Got Popcorn?
Neil
Kudos to him. What a great story.
I saw some data on San Joaquin county the other day for existing home sales. Among other things it showed:
1. Average time on the market was less than 60 days;
2. Steadily reducing home inventory over the past 12 months;
3. Steadily dropping prices on a per square foot basis;
4. Starting in about September of last year, fewer and fewer existing homes entering inventory on a monthly basis;
5. Starting in about September of last year, on average, homes that are selling are doing so for about their asking price;
6. At the current level of inventory, and current sales pace, there is <3 months supply of existing homes (more homes are entering the market, albeit at a slower and slower rate, so we won’t be out of homes in 3 months, but we’re finding a new balance).
I don’t think we can say that the bottom is in until home prices stop falling, but at what point do we all acknowledge that market forces are working to correct the imbalances in the housing market?
They clearly are.
Market forces are working, faster in some areas than others of course.
Inventory has come down in some areas because a lot of folks are “waiting it out” or renting it out. But there could be a high number of FSBOs on the market that don’t show up in NAR stats.
There are also a ton of REO that are not listed. In the zips I track it is as high as 2:1 REOs to listed REOs.
Who posted the data for San Joaquin county?
A guy I work with bid on a house, offer accepted. Then a few days later the bank came back and said you need to raise your bid there are 5 other offers, he said no. A few days go by and it turns out he was the high bidder and got the house.
Bank games learned form used car salesmen
If he had an “accepted offer,” how can the bank come back and ask for more? And why would the bank be the one asking for more?
None of this computes…
Sorry, was this a short sale? Still, I don’t understand how they could come back after signing their acceptance of an offer…
Sounds like they might have been asking him to pay the stupidity tax.
They can ask you to do anything. With an accepted offer in hand, the smart move is to tell them to shove it where the JT is already planted.
Given current events, why should this surprise anyone in the least? All rules are in the crapper, anything goes. Hardly a way to instill confidence, but that’s the way it goes.
We talked about these false bidding wars years ago.
Realtors ™ lie. The bank lied.
If anyone tells me I’m in a bidding war… I’m cutting my bid. Ghad… I hope the wife will play along.
Got Popcorn?
Neil
If not, fire the wife.
Let me teach you a lesson. There’s only one REAL way to win.
Talk about the subject endlessly with examples (”isn’t is shocking that Candy and Ding-dong got burned?”) and bore them so that when the problem arises, they ask, “Isn’t this what you said would happen?” (and they think they figured it out themselves!)
Lawd, if only I knew what I know about psych at 18!!!
“Rick Loughead”
I’m pretty sure that’s pronounced lunk head.
I’m sorry, I’m still laughing about Jamie Dimon’s comments about teaching Americans to not to walk away from their obligations. I just realized where that came from, he remembers Henry Paulson telling him to buy Bear at a coupla bucks a share, to really make it hurt, to teach them a lesson.
Hey, these Masters of the Screwniverse are PISSED, folks. They’re looking for someone to blame and that someone is Main Street.
Baby, this ain’t Japan. This be America.
I wanna see the face of the Candy-Crappin’ Unicorn™ when they start walking en masse.
Oh, not that I care either way, but 2010 election is totally up for grabs. This is NOT gonna be pretty.
“I wanna see the face of the Candy-Crappin’ Unicorn™ when they start walking en masse.”
Somehow, I don’t think he’ll be surprised at all. I agree with the poster that much of this is to make it look like his administration is doing something, to placate the politicians from national to local levels. And now he’s got a roadshow going.
People will realize it was all a magic trick when they look for the jobs to materialize. And when they try to call their friendly loan servicer and find themselves on hold listening to Kenny G for an hour. Presto, change-o! Hocus-pocus, gimme the smoke-us.
Dimon’s an emperor’s dweeb.
Of course he’s going to say that. Of course he wants the government to force the average Main Street clod to voluntarily cramdown through Fannie/Freddie. Dimon and crew will make a crapload of money via reduced mortgage payments and TARP.
Essentially, what we’re getting is taxpayer funded Section-8 housing for millions of Americans (and I’d bet anything that 75%+ of these new Section-8′ers will be minorities) who acted irresponsibily and ran themselves into debt.
This is rapidly turning into the largest giveaway program this country has ever seen. Houses for everyone!
Welfare for everyone! More federal funds to states that increase their welfare rolls the quickest!
Obama’s hero clearly is Herbert Hoover.
““Public school enrollment in Riverside and San Bernardino counties dropped by more than 8,700 students”
…
““It’s a mystery, however, where the students are now. ”
It’s called MEXICO. Idiot.
LMAO.
“It’s a mystery, however, where the students are now”
Lunch line Hamburger Helper ?
Yup. Budget problems solvedemo.
We know … now?
Or we knew … then? And let it go on because it was propping up our own house’s “value” and our dreams of retiring on the gains.
The NAR’s willing executioners.
…we know how in
manymost cases they ^ lied about their income and ^ were stretching themselves to be able to affordthe housethe first three or four monthly payments,’ Johnson said.”rofl … you nailed it … wow, this thread is my happy place today
This is the biggest pack of lies!!!
This 4/2.5 Santa Rosa track SFH has been sitting for under $300K for almost a year.
http://www.redfin.com/CA/Santa-Rosa/4125-Yeager-Dr-95407/home/2641327
There are other examples of under $300K houses just sitting in Santa Rosa.
http://www.redfin.com/CA/Santa-Rosa/4049-Rickenbacker-Dr-95407/home/2641295
http://www.redfin.com/CA/Santa-Rosa/4589-Earhart-Ave-95407/home/2641420
Damn, that first crapbox has no yard at all!
(Didn’t see my comment get posted)
This is the biggest pack of lies!!!
This 4/2.5 Santa Rosa track SFH has been sitting for under $300K for almost a year.
http://www.redfin.com/CA/Santa-Rosa/4125-Yeager-Dr-95407/home/2641327
There are other examples of under $300K houses just sitting in Santa Rosa.
http://www.redfin.com/CA/Santa-Rosa/4049-Rickenbacker-Dr-95407/home/2641295
http://www.redfin.com/CA/Santa-Rosa/4589-Earhart-Ave-95407/home/2641420
This is the biggest pack of lies!!!
“‘They’re coming out in droves because they know there’s no waiting any longer for prices to bottom out. There’s definitely more buyers than inventory. Anything under $300,000 — it’s gone,’ said Logan Adams, associate broker in Santa Rosa. Adams represents banks selling foreclosed homes. Last month, he had eight such homes — all priced under $300,000 — sell after one day on the market.”
This 4/2.5 Santa Rosa track SFH has been sitting for under $300K for almost a year.
http://www.redfin.com/CA/Santa-Rosa/4125-Yeager-Dr-95407/home/2641327
This is not the only one, check the related search results.
Good find, OaP!
I’m constantly asking who all these people are that are buying with homeownership rates at historic highs. One explanation? Realtors are lying. Silly me. I still assume that when people tell me something, they’re telling me the truth.
Cramer’s plan:
$75 billion for mortgages? Hysterical. Solves nothing. You want a plan? I have one, courtesy of my friend Matt Horween, who works closely with me every day and keeps me honest. Here goes:
First, we have to cut the principal of the mortgage. It is a hopeless issue without that, and an interest rate modification is a pure loser. The new mortgage should be given for 80% of the appraised value; the government can hire an army of appraisers, as we need to put people to work anyway. That’s the level where most people would be able to stay in their homes. That’s the virtuous circle with a drying up of new and old supply.
Second, the government has to offer 4% mortgages to everyone, so there is no moral hazard and so people can stay in their homes, which must happen if we are going to have house price appreciation. This 4% mortgage should be fixed for 40 years. Anyone who is in an owner-occupied home should be able to refinance at that rate, too.
Third, the servicers for the mortgage bonds, the CDOs, who are holding the whole system hostage, must modify the principal, too. They have fought this tooth and nail. Their resistance is stupid. Why? Because they aren’t going to get paid without modification of principal for any of the 2005-2007 vintages, and they are clogging the system.
Fourth, banks that modify mortgages must be given a chance to make the money back. You do that with an override certificate. That would allow the banks to recover the full price of the old mortgage for any time in the next 50 years. Anything over the original mortgage goes to the homeowner. No home equity or second mortgage can be placed on the property without first paying off the override certificate.
Fifth, construct the override certificate as an asset in full value. That means they will not be dinged by the regulators for the potential loss that comes from changing the principal of the loan. This would save all of the banks from insolvency. The CDO holders get the same override certificate.
This plan has NO SPONSORSHIP whatsoever, but it will work. It is the only one I have heard that has a real solution, and it has little immediate cash outlay and does not forgive debt permanently, so it will fly with Congress. Even with the Republicans. No one who has an existing mortgage — 90% of which are current — would fight this plan. The banks would be able to get through this without nationalization. The housing supply pool would be reduced dramatically. The foreclosures would drop dramatically. There would be no points, and closing costs would be normal.
I have been ahead of the game on this housing issue for some time, right back to when I said in August 2007 that if the Fed didn’t cut rates, buy mortgage paper and lower rates we would have a dramatic decrease in what I saw was a huge surge of foreclosures.
That didn’t happen in time.
Now we have come to this modification of principal. It offers more to the banks and the mortgage servicers while keeping the homeowners in their homes and not breaking the Treasury bank. It is the best I could come up with and it makes much more sense than the nonsense I see Obama offering.
I will stay on this case and campaign for this plan endlessly, including behind the scenes with the FDIC.
It can work.
Heaven knows, we need solutions. This one’s mine and my friend Matt’s, and it will have the support of all involved.
I am ADAMANTLY against ANY principal reduction. This is just unfair!
Reward bad behavior? NOT!!
The housing market will not return to it’s recent insanity. The plan is not designed to save the housing market. It’s designed to prevent a full-blown depression. That means RE will go down 50% from peak instead of 90% from peak. No one is attempting anything else.
Wall Street Journal
* REVIEW & OUTLOOK
* FEBRUARY 17, 2009, 9:59 P.M. ET
The Decline of California
They still think they can tax their way out of this one.
…
It’s sad to watch. The Golden State — which a decade ago was the booming technology capital of the world — has been done in by two decades of chronic overspending, overregulating and a hyperprogressive tax code that exaggerates the impact on state revenues of economic boom and bust. Total state expenditures have grown to $145 billion in 2008 from $104 billion in 2003 and California now has the worst credit rating in the nation — worse even than Louisiana’s. It also has the nation’s fourth highest unemployment rate of 9.3% (after Michigan, Rhode Island and South Carolina) and the second highest home foreclosure rate (after Nevada).
Roughly 1.4 million more nonimmigrant Americans have left California than entered over the last decade, according to the American Legislative Exchange Council. California is suffering more than most states from the housing bust, but its politicians also showed less spending restraint during the boom.
Didn’t help when the voters kept voting yes on all those bonds known as propositions.
Illegal immigration has buried California.
Finally all the bigshot investors are losing their shirts in san luis obispo county.These people all had their trophy homes in Pismo,they all said centraloast real estate will never go down,while i rent one of their ocean view home for 2k a month.The amount of money i have saved while being a happy renter is incredible.NO property taxes,2 kids in a wonderful public school,and a further diminshing real estate market….Pismo Beach home for 00k ???????????
Okay I give up, I guess I’m not dressed right for this club.
So THAT one gets through. I guess I need to pray more to Goid the Capricious Posting Deity.