Bits Bucket For March 4, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Bank of America Charges May Surge as Mortgages Marked to Market.
March 4 (Bloomberg) — Patricia Greenberg’s townhouse in Irvine, California, was losing about $10,000 a month in value when she received a letter in February 2008 that looked too good to be true: An investor was offering to cut her $472,000 mortgage by 26 percent and her monthly payment by a third.
“I didn’t want to get involved in a scam,” says Greenberg, a cosmetics saleswoman for Orlane Inc., who had bought the house with no money down eight months earlier.
It was no ruse. New York hedge fund manager Ralph DellaCamera Jr., says he’d purchased the mortgage for 60 cents on the dollar and forced the originator, MLSG Home Loans of Reno, Nevada, to eat the loss. Protecting his investment, DellaCamera lowered Greenberg’s debt to keep her in the home. She now pays $2,400 a month instead of $3,800 and plows some of her savings into upgrading the Cape Cod-style residence.
One in five borrowers in the $10.5 trillion U.S. mortgage market owes more than their property is worth, according to First American CoreLogic Inc., a real estate data company based in Santa Ana, California. Ten percent or fewer have benefited from the principal reductions that Ron D’Vari, former head of structured finance at New York-based investment adviser BlackRock Inc., says would help solve the mortgage crisis.
“You have to take the poison out of the water at the source,” says D’Vari, 50, who is now chief executive officer of his own firm, New York-based NewOak Capital LLC, which advises mortgage investors. “You have to go to the borrower, and you need to create liquidity at the borrower level.”
So far, recovery plans by the federal government and private lenders have avoided writing down mortgage loans to market values in the worst slump since the Great Depression.
All kinds of goodness in this article!
A cosmetics saleswomen in a 472K house? What kind of “cosmetics” is she selling? I’d LOVE to hear what her income was to purchase this home, just LOVE it. She would need to have an income of ~150K/yr to support the home, she probably makes 50K.
The house was losing 10K a month in value. She gets a writedown. What does she think is going to happen next month? Go up 10K in value? LOL. What is going to happen is that she is going to realize that she is once again underwater and still can’t afford the MTG.
Orlane
B21 Beautiful Bust Care 50ml/1.7oz
A treatment dedicated to the beauty & youthfulness of bust
Sweet Almond biopolymer lifts bust & tones skin
Flower seaweed firms skin & restores density
Line reducing & restorative plant proteins smooth contours
Bust appears firm, toned with redefined contours
Skin is smoother & younger looking
To use: Apply morning & night over the bust in light, upward movements
rec. retail: US$ 105.00
our price: US$ 84.00 (save 20%)
Ah I think I’ve found my dream retirement job - selling Orlane boob cream. I could visit lonely housewives at their homes and demonstrate how to apply Orlane boob cream.
I think a college student might be more up to the challenges of the job than a retired guy.
I don’t know about that….I’m a dashing 56 years old. Think Ricardo Montalban or Omar Sharif. After getting the housewife properly stimulated, I could ravish her. Afterwards, I could tell her “see Madam, if you use my cosmetics no man can resist your charms!”
Man this could make a great soap-opera plot.
You can demonstrate the “penile enchancement” cream at the same time.
DIRECTIONS:
-Apply to Johnson
-Rub vigorously, in a lengthwise direction
-Results usually take a minute or two.
Your results may vary.
zilker- Just think of it as a reason to retire young…
Johnson?
“Ah I think I’ve found my dream retirement job - selling Orlane boob cream. I could visit lonely housewives at their homes and demonstrate how to apply Orlane boob cream.”
Keep in mind that you can’t cull any of them; you will have to demonstrate to all.
You cubicle farm types gotta get with the program….
Try some Utter Balm. Is mighty cheap at a few bucks a tin and you can use it on all cows…. even hogs.
Johnson = Generic nickname for male sexual equipment.
See also: Junk, Tool, Willie, Mr. Happy, Big Jim and the Twins, ……….
Jim A -
DennisN said below (in a post about life insurance) that he had retired young…
X-GS –
Sorry. Obscure Big Lebowski reference. Just being fatuous…
Maude Lebowski: Does the female form make you uncomfortable, Mr. Lebowski?
The Dude: Uh, is that what this is a picture of?
Maude Lebowski: In a sense, yes. My art has been commended as being strongly vaginal which bothers some men. The word itself makes some men uncomfortable. Vagina.
The Dude: Oh yeah?
Maude Lebowski: Yes, they don’t like hearing it and find it difficult to say whereas without batting an eye a man will refer to his dick or his rod or his Johnson.
The Dude: Johnson?
People, stop it. I’m trying to make cold calls and you’re making me laugh too hard.
‘Man this could make a great soap-opera plot.’…
Well, Dennis, I know I, for one, can’t wait to hear allllll about it.
MrB
Sorry……I’m probably the only guy in the USA that hasn’t seen “The Big Lebowski”
(I worked second shift most of the 90s……I can tell you about any kiddie/matinee movie released in the 90s, however)
..
RE: The Boob Cream Lady -
I’ll bet that $108.00 jars of boob cream are selling like hotcakes just about now.
I doubt this snakeoil / wrinkle-cream saleslady will bring home more than a couple of hundred bucks a month during this downturn.
Maybe she can open a candle shop or something to go along with the boob cream business ?
..
Ye Olde Pirate Scrapbooking Candle Shoppe
I’ve said it before, and I say it again. Polly; you’re a freakin’ genious.
“Utter Balm”
Bag Balm, farm boy. I think it’s just Carmex in a big green can or maybe Carmex is just Bag Balm in a little white glass?
Probably over extended but you might be surprised what commissioned retail people make in good economy. Supposedly the top shoe people here in DC make like $100K to $150K at places like Nordstroms and Saks. Cosmetics are equally pricey.
Ah, Capitalism at work. I love it.
It a win-win-win. The homebuyer wins because she gets her monthly payment reduced along with the amount she owes on her mortgage. The hedge fund manager wins because he gets to scoop up assets at greatly reduced prices. The taxpayer wins because the homebuyer keeps up with the payments instead of walking (I am assuming here that the taxpayer won’t make up for the banks’ loss due to taking the hit when it sold to the hedge fund).
(I am assuming here that the taxpayer won’t make up for the banks’ loss due to taking the hit when it sold to the hedge fund).
If your assumption is right, this is indeed a private market solution and makes a lot of sense.
Well, I assumed combo was being sarcastic, palmy.
Or, just taking that off the table to make his point tidier.
__
Millions of words have been written in an attempt to do something with this huge mountain of crap-sh*t.
Let’s pretend it doesnt exist = market to model/fantasy.
Let’s warehouse it = bad bank.
Let’s hope it goes away = investors will buy it.
Let’s turn turn it into gold = imaginary future income stream.
(The last one is alchemy: the crap-sh*t will magically turn into gold = the crap-sh*t has value = imaginary future income stream that the fertilizer will generate = crap-sh*t turned to gold.)
Policymakers have not even begun to properly address this crisis. The real problem is nobody trusts the paper our financial institutions produce anymore. They don’t trust our ratings, investment banks, or even GSEs. They will not buy our paper unless it has some kind of government guarantee.
Our financial system is in shambles. Yet, day after day, policymakers are attempting to prop it up when they should be tearing it down and starting over from fresh. Someone needs to step up and say they are going to clean this mess up before our banks will ever be trusted again.
This lady’s case demonstrates why there is so much mistrust. These are the types of AAA loans WS packaged and sold to the rest of the world. This is the reason some of these guys need to fail. They’ve destroyed their brands.
I’ve seen investors try this on a far smaller scale, and when it all comes together, it’s really a work of art.
She owes no taxes on this largess of the private hedge fund manager? Did the IRS change the regulations on this?
Does this allow one to get around the IRS limit on gifts? Can my father loan me $100k and then “forgive” the loan and I owe no taxes?
The giver of the gift is the one whow owes the gift tax. And only if the gift is larger than the yearly exemption and the giver has already used up his lifetime unified credit.
I am not completely sure, but I believe there aren’t any gift taxes on Corporations, LLC’s or whatever entity he used, hence they pay nada. I also believe it is deemed “income” to people like her under the IRC and she should be getting a 1099/98 or some other form.
I was responding to the question about his father. Though, of course, even that is conditional on the debt forgiveness actually being a gift and not compensation for services.
However, it would be interesting to research whether the tax code change that eliminated certain items of debt forgiveness from income required a corresponding decrease in the basis of the asset that was financed with the debt that was forgiven. Anyone want to look it up? Reuven is particularly interested in this tax code provision.
Polly- Gotcha, I understand now. I was wondering the same thing about if this fits within that regulation. I haven’t wrestled with the CFR’s since law school so I can’t be of much help figuring out this issue.
Skip - your Dad could give you $100k and forgive $13k a year until it was completely forgiven without using any of his lifetime unified credit amount. If his estate if less than a couple million you could do it in one year just by filing, no tax actually due, no harm to him and your done…. If your Mom is still with us and they are still married they could do $26,000 a year tax free…. Just thinking out loud.
After Enron, where a lot of income was paid out in “forgiven loans” they regulated a lot of corporate loan-giving. You probably can’t legally get away with it any more (unless you’re a Obama appointee)
“She now pays $2,400 a month instead of $3,800 and plows some of her savings into upgrading the Cape Cod-style residence.”
Good grief.
Even when they’re given an enormous financial break, many people don’t know what the hell to do with it.
Kind of like winning the lotto. People win 10M dollars and blow it in 2 years. They simply have no idea what to do with the money and wind up spending it all on things that have little/no intrinsic value.
Same concept here, this homeowner won the lotto, and is going to blow it, and then try to win the lotto again. The problem is, we are all paying for her scratch off tickets.
The problem is, we are all paying for her scratch off tickets.
We’re not paying a dime for this particular work-out. Like Combo said, it’s a win-win-win… in fact, taxpayers are better off because she is still paying her taxes and doesn’t require a “government-sponsored” bailout or writedown.
At first glance, I was annoyed. This woman speculated, bought more house than she could afford with no-money-down. My family makes over $150K and we don’t feel comfortable taking on a $472K mortgage. Of course, I like to have money left over for savings, retirement, college for the kids, etc.
But then I thought, how is this speculation any different than trading stocks, bonds, gold, or any other asset? It’s not. She took a risk with other people’s money and it paid off for her. I chose not to speculate in an over-leveraged asset like SFH’s and so no reward for me beyond still being solvent. Another benefit here is that her cost basis is now lower, so she can sell at a lower price if she needs to. This will eventually help my family get into a nice house at a price we should be able to reasonably afford. Lower cost-basis should add some liquidity to the market. My $.02…
I don’t quite follow why her cost-basis would be reduced. Reducing the mortgage balance does not reduce her basis, which is whatever price she paid for the property.
Reducing the mortgage balance does not reduce her basis
Let me rephrase:
Her mortgage balance has been cut from $472K to 349K.
Prior to the workouts, the options for her selling were sell for what she owes (her cost basis), do a short sale for less than her mortgage and hope the bank approves it, or walk away and let the bank foreclosure.
With the workout, the bank has already taken a hit by selling the underlying security for .60/dollar. The owner of the security has reduced the mortgage balance to reflect his lower basis and keep her in the house. She can now sell for $349K without taking a real loss, hence my reference to her lowered cost basis… hopefully this makes more sense.
All this is predicated on the idea that liquidity in the market will return when prices are more affordable for buyers and sellers can lower their prices, essentially “mark to market” for homeowners, without bank approval or the onerous process of foreclosure even though they may be upside down.
That makes more sense. The term “basis” has a very specific meaning in terms of tax, though—I’d avoid that word. It sounds like you’re actually just referring to her break-even point.
Speaking of tax basis, it does seem like she should be hit with a taxable event on the debt write-down, and later, when she sells the property that she is still far underwater on, she will get a corresponding tax benefit from the taxable loss, since her basis would actually still be her original purchase price.
But then I thought, how is this speculation any different than trading stocks, bonds, gold, or any other asset? It’s not. She took a risk with other people’s money and it paid off for her.
Ah, but most people don’t buy stocks on margin. Most people I know pay cash for stocks.
Imagine if everyone bought stocks on margin, a few percent down. The DOW plummets. What would happen to the brokerages who extended the credit for those purchases on margin? Wouldn’t they pull a margin-call when prices dropped?
Sorry, I was referring to the cost basis from a pure profit/loss standpoint, not from a tax standpoint.
IIRC, didn’t Bush sign legislation that forgave taxes owed on forgiven mortgage debt?
Why is it that Countrywide and Indymac and others were able to sell these bad loans to the taxpayers via Fannie and Freddie, and this particular bank was not? Other than the “conforming” issue, what is it that determines which lender gets to flog a loan onto the taxpayers and which doesn’t?
Sounds good, but what does this have to do with BofA as noted in the title?
If everything is on the up and up, then finally we are seeing the so-called “free market” start to take care of itself.
I would be very interested in the mechanics of how he talks the mortgage holder into the cram down.
I can speculate all day, but for the mortgage holder to take a 40% haircut is interesting.
Ditto, ditto, ditto.
Thanks for pointing that out. I gave it just a quick read and thought that she had plowed the extra money into savings. I thought, “At least she learned something.” and moved on. Apparently, she has learned nothing.
MrBubble
Oh goody, a story about life behind the Orange Curtain…”The O.C.”!
“I didn’t want to get involved in a scam,” says Greenberg, a cosmetics saleswoman for Orlane Inc., who had bought the house with no money down eight months earlier.
Would it be a waste of time giving this person an I.Q. assessment?
I dunno, I think that’s a pretty healthy initial response. When someone shows up at your door offering to help you, it is totally reasonble to check for your wallet right away.
“…it is totally reasonable to check for your wallet right away.”
O.K., how much was in her wallet when she purchased the house?
Maybe the Olde Euro, She Ain’t What She Used To Be?
From the U.K. Telegraph:
Europe sees trouble rising in the East.
Economic crisis has brought tensions between the ‘old’ and ‘new’ EU to boiling point, say Adrian Michaels and Bruno Waterfield
So much for a compelling display of European unity. A disastrous summit in Brussels at the weekend laid bare what everyone already knew: the global economic crisis is threatening to tear apart both the continent’s single market and the peaceful transition to a prosperous European era after the dissolution of the USSR.
Mirek Topolanek, prime minister of the Czech Republic, one of the first former Eastern Bloc countries to hold the European Union’s rotating presidency, warned of “the greatest crisis in the history of European integration”. Ferenc Gyurcsany, his Hungarian counterpart, spoke of fears that the economic meltdown would lead to the abandonment of poor by rich, of East by West. “We do not want any new dividing lines. We do not want a Europe divided along a North-South or an East-West line … We should not allow a new Iron Curtain to be set up.”
But disputes between East and West were very much in evidence. Germany scoffed at Hungary’s call for a mass bail-out of economies near the brink in eastern Europe. The French, who recently handed the EU presidency to the Czechs, continued to act like disruptive back-seat drivers. Nicolas Sarkozy openly suggested the Czechs were not up to the task of running the EU.
On Sunday, following a tense lunch hosted by the Czechs, he even claimed that the whole idea of an emergency summit had come from him and from Angela Merkel, the German Chancellor.
I wish someone would explain to me why when Eastern Europe abandoned communism , we Westerners throw them to the wolves when their new system starts to dysfunction through factors largely beyond their countrol?
and yet…
Our omniscient free market capitalists throw billions of dollars at China (which has not abandoned Communism), and now they practically own our currency, flagrantly violate copyright laws, and will always be at risk for nationalizing their assets?
Is this the “wisdom” of the free market?
NSO - I think it’s more likely a result of the Eastern Europeans not producing higher-quality stuff and increasingly better prices, as the Chinese have done.
In Eastern Europe productivity was awful during the USSR. A W. German friend of mine was elated when he was going to be able to see his E. German brother regularly. But the latter turned out to be a slug, never having learned how to work hard, persist and not hold his hand out for whatever the government would give him. Many yearas after 1989 this still had not changed and it soured their relationship. The W. Germans have plenty of their own brand of socialism, but most of them seem to have developed a thriving business in barter and underground-trade - they work in jobs to earn enough for their cash-only needs and barter for most everything else.
The Chinese never had such easy living. The peasants in the factories probably worked much harder, for much less, on the farms or communes.
I think that trade with China, and the lack of much trade with E. Europe, is a logical outcome of this. The don’t-trade-with communists stuff is political thinking, not market thinking, IMHO.
REAL ESTATE LA. TIMES
As projects grind to a halt, home sites turn to wasteland
They rip out copper wire, haul away pipes and take anything else they can steal from dozens of buildings on the site, abandoned after Irvine developer SunCal Cos. fell victim to the economy.
It’s a scene not uncommon throughout California, as residential construction grinds to a halt under the dual weight of the credit crunch and the housing crisis: a rusty chain the only barrier between the community and a half-built structure in Hollywood; a bare dirt lot in Pasadena; old stoves amid the trash at the site in Oakland.
“I hear hacking and see scary bonfires in the middle of the night,” said Don Johnson, a retired Coast Guard employee who lives near the defunct Oak Knoll Naval Medical Center in Oakland.
Nearly 250 residential developments with a combined total of 9,389 houses and condominiums have been halted in California, according to research firm Hanley Wood Market Intelligence. The units, worth close to $3.5 billion, were in various stages of development.
Now, many are in bankruptcy or have been foreclosed by lenders. Developers have halted sales on an additional 370 new-home developments — about 30,000 units worth $11.9 billion.
“It’s a sad state of affairs,” said Greg Doyle, regional director of Hanley Wood.
LandSource Communities Development, the parent company of the developer building the 21,000-home Newhall Ranch community near Santa Clarita, filed for Chapter 11 in June.
Hmm copper pipe bomb mounted in the wall of one of the houses would expose a thief. Wonder if the thieves are illegals?
Somehow, visions of the old B-film classic “Night of The Living Dead” come to mind.
Except, in this case, methamphetamine is probably involved; and the same toothless tweakers / illegals who built these houses are coming back to harvest the precious parts once the house “dies”…
Sorta like the story running about how the old Countrywide executives are now setting up vulture funds to buy up all the bad mortages they sold to FB’s for pennies on the dollar…
Everybody that had anything to do with the Housing Ponzi Scheme seems to be riding this thing all the way back down for additional profits.
Sickening, really.
..
I watched this happen as a kid, way back in the day. We would often visit my grandparents, who at the time were living in northwest Arizona.
Some odd fella was building a really nice, really really big 2 story house out on some land 10 miles north of Kingman, AZ (coincidentally, the only other house anywhere near my grandparents, they had a small place on 15 acres out there). Anyway, I watched it go up over a summer, beautiful custom woodwork, huge double oak door entryway, all the fitments of a small mansion. Somehow, just a bit before completion, the work stopped. Still not really sure what happened to have him abandon the work, maybe he passed away, maybe he lost his small fortune and fled, no idea….
Months passed, but slowly you watched as the human locusts descended. The beautiful doors walked away, and then some of the interior fixtures, the appliances, the pipes, the huge windows, the ceramic shingles. A year later there was a rubble pile, people had even taken the wood.
Now imagine that happening across the country, to whole subdivisions. Scary!
“Faced with a plunging stock market, weak consumer confidence, growing job losses, challenging credit markets and a hobbled economy, we continue to focus on maintaining a strong balance sheet and significant liquidity,” Robert I. Toll, chairman and chief executive, said in a statement. “With this capital, we hope to take advantage of opportunities we believe will arise from the current downturn.”
Opportunities?? How about “Starting from the low 50’s” on a billboard - that ought to do it. Actually KB homes has been building section 8 townhomes that look like shoeboxes with windows here in New Smyrna Beach FL.
“Starting from the low 50’s”
Their cost is probably down to the low $40s psqf under roof.
Therefore, starting in the low 90s including lot is not far fetch.
(There were builders doing from the 110s on your lot last year.)
I’ve been dismissed on this point before, but I built my own house in Fl acting as owner-builder. My house was higher-end finish and I came in $57 under roof. Friend came in at $48. This was in 07-08.
I sold my house 6 months later and broke even (same house a year earlier would have gone for $100K higher in a week)
In FL from construction loan fees to clearing and land fill to permitting, impact fees to finishing your house with appliances inside and getting a certificate of occupancy, comes in at -$50 under roof.
I defended this a while ago, today, I will not, let everyone believe what they may.
Recovery is a 5 step program.
I believe we’re in the “bargaining” phase. Still waiting on acceptance…
Muir - I believe you.
My house-hunting involves a maximum price to offer of $100/sf for a well-built house, brand-new or almost new, with 3 or 4-sides brick and a full unfinished basement, good wood molding and floors and other nice trim, on a developed lot with a decent view to the rear(no neighbor or road). This is in Georgia. It is beginning to happen, even though those folks claim they never were part of the bubble (groan).
Muir, you could get entrepreneurial with this story. There is a market for how-to books on doing exactly what you did. Wouldn’t be a backbreaker to do the opus: Put together an outline. An introduction with a good problem statement and the constraints. For example, the big picture - what has to be done first, second, third. Some folksy anecdotes on the general theme of “the best laid plans”. A chapter listing, with three paragraph summaries about what you intend to accomplish with the chapter, and list of intended pictures/illustrations. A conclusion, with before (empty land) and after (house) photos.
Shop the outline and the first chapter around, prominently labelled with copyright restrictions.
Under the six degrees of separation theory, there is somebody on HBB who knows somebody who knows a literary agent. This step is optional.
Once you set the wheels into motion, set yourself a target of one page a day. One page a day is doable. It will not burden you to a horrible extent. One page a day seems very little, except that the less onerous this kind of thing is, the more you leverage the 98% of your brain cells that are always at work sub rosa. Stretching it out gives your subconscious mind time to fine tune and refine your message without your awareness.
In a year to 18 months (allows for interim weeks of revisions, re ordering, looking for photos or doing illustrations), you will have a 400 page illustrated book.
Suitable for web publishing, self publishing (a la Tufte series model - seriously, he started out on a shoestring but had something compelling to say, upon which he has waxed glorious for thirty years) or the long shot, being picked up by some kind of mainstream publisher. I don’t know if they are a book publisher, but Taunton Press puts out Fine Homebuilding mag (among other craft publications), and has a targeted market.
You have something to say. You’ve mentioned it a couple of times on the blog. I, for one, have a keen interest in authentic stories, whether they be about war, history, animal husbandry, Renaissance anything, the electromagnetic spectrum, or the periodic table. There are millions of people like me, and there will be more now that thinking people are shutting off cable and mainstream folks are getting throttled.
I want to buy your book. In fact, I yearn to buy it, and will pay a premium if you sell me an autographed edition.
I wish I had something as compelling to report!
OTOH, my ex-husbands always did note my talent for finding things for them to do and advising them on the optimal ways to do them. So I totally understand the annoyance quotient of this kind of post, and apologize in advance.
Just saying, your hard earned knowledge is greatly appreciated and deserves an audience.
“…With this capital, we hope to take advantage of opportunities we believe will arise from the current downturn.” Robert I. Toll, chairman and chief executive, said in a statement
I think he’s been at this occupation for too long, he doesn’t seem to be able to simply say:
“I guess we’ll just have to build smaller more affordable homes.”
Will never happen (saying or doing it). Not from Toll.
Robert I. Toll, chairman and chief executive, said in a statement. “With this capital, we hope to take advantage of opportunities we believe will arise from the current downturn.”
Yep. More yapping and yammering from none other than Bob HOLE. If you all recall, he’s the same puke who said houses will cost millions and everyone will live with mom and dad until they’re in their 40’s.
Just a note and bears repeating. Hole Brothers have a large equity stake in the Philadelphia Inquirerer.
NEW YORK (Reuters) - Applications for loans to buy U.S. homes and to refinance existing mortgages fell for the second straight week, the Mortgage Bankers Association said on Wednesday, as consumers awaited for specific details on President Barack Obama’s housing stimulus plan.
The $275 billion program announced two weeks ago aims to reduce mortgage rates and stem the record tide of foreclosures that has dragged home prices down nearly 27 percent from their mid-2006 peak.
The Mortgage Bankers Association’s seasonally adjusted mortgage applications index, made up of both purchase and refinance loans, fell 12.6 percent to 649.7 last week.
That was about half the level posted early this year, when average 30-year mortgage rates fell as low as 4.89 percent, according to the trade group. Mortgage rates rose to 5.14 percent last week from 5.07 percent the prior week.
Potential buyers and refinancers have pulled back in the hopes that Obama’s Homeowner Affordability and Stability Plan will cut borrowing costs and steady house prices.
“The housing stimulus package was announced but without sufficient detail to cause the market to have comfort that it would work, and (a sense about) when it would work,” Michael Feder, chief executive at real estate data and analytics company Radar Logic, told Reuters on Tuesday.
‘Potential buyers and refinancers have pulled back in the hopes that Obama’s Homeowner Affordability and Stability Plan will cut borrowing costs and steady house prices.”
Normally Reuters is pretty fair in reporting, but this is a line of BS. First, how can they speak for ‘potential buyers’? There are a lot of things going on right now, and IMO prices dropping like a rock might have a little to do with it.
“Homeowner Affordability and Stability Plan will cut borrowing costs and steady house prices.”
I guess my brain is not wired to understand how anyone thinks any program the government comes up with will “steady house prices” and bring in a flood of buying activity.
I have known all along they would try and repeal the laws of gravity, but it just can’t be done.
Especially with all the demand stolen from the future during the bubble. There’s simply not anywhere near enough people ready to buy to absorb all the inventory. In fact, many of the people who bought during the boom will go back to renting, pushing down the rates of homeownership.
There’s simply no way (without going back to the NINJA days) to find enough qualified buyers, they are simply not out there.
“There’s simply no way (without going back to the NINJA days) to find enough qualified buyers, they are simply not out there”.
Correct, but I’m not hearing that fact in the MSM or from the D.C. gang!
“Especially with all the demand stolen from the future during the bubble.”
This applies to cars too, IMHO. Which is why I disagree with whoever said in an article yesterday that the current rate of car sales is “unsustainable.”
Even if you went back to the NINJA days, there aren’t any buyers out there. They ran out of buyers while NINJA was still operating. If there were still NINJA buyers out there, the market would still be bubbling.
I think car volume will come back quickly. The change will be in what cars are sold. The $30K millionaire driving the leased $299 a month BMW 325 will still buy a car when that lease is up.
But it will be a Civic next time around.
This applies to cars too, IMHO.
It applies to ALL credit transactions which are everything in this credit-driven asset economy.
That this simple point is not grasped by people like Krugman is just shocking!
90% of the transactions using HELOC’s are gone for many years. In a state like Florida and California, that was probably 25% of all the cars sold in 2004-2006. Add to this the substantial decrease in credit ratings as people can’t pay their mortgages and credit cards. Finally, those 2004-2007 cars are much better and longer lasting than ever. I think the car sales volumes of those years will never be repeated.
“90% of the transactions using HELOC’s are gone for many years. In a state like Florida and California, that was probably 25% of all the cars sold in 2004-2006. Add to this the substantial decrease in credit ratings as people can’t pay their mortgages and credit cards. Finally, those 2004-2007 cars are much better and longer lasting than ever. I think the car sales volumes of those years will never be repeated.”
Suspect 90% of the transactions using stock market returns are also gone for many years.
SFC — “In 2006, about 24 percent of homeowners used a home equity line of credit to buy a car or truck, according to Synergistics Research Corp., a financial services consumer market research company based in Atlanta.” Looks like nation-wide, so CA and FL might even be worse.
Manny — although I agree that 325 “owners” will have to downgrade, I don’t think that they’ll be in a position to buy a new car and we have to go used and try to keep it going. Car sales are not coming back anytime soon. I have already gotten a few fellow wing-nuts to ditch their cars altogether (all together?).
MrBubble
“This applies to cars too, IMHO.
It applies to ALL credit transactions which are everything in this credit-driven asset economy.
That this simple point is not grasped by people like Krugman is just shocking!”
Exactly.
Doesn’t seem to register with corporations that are constantly driving down wages in a consumer driven economy either.
If I’ve never had a car to ditch, can I still be a fellow wing-nut?
It’s a self-selecting club. If you’re crazy enough to join the wing-nuts, you’re in!
This is my first rainy season with no car and ‘m getting sick of the rain…
Good for you. I’m sure the 1 or 2 UAW workers who lost their jobs are very proud of you as well. I thought you guys were all about helping union workers. Guess not.
As a potential buyer, I can say we are not waiting for Obama’s plan to “steady house prices”.
We’re waiting for them to drop.
“It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets,” Treasury Secretary Timothy Geithner said in a statement.
Yes, yes of course… We must lower housing prices to make them more affordable at the same time that we stop the decline in those same housing prices to arrest the daming spiral. Yes, yes of course…
Somebody please get me a beer.
Sorry, “damaging spiral”. Now, about that beer…
I noticed that one, too. It seems to me that dropping prices is the best way to lower “borrowing costs”, but you know some of here are funny like that in our thinking.
If they lower the prices then bankers make no money and can’t support the new government.
Steadying house prices is not meant to reassure buyers, it’s meant to reassure the stock market. If buyers are dumb enough to bite that particular piece of bait, then even better…
“It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets,” Treasury Secretary Timothy Geithner said in a statement.
Uh, aren’t those two goals at odds with each other? Or at least, you can’t have B (stop the spiral) until A (affordable housing) occurs.
Low prices and high interest rates do not a wage slave make.
I mean seriously, can’t America read between the lines?
By “damaging spiral,” maybe he means… no 6 percentages.
Heres some detail on Yahoo:
“The administration, launching what it calls the “Making Home Affordable” initiative, said that borrowers will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the $75 billion loan modification program, which runs through 2012.
Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Mortgages for single-family properties that are worth more than $729,750 are excluded.”
If the original mortage initiation (or most recent re-fi) is within the last two years, will they check the mortgage application against the tax returns to see if it was a liar loan?
I seriously doubt it. Given the state of the mortgage industry, most of that paperwork is who-knows-where. There was a very interesting story this week on local Salt Lake news about mortgage paperwork being improperly disposed of when a mortgage office closed down. Bags and bags of old applications turning up unshredded in various dumping sites, with incredible opportunity for identity theft.
A little look into the wage and job situation in China:
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/03/china_all_about_jobs.html
A lot of these stories sound alike, falling wages, too few jobs. In such a large country it’s tough to really grasp the real picture, so more time is needed. Also unhelpful is a government that is in complete control of the data - and western nations that seem all too willing to trust that data.
“… and western nations that seem all too willing to trust that data.”
Ain’t that the truth.
I never understood the fascination with the emerging markets and BRIC.
Maybe the B, certainly not the RIC.
Somehow the Smartest In The Room became convinced the smartest thing they could do was to commit hundreds of billions of dollars to building infrastructure in a Communist country located on the other side of the planet.
Time will tell if this decision will end well. I suspect it won’t.
Without any property rights… Just 99 year leases.
Tapping cheap pool of labor, lax or no environmental laws, and profit. of course we know how that as worked out, lead paint etc.
What i dont get is why said Bric countries are taking our IOU’s money. I kept wondering when countries like china and japan are going to spend their dollars on america goods and services
Well, when all of your competitors are moving to China and undercutting your prices, you don’t have much of a choice.
When Wall Street is telling you to move your factories to China or risk your stock prices, you don’t have much of a choice.
The free market at work.
“Democrats reach deal on mortgage relief bill . . .The deal would require judges to consider whether homeowners were offered a “qualified” loan workout — defined as one that would set monthly payments equal to about one-third of a homeowner’s income. . . . Bankruptcy judges would have to deny a judicial mortgage adjustment in cases where the homeowner is deemed able to afford the loan. . . It would encourage lenders to make modifications and there would be consequences if they don’t do it.”
This is one of the most offensive pieces of legislation I have ever seen. Rewarding bad homebuyers that were the most egregious gamblers and punishing banks that don’t comply is totally insane. I despise what America is turning into. I only hope it causes banks to severely tighten their landing standards to a point much stricter than prebubble. It amazes me they refuse to consider the other alternative, which would to be to make the foreclosure process faster and easier, and let the prudent on the sidelines come in and establish new market prices which ppl can afford to pay. The sooner this is done the sooner this mess is behind us. This would also punish the bad apples and reward those that deserve to be rewarded.
“This is one of the most offensive pieces of legislation I have ever seen. Rewarding bad homebuyers that were the most egregious gamblers and punishing banks that don’t comply is totally insane. I despise what America is turning into”.
I agree, but think that no matter what they roll out, it won’t ‘fix’ anything. How can this legislation do anything but have an adverse effect on RE?
In my mind it would hammer real estate down farther but at a slower rate. They are creating more and more uncertainty in the market place, as anyone knows the bills have a way of morphing into different creatures.
“I agree, but think that no matter what they roll out, it won’t ‘fix’ anything. How can this legislation do anything but have an adverse effect on RE?”
Yes but Obama can stand there looking all presidential like and tell the masses that he is DOING SOMETHING. Remember, it doesn’t matter what the final results are, only the good intentions.
I think that what this will acomplish is to send interest rates for mortgages to Credit Card levels, and have the banks break out the microscopes and check everything and everyone, and it will take the smallest blemish in the history to deny any credit to those who are looking to buy a house. It is the law of unintended consequences.
I think that this will work out in favor of those who save money in the long run, as they will be the only ones able to buy the house without financing it.
If there is no finacing, things will drop dramatically in price. Cars, Houses, even labor.
Banks won’t worry about checking that closely if they’re passing all the risk along to Freddie/Fannie. But it will ensure that the non-GSE segment tightens enough to stay dead.
Right but you’re wrongly assuming the future will hold a capitalist system where banks make decisions as to lending practices. In reality we will have a quasi nationalization of banks where Obama and Co. make those decisions. See the - Obama owned - Citi program to give unemployed deadbeats 3 months of free mortgages as a sign of things to come.
Manny - not knowing the details, I am thinking these payments will be a neg-am situation, where the FB just has the earned-but-unpaid interested added to principal. For the amount of time involved, it would not seem like that bad a deal to the FB. Oh, and the fees will be added, too. Can’t forget the fees.
I just want to point out that currently Bankruptcy Judges can force cram downs on second home mortgages, but not primary residences.
This would help those that actually bought a home to live in, instead of as an “investment”.
But don’t let the facts get in the way of a good rant.
This would help those that actually bought a home to live in, instead of as an “investment”.
Wouldn’t those people already have an “affordable” mortgage? The only justifiable reason to leverage yourself further than what would be considered reasonable for simple living expenses is if you are anticipating a net gain from the whole transaction.
If I was a lender, then I will rethink new loan requirements. Charge a higher interest rate, higher fees, and a HUGE down payment.
The Government right now is helping the few who is in debt up to their knees that shouldn’t have a mortgage in the first place and is pushing away the people that actually have money and spend for all the right reasons.
And what about the 92% of the “responsible” mortgage debtors out there. WOW. I would be livid right now. You would have to think they might reconsider and defualt on the loans purposely to get some of that helping hand from the Gov.
This is going to get Ugly.
“You would have to think they might reconsider and defualt on the loans purposely to get some of that helping hand from the Gov.”
Thats exactly what I predict will happen. Why wouldent they?
My sister is considering it. Bought a house at the peak of the market 2005. It’s worth maybe half now. Lost her job with Wachovia Securities over the summer just as she found out she has breast cancer.
Spent the last 8 months undergoing chemo, raising a 2 year old while her husband is away all the time being a co-pilot at $45K/year.
They’ve been going without food to make the PITI. Said she’s called the bank to see what they can do, and the bank says walk away. I told her to walk away. She has integrity, though. I told her no one else in this arrangement does, why should she?
Damn. Now that’s reality there, people. It ain’t all FBs.
I sincerely wish her the best of luck to her Jon.
Sorry to hear about your sister, Jon.
Try to convince her that it is not a matter of “integrity”. It’s simply a business decision; it is in her best business interest to return the collateral to the bank.
The bank wrote the note based on the collateral, assuming it would give them sufficient cover to limit their risk. They were wrong in that.
There’s no lack of integrity in handing them their “surety”.
Jon, thats some harsh reality and I’m sorry to hear that about your sister. I would seriously tell her to quit making the payments and live there until the sheriff shows up to lock them out. Depending on where she lives, it might be a year or more before that happens. I still have yet to see that happen to my neighbors and they quit making the payments on their house over a year ago.
Jon, my most energetic good thoughts go to your sister. It sounds like she is a fighter all around, and will do her best to overcome any obstacle. This underwater house situation is not a “hurdle” worth her energies. The idea of “debt = hurdle to be overcome” is a fallacious construct.
Sounds like she has been fighting so long and so hard that she has gotten into the habit.
If you can, it would greatly help her, if you could lead her to a shift in perspective. There are some obstacles worth fighting. There are some that are mere words on paper, that are used as weapons by a debased system to preserve their equities. Remember the old nursery rhyme. She needs to focus on the “sticks and stones”. Words should not be permitted to harm her.
Again, my best to her.
Jon, if you read this please know it’s made me cry with frustration for your sister’s (and your,) awful situation. Perhaps her home represents the only hold on power she has left, and her reluctance to do the reasonable thing and leave it would be like giving up to her? Eight months of chemo AND a toddler? THAT takes inner strength I cannot even imagine. Please let her know that folks on this blog are sending their support to her? You’re a good bro, honey. Here’s a big old cyber hug for you, too.
“If I was a lender, then I will rethink new loan requirements. Charge a higher interest rate, higher fees, and a HUGE down payment.”
You mean require 20% down in the absence of mortgage insurance, and charge 6.0% for a 30-year loan?
Who knows what they might do next? They might even require proof of income.
Nah, that’s crazy talk.
” Rewarding bad homebuyers that were the most egregious gamblers and punishing banks that don’t comply is totally insane.”
Nice to see you back, Tim. But I’m curious…how are we punishing banks if they are getting billions in free money from taxpayers to save them from their bad business decisions?
How do you know that the homebuyers were “egregious gamblers”? Certainly some of them were…and some of them were people who lost their jobs, had illnesses/deaths, and/or were suckered by commission hungry brokers into bad deals?
You forgot the rampant fraud as well.
…by the lenders. (oops and I forgot that part)
some of them were people who lost their jobs, had illnesses/deaths
I’m not unsympathetic, but job loss, illness and death are foreseeable facts of life. Tradtional underwriting recognize that life happens so too should the buyers who apparently did not have a plan B. For the Jon whose sister got sick, hope she gets a complete and speed recovery, but no insurance ? Medical ? Disability ?
I’ve been doing some thinking, and the end result is that I think it’s unlikely that the US stock market will ever return to anything like the glorious bull market enjoyed from ‘82 - ‘00.
Here’s why. During that time, there was a unique confluence of factors that led to lots of money flowing into the market. It didn’t really have to do with businesses being run particularly well. Rather, it had to do with the following:
*The ’80s was when the US transitioned from defined benefits pension plans to 401Ks. The 401Ks were (are) mainly composed of stocks.
*Baby Boomers, a huge demographic group,were in their late teens to mid-30s in 1982. Just the time to be working and putting money into 401Ks. Hence, into the stock market.
*Women entered the workforce in formidable numbers starting in the ’80s. The two-earner household became standard, thus providing more money to buy stuff, increasing profitability for many businesses and making other businesses viable that otherwise wouldn’t have been (many of them taking on tasks that housewives would have performed before).
*Revolving credit exploded in the ’80s, making it possible for people to spend more without earning more. Again, this increased the profitability of many businesses.
Why I think the stock market is unlikely to ever get back to that explosion of growth? Well, all these factors are played out.
*401Ks have shrunk dramatically TWICE in the past 10 years. Many people will be dubious about putting their money back into them, at least in the form of stocks. Children who have seen their parents’ retirements nearly obliterated not once but twice will be leery of putting money into the stock market.
*The oldest Baby Boomers are reaching retirement age…don’t expect any more money to flow from their shrunken bank accounts back into the market. Younger Baby Boomers either don’t have the money anymore or, if they do, will be wary of being burned yet again.
*Now that the two-earner household is standard, there’s no easy way to increase household income, short of putting young children to work…if there were any work available, which there isn’t.
*Credit (revolving, home equity, etc.) expanded as far as it could, then exploded in our faces. Don’t expect an expansion again anytime soon. We’re in a period of credit tightening that will last awhile.
Now, it’s always possible that some unforeseen event, set of circumstances, whatever could occur that will somehow make the US stock market once more become a good investment. I’m just saying that the facts as they stand now don’t make it look too promising.
Anybody else have any thoughts?
A generation from now will do this again. The beat wil go on.
Seems to be so. I remember a family trip when I was a child, and my father being very irritated that my mother’s sister and her husband had bought a color TV (so long ago, when they first came out). It was years before we had one. Many years later I learned that they owed my parents $300 that they never repaid.
There is a bad character component to people getting in hock up to their eyeballs. I don’t care how sympathetic their stories are crafted by the media or the politicians, I know that people who get deep in debt and need a bail-out are not victims. Its just awful how much they can hurt other people.
“There is a bad character component to people getting in hock up to their eyeballs.”
I agree.
It also applies to a feeling of entitlement for welfare. There are wat too many people on it undeserving, and it makes me sick.
Excellent story Plaid. Thank you.
“A generation from now will do this again. The beat wil go on.”
My acting theory is that it takes three generations to go from depression-scale bust to depression-scale bust.
The generation in diapers & grade-school now will grow up with a different level of risk-aversion, and will behave like the great-depression generation: eschewing credit and living within their means.
Their kids will not adhere as tightly to these principles, never having seen first-hand what comes of it.
And their kids will blow another massive RE & stock-market bubble in about 70yrs & enjoy the subsequent depressive-bust.
I’ve had the same thoughts. I’ve told several people it may well be 30 years before the market reaches it’s 14k peak again, and there’s a good chance it will never reach it again in inflation-adjusted terms.
Especially now that many companies have stopped the matching 401k contributions. Those may go the way of defined pension plans.
RE: I’ve had the same thoughts. I’ve told several people it may well be 30 years before the market reaches it’s 14k peak again, and there’s a good chance it will never reach it again in inflation-adjusted terms.
Right on the money, packman…
Just read it took until 1954 for the stock market to recover to inflation adjusted pre ‘29 levels.
Fortunately, I remember when 4 returnable Coke bottles for 12 cents of penny candy was a HUGE deal.
These soccer mommy coddled kids today who get an unearned $20.00 flipped to them for a nite of pizza, candy and movies, and are gonna end up mentally warped.
“Just read it took until 1954 for the stock market to recover to inflation adjusted pre ‘29 levels.”
Actually:
- It was 1959 until the DJI got back to 1929 levels, inflation-adjusted. 1954 was when it got back to non-inflation-adjusted levels.
- It dipped below again in 1973, and didn’t go back above again until 1987, but only for 3 months before crashing again, then not again until 1990.
- It then proceeded to skyrocket to 3x inflation-adjusted levels at the very end of 1999 (party time!!!)
- It’s now back down to 1.6x inflation-adjusted levels (of the 1929 peak that is - it’s still about 3x above a solid “base”, which is about 2,500 or so)
“Anybody else have any thoughts?”
A couple.
“Now that the two-earner household is standard, there’s no easy way to increase household income, short of putting young children to work.”
First thought, please do not give them ideas.
“Now, it’s always possible that some unforeseen event, set of circumstances, whatever could occur that will somehow make the US stock market once more become a good investment. I’m just saying that the facts as they stand now don’t make it look too promising.”
Second thought, at some point baring a Cuban takeover of the White House, if I were going to invest money in a stock market, it would be in the US. Where else, China? I’ll pass.
“*Now that the two-earner household is standard, there’s no easy way to increase household income, short of putting young children to work…if there were any work available, which there isn’t.”
There’s always polygamy; memo — lobby the Pope.
You’ve described the life cycle of the typical Ponzi scheme.
With layoffs, the 2 wage earner family could possibly drop back down to one for the foreseeable future.
The only difference - its not necessarily the wife who will be staying home.
No problem! I have been looking for a sugar mama…
Expect the government to increase penalties for early 401K withdrawals, increase the age, and otherwise deny people access to their 401K’s “for their own good” in order to prop up the market. Also look for legislation that forces contributions to 401K’s (I have read about several proposals to this effect).
I need to get out of the “employee” mode and back to the “owner of small business mode”. Employees and employers are about to get hammered by the government.
Which is why I went the business route in the mid-1990s. It’s been lean at times, but I’ve never regretted leaving the employee/serfdom world.
Smathis - nicely written.
You nailed it, Smathis. Complicating the issue is the fact that the boomers are now just starting to get out of their houses en mass (selling into a saturated market,) to purchase or rent smaller, less expensive retirement homes. Moreover, since many of us only had one kid, when we die off those single kids who are now married another single kid will inherit TWO paid for houses they can’t sell. You’re absolutely right the the glut is only going to get bigger and bigger as we pre-geezes move to Sunshine Villas and croak in the next twenty to thirty years. But at least our now 20-something children will have a paid for house at some point.
Five to One, Baby,
One in Five -
No One Here
Gets Out Alive…
NEW YORK (Reuters) – One in five U.S. homeowners with mortgages owe more to their lenders than their properties are worth, and the rate will increase as housing values drop in states that have so far avoided the worst of the crisis, a new study shows.
About 8.31 million properties had negative equity at the end of 2008, up 9 percent from 7.63 million at the end of September, according to the study, released Wednesday by First American CoreLogic. The percentage of “underwater” borrowers rose to 20 percent from 18 percent.
Another 2.16 million properties could go underwater if home prices fall another 5 percent, the study shows.
First American said the value of residential properties fell to $19.1 trillion at year-end from $21.5 trillion a year earlier, with half the decline in California. Forty-three U.S. states and Washington, D.C., were included in the study.
“California had 1.9 million borrowers with negative equity, more than any other state, followed by Florida’s 1.28 million. About three in 10 borrowers in both states were underwater.
“Nevada was the most stressed, with 55 percent of owners having negative equity and borrowers on average owing 97 percent of what their homes are worth. About 28 percent owe more than 125 percent of their homes’ value.”
“New York fared best, with just 4.7 percent of borrowers with negative equity and an average 48 percent loan-to-value ratio”.
As if New York taxpayers aren’t already being screwed enough, they now have to pay to bail out the warm states.
New Yorkers are going to love it and you better not complain.
There will be cold comfort to the states that came to the party late.
Very many New Yorkers are on the Mortgage papers in FL.
Yes, but for many they are their 2nd homes, which are ineligible for this bailout. They are also going to have a hard time convincing a bank they can’t make their Florida payments if they have untapped equity in their NY homes. Maybe Florida should have a new marketing slogan - “Hey New Yorkers, move to Florida fulltime, you’re paying for it anyway!” Not that I’m advising that; watching those NY and NJ car carriers heading North in April is one of my favorite things.
Those who own one of the two properties free and clear might just decide to omit mention of the property when filing for relief. It’s fraud, but some will do it because of the low chance of discovery.
More in NJ, but you’ve got the right general area.
The flip side of this is our housing is still unaffordable. When it becomes affordable, there will be more New Yorkers under water.
In general, however, there was less insanity here than elsewhere. The situation seems to be that middle class New Yorkers are forced bail out the middle class of the “sand states,” who in turn are forced to bail out the rich of New York!
“In general, however, there was less insanity here than elsewhere.”
RE doubled at a minimum in all towns in this state, circa 2001-2007.
Is that not insane to you?
Test, am I banned?
You’re not! Pass!
No banhammer for you!
Hi, Muggy. Your fiery orbit rotatin’ ya back around here for awhile?
Muggyyyyyyyyyyyyyyy,
Hope you are feeling better.
Muggy! Welcome back, so good. Pls. give my best regards to Mini-Muggy.
Gerald Celente
3-3-9
KINGSTON, NY, 2, March 2009 - “The Greatest Depression” that The Trends Research Institute forecast, well before Wall Street or Washington would acknowledge recession, is upon us.
The global financial markets are collapsing.
All the pundit’s cautious predictions and business media’s hopeful expectations at the New Year for an economic turn around and imminent market bottom were dead wrong. There will be no turn around in the second quarter of 2009 or 2010 or 2011 America and much of the world has entered “The Greatest Depression.”
The global financial system, built on endless supplies of cheap money, rampant speculation, fraud, greed, and delusion is terminally ill and will not be coaxed into remission by stimulus packages nor restored to health by government buyouts and bailouts.
Today, the MSCI World Index of stocks in 23 developed nations fell 4.9 percent to 713.75, the lowest closing level since March 2003, and its Emerging Markets Index slid 5 percent. The Dow followed, plunging 300 points, closing below 7,000 for the first time since 1997.
There is no stock market bottom in sight. The only figure that can be forecast with confidence is that the Dow won’t reach zero!
As the crisis worsens, governments will take draconian measures to prevent total economic collapse and public panic. We have cautioned the likelihood of such measures before. But the rapidity and severity of the economic unraveling now demands immediate attention.
Expect massive bank failures, runs on banks, and bank holidays. Even if deposits are FDIC insured, quick access to money is by no means assured. At minimum, have reserves on hand for emergencies.
Trendpost: When the ship is sinking there are very few options: Life boats, life rafts, life preservers and for the late to act, possibly a few pieces of floating debris to cling to.
“…Trendpost: When the ship is sinking there are very few options: Life boats, life rafts, life preservers and for the late to act, possibly a few pieces of floating debris to cling to.”
6 Billion people are going to stop consuming…hurry, buy… toilet paper, Tide detergent & edible gold.
“hurry, buy… toilet paper, Tide detergent & edible gold.”
By “edible gold,” were you referring to those little gold-foil-covered chocolate coins???
That’s a GREAT idea! I loved those as a kid. I’m going to start hoarding gold after all: stockpile _those_ in the basement!
Who knows—-it may do better than real gold coins.
Gerald Cerente has been embraced by FoxNexs, Glenn Beck, and the “we hope the US fails” crowd. Nice company.
He sure got this part right.
“The global financial system, built on endless supplies of cheap money, rampant speculation, fraud, greed, and delusion is terminally ill…”
I have some friends who are debating buying houses. I encouraged them to post here. Please give them a healthy HBB beatdown. FPSS, you’re going to have to bring you a-game for this…
**scuttles off to return to the darkness**
Love it - the great HBB recommendation.
That should calm them down.
A-game = LOL
But why? What’s the hurry? Don’t they see the prices falling steeply?
This mania is not over until most people including the HBB have no particular urge to even think about housing.
“…This mania is not over until most people including the HBB have no particular urge to even think about housing.”
“When the fish a caught…the nets are forgotten” …Lao Tzu
We have friends who are all hot-to-trot to buy a house here in SoCal.
Reason??? … wait for it … wait for it….
The Obama Housing Credit !
Gonna catch a sharp knife in CA, all for a $8k rebate check.
These are the same people that quoted the Today Show as saying, ‘recessions are a good time to take advantage of retail details’, and used it as an excuse to shop-till-they-dropped.
They said they are just sick of paying all this money in rent. I told them they should do the math on what the cost to own will be - they just stared at me, blankly.
But, but … they don’t get $8k for renting!!!!
Yeah, the whole “cost of ownership” really falls on deaf ears. Nobody seems to understand that there is a cost involved in owning a home. The NAR mind control is so deep and pervasive that people actually believe that there is no cost to home ownership. You buy and you make money. And the money you use to buy… it isn’t even yours.
Woah… had to stop myself for a second. My mind started to spin. Put THAT way, it sounded like such a good deal… the mantra “gotta buy a house, gotta buy a house” started echoing in my ears. Whew… that was a close one.
‘My mind started to spin. Put THAT way, it sounded like such a good deal… the mantra “gotta buy a house, gotta buy a house” started echoing in my ears.’
What?!
*administers a brisk virtual slap to the laffy face*
Get ahold of yourself, man!
“The NAR mind control is so deep and pervasive that people actually believe that there is no cost to home ownership.”
Outisders view this statement as facetiousness but I assert that every single letter of it is 100% dead correct.
I came across an article a few years ago that broke down the actual cost of owning a house. At the time it broke down how long a roof would last, pipes etc.., how much money you should save to make those repairs. The article also included costs of water, electricity, gas, etc… It was a real eye opener to me.
Forgot to add, the article also included the average cost of homeowner insurance, gave an estimate of taxes etc..
RE: how long a roof would last, pipes etc.., how much money you should save to make those repairs. The article also included costs of water, electricity, gas, etc… It was a real eye opener to me.
The monies are called reserves for replacement.
REALTWHORES are especially notorious for their ignorance of the concept when putting together their net income statements for multi-unit property listings.
RFR…what da fook is dat?
Been reading this blog since … 2005? I’ve actually seen a few (very few) homes that would be incredibly cash flow positive. Prices that are 1/3rd of their price 2 years ago. Only a fraction of total listings but they do exist and if they’re the right home for someone, it might be time to buy. I expect the market to continue down but many houses make up a market. There might be single instances that make sense to buy.
Yep and that’s what separates the pros from the specuvestors.
The flippers are getting mowed down like wheat in the field.
Unfortunately, I am not seeing prices falling steeply around me. However, it depends on where someone is located. From all I’ve been hearing about FL, if you can get a decent house under (or even way under) $100K and you can do it responsibly (20% down, still have savings banked), then why the hell not?
Carrying costs are what kill people in FL.
Homeowner’s insurance policies that would cost $600 per year elsewhere can cost $6,000 (or more) in FL. I knew a woman who, before she managed to sell her (modest) house, was paying $10K per year for insurance on it.
Property taxes are around 2% of “assessed value”…and wouldn’t you know it? The gov’t insists on assessing that house you just purchased for $250K at its “full value” of $450K at the peak of the bubble. So now you’re stuck paying $9,000 per year in property taxes.
Then there are the homeowner’s associations. Unless your house is 30+ years old (and the vast majority of homes in South Florida are much newer than that), you’ll have an HOA. So what, you might think, HOAs in other states cost $100, $200 per year, right? Well, in SFla they’re $1, 2, 300 per MONTH.
You can easily spend $1000-2000 per month just for CARRYING COSTS of a single family home in South Florida. Now add the mortgage to that. Most people simply can’t afford it.
Wow. That’s enlightening.
Yeah, I live in Titusville, Florida (Head due east from Orlando ’til you hit the Indian River). Some developer built some tall condos on the river. Really nice spot. You can watch space shuttle launches from your balcony. Private boat slips. Tennis courts. Nice place. They were selling for $650K when they first went up in 2005.
Saw one in the paper this weekend for $350K. Wife & I stopped by to check it out. I’d never buy one, I just wanted to see what all the fuss was about and screw around with the realtor a bit.
They want $240/mo for condo fees. WTF? There must be 150 condos there. What could possibly cost so much?
Jon - if this is Harbor Point, we’ve looked over there for a possible rental. It is easy to buy units there now for under $300K, from what I see. $240 is not bad for condo fees and I would not be shocked if those rose a lot. You’d want to know if the developer still controls the Condo Association. I believe the real owners of the units have to agree whether or not to accrue in a sinking fund a reserve for replacements, or just wing it. If they vote to fund a reserve, the fees could double or nore.
As for the $240, it normally covers all exterior maintenance, including elevators and grounds and exercise equipment and the pool. And it includes you water, sewer, garbage & trash and basic cable TV service. In most new condos, it also includes your hot water. So $240 is not bad. When we’ve looked at beach condos, none of them had fees that low - which is why I suspect they won’t remain there.
I would check out the owner-occupied ratio there. If 30% or more are rental units, you could have a hard time getting any kind of loan.
Titusville has been a bedroom community for NASA workers, but today there was supposed to be an announcement from Washington that might mean many NASA professionals moving to Huntsville. Bye-bye values, if that happens, IMO.
It’s all too bad, though, because the wide river view from that condo and the one south of it are outstanding. And you get to eat at Dixie Crossroads.
Recommend you read this:
http://www.bankrate.com/brm/news/real-estate/20090219-vulture-funds-taint-condo-deals-a1.asp
Muggy,
Timmy boy wants you to be happy and so does his boss.
Come back from the darkness!
Saw this today - though it was pretty funny.
Young Ben in Montana bought a horse from a farmer for $100. The farmer agreed to deliver the horse the next day.
The next day the farmer drove up and said, “Sorry son, but I have some bad news… the horse died.”
Ben replied, “Well, then just give me my money back.” The farmer said, “Can’t do that. I went and spent it already.”
Ben said, “Ok, then just bring me the dead horse.” The farmer asked, “What ya’ gonna’ do with him?”
Ben said, “I’m going to raffle him off.”
The farmer said, “You can’t raffle off a dead horse!”
Ben said, “Sure I can. Watch me. I just won’t tell anybody he’s dead.”
A month later, the farmer met up with Ben and asked, “What happened with that dead horse?”
Ben said, “I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $900.”
The farmer said, “Didn’t anyone complain?”
Ben said, “Just the guy who won. So I gave him his two dollars back.”
Ben grew up and now works for the government. He’s the one who figured out how this “bail-out” is going to work.
kinda like the example i read describing our current healthcare system.
our system is like a group of 10 people going out to lunch together. they all agree up front to split the check. they all order the same entree.
then it comes to dessert…a very pricey $10 piece of cake. everyone wants dessert but you…then you think…awww hell…i’m gonna get it anyway…it’s only costing me a buck.
Who does the farmer represent? Someone who would sell a dying horse and then spend the money once it’s dead and expect to get away with it…sounds like he went on to own one of the bond rating agencies, or maybe his own brokerage.
GE sell-off continues unabated.
How about WFC in an up market?
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7b259163C8-33FD-4B9F-9B56-090B60809E2E%7d&siteid=yhoof2
That explains WFC. Insiders bail out of burning airship.
Wells is headed for 3 buck chuck.
I only say that because The Oracle of Obamanation has a large stake in the heart of the Well.
A stake at 30 buck chuck, on a ten to 1 reverse/
3 dollars is even money with Buffett, excluding dividends of course.
dude, whose your favorite sockpuppet?
Punch.
Does this mean CNBC and NBC is going off the air?
no, it means the triple A credit rating is about to get slashed just like the dividend……then GE can post 9 billion in collateral to its creditors, then the stock goes under 5 bucks….then the the great hoard of Funds are forced to purge the shares from the Pension fund lockboxes……then the 2.50 puts on the June Contract go in the money on a teardrop bottom.
-but hey, Im just an avatar of fine commentariat.
I don’t understand posters’ attempts to villanize those of us who sat out this outrageous housing bubble and escaped the stock market carnage. What is wrong with these people? Don’t they get it?
Did they miss Greenspan’s call to ARMs? Did they miss David Lereah and the NAR’s monthly dose of mind-numbing spin? Don’t they know about feeding the squirrels? Haven’t they been scorned and looked down on during the housing boom by cousins, friends, MILs or FILs for not buying a house?
Do they even know about Goldilocks? Or, about the guy who was on the financial networks telling people to buy stocks with both hands right at the peak? Did they miss all the weekend pumps and rate cuts to prop up financial stock prices and the broader market?
I’m not happy about everyone losing their homes or retirements savings. After all the name calling and put downs, however, I happy to be redeemed. As home prices continue to plummet in Florida, with interest rates at historic lows, and tax credits in the offing, I’m happy to tell all the people in my life who have been nagging me to buy a freaking house (MIL, Grandma, Mom, BIL, Big Sis), “I told you so.”
“I’m happy to tell all the people in my life who have been nagging me to buy a freaking house (MIL, Grandma, Mom, BIL, Big Sis), “I told you so.”
There are as many who still reject the housing bubble as those who begrudgingly concede to it. Conditions in FL and CA are obvious to those residents there. The denial runs deep elsewhere.
“I don’t understand posters’ attempts to villanize those of us who sat out this outrageous housing bubble”
Who’s doing that?
Has anyone tried that “Met Life” insurance calculator which is posted as an ad here on the HBB? It’s just plain junk. After answering its (loaded) questions as accurately as possible, it said that I should buy $400K of term life insurance.
It never once asked me for my marital/family status or any other pertinent items.
I’m single, never married, never had any kids or other dependents, am already retired, paid off house, good sized nest egg.
Why on earth would I need ANY life insurance of any kind? What does Met Life think I want to do - leave a couple hundred K dollars to my lawyer?
Next you know a mortgage calculator will say you should buy a $500k home on a $40k salary.
Shocking!
Snoopy needs your money d*mnit!
Seriously? Wow.
Why would anyone who doesn’t have dependents buy life insurance?
Wait - let me answer that. I did. It was back when I was young and stupid, and it was sold to me as an “investment”. Stupidest financial decision I ever made. The smartest was canceling the “policy” a year later and just eating the $1,200 spent cost. Later there was a class-action lawsuit against Met Life for their marketing of those, but I didn’t bother participating.
That shows you what the target market is for these things - people who are young and financially stupid. There are a lot of them.
You’re being obtuse here.
You need more insurance, don’t you understand? It’s really that simple. Oh, and there’s never been a better time to buy a house than today. Prices are more affordable than they’ve been in 100 years.
C’mon, hurry up, or I’ll be late for my next appointment.
Wow, you actually clicked on an ad?
If for no other reason, it helps Ben.
Lawyers are people too.
No we aren’t.
People who knead people, are the luckiest people in the world.
Shouldn’t that be ‘People who BLEED people are the luckiest people in the world’ ?
NEW YORK (Reuters)
ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.
Whoa ho! Look at that JAN revision! Mmmmmm, bullish!
512k -> 622k is quite a revision. Seems like ADP jumps the gun a bit.
I believe in December they revised how they calculated the numbers because throughout 2008 they were coming in too low each month. IIRC in December they came in a bit high, but with revisions of this magnitude - who knows?
Looks like they have that problem again.
ADP must hate our freedom.
How many nail salons and candle shops does a country need?
On a walk through the local shopping mall last week I saw an eyebrow plucking stand operating out of one of the pushcarts in the main isle. I can’t imagine who would want to have their eyebrows tweezed right in the middle of the mall as people walk by…
How hard can it be to tweeze your own eyebrows? I mean, really?!? This is not rocket science.
Not an expert on the subject. Anyone want to chime in?
I am not an expert either, but, as always, I am more than willing to chime in with a bold and lengthy opinion anyway.
Here’s my eyebrow thinkiness, numbered:
1. I don’t pluck my eyebrows very much. My eyebrows are not like my silky tresses, which sprout out in great abundance and can be monkeyed with with abandon, say for example when I’m drunk and happen to have a pair of scissors in my hand, and you can’t even see any unfortunate tinkering, if that’s what results, because it sinks back into the mass and then grows out in a week anyhow. See, it’d be easy to go overboard with a tweezers and before you know it my face would be bald, and cause hilarity. I sense this. That’s why me and my eyebrows have an agreement that we leave each other the He*ll alone and don’t get carried away. We live our own lives, man.
2.Sometimes I wish I would grow great big giant tufty eyebrows like the Juice-man guy on the commercials, you all know the one? Looks like he has little marmots glued to his face? Exciting! Every time I see his brows I am struck mute with flabbergasted admiration. I could scowl even better with brows like that, and experiment and everything.
And sell juice machines!
3. I think having your eyebrows plucked at a cart in the mall is tacky. And seems vaguely unhygenic, as well. *disapproving sniff *
4. Sometimes when I go to Christmas in Utarr my sister Rachel offers to pluck my brows, and I let her, and they always look good and I posture in front of the mirror for 15 minutes. But that’s more for social groomingness, like when gorillas sit and pick ticks off each other. What?! No! I don’t have ticks! That was an illustrative analogy! Jeeze!
Go play with your eyebrows! *flounces out *
And now I’m never going to think about eyebrows again. I have explored the subject to my complete satisfaction.
Except if any of you have fascinating eyebrow stories, I want to hear them.
So basically you agree with me?
I knew it!
‘So basically you agree with me?’
I almost always agree with you, and you know what? That irks the livin’ H*ell out of me. I am coming to accept that perhaps a fundamental pillar of my spiritual being is a deep-seated unwillingness to be agreeable. Is this good? Is this bad? I’m still thinking on the subject.
Why, just the other day I was sitting peaceably, drinking a lovely beer called ‘Screaming Pig Ale’, and minding my own business, mostly, and someone walked up and said to me ‘You’re the most contrary person I know’. So I sat bolt upright and violently shouted ‘I am NOT!!!’
And then everyone laughed, and I was mad, and considered killing the lot of them, except I was too dispirited. And drunk.
Maybe later.
Anyway, Fasty, I wish you’d say something really really stupid one of these days, so I could rebuke you. In fact, let’s schedule the event, shall we?
I can do this blindfolded or with one hand tied behind my back. On the other hand that may explain why I have an eyebrow that looks like Mr. Spock
Really? Exciting. Do you mean you have one giant over-arching mono-brow of Mr. Spockness, or that you have two separate eyebrows, only one of which is Mr. Spocky? And the only one is more like Sulu, or Ahura, or Data, or something?
Tweeze your own? Are you out of your Vulcan mind?
i wonder when we will have a butt wiping kiosk.
‘i wonder when we will have a butt wiping kiosk.”
A new calling for the asswipes in your life.
Or a booger-picking salon.
That idea would never work.
Why would you pay someone to do the fun stuff for you?
Upper-class twits would rather brag about having someone do it for them. Sorta like “pi$$-boys”
“Your Majesty, you look like the pi$$-boy !!!”
“And you look like a bucket of $hit !!!”
“Fifty bucks says the Smails kid picks his nose…”
www dot youtube dot com/watch?v=AwXFbiuxlrA
I saw a guy in the mall getting his teeth whitened by some sort of fancy machine that had what looked something like a vacuum cleaner hose with the end of it stuck deep into the guy’s mouth, apparantly sloshing his teeth with whitening chemicals.
How about gourmet dog food shoppes?
Dog-treat gourmet bakeries. They exist. Don’t ask me why.
Exactly 5,398. Pretty sure I read that somewhere, but can’t find a link right now.
After 3 near-fires due to candles with flare-ups (I call them candlerrhoids), I switched to nice flickering LEDs in the candle bases.
They look nice, cost almost zero to run (100 hours on the battery?), and work fine for my humble abode.
I did receive some candles people made at candle-making shops. I think 2 of them were the flare-up ones, too. Makes one think — if only those shops were profitable, we could have sued them to where they are today.
You have a lot of candle problems. I burn them all the time and never have an issue. Maybe ’cause I trim the wick before each lighting? Don’t know.
I love fire. I love the warm flickering light that fire gives off, better than any other. I was thinking the other day, when the Happy Birthday Gal Spearmint Tea was grousing about ‘hating being white’ and then someone else mentioned light eyes get cataracts easier? I was thinking maybe that’s why I like firelight so much, because I have very light eyes and firelight is easier on them? It’s true, bright electric light often hurts my wee green orbs, and I always wear dark sunglasses, sometimes even in buildings. (But before alla you get all pitying, the trade-off is, I have some seriously amazing night vision. Which I find rather handy, rather often.)
Or maybe I like it because I enjoy burning stuff up.
Anyway, I have a woodstove with a glass door that I light a little fire in almost every single night all rainy season long, and it flickers orange and red and gold cozily while the rain thumps down on the roof. I can’t even imagine 7 months of rain without a fire. I have a zillion candles, too, and I light many, all the time. I’ve never had a problem. Dada, maybe just don’t nestle your candles down in a pile of kerosene-soaked cotton wicking, huh? That’d help.
My point is, no way is a LED pretend candle gonna do it. Nohow! Never! Icky!
* makes grandly dismissive gesture and then contemplates setting my desk on fire. Because I really like fire. *
DADA!
Long time no see.
I was beginning to think DADA was Aladinsane’s alter ego and they disappeared together….
They both used to routinely express a lot of fondness for gold, so I had thought maybe they met to discuss The Precious, maybe fondle some ingots, and then things got out of hand, as things so often do, with negative results…like maybe someone got eaten, or else stuffed into a tree bole or something.
And, if so, if that’s how it went, I guess Dada was the winner, huh? ‘Cause here he is…
dada, DADA?
I drive alone home from work and I think of her.
Late at night I call her, but I never say a word.
I can see her squeeze the phone between her chin and shoulder
I can almost smell her breath with the sweet scent of decay
does she ever whisper in his ear all her favorite fruit?
WE play croquet behind whitewashed walls
and drink our tea at four.
budding,
like a fruit
Well the RE Bubble must be over. Talking with a relative, whom I tried four years ago to convince to avoid RE. She and husband went full force. They managed to sell everything but the house they live in and one other. The rental is for sale. She said they were putting their own house on the market. If it sells they will move to the (smaller) rental.If both sell they will rent for a while. They paid too much for both. Don’t either will sell anytime soon. Think they’ll face bankruptcy.
These are hard working honest people. Just not too savy. They thought RE was the path to get ahead and make up for lost years of low paying jobs. Neither one has a college degree. They both come from somewhat under priviledge backgrounds.
On another note when I was a kid in school in 1970s / 1980s there was this theory that with computers and other automation everyone would work just a few hours a week and have high standard of living. I’m still waiting.
They’re both working 2 jobs each about trying to stay afloat.
“They’re both working 2 jobs each about trying to stay afloat.”
Wow, what a stressful way to live. There is a price to be paid for drinking the koolaid.
But they probably could have gotten out “cheaper” and without the stress by just walking away from all the RE.
In other words, they’re still not savy even after this excellent learning opportunity.
When I was in the public schools in the 1960’s, one of my text books had a story in it concerning what one should do for a living. The story basically touted a view that one shouldn’t look down one’s nose at blue-collar jobs: that a union job at a steel mill or auto plant paid better than some white-collar clerical job.
The prognosticators of five decades past were totally clueless.
Ah yes, these were the same textbooks that assured us of the imminent U.S. switchover to the metric system…
I remember sitting in the classroom learning how to convert from the U.S. system to the metric system.
Ladies and Gentlemen,
I have a question for you. So, I used to rent a condo, which was built in the mid 80s. The place was really outdated including appliances, counters, cabinets, older carpet (including carpet in the bathroom… gross, I know!). I finally decided to move out and get a place that better suit my needs.
Anyways, the owner, who is an investor from Cali, sold the place about 2 weeks ago. However, the entire process was executed by his realtor in Austin, TX. Everything was pretty much done over the phone and email between these two guys.
They have to turn in the keys to the new owner on Sunday; the realtor has been very noisy with my move. He’s been calling me everyday asking me if I would get a cleaning lady to leave the place looking ’sharp’ or if I knew I HAD to shampoo the carpet; he said if I did the job ‘right’, I would make his life a lot easier.
I hired a cleaning lady to clean the bathroom, counters, windows, etc, etc, and she did a good job, as always! Last night, I took my fancy new carpet cleaner and spent a couple of hourse washing those carpets, and I thought they looked very well taking into account how old the carpet is.
Well, the Realtor called me this morning and said the place wasn’t up to ‘his standards’, and he could not turn it in to the new owner in the current condition. So, now he ‘will hire’ professionals to clean the place and wants to take the cost out of my deposit of 900 dollars. He wants between 500 to 600 dollars to ‘professionally’ clean the carpets and bathroom. I am so pissed!!!!!!!!!!
What can I do?
I think this guy is trying to rip me off big time!
I’ve bought in recessions only — always condos. I always nitpick at closing over the tiniest things (once got $300 for a chipped closet door).
If you haven’t received the buyer’s check, NEGOTIATE. Tell the other realtor you’ll “split the difference” and bring $300 cash to closing.
If you received the check, tell him that acceptance of the check and title meant they’ve done their inspection and the place is as-is short of any promises dictated in the documents.
Note: Because I am a hard negotiator, I always tried to get an extra 0.5% at closing. Since most of the properties I bought were under $50,000, that was generally $200-$250 in “Hey, look at the tub, it needs to be replaced!” at closing.
If you’re getting $100k out of it, just eat $300 by splitting the difference and be happy you sold.
Boy am I confused. I thought Brett was renting and the landlord had sold.
Did you look over your lease, dude? There should be provisions in it regarding the desired move out condition, return of deposit, and so on. Leaving a place “broom-clean” is fairly typical, as most landlords send in someone to patch, paint, and clean after a tenant moves out.
Each state and many municipalities have laws restricting the landlord’s reach as well. In Illinois, for example, a claim of damages or cleaning fees by the landlord must be provided in writing, with reasonable estimates, within 30 days of move-out (at which point the tenant can contest the claim or seek their own estimates), and the security deposit must be returned in 45 days. Failure to fully comply with these benchmarks allows the tenant to take the landlord to court, where 2x security deposit, plus lawyer’s fees, plus court costs are a typical finding when landlords haven’t complied with the law. Landlords count on renters not knowing the law and not being willing to take action.
In short, do a little research. It’s highly unlikely that the Realtor can make any such demands on you, and somewhat likely that you can make his life miserable if you’re willing to do a little legwork.
I hope you took pictures of the place. That will help if you have to take this guy to small claims court to get your deposit back.
I do not have pictures of the place when I moved in; I bet he can argue the place was brand new… ugh!
Brett, you are young. Live and learn; that’s the way us old farts learned to be the way we are. We like to call it wisdom however because that sounds much better.
Sue him in Small Claims. If you don’t have pictures of the place after you packed and cleaned up, try to find some showing that the carpets, etc. weren’t brand new. He may be planning to let you help him buy new carpeting for the rental unit.
Whenever possible, be out of the rental, have it cleaned up, then have a representative of the person/company renting out the property do an inspection while you still have time to address any issues they come up with. Have them sign off on it (most “professional” property managers will be doing this anyway). If nothing else, it will give you a heads up that you may have problems getting your deposit returned, and can document things accordingly.
Another bit of advice….when renting an apartment, have them show you the ACTUAL apartment you are going to rent, not the mode/display apartment. Make sure the apartment you look at is the same one on the lease documents. Don’t let them switch you to something else, before you get a chance to inspect THAT place.
This may be old hat, it’s just some friendly advice for people getting their first rentals, or getting back into the rental market.
I’d meet with him face to face and tell him only once, that we can do this the easy way or we can do this the hard way. The possibilities are endless. Threaten small claims court, or that you’ll have friends contact him to look at properties or rentals and be total time vacuums sucking up his precious time and gas on endless unproductive showings, etc. Grow a pair and have fun with the intimidation! Tell him that one way or another, you’ll get your deposit back!
What’s with all the questions? Can’t think for yourself? Yesterday, you had all the answers, arguing we are all in this together, implying some of us were villains for saying, “I told you so.”
Each of us has a responsibility to protect ourselves and neighbors from the con-men among us. Yes, it’s sad when someone gets conned, or Ponzi-ed, or fooled into believing house prices and stock prices only go up. But, scorning the people arguing a con is in progress, or a policy won’t work, isn’t polite.
You are being ripped off. I’m going through the same scenario. Property Management/Landlords will do everything in their power to extract every dime from your deposit.
I don’t know what state you are in, but in California, if the carpet is more than 10 years old, they will receive nothing. I believe they can keep a percentage up to 10 years - which gets less the older the carpet is. My ex LL is trying to charge me for half of his new carpet - $2,400 - to replace a carpet that was old, fraying and so stained from his previous tenants - stains which only reappeared after I had moved in.
Tell them you are going to small claims - they will back off immediately.
Most landlords do this. I think they have fun with it. The property management company where I rent (in Norfolk) is known to wait until the last exact day to refund deposit, and they will tell you they are doing this just because, to your face. A friend was renting and the unit above his flooded spilling water all over their unit. The damage was bad enough that they ended up moving to another empty unit that was similar a floor down. The mgmt company charged them $50 for every nail hole in the wall for pictures (normal nail holes). They weren’t moving out, they were moving because of the extreme damage from water from the unit above. I think personally what needs to happen is someone needs to beat the a%% of the lady in the office, severely. She needs a physical attitude readjustment in a major way.
Stanley Steam clean is 350.00
Merry maids is 250.00.
Yes he is trying to rip you off.
You have receipts proving due diligence. Take pictures if you can to CYA as to the age of the place.
Tell him to take hike and keep his hands off your security deposit.
This isn’t a big deal. I had to sue a landlord in small claims once. Trust me the judges know the biggest scam out there is not returning deposits. You are not responsible for shampooing carpets and leaving a place spotless. Normal wear and tear is included in your rent. Clean it well, but not professionally. Save the receipts from all supplies, the carpet cleaner etc. Take lots of photos the day you leave showing the clean condition. Write a letter to the landlord after you get back your deposit check stating nicely why you disagree with any deposit being withheld. Document what you did and how it compared to the condition when you moved it. (If you did damage something estimate the cost and go from there.) Indicate the age of the carpets and that you were unable to get them cleaner than when you moved in, etc. Finally, nicely ask for the rest of your deposit back by XYZ date or you will be filing in ABC court for $ in damages. California knows this abuse is so bad you can actually sue for more than the deposit as an incentive to get bad landlords to pay. Most renters won’t take the time to sue, but it really doesn’t take that long and you can pay a little extra to have a sheriff deliver the notice and get that money back as well.
You can e-mail me at sd.re.b at hotmail dot com if you want more info about my experience in CA. If you have a lawyer friend you can have them write the letter which might help. But remind the landlord you fulfilled your duties and you will get your money back.
Good luck!
if I want to prove that something existed on a certain date, I include that day’s front page of the local newspaper in a corner of the photo. With today’s hi-megapixel cameras, it is easy to magnify to confirm the date.
Threaten to not move out. Get a pro bono lawyer to write a letter. It will take 6-12 months to evict you. Tell them if you give them $500 you might think about moving.
Hello everyone, I’m back in Utah and was bracing for trouble (financial), was preparing for disaster, but then I discovered this about the future and I quit worrying:
youtube dot com/watch?v=WGoi1MSGu64
Lostie gal,
Are you back in Utah for good? Good to see you posting
Very good to see you posting, losty! I missed yer.
We used poisonous gases…
The above post was a response to the video link. Looked kind of weird sitting there by itself. Love the Flight of the Conchords.
Back by Popular Demand
It’s the Bay Area meetup. This has been delayed due to the Vegas thing, but you Bay Aryanites are starting to get antsy, so I’m setting a date. It will be Friday, April 3rd, sometime after work, somewhere in Newark (right off the 84 on the east side of the bay).
Plz e-mail me at BigVHBBatgmaildotkom if you think you can go.
Thks,
Big V
Why is CAT up so much today??? Dow’s up 100 but I see mostly red and the financials are taking a drubbing again. Is it that ChiCom stimulus package thingy??
Yep, Chinese PPT. Its pmi is up MoM ahead of some big political get together. It is playing make believe with its population to prevent unrest. Look at its power usage, if you really want to know what’s going on in there. Oz and everyone around it is contracting hard.
Many banks are outraged at the new fee the FDIC is imposing.
The FDIC’s deposit-insurance fund has been shrinking, and that since the beginning of 2009 the FDIC has rolled up two banks a week, on average. It took over two more last Friday. The fund is now down to $19 billion from $52 billion a year ago and by law has to be replenished. The FDIC insurance fund could become insolvent this year, according to its director Sheila Bair. FDIC
As well they should. It would be like my auto insurance going up if a bunch of other people had car accidents.
The FDIC should base its rates on the risk of each bank, not a flat rate like it is (I think) today. Obviously the downside is how to weigh the risk properly, but IMO it’s better than the current system which penalizes the safe banks.
E.g. any bank that has a brokerage ARM automatically should pay 10x premium or thereabouts. Likewise the premiums should include weighting for leverage ratios - these banks that were 30:1, 40:1 etc should have been paying out the wazoo for FDIC insurance.
“It would be like my auto insurance going up if a bunch of other people had car accidents.”
Um, that’s actually how auto insurance works, packman. They put you in various pools based on risk, but if your pool as a whole experiences higher-than-projected expenses, they can and will raise rates for that risk-pool.
I think packman’s point was that all banks are in the same pool instead of different levels of pools. However, when you are only dealing with a few thousand banks it makes sense to charge each bank according to their risk… otherwise some banks subsidize others.
Insurance is supposed to be based upon risk of the insured, not some kind of socialized system whereby low-risk subsidize the high-risk.
FDIC is a joke anyway, it is nothing more than a tax on savings considering all fees paid must be put into treasuries who fund current government expenses. There is no real insurance fund, just a promise for the government to print more money when the bank fails.
Remove FDIC and the free market would provide insurance to banks and the insurance companies would compete for the lowest rates that allow them to be profitable.
Remove fractional reserve lending and FDIC becomes irrelevant.
Yep - what you said, except for the part about the funding. FDIC is indeed a different separate fund - e.g. see the articles the past few days about how the fund has run extremely low, which is why they want such a rapid increase in the rate. Nevertheless, the fact that it implicitly (or maybe explicitly - not sure though it doesn’t really matter) has the backing of the general government fund makes the point moot. I would imagine that sometime really soon the FDIC indeed will require government backing - increasing the rates isn’t going to make up for the tsunami of bank failures that are just now starting.
However *that* being said - in essence the TARP is acting as one big whopper of an FDIC - except instead of bailing out the depositors directly (which makes sense), they’re bailing them out indirectly through the banks themselves (which makes dollars - lots and lots of them, the bulk of which are lining the executives’ pockets).
“I think packman’s point was that all banks are in the same pool instead of different levels of pools.”
My understanding of the way FDIC works is that there are different risk-pools. Banks more at risk are charged a higher rates on their insurance payments to FDIC.
“Remove FDIC and the free market would provide insurance to banks and the insurance companies would compete for the lowest rates that allow them to be profitable.”
Ummmm… Yeah, right, Dan. The free market would do a fabulous job with banking deposit insurance.
Just like the free market did a fantastic job of insuring against so many other things in the form of AIG. Insurance companies would compete to maximize their PROFITS and the h*ll with safety.
Insurance companies should be run conservatively, and I think the only way to guarantee that is to regulate the heck out of them.
Remove FDIC and the free market would provide insurance to banks HOO HA. 76 years ago tomorrow (more or less) President Roosevelt closed all the banks in the country. The free market had once again failed. The FDIC was instituted 16 June 1933.
Fractional reserve banking is fraud, nothing more and nothing less. Non-fraudulent (i.e., 100% reserve) banks don’t need no stinking deposit insurance, as they cannot fail.
“100% reserve banks don’t need no stinking deposit insurance, as they cannot fail.”
And what incentive does a bank have to even accept your deposits, if they cannot lend ANY of it out at a higher rate?
Clearly they have to be allowed to lend some of it out. If they are, they can fail (liquidity failure), if depositors ask to withdraw more of their money than is currently available in the vault.
Research “demand deposits” and “time deposits” please.
And once upon a time - like not that long ago - banks actually charged money for checking accounts. That’s how they made profits, even as late as the 1980’s.
Not to mention:
- ATM fees
- Safe deposit boxes fees
- Cashiers check fees
- Etc, etc
You know - banking stuff. Stuff that actually provides a service.
P.S. with regards to FDIC fee increases, see this article, including this bit:
“The Federal Deposit Insurance Corp.’s board on Friday approved a proposal to charge banks a one-time fee of 20 cents on every $100 of domestic deposits, as well as give the agency the power to collect other emergency fees in the future. Those charges would be combined with a general increase in the amount banks pay each quarter for the government to back deposits in U.S. bank accounts.”
20 cents per $100 of deposits sounds to me like a flat fee increase, not risk-based.
Once again - prudence gets screwed.
Lordy Lordy look where housing sales have collapsed time 40….
53 out of 58 NY counties post double digit declines in sales YoY, Jan08-Jan09. And there are some declines of 50, 60, 70 and 80%…
BWHAHAHAHAHAHAHAHA!
http://www.nysar.com/pdfs/monthmedian.pdf
And the magnitude of price declines has grown from single to double digits for an even BIGGER BWHAHAHAHAHAHAHAHAH!
Hows that for a big fat $hit sandwich NY RealtWhores?!
Don’t hold back on your true feelings exeter
Monroe County (site of my brief appearances last summer) down 16 percent in one month??? Yikes.
statewide median down 30% Jan07/Jan09.
Even Yates has joined the club.
Sales in January are pretty thin. Spring will be interesting!
How long before lakefront property is free?
Foreclosure By Design
Andrew Jeffery Mar 04, 2009 1:40 pm
Many months ago, long before bureaucrats dreamed up their massive, ill-conceived loan-modification programs, the free market found a solution to the mortgage mess.
Specialists in handling distressed debt amassed tens of billions of dollars to buy up bad loans at steep discounts. The offending institutions who had bought the stuff in the first place would be forced to own up to their mistakes, take their lumps and move on. Meanwhile, those deft enough to clean up the problems would reap their just deserts.
Alas, it was not to be.
Sometime around the middle of 2006, some regulator woke from a decade-long slumber and decided to hazard a look at the balance sheets of America’s largest financial institutions. To his horror, just about every bank in the country would be insolvent, given the going prices for delinquent mortgage debt.
He raced off to tell his boss, who alerted his superior, and so on up the chain until then-Treasury Secretary Hank Paulson got wind of the coming tsunami of losses. Paulson barely flinched, for Wall Street’s top brass was well aware their collective predicament. After all, it was the likes of his former charge, Goldman Sachs (GS), who designed and sold the toxic assets in the first place.
The choice then was simple: Step back and let markets sort out the mess, risking the lives of storied firms like Citigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM) - or latch onto the absurd notion that these institutions were “too big to fail,” and begin a process whereby the American taxpayer’s hard-earned nest egg would be used to forestall the inevitable day of reckoning.
We now know how the sad story ends.
To prevent the market from clearing these assets at their true value — sometimes just pennies on the dollar — lawmakers, bureaucrats and big bank executives huddled together and devised ingenious schemes like the Super-SIV, HOPE NOW, Project Lifeline, TARP, and other utterly contrived “solutions” that, despite their claims to the contrary, were simply ways to extend the lives of these zombie banks.
* STOCKS
* RELATED ARTICLES
* ALSO BY…
GS 85.26 +2.89 (+3.51%)
C 1.18 -0.04 (-3.28%)
BAC 3.63 -0.02 (-0.55%)
JPM 19.56 -1.45 (-6.90%)
Okay. So now I’m getting curious about short sales and foreclosures. One thing I notice (from Ben’s abandoned Foreclosure blog) is that the Fannie and Freddie foreclosure search force you to use a Realtor. That’s kind of bum. Outside of the few internet search engines (like the banks run) and a few local Realtors that specialize in REOs… how do you find foreclosure deals? I’m not really looking to buy right now. And I’m not sure if I want to stay in the area. But I figure if I learn what I learned about the bubble, about foreclosures, then I will be in a good position.
I now subscribe to Realty Trac. It is expensive, but it is worth it to me. I recently found a REO that was listed by an agent, as you note, but owned by Freddie. The information the agent gave me did not match what I found in Realty Trac - there was an additional owner listed in Realty Trac.
I am willing to buy a REO from the bank that made the loan. But I am very leery of buying from a GSE because of their sloth, lack of due diligence and tendency to disclose serious problems after you’ve already booked the moving van. I’m sure professional investors are less timid about it, but I’m a cash buyer. If I were borrowing 95% I probably wouldn’t be as worried about clouds popping up.
Can new entrants to the housing market qualify for 2 percent financing, or is it only available to FBs?
Financial Times
Obama home rescue plan welcomed
By Saskia Scholtes in New York
Published: March 4 2009 16:10 | Last updated: March 4 2009 16:10
The US Treasury on Wednesday unveiled the details of Barack Obama’s housing rescue plan, which will pay mortgage servicers to modify troubled home loans while reducing borrowers’ interest rates to as low as 2 per cent.
In an effort to ensure that a relaxation of mortgage terms is only given to borrowers who need them, those hoping to qualify for changes will have to fully document their income and sign an affidavit declaring financial hardship.
Servicers, which collect home loan payments and work with troubled borrowers, will have to conduct detailed assessments of a borrower’s ability to pay and adhere to strict reporting requirements in order to collect incentive payments from the Treasury. Fannie Mae and Freddie Mac, the government-run mortgage financiers, will administer the programme to ensure that servicers only receive payments for successful mortgage modifications.
Even if you could why would you?
You are far better off buying at equilibrium or below-equilibrium prices (price to rents/incomes) than any amount of differential interest rate “break” for a mere 5 years.
This is just a ploy to keep the slaves forever.
“Even if you could why would you?”
Ummmm… I assume this is a rhetorical question. The obvious answer is “People are stupid.” A friend of mine once posited that that is the correct answer to every “why” question.
Some desperate folks will take these in the hopes that they can hang onto the house with the improved cash-flow. And a couple of years later, they will realize it was a mistake. They will be further underwater than ever…
Does anyone else think it is ironic that in the wake of a mania that was goosed by teaser-rate mortgages, the Obama plan gives out….wait for it…. MORE teaser-rate mortgages!
Oh yes, this will end well.
ROTFLMAO
I will just use this space to point out the obvious difference between “absolute solvency” and the illusion of “cash-flow solvency”.
If rigorously observed, half the “discussions” on this blog would become irrelevant.
“People are stupid.” A friend of mine once posited that that is the correct answer to every “why” question.”
So Johnny asks his daddy, “Why is the sky blue?”
Daddy retorts, “People are stupid, Johnny.”
I’m not sure it works in all cases, but it would be funny to watch for a while.
‘bama housing bill.
It seems to me to only be directed to:
1. inner city low income areas
2. slow down the foreclosure rate
IOW: all window dressing for PR purposes.
I’m only interested in buying on the old standard and that is location, location, location and when the price is right. Here in Monterey County, months and months and months away.
Mortgage Help: Do you qualify?
Who’s not eligible. Speculators, those who bought homes for investment purposes, do not qualify for help because the property must be owner-occupied. No investor, vacant or condemned properties are eligible. Occupancy will be verified through a credit report and other documentation.
The program will also not reward homebuyers who were irresponsible in their borrowing. All applicants will be closely examined by lenders and those who acted unscrupulously by, for example, misrepresenting their incomes in no-doc loan applications, would not qualify.
To protect taxpayer money, modifications must make sound financial sense. Servicers are required to apply a “net present value test” on the loans at risk of immediate default or that are 60 days or more delinquent. If the test determines that the value of the loan is enhanced by doing a modification compared with allowing the loan to go into foreclosure, the lender will proceed with the workout.
That will disqualify many borrowers who simply can’t afford any reasonable mortgage payment.
http://biz.yahoo.com/cnnm/090304/030409_obama_foreclosure_plan.html
“Who’s not eligible.”
Priced-out, bitter renters.
Banks of the Living Dead.
its all good.
ChiComs are coming in with the Chop-stick save.
There’s some new graphs posted on the FED website today for those interested.
caution PDF
http://www.newyorkfed.org/research/directors_charts/econ_fin.pdf
Every bubble transaction had as a a participant a stupid or dishonest appriaser.
Now that B.H.Obama is handing out money to folks who are “upside down” won’t this army of ready and willing dishonest appraisers simply start mis-appraising the other way so Harry Homedebtor can collect his windfall?
Don’t lawmakers think at all about consequences.
(Getting ready to board plane back from SYD->SFO)
That dog won`t hunt.
Vick will work with Habitat for Humanity on work-release program
By Steve Wyche | NFL.com
Senior Writer
Convicted Atlanta Falcons quarterback Michael Vick will help build homes in his old Newport News, Va., neighborhood with Habitat for Humanity as part of a work-release program set to begin in the next few weeks, a source with knowledge of the situation told NFL.com.
Is there any way for priced out, bitter renters to qualify for housing bailout monies? Because I still can not come anywhere near affording the homes in my area whose FBs will get rescue funding from Uncle Sam.
However, there is a silver lining to this story. Can anyone remember when Stammerin’ Hank tried to convince everyone to not refer to the myriad housing and FIRE rescues as “bailouts”? Nowadays, the financial press routinely uses “bailout” in every other byline. We’ve come a long way, babeeeeeeee!!!
Wall Street Journal
* MARCH 5, 2009
Mortgage Bailout to Aid 1 in 9 U.S. Homeowners
By MICHAEL M. PHILLIPS and RUTH SIMON
WASHINGTON — The Obama administration announced details of a housing-rescue plan it said would help as many as one in nine homeowners, from low-income Americans struggling to avoid foreclosure to well-off borrowers who owe more than their homes are worth.
The announcement came two weeks after President Barack Obama said he would spend $75 billion on the housing component of an emergency economic plan that includes a financial-system bailout and a $787 billion spending-and-tax-cut package.
The package represents an effort to tackle the political challenges inherent in any housing rescue. While the administration wants a sweeping program that would prevent millions of foreclosures, it doesn’t want to be seen as rewarding the greedy or reckless.
“It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets, just as we work to stabilize our financial system, create jobs and help businesses thrive,” Treasury Secretary Timothy Geithner said in a written statement.
March 4 (Bloomberg) — JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp., the three largest U.S. banks by market value, may have credit ratings cut by Moody’s Investors Service on concern they’ll set aside more cash for loan losses.
Quick! Somebody take the toxic loans off these Megabank, Inc members’ books before the ratings companies catch on to possible problems with their balance sheets!!!
Funny. When are they going to hit the reset button? This is beyond laughable. It’s pathetic.
RE: reset button
Did you ever play the arcade game Defender? When the number of aliens coming after you was unbearable, you could use a smart bomb to obliterate everything and start over.
At this point we’ve burned through all of our smart bombs. Pulling the plug might be the only remedy left.
March 3, 2009, 3:25 pm
‘Honk If You’re Paying My Mortgage’: Stimulus Backlash Hits Bumpers
Dawn Wotapka reports:
Tennessee’s Republican Party is trying to tap into the resentment that some Americans are feeling about the Obama administration’s foreclosure prevention program.
Thursday, the Nashville-based organization began selling bumper stickers reading “HONK If you’re paying my mortgage.” In five days more than 4,000 have been purchased, according to Bill Hobbs, the party’s spokesman. He said that this beats the 3,500 stickers the party sold last fall that read YOUR WALLET The only place Democrats want to drill.
“It was the right time, given all the backlash in the public to the mortgage bailout,” he said.
The Los Angeles Times’s L.A Land blogger wonders why the slogan isn’t “HONK If I’m paying your mortgage?” Mr. Hobbs said there are two reasons: It would be rude to call the drivers behind you a “deadbeat,” and the party wanted readers to think about being forced to pay other people’s mortgages.
Mr. Hobbs said the party sensed a growing sentiment, particularly after CNBC reporter Rick Santelli’s Feb. 19 rant against the plan on the floor of the CME Group in Chicago, which has made the rounds online.
Dubbed the “Tea Party,” it has sparked a grassroots effort decrying the President’s stimulus plan. At a Nashville “tea party” protest against the stimulus on Friday, 300 stickers were snapped up.
They sell for $5 bucks a pop, or $12 for 3. The money, nearly $10,000 so far, supports the party. “This is not a huge fundraiser for us,” Mr. Hobbs said. But “this is politics, so every dollar helps.”