The Real Estate Market Led Us Into This
The Hartford Courant reports from Connecticut. “George and Susan Hitchcock thought they were doing the responsible thing. They could no longer afford the mortgage on their ranch house in Farmington so they put it up for sale, knowing they owed more than the house was worth. When they finally got an offer in December, they hoped their lender, Countrywide Financial, would accept it even though it was less than the mortgage. After all, there had been so much publicity about lenders working with homeowners.”
“For three months, the couple tried to get an answer from Countrywide, to no avail. Finally, in early March, the buyer lost patience and walked away. Countrywide auctioned off their house on April 4. As the volume has grown, the average time to just get an answer has doubled in the past year alone, to two months — and in many cases, it is much longer, according to a recent survey of 2,000 real estate agents nationwide.”
“Frustration among real estate agents, sellers and potential buyers is growing. ‘Bad enough we have a slow market, this is pushing down values,” said Art Rose, a real estate agent in East Hartford who represented the Hitchcocks.”
“In Connecticut, 14 percent of all houses and condominiums with mortgages on them were ‘underwater’ as of the end of 2008 according to The Warren Group. That was 95,640 residential properties in all, a number that’s probably still rising. Short sales were rare during the boom years in housing because property values kept rising, sometimes at double-digit rates annually. When the housing bubble burst and prices slid.”
“The Hitchcocks — whose mortgage was standard, not subprime — would seem to have been strong short-sale candidates. In 2007, George Hitchcock was diagnosed with a lung disease and had to give up his job as a maintenance worker. Their home has been in the family since 1961 when George Hitchcock, then 11, and his parents moved in.”
“But their mortgage debt — dating to the Hitchcocks’ buying out George’s siblings after they married in 1993 — had been compounded by a second mortgage to pay off a car loan and some other bills. ‘I feel like they could have cared less,’ said Susan Hitchcock.”
From The Day in Connecticut. “By last October, one of every 20 mortgages in the city was in foreclosure, the third-highest rate in Connecticut behind those of Bridgeport and New Haven, according to the state Department of Economic and Community Development. An estimated 21 percent of the nearly 3,800 mortgage loans in New London were classified as subprime, and payments on nearly 8.5 percent of the mortgages were more than a month overdue, suggesting additional foreclosures would occur.”
“The recent spate of foreclosures in the city is the most anyone can remember, and comes on the heels of a scandal involving Jose Guzman of Waterford, a former loan officer who last September pleaded guilty in federal court to fraud charges. Guzman admitted to falsifying information in obtaining mortgage loans for more than 200 borrowers in New London County between August 2004 and June 2007. Guzman is scheduled to be sentenced July 22, while his co-conspirator, Brian Guimond, of Norwich, is scheduled to be sentenced Thursday.”
“In February, the last month for which data were available, the median sales price of homes in New London was $136,450, down from $179,900 in February 2008 and $275,000 in February 2007, according to The Warren Group. Eight homes sold in February, compared to 13 the previous February and 37 in February 2007.”
“Having won $867,850 in federal stimulus funds set aside for ‘neighborhood stabilization,’ New London’s Office of Development and Planning will train its sights on a downtown district. The city will kick in $250,000, and other sources of funding will up the budget for the effort to about $2 million. That’s enough, wrote Cara Pianka, the city’s community development coordinator, in applying for the stimulus money, to purchase and rehabilitate a dozen units.”
“Among the candidates for improvement are a three-family structure at 77 Garfield Ave. City tax records show the South Ledyard Street house sold for $55,000 in 1995 and for $220,000 in January 2007. Sutton Funding LLC of Raleigh, N.C., foreclosed on it in January of this year. The Garfield Avenue dwelling sold for $87,000 in 2003 and, in a Jose Guzman-brokered transaction, for $295,000 in 2005. In October, U.S. Bank, of San Diego, Calif., took possession of it for $193,445.”
“Nothing less than the fate of the economy rests on such efforts, some say. ‘It’s the real estate market that feeds the economy,’ said John Bolduc, executive VP of the Eastern Connecticut Association of Realtors. ‘The real estate market — the whole subprime mess — led us into this and the real estate market will lead us out.’”
South Coast Today in Massachusetts. “The Massachusetts Association of Realtors has named Congressman Barney Frank, chairman of the House Financial Services Committee, its first ‘Distinguished Champion of Housing Opportunities.’”
“Frank received the proclamation for his tireless work and support for legislation and regulations to ensure a robust and sustainable housing market.’Chairman Frank has long been a leading voice in Congress on the importance of housing opportunities — both homeownership and affordable rental housing — for residents of Massachusetts and the entire country for years,’ said MAR president Gary Rogers, a broker at RE/MAX First Realty in Waltham.”
The Boston Globe in Massachusetts. “Boston’s luxury real estate market is finally feeling the pain of the housing downturn. Until recently, sales of luxury condominiums were holding steady. But now the luxury market is faring worse than the rest of the Boston condo market. The median selling price of luxury condos plunged 19 percent to $560,000, while sales skidded nearly 42 percent in the first quarter of this year when compared with the same period in 2008, according to the Listing Information Network. Sales in the city’s overall condo market fell about 33 percent, and the median sales price, or midpoint price, dropped almost 14 percent to $410,000.”
“‘This has been one of the most dramatic declines that we’ve seen within one quarter,’ said LINK president Debra Taylor Blair. ‘A lot of those buyers tend to be hedge fund managers, people directly tied to Wall Street. People maybe who were expecting a bonus that didn’t happen.’”
“‘The numbers on the high end came to a screeching stop after the financial crisis hit,’ said Kevin Ahearn, president of a residential brokerage and marketing company that specializes in Boston luxury real estate.”
The Philadelphia Inquirer in Pennsylvania. “Existing-home sales in the eight-county Philadelphia region continued to slide in March, declining 25 percent from the same month in 2008. Median prices fell 7.5 percent year-over-year, according to Prudential Fox & Roach’s HomExpert Market Report. In Philadelphia, prices of single-family homes fell 8.4 percent in the first quarter from the same period in 2008, said Kevin Gillen, an economist with the Wharton School and Econsult.”
“Since the boom ended two years ago, he said, city home prices, excluding condos, have fallen a cumulative 18 percent, moving Philadelphia closer to the average drop of 30 percent in the 10 largest U.S. cities tracked by S&P Case-Shiller.”
“‘Two competing forces are driving existing-home sales,’ said Patrick Newport of IHS Global Insight Inc., of Lexington, Mass. ‘Distressed sales - foreclosures and short sales - in a handful of states, including California, Arizona, and Nevada, are driving sales up. Driving housing sales down is weak demand across most states.’”
The Baltimore Sun in Maryland. “K Bank in Owings Mills has been placed under heightened federal supervision as it becomes the latest regional bank to suffer from bad loans caused by the collapse of the real estate market. The Federal Deposit Insurance Corp. issued a ‘cease and desist’ order against the bank, requiring it to stop issuing construction and development loans and raise more capital, among other guidelines.”
“David H. Wells Jr., CEO of K Bank, said …the bank was caught off guard by the declining real estate market. He added that the bank voluntarily stopped issuing construction and development loans before the order was issued. Wells also said the bank wasn’t in danger of closing.”
“‘A core part of our business for the past 48 years has been lending to local developers, and that hasn’t gone so well lately,’ Wells said.”
“Regulators shut down Suburban Federal Savings Bank of Crofton in late January, Maryland’s first bank failure in 17 years, after it failed to make changes ordered by the federal government. The Office of Thrift Supervision also issued ‘cease and desist’ orders to Eastern Savings Bank of Hunt Valley and Baltimore’s Bradford Bank in late February. At least a half-dozen banks in the area are operating under heightened scrutiny.”
“Wells said the bank began seeing problems with the real estate market in 2007, when it curtailed construction lending significantly. It stopped those loans altogether in 2008. As people stopped buying houses and values plummeted, many developers couldn’t afford to pay their loans. Wells said the bank was hit particularly hard in Prince George’s County, where real estate values dropped significantly.”
“‘We saw it getting worse,’ Wells said. ‘We didn’t see it getting this bad. We’re in a very, very different economy.’”
The Washington Post. “Condo owners share more than roofs and lobbies these days. They also share one another’s financial burdens. New mortgage industry policies are forcing lenders to look more closely at the makeup of entire complexes before extending loans to prospective buyers or to people who want to refinance. The increased scrutiny is making it tougher to buy — and hence sell — condos, which are widely considered the housing market’s shakiest segment because they are popular with speculators and financially vulnerable entry-level buyers. The policies are also exacting higher fees and larger down payments from condo buyers while limiting where they can live.”
“A lot of foreclosure-related losses have come from condo lending, pushing prices lower and wrecking condo association budgets. Some areas have had particularly dramatic drops in sales volume. The number of condos sold in Fairfax, Montgomery, Anne Arundel and Frederick counties last year was half what it was in 2006, according to a Washington Post analysis. In Prince George’s County, it was off by two-thirds.”
“Tom Murphy, a Long & Foster agent in Georgetown, understands the motivation behind the rules. ‘The lenders don’t want to put up money anymore if the building is not going to fly,’ he said.”
“But the rules risk disrupting sales, especially in parts of the District that tend to attract diplomats and others who are often temporarily transferred for their jobs, Murphy said. ‘Here, people are in motion,’ he said. ‘While they’re gone, they count as investors if they’re renting out their places. That throws everything off for people who are trying to buy in those buildings.’”
“Benjamin Chiang nearly lost the chance to refinance his condominium when his lender discovered that many other people in the building were behind on their condo dues. ‘It made me a little peeved that my loan depended on the credentials and behavior of my neighbors,’ said Chiang, who bought his Arlington home eight years ago.”
The News & Observer from North Carolina. “Nuestro Banco, the first bank chartered in the state that focuses on the Hispanic community, is being pressured by regulators to overhaul its operations. A cease-and-desist order issued by state and federal regulators, made public Friday, requires the Garner bank to halt ‘unsafe and unsound banking practices and violations.’ Nuestro Banco…opened its first and only branch in Garner in fall 2007.”
“Among other things, the cease-and-desist order calls upon Nuestro Banco to stop: ‘Operating with management whose policies and practices are detrimental to the bank and jeopardize the safety of its deposits.’ ‘Operating with hazardous loan underwriting and administration practices.’”
“Tony Plath, a professor of finance at UNC-Charlotte…said it is ‘very rare’ for a bank as young as Nuestro Banco to receive a cease-and-desist order because regulators pay extra attention to fledgling banks.”
“In addition, he said, ‘It is hard to screw up the bank when you don’t have the balance sheet underneath you yet.’ Loans, for example, don’t usually go bad right away.”
A couple of things:
‘But their mortgage debt …had been compounded by a second mortgage to pay off a car loan and some other bills.’
So they spent the money; why is it we never hear questions about the wisdom of borrowing against a house for ‘bills’ and ‘cars’?
And why is New London wasting money ’stabilizing’ a fraud?
Not only that, but they want the money from the second mortgage as TAX FREE INCOME! And they feel slighted if they can’t arrange that.
Wasn’t New London where they had that famous eminent domain case, where the local gov’t took property from people who didn’t want to sell and handed it over to developers, and SCOTUS upheld it? I thought the developers were supposed to “revitalize” the downtown district?
I’m sick to my stomach.
Read it and weep. The Kelo property is a vacant lot that generates no revenue for the City of New London. BWAHAHAHAHA!
http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London
All that time, money and controversy wasted for nothing. Well, you don’t get any more stable than a vacant lot, right?
You reap what you sow.
An idea: Turn vacant urban lots back into farmland. T’would go a long way toward reducing “food miles.”
Thanks for the reminder Palmy.
I followed the case at the time, since friends in Ardmore PA were struggling against a similar “eminent domain for private gain” situation. IIRC, their neighborhood was safe, the downtown was going to be taken over for a galleria mall type shopping area, and the neighborhood “parallel” to theirs - a historically working class and middle class black community of 3 story rowhouses on the other side of downtown - was going to be replaced by “luxury” condos or townhouses or something. The downtown and the other neighborhood were declared “blighted” - although they apparently were a thriving downtown and a neighborhood of well-kept mainly owner-occupied homes. The community managed to save the downtown by getting it declared historical, as I guess Ardmore was the first garden suburb of its type in the region. The other neighborhood as far as I know was declared blighted and bought out by the developers.
This is just as I recall from a couple of annual conversations a few years ago with a friend from Ardmore. If phillygal or anyone else has a more accurate and informed version of the Ardmore case, I would love to know more about it.
No wonder our pubic institutions get so little respect. Greedy developers put local government officials in their pockets, then use our “you get the justice you pay for” legal system to steamroller uncooperative property owners. Of course, most of said property owners are simply reaping the just desserts of being part of a quiesient, depolitisized populace that is too busy chasing the almighty dollar to take a stand for unimportant things like basic liberties.
hip -
I do recall that attempted grab in Ardmore, it occurred around the same time as the Sarum farm attempted grab in Chester County. Both failed. Both properties were fine just as they were, I think the farm was to be appropriated for a golf course. Both of these attempted grabs violated the traditional use of eminent domain, it was all for private enrichment. And they both failed. I don’t have details about the Ardmore situation, I know the Sarum farm situation ended because the community voted out the town commissioners who were advocating and legislating for the land grab. Came election time, out they went and so did their miserable plan.
And why is it that most FB can’t seem to make the logical connection between the stuff they have and the bills they get? Like the stuff is just theirs, by virtue of the universe, and the bills are suddenly happening to them, totally not fair, and ought to be illegal.
It goes back to the colossial sense of entitlement most people have. Outmoded concepts like living within your means would be too restrictive.
“‘I feel like they could have cared less,’ said Susan Hitchcock.”
No, you idiot, you mean the COULDN’T have cared less. If they could have cared less, that means they did care somewhat.
I hate it when people just go around repeating phrases that they’ve heard, not even thinking about what they mean.
Molly, that “could care less: stuff has ALWAYS been a pet peave of mine. I finally just shut up about it. Can’t change the world.
ATE-UP
Then there’s the abuse of pronouns because it sounds right.
“… with Mary and I.”
“… for he and Bob.”
I wonder how many gasped when they heard Hillary Clinton (the smartest woman in the U.S.) say, “…for Bill and me…” during one of her speeches.
Why would anyone have gasped?
Nothing is wrong with “…for Bill and me.” “Bill” and “me” are objects of the preposition “for.” Just like “Mary” and “me” are objects of the preposition “with.”
Now if Hillary said, “Bill and me enjoyed our state visit to India,” “Chelsea and me dressed up in saris,” or “After Bill and me killed Vince Foster…” we would have gasped.
I thought Bill meant, do the morons who say it wrong think someone who says it correctly is wrong? I wonder this myself. I won’t correct someone but do they think I’m wrong when I say “for him and me” or do they not think about it at all?
or “After Bill and me killed Vince Foster…” we would have gasped.
No, I would not have gasped. I’d a gone ahaid’n freakin’ applauded.
I’m currently in a production of Gilbert & Sullivan’s Ruddigore that has the following interchange (between the local etiquette girl and a madwoman):
“For whom?”
“You mean, ‘for who.’ ”
“Nay, it is the accusative after the verb.”
(I find it helpful to think of “whom” in the same category as “him” and used in similar circumstances. “For whom shall I hold this?” “For him.”)
Most.boring.post.ever. Zzzzzzzzzzzzzzzzz.
Aww.
I appreciated it, Durbin. And I don’t care whom knows it!
zilker
:) 
:) 
Five Stars humor
It’s always a pet peeve of mine when people spell it “pet peave”
Sorry, Molly — I caught (and posted on) the exact same irritating abuse of a familiar cliche’ before I saw your post.
Ben Jones took the words right out of my mouth re the Hartford story. It contains a little variation on the shopworn reference to unspecified “home improvements and medical expenses” paid for with the second mortgage. Why don’t these enterprising reporters ever press the poor FBs for some particulars? I’ve asked before and I’ll ask again: Does the bill for a hair transplant qualify as a “medical expense”?
I’ve asked before and I’ll ask again: Does the bill for a hair transplant qualify as a “medical expense”?
Nope, just a boob job.
I’ve asked before and I’ll ask again: Does the bill for a hair transplant qualify as a “medical expense”?
Can’t you just spray-paint your head to be the color of hair you want? After all, they spray-paint lawns to be the color of grass they want…
“Can’t you just spray-paint your head to be the color of hair you want? After all, they spray-paint lawns to be the color of grass they want…”
That exact product is marketed as “Couvre”, hair thickener and scalp colorizer in a spray can. Brought to us by Ron Popiel, the marketing and consumer product guy you might see on TV around 2AM, who has also contributed the “Vegematic” and “Pocket Fisherman” to our civilization.
Got to hand it to Ron, the name “Couvre” has class!
That exact product is marketed as “Couvre”, hair thickener and scalp colorizer in a spray can.
Are you freakin’ KIDDING me? I thought I was being funny! They actually HAVE such a thing?!
Wow. I wonder how much money they made…
You know what, I’m gonna sit here and try to recall all my fanciful and silly notions to see if there’s something that, no matter how silly and fanciful, someone might actually buy, after I slap on a French name to make it sound elegant.
Some days I don’t do a single da*mn thing but generate endless silly and fanciful ideas, so man, I could have a gold mine in this here fluffy noggin!
I better be more careful and not fall out of trees so much onto it.
We had the original Vegematic. It was a great tool for slicing and dicing potatoes, tomatoes, etc.
Well, that’s fine, and SanFran, I have the Popeil pasta maker, (that I got new in the box at an estate sale for 3 bucks—I bragged to everybody about it on Friday when Fastette announced his new ravioli-maker purchase and we discovered with squeals of joy that we both have the wondrous Marconi hand-cranker)—and I had hitherto felt no specific objection to Mr. Ron Popeil.
In fact, I found his oddly distinct lips to be quite fascinating the few times I encountered him and his endorsed products on the teevee and I would sit there and watch with close attention and my own lips would move involuntarily, I was so interested in the movement of those things.
But that was before I heard about this spray-painting yer head notion. And it’s called ‘Couvre?!’ Can this be?
Worse and worser!
Look, there’s limits to what I will accept, and evidently this is one of them. Who knew? Not me. But THAT. IS. CRAZ.EEEEE.
Worse than Surinam toads!
*tries to supress a tremendous screech of annoyance *
Try Hagen Das……ice cream made in the US.
And don’t forget Topik (or some such). It was a colored spray that contained little fiber-y bits that clung to the few remaining hairs via static electricity. It wasn’t just colored spray but gave the balding pate some fuzzy kinda texture as well. I saw this too on late night TV.
Does anyone else think we’ll have a better society with fewer hair transplants, reduced demand for boob jobs, and less Viagra? Just saying…
Got Popcorn?
Neil
Me, me, me! Sign me up for that better society!
Oh, I forgot. I can sign myself up for that better society.
Umm…boob jobs can stay. And I’ll probably need viagra in ten years so it can stay.
Maybe not.
My SO is in his late 40s and I’m considering getting him a concubine for his b’day.
Could be the weed. Do ganja have THAT effect on men?
My SO is in his late 40s and I’m considering getting him a concubine for his b’day.
What?! Are you shit*ing me?
*spits out beer onto desk, wastefully *
And here just YESTERDAY you, and yes, it was you, you was all sedately advising us to not experiment with naughtiness, but to instead ‘pick a lane and stick in it’.
Boy—what a difference a day makes at Chez Phillygal’s, huh?
If a transplant qualifies, then a haircut should count too.
Although since I decided to buzz off all of my hair, my wife cuts my hair and I don’t have any hair related expenses any more. She jokingly complains I don’t tip her enough..
“Nuestro Banco, the first bank chartered in the state that focuses on the Hispanic community, is being pressured by regulators to overhaul its operations. A cease-and-desist order issued by state and federal regulators, made public Friday, requires the Garner bank to halt ‘unsafe and unsound banking practices and violations.’ Nuestro Banco…opened its first and only branch in Garner in fall 2007.”
The state shouldn’t have chartered this bank in the first place. I didn’t think banks were allowed to cater to certain segments of the population. I thought that was considered discriminatory?
Oh dear, no, Palmetto. A bank or other institution that practices exlusionary policies towards minorities, disadvantaged or otherwise, is EMPOWERING. The only time it is DISCRIMINATION is when intrinsically evil white males like you are doing anything that looks vaguely exclusionary.
Glad we cleared that up.
‘It made me a little peeved that my loan depended on the credentials and behavior of my neighbors,’ said Chiang, who bought his Arlington home eight years ago.”
And therein lies the problem with condoze.
When I first started to think about the housing bubble, the condo shared risk problem was almost the first thing that occured to me. Seriously, how can anyone want to buy into a building where 70% of the owners are underwater. What a recipe for disaster.
On Thursday, I was asked at work about when I am going buy. He wasn’t pushing, just asking. I told him flat out that I don’t believe in a V shaped recovery and have no problem saving money while renting, so no starter anything for me. I’ll buy if something I really want to live in for a very very long time becomes available at a price I want to pay. That is it. I predict that I will end up in a 2 bedroom apartment next time my lease comes up. That would be nice.
I was out on one of two-wheelers today. (Riding the damn thing cost me 65 bucks last night, and I’m still smoked about that. Bike lock got jammed shut, and, after trying, this, that, and the other thing, I had to call a locksmith to free the bike.)
Any-hoo, lots and lotsa houses for sale out there. A plethora of new listings along with the oldie-moldie listings.
I also noticed that the apartment complex across from where I used to live has recovered from its condo conversion delusions. The place is now back to being rented (by the room) to University of Arizona students. I’ll bet my former neighbors are lovin’ that situation.
Hey Palmy!
How is Florida weather this weekend?
ATE-UP
Weather is beautiful, ATE! How’s it going?
Even in good times this is a problem. If you have lots of renters in the complex, then the owners oftentimes don’t want to spend a lot of money on upkeep and maintenance.
With an apartment building, there is one owner (more or less - could be owned by a family), and they make the decisions on how much to spend and what the rent should be, so you don’t have those pesky contentious condo board meetings. Tenants get to vote with their feet.
““Frustration among real estate agents, sellers and potential buyers is growing. ‘Bad enough we have a slow market, this is pushing down values,” said Art Rose, a real estate agent in East Hartford who represented the Hitchcocks.””
I presume by “home values” he means “house prices.” So here’s my question to Art Rose: What better way is there to speed up a slow market than to have lower prices?
“I presume by “home values” he means “house prices.””
BINGO
Lets see…
agents are frustrated as there are fewer commissions (easy money is gone).
Sellers are frustrated as they’re having to pay a debt they willing jumped on!
The only one I sympathize with is the buyers. They decide to buy a deal and it turns out the sellers are not
allowedable to swindle out of their home easy.Oh, +1 on home prices. I’m tired of hearing about ‘values.’ Value=price/rent and I somehow never hear the Realtors ™ talking about that…
Got Popcorn?
Neil
A CT post….. the timing is perfect.
I had to do a one day run back to the family homestead in VT yesterday. I typically run up NY Rt22 and cut into VT on 22A. This time I came and went out of Hartford, CT. On the return trip, I got off I-84 at Southbury, CT and took RT67 which is a back assed way to get to New Milford and Kent, CT where I currently live.
Jeez, anyways…. Rt 67 passes through Southbury, Woodbury and Roxbury CT. The nuance is one of a snobbish, pseudo-old new england flavor. Over built and over sized, cheap construction (Drive-It system in lieu of real stone or marble) with new central american labor built stone hedges around the shack, electric gates (new)…. you get my drift?
So I ask…. what do you guys think when you see the name Sotheby’s? I think of art and antique auctions where UK royalty is the main audience. Well countless shacks on RT67 have Sotheby’s for sale signs. These aren’t 100 year old Baron-esque country estates or coastal RI cottages… these are newer stick built shacks, grossly oversized architectural abortions that I seriously doubt anyone of us would be caught dead in. There were the other RE shyster signs too but the Sotheby’s signs gave me the urge to crash my Duramax through the cheesy plastic gates and blast right on through the gable end of one these abominations.
gave me the urge to crash my Duramax through the cheesy plastic gates and blast right on through the gable end of one these abominations.
You know, I was just thinking how I’m really fond of you, exeter.
And it’s not just ’cause of your insightful and generous philosphical stance and the beautifully balanced Weltanschauung you display, either.
Look out FPSS….
Ex, the Sotheby’s marque aligns perfectly with the pretensions of the local populace. Just MHO. I’m familiar with the area as well, though I no longer live in CT, thank heavens.
pretentious is exactly it. Phony works as well.
I’ve been reading the blog for a while.
I’m recently unemployed (planned for) and staying in the OBX, NC for a couple months.
I’ve thought it before, but after seeing the recent Vegas interviews,
it really struck me what a great American Ben is - a check will be arriving soon Ben. Thank you for you’re time and effort.
I’ve especially enjoyed the inflation/deflation debates.
OBX meet-up Jane ? I think you mentioned this area before.
- Sorry, forgot to add: “Burn, baby, Burn!!!” - directed at the market, of course, not at you.
Exeter,
You live in Kent? No way! My grandmother lives in New Preston, by Lake Waramaug. It’s such a nice place, all that is best about New England. So quiet and beautiful.
Underhill Center, Vt., embodies those qualities, too, though the natives have had to put up with TV crews of late who were trying to track the family of that freed ship captain who was ambushed near Somalia.
They didn’t get very many interviews; the folks were as quiet as the hand-made stone fences that have crept through the blackberry bushes and the snow for more than a century.
Milkcrate…. those are depression era walls built by day laborers back in the 1930’s.
Schmoe… not exactly. I can walk to Bulls Bridge in less than 5 minutes from the NY side.
Shoot, I’ve seen Sotheby’s signs on spec McMansions (aka “grossly oversized architectural abortions”) here in Austin south of the river - where there’s plenty of places to get your car worked on and where snakes and rats fall out of the trees
Maybe Sotheby’s has a Bubbaland division now…
aHa! another Duramax owner. Crew cab, one ton,
4X4 that we call our “Cowboy Cadillac” it rides so
smooth…
haa! I gave up on Ferd. Besides, I needed a body cast after test driving an 2007 PowerJoke. It’s my first GM and I was VERY skeptical but out of the dozen or so trucks I’ve owned, the D-max has them all beat… easily.
hmmm, interesting, see a lot of Sotheby’s signs where I live too (CA wine country) but here they tend to be on fair to middling older houses
Exeter: You should have spent more time driving around Southbury. There are spec houses built a few years ago the size of a small hotel that are still unsold. Quite a number, by the way. Don’t understand how these builders can still be paying off construction loans and real estate taxes on these houses that will never be sold in today’s environment.
How do you know they haven’t already gone back to the bank? That’s the case here where in late-2006 to mid-2007 specuvestors paid to have a house built on a lot and, oops, they never sold. At any price.
Fortunately there are only about 15 to 20, out of a community of around 1,400 residences.
Slim here with another report from today’s bike ride. I noticed quite a few speculative purchases (from 2003-2007) sporting the “for sale” signs I alluded to in my previous comment.
Looks like the speculators lacked a bit of endurance, eh?
I believe it SPQR…. I was so close to hanging my skull out the window and puking as it was. Sticking around for more bubble madness was not on the menu.
Megabank, Inc vrs. the United States of America — Watch your shorts!
North County Times
EXCLUSIVE: Lawyers say lenders set stage to collect on ’short sales’
Foreclosure may be better option for some struggling homeowners
By ZACH FOX - Staff Writer | Saturday, April 25, 2009 11:38 PM PDT ∞
A “short sale” might not be the end of a homeowner’s problems.
The practice, which has exploded in popularity as homeowners struggle to pay their mortgages, is supposed to allow a borrower to sell a home for less than the mortgage amount, walk away, and avoid a credit-killing foreclosure.
Not so fast, say local real estate attorneys.
Lenders appear to be inserting language into short sale contracts that allow them to sue for any “deficiency,” or the amount lost by a bank by selling a home for less than the mortgage —- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners.
What’s more, the nation’s premier credit scoring firm says that short sales and foreclosures are equally damaging to credit scores.
Yet short sales have surged in popularity, as homeowners struggling with falling values and rising unemployment seek a way out.
It’s not clear how many short sales in fact fail to protect former homeowners from subsequent collection efforts. But local real estate attorneys and other professionals say such vulnerability may be widespread.
One real estate agent who specializes in short sales, Chris Mackey of Carmel Valley, said about 50 percent of the short sale contracts he has seen include the language before he requests its removal. Banks generally have removed the language, he said.
Major lenders Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. (owner of the former Washington Mutual) declined comment for this story or, through spokesmen, said officials were unavailable for comment.
Wouldn’t just handing over the keys and walking away be a more sensible way to stiff Megabank, Inc than going through the hassle of a short sale?
It would be great if anyone could elaborate on the relative advantages of the various ways to walk away from a house you cannot afford, particularly with respect to avoiding legal hangovers as described in the above story.
Wouldn’t just handing over the keys and walking away be a more sensible way to stiff Megabank, Inc than going through the hassle of a short sale?
That’s the most popular option in coastal CA.
But then again, in CA, as long as you didn’t refinance or take out a 2nd/HELOC, you should be covered.
It amuses and scares me how much further this has to go.
Got Popcorn?
Neil
Doing a short sale looks less bad to your neighbors since you have a for sale sign in front of the house and agents and possible buyers walkign through. It looks more normal. That has to be about it.
Is saving face in the ex-neighbors’ eyes truly worth hundreds of thousands of dollars to many people?
sue for any “deficiency,” or the amount lost by a bank by selling a home for less than the mortgage
In other words, the banks are demanding payment in full (one way or another), which totally defeats the original idea of a short sale. No wonder the banks aren’t talking to the press.
But can’t a California home owner legally tell the bank to just “take this home and shove it,” proverbially speaking? That just sounds so much more satisfying and hassle-free than dealing with the headache of negotiating a short sale. And if you can get sued for hundreds of thousands of dollars of deficiency after executing a short sale, I fail to see the upside.
—————————————————————————-
These are all the mortgage walkaway trustee sale states, meaning they are non-judicial foreclosure states.
In those states, generally, when they foreclose on you, they cannot pursue you for their financial losses.
Many, such as California, do in theory allow a lender to choose judicial foreclosure but in those cases the lenders only do so if a borrower has significant other assets. This is the “one action” rule that lets the lender either pursue non-judicial foreclosure, at lower cost and less time, or judicial foreclosure that costs more money and takes more time but lets them go after you for their financial losses.
Alaska
Arizona
Arkansas
California
Colorado
District of Columbia (Washington DC)
Georgia
Hawaii
Idaho
Mississippi
Missouri
Montana (as long as non-judicial foreclosure is used)
Nevada - note that the lender CAN get a deficiency judgment (See below)
New Hampshire
Oregon
Tennessee
Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
Virginia
Washington
West Virginia
These are states that also allow non-judicial foreclosure, and/or where non-judicial foreclosure is more common and deficiency judgments can be obtained more easily:
Michigan
Minnesota
North Carolina
Rhode Island
South Dakota
Utah
Wyoming
The Wall Street buccaneers who brought the global economy to its knees last year have set aside buckets of bailout money to hold their stratospheric compensation packages aloft. They must be laughing all the way to the bank. MATTER OF FACT, THEY ARE THE BANK!
As banks’ profits return, so does high worker pay
By Louise Story
NEW YORK TIMES NEWS SERVICE
2:00 a.m. April 26, 2009
The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.
Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began because bank profits have started strong this year.
Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside more than $36 billion in the first quarter to pay their employees, according to a review of financial statements.
If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay – much of it in bonuses – recover from the lows of last year.
“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”
Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”
In total, the banks are not necessarily spending more on compensation because their work forces have shrunk sharply in the past 18 months. Still, the average pay for those who remain – rank-and-file workers whose earnings are not affected by government-imposed limits – appears to be rebounding.
Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker – almost as much as the pay in 2007, a record year.
“We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, so the first-quarter reserves might simply be “sensible husbandry.”
Last year, when Goldman lost money in the fourth quarter, it did not pay out some of the compensation set aside when earnings were stronger.
At other banks, pay scales tilt in favor of particular units. JPMorgan Chase, for example, is setting aside what would total $138,234 on average for workers. But in the bank’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.
How are the big banks going to be able to afford paying their shareholders after richly rewarding the managers who are culpable for overseeing the worst financial collapse in modern economic history?
Wall Street on edge over earnings, banking sector
By IEVA M. AUGSTUMS, The Associated Press
12:45 p.m. April 26, 2009
Traders work on the floor of the New York Stock Exchange Friday, April 24, 2009. (AP Photo/Richard Drew) - AP
CHARLOTTE, N.C. — The wait for news about the government’s stress tests of big banks and a crush of earnings reports are likely to keep Wall Street on edge this week.
Investors whose burst of optimism sent stocks higher Friday will see if their bets – which came in part on some stronger-than-expected earnings reports – were well-founded. Hundreds of companies will be reporting their first-quarter results and their outlooks for the coming months.
“Companies that are being challenged will continue to be challenged, but the market is looking past what happened last quarter and looking more ahead to what’s going to happen later this year,” said Jason Ronovech, portfolio manager for Paradigm Capital Management in Albany, N.Y.
Maybe they can get Geithner et al to help dump all their off-balance-sheet toxic assets on to some unsuspecting bagholder’s plate? I suggest trying to dupe pension fund managers into buying toxic assets at inflated prices.
Today finds me reflecting on the Enron collapse. When their off-balance-sheet liabilities came to light, the company quickly fell apart. By contrast, Megabank, Inc destroyed far more wealth, is doubtless sitting on far bigger toxic asset pools, yet some how manages to keep paying their work forces beau coup buckaroos. What did Ken Lay do wrong that the leaders of Megabank, Inc did not?
Well, for one thing, he died.
And that golden promise is a golden shower on the rest of us.
A golden shower sprayed over supersized odorous dark chocolate fudge truffles.
I don’t know where to begin with this Sunday brief. It certainly sums up the mess at this point in time.
I remember how long it took for the S&L debacle to resolve itself and I have no doubt this is going to take longer.
It’s getting too bloody expensive to even die anymore!
More cremations seen amid tough economy
Recession is leaving many families unable to pay for elaborate funerals and burials
2:00 a.m. April 26, 2009
John Rodriguez, owner of Aztlan Mortuary in La Mesa, held a state-mandated urn used for ashes after cremation. “I see families upset because they cannot afford what they want for their loved ones,” he said. (Laura Embry / Union-Tribune) -
John Q. Rodriguez knows what grief looks like. He’s been the funeral director and owner of Aztlan Mortuary in La Mesa for 10 years and a mortician for most of his life.
The anguish he now sees ripping at some families goes beyond mourning.
“I see families upset because they cannot afford what they want for their loved ones,” he said.
The economic crash has left some families unable to provide elaborate funerals and burials for relatives, even when their culture or religion calls for such customs.
Many are turning to cremation as a more budget-friendly alternative.
The cost of a cremation, with the ashes either returned to the family in a container or scattered at sea, runs between $700 and $1,200, while a funeral with all the flourishes, including an elegant casket, limousines and burial plot, can exceed $10,000.
“We see families coming in now who say they would prefer a traditional funeral and burial but cannot afford it,” said Wally Featheringill, who owns a funeral home in the College Area section of San Diego.
I heard a story once about how a man kept his dad’s remains in his tackle box as a good luck charm of sorts. He used a plastic bag, presumably restrained with a twist-tie so the ashes didn’t run amok amid the sinkers, nylon line and Li’l Stinker Catfish Bait.
Trouble is, his car broke down one day. The tackle box was in the trunk.
This was Florida. And yes, someone came along and stole the car.
And dad’s dust.
Memo to all: Don’t be shy about ordering the urn, and if you don’t want it on your mantle, put it in your garage for safekeeping. Or your freezer, with your gold?
I showed someone my urn burial plot today. It’s located in a historic church cemetery, under an old shade tree. My “neighbor” is a Korean war vet who has a coffee cup engraved on his headstone. I told the guy, “When the time comes I will be happy to share this real estate with you”.
Embalming is so gross I can’t stand the thought of that being done to my body. I don’t have a problem being flash fried.
…or you could rent until you die, have your LL squish you into a gaint Hefty Bag and plop you on the curb for the City to cart you away.
Wouldn’t the adverse selection and moral hazard inherent in this insurance suggest that it will attract a disproportionate share of applicants who are likely to soon lose their jobs, plus increase the probability of job loss for those who take it?
NATION’S HOUSING | KENNETH HARNEY
Mortgage insurance available in case of layoff
2:00 a.m. April 26, 2009
WASHINGTON – Is there a rainy day in your personal job forecast? That wouldn’t be surprising – not with unemployment rates in double digits in several states, 8.2 percent nationwide and widely expected to hit 10 percent or higher by next year.
Nor would it be surprising if uncertainty about your income is a major barrier keeping you out of the home-buying market this spring. Which is why a previously obscure charitable group based in Washington, D.C. – the Rainy Day Foundation – suddenly is doing a booming business in what’s called the mortgage payment protection niche.
According to CEO Rick Del Sontro, Rainy Day is now offering job-loss protection coverage and home-buyer financial counseling through approximately 100 builders and lenders across the country, plus two large real estate brokerages.
Some of the clients and partners are big: Lennar Corp., for example, is active in 17 states including California, Florida, Arizona, the Carolinas, Illinois and the metropolitan Washington area. Long & Foster Real Estate is the largest independent realty brokerage in the country, according to industry estimates. Keller Williams, whose south Florida affiliate began offering coverage earlier this month, is the third-largest realty franchise firm in the United States.
Here’s how the Rainy Day plan works: Consumers purchasing homes through a participating builder, lender or realty agency can qualify for up to six months of mortgage payments – capped at $1,800 per month in some versions and $2,500 in others – if they lose their job during the two years following their closing. There is no direct cost to the buyer. The insurance coverage is underwritten by Virginia Surety Co. Inc.
Buyers can also receive prepurchase financial education and periodic post-closing check-ins by Rainy Day counselors. Purchasers may also be eligible to receive “emergency fund” grants from Rainy Day if they encounter short-term financial drains such as unexpected medical bills.
The emergency fund, which Del Sontro estimates will pay out $8 million to homeowners in 2009 – up from $4 million last year – is designed to “bridge the gap” and keep full payments flowing for a month or two following an unanticipated financial problem. If the owners only have $1,000 available in a given month, but their mortgage bill is $1,500, Rainy Day contributes the missing $500.
The emergency grants are not extended to everyone who is in a jam: Rainy Day won’t provide extra money when individuals have been financially reckless. Nor will it give grants in divorce or separation situations, or other problems attributable to actions by the homeowners themselves.
“When they finally got an offer in December, they hoped their lender, Countrywide Financial, would accept it even though it was less than the mortgage. After all, there had been so much publicity about lenders working with homeowners. For three months, the couple tried to get an answer from Countrywide, to no avail.”
Is it reasonable to expect an answer from a debt corporation?
We’re waiting for you to answer yourself PB.
The Eagle-Tribune Online
Published: April 26, 2009 12:01 am
Column: Executive’s death shatters illusions about economy
Donna Green
His picture stares up at me. “Freddie Moneyman Found Dead,” says the headline on Drudge. He looks like a wholesome cousin of whom I would be proud, or a personable executive I might have encountered at a financial conference. At 41, David Kellermann, acting CFO of Freddie Mac is dead, presumably by his own hand, though Drudge assures us homicide investigators are looking into Kellermann’s hanging.
Apart from the inescapable suspicion that things must be really bad at Freddie Mac, the significance of our new economic reality is beginning to settle in on me. My retirement savings will never be sufficient to give me a comfortable retirement, as they were on track to do just two years ago. My house is simply a place to live and not an investment. Employment is something of a blessing and not anything to be taken for granted or to which my talents entitle me. My possessions are going to have to grow old with me. I can now understand why elderly people have lamps from 1950 (though I promise I will never have my medications lined up on a TV tray).
When my parents used to tell me about stock brokers plunging to their deaths out of Manhattan towers during the stock market crash of 1929, I laughed. “How unhinged can people get about money?” I mean, didn’t we all think that level of despair was risible?
…
The unshakeable feeling that there is more to a young senior executive’s suicide than the suddenly unaccountable desperation of a man over his head in corporate responsibilities, makes me deeply pessimistic. The current crop of financial wizards allowed financial instruments to be promulgated worldwide that contained tremendous moral hazard and our citizens in scandalous and disastrous numbers took advantage of this by taking out mortgages that were clearly beyond their reach, often by lying. These same wizards don’t know what to do while the financial system collapses like a house of cards and taxpayers spray cash out of a fire hose to keep the cards in the air.
Donna Green is a freelance writer who was for a few years the Canadian stringer to The Economist, Finance and Economics page. She lives in a more modest home than she bought in Sandown, N.H.
Yeah, pretty much the equivalent of teenagers who wrap their news cars around telephone poles.
Too young and dumb to know better.
Gee, this says it all “My retirement savings will never be sufficient to give me a comfortable retirement, as they were on track to do just two years ago. My house is simply a place to live and not an investment.”
News From Houston
http://www.chron.com/disp/story.mpl/business/steffy/6391630.html
The logjam in lending inflicts pain
Is it time to say:
Don’t build things you can’t pay for?
‘The real estate market — the whole subprime mess — led us into this and the real estate market will lead us out.’”
Wrong, Realtor Boy. Rampant greed and irresponsibility led us into this mess. A return of sound credit and lending practices, and letting the natural consequences of bad choices play out, is the only thing that will lead us out.
Did tulip bulbs lead the recovery after the tulip bubble?
- Did the South Sea economic rebound lead the recovery from the South Sea bubble?
- Did the Nasdaq rebound lead the recovery after the tech stock crash?
- Did the rebound in Japanese land and share prices lead the way back from the lost decade?
(Answers: No. No. No.)
“But their mortgage debt — dating to the Hitchcocks’ buying out George’s siblings after they married in 1993 — had been compounded by a second mortgage to pay off a car loan and some other bills. ‘I feel like they could have cared less,’ said Susan Hitchcock.”
Never ever use a house refi to pay out a short term debt like a car.
Roidy
If they could have cared less, then they probably cared far to much.
By contrast, someone who couldn’t have cared less truly did not care at all.
From teh NYT
nytimes.com/2009/04/27/business/27geithner.html?pagewanted=2&_r=1&partner=rss&emc=rss
IN june when asked what emergency powers might the US gov ask for in dealing with the financial crisis.
Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation’s most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele A. Smith, then an assistant Treasury secretary.
The proposal quickly died amid protests that it was politically untenable because it could put taxpayers on the hook for trillions of dollars.
“People thought, ‘Wow, that’s kind of out there,’ ” said John C. Dugan, the comptroller of the currency, who heard about the idea afterward. Mr. Geithner says, “I don’t remember a serious discussion on that proposal then.”
But in the 10 months since then, the government has in many ways embraced his blue-sky prescription. Step by step, through an array of new programs, the Federal Reserve and Treasury have assumed an unprecedented role in the banking system, using unprecedented amounts of taxpayer money, to try to save the nation’s financiers from their own mistakes.
They should call their program DMSITA — Drown Main Street in Toxic Assets. Because that is what is effectively happening.
Is anyone looking for a foreclosure home to buy in the $1,000,000+ price range? Because there are plenty of them in Rancho Santa Fe right now, according to this ForeclosureTown dot com web site my loverly wife just showed me. This is the high end of the price range for a search of homes within 10 miles of our zip code (92127), which turned up 1265 — yes 1265 results:
Go to Results Page: First Prev 57 58 59 60 61 62 63 64 (Displaying 1261 - 1265 of 1265 Results)
Address / Property Type / Beds / Baths / Price
LOMA LINDA DR
RANCHO SANTA FE , CA 92067 /
For Sale by Broker /
7 / 10 / $11,950,000
LOMA LINDA DR
RANCHO SANTA FE , CA 92067 /
For Sale by Broker /
7 / 7 / $11,950,000
PASEO HERMOSA
RANCHO SANTA FE , CA
92067 /
For Sale by Broker /
6 / 6 / $13,500,000
FORTUNA DEL ESTE
RANCHO SANTA FE , CA
92067 /
For Sale by Broker /
6 / 8 / $14,000,000
BOX 675864
RCHO SANTA FE , CA
92067 /
Bankruptcy /
* / * / Must call
Just imagine what these listings will look like by year-end 2010, after the prime and Alt-A ARM resets have ripped a path of devastation through high end California coastal housing markets.
Bet they bulldoze and subdivide the land when all is said and done. Even when the prices to buy drop to nothing, nobody will touch these places due to the SF, taxes, and ongoing maintenance costs.
From NYT article
William Poole, president of the Federal Reserve Bank of St. Louis until March 2008, said that the Fed, by effectively creating money out of thin air, not only runs the risk of “massive inflation” but has also done an end-run around Congressional power to control spending.
Many of the programs “ought to be legislated and shouldn’t be in the Federal Reserve at all,” he contended.
I think it is awesome that Poole is taking every opportunity to pull away the curtain from the Wizards of Fed. He gives me hope for the future of the economics profession, as there evidently are at least some economists who sufficiently value their professional integrity to forgo auctioning it off to the highest bidder.
My wife is reading San Diego used home listings right now on the other computer and laughing about them.
Example: $1.7 million for a 5100 square foot home, built in 1981. It has an abundance of windows, and did not burn down in any fires since 1981, despite being situated in Old Poway. But who needs that much house, or that much living expense, in an economy stuck in the middle of the worst economic downturn since the 1930s?
This is un fn believable
Same article NYT
Mr. Geithner has also faced scrutiny over how well taxpayers were served by his handling of another aspect of the bailout: three no-bid contracts the New York Fed awarded to BlackRock, a money management firm, to oversee troubled assets acquired by the bank.
BlackRock was well known to the Fed. Mr. Geithner socialized with Ralph L. Schlosstein, who founded the company and remains a large shareholder, and has dined at his Manhattan home. Peter R. Fisher, who was a senior official at the New York Fed until 2001, is a managing director at BlackRock.
Mr. Schlosstein said that while he and Mr. Geithner spoke frequently, BlackRock’s work for the Fed never came up.
“Conversations with Tim were appropriately a one-way street. He’d call you and pepper you with a bunch of questions and say thank you very much and hang up,” he said. “My experience with Tim is that he makes those kinds of decisions 100 percent based on capability and zero about relationships.”
For months, New York Fed officials declined to make public details of the contract, which has become a flash point with some lawmakers who say the Fed’s handling of the bailout is too secretive. New York Fed officials initially said in interviews that they could not disclose the fees because they had agreed with BlackRock to keep them confidential in exchange for a discount.
The top echelon of the Treasury Department is a common destination for financiers, and Mr. Geithner has also recruited aides from Wall Street, some from firms that were at the heart of the crisis. For instance, his chief of staff, Mark A. Patterson, is a former lobbyist for Goldman Sachs, and one of his top counselors is Lewis S. Alexander, a former chief economist at Citigroup.
A bill sent recently by the Treasury to Capitol Hill would give the Obama administration extensive new powers to inject money into or seize systemically important firms in danger of failure. It was drafted in large measure by Davis Polk & Wardwell, a law firm that represents many banks and the financial industry’s lobbying group. Mr. Geithner also hired Davis Polk to represent the New York Fed during the A.I.G. bailout.
Treasury officials say they inadvertently used a copy of Davis Polk’s draft sent to them by the Federal Reserve as a template for their own bill, with the result that the proposed legislation Treasury sent to Capitol Hill bore the law firm’s computer footprints. And they point to several significant changes to that draft that “better protect the taxpayer,” in the words of Andrew Williams, a Treasury spokesman.
But others say important provisions in the original industry bill remain. Most significant, the bill does not require that any government rescue of a troubled firm be done at the lowest possible cost, as is required by the F.D.I.C. when it takes over a failed bank.
OK I”m going to call this NYT piece the first shot over the bow at removing Geithner.
April 24 (Bloomberg) — Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.
While the Standard & Poor’s 500 Index climbed 28 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show. That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc.
“They should know more than outsiders would, so you could take it as a signal that there is something wrong if they’re selling,” said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. “Whether it’s a sustainable rebound is still in question. I’d prefer they were buying.”
Insiders Sell
Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients.
That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the 17-month bear market that wiped out more than half the market value of U.S. companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992.
“Condo owners share more than roofs and lobbies these days. They also share one another’s financial burdens”
This is something that I have definitely noticed…