An Egregious Error
It’s Friday desk clearing time for this blogger. “Chicago’s bungalows and brick Georgians are selling, but woe to the owner of a city condo. Phil Sammarco didn’t think it’d be so hard to sell his two-bedroom, two-bathroom condo in the city’s DePaul neighborhood when he put it on the market in March for $449,000. Now priced at $435,000, he has fielded — and rejected — a few low-ball offers and showed the unit to a lot of first-time buyers who have indicated they have a wealth of properties to look at. Now he’s thinking of turning it into a rental instead of lowering the price again.”
“‘You’ve got a lot of choices,’ Sammarco said. ‘Right now nobody is really comfortable that the worst is behind us. If you don’t think the market is stable and you don’t think it’s going to be as good or better, why wouldn’t you rent?’”
“A few years ago, few people in the housing market had ever heard of a short sale. Mention the term today and people, whether they are homeowners or real estate agents, just roll their eyes. The Obama administration is aware of the frustrations. In mid-May, Treasury Secretary Tim Geithner announced plans to streamline the process by offering financial incentives to mortgage servicers and investors that accept short sales.”
“Meanwhile, homeowners like Dallas O’Day are in limbo. O’Day, a Chicago attorney, and his family relocated from California in June 2004 and bought a Mediterranean-style home in Chicago’s Beverly neighborhood for $395,000. They rewired the house, stripped and refinished the wood floors and the woodwork, and did other work to restore its charm.”
“Last year, personal circumstances prompted them to list the home for sale just as the housing industry’s meltdown was picking up steam. With no takers and no longer even expecting to break even on his investment, O’Day relisted the 2,700-square-foot home in January as a short sale. Four months and three price reductions brought the house down to $384,900, at which point a potential buyer made an offer in late May. O’Day accepted it and submitted the paperwork to the lenders holding first and second mortgages on the home. He has yet to receive a response.”
“Meanwhile, the family has moved into an apartment, the refrigerator has broken in the home and there’s evidence of mold in the basement.”
“‘What has astonished me is that in the presence of one of the softest housing markets I can remember, we’re hitting up on four months and they’ve just had a person assigned to look at it, that they would move at such a glacial pace,’ O’Day said. ‘My expectation is I’ll be renting until whatever blemish is gone. I’ve just accepted the fact that at some point it’ll be foreclosed upon because I just don’t think the banks will pull it together. I feel like I’ve done everything I can do.’”
“A slowdown in the local housing market is reflected in assessed values for homes in Yakima County this year, the Yakima County Assessor’s Office said. .Certainly, King County has suffered from a bursting of the housing bubble. Stan Roe, assessment unit supervisor in the King County Assessor’s Office, said Monday market values in King County fell by an average of 15 percent this year.”
“‘I don’t think I’ve seen this big a drop before’ said Roe, who has worked for the King County Assessor’s Office for 19 years.”
“The spectacular fall of WaMu has left a hole in the heart of Seattle. To mark the anniversary of WaMu’s collapse, The Seattle Times caught up with former employees…who saw problems behind the scenes before the final days. James Meacham was at ground zero for some of Washington Mutual’s most questionable home loans. He wasn’t a typical banking executive — he had a master’s degree in theology and had spent time as a minister. He was hired in Seattle in 2000 and rose to become a vice president of business strategy at WaMu’s Long Beach Mortgage division. Based in California, the division specialized in subprime mortgages, made to those with flawed credit histories.”
“On a gut level, Meacham says, the packages of loans that Long Beach and WaMu began bundling and selling to investment banks didn’t make sense. But those loans held the lure of bigger profits for everyone, and the investment banks couldn’t seem to get enough of them. Meacham says he could see the housing crash coming, and sold his California home in 2006 at the peak of the market: ‘It didn’t take a financial genius to work out that blue-collar workers can’t be paying $3,000 a month for their houses,’ he says.”
“There was the pressure from his superiors at WaMu to grow the business rapidly, he says. There were the mathematical formulas and financial projections that showed bundling all those risky mortgages would turn out just fine. And there was a sense that the rules of the game had changed. He has wrestled with the question of who was primarily to blame for the mess. Was it lenders like WaMu? The investment banks? The global housing boom? He wonders if there is a point where credulity, and belief in a system, become culpability.”
“‘The basic problem was the assumption that housing prices would always go up,’ Meacham says. ‘It was an egregious error.’”
“No state has fallen as far as California has in the current global recession. James Doti, president of Chapman University in Orange County and a member of Mr. Schwarzenegger’s council of economic advisors, was in Toronto to discuss the many issues plaguing the state. Here is an edited conversation with the Financial Post’s Eric Lam.”
“Q. What was it about Southern California that made it such a target? A. Zoning, environmental regulations, real estate controls are all greater in California than other parts of the nation. This led to more rapid housing appreciation in Orange County than elsewhere because it was more difficult and costly to build there. Since the construction industry could not respond as rapidly as it could in other parts of the country, it led to a severe supply-demand imbalance.”
“Q. What kind of price appreciation are we talking about?”
“A. At one point average prices in Orange County hit US$750,000, roughly ten times the household income. This could not be supported and that’s when the drop occurred. But houses are affordable again: the average house price is about US$400,000. There were small 100-year-old units close to Chapman that were two room bungalows, maybe 900 square feet, going for US$900,000. Now they’re down to US$300,000, and still people look at them and say, ‘My goodness that should be no more than US $75,000.’ But in Orange County that’s affordable.”
“The real-estate bust that has pummeled San Diego’s downtown condo market and wreaked havoc in its outlying suburbs has hit its once-impregnable beach communities. Beachfront property has come down as much 30 percent in some areas from 2006 highs, with much greater savings possible on foreclosure properties or short sales.”
“Even the crown jewel, Coronado, hasn’t escaped the downturn. ‘Four years ago, you couldn’t find anything in Coronado for under $1 million,’ said Maureen Kerley, a real-estate agent who works in Coronado and Scottsdale. ‘Now, there are dozens.’”
“Please, keep those tax credits rolling. That, not surprisingly, is what the battered real estate industry is arguing as it lobbies for an extension of the $8,000 first-time homebuyer tax credit. Zillow is rolling out a new survey of homebuyers that finds that extending the tax credit would bring an additional 334,000 buyers into the market over the next year starting in December. Overall, that estimate is based on a nationwide survey of prospective homebuyers in which 18 percent cited an extension of $8,000 tax credit as the ‘primary’ influence on whether to jump into the market.”
“Still, extending the tax credit could prove costly to the rest of us who have either already bought homes are renting now. Obviously, at some point the market will have to stand or fall on its own without Uncle Sam’s help. But is it time to go cold turkey now?”
“The Florida housing market is struggling because of a declining population, tight credit, high unemployment rates and a lengthening of the home-buying process, economists said. ‘I think we have a tougher path to get (out of the housing slump) than the nation as a whole,’ said Dr. Sean Snaith of the University of Central Florida’s Institute for Economic Competitiveness.”
“Tax credits won’t solve the main problem of limited credit, Snaith said. ‘Most people cannot get financing right now — that to me is the bigger problem,’ Snaith said.”
“First-time house buyers in Australia this summer took out bigger loans than the same period a year ago, writes Nick Gibson. The Australian Bureau of Statistics says that the average loan size for first home owners increased from $246,500 in 2008 to $269,100 in July 2009. This compares with the average mortgage for a new house of $266,900.”
“The trend suggests that first-time home buyers have been contributing less of their own savings while taking advantage of the $21,000 in government housing grants introduced this year as as part of a national stimulus package.”
“‘The housing grants have helped to incentivise a property market that shows no sign of stalling and is forecast to grow consitently over the next decade,’ says Darrell Todd, ceo of thinkingaustralia.”
“The Reserve Bank warned yesterday that the super-sized loans were an ‘unusual outcome’ given that loans to first home buyers were normally smaller than loans to other home buyers. However, figures compiled by the Australian Bureau of Statistics show the average loan size for first home owners was up from $246,500 a year ago to $269,100 in July. This compares with the average loan size for all owner-occupied housing commitments of $266,900.”
“First home buyers have also helped to push up new home sales, according to the latest Housing Industry Association report. According to analysts, the growing loan size suggests first home buyers have been relying heavily on government grants of up to $21,000 rather than putting their own savings into it.”
“The International Monetary Fund has urged central banks to be prepared to lift interest rates to head off the sort of asset price bubbles that produced the global crisis. But don’t expect the Reserve Bank to start targeting Australian housing prices. Yet still be prepared for the central bank to lift interest rates more aggressively if house price rises start getting out of hand. And expect governor Glenn Stevens to complain more about other policy bottlenecks that appear to be pushing up house prices.”
“Stevens has long been uneasy with the orthodoxy — promoted by former US Federal Reserve Board chairman Alan Greenspan — that monetary policy should not aim to dampen asset prices, except to the extent needed to keep goods and services inflation low.”
“‘I personally would not want to commit to saying, ‘we’re definitely never going to pay attention to asset prices and totally ignore them,’ he said. ‘That has been shown to be a mistake, basically.’ But neither would the Reserve Bank ‘aggressively chase down’ asset prices that “pop up here and there”, even if they didn’t seem to make sense.”
“Today’s rising housing prices, however puzzling, are not a bubble now because credit growth remains subdued. But Stevens admitted to not understanding why Australia’s housing prices are so high given we have so much spare land.”
“Agents are expecting a flood of first-home buyers this weekend. Figures from Australian Property Monitors show there are 4054 metropolitan properties priced under $400,000 on the market - 58 per cent of the total 6997 listings. This compares to the 3921 properties under $400,000 that were on the market at the same time last year and 6412 for total listings.”
“‘It’s the last weekend before the grant changes,’ said Toop & Toop agent Kay Morris. I would imagine there would be more people this weekend looking.’”
“Century 21 Central agent Rosalyn Marker said there was a sense of urgency, which was evident at a Melrose Park sale this week. ‘To have an open with 88 people over the last Saturday and Sunday was a very rewarding result for us,’ she said. ‘We had 11 offers on that property, most of them were young couples … and I would be expecting them (those who missed out) to be looking again this weekend.’”
“Sang Ah Lee, 25, signed a contract for the Melrose Park home on Tuesday after searching the property market for about four months. ‘Because of the grant I tried harder to find a property I liked because that was a deadline for me,’ she said. ‘So I was very lucky.’”
“The Australian dream of home ownership is slipping away, leaving a threat of a US-style collapse in house prices, according to a team of university researchers. Analysis by researchers from South Australia’s Flinders University has revealed home ownership in the 10 years from 1996 rose only 0.8 per cent despite strong economic growth and low interest rates in that period.”
“Other findings included large gains in national income from the resources boom were ‘wasted’ by increasing house prices and accumulating debt to unreasonable levels.”
“Dr Joe Flood, the Institute’s adjunct professor, said the ‘the writing is on the wall for the ‘Australian dream.’ Dr Flood and his team assessed Census data to conclude that Australia’s housing market is in “a very dangerous and unstable situation which has received little adverse attention.’ The researchers found that after 1996, average house prices increased by three times on average - to around 6.8 times medium household income - and debt levels surged.”
“‘On the one hand Australia is vulnerable to a collapse like the United States, where prices fell by a half during the sub-prime collapse … or to a long slow decline as in Japan since 1988,’ Dr Flood said.”
”’The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,’ Dr Flood said. ‘As long as the Government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve.’”
‘A friend asked me the other night whether he should wait until after the first home owners’ boost expires to buy his first property. I didn’t think twice. “Yes,” I replied.”
“Usually, I’m a bit more circumspect with my financial advice, but on this point, the evidence is clear. Wannabe first home buyers should be sitting back and breathing a huge collective sigh of relief when the Rudd government’s boost begins to be phased out two weeks from today. You see, it was designed with their baby boomer parents’ interests at hearts, not theirs.”
‘The irony escaped me at the time, but I had been sitting in the same room about a year earlier, when Labor in Opposition hosted a ‘‘Housing Affordability Summit’’ to deal with what it had dubbed the “housing affordability crisis”. About 150 housing experts from all over the country were in attendance: developers, welfare groups, banks, academics. They didn’t agree on much, but they all agreed that increasing the first home buyers’ grant would simply put up house prices.’
‘To her credit, the Australian Financial Review’s political editor, Laura Tingle, was on to it like a flash. “Just on the housing package,” she inquired of Rudd during his press conference. “You said in your opening remarks that they were designed to support activity in the housing sector…is it also essentially designed to help keep housing prices from falling?’’
‘But the PM obfuscated a little: ‘‘Our principal concern here Laura is activity in the economy. Our policy action here, given the significance which private dwelling investment represents in the national accounts, is to ensure that we maintain activity in the sector. That is why these one off measures have been embraced.’
‘It’s clear that the political imperative to stop house prices from falling is now deeply ingrained in our political economy. First home buyers are being used as unwitting instruments, doing the bidding of their baby boomer political leaders, on behalf of their parents.’
‘Simply giving people extra cash to pay more upfront for housing, without properly addressing underlying problems with supply, only inflates prices and makes it harder in the long term for future generations of first home buyers.’
Whooo Hoooo! Thanks, Ben! Satisfying fare for this lovely Friday.
IIIII’m back in front of a computer and ready to spend my work day productively—catching up on the last few days of Bens Blog, shouting at idjit comments and boldly typing in rebuttals to comments that are 3 days old and will never again be viewed by any living soul…smart stuff like that, as well as gossiping cruelly, twirling in my chair, and eating Twizzlers. I’m great at this. My performance reviews in these categories are freakin’ sterling.
And guess what? Yesterday I learned that a semi neighbor one street over has FINALLY got their house sold—barring unforeseen catastrophes. I like her and had always meant to get to know her better but never got around to it, and now they’re moving to AZ. (Say hi to them, Ben. They’ll be the very pale folks with moss growing on them here and there in patches.)
But anyway, they had their house on the market for 2 years and I learned yesterday they had—are you ready—two showings. In two years. The final price I see online is about 630 K. They started out at 750 K and just followed the market down. Had they put that house up at the peak in 2005 they’d a got that easy, or more, after the bidding wars began. He told me ‘Well, we were greedy’. I thought inside my fluffy noggin ‘Jeeze, ya think?’
But I didn’t say anything cruel out loud, because they might have a garage sale and I don’t want to be barred. Last weekend I said something snotty at an estate sale and the lady got grouchy and then changed her mind and wouldn’t sell me a teapot.
But my points are, I think they got lucky as blazes to get 630K, that it’s NOT ‘different here’, and that I hope capitulation has begin hereabouts, because I was tired of all the sticky prices and the lingering air of wistful stupidity/hope.
Snaith ? You can’t make these names up, or can you?
I think it’s the perfect name for this particular fellow. Sort of a combination of ’snake’ and ’slither’ and ’slather’.
The very sound conjures forth an image of an oily second-rate con-man with a fast patter and nervously darting eyes.
Oly, you left out Snidely (Mr. Whiplash)
Oly, you left out Snidely (Mr. Whiplash)
Nostalgia! I was ‘Purity Dean’ in my high-school production of ‘Pure as The Driven Snow’.
I don’t recall much about it, except I got to faint a lot, and look dewey-eyed, and there was this evil guy who wore overalls and drove a tractor around and stalked me.
…Wait…dang. Maybe that was my real life?
I imagine a big part of these credits is to stimulate sales and taxes in addition to proping up the price for banks.
Snaith = son of Slytherin…
I think we’ve heard from Doctor Sean Snaith before, but a new one on me is political editor Laura Tingle. Guess she investigates sex scandals and the like.
OMG…(computer monitor static in dark room)
“She baaaaack”
Bite me!
“She baaaaack”
Delightfully so!
Thanks.
Good to have you back, Olygal.
Hope you had a fun break…whatever it was you were doing.
She wuz a-huntin’ grizzlies with a switch.
Dough-4-Dumps
I think “no” is a good response to that question. Every realtard i’ve talked to lately though not only expects an extension, they expect an increase in the cash for shacks program.
I can say from recent experience that this credit has definitely led to to higher prices on the low end through mid range of the market. Bidding wars full of young buyers bidding over inflated appraisals to stupid numbers…. It feels wrong. I say rip off the bandaid and let things return to a healthy affordable level. Unfortunately I don’t have enough cash to buy an opinion on the hill.
Speaking of real shacks, a friend of mine in a small 4 year Wisconsin college town brought the following to my attention with the low end student rental housing racket recently.
Shacks for students has been a good living and side business there for lots of local LL, small time investors and RE agents for many, many years.
Two guys that we knew, went to college there, or at least that’s what they told their parents, They stayed, bought a bar which was a gold mine and had 37 rentals before they sold out and left town. Those guys and EZ rental days are both long gone.
Anyhoo, the 1st 5 low end shacks listed for sale in town on a RE website were known rentals since before the Last Supper and stated as “broker owned”.
Of the next 5 listed for sale, 3 were thought to be hers and noted “Leased until 5/3/2010″.
I asked him if she was retiring and getting out of the side-line rental business because of upkeep or taxes.
He wasn’t sure but said that a lot of the older college town’s slum lords had been desperately trying to dump their old college rentals pushing the $8k tax rebate. The old pro’s of the college rental’s…were getting old or getting out.
He did mention that there was the biggest “shadow inventory” of really decent to nice middle class housing(normal houses) he ever saw of in his town this Fall and that they were scrambling to rent to students.(economy and locals in trouble?)
His wife is a professor and says today’s college students don’t like to suffer with cold old houses with a housemouse, bats and mac n’ cheese. They drive a nicer cars than hers, have a $10 a day Starbucks Habit and pay for it all …later
Hey…IT’s Amerika
College-wise, students are pinching pennies these days. College life has radically changed in only one year.
Nicer cars? Not in 2009.
A huge percentage of college endowment funds are underwater. Colleges have obligations to pay charitable gift annuities, but the money may run out in a few short years.
I think buying homes in Madison, Wisconsin is a different story. But homes in a small town with a Liberal Arts college is a losing proposition. A degree in Latin or Anthropology is worthless. Even a business degree is worthless these days.
True that the college economic hammer is coming down.
In the Cost and Aid section of UWM main campus Tuition Costs, under “Investing in your Future”, it lists 2009-2010 total estimated cost for as $19,990, $21,550 and $34,240 for resident, Minnestoa and non-resident students.
True, that’s become a fairly hefty “Investment” but they keep on coming…to “Invest in their Futures”.
My sister has gone from a single room for herself, the next year a studio, the next year 4 girls in a 4 bedroom and this year 3 in a 2 bedroom. Next up 2 in a studio.
“even a business degree is worthless”
Yup. But a medical degree is not. ‘Course that’s a hefty amt of student debt.
I feel sorry for the 30-year-olds who were suckered into taking on big student loans to get law and biz degrees and who are being laid off now. When too many are trained for “elite” occupations, the training confers no advantage.
I do believe many students now should assess the pros and cons of a college education. The dynamics have completely changed.
Personally, I don’t think any college student should invest $150k (?) unless they’re extremely bright, a go-getter, and have a keen interest in something like planetary molecular fusion.
The job market is just brutal. And it’s even more brutal if you’ve been unemployed for any length of time. If you’ve been unemployed for a year, the chances of finding a job are even slimmer. I guess employers will hire the guy who’s been unemployed for a month as opposed to a guy who’s been unemployed for a year.
I don’t know about online college degrees. I’m still somewhat skeptical of them. I think the limited social contact is problematic. It’s problematic if you’re a young introverted person. You’re just not going to gain many social skills on a computer. If you’re an outgoing person, that’s different.
Online degrees may be the wave of the future. I don’t know? I do believe it’s a good fit for some students but not for others.
Interesting that it takes an Australian media outlet to acknowledge that there will be no bottom in housing until we stop trying to prevent one. The news in Florida this week –stupidly, it was celebrated as a good thing — was of a slight increase in housing prices, without any reporter drawing the conclusion that an $8,000 tax credit might produce a corresponding effect on those prices.
And speaking of stupid, check out this couple. There are 50 houses for sale in Tampa’s Avila neighborhood, including this 19,000 square foot moron monument in foreclosure that the owners walked away from to resettle in the south of France. The paper had a picture of the two-story walk in closet, which looks bigger than some apartments I’ve lived in.
http://tinyurl.com/y993l8d
I invite Snaith, and Hank Fishkind, to submit to an interview on this blog, like Jack McCabe did.
I’m already observing $20K price cuts in anticipation of the expiring tax credit. Plus, with few exceptions, everyone expects 10 pct off list prices. Furthermore, according to one source, closings are down and listings are up for the month of September. The market is going cold.
Expect lobbying efforts to double or triple.
I hadn’t noticed recent reductions. Where are you, mMaven?
Giving people extra cash/grants/tax rebates doesn’t give people SKIN IN THE GAME though. Hard work and saving for a decent (>20%) downpayment does. Otherwise it’s walk away renee.
I’ll take a good house for free if the gov is giving em away instead of that 8k. Just throwing that in the mix.
Me too
Been reading blog for over 4 years and never crossed my mind parents are the funding source and opportunists behind the over the top response to the first time buyers credit. They get little Johnny out of their home for practically nothing and help set Johnny up with a house so they never need to feel guilt down the road for not caring about little Johnny. A three-fer.
The problem is that little Johnny doesn’t know how many houses he owns.
Little Johnny McCain that is.
He wasn’t a typical banking executive — he had a master’s degree in theology and had spent time as a minister. He was hired in Seattle in 2000 and rose to become a vice president of business strategy at WaMu’s Long Beach Mortgage division.
‘It didn’t take a financial genius to work out that blue-collar workers can’t be paying $3,000 a month for their houses,’ he says.”
But that did not STOP you - did it? You rode that train until it came right off the tracks instead of doing the right thing.
‘On a gut level, Meacham says, the packages of loans that Long Beach and WaMu began bundling and selling to investment banks didn’t make sense. But those loans held the lure of bigger profits for everyone, and the investment banks couldn’t seem to get enough of them.’
“There are times that I think that I should have spoken up more when things didn’t seem right to me,” he says. “On the other hand, I’m not sure it would have helped any.’
If you had spoken up, you would have been fired ! LOL Fishkind, there’s another name out of the past ?
Please note, he is a “former” minister. I’m sure there is a story of two behind why he is no longer a clergyman.
Let’s make up a story about Fishkind being defrocked for 1.Playing around with the organist 2. Playing around with the alter boys 3. Playing around with various parishoners 4. Keep it going HBBers.
Is he the kind of “former ” minister like the one from Colorado Spgs who would villify gays, but drive to Denver for gay sex with his masseuse And “just try” cocaine? Go back and sermonize?
Now he is “straight” again. Got ‘fixed’ in 2 weeks.
Would be Ted Haggard. Last I heard he relocated to Phoenix. Lucky us. http://en.wikipedia.org/wiki/Ted_Haggard
That is the one. Major evangelist anti gay, anti drugs, ” but I just tried it “once”", and there must be no legit masseuses or even gay ones in his town.
Didn’t Haggard have some type of sexual relationship with a young guy who attended his worship services.
Two weeks? Why did it take so long? That therapy is obviously bogus. Something doesn’t sound right.
I thought most ministers, with expertise in chosen sexual orientation issues, just put their hands on the person and chant something like, ” Zappo. Yappo. Wappo. Healed.”
For this type of sexual orientation therapy, two seconds should do the trick. “Healed!”
Whatever the reason, I’m glad he’s no longer a clergyman. Clearly his moral compass doesn’t point True North.
Like True North to Alaska. You betcha!
his master’s thesis was on making pacts with the devil…
According to the article, he now wants to teach business ethics.
ya can’t make this stuff up
That is an awfully funny quote. Is he calling himself redicoulously stupid or is he calling himself criminally negligent? It doesn’t take a genius to see this guy is crooked. Good work bringing down wamu and the greater economy, you financial genius you.
“‘The basic problem was the assumption that housing prices would always go up,’ Meacham (former minister) says. ‘It was an egregious error.’”
Was it an “egregious error”, or was it …SATAN?
The Devil made me do it. then he did a ‘Geraldine’ (FlipWIlson) sashay.
With a master’s in theology, I’m sure the guy’s business strategy was to simply pray…
I’m sure St. Joseph was involved somewhere along the line here.
I think he worshiped the false god of Prosperity Theology, which is of course, complete nonsense when the Scriptures teach that a hard worker is worth his wages and lazy people come to poverty.
I would like to think that I would not of sold my brothers and sisters down the tubes when I was in the business many years ago ,but back in those old days the objective was to deny a loan if the borrower looked like they would be stressed or a bad risk .
I wasn’t in the business during this last mania ,but its hard for me to believe that the industry just didn’t turn criminal eventually .A loan agent would know if the file was fraudulent and so would the real estate agents . It all starts with the real estate agents knowing the income of the borrower and pushing them into getting something beyond what a borrower can afford and actually selling the borrower on the concept of leverage . Than the real estate agent would have to know which loan agents to turn their customers on to ,and no doubt many kickbacks were going on to do this .
Real estate agents were double escrowing like crazy during the boom ,which drove up the false prices .
The industry totally breached their duty to underwrite loans and police the situation ,but the Wall Street Investment firms that sold to the Secondary market, with the help of the Rating Agencies ,made it possible for the chain to breach their duty to underwrite loans . The people at the lower end of the chain just took advantage of the lack of policing of the higher ups .
“Now he’s thinking of turning it into a rental instead of lowering the price again.””
On a $435k condo? What is he going to get for it? I would suspect, not what his mortgage it, that’s for sure.
That’s too funny. Those that are so willing to wait for the market to come back, only to realize in the near future that they made their loss just slightly bigger.
And then, in the intermediate future, the loss grows further.
“On a gut level, Meacham says, the packages of loans that Long Beach and WaMu began bundling and selling to investment banks didn’t make sense. But those loans held the lure of bigger profits for everyone, and the investment banks couldn’t seem to get enough of them.”
Main Street was punished on so many levels by the predatory infusion of Wall-Street-securitized subprime loans. The subprime mortgage lending kingpins are going unpunished while the rest of the country suffers. It is wrong — I would like to see jail time for the executives who perpetrated this disaster, instead of ongoing multi-million dollar bonus payments.
Yes! Where are the perp walks?!?!? I want to see these a$$clowns in orange jumpsuits instead of Armani!
Athena!
So good to see you my dear! I’m in no way taking up for those slimeballs, but I guess I tend to see it the other way around. Why do we think it was the “broker originated” loans that became un-sellable right out of the gate as this thing broke?
All of these MB’s are ( supposedly ) monitored and regulated at the s-t-a-t-e level. The pure fabrications of independent MB’s ’should’ have been caught long before they found their way to WS. There wouldn’t be “fences” ( if it wasn’t for thiefs? )
DinOr …The very loans with no down payments and toxic increases
were a set up for a big fall and how dare the Rating Agencies rate that junk as low risk .The BIg Boys of Wall Street just wanted to keep leveraging and churning the customer ,like they do with stocks . How dare Wall Street and the Rating agencies approve bizarre risk models ,such as no skin in the game and all the other crazy loans that became common place during the boom.
This crazy idea that trenches of CDO’s would spread out the risk,therefore there was no risk ,was just poppycock . What proof did they have that these risk models would work ? They lived off the past steam and good reputation of prior markets and used that reputation to hoodwink the World because they wanted to create a way to make money ,just as any ponzi-scheme looks for a way ,and de-regulation didn’t help .
The lower levels criminals that created the bundles ,knew that the upper level buyers were taking anything and everything
without quality control . All Wall Street cared about was that they could makes billions on leveraging this junk paper that was risky and they drove up the prices by this easy money . Wall Street likes driving up stock prices so churning is easier ,so they
brought their madness to the streets of real estate . How dare they leverage 40X funds ,yet many of those clowns were bailed out and have their money in tack . Hank Paulson has his one half billion in tack from this unregulated run for 7 years .
And what a joke regarding the Rating Agencies that in no way shape or form were doing their job by being in bed with Wall Street . What a joke .And the regulators ,they were just closing their eyes and sleeping on the job. So much in advertising bucks were put into keeping the cheer-leading for real estate going that its frightening that even the news media can be bought off that way .Talk about the Big Casino gaining control and becoming the Evil Money Changers . So,the devil got bailed out ,
how do you like it now .
The Wizard is BACK
Wizard —
Something tells me you don’t buy the “Noone could have seen it coming” line?
PB…..Right ,I don’t buy the nobody could see it coming . Maybe because I was in the business at one time ,so I know that it would be clear what was going on . This scum just thought that the roller coaster ride upward would last longer and give them time to take the money and run . There wasn’t any good faith in any of this ,it was all about short term money ,pump and dumb stocks ,and all that is associated with selling to a greater fool in a Ponzi-scheme .
OMG how the heck have you been? Hope you are doing well.
woe to the owner of a city condo
Ben, could you do a post or could someone guest post focusing on downtown condo high-rise development? Or condos in general.
You’ve referred to condos before as indicating a late stage in housing bubble development (and to ‘luxury’ condos overlooking the auto-related businesses of S. Lamar Blvd. as a sign of Austin’s ’screwedness,’ to paraphrase.)
Austin, while late to the party, has gone hog-wild - our last mayor was a professional downtown condo developers’ pimp (really, that’s what he did before becoming mayor).
Local discourse is unenlightening. The media is sucking on the REIC teat and people I otherwise respect repeat the growth mantra. Criticism of the condo blight or the sterility of VMU and trying to maintain the character of your own neighborhood brings attacks - you’re advocating suburban sprawl, opposing supposedly ‘earth-friendly’ density, preventing ‘walkability,’ denying younger people the opportunity to live near the park and downtown…
‘Criticism of the condo blight or the sterility of VMU and trying to maintain the character of your own neighborhood brings attacks’
Man, Austin must have changed a lot. A few years back you couldn’t cut down a dead tree without a committee and a hippy protest. I laugh (ha ha) at the idea that Texas doesn’t have a bubble. IMO, the mania started somewhere from 91 to 95, depending on what part of the state you’re talking about.
So, I’ll be on the lookout for condo reports.
Thanks Ben. I started thinking about the topic when I read ET and edgewater’s comments about Chicago condos in the bits.
Here,there’s still a lot of local activism, but the “raze the landscape, drive out the individual businesses with character, replace with VMU - luxury low-rise condos over cookie cutter boutique retail - and luxury condo towers” dominate the discourse, probably because of the big money backing them. (And the local activists are having to fight city hall to prevent the cutting down of 20+ big trees at BARTON SPRINGS, which was going to happen even though reputable arborists suggested other solutions to prevent limbs from endangering park users.)
The “raze the landscape” crew fashion themselves as pro-density, pro-walkability, and anti-sprawl, although the downtown and close-in development has not slowed the suburban and exurban sprawl at all. The suburban “raze the landscape” crew has been even more effective than the urban one.
I won’t grant the “raze the landscape” crowd the name “smart growth,” because the growth we’re experiencing seems stupid (as if the Austin market is mainly movie stars and record executives, as if other than a couple of weeks a year Austin needs beaucoup boutique hotel rooms, as if Austin has more people desiring concierge services than people ready to provide them) and the people promoting it are just stupid RE-sters who brand themselves “urban, hip” and use gel instead of mousse, or perhaps vice versa.
F eartrh friendly density! People want their own boundry with a Rothwiler running wild in their back yard.
Hip has the foreclosure party started yet on all those Austin new condos? I can’t imagine everyone that bought one planned on really living there.
Did those new condos get tax abatements?
Oh my, Skip, I just wore myself out on my rant above. I’ll offer a couple anecdotal observations and try and get some data to post tomorrow or Sunday.
AFAIK, there have been tons of foreclosures on condo conversions in south Austin, particularly between Lamar and I-35. I heard a rumor that there has been one symbolically-charged foreclosure at the Nokonah building (just north of the last old Whole Foods on Lamar). Built in the mid- to late-nineties, a zero-lot-line 9-story complex among lower-rise commercial buildings, the Nokonah’s success spurred the current condo building drive. (BTW, the neighborhood association across Lamar acquiesced to variances on the project because of the developer’s plan for retail and restaurant on the ground floor. Never happened. To this day, there is just a - you guessed it - real estate office occupying the ground floor.)
As far as the newer downtown condos go, I haven’t heard of foreclosures yet (I think it’s too soon), but I will look into it tomorrow. That would be kept as quiet as possible.
Definitely, there have been people forfeiting their deposits. And in the frenzy (such as the immediate sell-out of the still not very lit-up-at-night 360), a lot of people bought as “investments.” Typical stories are: “I love the music scene, so I’ll drive 4 hours from Houston to go to a club and hear a band and stay in my own place for the weekend, have coffee outdoors under an umbrella - cool. And I’m hoping that my 3 kids at UT will live there together so that instead of paying their rent elsewhere I can pay my mortgage.” Another: “Mom was hoping to retire so that she can be close to her grandkids, but now she has decided to keep working for a few years. Anyone know someone looking for a downtown rental?” [Later it was revealed that grandma currently lives somewhat closer to her grandkids than downtown.]
Re tax abatements, I reckon they did. I’ll check. Downtown commercial buildings normally do. And since the downtown condos were part of the city project, during the Will Wynn administration, of moving 25,000 people downtown in a handful of years, I should think that they got generous ones.
I have a friend who bought a high rise condo in Austin about a year ago. Work required her to travel to Austin and she thought it would be a good investment. I tried to talk her out of it but failed. She was laid off and is now renting the condo at a $1800 loss monthly. She doesn’t want to walk away and “lose” her investment. I say she will only compound her losses. Any thoughts on this?
Austin?
I would say to Renee, just walk away!
I see some Marina Del Rey loft prices are falling (yeah!). But HOA dues are outrageous! I’ve seen some with over $1,000 monthly HOAs. How about an under $400,000 MDR loft with $900 per month HOA? LOL. Not unless I had a net worth of $5,000,000 and I absolutely wanted to be at Marina Del Rey.
Where does this “walk away Renee” come from? holytrainwreck used the same phrase above. Can’t be from “50 Ways to Leave Your Lover,” those were all guys’ names. Make a new plan Stan, walk out the back Jack, and so forth. Renee? Who’s that?
az.
“Just walk away, Renee” was a quite lovely song from the late 60’s by the Left Banke.
http://www.youtube.com/watch?v=6uqBTzfcIk4&feature=related
http://www.youtube.com/watch?v=nZ2c-h2rOS4&feature=related
http://www.youtube.com/watch?v=vWFu0ernD0E
Shorty, that sounds like an awful deal for your friend. The high rise condos are so overbuilt here that it’s hard to imagine things recovering so that she could make up for the $1800 monthly loss.
That’s really too bad. Sorry she didn’t listen to your advice.
Shorty, I will qualify that I don’t know the numbers, I (an HBB type) just look at the buildings (looming over my landscape), hear the prices, hear endless variations of basically speculative purchases (like your friend’s thinking it would be a good investment) and think “Damn!”
AFAIK, a neighbor and a friend of a friend have taken losses and gotten out of downtown condos (I say AFAIK because it’s not really something to bring up in conversation).
Does an FB have some leverage to sell back to the developer because the developers don’t want the news of bankruptcies to get around and affect the sell-off of the remaining units?
“A. At one point average prices in Orange County hit US$750,000, roughly ten times the household income. This could not be supported and that’s when the drop occurred. But houses are affordable again: the average house price is about US$400,000. There were small 100-year-old units close to Chapman that were two room bungalows, maybe 900 square feet, going for US$900,000.”
And since Chapman costs more $$$$$$$$$$$$$$ to attend then Cal-Tech or MIT And since Chapman has been buying up every conceivable piece of property surrounding the campus for the last 10 years… (Hwy, wonders how many millions $$$$$$$ were spent on the $900,000 -/ 900 sf “bungalows under Sir Doti’s reign?)
Lost corporate sponsors: Ameriquest & New Century!
Expansion
Attallah Piazza and Leatherby Libraries
Chapman began an aggressive, ten year construction program with the opening of Beckman Hall in 1998. And in 1999, Chapman launched its largest fundraising effort ever—a $200 million comprehensive campaign for facilities, programs and endowments—which surpassed its goal and drew in $214 million by the time it ended in May 2002.
* 1998 - Beckman Hall - Argyros School of Business and Economics
* 1999 - Kennedy Hall - School of Law
* 2001 - Henley Residence Hall
* 2004 - Fish Interfaith Center
* 2004 - Leatherby Libraries
* 2004 - Oliphant Hall - College of Performing Art’s Conservatory of Music
* 2005 - Glass Residence Hall
* 2006 - Marion Knott Studios - Dodge College of Film and Media Arts
* 2007 - Fahmy Attallah Piazza
* 2008 - Erin J. Lastinger Athletics Complex
* 2009 - George L. Argyros Global Citizens Plaza
* 2009 - Sandhu Residence Hall and Conference Center
The recently completed Erin J. Lastinger Athletics Complex features a new football stadium, soccer field, aquatics center, and olympic pool. Additionally, a new residence and dining facility (with 300 beds and a rock wall) is being constructed as the University continues to grow on-site campus housing.
Here are some tuition facts (full-time undergraduate tuition, excluding fees, ranking Chapman and other leading independent schools. Figures are for last year, the ‘08-’09 academic year, the most recent stats I had available for all these schools.)
USC $37,692
Claremont/McKenna 36,825
Pepperdine 36,650
Occidental 36,160
Pomona 35,318
Santa Clara 34,950
USD 34,000
Chapman 33,760
Loyola Marymount 33,266
Redlands 31,994
Whittier 31,950
Univ of the Pacific 30,230
Cal Lutheran 27,600
La Verne 26,910
Chapman’s ’09-10 tuition is $35,790. Since that increase was 6 percent, we guess that our relative position with the above schools stayed about the same. We say that because most schools raised their tuition more than 6 percent. (Remember, this is tuition only, not fees — the number Gary cites in the main post is tuition plus fees. I don’t have fee info for all these schools. “Fees” can vary widely, but mostly encompass things like student government fees, parking fees, health center fees, etc.)
Mary Platt
Director, Communications and Media Relations, Chapman University
OMG. What possible benefit is there for shelling out that kind of dough (borrowing) to go to friggin’Chapman.
the world has gone mad.
Yeah, I wondered why it costs more than Yale Harvard Caltech MIT. Then I saw that you can major in (hey hey hey!) film production at Chapman. Wonder how many film-something majors they sucker in each year. OTOH, if you WANT to get into film production or broadcast journalism or like that, it probably makes sense to go to some school where you can make some of the contacts. ??
Better off going to UCLA or USC, USC is arguably the top film production program in the US, and UCLA comes up close behind.
Or flunk out from Cal State Long Beach like Speilberg did.
Just how absurd it was for the Real Estate and loan Industry to sell people the concept of a 2 years buy to sell investment
ponzi- scheme with real estate . In the pass it would take at least five years to be able to pay for the selling costs and new loans costs of getting a new loan ,add to that moving costs .
Wall Street wanted to place funds for refinances ,so the appraisals ended up coming in at a hit the mark amount ,which had nothing to do with anything near true value .
Somewhat on thread:
A coworker and I have been amazed at the number of people who are not paying their mortgage but there is no foreclosure notice. His sister was supposed to be foreclosed upon this month… there is a paperwork SNAFU, so their file has been put into a new que for processing. They’ve been told to expect an eviction notice in 4 years.
I’m not kidding, that is not a typo. FOUR years of further rent free living. The processor (working for this Countrywide mortgage) gave them that estimate.
Where? Riverside California So far, 18 months mortgage/rent free for the sister and hubby. There were contacted 9 months ago to be aware that foreclosure proceedings could occur in April. In February it was pushed to September due to ‘paperwork questions.’ Now they’ll pick up the file again in 2013.
When do squatters rights kick in?
Got Popcorn?
Neil
Ultimately, I think it will take more stories like that of your coworker’s sister to change the concept of homeownership in American life.
We only need look at the newspaper industry to see what happens when stuff that used to cost money can be had for free.
never thought I’d live to see a housing black market.
Could you see these rent-free dwellers trading between themselves, the lienholder never seeing a dime of any transactions until the paperwork is ready?
So the people that we were competing with to get into a home are now living there for free (after bidding the market up) while we shell out $800-$2500 a month (your mileage will vary).
We got owned.
Sure feels like it doesn’t it?!
TASED BRO. Damn, I feel abused.
we got owned.
I should have ended my thought with the conclusion in my head at the time:
“…while we shell out $800-$2500 a month (your mileage will vary)…thereby allowing them to save - on average - $1600 per month more than us and putting them right back in position to compete with us again, instead of being foreclosed on and forcing prices down.”
$76,800 in Neil’s case. That’s a nice downpayment.
Then again, given their history of poor choices, I take solace in the fact that they’d probably have it all spent by that time.
sleepless, hoping you are right.
” I take solace in the fact that they’d probably have it all spent by that time.”
given their history of poor choices, I take solace in the fact that they’d probably have it all spent by that time
I think that is probably a very reasonable form of solace. Other aspects of their lives will also probably be all messed up. They are not enviable.
The new American dream: Home Squattership.
You have my 13 months withouta payment coworker beat. I am also flabbergasted at the dozen people I work with not paying mortages with no forclosure on the horizon. Never seen anything like it. Never even heard of anything like this happening in the past.
I was talking to my 13 month guy, all of this is a game to him at this point. He’s so underwater that he doesn’t care what happens. he’s sitting on dozens of certified letters trying to get gmac to modify, and dozens more asking for them to provide his original note (his contract discusses a 10 day or less requirement for response to any requests etc for mediation) they have yet to contact him. He’s sat on hold for hours with no response. The bank contacts him once every couple months to harass him for a payment. He tells them he is happy to pay if they are the people he owes, and politely asks again for the note with his signature on it. The call always ends in confusion on the poor bill collectors part.
He intends to tie this house up for years. In the event they eventually start forclosing he has a unlawful forclosure suit drawn up to hold things off, and a bankruptcy filing to go even further. He has nothing to lose, just a house he owes 200k too much on.
He laughed as he told me if they finally do take the house he’ll spend the last month or two restoring it’s previous patina, removing all the work he put into it (he bought it at market peak as a fixer upper). They will end up with a ruined husk.
I hate to say it, but I perceive your 13 month guy as nothing but a opportunistic thief . Not that the lenders were not the same during the boom . The fact that he plans to remove things attached to the
property in the end is down right upsetting .
No doubt this clown bought the property to make a quick killing by using other peoples money (he bought a fixer upper ),yet he continues to reek his havoc on this world with his self-serving objectives that are no different than some low level thief . People like this guy are the sort that make it bad on everyone because the costs are always passed to the main street . It like when you have a major arson fire ,the cost of insurance goes up and everyone pays for it .
Likewise the greed and folly of Wall Street ends up being passed to
honest folk and people who were priced out of the market . I guess there will be a lot of people that will act like this guy . Sorry ,I think he is creepy and I wouldn’t trust him as a friend .
You are right, Wiz, but this is exactly the behaviour they are encouraging with all the bailouts/mods/moratoriums/etc.
Many of us are feeling pretty foolish these days for refusing to buy what we couldn’t afford, and for paying our rent on time. The govt/PTB have definitely taught us a lesson with this one.
BTW, I also know of a family that hadn’t paid their mortgage for over 6 months without a NOD. Supposedly, the did get a modification recently, so will have to ask them what their new terms are.
Yep, Ca renter …trying to bail out these loan contracts that were conceived in greed and fraud during a mania , with the idea of leverage
and selling to a greater fool ,is impossible . But,to cause further damage and rationalize it ,its just crazy .
Seems there was a time when not paying your bills or filing bankruptcy had a stigma attached to it. Now people talk openly about being in foreclosure and not making their monthly payments. It’s hard to believe that folks would volunteer personal financial information, especially in the workplace.
A $395K house purchased in Chicago is about to be sold for $384,900 and that’s a Short Sale? See second article in Ben’s desk-clearing post. Mmmm, somebody lent almost 97 1/2% of the purchase price? (It wasn’t me.) Smaaarrrrrt. Not.
The article said he did some work to it. Probably did a 115% loan for the remodel. And spent 3% on remodeling and the other 12% on living expenses.
“Chicago’s bungalows and brick Georgians are selling, but woe to the owner of a city condo. Phil Sammarco didn’t think it’d be so hard to sell his two-bedroom, two-bathroom condo in the city’s DePaul neighborhood when he put it on the market in March for $449,000. Now priced at $435,000, he has fielded — and rejected — a few low-ball offers and showed the unit to a lot of first-time buyers who have indicated they have a wealth of properties to look at. Now he’s thinking of turning it into a rental instead of lowering the price again.”
That should read “woe to the owner of a city condo, but if you own a two-flat or a three-flat or a bungalow, you are by no means exempt from woe.”
I’ve enjoyed watching condos and houses alike in my neighborhood go up for sale, see no action, and then the wishing price is lowered (rarely enough) and/or the property is taken back off the market. There are at least three condos on my block — and it’s a fairly low density block as city blocks go — that have gone through this cycle a number of times. Those condo owners put away their sales signs for the winter, I guess, ’cause they’re gone again.
And there’s a pretty little turn-of-the-century house (not a Chicago bungalow) two blocks away that’s been for sale on-and-off for a year and a half. The owner is rightfully proud of their house, but entirely mistaken about its current value. Last time I looked, the price was about $450K for a place with around 1250 sq. ft. and a garage.
“‘You’ve got a lot of choices,’ Sammarco said. ‘Right now nobody is really comfortable that the worst is behind us. If you don’t think the market is stable and you don’t think it’s going to be as good or better, why wouldn’t you rent?’”
So he grasps this concept yet still thinks his price level will be coming back? The missing piece of data is what the ‘lowball’ offers were.
Check out the comments section of that article. Good read.
I read those comments.
It kind of irks me how many people slag renters, though, because I treat my rental unit like I own it, if not better. I’ll even fix stuff for free, because I have pride in it. Maybe it’s because I actually have respect for property. Am I really that silly to think that other renters aren’t, too?
Never had renters ‘fix things up’, but I sure would if the rent were lots, way, seriously lower. Several things I would fix right now.
That $ goes to rent.
We’ve put a few thousand into our rental because it’s our **home** and there were some things we wanted to fix or change, but not something the LL should have to do (new ceiling fans and lights in all bedrooms and family room, new shower because the old one was original and really icky, new grass and sprinklers, etc.)
Agree that renters get a bad rap. It’s because, in the past, renters tended to be somewhat less dependable and clean, etc. Today, those sorts of people are called “homeowners” because they can “buy” houses with free money from taxpayers. Nice, huh?
“The International Monetary Fund has urged central banks to be prepared to lift interest rates to head off the sort of asset price bubbles that produced the global crisis.”
Good thing the Fed is taking this advice seriously.
It’s the G-20 nations’ moment on the ship in the War on GD2:
G20 upbeat on economy, pledges financial reforms
Fri Sep 25, 2009 9:06pm EDT
By Sumeet Desai and Chris Buckley
PITTSBURGH (Reuters) - The Group of 20 rich and developing nations promised to give rising powers such as China more say in rebuilding and guiding the global economy, and declared their crisis-fighting efforts a success on Friday.
Leaders pledged to keep emergency economic supports in place until sustainable recovery is assured, launch a framework for acting together to rebalance economic growth, and implement tougher rules governing banks by 2012.
“Here in Pittsburgh, leaders representing two thirds of the planet’s population have agreed to a global plan for jobs, growth and a sustained economic recovery,” British Prime Minister Gordon Brown said after a two-day summit.
U.S. President Barack Obama’s first turn hosting a major summit ended on an upbeat note, with leaders claiming victory in stopping the recession from turning into a depression.
“It worked,” they said in the final communique. “Our forceful response helped stop the dangerous, sharp decline in global activity and stabilize financial markets.”
…
“MISSION ACCOMPLISHED”
HA HA HA HA HA HA HA
Are all our Presidents alike, or what? (I’m a Repub, but I have to say I think GWB really WAS a little worse than Obama.)
a little worse ????????
You are joking right? Yep, we scraped the bottom.
W was dismal his 1st stolen yr, then someone did the 9/11. Suddenly he was ‘god’(pffft) and ppl started backing his cra p.
I can’t wait for the opportunity to roundly mock these chest thumpers when it turns out the crisis was not over yet, and ends up lasting “much longer than expected.”
ANALYSIS-Will “It worked” come back to haunt G20?
Sat Sep 26, 2009 3:43pm EDT
* Unemployment, real estate loan losses, among pitfalls
* Finding political backing for regulatory reform not easy
* Some worry for global economy once supports removed
By Emily Kaiser
PITTSBURGH, Sept 26 (Reuters) - The G20 may face a “mission accomplished” moment akin to former President George W. Bush’s premature declaration of victory in Iraq unless leaders quickly make good on pledges for substantive financial reforms.
Leaders from the Group of 20 rich and developing nations were so confident they had succeeded in tackling the global financial crisis and recession that they included in the preamble of their final statement on Friday this bold, two-word declarative sentence: “It worked.”
“It’s hubris,” said Simon Johnson, a former chief economist of the International Monetary Fund.
Johnson, who is now a senior fellow at the Peterson Institute for International Economics in Washington, listed possible pitfalls including growing losses on commercial real estate loans, the need to recapitalize European banks, and stubbornly high unemployment in most developed countries.
Any of those has the potential to trigger an economic setback serious enough to force a re-thinking of policy.
Even though G20 leaders insisted they were on guard against complacency, Johnson said they may have assumed success too soon, much like Bush’s infamous May 2003 Iraq speech on an aircraft carrier in front of a banner that read “mission accomplished.”
“What can you point to in terms of real regulatory reform since April?” Johnson said, refering to the last G20 leaders’ summit in London.
The G20 acknowledged there was considerable work to be done to make the global economy less susceptible to crises, and said they would work toward “growth without cycles of boom and bust and markets that foster responsibility not recklessness.”
Mustering the political will back home to put in place the necessary rules won’t be easy, particularly in the United States where the contentious issue of reforming healthcare holds the attention of Congress and regulatory overhaul seems to have been relegated to the back burner.
Anil Kashyap, an economics professor at the University of Chicago’s Booth Graduate School of Business, said he would give the G20 an “incomplete” grade.
“It’s too early to tell whether they’ve got a reasonable exit strategy for unwinding some of the things they’ve done, and it’s really unfortunate that they haven’t attended to some of the gaps in the regulatory arrangements,” he said.
…
I’m requesting advice on reasonable closing costs. I was high bidder on a bank owned home in Florida. The real estate agent is trying to get me to go with her mortgage broker. The good faith estimate is on a loan amount of $132,000. Are the following fees in the good faith estimate reasonable?:
810 Processing fee $695.00
812 Broker fee $650.00
Admin fee $595.00
1101 Closing/Escrow Fee $250.00
Thanks
Bob you may have to repost this earlier tomorrow. Good luck!
OK, thanks DD, BTW it’s an FHA loan if that makes a difference.
* The Wall Street Journal
* SEPTEMBER 25, 2009, 8:57 A.M. ET
Delinquencies Rise Further In Freddie’s Shrinking Portfolio
DOW JONES NEWSWIRES
Freddie Mac (FRE) said Friday that delinquencies in its mortgage portfolio continued to rise last month, putting further pressure on the mortgage financier.
It and larger sibling Fannie Mae (FNM) were put into conservatorship a year ago by the federal government amid fears of mounting losses at the companies.
Freddie said August delinquencies rose to 3.13% from 2.95% in July and 1.11% a year earlier.
The report also showed that Freddie is continuing to unwind its portfolio, falling another $20 billion during the month to $779.41 billion. As in July, the drop was driven by a decrease in Freddie mortgage-backed securities held by the company. Still, the portfolio rose at a 3.7% annualized rate in August.
Freddie shares, which have been active and volatile the past several months, were recently down 2.07% to $1.89.
…
* The Wall Street Journal
* SEPTEMBER 24, 2009, 2:21 P.M. ET
Delinquencies Rise Further For Many Primary Mortgages
DOW JONES NEWSWIRES
Delinquencies continued to rise in August among prime jumbo, subprime and Alt-A mortgages issued from 2005 through 2007 but fell for second mortgages and home-equity lines of credit.
Jumbo loans, those issued to homeowners needing at least $417,000 in financing, continued to see spiking delinquency rates, rising about 5% from July for each of those three years - which saw the loosest underwriting standards before the housing bubble burst.
Still, the overall delinquency rates are far below other types of home loans. Subprime loans, for example, have delinquency rates near or above 50% for those years, nearly one-quarter the rate for jumbo loans.
At Alt-A loans, those between prime and subprime and generally given which documentation of assets and/or income, S&P said delinquency growth is moderating. Still, the overall rates are about one-third of loans made from 2005 through 2007.
As for loans seeing falling delinquency rates, it was a 2% to 4% decline in August from July for second mortgages - the overall figures are about 20% - and less for home-equity lines of credit. After jumbo mortgages, those two loan classes have the lowest delinquency rates from those years - but they’re in double-digit territory nonetheless.
“subprime loans…have delinquency rates near…50% for those years, nearly one-quarter the rate for jumbo loans”
Oh, so jumbo loans have a 200% delinquency rate? Hmm, how does that work? Guess that’s why they call ‘em “jumbo” !!?
Mortgage Delinquencies Still Climbing for Subprime Borrowers: Equifax
By JON PRIOR
September 22, 2009 4:39 PM CST
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Delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers.
In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report.
The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March.
California unemployment at 70-year high.
The solution? Monetary reform!
September 19, 2:07
We hold these Truths to be self-evident…
California’s official unemployment is 12.2%, or over 2 million California adults actively seeking work. This is the worst unemployment crisis in the state since the Great Depression. Many of the lost jobs are in state and local government, such as 20,000 laid-off teachers in California. I wrote that the recent Los Angeles fires could have been prevented if unemployed Americans had been hired to clear brush. California has important work to be done, the workers and resources to do it, but not the green slips of paper to facilitate beneficial economic production?
How could this be? Isn’t this an irrational economic system when preventable fires blaze, and needed teachers are sitting at home while students are packed into more crowded classrooms?
I’m about to explain the solution embraced by Americans from Benjamin Franklin to Thomas Edison. But this is important: you need to take a moment to FEEL how our current macroeconomic structure that prevents important work being accomplished HAS SOMETHING TERRIBLY WRONG with its structure. Don’t feel alone in a conclusion of criminal acts. Nobel prize winners and Pulitzer journalists are also writing with passion that these are the largest economic crimes in the history of the planet.
Have you reflected? Here we go:
The answer is generally called “monetary reform.” This takes the power of creating money away from the banking industry and returns it to its Constitutional authority with our community (government) for the direct payment of public goods and services. The economic benefits of this shift are $1 TRILLION every year, paying-off the national debt forever, and full employment.
…
It would be interesting to see what would happen if the US dollar was retired and replaced without regard to foreign debt holders.
What would they (Japan, UK, China, UAI, etc.) do with all those worthless fiat USDs they are sitting on if they couldn’t spend them buying American property and other assets?
My guess is that some sort of warfare would ensue (WW3?). But, in reality haven’t we been allowing wealthy capitalists and corporations in collusion with foreign entities to wage an economic war against the USA in the form of job outsourcing and trade imbalances?
The United States isn’t a country anymore to the elite and political classes. It’s an extraction point for wealth.
From the same folks who brought us the agit-prop indie film, “Zeitgeist.” Essentially the author argues for elimination of the Federal Reserve Banking system and replacing it with a non-debt based economy. Interestingly, however, the end result of the zero interest “state” banks he offers as an alternative is…socialism–a fact which might give Ron Paulians (whom he indirectly references,) pause.
Remember the conjecture that rich Asians were going to rescue the California housing market? STICK A FORK IN IT.
Asians suffered largest drop in U.S. homeownership in ‘08
Large Asian population in California, which has been hard hit with foreclosures, may be the reason, experts say.
By ALEX VEIGA
The Associated Press
LOS ANGELES — Asians, many of them living in foreclosure-ravaged California, suffered the sharpest drop in homeownership last year, eclipsing declines felt by whites, blacks and Hispanics, according to new census data.
The decline was surprising, because Asians tend to earn more than other minority groups and have less debt. But one out of three Asian homeowners lives in California, which has seen foreclosure rates skyrocket and home values plummet since the housing bubble burst. And that appears to have disproportionately exposed them to the effects from the housing collapse, experts suggested.
The U.S. homeownership rate fell to 66.6 percent last year, the lowest in six years, after hitting a peak of 67.3 percent in 2006, according to figures from the American Community Survey, which was released last week by the U.S. Census Bureau.
Homeownership for Asians fell 1.24 percentage points last year to 59.4 percent.
The decline was 0.88 percentage points for blacks to 45.6 percent. Hispanics experienced a similar decline, down 0.80 to 49.1 percent. Whites suffered the smallest decline, down 0.40 to 73.4 percent.
But because Asians only represent 3.3 percent of all U.S. homeowners, the decline in the number of black and white households was greater. The number of Hispanic homeowners actually rose, reflecting trends in immigration and higher birthrates.
Nevertheless, as a population group, Asian homeowners fared far worse than others.
Whittier Daily News
Federal stimulus driving demand for homes
By Ryan Carter, Staff Writer
Posted: 09/25/2009 08:33:37 PM PDT
Cities across the region saw home sales and prices rise from July to August, according to the California Association of Realtors, which released monthly numbers Friday.
And while home prices in most local cities are still below what they were a year ago, prices have been on the rise.
“This is a real good sign that we’re skipping along the bottom, or better yet, moving upward,” said Steve Goddard, CAR’s president-elect.
El Monte, for instance, had a median home price of $295,000 in August. That was up from $275,000 in July and $270,000 in June.
Whittier’s median home price was $327,000 last month, up from $305,000 in July and $295,000 in June.
And Pasadena’s median was $575,000, up from $510,000 in July, according to the association.
The uptick comes after months of rapidly falling prices. California’s median price - $292,960 - was the sixth consecutive month-to-month increase in a row, Goddard said. In February, the state’s median was $245,000, he said. L.A. County’s median price was $339,980.
That’s significant because as demand for homes increases, so does business at firms that depend on real estate - construction, furnishings and gardeners, among others, CAR officials said.
That’s also why CAR is pushing hard for Congress to extend and expand an $8,000 federal tax credit for first-time homebuyers. The credit will end Nov. 30.
The credit has helped 1.4 million people buy a home. Association
studies have shown the credit has become a significant part of a buyer’s thinking in deciding to buy a home, Goddard said.
CAR officials want the credit extended through next year, and expanded to include all homebuyers.
“I think the people who took advantage of that will look back and historically say this was a great thing I took advantage of,” said Tom Adams, a Monrovia Realtor.
…
Have CA home prices risen thusly during previous recessions with double-digit unemployment? I am thinking lots of people may have unwittingly caught themselves falling knives, thanks to the government’s knifecatcher incentive programs.
You do know that there are knife holders, usually made of oak, now made of human beans.
“There has never been a period of serious inflation in the US without wage inflation. But real incomes are falling, and there is little reason to believe we will see wage pressures within the next few years. The opposite is likely to be the case.”
from John Mauldin he has a free letter he puts on the web at least once a week a pretty good read IMO
what ever happened to the treasury bond guy from tehacapphi ? Mr deflation ? called himself Milkin Mish something like that I can’t remember how sad.
“I think the people who took advantage of that will look back and historically say this was a great thing I took advantage of,” said Tom Adams, a Monrovia Realtor.
and then hand the keys back to the bank and walk away 1n 2015
“Buy now get a good deal and take advantage of the housing situation”
realtor told me just that today at an open house, 1800 SF built in the 1960’s only 518-549K owner was there too with the realtor, werid it was like a flip all fixed up with desperate owner and car salesman like realtor. I was polite I just laughed once couldn’t help it. I no longer bother to tell reltards about my deflationary thinking, not in Ca its just too desperate and werid here.
Many estate sales in Rancho Bernardo were everyone is 90 years old so whos going to buy all the houses from the dead? And the stuff for sale is way over priced. I saw a used hair brush with hair in it maybe the deceased hair ? 2 bucks. I also think I see the heirs of the dead with freaky greedy scared looks in their eyes, maybe I’m just imagining stuff being back in CA after living in AZ………….
Its like halloween here
cactus, and the folks in az are younger than those in CA and rancho bernardo?
I don’t think so.
I would say, pretty even steven on those walkers, oxygen tanks, and wheel chairs, or ’scooters’, rvs, and ‘early bird diners’.
“Many estate sales in Rancho Bernardo were everyone is 90 years old so whos going to buy all the houses from the dead?”
Same thing here in PInellas County Florida. A lot of what I see is offspring moving into grammy’s house. I have a colleague who openly, excitedly says, “when my wfie’s grandma dies, we’re getting her house!”
There is a house down the street from me that has three motorized wheelchairs in the front lawn with ‘For Sale’ signs on them. I kinda want to know the story behind that, but also don’t want to know the story behind that.
Lastly, an elderly couple in a ‘hood adjacent to mine recently commited suicide. I thought for sure they’d leave this waterfron property to heirs, but apprantly they only want the cash as the house is now for sale.
This will be a massive rush to the exits. The problem is, Great White is still only in sound check (awful, I’m just awful). This is why I need to separate my boomer-baiting from the fact: there aren’t enough people to meet boomer numbers at boomer pricing.
We… could… deflate… all… the… way…