Laying A Road Mine That Will Explode Later
On Friday I proposed the following: “There is something going on right now regarding the “shadow inventory” and lender-owned foreclosures. I suggest an initiative to counter this and expose it for what it is; illegal. It should be something like this: To use public pressure and legal avenues to stop the collusion within the real estate industry, lenders and the government to manipulate the housing market to the detriment of consumers.”
“I invite any and all input in this endeavor, especially ideas on what legal actions we might take. A few things are clear; the government has no mandate to set housing prices. The agents and lenders are breaking the law if they are colluding to manipulate inventory. Let’s get to the bottom of this and if we find that this sort of thing is happening, we should do something about it.”
It was related to this article in the desk clearing post: “(In the 1980’s) President of Buffalo Federal Savings and Loan at the time was Bill Perry, and Bjerke said Perry was adamant in his opposition to forcing an immediate sale of all of those homes. At the time they were getting pressure to market them immediately from bank regulators.”
“The company held a meeting with local realtors, put all the properties in a hat and let them ‘draw’ for the rights (listings) to sell those homes as they could without placing prices under the current market values. This was done to avoid driving down property values in Buffalo and to reduce losses to Buffalo Federal Savings and Loan.”
There is plenty of evidence this is going on. San Francisco Chronicle, April 2009: “A vast ’shadow inventory’ of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say. Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. ‘We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,’ said Rick Sharga, vice president of RealtyTrac. ‘California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.’”
“In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as ’shadow inventory.’”
“For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.”
“‘There is a real danger that there is much more (foreclosure) inventory than we are measuring,’ said Celia Chen, director of housing economics at Moody’s Economy.com. ‘Eventually those homes will have to be dealt with. If they’re all put on the market, that will add more inventory to an already bloated market and drive down home prices even more.’”
The Press Democrat, June 2009: “Home sales remained strong in May and supplies continued to shrink, signs that Sonoma County’s housing market could be starting to stabilize, according to a new report. But a new wave of foreclosures is looming on the horizon. The market is dominated by foreclosure homes and short sales, where owners owe more than the price they hope to get. While buyers are snapping up distressed homes, the supply could swell again if banks put more on the market, said Chris Smith, a CPS agent in Santa Rosa who sells foreclosed homes.”
“‘The fact that the banks held foreclosures off the market from the foreclosure agents dried up the supply,’ he said.”
“Some banks held off selling foreclosed homes this spring after President Obama launched an effort pushing lenders to help owners stay in homes, Smith said. Banks also didn’t want to help drive prices lower by flooding the market, he said. After receiving a handful of foreclosure listings the past two months, Smith received six in the past week.”
“‘I think we’ve got another wave of foreclosures that is about the same size as the first wave that we had,’ Smith said.”
And the same article points out a familiar problem from the boom days; frenzied speculation: “‘People know that properties are priced to buy. They’re afraid of missing out,’ said Kris Anderson, a broker with Allstate Mortgage Company, in Santa Rosa.”
“Buyers also have been motivated by mortgage interest rates that have risen the past several weeks, but remain near historic lows. The monthly loan payment for a $350,000 home purchased with a 10 percent down payment and a 30-year loan is $1,789 today, down from $1,940 a year ago, Anderson said. ‘They sense that now is the time to buy’ she said.”
And as we learned during the bubble, what do speculators do when the bet turns bad? Head for the exits. The Herald Tribune, November 2009: “Foreclosure filings in the Sunshine State last month dropped for the first time since July 2006. The fickle nature of the region’s foreclosure activity in recent months is the result of the push-and-pull of varying factors, said Bill Geller, president of the Sarasota Association of Realtors. There are investors buying up deals, first-time home buyers rushing to take advantage of the government’s recently extended and expanded tax credit coupled with lenders who have different strategies on how and when to release their bank-owned properties into the market.”
“‘Those investors on the sidelines with the money have been much more active in the last few months because they have realized prices are going to increase,’ Geller said. ‘The tax credit, especially now that it has been expanded, definitely has an impact on the market.’”
“Some banks are releasing their inventories of reclaimed homes in batches, hoping not to flood the market and to keep prices relatively higher. Others are holding on until prices rise while still others are getting foreclosed homes off their books as quickly as possible. The total number of foreclosures may remain about the same until the end of April, when the tax credit expires. Then, who knows, Geller said.”
“‘Next May, are there going to be more foreclosures? That is a question I cannot answer,’ Geller said. ‘I would love to say the inventories are being absorbed and there won’t be more foreclosures coming on to the market, but I can’t say that. We’ll have to wait and see.’”
From Realty Check, November 2009: “I’m back on the foreclosure bandwagon again, especially after getting the Treasury’s Home Affordable Modification Program status report this morning, and its glaring omission of any information as to how many borrowers are actually keeping up with the payments on their trial modifications. Even more distressing was a report I received today from Lender Processing Services, which is a huge mortgage data aggregate.”
“Foreclosure inventories continued their upward climb. The nation’s September 2009 foreclosure rate stood at 3.12 percent - a month-over-month increase of 2.6 percent and a year-over-year increase of 88.9 percent. Among individual states, Florida posted the most troubling results with 10.4 percent of loans in foreclosure, and more than 22 percent of loans reported as non-current.”
“LPS’ October Mortgage Monitor also cites large ’shadow’ foreclosure and REO inventories. The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline. Nearly one-third of foreclosures remain in pre-sale status after 12 months - twice as many as the year prior. The six-month average deterioration ratio has risen the past two months to 300 percent, showing that for every loan that improves in status, three more deteriorate further.”
“So you’ve got all this excess inventory, and then you’ve got another problem, or two or three, eloquently laid out by mortgage guru Howard Glaser: ‘What I am most worried about is March and April of next year. What happens to a housing market that seems like it is finding its footing at that point? Because several things will happen simultaneously: You’ve got the option ARM resets beginning to kick in, you have the home buyer tax credit expiring, maybe for real that time, and you have the Federal Reserve maybe running out of money to buy mortgage-backed securities. If we add on top of that, banks beginning to release some of this inventory ,which they have been holding on to for a long time, those three items are potentially very destabilizing to the marketplace. So I’m concerned. I think buckle your seatbelts for Spring of next year.’”
And December 2009: “Foreclosure inventory will be a lot higher than some predict. Shadow inventory should be seen not just as homes the banks are holding on to or that are still in the foreclosure process, but homes where borrowers have stopped making payments and have not heard from the banks.”
The Staten Island Advance: “A new foreclosure tactic, whereby lenders or debt collectors holding second mortgages freeze bank accounts or garnish pay checks of already struggling homeowners, is emerging and making it even more difficult for people to hold onto their homes.”
“Lawyers for troubled Staten Island homeowners say they are beginning to see examples of clients who go to the bank to take out money and find that their accounts have been frozen or wiped out by other banks or debt collectors — the entities holding second mortgages on houses already in default on the first and primary mortgage. Some are learning the lender or debt collector has already gone to court and secured a judgment to garnish paychecks.”
“It’s a move more in line with the traditional debt collection industry, which typically targets credit card debt, and it’s dragging the house and what little cash reserves people often have into the foreclosure battleground. Experts say it’s an end-run by second lien holders around the traditional foreclosure process, which involves only the first mortgage holder and provides important legal protections for the homeowner.”
“George Apolinaris of Graniteville said his longtime companion, Maria Gil, got an unwelcome surprise when Ms. Gil tried to withdraw some money for groceries from two small bank accounts totaling $6,000 that the two maintained. The accounts were frozen and in the red for $250,000 — twice the $126,000 owed on their second mortgage. Apolinaris said the couple never received any notice about the court action that froze the bank accounts.”
“The couple acknowledges their own financial missteps — the kind that helped fuel the housing crisis. Apolinaris bought a house in Clifton in 2004 as an investment, refinanced several times and then fell behind on payments after his tenant stopped paying rent and he was forced to evict. That house recently entered foreclosure.”
“Apolinaris said he used some of the money he took out of that house during those refinancings to buy the two-family home in Graniteville with Ms. Gil. At the time, he said, both were working and making money and the housing market was booming. The couple bought the home for $520,000 early in 2006 with an adjustable rate subprime loan from IndyMac bank, which was shut by the government last year. Less than a year later, they said, they refinanced to lower their interest rate and took out $20,000 to pay off credit card debt.”
“As part of the refinancing, they took out a mortgage in the amount of $464,000 from HSBC bank with an interest rate of 6.8 percent, and a simultaneous second loan from Citimortgage for $126,000. The latter loan came with an interest rate of 9.5 percent. In all the refinancings, the couple never used an attorney.”
“Josh Zinner of the Neighborhood Economic Development Advocacy Project in Manhattan said some lenders or trusts for banks that went out of business are selling off second mortgages today to debt collectors for pennies on the dollars. Those debt collectors are then going after the homeowners’ bank accounts or pay checks to recoup whatever money they can.”
“‘The backdrop to that is there are real fundamental problems in the debt buyer industry,’ said Zinner. ‘The combination of the second mortgage problem with all the abuses in the debt collection industry is toxic, and could really create havoc for homeowners who are trying to avoid foreclosure on their primary mortgage.’”
And then there is the overbuilding, (also a form of speculation) which is only made worse by higher prices. Arizona Republic: “Arizona’s economy may take four more years to fully rebound, an Arizona State University economist said Wednesday. Lee McPheters, director of the JPMorgan Chase Outlook Center told a lunchtime audience that the state’s economy will return to prerecessionary growth levels but not until 2013 or 2014.”
“The state has lost more than 265,000 jobs since the recession began in December 2007, according to the U.S. Labor Department. For the first time in recorded Arizona history, personal income is expected to shrink. In 2009, it will drop by 1.5 percent. Phoenix and Riverside, Calif., are tied for second place behind Las Vegas with the most homes underwater, in which owners owe more than their homes are worth. He called those cities a Bermuda Triangle.”
“‘We were all through 2008 and into 2009, the first half, drowning in 30 feet of water. Now, we’re only drowning in 20 feet of water, but we’re still drowning,’ he said.”
“Scottsdale economist Elliott Pollack contends that about 75,000 too many single-family and condo units were built in the 2003 to 2006 boom years and that there are still about 50,000 units too many. That doesn’t include what he calls a ’shadow supply.’ Many of the investors who have been buying fix-up and vacant homes probably plan to put them back on the market over the next few years.”
The Dallas Morning News. “The latest ruckus about home foreclosures makes for great political theater. And that’s about all it is. The somber truth is that most people who can no longer afford to make their mortgage payments will lose their homes. And no amount of programs out of Washington will change that.”
“Indeed, so-called loan modifications or workouts are much less likely to succeed today than when we first heard about them a couple of years ago.”
“Short of giving people their houses outright, there’s nothing the mortgage company can do. Almost a quarter of Americans with loans now owe more than their houses are worth. I credit the mortgage companies for holding off foreclosure for as long as they have in many of these cases. But that could backfire as the housing market slowly recovers.”
“Almost half of this year’s home foreclosure filings in North Texas are loans that have been posted and reposted for forced sale while lenders work with the borrowers. That adds up to more than 25,000 foreclosure filings. What happens – as soon as early next year – when the mortgage companies decide to bite the bullet and take back all of these houses?”
“What will happen to local residential values when a new wave of distressed houses hits the market?”
“Does postponing the foreclosures until the economy and housing markets are on the mend really help anyone? Or are the mortgage companies just laying a road mine that will explode later in the recovery?”
What is clear? This is definitely happening; all the experts, anecdotes and statistics indicate this to be the case. Given that our system rewards all players for recklessness and short-sightedness, it isn’t surprising. But what is also clear is that this is could make this so-called financial “crisis” a true disaster. There will be MORE foreclosures as a result of these actions, not less. Also we can expect more overbuilding and higher loan losses. And, it is more than bad policy; it is probably illegal and/or in violation of regulations, not to mention a harm to consumers and even the stockholders of the lenders. IMO, somebody has to stand up and make a ruckus about this and unfortunately it may be up to us.
by Ben Jones
“I invite any and all input in this endeavor, especially ideas on what legal actions we might take.
I suppose the nearest lamppost and a good rope might be viewed as excessive in certain quarters.
It is uncanny that unemployment is rising, foreclosures are rising, yet home prices are increasing again, no?
Some numbers pulled from RealtyTrac in Flagstaff, AZ
Trustee sales: 359
Bank Owned Homes: 177
REO listed for sale: 7
There seems to be a great “mystery” as to what is going on (wink wink).
Many of the foreclosures I go to in the Flag area have been vacant for years. And because I was following trustee sales for a while, I could see that 80-90% plus were being postponed, and often over and over again. I could also see who the lenders were and it was obvious that the really big corps are doing this.
When I would tell this to UHS and others a few months ago and say I thought there were hundreds of houses in Flag that payments weren’t being made on, they would look at me like a third eye just appeared on my forehead.
I was under the impression that banks were forced to get the foreclosures off their books before the end of the year. Of course, with all of the cooked books out there it doesn’t seem like there are any sound accounting principles, much less laws, adhered to anymore.
Why aren’t the Fed and other bank regulators working to ensure that banks are processing foreclosures in a timely fashion? Why is it that all regulatory actions appear to work in favor of banks and other owners of real estate, to the detriment of consumers (prospective buyers)?
Why is it that all regulatory actions appear to work in favor of banks and other owners of real estate Only in favor of some banks, PB. I question whether the FDIC’s forbearance on dealing with the recently failed Amtrust could be considered to favor the bank. Amtrust failed anyway, costing the FDIC & us some X $billion, this loss being much greater than it would have been had FDIC applied the legally mandated “prompt corrective action” a couple of years ago.
There was talk this year of the Feds encouraging banks to suspend normal accounting rules so that assets could be kept marked to fantasy. Does the fantasy continue on foreclosed houses but end if the foreclosure is sold at a loss? Does stalling taking this loss on the books allow the banks to party on like dead men walking?
Aren’t our lawmakers in DC encouraging this charade?
Aren’t our lawmakers in DC encouraging this charade? They abdicated quite some time ago. They are showing a few signs of wanting to get back in control, though.
Why is it that all regulatory actions appear to work in favor of banks and other owners of real estate, to the detriment of consumers (prospective buyers)?
That’s easy. It’s because the banks and financial services industry own the Republicrat lawmakers, who in turn make sure the regulators turn a blind eye.
Maybe the place to play is at the state Atty General level.
The only way lawmakers will decide to get “back in control” is if the banksters cut off their campaign funding and lobbying payola. At that point some of our bought-and-paid-for Republicrat politicos might suddenly rediscover something called the public interest.
The wealthier the person, the more money they have tied up in real estate. Our lawmakers are all wealthy people. This whole charade is working in favor of their pocketbooks, both when it comes to their own personal net worth as well as future campaign contributions. The politicians ARE the problem.
No…the ignoramuses who keep returning corrupt and unprincipled Establishment politicians to office are the real problem. You seem to have some basic confusion about cause and effect.
The only mantra right now from up high, is to support property prices. If all the current foreclosures hit the market it would be carnage. We will have to wait a while for carnage…
Seeing as how, most of the ignoramousi ( which is plural )
don’t want to learn anything, get irritated when you say something pertinent to todays financial situation, then it is
going to be a heavy lift.
I agree with Blue Skye. The federal government is completely in the pocket of the REIC lobby and has done everything it can to extend, pretend, and re-inflate the bubble. States should be held accountable and I would propose a ballot initiative in California at the state level (I think our AG would be friendly to this idea) so the state would stop doing business with financial institutions that engage in wildly unsustainable practices such as refusing to mark their assetts at their proper value (which is what holding foreclosures off the market is all about).
The stupid Obama home modification plan is a total bust. There have been 650,000 temp (3 mos) modifications and 1650 permanent mods. $350 billion for failed program.Banks will not modify for FBBs if they have $2 in assets. They sold the paper to the FHA, Fnm, or Fed so they won’t have any losses. Next wave of foreclosures coming with Maxine Waters and Barney Franks pushing the ‘lend a down payment’ scam for new FHA loans. FBBers with ‘No skin in the game’ will be defaulting (already have) after making no or only 1 payment. I can’t wait until 2010. I thought Bush was an idiot.
Aren’t the banks helped by high house prices? Won’t the Fed just say that it’s doing what it needs to, in manipulating real estate prices with the help of the NAR, in order to keep banks (and thus the whole economy, according to the Fed) healthy?
So apart from the obvious, wouldn’t we have been better off with many smaller banks made stronger, and fewer BIG mega banks?
Instead we have a lot less small banks and even bigger mega banks. I think they knew exactly what they were doing.
Comment by Ben Jones
2009-12-06 11:15:27
Many of the foreclosures I go to in the Flag area have been vacant for years. And because I was following trustee sales for a while, I could see that 80-90% plus were being postponed, and often over and over again. I could also see who the lenders were and it was obvious that the really big corps are doing this.
When I would tell this to UHS and others a few months ago and say I thought there were hundreds of houses in Flag that payments weren’t being made on, they would look at me like a third eye just appeared on my forehead.
———————
This is exactly what we have going on out here.
I’ve also been told that I’m a tin-foil hat-wearing conspiracy theorist by UHSs, and that the banks are merely “overwhelmed.” Not buying it. This is all being done intentionally.
This is part of the Great Scam.
Once all those abandoned homes fall apart from neglect, several wonderful things will happen:
1) Artificial reduction in inventory without having to sell houses at a reasonable price to responsible people.
2) Destruction of established neighborhoods via blight and crime, which the Rich always love to see happen to poor and middle class neighborhoods since it creates conflict, encourages people to move (and thus spend money), etc.
3) The banks can keep the crumbling (or even demolished) homes on their balance sheet as “assets” at 2005 prices forever.
“A vast ’shadow inventory’ of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say. Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources.
This is why I have no compunction at all about advising underwater FBs to mail in the keys and walk. That’s the only way to beat the banks at their own game. Let their inventory of foreclosures swell up to the point that they realize they HAVE to dump them onto the market, and let the chips fall where they may. For the same reason I would hope that HBB posters energetically initiate and back local initiatives aimed at forcing lenders to bear the costs of maintaining houses that FBs have walked away from. That way they’ll have some incentive to get them off the books.
Agree 100%, Sammy. This is exactly what I’ve been doing.
Nice essay Ben…
Given that our system rewards all players for recklessness and short-sightedness ??
That kind of sums up the whole debacle for me…
Thanks. It’s really a call to action. I know we are all busy, but this has to be challenged. I’m not asking for funds to be raised or anything; I think we can have an impact though the media and possibly some help from civic-minded attorneys out there. If this is really going on, it will be a huge issue in 2010-11-12.
Ben, I’m going to see if I can forward this thread to William K. Black and ask for his suggestions. Not sure how I’ll contact him, but he does know what’s going on.
http://en.wikipedia.org/wiki/William_K._Black
Also Paladin seemed to have had some luck with the FBI, but I’m just not sure I have the guts to approach them like he did.
Hmm…which gives me a thought. Perhaps, Ben, you might be able to contact Paladin and see if he has any suggestions?
I’d also like to make a suggestion to others on the blog if you’re going to approach this. Baby steps. The capacity of the public, politicians and the frauds themselves to stare and shrug at a bloody dripping hand or dead body is enormous. It’s best to start with small concessions or small victories and build up from there. People “know” they just can’t do anything about it, because it is too “big”. But give them something small that they can do, and they will do it.
Example: Love him or hate him, this is how Giuliani started on cleaning up NY. If he’d told the citizens to work with him on confronting gangs, drugs, violent crime, etc., they would have immediately gone apathetic. Because they “know” it’s just too big to do anything about. But ask them to harrass a few bums spraying windshields at stop lights and they go for it with gusto. Because it is something they CAN do. And having accomplished that, they looked for more things they could actually accomplish and built from there.
Good activists and social workers know this and that’s how they built a movement. I recently watched a special on PBS about an “activist” (meddlesome Venezuelan lady doctor in the US, but I had to admire her tactics) who went into (illegal) immigrant neighborhoods and educated the women on diabetes (inoffensive, gets a lot of agreement) and just got one person to bring another to meetings, got them going door-to-door, etc. It was a movement that built and now they’re getting city hall to build them playgrounds for their anchor babies, etc. and all sorts of delights on the public dime. Of course, I had to wonder why the lady doctor didn’t stay in Venezuela and improve the lot of her fellow citizens there. I guess the trough is deeper and fuller here.
See if you can find evidence of banks agreeing with other banks to hold off selling the inventory they own. That might show an unlawful agreement in restraint of trade that violates the antitrust laws.
I doubt we’ll find that smoking gun, unless somebody leaks it or gives it up under questioning. We have word that something along these lines was a part of the TARP money, and we contacted a watchdog group that is doing FOIA requests, but no luck so far. But I think it’s fair to say that formal agreements or no, there is collusion against the buyers.
Perhaps during the Congressional audit, the Fed could be asked a few questions to see whether they have any insights to share on banks collusively and anticompetitively withholding homes off the market…
Proof of ‘collusion’ would seem to be requisite to getting the electorate concerned enough to do something. However, I don’t see that collusion is a necessary condition for banks (as a group) holding foreclosures off the market. Bank regulators are not holding banks to usual banking standards, which (I think) demand that banks promptly market seized collateral to convert their bad loans to cash. The Feds have shown they will prop up insolvent banks to a remarkable degree. Banks with a large stock of foreclosures, at this point aren’t benefited by or being forced to unload them at a loss, along with the side effect of provoking even lower housing prices if they all do this together. So current conditions put it in the banks’ individual and collective interest to keep foreclosures off the market, no formal collusion is necessary. Our esteemed [spit] legislatures and the MSM all hold to the meme that falling housing prices and foreclosures are great evils, that keeping prices high is the most important thing to do now.
“However, I don’t see that collusion is a necessary condition for banks (as a group) holding foreclosures off the market.”
I don’t either. Having excessive concentration of the banking sector in the hands of a few firms could also suffice.
Having excessive concentration of the banking sector in the hands of a few firms could also suffice. I hadn’t thought about that, but it’s an EXCELLENT point!
Conversely, breaking up the too-big-to-fail trusts of Megabank, Inc would be a good first step in the direction of leveling the playing field between banksters and American consumers.
Well I agree that we’re unlikely to find a smoking gun. The banks don’t need to activly collude, none of them WANT to find out how much their collateral is worth. And the regulators don’t want to force them. Heck, the FDIC can’t really afford to bail out the depositors of all the banks they’d be forced to close if everything was “marked to market” by foreclosure sales. There is still a perception on the part of the powers that be that everything will be okay if we can avoid “panic.” But like the Titanic, there simply AREN’T enough seats in the lifeboats. Not panicing will not save us.
The banks don’t want to value toxics, because they own them.
The gov doesn’t want to regulate the toxics, because they bought into them.
The politicians don’t want to do anything because they are owned by the banks.
The general public doesn’t want to do anything, because they are underwater enough as it is.
So the bottom line is: the only people who would benefit from unwinding this rigged system is…US HBBers. Aw hell.
oxide is correct. Nothing will be done to force sales, simply because most of the public are content to see the collusion continue, to delay the reckoning for as long as possible. It may be “illegal” but not enough people care — or they simply fear the consequences seeing the law enforced.
Many of the bears have, in fact, purchased housing this past year or so. Funny how many of them suddenly become bulls once they’ve purchased their own homes (not so much on this blog, thankfully).
I imagine there are very, very few people out there who feel like we do and want housing prices to tank. It will be nearly impossible to get anyone to agree with us, no matter how “illegal” the govt/banks’ actions may be.
I notice that discussions on this blog have a way of ‘trickling up’ to the MSM many months hence. Case in point: When we first raised the issue of “too-big-to-fail” here quite a while back, ours were among a small number of voices crying in the wilderness. Now Fed governors are openly discussing it, all the top financial newspapers in the MSM are covering the issue, and we even have Congressmen drafting legislation to end too-big-to-fail.
I wish I could personally thank the framers of the U.S. Constitution for making freedom of speech a basic right, as I believe it is of utmost importance to righting a capsized system of governance.
The framers of the U.S. Constitution would be disgusted at the people of this country today, whose monumental ignorance and apathy have allowed all those things the founders warned of as threats to liberty - especially the corrosive effect of the “moneyed interests” to usurp our formerly republican political system.
Yes, but certainly many of them were disgusted with the electorate of their day as well.
Ben,
A lot of us don’t have access to either MLS or county recorder’s title/loan searches. If anyone out there can post passwords or links, it would be most helpful to those of us inclined to do a little sleuthing.
Don’t we have a couple realtors here who did the training and test just so they could buy their own home…maybe they could act as a mole.
Many realtor websites now include limited MLS search engines. One tip: in the agents remarks field, try “bank” or “bank owned”. Also “short sale.”
I can’t imagine any county not having the county recorders info online any more, and this is where you’ll find NODs (and other foreclosure actions like trustee sales or sometimes called sheriffs sales.)
Ben, I for one appreciate your leadership on this. A call to action is exactly what’s needed and called for. I would hope each and every one of the regulars in here, at least, will step and get behind Ben on this not just with verbal encouragement - though God knows that’s the American Way - but with action and support, especially donations to this blog.
WHAT IF…
the banks are holding the foreclosures because if they sold them all right away at the prices they would fetch, the banks would suffer such deep losses as to be insolvent? Just asking.
Collusion or survival?
‘Collusion or survival’
This is a falling market. The longer they wait, the less they’ll get. How does that spell survival?
“The longer they wait, the less they’ll get.”
This is where the Fed’s constant announcements that a rebound is right around the corner come into play…
Ben it’s the same three-month mentality we’ve been seeing in all companies for the past 20 years. Holding back inventory means survival this quarter. next year? who cares. As long as they get their bonus this year. And they’re waiting for inflation to float they’re problems away…
Here in the Inland Empire FHA loans swelled from like 5% of totals in 2006 to about 50% in 2008 per an LA times article thursday or friday. Holding back foreclosures and FHA fraud are the 2 reasons the true collapse has been avoided. The government is encouraging on the front and back end, joshua trees for both!
I’d be happy to raise a ruckus in my neck of the woods, but I really have no way of knowing for sure if there is a shadow inventory here or how big it is. There is no way to look at property transactions online, for example, the way some of you so easily do in Florida or California. And it isn’t quite the disaster area here that it is in the IE or Central Valley.
So how do you find these things out? Most realtors I know are already wise to me.
A little detective work should be all you need. Look at notices of default; these have to be filed, even if they take no action. Then compare that to actual foreclosures. Do a search for how many MLS listings say “bank owned” or REO. Tell a realtor you would like a list of foreclosures and keep track versus the NODs.
Then tell a local reporter and post it here. This is news that will impact everyone.
“Look at notices of default; these have to be filed, even if they take no action.”
Ben, what makes you say that these “have to be filed”? Aren’t they only required to be filed if the banks wants to act to protect/enforce their interest in the property? I don’t think there is any legal reason they have to proceed with filing the NOD…
‘if the banks wants to act to protect/enforce their interest in the property’
These corps have shareholders, bondholders, etc. IMO, they have to file.
Following through with the action seems to be discretionary, which I say still violates both regulations and the interests of the bond/shareholders, as these properties will return less and less the longer a sale is delayed.
I say still violates both regulations and the interests of the bond/shareholders, as these properties will return less and less the longer a sale is delayed. The Feds have been neglecting to enforce these regulations for years now. Events of the last 2 years show that bondholders and shareholders are merely bagholders, unless they are holding Sachs of Gold, in which case they are bailed out directly or indirectly through AIG.
as these properties will return less and less the longer a sale is delayed. Well of course that’s the opinion of most of us “tin-foil-hat types” around here. But the PTB behave as if the market can be “stabilized” at or near the current price levels. And the bankers either hope that that is true, or just want to get one more round at the bonus bar before closing time.
How about a tin-foil-hat vs rose-colored-glasses cage match?
Well, RE markets are fairly predictable, trend-wise. Many years up, many years down. This was a once in a lifetime thing, but any knowledgeable broker will tell you we have years of declines ahead of us.
Hey, you don’t have to convince me. IMHO the Treasury and the Fed behavior seems to indicate that THEY need convincing. And while REAL declines are inevetable/unavoidable/actually-a-GOOD-thing-given-that-the-alternative-is-perpetually-unafordable-housing, it isn’t at all clear to me that further NOMINAL declines will necessarily be significant. Ben certainly seems to believe that increasing the money supply is the “answer.” The problem is, as it was seven years ago, the Fed can pump money in, but it can’t* control where the money goes then. It seems inevitable to me to make sure that enough money goes into the RE mess, they’ll have to pump so much that other dislocations and distortions are ineveitable, just as pumping money to soften the dot-com bust and post 9/11 fearfulness ended up funding the RE bubble.
*not that we’d really want them to.
The main street press, newspapers reporting “inside news” is a lost art now. Very few if any true investigating reporters left who will see this shadow inventory and report on it. Much easier to report on the daily lifes of Tiger woods, etc. Best news is now on the internet, blogs, etc. Many newspapers were given forcasts of the real estate bubble in 2003, 2004, that was sure to happen but you read of no such articles. I myself contacted newspapers about this but was turned down.
People are now realizing they can find little thoughtful news today in their papers except gossip news etc. More and more Realtity will be the teacher and for most it will be to late to change their ways. Sad.
“Look at notices of default; these have to be filed, even if they take no action. ”
So if a place has had an NOD for say a year, and it’s still active but not listed for sale, is that shadow inventory?
Just looking at foreclosure.com the last couple years, it does seem like it takes a long time to clear. I was going blind reading the notices in the paper but stopped when I realized I was just reading the same ones over and over.
Many of the foreclosure sites are duplicative. It’s better and not too hard to do it your self.
If you guys can get Ben some hard figures, I can compile them into a report for press release.
I still don’t quite understand what to look for: NOD properties that are not listed for sale yet/
‘NOD properties that are not listed for sale yet’
NODs are notices of default. They are formal notices that payments are late enough to be recorded. This is what’s called pre-foreclosure; or “pre-sale” in the industry. They may very well be for-sale on the mls but by the owner (or rarely FSBO). Often, the people I interact with on a pre-foreclosure are the listing agents of the owner.
Realtors sometimes protect affluent folks who lose their house. I don’t know if they do this for middle-class folks. I’m sure they wouldn’t protect me. LOL!
One expensive house was vacant for months. This house is not in my state, but I have personal knowledge of this owner. I kept noticing the for-sale ad, month-after-month, on the Internet.
For the life of me, I couldn’t figure out why the vacant house was for sale. Why would this owner be selling the beautiful, big house in such a down market.
The owner of the house was wealthy and to my knowledge worth millions of dollars.
The puzzle of why the house was for-sale was finally solved. And it was a shocker to me. A real shocker.
The listing agent finally said in one of the Internet ads, “I have permission from another real estate person to say that this house is bank owned.” Up to this point, not one ad had mentioned that the house was bank owned.
It’s obvious a real estate agent was trying to protect the embarrassment of foreclosure. The city is not a small city so many local folks probably didn’t know the circumstances of the house sale.
And I wonder if the lookers, during the many open houses, even knew it was bank owned until it was specifically stated in an ad.
‘I wonder if the lookers even knew it was bank owned’
The other day I was working on a foreclosed house and a lady next door approached me who had just bought this adjacent property. It just so happened I had done all the work on this lady’s house about a year ago. While talking, I mentioned that this had been a US Marshall’s foreclosure (probably drugs, etc) and she had no knowledge of that. She really did her homework! And she said, “I think I got a great deal.” The less said about that the better.
Ben,
That story is surprising. I suppose the house was vacant the entire year while she was living next door. Maybe?
If the drug people were living there, you would think she would have suspected something going on.
I should have mentioned that the owner of the expensive foreclosed house made a beeline out of the city. Not only that, a beeline out of the state.
I guess I would probably do the same thing. Starting over in a new city and state would be better than starting over in a city in which you have called home for over 30-years. Eventually, word gets out that you’ve lost millions of dollars.
I assume this owner is broke. If you can’t make the mortgage payments on a house, you must be running on empty.
sigh, I have been living through this for too long.
Two things in I have learned.
1. Banks don’t need to have a fire sale on realestate holdings, they were made flush through the bail-outs.
2. Every one in the world is represented in our government, except middle class Americans who as a general policy take care of them selves.
Case in point: Wall St. recieved trillions because they are too big to fail. Minorities get looser lending standards, to qualify for sub-prime loans, Illegal aliens get amnesty and a gravey train of government aid because of Hispanic lobby, business groups get h1-b visas and high legal and illegal immigration despite huge unemployment levels. My list can go on and on, but bottom line every interest in the world has representation in our congress, except us, The American middle class.
As for the banks “shaddow inventory”. The Government has colluded with those banks, correct me if I am wrong but,dosn’t the treasury own near controlling interest in those “too big to fail”.
One conclusion that I am drawing is that we are seeing what it is like living through what Japan has been living trough the last 20 years. They call it the lost decade. Just when we thought housing prices would come in line with pre-recession incomes, the Gov. and “too big to fail” banks collude to stop foreclosures and limit inventory to raise prices.
Folks this could go on for decades like it has in Japan while incomes and private sector jobs shrink.
It has been tough to keep waiting and waiting as the elite keep kicking this can down the road. I keep reminding myself this has been happening in Japan for almost 20 years.
I recently read that the Japanese have passed new moratoriums on paying back all delinquent bank held debt, in effect putting a halt on paying all delinquent debt. People are saying that the Federal Reserve has chosen the same course of action.
I have been in a realestate pergatory these last four years,waiting to get back in. It is looking like a lost decade for Amerians also.
Revenge: Never buy real estate again. Rent.
“2. Every one in the world is represented in our government, except middle class Americans who as a general policy take care of them selves.”
The American middle class has been the whipping boy of choice for top politicians ever since I was a child. At this point, the practice is coming to fruition, as the middle class has been kicked and broken beyond the point of no return.
And that was the goal all along: a shattered nation of a small rich minority and a vast mass of poor people at each other’s throats.
The government takes money from the middle class for one reason: because it can. The poor don’t have the money, the rich can hide their money.
It was quite remarkable to hear Warren Buffet say that he pays a lower marginal rate than his secretary. (Do a search on the word ‘Buffet’ and this tidbit will be the first hit).
Deficits don’t matter. Less taxes for the rich.
At least we threw those bums out.
Only one bum was thrown out, replaced by another one. The rest of the bums are still writing law.
There’s still too many bums left, but at least we did get rid of quite a few.
I’m a straight, white, and single. I’m almost 54. I can’t recall a single law passed in my lifetime to my benefit from the USA. Every law passed from the Feds since the 60’s has been to my detriment.
Let the wage garnishment begin!
I’ve been wondering how long it would take before we saw that. Thanks Ben!
Manipulating supply and demand is nothing new. So, nothing suprises me.
I’m not sure about the status quo today, but at one point in time the American Medical Association had a quota system for medical school applicants. Consequently, high physician salaries were a contributing factor to our out-of-control medical costs. Limiting the medical class size to only 50 or so students was not prudent.
Manipulating the sale of foreclosures is the wrong approach. Apparently the powers that be think this approach is going to work. LOL! How long can they hold these homes? The time frame is years not months.
The sooner these foreclosed homes have owners the better. Many of the homes are in a state of disrepair and lowering the prices in the respective subdivisions.
I don’t know how the little guy can fight the system. Everything is seemingly broken.
“I’m not sure about the status quo today, but at one point in time the American Medical Association had a quota system for medical school applicants.”
Milton Friedman wrote his PhD dissertation on the topic of the AMA’s monopoly power, including exclusion of qualified applicants from medical school to keep the ‘price’ of medical services high…
Milton Friedman wrote his PhD dissertation on the topic of the AMA’s monopoly power … to keep the ‘price’ of medical services high Milton, IIRC, also opposed the licensing of physicians by governments, so that anyone at all could practice medicine, and that the free market coull kill off the most gullible patients and sort out the rest. Non-licensing was actually attempted by some states in the 1800’s, but it didn’t work out very well, kind of like trying to stay on the Gold Standard, now that I think about it.
Like many other economists, Friedman apparently lacked compunctions about taking a good idea too far…
I only had 6 semesters of Econ during my AA/BA/MBA stints.
Rose and Milton Friedman were logical and approachable to me. Their velocity theory of money lives forever in my mind. What goes around comes around. Slowly or quickly?
Too slowly as of late, ne?
A few, or more than a few, doctors today are performing medical procedures without the proper credentials.
The ex-wife of Elvis Presley and Mrs. Larry King had a guy from Brazil inject an anti-aging substance into their face. As I recall, the substance turned out to be something similiar to motor oil. Presley’s face is disfigured.
Don’t worry about non-licensed doctors for Congress. A couple of weeks ago I read about their health insurance. I almost got sick reading about their great coverage.
I can’t remember the exact fee, but over a 100 Congressman have coverage where the doctor comes to them. That’s pretty nice. No traffic! No hour wait.
Thanks for the information.
It’s high time the AMA should be held accountable for their misdeeds.
Look, I am not a member of the AMA and part of this stems from disagreeing how much of the advocacy is for patients and how much is for the profession.
That being said, it is ridiculous to think the AMA has magic control over the supply of doctors in this country - if this were true, there would not be any foreign medical graduates practicing in the US. We have thousands of FMGs, many training in residency programs often in urban areas and in primary care, shunned by US graduates.
Medical schools are exceedingly expensive and rely on volunteer faculty (unpaid) to do much of the teaching. Most (all?) medical schools run a big operating deficit - if not, every university would want a medical school for both the prestiege and the money. States like Montana, Alaska and Idaho would have medical schools because surely they need doctors. Medical students incur 200K + debts routinely at private schools (and the taxpayer subsidizes the equivalent at public schools which opens up a whole different can of worms) and yet the schools routinely lose money at least on an operating basis.
If you want to reduce health care costs and don’t care about public health, you want to reduce the number of MDs/DOs/NPs/PAs because it isn’t their salary that drives up health care costs - it is their ordering of tests and drugs that uses up real resources. $2500 for a cardiac echocardiagram because they hear a murmur? $4000 for a Brain MRI due to headaches?
While I think tort reform would help marginally at the excessive use of tests, I’m afraid a whole generation of medical professionals has been trained to order tests first and ask questions later, costs be damned. Is it really the medical professional’s role to “ration” expensive medical care? You are expected to be right….now, and god help you if your excuse is waiting a bit to see if expensive testing was really needed. Most patients (and med-mal attorneys) do not think “defensive medicine” exists, and it will likely require the government to make the final decision.
They order all the tests because of the trial lawyers. Give me three things in a health bill: HSAs, tort reform, and Buy insurance accross state lines. Oh yes, make Congress have the same insurance rules they give us!!!
I don’t have a lot of time to post.
There’s a myriad of reasons health costs are so high in America. The list of reasons is long.
Keeping the supply of doctors low inflates doctors’ salaries.
I just briefly read on the Internet that a fairly large percentage of Canadian doctors and IT specialists move to America to make more money. I assume that’s true.
The AMA is a very powerful group. These folks carry a big stick. The pharmaceutical companies carry a big a stick, too.
Yes, many medical tests are unnecessary. I agree.
I find it baffling why employers are expected to pay peoples’ health insurance.
“I don’t know how the little guy can fight the system. Everything is seemingly broken.”
You have wait for a critical mass who have lost everything. Then, look out!
The stopped clock prediction lives on: The housing market recovery is one year out…
“1. The residential housing market will dip again in mid-2010 before settling into a recovery in the back half of the year.”
“IMO, somebody has to stand up and make a ruckus about this and unfortunately it may be up to us.”
Blog vigilantes seem to always get more than their fair share of the work, thanks to regulatory vacuum in the lending sector engineered by the Greenspan Fed.
Blog vigilantes I love that term!
So do I. Many of those blog vigalantes are the closet thing we have to muckracking journalists and heroes today. God knows the corporate-owned MSM and their talentless scribblers would rather cravenly tout whatever party line they’re given by corporate sponsors than beat the bushes for actual truth in the public interest.
Prop-up, bail-out and delay is the consensus of our elites in banking and the Federal Government.
We all want to buy a home that is in line with rents and incomes.
The Government and the Federal Reserve have the big guns, and they will do anything to protect the assets of the “too big to fail”.
Who do you think is going to win? it is us vs. The bail-outs from Washington. We are fighting our own government!
Case in point. The worst financial crises in 70 years, and no heads have rolled, no federal investigations, no arrests, nothing. infact the banks that were bailed out last year to the tune of trillions of dollars, are getting 30 billion dollars in bonuses this Christmas!
Folks were is the outrage!
Think about it, in the crisis who has been helped {think big banks, Government employees, S.E.I.U. Wall St. The realestate industry, the car companies).
Who has been hurt. All private sector industries, people waiting to buy a house in line with rents and incomes.
It seems to me the powerfull got bailed-out and everyone else got the shaft.
I am not saying that this is the end of the story, but right now it is the tail wagging the dog. The tail being an elite banking industry, and it’s bought and paid for Federal government. The dog being the rest of us in the ever shrinking private sector, who have to support them, and pay for their over-priced assets.
I’ve said before when the bubble popped last year, what was happening was a correction, something in the extreme debt and inflation world America lives in was trying to give, something had to give. people could not continue to pay the price of housing. It had become too high. Then the elite in Government came in to save the day, and arrest the correction. Now we all live in purgatory, until things fall apart again.
The thing that makes me most upset now is that only the strange now stand on their own two feet. The powerfull in Wall St. survive and prosper on government entitlement, Demanding more and more growing larger and larger, risking ever more all the while demanding backing by the US treasury,
More and more citizens demand entitlement and subsidy from Uncle Sam, now in the form of Government healthcare. The elites in academia recieve bigger and bigger pensions, while tuitions increases never stop. Do Americans really ever pay cash for tuition? I don’t know of any, it is all just Gov. loans and pell grants.
How about all the recent and not so recent immigrants all loaded up on Medical, housing assistance, food stamps, WIC, Social security, and never putting a dime into these entitlements.
What I am saying is only the crazy or the retarded stand on their own two feet these days.
Folks The Banks and their bought and payed for Federal Government are growing and they are running the show now. We the middle class standing on our own two feet , treading water remain unrepresented.
“The worst financial crises in 70 years, and no heads have rolled, no federal investigations, no arrests, nothing. infact the banks that were bailed out last year to the tune of trillions of dollars, are getting 30 billion dollars in bonuses this Christmas!”
This really demonstrates that private sector competition is not working as advertised. What was supposed to be happening, under the “invisible hand of the market” is this:
1. Companies that bet on a never-ending housing bubble should die. Companies that bet on a housing bubble popping should prosper.
2. Inside each company, people that bet on a never-ending housing bubble should be fired. People that bet on its demise should be promoted.
Neither 1 or 2 is happening. Idealogues who tout the private sector as the modern incarnation of social darwinism should be throughly disabused of this notion by now.
Yes! You’re right. Where is the outrage? Zillions going to Wall Street.
And then you have PBS this past week, with these music telethons, begging and pleading for money. It’s been an entire week of ‘50, ’60s, New Age, and disco music. Maybe they had ’40s music, too. I didn’t see it every night.
Can’t at least some of the AIG money go to PBS? A billion dollars is nothing.
PBS must be really hurtin’ if they have to bring out Pat Boone to raise money? I’d pay major bucks just not to see his face.
Some of the artists and tunes were good but for the most part PBS was begging for money. Really begging–80% begging and 20% music. I wanted to hear more music and all I heard was begging.
It is rather sad to think that PBS is hurting financially and these big Wall Street firms are rolling in dough.
Wall Streeters should at least be forced to listed to several hours of Pat Boone. Or the song ‘Earth Angel’ sung 200 times.
Just be thankful we haven’t been inundated with Celtic Woman. Susan Boyle has more talent in her stubby finger than all of them put together.
Major League Stub, BTW.
PBS isn’t hurting. They get money from the gov’t by means of the corporation for public broadcasting. I pointed this out locally, and one of the local WHRO PBS guys jumps in on the forum (scary!) and schools me, that they don’t get that much money from the CPB/gov’t, they make most of their money from the public schools. I thought it was a pretty funny post myself.
I just find it really sad that PBS has to beg for money.
PBS is viewed as much too liberal by many conservatives. I think some of the PBS shows concerning global warning were censored by the Bushies. That’s what I recall.
Greg …Good post .The middle class is standing on their own feet and at the same time being robbed .
It’s wrong that they are holding back vacant houses from sale . To me this is a health and safety violation ,along with being a attempt to price fix by controlling inventory . Anything to not have to mark to market .
If the lenders are short staffed regarding taking care of inventory ,than why didn’t they hire more people instead of handing out a bunch of bonus packages ?
I suspect that laws are being broken right and left ,as they were broken
leading up to the debacle . The Politicians choice was not to bust evil and they have managed to create more evil for failure to bust corruption , collusion , monopolies , price fixing ,you name it ,and all the madness .
The houses will increasingly go downhill ,while people who could live in them are denied fair market ability to buy them . I think they are going to let the culprits do whatever they want ,never mind standing law .I hope I’m wrong .Every time one of the unintended consequences comes up from the stupid choices being made ,the Politicians come up with a new crazy law or Act to deal with that ,than they cause more unintended consequences . THEY ARE NUTS ,I’m telling you ,they have been in their Ivory towers for to long .
‘If the lenders are short staffed regarding taking care of inventory ,than why didn’t they hire more people’
Well, they have and I’m still not buying the “overwhelmed” thing anymore. I work in this business and it ain’t hard to get a property on the market, or even to repo it. We are talking $150 bucks to take it back at most.
Some of the lenders were complaining because they had ramped-up their hiring/training, and then the foreclosure well ran dry.
I’m willing to bet big $$$ that the banks/servicers are not at all overwhelmed with foreclosures. They **are** overwhelmed by FBs calling in all day, wanting the lenders to reduce their principal balances.
Give it six months things will look very different in July.
‘California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.’
Why are so many MSM-favored ‘housing experts’ so adamantly and utterly opposed to affordable housing?
Why are so many MSM-favored ‘housing experts’ so adamantly and utterly opposed to affordable housing? I think that’s part of their religion.
“It could be disastrous if the banks suddenly flooded the market with those distressed properties.”
Unfortunately, I believe this statement to be true. These properties need to be dribbled out into the market rather than dumped, else the banks - and ultimately we taxpayers - take another big financial hit.
Which means potential buyers need to be convinced to put their money down. And NOBODY is better convincing people to do this than the NAR.
Therefore … (drum roll, please) … (thank you) … that makes the NAR the taxpayer’s best friend.
(TIA for your applause.)
Unfortunately, I believe this statement to be true. These properties need to be dribbled out into the market rather than dumped, else the banks - and ultimately we taxpayers - take another big financial hit.
I find sentiments like this inexplicable and disgusting. The bovine-like acceptance of taxpayer bailouts of lenders, and dumb herd-like acquiesence to going along with their program - “let’s dribble homes into the market to protect the banks” - are symptomatic of the zombie-like complacency that has overtaken even the more astute among the American public.
Instead of going along with such lunancy, we should be fighting it tooth and nail. But for most of the herd creatures, it isn’t worth the bother.
‘Why are so many MSM-favored ‘housing experts’ so adamantly and utterly opposed to affordable housing?’
This reminds me, we need a name for this initiative. Any suggestions?
“Operation Equilibrium”
Lightpoles for Lenders?
Bullets for Bankers?
Lead for Lenders?
Sorry. My scorn and contempt for the corporate banking elite blinds me.
Can you ask that question again tomorrow in the Bits Bucket, Ben?
I think a lot of posters take the weekends off, and many of them are awfully talented at coming up with creative titles, etc.
Out of the Shadow.
“I finds sentiments like this inexplicable and disgusting. The bovine-like acceptance of taxpayer bailouts of lenders, and dumb herd-like acquiensence to going along with their program - ‘let’s dribble homes into the market to protect the banks’ - are symptomic of the zombie-like complacency that has taken over the more astute of the American public.”
Lol. So, other than that, you are in total agreement with my position?
Why are so many MSM-favored ‘housing experts’ so adamantly and utterly opposed to affordable housing?
They’ve already got theirs. They bought when housing was cheaper and it is in their interest to keep prices artificially high. It’s no different than the indifference of the San Diego City Council in regulating condo conversions earlier this decade. They weren’t renters getting booted out of their shelter. They already owned and their campaigns were financed be developers.
Because they are industry shills. The media is lazy - they want “expert commentary” on the issues of the day, and they want it fast, and they want it now. The industry is more than happy to make their jobs easier. Hence the prevalence of industry shills cheerleading housing on so many TV and radio shows.
Those debt collectors are then going after the homeowners’ bank accounts or pay checks to recoup whatever money they can.”
“‘The backdrop to that is there are real fundamental problems in the debt buyer industry,’ said Zinner. ‘The combination of the second mortgage problem with all the abuses in the debt collection industry is toxic, and could really create havoc for homeowners who are trying to avoid foreclosure on their primary mortgage.’”
Damn - you mean they WANT me to pay back the money I borrowed? How dare they! I am a victim. 2nd and 3rd mortgages don’t count. I used that money for medical expenses and taking care of grandma anyways.
Lenders loaned more than can ever possibly be repaid, never mind the questionable purposes for which it was borrowed. They should be surprised that it isn’t being repaid exactly how?
The only plus of lenders going after the borrowers is it may finally force the issue of working down all of this debt. Some will be repaid, much will not. This should lead another leg down in the economy and might finally force the death or break up of some of the big lenders.
Set up a fund to buy stocks in the banks (a minimal number from a spectrum of banks). Sue, calss action, to compel an accurate accounting of each company’s assets and liabilities. In addition, sue to have the banks maintain the value of the tangible assets and properties they hold (no more moldering, vacant homes), or in the alternative, to liquidate those holdings at their current market value (as it can be argued that the decline in the physical condition of the asset through neglect, can only result in a lower price in the future). Cite “shareholder protection” throughout the process.
I could go on, if anyone is interested.
Uncle Bob,
Wow. Thank you so much for suggesting this course of action, and yes, please do continue to post and outline it for us? Even if our collective investment is very modest, if it’s well-placed we can at least show up at shareholders’ meetings and cause a ruckus. With cameras. On slow news days.
Very good post, Bob.
Please do continue with with your thoughts during the next few days/weeks. If nothing else, we might be able to work something out as per your suggestion.
Comment by Bob, your uncle.
2009-12-06 16:10:42
Set up a fund to buy stocks in the banks (a minimal number from a spectrum of banks). Sue, calss action, to compel an accurate accounting of each company’s assets and liabilities. In addition, sue to have the banks maintain the value of the tangible assets and properties they hold (no more moldering, vacant homes), or in the alternative, to liquidate those holdings at their current market value (as it can be argued that the decline in the physical condition of the asset through neglect, can only result in a lower price in the future). Cite “shareholder protection” throughout the process.
I could go on, if anyone is interested.
Great idea!
The Fake Recovery of 09 will undoubtedly go down in history as the greatest hoax of all time. Calling out Eddie.
Here’s a thought: could a group of people who want to buy houses, but refuse to do so at manipulated prices constitute a class for a class-action lawsuit?
I know the federal government can’t be sued, but it strikes me that the largest banks and mortgage servicers could be sued. As part of the suit, their executives could be deposed to get to the truth of why they are keeping properties off the market.
If they are doing it in collusion with other banks/servicers, that might constitude price-fixing. If they were doing it individually to protectly only their own interests, it might not be actionable.
But if I had to guess, the depositions would reveal some interesting things…
One risk of this approach is that class-action lawyers typically just want a good $$$ settlement; they aren’t interested in the truth. Often class-action settlements look to my eye more like pay-offs, since the lawyers get a bundle, and the class gets almost nothing. So finding the right representation might be a challenge.
Primey, meet Bob, our uncle.
Bob, Primey.
From Diana Olick’s piece: “They also say that a lot of borrowers got extensions on the trial period in order to get paperwork together to move on to permanent modifications. Insiders however tell me that a lot of that paperwork has to do with those so-called “stated-income” loans, where you just had to tell the lender what you make for a living, not actually prove it. In order to move to a permanent mod, you have to prove it, so now we get to find out how many of those “liar loans” were just that.”
Here’s the problem in a nutshell.
I can provide a password for the North Jersey MLS if anyone is interested.
also, I might be able to get some documented evidence of structured efforts to keep foreclosures off the market from a very, very large mortgage lender.
What can I do with this info to help, Ben?
Thank you so much, EINJ!!!!!
Please do contact Ben to discuss this with him, in case you haven’t already.
Again, we need to create a “sticky” post so that we can discuss this on an ongoing basis.
“It should be something like this: To use public pressure and legal avenues to stop the collusion within the real estate industry, lenders and the government to manipulate the housing market to the detriment of consumers.”
The problem is, most of the consumers in this country are helped by efforts to manipulate the housing market (higher) than are hurt. Remember, the majority owns, and of the majority that own, the vast majority of them are those that are of the higher income brackets than those that are do not.
Consumers, as a group, are very much helped by efforts to re-flate the bubble. Doesn’t make it right (quite the opposite) and I’m totally with you in the efforts to try to expose and stop this behavior. But, let’s be honest, the only people helped are the few (10%?) of the population buying homes each year. The best thing that could happen to “consumers” is that home prices go up 10X tomorrow.
Not exactly on topic but part of the bigger picture-
I’m a bit of a Suzy Orman fan for entertainment purposes. Wifey and I enjoy watching spendthrifts call in for advice. And if you’ve watched, you can attest there are some doozies. I mean these clowns calling in are spendthrifts of spendthrifts.
Anyways, Sat nite, surprisingly, Suzy is advocating on her show and web page for people to stop using credit cards completely, irrespective whether you pay them off at the end of month or not. Her point is that the banks are getting desperate to the point of maltreatment of their CC customers via outlandish fees and ratcheted interest rates for no cause. This is a surpise to me as if you’ve watched her, you’ll hear some of her advice in the past seemed to ultimately support the banks in some way. No more. She’s pissed and said so. Yeah yeah, whether you like it or not, it’s a significant change of message for her.
I’m no conspiracist but between the heat getting put on the fed reserve and the growing negative sentiment of banks by the public, something seems to be stirring and I think I heard BJ say a few days ago, “this is gonna be big”.
BJ just might be correct.
PS…. Any of you out their whining for the poor innocent banks after all this need to pull your head out of your a$$.
Right ,the Banks and Investment houses get bail outs and than they raise some credit cards rates to 29% ,while we the taxpayers insure low rated
loans the banks don’t want to carry .
The Feds (BB), the Treasury (Hank Paulson )and the Politicians didn’t put any requirements on the Entities bailed out .. It’s all about getting these entities profitable at the expense of the the middle and upper middle class .
Why would the lenders want to lend when the economy is trying to figure out where money should go now since real estate investment was a
mis-allocation of funds and small business is closing rather than opening .They got to many houses right now ,to much commercial .
.The Powers are pushing people around into new bubbles ,but not into
a new sustainable economy of solid long term investments .
I still think they could work on the roads and bridges and a number of
social goods needed at this time until this economy figures out where money should be directed .
In the meantime the Casinos are still open ,jobs are lost ,and more and more jobs are outsourced or in-sourced and the Powers that
control everything don’t want a overhaul of their faulty gambling Casinos .
This is going to get very interesting next year. Through all of the changes to credit card terms in the past year, the credit card companies are going to force many borrowers into bankruptcy. Debt that might have slowly been paid down under the old terms is simply no longer manageable.
As those self-inflicted losses hit the big banks, how long will they be able to hide them before they run to Congress for another bailout? If it’s next year, that’s simply not doable during an election year. The public is already livid over the past bailouts of the big banks. A huge number of incumbents could lose if passed another big bailout for Wall Street and the big banks. With no bailout, would the big banks finally be declared insolvent, shut down, and broken up?
I’m thinking the fastest way to force this issue may be for most borrowers to stop paying most debt.
BJ,
I came across a massive hidden inventory on the net last week by messing with the id numbers in the web address. The amount not shown is staggering. It seems like it’s in the tens of thousands based on my preliminary observations.
I will mail you in the morning. A phone call is in order so I can walk you through it. It’s took much of a PITA to explain in a mail.
Exeter
‘A phone call is in order so I can walk you through it’
That’s cool. I’m serious about this and I’m not going to let it slide. Anything that can be added will be utilized. Thanks.
OT, Ben how is the foreclosed home contracting business? I am thinking about renewing my general contractor license again after letting it slide many years - 570000 series license and going after some of this work myself, as I am sick and tired of writing software for a living, especially with the down pressure on salaries from H1B and expectation of longer and uncompensated hours… I would be working out of San Diego, so probably not stepping on your toes.
For what it is worth.
Here is info RE: Polk County Florida (Between Tampa and Orlando)
Preforeclosures (NOD?) 3460
Sheriffs Sales 24
Foreclosures 1931
Bankruptcies 1066 (Battle of Hastings?)
FSBO 148
Tax Liens 3186
Found all this info at foreclosure dot com.
What I do not know how to find out is how many total single family houses there are in Polk County as a reference to the above.
eg. Is it 2% 5% 8%, ect. of the total?
If the hand that once fed you now starves you, how long do you take it before doing something? Hello newspapers, journalists??? Opportunity knocks- or does the NAR own you too?
Something is definitely up here in the Bay Area. Some friends put in a bid for a 2 bedroom in Jerkeley. There were a total of 11 bids on the house and it sold in the 800k range. My friends were outbid by six figures. This is a place that has no garage - only one bath. Please, someone explain to me who can afford this? What banks are forking out the cash for this? It’s prebubble mania here again.
Whatever these people are smoking, I want some. Not so I can buy a house, but if it alters reality (and realty) that much, it must be pretty good shit.
Yep. I said it just the other day here. The bubble is back in all it’s glory! We’ve had multiple bidders offering over asking price around here for quite a while (most of the year).
With the tax credit, the low FHA loans, super-low interest rates, and money flooding in from ????? (China)???, the RE market is very, very hot right now — even in the middle of the holiday season.
Add to all that the collusion between banks and the govt (IMHO), we’re in for one heck of a ride.
Agreed. It is back in the bay area California. People are again asking “why don’t you buy now? The prices have really come down…”
Here is some inside information I got from my Moms boyfriend.
My moms boyfriend has a close friend who is incharge of reo’s at a major bank. In fall 2008 he told her that he wanted to invest in real-estate and asked her when it was a good time to buy. She told him not to buy, instead wait until fall 2009. In Fall 2009 she told him to wait another year until fall 2010. The reason being that her bank and all banks are under extreme pressure from the Federal Government (Obama), not to foreclose, and especially not during Christmas and New Years. She said that she believes that the banks will start foreclosing next year, and that the Federal Gov. is going to start some sort of campaign to get people to start saving.
Her point was banks have enormous pressure not to foreclose right now, but will start sometime next year.
Some of this makes a lot of sense. The pressure to not foreclose, explaines the “Shaddow inventory” aspect of the nonmarket, and the recent pressure Obama is putting on banks to make loan modifications permanent.
See, Ben. ^^^This is what I told you about. I’ve heard the very same thing from people who are supposedly “in the know.”
The govt is behind this.
Again, Barney Frank had mentioned within the last few months something about the banks “continuing with the policy” of keeping inventory off the market. Wish I had recorded it. I am still trying to find it.
Greg ,the pressure not to foreclose during Holidays would not apply to houses that have been sitting vacant for over a year . Why sit on those ?
Ben,
If you guys can get enough info together, I’m willing to bet that FOX news would run this story! This is totally the type of stories they like. Anything that discredits this current administration and the “bail outs” as well as any type of economic recovery. Im totally serious here, I think once you get your facts collected with the help of the bloggers here, you should contact FOX new first! They are the most watched news network out there and they love to be the first reporting stories like this. Good Luck and keep up the good work!
John
Wow…. ClusterFox just might be good for something. Good idea John.
Get information together and make a documentary? Why rely only on the news outlets to cover the story? Make a documentary, offer it to news agencies but get it to people and rile them up. Include clips of quotes supporting the government, bank, RE industry collusion. They are colluding AGAINST the American Taxpayer.
To Act like the Rich, be Frugal. or Like BillLa.!!
What is a good rule if you are determined to become wealthy?
The market value of the home you purchase should be less than three times your household’s total annual realized income. Also, if you are not yet wealthy, but want to be someday, never purchase a home that requires a mortgage that is more than twice your household’s annual realized income.
http://customsites.yahoo.com/financiallyfit/finance/article-108292-3378-0-the-key-to-acting-like-the-rich-be-frugal
OT
PB, I got off on the Rancho Bernardo Center exit.. looked around and thought I saw you..must have been mistaken!
I really should get your ph so I can at least meet you 1x for beer, a mini HBB midday break.
Just driving through - dang it was cold- for us, huh!
Was trying to find on ramp back to 15 north and found myself in the semi dried natural wetlands. Totally different than when we were younger, now you get lost in the Burbs.
Not at all clear that holding houses off the market is illegal. You can no more force owners to sell, than force buyers to buy. There would have to be some clear evidence of conspiracy to fix prices and some harm shown to make a good case against this, even in the popular press and blogspace.
The harm to consumers argument needs more thought. Sure buyers would be better off if prices were lower, but as long as rents are below prices, they are even better off by renting. Attempts to confuse consumers by hiding excess inventory, could be overcome by better public reporting on the status of these houses. The Fed probably already has the power to do this, but needs to be convinced by a sound public argument.
Similarly, banks are required to estimate the expected recovery value of their loans and calculate their balance sheets, earnings and capital requirements accordingly, but they are not required sell real assets they take over at any particular time, especially if they believe they can minimize their losses by spreading the sales out
Of course banks should be expected to maintain the houses they take over, both to assure they will realize their estimated prices and to avoid the externalities they pose for the neighbors. But these laws would seem more appropriate at the local level than trying to get congress to agree on anything sensible.
They should put vacant houses on the market because they are a
health and safety violation and they are increasing crime and potential for fires ,etc. The value is going down hill on those properties and the banks/government have a obligation not to create crime potential and health and safety threats .
Vacant houses increase the following risks :
I1) More fire potential
(2) more crime
(3) blight to neighborhoods
(4) property going downhill
(5) health and safety violations regarding pests and more potential for the water lines breaking
(6) Potential for the growth of mold ,termites , wild creatures ,bugs , even rats and bees ,ants ,etc
(7) Potential for children being harmed
(8) Potential for fraud and thief of attached items on property
(9) Pools pose major risks
(10) Potential for break in and lack of proper use of utilities
(11) Increase potential for drug use in abandoned property
OK I could go on and on ,but you get the idea
So,in the final analysis ,does the Government have the right to create
a social harm ,simply so they can prop up real estate prices or
delay mark to market to aid the lenders financial position ?
Remember how the threats to neighborhoods were used as ground for
giving bail-outs to begin with ,so you can see that the Powers were not sincere giving bail-outs to prevent these risks .
“OK I could go on and on ,but you get the idea ”
All true and very good reasons for holding owners of empty houses responsible for their maintenance and any externality costs. But not good enough reasons for government to force people to sell assets at prices not to their liking. Consider all the people who own vacation homes which sit empty much of the time, owners who cannot find renters at prices which cover their operating costs, or even people who like to take long vacations.
Local governments should be able to exercise their rights of eminent domain over houses that create a public nuisance and auction them off. But the nuisance needs to be clearly defined before taking somebody’s property, even if the owner is a bank.
“There is something going on right now regarding the “shadow inventory” and lender-owned foreclosures. I suggest an initiative to counter this and expose it for what it is; illegal. It should be something like this: To use public pressure and legal avenues to stop the collusion within the real estate industry, lenders and the government to manipulate the housing market to the detriment of consumers.”
by Ben Jones Housing Bubble Blog
I hve posted this anywhere I could.
I’ll keep a sharp look out for houses in the following area codes:
76116 - stable and rising prices, low inventory and I rarely spot a house for sale very long.
76107 - High-end RE. lots of inventory, Repos, prices still @ 2007 levels so this is where the high dollar write offs will happen.
76109 - Low end area with avg. inventory with prices from $40k-$150k. This area doesn’t have a lot of turnover but the number of people in this zip code doubled in the last 6-7 years from Hispanic families. I’m watching this area closer now that the immigration trends are shifting.
PS: I’m located in Ft. Worth, TX and the one of my rental houses taxable value went from $32k (700sq frame house) to $61k my taxes went up huge. The appraisal values of the comparable houses were completely out of wack by over 40% so it made my house look cheep and I challenged them and they didn’t budge an inch. They are really squeezing the tax base.