What Appeared To Be Demand For Housing
The Palm Beach Post reports from Florida. “Residents say they’re disappointed with the lack of progress and upkeep at the 32-acre community on Oakland Park Boulevard. As recently as 2006 it was billed as the city’s largest downtown redevelopment project, with 72 condos, 110 townhomes, 18,000 square feet of retail and office space, and open space for a public commons. To date, about 80 townhomes have been built. But at the housing community clubhouse is closed, the pool has a wide-open gate and no lounge chairs. And on a recent weekday afternoon, no one was staffing the on-site sales office. Last month a bank filed foreclosure proceedings against the builder. A view of an overgrown field is not what Tiffani Brown thought she’d have now — three years after moving into a townhouse in Bella Vista.”
“‘I expected to have shopping plazas with stores,’ said Brown, who paid close to $200,000 for her three-bedroom unit. ‘It’s still deserted.”’
“South Florida poker superstar Michael Mizrachi owes almost $340,000 in federal taxes and is facing foreclosure. He paid $440,000 in 2005 for his Miramar home in the Vizcaya neighborhood. March 2010 court documents show he had an unpaid principal of $367,359. A Hollywood condo he and his brother owned was sold via online auction. They paid $310,000 for the property in 2005, and used it as a rental property. ‘But people weren’t paying their rent, and we were advised that the best thing to do was foreclosure,’ he said. Both properties were assessed this year at less than half of their purchase price. All told, he estimates he lost $600,000 in the housing market.’
“‘Obviously, I’m a better poker player than a businessman, but I’m getting better,’ he said.”
The Orlando Sentinel in Florida. “Orlando now leads Florida and most of the nation for underwater mortgages, according to a report released last week by CoreLogic Inc. Only Las Vegas and Phoenix surpass it. The researchers determined that 55 percent, or 285,004, of the area’s mortgaged homes are worth less than their outstanding mortgage. Industry experts describe the properties as being a ’shadow inventory’ of bank-repossessed properties and mortgages facing foreclosure.”
“Mark and Susan Stone are weighing a decision being echoed across Central Florida: Should we stay in a home worth less than the mortgage — or walk away? ‘That was my dream kitchen. But it’s just a kitchen,’ said Susan Stone, who lives in the home with her husband and two sons, ages 7 and 3. ‘Both kids were there since they were born. It’s all they’ve ever known. … We just want an affordable payment, or they [the bank] can have the house. It will sit vacant for who knows how long.’”
“Mark Stone bought the home 12 years ago for $93,000. Then, about two years later, he took equity out of the appreciating house to open a bar and grill, but the 2004 hurricanes closed the adjacent hotel for six months, and the bar and grill was a casualty. The Stones then took out more equity to launch a vending business, which also failed.”
“They owe about $208,000, and the house is listed for sale at $229,000, which would cover the debt plus real-estate costs. But even with the boat dock and granite counters, the house is unlikely to fetch that price because similar houses in the neighborhood have sold for about $160,000. A corporation would not continue to continue pay top dollar for an asset that had lost half its value, she added. After the lender denied them a mortgage modification in January, they stopped making payments, and she estimated they could soon save $10,000 for a down payment on another house.”
”Basically you have to look at it like a business would,’ said Susan Stone.”
The Ledger in Florida. “Downtown’s chic Lofts on the Park condominiums will auction its last five units May 22 amid an uncertain housing recovery. By the time it was completed in mid-2007, local home sales had already begun their tumble from the boom. The Lofts’ developers managed to sell 11 of 16 units but the others have gone unsold for nearly three years.”
“‘There’s been lack of movement and lack of interest for the last 2 1/2 years, basically,’ said Peter Munson, a Lakeland lawyer who developed the lofts with partners Jerry Herring and Frank Drake. The units that sold fetched roughly $250,000 apiece, Munson said.”
“Herring said the Lofts once had more than 80 reservations from prospective buyers. ‘By the time we completed the construction the bottom had begun to fall out (of the housing market),’ he said during a recent interview. ‘The timing issue with the Lofts just killed us.’”
The Herald Tribune in Florida. “A wave of commercial foreclosures — $154 million during the first quarter alone in Manatee and Sarasota counties — is putting renewed pressure on the region’s struggling banks and threatening to sap governments of at least another $90 million in tax revenues. Some experts think commercial foreclosures this year could total a half-billion dollars, eclipsing the $300 million in troubled loans during 2009.”
“The wave of commercial defaults follows the broad shakeout in the residential market that sent foreclosure rates in Southwest Florida soaring during the last three years. ‘Just like in the residential market, Florida will lead the nation or be in the top three states in terms of commercial defaults,’ said Jack McCabe, a Deerfield Beach-based real estate consultant. ‘By the end of the year we will probably see over $500 million in commercial defaults in Sarasota and Manatee alone and billions in the state of Florida.’”
“Analysts and market watchers say banks and developers hurt themselves by misreading demand for commercial projects. The result was a surplus of office, retail and warehouse and pad-ready commercial lots. ‘Banks made stupid loans,’ said Carl Wise, a Sarasota-based commercial real estate agent. ‘They were out generating fees, growing their banks, and they made mistakes because they did not understand what they were doing.’”
“Statistics show that it also is smaller community banks that are bearing more than their share of the burden from the rash of commercial defaults. Of the 56 defaults representing the $154 million, 25 — or $48 million — originally were made by 13 Southwest Florida community banks — four of which already have failed. ‘Obviously many more banks will go belly up this year,’ said McCabe,. ‘We’re just in the third inning of this. The worst is ahead.’”
McClatchy Newspapers. “It’s become conventional wisdom that big investment and commercial banks caused the crisis and small community banks are paying for the sins of others. That’s not true, however. Georgia leads the nation in bank failures since the crisis began, and all of them have been at small banks, most caused by bad loans to builders.”
“The reasons that 38 small Georgia banks have failed are varied and in dispute. Some are peculiar to the Peach State, but one lesson Georgia offers the nation is that small community banks have made many of the same mistakes their larger brethren did, and thus exacerbated the national crisis.”
“‘Almost all of the failed banks in recent years have been community banks, i.e., with total assets under $10 billion. Over three-quarters of the failures had less than $1 billion in assets. ‘Most of these banks failed for the classic reason: bad lending, compounded in many cases by excessively rapid growth,’ said Bert Ely, a banking consultant who rose to prominence during the savings and loan crisis of the 1980s and ’90s, when more than 700 thrifts failed.”
“What lessons do regulators draw from Georgia’s bank problems? The Atlanta Fed regulates only a small number of Georgia banks, including one large one, SunTrust. Most Georgia bank failures weren’t on its watch, but they clearly remain a concern. W. Brian Bowling, a vice president at the Federal Reserve Bank of Atlanta, is sympathetic to the idea that fragmented banks and builders may have created a distorted view of what was happening in the housing market.”
“‘Smaller banks would not have been doing what they were doing … if there was not what appeared to be such demand for housing,’ he said.”
The Atlanta Journal Constitution in Georgia. “Looking back, Atlanta’s 2009 housing market followed the letter of the law. Murphy’s Law. If it could go wrong, it did. Throughout the metro area, potential buyers found themselves cash-strapped as the economy worsened. ‘For Sale’ signs seemed to become permanent lawn ornaments. Sellers, like Mary Ely in Johns Creek, could only watch as the real estate market receded. ‘I could see the economic downturn coming and I tried to sell, but I didn’t get any offers,’ Ely said. ‘I was stuck.’”
“‘Foreclosures drove prices way down,’ said Eugene James, head of the Atlanta division of the real estate research company Metrostudy. ‘You had people who didn’t have to sell saying, ‘No, I’m not going to accept your lowball price,’ and took their homes off the market.’”
“‘While the price declines here in Atlanta weren’t as severe, the breadth of the problem was worse,’ said Jim Grissett, an adjunct professor at Emory and investment adviser who specializes in real estate. ‘There were definitely winners and losers in this thing. On a broad scale, the losers were people who had to sell for a loss, who bought at the end of the cycle and the people who speculated. The winners were people who waited and saved their money and just entered the market.’”
“Ely, who now has a contract on her Johns Creek home, said selling the home for less than she owes the bank — a short sale — was her only option. ‘I can’t go through a foreclosure,’ she said. ‘I just can’t.’”
The Birmingham News in Alabama. “The U.S. Senate rejected an attempt to rein in taxpayer support of mortgage giants Fannie Mae and Freddie Mac. It was another in a long line of defeats for housing finance changes that two Alabama lawmakers have sought for years. Sen. Richard Shelby and Rep. Spencer Bachus, the top two Republicans on the key financial committees of Congress, argue that the two government-sponsored enterprises — now surviving on $145 billion in taxpayer bailout funds — should be transitioned into private entities. ”
“Congress, no matter which party has been in charge, has not agreed.”
“While Shelby and Bachus have been urging a crackdown on Fannie Mae and Freddie Mac, they also celebrated the rise in homeownership during then-President George W. Bush’s administration, a policy promoted by Fannie and Freddie’s mission to provide lower-cost mortgages. In separate interviews Tuesday, they said they still supported the goal, just without so much taxpayer support.”
“‘We’ve all been guilty of promoting homeownership, which I think is good, but it reaches a point of diminishing returns, as we’ve seen,’ Shelby said. ‘We can’t put people in houses with nothing down and bad credit and a questionable job and hope they’re going to make those loans. That’s crazy.’”
“Bachus said owning a home is not right for everyone, and he wanted to ‘wean (Fannie and Freddie) from the public trough.’ ‘They may lower interest rates by a quarter or a half of a point, but now we find out there is quite a cost for that,’ Bachus said.”
“The Birmingham News analysis of 51,682 single-family homes in Shelby County found that 41,375 of them — 80 percent — dropped in value in the current revaluation. Altogether for the county tax roll, the overall assessed value of single-family homes dropped by almost $171 million. Robin and Vic Paschal have their Norwick Forest house on the market. The Paschals’ two-story, traditional-style brick house declined 12.1 percent in value since last year. They are asking $267,900 for the four-bedroom, 2½-bath house they bought in 2002. Both their children have graduated high school, and the Paschals are ready to downsize. They are trying to sell it themselves.”
“‘We put the house on the market last fall, and the residential prices dropped drastically,’ Paschal said. ‘The real estate fees were going to be in excess of $20,000. Last spring, the house was appraised for $297,000, and now the real estate people are telling us we can ask $230,000 or $240,000 at the most, and then be ready to negotiate.’”
The couple owes $48,000 more than the house is worth and they’re willing to walk away. That’s only $300/month mortgage payment. It sounds nutty to me. Maybe it’s the Florida property taxes. Or maybe they’re incredibly stupid.
That seems strage to me too.You got to know when to hold em and know when to fold em!!!!!!!!!!!
lol
“‘Obviously, I’m a better poker player than a businessman, but I’m getting better,’ he said.”
This sounds like Wile E Coyote, just shooting the breeze, while placing another rocket shoes order with his friendly salesman at Acme Products.
Or maybe they’re starting to think it can only get worse from here.
“The couple owes $48,000 more than the house is worth and they’re willing to walk away. That’s only $300/month mortgage payment. It sounds nutty to me.”
Why is that nutty??? The amount for which different people will be willing to sell their credit-ratings VARIES dramatically with their circumstances.
If they have zero other assets to protect, or are in a no-recourse state, why shouldn’t they sell their credit-rating for almost $50K? It would likely take them a long time to earn that much (after taxes).
For people with a higher need for credit over the next few years, or more other assets to lose (assuming there is a risk of recourse), the price might be higher.
For people with a lower need for credit, or no other assets to lose, the price might be even lower.
REhobbyist, what price would you sell your credit-rating for?
it’s not really how much you sell the FICO for, it’s when. These underwater FB’s are probably going to default/BK anyway; best to get it over with now. If they still have a job they can rent and start over with 0, which is far ahead of FB’s who are still in the hole.
There was a poster who commented only once or twice on this blog. He recounted how he had gone through BK with a credit rating of something like 560. After three years he managed to build his FICO up to 650 or so. So why wait? Out of “honor?” Why? The banks are hardly honorable.
Weren’t there noises that FHA was going to finance BK people after just 3 years? They really need to get those folks back on the treadmill or this “recovery” won’t last. LOL
That’s the thing. There are so many people who will have a BK or foreclosure on their record that the market “needs” them in order to keep the churn going.
Two quick comments:
1. “FHA Set to Reduce Closing Cost Assistance This Summer”- HousingWire website
2. If they give these fb’s and stategic defaulters credit amnesty, I’ll be very pissed off. I’ve earned my 825+ FICO.
“That’s the thing. There are so many people who will have a BK or foreclosure on their record that the market “needs” them in order to keep the churn going.”
This is an interesting point, one that is beyond me a bit. I understand what you’ve said, but the advantages versus ramifications equation isn’t exactly concrete.
What is the value/profit of “churn” per se? Not for the NAR crowd; there, it is obvious. But for the rest of us. Churn for churn sake - the illusion that the market is functioning.
“It’s become conventional wisdom that big investment and commercial banks caused the crisis and small community banks are paying for the sins of others. That’s not true, however. Georgia leads the nation in bank failures since the crisis began, and all of them have been at small banks, most caused by bad loans to builders.”
“The reasons that 38 small Georgia banks have failed are varied and in dispute. Some are peculiar to the Peach State, but one lesson Georgia offers the nation is that small community banks have made many of the same mistakes their larger brethren did, and thus exacerbated the national crisis.”
I think this blame game over whether big banks or little banks are responsible for the crisis is off target. Most if not all the problems of a collapsing banking sector appear to be related to an excess of market power among Wall Street and K Street goliaths (e.g., Megabank, Inc subprime mortgage lending kingpins and the zombie GSEs) destroying the competitive mechanism of a free lending market.
A few changes would appear to offer great potential improvements to mortgage lending industry structure, conduct and performance:
1) Break up the sector’s monopolistic Goliaths into small, independent, competitive pieces.
2) Allow banks that make poor underwriting decisions (e.g., that throw away $700 bn loans on households earning $30K in annual income) to fail, and banks that make prudent underwriting decisions to thrive.
3) Stop bailing out banks run by bankers who are bad at traditional banking (i.e., no more bailout incentives to commit international piracy).
4) Stop artificially suppressing mortgage lending rates to levels where sources of loanable funds are not compensated for their risk of loss.
Pretty soon, through a natural evolutionary winnowing process which includes eliminating the moral hazard due problem caused by bottomless bailouts, the only banks left would be those which practice prudent underwriting. The health and confidence in the mortgage lending system could be thereby restored. Private sources of mortgage lending would likely come out from under the mattress, where they are currently hidden, and the GSEs could enjoy a proper burial.
‘Of the 56 defaults…25 originally were made by 13 Southwest Florida community banks — four of which already have failed’
‘Most of these banks failed for the classic reason: bad lending, compounded in many cases by excessively rapid growth,’ said Bert Ely…who rose to prominence during the savings and loan crisis of the 1980s and ’90s, when more than 700 thrifts failed.’
The classic reason is the genie that ain’t going back in the bottle. If the government, any government, could paper over busts, we wouldn’t have them. This ‘other shoe to drop’ will change the landscape of the foreclosure market in the future, IMO.
“We just want an affordable payment, or they [the bank] can have the house. It will sit vacant for who knows how long.’”
They had an affordable payment and it became unaffordable through their own actions.
“After the lender denied them a mortgage modification in January, they stopped making payments, and she estimated they could soon save $10,000 for a down payment on another house.”
You’ve gotta be kidding me. Who would give them a mortgage after this?
In many cases even if the first mortgage is non-recourse, seconds and other types are. I would love to see a flood of civil lawsuits against deadbeats with assets forcing them to pay or declare bankruptcy.
I’d love to see the IRS go after them.
“I’d love to see the IRS go after them.”
Stay tuned. Interesting Times await after the November elections.
You think the Republicans have the spine to tax these deadbeats? I hope they do, but I’m not so sure.
Remember that John McCain, when campaigning in Florida, promised seniors that the government would buy out their mortgages (see http://www.planetizen.com/node/35527 for example)
I’d love to see the IRS go after them ??
Patience grasshopper…
The IRS has “time” on their side…How far can they go back on fraud ? I believe there is no limit…
Three or four years will go by and the “sympathy” violin players in DC will have moved on…Then, the parana will move in…Their computer programs will determine “who” has something to lose…They won’t bother to go after the strawberry pickers or flippers who lost it all and still have nothing to forfeit…
Fraud audits = current year + five years back.
I doubt it. You are assuming that the republicans want to go after their own. In California — the coastal towns are Dems heavily lead by LA and the Bay Area, but where the majority of foreclosures happened — strictly Repub. in the central valley.
assuming that the republicans want to go after their own ??
I did not know the IRS was republican….
“I doubt it. You are assuming that the republicans want to go after their own. In California — the coastal towns are Dems heavily lead by LA and the Bay Area, but where the majority of foreclosures happened — strictly Repub. in the central valley.”
This is extremely true! Foreclosures track “conservative values” in lockstep. I don’t know why (and it’s not meant to be mean…I’m considered to be “conservative” on most issues.)
It’s my understanding that Florida is a recourse state. Hey, at least this story told us where the money went: failed business ventures. If they had refinanced to a sub 5% 15 year mortgage in 2003, they would have 8 years left of payments of less than $900. Instead they more than doubled their debt levels. Is that ~10k “nestegg” worth getting a deficiency judgement against them? Because this couple really NEEDS to have their credit record branded with the “scarlet B” of bankruptcy.
“Is that ~10k “nestegg” worth getting a deficiency judgement against them?” I would think that the banks could hand their deficiencies over to a law firm willing to work on contingency, so it would be pretty much all profit from the bank’s side. Of course lawyers would cherry-pick the lawsuits. A rich strategic defaulter should share more blame and cost than the us as taxpayers, so I am all for it.
The thing that really bopped me over the head was the nature of the business. The bar/restaurant trade has a very high failure rate. To the point where the SBA lenders avoid it.
So, these folks probably didn’t have too many other places to go besides the First National Bank of Their House. And boy, that bank was all too eager to give them the money.
BTW, not all fields are like bar/restaurant. I follow one photographer marketing consultant’s blog, and she’s very adamant on the idea of NOT borrowing against the house. As in, don’t do it. Ever.
Arizona Slim,
You mean “Stone Federal”? And what’s with the vending machine route thing? Did he read about that in the Nickel Ads while he was waiting to open the bar?
Isn’t that the adult version of a paper route?
Slim:
I would have a heart and forgive the debt for those who heloc’d their homes for a medical emergency…or for those who built an extra room or two so mom/dad didn’t have to live out their lifes in a nursing home. But you know that number would be very small…
I follow one photographer marketing consultant’s blog, and she’s very adamant on the idea of NOT borrowing against the house. As in, don’t do it. Ever.
aNYCdj,
My assessment as well. There ‘can’ be perfectly good reasons for accessing your home equity. The problem for lenders trying to weed thru will be the fact in many cases there were multiple re-fi’s over a number of years and not all of it found it’s way back in ‘to’ the home?
To the point where the SBA lenders avoid it.
And suppliers demand to be paid upfront upon delivery. No invoices, no 30 days to pay.
What if they went around blowing their incomes on gambling, drugs and yellow hummers before they had the medical emergency? Where would your “heart” be then?
True Michael…again the numbers would be small probably less then 5% maybe even less then 1%…..
DinOR…true but if you have proof of medical emergency…aged parents or maybe you did take out the money to go back to school on good faith and/or became disabled…then you go to the head of the line….again the numbers will be small enough to forgive.
aNYCdj,
Oh don’t get me wrong, I’m firmly in your camp. Hang on to your paperwork and you shouldn’t have a thing to worry about.
Even if it does come to a short sale etc. the lender should be able to send out an appraiser ( I have NO faith in BPO’s ) and see for themselves that pro-active steps were taken to improve/maintain the property!
In cases such as these, it’s just unfortunate, that’s all. There was no attempt to deceive or conceal anything.
‘Who would give them a mortgage after this’
No one, not for a while anyway. I believe the article said they refied 3 times. These guys sold the house to the bank, more than once. They should consider themselves lucky; they got top dollar. What they did with the money is another thing.
Ben,
My thoughts precisely! “Owining a home ‘as been bery, bery good to me!”
This is what I’m referring to when we talk about people that want nothing more than to “re-load the game”. In fact, I’d say they had a pretty good run of it?
Not punching a clock and calling their own shots all those years. Still have little ones to raise you know? Btw, ‘my’ mother didn’t get her “dream kitchen” until after dad died, let alone when we were growing up. Am I ‘weird’?
These are perceptions of money that are changing. It’s just so slow that it has to sink in. Back in the 80’s, I knew people in my hometown that made good money in oil and RE. Some of these guys bought jets, their teenage kids drove very expensive cars. One family I knew of built 13 polo fields on their estate. (yeah, polo fields in N TX)
Then it crashed and a bunch of these people had to step down from their high horse. Was it a ‘bad’ thing? That probably depended on who you asked, but in hindsight it was certainly not a situation that could keep going. Maybe some of you saw those bumper stickers that said, ‘dear lord give me one more boom and I promise not to piss it off’? It was a joke but it was true too. Most people wasted all that loot on crap they didn’t need.
Ben,
I keep forgetting this is actually your ‘third’ bubble. Or even that there was a time when bubbles ‘could’ be contained or local in nature.
Just curious, what became of those polo fields, or grounds or whatever they call them?
‘what became of those polo fields’
They went back to pasture. You could see the outline of them for years, and we’d drive by and talk about how crazy it was.
“They went back to pasture” LOL
Or ‘out to pasture’ as we in the business like to say? As I mentioned, your having lived thru that first hand affords you added perspective.
The balance of us non-Texans would simply ask ‘which’ Bubble are you referring to, Tech or Housing?
Didn’t the Ewing Ranch (the house that was used) wind up in forclosure during the Texas mid 80’s RE bust? I seem to recall that it did.
A friend of the family built several high end spec homes in Dallas in the early 80’s and did quite nicely on them, well, except for the last two. As I recall his widow had to deal with finally getting rid of them.
If you drive south on I-35 toward Dallas you will see a huge house with a stone facade near the highway on the west side. There are no windows in the house, and it’s been that way for at least 10 years. It looks like construction just stopped. Some day I’d like to learn the story behind that one.
Plano, Texas, in the 1980s. Land of wealthy, drugged-out-of-their-minds teenagers.
Just to be clear, it isn’t ReFiing per se that’s the problem. If you DIDN’T ReFi to take advange of lower rates after the dot bomb crash you were a fool. I got a sweet 4.875% 15 year fixed in 2003. I even took money out to repay the 401k loan that I had used for part of my downpayment. But falling interest rates are no reason to DOUBLE your debt levels. Look, they “bet the house,” on starting their own business TWICE. They lost those bets. The idea that the bank somehow owes them an opportunity to write down their debts because the principal has declined in value is INFURIATING.
‘falling interest rates are no reason to DOUBLE your debt levels’
Yep, and it’s beyond me how the media/govt can’t make this connection. I mentioned here before that I heard the vice president on the radio going on about how FBs who refied to put a kid through college was a ‘perfectly rational thing to do.’ That’s just BS.
Hey I’m just happy that this is one of the stories where they TOLD us where the money went, instead of just having numbers that obviously don’t add up.
Jim A,
I couldn’t agree more. If I hadn’t been hunkering down for the coming turd storm, we would have re-fi’d as well.
I’m pretty sure The Stones weren’t ‘alone’ in their little business model? In fact you could be safe in assuming that a good many fledgling businesses were financed thru this very route. And yes, it is infuriating!
“The idea that the bank somehow owes them an opportunity to write down their debts because the principal has declined in value is INFURIATING.”
However infuriating it may be, the bank SHOULD write down their debts—not because they deserve it, but because the total losses for the bank would be lower that way. The home will diminish more in value during the time that it will be vacant than the bank would lose by reducing principal now.
True, but the home won’t decrease in “value” thanks to “mark to fantasy.” The house will still be “worth” it’s 2005 / peak price forever on the bank’s crooked books, even as it crumbles into a ruin.
Well writing down principal leads to lower losses for banks IF:
1.) They don’t re-default in another year or two.
and
2.) We don’t see further significant declines in prices.
The advantage of kicking out the FB and selling the house NOW is that you’ve cut your losses. Letting them stay may or may not save money. The redefault rate for restructured mortgages is pretty high. If workouts just kick the can down the road for a year while house prices continue their decline it could lead to greater losses. And of course having the house empty for an extended (more than say, 90 days) period of time is purely a result of choices by the bank. They can have a no reserve auction at any time if the’re willing to accept a market price for the house.
I’m not asserting that it definitly ISN’T in the banks interest to forgive principal. Maybe it is, maybe it isn’t. I’m just saying that it leaves the bank still shackeled to a borrower who has proved lesss than reliable.
The advantage of kicking out the FB and selling the house NOW is that you’ve cut your losses.
If the banks were solvent that would make perfect sense.
If the banks were solvent that would make perfect sense.
—While sitting back in chair and templing hands…
“Indeed sir.”
When the rates started going down, a lot of people refinanced from a 30 year loan to a 15 year loan, ourselves included.
In our case, it was easy to refinance and get some money out to do the roof and windows around the house, NOTHING ELSE.
We were still ahead because of the refinance, as we would save thousands over the life of the loan.
This process was then totally corrupted, when you could refinance to a lower (for a little bit only) rate, get $$ out, and do whatever you wanted with that $$.
And they covered their ass with the end blurb of ‘contact your tax accountant’ because any $$ that you take out NOT used on the house is NOT deductible.
SMF,
And man… did they ever ‘breeze’ thru that little disclaimer quickly? So miniscule in fact, why you’d hardly even know it was there!
A lot of these types had their cake and ate it too I’m sure. Using the Fat o’ the MEW to feed their business and then wrote off the expenses to the biz etc. Gotta’ have a new Suburban to deliver those widgets you know!
Then Section 179′d the Vehicle purchase on their Schedule C. This is the type of fraud that really gets me. We endlessly wring our hands over the ongoings at Goldman ( like we could DO anything about it ) and then give our neighbors a pass. I’ll never get that.
“When the rates started going down, a lot of people refinanced from a 30 year loan to a 15 year loan, ourselves included.
In our case, it was easy to refinance and get some money out to do the roof and windows around the house, NOTHING ELSE.”
Ditto (except we went from 30yr to 20yr, and pulled out just enough to redo the roof, not the windows).
Mark Stone bought the home 12 years ago for $93,000. Then, about two years later, he took equity out …
They owe about $208,000 …
So much for paying down the principle.
They should have just gotten jobs and foregone the “own your own business” dream. I’m thinking that too many people want to run their own business for the worst reason: they don’t get along with other people, especially bosses.
He wanted to open a bar and grill, but the journalist still didn’t ask the pertinent question: how much experience did you have previously in restaurant management? Did you work as a salaried restaurant manager for other places first?
DennisN,
That’s entirely where I was going with this. One of my first civilian ‘jobs’ was cold calling from coast-to-coast and virtually all of the leads were self-employed.
I quickly learned that was a personality trait they all basically shared. An inability to adhere to regs. and protocol married to “idea junkies” that were changing their business ‘model’ on an almost hourly basis.
You would often over hear them flailing instructions to their employees and it was an absolute mess. Lesson #2 was that, just b/c you can’t get along w/ your boss/people is by no means an endorsement for being self employed!
They should have just gotten jobs and foregone the “own your own business” dream. I’m thinking that too many people want to run their own business for the worst reason: they don’t get along with other people, especially bosses.
Depends on the boss. I had One of Those Bosses when I worked full-time. She was one of my main motivators to self-employment.
Alas, didn’t take too long for self-employed me to realize that I didn’t know much about business. I bumped along for a few years, then took a part-time job in a bike shop.
Boss and I got along fabulously, and, 10 years later, we still do. Matter of fact, whenever I see any of my former coworkers or anyone else who worked at that shop, my first question is, “Have you talked to Bob lately?”
It seems that all of us have a favorite Bob story, and that’s how this shop was. I say “was” because Bob closed the place in late 2000. He’s now retired and has moved out of state.
Slim,
Glad yours was a positive experience, but more the exception than the rule. Remember, I had these guys as clients, and for years. You’d get to know them.
Given there’s no drug test, alcohol is almost a given and drugs are highly likely. Contempt for employees, standard. The only thing they’re consistent on is looking out for # 1.
It’s not until you get above 25 employees that anything resembling ‘policy’ or a manual take place. Below that “hitting on employees” is considered a perk. Sorry.
I know that type well, DinOR. Met more than a few of them in the small business community here in Tucson.
And, you know what? I’ve shared my penchant for cold calling here.
Matter of fact, this blog is my diversion while I’m hitting the telephone prospecting trail. So far, there haven’t been too many times when I’ve read something here, laughed while dialing a number, then whoops! the lead answers the call.
I do at least 1,000 cold calls a year — with emphasis on the “at least”part. I learned from my first few months of calling that the small biz people are very much how DinOR describes them. That’s why I don’t call them now.
Arizona Slim,
If you see my spelling go to hell ( it’s usually b/c I’ve finally stumbled upon a decent prospect ) All during the downturn, I really didn’t see much sense in CC’ing?
Hi, I’m with the Donner Party and I thought you might want to join us on a “camping expedition” of… sorts?” I mean, it would have been what I believe in prison lingo is referred to as a “human sandwhich” ( where they intentionally bring a 3rd guy the other escapees -know- isn’t going to make it! )
I also CC for the firm next door to keep from going insane waiting for this dust to settle. Businesses are finally loosening the purse strings a little and realizing they haven’t re-invested in their own biz for quite awhile. I’ve been doing it for so long, I don’t even think about it, but I think you gals are better at it. Less threatening.
This is ‘merkuh!
You don’t need experience or knowledge to do things! Just “positive thoughts” and a “can-do” (or “in your face”) attitude! Oh, and a boatload of other people’s money or debt!!
“Mark and Susan Stone are weighing a decision being echoed across Central Florida: Should we stay in a home worth less than the mortgage — or walk away… We just want an affordable payment, or they [the bank] can have the house… Mark Stone… took equity out of the appreciating house to open a bar and grill.”
I can’t wait until no longer have to hear stories about homeowners that believe banks should share in their losses but in none of their gain. What a sick and twisted, self-absorbed mentality. The Stone’s were in control of every decision they made and the consquences of them making the wrong decisions should lie squarely on their shoulders. This is one of the reasons I hate Obama’s attacks on the banks without at the same time pointing the finger at homeowners who paid too much and/or pulled out phantom equity and having them take their share of the blame. It may feel good to blame others for your mistakes, but it isnt very healthy or productive.
I couldn’t agree more. I have a “buddy” who is deliberately defaulting on his mortgage. Of course, he has it completely justified in his own eyes. The house is worth less than what is owed, so voila!
It’s hard to blame him when so many are doing it, when the banks do as they please, but it just doesn’t seem right.
No rule of law anymore, really.
Me thinks a LOT of these people walking away will soon find out the consequences of their actions.
Debt forgiveness does not apply to HELOCs and investment properties. And there is nothign out there to stop someone from rightfully coming after the money you ended up owing in these circumstances.
yep…two coworkers have done the same, but both were a trifle slimy to begin with….both houses were bought relatively cheaply, but were then refinanced several times
I have mixed feelings about strategic defaults. On one hand I’d love to TASER these moralizing deadbeats who make all kinds of high-minded excuses to explain their failure to honor their obligations. On the other, I want lenders to get burned so badly they’ll never, ever again, at least in our lifetime, extend such easy credit to such bums. Mass strategic defaults will also balloon the shadow inventory to the point a mass sell-off will become inevitable, with corresponding haircuts to housing prices.
Yes and yes. Hey, these people have a large negative net worth. Frankly, to get the debt forgiveness that they desire they should have to go through bankruptcy. One of the things that REALLY steams me is people who expect to have their debts wiped away and somehow think that they “don’t deserve” bankruptcy. Look you don’t DESERVE to have your debts forgiven. But we as a society have decided that debt-peonage is a bad thing. So we allow people with large negative net-worths to declare bankruptcy to discourage lenders from giving loans in excess of borrowers abiltiy to service them. But in exchange for protection from creditors, we put the rest of the financial world on notice that these people have gone bankrupt.
Sammy,
Like you, I’m torn on the issue. Here’s where I see a difference and where the system got short ciruited?
Had The Stones ( no the other Stones ) been forced to present a coherent business plan to a commercial lender.., they’d have been turned down point blank!
But they weren’t. They were able to secure financing not once but several times. They’ve been employing MEW where in previous times it simply wouldn’t have been available to them at all.
Yeah, but Susan researched these businesses and said it would be ok!! Just gotta believe!!
AZtoOR,
What up Dude!?
Maybe the line I’m missing here is, had a W-2 type couple simply taken the money ‘out’ of their home ( and in turn ) placed it right back ‘in’ their home, new roof, pool and other obvious and tangible improvements and then got laid off, I wouldn’t be so hacked off about it?
But when nary a DIME was used toward improving the Freaking Colateral..? Why weren’t these questions asked? Is there something in the Truth In Lending Requirements that fordbids the lender from asking where several hundreds of thousands of dollars might ‘go’?
Hey, it ISN’T the banks job to be some sort of moral policemen. Each one is a whole, new mortgage. If they’re willing to write a new 200k loan on a house that is currently worth 240k there’s no real reason for the bank to care that they only need 100k to pay off the old loan.
Jim A,
I’ll have to respectfully disagree. If “I” am writing out a check for 100, 250, 500+k ( I want to know how the money will be used ) I’m just funny that way.
Further, why didn’t any of these lenders even bother to look at the scale they were working on? I can see $200,000 worth of rennovations on a million dollar home. But 200k in “improvements” on a 200k home? How does that make sense?
But they did it, time and again and w/ no questions asked.
DinOr: I want to know how the money will be used.
Why exactly? ISTM that the big questions are:
1.)Does the borrower have the capacity to pay back the money according to terms?
2.)Will the borrower have the inclination to pay back the money according to terms?
3.)Failing either of those, is the pledged collateral sufficient to make you whole?
There’s nothing wrong per se with making a business startup loan secured by the house, which is essentially what the lender did. They just did a TERRIBLE job at estimating the future value of the collateral and a POOR job of estimating the borrowers inclination to pay back the loan.
Jim A,
Point taken and it’s always been my position that what these are ( really ) is “Job Equity Loans” not Home Equity Loans. You can have all the eq. in the world, but without a JOB with which to repay it..?
And it’s not that I have anything against a “bootstrap” start up either. So your points stand up there as well. The only issue I had with that whole “distribution channel” was that EVERYONE was doing it!
In retrospect.., perhaps this model was more viable to the bank than those that took the $’s out to buy/build/flip even MORE homes!?
I don’t know if anyone recalls but Cheech & Chong used to do the most hysterical skit about “What I did on my Summer Vacation” essay and I thought it describes the HB to a ‘t’. Anyone remember that?
On the ‘first’ day of my summer vac. I hung out in front of the store.
On the second day of my summer vac. I hung out in front of the store.
On the third day of my summer vacation I got a job… keeping people from hanging out in front of the store…
If “I” am writing out a check for 100, 250, 500+k ( I want to know how the money will be used ) I’m just funny that way.
However, $100K is a “lot” of money to you because you’re an individual. These banks are dealing in billions, millions of $100K’s. $100K is not a lot of money to them. It’s like paying 2¢ more for a gallon of gas. Yes it’s money, but not enough to bother about.
oxide,
Sadly that’s true. There was a time when bankers felt an obligation to their depositors and shareholders but that was so yesterday.
Our Admin. for the Portland BB worked in grading auto/personal loans prior and during da’ Boom. He told his boss he was concerned about their underwriting and risk models and was politely told to STFU and go back to his little cubby hole.
It was later explained that they just “didn’t have time to split hairs” and they knew full well a % wouldn’t perform. Just the cost of doing business.., nothing to see here folks, move along.
DinOR –Stuff defininly got wonky when lenders stopped worrying about whether borrowers had the INCOME to pay back the loan and simply anticipated that they would ReFi and repay the loan within 5 years. Collateral is SUPPOSED to be a backstop in case unforseen calamaties prevent payment according to schedule.
I am surprised that banks never came up with a “profit sharing” mortgage plan. You could get a reduced down-payment requirement, or maybe lower interest rate, in exchange for the bank getting say 20% of any future net profit upon sale.
Banks have routinely put in pre-payment penalty clauses - why not this?
They are called “shared appreciation mortgages” or SAMs and they have been around for decades. Not commonly used in the case of bank originated residential mortgages as far as I know.
polly,
As prices began to peak in the Bay Area we saw at least one “Equity Group” ( they always have such well established sounding names? ) attempting exactly that.
We posted a link to their website and just getting a handle on their terms & conditions was enough to give us a collective headache.
” I can’t wait until no longer have to hear stories about homeowners that believe banks should share in their losses but in none of their gain. What a sick and twisted, self-absorbed mentality. ”
Indeed. These homeowners have a mindset that is almost like that of… bankers.
Privatize the profits and socialize the losses.
I just wish that both sides (banksters and homemoaners) weren’t so determined to rob the rest of us who didn’t participate in the fraud!
“These homeowners have a mindset that is almost like that of… bankers”
?
I think he’s on to something there? That is exactly what is going on! No idea why this surprises me. All during the Great Ramp Up they colluded together to defraud the next guy in line ( flip/buyer/lender/whatever ) why wouldn’t they be perfectly aligned on the way down?
I am also sick of the mantra “We are only making a business decision and doing what any business would do.” Granted, the giant corporations get to operate this way and the last decade saw some cheap money flow into some smaller businesses in the real estate sector, but that is not the norm for the majority of US companies. The small to medium size businesses I’ve helped run have always had to struggle to acquire any funding and most comes with steep costs and personal guarantees. Many loans even come with contingent interest so the lender gets to share on the upside above and beyond normal interest. These worthless fools have come to believe that money flows freely to all companies and they are just taking their fair share. They can’t appreciate that they were given an unprecedented free ride by bad government policies and the ponzi scheme that Wall Street has become.
John!
God love you Sir! Can’t tell you how long I’ve been banging on that? And then their incredulous gazes when you patiently try to explain to them that any monies borrowed will need to be repaid at some point in the future. That we don’t have newly minted greater fools to palm our debt off onto on a daily basis. And NO, we won’t be needing a ‘cart’.
Like.., ‘what’ don’t you have your own personal feed trough to gorge yourself on? Gee, NO, I ‘don’t’. And thanks for pointing out the personal guarantees as well. You don’t think I wouldn’t have liked to acquire any number of other practices over the last 5 or 10 years?
Yeah, that money comes w/ strings attached. You’ve really nailed it here. Stick around, I’ll be watching you!
“The Birmingham News analysis of 51,682 single-family homes in Shelby County found that 41,375 of them — 80 percent — dropped in value in the current revaluation.”
This is the root source of “TrueAnger™” @ PeeParty tea toadlers gatherings, because Shirley no one has lost their home due to an illegal mason or maid, but really I’m just guessing…
I have one friend who lives in Parkland and has not made a mortgage payment in about two years. The bank sent one letter to them but I beleive that is it. You wonder why the banks are losing money.
“I have one friend who lives in Parkland and has not made a mortgage payment in about two years.”
If I missed even one moths rent I am sure my LL would be screaming, even though he is not paying his mortgage.
jeff saturday,
Expand a little on that for us. Are you serious?
It’s not at all uncommon for landlords to evict non-paying tenants while going through foreclosure. With the exception of Oregon tenants, tenants cannot even withhold rent to insure that they recover their security deposits.
The Biblical story about some shmuck debter who had his loan forgiven by his creditor and who then turned around and refused to forgive the much smaller debt owned to him by another comes to mind… people haven’t learned much in 2,000 years, I guess.
Sorry you have to put up with that type of crooked nonsense, Jeff.
RealtyTrac
Hickory Hill Rd
Tequesta, FL 33469
View Details Map it
5/17/2010 3bed 2bath 1,910 Pre-foreclosure
Been here since March 1
My rent is paid
Yes I believe Wamu now Chase holds the mortgage.
The obligation is still owed for now with default interest. Can you imagine the carnage if the banks foreclosed on every house where payments are in default and put them on the market at the same time?
I think they realize that fact and that is why they are holding back on inventory.In the long run is it cheaper to hold the inventory back or flood the market and drop values substantially?I think they ran the numbers and made their choice.
The trouble with holding back inventory is that it doesn’t improve with age. Vacant houses tend to deteriorate faster than those that are occupied. (Yes, I know. There are exceptions to this rule. That’s why I used the words “tend to.”)
But this is a *good* thing to a fraud-churn based economy such as ours.
1) Falling apart houses = more money for Home Despot and the rest as new buyers have to rebuild most of the house.
2) Falling apart houses can help create an artificial housing shortage as people can’t find a decent place to live and thus bid up the prices of the few houses that are not falling apart.
3) When the house eventually falls down, a developer can buy up the land and put in an even larger, more grossly overpriced house.
4) The houses never lose value since the banksters can mark everything to fantasy these days, so everything is still “worth” it’s peak price, provided it is never sold.
“provided it never sold”
See.., that’s key to the ‘plan’. All important key right there baby.
Yes. It’s a regular high wire act, through a flock of black swans.
Will they pull it off? Stay tuned…
I have a question for some of you in the Palm Beach Gardens area, I have been thinking about purchasing a house in that area. I have looked at PGA National, Ballen Isles, Ibis, and Mirasol. Each development has some pros and cons. PGA National is older and not really a country club community. Ballen Isles is nice except I believe the average age of the people there is a little older than I want. Ibis is nice except it farther west than I want to be. I really like Mirasol, but for some reason the prices to not seem to be dropping like the other developments and I can’t figure out why. I can get a nice house 3 bedroom, 3 bath house in Ballen Isles or Ibis for under $250,000, a similar house in Mirasol is at least $450,000. I don’t get it. Can someone enlighten me.
Thanks.
Michael
Perhaps your circumstances are not that unique and it is other people’s first choice as well.
Michael, I’d hold off for the time being. There was a report this morning that tar balls have already started washing up on the beaches of Key West. There has been much talk on the local news programs about the “loop current” in the Gulf of Mexico. I never heard of it until now, but that current travels north and then southeast, down around the Keys, and up the eastern seaboard. 100% of it enters the Gulf Stream, according to an oceanographer at USF. Part of the oil slick has now been grabbed by that loop current and the estimate as of last night was that the Keys would see the oil in 10 days. Looks like it’s happening a lot sooner.
Anyway, my point as it relates to your situation, is that the prediction is that the oil will miss the Miami & Ft. Lauderdale Beaches, but will hit Palm Beach. Now, I know you’re in West Palm Beach, but perceptions will drag down prices there. Hold on, you’ll be able to get a bargain you never dreamed of. That is, if you still want to live in the area after this oil spill is through with it.
The spill is worse, far worse than anyone imagines.
The spill is worse, far worse than anyone imagines.
On 60 minutes they said it was an Exxon Valdez every 5-7 days that it continues.
Yep, the spill is a huge disaster.
I’m just wondering how long it will be until Goldman Sucks turns a profit on it, maybe by driving up oil prices, etc.
palmetto,
Right, and if I didn’t get up at the crack of dawn I wouldn’t have even heard Rob Van Dillen talk about it on HLN? I was like.., uh, why wasn’t this discussed w/ the public before?
I’m not expected to be an oceanographer! I don’t know this stuff. Wouldn’t this have only been logical? Now they’re saying it can reach the Carolinas. Great….
Are you looking at Mirabella in Mirsol? There are some nice houses in there, I considered buying there at one point but, as you point out, the prices weren’t low enough to get me to pull the trigger.
I currently rent in Evergrene, and prices have totally crashed here; the house I live in is down at least 50%, and probably more, from the last sale. This community is OK as long as you’re on the right side; don’t buy anything near the tracks; the train is very loud and comes by all the time. I’d look here if you’re thinking about PBG, it’s a reasonably good place to live (HOA is staggeringly high though).
IIRC, both Ballen Isles and Ibis are further west. That’s part of the reason the prices are lower. And Mirabella is brand new, that’s holding up prices somewhat as well.
You couldn’t pay me to live on a golf course. The thought of a**holes hitting chip shots into my house makes me crazy; and I’ve decided that I’d rather not spend the rest of my life in jail for beating someone with a 9 iron.
I don’t want to be on the golf course, I want to be on one of the lakes. Too many golfers suck and would hit my house.
I really prefer to live in a golf course community, I know I will pay for that right, however, I just do understand why the prices in Mirasol are not falling like the rest of the area. I just got an email for a house in Ibis located at 6921 Isla Vista Blvd, the original cost in Jan 05 was $697,000 and the asking price is now $445,000 and I am fairly sure they would take less. The house is vacant from the pictures.
Mirabella is not in the gated community that is why I don’t want to live there and those houses are totally overpriced.
That article from the Ledger may be the first time somebody put the words “chic” and “Lakeland” in the same sentence.
I work in Lakeland and can understand why those two words never arrive together.
‘Most Georgia bank failures weren’t on its watch…W. Brian Bowling, a vice president at the Federal Reserve Bank of Atlanta, is sympathetic to the idea that fragmented banks and builders may have created a distorted view of what was happening in the housing market’
Were these banks a part of the Federal Reserve system or not?
BTW, back in 2005, when there was no fear, the FDIC started putting out a series of papers on the percentage of loans that were in RE. They weighed each state. I didn’t have a lot to hang my hat on back then, so I would read these long PDFs and post about them. Georgia was the most RE leveraged banking area in the country, even more than Florida.
“Georgia was the most RE leveraged banking area in the country, even more than Florida.”
Eddie country
By the time FDIC ( which came in like a SWAT Team I’m told ) shut down our local 3-branch OR bank, they had the 4th worst Texas-Ratio in the country! ( But they were blindsided by the economy like everyone else and it’s WS’s fault! )
Ben I agree, in ‘05 “when there was no fear” -not- making the loan to the local builder was viewed as just plain missing the boat! At time of closing 97% of their loans were ADC. Nice mix.
I work for the FDIC and we don’t come in like SWAT Team. We are always considerate and respectful of the bank employees.
Michael F,
Oh I know, it’s just that I’ve hated these local bangsters for years ( and warned anyone that would listen about them! )
But you have to admit, it’s swift and sudden and usually about 5 minutes to 5 and they very much have defined roles and execute w/ precision.
( We’ve all been thru enough and the last thing we need is a bank prez, well EX-bank prez stuffing his pockets b/c he was fore warned! )
Sounds like they suffered from: “The single transaction” itch & Kudzu
‘Sen. Richard Shelby and Rep. Spencer Bachus, the top two Republicans on the key financial committees of Congress, argue that the two government-sponsored enterprises — now surviving on $145 billion in taxpayer bailout funds — should be transitioned into private entities. While Shelby and Bachus have been urging a crackdown on Fannie Mae and Freddie Mac, they also celebrated the rise in homeownership during then-President George W. Bush’s administration’
I can’t let this one go without posting this again, from April 2005:
‘Leave it to the Congressional Budget Office to tell congress the short route to fix the GSE’s is to eliminate the subsidy. “CBO Director Douglas Holtz-Eakin, said the housing market no longer needs the parts of U.S. law governing Fannie and Freddie that Wall Street interprets as a federal guarantee of the companies’ obligations.”
“Therefore, those entities could gradually be relieved of the responsibilities and benefits of their current status as GSE’s and required to operate as fully private organizations, which would reduce their risks and costs to the federal government.”
‘Sounds perfectly reasonable to me. But hear the horror from the so-called reformers. “‘I’m not pushing for the total privatization of the GSEs,’ said Alabama Republican Sen. Richard Shelby, chairman of the Senate Banking Committee. ‘The GSEs play a critical role in the housing market.’”
‘OK, Mr. Shelby, I have a long memory and when this thing goes sideways, you will be reminded that the US could have escaped billions, maybe trillions in liability.’
http://thehousingbubble.blogspot.com/2005/04/congress-wont-reform-gses.html
Thank you Ben, for that blast from the past. Can we construct what would happen if Congress immediately eliminated the subsidies? Sure, they’d be private companies, but they’d also default on day one. Who would buy them? Goldman, for pennies?
Ah, the good old days of 4 comments to a post.
Such a reminder… might not much change the taste of his Mint julep.
The winners were people who waited and saved their money and just entered the market.
Or maybe they were just winners in the sense that they made the first round of the playoffs…only to be blown out in the first game.
. But even with the boat dock and granite counters, the house is unlikely to fetch that price because similar houses in the neighborhood have sold for about $160,000.
——————————————-
What’s going on in Florida is insane. My parents have a home near a lake in BFE middle of nowhere TX, and old busted looking trailerhomes with the lake down a 20 foot rocky cliff and the lake itself at a max of 35 feet deep, less in many places because of the draught, and those homes list around $160k. It’s also 30 minute drive away from small town (lousy) shopping.
I’m guessing the place described in the article is similar, but at in Florida it’s not also an 8 hour drive to the actual ocean.
The_Overdog,
You have no idea how glad you brought that up. Let’s see.., BFE_check! Busted looking_ckeck! 30 min. drive to ’shopping’_check! And all for just 160k!
The wife and I have abandoned the misguided notion we’ll ever find anything we can afford/pay off cash any time we want within a reasonable distance to civilization.
So you expand your search ( and your mind ) to include areas you never… would have otherwise considered and you’re STILL finding over priced P’s of S.
“‘Smaller banks would not have been doing what they were doing … if there was not what appeared to be such demand for housing,’ he said.”
So if there’s sufficient demand for housing, then there’s no type of loan that’s too risky?
Yes. If “housing always goes up”, there is zero risk and everything that happened makes perfect sense. Right up until housing stopped going up.
We must not confuse a demand for housing in the traditional sense of the world with a demand for “shacks to flip.” Most houses in the past 10 years were not built with any real intent of long-term occupation; they were tossed together as quickly as possible so people could then flip them back and forth at ever-increasing prices based on fraud and fantasy. It’s much like flipping worthless stocks of broke dot.com businesses or beanie babies, except this time the world’s economy was destroyed… and a lot of land was paved over for no good reason.
Pondering,
Nicely delivered complete w/ a bow! In the past we’ve had people plaster up Craigslist Homes (TM) where the lawns had been photoshopped green! I mean you could SEE it was fake.
But whatever it took to “get the deal done” in the macho world of Relitters. What could they have been thinking, I mean the ones that -knew- this was completely fraudulent? that they’d somehow ride off into the sunset and there’d be no repurcussions?
Sadly, for most of them there are no real repurcussions. They may have lost their easy looting jobs, but they still had fun with the fraud money while it lasted, and there’s no doubt in my mind that they’ll be back - wheeling, dealing, and rolling in dought - in whatever the next scheme is that’ll be cooked up.
This nation is far too forgiving of crooks; people seem willing to grant sociopaths and criminals infinite chances to “reform” while ignoring the disasters that result each time.
To an extent isn’t that part of what helped the country grow and produce so much…back when we rewarded risk but prosecuted fraud?
Exactly!
Honest risk was rewarded, but crooks were run out of town on rail. Nowdays, crooks are lauded for their “genius” and honest people are considered dupes. I don’t see how a nation can long function with that type of morality.
Pondering the Mess,
( And that “easy looting jobs” busted me up btw ) yeah, we’ve completely lost sight of what is “Honest Risk” and low-level/everybody’s doin’ it Fraud?
Watch Pawn Stars and look for the reaction when people try to palm off fakes as genuine when the gig is up! It’s like a split second’s remorse ( for not getting the money ) and then rationalizations as to how they themselves were ‘duped’!
Well… I didn’t know, some guy sold it to my grandpa back in the day and I didn’t have any reason to doubt ’some guy’? You mean other than the fact that you were fully prepared to ask major BUCKS for it!? Sadly we’re seeing this in the vintage guitar circles as well. Lots of imposters out there, and like you said, no repurcussions either. You tried, it didn’t work, now just walk. Simple.
hehe…i saw the one one where the guy tried to sale five pristine pete rose rookie cards.
the pawn dude told him that the liklihood of you having a pete rose rookie card in this perfect a condition is remote…much less five of them…they are fake.
This nation is far too forgiving of crooks; people seem willing to grant sociopaths and criminals infinite chances to “reform” while ignoring the disasters that result each time.
Good point, Pondering. I’m currently reading the book Columbine. It goes into a fair amount of detail about psychopathy, including an interview with Dr. Robert Hare, who’s a world-renowned authority on the subject.
When it comes to treating such people, Dr. Hare says, “Nothing works.”
Best thing the rest of us can do is know how to recognize them and protect ourselves. I recommend Dr. Hare’s book, Without Conscience.
With regards from the HBB librarian…
The Columbine book is excellent, in part because it sets forth how so much of the reported story had little to no basis in fact, but instead evolved to fit preconceived narratives.
I’ve read that the sensation of skin crawling may be an unconscious human defense mechanism activated in the presence of a sociopath. I’ve also been told by a critic of real estate developers that such persons tend towards sociopathy, which would be an interesting study if anyone would attempt to prove it.
Columbine, huh, I’ll have to get a hold of that. Wasn’t there another along the lines of “Without Conscience” like… “The Snakes Among Us” or something like that?
snake charmer,
Hence the old saying “He made my skin crawl”? It certainly does stand to reason. Still I liken your typical reic’ster more toward a pedophile. These guys usually know or know ‘of’ one another and work together when it’s beneficial to their ‘needs’.
What made this latest round of fraud so hard to prosecute is they were enough other players it wasn’t like in the past where you’d have the -same- appraiser/realtwhore/MB on each and every transaction! When there’s that many to choose from ( who need resort to incest? )
Columbine, huh, I’ll have to get a hold of that. Wasn’t there another along the lines of “Without Conscience” like… “The Snakes Among Us” or something like that?
There’s Martha Stout’s book, The Sociopath Next Door.
BTW, the terms psychopath and sociopath are different words to describe the same thing. Law enforcement types (and those who study the condition like Dr. Hare) prefer the word “psychopath.” Sociologists prefer “sociopath.”
Pick your poison.
Thanks for the book recommendations. I just send “Sociopath Next Door” to my Kindle.
I think the 1-in-50 estimate that Martha Stout gives is way too low.
‘That was my dream kitchen. But it’s just a kitchen,’
–Susan Stone”
“What good are dreams if they come true?”
– Fredrick Exley
“Not only are dozens of the homes foreclosed on bringing down the value of the neighborhoods, but the whole scheme drove up the original cost of new homes.”
You can have one or the other. But both can’t be true.
““Mark Stone bought the home 12 years ago for $93,000. Then, about two years later, he took equity out of the appreciating house to open a bar and grill, but the 2004 hurricanes closed the adjacent hotel for six months, and the bar and grill was a casualty. The Stones then took out more equity to launch a vending business, which also failed.”
[ blah blah blah ]
”Basically you have to look at it like a business would,’ said Susan Stone.””
I’m not so sure they can legally walk away from this debt! And I hope that they didn’t deduct the interest from the equity loan when they used it for something other than structural improvements on the house.
But, in reality, our government would rather raise my taxes (and yours) than to make these people pay off their debt.