Bits Bucket For June 10, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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The petition comments of the day:
‘Banks get: TARP money from taxpayers, cheap money from the Fed, and mark to fantasy accounting principles enabling them to indefinitely hold onto a veritable tsunami of foreclosure inventory. The American people get: screwed.’
‘Please stop bailing out housing .Please stop bailing out banks and Investments entities because it will kill America as we have known it.’
‘Please don’t use my tax dollars to help banks hold REO inventory off the housing market. My taxes are high enough already without having to pay artificially inflated rents.’
WASHINGTON (AP) — A watchdog panel says it’s still unclear whether U.S. taxpayers will ever fully recoup the $182 billion they plowed into American International Group Inc., and the government should have used up all its options before bailing out the crippled insurance titan.
The government could have acted sooner and more aggressively to engineer a privately funded rescue of AIG in September 2008, the Congressional Oversight Panel says in a new report released Thursday.
The bailout had a “poisonous” effect, the report says, because now the markets believe the government will commit taxpayer money to prevent the collapse of big financial institutions and to repay their trading partners.
‘The bailout had a “poisonous” effect, the report says, because now the markets believe the government will commit taxpayer money to prevent the collapse of big financial institutions and to repay their trading partners.’
Couldn’t one argue that this sort of moral hazard actually helps too-big-to-fail banks and financially institutions operate more efficiently, by reducing their costs of raising funds? For instance, after the Fall 2008 financial crisis began, the Fed began loaning to many of the largest banks at zero percent interest rates, enabling them to make sizable profits despite the crisis. And before the crisis, the belief that large financial institutions such as Fannie Mae and Freddie Mac would be bailed out reduced their costs of raising capital.
Economies of bail make for a more profitable banking sector.
It also promotes excessive risk taking by said entities providing mispriced capital to borrowers resulting in a misallocation of scarce resources. When scarce resources are misallocated all members of society are hurt as the economy doesn’t achieve its potential. National income is lower than it could have been.
True, though a lower income IS the goal, IMHO.
Poor people live off of credit. Credit makes the banks rich and everyone else a serf. Therefore, we need everyone to be poor. Hail to Bailouts, outsourcing/insourcing, etc.
Also, the poor rely heavilly on govt. services and transfer payments. Indentured to the bankers and the govt. Dang, what a life.
No, thanks, but I have a choice, many in the future will not.
(Chorus:)
You haul Sixteen Tons, whadaya get
Another day older and deeper in debt
Saint Peter don’t you call me cause I can’t go
I owe my soul to the company store…
The old long gone, Tennessee Ernie Ford
“Economies of bail….” HaaHaaHaaaaHaaaaa. I love a good turn of a phrase in the morning!!
“Economies of bail make for a more profitable banking sector.”
Unfortunately, economies of bail and systemic theft are observationally equivalent.
Exactly.
test
Who do you think give the comgressmen their money for special favors? Answer that and you see where and who is most important to “our” congressmen/elected officials. Am afraid the good old taxpapers are far down on their lists and then you wonder Why things are not going better! Wall St/Banks have the money to give to their lobbying boy’s to make sure all of their “special needs” are handle correctly. Simple as that.
http://blogs.wsj.com/developments/2010/06/07/tax-credit-hangover-here-come-the-builder-price-cuts/
Builders, who ramped up speculative construction to take advantage of the federal home buyer tax credit, won’t know until he credit ends this month how many extra homes they have. But they’re already cutting prices and offering deals to move inventory.
Beazer Homes USA, is offering up to $50,000 in free design options on some houses. Lennar Corp., which already slashed more than 15% off of some Las Vegas inventory, is currently offering a 3.99% mortgage rate “fixed for life.” DR Horton touts the “The Great American Home Sale” on June 12 and 13. The sector giant provides no further detail.
They “want to keep the momentum going,” says Jody Kahn, a vice president with John Burns Real Estate Consulting. “Traffic and sales fell off pretty dramatically in May.”
Never saw the drop off coming.
It was completely unexpected!
Yup, one of these Bolts outta the Blue, who coulda Knew !
Lennar Corp., which already slashed more than 15% off of some Las Vegas inventory
Wasn’t there an article just a few weeks ago about new housing developments going up in Vegas, in spite of the bulging inventory of empty, nearly new houses for sale? IIRC the rationale was that the nealry new houses were “dated” and that buyers wanted the latest and greatest.
Yep. Sure was.
Not to mention the glut of foreclosures in older areas AND the wonderful semicompleted condo-tells all over the place.
Seems like we need more people to fill the place up. Hopefully China starts sending over their few remaining girls, since they are less valuable and all.
The big national builders dusted off the construction equipment, and resumed building out many of their stalled projects in places like NV, AZ, and CA. I don’t see this ending well.
During the peak bubble years, what do you guess Lanier’s or Pulte’s markup on the direct cost of building a house was? In other words, if the land cost, direct site development costs, and materials and labor on the house was say $150K, what would they have listed the house for?
I don’t have even an educated guess.
It was obviously an unholy amount of money given their staying power. The predictions by many here that many national builders would be going belly up have not borne out thus far.
During “normal” years, local builders around here would get maybe 20% or so above cost. But in cheap building areas like NV or Inland CA, I wouldn’t be surprised if they got double their costs. I suppose I could look at the 10-K for a publicly held builder and get an idea. Good weekend reading project.
‘Liquidity Seizure’ May Renew Recession, Nomura Says (Update2)
June 10 (Bloomberg) — A “liquidity seizure” arising from Europe’s worsening debt crisis could drag the global economy back into recession, according to Paul Schulte, head of multi- asset strategy in Asia excluding Japan at Nomura Holdings Ltd.
“As Europe’s problems unwind, liquidity is going to seize up. As liquidity seizes up, multiples are going to contract,” Hong Kong-based Schulte told reporters in Singapore today. “Equities are not necessarily cheap.”
Sounds like somebody wants another bailout.
Right?
“liquidity seizure” Why does that sound familiar? Isn’t this where we came in?
I think they mean “solvency seizure.”
“As liquidity seizes up, multiples are going to contract.”
Look for P/Es to slide well below ten, probably below eight. As the need for cash grows stocks (and gold) will need to be sold.
“…stocks (and gold)…” and investment housing…
You mean a time may come what assets are priced at a level that actually allows buyers to make money?
Yep, that’s what I mean. That’s when it will be time to dust off Benjamin Graham’s books.
That’s when cash will definitely rule.
That’s when cash will definitely rule.
I’m confused here. I thought cash has been ruling for a number of years. Now sometime in the future it will be definitely ruling?
Michael Viking,
If you’re referring to ‘08 to Present, then yes. But de-leveraging a decade’s worth of Debt=Wealth cannot happen overnight.
That’s were a lot of innocents have gotten hurt. The Dash-to-Cash!
I seem to recall that the long-term average for P/Es was around 15. Am I correct?
I seem to recall that the long-term average for P/Es was around 15. Am I correct?”
Yes but interest rates are extremly low now that can skew things
The long term average was 12 or 13. Then we had a bubble and it got pushed up to 15.
If the bust is low enough, it might get back down to 12 or 13.
According to David Rosenberg, the long term average of the S&P is 16.5, and it is currently at about 20 (trailing)
chart
as of the end of May, with S&P at 1089 - pretty much exactly where it is now. P/E is 19.47, with a long-term average of 16.27.
This however is based on 10-year running earnings average, which IMO is inflated lately due to the housing bubble itself.
Thus as the 10-year earnings continues to drop, the stock market will look like less and less of a bargain (higher P/E) even if prices remain the same.
I just love these clowns screaming it’s another “liquidity seizure” problem when we’ve got the “inslovency culprit” hiding under the blanket groping the pretty girl’s A$$ets.
Just wait until morning when everybody gets a good look at her.
http://www.cnbc.com/id/37591679/
The French government says it’s selling off 1,700 properties including chateaux, barracks and Parisian mansions, in part to cut the country’s heavy debt.
The announcement Wednesday was the first time the government laid out such ambitious sell-off plans.
…….He says reducing some of the country’s 1.49 trillion euros ($1.79 trillion) debt is part of the reason for the sales, although less than 20 percent of proceeds will go directly to debt payments.
The rest goes to new government investments.
*******************
Hmmmmmm, new government investments instead of paying down debt. I’d be curious to know who’s benefitting from those “new investments”. And the beat goes on.
The “new government investments” are probably loans to people to buy the chateaux, barracks, and parisian mansions. Then they can slice up the loans into tranches and sell them to investors….oh wait.
Yesterday our local paper had an article describing how the city is selling off property to meet budget shortfall. School districts were buying overpriced property at the peak of the bubble. Politicians don’t understand the basic concept of buy low, sell high.
“Politicians don’t understand the basic concept of buy low, sell high.”
Yes they do. They used your money to buy that land at a high price from politically-connected friends and campaign donors. Now they’re selling at a low price, most likely to those same individuals but probably operating under different corporate identities. They win, you lose.
Follow the money.
Bill in Carolina,
Sad, you’re right. Lather, rinse, repeat.
Very true, Bill. I’ve seen it myself here.
So long as the loan can be BS’d into counting as “performing” on the books, it counts as wealth… because a bad loan = wealth in New eCONomy!
Dave of the North, what do you mean “probably?”
“The French government says it’s selling off 1,700 properties including chateaux, barracks and Parisian mansions, in part to cut the country’s heavy debt.”
Could Uncle Sam ask Fannie Mae and Freddie Mac to sell off their REO portfolios for similar purposes? How much money could be raised, especially if you took into consideration the labor market mobility that might follow the advent of affordable housing?
I seriously doubt anyone in govt wants to find out how much FM & FM’s houses are really worth.
And you would be right.
You can bet at some point the US will start selling off national parks etc. As I recall the Bush administration was already at work doing this.
I wonder when they will start selling naming rights to national landmarks - Mt. Rainier may someday be named Mt. Starbucks. Just like we’ve done with municipal stadiums, etc.
I thought Mt. Rainier was already named on behalf of the brewerey that makes Rainier Ale.
DennisN,
Correct, the beer was so excellent they named a mountain after it!
No I think b-hamster has a point there? Only question is, how long will it take?
The old Rainier Beer commercials were a hoot. Particularly the motorcycle. But that was then, and then I had a sense of humor. Not so much any more.
Ever see the movie “Americathon?”
That would be a nightmare… Imagine the national parks all utterly destroyed so that more overpriced McShacks can be put in… while the currently overpriced ones are rotting in the weather… Argh!
Most have been ruined by overuse already. Try Yellowstone or Yosimite in the peak summer time. Bumper to bumper traffic, and hundreds of Harleys competing to see which can make the most noise.
I was hiking in Glacier a couple of summers ago a good two miles off of Going to the Sun and could still hear the Harley packs. I think they should ban vehicles that are > say 85 db.
And, from the Arizona Slim File, here’s a list of under-appreciated national parks and monuments.
1. Wind Cave National Monument, South Dakota
2. Cape Hatteras National Seashore, North Carolina
3. Rocky Mountain National Park, Colorado (Trail Ridge Road on a bicycle is a real kick in the derriere.)
4. Point Reyes National Seashore, California
And my all-time favorite, which is a California state park:
Anza-Borrego
Look at the Grand Canyon. They closed it down and you have to take NG powered buses along the rim. Personally I like the way the CG is doing it.
I suspect the other parks will eventually follow suit.
I always head to the back country in most of the big parks after the breif tour stops. After a couple miles off road you have things pretty much to yourself. If you get off main trails it is even better.
Spokaneman,
Amen brother. ( Talk about unsolicited intrusions? ) Oh it’s a Stone GAS if you’re riding one of those Hogs ( the rest of us, not so much? )
We’ll work on you re-connecting w/ your sense of humor later. Please don’t lose that. If your energy level wavers in the slightest, it’s the first thing to go! Lose anything, but don’t lose that.
I hadn’t ridden motorcycles for years (had two but got out in the early 80’s). A few years ago I rented a hog for a day on the Big Island. Got my lifetime fill of motorcycle riding that day. Doesn’t trip the trigger any more.
Good idea. Keep ys, glacier. The rest, sell to the highest bidder.
May foreclosure rate steadies as banks hold back
May foreclosure notices level off but remain high; banks give delinquent borrowers more time.
WASHINGTON (AP) — The foreclosure crisis appears to be leveling off.
The number of people facing foreclosure is nearly flat from a year ago, according to the latest report from a private foreclosure listing service. A third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities.
Still, the number of foreclosures remains extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws, which vary by state, have also meant borrowers can spend more time in their homes.
Considering the projections of a high number of resets and recasts in the comming year, speeding the inventory out this spring is going to look like it would have been a VERY GOOD idea IMHO. Holding on and dribbling it out to the market slowly might not have been such a bad idea except for the huge amount of distressed inventory that is HEADING to the market.
“The foreclosure crisis appears to be leveling off.”
Does this imply it has reached a permanently high plateau?
Snort.
Yeah, I think if you look at the failure rate of loans it is slightly higher than the interest rate on loans.
Not sure how the math works out in the long run. Probably badly.
“…if you look at the failure rate of loans it is slightly higher than the interest rate on loans.”
That is one of the big drawbacks of the Fed’s interest rate suppression measures: The private market for loanable funds cannot price in a risk premium sufficiently large to cover the risk of default.
Hence there is no private supply of loanable funds.
“New consumer protection laws have also meant borrowers can spend more time in their homes.”
I think they meant that borrowers can spend more time in the bank’s homes without paying. Do we really need extra laws for that considering the way banks are willingly dragging their feet?
It’s been renamed the iLeak.
Apple’s Worst Security Breach: 114,000 iPad Owners Exposed.
Apple has suffered another embarrassment. A security breach has exposed iPad owners including dozens of CEOs, military officials, and top politicians. They—and every other buyer of the cellular-enabled tablet—could be vulnerable to spam marketing and malicious hacking.
The breach, which comes just weeks after an Apple employee lost an iPhone prototype in a bar, exposed the most exclusive email list on the planet, a collection of early-adopter iPad 3G subscribers that includes thousands of A-listers in finance, politics and media, from New York Times Co. CEO Janet Robinson to Diane Sawyer of ABC News to film mogul Harvey Weinstein to Mayor Michael Bloomberg. It even appears that White House Chief of Staff Rahm Emanuel’s information was compromised.
Great, iLeak AND IPad. Like it didn’t sound enough like a feminine hygene product BEFORE this.
Well, funny you should mention the hygiene idea. Here’s a Mad Tv video on that very topic.
The best part is that video is years old. They made that joke a loooong time ago.
InfoSec is a joke with most organizations. That’s why the Chinese have been able to stroll through our systems almost at will.
I believe BB stays in a state of puzzlement…
Bernanke Puzzled by Gold Rally.
Federal Reserve Chairman Ben Bernanke says he’s a bit puzzled by surging gold prices. The 30% rally from a year ago, on top of gains in previous years, might be interpreted as a loud signal from markets that big inflation pressures are building in the U.S. Gold is seen by many investors as a hedge against inflation risk.
Oh, he knows alright. BUt if ZIRP goes away then cash really will be king, and who has any cash these days?
Who has any cash?
Well hasn’t the FED been handing cash to big banks for a long time. You can bet that deflation will occur when banks have loaded themselves with cash, as we all know the FED works for the banks.
When the banks are full of bad debt then you have ZIRP
When the banks are full of cash then you will have rising interest rates unemployment and poverty be damned.
My guess is we will see a collapsing stock market just before the election. The GOP puppets will replace the democratic puppets. This time they will actually cut spending and the FED will jack up interest rates.
The cash that the Fed is printing and handing out to banks at zero interest is their desperate attempt to stave off full-blown deflation. The “new” cash is simply replacing the $Trillion-plus that has gone “poof” in this slow-motion housing crash.
True… if they can put the squeeze on the people - jack up rates in a bad way with high unemployment, etc. - they can get more folks in debt. And that IS their goal, of course.
No the goal is enrichment of bankers and the elite that control banks.
As Jefferson said banks will own everyting viea a series of inflation adn deflation that they control.
Massive inflation first everyone borrows money to overpriced assetts.
Then bailout the bad positions of banks when the bubble collapses and give them mountains of cash.
Then allow deflation to occur
Elite buy up property at penies on the dollar. With all the money given them by the FED.
Then open up the spickets so that people start buying thus driving up the value of all the goods purchased by the banking elite.
rinse lather and repeat.
Exactly measton. It’s the second oldest profession. And that’s not hyperbole.
I’m betting on *exactly* what you’ve said, measton.
Gold is real money, so they have to act “confused” about it. They need the game of worthless fiat currency to continue - people need to think that low interest rates and bailouts are great and don’t have any drawbacks such as a worthless dollar. So, he’ll keep acting “confused” as the printing press runs full tilt forever.
Bingo.
Here Heli-Ben - allow me to clear your mind.
That’s exactly what it’s about. That’s all it’s about. It’s not about interest rates, and it’s not even about things like Fed MBS purchases (though that isn’t helping). It’s about the very strong likelihood that in the not-too-distant future the U.S. will simply default on its debt - either officially or via hyperinflation - i.e. death by printing press.
Got it? Good.
Seems like that is the end game.
This brings up a question I’ve been meaning to ask Combotechie. The first depression was highly deflationary, yet the dollar was significantly devalued against gold. What is different about our current situation that makes you think greenbacks will hold their value?
yet the dollar was significantly devalued against gold.
But this was done explicitly by the government (through revaluation of the dollar), rather than by the open market, no? I’m not sure how one could compare the two…
The current devaluation of the dollar is also a function of goverment and is for the same purpose. Future debt payments will be made with currency that is less valuable, banks get bailed out/saved and savers get hosed.
Future debt payments will be made with currency that is less valuable, banks get bailed out/saved and savers get hosed.
Not if you store your savings in “the precious”
A puzzled Bernanke is nothing new:
Bartiromo: “What is the worst case scenario if in fact we were to see [house] prices come down substantially across the country?”
Bernanke: “Well, I guess I don’t buy your premise- it’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis so what I think is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s going to drive the economy from its [inaudible] path though.”
-Ben Bernanke, June 2005
“Unquestioningly, house prices are up quite a bit, I think it’s important to note that fundamentals are also very strong, we’ve got a growing economy, uh, jobs, incomes, we’ve got very low mortgage rates, uh, we’ve got, uh, demographics, uh, supporting, uh, housing, uh, growth, uh we’ve got restricted supply in some places so it’s certainly understandable that prices would go up some. Umm, I don’t know whether prices are exactly where they should be, but I think it’s fair to say much of what’s happened is supported by the economy.”
-Bernanke, July 2005
“At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,”
-Bernanke, March 2007
Priceless.
A commodity fund I own hit an 8 month low last week.
(And it owns a little gold, too.)
Gold sure isn’t following commodity prices.
Gold hasn’t been a commodity for about $700 and 5 years now.
Ore. budget cuts would close 3 prisons, shrink aid.
State agencies have given Gov. Ted Kulongoski the budget cut ideas he asked for. They include closing three prisons, releasing nearly 1,000 inmates and slashing aid to elderly, disabled and impoverished Oregonians.
The revenue shortfall the governor announced two weeks ago has already begun to affect schools in Oregon. Universities are raising tuition and fees, and some school districts are closing early this year or cutting jobs and pay.
In all, agencies proposed $577 million in cuts Wednesday. Kulongoski says he’ll have a final cut list by the end of the month.
Huh? B-b-b-but my left-leaning offspring the Oregon school teacher smugly told me just earlier this year that the new higher income tax rates on “the rich” would close the state’s defecit. What happened?
“… and slashing aid to elderly, disabled and impoverished Oregonians.”
No money in the state’s coffers means no money for the state’s inhabitants.
Promises, promises … show me the money.
Too bad states can’t print money. Meanwhile. the Federal Reserve is starting to crack the inflation whip, threatening to raise interest rates. It’s just a threat though. QE isn’t going anywhere soon. Still I wonder just how willing the Fed is to continue financing the federal budget deficit, at least the part of it that doesn’t pay for the military machine.
“Too bad states can’t print money.”
I’m glad as hell states can’t print money. I wish the state I live in wouldn’t spend as if the thought they could.
I think this is the dawn of the new reality, reality that was abandoned beginning with the New Deal, continued with the War on Poverty and the Great Society and so on and so forth. We have finally gotten beyond the tipping point where things are going to change, like it or not. The ability for the government to stand in place of personal responsiblity is gone. It will take a couple of generations of pain and dislocations, particularly for those that have come to rely on govt largess for most of thier sustenance and sadly, thier children and grandchildren. It will be painful, and likely will result in turbulence much like the 60’s, but to try to avoid it is just kicking the can down the road. It is inevitable, none, well maybe a few of the very wealthy, will be untouched.
The New Deal? The New Deal was created because the bankers back then had lost touch with reality.
The biggest welfare recipients are corporations. If that hasn’t been proven conclusively(!) with current events to everyone, then someone needs to get a new seeing eye dog.
Without government intervention, you end up with wild swings in market conditions that is both destructive, destabilizing and creates serious strategic vulnerabilities.
Study up on why farm subsidies were first introduced. Or why the FDA, FAA, etc were created.
I’m no fan of government, but I’m even less of a fan of uncontrolled business and corporations.
Amen, eco.
If this is posted elsewhere, I apologize.
But, what we are confronting is a new reality, displacing the old paradigm begun with the New Deal, continued with the Great Society and War on Poverty resulting in multiple generations of people that see government largess as an ordinary way of life. There just is no longer enough money in the system to continue to provide those benefits and over the next couple of generations they will be substantially reduced. Not only for the traditional welfare receipent, but for Social Security/Medicare receipients, state and local government retirees and untold legions of others who have come to rely on government transfer payments for thier every day existance. The process will be painful, and the dislocations many. Very few of us, probably only the very wealthy with escape the impact of this change. Hopefully, 50 years hence, when most on this board are long gone, a new stronger and more self relient society will emerge. It will certainly be a different society than what we have come to know, post great depression.
Spokaneman,
I’m just not built to look that far out into the future. Most people like me think.., the next quarter, after Labor Day etc. And it’s not that I doubt your predictions at all, still it’s funny you’d mention that?
Recently on the PDX blog I mentioned that even to traverse this mess we’re currently in, I doubt most of us will be at the job we’re ‘currently’ at? ( Nary a response! ) It ‘is’ frightening. How many of us want to openly entertain the possibility we won’t be able “ride this thing out” at our current gig?
Not very reassuring is it. Particularly for younger folks, most here are fairly well established or we’re just too old to make changes now. Judging from the Legions Of The Laid Off at mom’s work, they’re not adapting well, at all! So saying “I’ll just rent until the dust settles” is really only ‘part’ of the equation.
Post socialist and post altruist. I would love to be alive when the general philosophy begins with the “primacy of existence.”
Total jobless benefit rolls drop by most in almost a year, while new claims dip ~ June 10, 2010
WASHINGTON (AP) — The tally of laid-off workers continuing to claim jobless benefits fell by the largest amount in almost a year, suggesting that more unemployed workers may be finding work.
At the same time, new claims for unemployment insurance dipped slightly for the third straight week.
The Labor Department says the total unemployment benefit rolls fell by 255,000 to a seasonally adjusted 4.5 million. It was the lowest total since December 2008. Analysts polled by Thomson Financial expected a much smaller drop.
The number of first-time claims fell by 3,000 to a seasonally adjusted 456,000. New claims have been stuck at 450,000 since the beginning of the year.
“The Labor Department says the total unemployment benefit rolls fell by 255,000 to a seasonally adjusted 4.5 million. It was the lowest total since December 2008.”
Because the unemployed are all moving into the extended benefit program as the initial unemployment program only lasts 26 weeks.
Didn’t the federal benefit extensions just expire on June 1? Could that account for the dropoff?
And benefits are limited to 99 months, so those people aren’t eligible to apply for new benefits.
Please tell me you meant weeks…. Or was there some real strange news
A local VLE (very large employer) is hiring again… at 15% less pay than before.
Trade deficit rises to $40.3B in April, highest in 16 months, as demand for exports slips.
WASHINGTON (AP) — The U.S. trade deficit rose to the highest level in 16 months as exports fell for the second time in three months, a potentially worrisome sign that Europe’s debt troubles are beginning to crimp American manufacturers.
The Commerce Department said Thursday the trade deficit widened to $40.3 billion in April, up by 0.6 percent from March. U.S. exports dropped 0.6 percent while imports declined by 0.4 percent.
U.S. manufacturing has been a standout performer as the U.S. recovers from the worst recession in decades. But the concern is that Europe’s debt crisis will slow growth in that part of the world and dampen demand in a key U.S. export market.
Banks Face Short-Sale Fraud as Home ‘Flopping’ Schemes Spread.
(Bloomberg) — Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed — known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.
The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures.
wmbz,
And this is ’shocking’ exactly..? Guys, this is what your local NAR-membership has been waiting for! ( How long have I been beating on that drum? )
In a stable market it is harder to “fake” appraisals enough to make a profit considering the high transaction costs. But when the market is zooming up or down, it’s much easier to fool the bank* as to the value of the property being used as collateral.
*okay, the ultimate lender whomever THAT happens to be.
Yep - always looking for the next scam. It’s what makes the current economy go ’round!
I don’t know all the details of the fraud, but it seems that this kind of thing will only further delay banks from accepting low but legitimate offers on short sales.
The only solution that I can think of would be for short sale buyers to allow the banks to put, say, a special two year lein against the property so that if the buyer resold within that time frame, the short selling bank would capture the majority share should there happen to be any upside. I don’t know if that would work or even be legal. I do know the housing market doesn’t need any further impediments to finding its natural balance.
Kim,
Yahtzee!
Of course ‘my’ position has always been, Reform The REIC FIRST! ( then go looking for WS MBS shell games ) but you’re absolutely right.
I’m as hacked off about the Peter and the Dike shuffle the banks have been playing but damn it, opening the floodgates of the shadow inventory without ANY controls or restrictions only paves the way for Fraud Bubble ( Part II )
I’ve always thought that the large percentage of home “ownership” was needlessly inflated since calling many FB’s “owners” distorts the meaning of the word.
Now - of all people - the NY FED has published a bulletin containing graphs showing the previously defined percentages of home ownership vs. percentages of home owners minus the underwater FBs. Some of the graphs are priceless: one shows the “real” percentage of home ownership in Las Vegas is down around 14%, and another for San Diego is around 35%.
Linky http://www.newyorkfed.org/research/current_issues/ci16-5.pdf
from the article:
“…negative equity homeowners…are included in the official homeownership rate computed by the Census Bureau, but the savings they must amass to retain their home or purchase a new home are daunting. Recognizing that these homeowners are likely to convert to renters over time, the authors of this analysis calculate an “effective” rate of homeownership that excludes negative equity households. They argue that the effective rate—5.6 percentage points below the official rate—may be a useful guide to the future path of the official rate.”
And what about all of those downsizing households? Y’know, the ones who are getting out of the McMansions and into smaller quarters?
Happened in my own family. Grandma and Grandpa sold the McMansion and moved into a rented 3/1 apartment with one of their children.
Interesting to see that if you are a measly 10% under water that it will take ten years for you to have 6% equity in the house.
Clearly points out that you are better off defaulting or negotiate with the lender to reduce principle.
Also points out why we could be entering multiple lost decades. Could see properties being sat on for 10 years and the FB still emerging bankrupt.
Once again, those that fail early will be comming out way ahead.
The second reason that our estimate
may understate the homeownership gap is that the coverage
of subordinate liens in our database is most likely incomplete,
since it excludes all subordinate liens on prime mortgages and
some subordinate liens on nonprime mortgages.
Geez, are these guys pessimists or what?
To me, the most stunning moment of the housing bubble was Greenspan co-writing an academic paper that found that consumer spending funded by mortgage equity withdrawl was responsible for all the growth in the economy in the most recent economic expansion.
And instead of reaching the conclusion “OMG we’re screwed!” cheered that modern finance had given everyone the same access to debt that the rich had, so that they could rationally balance their consumption over their lifetimes.
The man had the knowledge, but was blinded by ideology.
ISTR pretty early on, seeing a chart that even as the theoretical homeowner percentage was going up during the bubble, the total net equity was going down. Just another clear piece of evidence that we were heading full speed into a brick wall.
Go Go Illegals:
http://queenscrap.blogspot.com/2010/06/public-university-proud-to-enroll.html
Ain’t politics grand? States across the country are unable to fund their state colleges and univeristies, forcing tuition rates to skyrocket. Meanwhile they add to the burden with harebrained schemes like this.
From the comments
” Anonymous said…
If i was forced to pick from attending 4 years at Queensborough or working McDonalds for the rest of my life, i would pick McD’s ”
Thursday, June 10, 2010
Seems like the stock market is slowly getting back to what I think should be another crash, which because it will force more dollars toward Treasuries.
The Fed spends years perfecting ways to engineer booms and crashes.
As far as our fraudulently inflated upon impossible valuations of assets S&P, Dow, NYSE, and NASDAQ, rigged markets always crash deeper and longer than anyone “expected”.
My advice:
“SELL EVERY RALLY!!!”
I bought some more yesterday. Let’s talk in Jan.
OK Natalie,
We’ll talk then. I’ll be the guy in the blue HBB’er T-shirt over by the Oyster Bar.
That is classic. Thank you for making me smile.
Every stock market rally set the stage for the next correction, which enables more U.S. debt issuance at super-low interest rates. Seems to me like a pretty durn good system of debt refinancing.
Are you kidding? The ten year note yield is about 3.31%, meaning that quite a few people are buying ten year notes. Chumps. The yield driving down will sooner or later make a rebound in dividend stocks. For instance, RTN yields 2.9%. At what some point RTN will be a much better deal (with a lot of upside) than the ten year note. The yield drop on the Ten Year Note should get less and less as people realize that long term rates will have to go back up.
Hey guys.
Going up to PA to look at rental places. I have been looking on the internet, and I see NO four bedroom apts. Actually, the area of Carlisle, PA looks like another Fayetteville N.C.
I will report while up there on prices…
BTW,
Went looking in the Kernersville N.C. yesterday with DW. Alot of houses on the market for many months. Lots of McMansions in the countryside and no jobs t support them. Lots of for sale signs…
A question for the peanut gallery for clarity purposes-
Does DW mean da wife, and does DH mean da husband?
I’ve seen several posts where DW and DH seem, by their context, to refer to the poster’s spouse.
Stpn, I think 4-bedroom apartments are pretty rare everywhere. How ’bout renting a house? Yeah, you gotta cut the grass but the LL is still responsible for all the other maintenance and repairs.
I believe technically it’s supposed to mean ‘dear’ husband or wife, but when my wife uses it in her posts, she assures me it means ‘damn’ husband.
I thought it was ‘devoted’?
Eh, it’s something like that….dear, devoted, damned, etc…
DOH!!!!
Be grateful that DW doesn’t mean “desultory witch”.
A friend of mine was really excited about buying a summer cottage. The boat house was listed as coming with two wenches.
Yes. DH is “dear husband” and DW is “dear wife”. For the first many months I would see it I thought it mean “Divorced Wife” meaning “ex-wife” or “divorced husband” meaning “ex-husband”. I was like, “dang, is everybody divorced these days?”. But no, it’s all good.
Are you just visiting there? What the heck would you want to stay there?
Going to have a small farm?
It is a pretty expensive area for the boonies of PA.
Eastern PA, Central Jersey, Baltimore area… North Carolina in the research traingle area..
Better job opporitunities and kind of a hub.
Is it near Oil City?
No. Carlisle is near Harriburg, PA, in central PA. Oil City is in northwestern PA.
I am going to be stationed there…
Jobs? Jobs?!?!
Jobs get in the way of consuming and flipping properties, which is (of course) the proper way to wealth in post-economy Amerika… or so I’ve been told by my local Realtors!
A Citi Bank report from 2006 said exactly the same thing.
Tale of Two Co-Workers:
Two of the wife’s co-workers ( tech co. in Portland ) had startlingly different results!
One bought a home in Beaverton, OR for $500k. She and her ( also TECH-employed hubbie plopped down a $200k DP ) They are sh!tting themselves. He ( predictably got laid off ) and they’re fearful if things don’t change for the better -fast- they’ll lose any ‘future’ window to recover that DP.
Co-worker (2) met and married a guy that bought his bubble-era home and he too ( predictably ) got laid off. It was in ‘his’ name alone! They’ve bilked about all the free rent possible, saved the diff., bought a home in the same neigborhood for about 300k ( based on ‘her’ credit alone! )
See, everything worked out and all is well in the Rose City.
The saddest part is that co-worker 2 wasn’t ashamed to tell you the story of why must of us will have a much lower standard of living for the rest of our lives. She sounds like a real peach.
You’re acting like they did something wrong. The bank didn’t have to loan that guy the money, nor did they have to let him stay for months/years without paying. Nor did the next bank have to loan the woman money for the next house.
States have different laws so I wont go into all the details of each State’s law. Although, I am fine with walking away from an underwater home, I am not ok with not paying debt service for the period prior to foreclosure and pocketing it, or the strategic use of one name v. both names with respect to certain assets to play shell games. In many States it would be considered illegal and in my opinion is always morally bankrupt. I don’t buy into the “as long as you can get away with it, it is cool” line of thinking. I am un-American in that respect.
I should add I also find it very disheartening that many of the same ppl that view bankers evil are ok with such behavior. It is not ok for bankers to push the envelope for profit, but it is ok for everyone else. WTH is that all about?
Natalie, you are missing one important fact: the strategic-defaulters who stay rent-free in the house and save their payments while awaiting the foreclosure are doing the loan-holders a FAVOR.
The collateral decreases in value much more rapidly if it is unoccuped. Think squaters, crack-heads, party-house, weather-damage, frozen pipes, etc etc etc.
Once you decide that strategic-default makes sense, it is foolish not to stay while the wheels turn and save up for a deposit on the “next” rental. And the bank benefits.
If the bank wants to expedite the process, more power to them—I would fully support them in that. But apparently they do not care to do so.
Why is it wrong for them to continue to live in the house until the Bank asked them to leave? If they were blowing money on lawyers to fight the foreclosure without actually intending to repay the loan, that’s one thing. But they are under no moral obligation to move out of the house until the bank forecloses on it, and if the bank takes a year or two to do so, it would be stupid for them to have moved out sooner.
ESPECIALLY since they would be liable for maintaining insurance/etc on the house and could be sued by kids breaking into the house to ‘party’ and then falling down the stairs. The house is still in their name until fully repossessed.
20% down payments are required will sort out the majority of the mess. It may take killing Freddie/Fannie/FHA to ever get there.
The collateral decreases in value much more rapidly if it is unoccupied. Think squaters, crack-heads, party-house, weather-damage, frozen pipes, etc etc etc.
Case in point: That foreclosed duplex I told y’all about a few days ago. The gate by the street was unlocked. The locks had been removed from the front security door. And the front door was ajar.
Which meant that anyone and everyone could have waltzed right in and trashed the place.
Bravo, Natalie. I agree 100%. It goes back to character. I would not want to be friends or relatives of the second example. It is fitting that they be labeled as “number two”.
Two wrongs don’t equal a right. Once we get back to holding everybody accountable for their actions we might just have a functional nation again.
I thought the banks were were trying to keep their claim they are owed debt service. It may hinge on State recourse laws which vary State to State and the facts of the particular situation (i.e., seconds, HELOCs, etc.). I live in a recourse state and hear stories like this in recourse states. I think the media attn is confusing ppl by not being specific. Also, with respect to the evil banks, I have stated before that most of what was done by the banks was legal although harmful. Thus, to be consistent, you either need to view such homeowners evil as well, or cut the banks some slack and focus your attention somewhere else such as meaningful reform. Not you expressly, but ppl in general. It is odd that I get called every name in the book for cutting banks slack for legal but harmful behavior but many seem ok with stratgic defaulters.
I also do not agree that banks in general do not act any quicker if it is abandoned. Seems to me to be an after-the-fact way for ppl to feel better about their decisions in life.
Natalie,
Excellent points, and don’t anybody get me wrong ( I freakin’ HATE banks, always have ) It’s sad the MSM has taken so long to come around to the notion that relationships can be “mutually exploitive”!
How ironic yet another installment of Robin Hood is in theaters? And no, Two Wrongs don’t make a Right, nycityboy! I think further, as long as we remain on that ethical trajectory, no, there won’t be a recovery ( which everyone has seemed to lost interest in of late? )
I’m really kind of pissed about people using abandoned houses as party houses.
Mostly cause I don’t get invited to those sort of parties.
Co-worker 2 is just playing the game. I admire her.
Justin,
I’d “admire” her a helluva’ lot more had they simply remained on the sidelines and brought cash to bear POST… bust ( but that’s just me? )
Natalie,
Not only was she not ‘ashamed’ ( Hell, she was bragging! ) This cuts to the core of much of what we’ve struggled w/ as a group these many years. Most have maintained that had down payments remained within historic standards ( we wouldn’t have been subjected to a Bubble to begin with! )
Now they’re in peril of losing it all ( similar homes I’m told ) so here we have ppl w/ skin in the game ( only to take it in the shorts? ) So much for ‘that’ huh?
Society can only exist when doing the ‘right’ thing is also doing what is good for your family/group/etc. The housing bubble led the banks to embrace rules that let people have no skin in the game. Then their accounting tricks to conceal their true troubles led people to getting free rent.
Hopefully these examples will lead to more sane underwriting in the future. You have to have people exploiting the loopholes in order to convince the sheeple that said loopholes MUST be closed.
Sadly, this loophole is pretty unlikely to get closed. I suspect that the will to abolish housing subsidies like 3% down FHA loans doesn’t exist in the population at large or the government.
“Society can only exist when doing the ‘right’ thing is also doing what is good for your family/group/etc.”
Growing up we probably could have qualified for reduced lunches. We couldn’t afford the full price for everybody everyday. Instead of taking that handout we made our own lunches.
Our neighbors had no qualms about taking the free money. They even bragged about it. The money they made under the table didn’t calculate into the equation. The character of that family was repugnant. As they grew up they could justify robbing others with very little effort.
People that game one system will game any system they can game.
Growing up we probably could have qualified for reduced lunches. We couldn’t afford the full price for everybody everyday. Instead of taking that handout we made our own lunches.
Our neighbors had no qualms about taking the free money. They even bragged about it. The money they made under the table didn’t calculate into the equation. The character of that family was repugnant. As they grew up they could justify robbing others with very little effort.
I know a lady who could have gotten the reduced lunch — if such a thing had existed back in the 1940s and 1950s. The people running the school cafeteria gave her the job of cashier in exchange for lunch. And that’s how she earned her lunches. She was very proud of working for them too.
“their true troubles led to people getting free rent”
( And notice he says that w/ no particular malice! ) LOL
nycityboy,
Good for you. I’ve made a lot of proud ( but “dumb” ) choices over the course of my life. Oh btw, that’s exactly what these people think of us you know?
“If they were smart, they’d be doing the same thing” blah, blah…
I’m not recommending that course. My wife and I put down 25% and are paying down the mortgage aggressively with extra principle each month.
I just don’t hate on the people who are following their contracts with the banks in the most beneficial way they can. People doing this should not surprise the banks given the way they structured and underwrote debt. And the truth is a large majority of people aren’t getting away with things as slickly as your example #2 up there represent. But I do personally know a family who (in a non-recourse state) :
Bought a house 50 miles from their primary job for 800kish in 2006 for very little down which is now worth ~300k at best.
Bought a nicer, bigger house in a better neighborhood 3 miles from work in 2009 for 700k with 10% down.
Offered to short sale or mail the keys to the bank on house #1.
They managed this because they had cash around and could buy the second place while still current on the first place.
I’m not going to hate on the guy for doing what’s financially responsible for his family.
However, I’m not likely to loan him money ever.
They managed this because they had cash around and could buy the second place while still current on the first place.
I’m not going to hate on the guy for doing what’s financially responsible for his family.
They managed to do this because Congress waived the tax on forgiven debt.
Sure, they’re acting in their own best interest. But it’s at the expense not just of the banks/note holder, but of taxpayers.
sfbb,
Good example, and what I’ve learned about #2 is strictly third hand. I can’t visualize there wasn’t a fair amount of angst and indecision that went into that formula?
Nor do I think it’s altogether that common here. What made it a real gem is that, people in FL were pulling this left and right oh… “way back in ‘06″ when banks would believe whatever you were willing to tell them! All you had to say was that you had it “listed”. ( Surely a bidding war would ensue? )
But by ‘07 and certainly by ‘08 ( when The Bust came home to roost in the PNW ) virtually NObody was being given those kind of options. Yeah, right, SELL your first house ( or get a bona-fide offer ) and then we’ll talk.
BINGO
The F’n banks have shown us the way. I would have done what coworker #2 did in a heart beat as would any big business. You play the game by the rules that are written and coworker #2 played the game well. It doesn’t mean that I like our system, but that’ s the way the rules are written.
On a side note I put out an offer for a place last week for 50% of the original asking price and 25% off current asking. The lady came back with an offer that was close but not close enough so I walked. It does look like I helped the next guy because she promptly lowered her asking price and appears to have a bidder. Of note 3 of 4 of the other properties on my watch list appear to have sold. Those with cash like me sat on the sidelines until June and have all come out with low bids. The 3 properties have been on the market for 3 years despite lowering their prices fairly dramatically. The Mrs. isn’t happy with me at the moment. It looks like we’ll be purchasing a low end home for the next year so we can get the kids in the school district the wife wants. I’ll make a stab at the dream home in a year or two.
measton,
Probably right. I think where the envy factor comes in is that.., ‘most’ couples have both names on the deed. We couldn’t employ this tactic if we wanted?
Overall though, I don’t see a lot of difference between this and fraudulent equity skimming etc. and in the end, we ‘all’ pay for it one way or another. Good lowballing tactics btw. At least we’re helping each other. If you can’t dislodge the shadow inv. this is something we ‘can’ do.
Oregon’s not a community property state. Transmutation of individual property to community property may happen easily in community property states. In an “East coast marital property” state like Oregon who knows what may happen.
DennisN,
No offense but would you mind putting that in English? ( Some of us here don’t speak legalese? )
“Transmutation”? WTF ( did I get any on me!? )
I think he’s talking about turning poop into gold… and vice versa. Which is what your two examples above showed! Financial Alchemy!
Oy Veh….
In a community property state, all property owned by a couple is either separate property (owned by one of them) or community property (owned jointly by both of them). Anything you own prior to the marriage is presumed to be separate property. Separate property may be transmuted (converted) into community property. Sometimes transmutation may occur unwittingly. We read cases where the happy groom was walking down the beach with his dear bride and said to her “I love you so much, everything I have is yours!”. Oooops….all his separate property became community property!
Oregon’s the only non-community property state in the West, instead sharing the old-English marital property laws with the liberal bastions of the east coast. Those states essentially maintain that a woman can’t inherit property because a woman IS just “property”, not really a human being.
I would have thought after 40 years of women’s lib that most of the states maintaining old-English marital property laws would have been pressured into converting to community property laws.
DinOR,
On more than one occasion you’ve threatened to move to another state. CA, NV, ID, AZ, and WA are all community property states. I’d advise all married people to understand the differences before moving from a non-community property state (like OR) to a community property state.
DennisN,
Thanks for clearing that up ( you could have just said “converted” for the benefit of us non-lawyer types? )
Getting back to Emp. #2 for a moment, how would or should this impact the lender? Can you see any instance where the lender may have recourse against the wife given the little stunt they’ve pulled? ( It’s not like they got divorced in the interim? )
Obviously ‘his’ credit is in ruin but we noticed going thru the NOD filings for PDX where you would see multiple defaults among couples where ’she’ owned prop’s in ‘her’ name ( and he the same ) but they both had a primary address in common. To measton’s delight I’m sure ( this in primarily affluent ( read republican ) districts!
Basically I was thinking that in a community property state her name could have been essentially “on the deed” (more correctly “on the note”) whether she was aware of it or not. There’s “community debt” as well as community property, although the laws on community debt vary from state to state and are complicated.
DennisN,
Thank you again, that’s really more what I was driving at. She’did’ live there and derived financial benefit ( shelter in this instance )
I’m still too aghast at the whole situation to even pass any kind of moral judgment? I wonder how everyone that’s affording her a pass would feel about it had the Boom continued long enough for her to have made a ‘profit’ from it?
Clearly this is a loophole lenders hadn’t stopped to consider. From a legal standpoint, I’m afraid there won’t be a thing they can do?
How is it any different than having a renter in your house? Should they go on the title and mortgage since technically THEY are paying part of the lease? He bought the house in his name, and agreed to pay the mortgage. She bought the second house.
For some reason, I don’t exactly believe they couldn’t afford the first house, however, if they could afford the second house on ‘one’ salary, and afforded the first house on ‘one’ salary (unless they have been lying on the loan applications.)
“if they could afford the second house on ‘one’ salary”
Perzactly! ( This is why ppl at work are starting to get a little quizzical about the whole “arrangement”? ) Hope she thought it was worth it?
Am I having s*x w/ the ‘renter’ in your above hypothetical btw?
Am I having s*x w/ the ‘renter’ in your above hypothetical btw?
You can charge what the market will bear.
“Oregon’s the only non-community property state in the West,”
MT isn’t community property either.
“…so we can get the kids in the school district the wife wants.”
I didn’t realize private schools had “districts” or attendance zones. OMG, you’re not sending them to public schools, are you?
Yep
Personally I don’t care
Any of the schools here are light years ahead of where I went to school. We have friends with kids in this district as well, which I think is the driving force.
I think Bill was probably being ironic up there.
My kid(s) will be in public school as well.
Private school for us, but only because we have been unable to find a reasonably priced house in a good school district and our current public school is a failing one. But I got Bill’s irony.
I find it troubling that so many people look to laws and regulations to the extent that they can no longer distinguish right from wrong. I think serious introspection is in order if your actions are guided solely by what you can legally get away with.
Heck many people think you can CHANGE wrong into right by simply changing the law, e.g. legalizing infidelity.
SawItComing,
Wonder the same thing every damn day. What can I get away with ( I mean “legally” if ya’ know what I mean, wink-wink )
Notice now, even the slightest downturn suffices to pull out the “street tactics”.
I’d have to judge coworker #2’s character based on the condition in which she left house #1.
Its one thing for a family member to lose a job, find your living situation unaffordable, admit you made a mistake buying ahead of your means, and move on. But to whine to the press about how the big bad banks are treating you, then steal all the appliances and fixtures, strip the place bare and pour cement down all the pipes is just criminal.
Co-worker 2 is just playing the game. I admire her.
That is great. She is privatizing the gains and socializing her losses. If that is the type of person you admire Justin then it is pretty clear what you are.
Agreed. There are still people (I’ll call group a) who think individuals on the other side of the contract cannot have done any wrong. The group a people are enablers of irresponsibility.
Number 2 is smart. Number 1 will be there soon enough.
Even it is smart it is still not a cause to admire these people. So many of these people went into these houses with the battle cries of, “renting is throwing your money away” and “real estate is always a good investment”.
Everybody’s harping on the huge bailout the lenders got and how the borrowers got nothing. Wrong. The borrowers aren’t being taxed on forgiven debt. The borrowers will probably jump right into another house thanks to Fan, Fred, FHA. Most borrowers won’t face deficiency judgments. And this is after many of these borrowers got interest and even principle reductions. The borrowers have gotten their share of free cheese.
Just as the lenders deserve to pay for their mistakes so do the borrowers. Holding any of them harmless seems wrong to me. I am glad that at the very least the FBs that walk should take a huge credit hit and not be able to buy again for several years. Maybe that would smarten up so many of the idiots that now roam this country.
Nyc,
morality left the American psyche long ago. The left has taught us that if it feels good then do it. Morals, shmorals. This is the byproduct.
If you are moral, then right feels good.
Yep, all is well!
The scammers win, and the honest people lose!
I can’t see how that type event repeating itself over and over for decades can have any possible negative outcome for a nation’s future… right? Right? Oh, wait… nevermind!
Buying a home isn’t a moral decision it’s a financial decision. When it no longer works out for you financially, then you need to do what is financially best for you and your family. That is it.
Banks lend you the money, knowing that if you stop paying off the loan they can take your home as collateral. Banks aren’t doing you a favor. You have no moral obligation to continue paying the loan. You can stop paying the minute it no longer is beneficial to you. And then the bank can come in and take your home.
America really has become a peasant society, where we serve our lords and masters and put what they want first. It’s so ridiculous. I’m glad this mentality is slowly changing.
I am assuming that when debating why non-recourse laws should be enacted the argument that one should be able to stop paying their mortgage and apply the savings to the purchase of another home bought in only one spouse’s name, so as not to trigger warning bells for the new lender, never came up. I am also assuming the bank would not be making the new loan if it knew that the sweet couple let their last house go into foreclosure. I base my assumations on rational behavior, and may be wrong.
assumations = assumptions
I note it is really only the aspect that the buyers are trying to keep the new lender in the dark that is bothering me. The facts don’t make sense. I am hearing the new lender made the loan based on her “credit” yet the rest of the facts make it sound like a non-recourse state, in which case “risk of default” would be more important than “credit.” Thus, it does not appear to the case that all the facts are laid out on the table as Justin would suggest. Yes, if all the parties go in knowing the rules and the facts, all options should be available without moral judgement. This does not appear to be a case of perfect knowledge on both sides at all. Either one party is really stupid and not asking the right questions, or someone is being dishonest.
“the buyers are trying to keep the new lender in the dark”
The new lender could care less. All they want is their fees, not the truth. They will be selling the loan to Fannie/Freddie ASAP.
“so as not to trigger warning bells for the new lender”
That is what has troubled me in this whole process. Disclosure. Have you ever declared BK? No. Good. Have you ( or any spouse/s to which you have shared a residence ) defaulted on a hoooome..?
Uh, define ’spouse’?
But the mortgage industry is sucking SO bad they’re probably only too willing to sweep that under the carpet too? Well, if that’s the case then we simply must provide them direction.
If I was a bank, I would either never loan money in a non recourse state or I would exact very high interest rates on my loans. Absent of bailouts, shareholders of said banks would certainly want to be sure they don’t lose money on bad loans.
In a free society - a capitalist one, there would be very few bad loans and no bank bailouts.
Well, your capitalist society helped “innovate” the CDS market which made it difficult for lenders to price risk accordingly. Other lenders were offering 1.5% because the CDS market hid the true default risk. How much business do you think you’d get if you advertised 9% rates when your competition was advertising 1.5% rates?
must = most
I’m so confused.
fat, drunk, and stupid is no way to go through life, son…
And now… :
For my crowning achievement! ( My least most popular post evah! )
Want to “re-start” the economy?
Do away with the National Do-Not-Call List!
Sorry guys, it’s just come time. This was a grass roots movement ( started by a schtick on “Seinfeld” ) that gathered momentum and is perhaps one of THE biggest impediments to our recovery.
This is America, and everyone has the right to pedal their wares. Personally, I’m not in the -least- bit interested if you find them ‘annoying’, intrusive or horribly inconvenient? Really couldn’t care less. Not… to sure how I feel about giving access to “Loan Modification” companies.., but sorry, it’s just time. We can sit around and pretend we don’t have to rebuild from scratch or we can face reality. I look forward to calling all of you real soon!
Love,
DinOR
DinOR,
I respectfully disagree. In fact, I feel you have it backwards.
There is no way this will help as the only people dumb enough to buy stuff from direct cold-call marketing are dumb enough to not have signed up for the do-not-call list. Doing AWAY with it would just decrease the productivity of the call centers, thereby reducing sales and dropping company earnings and helping sink the country further into the recession.
Hahahahaha!
Are you for real?!
Who is going to do business with somebody who cold-calls them over the phone? And most of those callers were scammers anyway… No, silencing the crooked telemarketers was a good thing.
Guys,
I think I amply prefaced this would be about as popular as signing up for a blood disorder, but we’re now in what.., Year 10 of the DNC? How has it worked out ’so’ far?
Take the HB out of the equation and we’ve been in recession since March 2000. It’s distorted marketing/adv. budgets, companies are TRYING to make internet marketing ‘work’ for them ( w/ dubious success at best? ) and 40 min. of every hour on tv are dedicated to commercials.
I can put mute on the ringer, and most people do. Just sayin’ if the current admin. is serious about re-starting employment, why not bring those jobs/CC’s -back- to the US and instead of putting ppl on 99 wks. of UN, let ‘em do ’something’?
We’ve racked up trillions in debt without so much as a debate, put in perspective ( is this really ‘that’ big a’ deal? ) Most of the items, I’m sure, on Craigslist, Ebay etc. go unsold. At this point, I don’t know what it could possibly ‘hurt’?
Are you trying to hurt the direct mailing industry to protect your pretty trees up there in Oregon? I bet you’re out kissing spotted owls every morning!
Seriously, though, I still say no. Marketing should be voluntary. You can turn off the TV, avoid ad-heavy web sites, not bother reading magazines, etc, but direct calling and to a lesser extent, mailing, is an unavoidable intrusion.
The only way I would support it is if you had to pay to recipients. Wanna call me and pitch your product? That’s a buck. Don’t think I’ll buy it? Then don’t f’ing call me.
Who answers their phone anymore? I’ve done a lot of political calls, which aren’t subject to the do not call list, and most the time I got answering machines.
Very few people are answering the phone these days. That’s why I also send e-mail along with my voice mail messages. (And, since I’m prospecting in universities and government agencies, the e-mail addresses are on their websites.)
Who is going to do business with somebody who cold-calls them over the phone?
I don’t know what prompted DinOr’s post, but I can tell you who does business with these scammers: old people whose faculties are declining and suckers. Plenty of both to make cold-calling profitable.
I’ll admit to doing quite a bit of cold calling. It’s how I bring in business for my design/photo studio.
But, unlike the scammers, when I call you, I’m not looking for your credit card number or your bank routing information. That’s because my services aren’t the type that people up and buy over the phone. The actual sales take place weeks, months, and even years later.
In essence, I’m calling to introduce my services. And, so far this year, about 4% of the people I’ve called express enough interest to merit follow-up. (By way of comparison, the industry standard response rate for direct mail is 1-2%. And that’s just the response rate. The actual sales rate may be a lot lower.)
So, there you have it. A glimpse at B2B sales prospecting at the Arizona Slim Ranch.
Arizona Slim,
Oh that’s not bad at all. Typically it’s about 1%, and yes I realize that means a 99% failure rate. Will there be shady operators, I’ve no doubt.
Perhaps we can hire cold-calling police? Surely they’d do more than the SEC? What I’m really referring to was jump-starting the economy. Teaching people to sell again!
Who knows, after the Great REIC-out ( and they clean house thoroughly ) I might even consider letting ‘them’ back in the pool? After they’ve been sanitized and disinfected!*
*Ted Knight in Caddyshack
There is a difference between b2b calls and obnoxious auto warranty calls during dinner. Friends armed with software PBXes and cheap SIP service wait for telemarketers then hammer them back with hundreds of calls on hundreds of SIP channels at once. It’s hilarious.
Michael
Actually, I’ve wanted to bring it up for quite awhile. This seemed as good a time as any?
But rather than debate it ‘purely’ on it’s social merits ( calls during those ALL important ‘family’ dinners etc. ) I was hoping we could focus on the economic impacts for a change?
Since it’s been quite some time ( OR has had a ’state’ DNC for years prior to the Nat’l rollout ) -most- of those types of firms have been looong put out of business! More importantly, I think any sane re-introduction would at least include a “Registry” one must conform to along with ample reg’s and penalties for non-compliance. Immediate expulsion for those that do not!
I can’t say for sure it would have an impact at all? Positive, negative or otherwise. It seems ridiculous to ‘me’ though that a gov’t that couldn’t stop planes from flying into the WTC would obsess over dinner hour?
I dunno. I can see all the calls coming from India-based call centers and the Chinese manufacturing the caller ID technology.
Tmarketing did provide jobs for lots of people. Anyone with any spunk would soon decide to work their way out of telemarketing.
It never bothered me that much and I seem to get just as many “legal” calls now.
In Montana,
Generally my sense as well. It’s 2010, I think most people ( that still have a landline! ) have gotten onboard w/ Caller ID etc.
And you’re right, it ‘is’ a “farm league” for sales people. I think what we may have to come to grips w/ is.., all during The Boom borrowed money meant for easy sales. Hell, all ‘you’ had to do was ring it up!
Well, we’re not there now. This is down to bootstrap efforts. And I resent the notion that buying over the phone is strictly for total doofuses. I’ve bought and sold plenty of things via the phone ( wonderful invention btw ) over the years. As long as you do your homework, you shouldn’t have any issues. I never have?
I also take special pains to “tone” anyone from the GOP calling me for fundraising too! They BANNED nearly everyone else but somehow mgd. to Exempt themselves. If that doesn’t queer w/ ya’ I don’t know what will?
Oooooh, DinOR…
This is one of my pet peeves.
As an privacy rights advocate and “amateur” consumer and taxpayer advocate, I was involved in the creation of the do-not-call list. This was one of my passions before the housing bubble.
With all due respect, NOBODY should have the right to violate the peace and sanctity of a person’s private home. Whether it’s cold calling by phone or door-to-door sales, it’s an unwanted intrustion AND it’s often the way in which criminals gain access to people’s homes and financial information.
If you want to sell, set up shop in a public place and sell your goods/services. Advertise on TV, radio, billboards, magazines, direct mail, etc. But you don’t have the right to harass people in the privacy of their own home.
If you want to re-open call centers (and I agree that we should), let’s bring back the customer service jobs that were sent to India, okay?
Most of the calls I get are recorded messages.
I have caller ID and I get all sorts of shady calls. Y’know, free grants from the government and other offers.
While the phone is ringing, I Google the number, and that’s how I find out about the caller.
Which leads to my next proposal: Government-subsidized caller ID for everyone! Keep those shady callers at bay!
Which leads to my next proposal: Government-subsidized caller ID for everyone! Keep those shady callers at bay!
Slim, I think you just jumped the shark.
Yep, and the shark is very annoyed at me. The nerve of me jumping over it.
So, here I go, swimming as fast as I can to get away! Cue up the music from Jaws! Chomp! Auggggghhhh!
Excellent idea.
There are a lot of folks laid off at home with nothing to do. Cold callers need to sell them something to take thier mind off of the economy. One last oppurtunity to max out someone’s credit card.
http://www.costar.com/news/Article.aspx?id=55A10CB6BE70FB25FEF7DDDD135CCA76
Distressed CMBS Loans Now Returning Less Than Half Their Note Value
Declining Property Values Indicate Loss Severities Will Go Higher
The amount of losses on distressed CMBS loans resolved in the past year has jumped 33% to where noteholders are now recovering approximately 43 cents on the dollar. And, say analysts, the losses are expected to continue to mount this year.
The average loss severity rate or the ratio of realized loss to liquidation balance for U.S. commercial mortgaged-backed securities (CMBS) loans resolved with losses in 2009 was 57% compared to the 43% rate in 2008, according to new data from Fitch Ratings. Those losses outpace the cumulative historical average of 37.2%.
“Loss severities are expected to remain above the current cumulative average through 2011,” said Fitch managing director Mary MacNeill. “Assets liquidated in the current economic environment will be those not likely to see cash flow improvement from an extension or modification.”
“In a ‘normal’ economic environment, proceeds from a collateral liquidation could fully recover the interest shortfalls, and sometimes even the total outstanding balance in a booming market,” Li said. “But in an environment such as today’s, when the economy is not fully out of the woods and commercial real estate values are well below the levels from a few years ago, high loss severities are expected to linger, if not deepen.”
Fitch expects higher loss severities for all property types this year. Annual loss severities by property type for last year were as follows:
* Hotel: 81.9%.
* Multifamily: 58%
* Office: 56.9%
* Industrial: 48.8% and
* Retail: 48.2%.
No wonder banks would rather extend and pretend.
Well. With modest 10:1 leverage you can handle 10% losses.
How fubared are they with 80% losses?
Hence, why we now own the Red Roof Inn.
Loss severity is not the reason to extend and pretend. Banks know severity will only increase with extend and pretend, as deferred maintenance piles up further reducing property value. Banks pursue extend and pretend because they don’t have the capital to take the loss. They would all be insolvent if they had to recognize all losses today.
* Hotel: 81.9%.
* Multifamily: 58%
* Office: 56.9%
* Industrial: 48.8% and
* Retail: 48.2%.
Those are NOT the figures of a recovery. In fact, they scream “depression.”
Not good. Not good at all.
UK Government Deficit Reduction Plan Could Mean 725,000 Job Cuts
LONDON (Dow Jones)–U.K. public-sector job cuts could total 725,000 by 2015 if the government cuts spending as sharply as expected, a report said Thursday.
The Chartered Institute of Personnel and Development said while reducing the U.K.’s record budget deficit in a timely manner should ultimately boost the U.K. economy over a longer time, the shorter term outlook over the next five years will suffer.
“Although tough fiscal medicine is unavoidable and may boost the U.K.’s long-run economic growth and job prospects, reliance on cuts in public spending rather than tax increases as the primary means of cutting the deficit makes
Let’s see: Population of England is approximately 51 million, which is about one sixth of the U.S. So 725,000 government job cuts in England is like 4,350,000 government job cuts in the U.S.
I’m impressed! Great for England!
TrimTabs’ Preliminary Data Suggests U.S. Economy Will Lose at Least 200,000 Jobs in June as Census Bureau Starts Massive Layoffs
SAUSALITO, Calif., June 10 /PRNewswire/ — TrimTabs Investment Research reported that based on preliminary data, the U.S. economy is likely to lose at least 200,000 jobs in June. That is because the Census Bureau is projected to lay off more than half of the 525,000 temporary workers it hired from March to May to conduct the 2010 Census.
TrimTabs, which bases its job estimates on daily income tax data, said the June losses will be partially offset by positive but weak private sector job growth. If tax deposits from the rest of June are consistent with the first week, TrimTabs estimates that private sector job growth will be an anemic 50,000 to 75,000 jobs.
“Once again, investors shouldn’t let the headline job loss number mislead them,” said Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. “Job growth is likely to be sharply negative because the Census Bureau is laying off temporary workers, not because the economy is weakening dramatically.”
Via one of the big social networking sites, I’ve been corresponding with one of those ex-census workers. The language she used to describe the job was not flattering.
And, since she was jobless before, she’s back in the job market again. Not an easy place to be when you’re over 60.
My daughter says that things are staring to wind down here. Maybe 2 more weeks of Census work. It was a nice gig while it lasted. She was paid $13/hr plus 50 cents a mile. She used a chunk of her pay to get some neglected maintenance done on her car.
SEC Approves Trading Curbs for S&P 500 Stocks Moving 10%
A circuit-breaker test will pause trading for five minutes when a company rises or falls 10 percent in five minutes or less. Photographer: Daniel Acker/Bloomberg
The U.S. Securities and Exchange Commission approved rules that will halt trading in Standard & Poor’s 500 Index stocks during periods of volatility, a response to the May 6 plunge that wiped out $862 billion in 20 minutes.
The circuit-breaker test, scheduled to last through Dec. 10, will pause trading for five minutes when a company rises or falls 10 percent in five minutes or less. The New York Stock Exchange said it will begin implementing the curbs tomorrow. The regulator delayed the start of the pilot program last week.
Fat Finger Boy better watch out!
The last Fat Finger Boy had a damn fat ass finger. Considering where the “T” and “B” are on the keyboard.
Supposedly it was M and B (still requires a very… odd shaped… finger).
I stand corrected, for some reason I have “T”illion on the brain.
That’s, that’s just bizarre. I wonder how this will integrate with ‘bot traders.
Debt Spreading ‘Like a Cancer’: Black Swan Author
CNBC June 10, 2010
The economic situation today is drastically worse than a couple years ago, and the euro is doomed as a concept, Nassim Taleb, professor and author of the bestselling book “The Black Swan,” told CNBC on Thursday.
“We had less debt cumulatively (two years ago), and more people employed. Today, we have more risk in the system, and a smaller tax base,” Taleb said.
“Banks balance sheets are just as bad as they were” two years ago when the crisis began and “the quality of the risks hasn’t improved,” he added.
The root of the crisis over the past couple of years wasn’t recession, but debt, which has spread “like a cancer,” according to Taleb, who is now relived that public attention has shifted to debt, instead of growth.
The world needs to prepare itself for austerity, he warned. “We need to slash debt. Unfortunately, that’s the only solution,” Taleb said.
The world needs to prepare itself for austerity
In ancient times austerity went hand in hand with scarcity. Biblical skinny cows and all that jazz.
Today there is no shortage of crap to buy, worker bees across the globe aren’t paid enough to buy the goods and services they produce. Perhaps if the masters of the universe were willing to pay their serfs more merchandise could be sold without getting everyone into debt.
Today there is no shortage of crap to buy, worker bees across the globe aren’t paid enough to buy the goods and services they produce. Perhaps if the masters of the universe were willing to pay their serfs more merchandise could be sold without getting everyone into debt.
I seem to recall reading that Henry Ford had that idea: Pay the employees enough and they’ll be able to buy the cars they make.
..and they called him a communists for doing so. (google it)
Yet his company started out and remained No. 1 and 2 for most of the 20th century and never required a bailout either.
I’m sure there is no correlation.
The world needs to prepare itself for austerity, he warned. “We need to slash debt. Unfortunately, that’s the only solution,” Taleb said.
This needs to be shouted from every rooftop.
Excellent summary by Taleb.
Let’s hope somebody listens to him…instead of making the problem worse, like they’ve done over the past few years.
We cannot sustain ever-higher prices when our wages are stagnant/declining. Debt has masked this disparity, but there is a limit after which it all falls apart (exactly what caused the “crisis”). Why is nobody talking about this?
State warns 57,000 of foreclosure risk
The Business Review (Albany) June 10, 2010,
In the past four months, lenders have warned more than 57,000 New York homeowners that they’re getting close to foreclosure.
The new data, released Thursday by the state Banking Department, were made available under wide-ranging foreclosure regulations enacted into law last year.
The law required lenders to warn mortgage holders of trouble at least 90 days before legal action would begin. The notices tell homeowners they are in default, and explain their options for how to avoid foreclosure.
Nice info for us northeastern folks.
Thank you.
You are welcome!
Glaxo Cuts 700 U.S. Sales and Marketing Positions. ~ WSJ
The downsizing of Glaxo’s U.S. pharma business continues apace.
Cafe Pharma message boards have been lit up in recent days with Glaxo sales reps claiming to have been laid off. While that’s not hugely surprising – Glaxo and others have had rolling layoffs for a few years now – the Health Blog checked in with the company to get the latest.
A Glaxo spokeswoman said 700 sales and marketing staffers (and related support staff) have taken buyout offers in recent months, while others’ jobs are being cut. She declined to give a total figure, but said the cuts are affecting “a variety of different positions in the U.S. pharma commercial staff.”
I guess those former cheerleaders* are going to have to get real jobs now.
*For their sales staffs, the pharma companies like to recruit on college campuses. Specifically, from the ranks of college cheerleaders. Reason: The pharma companies have found that doctors enjoy visits by good-looking young things who are all too eager to talk about the latest drugs. And who knows what else.
The pharma companies have found that doctors enjoy visits by good-looking young things
Who doesn’t?
New Jersey Towns Raising Property Taxes Above Christie’s Proposed 2.5% Cap
Robbinsville, the central New Jersey town where Governor Chris Christie appeared last week to promote his plan to cap annual property-tax increases at 2.5 percent, won approval yesterday to raise its tax bills by 29 percent.
The $2.3 million increase will boost the average homeowner’s municipal tax bill to $2,000 from about $1,600, Mayor David Fried said during a hearing before the state’s Local Finance Board in Trenton. It is the result of a 2007 reassessment that prompted warehouse owners such as closely held Matrix Development Group to file successful appeals that are costing the community more than $1 million, Fried said.
Fried was among 57 mayors Christie listed on a May 26 press release as supporting his plan to impose a 2.5 percent limit on annual property-tax increases. Christie was in Robbinsville June 3 for the fourth of several town hall meetings he is holding to talk about his proposal, aimed at controlling growth in New Jersey’s property taxes, which are the highest in the nation.
“We have done everything we possibly can,” Fried said during testimony on his tax increase. “It’s a very good question how we’re going to get to 2.5 percent.”
New Jersey’s property-tax bills averaged $7,281 per household last year, according to the state Department of Community Affairs. The levy has climbed 72 percent since they averaged $4,239 in 1999.
New Jersey’s property-tax bills averaged $7,281 per household last year, according to the state Department of Community Affairs.
Holy Cannoli! I only pay $2100 for a house that’s assesed at 335K
http://crfb.org/stabilizethedebt/
try this stabilizer the debt calculator
That was fun!
I got our debt down to 56% of GDP and it remained “sustainable” through 2030.
You might think team gubmint motors could find better things to do with their time…
GM memo urges dumping Chevrolet’s ‘Chevy’ nickname. USA Today
The Chevrolet brand will continue, but some General Motors executives are apparently pushing for killing the shorthand name, Chevy, the New York Times reports. GM, 61% owned by the federal government, says it is important to ditch the brand’s name for “consistency,” the Times quotes the memo as saying. Who knew?
So, um, we guess there will be a flurry of activity at Coca-Cola headquarters tomorrow on whether to banish the name Coke. Or might BMW be thrown in a tizzy over whether owners are still referring to their cars as Bimmers.
From now on, Chevy employees are being told, think three syllables — Chev -ro -let (or maybe they’ll rethink it, as you’ll see from the response below):
Oh, brother. The GM folks are the gift that just keeps on giving.
Another tidbit from my Monday evening walkabout with my old college friend: He’s now an optical engineer — living and working in Dallas, Texas. This is the sort of engineering I remember him wanting to do back in college, and, well, he’s been doing it for 30 years.
Any-hoo, we were talking about the demise of the U.S. auto industry, and I pointed out that I knew quite a number of kids whose parents worked on the assembly lines, and no way were those kids going to do the same thing. That’s why they were going to the University of Michigan.
Well, my friend was from a blue collar family, and guess why he was at Michigan. Because he was going to get a college degree, by golly!
I also noted the lack of interest in auto industry jobs among our classmates. You’d think that, with the industry’s long presence in Michigan, that the kids whose parents worked on the lines would want to go into managerial jobs at Ford, GM, or Chrysler. Nope.
Ditto for the other kids we knew. It wasn’t like they were craving Big Three jobs either. The brightest and most talented among them were interested in that new industry called “computers.”
One of our classmates went into “computers” and became a multi-millionaire. And he’s still one of the nicest guys you’d ever want to meet.
So, long story short: The U.S. auto industry is being run by the B-team. The best and the brightest have gone elsewhere.
I’ve been saying that for decades. But popular opinion says it was the unions.
I’m still trying to figure out how the unions designed the cars and created the policy of the dealerships dirty deals.
Union’s don’t help much either. A lot of history there but since oh… the 70s… unions have been a major drag.
Still the bureaucracy in those big companies is just about the same as a union. One of the primary reasons I decided to move on. Too many clicks and too much inbreeding. Seems like you have to toe the line and wait your turn. Not many merit increases.
Painful. I jumped.
I heard about that this morning. They’re even dumber than I thought.
World Cup to be UK’s biggest betting event.
LONDON (AFP) – The football World Cup is set to become the biggest-ever betting event in Britain, bookmakers said Wednesday, with online gambling expected to help turnover hit more than one billion pounds.
Britons are expected to bet around a billion pounds, breaking all records, with the growth of online gambling seeing many more people becoming punters.
But gamblers are seemingly not just backing England — bets are going on a whole variety of teams, matches and outcomes.
“It’s huge, really surging this week and going into a World Cup frenzy for football fans,” Darren Haines, spokesman for bookmakers Paddy Power, told AFP.
“We anticipate one-billion-pounds being gambled industry-wide, and the further England go in the tournament, it’s more likely that this figure will be comfortably surpassed.
How does this compare with March Madness? I mean, come on, we can’t let the Brits out-wager us!
Being anoited in holy oil is enough for a fortnight.
It’s noy just the Brits. The whole world will come to a halt tomorrow and stay that way for a month. March Madness is nothing compared to the World Cup. For one thing, no one outside the US gives a rats tail about March Madness.
Soccer…Could they make the field any larger? What about the size of the goal???You could fit a couple of cars in there.
Welcome to The Housing Bubble Burger Barn
My name is Suzanne and I will be your waitress.
Here is a coupon for $8 off first time burgers.
Todays specials are…
The Quarter Pound Melt Down
or
The Half Pound Cram Down
Both come with Refied Beans and Upside Down cake
You didn`t hear this from me but you can eat here for up to 2 years without paying and by then, I won`t be able to find your bill.
“You can checkout any time you like,
But you can never leave!
Banks’ home takeovers surge 81 percent from same period in 2009
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 12:09 a.m. Thursday, June 10, 2010
Nearly 11,000 Floridians lost their homes to bank takeover in May, a whopping 81 percent increase over the same month last year and an indication that loan modification programs are failing, some economists say.
In Palm Beach County, the number of homes lenders repossessed last month was 824, six times the amount in May 2009, according to a report the Irvine, Calif.-based company RealtyTrac released today.
It’s a trend seen nationwide, with lenders taking back a record 93,777 homes in May. All 50 states reported higher numbers of bank repossessions over May 2009.
RealtyTrac measures initial foreclosure filings, notices of sale and the final takeover - a so-called REO, or Real Estate Owned.
“You are seeing the fallout from the most recent loan modification programs,” said Mike Larson, an analyst with Weiss Research in Jupiter. “At some point, the banks just have to let the borrower go and say it’s better for the borrower and the lender to write things off and say it’s not working.”
The federal Making Home Affordable loan modification program was unveiled in February 2009, halting foreclosure proceedings for thousands of borrowers who sought lower monthly payments.
For helping to keep me out of this mess. Thanks Ben.
From $487,000 in Aug-2006 to $179,900 asking price today
13887 N 86Th Rd West Palm Beach, FL 33412
$179,900
Loading Payment…|Estimate My Monthly Payment|Get Mortgage Rates 4 Bed, 3 Bath | 3,246 Sq Ft | MLS #R3115883 | Refreshed 7 minutes ago
Name: PLASENCIA EUGENIO C
Mailing Address: 13887 86TH RD N
WEST PALM BEACH FL 33412 2674
Sales Information
Sales Date Book/Page Price Sale Type Owner
Jul-2008 22776/0817 $10 QUIT CLAIM PLASENCIA EUGENIO C
Sep-2007 22407/1066 $10 QUIT CLAIM MALLEA JULIO &
Aug-2006 20838/0433 $487,000 WARRANTY DEED PLASENCIA EUGENIO CAMILO
Real estate fraud linked to Tucson murder. (This happened today.)
Geez - the woman in the article was quoted as saying she saw the suspect before. Not a smart move on her part. The guy may go back to knock her off.
And the victim of the shooting was suspected of scamming. Was meeting a Christian group. He’s the head of it.
No surprises to me. The big name Christians, Jim Bakker, Oral (in the biblical sense of the word?) Roberts, then the hundreds of Catholic bishops who love (really really) alter boys, et al.
Scott Rothstein, a former lawyer from Florida, was handed a 50-year prison sentence Wednesday, after he pleaded guilty earlier this year to orchestrating a Ponzi scheme that defrauded $1.2 billion from investors,
http://dealbook.blogs.nytimes.com/2010/06/10/ponzi-fraudster-rothstein-gets-50-years/
That’s $1.2 BILLION that was not being productive. How many more are out there?
And there it is:
Lawmakers consider home tax credit extension
Lawmakers consider giving homebuyers 3 more months to finish sales and qualify for tax credit
http://finance.yahoo.com/news/Lawmakers-consider-home-tax-apf-3706397283.html?x=0&sec=topStories&pos=1&asset=&ccode=
Looks like you still have to be under signed contract by April 30th. They just want to allow for longer closings.
2010-06-10 — reuters.com
“The U.S. House of Representatives on Thursday approved a bill to shore up the finances of the cash-strapped Federal Housing Administration while also backing a measure to raise the loan limits for FHA-backed mortgages used to develop some apartment buildings.”
Just as predicted so many years ago, here at the hbb the politicoes just can’t say no.