Bits Bucket For October 14, 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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Across the U.S., Long Recovery Looks Like Recession
NY Times
At the current rate of job creation, the nation would need nine more years to recapture the jobs lost during the recession. And that doesn’t even account for five million or six million jobs needed in that time to keep pace with an expanding population. Even top Obama officials concede the unemployment rate could climb higher still.
New shocks could push the nation into another recession or deflation. “We are in a situation where our vulnerability to any new problem is great,” said Carmen M. Reinhart, a professor of economics at the University of Maryland.
Signs offer discounts, distress sales and rent with the first and second month free. Discounts do not help if your income is cut in half. Construction workers speak of stringing together 20-hour weeks with odd jobs, and a 45-year-old woman who was a real estate agent talks of her job making minimum wage bathing elderly patients. Many live close to the poverty line, without the conveniences they once took for granted.
In Camden County, where Cherry Hill sits, unemployment is near 10 percent. Several large employers have closed or conducted huge layoffs, and others have pruned hours. With Gov. Chris Christie reining in spending, government workers are jittery.
Real estate agents say it has rarely been a better time to buy: interest rates are at record lows, house prices have fallen and the selection is large.
I have no desire to “recapture” the construction, re-al-TOR, or candle shop jobs of the Roaring 2000’s. We need to recapture the real jobs, the ones that went overseas.
Interest rates are low, yes. House prices have fallen, yes but in line with incomes and not in line with rents — not even in line with the ridiculous rents they charge here. Large selection? Not really. AFAIK, there are only three dwellings for sale: 1 condo, 1 townhome, 1 McMansion… most of which are falling apart because they’re old, or falling apart because they’re new.
House prices have fallen, yes but in line with incomes and not in line with rents
On a nationwide average, I don’t think housing prices have fallen back inline with incomes at all, especially given unemployment levels.
Housing prices are still high relative to price inflation (CPI). CPI is down some relative to wages (private industry at least, per official numbers anyhow), however that doesn’t account for unemployment. When accounting for unemployment - total income is way down relative to inflation. Thus, home prices should right now reflect that, and be lower historically than CPI, but they are still higher instead.
As I’ve stated above, local list prices have bounced back up since last year. I have not seen much downward movement since the expiration of the tax credit and I do still see SOLD signs.
My lawyer’s staff doesn’t always take calls saying they’ve been in closings all day. Maybe all the talk of hyperinflation has people jumping. Or is the term for the bank taking over a foreclosure also referred to as a closing?
“Maybe all the talk of hyperinflation has people jumping.”
It doesn’t work that way, thanks to household budget constraints in an era of low savings.
I know that and that’s why we’re still renting but who’s at all those closings?
Carrie, I’ll let you in on a little secret. Where I live, attorneys are generally not involved in residential real estate closings. Thus, if I’m busy or don’t want to talk to someone, I am “in court” and can’t be reached. Your attorney might be “in closings all day” for the same reason that I’m “in court”.
Just sayin’.
There has never been a better time to quit paying your mortgage.
+10
CarrieAnne,
As you’ve pointed out, and I’ve pointed out to some extent, this recession is not playing out uniformly across the country. Places that ahve been relatively stagnant for some time (meaning they went thru a period of -right-sizing over the past decade) are not impacted like those places that have yet to re-adjust.
Metro Syracuse today is smaller than it was 12 years ago, I think. It had a terrible ’90s and early ’00s. A lot of young people left during the lean years, so the population has remained in sync with the remaining jobs. The various industries stabalized and have held constant. And Syracuse is a regional center (gov’t, education, etc) so it’s better insulated on the down-turn.
The Cincy economy has always been lean employment-wise. Companies here don’t add much during econimic good-times, and don’t have any fat to cut during the down-turns. So employment remains relative stagnant (average 1% growth a year). Again, young people leave at a rate that allows the remaining people to be employed.
But I understand that other parts of the country are not like Syracuse and Cincinnati.
“There has never been a better time to quit paying your mortgage.”
While I wholeheartedly support the spirit of this comment, I actually would argue that a better time to quick paying your mortgage was two years ago. Who knows if the various excuses, moratoria, etc will continue to have as much effect over the next two years?
Ooops, I mean NOT in line in incomes. DEFINITELY NOT IN LINE WITH INCOMES!!!! sorry…
Prices are about one-tier above the level of incomes:
– Wealthy $250K can only afford the cheap McMansions intended for upper-middle class.
– Upper-middle class $120K can only afford townhomes intended for mid-middle class.
– Mid-Middle class $70K can only afford shacks intended for blue collar (if any are available at that end — they’re aren’t).
– Blue-collar $40K can’t afford anything. No SFH in their range, and they don’t qualify for assistance. They’re stuck with high rents in a decent dwelling, or normal rents in a bad ‘hood.
– Poor working class, which is still renting, can barely afford to rent without a Section 8 subsidy.
Prices still need to fall another tier (20-30%?), especially in the small SFH category.
Stocks are up but it’s a phantom stock market.
The economy is in expansion mode, but it’s a phantom expansion.
Real estate is bouncing back. You all see sold signs. But they are fake sold signs and lawyers are in court all day.
Interesting.
And did someone just claim that $120K a year is upper middle class? Maybe in Mumbai that is the case. In most of America, not so much. $120K is barely middle class. In palces like NYC or SF, it’s not even middle class.
A phantom Troll completes the illusion.
$120K is barely middle class.
You are just insane to say that. $120K is like the top 5% of incomes in the USA. That’s “barely middle class”? In places like NYC or SF, it’s probably close to the median income. How can the median income be anything but “middle class”? I hope that you some day have a life changing event, that helps to temper your hubris.
“$120K is barely middle class.”
Only in your delusions. Since housing prices are so out of line with income, it appears that way, but reality will eventually give way. No, the sold signs aren’t fake, any more than they were in 2005. The fallout obviously takes time.
Please tell me why housing prices should take a radical departure from rents and income, other than in extremely desireable areas.
$120K is barely middle class. Eddie
You are just insane to say that. Chris M
Dang. Where are my manners?
Chris M, this is Eddie one of our….
our…more .. special posters..
Last time I made $120K a year I was driving an Accord and had a 3 bedroom apartment. That is middle class.
The only sold sign on our street has a yellow happy face sticker pasted over the O in SOLD! I can imagine that sentiment.
Anyone want to know who is servicing your loan or the investor who invested in that nearby foreclosure:
https://www.mers-servicerid.org/sis/
Ah, how nice! An addition to my toolbox. Thanks.
“Real estate agents say it has rarely been a better time to buy…”
Hasn’t tomorrow been a better time to buy than yesterday for about four years now? Its as close as anything can be to a sure thing that the longer one waits, the better the deals will get. How do these assclowns say this kind of cliche crap with a straight face?
All realtors need to go to rehab for serial liars.
Here we go again - “all” realtors are liars. Not true!!!! You have a “bash realtor” disease and can’t stop. Why can’t you make a comment without trashing realtors? I’m not going to let you get away with it.
You need to go to rehab for “trashing realtors” disease. You have not earned my respect.
Want to know what’s fun?
What’s fun is making a quick post on a message board very early in the morning which has the effect of leaving a total stranger highly pissed off for the entire day.
Hey there, Georgiagirl.
You might ask yourself this question: What is it that is lurking about in your psyche that demands to be fed a large dose of anger every morning?
(Words by Jim Dale and Music by Tom Springfield)
Hey there, Georgy girl
Swingin’ down the street so fancy-free
Nobody you meet could ever see the loneliness there - inside you
Hey there, Georgy girl
Why do all the boys just pass you by?
Could it be you just don’t try or is it the clothes you wear?
You’re always window shopping but never stopping to buy
So shed those dowdy feathers and fly - a little bit
Hey there, Georgy girl
There’s another Georgy deep inside
Bring out all the love you hide and, oh, what a change there’d be
The world would see a new Georgy girl
[Instrumental Interlude]
Hey there, Georgy girl
Dreamin’; of the someone you could be
Life is a reality, you can’t always run away
Don’t be so scared of changing and rearranging yourself
It’s time for jumping down from the shelf - a little bit
Hey there, Georgy girl
There’s another Georgy deep inside
Bring out all the love you hide and, oh, what a change there’d be
The world would see a new Georgy girl
(Hey there, Georgy girl)
Wake up, Georgy girl
(Hey there, Georgy girl)
Come on, Georgy girl
[Fade]
(Hey there, Georgy girl)
Wake up, Georgy girl
“You have not earned my respect.”
This has got to be one of the funniest comments on this blog, ever. A realtor asking to earn our respect. If you want to earn our respect, wear a sandwich board around your neck that says “Now is Still Not a Good Time to Buy”, or something to that effect.
“I’m not going to let you get away with it.”
How are you going to stop him? Seriously, just pointing out that you disagree has no effect on the posters in question other than give them a feeling of satisfaction that their generalization has upset someone for whom they have distain.
And you kind of amuse a lot of the rest of us.
+1 Polly. She’s NOT going go “let us get away with it.” Really? How?
Look, Georgiagirl. We on this blog are generally honest and responsible people who saved and calculated the old-fashioned way, and only wanted a fairly-priced home. For the past 6 years, we have been watching you and your Real-a-TOR ilk make false promises such as “I can get you INTO this home,” “you can always refinance later,” and other assorted crap platitudes fed to you by the likes of con men like David Learah and Lawrence Yun, all to feather your own nests to the the tune of an inflated 6% commission based on that monopolistic collusion known as the MLS. Our only fault is that we were too smart to be fleeced by you and your corrupt and rotten collegues. Instead were have been forced to sit and watch you and your Real-a-TOR ilk destroy the American Dream and help to destroy the American economy with it.
We have a deep scorn for entire Real-a-TOR profession, and justafiably so. We no longer have the patience to cherry-pick the “good” Real-al-TORs, because there simply aren’t enough good ones to make it worth our while.
Am I trashing Real-al-TORs? Bloody hell yes I am. Is trashing you and your ilk some sort of mental disease, and will I go into therapy to stop? Bloody hell no it’s not and bloody hell no I won’t. You deserve the scorn that you get here. May you go the way of the buggy-whip maker and the travel agent.
Aww…come on, oxide. I had one or two nice experiences working with travel agents back in the day.
Oxide,
This hatred towards real estate agents is kinda odd. It’s the equivalent of hating the guy who works at a theater because you paid $10 to see a crappy movie. Yea he sold you the ticket, but he didn’t make the movie.
The realtor is a middle man. He/she didn’t build the house, didn’t set the price of the house, didn’t set the interest rates that caused the bubble, didn’t force the banks to loan money to people who should never have been loaned to.
Pretty much all they did was the paperwork to make the system function. You give them way too much credit/blame for what happened with real estate.
The UHS is not the same as a car salesman. A car salesman has no pretense about who he is. He is simply trying to sell you a car. A UHS is supposed to be your AGENT, similar to a lawyer. Ie, they are supposed to have YOUR interests at heart. This is usually true in the case of a seller. But for the buyer? The UHS makes more when the buyer pays more. That right there is a conflict of interest. That fact alone makes their role questionable.
Unless the UHS actively discourages their clients from overbidding, points out flaws in the house, encourages thorough inspections, insists on a bunch of contingencies, etc, etc, they are NOT your friend (if you are the buyer) and fully deserve your scorn. When we were buyers we were lucky to have a UHS that DID meet all these requirements and in fact, supported us when we wanted to back out of an accepted offer (based on nothing more than a few rats in the basement and a “bad feeling”) with absolutely no guilt trips, pressure or insinuations. But all other UHS we have encountered are only interested in the commission and encourage overbidding in order to “get the house”. Like it’s some grand prize or something. Or they are paying for it.
Incidentally, the house we backed out of lost over $200k in value in the next 3 years.
“Pretty much all they did was the paperwork to make the system function”
Whaaaat!? What.., ok, define “function”? They couldn’t even get ‘that’ right! What’s functioning here.., has anyone seen my function?
Goddammit! My house just got pelted with rotten peaches! How on earth did she find me?
She’s NOT going go “let us get away with it.”
Has anyone noticed that Eddie and Georgia Girl are both from Georgia, never post at the same time, and both are apologists for the RE industry? Just sayin.
This hatred towards real estate agents is kinda odd. It’s the equivalent of hating the guy who works at a theater because you paid $10 to see a crappy movie.
No, Eddie, it’s not at all like that. The pimply-faced kid who sells me a movie ticket makes no representation that he cares one way or the other about my movie experience or whether I even see a movie or not. Realtors, on the other hand, are an industry of dissemblers (to quote FREAKONOMICS). Truer words were never spoken. There might be a tiny handful of ethnical and conscientious realtors, but they sure held their peace while the various NAR spokespeople were lying through their teeth. As a group they are morally bankrupt and have completely dishonored any fudiciary obligations toward their “clients.” May they all catch Syphilis.
Sammy,
They are sales people. Of course they tell you whatsoever you want to hear in order to make a sale. What do you expect them to do, tell you to NOT buy a house? I guess next thing you’ll expect is a car salesman to tell me riding the bus is actually a better idea than driving.
You’re not really this naive are you?
And let’s say everything you say is true. At the end of the day no real estate agent ever put a gun to a buyer’s head and forced them to sign a contract. I think your real beef is with the American public that is so easily bamboozled by a slick salesman. This was in full display on the evening of Nov 4, 2008.
This is the core deceit issue I have with the NAR.
Both the seller and the realtor have the same interest - as high a home price as possible.
But the agent for the buyer? The buyer’s agent also has the same interest - which is 100% opposed to the buyer’s interest.
I think probably the only way for there to be true “buyer’s agents” is if the buyer’s agent is paid a flat fee, perhaps with a percentage of the money between asking price and selling price, where selling price is lower than asking price.
The current system of buyer’s agent is totally corrupt and has fooled a lot of buyers. And the current system strongly pushes the buyer into contracting with an agent.
Eddie,
My operative assumption when dealing with all realtors is that they are scum. I will maintain my personal and professional integrity but have no illusions about who I’m dealing with. I never trust anybody who has a vested interest in selling me something. As I said, the NAR is an industry of dissemblers. The sooner people figure that out, the better.
Sammy,
My beef with this blanket hatred of them is that you’re looking for a scapegoat and they’re the easy group to use. But you’re dead wrong.
Suppose there was no such thing as a real estate agent. Houses were bought and sold between buyer and seller with no middle man. Do you think the housing bubble would have been any different? I don’t think so. The bubble was caused by low interest rates, Fannie/Freddie and the political pressure on banks to lend money to people who they knew very well would never loan the money back. All realtors did was take a cut of the action. And a nice cut it was. But that action would have happened with or without them.
“All realtors did was take a cut of the action. But that action would have happened with or without them.”
I think there’s at least a kernel of truth to that, but it’s not completely true.
Realtors may have not been the fuel nor the fire, but they certainly were the bellows. And boy, did they blow hard.
do you tell your clients that now is NOT the best time to buy?
With all due respect GeorgiaGirl your collective industry has had a significant hand in the destruction of ethical commerce in this country. The repeated realtor trashing you see here is a direct result of the repeated experience we each have had with many of your peers. Can you tell me how often you witnessed, overheard, knew about or discovered unethical behaviors in your profession? And when you did become aware did you let them get away with it? Tell me about pocket listings, collusion with appraisers, bogus bidding wars, and the interesting dialect of the english langiuage used to describe properties in a manner that departs from the truth to such a degree that it may no longer be English. Where was your indigantion as all of this has been going on? You see, it is thee not we who have trashed your profession.
IMHO, Realtors were at the starting point for this financial train wreck because so many of them chose to sell properties to folks who simply could not afford them. If, as you claim, common folk need Realtors as professional guides through the complex process, then how in God’s green earth did so many people end up in houses they should never have bought? In my opinion everything was being driven by personal gain and very little was being decided based on a “professional” analysis of the client’s needs and ability to sustain a purchase. Those individuals who saw this going on and did nothing failed to be professional. The NAR failed to call out those members for unethical practices. Instead it cheered them on.
Just one more instance of professional cowardice that has contributed to the decline of that which is good.
http://www.ocregister.com/opinion/government-270326-people-character.html
“your collective industry has had a significant hand in the destruction of ethical commerce in this county”
Thanks Ed, it’s time we get the cart behind… the horse. I just don’t see any uproarious rendentions of the meltdown coming to a theater near you any time soon.
Not funny.
“so many of them chose to sell properties to folks who simply could not afford them”
Yup. It goes further back than the bubble, too, in Realtor culture. I recall a UHS friend trying to talk me into buying in 1982. Houses were cheap but I didn’t even have a job, just some cash saved up to go back to school, which I did. But you could tell, they were trained at their seminars to say oh yes you CAN buy a house!11!! Let me show you how!!
But I bought when I was good and ready, in 1990. By then the houses she showed me in ‘82 were even cheaper.
I have been a realtor for over 20 years in Long Beach California. The business has been very good to me and my clients. In the mid 1990’s I sold many clients well priced foreclosures that by 2005 tripled in value . By the fall of 2003 I felt the market had topped out and was ready for a correction and according to UCI business school that was a fundemental top of the market (rates, income etc) . Then the flood gates opened with free money and the market went crazy. I found this blog through an article in the LA times and have followed it closely. When all the agents in my office were pushing buyers I stopped working with them. I could not sell a property for $300,000 when in 1996 it was priced at $30,000
I was called negative when I said the market was going to collapse and drop by at least 50%. I brought in the Credit Suisse bank chart of the coming doom and they ignored it. I have asked agents how they felt about losing a client hundreds of thousands of dollars and they always state “I didn’t put a gun to their head”.
The profession is filled with pcychopaths, liers , cheats and scumbags. The board does nothing, CAR does nothing. The fraud is rampant. All the brokers care about is your production and percentage of sales in a neighborhood. I calculated that a top producer in my office that y-t-d her past clients have a net loss of over $4,000,000 equity, (what they paid and what the bank sold them for). That’s customer service.
Now the crooks are the REO agents who hold listings, don’t present offers, have in house buyer agents (They know what your offer is) etc.
I am advising clients that we are in the 4th inning of a very long game.
I have always loved real estate. I tend to my rentals, live frugally and am enjoying my time off.
Thanks for letting me vent
The profession is filled with pcychopaths, liers , cheats and scumbags. The board does nothing, CAR does nothing. The fraud is rampant. All the brokers care about is your production…
woa, dang, I guess maybe
but some of the brokers are really hot
OMG, toast on the coast, if only there were more realtors like you!
Out of curiousity, if you fully expected a 50% decline in values, why didn’t you sell your rentals nears the top???
I am advising clients that we are in the 4th inning of a very long game.
Hey Diogenes! Over here!
I did sell one for $800,000 that was purchased for $315,000. The net paid down some of the other properties, gave me a cushion. Realtor friends said I should avoid the capital gains and do a 1031 exchange. I said why sell high and buy high.
As I stated I love real estate. I like owning property.
I’m with you toast. I sell a little real estate, but it’s because I enjoy it. I make low offers on low-priced properties, and tell my clients/friends not to hesitate to back out. I refuse to let them get into bidding wars. I won’t work with anybody who doesn’t have a big down payment or cash; instead I encourage them to save and be patient. I educate buyers about all of the hidden costs in real estate, the nature of the bubble, and encourage them to buy a house they can truly afford. My goal is that they will still feel that they got a good deal five years from now. The other agents in my brokerage are desperate for money, which amazes me since they made so much during the boom. Most of them can’t even afford health insurance. This forces them to encourage full offers on houses that are still overpriced.
One other thing I’ve noticed on the MLS. It’s rare to see a person who bought 2002-2007 and is now trying to sell, use their original agent. It’s because they were betrayed by them, so they find a new agent. It didn’t used to be that way.
And I loved oc-ed’s outrage. Masterful!
I might concede that 99% of unprofessional realtors give the 1% professional realtors a bad rap. In my experience, realtors are highly uneducated and unskilled persons. Barriers to entry into real estate sales are nill so of course the least qualified will enter.
Just like police work.
lint,
LOL, my general theory is that a good many of them ‘are’ honest when they arrive on the scene but are quickly indoctrinated in “how things ‘really’ work around here!”
I just don’t think you could have made it as an honest realtor 1997-2007. IMHO.
+ 1 lint…Spot on regarding ease of entry…
When we bought the house back in 2000 the realtor mentioned it took her 11 tries to pass the realtor’s exam. She also mentioned her husband was the smart one because he passed it on the 4th try. The scary thing was that she was very proud of it.
In CA any members of the CA bar can get “waived in” for a realtor’s license without taking any exam. This makes sense since the CA bar exam tests knowledge of real property law, contracts, and torts far more extensively than the realty license exam.
Something that’s well-known in the CA legal business is that attorneys that get disbarred for ethics violations generally start up a new fall-back career selling real estate.
It’s Still A Terrible Time To Buy
1. Because house prices will keep falling in most places. Prices are still dangerously high compared to incomes and rents.
2. Because it’s still much cheaper to rent than to own the same size and quality house.
3. Because it’s a terrible time to buy when interest rates are low, like now. Realtors just lie without shame about this fundamental fact. House prices rose as interest rates fell, and house prices will fall as interest rates rise, because a fixed monthly payment covers a smaller mortgage at a higher interest rate. Since interest rates have nowhere to go but up, prices have nowhere to go but down. The way to win the game is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates.
4. Because buyers lose on the leverage. Most people forget that debt amplifies losses as well. If a buyer puts 10% down and the house goes down 10%, he has lost 100% of his money on paper. If he has to sell due to job loss or a mortgage rate adjustment, he lost 100% in the real world.
5. Because the housing bubble was driven by speculation. Prices in the bubble, even now, are entirely a function of how much the banks are willing and able to lend. Most people will borrow as much as they possibly can, amounts that are disconnected from their salaries.
6. Because there is a huge glut of empty new houses. Builders are being forced to drop prices even faster than owners, because builders must sell to keep their business going. They need the money now. Builders have huge excess inventory that they cannot sell at current prices, and more houses are completed each day, making the housing slump worse.
7. because you can’t get a clean title on the house and could have it taken away from you after expensive court costs.
“Because it’s a terrible time to buy when interest rates are low, like now. Realtors just lie without shame about this fundamental fact.”
Never ascribe to mendacity what is best attributed to stupidity.
Georgiagirl,
Why are you here if you can’t take the bashing? The industry is what it is. I know good realtors but even they have given me the “if you don’t buy this today, it’ll be gone by the weekend” line. Yeah, that home’s had 3 reductions and is still sitting months later. Most play to the FIRE economy machine and don’t have what it takes to see change in direction. Worse yet, most supposedly straight ones won’t acknowledge the pathological liars. That really sets off alarms in my head.
The underlying problem is the pure commission pay structure. That’s worked in realtors’ favor during the bubble. Now its working against. But as a buyer, if sellers’ prices don’t correct, my hands are tied. I’m sorry you’re worried about your bills but I’m not buying an overpriced home to help you out. And that’s basically what most realtors are looking for us to do.
Every position that works w/the public has been derided. Sometimes it’s the truth. Sometimes it’s the by-product of a weary public. But if you think you can shake a finger and stop it you’re in for a lot of frustration.
You have to get an outsiders perspective looking in, not the other way around. For years consumers have been jacked around with these sayings about interest rates, inventory, HELOCs, ARMs, etc. Having the ‘good time to buy’ or ‘don’t offend them with a low offer’ or ‘you’ll refinance by the time it resets’ are things of the past. People sitting on the sidelines waiting to buy are much more educated than the person siting in an upside down McMansion. Over the past year we’ve gone to dozens of open houses it’s been the same thing, except for one (1) realtor who told me flat out: “Wait for the tax credit to expire, you’ll get a better deal” and “lowball the REO houses, offend them, I’d do the same thing”. He is the realtor I signed with. You’d think in a referral style business Realtors would use honesty more than campaign slogans. Not so much.
Realtors are about the equivalent of used car salesmen. The majority of them are only interested in the commission check. Even the few ‘good’ realtors I have bumped into are blinded by optimism because understanding the true depth of the housing crisis is too much to face if your livelihood depends on it.
What they USED to be good for, which was knowing what all was for sale and the pricing, is now fully computerized. The contract can also be churned out by legal software. A lawyer can be had to review the contract for a fraction of the cost that the realtors charge (yes, you make hiring a lawyer look cheap) and offer better advice.
Realtors are a dying breed. The industry will survive, but it will be MUCH smaller going forward, much like the travel agency business.
Why do Realtors as a group characteristically make stoopid remarks, such as, “Real estate always goes up,” “All real estate is local,” “Buy now or you will get priced out forever,” “Renting is throwing away money,” “There has never been a better time to buy,” etc etc etc?
RE seminars. It must be like those like those meetings WalMart workers have every morning..standing around in the canned goods aisle chanting, cheering and clapping. Then off to face the customers! Yay!
You are right. The broker meetings are embarrassing, at best.
Boo-hoo for the realtors. They are the true victims of this housing crash. What this country really needs are more worthless middlemen.
quit defending realtors,no one cares that you are one,your defensive attitude is getting stale….go hand out some oven mitts….
Don’t say I didn’t warn you, TrollGirl. It’s been ages since the forum had a red meat fest of any note, and the locals have been getting increasingly restless over the last months.
Your staggering nitwittery has only exacerbated their longing for carnage….
Next time, instead of the gloves simply coming off, they’ll likely be folded and subsequently stuffed, so be forewarned.
But for heaven’s sake keep posting! We’re just getting warmed up. (And it feels so good.)
Cheers.
If today is the best time to buy, then what do you tell someone who bought last spring (during the tax credit)?
Buy another house? You’re SOL? We’ll reserve you a spot in the soon-to-be-built tomb of the unknown FB?
+1. What would you say to them, peach-cheeks?
peach-cheeks ?? LOL.Your killing me pbox…To early in the morning to be laughing this hard…
Buy another lower priced home so as to cost average? Double down?
LOL.
back in 2005 a Relator told me ” we are not supposed to tell you this but California is a non-recourse State so me and all my reltor friends are selling our homes and buying identical homes with no money down the beauty is if the house goes up we win and if it goes down we walk so what if our credit gets trashed we stashed our equity in the bank. ” Isn’t that a great idea and it worked too.
I spent quite a bit of time talking to lawyers about this all said it was a bad idea. Ethical laywers and dishonest Relators in a world turned upsidedown. go figure
I sold in 2006 rent now probably will rent for a long time
“Real estate agents say it has rarely been a better time to buy: interest rates are at record lows, house prices have fallen and the selection is large.”
The selection is large if I’m looking for a home priced at 10x our family’s annual income. 2-3x, not so much!
The local paper just announced Onondaga county taxes are going up in the suburbs as struggling towns which used to take a distribution and use it to reduce residential property taxes are now taking the distribution in cash (to use toward other things). A home we were considering moving on with a tax bill of over $10k would see an increase of about $750/year. And that’s before the schools (the bulk of this areas tax burden) start with their increases. I attend the meetings. I know those are coming.
But alas the “reduced prices” category on our local mls search engine is quite small. And they usually come on the market at $100/sq foot or higher when last year they were at that point or lower. I saw a smattering around the $79/sq ft mark. Apparently the sellers aren’t going to give their homes away. With all the headlines lately I wonder what these people are waiting for. One house I’ve watched is owned by a judge. He has to have some sort of clue. But yet not even one price reduction on his home in 6 mos.
Carrie, $100/sq ft in a good neighborhood sounds like 1998 prices to me. A 2000 sq ft house would only be $200,000 - affordable if your family income is $70,000/year. I’m surprised they’re priced that low, since you said that houses in your ‘hood are 10X income. What gives?
“Real estate agents say it has rarely been a better time to buy: interest rates are at record lows, house prices have fallen and the selection is large.”
The MSM only continues to print this crap because the REIC spends $$$ on advertising. Who cares about credibility when there is a dollar or two to be had, right?
rarely been a better time to buy ??
I would agree with this statement “if” it is framed around long term mortgage rates…If the house is expensive by price vs. income then it is expensive or over-priced if you prefer…If on the other hand, your ability & preference is to buy (like a few have on the board) even in the face of potentially lower prices then locking in these long term low rates does make some sense doesn’t it ?
There has never been a better time to lie your ass off if your livelihood depends on selling houses.
I’m having fun now! Wow, I really got you guys all riled up! I’m having a good laugh reading some of these posts. Actually, I think I helped you all get rid of a lot of frustration today, and it’s O.K., if I get the brunt of it. So much attention for little ole me making a simple comment. You guys made a mountain out of a molehill. Even a song! I couldn’t be prouder! Even the insanity was not so bad. So much ignorance, so little time!
So much ignorance, so little time!
Yeah, that’s the problem…all the ignorance here.
Dollar tanks but stocks rise on Fed easing hopes- AP
World markets mostly rose Thursday as investors remained buoyed by the prospect of another monetary stimulus from the Federal Reserve. However, predictions of looser U.S. policy have not done the dollar any good as it slid to a 15-year low against the yen and multi-month troughs against the euro and the pound.
I’m going to run out and spend lots of money on stocks today because our economy is so screwed up and the Fed is so desperate to get money to flow that it is on the verge of giving it away.
If this is not a good reason to pour all my life savings into stocks then I don’t know what one is.
I no longer know what to do with my portfolio. Nothing makes sense anymore and I trust no financial advisors.
The sheeple seem to be jumping in to the market as we blow past 11,000.
It would be interesting to hear HBBers thoughts on asset allocation within a deferred account.
I know the answer depends on ones time horizon for retirement.
Me first: I’m looking at five years before retirment and still have a 50/50 mix with half in a large cap index fund and the other half in a retirement preservation fund.
Join the club, pal. All I can say is, diversify, diversify, diversify.
I don’t know how old you are PBear, but I would guess 40’s from what I know about you. I know that you are at least partially in stocks now. I think you should do some timing instead of just riding up and down. Maybe you can pull your money out when Dow reaches 12,000, then go back in after it falls some. Anybody who started ten years ago and has been riding up and down in index funds is now back to square one. Buy and hold hasn’t worked for them. That’s a terrible place to be, not to mention the stress.
OTOH, those who are buying on a continual basis have bought on the dips since 2000. Hey, I have only a small proportion of my retirement in equities, and more than half of that in foreign equities, since I’m not sanguine about the dollar’s prospect over the medium term. Most of it is sitting around doing nothing in treasuries. The more quickly people realize that there is no guaranteed, safe source of high returns the better. And with current economic conditions, 5% constitutes high returns. If you don’t like where that gets you at retirement age, you can either spend less and save more, or you can roll the dice at the Wall Street Casino. But the house always gets it’s cut if you do it, and the free buffet isn’t particularly apetizing.
“I think you should do some timing instead of just riding up and down. Maybe you can pull your money out when Dow reaches 12,000, then go back in after it falls some.”
I see fairly strong evidence of pre-Election Day plunge protection in play, which might suggest the risk of post-Election Day stock market blood letting. So I am tempted to take some chips off the table for the moment, on the theory that the Fed’s QE2 dollar debasement may have already overshot the eventual effect.
I already did some selling in late April during the first 11000 run. I’m still relatively young so i don’t want to do too much timing. Instead, I’m packing cash and waiting for the next dip. Regardless of the election results, I think the real hammer will fall after Christmas.
Discretionary cash kept in the form of fed notes will lose 20% of their buying power per annum at a minimum for at least two more years.
Would be better to park that cash in tangibles of some kind.
Beans, bullets, seeds, silver, gold, guns, tractors, implements
“Beans, bullets, seeds, silver, gold, guns, tractors, implements”
Fine if you have a house and land with a few out buildings or at least a large garage. For the rest of us? not so much.
“Fine if you have a house and land with a few out buildings or at least a large garage. For the rest of us? not so much.”
Which is why it will be called the greater depression. 60% of Americans live in cities and suburbs. The outcome for the city dwellers must necessarily be dire IF the current economic system rapidly deteriorates from here. Think supply chain disruption and medium term monetary seizure then let you imagination run wild.
Marko: My time horizon is 2-3 years. I left stocks in 2007 and put retirement funds in savings and bonds, then got out of bonds in 2009. I’m sitting in cash, waiting for bonds to fall and interest rates to rise. My husband’s 403B is in an annuity option that is returning 4% this year, through the teachers’ retirement plan. He is six years from retirement. I don’t have any option like that and wish I did.
There is no way I’m going to risk my retirement money in stocks again. I lost in 2000 and won in 2007 on that roulette wheel. I do have some non-retirement funds in dividend-producing stocks. If I can get 4% guaranteed I’ll be happy, and hopefully I won’t have to wait too long for that. If interest rates don’t rise by the time I retire I can always keep working full time a little longer - I’ll be 55 in Dec.
There is no way I’m going to risk my retirement money in stocks again ??
Exactly what we were talking about a few days ago…The retail investor is spooked…The older retail investor is out all together probably permanently…
There is no such things as long-term anymore. It’s all about anticipating the next trade and managing your risks accordingly.
As we approach the flash-crash high, it might be a good time to go flat and wait for the market. You could lose a couple points if it continues up but save a bundle if it swings down.
Marko,
I manage self directed IRA’s for around 75 really smart people.
It helps to assess the multitude of choices out there via a gold filter. Example, according to the Dow/gold ratio(go to stockcharts.com and paste “$INDU:$GOLD” into the symbol window. As can be seen the Dow is actually tanking in terms of gold.
I invested 100% of my clients monies into silver bullion in 2003. Then on each huge corrective dip added new money to the trade. I expect at least two more years of silver bull markets.
Should you buy silver? Only on the huge and violent dips.
lint,
That is so very interesting. Sounds familiar. I went the self-directed route, well… about the time this all got started back in ‘03?
Are you comfortable revealing who you clear thru? If not, I can leave my email w/ Ben. I’d love to get your thoughts. TIA.
My principals are with Sterling Trust(not the best pm IRA out there). I buy and sell with two metals dealers that are big enough to play with me. Does that answer your clearing question?
Lint…I believe I have seen you post in the past but we all welcome your perspective giving that you manage money for that many investors…
“I manage self directed IRA’s for around 75 really smart people.”
Can one include collectibles in self-directed IRA’s?
PB,
Unfortunately, not. IRS Pub. 590 details what you can and can’t get away with. It’s actually fairly generous. Other than GIC’s, Sub. S shares and… “collectibles”.
The explanation I’ve always been given is that it is impossible for the IRS to place a valuation on them! ( Like real estate is rock solid right? ) I’ve argued that be it art, a Barrett Jackson auto, persian rug etc. that there ARE competent appraisers!
I’ve always been willing to push the envelope for a client but the truth is, one of my primary custodians has really come crashing down lately. Especially on Pvt. Notes etc.
Oh and the only reason you can’t hold Sub. S shares is not b/c the IRS has disqualified them but b/c Sub. “S” does not allow it!
So Yes to Livestock, aircraft eq. leases etc. but No to baseball cards, lamps, furnishings etc. Something to do with “beneficial use”.
Also you could buy a rental prop. and lease it to your brother or sister but NOT you parents or kids. Think vertically vice laterally. PenscoTrust had been my main custodian but they’ve gotten so damned expensive!
lint,
Yes it does, thank you. Everyone in the Self-Directed arena is familiar w/ Sterling. But… it only leads me to another question?
How do ‘link’ accounts so that they can daytrade, have their beach house etc. AND convert to fixed income ( as appropriate ) and have it all show up on one single acct. statement?
That’s the glitch I’ve been ‘on about’ for years w/ the custodians. They’re getting better about it and finally… the BD channel is falling in line! For years it was viewed as “selling away”. Anything helps!
“The explanation I’ve always been given is that it is impossible for the IRS to place a valuation on them!”
Given regularly scheduled public auctions for collectibles, I find this argument specious.
DinOR..
My principals all insist upon silver as their only asset in the IRA. That is the only item I choose am educated about regarding IRAS. In fact, several principals converted all of their realty into silver in mid 2005. Asset surfers are cool.
“I find this argument specious”
As do ‘I’ good sir. The only thing I can think of is that the IRS drew the line in the sand loooong before the advent of not only the internet but active secondary markets for all that which is collectible?
I’d love to place some of my guitar collections in there but good luck. The other thing is that you can’t take a property you’ve long held and place it in your self-directed IRA! New acquisitions ‘only’. Cost basis thing.
You ‘can’ place your primary res. into it but it’s a little trickier. Say at RMD ( 70 1/2 ) you begin to show ‘distribution’ ( annually ) based on mortality tables. So each successive year more and more of your home moves outside your IRA. Make sense?
“I’d love to place some of my guitar collections in there but good luck.”
Plan B: If you are a free lance musician with a track record of Sch C income, hows about buying an expensive instrument (or instrument collection) and fully depreciating it as a business asset?
I had the same experience five years ago. I always thought of myself as somewhat smart about things but every investment looked like trash to me. So in total anger and frustration, I sold all my stocks and cd’s in my retirement accounts and bought gold and silver using the ETF’s.
I just did not want to worry about it anymore. Any advisor would say it was a poor way to make a decision but it worked for me.
“Any advisor would say it was a poor way to make a decision but it worked for me.”
I suppose any advisors would consider my move to fire my dad’s advisor a poor decision, but it worked for us — probably saved us hundreds of thousands of dollars when he sold off most of his stock before the Fall 2008 crash.
I gave up on advisors after 2000 and started educating myself. But the thought of investing 100% of my retirement in silver gives me the willies and would not let me sleep at night. Lint, I hope you don’t charge much since you’re not making any kind of analysis or decisions - buy silver. Why would someone use you when they can just buy silver on their own?
I’m going to run out and spend lots of money on stocks today because our economy is so screwed up and the Fed is so desperate to get money to flow that it is on the verge of giving it away.
So what you’re saying is - cash is still king, but the deck has been stacked and only consists of kings and aces now?
(Seriously - IMO that’s not a bad analogy.)
“So what you’re saying is - cash is still king …?”
Louder than ever. Ever notice how ready cash seems to be the ultimate solution to most people’s financial woes?
If wages are being cut, if long-ago-promised money will not be forthcoming, if many things are going to become more expensive to buy, then lots of cash is what I want to have on hand because the demand for the stuff will be very much increased.
So people should never invest in stocks, bonds, CDs, etc - because you can’t use these things to buy stuff in stores or pay your utility bill?
Seems to me you’re assertion that cash is king only applies to the very small “when I want to do my day-to-day transactions with liquid funds” kingdom, does it not?
Otherwise - in the larger world of “investing” it sure hasn’t been king lately (in case you haven’t noticed), and probably won’t be going forward for a long time.
Next up: Households squeezed by rising prices and/or a dearth of income sell their gold to raise cash.
It happened to us in the early 2000s…
I’m always wary when I read an argument that suggest something is ALWAYS true without exception.
There are times when cash is a good store of value but other times when other mediums are increasing relative to cash’s value, ultimately generating even more cash and wealth.
“There are times when cash is a good store of value but other times when other mediums are increasing relative to cash’s value, ultimately generating even more cash and wealth.”
Absolutely. Case in point: The dollar has lost 97%+ of its value relative to gold over the last forty years.
it sure hasn’t been king lately ??
Maybe not but I see cash in a different way then combo’s “King” analogy although I do generally agree with him…Cash is insurance…Cash means safety…Cash equals power in a environment like this particularly if you need to service Debt or you want to take on more…
Greetings and Salutations from the Center of the Universe in Fly Over County and on the Edge of the Known World HBB gang.
I made it, mikey’s home and safe and sound. Been watching the leaves turn and fall in this Indian Summer while drinking Jack Daniels on my rear deck. God, is it so hypnotizing and I can’t get anything done. Think that my typing and spelling was horrible before, I cut my right index finger badly and now I’m almost down to one finger. I soaked it in hydgron peroxide, applied neosporin and stuck it together with a bandaid after bleeding and crying a lot. I think it will work again…eventually.
Just got phone, internet, DSL and wifi seems to be working. Got a new couch with more furniture to come tomorrow. Guys just cleaned and inspected my chimney and fireplace and my buddy is loading oak and elm as I type. Super nice neighbors in established neighborhood with assorted mix of business owner families, doctors, accountants, weathy retired farmers, ret Lt. colonels and so on. I am the only poor person on the block. Everyone stopped by to introduce themselves and to say Hello.
People are very nice, a little neighbor girl even gave me a painted pumpkin as I am no longer trusted with sharp or pointy objects. Already had snacks and drinks with other neighbors on my deck and they brought me a meal.
Today I hung a new bird feeder, got birds and I bought a ton of Halloween candy and have my decorations up. These are my priorities and I can take all winter to unpack and find things in my double garage filled with my accumulated junk. House appears to be in great working order for winter and just needs a few leaves removed from front gutters which lack gutter guards for some reason.
It’s a fantastic small town, peaceful and quiet and I can see the all of the stars at night. Say what you will about the midwest and flyover country. I wouldn’t trade my little setup here for anything out there, fits me perfectly. I even buy fresh apple cider from down the guys at the orchard across and down the street.
Just happy mikey, checking in, from Land’s End, Wisconsin.
Later good people…
Hi Mikey! Aren’t you glad that you hold title, given the new news?
How far is your place from Chicago?
You sound happy and settled.
Mazeltov!
“So people should never invest in stocks, bonds, CDs, etc - because you can’t use these things to buy stuff in stores or pay your utility bills?”
Lol. I never said anything that even comes close to that. What I have said in the past and I will now say again is for every thing there is a season. There is a season for stocks, a season for bonds, a season for CDs - a season for everything under the sun.
There used to be a season for debt and for houses, now those seasons are over and the season for cash has taken their place. The season for cash will eventualy pass and another season will take ITS place.
The beat goes on.
Thanks and for sure REhobbyist, title is duely recorded and orgional is tucked away in a safety deposit box. I sleep comfy with that knowledge, a copy and a 45 cal under my pillow
I am 190.61 miles and 3hrs 16 mins from N La Salle Street, Chicago,Il and 43 miles west of Madison.
I am very happy and my younger sister gave me a wonderful suprise with a quick trip from northern Mn by being here when I arrived. She couldn’t stay long as she and her hubby are busy with their vet clinic practice and farm but it was so great to see her again and we celebrated with her favorite pizza and a few local beers at Pizza Hut. She rode over 1000 miles on her motorcycle in great weather just to see me and my house and then had arrived back up home safely when I called to check on her last night.
… and the Fed is so desperate to get money to flow that it is on the verge of giving it away.”
Gold agrees.
“All I can say is, diversify, diversify, diversify.”
I must disagree on this. Diversification will minimize returns toward zero. I must also note the motive as to why one hears “diversify” from the mainstream investment set: more commissions result from diversification and in a big way.
lint,
Again, that’s my suspicion as well. I generally tell clients “Why do you want to own ‘everything’?” My general practice has not been so much stock selection or timing ( but simply eliminating the -obvious- losers! )
If you can only manage to do ‘that’ then in a large way you’ve justified your fees. Typically w/ self-directed you’re lucky to add 50 bps. to AUM.
“Diversification will minimize returns toward zero.”
I’m just trying to minimize my losses. But I suppose a better bit of advice would be to diversify into what is out of favor (e.g. stocks) and away from what is (e.g. gold, cash). That’s the general flavor of my investing strategy.
“Diversification will minimize returns toward zero.”
P.S. Is this just your opinion? Because there is a bevy of evidence to contradict it. There has never been a better time to buy books about investing, either, as severe price deflation has hit books on financial topics.
The classic simplified example of diversifircation in the stock market posits exactly this.
War Co makes money when we are at war, and loses the same amount (I said it was simplified) when we are not.
Peace Co makes the same money when we are at peace and loses it when we are at war.
Assuming that stock prices accurately reflect the money the company is making (and losing), if your portfolio is 50/50 Peace Co and War Co, you will always make nothing, no matter what the national security situation is. Highly, highly simplified, but that is what you get.
Diversification theory assumes that “the market” whether it is a basket of stocks or a basket of a variety of investments goes up over time. DIversification lessens risk that the management of a particular company will be crooks and it lowers volitility, but unless your investment basket goes up overall, diversification can’t get you a positive return.
At least, that is how I understand it. But I took corporate finance at the law school, not one of my forays over to the b-school, so take it with a grain of salt.
Diversification is justified as has the purpose of reducing risk in its various forms(currency risk, systemic risk, industry risk, et al).
Problem is that risk is what one is compensated for taking. Zero risk equates to zero dividends or payout. In fact low or zero risk whithin inflationary environs is devastating to returns.
Of course there are examples to counter mine, however my principals have all their wealth in one silver basket. Several have become millionaires just this year as a result. This would be an example of what most mainstream wealth managers would call highly risky. I agree. However, the de facto risk is not being protected from the ravages of monetary explosions which are coming strongly to fore.
Furthermore, 99% of Americans will simply refuse to protect themselves from inflation due to a combo of being badly under-educated and wildly arrogant. The result? All those unhedged with gold/silver will transfer their assets to those properly hedged by way of the monetary metals.
“All I can say is, diversify, diversify, diversify.”
I must disagree on this. Diversification will minimize returns toward zero.
Both are correct depending on what types of funds, degree of diversification, time horizon, goals, personal temperament and the future earning potential of the person investing. (among other things)
One will not generally hit the big-time diversified. However I’m sure a 65 year old who had 100% of his IRA invested in the NASDAQ before, during and after the crash of 2000 would have thanked God if his IRA had shown “minimize(d) returns towards zero” instead of a 60% loss.
“I’m just trying to minimize my losses” LOL
( As are we all PB, as are we all )
Diversification = feeding time for the high frequency trading systems.
Max diversification should get you a return reflecting the overall growth of the economy, or at least whatever parts of the economy you’re investing in. Not necessarily a good move in a shrinking economy, an economy coming off bubbly valuations, or both.
“Furthermore, 99% of Americans will simply refuse to protect themselves from inflation due to a combo of being badly under-educated and wildly arrogant.:
More like 50% as we know that 10% don’t have a job, another 10% are underemployed, another 10% have not received a raise in years, and another 10% have taken wage cute and yet another 10% have very little choice in their 401k and that’s all they can afford.
Diversification theory assumes that “the market” whether it is a basket of stocks or a basket of a variety of investments goes up over time.
Why would it not? You (and lint) are assuming the economy is a zero-sum game - it is not. Normally overall wealth does built up over time - even in inflation-adjusted and population-adjusted terms. This is due to the fact that:
A. Not all things that are produced are disposable (e.g. houses, office buildings, jewelry, etc.)
B. Knowledge accumulates, resulting in future production per unit of work to go up (e.g. via automation).
A diverse portfolio is a good risk hedge - it’s less risky than a portfolio concentrated in one class. It generally has less gains than riskier classes (and more gains than safe classes), but it will gain over time, even relative to inflation. This is true both in theory and empirical data.
Normally overall wealth does built up over time - even in inflation-adjusted and population-adjusted terms.
exactly correct. and this is why it’s against the law to destroy our currency in any way. destroying currency destroys that part of the wealth of the nation. value isn’t only in infrastructure or cars or houses, it is in the currency itself. and it is in the sophistication of our labor.
this is also the reason that more dollars chasing the same or less number of goods doesn’t necessarily make for inflation. if the currency is made in a legitimate, normal way (not counterfeit) there is a natural limit to the number of dollars that can be created. in other words, if the currency is made with its normal value, it won’t be inflationary.
of course that’s a big ‘if’ because we don’t know that the FED is always creating dollars in a legitimate way..
anyway, like you said, wealth builds up over time.. if we don’t squander it.
Did I write “Wage cute?”
“cuts” Wage “cuts.”
Oh, you just know this is a setup. Yeah, they’ll get money to flow alright, just not in the direction most people want.
edge,
( As in down the cr@pper? )
I’m going to run out and spend lots of money on stocks today because our economy is so screwed up and the Fed is so desperate to get money to flow that it is on the verge of giving it away. ”
You’re making Ben Bernake Smile now
Dollar tanks
butand prices of stocks and other risky assets rise on Fed easing hopesStill trying to figyre this out.Makes no sense to me.Going into exessive debt is not good for the economy.
It’s been great for the economy for 25 years. Why shouldn’t it always be great for the economy?
It’s all about the estimated rate of “financial inflation.” Not the CPI which measures too many dollars chasing too few consumer goods. Rather “easing” and TARP and other things that are likely to send too many dollars chasing too few dividends, not an estimate that those dividends are likely to grow.
If the dollar went to zero then stocks would go to infinity. Isn’t that how it works? People are smart.
In 2007 the Zimbabwe Stock Exchange was the best performing stock exchange in the world. The Zimbabwe Industrials Index was up approximately 12,000% over twelve months.
If the dollar goes to zero then no one can afford to buy anything. Workers won’t go to work.
Rut-row.
France.
The french are rioting weekly now.
Don’t you mean to say that the French are revolting?
They riot because they don’t have any fluoride in their water like us `Mericans. We’re dumb, fat, happy–and prouderthan$hit about it, too.
If I’m lucky I could be 20% to 40% smarter than you in the next couple of years
FWIW - IMO I think the currency wars and fears of easing are probably getting overblown right now, at least for the short term. Yes easing will happen, and yes the dollar will end up being worth less than it was, and yes things are going to get consistently worse in the long run. But the PTB have shown a pretty good knack for preventing things from “blowing up”, and I think things will indeed stay settled down (relatively speaking) for a while now - like 12-15 years or so.
That being the case, I’m going to make this statement:
Gold is in a bubble.
(gasp)
At least that’s my view. Prices have gone up a lot lately of course. I think much of the recent price movement is now including pure speculation; based on expectations of future price gains instead of demand for safety net.
All things considered, I think a proper price is somewhere in the $1k - $1.2k range; I think the rest is pricing speculation.
I generally concur. Then the question is: “Is there a commodity that would constitute a good store of value that hasn’t already gone up in price in anticipation of dollar devaluation?”
From a very surface layman’s view - seems like natural gas might be a candidate. I haven’t dug into it much though, just noticing that prices haven’t gone up that much relative to other commodities.
Atlas America is good.
Harder to export Nat Gas thus it hasn’t gone up, but I’ve read a couple articles about how we will be shutting coal plants because it will be cheaper to build Nat Gas plant then to add polution control to Coal. I would add that we will then export a higher percentage of our coal as it’s price will rise more than Nat Gas.
No safe haven even in tree-hugging industries like solar and wind. They’re now as crowded and corrupt as a pristine beach two years after it’s discovered by a capitalist.
Maybe water rights?
Arable land to be subdivided into small homesteads?
Tractor Supply Stores (”The stuff you need out here” (TM))?
The usual canned peas and AK-47’s? — after all, we can’t import our veggies from China forever…
We have a wealthy developer in Sacramento named Angelo Tsakopoulous (spelling approximate.) He’s a mentor to Phil Angelides. In the Bee today there was an article about how he just bought a huge tract of farmland just east of the Sacramento river. It can’t be developed because of environmental concerns. But it has a huge amount of water underground, not to mention access to the river. If I were a billionaire that’s exactly what I’d do - buy water. And he bought it from a group of people who bought it in 2004 so he probably got a good deal.
“Is there a commodity that would constitute a good store of value that hasn’t already gone up in price in anticipation of dollar devaluation?”
Barley & Hops ??
“Is there a commodity that would constitute a good store of value that hasn’t already gone up in price in anticipation of dollar devaluation?”
Learn an esoteric trade.
Gunsmithing?
“All things considered, I think a proper price is somewhere in the $1k - $1.2k range”
why?
It’s roughly equivalent to the purchasing power gold had over the ages. An ounce is about a month salary for an unskilled worker, think minimum wage. Almost all gold that has ever been mined is still around the amount of gold per person has stayed about the same. So comparing its value to the purchasing power it had 100 years ago is not unreasonable. Still short term deviations from the mean are to be expected.
Sure, my dad did farm work in the 30’s for $1/day. That’s a $20 gold piece/month, one ounce.
Still, I don’t particularly think the “over the ages” has that much traction. So many aspects of those ages that I don’t see returning.
Still short term deviations from the mean are to be expected.
Suspect you’re referring to the declining value of the U.S. dollar against other currencies.
http://www.marketwatch.com/investing/index/DXY
So if the proper price is 1000-1200, and gold is there now, you shouldn’t buy gold unless you intend to time the market, right?
IMO there’s some value in diversification - especially in uncertain times, even if you’re paying a bit more than you think something’s worth.
But personally no - I wouldn’t buy gold at this price. But then I’m already pretty well diversified.
“All things considered, I think a proper price is somewhere in the $1k - $1.2k range”
why?
As mentioned above - it’s about the range historically relative to things like men’s suits and to a month’s wages for an unskilled worker.
Add to that however the fact that there still is a lot of currency risk premium built in right now, due to the current and expected currency devaluation that is real. That being the case, one might be tempted to value it at $1.5k or even $2.0k or so (or even more, as some pundits do). However…
Subtract from that the fact that (unlike historically) it’s not legal tender, and doesn’t even back fiat legal tender. That knocks it back down a lot.
“Gold is in a bubble.”
Is gold in a bubble or is the currency in which it is priced in a bubble?
Gold is finite while fed notes and credit are theoretically infinite making it impossible for gold to ever be in a bubble. Keep in mind that the real(inflation adjusted) high of gold is $2300.
Bubbles result from crowded trades. Go take a poll..Who is your metals dealer? 99% of respondents will respond, “Whaaat?”. So obviously gold ownership is not a crowded trade. Take another poll…do you own US dollars? 100% respondents will indicate , “yes”.
The dollar is the bubble which is being expressed by gold.
“Prices have gone up a lot lately of course.”
Which means that dteep dips ought to be scaled into in long fashion.
This is not a substantial argument. Who is your MBS dealer? Where do you buy your Treasuries? Most people do own gold and silver BTW, as jewelry, Grandmother’s place settings, etc.
I doubt seriously that the common working stiff owned tulips back in the day. We ridiculed all the slogans as arguments related to housing, but the believers were many.
“Most people do own gold and silver BTW”
In the quantities that they own, it’s nothing compared to the people in the 1920s when there was a gold standard.
In addition, we are once again America-centric on this “who owns how much gold” deal.
A whole bunch of other nations are devalueing their currencies too.
Gold is a hard currency that, if not useful in the U.S. is useful in buying other nations’ products.
Most folks don’t own gold as an investment, unless mom and dad are getting ready to unload the wedding rings. And I’m not so sure grandma is ready to send her prized place settings to Goldline or put them on E-bay. Then again, grandma might be on a fixed income and the ARM just reset and she desperately needs the cash.
One way to gauge gold investments is to compare today’s percentage of global financial assets in gold to the last great bull market.
http://tinyurl.com/2w77r3r
I came across this great graph you provided a few days ago.
Takeaways:
The precious metals market is ultra tiny and devoid of widespread participation..a true treasure hidden in plain site.
Wild volatility in the pm markets are thus guaranteed as participation goes up.
There is less silver and gold per person today than 1980 yet global demand is exploding.
Obviously metals are totally under-appreciated indicating we are near the bottom of the valuation not the top!
There is less silver and gold per person today than 1980
Where did you see that? It’s not true.
1980 world population: 4.4B
1980 gold accumulation: 100,000 metric tons
2010 world population: 6.9B
2010 gold accumulation: 170,000 metric tons
57% increase in population, 70% increase in gold.
Not sure about silver though.
That being said - gold production had a peak in 2000, at about 2600 tons per year. Now it’s down to about 2300. I’m guessing that’ll ramp up again some due to the high price. There’s lots of talk about whether we’ve hit “peak gold” or not. Certainly it’s gotten more expensive to extract as the easiest reserves are mined out.
“Gold is finite while fed notes and credit are theoretically infinite making it impossible for gold to ever be in a bubble.”
And don’t forget that we are running out of land, making it impossible for housing to ever be in a bubble.
Land has never been in a bubble. Only the amount of dollars required to buy it. Does this make sense?
Lint. Maybe we are not using the same vocabulary. When an asset is priced above it’s productive value, when it is going up in price spectacularly simply because many believe it will only go up in price, not because its utility is increasing or its supply disrupted it is in a “bubble”. The proof is when the price collapses and the “investors” go home exhausted. So yes, land has been in many bubbles. This last huge one happened to be global.
It could be you are about to get an education in bubble psychology. maybe not. We’ll see.
When an asset is priced above it’s productive value
Hmmm - then all land should be free, should it not?
I wouldn’t be able to fit that simplification with a city building lot easily, but I can for the kind of raw land that is around here, either farmland, timberland or vineyard. As for a building lot, I expect it would have to do with what rents could be collected there relative to the cost to build and the taxes. No, not zero in most cases. Maybe in Detroit or Buffalo.
Gold is in a bubble.
Maybe so but I wonder if it is when one considers. (Not even including debt, currency crises or end of the world stuff)
1. 4000 years of perceived “value”
2. A slowly growing but “finite” supply at any given moment
3. The value that gold is given in relationship to the quickly growing number of “wealth holders” in the world.
4. “Wealth holders” increasing much faster than the supply of gold the past 30 years.
5. Gold rejoining the ranks of “conventionally accepted” investments after a 30 year absence.
5. Even non-wealthy now becoming aware of gold.
But you said 5 twice I like 5
I like gold and silver. I’ve collected Eagles and St. Gaudens and Krugerrands and Indians and Jefferson halves and junk coins and 100 oz Engelhard bars over the past 40 years. Some of what I have was from general circulation before we quit using silver coins. I remember Nixon and was shocked along with some of the older members of my family at the debasement of the dollar. I’ve heard all the slogans of the goldbug for a generation. I have some that was stashed before gold was taken out of circulation, given to me with stern warnings.
Clearly we are in an unfolding crisis and who knows what will happen to governments around the world. Yet these things have not happened yet. What has happened is a beginning collapse of the debt pyramid, which means to me that people will struggle to earn currency and struggle to pay obligations with currency. Right now the price of gold is irrelevant except to the get rich quick crowd and the gullible. You have too much currency, go ahead and throw it where you will. With no solid productive investments in view, hot money is chasing commodities. Those who do so while still obliged by debt are at great risk. I will not follow the herd. Easy for me to say since I’ve already made that harvest, but for others, beware the madness of crowds.
Banks seize 288K homes in Q3, but challenges await
Lenders foreclose on 288K homes in third quarter, but many could be challenged in court.
LOS ANGELES (AP) — Lenders seized more U.S. homes this summer than in any three-month stretch since the housing market began to bust in 2006. But many of the foreclosures may be challenged in court later because of allegations that banks evicted people without reading the documents.
A total of 288,345 properties were lost to foreclosure in the July-September quarter, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service. That’s up from nearly 270,000 in the second quarter, the previous high point in the firm’s records dating back to 2005.
Banks have seized more than 816,000 homes through the first nine months of the year and had been on pace to seize 1.2 million by the end of 2010. But fewer are expected now that several major lenders have suspended foreclosures and sales of repossessed homes until they can sort out the foreclosure-documents mess.
4 X 288K = 1,152,000 annualized rate of used homes added to the shadow inventory pyre. That’s a lot of additional homes to be sold into the headwinds of a slow-growth recovery!
The really scary thing for some areas is this shadow inventory is hardly distributed equally across the nation. The fraud heavy areas will see far, far more of these per resident than the areas that went through the bubble w/only luke warm housing growth.
“The fraud heavy areas…”
such as America’s Finest City (San Diego)…
“The fraud heavy areas…”
such as America’s Finest City (San Diego)…
Well, if that’s (RE Fraud) what it takes to make a “Finest” city, then LV’s got you beat, bub.
Sorry PB…
Mortgage applications to refinance rise 21 percent last week, but purchase applications drop.
NEW YORK (AP) — Applications for mortgage refinancings jumped last week, while purchase applications fell.
The Mortgage Bankers Association said Wednesday overall applications rose 14.6 percent from a week earlier, driven by a 21 percent increase in applications to refinance home loans. Applications for loans to purchase homes, however, tumbled 8.5 percent from a week earlier.
Rates have been at or near the lowest level in decades since spring as investors have poured money into safer Treasury bonds, lowering their yields. Mortgage rates tend to track those yields. However the weak economy has dissuaded would-be homebuyers from purchasing.
The average rate for a 30-year fixed loan dipped to 4.21 percent from 4.25 percent a week earlier. Rates on the 15-year fixed-rate mortgage, a common refinancing option, fell to 3.62 percent from 3.73 percent. Those were the lowest rate levels on record for this survey, which started in 1990.
Two families in my personal circle announced plans to buy homes within the past week. At this stage, I have given up trying to warn people; at any rate, these folks will not pay the crazy prices of 2006 for the privilege of ownership. But my personal view is that the Great American Foreclosure Fiasco will kick the used home market into an even lower gear than was believed possible, sending sales, prices or both down to levels which nobody could have seen coming.
To put this in simple terms, now is decidedly not the time to buy.
Well yes. But better now than three years ago. Rather than counciling people not to buy, I’d council them to make SURE that they can truely afford their mortgages (this means no ARMs, IOs or Neg Ams) and that they’ll be content living in their house for at least the next 10-15 years. After all, if you don’t sell, you haven’t realized your loss, but by buying early you may have missed an opportunity to pay less.
In one case, they traded a long commute for affordability — something I would never advise in a declining market, given that outlying areas tend to get hammered the worst as affordability improves closer to where the jobs are.
But like I said, I am out of the warnings business anymore these days.
and that they’ll be content living in their house for at least the next 10-15 years ??
After all, if you don’t sell, you haven’t realized your loss ??
I agree 100% on both points…
I sincerely do not see how the foreclosure “mess” will alter the outcome of the housing crash other than acting as a speedbump.
I’m thinking it could prove to be more than a speedbump, but unsure actually what it means. This will slow the release of inventory of course, which normally drives prices up. But it also might reduce the already weak demand as people are fearful of buying a property that may or may not have clear title. Even overwater (?) houses might have title issues if there is still a mortgage. The ‘mess’ also has the potential to spike strategic defaults even higher. Probably a good topic for the coming months or years.
Seen the developing bond scandal?
Seems the mortgage bonds are not very legit.
My silver lining is that this foreclosure/who holds the title mess is tanking bank stocks. This forces stockbuyers to actually think about all of the crap on their books.
Bless their charitable hearts buying realty at these nosebleed high levels.
Shouldn’t they be waiting until after QE2 to refi? I mean, that’s the intention, isn’t it - to make rate lower still?
I think the bond market may push back ejohn…Even with Q2 we may only see marginal drop IMO….I think Q2 is a attempt to just keep things were they are…Nobody questions that these long term rates are already compelling…
Mortgage bond market is about to go FUBAR.
Seen the latest scandal?
* HOMES
* OCTOBER 14, 2010, 5:24 P.M. ET
Investors Wake to Foreclosure Issue
After Days of Shrugging Off the Debacle, Financial Markets Start to Penalize U.S. Banks
By MARK GONGLOFF
For several days investors have seemed barely to blink at the slow-motion train wreck in mortgage foreclosures. But that calm facade is starting to crack.
On Thursday, shares of U.S. banks fell, and the cost of buying protection against their possible default surged, as investors began to consider what the foreclosure problem could cost them.
Meantime, prices of the mortgage securities most affected by the problems—”private label” securities, or those not issued by government-sponsored entities such as Fannie Mae and Freddie Mac—have weakened a bit in recent days, according to market participants.
“The market seems to be functioning relatively well, but that could change depending on how we see this play out,” said BlackRock Inc. portfolio manager John Vibert, referring to the private-label mortgage market.
Investors have only just begun to wrap their arms around the foreclosure issue, and the uncertainties are legion. Banks nationwide have halted or begun reviewing foreclosures after discovering flaws in the process, including faulty or missing documentation. If these are just easily resolved technical glitches, with most foreclosures resuming after brief delays, then the impact on most investors would be small.
The risk is that foreclosure flaws are so widespread, or the political furor so heated, that the entire process grinds “to a halt,” as Citigroup analyst Joshua Levin said in a conference call this week, choking off the cash flow on which mortgage investors depend.
One result in that case could be that banks are forced to modify billions of dollars in loans, cutting principal balances and leaving bondholders the losers, as happened in Bank of America’s settlement over Countrywide’s lending practices.
Banks, meanwhile, could be hit with investor lawsuits, and foreclosure delays could bring short-term losses. Some investors are pushing for banks to take back nonperforming mortgages in cases of faulty documentation.
Such worries helped weaken shares of Bank of America, which has the most mortgage exposure of the biggest U.S. banks, by more than 5% on Thursday. Wells Fargo, with its own large mortgage portfolio, fell 4%, as did Citigroup.
…
The enormous mortgage-bond scandal
Oct 13, 2010 11:21 EDT
You thought the foreclosure mess was bad? You’re right about that. But it gets so much worse once you start adding in a whole bunch of parallel messes in the world of mortgage bonds. For instance, as Tracy Alloway says, mortgage-bond documentation generally says that if more than a minuscule proportion of notes in a mortgage pool weren’t properly transferred, then the trustee for the bondholders can force the investment bank who put the deal together to repurchase the mortgages. And it’s looking very much as though none of the notes were properly transferred.
But that’s not even the biggest potential problem facing the investment banks who put these deals together. It also turns out that there’s a pretty strong case that they lied to the investors in many if not most of these deals.
I mentioned this back in September, and I’ve been doing a bit more digging since then. And I’m increasingly convinced that the risk to investment banks isn’t only one of dodgy paperwork; there’s also a serious risk of massive lawsuits from the SEC or other prosecutors, as well as suits from individual mortgage investors.
The key firm here is Clayton Holdings, a company which was hired by various investment banks — Goldman Sachs, Bear Stearns, Citigroup, Merrill Lynch, Lehman Brothers, Morgan Stanley, Deutsche Bank, everyone — to taste-test the mortgage pools they were buying from originators.
…
That’s the one.
I’d like 50 million pounds of popcorn, please. Oh, and a jumbo tanker of coke a cola also.
Dubai’s Worst Office Buildings Will Be Empty Forever, CBRE Says
Some Dubai office buildings are so ill-conceived and poorly located that they will never be occupied, while others may command no more than the cost of maintenance, according to CB Richard Ellis Group Inc.
“Some buildings will be permanently vacant and will never be let because they are wrongly located, they are of poor quality or have the wrong legal structure in place,” Nicholas Maclean, Middle East managing director for the U.S. property broker said in an interview.
Speculation fueled Dubai’s property market after foreigners were allowed to buy real estate in parts of the emirate in 2002. Buyers with no experience in property management flocked to purchase floors in planned office buildings before any work started, resulting in poorly finished office towers in inconvenient locations with multiple owners, Maclean said.
Such places have to compete for tenants in a Dubai market with an overall vacancy rate of 40 percent, with newly developed areas on the outskirts hit the hardest. At least 20 million square feet (1.85 million square meters) of space, about 40 percent of Dubai’s existing office supply, will be added in the next four years, CBRE estimates. That will put further pressure on prices that slumped by 60 percent on average since the peak in mid-2008.
Perhaps if they just borrowed more things would be ok? Don’t they know that when you build something nobody needs in a place where nobody will ever need it, the solution is to extend and pretend by borrowing to make payments? Don’t they have bankster experts over there like we have? What a bunch of backward losers.
Buyers with no experience in property management flocked to purchase floors in planned office buildings before any work started, resulting in poorly finished office towers in inconvenient locations with multiple owners, Maclean said.
Huh?
High demand, especially sight-unseen, leads to slap-dash shoddy work on the cheapest ie most inconvenient land. And imagine a building where separate floors are owned by separate landlords. Who fixes the elevators? Or cleans up a flood? Collecting maintenance fees must be a nightmare when whole floors of a building are BK.
In other words, condos circa 2006-2008.
Worst Office Buildings Will Be Empty Forever ??
Not just Dubai…I think commercial office space in most of the country may be the worst of all real estate to be holding right now…2nd only by industrial R&D…Industrial may come back some day…I do not think office space will…Due mainly to technology advances…See Cisco…
Don’t forget retail. There’s a nearly empty strip mall near every nearly empty development. And many half vacent condos have vacant street-retail on the ground floor.
I consider retail 3rd in line with the other two…Rents are down but many are still doing okay…You can’t give office space away…Nobody wants or needs it…
Foreclosure mess overshadows JPMorgan earnings
JPMorgan’s profit rises 23 percent, but analysts want answers on foreclosure fiasco
NEW YORK (AP) — The last thing that top executives at JPMorgan Chase & Co. wanted to talk about Wednesday was the raging foreclosure mess.
“We’re not going to say too much about this today, other than the comments that we’re giving you here,” Chief Financial Officer Douglas Braunstein said on a conference call to discuss the company’s earnings.
That was wishful thinking.
Instead, analysts and investors wanted answers from Braunstein and CEO Jamie Dimon on the rapidly escalating foreclosure fiasco, which overshadowed an otherwise strong earnings report from the nation’s second-largest bank. JPMorgan’s profits increased 23 percent to $4.42 billion.
“The last thing that top executives at JPMorgan Chase & Co. wanted to talk about Wednesday was their raging foreclosure mess.”
“‘We’re not going to say too much about this today, other than the comment we’re giving you here.’”
If this were a private company the owners of the company would immediately fire these guys.
Stockholders, in theory at least, are the owners of a company, and the officers of the company are the hired help that are hired to run the company. If the guys who are hired to run the company are not open and honest about what is going on within the company then it would be logical to suggest that maybe these guys should be fired and replaced by someone who is open and honest about running the company.
This can be done - and it is regularly done - if the owner of the company is one person or a small group of people. But it is tough to do when the owners are thousands of stockholders, many who haven’t a clue about how a company is run or is supposed to be run.
And therein lies the strength behind the corporate executives ability to gain liscense to run a company into the ground and all the while getting paid some very big bucks for doing so.
The bests stocks to buy are stocks where the guys who are running the company have a personal stake in how well the company is managed.
Stock options are supposed to give incentive to officers to do what is best for the company but they really don’t have that much effect, long-term, if the options are exercised and the stock bought by this exercise of options are immediately sold.
Someone who is interested in immediately selling what he is granted is more interested in immediate PRICE than he is in long-term VALUE. It’s fairly easy to get a stock price up - a good lie will do that trick - but it’s tough to increase true value. Lies won’t increase long-term value of a company, only good management (and a lot of luck) will do that.
Perhaps the answer is stock options with a long timeframe before they can be exercised, say 10-20 years or so.
But…but…with crappy perks like that, how would they attract any talent?
Yeah, how do you expect them to keep top-notch foreclosure-paperwork organizers such as their talented elite staff without outrageous bonuses?
Talent at hollowing out a corporation and stuffing it full of debt is something we don’t really need. : -(
“The last thing that top executives at JPMorgan Chase & Co. wanted to talk about Wednesday was their raging foreclosure mess.”
Interestingly enough, they were eager to talk about it in the British press:
JPMorgan chief defends home foreclosures
Jamie Dimon, chief executive of JPMorgan Chase, has robustly defended how the bank evicts homeowners, as the row over repossessions in America escalates in the run-up to key elections.
By Richard Blackden, US Business Editor
Published: 6:27PM BST 13 Oct 2010
The country’s second-biggest bank has suspended repossessions in 23 states amid allegations that homes have been taken back without the necessary paperwork being properly checked. JPMorgan is examining 115,000 cases at the moment and is confident its procedures were correct. Bank of America has halted repossessions throughout the US.
“I don’t think there are cases where people have been evicted out of their homes when they shouldn’t have been,” Mr Dimon said on Wednesday, as the bank delivered third-quarter profits ahead of Wall Street’s expectations.
…
What a damn liar.
Shouldn’t investors WANT those foreclosures to be challanged and delayed? Every challenged foreclosure is another deferred-interest-booked-profit-high-price-asset on JPM’s balance sheet, which is good. Every true forclosure is a lowered asset price and therefore a ding on JPM’s profit, which is BAD.
If I were the investors, I would have kept quiet.
Or maybe the legal costs outweigh the benefits of shadow inventory?
Cash flow plays a role too. Keeping houses on the books as a Level III asset at inflated values makes the balance sheet look better, but sooner or later cash flow will bite them in the butt and the investors know it.
It should benefit the banks to play into the stir and keep those assets at make believe for a little while longer. The regulators will probably give them more and more slack with this socalled crisis as an excuse.
On the other hand, if the MBS holders can reverse their deals and make the banks eat the bonds based on fraud, it could be painful for the banks.
The FB still deserves to be foreclosed, but it could be interesting seeing who gets to eat the loss at the higher levels of the food chain.
Do the Banks own this paper or do they just service this foreclosure paper?
If these loans were sold to the secondary market in large part than the MBS investors own the toxic loan bundles .
One of the big selling points of MBS’s was that the risk was spread out into the Secondary Market . Were the Banks forced to buy back so much paper because of their fraud of AAA ratings and questionable title to avoid lawsuits from these funds that actually owned this paper .I know for a fact that F&F has been taking a lot of this foreclosure bound paper on their books .
My point is that the Banks/Middlemen sold off this paper while retaining the best stuff for their own books ,so why is this point confused . Just because a Bank services a loan doesn’t mean they own it .
For instance, my loan was made by one major bank and it was bought by another major bank for their books because I’m sure it was considered actual AAA paper because of the loan to value and credit rating and it was a conforming fixed note . Another loan I reviewed for someone the loan was transferred from
BOA to F&F after the property went into foreclosure .
So when the market blew up who were the real parties of interest and who were the parties just trying to avoid lawsuits and who were the real parties of interest that got the bail outs and did they really qualify for those bailouts ?
Also ,its a known fact that Insurance Companies can deny a claim if any fraud is involved ,so how does that play into the
scheme of things regarding liability in this meltdown ?
I have my theories on what has been going on behind the
big curtain .
“Do the Banks own this paper or do they just service this foreclosure paper?”
I was thinking they did once own the paper, sold it in MDS’s and kept the servicing. So, if it is defective in its formation, I suppose they could be made to buy it back.
….”MBS’s”
WTH? The smart set knows that only real estate goes up in the long run, everything else is a fluke…
Oil, gold, corn… oh my!
NEW YORK (CNNMoney.com) — Commodity prices are surging across the board as the U.S. dollar remains under pressure from building speculation that the Federal Reserve is about to take action to aid the stumbling economy.
Oil and gold prices have been on a tear this month. After jumping 1.5% last week, crude prices spiked more than 1% again Wednesday. And gold continued it’s record-breaking streak, surging nearly 2% to settle at a new record high of $1,370.50 an ounce.
Meanwhile, the Reuters-Jefferies CRB index, a key benchmark for global commodities, surged to its highest level since 2008.
Grains and soft commodities like corn, sugar, cocoa, coffee and cotton were also in the thick of the buying frenzy, with prices continuing to hover at yearly highs.
We’re going to find ourselves bidding against foreigners for the food that we grow in our own country. After all, it’s one of the few things we have that anybody wants.
That’s when USD based inflation will rear its ugly head.
Already happening.
“That’s when USD based inflation will rear its ugly head.”
And that’s when all the trillions of dollars we’ve been sending elsewhere will find their way home.
One thing we as a country are VERY good at is growing food. Unfortunately we are so good at doing this that it takes very few of us to do it.
Today’s wheat farmer farms, what?, a thousand acres of wheat? More than a thousand acres? How many farmers do we need to have to produce a whole bunch of wheat at this rate?
If we don’t have many farmers then we don’t need many surporting jobs to lend support to these few farmers. We can’t have large department stores, for example, in the farm belt because there isn’t the large population base of farmers to support large department stores.
Farmers may make a good living due to rising farm prices and they may spend a lot of this money but that won’t matter all that much to the economy because there aren’t that many of them.
A thousand acres would actually be a pretty small farm, like a family farm. The bigger ones are like 3,000-30,000.
A friend of mine owns an 18,000 acre wheat
farm. The scope and size is amazing.
That’s alot of bowls of frosted mini-wheats.
Some of the most tangible assets are the farmland in the central San Joaquin Valley of California. Great soil, lots of water, perfect growing climate. Prices are high, but people gotta eat.
lots of water
Well not exactly. Therein lies the rub. Ever hear of the Delta Smelt?
but people gotta eat ??
Food is still relatively cheap thats why there is so much waste IMO…Remember the saying “finish your plate” ??
Cringing at the checkout lane as I do, shame on me for not thinking of food prices that way, scdave. You’ve provided some food for thought.
Not only is there still a lot of waste, but dining out (around here anyway) is still too big. If food prices were truly too high then restaurants would be closing even more than they have been as everyone scrambles to save with home food perparation.
“If food prices were truly too high then restaurants would be closing even more than they have been as everyone scrambles to save with home food perparation.”
They are certainly prety empty out here in my neck of the woods.
I can make a steak dinner at home for the family for less than what it would cost to eat burgers at Red Robin.
The downside for the farmers is the rising prices of energy and fertilizer and other stuff they need. Especially energy. There’s no garauntee that much of the increasing prices are making into the farmers wallets either. GS is probably getting a cut somehow.
GS is bidding up corn that will be grown next year, along with the oil that will be used to produce it. Why not, unlimited amounts of free money can be borrowed from the Fed. It’s like a groin laceration to slow the bleeding from a cut on the arm.
Don’t forget the WATER!!!
Yeah..the water. I read years ago that the aquifer under the Central Valley was waaay down due to all the farm usage. How can they keep going?
The Peripheral Canal, which is being forced on northern California by southern California (ie governator). It will bypass the Delta and carry water from the Sacramento river southward. It’s a done deal.
Farmers may make a good living due to rising farm prices
Raising farm prices do not benefit the farmer unless he sells out to a developer.
And rising crop prices profit only the processors and distributors like ADM and Cargill, who make the Mini-Wheats.
We have GOT to get away from a wheat/corn based diet. Those subsidies need to be directed closer to the soil, toward paying for healthy but labor-intensive crops like vegetables.
Public-Option health care would go a LONG way toward making family farms viable too.
And rising crop prices profit only the processors and distributors like ADM and Cargill, who make the Mini-Wheats.”
yea whoever owns the silos and can store the grains and sell after the peak harvest they set the price 10,000 arces of wheat aren’t worth much laying on the ground
We have GOT to get away from a wheat/corn based diet.
Eat more potatoes!
Brought to you by the state of Idaho.
Diversify!
Brought to you by the country of Ireland.
I took a drive through corn country a few months back. Lots of new houses, schools, stadiums, cars, truck, and booming small towns.
Corn farmers are doing very, VERY well and have been for a few years since ethanol went into production. And apparently will continue to do so as the EPA just approved adding another 5% (for a total of 15%) to gasoline.
“We’re going to find ourselves bidding against foreigners for the food that we grow in our own country.”
It happened in Ireland in 1845-1846. Ireland is surrounded by water (fish!) and they also raised a lot of livestock and chickens (meat and eggs!). But those products were all exported, so when the potato harvest failed, 1.5 million citizens starved to death.
China said: give me your beef, pork, wheat or else.
Californians are subsidizing farming companies with cheap water
to grow food to send to China.
Remove “all” Ag. subsidies including water…
You really, really don’t want that. AG subsidies primary reason for existence is to smooth out the wild swings in both production and trading and keep arable land in reserve for future emergencies.
And just in case it isn’t obvious, food production is top of the list of strategic resources. Of course, big corporations don’t give a damn about any country they are looting and pillaging.
Can’t wait to see the impact on consumer confidence and producer profit margins and ultimately employment. It worked really well in 2007-08.
“Florida isn’t quite the foreclosure capital of the country. But it’s getting closer.”
http://www.tampabay.com/news/business/realestate/florida-could-soon-become-no-1-state-for-foreclosures/1128090
WE NEED MORE BOOMERS, SEND MORE BOOMERS!
“There are 1000 people a day moving to Florida” -Jane Doe Realtor circa 2005
Their goal is still to get there but older boomers are still stuck up north cuz they’re not going to give their homes away just to move on with their lives.
We are indeed working under a new economic paradigm — our real estate market soufflopped.
SEND MORE BOOMERS!
It could make some sense for some of us to buy a place in Florida to protect pension income but for me the “bugs” are just to damm big…
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 12:18 a.m. Thursday, Oct. 14, 2010
More than 13,200 Floridians lost their homes to the banks in September, a record number expected to plummet next month with lender freezes on foreclosure sales.
“This adds a whole new cloud of uncertainty to the housing market,” said RealtyTrac spokesman Daren Blomquist. “These properties represent a big chunk of what’s being sold in Florida.”
“This adds a whole new cloud of uncertainty to the housing market,” said RealtyTrac spokesman Daren Blomquist.”
No Daren, it’s the same old cloud from 2004.
Banks ‘hired hair stylists’ to vet foreclosures
In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in “foreclosure expert” jobs with no formal training, a Florida lawyer says.
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn’t define the word “affidavit.” Others didn’t know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud.
‘hired hair stylists’
I suppose while they weren’t busy making Jamie Boy and his ilk look pretty, they were out signing foreclosure affidavits?
Hair stylists (at lest in my state) must have had some training and be licensed.
(And a good one gets followed whenever they change salons…)
American lenders are as thorough with foreclosures as they were in making loans during the bubble years. Surprise, surprise.
Sounds a lot like web programmers in 1999.
Remember that TV ad from I think 2002′ish? Paraphrasing:
A group of potential investors is having a meeting with a fledgling garage shop tech company.
GARAGE SHOP GUY 1: “So I think you’ll find this is a worthwhile investment…”
INVESTOR 1: “What we really want to know is - are you on the web?”
INVESTOR 2: “Yes, do you have any web presence?”
GS guy 1 glances as GS guy 2.
GS GUY 1: “Um… well we have a web site under construction…”
INVESTOR 1: “YOU HAVE A WEB SITE???!!”
INVESTOR 2: “THEY HAVE A WEB SITE!!!”
INVESTOR 3: “SOUNDS GREAT - I THINK WE SHOULD DO THIS!”
You get what you pay for and it’s about time this came around to bite them in the rear end.
Good, fast or cheap. Pick 2.
Heh heh heh…
Foreclosure Fiasco Trail Leads to Washington
By Jonathan Weil - Oct 13, 2010 6:01 PM PT
Bloomberg Opinion
What were banking regulators doing while some of the biggest U.S. lenders routinely filed false foreclosure documents in local courthouses around the country? In the case of IndyMac Federal Bank, it turns out the Federal Deposit Insurance Corp. was running the joint.
This may help explain why the mortgage-servicing industry got away with such misbehavior for so long. The government, in one form or another, was doing it, too.
…
Barney Frank: “When I go to pwison do I have to wear pants?”
To really punish Barney, we’ll have to send him to a women’s prison.
Those are called penal institutions right?
What if he’s secretly a lesbian in a man’s body?
Barney’s first prison shower: “Boy, that soap sure is a swippu-wee little sucker.”
Regulators adopting the bwanks best fraudulent pwactices demonstrates how little has changed at TBTF institutions. It’s shell-shocking.
You misspelled “fwaudulent.”
So did you. Fwauduwent.
Watch for more paltry multi-million dollar wrist slap fines on Megabank, Inc’s multi-billion dollar operations to presumptively lay this Foreclosure Fiasco issue to rest.
Wells adds to crisis over home seizures
By Suzanne Kapner in New York
Published: October 14 2010 00:01 | Last updated: October 14 2010 00:01
The US mortgage foreclosure crisis deepened as it emerged that Wells Fargo may have used practices that prompted rivals to halt home repossessions, and JPMorgan Chase said banks might be fined over the issue.
Bank of America, JPMorgan and GMAC have halted foreclosures after learning that “robo signers” had rubber-stamped thousands of mortgage documents without checking their accuracy. Attorneys-general in 50 states have launched a joint investigation into the matter.
Jamie Dimon, JPMorgan chief executive, on Wednesday became the first top banking executive to say some attorneys-general may levy penalties on banks for their foreclosure practices.
Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a “robo signer”.
Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses.
In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.
…
Ben, Sorry about so much space but I thought this was worth it.
Homeowners’ Robin Hood fights foreclosure giants
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 4:35 p.m. Wednesday, Oct. 13, 2010
ROYAL PALM BEACH — Tom Ice was a desert boy who wanted to be Jacques Cousteau. He earned the degree and everything, leaving his home in Santa Fe, N.M., to study ocean engineering at the University of Miami.
Ice, 50, has emerged as a Robin Hood of sorts in the tangled world of foreclosures, representing homeowners and fighting powerful law firms backed by big banks.
What he and his wife, Ariane, found buried under boulders of foreclosure paperwork were backdated documents, affidavits sworn to by bank employees processing thousands of foreclosures a month, and questionable assignments of mortgages coming out of the Mortgage Electronic Registration System, or MERS.
After the discoveries, Ice did what any good litigator would do: He asked to depose employees involved in creating the documents.
Then he made the unusual move of posting the depositions on his website, a strategy he credits for much of the snowball of foreclosure suspensions.
Ice Legal, where the motto is “Your home is your castle, defend it,” now has seven attorneys working mostly on foreclosure cases.
Ice has 400 active clients and said he has lost only a handful of cases. He admits to workaholic hours, describing himself as an early riser and an insomniac.
1 of the 15 COMMENTS
Do your homework and do the math, it is all about the $$ 400 cases at $350-$500 per month per homeonwer and Ice is making $200,000 per month. These lawfirms withdraw as soon as the homeowner stops making the payment to the lawfirm. Check the Court dockets.
Homework
10:29 PM, 10/13/2010
http://www.palmbeachpost.com/money/real-estate/homeowners-robin-hood-fights-foreclosure-giants-970273.html?cxtype=ynews_rss -
Another of the comments and along the lines of what I see.
Most of the people I know that are in Lis Pendins have not made a mortgage payment for 2 or 3 years. All of them are still living in the houses that they are NOT paying a dime on.
One of them says ” I can’t believe that the banks are SO STUPID I have not paid in 3 years and the bank is paying my taxes and insurance payments!!!!!!!”
She then laughs her head off as she goes back to cutting her grass.
skb
11:03 PM, 10/13/2010
Will somebody slap these squatters with at least a 1099? Those misssed payments are “income,” in the same way that short sale loan forgiveness is income, right?
Missing payments is not forgiven debt….yet.
Yep. Debt isn’t income until it’s forgiven. Something many HELOCers and serial REFIers didn’t figure out.
Good for him. He did find a career in underwater exploration.
Yay Blue!
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* October 11, 2010, 12:04 PM ET
Foreclosure Suspensions Raise Anti-Bank Anger
By Emily Peck
The foreclosure market is stalling and confusion is rising in the wake of the recent suspensions of foreclosures by four major mortgage servicers.
On Friday, Bank of America announced it would suspend foreclosure sales in all 50 states. That follows the bank’s earlier suspension of tens of thousands of foreclosures in the states that handle foreclosures through the court system, a move also taken by GMAC Home Mortgage, Inc., a unit of Ally Financial Inc., and J.P. Mortgage Chase & Co.’s home-loan unit.
Meanwhile, several state attorneys general, as well as members of Congress, are calling for an across-the-board foreclosure moratorium to sort out alleged irregularities in foreclosure documents submitted by the banks. (More: Courts Add to Foreclosure Delay)
It’s unclear how long the foreclosure market will be stalled–but economists are warning that the delays are bad for housing. The uncertainty in the market will likely scare buyers away from foreclosed homes, which represent a big chunk of current sales.
…
” The uncertainty in the market will likely scare buyers away from foreclosed homes…”
The Cheezeball Hombuilders are going to try to capitalize on this opportunity: “Don’t waste your time and money on a possible title problem, Buy NEW, Buy from your most trusted builder…”
It’s all good, as more new home construction represents more supply, and increased supply results in better affordability, unless collusion amongst banksters withholds supply from the market, that is.
“It’s unclear how long the foreclosure market will be stalled–but economists are warning that the delays are bad for housing.”
How about providing an honest, transparent housing market that produces the housing people need at prices they can afford? If they did that, there would be an easily sustainable housing market. Instead, all they want to give us is one scam after another. That type of market can die, forever, yesterday.
Greg — I admire your lingering optimism. But the housing market is so FUBAR, that I also have a hard time sharing it.
I’m not optimistic at all. I was just throwing that out there as a legitimate alternative for a truly sustainable housing market. That will never happen in this country for reasons that run far deeper than just housing.
It’s becoming increasingly apparent that what happened during the housing bubble of the past decade is infinitely worse than anything that occurred with bubble of the 1920’s and the future economic prospects of this country far worse than during the depths of the Great Depression. There are no good outcomes and lots of land mines.
HBB participants have become accustomed to that “deer in the headlights” look on the faces of politicians upon seeing another housing market glitch thrown into the campaign trail path.
Home foreclosures touching off a new wave of voter anger, weighing on midterm election races
LAURA WIDES-MUNOZ, TOM RAUM Associated Press Writers
October 13, 2010|6:33 p.m.
MIAMI (AP) — Three weeks before the election, anger over tainted home foreclosure documents is bursting into the battle for control of Congress, especially in hard-hit states such as Nevada and Florida. Democrats in tight races in the worst housing markets are pressing for a national moratorium, putting a reluctant White House on the spot.
Leading the call for a nationwide time-out on kicking people out of their homes is Democratic Senate Majority Leader Harry Reid, who is locked in a neck-and-neck re-election contest with tea party-endorsed Sharron Angle in Nevada, which has the highest foreclose rate in the country. Reid is decrying “reports of shoddy and defective affidavit preparation.”
On Wednesday, attorneys general and bank regulators in all 50 states announced a joint investigation into questionable foreclosure practices, including forged documents, apparently bogus signatures and questionable notarizations. U.S. Attorney General Eric Holder has said the Justice Department also is looking into the allegations — but he stopped short of opening a formal investigation.
While the allegations have suddenly become part of the political dialogue in a volatile election season, politicians are all over the map on the issue, some fearing that direct government action could snuff out a fragile recovery. Some candidates appear to be ducking the issue entirely, leery or unsure how to address it.
…
Get ready for 15% ethanol and replacing the seals on your engine!
http://www.salon.com/news/feature/2010/10/13/us_epa_ethanol
This is yet another brilliant plan from the Obama administration. The 67% of the people with older cars will have to make sure they don’t fill up with E15, lest their engine fall apart. Thank God everyone working for the government can afford new cars!
Planned obsolescence is a pretty good strategy to get more people buying cars and lawn mowers.
Yep….
And they will buy those with…. what?
I’ll have to ask Saturn about what to use for my 14 year old vehicle.
But Government Motors sells new cars. It’s all about integrating.
Some local gas stations advertise “ethanol-free” gas and are the most popular places to get fuel. Ethanol sucks. It draws moisture out to the air and into your fuel which corrodes the entire fuel system. It also gives you lousy power and gas-milage. If every gas station followed similar practice by boycotting ethanol the problem would just go away. The people (”consumers” as the govt has pigeon-holed us) need to dictate demand, not some corn-fed bureaucrat corrupt lawmaker scumbag with his hand in the till. Stand up and buy only what you want to buy.
“Some local gas stations advertise “ethanol-free” gas and are the most popular places to get fuel.”
I didn’t know such gas stations existed. How do you find them?
I see now the link below now.
None in CA, none in NV, two in the middle of nowhere in AZ. It looks like I’m stuck with the ethanol mix.
IIRC California mandates the use of ethanol in their “special CA blend” gas. They mandate oxygenates, either ethanol or MTBE, but MTBE had so many drawbacks that its use was dropped.
Quite common in FL and I found some in NC boondocks just by random chance. Most FL marinas now stock only no-ethanol gas because the boaters demand it. Everyone should demand it.
…and paying more for your Corn Pops. Gotta have my Pops!
What a messed up strategy ethanol is, encourage yet another misallocation of resources instead of making the choices and taking the steps to coax people in cities out of their cars. What a wasteful move, not green at all because it does nothing to help the nation rethink its attitudes towards resource consumption. The argument is that this helps the transition away from fossil fuels - but how much of a transition is needed? It’s been almost forty years and two oil wars since the embargo?
A pure waste of good whiskey IMO.
Naah, they don’t make it out of barley. It may still be a waste of cheap corn liquour.
Time to hit up
www dot pure-gas dot org
Damn. Not a single one in the big cities in Texas.
The move, which comes less than a month before November’s midterm elections, is politically popular in rural farm areas. But ethanol faces strong opposition from the auto industry, environmentalists, cattle ranchers, food companies and a broad coalition of other groups.
Opponents argue that the increase in production of corn and its diversion into ethanol is making animal feed more expensive, raising prices at the grocery store and tearing up the land. Manufacturers of smaller engines — used in everything from lawn mowers to boats — also oppose increasing the use of the fuel, saying those engines are not designed for the higher concentrations.
Sounds like older gas formulations will still be available, but I’m sure it will result in many people blowing up older cars and lawn mowers. Good time to own an electric car and lawn mower.
The proponents for the use of ethanol in gasoline make two arguments. One is for reducing demand upon oil. The other is that ethanol, as an oxygenate, makes old clunkers run cleaner.
To me that second argument is specious. Modern fuel-injected and computer controller engines run about as clean with or without oxygenates. Only old clunkers can benefit. But old clunkers are precisely those vehicles whose fuel systems get ruined running high percentage ethanol in their gas. So where is this putative benefit?
It takes a lot of oil to fertilize the fields and plow them. The question is does it take more than the equivalent fuel produced?
Time to buy a diesel auto.
Problem solved.
From what I understand you get high(er) temperatures in the engine therefore bad for the engine and the cat converter.
If I have no other choice but to use these fuels in my 93 car then … I’ll keep using the synthetic oil I’m using right now but there’s nothing stopping me from removing the cat and installing a O2 sensor simulator (50$ on Amazon) …
Now, where’s the “green” in this situation?
The Chile Mine Rescue has messed up my Sleep cycle. Up till 2Am one night and midnight the next. . I watched about half of it on Fox streaming vidio . Absolutely amazing . The Chile government is supporting all the Miners for 6 months , then back to work for them . In the USA all would get on Disability at once and stay there for life . And , why did Our Dear Pres. Obama think NASA did the most of the rescue ?
I watched some of it too. It was pretty amazing! Most of these guys won’t have to go back to work in the mines, however. There will be enough book and movie deals to go around. I read that some had already gotten job offers elsewhere too.
I certainly hope they get a big enough slice of the book/movie deal pie to compensate them for their ordeal.
Plus the mine will be open for tours soon and they can sell tickets to tourists.
Was Pepe and mistress reunited?
I think their just released audio tapes of cell phone conversations will be on Entertainment Tonight. Don’t forget to tune in! (head shake)
yes, she was there but wife was not. he seemed somewhat suprised.
I think he was the 30th miner to be let out. Saw that the 30th miner greeted his girlfriend in a video on Fox News after he got out.
The toughest times are ahead for him.
If he was a French man or Italian, it would be no big deal. Many of the married men have mistresses anyway. America is too puritan for that
Don worry Pepe gonna be alright.
The toughest times are ahead for him.
If he was a French man or Italian, it would be no big deal.
The South American Latin culture is much the same as the French and Italian when it comes to mistresses.
From the NYT
Yonny Barrios, 50, faced a slightly more complicated future. The woman he embraced upon exiting the rescue capsule turned out to be his mistress, not his wife.
“He has another companion,” Marta Salinas, his wife of 28 years, told reporters, adding that she might wait for him at home. “I’m happy for him, and if he remakes his life, good for him.”
Was it my imagination or did they appear closer and warmer than in a US rescue situation? Perhaps it was the Chilean President and his wife on site for both days. Perhaps it was the fact that the rescue team felt free to break out in frat boy style chanting. Perhaps it was the fact that instead of getting all wrapped up in political bureaucracy they simply got it done quickly and efficiently. All I know is I felt like they had something special we had lost.
I sure am happy how well it worked out.
If our prez had stayed for days he would be criticized for seeking publicity and not taking care of business.
I too was impressed by the Chilean response: very practical just-get-it-done, ask for help from whomever has expertise. They seemed to handle their recent earthquake pretty well too.
It’s a country that’s not much on my radar… will have to find out more about them.
Was it my imagination or did they appear closer and warmer than in a US rescue situation?….All I know is I felt like they had something special we had lost.
It was not your imagination at all. The Latin culture is much “warmer” than our American. That does not mean it is more sincere, but it is a lot warmer.
Very good observation Rio.
Foreclosure Fiasco Spreads to Luxury Market
Mon Oct 11, 3:23PM ET - CNBC 6:30 | 300 views
The foreclosure freeze is hitting the luxury housing market, and Dolly Lenz, of Douglas Elliman; Bob Hassett, of Russ Lyon Sotheby’s International; and CNBC’s Diana Olick share their insight.
Dolly Lenz, the Nation’s Top Realtor: “There’s a whole negative Zeitgeist…”
Great American Foreclosure Fiasco hammers luxury home market buyer sentiment…
I have news for y’all: Foreclosure moratorium or not, home prices have another leg down ahead before this is over. Unless this time is different, that is. But I agree with not going along with Megabank, Inc’s initiative to throw yet another wrench into the housing market’s operation. Used home sellers will do much better over the near term without a foreclosure moratorium severely limiting supply. And hopefully, Megabank, Inc will lose a bundle.
Obama resists call to halt foreclosures nationwide
Top White House officials say a moratorium could backfire by driving home prices down further and delaying the real estate recovery.
By Jim Puzzanghera and Alejandro Lazo, Los Angeles Times
October 14, 2010
Reporting from Washington and Los Angeles —
As all 50 states escalate efforts to quell a rising tide of foreclosures, one prominent figure is resisting calls for the federal government to do more: President Obama.
Banks seized 102,134 homes in September, a record for any month, RealtyTrac reported Wednesday. California led the nation with 17,756, the Irvine company said.
Even so, top White House officials worry that imposing a national moratorium on foreclosures would backfire by driving down prices even more, delaying the real estate shakeout and potentially creating more foreclosures as additional homeowners find themselves underwater.
“In places that have been particularly hard hit like Los Angeles and California … where foreclosures make up about 40% of home sales, that has the potential to hurt not only those individual home buyers but to delay the recovery of the housing market,” Housing and Urban Development Secretary Shaun Donovan said in an interview.
…
I wonder… will the foreclosure controversy make banks more likely to approve short sales as a way to provide “clean” paperwork?
That glosses over the issue of not reviewing files or bankers signing false affadavits, but if the mortgage was incorrectly recorded when securitized (or incorrectly securitized), then that’s a different can of worms.
One way to clean paperwork is a refi or loan modification. The lenders could solve a lot of problems that way. A good number of FBs might be happy with an extension and/or rate reduction, even if a principal reduction isn’t in the cards.
Personally, I think the banks moratoriums shouldn’t block FBs who want out at this juncture (either through a short sale or foreclosure). If there are securitization or other issues, well, at least deal with those people’s files first, even though it means the folks who want to fight it get a free roof over their heads a little longer.
Lil’ Opie, that (Non-Hawaiian) Kenyan Muslim-Islamic Socialist, destroying the “TrueAmerica™” yet again!
Appears the sheeple just got fleeced by a coordinated pump and dump. It’s nice to have friends at the tyrannical fed.
Oct. 14 (Bloomberg) — Pacific Investment Management Co., which runs the world’s biggest bond fund, said it sold Treasuries on expectations a second round of debt purchases by the Federal Reserve will have limited impact.
Litte impact? How can the mighty Fed have “little impact”? How dare they question the power of the Almighty like that. Heathens!
Hey Bernanke, the only power you have is to RAISE rates. That’s all you’ve got.
“How can the mighty Fed have “little impact”?”
Once they lowered the interest rate all the way to to 0 the mighty Fed used their power. How much more can they print before gas is $5 a gallon and there are riots? Now they are much like Dwight D. Eisenhower after he gave the order for the D Day invasion.
Gen. Dwight D. Eisenhower: Hell it’s just the way it is Bedell, one minute I’m exactly what Churchill described me the most powerful man in history. Now the Order’s given, hell; I’m just audience front row center to the shoe. But a Corporal on Juno, a Private on Utah there the ones who will affect the outcome not me. It’s up to them now.
If I told you that I was going to buy a certain set of securities at any price by Nov 3rd and you knew I had unlimited printing ability to make such purchases, what would you do if you owned those securities? What do you think would happen to the price of the security if everyone else piled in on the no lose trade?
Here is yet another support for a contrarian rally on Wall Street:
Economic Report
Oct. 14, 2010, 8:49 a.m. EDT
Weekly jobless claims rise 13,000 to 462,000
New applications for compensation back above year-end 2009 level
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The number of people who signed up for state unemployment benefits jumped 13,000 to 462,000 in the latest week, the federal government reported, signaling no improvement in a weak U.S. jobs market.
Economists polled by MarketWatch had expected initial claims to fall to a seasonally adjusted 444,000 in the week ended Oct. 9. Claims for last week were revised up by 4,000 to 449,000, according to Labor Department data.
…
There’s nothing “contrarian” about it. It’s pump and dump for year end bonuses.
This is playing out much like Fall 2008, when everyone thought the dollar was badly burnt toast. Next thing you know, the dollar was oversold and began to rally strongly, against the backdrop of a selloff on the DJIA clear down to 6K.
But don’t worry — this time is different, as I’m sure Eddie could attest.
Stay tuned for BB’s speech tomorrow — should be a doozy!
Currencies
Oct. 14, 2010, 6:29 a.m. EDT
Dollar tumbles on heels of Singapore rate hike
Euro jumps to nearly a nine-month high on dollar; Aussie near parity
Dollar falls a second day on Fed’s easing hints
By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The dollar tumbled Thursday, setting a new lows against various currencies as investors reacted to expectations the Federal Reserve will soon undertake another round of monetary easing to boost the faltering U.S. economy.
The selling momentum accelerated after Singapore’s central bank surprised markets overnight by widening the trading band for the Singapore dollar, effectively tightening monetary policy.
The euro hit the highest in nearly nine months against the U.S. unit, which fell to a new 15-year low versus the Japanese yen and an all-time low against the Swiss franc. The Canadian dollar moved through parity with the U.S. unit for the first time in six months, while the Australian dollar neared parity with the greenback.
The dollar index (DXY 76.60, -0.47, -0.61%) , a measure of the U.S. unit against a basket of major global currencies, fell to its lowest level since December to stand at 76.389, down from 77.061 late Wednesday.
The Singapore announcement highlighted the difference between central banks “that are starting to tighten monetary policy and the few such as the Fed, the [Bank of England] and the [Bank of Japan] that continue to be highly accommodative,” Boris Schlossberg, director of currency research at GFT, said.
“This sharp contrast in policy direction … could push the dollar even lower,” Schlossberg said, adding that he thinks the greenback “continues to be grossly oversold.”
…
“This is playing out much like Fall 2008, when everyone thought the dollar was badly burnt toast. Next thing you know, the dollar was oversold and began to rally strongly, against the backdrop of a selloff on the DJIA clear down to 6K.”
I think it would be wise to get out of the dollar and stocks. The problem is, I can’t think of anything better to get into.
So I’m mostly cash (3 month treasuries) with perhaps 1/3 in stocks in 401K accounts.
The smart (and socially sanctioned) move appears to be to borrow lots of money, blow it all or wild living (or move it out of the country), and don’t pay it back. One wonders why Vegas isn’t doing better.
Oct. 14, 2010, 12:01 a.m. EDT
Don’t get used to the new Fed
Commentary: Quantitative easing will work for only a short time
By Jon Markman
SEATTLE (MarketWatch) — For decades, the Federal Reserve has been a brooding, dark, menacing presence at the edge of Wall Street, feared for its propensity to spit acid rain on markets whenever mortals dared to crack a smile.
At one time, news that Americans might be enjoying a little happiness was enough to provoke saturnine Fed chairmen to jack up interest rates, thin the money supply and generally just bum us out.
So you can understand that investors have been slow to understand the new Fed, which appears to be populated by unicorns and leprechauns who spend their days paging through how-to manuals to find new ways to shower the markets with cheap money. The Fed may have been on traders’ side for around 20 months now, but the relationship is so awkward that few can quite believe it.
Sadly, there might not be too much more time to enjoy it. About 12 weeks, in fact. Here’s why.
…
That’s no problem. They can just do another QE. and a QE after that. Then more QE. They totally have it covered.
I saw this and began to see how it explains why we are in this cluster****. Our society truely is hopeless. Even if we cleaned house and threw everyone in DC out, they would likely be replaced by an equally repugnant group of douchebags. I need a drink.
http://www.cracked.com/article_18777_5-scientific-reasons-powerful-people-will-always-suck.html
I hope they mentioned the supreme court decision giving corporate America a financial whip that will keep all politicians in line.
Here we have Feingold who voted no on TARP1,TARP2, voted to audit the FED, voted against NAFTA, voted most hated by lobbiests, getting slammed by corporate money and trailing by 8 points.
“Politician” is a career path now.
Witness the proliferation of 20 something recent college grads with Poli Sci degrees running for state offices.
One of them around here screwed up. Mostly, all you have to do to get elected to state office around here, is put up some signs, with “Republican” displayed on it somewhere. Her mistake was putting her picture on the signs. She looks like she’s about 16 years old.
If the locals had any sense, she wouldn’t have a chance. But I expect her to be elected in a landslide.
Tankxs, I’ll email this to Hwy’s “TrueBeliever’s™ / “TrueDeceiver’s™” “TrueHypocrite™” / “TruePurity™” siblings Thanksgiving morning…
“…This one goes a long way toward explaining the almost endemic hypocrisy of politicians and business leaders we see in the news every day. It explains why so many vehemently anti-gay politicians and religious leaders are creepy sexual deviants. It explains why banks are currently refusing to lend to anyone while giving their employees huge bonuses with bailout money. And it explains why the Senate voted itself a pay raise on the same day it refused to increase the minimum wage.”
It’s the number one reason I drink.
The world is run by sociopaths. And nothing short of serious, serious, disaster ever really changers things. Long after after many, many people have been maimed or killed.
… so have NICE day!
Very entertaining, stewie.
“When things cannot continue, they have a tendency to stop.”
~Herb Stein
Apparently Herb never considered a printing press. What a Dumbazz.
Oh no. His comment most certainly applies to printing presses which have run amok.
Bernanke is wisest of them all. Was Herb ever voted man of the year? I didn’t think so.
The Walls Keep Tumbling Down: Foreclosure Flap and Other Housing Industry Woes
Published: October 13, 2010 in Knowledge@Wharton
After suspending foreclosures in order to review cases that may be flawed by procedural errors or fraud, major mortgage companies have injected new uncertainty into the already weak housing market. While few of the homeowners under scrutiny are likely to avoid foreclosure, the freeze adds additional confusion and delays recovery of the troubled housing sector, according to Wharton faculty and real estate analysts.
The foreclosure flap is the most recent of many setbacks for the troubled industry, even as a new generation of potential buyers is rethinking the traditional dream of homeownership. “Buying a home doesn’t make sense for a large proportion of the population,” says Wharton real estate professor Fernando Ferreira, noting that ownership reduces the flexibility to pursue work in other regions and ties up cash in a down payment that might be used for better investments. “We forgot these lessons in the housing boom. But I think the new generation is learning them — at least for the next five to 10 years.”
…
I’m old enough to remember in the 1960s when it was common to hear people say they didn’t want to be “tied down with a mortgage.” And that was back when you could get a job and keep it for life practically. There were auto plants, aerospace and electronics outfits, utilities, govt jobs OTA back then.
I remember going to “mortgage burning” parties… they were a real source of pride at the time.
I’m looking forward to mine…
Good on the President for foiling Megabank, Inc’s plot to assassinate the nascent housing market recovery.
Foreclosure chaos for homebuyers, sellers
By Marcie Geffner • Bankrate.com
* Homeowners in some states get relief from the foreclosure process.
* Prices may rise with falling supply of for-sale foreclosure homes.
* Buyers who get a clear title can eliminate potential risks.
Recently, several major lenders suspended foreclosures as they review irregularities in legal paperwork. These suspensions could have a significant impact on today’s homebuyers and sellers.
The extent of disruption will depend largely on how long banks hold up foreclosures in states that require a judicial foreclosure process. During these suspensions, banks will review affidavits that have been challenged.
If the problems are resolved quickly, the impact may be minor, according to Rick Sharga, senior vice president at RealtyTrac, a national foreclosure-tracking service in Irvine, Calif.
“We should see a slowdown in new foreclosures and foreclosure processing over the next two to three months, followed by an accelerated rate of foreclosure activity in the first quarter of 2011, and then we’ll be more or less back to normal,” he says.
The risk, however, is that foreclosure delays could drag into next year or be expanded to more states — as already has begun to happen.
“The concern is the potential implications for the overall housing market and economy,” Sharga says. “If you freeze the sale of homes that have been repossessed and are in foreclosure, you will wipe out 30 percent of all home sales. That’s like finding a patient who’s in intensive care and unplugging some of the tubes.”
…
“Irregularities?”
That’s like saying Hitler, Pol Pot, Stalin, and Idi Amin were just misunderstood.
Foreclosures Rise; Repossessions Exceed 100,000 for First Time
Published: Thursday, 14 Oct 2010 | 12:03 AM ET
By: Joseph Pisani
CNBC News Associate
Amid a new flare-up in the national foreclosure crisis, a closely-watched private-sector index Thursday showed foreclosure activity in September rose on both a monthly and annual basis for the first time in four months.
The report, released by foreclosure listing website RealtyTrac, also found that banks took ownership from homeowners at a record pace in September.
The discouraging data comes as attorneys general in all 50 states Wednesday agreed to join forces in an investigation into whether banks and other lenders have used false signatures and documents to justify foreclosures.
Meanwhile, major mortgage lenders such as Bank of America [BAC 12.69 -0.60 -4.51%], GMAC, JP Morgan [JPM 38.81 -1.03 -2.59%] and PNC Bank [PNC 51.79 -1.13 -2.14%] have voluntarily halted foreclosure activity in some states, if not all 50, as they review their foreclosure process. Lenders made a similar move in 2009.
The RealtyTrac report found that foreclosures were up 2.53 percent in September from the previous month, and up 1.10 percent from the previous year. In all, 347,420 properties were in the foreclosure process. It was the first annual increase since May.
One in 371 U.S. households received a foreclosure notice in September. (Foreclosure notices are defined as a default notice, auction sale notice or bank repossession.)
Bank repossessions, the final step in the foreclosure process after a home fails to sell at auction, reached a record high of 102,134. It was the first time that bank repossessions have surpassed the 100,000 mark since RealtyTrac began collecting data in 2005.
…
Financial Stocks
Oct. 14, 2010, 10:49 a.m. EDT
Bank stocks slide on foreclosure fears
Wells Fargo, Bank of America, Citi shares hurt by widening scandal
By John Spence, MarketWatch
BOSTON (MarketWatch) — Shares of large-cap banks Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. slid more than 3% Thursday on growing concerns about the “robo-signing” foreclosure scandal.
Financials were the worst-performing sector as the Financial Select Sector SPDR Fund (XLF 14.60, -0.26, -1.74%) slipped more than 1%.
On Wednesday, officials in all 50 states unveiled a joint investigation into mortgage companies’ conduct during foreclosure proceedings. Some big banks like Bank of America (BAC 12.64, -0.65, -4.89%) and J.P. Morgan Chase & Co. (JPM 38.76, -1.08, -2.70%) have placed moratoriums on foreclosures. See related story on the foreclosure fraud scandal.
…
BAC’s share price appears to have made a miraculous recovery by close of trading today, given that it was down by 4.89% or more midday.
Credit Markets
Oct. 14, 2010, 11:41 a.m. EDT
Bank bonds fall on foreclosure uncertainty
Bank of America, J.P. Morgan in the crossfire
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Yields on U.S. bank bonds rose more than government debt on Thursday as worries about more firms halting foreclosures weighed on the market.
“Unfortunately for the banks, the markets do not like uncertainty and until more clarity surfaces, pressure will most likely remain on spreads,” said James Barnes, senior fixed income manager at National Penn Investors Trust Co.
The gap between U.S. debt and Bank of America Corp’s (BAC 12.55, -0.05, -0.40%) 5-year and 10-year debt widened about 0.25 percentage points earlier in the session, according to Andrew Brenner, head of emerging markets at Guggenheim Securities.
…
I love the smell of housing market chaos in election season.
Oct. 14, 2010, 12:01 a.m. EDT
Foreclosure filings up 3% in September
By Steve Goldstein
WASHINGTON (MarketWatch) — Foreclosure filings were reported on 347,420 U.S. properties in September, an increase of nearly 3% from the previous month and an increase of 1% from September 2009, RealtyTrac said Thursday. RealtyTrac expects a dip in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation. Foreclosure activity in the 24 judicial foreclosure states most affected by the foreclosure documentation issue accounted for 40% of all foreclosure activity in the third quarter and 36% of bank repossessions, RealtyTrac said. “If the lenders can resolve the documentation issue quickly, then we would expect the temporary lull in foreclosure activity to be followed by a parallel spike in activity as many of the delayed foreclosures move forward in the foreclosure process,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, if the documentation issue cannot be quickly resolved and expands to more lenders we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows - causing more uncertainty about home prices.“
I’m thinking “foreclosure” is the single word you’ve been typiing into the search engine for a few days.
My search terms are endogenously determined.
lol.
Who gets to pay for Brown’s promised modifications? And what law is he talking about that requires these?
California to Play a Lead Role in 50-State Probe of Foreclosure Practices
By Amita Sharma
October 13, 2010
The California Attorney General’s office has already sent letters to major lenders asking them to provide proof they’re complying with the law. State law bars banks from issuing mortgage default notices between 2003 and 2007 unless the lender checked whether a borrower is eligible for a loan modification. But California officials were concerned that banks may not have followed that law after recent acknowledgements by major lenders that their employees signed foreclosure affidavits without reading the documents. There have been more than three thousand foreclosures in San Diego County in the first half of this year. Brown says the inquiry may offer a reprieve to some people who are on the brink of losing their home.
“Other homeowners…they’re going to get what the law requires,” Brown said. “They’re going to get a modification.”
…
“The California Attorney General’s office has already sent letters to major lenders asking them to provide proof they’re complying with the law.”
I can’t help but wonder… exactly what kind of proof do they have in mind?
Alabama was a holdout yesterday. I take it they joined the fray in the last 24 hours.
Why hyperinflation is unlikely.
“The way to default on all debts is hyperinflation. But this is devastating for commercial banks. They get paid off by creditors without mercy. This is why hyperinflation does not come to large modern nations that have not suffered a military defeat. It has happened to no Western nation since 1945. Bankers run the central banks. They do not allow central banks to hyperinflate. They allow them to bail out failed banks, or swap assets at face value to keep big banks solvent. But hyperinflation is the debtor class’s friend and the bankers’ enemy. Bankers simply do not allow central banks to hyperinflate. Hyperinflation is not in their self-interest.”
~ America’s Future ~ Gary North
“This is why hyperinflation does not come to large modern nations that have not suffered a military defeat. It has happened to no Western nation since 1945.”
Oh, that’s right - Argentina lost the Falkland War.
Seriously though, I agree with North. Both the likelihood and the effectiveness of inflation in solving this are being grossly overplayed. How much more crowded can the inflation play get?
What makes Gary think we’re going to win all of our wars going forward?
Hyperinflation probably would solve our problems if it was distributed.
If the gov printed money and increased everyones paycheck 25% and added 25% to all savings accounts and gave credits to people who lost money through collapsing bond prices then prices would rise but people would have the money to pay the higher prices and that house that you purchased would seem more affordable with fixed debt. Gov tax revenue would increase exports would increase.
The problem is that all the printed money is going to the banks and speculators. Thus they drive up prices, people don’t have the money to pay so they cut down their consumption driving unemployment etc etc. What’s going on now is a massive wealth transfer from wage slaves and savers to the elite gamblers and manipulators. This will not fix the problem. It’s a game of musical chairs and at some point the music will stop. The elite on the inside have already been told where the music will stop.
Bad foreclosures threaten housing market
Economist warns Santa Rosa crowd they could ‘blow up’ real estate market
By ROBERT DIGITALE
THE PRESS DEMOCRAT
Published: Wednesday, October 13, 2010 at 6:17 p.m.
Last Modified: Wednesday, October 13, 2010 at 6:17 p.m.
Improper foreclosures could jeopardize the fragile U.S. housing market, a real estate economist told a Santa Rosa audience Wednesday.
“This has a real potential to blow up,” said Robert Kleinhenz, deputy chief economist with the California Association of Realtors.
Kleinhenz spoke at a luncheon of the Women’s Council of Realtors Wine County Chapter.
He said his concerns have grown in recent days as banks have expanded foreclosure moratoriums and state attorneys general have launched investigations into whether loan servicers processed documents without verifying key mortgage details.
The worst-case scenario would be if investors who acquired the loans went on to sue banks over alleged failures that lead to losses on the foreclosed homes, he said. That could further slow a resolution of distressed properties, which already is expected to take several years.
…
Something is rotten in the state of California!
North Coast frustration growing over foreclosures
By NATHAN HALVERSON
THE PRESS DEMOCRAT
Published: Saturday, October 2, 2010 at 3:00 a.m.
Last Modified: Saturday, October 2, 2010 at 9:53 p.m.
The public’s anger at national banks over the foreclosure crisis continues to boil over and has spurred a flurry of actions by elected officials.
Rep. Lynn Woolsey, D-Petaluma, joined other Democrats last week in calling for a federal investigation into the foreclosure process.
A bill co-authored by Rep. Mike Thompson, D-St. Helena, would allow some struggling homeowners to lower their monthly payments by refinancing loans at today’s low rates.
And as the week came to a close, state Attorney General and gubernatorial candidate Jerry Brown asked JPMorgan Chase to stop all foreclosure proceedings in California.
Their actions come amid growing frustration by homeowners who say major banks have stymied a 1-year-old federal program designed to lower monthly mortgage payments and reduce the number of foreclosures.
Lenders have foreclosed on more than 7,000 properties in Sonoma County since the beginning of 2008.
Woolsey said the banks might have acted illegally in some of those cases and, in a letter signed by other Democrats, is asking Attorney General Eric Holder, Federal Reserve Chairman Ben Bernanke and other officials to investigate bank practices.
“We think there is something amiss,” she said.
…
“…Lenders have foreclosed on more than 7,000 properties in Sonoma County since the beginning of 2008″
The fungus of sour grapes.
We think there is something amiss, and that miss is Leslie Appleton-Young.
I can’t stand how these porcine beauticians never tire of painting lipstick on pigs. Why do they always have to sugar coat the situation at hand?
Bank Repossessions Of Homes Top 100,000 For First Time, With No Solution In Sight
Posted: October 14, 2010 at 5:32 am
Bank repossession of homes passed 100,00 for the first time in September, according to industry research firm RealtyTrac. A record total of 102,134 bank repossessions were reported for the month.
If unemployment remains high, as expected, and the mortgage foreclosure fiasco grid locks the housing market, the trouble could get much worse as 2010 rolls into the first quarter of 2011.
The RealtyTrac U.S. Foreclosure Market Report for the third quarter of 2010, shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 930,437 properties in the third quarter, a 4% increase from the previous quarter and a 1% decrease from the third quarter of 2009. This figure is one out of every 139 homes in the US.
Foreclosure filings were reported on 347,420 U.S. properties in September, an increase of 3% from the previous month, the firm said.
Foreclosure auctions were scheduled for the first time on a total of 372,445 properties in the third quarter, a total of 269,647 properties received default notices, and bank repossessions hit a record high with a total of 288,345 properties repossessed by the lender.
Nevada, Florida, Arizona, and California continue to be the states hit hardest by the real estate disaster which began in 2007. One in every 29 Nevada housing units received a foreclosure filing during the quarter, almost five times the national average.
The inexorable cycle of regional high levels of joblessness which causes local housing market troubles continues. Nevada has one of the highest unemployment levels in the US and the jobless rate in Las Vegas is more than 15%. Overbuilding in the region caused a bubble which has created an inventory of unsold homes that would take more than 20 months to relieve if sales continue at the current pace.
The mortgage market is likely to remain troubled even with mortgage interest rates at historic lows. Potential buyers still face tough loan standards at banks shocked by home loan write-offs. Federal tax benefits for home buyers have expired. Perhaps the worst hurdle which faces the housing market is the perception among those in the market for homes that prices could drop another 5% to 10%.
Home prices could indeed fall further. A period of gridlock could be at its beginning now that banks and mortgage firms have begun to examine their foreclosure processes. Forty state attorneys general have joined in an investigation of the practices. This action alone could take months to conclude.
…
Coincidence is a sham concept here.
In Montana posted a story link yesterday, and embedded in that story was a link to a law review article that gives a history and legal disection of MERS. The law review article is 51 pages of dry reading but this tidbit is on page 19 of the pdf.
MERS’s position is no clearer in litigation. Interestingly, the
company tends to argue it is an actual mortgagee or assignee when it
brings foreclosure actions; but, when sued in cases alleging fraud,
deceptive practices, or other statutory consumer protection claims
associated with loans registered on its system, MERS argues it is merely an agent without exposure to liability. Even more perplexing, in a series of bankruptcy cases filed and then consolidated in the same bankruptcy court, MERS simultaneously brought the same type of foreclosure related actions both solely in its own name and as a nominee on behalf of other entities.
So MERS tries to be a principal when it suits it, and an agent to duck charges when it suits it.
Here’s the direct link to a site where you can download the .pdf of the law review article.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1469749&download=yes
Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System
Christopher Lewis Peterson
University of Utah - S.J. Quinney College of Law
University of Cincinnati Law Review, Vol. 78, No. 4, 2010
An entire business built on plausible deniability and being intentionally legally vague. Who’d a thunk it?
Tankxs,…
“MERS argues it is merely an agent without exposure to liability.”
Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)
Hwy’s favorite legal term: Indemnified!
Hey you missed your cue - about “duck charges”.
Ha,… good one DennisN
Yeah how bout them apples, Dennis. The legal issues are, uh, quite interesting. Between MERS and the Lost Note Affidavits… I wish I’d gotten into RE law.
Its “Biketoberfest” (fall bike-week) here in Daytona. Biketoberbust is more like it this year in this Depression-wracked area. Anyway, here is the helmet you will need to be in style:
http://cgi.ebay.com/ebaymotors/ws/eBayISAPI.dll?ViewItem&item=400153979748&ru=http://search.ebay.com:80/search/search.dll%3F%26rvr_id%3D145166384238%26satitle%3D400153979748%26fvi%3D1&viewitem
The funniest Ebay ad I have ever seen.
The Q and A at the bottom made me bust a gut! Pbox, you’re on a roll.
Oh well, our 3.75% 15 is no longer a record…
30-year mortgages fall to 4.19%
Washington Business Journal
The average rate on a 30-year fixed-rate mortgage is now the lowest it has been in six decades.
Freddie Mac’s weekly rate report says a 30-year fix fell to an average of 4.19 percent in the week ending Oct. 14, down from 4.27 percent last week, the lowest since at least 1951 based on FHA data going back to 1948.
It is the 23rd consecutive week the average rate on a 30-year mortgage has remained below 5 percent.
A 15-year fixed-rate mortgage fell to 3.62 percent this week, also a record low.
When I got my 4.875% 15 in 2003, I said to several people, “I’ll never see rates this low again.”
I thought I did well to get a 15 year at 4.375% back in in ‘09. Looks like I jumped the gun!
I would have thought the DOW would continue it’s moon shot today. What with all the good news about unemployment, record foreclosures, etc. All very good news for the w street gang.
Even plugs Bite-Me said team Barrys accomplishments were “to hard to explain”
Wow, I guess he means that he’s a moron, or the public is to stupid to understand their brilliance!
Hard to explain? How is it hard to explain that the bankers are getting higher bonuses than last year?
Plugs has said he is thinking about running in 2016. Not only is he an imbecile, he is a delusional imbecile if he thinks he can win.
Biden-Pelosi ‘16 has a nice ring to it.
I’d vote myself for a Condi Rice/Mitt Romney ticket instead.
Schiff-Paul is my write-in.
UP UP AND AWAY…..
Frob Bloomberg:
The Standard & Poor’s 500 Index exceeded 1,173.57 intraday yesterday, topping the post-crash peak reached on May 13 that marks a “significant bullish development,” said Craig Peskin and John Kolovos, co-heads of technical analysis research at Concept Capital.
The S&P 500 fell on three of the first five days of October. When U.S. stocks drop at the beginning of this month, it usually leads to a rally lasting into the subsequent year, according to Concept, which cited trading patterns going back to 1961. The market also does best at this stage of a U.S. president’s term, two years before the next election, they said.
“The strength that typically starts during midterm Octobers usually runs into the summer of a pre-election year,” the note said. “Pre-election years are the strongest of the four-year presidential cycle.”
Would now be a good time to buy the dip?
Hwy’s 40,000 coconuts look ripe for pickin’ just about now…
What if the dow were to tank like a thousand points the next few days? Woudn’t Eddie feel like an ass, I mean about normal.
Dollar tanks, stocks drop as Bernanke speech looms
By PAN PYLAS, AP Business Writer,
Thursday, October 14, 2010 at 8:57 a.m.
LONDON — European and U.S. stock markets mostly fell Thursday as investors awaited a speech from the Federal Reserve chairman that is expected to give more clarity on what the central bank is planning to do to prop up the ailing U.S. economy.
However, the prospect of more dollars floating around the system continued to pile the pressure on the currency itself.
…
Trolley ridership drops substantially
Bad economy, high unemployment cited as likely causes for decline
By Robert J. Hawkins
Originally published October 13, 2010 at 7:36 p.m., updated October 14, 2010 at 7:46 a.m.
At a time when many mass-transit systems across the country are enjoying a resurgence, the San Diego Trolley lost 6.5 million passengers.
While expressing reservations about their own numbers, Metropolitan Transit System officials say familiar suspects are behind this 17.5 percent ridership loss in fiscal 2010, which ended June 30: a bad economy, high unemployment, cutbacks in state funding, relatively stable gas prices.
“I really believe it is a reflection of the economy,” says county Supervisor Ron Roberts, a member of the MTS board of directors. “It is a concern, but I do not believe it is a rejection of the trolley by riders.”
The agency also raised rates last year and made some cutbacks in services to meet its budget. Almost no corner of the MTS system — city buses, express buses, trolleys — escaped the effects of a failed economy and double-digit unemployment. The whole system lost just more than 10 percent of its riders last year, according to the agency’s annual report.
…
Trolley ridership
2008: 37,620,994
2009: 36,928,284
2010: 30,468,981
Total MTS ridership
2008: 90,652,960
2009: 92,072,445
2010: 82,759,217
Source: Annual MTS Service Performance Monitoring Report
Posted on Wednesday, 10.13.10
States launch an inquiry into home foreclosure crisis
Florida’s attorney general joined 49 states and DC to launch a national probe into bank foreclosures.
* Exposing `robo-signers’
By TOLUSE OLORUNNIPA AND INA PAIVA CORDLE
tolorunnipa@MiamiHerald.com
In a new foreclosure crisis that has gone national, all 50 states plus the District of Columbia have launched a sweeping probe of the country’s lenders, even as new figures showed banks repossessed a record number of homes in September.
The joint investigation announced Wednesday, led by Iowa Attorney General Tom Miller, seeks to find out whether mortgage servicers and banks have been using flawed documents in court proceedings that have dispossessed hundreds of thousands of distressed homeowners.
With jurisdiction over one out of every eight mortgage servicers, Florida stands at the forefront of a probe that could lead to criminal charges, more delayed foreclosures, new regulations and tons of litigation.
In Florida, which has one of the nation’s highest foreclosure rates and an overwhelmed court system, the investigation could further complicate the process of home repossessions and possibly help homeowners challenge banks.
“Florida is taking a leading role in this multistate initiative as a member of the Executive Committee of the multistate group,” Florida attorney general spokeswoman Ryan Wiggins said in a statement.
The announcement comes at a time when the foreclosure debacle — which encompasses millions of now-questionable documents, foreclosure-shy title insurers and law firms processing paperwork at a dizzying pace — has mushroomed in magnitude.
On Wednesday, both GMAC and JPMorgan Chase followed in the footsteps of Bank of America by expanding their foreclosure suspensions. Those freezes, previously restricted to 23 states, now blanket the country, encompassing hundreds of thousands of distressed homes.
Two of the nation’s other top lenders, Wells Fargo and Citigroup have not stopped their foreclosure processes.
Figures released Thursday reveal that in the months before the foreclosure system began to implode, lenders were ramping up their home repossession operations to unprecedented levels.
According to RealtyTrac, an Irvine, Calif.-based real estate research firm, lenders reclaimed 102,134 homes nationwide in September, the first month that bank repossessions have ever reached the 100,000 mark.
The lenders holding South Florida’s glut of distressed mortgages were particularly eager to take back homes in the months leading up to the foreclosure document mess. In Miami-Dade County, 2,082 repossessions in September represented an increase of 203 percent over September 2009, when only 687 homes were reclaimed from owners in default. In Broward and Monroe counties last month, there were 1,986 and 734 bank repos, respectively, with both counties posting large year-over-year increases.
For the third quarter of 2010, bank repossessions in Miami-Dade, Broward and Monroe counties totaled 11,207, up 86.2 percent year-over-year.
In South Florida, the rate at which homeowners are entering into foreclosure is slowing — but some 22,500 homes are currently caught somewhere in the pipeline, RealtyTrac found.
As the legal tension grows among major lenders, attorneys general and foreclosure law firms, South Florida’s distressed homeowners are left with the task of navigating the unpredictable environment.
…
Regardless of your political persuasion, a little humor!
Last Tuesday President Obama got off the helicopter in front of The White House - carrying a baby piglet under each arm.
The squared-away Marine guard snapped to attention, saluted and said: “Nice pigs, sir.” The President replied: “These are not pigs. These are authentic Arkansas Razorback Hogs. I got one for Secretary of State Hillary Clinton, and I got one for Speaker of the House Nancy Pelosi.”
The squared-away Marine again snapped to attention, salutes and said, “Excellent trade, sir.”
Some great news for 700 folks, just in time for X-Mas.
Quad/Graphics Dyersburg Factory to Eliminate More Than 700 Jobs, an Industrial Info News Alert ~ Thu, 14 Oct 2010
(MARKETWIRE via COMTEX) –
Researched by Industrial Resources (Sugar Land, Texas) — Quad/Graphics (Sussex, Wisconsin) announced it will shut down its 770,000-square-foot printing plant in Dyersburg, Tennessee. The first layoffs are estimated to affect 165 employees, and the remaining 600 will be out of jobs by November or December 2010.
That really stinks for employees that have probably been in printing their entire lives and may not be sure what to do next, but Quad just had a merger w/in a struggling industry. The writing was on the wall. I’m surprised the announcements took this long.
Quad was my favorite vendor back in the 80s/90s. Mostly because the employees were so good at what they did. The whole thing is tough to watch but the company’s long term survival is at stake.
State Fiscal Problems Crippling Buffalo Schools
More layoffs could be coming to the Buffalo School District if a fiscal crisis is not resolved by Albany decision-makers.
That’s the assessment Superintendent Dr. James Williams delivered to the school board last night.
If no corrections are made, “we will have to adjust the budget by laying off people equivalent to $22 million” or 900 layoffs, Williams said.
A veto by Governor Paterson means more than $11 million more for charter schools and more than that which won’t come in to help with pension costs, along with a $4 million cut in state aid and $8 million which hasn’t come in from the federal jobs bill.
It wasn’t supposed to happen but a bill passed in the Assembly hasn’t passed the Senate making the situation worse.
“We’re just in disarray right now because of lack of decision making (in Albany),” said Williams.
The superintendent is already fighting a war on another front where students appeared at the board meeting to protest the Washington-required firings of two high school principals because of low school test scores.
“These just aren’t principals, these are people that you are firing,” said Riverside High School senior Anthony Vega.
Is the dollar toast?
NEW YORK (CNNMoney.com) — In Gary Shteyngart’s brilliant new novel “Super Sad Love Story,” he envisions a not-so distant nightmarish future for the United States where the dollar has essentially no value and China gets tired of backing our worthless debt.
Fortunately, it’s just a satire. Or is it?
The dollar has sunk like a stone in recent weeks. With the euro now at $1.41, nobody’s seriously talking about parity any more. There are growing concerns about the trade deficit in the United States and the possibility of trade and currency wars — particularly with China.
And with the Federal Reserve strongly hinting that a new round of bond buying — the so-called quantitative easing policy — is likely to be announced at its next meeting in early November, long-term bond yields could continue to sink.
That may put pressure on the dollar and make our nation’s biggest creditors, i.e. China and Japan, increasingly wary of holding debt that offers such little in the way of return.
“…increasingly wary of holding debt that offers such little in the way of return.”
It’s officially brunch babeeeeeeeee,…
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Oct. 14, 2010, 1:36 p.m. EDT
B. of A. spreads highest since July 2009: Markit
BOSTON (MarketWatch) — The cost of default protection against U.S. bank debt jumped Thursday amid worries financial institutions could be on the hook for losses as a result of the nationwide foreclosure probe. U.S. bank credit default swap spreads “have widened sharply amid fears of prolonged litigation,” said Gavan Nolan, vice president of credit research at Markit, in a note. “Bank of America’s (BAC 12.53, -0.76, -5.72%) spreads are now at their widest levels since July 2009. There are also concerns that the issue could have a damaging effect on the fragile U.S. housing market.“
Emac’s Bottom Line
Does the US Deserve its Triple-A?
By Elizabeth MacDonald
Published October 14, 2010
Fourth installment in the “They’re Burning Your Money” series featured all week on FOX Business
Will the credit ratings agencies downgrade the US’s triple-A rating, which it has held since 1917?
Moody’s Investors Service and Standard & Poor’s have made threats to downgrade the US in the past, but the threats are coming more frequently in recent years, along with tougher language.
One big breaking point for the credit ratings agencies: Interest costs on the US debt as a percentage of total federal tax revenues.
Keeping the interest cost to federal tax revenue ratio stable is why the government is increasingly talking about ways to raise federal taxes in order to avoid an embarrassing credit rating downgrade, exacerbated by soaring government spending.
The credit rating agencies essentially do not want to see any sovereign government getting on a hamster wheel of printing or borrowing money just to pay interest on their debt load.
…
Affirmation of Israel’s Jewishness, however, is the very foundation of peace, its DNA. Just as Israel recognizes the existence of a Palestinian people with an inalienable right to self-determination in its homeland, so, too, must the Palestinians accede to the Jewish people’s 3,000-year connection to our homeland and our right to sovereignty there. This mutual acceptance is essential if both peoples are to live side by side in two states in genuine and lasting peace.
.” Why, then, can’t the Palestinians simply say “Israel is the Jewish state”?
The reason, perhaps, is that so much of Palestinian identity as a people has coalesced around denying that same status to Jews. “I will not allow it to be written of me that I have … confirmed the existence of the so-called Temple beneath the Mount,” Yasir Arafat told President Bill Clinton in 2000…u cant have peace w/ people who wont recognize your right to exist….i hope Israel keeps on building on the west bank…….
Israel just killed an American man on one of the Flotillas attempting to provide humanitarian aid to the Gazans that Israel is attempting to exterminate.
Why do Israelis get away with the crime of murder and land theft?
Because nobody is willing and able to stop them.
P.S. Same comment explains why the biggest, most powerful U.S. banks get away with fraud in perpetuity…
TBTF has its privileges.
Just like no one was interested in stopping the Nazis.
The greatest asset that the Israeli state had was the status of victim-hood. Said status is now no longer applicable as any informed person understands that Israel victimizes all who oppose it including its very own. The Gaza situation is very aptly being referred to as a holocaust its main victims being infants, toddlers, and the elderly. Shame upon those who allow such atrocity. Good on those attempting to provide aid to Gazans which include jews yet far to few.
Just to consider the flip side
There used to be a fair number of jews in many of the arab states and as you know there were many more in Europe at one time. You said that you wouldn’t fight for land that you lived on. I suspect you might reconsider if you had previously been violently pushed out of other places. That being said they sure poor gas on a bad situation with the settlements. I’m sure as with all religions that they think they are the chosen ones.
Why do Israelis get away with the crime of murder and land theft?
Maybe for the same reasons the Palestinians get away with murder. It’s almost like a war or something.
But wait. What “land theft”?
I mean,
Which people (who were there since when?) stole who’s land that they had been on (for how long?) since the other was kicked off (when?) and by whom and why did they do it anyway?
“Maybe for the same reasons the Palestinians get away with murder.”
The Gazan children have not murdered anyone yet scores are dying as a result of the Israeli blockade. Again, Israel has given away its victim-hood in exchange for the title of mass murderers and collective punishers.
If a people were on my land and getting them to leave required me to murder them by the 100’s then I would leave my land. Killing people for land is no problem at all for the Israeli settlers and military which is unacceptable. Clearly the Israeli powers lack humanity which ought to strike fear in all people considering that Israel possesses nuclear weapons. Again, good to the Israelis and others that resist the stealing of land from their neighbors.
The Gazan children have not murdered anyone yet scores are dying as a result of the Israeli blockade.
But why is there a Israeli blockade? The Israeli’s want the Gaza beach-front property? This is why there is a blockade?
Thankfully only the rich are allowed to steal peoples land in the US.
And these days they generally only use financial scams, not guns anymore.
Palestinian people
??? A made-up term of political correctness…
There was no such thing as a “Palestinian people” (ie – no-jewish arabs who lived in the area) ever - until the arabs lost their wars of “pushing jews into the sea” and made up the term.
A “Palestinian people” never existed under the Ottomans, never existed under the British or the Jordanians.
Stocks Dip; Likely Fed Move Keeps Losses in Check- AP
Stocks dipped Thursday after concerns about another disappointing report on jobs and traders worried about foreclosure practices at banks. But losses were held in check by expectations the Federal Reserve will act soon to strengthen the economy.
http://www.youtube.com/watch?v=hQdyyAP7PbE&feature=bulletin
October 13, 2010
“A California family claims they were illegally evicted, and Saturday, they broke the locks and started moving back in even though the home has already been sold. This comes at a time when some banks are halting foreclosures across the country due to flawed paperwork. The family and their attorney said the bank used fraudulent paperwork to force them out.”
The foreclosure mess
Procedural problems have led several top lenders to suspend efforts to repossess homes.
October 12, 2010
The banking industry may finally have found a way to help struggling homeowners — by fouling up the paperwork so badly that foreclosures can’t proceed as planned. Several mortgage-servicing companies have acknowledged that the workers who were supposed to verify foreclosure documents didn’t actually, you know, read them. Meanwhile, judges in at least three states have blocked a handful of foreclosures because of confusion over who actually owned the loans, which had been bundled into securities that were sold in fragments electronically.
…
“In the long term, stock prices will go back to reflect the fundamentals of the banks and their balance sheets,…”
Ruh-roh, Scooby…
* OCTOBER 14, 2010, 1:04 P.M. ET
Bank Stocks Tumble On Foreclosure Moratorium Uncertainty
By Corrie Driebusch
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Investors fled out of U.S. bank stocks on Thursday amid growing concerns that foreclosure moratoriums could sideswipe the financial industry.
J.P. Morgan Chase & Co. (JPM) tumbled 3% to $38.66 in recent trading, as Wells Fargo & Co. (WFC) declined 4.7% to $24.61 and Bank of America Corp. (BAC) slid 5% to $12.62. The Standard & Poor’s 500 Financials Index fell 2.2%.
The drop follows probes by 50 state attorneys general into allegations that thousands of home foreclosures were improperly handled. J.P. Morgan Chief Executive Jamie Dimon vowed to root out any flawed foreclosure-sale paperwork on Wednesday as the banking giant temporarily suspended evictions in 23 states and is reviewing foreclosures in 41 states.
BofA halted all foreclosures and foreclosure sales last month. Wells Fargo initiated a review of all pending foreclosures where affidavits are required.
The flood of mortgage worries could distract from potentially positive third-quarter earnings reports expected in the next several weeks, analysts said.
“Any moratorium is bad for banks,” Morningstar analyst Jaime Peters said.
At issue is the process by which banks approved foreclosing on homes and whether banks used employees, or “robo-signers,” who signed foreclosure documents without fully reading them.
Besides facing legal fees and fines, a moratorium means under-performing and non-performing loans stay on the banks’ books longer. One possible, but unlikely, scenario is that banks may be forced to return homes to previous owners, modify their mortgages and take a hit on the principle.
Still, Peters said she believes this is a short-term blip for bank stocks and repercussions will not affect shares more than a quarter or two from now. In the long term, stock prices will go back to reflect the fundamentals of the banks and their balance sheets, Peters said.
…
GONZALO LIRA: The Coming Middle-Class Anarchy
Gonzalo Lira | Oct. 12, 2010, 4:47 PM
…
Brian and Ilsa — the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law — who don’t even cheat on their golf scores — even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”) — have decided to give their bank the middle finger.
They have essentially said, Fuck!t.
They haven’t defaulted — not yet. They’re paying the lower mortgage rate. That they’re making payments is because of Brian: He is insisting that they pay something — Ilsa is of the opinion that they should forget about paying the mortgage at all.
“We follow the rules, and look where that’s gotten us?” she says, furious and depressed. “Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had complied — and when the government got off their backs, they turned around and raised the mortgage back up again!”
“And charged us a penalty,” Brian chimes in. The non-payment penalty was only $84—but it might as well been $84 million, for all the outrage they feel. “A penalty for non-payment!”
Nevertheless, Brian is insisting that they continue paying the mortgage — albeit the lower monthly payment — because he’s still under the atavistic sway of his law-abiding-ness.
But Ilsa is quietly, constantly insisting that they stop paying the mortgage altogether: “Everybody else is doing it—so why shouldn’t we?”
A terrible sentence, when a law-abiding citizen speaks it: Everybody else is doing it — so why don’t we?
I’m like Wayne Gretsky: I don’t concern myself with where the puck has been — I look for where the puck is going to be.
Right now, people are having a little hissy-fit over the robo-signing scandal, and the double-booking scandal (where the same mortgage was signed over to two different bonds), and the little fights between junior tranches and senior tranches and the servicer, in the MBS mess.
But none of that sh!t is important.
What’s really important is Brian and Ilsa: What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules is nothing but a sucker’s game.
…
What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules and buying an OVER-PRICED house is nothing but a sucker’s game.
Revised: What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules is a sucker’s game.
Sure are a lot of interesting comments. I actually saw a familiar HBB moniker there - a real blast from the past.
Maybe they can trot out Hankie Panky Paulson to shame these people to keep paying - call them “speculators” or some such?
What are these members of Generation Greed, the best off generation in U.S. history, on the right side of all the inter-generational transfers (from those who came before, who sacrificed for the future, and from those coming after, whose future was sacrificed), who voted for Reagan to cut their taxes and Bush II to enhance their Medicare, doing with a mortgage at age 60? What are the doing retired at age 60? Do they really think anyone coming after will be able to retire at 60, unless forced to retire at 60?
Yeesh.
La la la-la-la they lived for today.
La la la-la-la they lived for today.
The borrowed against their tomorrow,
someone has to pay.
“Diz ALL the Gov’ts fault!”
http://www.fhwa.dot.gov/pressroom/fhwa1054.htm
Those who claim to understand macroeconomics better than I claim to feel free to jump in here, but wouldn’t the aftermath of the housing bubble’s home building binge result in structural, not cyclical, unemployment in the housing sector? We aren’t likely to see 2006 levels of employment in housing and housing-related services again for another century or so. I suppose one might argue that in the long run, all employment adjustments are cyclical?
At any rate, it appears the economic downturn was largely driven by a housing collapse, and the associated employment drop was structural, not cyclical. If my conjectures prove correct, the article posted here suggests a monumental policy error may be in play.
* CAPITAL
* OCTOBER 14, 2010
For Fed, Risks of Goosing Market Are Worth It
* By DAVID WESSEL
…
Now, the Fed is saying: We stopped prematurely. It reasons that if the government did more to juice the economy now, unemployment would fall, as would the risk of deflation, a debilitating decline in prices and wages. That diagnosis is important. As the German central banker Axel Weber argued this week: If a central bank thinks unemployment is “structural”—workers don’t have the skills employers need or won’t move to where the jobs are, or if consumers won’t spend for fear of future tax increases or pension cuts—a central bank can and should do nothing. But after weekend meetings in Washington, Mr. Weber said: “My reading of U.S. colleagues’ judgment is that when it comes to the strong increase in the unemployment rate, a large part…must be perceived as being [cyclical] rather than structural.” And what is cyclical is susceptible to monetary stimulus, he said.
…
“…If a central bank thinks unemployment is “structural”—workers don’t have the skills employers need or won’t move to where the jobs are…”
What types of skills?
What types of jobs?
Where?
At what rate?
Oh, it’s a thin line between a strawberry/peach picker’s income and a “sliced & diced” $475,000 home loan.
Structural unemployment means we screwed the pooch on overbuilding.
That was my point, exactly! I guess the Fed is still living in denial on that point?
How do Obamanomics Team members decide whom to protect and whom to throw into the jaws of hungry Wall Street loan sharks?
Foreclosuregate
Robostop
The fuss over poorly reviewed repossessions exposes deeper problems
Oct 14th 2010 | NEW YORK
HOW did foreclosures go, in a matter of weeks, from just another miserable statistic in America’s housing bust to the subject of a scandal with its own “-gate” suffix? The answer is a combination of sloppy (and possibly fraudulent) paperwork, a securitisation process that is even more broken than anyone imagined and a febrile political environment.
“Foreclosuregate” flared up when an employee at GMAC Mortgage, part of Ally Financial, admitted to having approved thousands of repossessions without properly reviewing the documents. The company responded by halting sales of seized homes in the 23 states where court approval is required to foreclose while it gets to the bottom of its “robo-signing” problem. JPMorgan Chase and several other servicers (which manage loans and distribute payments to investors in mortgage-backed securities) quickly followed suit. Bank of America has called a stop in all 50 states.
Brushing the problem aside was not an option, given intense pressure from Congress, state officials and community groups. With more than 2m homes in foreclosure (see chart), and mid-term elections looming, the outrage has been deafening. On October 13th a group of attorneys-general and bank regulators from all 50 states announced a probe of foreclosure practices. Calls for a nationwide freeze grow.
The Obama administration and many economists worry that this would merely prolong the housing market’s pain by holding up the clearing of excess inventory (sales of foreclosed homes accounted for 24% of the second-quarter total, according to RealtyTrac). It would be “very damaging to exactly the kind of people we’re trying to protect”, argued Tim Geithner, the treasury secretary, because houses would remain empty, dragging down local prices.
…
Excuse me, but how does houses remaining empty drag down local prices? I thunked the banksters’ plan was to withhold inventory from the market in order to keep prices propped up…
Oct. 14, 2010, 2:14 p.m. EDT
Foreclosure crisis: What it means for you
Commentary: If you bought a foreclosure, trouble may be brewing
By Jennifer Openshaw
NEW YORK (MarketWatch) — Whether you recently bought or plan to buy a foreclosed home, the latest news that banks have mishandled foreclosures may have you worried.
…
..Moreover, T2’s (Glenn) Tongue says he still expects some 10 million defaults on mortgages still to come..
Should a concerned buyer worry more about sloppy paperwork or about 10,000,000 more houses hitting the market?
“…10,000,000 more houses…”
‘Tis a mere flesh wound. And the associated economic adjustment will be cyclical, not structural — because Bernanke said so.
cynical adjustment.
DENVER – Former Denver Broncos quarterback John Elway and his business partner gave $15 million to a hedge-fund manager now accused of running a Ponzi scheme.
The Denver Post reported Thursday that Elway and Mitchell Pierce filed a motion saying they wired the money to Sean Michael Mueller in March. They said Mueller agreed to hold the money in trust until they agreed on where it would be invested.
A state investigator says 65 people invested $71 million with Mueller’s company over 10 years and it only had $9.5 million in assets in April and $45 million in liabilities.
Elway’s filing asks that the court put their claims ahead of others so they can collect their money first. His lawyer declined to comment.
I felt sorry for the guy until the last statement.
I didn’t feel sorry for him from word #1.
Mar 30, 2009 … John Elway is estimated to have a net worth in excess of $100 million..
Even so, a 15 mill “sack” has to sting a little..
He made some money when he sold his car dealerships to Wayne Huizenga. Since then he’s been batting 0.000. His Arena Football League team folded with the league. He divorced his wife, etc.
I guess he wanted more than a 1-2% return on his investments.
Oh well.
…they wired the money to Sean Michael Mueller in March..
..wired the $15M in March? 2010?
Madoff was arrested 12 months earlier.
I understand how someone with lots of money hates to see it sit around, doing nothing, but these are dangerous times. Hang on to what you got, and be thankful.
But 1-2% return on $100 million is still a safe and easy $1-2 million. Surely he could live on that income.
Paige Green.. Oakland Raiderette.. married August 2009..
Looks good for 41.
I bet she could spend $1 million a year on clothes and stuff..
Yawn… time to prepare for winter hibernation. I can’t foresee any housing market recovery until after the Souper Bowl.
PM Report: Foreclosure Mess - How Bad Will It Get?
Oct. 14, 2010
Nick Timiraos discusses the unfolding foreclosure-crisis, including how bad it’s likely to get, how much it’s likely to cost banks and the risk that it could paralyze the housing market.
Always remember, a closely-watched pot never boils over.
How Foreclosure Fraud Might Impact Home Prices
By Annie Lowrey
10/14/10 2:41 PM
Today, RealtyTrac reported foreclosure and home-sale information for September and the third quarter of the year, showing an extraordinarily weak housing market. Here are just a few data points:
* Banks repossessed a record 102,134 homes in September. That is the highest monthly count ever recorded, and the first time monthly repossessions have surpassed the 100,000 mark.
* Repossessions also hit a quarterly high. Banks took back 288,345 properties between July 1 and September 30, seven percent more than the previous quarter and 22 percent more year-on-year.
* During the third quarter of the year, banks scheduled auctions on 372,445 properties. That is a record high, up five percent from the previous quarter.
* Sales of properties in foreclosure — whether entering foreclosure, or bank-repossessed — accounted for 31 percent of total sales in September.
Banks are repossessing more homes. That is, of course, difficult for families, but ultimately important for the housing market, as banks take the houses back, resell them and clear their books. But the foreclosure fraud crisis is stymieing and slowing that process, in a way that might cause home prices to slide six months or a year from now.
Why? Rather than selling repossessed homes, banks are holding them — and as foreclosures work through the system, that pool of houses will grow. Eventually, though, when the fraud crisis is worked out, banks will start pushing that backlog of houses onto the market. That will flood the housing market with properties, leading to, analysts fear, another nationwide decline in housing prices.
…
Hopefully the states’ attorneys generals can clear up issues such as the allegations raised in this article. The American people deserve no less.
Zach Carter
Economics Editor, AlterNet; Fellow, Campaign for America’s Future
Posted: October 13, 2010 12:47 PM
The Subprime Swindle and the Foreclosure Fraud Cover-Up
There are plenty of reasons why the foreclosure fraud crisis sweeping the nation’s housing market is an economic disaster. Banks are charging borrowers illegal fees, kicking the wrong people out of their homes and even hiring thugs to illegally break into houses. But the fundamental scam is much worse than these shameful acts. Fraud in the foreclosure process conceals a second, more massive fraud: the astonishing levels of mortgage fraud perpetrated by subprime lenders during the housing bubble. These frauds don’t just expose big banks to epic losses, they expose bigwig bankers to prison time.
Clearly, we’re dealing with a lot of different frauds here. Tomorrow, I’ll detail one of the smaller-bore problems with foreclosure fraud: providing cover for illegal fees that lenders charge to troubled borrowers. But today I’ll discuss a much different and much bigger scandal. During the housing bubble, banks falsified documents on a massive scale in order to issue as many toxic subprime loans as possible. This was straightforward mortgage fraud, and the current wave of fraud in the foreclosure process is covering it up.
…
Foreclosure Fraud: “Burger King Kids” Signed Foreclosure Papers
October 14th, 2010.
Carlo Gabriel Simbajon.
They are called “Burger King Kids” – workers with high school educations and with little or no experience in handling mortgages and foreclosures. In the latest twist in the ongoing foreclosure fraud scandal, these “robo-signers” have allegedly been signing foreclosure affidavits since 2007. According to reports from the New York Times and CTV News, mortgage companies like JPMorgan Chase (NYSE:JPM) employed inexperienced walk-in hires who “barely knew what a mortgage was.”
According to CTV News, an avalanche of home foreclosures in 2007 required US financial institutions and their mortgage departments to hire “hair stylists, retail workers and people who had worked on assembly lines” to handle homeowners’ papers even though they did not have any formal training.
…
i realize this “story” is based on (thus far) unproven and undocumented accusations by some ambulance chasing attorney, and the press will naturally run with it, but it does point out one important thing:
Banks were totally unprepared to deal with all the foreclosures and, for the most part, still are.
“…unproven and undocumented accusations by some ambulance chasing attorney…”
I’m sure the investigation to verify these unproven and undocumented accusations will be conducted post haste by the Ueberregulator Fed.
Q&A: What are mortgage foreclosure ‘robo signers’?
The US mortgage foreclosure crisis continues to deepen, with new evidence that Wells Fargo, the second-largest mortgage servicer, used a ‘robo signer’ like other banks
* Julia Kollewe
* guardian.co.uk, Thursday 14 October 2010 11.25 BST
A broken ‘For Sale’ sign in America
‘Robo signers’ have been accused of rubberstamping foreclosure documents too quickly. Photograph: Shannon Stapleton/Reuters
Who are these ‘robo signers’ or ‘Burger King kids’?
The staff used by US banks to sign off on foreclosures have been dubbed “robo signers” for the speed with which they rubber-stamped mortgage documents without checking their accuracy. They have also been dubbed “Burger King kids” – walk-in hires who barely knew what a mortgage was. Tens of thousands of American families have been evicted in this way.
How do we know this is happening?
Several bank employees have made statements in court. For example, GMAC manager Jeffrey Stephan said he had signed off on legal documents for 10,000 foreclosure papers a month without verifying them. Threatened with legal action, many of the banks, with the notable exception of Wells Fargo, have halted foreclosures on delinquent borrowers to review their procedures.
Can the banks get away with this?
JP Morgan’s chief executive, Jamie Dimon, said on Wednesday that banks could get fined for their foreclosure practices, the first top banking executive to make such comments. Attorney-generals in 50 American states have begun a joint investigation and some homeowners have also taken legal action.
Which banks are embroiled in the ‘robo signer’ scandal?
Banks embroiled in the scandal include Wells Fargo, GMAC, OneWest Bank and JP Morgan. JP Morgan has more loans, in value, in foreclosure than any other bank in the US and is reviewing its approach to the 115,000 home loans across 41 states. GMAC halted foreclosure evictions in 23 states last month.
Fannie Mae and Freddie Mac are reviewing foreclosures on GMAC-serviced mortgages they own and have halted evictions on them until the review has been completed.
…
Interesting coincidence: The four biggest U.S. banks just happen to also be four of the banks caught up in the Great American Foreclosure Fiasco.
Sanders re-introduces bill breaking up big firms
By Jay Heflin - 10/12/10 03:08 PM ET
On the heels of reports that Wall Street will pay out record-setting bonuses for a second straight year, Sen. Bernie Sanders (I-Vt.) on Tuesday said he would reintroduce legislation aimed at breaking up financial institutions deemed “too big to fail.”
“At a time when the middle-class is disappearing due to greed and recklessness on Wall Street, it is unconscionable that big banks are rewarding the same executives that caused the worst financial crisis since the 1930s with record-breaking pay packages,” the senator said in prepared remarks. “Instead of doling out huge bonuses, Wall Street should be investing much of this money into the job-creating productive economy. These Wall Street executives would not have jobs today if working-class taxpayers did not bail them out.”
Sanders states that three out of the four largest banks in America (JP Morgan Chase, Bank of America and Wells Fargo) are now larger then before they received taxpayer bailout funds. The four largest banks in America have assets equal to more than 50 percent of the entire annual U.S. gross domestic product and now issue two-thirds of all credit cards, half of the mortgages, and control nearly 40 percent of all bank deposits.
…
“Coincidence?”
How come banks that can afford record making bonuses couldn’t afford enough workers to avoid robosigning?
You do not become rich by wasting your own money.
at this point, here’s what i figure happened.
Your bank forecloses and generates about 50 documents assigned to maybe 10 different departments. All the information is verified as happens in the normal course of business.
The documents are then accumulated into a pile on a robo-signer’s desk, and a coversheet says:
“I have read and verified all the information on the included documents.”
Signed, ____________ date ___________
The robo-signer is supposed to sign/date that sheet, check a list to insure all necessary paperwork is included, and stuff everything into a manila envelope.
It isn’t called called a “bone us” for nothing!
Is 60 million foreclosures even a plausible number?
Evicted Homeowners Revolt
Reported by: Sherri Palmeri
Email: sherri.palmeri@sandiego6.com
Last Update: 10/12 9:05 pm
Escondido, CA — More and more homeowners are beginning to revolt against what they say are wrongful foreclosure and eviction practices.
Today, in an effort to assert their legal rights, two families in Escondido took possession of homes they said they were illegally evicted from.
The families said the foreclosures were intentional and calculated to fraudulently evict them.
On the advice of their attorney, the families moved back into their homes.
“I’m very excited and feel a little bit worried about what is going to happen,” ” said Emiliano Bolanos.
His family was evicted in the middle of the night two months ago.
He has been living with friends ever since.
Next the families will take their battle to court.
Their attorney, Michael Pines, said he believes there are about 60 million foreclosures nationwide that were based on fabricated and forged documents.
…
“he believes there are about 60 million”
His client’s chance of avoiding arrest are about one in 60 million.
..while that attorney’s chances of absconding with the last of their money is about 60 million to one.
Well, there are 131M housing units in the U.S. I seriously doubt the foreclosure rate is going to end up 50%, let alone the number of fabricated ones.
We’re running at a rate of 4M foreclosure filings per year, across 2.8M homes. So 60M would be 15 years at that rate, with every single filing being fraudulent. Even if as many as half were fraudulent, that’s 30 years’ worth.
Nah. It’s bad - not that bad though.
Today, in an effort to assert their legal rights, two families in Escondido took possession of homes they said they were illegally evicted from.
The legal right to stay in a house you have not paid a mortgage on for two years…???
I must have missed that in law school…
Wrongful Foreclosures Investigation Launched
Posted: 4:44 pm EDT October 13, 2010
Updated: 6:08 pm EDT October 13, 2010
WINTER GARDEN. Fla. — Attorneys general from all 50 states are now launching an investigation into wrongful foreclosures. The case impacts more than 10,000 families in Central Florida. They want all mortgage companies to freeze foreclosures during the investigation.
Bank of America is one lender that’s already halted all foreclosures.
…
People whose homes have already gone through foreclosure can file a wrongful foreclosure suit, because of this investigation, and fight to get their deficiencies waived.
Halt foreclosures in St. Louis
by todd swanstrom and chris kreHmeyer
http://www.STLtoday.com
Posted: Thursday, October 14, 2010 12:00 am
It recently came to light that lawyers processing the paperwork for foreclosures have been signing 10,000 or more documents a month without even reviewing them for accuracy and proper documentation. Robo-signers, they are called. Facing the threat of lawsuits for wrongful foreclosure, a number of the largest banks and servicing companies have suspended foreclosures until these problems are resolved.
It’s time for the state of Missouri do the same thing, instituting a 60-day moratorium on foreclosures, both to clear up the legal problems and to institute a system of voluntary mediation.
Instead of slowing down, the foreclosure crisis is speeding up. Completed foreclosures in the St. Louis County reached an all-time high in September. The Missouri economy is being dragged down by the foreclosure problem. About 11 percent of first-lien mortgages in Missouri either are delinquent or in foreclosure, and 15 percent of mortgages are “underwater,” meaning homeowners owe more on the mortgage than the property is worth.
…
Wall Street takes notice of foreclosure troubles
The stock market hasn’t reacted much to the growing furor over foreclosures — until today, with Bank of America, Citigroup and Wells Fargo all dropping sharply more than 4 percent.
Problems in the foreclosure process have been brewing for weeks, and there weren’t any big news developments today (for a change).
So why now?
Wall Street has so far been shrugging its shoulders, characterizing the issue as a series of technical slip-ups. As a former member of the Goldman Sachs management committee told the New York Observer: “I don’t get it. It doesn’t feel like this is fraud. Maybe there is sloppiness, but at the end of the day, people took out mortgages they can’t pay back. Now I worry that if anything, the government is making something that is just a clerical error into something that would be nefarious or whatever.”
…
Foreclosure Crisis Further Batters Weak US Housing Market
Michael Bowman 14 October 2010
Law students from Florida A&M University go door to door offering help to homeowners facing foreclosure.
Photo: VOA
Hopes for a recovery in America’s anemic housing sector have been dashed by record-setting numbers of foreclosures - more than 100,000 in September alone. In addition, lenders stand accused of sloppy paperwork and improper procedures in taking possession of an untold number of homes, prompting state investigations and even discussion of a nationwide moratorium on foreclosures.
It was a rash of home mortgage defaults that helped spark the 2008 financial crisis and helped plunge the United States into the deepest recession of the post-World War II era. Today, the U.S. economy is growing, if only barely so. But the recovery has yet to reach the housing sector, where prices remain depressed and foreclosures are on the rise.
Adding to the woes are reports of widespread abuses in the foreclosure process itself, with allegations that lenders haphazardly signed off on a multitude of foreclosures with faulty or even falsified paperwork.
“Their [lender's] goal is to move through a foreclosure case as quickly as they can,” said Florida foreclosure attorney Christopher Immel. “That cut short people’s opportunities to try to get back on their feet.”
…
Mortgage Investors Urge State Attorneys General Not to Punish Bondholders
By Jody Shenn - Oct 14, 2010 12:30 PM PT
The Association of Mortgage Investors urged state attorneys general probing foreclosure practices to be careful not to harm investors in home-loan securities, who aren’t “the responsible parties.”
“A hasty and ill-formulated legal settlement may harm the investors of mortgage-backed securities, namely retirees, municipalities, government entities, state pension funds, retirement systems, universities, and charitable endowments. Chris Katopis, the Washington-based trade group’s executive director, said today in an e-mailed statement.
Attorneys general from all 50 states said yesterday they have jointly opened an investigation into whether lenders and mortgage companies falsified documents in foreclosure proceedings. Home-loan servicers, which manage outstanding mortgages, including Ally Financial Inc., Bank of America Corp. and JPMorgan Chase & Co. have suspended some foreclosures or evictions while they review paperwork.
“It is important that any legal settlement require large banks and servicers to accept the legal responsibility for their actions,” Katopis said. “Hasty action” by states may punish investors who aren’t “the responsible parties,” the group said.
…
Bank Shares Push Wall Street Lower
By CHRISTINE HAUSER
Published: October 14, 2010
Bank shares slipped on Thursday, a day after the state officials announced an investigation into foreclosure practices of major lenders. In the currency markets, the dollar continued to struggle against the yen and the euro.
“It’s quite a sell-off,” the equities analyst with Optique Capital Management, William Fitzpatrick, said of the banking sector, which helped to pull down the broader markets. “The risks on the foreclosures seem to have some legs on it. Investors are scared stiff.”
“This is just one more black eye over the banking sector,” he added.
The financial sector declined 1.82 percent.
Bank of America closed 69 cents or 5.2 percent lower at $12.60. SunTrust Banks was down $1.13 or 4.2 percent lower at $25.58; Wells Fargo declined 4.2 percent or $1.09 to $24.72, and Citigroup, the most actively traded share, was down 19 cents or 4.4 percent at $4.06.
JPMorgan Chase lost 2.8 percent or $1.12 to end at $38.72.
“There is some energy around the whole foreclosure question marks,” the chief equity strategist for Wells Fargo Advisors, Stuart Freeman, said.
…
Money & Company
Tracking the market and economic trends
that shape your finances.
Revenge of the foreclosed: Bank stocks plunge
October 14, 2010 | 12:18 pm
Shares of financial companies are tumbling Thursday as some investors and traders bail out, fearing the potential short-term and long-term effects from the Foreclosure-Gate mess.
Bank of America was down 78 cents, or 5.9%, to $12.51 at about 12:15 p.m. PDT, nearing the 52-week low of $12.32 reached Aug. 30.
JPMorgan Chase was off $1.63, or 4.1%, to $38.21, Citigroup slid 21 cents, or 5.1%, to $4.04 and Wells Fargo & Co. lost $1.34, or 5.2%, to $24.47.
Financial issues are a drag on the market overall, which hit five-month highs on Wednesday. The Dow Jones industrial average, which includes BofA and JPMorgan, was off 53 points, or 0.5%, to 11,042.
At this point, investors have no real handle on what botched or fraudulent foreclosures may end up costing the banks in terms of bottom-line earnings. But there are some guesses, as Reuters notes:
JPMorgan said Wednesday that it was reviewing about 115,000 loan files that are in the foreclosure process.
…
* OCTOBER 14, 2010, 2:35 P.M. ET
CONSUMER FINANCE: Foreclosure Crisis Affects Just About Everyone
By Jennifer Openshaw
A DOW JONES COLUMN
Whether you recently bought or plan to buy a foreclosed home, the latest news that banks have mishandled foreclosures may have you worried.
And if you’re struggling to pay your mortgage and possibly approaching a foreclosure, the news that banks are hitting the pause button on foreclosures may be good news, but only temporarily.
Bank of America Corp. (BAC) has put a stop to foreclosures in 50 states, while J.P. Morgan Chase & Co. (JPM) and Ally Financial’s GMAC Mortgage have halted foreclosures in about 23 states, all because of possible “robo-signing”–that is, quickly rubber-stamping documents rather than reviewing them closely before sending them to court.
Meanwhile, on Wednesday, attorneys general from 50 states joined forces for a nationwide investigation into whether mortgage servicers improperly submitted foreclosure affidavits or other documents.
Whether you’re heading into foreclosure, own a foreclosure, are thinking of getting a mortgage, or are just hoping for the job market to get better, the temporarily foreclosure halt is likely to affect you, even if just a little.
…
Robo-signing eviction scandal rattles Wall Street
Bank shares fall over concerns US watchdogs will decide thousands of Americans have been evicted unfairly by employees rubber-stamping repossession documents
* Jill Treanor and Julia Kollewe
* guardian.co.uk, Thursday 14 October 2010 18.11 BST
* Article history
A home advertised for sale at a foreclosure auction in California JP Morgan boss Jamie Dimon says banks could be fined over how they have handled foreclosures. Photograph: Reed Saxon/AP
Fears US regulators will rule that thousands of Americans may have been unfairly evicted from their homes rattled Wall Street today as the scandal over the use of “robo-signers” escalated.
Employees at mortgage firms are alleged to have rubber-stamped documents to force out defaulting homeowners without following the correct procedures.
Shares in Bank of America, Citigroup, Wells Fargo and JP Morgan all fell sharply after it emerged that Xee Moua, an employee at Wells Fargo, the second-largest US mortgage servicer, had pushed through 500 foreclosures a day.
The growing scandal over the way homeowners have been evicted came as property data firm RealtyTrac reported that the number of houses seized by banks topped 100,000 for the first time in September. Lenders took possession of 102,134 properties in September. The state with the highest rate was Nevada.
“Lenders foreclosed on a record number of properties in September and in the third quarter, taking a bite out of the backlog of distressed properties where the foreclosure process was delayed by prevention efforts over the past 20 months,” said James Saccacio, chief executive of RealtyTrac.
…
Banks could be “fined ” for fraudulent paperwork . What ever happened to fraud charges and going to jail ?
Charting the Foreclosure Crisis’s Far-Reaching Consequences
By CHARLES HUGH SMITH Posted 11:20 AM 10/14/10
Even as the consequences of the ongoing foreclosure crisis slowly unfold — and the ultimate impact is yet unknown — it’s not too early to tote up a list of 10 potentially important developments that have already happened. (For more background, see my recent DailyFinance article “The Foreclosure Crisis: Eroding Trust — and Ending the Recovery?“)
…
KNOXVILLE, Tenn. (WVLT) — If you’re buying a home, you might be thinking about foreclosed properties.
Posted: 6:00 PM Oct 14, 2010
Housing market flooded with foreclosures
Reporter: Sara Shookman
Email Address: sara.shookman@wvlt-tv.com
“We are seeing a lot of foreclosures in the market, now it’s a driving force in real estate,” said Greg Reynolds. Reynolds is a real estate agent with Envirian.
He says while Knoxville has been somewhat protected from foreclosures, they can still be found in any part of town, at nearly any price. “If you are willing to wait, let it all play through, there are some deals out there. But you are buying a distressed property that condition may be unknown,” he said.
If you are going to buy, make sure you know whether a foreclosure could be included in an investigation, that could put your purchase in limbo. Also many foreclosed homes are auctioned or sold with an as-is contract. “Banks will be less lenient in a lot of the fixing up. So you are buying what you see,” he said.
…
Fannie and Freddie in a Mess
Oct 14 2010, 1:50 PM ET 22
The foreclosure mess is now spreading to Fannie and Freddie, as our government-owned mortgage machines starts looking into what, exactly, its servicers have been doing with their loans. Meanwhile, I detect some overblown expectations on the part of various people; last night, after I gave a talk on a mostly unrelated subject, two different people asked me if this meant that they could simply walk away from their mortgages; it wasn’t clear if they were hoping, or horrified.
…
What this mess is most likely to do, as far as I can tell, is slow down even more the process of clearing out the backlog of bad housing loans. We may get a legislative moratorium–though it’s not clear to me if this will accomplish much more than simply having judges scrutinize the paperwork more closely–and making it clear that sanctions await any firms who don’t take care. These sorts of problems do arise periodically as changes in financial markets–like the massive boom in securitization–outstrip the legal and insitutional framework surrounding real estate transactions. The relatively new innovation of second mortgages became a huge headache in the 1930s, and it took the law and the courts a while to catch up. But the gaps in our regulatory framework did not result in mass mortgage forgiveness; it is rare that one party emerges a clear winner.
The worst case scenario is not that all mortgages are cancelled and banks start going bust; it’s more like what Adam Levitin outlined for the Wall Street Journal:
Folks hoping that now the banks finally get what’s coming to them should be mindful of the fact that if we decide there’s no clear title on houses with existing mortgages, that probably means you can’t sell your home, either.
…
“But so far, we haven’t seen many cases of people being foreclosed upon when they were not in default.”
The average FB probably dreams of Johnny Cochran rising from the dead to convince a courtroom judge to waive the balance of payments and grant them title to the bank’s home despite the fraudulent liar’s loan. When they die they’ll expect heaven too!
Investor fears grow over foreclosure mess
By Dave Clarke and Steve Eder
WASHINGTON/NEW YORK | Thu Oct 14, 2010 6:17pm EDT
WASHINGTON/NEW YORK (Reuters) - A growing crisis over shoddy foreclosure documents deepened on Thursday as investors dumped stock in some of the biggest U.S. banks on fears their profits could be hit.
At risk is not just the health of the banks but also the fragile housing market and the broader economy, which is still struggling to emerge from the worst recession since the 1930s, analysts warn.
All 50 U.S. states have started a joint investigation of the mortgage industry, focusing on allegations that for years banks have not reviewed documents properly or have submitted false statements to evict delinquent borrowers.
The investigation, one of the biggest legal probes of the mortgage industry in decades, has alarmed investors who fear cleaning up the foreclosure paperwork mess could take months, even years.
The fiasco threatens to eat into bank profits by delaying sales of bank-owned properties, drawing fines from regulators, and spawning lawsuits from both homeowners and investors in mortgage-backed securities.
The KBW Banks index dropped 2.6 percent on Thursday while the broad Standard & Poor’s 500 index fell just 0.4 percent.
Bank of America, the largest U.S. mortgage servicer, has temporarily halted evictions nationwide. JPMorgan Chase and others have halted some foreclosures pending reviews, while some have left foreclosure policies in place.
The moratoriums, combined with buyer wariness, could suppress home sales. Nearly one-third of all homes sold in September were in the foreclosure process, according to real estate data company RealtyTrac.
“Banks could be dealing with this on a loan-by-loan basis for years,” warned Jefferson Harralson, a bank analyst at Keefe, Bruyette & Woods in Atlanta.
…
..Banks could be dealing with this on a loan-by-loan basis for years,..
nah..
Soon after the elections, the Big BO will decide it’s gone on long enough, and tell some flunky to get the message to some friendly judge, who will rule such that a precedent is set, making further rob-signing litigation moot.
Interesting day: I sat at a conference and listened to some people discuss real estate on the side. Drumroll, they were talking about buying foreclosures and flipping them.
This weekend: I will be partying some buds in the mountains. One is an attorney who bought at the peak, one is unemployed, one inherited a house in NYC, one is the spouse of an author often quoted here… and then there is me. I’ll probably avoid RE discussions and just try to enjoy the weekend.
But you know what? Not a SINGLE person (other than my wife) has said, “dude, you called it.”
Don’t push it. It’s a fact in life that some people would rather kill you than be proven wrong.
Global Dow smells U.S. mortgage stench, heads south…
Check out the 3-month view on the Global Dow. Something really interesting has happened this month: A huge spike up from 2,000 to the 52-week high of 2,153 and back down over the course of a couple of weeks’ time. At the moment, it is still plunging rapidly back towards 2,000 (at 2,030 and still falling as I type).
But not to worry: The stock market always goes up!
Bank of America Downgraded By Bond Market on Foreclosures: Credit Markets
By Mary Childs - Oct 14, 2010 4:14 PM PT
Bondholders are penalizing Bank of America Corp. the most of any of the largest U.S. financial firms as the investigation into the foreclosure crisis expands.
Credit-default swaps on the country’s largest bank by assets are above those of its peers by a record margin, according to data provider CMA. The contracts, which imply Bank of America has lost its investment-grade rating, exceed Citigroup Inc.’s by the most ever and surpassed Morgan Stanley’s this week for the first time in a year.
Attorneys general from all 50 states joined to open an investigation into whether lenders and mortgage companies falsified documents as they sought to repossess homes. Charlotte, North Carolina-based Bank of America said Oct. 8 it would curtail foreclosure sales nationwide, as speculation rose the lender would have to buy back home mortgages with faulty documentation.
“As we look at the financial landscape and try to put pen to paper and figure out who might be most exposed to problems associated with foreclosure moratoria, with robo-signers, with mortgage put-backs, Bank of America’s at the top of the list,” said David Havens, a financial institution debt analyst at Nomura Holdings Inc. in New York.
Bank of America is being singled out for expanding its real-estate operations and acquiring Countrywide Financial Corp., then the biggest U.S. mortgage lender, in 2008 during the worst housing slump since the Great Depression, Havens said. The bank also increased its mortgage assets through the $29 billion purchase of Merrill Lynch & Co. in January 2009 under pressure from the Federal Reserve as it tried to prevent failure of the U.S. banking system.
…
Dollar Dips as Indexes Pull Back
By BLOOMBERG NEWS
Published: October 14, 2010
Stocks fell on Thursday on worries over the banking sector while the dollar continued its slide against major currencies.
An unexpected increase in the Labor Department’s weekly tally of new claims for jobless benefits reinforced expectations that unemployment above 9 percent will lead the Fed to take action.
Initial unemployment claims rose by 13,000 to 462,000 in the week ended Oct. 9, helping lead to a drop in the dollar, which fell to a 15-year low against the yen and reached its weakest level compared with the euro since January. The dollar is now trading at above $1.40 per euro.
“The market is more infatuated with these weekly and monthly numbers than ever before,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston. “The bulk of the move is coming from these numbers, and what you’re able to infer from that about whether there’s going to be continued easing from the Fed.”
Gold, meanwhile, continued its upward march, rising $9, to $1,381.15, as investors sought safe havens.
Some technology stocks rallied on takeover rumors and better earnings reports from companies like Google. But Bank of America, Citigroup and Wells Fargo slid more than 4 percent amid concern over growing legal scrutiny of home foreclosure practices.
…
Foreclosure freeze spreads uncertainty
Robert Selna, Chronicle Staff Writer
San Francisco Chronicle October 14, 2010 04:00 AM
Thursday, October 14, 2010
Now that Bank of America has said that it will temporarily suspend foreclosure sales in California and there are calls for all mortgage lenders to do the same, real estate analysts are trying to pinpoint the consequences of a foreclosure sales slowdown.
One-third of Californians with a mortgage are behind on their payments, so even if the sales are delayed only for a brief time, there is likely to be some ripple effect on many aspects of real estate, experts say.
If there is anything certain about the most recent phase of the foreclosure crisis, it is that it’s creating uncertainty and doubt, which is never good for the real estate business, said Sean O’Toole, CEO of ForeclosureRadar.
“The primary consequence of this situation is that it has created more confusion and fear about the future of housing,” O’Toole said. “Up to this point, the foreclosure process has been dominated by government intervention and lender intervention and now it’s happening again, and so no one can say with certainty when it will end.”
…
Kai Ryssdal and Jeremy Hobson can’t quite figure out whether another stage of panic might be at hand. Hobson’s straw man analogies seem to me a bit like so much whistling past the graveyard. Some of us were never misled to believe the panic had fully subsided, though it has seemed well hidden since green shoots busted out all over in spring 2009.
Happy October. BOO!!!!
Thursday, October 14, 2010
Will there be another banking crisis?
Foreclosure sign on house for sale
Kai Ryssdal talks to Marketplace’s Jeremy Hobson about how the latest mortgage scandal will affect the economy.
Kai Ryssdal: Bearing in mind the warning that correlation is not causality, the following things have happened in the past 24 hours. Item one: The attorneys general of all 50 states launched an investigation into the mortgage industry and the foreclosure paper trail. Item two: We learned this morning the past three months have seen the most foreclosures since real estate went bust four years ago. And item three: And at the close in New York today, bank stocks were by far the big losers.
…
Ryssdal: Yeah, OK, so here’s where I get to turn the tables: You bring tape to an interview, I bring tape to an interview. You ready? Alright, so we’re going to roll this piece of tape. Let’s hit it:
Ryssdal: Obviously, Ben Bernanke, the chairman of the Federal Reserve. Care to hazard a guess, Mr. Hobson, as to when he said that?
Hobson: Uh… I’m going to guess that he probably said that before it turned out the system was not contained.
Ryssdal: There you go. That’s right. So March 2007 was when he said that the point being he didn’t know then, and we, perhaps, don’t know now what this foreclosure mess might bring, right?
Hobson: That is a possibility, Kai. But I’ll remind you of this: Remember after 9/11 and after the anthrax attacks that every time there was a little pile of chalk dust on the floor that everybody thought there was another anthrax attack going on. I think we’re still very close to the memory of the financial crisis, and we look at the banking system today and the mortgage system today, and we say, “This is so complex, that we maybe in fact this little problem of documentation could ripple across the whole system and it turns out that every single mortgage is invalid.” Well, that’s a possibility, but a lot of people I spoke with said it’s not likely, and is probably not going to bring down the entire financial system.
Ryssdal: Jeremy Hobson from the Marketplace bureau in New York on the ever-increasing mortgage scandal. Jeremy, thanks a lot.
Hobson: You’re welcome.
Krugman versus Ferguson debate, from Bloomberg, October 13th
Ferguson said the U.S. risks losing investors’ confidence as more spending exacerbates its weak fiscal position, adding the U.S. debt situation is worse than that of Greece. Krugman dismissed the comments, saying there is no evidence in the markets that bondholders will flee.
“The markets are fine until they are not fine,” Ferguson countered.
“For more than a year since our debate began, it’s the Chinese who’ve been consistently agreeing with me, saying that they regard the course of U.S. fiscal and monetary policy as dangerous,” the Harvard professor said. “So it’s not just me you are arguing with, Paul, actually, it’s the Chinese government.”
http://www.bloomberg.com/news/2010-10-13/krugman-clashes-with-niall-ferguson-over-u-s-fiscal-stimulus-second-round.html
Dollar fall sparks stability warnings
By David Oakley and Peter Garnham in London and Michael Mackenzie in New York
Published: October 14 2010 19:55 | Last updated: October 14 2010 19:55
The dollar tumbled against most major currencies on Thursday, prompting warnings that the weakness of the world’s reserve currency could destabilise the global economy and push other countries into retaliatory devaluations to underwrite their exports.
Increasing expectations the Federal Reserve will pump more money into the US economy next month under a policy known as quantitative easing sent the dollar to new lows against the Chinese renminbi, Swiss franc and Australian dollar. It dropped to a 15-year low against the yen and an eight-month low against the euro.
The dollar index, which tracks a basket of currencies, reached its lowest level this year.
A senior European policy-maker, who asked not to be named, said a further aggressive round of monetary easing by the US Federal Reserve would be “irresponsible” as it made US exports more competitive at the expense of its rivals.
Simon Derrick, chief currency strategist for BNY Mellon, said: “In narrow terms, the US is winning the currency wars as a weaker dollar will help its economy, but it could damage the other big economic blocs of China, Japan and Europe.”
The dollar’s fall was given fresh impetus after the Monetary Authority of Singapore surprised the market when it tightened policy by widening the trading band for its currency, allowing it to appreciate. The move by the Singapore authorities, responding to fears over inflation, helped push up other Asian currencies.
Russia’s finance minister Alexei Kudrin, in a meeting with European Union officials, blamed the US – and others – for global currency instability.
He said one reason for exchange rate turmoil “is the stimulating monetary policy of some developed countries, above all the United States, which are trying to solve their structural problems in this way”.
…
Investors shun ailing US dollar
By Telis Demos in New York
Published: October 11 2010 03:45 | Last updated: October 14 2010 22:08
Thursday 21:30 BST. The impact of mooted US Federal Reserve intervention continues to batter the dollar, distorting markets and scattering assets to extremes.
Gold has hit a new nominal peak, the Aussie dollar is near parity with its US namesake, which is also at 15-year lows versus the yen. Commodities from copper to corn are at cyclical highs, while short-term core bond yields remain near record lows.
The FTSE All-World index is up 0.4 per cent to its best level since September 2008.
The benchmark has climbed by 14 per cent in six weeks, a period in which traders’ risk appetite has risen with every hint that the US Federal Reserve stands ready to inject further liquidity into the economy via the purchase of financial assets.
However, risky assets are struggling to make further headway, perhaps a sign that the reflation trade is flagging. Commodities are now down for the session after rising earlier to fresh highs, in spite of a bullish supply report.
Wall Street’s S&P 500 index was off 0.3 per cent, though primarily battered by financial groups on fears that the ongoing mortgage mess could spark big new losses.
US Treasury bond yields are also accelerating their rises on the day, with 10 -year bonds now above 2.50 per cent – though inflation-linked bonds are still at their highest since May, indicating an advance in price inflation expectations.
…
Bubbling gold looks vulnerable
By James Mackintosh
Published: October 14 2010 19:57 | Last updated: October 14 2010 19:57
Bulls and bears have spent months arguing over whether bonds are bubbly. They should be looking at gold. The yellow metal has set record highs in seven of the past 10 trading days. Its price has tripled in five years. Bets on rises by futures speculators are the highest ever. Central banks are once again buying. Vending machines are even springing up in Europe to sell gold bars.
Looking at the charts, gold looks remarkably like past bubbles. Since the start of 2005, gold has returned almost exactly the same – 220 per cent – as the Dow Jones Industrial Average during the period to the start of 1929. It matches the return on the Nikkei 225 in the lead-up to the Japanese crash of 1990 and the rise in the Nasdaq as the dotcom bubble was inflating.
Gold is soaring for good reasons. Central banks are engaged in a race to debase and currency wars are raging. On some measures gold does not look expensive either: adjusted for inflation it is well below its all-time high and, as Dylan Grice at Société Générale says, it would have to rise sixfold for the dollar to be fully backed by US gold reserves, as it was briefly in 1980.
…
America should open its vaults and sell gold
By Edwin Truman
Published: October 12 2010 14:01 | Last updated: October 12 2010 14:01
Gold is back in the news. Its price is soaring in what some analysts say is a reflection of a weak economy and a lack of confidence in government policies. Naturally, investors are looking at a new sure thing in the expectation that prices will continue upward. My advice to the US government, however, is that this may be the best time – to sell. Doing so would help President Barack Obama and Congress reduce indebtedness, at little cost.
It is an article of faith in bullion markets that the US will be the last country to dispose of its gold stock. For 30 years it has had a no-net-sales policy for reasons ranging from resistance by US gold-producing interests to concerns about the international monetary system. That assumption may remain plausible. Yet the administration has an obligation to re-examine its policy.
The market price of gold has risen for more than a decade propelled by low interest rates, the hype of the bullion dealers (holding large inventories) and no doubt the normal amount of fraud and misinformation accompanying asset price bubbles. The Financial Times has reported that the precious metals industry expects the price to increase by a further 11 per cent over the next year.
Meanwhile, the US Treasury holds 261.5m fine troy ounces of gold. The government has been sitting on it since the Great Depression, receiving no return. At the current market price of $1,300 per ounce, the US gold stock is worth $340bn. The Treasury secretary, with the approval of the president, has the power to sell (and buy) gold on terms that the secretary considers most beneficial to the public interest. Revenues from sales must be used to reduce the national debt.
If the US were to sell its entire gold stock at the current market price, it would reduce the gross government debt by 2¼ per cent of gross domestic product. (US net government debt would decline by essentially the same amount because the US gold stock, listed as an asset on the balance sheet, is valued at only $42.22 an ounce.) Based on the average interest cost from 2005 to 2008, this reduction in debt would trim the budget deficit by $15bn annually. Thus, the Obama administration would be doing something about the US fiscal debt and deficit without reducing near-term support for the ailing economy.
…
At least some high-profile commentators expect the U.S. to win the global currency log rolling contest.
Why America is going to win the global currency battle
By Martin Wolf
Published: October 12 2010 22:30 | Last updated: October 12 2010 22:30
Currencies dominated this year’s annual meetings of the International Monetary Fund. More precisely, two currencies did: the dollar and the renminbi, the former because it was deemed too weak and the latter because it was deemed too inflexible. But, behind the squabbles, lies a huge challenge: how best to manage the global economic adjustment.
In his foreword to the new World Economic Outlook, Olivier Blanchard, the IMF’s economic counsellor, states: “Achieving a ‘strong, balanced and sustained world recovery’ – to quote from the goal set in Pittsburgh by the G20 – was never going to be easy … It requires two fundamental and difficult economic rebalancing acts.”
The first is internal rebalancing – a return to reliance on private demand in advanced countries and retrenchment of the fiscal deficits that opened in the crisis. The second is external rebalancing – greater reliance on net exports by the US and some other advanced countries and on domestic demand by some emerging countries, notably China. Unfortunately, concludes, Professor Blanchard, “these two rebalancing acts are taking place too slowly”.
…
The Walls Keep Tumbling Down: Foreclosure Flap and Other Housing Industry Woes
Published: October 13, 2010 in Knowledge@Wharton
…
“Buying a home doesn’t make sense for a large proportion of the population,” says Wharton real estate professor Fernando Ferreira, noting that ownership reduces the flexibility to pursue work in other regions and ties up cash in a down payment that might be used for better investments. “We forgot these lessons in the housing boom. But I think the new generation is learning them — at least for the next five to 10 years.”
…
Wharton real estate professor Grace Wong Bucchianeri says the collapse in housing is likely to result in a “temporary wait-and-see period” for households that do not own a home. “The rest of us might stop and think harder about what we are really trying to get out of owning our own homes — whether it is freedom from rental fluctuations, control over our living space or prestige,” she notes. “I am not sure how long-term this change will be; Americans have a long history of wanting to own their land and homes.” Bucchianeri has studied the links between homeownership and happiness and discovered that people who own their own homes are not necessarily happier than others. She is now conducting a new study into what specific features of a home — such as a pool or a driveway or more space — potential buyers are willing to pay more for. “Hopefully we will be able to predict future changes in the desire to own our homes.”
…
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2616
Monopoly power in the lending industry really sux.
* The Wall Street Journal
* LOANS & CREDIT
* OCTOBER 12, 2010
Home-Loan Rates Would Lose at Limbo
They’re About as Low as They Can Go
Don’t bet the house, however, that they will drop too much lower. Rates haven’t fallen further, analysts and bankers said, because banks are unwilling to lower rates and lose profit margins, and because of uncertainty in the market that makes it difficult for them to predict the number of home buyers.
Instead of moving the rate lower to 4%, which banks might have done at “normal times” when bond yields are as low as they are, “illiquidity and unusual situations are causing originators to hold rates at this level rather than risk losing money on new loans they have difficulty hedging,” said Paul Jacob, director of research at Banc of Manhattan Capital, in Manhattan Beach, Calif.
Based on the yields of mortgage-backed securities traded on secondary markets, David Cannon, head of mortgage trading at Royal Bank of Scotland Group PLC, says that the mortgages in Freddie Mac’s weekly survey should come with interest rates between 3.75% to 4%.
At those lower rates, a homeowner could lower his monthly payments on a $200,000 loan by $30 to $60—saving nearly $22,000 over the full life of a 30-year mortgage.
Moving toward the theoretically lower rate isn’t a simple matter, however. There is a convoluted scenario at work that goes at the heart of how mortgages are bundled together and packaged into securities that are sold to investors.
Typically, local and regional banks lend to homeowners, then sell those loans to larger banks or aggregators, such as Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co. These firms pool loans from across the U.S. into mortgage securities.
Normally, small banks would push rates as low as they could go in order to make more loans and thus make more money. But they have found that while lower rates may bring in more home buyers, there is little guarantee that many of these consumers will qualify for a loan under today’s austere borrowing standards.
Further, these originators make money from the rates at which they can sell these loans to aggregators. Lower rates mean narrower margins for them, while the aggregators who buy these loans at lower rates stand to gain from selling them at higher rates in the secondary market.
Because there are so few new mortgages and so many investors eager to buy them, “the system now allows large aggregators to control the price on a loan and an interest rate the borrower gets,” said Mike Delehanty, president of Apex Analytics in Wildomar, Calif., which advises banks on selling their loans to larger mortgage-finance companies.
…
I find this story very encouraging. If luxury homes truly are off by 30% or more, prices in my middle-class San Diego neighborhood will be soon to follow.
* RELATIVE VALUES
* OCTOBER 15, 2010
Luxury Homes for (at Least) 30% Less
PINECREST, Fla.
$2 million
A home of about 6,000 square feet with five bedrooms and 5½ baths, on 0.86 acre.
DETAILS: This midcentury-modern house has a courtyard with a fountain, an outdoor entertaining area, a pool and a garden. There’s also a roughly 1,900-square-foot one-bedroom carriage home attached to a six-car garage. 2010 property taxes are about $20,300.
BLUE-LIGHT SPECIAL: The home was first listed in 2008 for just under $3 million.
QUICK BITE: Town Kitchen & Bar, three miles away, offers American comfort food. The $12, 12-ounce burgers are triple-ground.
FRIDAY’S FORECAST: Sunny, high 82 degrees.
SOURCE: Judy and Nathan Zeder, EWM Realtors, 305-960-2475, judy@allmiamirealestate.com; Realtor.com
LEAWOOD, Kan.
$2 million
A home of more than 9,000 square feet with six bedrooms and five baths, on 2.4 acres, near Kansas City, Mo.
DETAILS: This stone, castle-like home was built in 1928 and added onto over the years. The property has gardens with a reflecting pond, creek and fountains, a conservatory and a greenhouse. 2010 property taxes are about $25,000.
BLUE-LIGHT SPECIAL: The home was listed for $5.8 million in 2007.
QUICK BITE: Kona Grill, about six miles away, serves sushi, sandwiches and pizza. A miso-marinated salmon sandwich costs $12.25 at lunch.
FRIDAY’S FORECAST: Sunny, high 72 degrees.
SOURCE: Macy Jacobsen, Reece & Nichols Realtors, 913-207-1630, macy@reeceandnichols.com; HomeServices of America
DES PLAINES, Ill.
$1.6 million
A 7,100-square-foot lakefront home with four bedrooms and five baths, 20 miles northwest of Chicago.
DETAILS: This 20-room house was built in 2008 and has multiple terraces and lake views. There’s about 100 feet of lake frontage, and there’s a 30-foot-wide private beach. The home has a movie theater, sauna, wine cellar and boat dock. 2010 property taxes are $12,520.
BLUE-LIGHT SPECIAL: The home listed for $2.35 million in 2009.
QUICK BITE: Less than five miles away, Yard House offers pastas, sandwiches and steaks, plus 130 beers on tap.
FRIDAY’S FORECAST: Sunny, high 64 degrees.
SOURCE: Ronda Fish, Sudler Sotheby’s International Realty, 312-505-3474, ronda.fish@sothebysrealty.com
“…below market value…”
If the majority of home sales are foreclosures or short sales, then in what sense are these sales unrepresentative of market value, particularly if the home is in salable (not fixer-upper) condition?
* HOMES
* OCTOBER 13, 2010, 1:45 P.M. ET
The Short Sale Alternative
By SARAH MAX
Justin and Rebecca Rakitin are finally moving into their townhome after nearly a year of wrangling.
When newlyweds Justin and Rebecca Rakitin starting shopping for their first home in the Fort Lauderdale, Fla., area last year they assumed the process would be quick and easy, with a $8,000 first-time buyer tax credit at their disposal and ‘For Sale’ signs littering every block.
In fact, most of the listings in the Rakitins’ price range were either foreclosures or short sales, where sellers were asking for less than they owed on their mortgage. After seeing some “really nasty” foreclosures, says Ms. Rakitin, age 27, the couple decided to stick with short sales.
In November 2009 they found what they wanted–a three-bedroom, two-story townhome that sold for about $300,000 in 2007, listed for half the price. Worried that other buyers would pounce, they offered $165,000. The sellers quickly accepted.
Then the waiting game began.
Once relatively obscure transactions, short sales have become the norm in many hard-hit markets, representing roughly a third of properties for sale in Nevada, California and Florida, according to estimates from the National Association of Realtors. Though most buyers don’t actively seek short sales, they’re an opportunity to buy property that’s generally in good shape and priced 10% to 20% below market value.
While foreclosed properties typically see bigger discounts, short sales have one distinct advantage: “They have the cooperation of the owner,” says Lance Churchill, an attorney and president of Boise, Idaho-based Frontline Real Estate Education Group, which offers training to real-estate agents and investors, in Boise, Id. That’s particularly germane now. In recent weeks, four major mortgage servicers have halted foreclosures, as questions over improper documentation have arisen. Sales of foreclosed property are also being put on hold and buyers are wary of getting into the market. (More: Evicted Family Breaks Into Their Former House)
Of course, short sales have problems of their own. Because a short sale results in a loss to the seller’s lender, the deal can’t go through without a blessing from the bank. Typically that doesn’t happen until after an offer is made, says Rick Sharga, a senior vice president at RealtyTrac, which tracks foreclosure and home sales data and sells it to investors. “The bank may not even know that the seller is attempting to short sale the house,” he says.
…
I plan to encourage our friends, who were kicked out of their home by Megabank of America earlier this year, to fight to get it back.
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* October 13, 2010, 11:44 AM ET
Evicted Family Breaks Into Their Former House
By Emily Peck
One of the long-shot outcomes of the current foreclosure mess could be a chaotic scenario in which people fight to get their foreclosed homes back.
Enter the Earl family in Simi Valley, Calif. Over the weekend, Jim and Danielle Earl reportedly took their nine children, ages 9-23, and a locksmith and broke into the six-bedroom house they used to call home. The move was recommended by their lawyer, according to a story on Aol’s HousingWatch.com.
Police officers were on hand when the Earls changed the locks Saturday but did not intervene, the Ventura County Star reports.
The Earls paid $500,000 for the house in 2001 and then refinanced to pull out cash. They fell behind on their mortgage and at the time of their eviction they owed about $880,000 on a no-interest mortgage.
Investors at Conejo Capital bought the house for $697,000 at a lender’s trustee sale and put $40,000 of work into a remodel, replacing carpeting and appliances, as well as upgrading the kitchen. They flipped it to new buyers for $800,000. Those buyers were supposed to move in this week; those plans are on hold.
The Earls claim that they were working with GRP Financial Services to catch up on payments, but discovered a $25,000 difference between what they believed they owed and what the bank said they owed. They then stopped making payments.
“This is only the beginning of this,” the Earls’ attorney, Michael Pines tells KABC News. “I chose this family because we needed to get back in before the investor and the real-estate broker defrauded a new family by having them move in, which would have created a bigger mess. (The Earls) have done absolutely nothing wrong.”
…
(The Earls) have done absolutely nothing wrong.”
Except not pay their mortgage for a few years…
Not that there is anything wrong with that.
The Earls are criminals. First they extract all the phantom equity possible prior to defaulting on their mortgage obligation. Then they break in and reoccupy the home rendering the $40k of upgrades to “used.”
From the WSJ comments:
1:42 pm October 13, 2010
This gets better wrote:
Looks like their lawyer filed his own Chapter 11 in January of this year. It is the bankrupted leading the bankrupted…
More from the WSJ comments:
11:30 pm October 13, 2010
Dale wrote:
Wow. Bankrupt lawyer, 15,000 lights at Christmas, zero interest loans (? huh), a cop that watched it, 6 foster kids so the govt pays them cash, “trying” to get caught up (not with cash, but with help from another party), no payments because it wasn’t recorded correctly. Shame on the banks for making the paperwork so complex. But, shame on these people for breaking the law, not paying their debts, breaking promises, stealing, trespassing, blaming, and making the mortgage holders lose, as well as the buyer who bought and fixed up in good faith. Its a mess. And Congress wants to “keep all these poor people from being foreclosed upon”. A second crash is coming, and IT WILL BE A DOOSEY.
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* October 13, 2010, 10:56 AM ET
Foreclosure Delays: ‘Nail In The Coffin For Housing’
By Dawn Wotapka
With the foreclosure process grinding to a halt in many areas, the nation’s housing market is officially in turmoil.
Bank of America Corp. last Friday agreed to halt all foreclosures and foreclosure sales, the first bank to do so. On Tuesday, Wells Fargo said it started a review of all pending home foreclosures in states where certain paperwork was required.
Some homeowners are beginning to wonder why they should pay a mortgage at all. Others haven’t paid in months.
As we write today, foreclosed homes are being pulled from the market, and buyers—especially investors intent on quickly reselling or renting out foreclosed properties—are retreating to the sidelines amid growing uncertainty over the extent to which banks filed fraudulent foreclosure documents.
That’s troubling for the market because foreclosure sales have been a big part of recent closings, helping some markets limp closer to stability. Housing can’t truly recover until the foreclosure crisis ends.
We now know that’s not happening anytime soon. These delays “are just going to cause more chaos and confusion,” Alex Barron, a home-builder analyst with the Housing Research Center, tells Developments. “At this point, this is probably the nail in the coffin for housing. I think worse times are still ahead of us.”
…
“At this point, this is probably the nail in the coffin for housing. I think worse times are still ahead of us.”
+1 2011 is destined to be a terrible year for the suits.
+500 posts
YES WE CAN!!!
* OCTOBER 14, 2010, 5:59 A.M. ET
UPDATE: China Yuan Hits New High Late On Dollar’s Broad Weakness
SHANGHAI (Dow Jones)–China’s yuan surged to a new high against the U.S. dollar under the current system late Thursday afternoon, due to a record-low dollar-yuan central parity rate and the dollar’s broad weakness in Asia.
On the over-the-counter market, the dollar was at CNY6.6508 around 0930 GMT, the lowest settlement level since the yuan began regularly trading in 1994 and down from CNY6.6641 at Wednesday’s close. It traded between CNY6.6503, its lowest intraday level under the current system, and CNY6.6590.
At 6.6508 to a dollar, the yuan was up 2.6% since June 19, when the People’s Bank of China pledged to increase yuan trading flexibility and effectively removed the local currency’s two-year peg to the dollar.
The PBOC set Wednesday’s dollar-yuan central parity rate at a record low of 6.6582, down from the previous record of 6.6693, set Wednesday.
The dollar weakened against major currencies overnight, as the likelihood of more monetary easing and low interest rates in the U.S. pushed investors toward higher-yielding assets. The dollar fell even further in Asian trading following a surprise decision by the Monetary Authority of Singapore to tighten its monetary policy.
At a semi-annual meeting Thursday morning, Singapore’s central bank widened the trading band of the Singapore dollar against a basket of currencies. At the same time, the authorities said they were maintaining a policy of “modest and gradual appreciation” of the Singapore dollar.
The news drove the U.S. dollar sharply lower against the Singapore dollar, as well as other Asian currencies, including the yen.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at 76.393 around 0930 GMT, down from 77.060 late Wednesday in New York and 77.339 late Tuesday in New York.
“The record low central parity rate today was driven by the weak dollar index,” said a Shanghai-based trader at a European bank.
…
Economic Report
Oct. 14, 2010, 9:41 a.m. EDT
Trade gap widens to $46.3 billion in August
Import flow from China sets new record
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The U.S. trade deficit widened sharply in August as imports from China flooded into the country at a record pace, according to data released Thursday.
The nation’s trade deficit expanded 8.8% in August to $46.3 billion from $42.6 billion in July, the Commerce Department said. The size of the deficit in August was larger than expected, as analysts surveyed by MarketWatch had expected the deficit to widen to $44.1 billion.
After the report, as well as other statistics showing rising jobless claims and growing producer prices, U.S. stocks opened moderately lower and bonds fell as well.
“Rising imports are not normally a sign of slowing demand growth, nor of an economy headed towards a double-dip,” said analysts at RDQ Economics in a note to clients.
…
Washington Policy Makers Resist Calls for Big Fix in Foreclosure Crisis
By Lorraine Woellert and Phil Mattingly - Oct 14, 2010 9:01 PM PT
Washington policy makers, who moved swiftly to calm markets during the subprime mortgage crisis in 2008, have resisted calls for similarly broad steps in response to concern that banks may have acted illegally to seize homes.
President Barack Obama and the federal agencies that share responsibility for housing finance are opposing calls for a nationwide foreclosure freeze, fearing further damage to the housing market. Even as bank stocks tumbled yesterday on concern that the mishandled loans will increase costs for lenders, the White House and federal regulators avoided any grand gestures designed to reassure investors.
Obama this week endorsed a coordinated investigation by attorneys general from all 50 states into whether lenders used false documents to justify foreclosures. Mounting a response on the federal level is complicated by the fact that responsibility for overseeing housing finance and foreclosure law is fragmented among U.S., state and local agencies, with no single regulator shaping policy.
“We can see all too painfully the results from that gap,” said Clifford V. Rossi, executive-in-residence at the Center for Financial Policy at the Robert H. Smith School of Business at the University of Maryland.
U.S. regulators say they are aggressively investigating whether employees of lenders including Ally Financial Inc., JPMorgan Chase & Co. and Bank of America Corp. have falsified documents used in foreclosure proceedings.
“No one should misunderstand the magnitude of our response,” said Federal Housing Administration Commissioner David Stevens. “The administration has been very clear that there is no excuse for not fixing the problem.”
…
As long as Wall Street investment banks are enjoying bumper profits and have the Fed at their back, why should they worry about the Great American Foreclosure Fiasco?
Editorial
The Foreclosure Crises
Published: October 14, 2010
Attorneys general in all 50 states have pledged a coordinated investigation into chaotic foreclosure practices by some of the nation’s largest banks. The Department of Justice is also looking into what happened, while some lawmakers are now calling for a nationwide moratorium on all foreclosures until the legal questions are settled. The Obama administration is insisting such a broad delay would hurt the economy.
There is plenty to worry about. But amid all this roiling, neither Congress nor the administration has found a way to address an even more fundamental problem: What government and banks need to do to finally stanch the flood of foreclosures wreaking havoc on the lives of millions of Americans and threatening the recovery.
According to the latest figures, 4.2 million loans are now in or near foreclosure. An estimated 3.5 million homes will be lost by the end of 2012, on top of 6.2 million already lost. Yet the administration’s main antiforeclosure effort has modified fewer than 500,000 loans in about 18 months.
Judges and investigators need to be unflinching in their inquiries into the paperwork debacle and must hold the banks fully accountable. What we’ve already learned is chilling — and suggests that bankers have learned little since the 2008 implosion and taxpayer bailout.
Major banks — including Bank of America, JPMorgan Chase and Ally Bank, which is owned by GMAC — have suspended foreclosures after admitting they had submitted tens of thousands of affidavits to the courts, attesting to facts about the defaulted loans that had not been verified by the bank employees signing the documents.
…
* OCTOBER 14, 2010, 6:04 P.M. ET
Mortgage Mess Sharply Raises The Cost Of Insuring Bank Debt
By Katy Burne
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–An index gauging the creditworthiness of U.S. banks has risen about 6% in a week, underscoring concern that the lenders may be slammed with lawsuits over alleged foreclosure improprieties.
The Counterparty Risk Index, compiled by Credit Derivatives Research, rose to 127 basis points Thursday–meaning it would cost $127,000 annually to insure $10 million of corporate bonds issued by 14 banks, including J.P. Morgan Chase & Co. (JPM) and Citigroup (C), for five years. A week ago, the same protection cost $120,300.
Attorneys general in all 50 states said this week they would review foreclosures across the country, seeking to confirm allegations of procedural flaws including faulty or missing documentation.
Several banks have suspended actions on delinquent home loans until the problems are resolved, adding to investor worries.
“Introducing a delay in the foreclosure process stymies banks’ efforts in trying to work out delinquent loans, which not only delays the time of loan recovery but also likely depresses the ultimate recovery value,” said Otis Casey, credit analyst at Markit, a financial information services company.
The cost of insuring individual banks’ bonds also has risen. It cost $195,000 a year to insure $10 million of Bank of America (BAC) debt for five years using credit default swaps on Thursday, up from $155,000 on Monday, according to Markit. Insuring Citigroup costs $175,000 a year, up from $156,000; while insuring J.P. Morgan debt costs $96,000, up from $77,000.
Bank bonds also have been hard hit. The extra risk premium applied to U.S. bank bonds over government debt with a similar maturity date is now 220 basis points, according to the Bank of America Merrill Lynch U.S. Financial Corporate Index.
…
PB ,you mean that insuring that isn’t backed by the Insurance Company having the reserves to back their bets ?
Meanwhile, on the other side of the pond, a dramatic showdown over the official retirement age plays out:
Panic at the pumps: French motorists swamp petrol stations as strikes shut 11 out of 12 oil refineries
By Ian Sparks
Last updated at 9:58 AM on 15th October 2010
* Unions call for another strike to protest proposed rise in retirement age
* Students clash with police in demonstrations across France
French motorists began panic buying petrol yesterday as unions called for another strike and the nation’s oil refining industry came close to paralysis.
Striking workers have closed down 11 out of France’s 12 plants, sparking fears that the petrol pumps will run dry.
Union bosses yesterday called for a nationwide strike on Tuesday, hoping to galvanise France into a drawn-out confrontation with the government over a proposed rise in the retirement age.
…
Published: October 15. 2010 12:01AM
One reason for housing glut: Fewer new households
U.S. household formations are at their lowest since 1947, data from the Census Bureau show. And that’s helping to keep the supply of unsold homes at near-record levels nationwide, even though relatively few houses are being added to the inventory.
Between March 2009 and March 2010, the number of households rose just 357,000, according to the census data. In the previous 12 months, the number increased only 398,000, the third-smallest increase on record since World War II.
Between 2002 and 2007, before the economy started on its downward trajectory, household formations averaged 1.3 million a year, U.S. census data show.
…
The nation’s gross vacancy rate — the proportion of housing units that are vacant — stood at 14.5 percent at the end of the second quarter of 2010, census data show.
…
Immigration and the housing glut
Posted by Nin-Hai Tseng, reporter
October 12, 2010 11:10 am
Why are so many homes still sitting vacant? The U.S. Census offers some clues: falling immigration and more doubling up by young people.
The glut of vacant homes has helped send home prices on a downward spiral for years now. Most real estate experts blame record foreclosures for the excess inventory, but a new report says there are other factors contributing to the oversupply of housing units on the market.
Foreclosures may leave homes empty, but the owners need to go somewhere. If they end up renting elsewhere, that leaves the housing glut unchanged. The proportion of vacant units stood at 14.5% at the end of the second quarter of 2010, just below the 14.6% record high set in the first quarter of 2009. The vacancy rate hasn’t changed much, even though new home construction has plunged — housing starts have been running at an annual rate of under 1 million since June 2008. Historically, the market needed to build 1.5 million to 1.7 million per year just to meet demand.
So what’s the real culprit swelling the housing glut, if foreclosures aren’t to blame?
According to IHS, there are two, actually: The fall in immigration and the growing number of young people moving back in with their parents amid a frustratingly tough job market. These factors have contributed to slowest growth in the number of new households since the second World War.
…
It has to be said that to many units were built during the housing
boom which is mis-allocation of resources .
Census data: Weddings in 2009 at record low level
By HOPE YEN (AP) – Sep 28, 2010
WASHINGTON — As the recession shook Americans’ confidence last year, new figures show that weddings for people 18 and older dropped to the lowest point in over a hundred years.
A broad array of new Census Bureau data released Tuesday documents the far-reaching impact of a business slump that experts say technically ended in June 2009: a surging demand for food stamps, considerably fewer homeowners and people doubling up in housing to save money.
The new figures show, among other things, that the number of people getting married fell to a record low level in 2009, with just 52 percent of adults 18 and over saying they were joined in wedlock, compared to 57 percent in 2000.
Marriage rates have been declining for years due to rising divorce and an increase in unmarried couples living together. Demographers say the current downturn may now be causing more younger adults to postpone marriage as many struggle to find work and resist making long-term commitments.
“Given the scope of the recent recession, many more couples are likely to choose cohabitation over marriage in the coming years,” said Mark Mather, associate vice president of the Population Reference Bureau.
On the positive side: Americans spent about 36 minutes fewer minutes in the office per week and were stuck in less traffic, although the reason was largely because millions of them had lost jobs or were scraping by with part-time work.
…
Are these tiny reported drops in NYC housing prices plausible?
September 28, 2010, 10:34 am
Recession Takes Toll on City, Census Survey Shows
By SAM ROBERTS
In the first measurement of the full brunt of the recession, New Yorkers’ median income and house values declined between 2006 and 2009, and the percentage of people dependent on food stamps soared, according to census data released Tuesday.
The 2009 American Community Survey also suggested that the sluggish economy had other indirect effects on New York City. Fewer families reported having both parents in the work force, more people were living in housing that had no kitchen, the proportion paying 35 percent or more of their income on rent rose to 42 percent, and a smaller share of people owned two vehicles.
While the poverty rate has remained unchanged in the city, it has risen in the state since 2008 to 14.2 percent from 13.8 percent, and in New Jersey to 9.4 percent from 8.8 percent. Median household income has remained about the same. In Connecticut since 2008, the poverty rate and median income have remained unchanged.
In the city, housing values registered the sharpest declines, to $517,000 in 2009 from $537,600 in 2008 and $557,300 in 2007.
Home values also declined markedly in the metropolitan area, to $439,500 in 2009 from $459,200 in 2008 and $484,500 in 2007.
…
Homeowners Vs. Robo-Signers
Thursday, October 14, 2010
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Jeff Yastine in Miami. Dennis Brown can tell you plenty about his fight with mortgage servicing companies and by default, MERS.
DENNIS BROWN, HOMEOWNER: It`s just like if they`re playing in a card game and you find out they`re holding cards up under the seat.
YASTINE: He and his wife bought this house in 2002. Everything was fine until a not-so-funny thing started happening. The Browns were regularly sending in their monthly mortgage payments, yet, somehow, someway, the servicer of their loan - Citimortgage — wasn`t crediting them for their payments. And no matter who Brown talked to, no one could tell him why he wasn`t getting credited or where his money was going. Still, the Browns continued to pay.
BROWN: So we sent a monthly note in, and they said we had this much money. You still haven`t caught up. So I start sending two house notes a month.
Jeff: This is two checks a month?
BROWN: Two checks a month.
YASTINE: For how much?
BROWN: What was it, about $1,600 apiece. Then, I sent another $1,600, somewhere up in there. And then we started getting the same ordeal.
YASTINE: Eventually, Citimortgage sought to foreclose on their home. The Browns hired a lawyer, Kenneth Eric Trent, to fight back. When Trent requested a key piece of paper, called the mortgage assignment, he noticed something odd: the document, from Mortgage Electronic Registration Systems or MERS was signed and witnessed. But the actual signatures of those supposedly different people were exactly the same.
KENNETH ERIC TRENT, ATTORNEY: It`s not the sort of thing you can brush off. How do you have two different people with the same signature on a document with the importance of this one, which is essentially bestowing the right upon the plaintiff who`s suing my client, to take his home?
YASTINE: Trent had stumbled into what we now have come to know as robo-signing of key mortgage documents.
…
Megabank, Inc = BULLIES — happy to kick Americans when they are down in order to increase the size of their bonus pool.
America will get back to you, folks. Enjoy those bonuses while they last.
JPMorgan Insults All Employees of Burger King
* 10/14/10 at 11:34 AM
Executives at JPMorgan had a name for the underlings who willy-nilly foreclosed on tens of thousands of homeowners but failed to accurately document their actions, the “sloppy … frazzled workers” who lost documents or “sometimes tossed the paperwork into the garbage,” as the Times characterizes them this morning.
Well. Not only is this a slap in the face to the hardworking people at the Home of the Whopper, whose actions almost certainly have never resulted in people unfairly losing their homes, it’s rather awkward for JPMorgan to characterize them in such a derisory way given that JPMorgan is one of the primary lenders financing 3G’s $4 billion bid for Burger King.
Burger King has not responded to Daily Intel’s request for comment at this outrageous comparison. This morning, shares in Burger King fell one percent, to $23.96.
…
Bankers Ignored Signs of Trouble on Foreclosures
By ERIC DASH and NELSON D. SCHWARTZ
Published: October 13, 2010
At JPMorgan Chase & Company, they were derided as “Burger King kids” — walk-in hires who were so inexperienced they barely knew what a mortgage was.
At Citigroup and GMAC, dotting the i’s and crossing the t’s on home foreclosures was outsourced to frazzled workers who sometimes tossed the paperwork into the garbage.
And at Litton Loan Servicing, an arm of Goldman Sachs, employees processed foreclosure documents so quickly that they barely had time to see what they were signing.
“I don’t know the ins and outs of the loan,” a Litton employee said in a deposition last year. “I’m not a loan officer.”
…
Whoops! I did it again…
Lack of proper mortgage paper trail could leave big banks reeling again
By Ariana Eunjung Cha and Jia Lynn Yang
Washington Post Staff Writers
Wednesday, October 13, 2010; 10:44 PM
The federal government’s pressure on lenders Wednesday to fix the paperwork problems plaguing foreclosures left unaddressed a far greater potential threat facing the financial system and the U.S. economy.
Beyond sloppy documents, the foreclosure debacle has exposed one of Wall Street’s little-known practices: For more than a decade, big lenders sold millions of mortgages around the globe at lightning speed without properly transferring the physical documents that prove who legally owned the loans.
Now, some of the pension systems, hedge funds and other investors that took big losses on the loans are seeking to use this flaw to force banks to compensate them or even invalidate the mortgage trades themselves.
Their collective actions, if successful, could blow a hole through the balance sheets of big banks and raise fundamental questions about the financial system, financial analysts and a lawmaker said.
If judges rule in favor of such lawsuits, “it could be 2008 all over again,” said Josh Rosner, managing director at Graham Fisher & Co., referring to the Wall Street meltdown that occurred after Lehman Brothers collapsed.
…
“New residential construction had dropped by 80% as well.”
Not to want to seem like a gloomster or anything, but hasn’t residential construction dropped by 80% or so in the current episode?
Realty Q&A
Oct. 15, 2010, 12:01 a.m. EDT
The housing crisis in 1933, and today
The real-estate market is suffering now, but it was worse then
By Lew Sichelman
Realty Q&A is a weekly column in which Lew Sichelman, a nationally syndicated columnist who has been covering the housing market for more than 35 years, responds to readers’ questions on real estate.
WASHINGTON (MarketWatch) — Question: I know that the New Deal created the Home Owners’ Loan Corp. I have been eager to read an article by someone who has looked at the way that mortgage crisis was handled … and compared it to government efforts in our present crisis. If you are familiar with anything written on this subject I would appreciate your informing me where to find it. If you are not aware of anything, I might suggest that you would be an excellent person to explore it. —M.N.
Answer: Actually, you’re in luck. I do know of one such study; it was done a few years ago by Alex Pollock, a resident fellow at the American Enterprise Institute in Washington and the former president of the Federal Home Loan Bank of Chicago.
Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”
While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.
Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well.
…
Did anybody think that the Bankers /Middlemen that created the
fake housing boom Ponzi Scheme also processed the paper-work right ? It was a fraud market and in spite of the Cheerleaders of
Wall Street stating the Loan Peddlers didn’t do anything illegal
they couldn’t of pulled off this scheme without doing everything
illegal .
My next door neighbor lost their farm to the lender in the 1930’s .
One of the problems was my Neighbor’s Father died in a car accident
which affected the families ability to make income .Not a lot of mercy back in those days and you were lucky if the Lender let you rent the property you owned before .
Does anybody have any question on why regulations are needed as well as true watch dogs ?