Bits Bucket For November 26, 2010
Post off-topic ideas, links, and Craigslist finds here.
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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Name:Ben Jones
Location:Northern Arizona, United States
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This doesn’t seem like the kind of Marketwatch headline one would expect right on the eve of Eddie’s Santa Claus rally to DJIA = 12K!
But not to worry — I’m sure this is just one of the market’s famous head fakes, and it will soon be on track for the race to the finish line.
Index Futures:
S&P 500 1,185 -11.10 -0.93%
DOW 11,054 -101.00 -0.91%
NASDAQ 2,136 -22.25 -1.03%
Dow on track for drubbing
U.S. stock futures trade sharply lower on Black Friday, as news out of Europe roils global markets.
Me me me I didn’t go to black Friday sales do I win something???????/
I’m going out today in an hour or so. But not to buy things. Rather I’m going to fire one of my banks, or more correctly one of my credit unions. I have a 13 month CD maturing today. The previous rate was 2.23%. They told me they would renew it at 0.95% so they are going to be fired. I’ll stick it in my Zion’s MM account at 1.1%, at least temporarily.
I went in there Monday to inquire about rates. Never hurts to show up and ask. Sometimes local managers have quite a lot of leeway in rates. Back when WaMu collapsed, they offered a 13 month CD at 5%. So I walked into Bank X and said I’d like to withdraw my $100K thank you very much. They put their heads together and said they would MATCH the WaMu terms if I would pretty please leave my money in their wonderful bank. So I did. So I drove down the street and fired another of my banks to fund the WaMu CD.
They’d match the competitor’s rate? Sorry, but that’s not good enough.
I wonder how the conversation would go when the branch manager had to explain to his superiors that he let $100k walk out the door. I’d like to be a fly on the wall for that conversation.
Banks don’t seem to care much when depositors leave with their money. Why bother with depositors when you can get cash for 0% from the Fed?
Private fed creates money from out of thin air, makes it up and gives to “other Banks”. Then loans it’s free money to gullible,naive borrowers who then become “slaves” to the bankers. Winners and loosers. Now nations replace the public slave workers. The private bankers, ie “money changes” are now in control with their eur, dollar controlled currency. Public fell for the scam, hook ,line and sinker with all governments around the world approving every step of the way! When the public wakes up from their “deep sleep”, Rites, catastrophes, will be common day events everwhere!
They probably need the $100K cash as part of the reserve requirements.
I still think it would be cool to have a Public Option Bank, run by the government for the little guy. All they would offer would be checking, savings, Treasury notes of all lengths (no CD’s), ATM’s nationwide, and possibly FHA mortgages. $100K FDIC to keep out the big boyz. Make those banks quake in their boots trying to drum up actual reserves for their reserve requirements.
“Why bother with depositors when you can get cash for 0% from the Fed?”
That’s spot on, Dennis. The Fed has taken households and other private sources of loanable funds out of the lending equation, officially in the interest of jump starting the economy. It turns out that discriminatory access to the fruits of the virtual fiat money press offer the too-big-to-fail banks an overwhelming advantage over the rest of the participants in the U.S. economy.
I think there’s a disconnect between the academics and business people in the financial industry.
People rise to the top of the financial companies because in part, of an unwavering goal to improve the bottom line. Academics don’t seem to have an understanding of that pit-bull-esque pursuit of profit. Probably due to differing backgrounds. Academics may meet with the heads of big banks and it’s all fine wine and cheese and quietly playing classical music at a cocktail party, and they think they’re both looking at the world through the same lens. Alas they’re not.
And so, while an academic might understand that while a profiting opportunity might exist, they don’t realize the single-minded obsessive zeal with which the business people will pursue it. To the exclusion of all other concerns, societal or organizational.
“To the exclusion of all other concerns, societal or organizational.”
What about legal concerns?
What legal concerns?
The amount of age discrimination and how all of a sudden millions of paying jobs have all seemed to turn into “intern” jobs, and no one cares ……screw the law.
It is quite interesting to see gold and the Global DOW index of stock prices drop by similar amounts overnight in dollar terms. Is this the mirror image of a flight-to-quality into dollars?
PBOC Researcher Calls on U.S. to Sell Gold Reserves, People’s Daily Says - Bloomberg
The U.S. should cut its government spending and sell some gold reserves to balance its budget and fund its recovery, the People’s Daily overseas edition reported, citing Xia Bin, an adviser to the People’s Bank of China.
The U.S. has to resolve its “twin deficits” in the government budget and the current account, Xia was quoted as saying. Three ways that may help the U.S. achieve that target include reducing military expenses, selling part of its gold reserves and relaxing some export limits on technology, he said.
“The U.S. has more than 8,000 tons of gold reserves; why can’t it sell some of it since the country wants to raise funds for economic recovery but doesn’t want to add more burden to the fiscal deficit,” Xia told the newspaper. He didn’t mention whether China would be willing to purchase any gold from the U.S.
China ranks as the world’s largest foreign holder of U.S. Treasuries, with $883.5 billion as of Sept. 30, according to the U.S. Treasury Department. China should raise its gold holdings and its 1,054 tons of reserves are inadequate compared with the 8,133 tons held by the U.S. and 3,408 tons by Germany, Meng Qingfa, a researcher at the China Chamber of International Commerce said on Oct. 27.
The U.S. won’t be able to get to the bottom of the problem if the government keeps relying on printing money, Xia said.
“The financial market in the U.S. is not short of liquidity, and the money can’t get into the real economy,” he said. Expanding money supply may not be the answer in the U.S. as the high unemployment there is a structural, instead of a liquidity, issue, Xia said.
A broken clock….We probably should sell some of our gold reserves, now while the price for gold is real good. It’s not like the ammount that we have is sufficient to provide any kind of backing for the dollar. It’s not like there’s enough to make a real dent in the deficit either, but still…
Did a quick calculation:
8000 tons x 2000 lbs/ton x 16 oz/lb x $1200/oz = 307 trillion dollars. That’s more than a significant dent.
Either I made a huge calculational boo boo, or it’s paper gold, or the US is telling China to f off. China may whine, but they know that their growth comes from reverse-engineering American technology and American consumers.
Try again, you’re too high by three zero’s. It’s worth roughly $350 billion.
Thank you, LVH. What’s a few orders of magnitude among friends? And yes, $350 billion barely pays for anything. Better to keep the gold.
Well of course the laws of supply and demand haven’t been repealed. If the governemnt starts selling, the price would go down. But we certainly could sell SOME of it while demand was high, as it is now.
Assuming the US still owns any significant amount of gold, which I seriously doubt, selling it would make the price go down only for a very short time at most. Then it would go way UP, due to removing the possibility of their selling that same gold in the future. See the brilliant UK gold sale by Gordon Brown for an example, or the “London Gold Pool” idiocy from the 1960’s.
Let’s see if I have this straight…
China wants us to reduce our military spending.
China wants access to our restricted technology.
China wants us to sell gold reserves which would have the effect of making their US Treasury holdings more valuable.
How do you say, “go eff yourself” in Chinese?
China wants us to reduce our military spending.
Therefore, China should invade North Korea and kill off their tyrant leaders.
How do you say, “go eff yourself” in Chinese?
“TrueBambooLie™”
The Chinese can’t develop their own technology?
It’s more cost effective to steal it.
Nice to see that they are so concerned with “helping us out”. Almost as bad as Realtors.
With friends like this…….
Where will this Iberian debt contagion spread next: Perhaps the Spanish colonies, (Florida & California)?
Nov. 26, 2010, 5:40 a.m. EST
Portugal readies budget, denies bailout talk
Zapatero ‘absolutely’ rules out rescue for Spain
By William L. Watts, MarketWatch
LONDON (MarketWatch) — The epicenter of Europe’s sovereign-debt crisis migrated from Ireland to the Iberian peninsula, with European Union, Portuguese and Spanish officials scrambling Friday to head off speculation that Lisbon or Madrid could soon be forced to seek help to meet their borrowing needs.
…
Related stories
* Spanish market leads European stock selloff (4:30a)
* Portugal denies pressure to take bailout: report (4:00a)
* London stocks drop as miners, banks weigh (5:09a)
* Ireland details austerity plan amid bond turmoil (Nov. 24)
This news portends badly for progress towards Eddie’s DJIA = 12K prediction, as the dollar and the DJIA have lately tended to move with nearly 100% negative correlation.
Metals Stocks
Nov. 26, 2010, 7:21 a.m. EST
Gold, other metals fall as U.S. dollar rallies
Trading expected to remain thin because of Thanksgiving holiday
By Polya Lesova, MarketWatch
LONDON (MarketWatch) — Gold and other metals futures posted losses on Friday, as investors sold commodities and stocks and bought the U.S. dollar following renewed concerns over debt levels in the euro zone.
…
My company I work for was one of Nasdaq’s ten biggest gainers on Wednesday. Today it’s about two cents below what I sold 25% of my shares for a couple weeks ago.
Its estimated price for the next twelve months has been raised a bit today, I see.
Life is good!
Congrats on your market timing exercise, Bill!
Well, no word of Black Friday deaths from crowd trampling yet.
Y’know, in other countries, people are trampled at religous festivals.
In Amercia, people are trampled at Black Friday shopping festivals.
Therefore, in America, shopping is the religion. Q.E.D.
I consume therefore I am.
So true it’s not even funny.
Here is the story of a man from that new group
WAWSOP
(The Well Armed Wal-Mart Shopper on Prescription meds)
Police: Wal-Mart shopper arrested after packing gun in belt; knives too
by Stacey Singer
Disappointment is as much a part of the Black Friday experience as hope is.
Michelle Holder of Lake Worth was looking forward to buying her college-bound daughter a new laptop for Christmas.
Wal-Mart advertised one for $198, so Holder and a friend took their place in the tense, oppressive line at 1:15 am. But once she was inside the Boynton Beach store, the only thing she found was confusion.
“It is really disorganized. You’ve got to walk all around the store to find it, because it’s not in the usual place, and by the time you find it, it’s gone.”
She bought a few kitchen items only to see a fellow shopper being arrested for menacingly showing a pistol in his waistband.
According to Boynton Beach police log, that shopper was Christopher Scott, 49. Police report “Scott had a 40 caliber Glock with a 30 round magazine on his hip in a holster.”
They also found two concealed knives and a “pepper grenade” on his belt, as well as prescription meds with no label or prescription for them, police reported.
“I’m not doing this next year,” Holder said.
You’ve got to walk all around the store to find it, because it’s not in the usual place, and by the time you find it, it’s gone.”… She bought a few kitchen items…
…which is the real reason Wal-Mart has these sales, Ms. Holder. Black Friday is nothing more than the next generation of loss-leader sales circular from Safeway.
IIRC a trick shoppers do is go in before closing the day before and “hide” an item they want in the “wrong place” in the store. Then they go in Black Friday at opening and make a beeline for the “hidden treasure”.
The couple of times in my life I have been in wal-mart I wish I had packed my gun. What a bunch of losers in those stores.
www DOT peopleofwalmart
Not for the faint of heart, and possibly NSFW.
Is she related to Eric Holder?
Realty Q&A
Nov. 26, 2010, 12:01 a.m. EST
Walking away from a mortgage
Sometimes strategic default is the lesser of two evils
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’m from Hawaii. I just happened to come across your article on when to walk away from a mortgage. So strange as I’ve been dwelling on this issue for a couple years now.
I know you’re really busy, but since you have been in this business for 35 years, do you have someone you would recommend who I can hire to help me figure out what to do with my Orlando condo I bought as a second home? I am totally upside down on that one, and moved out of my home to keep making the payments.
I have been thinking about walking away, as I really can’t afford to do this anymore, but I do want to know all the facts and be educated about this process before I get into more trouble.
…
I have been reading a bit about short sales.It seems there are some negatitives you have to really research before going short or going to foreclosure:
1.Is the bank going to forgive the difference on what you owe.anti deficency laws only legally apply to trustee sale or judicial forclosure, not short sale.
2.Tax problems, Are you going to be liable for taxes on the debt forgiven?
3. Credit risk, I have read lots of conflicting articles on this.It appears that going short can have just as negative effect as foreclosure on your credit.
4.In some cases it can be profitable for homeowners just to sit and collect free rent , not pay property tax or hoa and save this money till the bank kicks them out.The bank is then liable to pay all these fees before selling it to someone else.
I have often heard that short sales merely exist so realtors can make a commission.Do your homework before deciding what route to go.
For some, foreclosures are good for business
By TAMARA LUSH
The Associated Press
Published Nov 25, 2010 10:03PM
Updated 8 hours ago
Cape Coral, Fla. • Across the nation, troubled homeowners have cheered the news that some banks are slowing the foreclosure process to review questionable documents. Then there are places like Lee County, Fla., where not everyone is applauding.
Foreclosures became so common here that they spawned a cottage industry. Real estate agents had homes to sell, landscapers and plumbers had work to do, and furniture stores and restaurants benefited, too.
…
“Foreclosures became so common here that they spawned a cottage industry. Real estate agents had homes to sell, landscapers and plumbers had work to do, and furniture stores and restaurants benefited, too.”
I have been laughed at after saying virtually the same thing. If house prices were allowed to fall it would be a boom to the economy. Many would hire people to do repairs, spend money at home centers and furniture stores. I would assume rents would fall giving people more disposable income to go out to restaurants, buy cars, electronics etc. It sounds like more than a “cottage industry” to me. Not to mention it may drop the number of people not paying their mortgage substantially after the upside down crowd drops out, which they are going to do eventually anyway.
I did an interview with Time magazine back during the presidential campaign. It was period when McCain and Obama were trying t o out-do each other with ideas to “save” people from foreclosure. The reporter asked me what I would suggest. I told her that prices had to fall after the bubble and that foreclosures were simply the mechanism for that to happen.
She was shocked, and said, “so you wouldn’t do ANYTHING?” I said, there is plenty the government could be doing, like throwing all these crooks in jail and seriously reform the GSEs, etc. I never heard back from them and nothing I said made it into the article.
Yeah, we live in bizarro world. The same feds who used to go on and on about affordable housing now act like falling prices and foreclosures are a sign of the apocalypse. Unless of course, it hurts the banks, when we are told the process must continue for the market to “heal.” No matter; the foreclosures and lower prices are coming, and nobody can stop it.
I wonder if any of these media folks would be interested in doing an interview with you NOW. My suspicion says no. They’ll probably just re-word your ideas and pass them off as their own.
But yup, you’re right, nobody can stop the fall in prices.
Oh I wouldn’t say that the government couldn’t/shouldn’t do ANYTHING, but really there isn’t very much that they can or should do. Prices NEED to come down, and for many people, especially those in non-recourse states there’s little rational reason to continue to pay an above-market rate mortgage on an inflated purchase price for property that has an equivalent rent that is a fraction of their monthly nut. The help that many need is bankruptcy protection. A few marginal cases can be helped by modification programs. As for “transition assistance”: how much help do people who have been living mortgage and rent free for the six months -two years that a foreclosure takes need?
‘there isn’t very much that they can or should do’
There was a lot of fraud a few years back, and those crimes could still be tracked down. IMO, one of the reasons we punish people is so others will be less likely to repeat similar crimes. This is a function reserved to government, and they are setting up more moral hazard type problems down the road.
This isn’t some intangible concept. Think about it; giant corporations make huge profits off the mania and then the government takes them off the hook; regulators turn a blind eye to fraud that could easily be seen; individuals gambled recklessly on real estate, and now cry victim and expect government help. This is some screwed up sh*t!
And the worst stuff; the actual politicians like Dodd and Frank and Shelby coast out of this pretending to be outraged, getting re-elected, or just generally avoiding the tar and feathering they deserve. What about the Federal Reserve? Not only are they not raked over the coals, but they get even more power? WTF Obama?
Anyhoo, I don’t let this stuff bother me too much. That there isn’t much justice in this country isn’t new, and there is opportunity we can focus on as individuals.
That there isn’t much justice in this country isn’t new, and there is opportunity we can focus on as individuals ??
Yeah…I agree Ben although it is just hard to stomach some people strutting around preaching how smart & savvy they are but really what they are is bandits…
I guess your advise is best…Just accept the fact that there is injustice all around us, that some will be unduly rewarded and just seek out what ever opportunities that may lay out in front of us…
“Oh I wouldn’t say that the government couldn’t/shouldn’t do ANYTHING, but really there isn’t very much that they can or should do.”
What is preventing them from reinstating a rule of law in the banking sector? Throwing crooks into prison would be a great start.
Ben, one of the things that has been very eye opening for me in the past few years is the size and scope of the gravy train. This is the real reason nobody wants prices to fail.
I still believe we represent a small group in the grand picture. My wife and I are the only people we know that want prices to fall. I’ve stated over the years about how my father-in-law constantly goes on about RE going up, but never reconciles the fact that none of is four children can afford a house. BTW, his house in upstate NY is still for sale.
In short, it’s something that not many people fully understand. We do, but even then it’s hard to articulate it to the people — for people like my FIL, he doesn’t care about a plumber getting more work, he needs top dollar for his house to pay off other crap he’s cosigned for like student loans.
and there is opportunity we can focus on as individuals.
These are very wise words. There are plenty of opportunities in this country. A person has to see it then step up to the plate and swing at it. I have said it before; it is easy to make money but more difficult to make a living. Unfortunately most people choose the hard way and think there is security in a job. I guess they have been brainwashed to be dailies and coupon people.
‘it’s something that not many people fully understand’
That may be, but if so it’s because almost no one in DC or the media is explaining the situation. We’ve never had a frank public discussion of this housing bubble in terms of a financial mania. Just a few years ago, magazines and news reports actually did look at the craziness, but with a boom-time view-point. Then the SHTF, and the talk turned away from the mania and focused on the negative fall-out as something that had to be fixed. In truth, these foreclosures and lender losses were as predictable as floods following record rainfall.
Why the bubble denial? I suppose it could be explained by many things. The big powers would have to share the blame if it was something as simple as the emperor wearing no clothes. The regulatory failures, Fed policy mistakes, terrible congressional oversight. Then there is a press/political machine still beholden to REIC interests. “Hey there, FB, you screwed up, we screwed up. Stop acting like a child and be responsible for once in your life.” That probably wouldn’t go over well with the advertising department, or the incumbent looking for votes.
So what do we get? It’s very subtle; the “financial crisis” started in 2007 with Lehman Brothers, not when prices exploded years before that. We have to save wall street, because otherwise we’ll all lose our jobs, and putting these crooks in jail would stifle financial innovation!
Back to the original point; we should be making lemonade out of the housing bubble lemons. Free up income that’s wasted on inflated housing costs. Let’s get these empty houses fixed up and back in use. And let us see falling prices as the “stabilization” that it is; crucial to healing the economy and getting on with our lives.
If DC wants to do something, let them work toward a post bubbles economy, based on sustainable productivity. That should keep them busy for a decade or two. Or they could just get out of the way and let the people do it.
Why the bubble denial?
Ben, it’s very simple. There are FAR more owners than there are renters. Keeping prices high will benefit those who already bought. Letting prices fall will benefit…who? A few hundred bottom feeder/flippers and a dozen folks on HBB? They have to accomodate the masses.
By “benefit,” I mean benefit immediately. It’s like the teach-a-man-to-fish story. If you give a man a fish, he can fry it up right away. If you teach a man to fish, he has to make a pole and wait for a fish, and he may starve in the meantime. So the gov is taking care of the starving. The healthy (us) are at the back of the line even if it’s unfair.
Of course the infuriating part is that the people allowed themselves to fritter away to the point of starving in the first place. And that the banker’s idea of “starving” is that they have to live on Ocean Spray and hamburger instead of Dom and mignon.
‘more owners than there are renters’
People who owe money on a house are the minority.
‘Keeping prices high… Letting prices fall’
It should be obvious by now that these forces aren’t controlled by the govt. Let’s take the strategic defaulters. The reason they walk away is simple; it no longer makes sense to send good money after bad. Some people could never afford the payments, some are taken down by the bursting bubble/bad economy.
Put another way, if these owners are so numerous, why don’t they just keep prices high with sheer will? Because most were speculating. That’s right - most. Otherwise they’d never have paid so much more than rent to have a house. Like all speculative manias, the basis is the greater fool. And when they run out of fools, they rush the exit, or walk away.
Someone should publicly explain that affordable housing benefits everyone. It’s not that hard to understand, and I suspect it will eventually become clear, even to the dolts in DC.
“People who owe money on a house are the minority.”
Where I am currently renting is a nice well established middle class neighborhood. Built mostly in the late 70`s to early 80`s. I have looked at the map on the Property Appraiser site which gives you the sale price, taxes etc. on every house you click on. In this hood and several others that I have looked at 95 to 98% of the homes were purchased in the mid 90`s or earlier at reasonable prices. Now I can`t tell how many refied them up, but most by purchase price are fine.
“Letting prices fall will benefit…who? A few hundred bottom feeder/flippers and a dozen folks on HBB? They have to accomodate the masses.”
That sounds suspiciously like the propaganda the REIC/Wall Street/DC establishment wants the masses to buy into. But the fact is that everyone suffers as a consequence of unsustainably high housing prices. To name two key examples (one already mentioned above):
1) Those who work in the home sales industry and related industries (construction, home furnishings, etc) tend to suffer when the rate of sales shuts down due to a government-sponsored discontinuity between supply (offer) and demand (willingness to pay) prices.
2) Labor markets shut down as a consequence of unaffordable housing prices, as it is impossible for workers to afford the cost of relocating to where jobs might otherwise await them. The work that is left undone due to the pecuniary externality of overpriced housing has a real value which your comment suggests you don’t grasp.
Market forces have a way of equilibrating the situation which top-down command-and-control intervention can not begin to match.
Almost forgot:
3) Empty houses face a much higher rate of physical depreciation than owner-occupied houses. The ginormous shadow inventory of vacant houses, which cannot be sold due to above market-clearing prices, represents a huge collective loss of real wealth to America, thanks to unchecked physical deterioration of the structures.
I’ve run a few businesses. It isn’t easy. There really is security in a day job. But far less opportunity to hit a home run.
Most small businesses are mom and pop and most of those make just enough money for the owners live comfortably.
90% of small businesses fail in the first 5 years. Have you had to start over lately? It sucks when you’re older. A LOT.
So I don’t blame most people for not risking everything. Because that’s what your doing when go into business for yourself.
Some people are able to trip over their own feet and be successful. Some have to put in some honest work. Others bust their butts and lose it all. There is no real rhyme or reason to being successful in business except for a good amount of luck. Seriously. I’ve seen people who couldn’t walk and chew gum, succeed and I wonder, “WTF?”
As for that “opportunity”, the low hanging fruit has been gone for decades. The Internet was the last big opportunity for the average person.
I hear real estate cheerleaders constantly - CONSTANTLY - on DC news radio. It’s because advertisers fund the medium. The radio hosts are not going to attack the hand that feeds them.
This issue has been highlighted with car magazines. For a long time, it was a bit of a joke (might still be) when car mags wrote about cars. Their biggest advertisers would not appreciate being badmouthed in the medium they help support.
I think this is why there has been no serious discussion about the housing bubble in the mainstream media - because the mainstream media is funded by realtors and wall street. Just see all the commercials for realtors and investment companies and banks.
“we live in bizarro world.” You got that right!
$200 off a plasma TVs at Wal-Mart on Black Friday is a GREAT THING for the “consumer”
But “foreclosures and lower prices” on houses “are a sign of the apocalypse”
The TV’s are virtually free to make. The house prices represent a paper dam holding back millions more foreclosures.
During Savings & Loan scandal: 1500 banksters jailed.
During 2008 home lending scandal: 0 banksters jailed because it’s “all our faults” and everybody -banks, investment houses, homeowners, appraisers are all to blame, hence all go free.
“If house prices were allowed to fall it would be a boom to the economy.”
I’ve said that here numerous times, and I will reiterate it now. While the politicians pay lip service to the notion that the economy will be unable to recover until the housing market comes back, they are either too ignorant to realize or choose to ignore that artificially high housing prices during a recession serve to push the real estate market towards a state of frozen liquidity.
Realtors™ certainly have a difficult time making a living when transactions volume is near a stand-still, banks are unwilling to lend when they fear further price declines are on the way, and related businesses such as home furnishings have no customers when nobody is moving. If housing prices had been allowed to adjust to equilibrium (market-clearing) levels, instead of being artificially propped up against the backdrop of a record glut, it seems quite obvious that the near-shutdown of the used home market we are currently experiencing, accompanied by the buildup of a massive shadow inventory glut, could have been avoided.
The only homes that are selling are short sales and reo’s.If you dont have a connection with a bank good luck getting a listing with a bank.Short sales are a pain in the butt for realtors to handle.But since this is the only business out there they are getting better a selling them.
If our economy is now based solely on RE, we doomed anyway.
“artificially high housing prices during a recession serve to push the real estate market towards a state of frozen liquidity.”
They’ve deluding themselves into thinking that frozen water will sublimate.
November 25, 2010
Foreclosures take toll on many Oklahomans
Numbers show state is not immune to housing market collapse
TREVOR BROWN CNHI
Capital Bureau
The Edmond Sun
Thu Nov 25, 2010, 08:46 PM CST
OKLA. CITY — OKLAHOMA CITY — Thousands of Oklahomans have joined the ever-growing number of people nationwide who cannot meet their mortgage payments.
There were 5,806 Oklahoma foreclosure filings reported during the third quarter of the year — a 2 percent increase from the previous quarter and up 15 percent from the third quarter of 2009 — according to real estate data service RealtyTrac Inc.
…
What was the peak price on a new spec 3/2 there, maybe $85k, or was that Kansas?
Thousands of Oklahomans have joined the ever-growing number of people nationwide who cannot meet their mortgage…nor their “Equity-@-work” ATM payments.
Foreclosures are skyrocketing in places I never heard of. So much for the theory that the housing bubble was limited to a few hot coastal areas where prices had become ‘a bit frothy.’
Souderton Independent > News
Foreclosures skyrocketing in Montgomery County
Published: Thursday, November 25, 2010
By Keith Phucas
For the Independent
Home mortgage foreclosures have been rising in Montgomery County for 10 of the past 11 years, especially during the recent recession, according to figures from the Prothonotary’s Office.
In 2000, the county processed 1,054 residential mortgage foreclosures. By the end of this year, officials project a total of at least 2,600.
By mid-September, 1,893 foreclosures had been filed in the Prothonotary’s office, according to Bonnie O’Kane, First Deputy Prothonotary.
“It’s not getting better,” O’Kane said during an interview in September.
…
Montgomery County PA. These must be the leapfrog outer-burbs for Philly. I checked the satellite but didn’t see any obvious McMansion developments..
Google Maps, RE, plug in size (rooms/sqft) and mortgage/rent.
http://www.bloomberg.com/news/2010-11-26/hungary-risks-fund-manager-exit-on-pension-grab-pioneer-says.html
Hungary goes for pension fund grab - how long before US (or more accurately, the TBTF banks that control US fiscal policy) follows?
IMF holds a gun to Hungary’s head: “Slash welfare state or we will throw you to the wolves”
Wed, 21 Jul 2010 08:12
CDTGordon Fairclough
Wall Street Journal
Hungary has been considered an IMF success story. The fund, along with the EU, kept the country afloat amid a financial crisis that began in 2008, when Budapest was unable to raise money on its own. Under the terms of the loan, Hungary moved to slash government spending. It cut pensions, raised the retirement age, froze wages for government employees and pared state-subsidy programs.
http://www.sott.net/articles/show/212390-IMF-holds-a-gun-to-Hungary-s-head-Slash-welfare-state-or-we-will-throw-you-to-the-wolves- - 56k -
“Hungary goes for pension fund grab…”
Cristina Kirchner thought of it first!
Defined, corporate pensions have been disappearing for the last 30 years.
Pension clawbacks have been happening for the last 20 as well.
401s and IRAs have been seeing more and more restrictions over the years with less and less company matching.
The Bush admin tried to put Social Sec. into the stock market casino.
We’re WAY past “pension grabs.”
Pensions funds are SOOOOO very sweet!
In all seriousness though, most were designated based on an unrealistic rate of investment return - 8% here in California. With so many having actually lost value rather than gained there is no way to pay out. What made anyone think that money just grew at 8% a year with NO risk for ever I don’t know. Not without at least the same in inflation at any rate, or there is not enough money in the universe to pay for it all.
Worse, more money has been loaned than ever has or will (without inflation) ever exist. Pretty much all leveraged bets.
Pensions: Do you know anybody who has had their private US company or goverment pension reduced?
GM Stock: For those who owned prior to BK, what was the final deal? If you never sold, was it a total loss?
For those who owne gm stock prioer to bankruptcy lost thier shirts.I think the holding company is trading on the pink sheets somewhere.
Researching more - there is the pink slip holding company which is almost worthless. GM stock holders could have at least off-set any gains last year by selling, but can no longer do that. Many held the stock thinking there would be worth with the new issue - which did not happen.
Check out the news releases from PBGC, the government agency that guarantees pension benefits from underfunded or BK employers. In 2009 alone, there were several dozen dead/dying companies added. PBGC has a ceiling on the monthly amount they will pay. I’m not sure if those under the ceiling get the full amount they would have gotten from their old company or get a reduced amount.
http://www.pbgc.gov/media/news-archive/news-releases/2009/index.html
Thanks Bill -
October 27, 2009
PBGC News Division
202-326-4343
PBGC Announces Maximum Insurance Benefit for 2010
WASHINGTON—The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2010 will be $54,000 per year for those who retire at age 65. The amount is higher for those who retire later and lower for those who retire earlier or elect survivor benefits (see chart). The PBGC maximum insurance benefit is indexed to a contribution and benefit base in Social Security law. Because that amount does not increase for 2010, the PBGC maximum insurance benefit is unchanged from 2009.
If a pension plan terminates in 2010 but a participant does not begin collecting benefits until a future year, the 2010 maximum insurance limits still apply. For plans that terminate while the plan sponsor is in bankruptcy proceedings, the Pension Protection Act of 2006 provides that the maximum benefit payable is determined by the legal limits in force on the date the plan sponsor filed for bankruptcy and not on the date of plan termination.
The maximum insurance benefit is set by law. Two additional legal limits on PBGC’s insurance coverage can also affect participants’ benefits. The first prohibits the PBGC from guaranteeing benefits that exceed the amount payable at the plan’s normal retirement age. The second limits PBGC’s guarantee of benefit increases made within the five years prior to plan termination, or the date the sponsor filed for bankruptcy, if the sponsor is in bankruptcy when the plan terminates. For more information, see PBGC’s fact sheet “Pension Guarantees”.
The overwhelming majority of the participants in plans taken over by the agency face no reduction in benefits due to the legal limits on coverage, PBGC research shows. The largest reductions occur in cases where participants earn pensions that 1) significantly exceed the maximum insurance benefit, or 2) provide generous early retirement subsidies.
“Pensions: Do you know anybody who has had their private US company or goverment pension reduced?”
Ask retired commercial pilot.
“Do you know anybody who has had their private US company or goverment pension reduced?”
Yes. A few thousand line workers for HP for starters. I personally met a few hundred of them. They got screwed. Hard.
I was thinking this morning….a big problem that BofA has is that the MBS trusts that Countrywide sold bad mortgages to may be able to demand a purchase-money refund from Countrywide, since the mortgages weren’t properly transferred to said trusts. It may be too late to effect a “proper” transfer to said trusts since so many of the mortgages are already in default.
IIRC BofA bought Countrywide at a “shotgun wedding” with Barney Frank playing the part of Jed Clampett. Could BofA in turn claim fraud and recind their purchase of Countrywide? Could they set up Countrywide as an independent entity to take the fall for them?
Spin off countrywide and let it go into bankruptcy.Then do another IPO for the company so they can pay off bad debts?
“…Barney Frank playing the part of Jed Clampett…”
My keyboard is giving thanks that I did not have coffee in hand when I read that…
Interesting article:
Despite a backlog of about 30,000 foreclosures in Pinellas and Pasco courts, lenders have been postponing the last step — the hearing on the motion for summary judgment.
http://www.tampabay.com/news/business/in-pinellas-foreclosure-court-often-uncontested-cases-carry-on/1136467
Here’s another glimpse behind the curtain.
This just reaffirms my long term faith in our currency!
Yea, right.
http://www.businessweek.com/ap/financialnews/D9JMJMRO0.htm
What did I tell ya? It is different here…gotta get ready for the 14 World Cup and the 16 Olympics.
Rio favela violence: police take control of gang stronghold…Police have taken control of a favela in Rio de Janeiro that was a gang stronghold following nearly a week of violence that has left dozens dead.
http://www.telegraph.co.uk/news/worldnews/southamerica/brazil/8162924/Rio-favela-violence-police-take-control-of-gang-stronghold.html
A battalion of 800 soldiers, two air force helicopters and ten armoured vehicles were sent to the area to support police…
Night vision goggles and hi-tech communication equipment was also provided.
Around 150 elite police officers had entered Vila Cruzeiro, an important base for the Red Command drug gang, on Thursday inside armoured vehicles provided by Brazil’s Marine Corps.
They raided the area after several days of gang members stopping cars and buses, robbing those inside and setting them alight, leading to scenes of chaos across the city.
At least 96 buses and cars have been burned out on major roads this week and 192 people arrested, police said.
“We took from these people what has never been taken – their territory,” he said. “It is important to seize drugs and arrest these people. But it is most important to take their territory.”
In all 17,500 state police officers have been deployed in Rio to deal with the violence with a further 80 federal police sent to assist in Vila Cruzeiro.
Rio,
If you have the time, could you tell us some of your observations about life in Brazil, esp. regarding the wide class divide.
When you have a country with people that are rich enough to shop at a high security department store that has its own helicopter pad for customers (Daslu) near to tin shanties, living there must be a pretty interesting experience.
Is there much of what we would consider a “middle class”? Is there a lot of class resentment? Etc…
As our society gets a bit more polarized, what you see there might be worth learning from.
If you have the time, could you tell us some of your observations about life in Brazil, esp. regarding the wide class divide.
I think of Brazil as two counties in one, a first world and third world country living side by side with great differences between the two. The biggest difference being education and who your parents were. Those translate into which world you will be in because of money. I mostly roll with the middle and upper-middle class Brazilians and not the helicopter crowd.
Although I do not live in their world, I do not see a lot of class resentment of poor resenting the rich and Brazilians tell me it is because of Brazil’s history of colonialism, slavery and Brazilians general passive or “happy” nature. Brazilians do not nourish or seek conflict as much as other cultures do, including ours. It is a very “go-along, get along” culture.
Brazil is mostly Catholic and more fatalistic than Protestant America. Brazilians believe in fate and that much is in God’s hands and therefore are more resigned to their “fate”. I do not think that America will handle great wealth inequality as the Brazilians tolerate. Americans are not Brazilians.
I do see the rich Brazilians looking down on their poorer countrymen in the sense that many feel naturally superior while at the same time having a responsibility to be the poor’s “patrons” in individual employee/employer relationships. I don’t see much desire to educate the poorer Brazilians in a meaningful public policy way yet.
Brazilian middle class: Out of a country of 190 million people, the past 15 years have seen roughly 20 million emerge from abject poverty and 35 million enter the “middle-class” or what American’s would consider lower middle class. I’ve seen figures that 1/2 of Brazil is now middle class and I’d estimate that maybe 1/4 of Brazilians are middle middle or upper middle class. So half are still poor.
There are now programs to feed and house the poor better which seem to be working well. Some of the rich resent these programs and get very agitated talking about them. I usually nod my head dumbly but “innocently” ask them why it’s so bad to give their uneducated, mal-nourished fellow countrymen $40 a month in rice and beans and that usually changes the subject. Much more needs to be spent on education as there are a lot here who could use it.
One day, I was coming back to Rio on a bus and I saw a cardboard shanty town that looked like something out of the poorest Africa. The next day, I walked 4 blocks from my house and had my shoulder MRI’d by a multi-million dollar GE MRI with medical service every bit as good as the best in the USA. Tonight I will go out to a middle-class restaurant and walk home past a few poor sleeping on cardboard in the street.
I live in a nice area in the south zone, Copacabana, Ipanema etc. Even in these rich areas we have slums climbing up sides of mountains. I have one about 8 blocks away and another about 10 blocks away. But now they have been “pacified”, that is, cops now live and patrol there which was not the case a year ago.
The big violence going on now is because the drug gangs have been chased out of the slums next to me (in Zona Sul) and now have retreated to the poorer, north zone (Zona Norte) favelas (slums). Well, the cops are now taking over THOSE slums as well and they are very serious about it.
Since the cops have taken over the Zona Sul slums, it is safer here, and home prices have risen. This has been a big change in less than a year.
Feel free to ask any other questions and I’ll answer best I can probably tomorrow.
Another reason Brazilians are more “resigned to their fate” is because they don’t have America’s history of constant promoted materialism. Brazil did not even offer a college degree in marketing 25 years ago and they are not nearly as “sophisticated” in it as we are.
Although this is changing, Brazil is not as materialistic as America which has given Brazil’s poor less to be jealous and resentful about.
Another reason Brazilians are not rioting in the streets is because there has been economic progress for ALL classes and not just for the rich as in America.
Unlike the USA, Brazil also protects its jobs. Most consumer items are made in Brazil. Brazil’s middle class is growing. There is a connection. The price Brazilian’s pay for domestic job growth and a growing middle-class is more expensive consumer items and some services.
Brazil’s middle-class and economic growth is showing that this is a price worth paying.
“Brazil is mostly Catholic and more fatalistic than Protestant America.”
When Jesus returns will it be somewhere in Brazil?
When Jesus returns will it be somewhere in Brazil?
Maybe I guess. But it might be in Brazil, Indiana instead.
Coming soon to a US Metroplex near you……
Where have you been for the last 40 years?
RIO street WAR pics. I find interesting the lady cop with the M-16 and the smiling Brazilian lady taking cover from gunfire. It is a very interesting country.
One time I told a Brazilian friend that American street cops don’t wear bullet-proof vests as they do in Rio. He looked at with a blank face and asked; “Why not?”
http://www.telegraph.co.uk/news/picturegalleries/worldnews/8161330/Police-raid-favelas-in-Rio-de-Janeiro-Brazil.html
FN rifles……..old school, baby……..none of that 5.56mm crap down there.
I have a hard time telling the difference between an FN and an H&K.
American street cops do, indeed wear bullet proof vests. But they wear them UNDER their uniform.
Look closer next time you see one.
Fannie Mae gives the ‘go-ahead’ to resume sales of foreclosed homes
By Kimberly Miller Palm Beach Post Staff Writer
Updated 3:21 p.m.
Fannie Mae gave the go-ahead this week to restart sales of its foreclosed properties, activity that had been on hold since September when it was revealed flawed or fraudulent court documents may have been used to repossess homes.
Brokers received a memo Wednesday from the government-sponsored enterprise saying that while evictions and home lockouts are still suspended, homes reclaimed by the company through the foreclosure process are open for business.
In South Florida, the move releases thousands of houses for sale that were taken off the market earlier this fall and allows buyers with contracts on foreclosed properties to finalize their purchase. The memo also tells brokers to contact buyers who chose to cancel delayed contracts to see if they are still interested.
“I’ve already sent e-mails to clients who opted out,” said Bill Richardson, managing broker for the Keyes Company in Boca Raton and the president of the Realtors Association of the Palm Beaches. “I had numerous people put on hold, and some of them cancelled because it was very uncertain when the auditing process would be done.”
A Lake Worth broker said she received a similar memo from Freddie Mac on Wednesday, but a Freddie spokesman said he could not confirm it today because too many people were off for the Thanksgiving holiday.
Amy Bonitatibus, spokeswoman for Fannie Mae, said the decision to move forward with the sales was made after a review of property acquisitions, including those handled by the Plantation-based foreclosure firm of David J. Stern.
Fannie Mae cut ties with the firm last month after former employees, one of whom had been fired, gave sworn statements to state investigators about wrongdoing at the company such as forged signatures on foreclosure documents and the hiding of flawed files from auditors. The Stern firm is one of four so-called “foreclosure mills” in Florida under investigation by the state attorney general’s office.
“Fannie Mae remains committed to ensuring that borrowers are treated fairly in accordance with the legal process and to allowing new homebuyers to close on transactions in a timely manner,” Bonitatibus said.
But some homeowner advocates said there are still too many unanswered questions about whether foreclosures have been handled legally. Concerns about obtaining a clear title are legitimate, said Tampa-based foreclosure defense attorney Mark Stopa.
The foreclosure paperwork problems have already led at least one former homeowner to challenge his foreclosure in Pinellas County. The man’s home, repossessed in 2008 by Bank of America, has since been sold to a family who has had to hire an attorney to defend their title to the property.
“There are still legitimate questions about the validity of title to these homes,” Stopa said. “Unfortunately, too few people in positions of authority care. The fraud is there and we all know it, but too many people think it’s easier or better to ignore it than fix it.”
Fannie Mae and Freddie Mac own or guarantee about half of all U.S. mortgages, or 31 million home loans worth more than $5 trillion.
About 12 percent of Fannie Mae loans in Florida are delinquent, while Freddie Mac has 17 percent of its Florida mortgages in arrears.
The embargo on selling foreclosed properties likely added to last month’s slump of existing home sales, which dropped 12 percent in Florida compared to September, and fell 21 percent compared to October 2009.
Here’s the money shot:
“There are still legitimate questions about the validity of title to these homes,” Stopa said. “Unfortunately, too few people in positions of authority care. The fraud is there and we all know it, but too many people think it’s easier or better to ignore it than fix it.”
“There are still legitimate questions about the validity of title to these homes,” … “Unfortunately, too few people in positions of authority care.”
I would think the key factor is whether anyone whose home was invalidly taken away has the savvy to recognize the impropriety and the legal resources to fight back. I would think most of those who were targeted as presumptive beneficiaries of Democrat-sponsored ‘affordable housing’ programs in recent years would either be too destitute or too poorly educated to put up much of a threat, so I guess it’s all good for the banksters?!
First off, it was the Repub authored and sponsored repeal of the Glass Steagall Act by a Repub controlled Congress that caused this mess and second, you always kick the poor. After all, what CAN they do about it?
1 COMMENT
Professional Realtors like me don’t need to wait for approval to sell a home. We sell them every day and there are plenty of ways to get around Fannie Mae and her foreclosure policy. People who don’t know this should speak with me, a true professional realtor. Reduce your price by 35% and I’ll have it sold in no time. Listen to the National Association of area Realtors, this is the best time to sell and buy a home! Area Realtr on facebook.
Area Realtor
2010-11-26 17:59:35.543
No News is Good News
More Money news from the wires
Stocks slide on worries over Korea, European debt Updated 3:22 p.m.
Tensions in Europe, Koreas boost dollar Updated 3:22 p.m.
Global fears support Treasurys 4 mins ago
FedEx finds missing radioactive equipment Updated 3:19 p.m.
Dollar and precious metals at a glance 16 mins ago
Worries over Europe debt, Korea support Treasurys Updated 3:07 p.m.
Metals, including gold, fall on worries over Korea 28 mins ago
Hershey sues Mars over similar candy packaging Updated 2:58 p.m.
Debt turmoil, contagion fears sweep Europe Updated 2:49 p.m.
Irish banks cut over rumored raid on bondholders Updated 2:43 p.m.
I just heard a thought provoking interview with an economist who appears to be smarter than your average chicken (which is more than I can say for most).
Manfred Max Neef
http://www.democracynow.org/2010/11/26/chilean_economist_manfred_max_neef_on
Though I disagree with numerous statements made by this fellow, he did seem to have a much better grasp of reality than most of the slobbering idiots endlessly quoted as experts in our MSM. Many of his observations correlate very well with contributers to this site regardless of political viewpoint. Worth a listen.
Hope ya’ll had a great Thanksgiving.
There is no prouder moment in a papa bear’s life than when one of his cubs demonstrates a grasp of economic issues well beyond his years, such as when my ten-year-old son selected this game I did not even know existed as a family Christmas gift. I am looking forward to doing fantasy battle with illegal real estate monopolists this holiday season.
HOW THIS GAME IS PLAYED:
* In Anti-Monopoly®, players play either by monopoly or competition rules fixed at the beginning of the game:
* COMPETITORS … charge fair rents, build as soon as they own a property, put five houses on their properties and occasionally go to Price War.
* MONOPOLISTS… extort monopoly-high rents from their poor tenants, build only after they have monopolized a color grouping, restrict supply by putting only four houses on their properties and occasionally go to Prison.
* The good guys are the small business entrepreneurs and the bad guys are the monopolists. Since players do not play by the same rules, fairness is achieved by a patented probability technique, has given each side equal chances to win.
OBJECT OF THE GAME: To be the richest competitor after all monopolists have been bankrupted or to be the richest monopolist after all competitors have been eliminated.
China’s RE bubble haunts dead people in the afterlife:
Land demand squeezes out dead in Shanghai
By Patti Waldmeir in Shanghai
Published: November 26 2010 19:08 | Last updated: November 26 2010 19:08
China’s property bubble has a new casualty: the corpses of Shanghai. In spite of stacking bodies seven or eight deep in graves, the squeeze on space in the city of 20m people has prompted the government to support burials at sea, part of a “green funeral” movement that is challenging deep traditions of filial piety.
…
Looks like “All the Devils are There” in the Indian financial sector, too.
FM tells banks to check scam exposure
Finance Minister Pranab Mukherjee on Thursday directed all public sector banks, financial institutions and insurance companies to review their exposure to companies mentioned in a CBI investigation, which unearthed a major housing finance racket involving officials of Bank of India, Central Bank of India, Punjab National Bank, LIC, LIC Housing Finance and non-banking finance company Money Matters.
Analysts said the unearthing of the racket would put downward pressure on banking sector stocks and adversely affect sentiment in the stock market. However, bankers maintained that these were isolated cases and that lending to the real estate sector would not be curtailed due to this.
The CBI on Wednesday arrested eight persons and alleged that officers in the top- and middle-level management of banks and institutions were receiving illegal gratification from private NBFC Money Matters, which was acting as a mediator and facilitator for corporate loans and other facilities from financial institutions.
…
* BUSINESS
* NOVEMBER 27, 2010
Foreclosure Restarts Limp Out of the Gate
By DAN FITZPATRICK and RUTH SIMON
Bank of America Corp. and J.P. Morgan Chase & Co. have hit snags in efforts to restart nearly 230,000 foreclosures across the U.S., meaning some cases are likely to remain in limbo until early next year.
Several complications are slowing the process, ranging from the hiring of new law firms to handle foreclosure paperwork to making sure that correct procedures are being followed as new or revised files are submitted in the 23 states where court approval is required for foreclosures.
The delays aren’t a sign that documentation problems are worse than previously acknowledged by the nation’s two largest banks by assets, according to the companies. And Bank of America, based in Charlotte, N.C., and J.P. Morgan, of New York, haven’t backed down from their insistence that no one was wrongly foreclosed on as a result of errors in affidavits or other loan documents.
Still, Bank of America said it has refiled documentation on just a “handful” of foreclosures that must be approved by a judge. The bank previously said it would resubmit 102,000 affidavits on pending foreclosures starting Oct. 25, with foreclosure sales resuming in November.
James Mahoney, Bank of America’s head of public policy, said “the process is now picking up,” adding that “we expect there will be thousands of affidavits in the courts by the end of December.” He wouldn’t provide an estimate of how long it could take to go through all 102,000 cases being reviewed by employees.
…
* HOMES
* NOVEMBER 26, 2010, 6:48 P.M. ET
Fannie, Freddie Recommend Foreclosure Sales Resume
By NICK TIMIRAOS
Fannie Mae and Freddie Mac have begun telling real-estate agents nationwide to resume sales of foreclosed properties that had been suspended after document-handling problems surfaced over the past two months.
Fannie said Friday it had lifted a moratorium on foreclosure sales following a review of the affected properties it has acquired and after consulting with its government regulator, the Federal Housing Finance Agency. It was unclear how quickly sales would resume because loan servicers are still completing their reviews of paperwork.
“Our decision was motivated by several factors including the protection of buyers with title insurance, the negative impact lingering foreclosed properties has on neighborhoods and the cost burden that is placed on taxpayers when [bank-owned] sales are suspended,” said a Fannie Mae spokeswoman.
Fannie and Freddie owned nearly 240,000 properties at the end of September, valued at nearly $24 billion. Difficulty selling those homes could lead to higher carrying costs for the mortgage titans. Delays also could prompt buyers that had been under contract to lower their asking prices or to walk away from deals.
In September, Fannie and Freddie were forced to suspend sales of certain properties amid reports that documents used to process foreclosures weren’t being properly submitted by companies that handle loan servicing and their attorneys.
A memo Fannie sent to real-estate agents on Wednesday directed agents to “proceed with scheduling and holding the closings” of sales of Fannie Mae-owned homes and to work with appropriate personnel “if a title issue arises with respect to the potential defect of an affidavit used in the underlying foreclosure.”
Freddie’s memo told agents to “resume all normal sales activity.”
…
* BUSINESS
* NOVEMBER 27, 2010
Second-Mortgage Standoffs Stand in Way of Short Sales
By NICK TIMIRAOS
Sergio Trujillo thought he could avoid foreclosure when an investor made an all-cash offer last month to buy his one-bedroom condominium in La Jolla, Calif., for less than the amount he owes on his mortgage.
But a standoff between Mr. Trujillo’s lenders over a few thousand dollars threatens to derail the deal, known as a short sale.
Like many heavily indebted borrowers, Mr. Trujillo has two mortgages: a first mortgage in the amount of $260,000, which is held by Freddie Mac; and a $50,000 second mortgage, handled by Specialized Loan Servicing LLC. Freddie Mac will allow no more than $3,000 in sale proceeds to go toward the second mortgage. But SLS says it will scotch any deal if it doesn’t get at least $7,000.
“This is an all-parties-lose scenario,” said Brian Flock, Mr. Trujillo’s real-estate agent. “There is no housing recovery when this happens
Over the past year, real-estate agents, lenders and federal policy makers have pointed to short sales as one way to revive moribund housing markets while helping troubled borrowers avoid foreclosure. But for homeowners that took out second mortgages during the boom, getting a short sale approved is proving to be a nightmare.
Most first mortgages, like Mr. Trujillo’s, are guaranteed by government-controlled mortgage giants Fannie Mae and Freddie Mac or held by other investors in mortgage securities. Second mortgages and other junior liens are typically owned by banks and credit unions.
Banks are reluctant to write down second mortgages because many are still current, even if the borrowers owe more than the value of their homes. They may also be able to pursue borrowers’ assets after foreclosure.
“If I’m the second-lien holder, I may say, ‘You know what, I want to see if I can hold out for a better deal,’ ” said Greg Hebner, president of MOS Group Inc., an Irvine, Calif., company that contacts troubled borrowers on behalf of lenders and servicers.
The result is a “chicken game” between investors that leads to unnecessary foreclosures, said Jon Goodman, a real-estate lawyer and investor in Boulder, Colo.
As of June 30, 11 million homeowners owe more than their homes are worth and an additional 2.5 million have just 5% equity, according to real-estate research firm CoreLogic. To sell, those homeowners must cover the shortfall or, more commonly, ask the bank to take a loss via a short sale. The short-sale process remains full of land mines. Loan servicers were never designed to handle large volumes of customized workouts and it can take months to bring loan servicers, investors and mortgage insurers to agree on a price. Softening home prices create greater potential for disputes over values. And lenders are wary of fraud.
…
NK lobs artillery at civilians on SK island, and in retaliation, China warns U.S. about routine military drill.
What’s wrong with this picture?
China Warns U.S. as Korea Tensions Rise
Beijing Bears Rising Cost for Support of Pyongyang; New Take on Naval Exercises
By JEREMY PAGE in Dandong, China and JAY SOLOMON and JULIAN E. BARNES in Washington
DANDONG, China—Beijing on Friday lodged its first official protest of a joint U.S.-South Korean military exercise planned for Sunday, even as the aircraft carrier USS George Washington steamed toward the region.
North Korea also responded angrily. “The situation on the Korean peninsula is inching closer to the brink of war,” the state controlled Korean Central News Agency responded Friday to the maneuvers, which are set to take place in the Yellow Sea between the Koreas and northeastern China.
The strong talk was the latest fallout from North Korea’s hour-long artillery attack of a South Korean island on Tuesday that killed four people. The next day, the U.S. and South Korea said planned joint exercises would go ahead over the weekend, heightening fears in some quarters that already-tense relations between North and South Korea—and their respective international protectors, China and the U.S.—could be heading for a showdown.
Yet China’s outwardly defiant response belies a more delicate political reality: Beijing’s continued support of North Korea’s erratic, martial regime is beginning to extract real costs. China’s statement Friday included a face-saving formulation that appeared to open the door for a scenario China has long sought to avert—a U.S. aircraft carrier, a potent symbol of U.S. military might, plying the edge of Chinese waters.
China’s Foreign Ministry suggested it wouldn’t escalate its protests against the naval exercises as long as they took place outside China’s “exclusive economic zone,” a term of international maritime law for an area where countries enjoy mineral and fishing rights, generally 200 nautical miles from a country’s coast.
“We hold a consistent and clear-cut stance on the issue,” Foreign Ministry spokesman Hong Lei was quoted as saying in a ministry statement. “We oppose any party to take any military actions in our exclusive economic zone without permission.”
…