The Housing Bubble

This is a silly comment, IMO. They sell coffee, and some other items, which a lot of people like. I happen to like their coffee, too, when I feel like overpaying for such a thing.

I’m just saying that to me they sell an image.I dont think there coffee is that great.they provide an atmosphere to socialize.There stores have a good atmosphere and people like to go into a clean store.

First off, a 2000sqft, 3/2, basic “ranch” should not cost 300k+ no matter where you live in this country.

And it sure as heck shouldn’t even be half that in and earthquake zone!

Have any of you guys checked what the “certain circumstances” are that invokes the life without parole requirement? Seems like relevant research before you get all upset.

Life without parole helps keep the prison industry thriving and well in California.

The laws are draconian..I know a kid who got caught in the crosshairs of the sex offender therapeutic establishment, and was upped to Level 3 (violent sex offender) for biting the staffer who was trying to force his mouth open for a Ritalin. I don’t think that’s what people had in mind for a Level 3, but the therapists have all the power now.

Amen, Montana. The best thing people can do is avoid the psycho-therapeutic complex. The best defense is to either have no insurance or insurance that does not include “mental health”. Then they’re not much interested in you.

“…..holes thru” = trucks thru

It is not as simple as you are indicating. If the person stopped paying the rent they can be evicted. What the landlord cannot do is become upset because other tenants are complaining that someone is being abused, and then evict the abuse victim. It forces the police to do their job and arrest the abuser, not “solve” the problem by visiting even more abuse on the abuse victim.

Further, as I am sure you know, any law can be abused. The police could pull you over for going 27 mph in a 25 mph zone. Should we therefore abolish the laws regulating speed in residential areas.

IAT

Believe me, GOP goes in for all the new rules too. Anti-bad-guy legislation is always a winner with voters - something everyone can agree on!

“It forces the police to do their job and arrest the abuser, not “solve” the problem by visiting even more abuse on the abuse victim.”

You actually cannot help an abuse victim who does not want help, and that is all too frequently the case. This law will not change that, and will not force the police to do _anything_.

As a LL, I would not want to rent to the unstable types either. There is a much higher probability of property damage if you rent to those in unstable, violent relationships. Poor anger-management and poor impulse control are unlikely to be expressed in only one direction.

“As a LL, I would not want to rent to the unstable types either.”

Alas, as a LL you can’t pick and choose to whom you want to rent, at least not according to some characteristics. You can’t refuse to rent to someone just because someone else is stalking them. If you have a problem with that, then don’t be a landlord.

As for your pseudo-scientific claim that violence is unlikely to go in one direction, tell that to Jennifer Aniston (currently being stalked by a guy) and the family of Rebecca Schaeffer (killed by a stalker in Hollywood).

IAT

Oh, it figures you guys would be complaining about laws that are designed to prevent women and children from being brutalized. Look, the point of the law is to prevent the landlord from kicking out an entire family just because one violent a-hole keeps beating everyone up. It’s not the landlord’s job to decide what kind of justice to mete out. That’s the cop’s job. If neighbors are complaining about violence, then the landlord should call the cops, and encourage the neighbors to call the cops too.

And what is this - “Poor anger-management and poor impulse control are unlikely to be expressed in only one direction.”? That’s just another way of saying “She deserves what she gets because she shouldn’t have made him mad”. That is just a way of apologizing for the abuser.

And don’t even start in with the whole “women can be violent too” stuff. I know that. Women can be child abusers (no, they cannot typically abuse men, who are typically stronger and richer). If they are, then the neighbors should be calling the COPS, not the landlord.

Anyway, this blog is supposed to be about the housing bubble. You all need to cut it out with the rampant complaining about the fact that some females are allowed to live in peace.

The trouble is, Big V, women don’t have a problem with whipping out the “domestic abuse” card, and can do all kinds of moral/ends-justify-the-means justifications in their minds for doing so, especially if it’s “for the children…….”

When I filed on my ex-, that was the FIRST thing to get thrown my way. (That, and the accusation that I was sleeping around and gave her an STD). None of this was true, but it doesn’t really matter, does it?

I thought that, as mature adults that basically couldn’t stand the sight of each other anymore, we could work out a mature, fair arrangement for both parties……..silly me.

The way the system is set up now, it’s a “guilty until proven innocent” charge. Same way with the child custody issue. Doesn’t matter if you can demonstrate that the father did 80% of the child-rearing, unless the mother is a drunk or junkie, she automatically gets custody.

Forgive me for being sensitive about it, but a “domestic violence” charge is a stacked deck against the accussee, and it’s takes a lot of time and money to prove otherwise, even when the charge is BS.

How on earth are complaining neighbors part of your woe-is-me story? The problem for a landlord would be neighbors complaining of an abuser making all sorts of noise, or a creep hanging out around the mailboxes. None of those possibilities are part of your story. Hence, your antagonism toward reasonable laws against abusers and stalkers, that protect victims against retaliation by NIMBY landlords, bespeaks a problem with your psyche. I gently suggest therapy.

IAT

“And what is this - “Poor anger-management and poor impulse control are unlikely to be expressed in only one direction.”? That’s just another way of saying “She deserves what she gets because she shouldn’t have made him mad”. That is just a way of apologizing for the abuser.”

Actually, all I meant to suggest by my “one direction” comment was that someone with violent tendencies would likely not only direct it in a single direction—in other words, they probably would direct anger towards the LL’s property as well as the human victims.

Or a whacko communist revolutionary.

Or a whacko fascist revolutionary.

4091 S Ilex Cir Palm Beach Gardens, FL 33410

$189,900

3 Bed2 Bath2,516 Sq Ft

•Status: Contingency

Days on site 48 days

Is everyone going to do a short sale these days and who is really eating the losses on these short sales?

I keep hearing the media encouraging people to do short sales. The stories I hear make me feel the banks really want the easier way out and they are not really losing any money.I feel that the fed is somehow picking up the losses here.

Even rich people who have income are allowed short sales.Since they have money they can buy another house immediately after a short sale.Even with a short sale most people can get another loan in 2-3 years.

So knowing they can get another house cheaper right now people are going for short sales.The ease of a short sales makes it appear to me that the banks are not eating the losses.

Any thoughts on this?

“I feel that the fed is somehow picking up the losses here.
…
Any thoughts on this?”

Eat the mortgage, digest the collateral.

P.S. Is the “$42 trillion” figure in the article cited below perhaps overstated by 1000X too high?

* December 17, 2010, 4:38 PM ET

Real Time Economics
Economic insight and analysis from The Wall Street Journal.
A Look Inside the Fed’s Balance Sheet
By Phil Izzo
…
Assets on the Fed’s balance sheet expanded to around $2.367 trillion in the latest week. But all the additions came from new Treasury purchases — some $18 billion just in the week ended Dec. 15. All other holdings were flat to lower. The Fed announced in November that it will purchase an additional $600 billion of Treasurys over the next eight months in addition to previously announced purchases with money reinvested from its MBS portfolio. Since the announcement, the Fed has purchased nearly $130 billion in Treasurys, while its MBS portfolio has declined by $42 trillion.

Though the overall size of the balance sheet is set to jump, the makeup is moving back toward the long-term trend. The MBS and agency debt holdings have steadily declined as loans are paid off or mature. The Fed still holds more assets in MBS — over $1 trillion — than any other portfolio, including Treasurys. Though at around $970 billion, Treasurys are catching up.
…

Stress Testing the Fed
Shadow Statement No. 302
By Shadow Financial Regulatory Committee | Shadow Committee Statements
(December 13, 2010)
…
The Fed now has a very large portfolio of mortgage-backed securities (MBS) and long term Treasury bonds that entail significant interest rate risk. When interest rates rise, security values fall. This will depress the market value of the Fed’s net worth or reduce its book capital when securities are sold. In the case of private banks, financial economists worry that unrecognized insolvency could lead to excessive risk taking by “zombie” institutions. For the Fed, a hidden insolvency might lead to excessive risk taking through a different channel, namely, the avoidance of a contraction of its balance sheet, at the cost of rising inflation. The Shadow Financial Regulatory Committee believes that the reputational risks and political and international ramifications of a de-capitalized central bank are significant and pose threats both to the appropriate conduct of monetary policy and political independence of the Fed.

Prior to the financial crisis, the Fed’s balance sheet did not contain significant exposures to interest rate risk, but the acquisitions of MBS and long-term Treasuries has put the Fed into a risky position. According to one market estimate, roughly 50 basis points of additional increases in medium- and long-term interest rates could render the Fed economically insolvent. Given current asset durations, the addition of an additional $600 billion to its balance sheet would nearly halve the estimate of the increase in interest rates that would result in economic insolvency. With the continuing acquisitions of medium- and long-term Treasuries under QE II, the market has responded by increasing expected inflation and long-term bond yields significantly. Market rates could even rise significantly before the Fed begins asset sales.
…

a) The banks don’t own most of the loans directly. The bond holders do.

b) The media is not as directly controlled by the banks as you think. The media is an entertainment business and they want to get eyes. If stories about how people should do short sales gets them eyes, they will run the stories whether it is easy to do a short sale or not, whether it is something the banks want to promote or not.

c) The Fed certainly owns some of the bonds. I’d be very surprised if they assign staff to sift through the stuff they own, review the actual documetns, figure out what percentage of the particular issuance they have to own to vote to give particular instructions to the servicer, and then go out to try to put together a coalition of a sufficient percentage of owners to have such a vote. I would not be at all surprised to find out there a lot of hedge funds/private equity funds out doing this as we blog. As a matter of fact, I’d be surprised if they weren’t. Going to be really interesting when it is Blackrock initiating 30,000 law suits against jingle mail folks with assets who had recourse loans.

Thanks
that was a good article.So help me try and figure this out.

So the fed buys all the cr@ppy securities from all these underwater homes.Does the fed pay the holder of the securities the full value( loan amount) on these securities?

So loan goes bad.Bank does short sale or reo. The bank gets a fraction of what was loaned on the house.

Since the fed has the security I imagine they are the ones that are now going to take the loss?

I do not feel the banks are eating these losses.they are much to eager to give short sales.

Your insight is much appreciated. thx

“Going to be really interesting when it is Blackrock intiating 30,000 law suits against jingle mail folks with assets who have recourse loans.”

This has been my thinking. The same people who thought they were financial wizzards because they bought much more house than they could possibly afford are the same wizzards that think they can just walk away from their houses without any scar tissue forming.

I would hate to be among this large group of people; Once the collection machinery is set up to go after their assets then hundreds of millions of dollars are going to be painfully stripped from their dumb asses.

Hundreds of millions of dollars! Maybe the figures will reach into the billions! This is much too tempting an opportunity to pass up.

Popcorn anyone?

Exactly, Combo. It won’t take forever as I am sure there is some statute of limitations implied somewhere, but it will still take a while. They bought some of these bonds at pennies on the dollar. The potential upside is huge. It is worth spending a few bucks to research which former owners can be profitably sued.

Oh, and this is only the backup. The first level is to see if there were deficiencies in the creation of the original securities to force an originator (or some other entity earlier in the ownership chain) to buy it back at par. But if there isn’t an issue with the securities (very possible, the wording promises very little) then you have this as a back up. And if there is that issue, you can then offer the bank that you forced to give you all that money, your services as an agent to sue the FBs since they don’t have the infrastructure to do it.

Quite a mess.

buying debt cheap and then going after it for every penny

Can’t most folks go bankrupt ? Or is it harder now if you make over a ceratin amount of money 70K I think ?

In a flat ecomomy this is one way to make a buck I guess

I don’t believe you are right about the FED’s “purchases”. The whole point of having the FED buy up “securities” is that there ISN’T ANY MARKET AT FULL PRICE. There are lots of buyers for Pennies on the Dollar.
The FED has paid full price to the Banks to get them money for worthless securites. They are worth pennies on the dollar but they FED gave them the face value.
That’s how the “recapitalized” the banks.

The main point being missed by all these discussions is that the FED is not authorized to buy up private debt. The FED is only supposed to buy US GOVERNMENT DEBT and Treasury Bonds.
PERIOD. They have no authority to buy up Mortgage Debt from Banks. They essentially have put the US Taxpayer on the line to pay off Goldman Sachs bad loans, without the consent of Congress.
Congress should have intervened, but they are too confused by their inside traders at the Treasury Department to understand, that just a Congress wrote the Federal Reserve Act, they can control the FED by oversight. They have Failed.
Ben Bernanke had no authority to Buy mortgages and Bad debt. The Fed’s independence did not give it the authority to do whatever it wants.
Where are the Congressional investigations??

I believe Representative Paul is arranging them now.

Will this not be the case where the horse has left the barn and Paul will be looking at closing the door?

I think he will end examinging the refuse left in the stalls. I doubt he has the authority to actually close the door.

“It is worth spending a few bucks to research which former owners can be profitably sued”.

Yeah, right. “Research” my azz. They will farm their “research” out to the lowest bidder. Expect “Robo-signers, Part Deax”….People being sued by Hedge Funds for mortgage arrears on property they never owned/held a mortgage on.

Nobody is safe. The mattress is looking better all the time.

So is the mbs debt of freddie and fannie considered private now that they are run by the GOVT?

“The Federal Reserve in its January meeting indicated a $1.25trn agency mortgage-backed securities (MBS) purchase program is on track for completion by the end of Q110.

So far, the Fed purchase represents 92% of the allotted MBS from Freddie Mac(FRE: 0.00 N/A), Fannie Mae(FNM: 0.00 N/A) and Ginnie Mae.”

Possible, but filing a lawsuit has different rules than requesting a foreclosure, and the judges are already on notice of where the paperwork is likely to be bad. The person filing suit has to prove all the elements. And the person being sued gets to request all the paperwork that they claim proves all those elements. Not too hard to figure out that they are suing the wrong person when the John Smith they want has a different social security number.

Procedure matters.

Yeah, but even if your innocent, you still have to hire/pay a lawyer.

Which I wouldn’t have a problem with, if I can countersue for 3x costs and damages, if I’m drug into court for an error on their part.

Fat chance of that happening. As with the Robo-signers, the banks and the courts will take a “Sue everyone, and let God sort them out” attitude.

If you are thinking that I have a very cynical attitude about the US criminal and civil justice system, you would be correct. Doesn’t really matter much if you are innocent or guilty….if you can “afford” justice, you will get it; if you can’t, you won’t. It’s as simple as that.

“According to one market estimate, roughly 50 basis points of additional increases in medium- and long-term interest rates could render the Fed economically insolvent.”

How can they possibly be considered “insolvent” when they can print up as much fresh, clean, digital currency as they need? It makes no sense at all…

They can cover up any amount of losses by buying the appropriate amount of Treasuries to get paid the needed interest.

The Central Bank has only one position. Keep money flowing into the banks by keeping people in debt. In 1998 I paid off my house and by 2000 was derided as a fool for having all my money “tied up” in my house. In 2001, I was smart for not staying in the market and not having a house payment.
Yet, even today, the idea that DEBT is GOOD, because you can use it to leverage you way to riches is pervasive.
As I have been shopping to find a new house, I still get comments about getting a mortgage to help me buy a bigger and better place. I am 55. I don’t want a mortgage. If you are 55 or older and have a mortgage, I believe you handled your finances poorly. You should have a debt-free residence, and be saving for retirement.
But the Banks don’t want that. They want us all to be paying tribute to them. Debt is what they sell. Have another serving.
Central Bankers want us all to be part of the credit system, whereby they collect continuing tribute from us drones.
They have no interest in what is best for “the people”. They have an interest in more debt and more trades for their buddies.

“If you are 55 or older and have a mortgage, I believe you handled your finances poorly. You should have a debt-free residence, and be saving for retirement.”

+1 This was common knowledge in the sixties.

“Does it seem to anyone besides me that our nation’s top central banker failed to understand the difference between cash flow and financial position?”

I think he understood it just fine; notice his use of the phrase “to use housing wealth to finance consumption.”

As long as consumption was up, AG was pleased, long-term consequences be d*mned.

“Bankers want us all to be part of the credit system, whereby they collect continuing tribute from us drones.”

Dio, that is the equation reduced to it’s simplest form.

The scam of all scams. Sure some get lucky playing their game.
They win either way.

Until they don’t. Stay tuned.

If you are 55 or older and have a mortgage, I believe you handled your finances poorly. You should have a debt-free residence, and be saving for retirement.

Would you say that about only this generation, or the next one too? I thought I had done everything right — got an education, paid off my college loans, worked hard, emergency fund, 401K, — and yet I’m still forced to rent even 10 years after graduating. There is no WAY I’m going to have a debt free residence when I’m 55 unless I do something drastic. I guess my “poor planning” was to spend too many years in college and to insist on that pesky 2.5xincome and stable job thing before I spent hundreds of K.

Comment by Diogenes (Tampa, Fl)
2011-01-02 10:00:18

The Central Bank has only one position. Keep money flowing into the banks by keeping people in debt. In 1998 I paid off my house and by 2000 was derided as a fool for having all my money “tied up” in my house. In 2001, I was smart for not staying in the market and not having a house payment.
Yet, even today, the idea that DEBT is GOOD, because you can use it to leverage you way to riches is pervasive.
As I have been shopping to find a new house, I still get comments about getting a mortgage to help me buy a bigger and better place. I am 55. I don’t want a mortgage. If you are 55 or older and have a mortgage, I believe you handled your finances poorly. You should have a debt-free residence, and be saving for retirement.
But the Banks don’t want that. They want us all to be paying tribute to them. Debt is what they sell. Have another serving.
Central Bankers want us all to be part of the credit system, whereby they collect continuing tribute from us drones.
They have no interest in what is best for “the people”. They have an interest in more debt and more trades for their buddies.
——————————————————————–
This post is nominated for the HBB Hall of Truth.

Thank you Dio.

Oxide…..

-First, you have not bought into the MSM generated “conventional wisdom”. Right now, I don’t believe it is possible to be too cynical about the motivations of our business and political leadership.

The good news is that the paradigm is shifting in your favor. This ain’t over yet…..not even close.

-For the next few years (five? ten?), being able to pack up and relocate, while keeping you your debts low, will work in your favor. A bunch of people are going to be unable/unwilling/unqualified to relocate for better jobs.

-The reason my parents bought their first house back in the 60s was because it was CHEAPER than renting. IOW, there was a “return” for assuming all of the liabilities of owning. Until that returns, it makes no sense to sign a contract for a huge, money consuming, illiquid asset.

-Likewise, we don’t have a clue as to what places will be the “best places to live” until after the dust settles. Hell, it could be Brazil or China (or, God forbid, North Dakota) for all we know right now.

Governments at all levels are going to be looking for ways to collect taxes for their retirees/pensioners, and this process is just starting. Taxes/User Fees are going to be going up, just as sure as the Sun rises in the east.

-Up until about 1980, the old way of thinking about you life and career worked……..back in the old days when there was steady jobs, stable pensions, inexpensive health care, and local sales taxes around 3-5%. Unfortunately, all this stuff has been thrown under the bus, and what worked back then doesn’t work now.

-You’ll be surprised on how quick all us Baby Boomers will die off. Nobody wants to pay for our retirement health care, and too many of us won’t be able to handle retiring to a dark room with a 13″ TV set, and living off Ramen and Alpo.

-Before it’s over, you be able to buy a nice 3/2/2 just about anywhere in the country, for less than a new Chevy Suburban. Mark my words.

-I’m not a member in the “All Debt is Evil” club. But going into stupid, ill-advised debt is not a good place to be. Going to work because “you have to pay bills” sucks. There is a certain amount of “freedom” you get when you have the financial ability to walk away from a crappy job.

“-Up until about 1980, the old way of thinking about you life and career worked……..back in the old days when there was steady jobs, stable pensions, inexpensive health care, and local sales taxes around 3-5%. Unfortunately, all this stuff has been thrown under the bus, and what worked back then doesn’t work now.”

Gee whiz….. What changed everything in 1980????????

Actually, it changed in 1973. That is when US oil fields started to visibly decline from their peak. Notice, it is also when OPEC had sufficient power to embargo oil from the US and make it hurt. It is also when a chasm began to open between productivity gains (which continued) and median wages (which stagnated).

By 1980 there was horrendous inflation, high unemployment, and stagnant wages. Voters repudiated Carter’s “live within our means, conserve oil” solution for Reagan’s “it’s mo(u)rning in America, so let’s borrow from tomorrow and let our kids (well, Reagan’s great grandkids) deal with the mess we leave.”

As 5 year olds are not allowed to vote, Reagan won. And, with the later complicity of many democrats and republicans who know better, the rest is (the end of American) history.

IAT

“Actually, it changed in 1973. That is when US oil fields started to visibly decline from their peak. Notice, it is also when OPEC had sufficient power to embargo oil from the US and make it hurt. It is also when a chasm began to open between productivity gains (which continued) and median wages (which stagnated).”

You left out the Yom Kippur War. The U.S. involvement and expenses in the middle-east grew exponentially beginning in 1973, the beginning of the end of our prosperity.

That was so late in the year it was not really a cause of a turning point, more an effect of one. If that expansion of expenses had happened 10 years earlier, it would have been little more than a hiccup.

IAT

‘when US oil fields started to visibly decline’

There is plenty of oil in the US.

True. But there’s a lot less than there used to be.

IAT

No, more like it began when Jack Welch and his ilk put profits over people and started the outsourcing wave. Computers helped the movement magnificently.

Since when did business ever put people over profits? One doesn’t need a computer to scr*w people.

IAT

Sadly, there are not enough Wal-Marts on the planet to employ 10,000 new Baby Boomers turning age 65 a day for the next few years as greeters.

Well he didn’t like “the box” he placed himself in either. He has always been bitter and negative about how “unfair” it is that the job he wants (print newspaper photographer) pays poorly and is prone to layoffs. He refused to transfer his skills over to electronic media, or to do an Arizona Slim and be an independent contractor.

On the other hand, the joke could also be on you if now that he’s had his fun, he turns out to live a long time, have no resources, and turns to you for help. Dealing with that, with whomever is left of the family to observe, may not be easy.

IAT

HOLY FRICKEN MOLY! Those **^%&^%##(& lyin’ ^#%^^%&^%!!!!!

By repaying its TARP loan, for example, Goldman wriggled out from under the nettlesome compensation limits imposed by TARP, while also conveying an image of financial strength. But this “strength” was illusory. Goldman repaid the TARP loans with funds it procured days earlier from the Federal Reserve. Then, over the ensuing months, Goldman recapitalized its balance sheet by selling tens of billions of Dollars of mortgage-backed securities to the Fed.

Socialism for the rich. No-holds-barred capitalism for the rest of us.

Any of you worthless “the poor are lazy and feel entitled” neocons care support and justify this?

No it was Reagan that took away all the tax deductions for interest as part of his tax reform act of 1986.

Where in fixer’s post does it say that the foreign-born engineers he refers to have only been here a short time or are not naturalized citizens?

They also may be UK/CA/AU guys who get preferential treatment on security clearances even as foreign citizens.

Because he’s a Protestant Fundamentalist?

Hot dang, exie. I’ve cut and pasted this little rant for future reference. As perfect and concise a screed as I’ve read.
I thank you for your umbrage.

YW sister.

‘foreign villages “longing” for democracy ‘

‘A new report from the Conflict Monitoring Centre has reported that 2,043 Pakistanis have been slain in CIA drone strikes in the past 5 years, with the vast majority of them innocent civilians…over 75% of them were actually killed in the past two years since President Obama took office.’

http://news.antiwar.com/2011/01/02/report-cia-drones-killed-over-2000-mostly-civilians-in-pakistan-since-2006/

If the drones were flown by civilians not wearing uniforms, how can this not be a war crime?

I thought if you shut the door then they were only using outside air, if the door was open then they were using both. I could well be wrong, I’m no expert, I just play one on the internet. But that’s how the one I had seemed to work.

None of the ones that I’ve used have used outside air. My current model has a draft-control/air intake right under the doors. I’ve also used newer catalytic models that had a draft control hidden at the back near the bottom, sometimes attached to a thermostat so they are more self-regulating. But unless there is an intake tube coming in from the outside, they are all burning inside room-air.