It’s Now A Liability In Florida
The Tampa Tribune reports from Florida. “If anything can tell the story of Florida’s housing boom and bust it’s this: In early 2007, Floridians were drawing nearly 20 percent of their total incomes from home-equity loans and credit lines. Property values rose so high, so fast, people couldn’t resist treating their homes like piggy banks. In Tampa, these ‘home-equity extractions’ made up 14 percent of people’s total incomes — nearly double the national average. And that’s nothing compared with Miami, where it made up 26 percent of their incomes, according to Moody’s Analytics.”
“Pool builders such as Dan Johnson couldn’t believe how loose banks were with home-equity loans and credit lines. ‘Even at the time, I said, ‘What are these guys doing?’ That’s crazy. They just couldn’t loan money fast enough,’ Johnson said.”
“But then the housing bust took hold, and today nearly half of Florida homeowners are underwater on their mortgages, or owe more than their homes are worth, according to a recent study by the CoreLogic real estate. The lack of an easy source of cash means Florida will recover from the recession very slowly, said Sean Snaith, an economist with the University of Central Florida.”
“‘Now, no longer is (the home) this little honey pot; it’s now a liability,’ Snaith said.”
From TC Palm. “During the past 10 years, a staggering 53,500 properties on the Treasure Coast have succumbed to foreclosure. In 2003, Jensen Beach resident Nicole West purchased a $330,000 home through mortgage lender Option One with a monthly adjustable-rate payment of $1,900. Two years later, West and her husband requested to refinance the loan at a fixed-rate with American Home Mortgage, which had taken over Option One. West claims during the closing, the terms of her original good faith estimate were suddenly and arbitrarily changed increasing her monthly mortgage payments to $3,100.”
“The family lived on a shoestring budget to make payments, but in January 2007, West’s husband was laid off from his 10-year executive career at Gateway computers. They could no longer afford the mortgage, she said. The couple asked American Home to modify the loan terms in February 2007. She was stunned when a foreclosure notice from Deutsche Bank, a trustee for Soundview Home Loan Trust, was served at the home in March.”
“Finally, West alleges she was told she qualified for a forbearance agreement, but the terms would require a $13,000 down payment to be wired by Western Union. Mortgage payments would then resume again in July for $4,700. ‘That was literally everything we had in savings. And they knew it and they took it all,’ said West.”
“West, like others in legal limbo, is in the depths of litigating her foreclosure. She still lives in the home with her family.”
“Vero Beach resident and breast cancer survivor Diann Russano lost her job in human resources two years ago. When her husband also got laid off, the couple immediately contacted JPMorgan Chase & Co. for a mortgage modification on their primary home. The couple, who have survived on unemployment and retirement savings, also own a small rental home and never missed a mortgage payment.”
“‘I’ve probably sent (Chase) 10 packages since 2009 and we finally got denied in December 2010,’ Russano said. ‘But after my husband found a job, we applied again because our income changed.’”
“Russano and her husband, who spent their $200,000 retirement savings on living expenses and the mortgages, said they have now given up on ever getting a modification from Chase. ‘They know they’re making that 7 percent interest on our mortgage,”‘ Russano said. ‘That’s probably the main reason they don’t want to modify it.’”
The Naples News. “At Granada Lakes Villas in East Naples, the resort-style pools are closed and the clubhouse is padlocked. It has been that way since April 2009. A half-dozen lawsuits have been filed in Collier Circuit Court involving Granada Lakes Villas, the condominium association, the developer and individual condo owners. The developer – Metro-Dade Investments Co. based in Miami – refuses to give owners access to the pools or the clubhouse.”
“The water in the pools is murky, with algae floating on top. The spa is filled with wooden planks. Potted plants are dead and there are no signs of life on the pool deck, other than a few birds. The sales office is closed and the community, with 248 condos, is plagued by foreclosures. ‘You’ll see tons and tons of foreclosures. Banks lost a lot of money on this place,’ said Douglas Rankin, a Naples attorney.”
“With the mess, prices have dropped more dramatically at Granada Lakes than in other communities similarly hit by the housing crisis. Some condos have sold for less than $20,000. At one time, they went for more than $200,000 with upgrades.”
“Paolo Ferrari, president of the Granada Lakes Condo Association, bought four condos in the community as an investment. None of his units were remodeled, so they don’t have mold or other defects caused by the unlicensed contractor. The condos, however, are in buildings where there were renovations done. Ferrari has sued to get his money back, contending the problems in other condos and his buildings make it impossible for him to resell his units for a fair price.”
The Sun Sentinel. “Highlands sits in the 33064 ZIP code, whose median home value plunged by 36.5 percent in February, the largest decline in Palm Beach and Broward counties, according to Zillow. From 2005, when the housing boom ended, to last year, prices in 33064 plummeted by 68.6 percent, the worst showing in Broward County, according to MDA DataQuick. More than 12 percent of the homes in Highlands and Cresthaven are in foreclosure, the highest rate in Pompano Beach, according to city officials.”
“In the 1950s, Miami-based General Development Corp., one of the companies founded by the Mackle brothers, sold one-bedroom Highlands homes for $4,950. Later, two- and three-bedroom models with screen porches and carports went for roughly $10,000. Buyers put about $400 down, and their monthly payments were $68. During the most recent housing boom, values soared, escalating into the $250,000 range, with some peaking at more than $300,000.”
“Sellers loved it, of course. But Jeff Torrey, president of the civic association, was concerned. ‘I told my wife, ‘What’s going to happen here if somebody loses a job or gets sick?’ Torrey recalled as he toured the neighborhood in his white Toyota Tundra. ‘You watch. In a few years, there will be more foreclosures than you can shake a stick at.’ And that was before I knew anything about those crummy loans.’”
“Painters, plumbers and other blue collar workers took out interest-only adjustable-rate mortgages and other risky loans to afford the high-priced Highlands homes. When interest rates reset, their monthly payments skyrocketed, and a wave of foreclosures ensued. Many of those homes are vacant. Other properties in the neighborhood aren’t being maintained by owners or renters. Now values are falling closer to those prices of yesteryear, with some of the homes selling for $40,000.”
“One house on Northeast 49th Street is typical of many in the community. It’s been vacant for months. Sandspurs and knee-high weeds grow on the lawn. The mailbox door dangles, and the front bedroom window has a hole in it. A neighbor desperate for someone to move there approached a newspaper photographer one day recently and asked if she were buying the home and fixing it up.”
From Highlands Today. “Foreclosures in Highlands County appear to be following the state trend, showing a significant drop from 108 in April 2010 to just 48 in April 2011. Appearances can often be deceiving. ‘Right now I’ve got about 1,500 still pending that haven’t gone through a judgment,’ said Clerk of Courts Bob Germaine. ‘Once they go to judgment then we’ll sell the property. What we’re hearing is there is another flood of foreclosures coming.’”
The News Journal. “Six years ago, Maria Squeteri-Lanier was living the high life. As a Realtor, she was earning six figures, selling expensive homes with ease. She could practically reach out her hand and touch a swarm of prospective homebuyers. That all changed when the housing bubble began losing air in late 2006, and proceeded to collapse over the next two years, leaving homeowners stuck with expensive homes nobody else could afford. Foreclosures became the new norm.”
“The lives of Realtors such as Squeteri-Lanier were also upended. Most today know colleagues whose own homes have gone into foreclosure. ‘Everything stopped. It was a very scary time to live,’ Squeteri-Lanier said. ‘All of our savings were gone.’”
“Lorie Natzel never thought she’d stop selling homes, as she did from 1992 to 2008. But when a broker at Weichert Realtors-Hallmark Properties in Ormond Beach asked her if she wanted to become a sales manager and oversee 32 agents, she took the opportunity. ‘It was a monthly check I could depend on rather than the unknown,’ Natzel said. ‘That was probably the biggest reason to make the change.’”
“One Realtor she works with recently took a part-time job at a Lowe’s Home Improvement store, but is keeping his real estate agent’s license active, hopeful that the home sales market will rebound. The home of another Realtor Natzel knows recently went into foreclosure. Troy Speed, a Realtor who runs her own company in Port Orange, knows a colleague who left the business to work as a door-checker at Sam’s Club.”
“Squeteri-Lanier decided to stick with real estate even during the worst of the downturn. She said business is finally starting to improve. And during the downturn, a time that was overwhelmed by the negative, she said she did learn one positive trait. ‘It’s really taught me to save more money,’ she said. ‘There was a point in time when you’re making six figures and you’re a baller. You think this is never going to end.’”
The Miami Herald. “Another vacant season winds to an end for the grand hotel formerly known as Trump. It’s empty. As empty, perhaps, as the Trump brand that was used to lure investors into a condominium-hotel scheme that would collapse before a single guest signed the register. More than 100 investors bought into the 248-room project in 2005 and early 2006, putting 20 percent down for units priced between $500,000 to $3 million.”
“Lawyer Joseph E. Altschul, who represents purchasers holding stakes in some 50 units, said his clients had bought into that Donald Trump allure. And they paid, he said, about $200 more per square foot over comparable condo-hotel projects along the beach for that magical Trump name. Preconstruction brochures assured buyers that ‘Mr. Trump is committed to personal and direct involvement in everything that this name represents.’”
“Not so much, as it turned out. Two years ago, when the project fell into foreclosure, Trump told the Sun-Sentinel, ‘We have nothing to do with the building. We had a licensing deal, and we terminated the licensing deal a long time ago.’”
“Altschul said his clients were shocked to learn that the famous name used to jack up the prices on investment packages for a luxury hotel project was just another cheesy Trump marketing deal. ‘Trump International’ carried no more meaning then the logo fixed on Trump shirts, Trump suits, Trump ties, Trump chocolate bars (’Each bar is packaged in a beautiful and luxurious gold, silver, or copper casing’) Trump crystal, steaks, vodka, lamps, bottled water, mattresses. And, of course, ‘Donald Trump by Donald Trump,’ which turns out to be a fragrance. Spray it on for ‘citrus notes with hints of mint, cucumber and black basil.’ And the subtle whisper of mendacity.”
‘It has been 13 years since Jorge Perez’s Related Group bought the popular Hyde Park Market on Las Olas…Last week an appeals court dismissed the last legal challenge to the project, and Perez can now begin bringing in the construction cranes. But now the question has to be asked: Are they crazy?’
‘Adding 42 stories of condos to the Fort Lauderdale market may have seemed genius 13 years ago, but the bubble that burst over the past five years now makes that idea seem like perhaps the city’s next boondoggle…Meanwhile, there were 124,341 vacant homes in Broward County last year, up 44 percent from a decade ago.’
‘The attorney general of Florida — a state where almost half of all mortgaged homes are underwater — opposes efforts that would force the nation’s five largest mortgage servicers to reduce the principal on loans owed by struggling U.S. homeowners…Florida Attorney General Pam Bondi is one of seven members of the group who oppose a key negotiating point: Cut the mortgage principal for qualified homeowners.’
‘Bondi and several attorneys general from other states say principal reduction oversteps the mission of the group that is negotiating with the five banks, and she fears it could turn into a free-for-all of underwater homeowners…’Some homeowners may simply default on their loan and use the States’ agreement to obtain a principal reduction — whether or not they actually made an effort to maintain their mortgage,” wrote Bondi, who serves on the negotiating group’s executive board.’
‘She called it a potential “moral hazard” that “rewards those who simply choose not to pay their mortgage — because they can simply take advantage of lenders’ obligation to honor virtually automatic principal write-downs.”
Aside from the “potential moral hazard” problem of encouraging homeowners to stop making payments, forced principle writedowns result in discrimination in favor of underwater homeowners. How about a rent payment writedown for those who were not sufficiently wealthy or otherwise fortunate to qualify for a mortgage?
“Cut the mortgage principal for qualified homeowners”
Now that qualifies for the oxymoron of the day! If you were qualified to begin with, you wouldn’t need a reduction in your outstanding loan balance.
Too many people, companies and banks took on too much leverage that they had no business doing in the first place and they all want those of us who did not to bail them out. If we continue to do this, the people who will end up with the short straw will be the ones who were careful with their money and purchases to begin with. Why are we letting this happen, again?
To be fair, some of them were qualified to begin with and have simply been bit by circumstances beyond their control. The Great Recession has trapped folks who had good jobs and a reasonable expectation of being able to sell without taking significant losses.
Some folks lived in flyover country where the bubble was muted and bought a house to live in for the rest of their lives. Then found that their job moved elsewhere. The swath of destruction has moved beyond those who took on more than they could handle.
It is still an open question as to whether anyone should have mortgage principal reduced.
Uh, this happened in the “Rust Belt” 20 years or so ago too. Billy Joel’s “Allentown.” but sine then, people refused to learn their careers won’t last long enough to pay off ten mortgage and have money left over for health care! Ouch! In those hpdays I saved like a monk to be able to sell my “anchor,” my house and pay the title company for my excess principle owed. the Rust Zbelt had a psychological effect on me and helped me be a serious student of “change.” I accept it all. My parents’ illnesses, their deaths. The death of stability and it made me comfortable only when I owned very few possessions and kept my leases minimal.
Bill, I don’t know if you know this, but you’re still advocating the “Bill the Nomad” way of life. In other words, if you want to survive, you better be prepared to move every 3-4 years (so don’t buy anything), and oh by the way, you better luck out into a career where the industry doesn’t offshore itself out of existance.
Terrible for kids, not so great for communities.
However, I do agree that people should have known enough not to buy a home in the past 8 years. If if they had to move, it would have been nearly impossible to sell and break even. People who brought before would have survived, but they were usually dumb enough to refinance.
Lies, all lies. The Rekovery is underway as planned. The buying will shortly resume. Buy now or soon be priced-out.
“… they have given up ever getting a modification from Chase. ‘They know they’re making that 7 percent interest on our mortgage’, Russano said . ‘That’s probably the main reason they don’t want to modify it.’”
Well, duh.
This is what keeps getting skipped over in all this:
‘A mediation program ordered by the Florida Supreme Court to prevent foreclosures has helped only 2,162 homeowners keep their homes. That’s just 3.7 percent of 57,909 foreclosure cases sent to mediation statewide between March and November 2010.’
‘Another problem: The Supreme Court requires that bank representatives have full authority to approve mortgage workouts with homeowners. But in thousands of cases, banks just service loans owned by distant investors and lack the final authority to sign off on an agreement.’
“It’s the wizard behind the curtains,” said lawyer Matt Weidner. “No one can make a decision. This report is a clear indication that we can’t solve this problem.’
Read this again: ‘banks just service loans owned by distant investors and lack the final authority’
Who are those ‘distant investors’? It’s the entities who bought mortgage backed securities. Which means almost everybody, if you have a 401k, or pension, etc. So the bank, which doesn’t own anything, and is getting PAID to collect, comes to some fund manager and asks, ‘hey can we shave off a few million or what you are owed so Joe down in Florida can keep his house’?
The fund manager also doesn’t have the authority to give away the money he oversees. And I’m sure that even if you could contact all the individuals who actually are owed the money, they would say, ‘you know, I’ve got my own problems and I was counting on that money for my future. Forget it.’
‘you know, I’ve got my own problems and I was counting on that money for my future. Forget it.’
There ya go. Discussions of cramdowns to save homeowners’ skins never delve into the question of who would get stiffed as a result.
It’s not just the bondholders. From the TC Palm article:
‘analysts say some banks are stalling, almost dragging their feet on finalizing ownership on thousands of foreclosures. Mainly because taking legal ownership of those properties would require banks to pay for lawn upkeep, utilities, homeowner association dues, property insurance and taxes.’
“That’s about $250 per month for each home,” said Jack McCabe, a Deerfield Beach-based real estate analyst and owner of McCabe Research & Consulting. “That’s not much when your talking about one or two homes, but we’re talking thousands upon thousands of homes in Florida alone.”
And then there are these people:
‘It’s a typical street in a Wellington (FL) neighborhood, but it could be anywhere. The houses are well maintained and the yards are well manicured. Except one. ‘It’s an eyesore that’s getting under everyone’s skin,” said Mike Pfahl, who’s been living in the community for 25 years.’
‘The owner packed up almost two years ago leaving siding to fall off and weeds to crawl up the walls. ‘It’s very depressing. We had a beautiful street here and one of the obligations when you move into a nice area is to keep it nice and that’s just not happening with this,” he said.’
‘The neighbors have tried to find who’s responsible for the house. But they haven’t had any luck determining who is holding the mortgage, and it’s becoming frustrating. With no one taking care of it, the house has become a magnet for bad behavior in the neighborhood. “You can see in here there have been some kids here; beer cans, soda cans and garbage,” said neighbor Gregg Poirier.’
‘Not only do the homeowners not want to have anything to do with these properties, but the lenders don’t want to have anything to do with these properties,” said financial analyst and foreclosure expert Shari Olefson. “There’s a difference between those cases where the lenders are simply too busy to be taking care of business and those cases where the lenders deliberately don’t want to be associated with that home.”
Think about this the next time you hear the media boo-hooing about signatures on some piece of paper.
“There’s a difference between those cases where the lenders are simply too busy to be taking care of business and those cases where the lenders deliberately don’t want to be associated with that home.”
The lenders don’t want to be associated with the obligations of home ownership, but they also don’t want to just give the homes away at prices which would entice an end-user owner-occupant to step up and assume those obligations.
Well, first of all we are talking about loan servicer’s, mainly, not lenders. But I doubt the people living next to these eyesores care about this difference.
‘don’t want to just give the homes away at prices which would entice an end-user owner-occupant’
This is where the shadow inventory issue looks like blatant, criminal market manipulation to me. Last week I posted a report saying there was 15 months of shadow inventory in Baltimore, and Oxide commented about 15 months at what rate? It’s a great point!
Would it be 15 months if the potential buyers could see this inventory out there? Would the potential buyers think twice about paying as much as they are currently? Would it be 15 months if the government wasn’t still guaranteeing loans with zero down?
Would it be 15 months if the government wasn’t still guaranteeing loans with zero down ??
And how many months will it be when the zero down goes away ?? Or when the MID is eliminated or phased out ?? Or when property taxes are no longer deductible on your Fed. taxes ?? Or when interest rates go up to 6-7% ??
When that happens people will have to stop looking at a house as a right and start having to look at the whole picture of being a homeowner. My guess is we’ll see a lot more young people choosing to rent.
What’s the moral difference between owners of MBSs, and owners of the real estate those MBSs are based on? Both made a bad investment decision, seems to me.
I bet a lot of those holders of MBSs would take a cram-down, if they knew the alternative was losing much more. I think that’s the point of the cram-downs. Half of something beats all of nothing.
‘I bet a lot of those holders of MBSs would take a cram-down, if they knew the alternative was losing much more’
Then why are you suggesting “cramming” something you say they would “take”?
Losing more? Who would voluntarily do that? There’s a lot more to this. For instance, all these HELOCs; they probably aren’t first liens. So you’ve got that little 1st/2nd/3rd lien struggle going on.
Then there is the matter of legality. Does a fund manager have the authority to forgive debt that he only oversees? Who is to say that they won’t get more if they foreclose and sell? Don’t forget, you are talking about borrowers who have already defaulted, and whose re-default rate is over 50%! Sign me up for that buzz-saw…
Anyway, none of this cram-down stuff even matters. The govt can’t force it. The system would break down into lawsuit hell if they tried.
“The system would break down into lawsuit hell if they tried.”
It seems like so-called ‘cram downs’ amount to govt interference in private contracts. I suggest it makes better sense to let the contracting parties work out their losses, rather than having Uncle Sam pick winners and losers.
My understanding is that cram-downs occur regularly in all forms of RE, other than house mortgages, where they are uniquely not allowed.
My suggestion that holders of MBSs would take cram-downs over nothing is related to the fact that MERS and securitization have made it impossible to deal with each mortgage and its note holder- since no one is sure who it is. Cram-downs may offer the only solution to this mess, allowing the holders of MBSs to get back more than if the underlying properties are allowed to foreclose. Just a pensee.
Ben, I have read that the documents on the MBSs often do have a means set up for allowing modifications. It requires votes by the bond holders. And it generally requires a supermajority (I’ve heard 60% or thereabouts) to do anything and you might need a supermajority of ALL the different tranches. So, assuming that you could locate all the owners and get them to bother to vote, you are going to have a heck of a time getting the most subordinated tranches to vote to allow the servicer to make modifications since they might be voting to make their holdings instantly worthless.
I bet a lot of those holders of MBSs would take a cram-down, if they knew the alternative was losing much more. I think that’s the point of the cram-downs. Half of something beats all of nothing.
You’re forgetting the “tranche warfare” effect. These mortgages weren’t just pooled, the payments were also tranched. As long as all the FBs are still paying their mortgages, all the bond holders get paid. But typically, once SOME of the mortgages in a pool become non-performing, those with the lowest rated tranches stop getting payments. If the houses are forclosed and sold, that goes to making those in the highest rated tranches whole. So when loans default, the interests of bondholders from various tranches are diametrically opposed. Absent a procedure like Polly outlines above, any decision by the servicer runs the risk of them being sued by whichever set of bondholders loses money because of that decision.
‘might be voting to make their holdings instantly worthless’
I’ve thought about that, because it’s how 2nd lienholders have been explained to me in a short sale. They might get nothing, so what incentive do they have to go along? Plus, you can’t sue later for some amount you forgave.
Overall, the media/govt have done a poor job explaining these details, then they act all surprised when the mods don’t work, or people re-default, or never bother signing up in the first place. IMO, it’s all just political/media theater.
“So when loans default, the interests of bondholders from various tranches are diametrically opposed. Absent a procedure like Polly outlines above, any decision by the servicer runs the risk of them being sued by whichever set of bondholders loses money ”
But Polly doesn’t outline a procedure- she just points out, like you do, that it’ll be hard as heck to hammer any modifications through, with the mess they’ve made of MBS securitization- especially when you throw the potential MERS problems in there. (Although the guys in the lowest tranches should expect to get the hose anyway- that’s what they signed up for.)
But that all just argues if favor of legal cram-downs, which was what I was trying to suggest, as a possible semi-solution to the mess.
Well, Polly does outline the procedure for getting a cram-down approved, but only to point out that it would be almost impossible to accomplish- due to the tranche warfare etc.
Which still argues in favor of legal cram-downs.
It seems like so-called ‘cram downs’ amount to govt interference in private contracts.
Doesn’t any bankruptcy amount to govt interference in private contracts? If mortgage debt were partially dischargable in bankruptcy, a cramdown may work. But it would take time and lawyer money. Most FB’s wouldn’t make it anyway.
The Bankruptcy court is interested in getting as much money from the bankrupted one as possible. So why would they even want to facilitate the person staying in their mortgaged house, when that is the most expensive way for them to live?
Every story I’ve ever seen about these various modification programs causes me to conclude that participants would have been much better served by walking away.
Now, no longer is (the home) this little honey pot; it’s now a liability,’ Snaith said.
Agree with you on the walking away part, snake charmer. Especially when homes are being called liabilities by people like Snaith. Who used to be quite the real estate cheerleader.
Ah, I love the smell of reality in the morning.
“‘hey can we shave off a few million or what you are owed so Joe down in Florida can keep his house’?”
I don`t know what happened to Joe down in Florida, but my neighbor Eric down in Florida just got his @ss kicked to the curb.
I just don’t think that you can make a bad loan good . In some instances lowing the interest rate on one that would re-set at a very high rate might of saved some people ,but the moral hazard of just cramming down loans produces a situation where everybody wants that deal . It’s become a blackmail situation in effect by saying “cram down my loan or I will walk “,or the Lenders saying “bail us out or the financial markets will fail .”
This was always a contract between the investor and the borrower
and the taxpayer should of never been put in the position of being the Bail Out Entity .
The problem was the level of faulty lending that produced a fake value market that crashed . The problem was people taking on loans they had no hope of sustaining the loan long term and it was just a leverage thing ,or speculation thing or a ATM thing .
Lenders have the potential of raising value falsely by faulty lending ,they are not suppose to do this .Your not suppose to make a loan based on future value ,its suppose to be based on ability to debt service the loan and the term of the loan based on current income .Higher down payments are suppose to offset borrowers that are risky .
Nobody stopped this run-a-way train that was absurd and a crime wave actually .
Lenders raised value by faulty lending and now they want the taxpayer to compensate for that value lost ,or the borrower wants someone to compensate for the value lost or the true inability to afford the loan long term .People are walking that could afford the loan also with the idea of why should they pay for a loss in value ,in spite of them making the contract .
This was a bad situation from day one . Loans are always suppose to be based on ability to pay ,not Wall Street wanting to create false money by breaching duty to have sound loans and pawning them off on the secondary market . Investors were relying on the past reputation of the secondary market as well as faulty risk ratings .
They created Glass -Steagall as a protection against the conflict of interest between investment and lending . They allowed these greedy bastards to regulate themselves and they created a false economy that was doomed to fail because it wasn’t based on real income or real ability to pay . Unheard of leverage and risk so the Fats Cats could make more money ,verses responsibility for proper handling of the deposits of the Nation is the issue ,a Ponzi scheme where Culprits want to be bailed out .
All remedy in response to this crisis has been either faulty ,unworkable ,or just plain bailing out the culprits and in large part a obstruction of Justice and Moral Hazard in every way .
Are we to think that as long as a crime is big ,it gets bailed out
because “big” means untouchable ? I hold the Lenders most responsible for faulty lending and faulty risk ratings and absurd leverage and unacceptable casino games that were considered
investments rather than Ponzi-schemes . All mad-hatter criminals with no feeling of social responsibility ,or buyer speculators going for the brass ring of the get rich quick without working for it .And the innocent has to pay in one way or another .
Don’t forget that nearly all these loans were guaranteed by Fanny and Freddy, your Congressmen forcing taxpayers to pick up the tab for both bankers’ negligence and borrowers’ duplicity.
Really not the case Will. Since the bust, F&F have been guaranteeing almost all loans. But at the height of the bubble, the worst of ‘em those “subprime” loans were exactly the sort of poo that F&F wouldn’t purchase, although they did put some of their (laughably small) ammount of reserve capital into bonds created from subprime loans. F&F probably secured a majority of mortgages, but nothing like “nearly all.”
“Never trust a banker”! Now you know why.
Realtors Are Liars
Troy Speed, a Realtor who runs her own company in Port Orange, knows a colleague who left the business to work as a door-checker at Sam’s Club.
Ah, sweet schadenfreude. A realtor in our area started work as a bag boy at the local golf club a few years back. He lasted only a few months, then got something a little better I guess.
A little better meaning waiting tables or selling used cars?
“,,,Miami, where it made up 26 percent of their incomes, according to Moody’s Analytics.
…
‘What are these guys doing?’ That’s crazy. They just couldn’t loan money fast enough,’
…
‘Now, no longer is (the home) this little honey pot’…”
Little honey pot, indeed…
I was going to say. The last time I heard that expression was my grandfather attempting politely to explain a male relative’s unfortunate marriage decision.
Snaith carefully has cultivated the media and, as a result, has become the go-to Florida economist for analysis and quotes. In the last year, I’ve started to see his picture appearing in the paper next to economics stories. Anyone with an internet connection can research Snaith’s previous incarnation as a housing cheerleader, but he’s a celebrity now and nobody cares.
And people wonder why others get pissed over the salary and pensions in public academia. Florida state taxpayers are footing the bill for this crap.
How do I compile a list of his past pronouncements? Google searches? I’m not the sharpest tool in the technological shed, but I’m pissed.
Remember Snaith’s “souffle” quote? “Souffle”. “Honey Pot”. Maybe he should have been a cooking instructor.
Your tax dollars at work.
FWIW, a lot of “chairs” are public U’s are privately endowed. Snaith may very well been on the bankster’s payroll.
“Snaith may very well been on the bankster’s payroll.”
Thanks, Colorado. I didn’t even think of that.
Even so, where’s the local MSM here? What a story that would be, eh? All they’d have to do is “Sean Snaith, Then and Now”. Just excerpt his quotes by date, against the backdrop of what was/is happening in Florida economically and in housing.
HELLO! Tampa Tribune, St. Pete Times, TBO.com, WTSP, WFLA, etc. etc. HELLOOOOO, KNOCK-KNOCK, WAKE the F UP, DAMMIT!!!!!!!!!!!!
Oh, wait, you’ve got a big ad schedule from the banks, developers, etc? Gee, sorry, and I thought I was giving you a great story idea.
“Snaith may very well been on the bankster’s payroll.”
OTOH, I’ll bet they don’t “endow” his pension, medical and other benefits, do they?
“OTOH, I’ll bet they don’t “endow” his pension, medical and other benefits, do they?”
Good question. I don’t see why not, but who knows?
http://www.iec.ucf.edu/page/About-Dr-Snaith.aspx
Here’s an example. The souffle analogy was just a clever way of presenting David Lereah’s “soft landing” garbage that almost universally was endorsed by mainstream economists at the time.
http://tinyurl.com/42gqkmc
Well my DB LL who somehow got a workout from Wells in Nov. after not paying the Mtg. for a year while collecting attorneys fees has him up to about a $1,000.00
Does anyone think they are planning on keeping this place or just milking every penny of rent they can get out of it to help pay for the much bigger and more expensive house they live in.rent, has had a lean placed on the house for not paying the HOA dues to
Party 1: TEQUESTA PINES PROPERTY OWNERS ASSOCIATION INC
of $293 for the year that were due on Jan. 1, 2011. That +
I don’t imagine they have any intention of keeping the house. Just delay, delay, delay. I’ve seen people use an attorney at $400 per month while collecting $1,200 per month in rent. $800 free and clear…what a scam.
“I don’t imagine they have any intention of keeping the house. Just delay, delay, delay. I’ve seen people use an attorney at $400 per month while collecting $1,200 per month in rent. $800 free and clear…what a scam”
I am paying $1,700.00 per month so the take would be $1,300.00 in that scenario.
PS
I am very proud to announce that I hit spell check and I spelled scenario correctly on my own. Although I just did it again and I only had one r in correctly. Oh well, Rome wasn’t foreclosed in a day.
When I went through the process, uncontested it took the bank…errr investwhores…nearly two years. It took Countrywide/Bank of America over three years to take a friend of mine’s home.
And permit me to offer a reason for their leisurely pace of home-taking: It allows the top execs more time to continue looting their companies. Which is the essence of control fraud. Quite a few of our beloved banksters are nothing more than control fraudsters.
To learn more about control fraud, read William K. Black’s book, The Best Way to Rob a Bank is to Own One.
With regards from your HBB Librarian…
Let me try that again.
Well my DB LL who somehow got a workout from Wells in Nov. after not paying the Mtg. for a year while collecting rent has had a LP placed on the house of $293 for HOA fees for the year that were due on Jan. 1, 2011. That + attorneys fees has him up to about a $1,000.00
Does anyone think they are planning on keeping this place or just milking every penny of rent they can get out of it to help pay for the much bigger and more expensive house they live in.
I never got the allure of the Trump name. Is this just wannabe richie-rich aspiration?
He is a wealthy jackass with a “FU” attitude. It is somewhat baffling why that apparently is attractive to so many Americans.
Its because Americans like to think they’re “bad asses” (when they are actually “big asses”)
Thanks Colorado, that’s one the funniest lines I’ve heard in a long time, and so true.
Thanks, I was thinking along both physical and personality planes, regarding the amplitude of American posteriors.
He’s the ultimate FB. Why wouldn’t he be their hero?
Dolly Parton once described her whole schtick as “a country girl’s idea of what glamour was”. Trump is an FB’s idea of what rich and classy is.
The stupid MLM that some people at church tried to hit my wife up with is associated with Trump and it probably makes perfect sense for the intended audience.
On three separate occasions my wife has had another woman invite her to coffee or lunch under the guise of starting a friendship when the undisclosed real intent was to involve her in multi-level marketing.
I can remember my father, who was still fairly new to the world of self-employment, being invited to an evening business meeting.
Dad wasn’t given any specifics about what the meeting would cover. And, alas, he didn’t press for details. Had my mother been invited, she would have given the host the third degree.
Any-hoo, Dad went, only to find out that it was an Amway recruitment meeting.
He came home and reported to my Mom and me. We were both quite disappointed in the fact that Dad had gone to a meeting that was misrepresented to him.
But we were glad to hear that he didn’t sign up.
God I hate that game. One of the steps got involved selling some MLM scheme, and every time DH would talk to him, he’d say oh yeah it was “going great guns,” exact same wording every time. So I guess even that phrase was part of the training.
Never heard any more about it after a couple months.
Agree with you, Professor Bear. Especially on the wealthy jackass with the “FU” attitude.
ISTR my very well off great aunt adopting a very modest demeanor while out in public. In private? Pretty much the same lady.
Her reasoning was that if you were well off, you were supposed to be modest and courteous to everyone. Giving back to society was also quite important to her, her husband, and her daughter.
Sadly, that daughter (my second cousin) was diagnosed with Alzheimer’s at a fairly young age. It proved to be quite an expensive illness. To the point that she became a ward of the state of Vermont.
It’s easy to be gracious when you’re rich. If some young’un or po’ folk snap at you, why snap back, or even bother to listen? It’s not as if you are competing for jobs with the po’ folk. Even after a barrage of verbal abuse from the proles, you can just walk back to the rose garden at your castle, while the proles have to go back to work. No harm done.
I wanted to attract chicks so I tried using DT’s “Donald Trump” cologne. All I got was mosquito bites. And I wanted to be like Trump, having a Fox on my head!
I thought I read a headline yesterday that Trump isn’t running for president now. A few days ago, when he was all over the media, I was thinking; how could he be a serious candidate when he just took part in all these condo boondoggles?
I guess Trump believed that one should never underestimate the stupidity of the American voter?
Snooki ‘12.
Snooki-Palin ‘12
LOL
“when he just took part in all these condo boondoggles?”
I associate the Trump name first and foremost w/ the whole “Public/Private Partnership” language when it comes to RE development and public fleecing. He should be given credit for ‘inventing’ that whole sordid exchange.
Any time someone speaks to us about “community development” they are channeling him. Getting these ill-concieved designs -financed- and funded is the important part. Completed.., not so much.
Time to END that gravy train.
It is the beauty of the royalty. Give your name to a project in exchange for royalty payments. The real developer has probably risked capital in some way or another (or at least their most recently created LLC would have to declare bankruptcy to get out of the loan obligations), but Mr. Trump has not. If the development is completely bankrupt he stops collecting the royalty payments for the use of his name, but that is all. He never had anything at risk except that the people who got suckered may think less of his name when attached to products they are being urged to buy.
You would think that after a couple of iterations, his name wouldn’t be worth much. He may come out okay, but if everybody who puts up money loses it, why is there still a line to do so?
“‘I’ve probably sent (Chase) 10 packages since 2009 and we finally got denied in December 2010,’ Russano said. ‘But after my husband found a job, we applied again because our income changed.’”
“Russano and her husband, who spent their $200,000 retirement savings on living expenses and the mortgages
$100,000/year on mortgage and living expenses? When you don’t have a job? In Florida?
That would have to be one heck of a house!
Take a look for yourself (the Indian River County Property Appraiser’s Office website includes both information and photos). Their houses are modest. They bought one in 1998 for $100,000, and the other in 2006 for $128,500. There’s something else going on here; possibly her medical expenses.
http://tinyurl.com/3o69px3
Not bad looking, quite modest. Perhaps medical bills caused HELOC and Refi fever? I’m not sure if Indian River let’s you look at the note like Palm Beach does. Plenty of people bought for $100K or $125K and took $300K mortgages in 2005.
FL’s Sunshine laws sometimes freak me out. I recently discovered that a colleague has a DUI arrest and all I did was google his name to get his office number. He wouldn’t be fired for it, but he would if he didn’t self-report. I occasionally lose sleep over stuff like this, which come up A LOT in education.
If and when I buy I will file the paperwork to be excluded (I can since I am a position to hire/fire gov. employees, among the few outside LE that can get the exemption).
The last thing I’d want is students looking up my house.
“‘Now, no longer is (the home) this little honey pot; it’s now a liability,’ Snaith said.”
A house has ALWAYS been a liability. Taxes, insurance, upkeep, utilities, new furnace, new roof, new carpets, kids writing on the walls, etc.
If you are very lucky - a house may keep its value with that of inflation.
And yes - you do have to pay back the home equity money.
FYI - A “honey pot” in many places in America is a sewage pumping truck
Sometimes you are so on the money….
When one is stable enough to know they’ll not want to move for at least 10 years, home ownership can be substantially less expensive than renting. If you don’t meet that criteria along with a 20% down payment, you should enjoy the flexibility of renting.
The problem is that even as fewer Americans have the sort of stable “lifetime” employment that makes homeownership likely to be advantageous, the homeownerhsip rate kept rising.
And yes - you do have to pay back the home equity money.
That was the inconvenient truth that was ignored during the bubble.
Everybody knows it’s the guy you sell it to when you cash out that’s going to pay it. But then the next guy will pay his, so it all works out.
FYI - A “honey pot” in many places in America is a sewage pumping truck
A friend of the family is in this business. It’s been his family’s business for more than a century, in fact. And his fleet of trucks have “Honeywagon” lettered on the backs.
Around here it’s Sweet Pea.
“Finally, West alleges she was told she qualified for a forbearance agreement, but the terms would require a $13,000 down payment to be wired by Western Union. Mortgage payments would then resume again in July for $4,700. ‘That was literally everything we had in savings. And they knew it and they took it all,’ said West.”
No FB dollar will be allowed to escape…
BTW, I came across this stat that may interest some readers:
‘DESTIN — Northwest Florida banks have been hit harder by the downturn in the economy and the housing market than other banks in the state and nation, according to a local economist.’
‘Rick Harper, director of the Haas Center for Business Research and Economic Development at the University of West Florida, said Tuesday that 14 percent of bank loans in the region are non-current on their payments and eventually could become non-performing loans. That compares to a 7 percent average for Florida and 4 percent for the nation.’
One in seven…Wow…Let the market clear on all that product and it would likely drag another 20% down with it making it basically 1 in 5….
The Tampa Tribune piece contains this gem:
“Where home-equity loans once were a source of income, they’re now a drag on incomes, said Chris Lafakis, an economist at Moody’s Analytics who follows Florida. As of last December, home-equity loans and credit lines accounted for -8.1 percent of Floridians’ income.
…
That’s not healthy for the economy, Lafakis said. He’d like to see Floridians drawing a modest amount of money from home equity, maybe 2 percent to 7 percent of their incomes.”
I’d like to see no one drawing any money from home equity unless it’s for home repairs or emergencies, but then again I’m not an economist. When Ben visited here I told him how dumbfounded I was back in 2005-06 to see so many people in this low-wage town driving Escalades and sending their kids to private school. At the time, I had no idea where the money was coming from. My wife and I are not wealthy by any means, but we do OK, and people with half our income were living three times as large.
There should be no home repair or emergency that requires you to draw from your home equity. Those people who don’t have savings are better off renting.
Speaking for myself hard-and-fast rules work best. They’re easy to remember and make decisions a lot easier. Say NO to HELOCs, no matter what the interest rate or amount or how much we could make investing it for more ROI blah blah blah. All these smart alecky rationalizations did was get a lot of normally sane people in over their heads.
If an emergency really justifies a heloc, I think I’ll know it when I see it.
SURGEON GENERAL’S WARNING: HELOCs Causes Lung Cancer, Heart Disease, Emphysema, And May Complicate Pregnancy.
SURGEON GENERAL’S WARNING: Not Taking a HELOC Now Greatly Reduces Serious Risks to Your Health.
Its a issue of never take out a loan you can’t afford to pay by some means . Would I buy a 500k car if I only made 50 thousand a
year ?The only way I would buy a car for 500k when I only made
50k is if someone convinced me the car would be worth 1 million in a year and I could re-sell it easy for 1 million ,or get another 300k by using it as the basis of a loan I planned to pay off by selling the car .
Need to be clear on this. Equity loans are never a source of income, they are an expense. You must pay back more on a loan than you took out…unless Uncle Harvy is especailly generous. You can turn equity into income by selling a home for more than you paid, not by borrowing against it.
yeah that’s the other thing, this was “income”?? wtf? is it taxable?
That’s because in the MSM’s mind any money you can spend is “income” even if you had to borrow it.
Housing Wizard said:
“Its a issue of never take out a loan you can’t afford to pay by some means . Would I buy a 500k car if I only made 50 thousand a
year ?”
Well when you put it that way..? Great to see Ben posting again! REALLY great. ( Is it just my imagination or are we 60+ posts into this and not (1) from several ‘concerned parties’? )
Wow, things are looking up!
WTF!
ARRRRRRGGGHHHHHH
http://www.realtor.com/realestateandhomes-detail/16312-2nd-St-E_Redington-Beach_FL_33708_M67966-36736?source=web
Is that a house you were trying to buy? Don’t worry about losing it. You would have been underwater by hurricane season.
I further note that the buyer had the listing agent represent them. That 6% commission is the same as offering double the listing price as far as the agent is concerned. I bet no other offers hit the bank’s desk.
No, but it’s a neighborhood I like, and everything is going for around $250ish and it’s driving me crazy.
Carl said it the other day, but I hate humidity, too. I’d really like to get this recession thingy over with so I can move out of Florida.
Crapshacks like these combined with humidity = not winning.
I liked this house a lot. Might not be the greatest layout for a family, but it’s a neat beach house. Nice little pool, with well-placed palms for privacy, nice landscaping up front. I like that era of Florida homes. A little pricey, but no HOA. Looks like a nice neighborhood. I’m sure there will be plenty more like this one, though.
NO! Tell me you hate it and they paid too much!
Dude, what happened?
LOL! I hate it and they paid too much.
Seriously, I’ll probably get razzed for saying this, but within a couple of blocks from the beach, a neat little beach house in a no-HOA nicer neighborhood, I don’t know if it’s going to get too much more cheaper.
Condos in half-deserted buildings, houses miles from the beach- different story.
Alpha, It’s also in a good school district.
Snake (your 12:39:53 comment), I live right down the road. We walk by this house when we take the kids to the park. We didn’t look at that one, but we like the neighborhood, and yes, it’s nice to be able to walk to the beach. Our kids love it, and even though I am not a huge beach fan, sunsets are nice and I like jogging out there.
I have been in FL for six years now, and it’s not the first time I’ve lived within walking distance from the beach, but now that I have kids it’ it’s different. If you know the area, it makes a huge difference when you go home and “cross the bridge.” I’m not going to say something absurd, like, “we’re on island time!” but the mood does get a little easier in the beach communities, and the crime drops off a cliff. The Redingtons and Madeira Beach are the only beach areas in Pinellas in which your kid will default to an “A” school, so to me, the extra money for flood insurance makes it worth it if we in fact stay.
On the other hand, $2,500 a year, for, say, 40 more years is a little of frickin’ money.
And speaking of insurance, our lovely Gov. just deregulated insurance a little more. FREEDOM!!
That price is not half bad, although I’m not sure about property taxes or whether affordable insurance could be procured that close to the Gulf. Were you looking at that one?
“And the subtle whisper of mendacity.”
Sounds presidential to me…
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