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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Time to use the RICO statutes on these hospitals and insurers. Racketeering, pure and simple….
Stark hospital fee disparities found
When a heart attack patient was admitted to South Shore Hospital in Weymouth in 2009, insurers paid $9,684 on average for the hospital stay. But for patients who got similar care at UMass Memorial Medical Center in Worcester, that price tag was nearly twice as high, $19,059.
The price of a new knee varied nearly as much. At Lowell General Hospital, insurers shelled out an average of $14,153. The typical bill for a knee replacement at Boston’s Brigham and Women’s Hospital: $25,284.
The administration also found that those more expensive hospitals treat a high percentage of patients, creating a double hit on insurers and on employers and employees who pay the premiums.
http://www.boston.com/lifestyle/health/articles/2011/05/27/stark_hospital_fee_disparities_found_in_massachusetts/?p1=Well_MostPop_Emailed3
Here’s a Tucson take on this topic:
The greed of the health-care system rivals the greed of the banking system
My last reconstructive surgery was billed at $89,000+. Of that, Blue Cross Anthem reimbursed $663. (About the same as the bi-monthly premium I’ve paid them for 30+ years.)
When hospitals are forced to take all comers (reimbursed by Medicaid or not — and many are not, or are mandated to treat Medicare patients for pennies on the dollar,) they must necessarily jack up prices to the insured to make up the shortfall. If they do not, the facility will be forced to close and the community will be the worse off for it. (Here I offer Drew Memorial/MLKing regional medical center in LA as an example.) Then these patients must be transported and offloaded to ever more distant and overcrowded facilities — further impacting care for the insured.
Moreover, private, office-based practitioners must necessarily charge exorbitant fees to reap even a miniscule percentage of what they would normally charge for their services. Add to this the markups on specialized hospital services, room rates, after care, drugs and devices, lab work, ad infinitum, and it’s easy to see how a broken finger, say, could end up costing $12,000 to treat. (As happened to me in the 1980’s.) I’ve since learned to reduce and set my own digits and sew up my own wounded extremities.
We the privately insured get to pay not only for our own care, and heavily subsidize those with group policies (who have the benefit of collective bargaining on bulk services, admissions, and pharmaceuticals,) but we also pay disproportionately for the indigent and unauthorized with our much higher premiums. Oh, and with our taxes. That’s four layers of extra charges right there….
As private payers like me tend to be self-employed, it’s obviously a recipe for millions of us going un or under-insured… which simply exacerbates the vicious cycle.
In the near future those with corporate and union-negotiated group policies, Medicare recipients, and certainly the uninsured “poor” are going to be hugely surprised when they find out what their health care REALLY costs. And believe me, those costs WILL be shifted to you all if we don’t get real about these disproportionate subsidies and the entities taking their profits therefrom.
When TeaParty Grandpa finds out that his prostate treatments are costing $36,000 apiece (and he’s responsible for $3,600 of each of them,) THEN maybe we’ll go to a single-payer public health system and get the insurance industry out of the public health field and back into privately-financed elective care where they belong.
On the other hand, single payer systems, like here in Canada, manage costs (badly) by (implicitly) rationing care. In NB, there are a set number of billing numbers for doctors, and thousands on the waiting list for a family doctor. One year to wait for cataract surgery, like my mother did.
Government designed, run and paid for health care is not the panacea that people think it is.
1. What actually caused the mortgage crisis?
2. Was it fraud, or something else?
3. If it indeed was fraud, who is culpable?
4. How can the number of foreclosures outnumber the number of properties?
US foreclosures hit record high in 2010
Thu May 26, 2011 11:39PM
A report shows that a total of 3.82 million foreclosures were reported on a record 2.87 million US properties in 2010, a rise of nearly two percent from 2009.
By the end of 2010, almost 67 million mortgages were held in the name of the Mortgage Electronic Registration Systems, known as MERS, RealtyTrac Inc said.
Homeowners’ lawyers and advocacy groups contend that MERS has no right to initiate the actions because it does not own the mortgage loans.
Lending laws specify that only the actual owner of the loan can file a foreclosure action. Lawyers also have alleged that MERS bypassed laws requiring mortgages and refinancing to be recorded in county recorders offices.
The report also shows 2.23 percent of all US housing units (one in 45) received at least one foreclosure filing during the year, up from 2.21 percent in 2009, 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006.
According to the other finding of the report, five states accounted for 51 percent of the nation’s total foreclosure activity in 2010: California, Florida, Arizona, Illinois and Michigan. Together, these five states documented nearly 1.5 million properties receiving a foreclosure filing during the year.
“Foreclosure became a rubber-stamping operation that robbed many homeowners of the American Dream without a fair and accurate process,” Attorney General Lisa Madigan said.
“I will not relent in my investigation into the fraudulent practices by lenders and others that caused and exacerbated the mortgage crisis and the resulting massive foreclosure crisis,” she added.
4. Multiple lein holders, I think. That’s not 2.87 million total properties, that 2.87 million properties in foreclosure. There was some discission (last year?) about junior lein holders, like HOAs initiating foreclosure actions to force senior holder to foreclose on FBs who were stiffing everybody.
1. What actually caused the mortgage crisis?
Earthquake
Tsunami
Hurricane
Tornado
Flooding
Blizzard
Destruction in a specific region.
“Vastly oversold National mortgage debacle?” Ben Jones
Destruction throughout the Nation/World.
Wow, mankind able to out-destroy Mother Nature!
See what happens when you break a “Financial Innovation” water valve,…under-water Sit-u-ations in all directions!
Act of Gawd / rapture?
From today’s desk clearing thread:
“…and start moving the government out of the business of egging on the worst behavior.”
Proposed weekend topic:
What was it that started the government down the path of egging on the worst behavior to begin with?
What was it that started the government down the path of egging on the worst behavior to begin with?
My opinion? That oft-repeated notion that homeownership makes people better. As in, their kids do better in school, they’re more engaged in their communities, the birds in their trees sing sweeter tunes, you get my drift.
“My opinion? That oft-repeated notion that homeownership makes people better. As in, their kids do better in school, they’re more engaged in their communities, the birds in their trees sing sweeter tunes, you get my drift.”
I agree that’s how it was sold. But the reason to keep it going was $$$, campaign contributions, tax revenues, etc. Also, of course, those that get in early on a ponzi scheme tend to benefit disproportionately and have an incentive to keep it going.
Did anyone ever examine whether one “owning” a house was the cause of all of those supposedly good things or instead merely a symptom of having a stable job with a decent income, enough income to be able to do all of those supposedly good things?
Homeownership was a byproduct of being an upstanding citizen. Back in the days of real down payments, and real credit checks before the banks handed you a couple hundred thousand bucks.
Then the marketers/advertisers started promoting the view that you could turn yourself in a upstanding indvidual by owning a home.
Sorta like the beer companies promoting the idea that hotties will start hanging around you, if you drink their swill.
Eventually, this morphs into “common knowledge”.
“Sorta like the beer companies promoting the idea that hotties will start hanging around you, if you drink their swill.”
Awesome analogy! I have yet to meet a babe who finds Homer Simpson beer bellies a turn on.
“As in, their kids do better in school, they’re more engaged in their communities, the birds in their trees sing sweeter tunes, you get my drift.”
I do get your drift, as in government housing economists have cause-and-effect all muddled up in their wee little brains. Presumably, before everyone who could breath qualified for a mortgage, owning a nice home, funded by a prudently-underwritten mortgage loan, was an indicator of middle-class stability; the same people who worked hard, had decent jobs, and lived in upscale neighborhoods also were more engaged in their communities, had above-average children, and enjoyed the sounds of the most gifted song birds singing sweet tunes in the canopy of trees above their heads.
Fast forward to the subprime lending era: Confused gubmint economists, who thought that home ownership caused desirable social outcomes, lowered the bar to the level where all manner of riffraff and no-account lowlife could qualify for a loan. Suddenly home ownership became a much better indicator for future financial hardship than for desirable social outcomes. Way to go, social engineering flunkies!
“…government…egging on the worst behavior…”
I would argue that the government was the trailing horse here; turning a blind eye to the depredations of GMAC, GreenPointe, Countrywide and their ilk, who were already in full swing by the time our (stated,) economic policy turned to real estate to bail it out of the tech crash in early 2000.
As early as the mid- 90’s, these mortgage lenders had blanketed the country non-stop, day and night with national advertising campaigns offering cheap money to the masses. They proved so popular that opposing them would have meant political suicide. George Bush’s “ownership society” only codified the carnage that was already well underway.
‘George Bush’s “ownership society” only codified the carnage that was already well underway.’
When conservative Republicans pander to socialist slogans, you know the world is temporarily standing on its head.
In my opinion WS saw that the American middle class had accumulated a massive amount of money. They then took over our gov through bribery and set themselves to work stripping that wealth. Mission accomplished.
“…stripping that wealth…”
WS systemically stripping away wealth from America’s middle class is definitely a huge and ongoing part of the story.
That government’s functions are more than providing justice and a national defense.
The worst behavior of the many is to the benefit of the few. The simple explanation is that government sought the benefit of the few, among which they become through the feedback of contributions and favors. People do what they are incenitized to do.
Is the robo-signing controversy pretty much resolved at this point?
May 26, 2011, 5:03 PM ET
Oregon Judge Denies Foreclosure, Challenges MERS
By Nick Timiraos
A federal judge in Oregon delivered a potential setback to the mortgage industry’s electronic lien-registry system in a ruling issued Wednesday.
Oregon allows lenders to foreclose without going to court, but the state requires banks to record the ownership history of the mortgage with local county governments in those non-judicial foreclosures. The Mortgage Electronic Registration Systems, or MERS, was created by the mortgage industry in the 1990s to facilitate the recording of mortgages that were being bundled and resold as securities.
Wednesday’s ruling says that banks should be required to process foreclosures through the court system in Oregon for loans that are in the MERS system. But it’s not clear whether the ruling by itself will turn Oregon into a judicial foreclosure state for loans assigned to MERS.
A spokeswoman for MERS said the ruling was “inconsistent” with other state decisions, citing two in the past year that found MERS had satisfied state law. The spokeswoman said MERS planned to appeal.
“That’s the problem. We have rulings on both sides, so it’s very difficult to determine what’s going to happen,” said James Stout, the lawyer who represented the homeowners.
The case concerned Ivan and Katherine Hooker of Tigard, Ore., who took out a $260,000 mortgage from GN Mortgage LLC in 2005. The Hookers defaulted on their mortgage in 2009, and Bank of America Corp., which had acquired the loan, went to foreclose on the borrower.
MERS had been named as the nominee for the mortgage in 2005, ostensibly allowing banks to record the assignment electronically, eliminating the step of recording it with the county.
But the court found holes in the chain of title. While the loan had been made by GN, the mortgage had been assigned to MERS by a different entity, Guaranty Bank. “The record is silent as to how or when Guaranty Bank obtained” the mortgage, wrote Judge Owen M. Panner.
The court also concluded that MERS’s use had run afoul of Oregon statutes that require all mortgage assignments to be recorded in county land records in non-judicial foreclosures. “While I recognize that plaintiffs have failed to make any payments on the note since September 2009, that failure does not permit defendants to violate Oregon law regulating non-judicial foreclosure,” wrote Judge Panner.
BofA is still free to pursue a judicial foreclosure, though Stout says the bank will have to correct any potential deficiencies in the chain of title. A BofA spokeswoman didn’t immediately respond to a request for comment.
…
The court also concluded that MERS’s use had run afoul of Oregon statutes that require all mortgage assignments to be recorded in county land records in non-judicial foreclosures.
If I were a county recorder (which is what they’re called in AZ), I’d be pretty steamed about the lost revenue. After all, they don’t record those deeds for free. Ya gotta pay a fee, even if you’re im-MERS-ed in other, grander things.
MERS was the program the banksters devised to bypass all the government fees.
And all those internal control systems to make sure that all the paperwork was on the up-and-up cost money too, so MERS threw them under the bus as well.
None of this was a problem until people quit making their house payments. It was all screwed up by all those strawberry pickers with $800K mortgages.
It’s probably a good thing that things blew up when they did. Basically it only affects mortgages written by the big banks in the past 5-6 years. Imagine how screwed things would be if the thing had been allowed to run for 20-30 years before it Chernobyled.
“MERS was the program the banksters devised to bypass all the government fees.”
Sounds illegal…
I can see a county recorder or two raising a stink about this.
And, in this fair city of Tucson, which is the seat of Pima County, Arizona, the county recorder’s office is just a block away from the county attorney’s office. And don’t tell me that those two offices don’t talk to each other, because they certainly do.
““While I recognize that plaintiffs have failed to make any payments on the note since September 2009, that failure does not permit defendants to violate Oregon law regulating non-judicial foreclosure,” wrote Judge Panner.”
O-oh, MERSy MERSy me…
I would like to see a topic on how much empty inventory we will end up with and what’s going to happen to it. Locally, builders are still building or trying to build. I’m in the DC area are the builders may have slowed down but they haven’t stopped. They’re still trying to build houses, condos, and office space. We have no need for more of any of that. Lots of office space or condos are sitting empty right now, but builders have submitted plans to build more condos and offices and tear down older office buildings to make larger office buildings. Some of the builders plans have stalled because of people complaining about various things like transportation issues but the builders are continuing to overbuild.
What’s going to happen to all this inventory? The answer is not that it will get used when the economy turns around. There is simply too much, period, and the builders are just adding to trying to add to the glut.
The above situation reminds me of that “Ghost Towers of Bangkok” video I saw a few years ago. It showed never-occupied office and apartment towers that were built before the Asian currency crisis of the late 1990s.
What gets me is not just the excess inventory generated during the boom. It’s that builders want to build what can only be described as even more excess inventory. Who is going to buy these houses and condos and office buildings? At least during the boom it was speculators. That was bad but it makes sense from the builders’ perspective. Now, the builders and building inventory that can’t possibly be sold. Even if the economy were to magically rebound there is simply no need for what they’re building.
At the rate the builders are going, they will be building 20 floor condo towers in Wyoming in 2020. By 2030 they will be building condo towers in Northern Alaska, the Canadian Arctic, Siberia, and other remote places such as the Atacama desert and the Australian Outback. By 2050 they will be building condo towers in Antarctica. By 2060 they will be building condo towers on the ocean floor and/or moon. This has to fall apart at some point.
“Who is going to buy these houses and condos and office buildings? At least during the boom it was speculators.”
All-cash Asian, Australian, Canadian and European investors?
“…What’s going to happen to all this inventory?”
Low-cost, high-density, and assisted-living/senior housing?
Topic suggestion:
If Mortgage Rates Keep Falling, Why Are Home Sales So Bad?
If Mortgage Rates Keep Falling, Why Are Home Sales So Bad?
Published: Friday, 27 May 2011 | 10:51 AM ET
By: Diana Olick
CNBC Real Estate Reporter
As mortgage rates continue to fall, so too are home sales. That wouldn’t make sense in a normal housing market, but these are very unique times.
Credit, or lack thereof, coupled with extremely weak consumer confidence is keeping potential buyers on the fence.
Contracts to purchase existing homes plunged a far weaker-than-expected 11.6 percent in April, the heart of the spring housing season.
Mortgage rates down
The National Association of Realtors’ Pending Home Sales Index is now 26 percent below its cyclical high in April of 2010, which was the deadline for the now-expired home buyer tax credit.
“The pullback in contract signings is disappointing and implies a slower than expected market recovery in upcoming months,” said NAR chief economist Lawrence Yun.
…
“Credit, or lack thereof, coupled with extremely weak consumer confidence is keeping potential buyers on the fence.”
So it has nothing whatsoever to do with (1) being broke; (2) unrealistic seller wishing prices; or (3) a wish to avoid catching a falling knife real estate investment?
Not to mention (4) credit that was destroyed in the foreclosure crisis; (5) lack of employment; (6) lack of savings; (7) a belief that real estate is a terrible investment; (8) a realization that renting is cheaper and more flexible than owning; and on and on and on…
Ben, CarrieAnn, SanFranciscoBayAreaGal, alpha, Hwy, et al,
I’ve had six posts to you either deleted or removed from the Bits Bucket today by our guest moderator, all of which were thoughtful, fair, and relevant to the conversation at hand. This board is not well-served when its conscientious posters are harassed for speaking out in favor of civil discourse and ethical editorial standards.
We’ve lost some informative, entertaining, and thought-provoking writers over the years because of this very thing, Alad, Joey, and NoSingleOne among them. When the conversation degenerates into braggadocio and petty ad hominem attacks, all our hard work and commitment to this blog and its ideals are debased — and we are all the poorer for it.
I’m posting here in the hope that my words will not again be censored on the whim of one disturbed individual who seemingly cannot resist the urge to self-aggrandize at the expense of other readers. This community deserves so much better.
Sincerely.
“…petty ad hominem attacks…Joey…”
Not just Joey, but also Eddie, Gekko, Antonio Villaraigoso and an army of trolls who used to show up here before the bubble popped, were quite the ad hominem attackers. I don’t consider myself thin-skinned, but trying to fend off this crew gets tiresome. Not sure whether thanks are owed to either them or Ben for sparing us.
Prof, considering that this family has been together, squawking and winging for six+ years now, we can congratulate ourselves that we’ve lasted longer than most American marriages. Thanks so much for keeping us focused on the real issues throughout. It’s a dirty job, but somebody has to do it….
There is something weird going on. What happened to the “Egging on..” thread?
More Transparency Coming to Hidden Costs of ‘Extend & Pretend’ Strategies
The number of loans that banks have to classify as troubled debt could increase dramatically in a few weeks as a result of new accounting rules issued last month. The new push to reclassify some loans is already hurting some lenders, and the reclassifications are expected to shine a spotlight on the commercial real estate lending practice that has come to be known as “extend and pretend.”
New accounting standards issued by the Financial Accounting Standards Board (FASB) just last month and taking effect for public companies first are expected to result in lenders re-examining their restructured debt and could compel them to reclassify some of it as troubled. Those adjustments will have to be made public in any quarterly and annual reports filed after June 15.
In addition to the accounting change, banking regulators have also started cracking down on lenders and requiring some to go back and reclassify some of their receivables as troubled debt restructurings (TDR).
The issue of TDRs sprung to life this month after FASB last month issued new guidance directing institutions to standardized what constitutes TDRs, and also report redefault rates on TDRs on a portfolio segment basis. Law and accounting firms have jumped into action with blogs and webinars for their clients explaining the change.