The Housing Bubble

Recovery of what? What’s your definition of a recovery of what it is you are talking about.

BTW, we had a whole WE topic on this last weekend.

Next….

I can only speak for my area. There are zero signs of anything that might be confused for a recovery here (central FL). Jobs picture is the same bleak one of the last few years.

Tell us about your recovery in your area, I could use the cheering up.

ps. I don’t want to hear how long the wait is at Applebees.

“jinglemale” went all in on houses, and a “recovery” is in his financial interests. What’s that saying about the difficulty in getting a man to understand something his financial well-being depends upon him not understanding?

You are deluded into believing that “megabanks” should be operating, at all, as though they have some “right” to exist. All these banks should have been liquidated, their assets seized and their managers fired. There should be NO “to big to fail” banks.
This was all handled as an inside job by the President, the FED, and the Treasury dept, who was appointed by the President. Congress was sold a bill of goods by the Treasury and handed a story of impending world-wide doom and collapse unless Banksters were rescued. It was all a lie. The banks should be taken over and liquidated.
Foreclosures should be handled the way foreclosures are always handled. You don’t pay, the house is foreclosed and SOLD.
RE-finances and Loan modifications..forget about them. Liquidate these underwater properties.
I don’t care how many people are “thrown out of their homes”. They don’t belong in these houses in the first place and have been freeloading for 2 years or longer, awaiting an “easy payment plan”.
The solution is not to save the banks, or save the borrowers, but to liquidate all the losses to establish market equilibrium and get back to price discovery that is not manipulated by government stooges for the benefit of the Banksters.
The world will not end. The sun will still rise, and many people will find they can live just fine in a smaller, less expensive house, or an apartment. It’s just that simple.
Don’t buy into the “mainstream” stories about the “economy” and how the world will end if 10 banks don’t hold all the nation’s debt in their vaults. Kill the FED. NOW.
And let’s get on with our lives. No more ‘managing’ the ‘crisis’.
End the crisis by immediate liquidations. Say goodbye to Goldman-Sachs…And CITI and Wells Fargo, and JP Morgan Chase. Break them all up and make small regional banks that serve their customers as BANKS, not speculation houses for traders. That is the solution.
The same applies to Europe, where they have been trying to “manage” the bad debts of the southern region for quite some time now, only to come up with another new plan every week.
You think someone there should “manage” the insolvency??
I don’t. Kill the deadbeats…. and let slip the dogs of war.

I’d expand the board and the executive staff to include a large number of sensible people.

I’d be looking for executives willing to do a good job for less. Not less than you and me, more than you and me, but less than before. The savings would be used for higher dividends.

Then I’d break up the bank into still large but independent and competing organizations, headed by different executives and boards. Each would have national scope and the full range of financial services, but lower market share.

And I’d rely on competition to provide the best deal for investors and customers, with the parts expected to become worth more than the whole.

Our oligopolistic financial industry is going the way our oligopolistic auto industry did in the 1960s and 1970s. Over paid, worse and worse.

I would completely dissolve the corporation, and forward all pertinent information to the Dept. of Justice.

I think that’s 11%, but in a ZERO interest rate environment, with Big economies controlled by Central Bank price manipulation, it’s a really high rate. And it’s not really what is should be. Lot’s of folks betting on a default, which is the best solution, but then the traders who want to trigger a CDS will have won a victory. We’ll see how this plays out.

Basically, we’ve lived the new normal right along.

If anything we (or at least she) is spending more, though she would deny it. That’s the problem with the internet. Since she has no time for shopping, we’d save money without it.

One item of current consumption likely to get the axe is our 15 year-old Saturn wagon. When it dies, we’ll probably to Zipcar/rental car and see if we miss it.

Live music has about disappeared in my area and I used to be able to see two or three bands a week but all that’s left now are the high dollar shows at large venues that costs 5X what I used to spend. There are still cultural centers like Austin, New Orleans and Memphis but every where else it’s a waste land.

All of these plans reward the idjits who participated.

But if you were smart enough to walk away from the whole mess? No government cheese for you.

The whole mess was enabled by government laws/policies at all levels. Until that gets unwound, and government start handing out carrots, while beating the crap out of some people with whup-azz sticks, nothing will have been gained, and the cycle will be repeated.

Polly:

Whats the NY law on this? If i remember the landlords can only ask for a max of 3 months back rent, and anymore a judge could rule and call it “use and occupancy”….say at 1/2 rent.

But i agree those who lived rent free should be force to pay back something…yes it rewards the idjits and screws people like me…but 1/2 is better then nothing. And if they don’t have 1/2 well either file for BK or have them attach your pay… I would be screaming mad if they played the “victim” again and said we don’t have any money to move….well you spent it all…didn’t same a dime…..go to the homeless shelter….

Now, what about the people who lived in the house for free for time well in excess of the expected time between defaulting and foreclosure. I’m inclined to dump most of this responsibility on the banks, but I can see an argument that the defaulter should have to pay rent on the time that they were living there and not paying the mortgage. I think this could use a lot more discussion.

Is It Better to Buy or Rent?

Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home. Compare the costs of buying and renting a home in the calculator below. Click the advanced settings button to change inputs such as your rate of return on investments, condo/common fees and your tax bracket.
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Is Owning or Renting Best?

There was a time when owning the roof over your head was considered an attainable and wholesome mark of prosperity for American families. See, for example, the higher calling for which George Bailey gives up his youth in It’s a Wonderful Life. (In retrospect, George was making sub-prime loans from a dangerously over-leveraged and illiquid bank. It was a simpler time.) Over the decades conventional wisdom on home ownership morphed from Victorian House wholesome goal to sound idea, then to great idea, and finally to such a great idea that it was practically free money.

Then it all went kablooey, and conventional wisdom started denying that it ever said any such thing. It’s really not clear what mainstream advice on home ownership is right now. Big time gurus like Suze Orman and David Bach (author of, among other bestselling titles, The Automatic Millionaire Homeowner) now spend time cautioning people about the dangerous waters of home buying and contradict, without apology or even acknowledgement, advice they gave a few years back to jump in with both feet. (See excellent article on this at the Wall Street Journal here, and my discussion of Orman’s latest book here.)

So perhaps now is as good a time as any to step back, push aside the headlines of the day, and reconsider if owning the place you live in is a good idea in principle or if maybe renting has gotten a bum rap all these years. Moreover, it’s worth asking if owning vs. renting is a question that should have a general one-size-fits-all answer.
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Own-ward Bound?
By Barbara Kiviat Monday, Aug. 31, 2009
ENLARGE PHOTO+
Illustration by Kyle T. Webster for TIME

Four years ago, Michael Choe appeared in the pages of this magazine for doing something spectacular: choosing to be a renter. At a time when real estate riches were Topic A (”Home $weet Home,” read the TIME cover line), the engineer, from Sacramento, Calif., decided to sell his house and move with his wife and baby boy into a rental. “Compared to owning, rent is cheap,” he said back then.

Exceedingly smart move. Since the summer of 2005, house prices in Sacramento have plummeted by half. Choe and his family — which now includes a second son — watched from the sidelines until the end of last year. That’s when the Choes moved back into a home of their own, a four-bedroom they plucked out of foreclosure at a 35% discount from what it had sold for two years earlier. (See pictures of Americans in their homes.)

Is this smart move No. 2? In other words: Is it really time to buy?
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One potential drawback to renting: A failure to qualify for $100,000 or so to reimburse you for money lost when the housing bubble popped. Is there any other investment class where losses are reimbursed in similar amounts?

P.P.P.S. 200,000 borrowers at “$100,000 or more” a piece equals $20,000,000,000 ($20 bn) or more. I didn’t realize BoA planned to fork out $20 bn or more all by itself, but perhaps with a class action lawsuit to ensure those who were previously foreclosed also get their fair share, they could push their liability up to this level.

BofA to slash mortgage balances by $100,000 or more
By Les Christie @CNNMoney March 9, 2012: 3:09 PM ET

NEW YORK (CNNMoney) — Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers.

As part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District of Columbia last month, Bank of America (BAC, Fortune 500) customers who qualify could see their mortgages reduced by an average of $100,000 or more, according to bank spokesman Rick Simon.

Those principal reductions are much deeper than the ones originally announced as part of the robo-signing settlement deal.

When the settlement was first announced, the average principal reduction was expected to reduce mortgage balances by an average of about $20,000. Among the five biggest lenders, the reductions are expected to help roughly 1 million homeowners who owe more on their homes than they are worth.

Multi-million dollar foreclosures

The other four banks, JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial, are expected to reduce qualified borrowers’ principal to between 115% and 125% of the value of their homes. Bank of America, meanwhile, is aiming to reduce the amount owed on a home to 100% match the current market value.

Bank of America’s deal only applies to the mortgages it owns and some that it services for private investors. Loans backed by government-controlled agencies like Fannie and Freddie or insured by the Federal Housing Administration are not eligible for the program.
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How can it possibly pencil out to offer $20bn+ in principle reductions in order to avoid a fine of $0.85bn? I simply never will “get” DC maths.

Bank of America to reduce mortgage principal for 200,000 ‘underwater’ homeowners
By Associated Press, Published: March 9

NEW YORK — Bank of America is providing mortgage relief to about 200,000 homeowners.

Homeowners that qualify are those whose home values have fallen below what they owe on their mortgages. Bank of America will reduce the amount owed by the homeowners by as much as $100,000 in some cases. Only mortgages that are currently owned by Bank of America will qualify. Those that are owned by government entities Fannie Mae and Freddie Mac, or backed by the Federal Housing Administration will not be eligible.

The move will help the bank reduce the amount of penalties it owes to the government’s Housing & Urban Development agency by $850 million.
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Potential drawback to ownership: You may end up owing taxes on the (implicit) extra income you received by failing to repay part of your mortgage.

If Congress doesn’t act, distressed homeowners could take another hit
Image
Sun File Photo
Nevada continues to be plagued by high foreclosure rates.
By Karoun Demirjian (contact)
Tuesday, Feb. 28, 2012 | 2 a.m.

Take note, Southern Nevadans: If you own one of the estimated 100,000 homes that experts predict will be lost to foreclosure before the protracted housing crisis comes to an end, you may see a massive tax hike this time next year.

A law that has waived homeowners’ tax liability for any mortgage debt that was forgiven through modified loans, short sales or foreclosures is expiring at the end of 2012. If Congress doesn’t vote for an extension this year, forgiven debt will again be taxed as regular income — just as it was before 2007, when the provision was passed after the housing bubble burst.
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Meyer Sees Shift From Home Ownership to Rentals

March 6 (Bloomberg) — Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch, talks about the outlook for the U.S. housing market and economy. Meyer speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

Buying Real Estate Not `Clever Move,’ Says Shiller

Jan. 31 (Bloomberg) — Robert Shiller, an economics professor at Yale University and co-creator of the S&P/Case-Shiller home-price index, talks about the U.S. housing market. He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

Home Prices to Fall Further in 2012, Wetenhall Says

Jan. 4 (Bloomberg) — Robert Wetenhall, an analyst with RBC Capital Markets, talks about the outlook for the U.S. housing market and homebuilder stocks. He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

Why would anyone who lived in an expensive area and believed prices were going to fall another 5% this year buy currently? For instance, if homes which interest you sell currently for $500,000, you could wait until next year and only pay 95% X $500,000 = $475,000, and spend the extra $25,000 some day on a long future European vacation or two. I fail to understand the logic that impels people to buy before prices bottom out.

Wetenhall Sees Home Prices Falling Another 5% in 2012 (Video)
Jan 4, 2012 11:06 AM PT
Home Prices to Fall Further in 2012, Wetenhall Says

Jan. 4 (Bloomberg) — Robert Wetenhall, an analyst with RBC Capital Markets, talks about the outlook for the U.S. housing market and homebuilder stocks. He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

Robert Wetenhall, an analyst with RBC Capital Markets, talks about the outlook for the U.S. housing market and homebuilder stocks.

He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

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