Bits Bucket for April 8, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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“Here’s what needs to happen for the housing crisis to end: People need to buy more houses, and banks need to be more willing to lend to them.”
Who’d've thunk it could possibly be that simple?
Why a housing recovery could happen sooner than you think, in two charts
Posted by Suzy Khimm at 04:30 PM ET, 04/05/2012
Here’s what needs to happen for the housing crisis to end: People need to buy more houses, and banks need to be more willing to lend to them.
(LARRY DOWNING/REUTERS)
The problem is, banks are still feeling nervous about lending to even creditworthy Americans, having been burned so recently by making loans to homeowners who couldn’t pay them off. As a result, by most measures, credit standards have remained extremely tight, fueling a lot of pessimism about the housing recovery. But Capital Economics, a UK-based research firm, believes there are signs that banks may be turning the corner.
Certainly, there are a lot of signs that lending hasn’t bounced back: the volume of mortgage lending has been falling, and lending standards are basically as high as they’ve ever been. But though banks have been reluctant to loan to more people, they are becoming more willing to loan more money to qualified buyers.
In a new research note, Capital Economics points out that the value of the average mortgage loan has sharply increased in recent months, and banks are financing more of the purchase price for homes, increasing the loan-to-value ratio.
(SOURCE: CAPITAL ECONOMICS) As Capital Economics concludes, “This could be the very first sign that banks have become a bit more willing to lend,” explaining that it could be linked to other signs of economic recovery and fewer mortgage writedowns. For now, though, it’s still an outlier.
“[L]ending standards are basically as high as they’ve ever been.” The author did not offer a single fact to support this statement, nor the implication that homes are now affordable and prices having bottomed. If anyone knows of anyone with great credit willing to put 20% down on a primary priced at less than 3 times their gross income let me know. I am still seeing ppl putting less than 10% down with average credit getting in bidding wars over homes 4 or more X their income with bank approval letters.
I put in a reasonable offer on a home last weekend. The sellers, who purchased in 2007, seemed insulted that anyone suggested they take a hit on selling a home, and decided to rent at a loss until the market “recovers.” Apparently this is what HGTV recommends these days. Still seems like a lot of stupidity out there to me. I dont understand why ppl think that after a year or more of rental abuse and rising interest rates they should expect a dramatic increase in offer prices.
I dont think lending is the issue here.Loans are still out there if you have a job. With the bubble you took away future demand. Now the herd is afraid of getting duped again. Screw me once…….
“I put in a reasonable offer on a home last weekend.”
Natalie
We just put in an offer Friday on a home that has been on the market 3 months, and now is $40K cheaper (but still pricey). I was wondering how you came up with your initial offer?
We didn’t lowball, but left room for us to go up, and for them to go down, and meeting at a fair price (that is to the sellers, it certainly will not be us).
Any insight?
I’m still seeing 100% financing with VA loans at 4 to 6X income. In fact, those are the only buyers I’ve seen in the last 2 years. My cousin bought his house this way sight unseen in San Diego just because it was 50% off the last sale price.
This screams “BUBBLE” to me, but I’m biased. I just signed a new rental agreement for another year. I tried to look at a few condos, but you have to make an offer before you can see the inside.
“I tried to look at a few condos, but you have to make an offer before you can see the inside.”
That’s insanity.
Thanks for saying so. Lots of people said that’s the new norm.
I’m still seeing 100% financing with VA loans at 4 to 6X income.
I always thought that the VA was supposed to provides benefits to people who’ve put their lives at risk to defend the nation. They’re not doing veterans any favors by by lending them four to six times their incomes.
I’m still seeing 100% financing with VA loans at 4 to 6X income.
How are you able to see this information?
SDJen
Interesting post.
Everyone
I wonder who else is going to make an offer, and if any others will be cash? That’s the thing with this engineered tight inventory, one house and five buyers. I hope our cash means something. What I am reading here is NO.
“My cousin bought his house this way sight unseen in San Diego just because it was 50% off the last sale price.”
Comparing today’s purchase price to peak purchase price in order to gauge value is a fool’s game. One should compare it to the price of the same home in the 90’s, before the insanity.
“Comparing today’s purchase price to peak purchase price in order to gauge value is a fool’s game”
I know a dude who bought a house in Loxahatchee Fl. for $250k in 2009, It was half off of the $500k it sold for in 2005. He lived there for a few rent free years and the house is now in the shadow inventory standing next to $165k for sale signs.
SDJen, I’ve been beating my head against the resistance to the truth, even here on the HBB, which should otherwise be a Mecca of alignment with the truth. It mostly is, but not entirely.
When a housing bubble pops, it’s still a bubble. The metaphor of ‘popping’ is highly inaccurate, since it implies it just “went away”. But it’s more like a balloon, and after inflation, it’s merely subject to deflation through the same valve, and given government interference, it deflates at least as slowly as it inflated, often more slowly.
Here in 2012, we’re still fully in the housing bubble. It’s deflating, but it’s not over yet. “Over” will be in 2015-2018. By then, those with money will find housing affordable, but nonsensical to purchase. By definition, THAT’S THE END of a speculation period. And then a protracted period of stagnation will occur. That’s likely to go on for at least 10 years, more like 15. So for appreciation’s sake, we’re looking at 2030 AD… a little less for more productive areas like NYC and LA, and a little more for East Moosefark, Idaho.
Making market value offers on houses purchased at the peak by people who can financially afford to carry the depreciating asset and rent it at a loss is a complete and total waste of time.
Do you think short sales are costing the lenders anything? I am serious. …And if not, why not lend to anyone with a pulse and do the whole thing over and over again? Just keep short-selling the same house evey couple of years until it actually becomes affordable.
Happy Easter.
the only won losing anything is the taxpayer.
In a new research note, Capital Economics points out that the value of the average mortgage loan has sharply increased in recent months, and banks are financing more of the purchase price for homes, increasing the loan-to-value ratio.
Remove government mortgage support, and we’ll see if this statement has any legs.
Not to worry, there are vast pools of money sitting out there in the Land of Low Return that can and will be tapped into.
Whip out a computer-generated spreadsheet showing a very colorful chart with an ugly solid line slanting downwards magically turning into a lovely dotted line slanting upwards (both lines backed by some carefully mined and selected historical data), and “explain” this chart to the multitudes of yield-hungry “investors” and - presto - a gigantic market is formed to purchase the otherwise unsalable.
I have been to the mountain and I have seen the Promised Line and I have observed that the Promised Line is the dotted one.
… and this dotted line is forever slanting upward.
I’ve been hoping to put a post together on some Fannie Mae stuff, but I’ll drop some of it in here. From the 2011 3rd quarter 10-q:
http://phx.corporate-ir.net/phoenix.zhtml?c=108360&p=irol-secQuarterly&control_SelectGroup=Quarterly%20Filings
pg 74
‘The credit profile of our acquisitions in the first nine months of 2011 was further influenced by our acquisitions of refinanced loans. Refinanced loans, which include Refi Plus loans, comprised 74% of our single-family acquisitions in the first nine months of 2011. Refinanced loans generally have a strong credit profile because refinancing indicates borrowers’ ability to make their mortgage payment and desire to maintain homeownership, but Refi Plus loans, which may have original LTV ratios as high as 125% and in some cases lower FICO credit scores than we generally require, may not ultimately perform as well as traditional refinanced loans.’
Pg 75
‘In the first quarter of 2011, our regulator granted our request for an extension of our ability to acquire loans under Refi Plus with LTV ratios greater than 80% and up to 125% for loans originated through June 2012. Approximately 19% of our total single-family conventional business volume for the first nine months of 2011 consisted of loans with LTV ratios higher than 80% at the time of purchase compared with 16% for the first nine months of 2010.’
‘On October 24, 2011, FHFA, Fannie Mae, and Freddie Mac announced changes to HARP. While HARP previously limited eligibility to borrowers with mortgage loans that had LTV ratios no greater than 125 percent, the new HARP guidelines remove that ceiling when the refinancing is into a new fixed-rate mortgage.’
‘The prolonged and severe decline in home prices has resulted in the overall estimated weighted average mark-to-market LTV ratio of our single-family conventional guaranty book of business to remain high at 78% as of September 30, 2011, and 77% as of December 31, 2010. The portion of our single-family conventional guaranty book of business with an estimated mark-to-market LTV ratio greater than 100% was 16% as of September 30, 2011 and December 31, 2010. If home prices decline further, more loans may have mark-to-market LTV ratios greater than 100%, which increases the risk of delinquency and default.’
Pg 81
‘The majority of our modifications in 2010 and the first nine months of 2011 were made to loans with a mark-to-market LTV ratio greater than 100%… As of September 30, 2011, the serious delinquency rate for loans with a mark-to-market LTV ratio greater than 100% was 15%, compared with our overall average single-family serious delinquency rate of 4.00%.’
Pg 90
‘The already weak financial condition of many of our mortgage insurer counterparties deteriorated at an accelerated pace during the third quarter of 2011, which increased the significant risk that these counterparties will fail to fulfill their obligations to reimburse us for claims under insurance policies…These six mortgage insurers provided a combined $75.7 billion, or 82%, of our risk in force mortgage insurance coverage of our single-family guaranty book of business as of September 30, 2011.’
And then on Pg 79, this bit of information puts all the LTV in a different light:
‘Second lien mortgage loans held by third parties are not included in the calculation of the estimated mark-to-market LTV ratios.’
but Refi Plus loans, which may have original LTV ratios as high as 125% and in some cases lower FICO credit scores than we generally require, may not ultimately perform as well as traditional refinanced loans.’
Translation: we know we are not pricing this product correctly, but we are doing any regardless, due to political pressures.
If home prices decline further, more loans may have mark-to-market LTV ratios greater than 100%, which increases the risk of delinquency and default.’
Translation: we clearly understand the relationship between underwater-LTV and increased defaults.
the serious delinquency rate for loans with a mark-to-market LTV ratio greater than 100% was 15%, compared with our overall average single-family serious delinquency rate of 4.00%.’
Translation: we know these loans are four-times as risky as traditional-LTV loans, and yet we write them and charge nothing for this increased risk regardless.
Wow. Great finds, Ben!
‘The already weak financial condition of many of our mortgage insurer counterparties deteriorated at an accelerated pace during the third quarter of 2011, which increased the significant risk that these counterparties will fail to fulfill their obligations to reimburse us for claims under insurance policies…
This tidbit is REALLY interesting. They know there is increasing risk here, and also take no action.
The funny thing is that the stock market has not been reflecting this deterioration at all. The one of these that I follow, MBI, is up roughly 50% since its low last Sept.
Did something magical happen to turn it around? Not that I have heard of…
“The already weak financial condition of many of our mortgage insurer counterparties deteriorated at an accelerated pace during the third quarter of 2011,”
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‘The already weak financial condition of many of our mortgage insurer counterparties deteriorated at an accelerated pace during the third quarter of 2011, which increased the significant risk that these counterparties will fail to fulfill their obligations to reimburse us for claims under insurance policies…These six mortgage insurers provided a combined $75.7 billion, or 82%, of our risk in force mortgage insurance coverage of our single-family guaranty book of business as of September 30, 2011.’
It must really suck to compete with govt-sponsored insurers who have a bottomless too-big-to-fail guarantee from the U.S. Treasury Department.
“Translation: we know these loans are four-times as risky as traditional-LTV loans, and yet we write them and charge nothing for this increased risk regardless.”
Charge nothing? I thought the U.S. taxpayer had it covered.
Charge nothing? I thought the U.S. taxpayer had it covered.
That seems to be the general idea…
I guess it seems like they ought to charge them a token more in the rate to account for the extra risk, though, no?
Suzy=twit
The Buzz
The fake housing recovery
By Paul R. La Monica
March 20, 2012: 12:40 PM ET
An ETF of home builder stocks is trouncing the broader market. But that may not necessarily mean housing has bottomed. Many of the stocks in the ETF are NOT builders.
NEW YORK (CNNMoney) — When is a homebuilder not a homebuilder? When it’s in an index of homebuilder stocks, of course!
The SPDR S&P Homebuilders (XHB) exchange traded fund has surged this year, leading many to speculate that the housing market has really, honestly, we’re not fooling around this time, cross our hearts and hope to die, bottomed.
The builders ETF is up a stunning 26% already this year. But here’s the thing. A big chunk of the companies in the fund that are doing well are not really builders.
Shares of Select Comfort (SCSS), manufacturer of the popular Sleep Number beds, is up more than 50% this year. It makes up 3.3% of the fund’s assets.
The ETF, which tracks the S&P Homebuilders Select Industry index, also includes many companies that have ties to the housing market, but whose fortunes may be improving for reasons beyond what’s going on with real estate in the U.S.
…
I actually made 20% on XHB in less than 6 months and dumped it. I assume your investments have been doing well too. I have been pulling some money off the table after the S&P hit 1400. Not sure what to do with it now though. Unfortunately, it looks like the government has been able to keep houses unaffordable in most areas, blocking millions of people from being able to purchase homes at affordable prices, and I don’t see it changing anytime soon. If the outcome of this health insurance mess is that I can get afforable healthcare insurance on my own at a reasonable price I will probably just retire 20 years early and rent the rest of my life, pursuing other interests. From what I have read though, it is unlikely to work effectively.
“I assume your investments have been doing well too.”
No complaints. In the black — far from six-figure losses incurred last year by many of my neighbors in the negative home equity wealth department.
I have losses on paper.
“I have losses on paper.”
I have losses on the table.
Mine are doing not-so-great.
I almost bought index puts last week, but waited one day too long.
If the outcome of this health insurance mess is that I can get afforable healthcare insurance on my own at a reasonable price I will probably just retire 20 years early and rent the rest of my life, pursuing other interests
This statement is a classic example of how the American health insurance system impinges on our liberty which is a violation of the social contract of our right to pursue happiness.
We can’t pursue other interests because we are afraid of the cost of a type of insurance? Now that’s just wacked. And happy Easter you all!
I’m tempted to “chuck” the security of traditional health-insurance, and go-it-alone at some point.
And with the clear knowledge that my health is solely my responsibility, and more time to take healthy actions, I’m guessing that I’ll be far better off.
This living in fear of health-cost-related improverishment is ridiculous, really.
A way to go is simply catatrophic coverage. Example a couple of years ago between jobs I had a catastrophic policy with for about $120 per month. (I posted this months ago that is was ~$100 per month. Someone called BS on it. I then checked my records. It was $118.) I am single late forties. $50K deductible. But of course under Obumercare this would be disallowed. Got to penalized (tax) me to pay for other people. Such as illegals (rather than deporting them) or old folks who did not plan for their old age. SURPRISE SURPRISE your body breaks down as it ages. Who would have thought. The sob stories (and they may well be genuine sob stories) about pre-existing conditions are the exceptions rather than the rule. Such people probably (I’ll concede I am not expert) could be covered without too much additional costs. It’s the other above mentioned groups that costs so much.
The sob stories (and they may well be genuine sob stories) about pre-existing conditions are the exceptions rather than the rule. Such people probably (I’ll concede I am not expert) could be covered without too much additional costs. It’s the other above mentioned groups that costs so much.
Life is simple and easy when you can make up your own facts.
Anon,
Wait until you have a recurring health issue, or one that requires several years to treat. That 50K deductible resets every year, and that’s before they stick you with denial-of-service, “reasonable and customary,” co-pays, and the fact that they’ll only cover 70% of your expenses after you’ve satisfied their hoops and hurdles.
Realistically, you’re throwing away that $120/month. Might as well pray for Medicaid.
Is QE3 in the bag now after last week’s jobs number?
Investing
4/06/2012 @ 11:56AM
Dismal Jobs Report Confirms Fed’s Suspicions
Sy Harding, Contributor
In his widely covered speech two weeks ago, Fed Chairman Bernanke said the anemic U.S. economic recovery seemed to be continuing, but that the Fed was suspicious of the positive employment reports of recent months. His actual words were “the better jobs numbers seem somewhat out of synch with the overall pace of the economic expansion.” Later in his speech he referred to the improvements in the jobs picture in relation to the anemic economic recovery as “a puzzle”.
The Fed’s suspicions seem to have been validated by Friday’s employment report which showed that only 120,000 new jobs were created in March compared to the consensus forecast of another increase of more than 220,000 jobs.
Added to the recent dismal reports from the housing industry indicating the promising housing reports of recent months were also only temporary, the jobs report certainly raises concerns regarding the sustainability of the U.S. economic recovery.
It also throws considerable cold water on hopes that the U.S. economic recovery will offset global slowdowns and prevent a threatening global recession.
The U.S. is just not that kind of economic powerhouse anymore.
Too many U.S. jobs were shipped overseas over the last ten years, to countries where wages are much lower. That grew the economies of those low-wage countries at the expense of the U.S. economy.
…
I only know about my little slice of the world - project finance, but business has picked up 40% this year. Probably due to a combination of low rates and efforts to get more work when I was slow. Are others feeling busier this year? Studies and published statistics really dont offer any real value to me as most ppl dont know enough to ask the right questions, or have the ability to separate cause and effect. I prefer to make decisions based on common sense and a sense of what is happening on the ground.
Business has picked up more than 40 percent for us also. We are in the manufacturing/ franchising industry. Last year was the second best year for us. I am noticing a shift in the type of clients that are going into business. The clients are mostly males who still have jobs or are laid off from sales/management jobs. They are looking to have more control over their finances as they seem to have lost faith in corporations.
It would have been better if the govt had just sent everyone a check instead of goosing the stock market for the rich.
It would have been better if the govt had just sent everyone a check instead of goosing the stock market for the rich.
I agree. W Bush got that one right.
I agree. W Bush got that one right.
The “free checks” were done for technical reasons, i.e., too many consecutive quarters in recession means the “D” word. IMHO, Dubya was protecting his legacy from the economic historians at the expense of future taxpayers.
too many consecutive quarters in recession means the “D” word.
Huh? How many?
Huh? How many?
That was a topic of debate among economists and dismal scientists, and they agreed to disagree. Pretty sad that in the “information age” many important economic measurements remain “fuzzy.”
Why don’t [you] Google “recession v. depression” for a definitive answer? I’d like to know too. Thanks!
Why don’t [you] Google “recession v. depression” for a definitive answer?
Because I don’t think there is one. I was curious if you had a source that showed one, and apparently you don’t.
he referred to the improvements in the jobs picture in relation to the anemic economic recovery as “a puzzle”.
So puzzling…you mean bailing out the rich and flooding the financial system with cash isn’t a long-term solution?
It was never intended as a solution. The jobs BS was just used to justify and provide cover for the theft and further concentration of the wealth. With global markets your country if foolish to have a strong middle class. They buy a bunch of stuff from other countries and demand higher pay and work conditions and environmental rules. What is going on now is a slow attempt to reduce the US to norm ie a massive pile of people living hand to mouth willing to do almost anything for a job and willing to live in filth.
Prospects for a higher gold price are apparently attached at the hip to QE3.
Agustino Fontevecchia, Forbes Staff
Bringing You The Bull And Bear Case From The Markets Desk
4/05/2012 @ 4:13PM
Gold’s Decade-Long Bull Run Is Dead, Gartman Says
Bernanke delivered the fatal blow to gold’s ten year bull market, according to Dennis Gartman. Gold has been in bear territory since the summer of 2011, when it topped out above $1,900 an ounce, with the latest post-FOMC sell-off inflicting irreparable technical damage, he says. UBS’ Edel Tully adds that markets’ no-QE-for-now realization will push gold even lower, probably down to $1,550 an ounce over the next month.
Over the last couple of years, gold’s precipitous, and continued, rise fueled causal theories, with some investors attributing it to U.S. dollar weakness, others to a safe haven trade in the face of widespread market turmoil, an inflation hedge, or whatever they could correlate a chart with. The yellow metal, though, appears as a Humean experiment in causality, marrying no single trend.
Gold has fallen nearly 9% since late February, trading at $1,628.5 an ounce on Thursday in New York. Gold went on a rollercoaster ride over the last 12 months, rising to an all-time high above $1,900 last spring, then tanking about 18% to December, then rising a further 15.5% to this February.
According to Gartman, gold’s latest price action confirms the trend line has clearly been broken, indicating we’ve been in a bear market for 12 months, since it peaked. In Thursday’s Gartman Letter, “in retrospect it does appear that gold has not been in a bull market but has indeed been in a bear market” since August 2011, when it peaked above $1,900.
“Since then,” he added “each new interim low has been lower and each new interim high has followed. How, we ask, had we missed that fact!”
The catalyst for that realization has been the Fed, specifically the latest FOMC meeting and Wednesday’s minutes from that meeting. In both, markets caught a glimpse of a more optimistic Fed that, while keeping the option on the table, has seen the necessity for a further round of quantitative easing reduced by the improved economic performance.
…
this guy is full of beans. one week he is bullish the next he is saying to get out, lame.
Is there a fundamental problem with limiting eligibility for federally-guaranteed mortgage loans to borrowers who are likely to be able to repay the money?
NEW RULES ON DEBTS COULD BITE SEEKERS OF FHA LOANS
Nation’s Housing
By Union-Tribune
12:01 a.m., April 8, 2012
Updated 3:23 p.m., April 6, 2012
A little-noticed mortgage rule change that took effect April 1 could create hassles for significant numbers of homebuyers who plan to use low-down-payment FHA financing this spring.
The change affects anyone with one or more “collection” accounts buried away in national credit bureau files. These include medical, student loan, retail and other debts reported as unpaid — correctly or incorrectly — by creditors and subsequently sent to collection agencies.
In a reversal of its previous policy, the Federal Housing Administration says it will no longer approve applications where the borrowers have outstanding collections or disputed accounts with an aggregate of $1,000 or more of unpaid bills. Previously, the agency took a more lenient approach, allowing lenders to review borrowers’ overall credit situation and approve applications despite the presence of such accounts.
…
If the buyer can’t muster $1000 to pay a bill that’s in collections, they have no business buying a house.
+infinity.
It blows my mind that they were ever ignoring accounts in collections, and shoveling mortgages at manifestly non-credit-worthy households.
In the old days, you would have to document that such accounts had been paid in full in order to avoid having them held against you.
At least they aren’t ignoring them anymore. Baby steps…
That’s what I was thinking.
Perhaps some of the posters here who live inside the beltway could explain the tone of Harney’s article, which suggests there is something wrong with a system which does not allow new federally-guaranteed loans to be made to people who never paid off other moneys they owe.
Why would anyone suggest that lending to deadbeats is a sound underwriting practice?
Why would anyone pretend that denying deadbeats new federally-guaranteed loans is some kind of a mistake?
Please enlighten this outside-the-Beltway thinker if you have any insights to share.
“These include medical, student loan, retail and other debts reported as unpaid — correctly or incorrectly “
It’s all well and good to whale on the deadbeats. But this is another weapon to be used against the innocent as well. Unfounded claims now attain the weight of truth, forever and ever.
Not to mention identity theft. I am sure some will have no sympathy for anyone who is on Medicaid, but this type of activity is not imited to Medicaid beneficiaries.
http://www.seattlepi.com/business/article/Utah-Medical-records-breach-more-extensive-3464695.php
“But this is another weapon to be used against the innocent as well.”
Is it that hard to sort out what reportedly unpaid debts are accurate and which are a mistake?
Have you ever had to correct your credit report?
USC forecast: Rents expected to climb in SD
Written by Lily Leung
1:39 p.m., April 4, 2012
Average rents in the San Diego area rose 4.3 percent in 2011 and are expected to rise at a slower rate in the next year, according to a preview of USC’s multifamily report on Wednesday. Vacancy rates locally also are expected to go up.
Some of the factors in play that may impact rental rates this year include high gas prices and an overall decline of San Diego home prices, based on a presentation by Tracey Seslen, an assistant professor of clinical finance at USC’s school of business.
“Things are not doing well for SoCal for the first couple of months in employment; we have to keep an eye on that,” said Seslen, who presented a sneak peek of the multifamily report from USC’s Lusk Center for Real Estate, at the Lodge at Torrey Pines on Wednesday.
The report said vacancies in the San Diego area are expected to rise 0.7 percentage points over the next year and 1.3 percentage points over the next two years.
…
student loan bubble popping?
http://www.americanbanker.com/issues/177_63/us-bank-student-lending-cfpb-1048016-1.html
Poof goes new household formation.
Seriously junior will live with Mom and Dad for 10-20 years now. Might even start their family in Mom and Dad’s house.
How to find housing help that’s free, reliable
Written by Lily Leung
1:11 p.m., April 6, 2012
Borrowers on the brink of losing their homes or are in need of advice often face unhelpful lender reps, or worse yet, unscrupulous companies who take up-front fees, promise housing relief and ultimately deliver nothing.
So, where can frustrated homeowners in San Diego County turn for information that’s spot-on, frank, and best of all, free?
…
“Borrowers on the brink of losing their homes or are in need of advice …”
And are, oh, so very desperate.
“… often face unhelpful lender reps, or worse yet, unscrupulous companies who take up-front fees, promise housing relief and ultimately deliver nothing.”
.. and these unscrupulous people collide with the desperate and act to keep the desperate willingly and forever broke and willingly and forever desperate.
There ain’t nuttin’ new under the sun.
I hear from the housing crime syndicate that bright sunny days are here on our doorstep…. yet sales are at 1997 levels. I see new listings at wacked out (2006+) prices….. yet sales are at 1997 levels. I see falling prices…. yet sales are at 1997 levels.
Here’s what I know
1) Realtors Are Liars
2) Journalists and the media are Liars
3) Economic opportunity is elusive, thus homedebtors who wish to sell are deluded liars.
4) Builders are adding new inventory and selling at prices under resale housing.
Comment by Muggy
2012-04-07 04:36:59
“It looks like all the FBs in my life are getting brand new houses and short-selling the house that made them an FB.”
“My wife’s cousin — the one who bought for $200k in Odessa and did an SS for $68 just bought in Land ‘O Lakes for $139k (FBs paid $290k).”
Deadbeats are buying. Now I hope this person demanded to know from the lender of this $139k loan and who would ultimately be the owner of the loan before they accepted the money. Again. Rebeat, Rebeat.
Heads I win
Tails you lose
Buy a car and take a cruise
It gets worse, Jeff, I just don’t have enough time to write it all up.
Basically all of our 2005-2007 buyer friends either now own two homes, and completed buy and bail.
ALL.
Oops
“own two homes, OR completed buy…”
Buy-and-bail is the rational financial strategy to undertake, if you are way underwater and still want to be a loanowner.
We should not be surprised when people engage in behavior that benefits them, or that they have been incented to do, or both.
“We should not be surprised when people engage in behavior that benefits them, or that they have been incented to do, or both.”
I am not suprised I am pissed. We should not be surprised when the PTB create a Moral Hazard and some people are pissed.
Is Mortgage-Debt Forgiveness Worth the ‘Moral Hazard’?.
April 2, 2012, 11:51 AM.
By Nick Timiraos
It’s been one of the most vexing problems of the mortgage crisis: Do policies to restructure loans for underwater borrowers encourage homeowners who don’t need help to default?
The federal regulator for mortgage-finance giants Fannie Mae and Freddie Mac said creating such a “moral hazard” is one of his top concerns now that the Treasury Department has offered to subsidize the costs of debt forgiveness for loans backed by the firms.
“What I’m really worried about is what happens if you put an incentive shift out there that says, ‘If you can demonstrate hardship, you can have your debt forgiven,’” said Edward DeMarco, the acting director of the Federal Housing Finance Agency, in an interview with The Wall Street Journal.
There’s been little research on the subject, in part because the speed and depth of the housing price-crash of the past five years has little national precedent.
One study suggests such concerns aren’t without reason. In 2008, Bank of America agreed to modify mortgages in a settlement related to allegedly predatory lending practices at Countrywide Financial Corp. A study published in January 2011 by economists at Columbia University concluded that Countrywide’s relative delinquency rate “increased substantially…during the months immediately after the public announcement of settlement.”
Moreover, the borrowers most likely to default after that announcement “were the borrowers least likely to default otherwise.”
http://blogs.wsj.com/developments/2012/04/02/is-mortgage-debt-forgiveness-worth-the-moral-hazard/ - 69k -
We should not be surprised when the PTB create a Moral Hazard and some people are pissed.
Fair enough, jeff—I am officially “not surprised” that you are pissed.
Frankly, I am pissed too. And we have every right to be.
Is Mortgage-Debt Forgiveness Worth the ‘Moral Hazard’?
The top policy makers have let the credit genie out of the bottle, and you can bet that behind closed doors they’re in panic mode trying to contain the losses and get the genie back in the bottle. Adding to problems are an historic demographic cohort transitioning into retirement and certain health-care expenses.
I know 2 guys who did the same thing and it seems like none of them are concerned with the “rule of law” when they are getting the loans, just when they don`t pay them back.
But I figured out why gun sales are up. The banks need them to make all the Deadbeat victims sign up for another loan.
all of our 2005-2007 buyer friends either now own two homes, and completed buy and bail
Gross wealth inequality turns country’s economies into rackets.
We used to laugh at banana republics because of this fact.
Who’s laughing now? A few few of the “banana republics” are laughing at us now and I’m not even talking politics where they think American politics have gone totally insane. The Republican debates are a classic example of what they consider insanity.
There’s a difference between insanity and criminal cynicism.
Basically all of our 2005-2007 buyer friends either now own two homes, and completed buy and bail.
Bail is good.
That’s better than rent ‘em out, withhold the mortgage payments, and use the cash for fun, and stop by your place to show off the vacation photos on the iPhone.
“1) Realtors Are Liars”
“2) Journalists and the media are Liars”
“3) Economic opportunity is elusive, thus homedebtors who wish to sell are deluded liars.”
“4) Builders are adding new inventory and selling at prices under resale housing.”
When you’re lying
When you’re lying
The whole world lies with you
When you’re lying
Oh, when you’re lying
The sun comes shining through
But when you’re honest
You bring on the rain
So start some lying
Be happy again
Keep on lying
’cause when you’re lying
The whole world lies with you
But when you’re honest
You bring on the rain
So stop your payments
Be happy again
Keep on lying
’cause when you’re lying
The whole world lies with you
Happy Easter everybody.
2) Journalists and the media are Liars
The media lies but I think a lot of journalists are pretty dumb.
“I think a lot of journalists are pretty dumb.”
I think a lot of journalists have editors who are pretty smart in that the editors understand just who it is that pays their bills and thus they are the people they need to satisfy.
The journalists who do not go along get replaced.
“I think a lot of journalists have editors who are pretty smart in that the editors understand just who it is that pays their bills and thus they are the people they need to satisfy.”
Source: NBC producer fired over Zimmerman 911 call
By FRAZIER MOORE | Associated Press – 15 hrs ago..
NEW YORK (AP) — NBC News has fired a producer for editing a recording of George Zimmerman’s call to police the night he shot Trayvon Martin, a person with direct knowledge of the matter said Saturday.
The person was not authorized to talk about the situation publicly and spoke on the condition of anonymity. The identity of the producer was not disclosed.
An NBC spokeswoman declined to comment.
The producer’s dismissal followed an internal investigation that led to NBC apologizing for having aired the misleading audio.
NBC’s “Today” show first aired the edited version of Zimmerman’s call on March 27. The recording viewers heard was trimmed to suggest that Zimmerman volunteered to police, with no prompting, that Martin was black: “This guy looks like he’s up to no good. He looks black.”
But the portion of the tape that was deleted had the 911 dispatcher asking Zimmerman if the person who had raised his suspicion was “black, white or Hispanic,” to which Zimmerman responded, “He looks black.”
http://news.yahoo.com/source-nbc-producer-fired-over-zimmerman-911-call-160330268.html -
Just finished doing my taxes.
My head is spinning because I had to read some new forms. When I finished parsing everything, it was about 6-7 lines of straightforward arithmetic in Excel.
What a crock!
Oh well. It’s finished which is cause enough to celebrate.
It’s shocking how hard to parse some of the tax legalese can be…
Doesn’t it seem like the IRS could just make a nice Excel spreadsheet available to the taxpayers?
Talk about a mandate. You want everyone to have to buy Microsoft Excel to be able to do their taxes?
I didn’t mean anyone should be _forced_ to use Excel.
Just that it would make life simpler for a vast array of folks who do have computers and Excel already.
You’re welcome to stick with paper forms…
I just finished helping a friend do 2011 and 2008. It took 4 hours even though she had done almost all the book keeping ahead of time. The interaction of the child tax credit (not refundable) and the additional child tax credit (refundable) is obscene. Of course, if they didn’t have to provide special instructions for people with untaxed combat pay, certain minister pay, etc. it would be a lot easier. And I had completely forgotten from last year that the EITC is calculated entirely on a worksheet. The only info you put on the schedule is the stuff that confirms your eligibility.
Mine take a tiny fraction of the time.
Home sales tracking made easier
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 8:38 p.m. Friday, April 6, 2012
Low-ball offers are a regular occurrence for downtown West Palm Beach Realtor Susan Hoffman.
A homebuyer, especially someone from out of state or Canada, calls after hearing prices in Palm Beach County are rock bottom. February’s median sales price for a condominium, after all, was $75,050.
So they’ll bid less.
But in Hoffman’s sales area - ZIP code 33401 - the median condo price in February was $135,000.
“It’s very frustrating because people are online reading articles about Palm Beach County prices, but you can’t just look at the entire county and lump it all together,” said Hoffman, who handles mostly condo sales. “Maybe the median price is $75,000, but not in 33401.”
Still, it’s hoped that more detailed sales data will help Realtors and their clients navigate the market better.
Hoffman, the downtown West Palm Beach Realtor, said in late March that she had only two condo listings for under $200,000, and fears many people already have lost out on buying cheaply.
“Most of our buildings have flushed out of foreclosures and when the listings come out, they’re coming out high,” she said.
http://www.palmbeachpost.com/money/real-estate/home-sales-tracking-made-easier-2288130.html - 76k -
Why wasn`t West Palm Beach Realtor Susan Hoffman asked about this headline that came out the same day by the same reporter?
Palm Beach County foreclosure filings surge in March
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 6:09 p.m. Friday, April 6, 2012
WEST PALM BEACH — Lenders filed to foreclose on 1,502 Palm Beach County homeowners in March, a 65 percent increase from the same time last year and up 25 percent from February.
The surge in new filings was called “dramatic” by Palm Beach County Clerk and Comptroller Sharon Bock, who released the numbers Friday. But it was a bump that analysts predicted would follow the $25 billion settlement between lenders and the nation’s attorneys general.
Palm Beach County foreclosure filings surge in March
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 6:09 p.m. Friday, April 6, 2012
14 COMMENTS
Long overdue. Clean up the garbage the deadbeats left behind, and let’s get this show on the road. While you’re at it, get the lousy lawyers off TV and radio that lure in the deadbeats, promising them to fight to keep their ill-gotten homes. These creeps are the worst of the worst.
Carol
7:29 PM, 4/6/2012
Right on, Rose…preach it sister….they should saw his leg off!!!!!
FLAMINGO PARK QUEEN
7:40 PM, 4/6/2012
We have not paid our mortgage in three years and are still in our house. We have saved over $75,000 in cash. When we are forced to move we will have a nice downpayment on a better house. Call us deadbeats but we’re laughing all the way to the bank , sorry I mean Laughing at the bank. We have made back our initial deposit on the house that we would have lost otherwise.
No Pay, No Go
8:02 PM, 4/6/2012
The banks have acted stupidly. Instead of writing down the principal, they insist on foreclosing, and getting no more when they sell the house than they would have gotten on the writedown. Meanwhile, they’ve put a family on the street, incurred tons of maintenance and legal costs, and depressed the market. Idiots!
Jay S
8:26 PM, 4/6/2012
No Pay, No Go, good luck getting a mortgage on your new house after defaulting on your old one.
Maybe in seven years….
Ben
8:29 PM, 4/6/2012
(I think seven years Muggy’s wife’s cousin may have shown you do not have to wait seven years to get another mortgage which I believe falls under Heads I win Tails you lose.
Here’s something I’ve been going over for a few days:
‘On March 22, 2012, the Fed chairman told students at George Washington University: ‘The decline in house prices by itself was not obviously a major threat.’ To clarify this statement, Bernanke was responding to a question about the housing bubble. He was addressing the aftermath, when prices fell. He concluded that falling house prices, by themselves, were not obviously a major threat to the economy, and, presumably to the financial system that serves to finance that economy.’
‘On March 23, 2012, the man running the Federal Reserve, who not only could not see the housing bubble but can not rotate his mind to believe anyone else did, is ‘100% sure’ he will extract the world from a money-printing escapade that has increased central bank balance sheets from about $4 trillion in 2008 to about $13 trillion in 2013 (these numbers are from memory), and not destabilize the world price structure.’
‘The man was either unaware of how housing finance was conducted in the U.S. during bubble years or considered it irrelevant. As a Federal Reserve Board member (from 2002 to the present day, with a short sabbatical as economic adviser to President Bush) Bernanke completely missed the coming mortgage collapse. He admits that. He also claims nobody else saw it coming. The Federal Reserve chairman, like all cloistered academic economists, would never condescend to read a newspaper, so would not see what the average bartender knew. Anyone reading the following knew that houses were the new momentum trade that replaced the dot.com fandango:
‘August 31, 2001, Wall Street Journal, Headline: “Is Appraisal Process Skewing Home Values?” We read: “Appraisers are frequently encouraged to fudge the numbers.” From Mark Vitner, an economist at First Union Corp., the “upward spiral of prices becomes self-reinforcing.” The Wall Street Journal reporter concluded: “Some believe home prices are beginning to act like technology stocks’
‘March 28, 2002, Economist, cover story: “The houses that saved the world”
‘July 22, 2002, Business Wire, Reporting on recent testimony of Federal Reserve Chairman Alan Greenspan: “We’ve looked at the bubble question and we’ve concluded that it is most unlikely.” Same article, quoting National Association of Home Builders Chief Economist David Seiders: “The time has come to put this issue to rest. The nation’s home builders have said it, the Realtors(R) have said it, and now Alan Greenspan has said it once again, in no uncertain terms: there is no such thing as a current or impending house price bubble.”
‘The 1980s savings-and-loan catastrophe left the Southern California mortgage market in a miserable state. The S&L boom was the product of relaxed regulations, funny finance, and dreadful accounting - all of which should have been evident to Ben S. Bernanke in 2002. L. William Seidman headed the Resolution Trust Corporation (RTC), which closed the bad banks and disposed of the busted real estate at fire sale prices. We should have followed the same blueprint today, but have done exactly the opposite. Thus, instead of clearing the market, we have millions of houses floating in limbo.’
‘Upon completion of his assignment, Seidman shut down this federal agency. He was very critical of Bernanke’s (and Paulson’s) TARP (Troubled Asset Relief Program). Comparing TARP to the RTC: “What we did, we took over the bank, nationalized it, fired the management, took out the bad assets and put a good bank back in the system.” Comparing Seidman’s purging of bad banks to Bernanke’s handling of the Too-Big-to-Fail Banks (which hold much larger quantities of assets today than in 2008), is, again, cause to believe Bernanke has no idea what he is doing.’
“that has increased central bank balance sheets from about $4 trillion in 2008 to about $13 trillion in 2013″
That`s a lot of granite kitchens.
“National Association of Home Builders Chief Economist David Seiders: “The time has come to put this issue to rest. The nation’s home builders have said it, the Realtors(R) have said it, and now Alan Greenspan has said it once again, in no uncertain terms: there is no such thing as a current or impending house price bubble.”
I went to rehab 24 years ago and have remained clean and sober ever since so evidently what ever this guy was taking was not available to me at that time. Maybe it was ecstasy.
Dizziness or Dependency? I am concerned about a friend of mine …
He took maybe 15 ecstasy pills on a long weekend (3-4 days). The next day he expressed to me a feeling of dizziness and disorientation. I reminded him that …
http://ecstasy.org/qanda/q76.html - 13k - Cached - Similar pages
Maybe they are all on ecstasy.
From http://ecstasy.org/qanda/q76.html - 13k
Further Expert Reply
Sounds like a problems with eye movement or blood pressure control but not severe enough (blood pressure problem) to get rebound flushing. His blood pressure needs to be checked properly.
This person is becoming psychologically dependent. The easy explanation is that they are rationalising their continued use of a drug that has scared them by making them ill by somatisising (ie turning physical) anxiety and guilt about continued use. I should not do these they are bad for me but it’s OK to do them because when I don’t etc.
They should stop immediately, have their blood pressure checked (almost certainly going to be OK), and find some other way to release all this introverted concern.
“He also claims nobody else saw it coming.”
What about Robert Shiller, who published an edition of this book in 2005
updated to show the most ginormous runup in housing prices in the history of modern finance, just before the housing market collapse began?
What about Edward Leamer, who showed rents were already too low relative to home prices to be sustainable back around 2003?
What about The Economist magazine, which was reporting on overvalued U.S. housing prices way back in 2003?
What about all the long-term HBB posters who made predictions of a housing crash which seemed implausibly dire, only to see them fully materialize?
I always like to come back to this article from the FRBNY as a perfect example of “nobody could have seen it coming” type thinking inside the cloister of the Federal Reserve. I believe that Timothy Geithner was the president of the FRBNY when it was published.
FRBNY Economic Policy Review / December 2004
Are Home Prices the Next “Bubble”?
Jonathan McCarthy and Richard W. Peach
• Home prices have been rising strongly since the
mid-1990s, prompting concerns that a bubble
exists in this asset class and that home prices
are vulnerable to a collapse that could harm the
U.S. economy.
• A close analysis of the U.S. housing market in
recent years, however, finds little basis for such
concerns. The marked upturn in home prices is
largely attributable to strong market
fundamentals: Home prices have essentially
moved in line with increases in family income
and declines in nominal mortgage interest rates.
• Moreover, weaker economic conditions are
unlikely to trigger a severe drop in home
prices. Historically, aggregate real home
prices have fallen only moderately in periods
of recession and high nominal interest rates.
• While such conditions could lead to lower home
prices in states along the east and west
coasts—areas where an inelastic supply of
housing has made home prices particularly
sensitive to changes in demand—regional price
declines in the past have not had devastating
effects on the broader economy.
“Thus, instead of clearing the market, we have millions of houses floating in limbo.”
No biggy, I guess?
Videos surface of the GSA junket in Vegas.
http://content.usatoday.com/communities/theoval/post/2012/04/embarrassing-gsa-videos-surface/1
But gosh no, can’t have any “draconian” budget cuts. This not anti government per se just anti bureaucracy. Is there any larger bureaucracy in the US? Also gives a black eye (a real shiner) to the vast majority of responsible fed employees. Though I think they’re overpaid. Lower pay used to be the trade off for the much more secure employment. Now it seems government workers get equal or better pay plus the greater security. Banking used to be the same way - low pay and greater security, esp at the executive level so my retired friend from banking tells me.
Lower pay used to be the trade off for the much more secure employment. Now it seems government workers get equal or better pay plus the greater security.
Because the invisible hand pimp-slapped the middle-class.
But it’s invisible, so McJobs didn’t hurt as much as if we could have seen it coming.
For centuries the monetary affairs of the Roman Republic had rested in the hands of the Senate. These elite liked to present themselves as steady and fiscally conservative, but as the 19th-century historian of Rome Wilhelm Ihne remarked:
“Though individually the Romans were exceedingly economical and careful in the management of their private property, the state as such was extravagant and careless with the state revenue. It was found impossible to protect the public property from being plundered by private individuals, and the feeling of powerlessness resulted in reckless indifference. It was felt that revenues which could not be preserved intact and devoted to the common good were of no value to the state and might as well be abandoned.”
1800 year later…….
Last week Palmy posted “Management fees! Management fees!” as a response to one of my posts about what ultimately happens to invested capital.
I think Palmy nailed it. But I want to exted the management fee term a bit to include government officials and the officers and directors of our corporations.
If you think of those running various government entities and corporations as collecting management fees as opposed to collecting salaries then I think you are close to understanding what is actually going on.
If collecting management fees - and management costs - is the driving force then one is endeavored to expand his management fees and costs as much as possible, something he cannot easily do with salaries.
Salaries are fixed; Management fees and management costs are not. Bonuses, conventions to Vegas, rides on the corporate jets, stock options and grants, etc. are fees and costs and make up a big chunk of the perks and benifits of control outside and way beyond of what mere salaries offer.
So. Bubbles. Any eggs?
New potatoes, chives, fennel, and asparagus from the garden plus a few guinea eggs equals the perfect yeaster frittata. I wish you the same. Yum!
Sounds delicious. You are arousing fantasies about a future HBB cookoff…
Depths of foreclosure crisis difficult to measure
WEST PALM BEACH, Fla. (AP) – When Frank Verna pulls up to a battered, four-unit apartment building at lunch hour, he’s just over a mile as the seagull flies from the gated, oceanfront palaces of South Florida’s wealthiest.
“Just watch your step,” the real estate agent says, parting bushes grown across the building’s entry path. Beyond is the darkened doorway to Unit 1 — missing its door.
“I think there’s a dead animal over there,” Verna says, aiming his flashlight at brown fur in the center of a living-room floor blanketed in garbage. The stench of whatever’s in there is potent. Nobody is home.
Verna is here because he specializes in distressed properties and Florida, thrashed by the mortgage crisis, has thousands. But figuring out just how many is not simple.
Economists at CoreLogic, a California company that analyzes mortgage data, chart 1.6 million homes in shadow inventory nationwide. They count homes not listed for sale, with loans at least 90 days overdue, in foreclosure or bank-owned.
Others say the shadow is much bigger. Laurie Goodman of Amherst Securities in New York says it covers from 8.3 million to 10.4 million homes. Goodman’s analysis includes homes with loans at least 60 days overdue, those that were delinquent before and are likely to default again, and thousands whose owners are making payments but may give up because they owe more than homes are worth.
Lenders have good reasons to delay. Empty homes require upkeep and claiming ownership means shouldering taxes and fines. As long as a case in still in process, loan servicers continue to collect their fees.
A recent check of records in this one county found more than 10,000 cases in which a bank secured a final judgment more than a year ago, yet there has still been no change in title, says Michael Olenick, a West Palm Beach computer programmer who tracks the system.
Then there are houses like one where Peter Gardner answers the door. Gardner, a former laser technician, bought it for $44,000 in 1995. After a car accident left him disabled, he says he tried to catch up on payments, but couldn’t meet demands to pay accumulated late fees. The lender filed foreclosure papers three years ago. Gardner, who says it’s been years since he’s made a payment, tried for a loan modification, but every three months was told to reapply. Last fall, the lender claimed his house at auction for $500.
It’s now owned by Bank of America, whose representatives still call. “They want me to live in the house, mow the lawn, keep the air conditioning on so the fungus doesn’t grow in it,” Gardner says. He tells callers he no longer owns the place, but they don’t believe him.
“Somebody went and sold my house and they’re telling me I’m not even in foreclosure,” Gardner says. “I was mad crazy with it and every time you just have to laugh. Otherwise, you’d just kill yourself inside.”
http://www.usatoday.com/money/economy/housing/story/2012-04-01/foreclosure-crisis-florida/53929010/1 - 64k -
I won`t post it because I know people don`t like it but Peter Gardner who bought his house for $44,000 in 1995 may have had an easier time catching up on payments after his his car accident that left him disabled if he had not cash out refied to the tune of $150k.
Got stagflation?
China inflation accelerates
March CPI quickens to 3.6% despite slowing economy
China’s consumer prices climb more than expected in March, narrowing the leeway for new rounds of policy easing by Beijing.
…