Bits Bucket for July 2, 2012
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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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Six years ago, when I visited the UK, the “buy-to-let” mania was in full bloom.
Seems it still is today!
Why buy-to-let homes are a worthy investment
UK properties can provide a reliable income for expats.
High Street Kensington, London
With desirable areas such as High Street Kensington, London continues to be a good place to buy Photo: Alamy
By Suzi Dixon
9:14AM BST 15 Jun 2012
Buy-to-let properties are an attractive source of income for expat investors and looking in your home country is a particularly alluring prospect. A home back home provides a safety net for Britons abroad, and a diverse portfolio can also form part of your pension.
Holiday lettings often benefit from a coastal location, but it’s the capital that remains truly popular for long-term landlords.
London house prices have defied the slump, in part due to the interest from international buyers. The capital is currently the fourth most expensive place to buy in the world, according to figures from Savills, and the sales keep on coming. More than £3.3billion was invested in London property last year.
Phil Cox, the owner and publisher of What Boat? International magazine, currently has three properties in the UK, one of which has been let for more than 15 years. “I’ve had success with properties with good transport links to London,” he said. “It’s also important to buy in an area you know well.”
…
It’s a safe haven thing.
Wealthy investors seeking a ’safe haven’ from the eurozone crisis are pushing up the price of luxury homes in central London - although a euro break-up could send prices crashing down, research has found.
http://news.sky.com/story/23469/euro-crisis-fuels-luxury-house-price-rises
Hey, everyone. Not dead or wilted in heat stroke. I never lost power which I certainly hope is also the case with all my fellow mid-atlatic HBB people. However, I did lose internet/cable/phone access late Friday night and didn’t get it back until sometime this morning. I think Comcast has their transmission station somewhere in or around Silver Spring and there were a lot of downed trees in that direction.
Walking back from the theater last night, I could see all the stores on Wisconsin had power. All the side streets had street lights. But the street lights and traffic lights on the main road were all out. Very weird.
So, is everyone else all right?
By the way, oddly enough I don’t blame Comcast for this. I blame Pepco. Idiots. No one in this area seems to understand that while trees are very pretty, they don’t belong in the same line along the side of a road with power lines. Cutting a small whole through the middle of a tree is not enough. Power lines should not be surrounded by branches. Take down the darn trees. Plant a new one on the other side of the sidewalk and several feet in.
Good to hear your ok polly.
Thank you. I am very fortunate. It was HOT this weekend. Pepco anticipates restoring power to 90% of customers by Friday. Which means 10% may be without power for over a week. Insane. When I left the office on Friday, it was still 103.
Did Oxide check in over the weekend. I think she might be in one of the areas with a lot of tree damage.
C’mon down to Florida and cool off, y’all!
Yep, oxide was here posting over the weekend, so presumably she is safe and sound…
She was at Starbucks powering up however, so I do think she lost power.
Horrible stuff - how the heck do you sleep when the house is 100 degrees?
Hope everyone is staying cool and sane.
how the heck do you sleep when the house is 100 degrees?
Looks like it’s in the mid/upper 70s at night, but probably very humid. I’d head for the basement, or camp in the backyard.
how the heck do you sleep when the house is 100 degrees?
I can answer that—I’ve slept in no-air-conditioning turn-of-the-century old houses in Louisiana in the summer. Hot, _and_ humid!
Ceiling fans work great: air moving across your sweating skin does cool you. Any old fan pointed right at the bed would probably work equally well. Also, cover as little as possible of your body with the sheet; I ended up wearing it like a loin-cloth. Tall ceilings help too; it’s why all the old houses had tall ceilings, and transom-windows above the doors, so you could vent the heat that rises to the ceiling.
And give your body some time to adjust. The first couple of nights are miserable, but like anything, you become somewhat accustomed to it with time.
I’m sure it is harder if you are elderly, though. I was fairly young (high-school-aged) at the time.
But don’t those ceiling fans need electricity?
Ooooo, looks like I totally missed the point!
Ok, I would replace the ceiling fan with “wet washcloths”.
The basement would probably be the best bet, if you have one…
Forget cuting down the trees, move the power lines. Put them under the ground.
I so agree with you.
It has been hot here too, but with the lake being cool, it’s easy to take the edge off. Just being on the water brings the temp down 10 degrees.
Woe to those in the asphalt jungle when there is any disturbance in supply.
My new frige is running and yesterday we filled the freezer with tasty perishables. Three cubic feet worth! Getting ready to push away from the dock for a couple of months.
I suppose it should read “fridge”.
Monkey’s + trees, it’s a long tailed story
Put them under the ground ??
No utility company could afford to do that unless you would be confortable with tripling your utility bill….Massive costs associated with doing that….
Offset by the cost of repairing and/or replacing lines every time a storm comes thru?
Not to mention the removal of all those ugly power poles and lines. Or keeping the copper thieves at bay, if we become “Zombie Nation”
He’s right. Big $$$ to retrofit buried service in established neighborhoods. New encased ductbanks, new service cable pulls, pull manholes every so many feet of primary service cable, new pad mounted x-formers, new triplex to house and new meter, etc. There is just too much $hit in the ground to get any production rates not to mention the cost to demo all the aerial facilities.
I think power lines transmit electricity less efficiently underground.
They’ve been putting all the lines underground here, block by block. It’s a drag when they dig up your street at 7 am every day, but our block is done now and it looks so much better.
The kids were excited about the possibility of flying a kite down the middle of the street, although I didn’t think that was the best idea.
Take down the trees? Move the power lines!
Glad to hear you’re OK. Had some other friends and acquaintances in that things path. One flew out the next day (just barely), one dodged the bullet near its origin and a couple in its direct path managed to get their power back by Sunday.
60mph straight winds with 90mph gusts in some places. 100+F in the upper midwest. Holy moly.
Sorry. The trees don’t belong that close to the road. The early reports after the storm said that one of the local hospitals had both of its main access roads blocked by fallen trees. The trees are beautiful. Love them. They need to be further back from the road. I’d love to see all the power lines underground, but that isn’t the only problem. People in this stupid part of the country somehow think that trees don’t have a life cycle or that they can be healthy when most of their root system is underneath asphalt. Move the trees. Take down the trees and plant new ones in a better place. If you are going to live in an area with killing levels of heat, you have to protect the power distribution system better. We were on mandatory water restrictions all weekend because the main pumping stations didn’t have any power and they wanted to keep the water pressure up in case of fires.
Or Polly have your own back up generators…my brother has 2 and he had to use it a couple of times last year like during irene….worked great kept the refridge, ac, microwave, computers but then he is an electrician.
Most urban planning is a disaster in every way.
“Most urban planning is a disaster in every way.”
Central planning and control doesn’t work well? Perish the thought. It works great for the economy, the banking system… must just be a random anomaly that putting the central committee in charge of land use planning doesn’t work.
I guess polly doesn’t care that trees probably lower the temperature ten degrees by being around, and that moving the trees back from the power lines enough that they don’t fall onto them would either put the trees in someone’s yard so they’d either fall on the house or on the power line to the house. That the entire problem could be solved by moving the lines underground (because one cannot move trees underground) seems to mean little.
Costly process yes. But, hey, that’s why Pepco executives get the big bucks.
IAT
You should read what I said. I love having the trees. They don’t belong that close to the road. And they definitely shouldn’t be used to disguise the power lines. There are power lines. If they are above ground they are ugly. Tough. Trying to hide them by placing huge trees in locations where it is clear you are using the largest limbs of the trees to hide the power lines is a disaster. The trees will lower the temperatures just as well set back from the roads and the power lines.
Polly, It’s not PEPCO that plants the trees but other groups that want pretty cities. Lots of new develop most places requires trees. But so many of the wrong species are uses. In Fairfax the city itself plants swamp maples. Fast growing lots of coverage and very invasion roots. Maybe the city likes the perpetual work it creates
Tell me about that perpetual work thing. After paying an arborist to trim My Favorite Tree last December, I’m finding that its branches are already caressing my roof again.
Leaving aside the romantic possibilities between My Favorite Tree and the house, it’s not a good idea to have branch-to-structure contact. So, hello arborist. Again.
Do not blame the Utility for the trees around power lines. Blame your tree hugging neighbors and local government. It would be way less expensive to permanently remove trees then have crews cut them back in a 5 year cycle. Remember, power deliver is a business and if they could save money they would.
Underground cabling cost about 3 times as much as overhead for distribution cables. For transmission cables (115kV and above) the cost is about 5 times as much. This cost would be directly transferred to the rate payers. Be careful what you wish for. Also, cables have a somewhat finite life span. They usually last about 30-40 years before cable failures happen. This is due to the lack of heat dissipation which causes failure in the cable insulation. Overhead lines can last indefinitely since they are insulated by the air. It is easy to critique when you don’t know all the facts. I work in the power industry and I usually stay out of the finance discussions. I just read and try to learn a thing or to but I have to respond when people post pure nonsense about a field I know about.
The above comment was meant as a general response to the thread. Not meant as a response to Az Slim.
All tree care has now shifted to the home owners here in SF. The city used to do a lot of the pruning, etc. of street trees.
It’s a big deal, esp. if you live on a block with a lot of big old trees. Expensive.
I have to laugh at this heat “crisis”. Every summer it’s the same thing. IT’S HOT IN JULY!! And every summer the media acts as if it’s never been hot in July before. Of course, if this “crisis” were happening in N. Dakota or Utah, it would be completely ignored by the media. But it’s happening in DC, therefore it’s front page news and 24/7 coverage on the alphabet networks.
By the way where was the 24/7 coverage of the record rainfall we got in March that caused a ton of flooding and damage to multiple homes, bridges and several deaths? Never heard of that? Of course not. It happened thousands of miles away from NYC and DC, so according to the MSM it’s like it never happened.
You must keep missing that important word in EVERY report: “record”
Yes, sometimes it’s REALLY HOT in July.
Usually it’s 102, this year it’s 104. My goodness, how will we ever cope with the hear?!??!?
I’m always amazed at how often you end up proving my point.
Arguing with him is like bullfighting a one-eyed bull.
He’s thinking he’s won, so it’s win/win!
He thinks he won the argument, too, so it’s win/win… even the slow kid gets a trophy!
Bah— double post. Order another trophy for the other slow kid.
Simpletons get excited about hot weather in July.
Totally agree with you, Smiters. If a tree can’t live there, neither should you. (Corollary: If you can’t live there without aircon, neither should you.)
(Corollary: If you can’t live there without aircon, neither should you.)
Right you are, Allena!
“the media acts as if” their only purpose is being sensationalist and keeping the population distracted.
The amazing part is there’s nothing more interesting to report. Or the five corporations that control everything you see on TV got marching orders not to rabble rouse about the supreme court decision. Or we’re about to invade syria, or iran, or both, because they hate our freedumb or they stole our oil or something. Euro’s ready to finally collapse. Or the local economy is rolling over again too much to be ignored or papered over. We need a distraction, like, um, how about the weather out there, hot enough for you?
Personally, I’m getting intense cabin fever. Maybe this is the time to pull off a big govt operation. Too hot outside to riot, even at night, and by the time it cools down, patriot act II will be in place.
I heard 22 people were killed by the storm and its aftermath. I have family living in those areas and I live 3,000 miles away. I call regularly but I would not have known to call and check on my elderly family members immediately if not for the coverage.
The media does a lot of stupid things. This wasn’t one of them.
IAT
Mortgage delinquency rate up as foreclosure moratoriums expire.
http://www.lpsvcs.com/LPSCorporateInformation/NewsRoom/Pages/20120620.aspx
Delinquency rates have nothing to do with foreclosure moratoriums.
Sure they do: they are depressed by them.
Without the moratoria, more properties would have been moved through the pipeline and onto the market. That would have depressed values more than they already were. The depressed values put more homeowners underwater. Underwater loanowners default at a higher rate.
Ergo, the moratoria reduced delinquency rates.
Fair point, but I don’t think that’s the one that HPT was making–the removal of the moratoriums hasn’t been removed for long enough for that effect to take place.
You’re a pimp.
the removal of the moratoriums hasn’t been removed for long enough for that effect to take place.
I agree. And the effect may be smaller now due to the delay.
But the duration is correspondingly longer, and part of the emotional mark that a depression leaves is due to the duration, not the depth.
There is always a price to be paid…
I also think the effect may be smaller since there seems to be more institutional money chasing distressed properties than there was when the moratorium started.
Also, I seem to recall there were two things going on: 1. Moratorium in some places/states, and 2. Process reviews at some major lenders (BofA for one).
The process reviews from BofA to my understanding were complete in Q4 of last year, when they recommenced foreclosures (you can see the blip up in foreclosures in late 2011 on foreclosureradar).
http://www.dailyfinance.com/2010/10/18/bank-of-america-resumes-foreclosure-processm-in-23-states/
Increased activity following the settlement was different and happened later.
I also think the effect may be smaller since there seems to be more institutional money chasing distressed properties than there was when the moratorium started.
Fair point; I buy that…
This crazy heat is all-time record breaking , we hope the record stands a long time .
Also , in the small trailer park we own , the trees we recently resisted cutting down perhaps saved lives with the shade they provided , as the power was off for a half day in the 109 degree heat .
Always keep the gas tank over half full ,it gives you a lot more options ,plus will cool the fuel pump too.
A carefully planted deciduous tree can be a neat thing to have planted next to one’s house.
Plant the tree on the south side and it will shade your house in the summertime but will allow the sun to shine through in the wintertime after all the leaves have fallen off.
BTW, the most photographed tree in Yosomite is a Sugar Maple that originally came from New England.
I just wrote a blog post about my favorite tree. Oh, yes, I do have a thing for this tree.
Not to mention trees in general.
It may have to do with the fact that I’m from Pennsylvania. And because I was raised in a house in the woods.
Whatever, I just love trees.
“Oh, yes, I do have a thing for this tree. Not to mention trees in general.”
We always suspected you were kinky.
Like here combo…wintertime I have a beautiful skyline view of Manhattan…now i get nice shade in the afternoon…
MORTGAGE CRISIS
Whistleblowers Win $46.5M In Foreclosure Settlement
Nation’s 5 Largest Mortgage Lenders Part Of Settlement
James O’Toole
POSTED: 3:12 am MDT July 2, 2012
UPDATED: 4:27 am MDT July 2, 2012
NEW YORK (CNNMoney) — Getting served with foreclosure papers made Lynn Szymoniak rich.
While she couldn’t have known it at the time, that day in 2008 led to her uncovering widespread fraud on the part of some of the country’s biggest banks, and ultimately taking home $18 million as a result of her lawsuits against them.
Szymoniak is one of six Americans who won big in the national foreclosure settlement, finalized earlier this year, as a result of whistleblower suits. In total, they collected $46.5 million, according to the Justice Department.
In the settlement, the nation’s five largest mortgage lenders –Bank of America, Wells Fargo, JPMorgan, Citigroup and Ally Financial — agreed to pay $5 billion in fines and committed to roughly $20 billion more in refinancing and mortgage modifications for borrowers.
A judge signed off on the agreement in April, and in May — Szymoniak received her cut.
“I recognize that mine’s a very, very happy ending,” she said. “I know there are plenty of people who have tried as hard as I have and won’t see these kinds of results.”
Whistleblower suits stem from the False Claims Act, which allows private citizens to file lawsuits on behalf of the U.S. when they have knowledge that the government is being defrauded. These citizens are then entitled to collect a portion of any penalties assessed in their case.
The act was originally passed in 1863, during a time when government officials were concerned that suppliers to the Union Army during the Civil War could be defrauding them.
In 1986, Congress modified the law to make it easier for whistleblowers to bring cases and giving them a larger share of any penalties collected. Whistleblowers can now take home between 15% and 30% of the sums collected in their cases.
In the cases addressed in the foreclosure settlement, the whistleblowers revealed that banks were gaming federal housing programs by failing to comply with their terms or submitting fraudulent documents.
In Szymoniak’s case alone, the government collected $95 million based on her allegations that the banks had been using false documents to prove ownership of defaulted mortgages for which they were submitting insurance claims to the Federal Housing Administration.
The FHA is a self-funded government agency that offers insurance on qualifying mortgages to encourage home ownership. In the event of a default on an FHA-insured mortgage, the FHA pays out a claim to the lender.
Szymoniak’s case was only partially resolved by the foreclosure settlement, and she could be in line for an even larger payout when all is said and done.
As an attorney specializing in white-collar crime, the 63-year-old Floridian was well-placed to spot an apparent forgery on one of the documents in her foreclosure case, one she saw repeated in dozens of others she examined later.
…
Is the govt the only game in town for a loan these days?
Private lenders have a hard time competing with too-big-to-fail federally-insured low-interest low-downpayment loans from Uncle Sam.
Even savers cannot compete with easy credit.
And there you have it.
This, THIS, is the crux of the problem. The game is rigged and we are all debt slaves with few exceptions.
“Private lenders have a hard time competing with …”
0.015% @ the di$count window
For a private lender, to make subprime loans these days would be suicidal. By contrast:
FHA rescinds tough new credit restrictions on loan applicants
The withdrawn policy change, which had been scheduled to take effect Sunday, would have affected borrowers with collections or disputed-bill accounts in their credit files.
June 30, 2012 | By Kenneth R. Harney
WASHINGTON — In a policy switch that could be important to thousands of applicants seeking low-down-payment home mortgages, the Federal Housing Administration has rescinded tough new credit restrictions that had been scheduled to take effect Sunday.
The policy change would have affected borrowers who have one or more collections or disputed-bill accounts on their national credit bureau files in which the aggregate amounts were $1,000 or more. Some mortgage industry experts estimate that if the now-rescinded rules had gone into effect, as many as 1 in 3 FHA loan applicants would have had difficulty being approved.
…
Kabuki theater at its finest.
Damn.
Is the govt the only game in town for a loan these days ??
No, but the interest rate will be higher with a portfolio lender…Terms will be worse also…I guess if there is any good news in it its that they are at least slowly coming back into the market of lending…
I guess Megabank, Inc does lots of mortgage loans, but I vaguely recall reading that over 90% of them are securitized (and taxpayer-guaranteed) by Fannie Mae, Freddie Mac or the FHA.
Is Wells Fargo the new “Countrywide”?
Wells Fargo Bankers Toting Guns Aim at 40% of Market: Mortgages
By Dakin Campbell - Jun 12, 2012 10:26 AM
In mid-January, sales managers in Wells Fargo & Co. (WFC)’s mortgage unit, the largest in the U.S., gathered at a hotel south of San Francisco dressed as cowboys, six shooters strapped to their hips.
The invitation said “40% or BUST!!” The goal: A bigger share of the business than they already control — about 34 percent of all U.S. home lending and 13 percent of mortgages for purchases in the first quarter. About a dozen managers urged the audience of 500 loan officers to lend more, according to two attendees who asked that their names not be used because they aren’t authorized to speak publicly. Onstage, the men had fake mustaches and wore red-flannel shirts and jeans, the women long dresses like those in a movie western, one of the people said.
Chief Executive Officer John Stumpf has said the bank doesn’t have market-share goals, even as it held the San Francisco rally and encouraged salespeople in New York and Atlanta. Regulators such as Edward J. DeMarco, acting director of the Federal Housing Finance Agency, have expressed concern about increasing concentration in lending, and analysts say the housing market has become too tied to the San Francisco-based lender since it successfully navigated the 2008 credit crisis.
“The part that amazes me is that back in the early days Wells Fargo said, ‘we don’t want as much market share,’” said David Lykken, a managing partner at Austin, Texas-based Mortgage Banking Solutions, who has more than 37 years of mortgage- industry experience. “Now, in many ways, they are the market.”
Record Share
Wells Fargo’s first-quarter market share for all mortgages, including new homes and refinancings, equal to $130 billion, is the most on record and more than triple the closest competitor, JPMorgan Chase & Co. (JPM), according to Inside Mortgage Finance, a trade journal. It’s up from 30.1 percent in the preceding three months and 13.3 percent in 2006.
Mortgage originations and sales accounted for 24 percent of the lender’s fee-based revenue in the quarter, with another 2 percent coming from servicing, according to an April 13 presentation. The lender reported $2.9 billion in income from mortgage banking as the Federal Reserve pushed down borrowing costs and government refinancing programs encouraged lending.
The bank wants more. The Jan. 19 sales rally at the San Francisco Airport Marriott Waterfront hotel in Burlingame, about 15 miles south of San Francisco, was billed as a “Purchase Stampede” in a memo e-mailed to employees, a copy of which was obtained by Bloomberg News. The invitation featured six horses pulling a stagecoach, the bank’s traditional logo, and trailing a banner with the words: “40% or BUST!!”
One man wore chaps and showed off a lasso, while some women wore corsets, one of the people said.
…
Is Wells Fargo the new “Countrywide”?
I don’t think so.
Back in the day, it was a question of who would be holding the largest pipeline of not-yet-securitized loans when the music stopped.
But we’re way past that stage of the game now. WFC is very efficiently pocketing the underwriting fees and passing all of the risk down-stream to the taxpayer (FHA/Fannie/Freddie).
I’m not seeing the risk, unless the music were to stop again—and I think that the PTB will work very hard to ensure that that does NOT happen.
“…passing all of the risk down-stream to the taxpayer (FHA/Fannie/Freddie).
I’m not seeing the risk, unless the music were to stop again—and I think that the PTB will work very hard to ensure that that does NOT happen.”
You’re joking, right?
KENNETH HARNEY NATION’S HOUSING
FHA BACKS DOWN ON CREDIT RESTRICTIONS
By Union-Tribune
12:01 a.m., July 1, 2012
Updated 4:14 p.m. , June 29, 2012
ECONOMISTS: FHA AID TO HIGH-PRICED HOMES SHOULD DROP
In a policy switch that could be important to thousands of applicants seeking home mortgages with low down payments, the Federal Housing Administration has rescinded tough new credit restrictions that had been scheduled to take effect today.
The policy change would have affected borrowers who have one or more collections or disputed-bill accounts on their national credit bureau files, where the aggregate amounts were $1,000 or greater. Some mortgage industry experts estimate that if the now-rescinded rules had gone into effect, as many as one in three FHA loan applicants would have had difficulty being approved.
Under the withdrawn plan, borrowers with collections or disputed unpaid bills would have been required to “resolve” them before their loan could be closed, either by paying them off in full or by arranging a schedule of repayments.
…
You’re joking, right?
You were being sarcastic, right PB? Because the article you linked to is a fine example of my point: the lengths to which they will go to avoid the lending markets even slowing down a bit due to more reasonable lending standards.
The government has been the only game in town for a loan for the past decade. Banks didn’t make any loan that couldn’t ultimately be sold to Fannie, almost immediately. Regulators tried to require banks to hold 5% of the loan that they originated (QRM rule), and banks and realtors squealed like a stuck pig. Originators chose to take the quick cash to please the boss and a little fee bonus they could take home to the wife.
‘Banks didn’t make any loan that couldn’t ultimately be sold to Fannie’
I don’t know about that. Any one can pick a county that has some foreclosures. Go to the county assessor website and do a search for ownership, using partial names like ‘bank’ or ‘trust’. You’ll find many that never fell into the GSE’s. Like Lehman Bros. (look also under their service arm Aurora). There’s Washington Mutual, DB, all the Taylor Bean mess, too many to name.
The government has been the only game in town for a loan for the past decade. Banks didn’t make any loan that couldn’t ultimately be sold to Fannie, almost immediately.
No, during the boom, investors were so crazy for MBS that the investment banks were all doing private-label securitization. The government was definitely NOT the only game in town.
They became the only game in town on purpose, but during the bust. So that’s really only been true for half a decade now.
In case the question comes to mind when you read this post, 9% of $1,000,000,000,000 is $90,000,000,000 ($90 billion).
ECONOMY
Updated June 8, 2012, 11:31 a.m. ET
Housing Agency to Sell More Troubled Loans
By NICK TIMIRAOS
The Federal Housing Administration, struggling to manage a growing glut of delinquent home mortgages, plans to ramp up sales of the loans to investors, a move that could stave off foreclosure for thousands of homeowners.
The government agency, which is expected to announce the bulk sale program Friday, has more than 700,000 loans in default, amounting to more than 9% of the $1 trillion in loans it insures. Bulk loan sales are one way the FHA could reduce the backlog of potential foreclosed properties it will have to take back and resell.
Mortgage-finance giants Fannie Mae and Freddie Mac as well as banks have shied away from bulk mortgage sales despite heavy interest from investors because they would have to sell the loans at such deep discounts. Instead, they modify the mortgages, and if that doesn’t work they sell the homes individually, often through foreclosure.
But FHA rules provide less flexibility on how troubled mortgages can be modified, leaving very little room to cut loan balances. Officials figure that if they sell defaulted loans to an investor for at least the same price as it would cost to foreclose, investors can take more aggressive steps to modify the mortgages, such as reducing principal, to keep the borrower in the house—all without raising costs for the government. If the borrower resumes making payments, the investor could later resell the loan for a profit.
“There will be an incentive for a modification that isn’t able to be done under the current system,” said Carol Galante, the FHA’s acting commissioner. “It will be cost-effective for the FHA….It will be better for the communities.”
…
I think we just found a lot of the Level 3.
“…a lot of the Level 3.”
For non-finance geeks, could you please explain?
No problem:
http://www.investopedia.com/terms/l/level3_assets.asp
I don’t buy into the whole notion of “very illiquid.” The only thing making them so illiquid is the prospect of bailouts, which keeps alive the cargo-cult faith that a higher price can be obtained by just holding on to those sh!tty assets for a little longer.
If not for bailouts and accounting gimmicks to throw a wrench into the normal operation of markets, the prices of the sh!tty assets would be common knowledge, and they would not be “illiquid.”
Exactly. Hence why it was all hidden and thus my statement.
I can see how the actual house is illiquid, but why the MBS? I thought MERS could transfer those in a microsecond.
It is illiquid simply because people don’t want to buy them. Illiquid doesn’t have to mean physically hard to sell. It could just mean that the market for the security is thinly traded - you might have to wait awhile before anyone who wants to buy it comes along.
Polly:
And this is what Michael Milken did, he was the middleman finding those buyers & sellers, and making his spread.
“…you might have to wait awhile before anyone who wants to buy it comes along.”
Especially if you don’t really have to sell and are hence in no hurry to reduce the price to market value (i.e. a price at which you can find a willing buyer)…
What a creative way to hide the fact that the FHA has been the one shoveling out the sh!t-mortgages for the past 5yrs.
Watch, in a couple of years, they’ll be defending the FHA with statements like “No, our delinquency stats are really low…”—after they move all the cr@p-loans off the books.
Sorry, Ben—this sleight-of-hand really pisses me off.
The other thought I had was that they can hide the injections of taxpayer dollars between the sale prices of all those homes that morphed into $90 billion worth of delinquent loans and the discounted price investors pay for the loans after writedown of principle. Thanks to this sleight of hand, the sale prices of those homes do not reflect true underlying market value.
I didn’t quite follow that, CIBT.
The difference between the sales price (which should be BELOW market value, incidentally) and the current book value should have to be recorded as a loss. So I would think that this would make FHA _more_ likely to have to face the music and have a taxpayer bailout, not less.
What am I missing?
“What am I missing?”
Market value
From Wikipedia, the free encyclopedia
Market value is the price at which an asset would trade in a competitive auction setting.
Sorry—I wasn’t clear. I was differentiating between the market value of the underlying assets (e.g. the houses _without_ restrictions), and the market value of the POOL being bought (_with_ restrictions).
The restrictions on resale lower the market value of the pool, but not the real underlying value of the houses when the lockup expires and they can be sold once again. The market value of the pool will be below true aggregate market value of the properties.
The market value of the pool at time of sale has to be accounted for on FHA’s books.
So I don’t see how they can “hide the injections of taxpayer dollars.” It should be all over the news when they book a huge loss and require a bailout.
How to save the banks.
1. US Government buys the banks “troubled loans” at or near par
2. Writes them down (taxpayer taxes the hit)
3. Sell back to the bank or other investors at pennies on the dollar
4. Rinse and repeat
5. Bankers all get huge bonuses….
Who are you and what have you done with the real 2banana?
If you take out Romney vs Obama or Repubs vs Dems and look at the issues and solutions on merit, people are a lot closer than they realize. No wonder politicians bring up the abortions & gods in the mix.
Exactly.
x eleventyzillion
politicians bring up the abortions & gods in the mix.
Seems like one party in particular is guilty of always bringing up abortions and god(s).
Nope. Both parties bring both up, just with different visuals.
IAT
Nope. The repubs are far, far more guilty of banging the gods, guns and gays drum. They are the masters of the culture wars, which is why they get so many to vote against their own economic interests. You can pretend it’s otherwise to make your ‘there’s no difference between the two parties’ point, but it’s clearly not true.
a-s
Perhaps it depends on where you live. Where I live the democrats are as much to blame as the republicans on this score.
IAT
Yes this tells us the problem in the US is facism and corporatism not socialism or unions. The corporate elite have taken over the show (Dems and GOP) and have used their control of gov to strip mine the wealth accumulated by the middle class. Just remember we need to cut the taxes on these job creators or we are all doomed.
More like socialism for rich and connected. Yes, the unions fall under this. At the minimum, union bosses.
I can agree with this as well. No matter the political philosophy, the 1% live in a different world than the rest of us.
butters
Follow the money and political power.
1. It certainly is not unions gaining political or financial power over the last decade or two. There numbers and financial power are collapsing. The dems listen to WS and elite more than unions that was not always the case. The unions are thrown a bone every now and then but basically they are collapsing.
I normally would support restrictions on public unions in terms of political donations, but have turned the other way as I see the balance of power tipping increasingly to the elite. There is really no organization that can stand in their way. Take a look at how they discredit and destroy any movement that developes ie Tea Party and OWS.
Do you consider union bosses who make $500K+ part of the elite?
Unions - especially public unions - were out in full force to destroy the Tea Party.
Take a look at how they discredit and destroy any movement that developes ie Tea Party and OWS.
U.S. government to offer troubled mortgages for sale
Sat Jun 9, 2012 3:30am IST
* FHA to offer up to 5,000 loans per quarter
* FHA saddled with over 700,000 bad loans
* Bulk loan sales aim to dampen FHA’s losses
June 8 (Reuters) - The U.S. Federal Housing Administration on Friday announced plans to sell off thousands of severely delinquent loans in an effort to protect its dwindling capital and improve the chances more troubled borrowers avoid foreclosure.
The FHA, which protects lenders against borrower defaults, said it would offer up to 5,000 loans each quarter in bulk sales to private investors starting as early as September. The sales build on a smaller-scale pilot program launched in 2010.
More than 700,000 FHA-backed mortgages are currently in default, or about 9 percent of the home loans the agency guarantees. In all, it insures about an estimated $1.1 trillion in loans.
Borrowers must be at least six months behind on their payments for the loans to be eligible for the investor pools. The program aims to help borrowers avoid foreclosure.
Investors will be prevented from foreclosing on the FHA-backed loans for six months after buying them.
The program will also require the loan servicers purchasing the pool of mortgages to modify at least half of the loans to make it easier for borrowers to stay current on payments. The servicers will have to hold the loans for at least three years.
…
Essentially letting contractors (insider investors) do the government’s dirty work.
Which raises the question, what’s in it for the investors? If the loan was in good enough shape, FHA would keep it. I guess there’s a lot of money to be made in renting them out.
Which raises the question, what’s in it for the investors?
They will be buying them below market value; that is motivation enough.
Note that they are really capturing a subsidy, one that the federal government is paying to help effect their policy of supporting house prices.
Take our shhh — tty loans, please!
Bloomberg News
FHA’s Galante Says Delinquent-Loan Buyers Could Become Landlords
By Clea Benson on June 11, 2012
Investors who bid on Federal Housing Administration pools of delinquent loans could end up converting some of the properties into rental housing, FHA Acting Commissioner Carol Galante said in an interview.
The FHA said last week it will begin quarterly sales of about 5,000 defaulted loans received from lenders in exchange for insurance payouts, expanding a pilot program started last year. The government mortgage insurer, which already has 35,000 repossessed homes on its books, is looking to sell loans at a discount to keep more properties from going into foreclosure.
About a third of foreclosed properties on the market are owned by the FHA or government-controlled finance companies Fannie Mae (FNMA) (FNMA) and Freddie Mac. Regulators put out a call last year for input on how to structure bulk sales of real-estate-owned properties, or REOs, to encourage their conversion into rentals.
Fannie Mae is auctioning properties that have been repossessed to investors who are required to rent them. The FHA auctions may encourage similar conversion of seized properties, Galante said yesterday.
“We really see this as our contribution to the REO-to- rental type of solution,” she said.
Under the FHA program, investors must first try to work with borrowers to make loans current. If they do foreclose, the investors can’t sell more than 50 percent of the properties in their pools and will be encouraged to rent out repossessed homes that they aren’t allowed to sell.
“This isn’t a quick flip,” Galante said. “For the majority of the pool, somehow or other they will be in a stabilized situation. That’s the goal.”
…
Trouble with all these plans to make buyers into landlords is…
1. Unless you have previous experience as a landlord, you’re going to be in for a real shock. Because it’s a never-ending job. And headache.
2. There are only so many tenants. And, in times like these, household formation isn’t exactly breaking records. People are doubling up, renting out spare bedrooms, and moving back home with the family.
Trouble with all these plans to make buyers into landlords is…
The bigger problem with all of these plans is that by putting restrictions on what the buyer can do with the property, they are lowering the price that a buyer would be willing to pay for the property.
A property with no restrictions will always be worth more than one that has restrictions attached to the purchase. We can argue about how much, but there is definitely some cost.
Fannie is INTENTIONALLY choosing to receive LESS money for the sale of these properties.
This cost is being borne directly by taxpayers.
A side riff on restrictions on what buyers can do:
A now-deceased friend opened a bike shop just north of the University of Arizona. Place was oriented to commuters and utilitarian cyclists like Yours Truly. I was in heaven every time I walked through the door.
Last summer, his heart announced that it was no longer going to work for him. He was hospitalized and put on a heart transplant waiting list. Guy never got his heart. He died shortly before Christmas.
His family went about the task of selling the shop. They put some strings on the sale — that it had to remain in the same location and continue to be a commuter/utilitarian shop. That didn’t exactly work wonders for buyer interest, and the place was closed down earlier this year.
“They put some strings on the sale — that it had to remain in the same location and continue to be a commuter/utilitarian shop.”
Did they require the new owners to feed the squirrels?
Did they require the new owners to feed the squirrels?
Shop location is along one of Tucson’s busiest east-west streets (Speedway). No squirrel would last long in that area.
Big drawback is that Speedway is divided, and if you’re not on the side of the street where the shop location is, getting to it is a bit of a challenge.
Slim another side note its also hard to sell a DJ business, unless people really know you.
One of the few successful sales was to a woman who was the booking agent office manager of a dj company Norman started in 1964 and worked at columbia records and was paid in paintings from Andy Warhol…. and when he retired in the mid 80’s she bought the biz, and ran it successfully for 20+ years…it literally was the only job she ever had I think she started in 1975 ish… then of course invested in real estate…mostly estate sales in her nabe from people she knew all her life…so she got some great fast deals. Last i heard she had 6-7 small 4 unit houses all within a couple of blocks walking distance, Of the house she grew up in.
She built up the business and was the largest female owned dj company on the east coast she did very little advertising, and no one knew her, just massive amounts of repeat business
Same with your friend HE was the business, so unless you were an employee and took it over, the chances of a sale even without the restrictions would be small.
PS she was a very good dj with kids and seniors…the rest ok, she also was a ballroom dancer so she had tons of gigs rhumbas, sambas, cha chas, fox trots,paso doble
its also hard to sell a DJ business
Yeah, that’s because there basically is not much of a business there to sell. There is just the DJ, who is most of the value of the business, and some equipment. The equipment is used, and not that valuable—there’s newer/nicer stuff out there.
The barriers to entry are quite low, so why would you buy an existing business rather than starting up your own?
Even the existing clients of the business may well not repeat-book when the know the DJ will be different.
EXACTLY Prime
Yet people beeatch and moan about rent control and stabilization here in NYC and ill bet in CA too, but face it if the property had no rent restrictions would the present buyer have had enough money or credit to buy it in the first place….probably not.
Here if you are a long term owner you can make out great after the old people die or move to floorriaah and raise the rents to market rate.
But the problem is lots of “landlords” don’t want to wait it out and do illegal things to hurry the process…and sometimes cause rent strikes…
—–A property with no restrictions will always be worth more than one that has restrictions attached to the purchase.
Amazingly - about 99% of all rents in 99% of the country are NOT rent controlled.
And, it seems, the market determines what an apartment should cost.
And it works out pretty well…
I used to live in NYC. Rent Control there is FULL of fraud and shams. Everyone trying to get something for nothing.
In the end, what do you think happens when people can not make a profit renting an apartment due to “rent control” from the city/state…
————————-
Yet people beeatch and moan about rent control and stabilization here in NYC and ill bet in CA too, but face it if the property had no rent restrictions would the present buyer have had enough money or credit to buy it in the first place….probably not.
YUP……but ending it quickly would displace lots of mostly elderly….probably 90% don’t drive or would be a real hardship to move from an elevator building or 1st floor to a walk up way out in queens for the same rent. We lived at 61st and 1st ave.
I used to live in NYC. Rent Control there is FULL of fraud and shams. Everyone trying to get something for nothing.
“A property with no restrictions will always be worth more than one that has restrictions attached to the purchase.”
That’s a nice economic application of Le Chatelier’s principle. Generally speaking, a system subject to more constraints achieves a lower optimum.
(This also explains why a stranglehold of pointless government regulations can kill private enterprise.)
Who are you and where is the real Cantankerous Intellectual Bomb Thrower©
(This also explains why a stranglehold of pointless government regulations can kill private enterprise.)
Sorry that people who don’t spout political talk show host drivel are hard to put into your little dem/”true conservative” boxes, tutti-fruity.
Responding to your points, Slim:
(1) They were vetting applicants to the program for previously property management experience. Or at least you had to say that you had it.
(2) The “only so many tenants” problem isn’t really a problem; market forces of supply and demand should adjust rents to deal with any differences between the two.
Me again. In response to your points:
1. I’d be interested in knowing how good the vetting of applicants is. For example, I could come to your company and pitch myself as a corporate board member. And, yes, I do have corporate board experience. One year of it, and let’s just say that I didn’t set the world of corporate governance on fire. If the vetting of me went as far as my pitch, you wouldn’t be getting the whole story.
2. If the market rent doesn’t cover the PITI and other expenses for the investment property, then it’s a loser. And we know what happens to loser property investments. They get walked away from, and, in this case, the taxpayers are left holding the bag.
They’re bulk sales so I guess you could presume that the buyers were either professional RE types or professional investors capable of hiring property management. I didn’t get that they were saying sales of individual homes to Joe6Pack were going to be tied to being used as rental property.
The fact that they were limiting the program to professional investors with management experience should address both of those concerns, Slim.
I can’t speak first-hand to the vetting process. But I did read the application, and they were asking for details of your experience, and they didn’t say what would “qualify” you. So the bar is essentially unknown.
But the fact that they were doing bulk sales of LOTS of properties should bring in deep pockets only, and those deep pockets are going to make sure they have good professional management. And the deep pockets are definitely not going to over-pay for these properties.
This will not be done by mom-and-pop operations, at least not under this program.
If anything, I think the risk is that this program is yet-another-giveaway to big-business; the folks with the means to play will likely pay less than they would have gotten by putting the properties on the MLS.
And this subsidy, flowing to deep pockets, will be paid for by the taxpayers.
Market forces of supply and demand should adjust rents?
Did we not just witness, and are currently suffering from, the consequences of markets that were rigged and gamed?
Exactly.
I would love to know what part of the law allows top-down market-distorting intervention to funnel money into the coffers of Wall Street investment banks.
I don’t expect to see any more responses to this request than I saw to yesterday’s request for Democrat or Republican supporters of FHA lending that resulted in 700,000 currently delinquent mortgages, but I thought I would ask anyway, just for fun.
Other than selling them the properties at below-market prices, I don’t see the mechanism by which the government will be able to influence the prices that these buyers charge in terms of rents.
So yes, the purchase price can be gamed—and I am sure that it will be.
But once the properties are in private hands, the incentive of these private businesses will be to maximize their return, not try to play policy games. And if you believe in free-market forces, that may mean that they rent the properties at below-market prices until they achieve their desired vacancy rates.
I think that is at least a step in the right direction. At least the properties will be providing some utility, unlike the ones that have been off-the-market for years.
Questioning who likes FHA, for the sole purpose of slamming anyone who answers with a 700K gotcha, isn’t likely to solicit resposes, p-bear.
I suspect the real supporters of the FHA are the banks who want prices kept stable on their own properties. If I were a bank, I would want FHA to step in and help some schmo buy the house next door for a solid 2003 price. Regardless of how the schmo house got bought, it gets the lawn mowed and keeps up the comps for a while. Delinquent? Bah, I wouldn’t lose money directly on the schmo house, and it would take so long for the loss discovery to shake out that I’d still get my bonus this year. Do you hnestly think anyone is looking beyond that?
“Questioning who likes FHA, for the sole purpose of slamming anyone who answers with a 700K gotcha, isn’t likely to solicit resposes, p-bear.”
Pussies.
‘The “only so many tenants” problem isn’t really a problem; market forces of supply and demand should adjust rents to deal with any differences between the two.’
That’s right. Once there are ‘too many rentals’ on the market, landlords will be forced to lower their rents to attract tenants. Falling rents will lure would-be homeowners into renting, up to the point where the number of renters clears the market at the lower rental rate. Sellers of owner-occupied housing will have to reduce their prices to find buyers in the face of decreased purchase demand.
Pretty soon, assuming no artificial shortages due to house hoarders holding homes off the market until “prices come back,” both the owner-occupied and rental markets will clear at lower sale prices and rental rates. The free market is a wonderful allocation mechanism when nobody throws a wrench into the gears.
…but someone always does. That’s the reality.
Euro Watch
Unemployment in Euro Zone Hits Record High
By DAVID JOLLY
Published: July 2, 2012
PARIS — Fundamental weaknesses in the euro zone economy were back in the spotlight Monday, with the release of reports showing record unemployment in May, a decline in manufacturing and intense pressure on French public finances just days after European leaders decided on measures to reinforce the longer-term prospects for the currency union.
Unemployment in the euro zone rose in May to 11.1 percent from 11.0 percent in April, Eurostat, the statistical agency of the European Union, reported from Luxembourg. The May jobless figure was the highest recorded since the creation of the euro in 1999.
A separate report showed euro zone manufacturing falling in June for an eleventh straight month. Markit Economics, a research concern, said its survey of purchasing managers in the manufacturing sector showed operating conditions continuing “to deteriorate at the fastest pace for almost three years.”
…
http://m.theatlantic.com/business/print/2012/06/the-myth-that-entitlements-ruin-countries-busted-in-1-little-graph/259056/
The recipe for ruining a country is well known: socialism, asset inflation and currency debasement.
China’s Manufacturing Growth Weakens as New Orders Drop
By Bloomberg News - Jul 2, 2012 1:10 AM PT
Chinese manufacturing indexes slipped to seven-month lows as overseas orders dropped, and South Korea cut its estimate for exports this year, underscoring risks to Asian economies from Europe’s debt crisis.
A purchasing managers’ index for China fell to 48.2 in June from 48.4 in May, HSBC Holdings Plc and Markit said today. A similar measure released by the government yesterday also slid. South Korea yesterday lowered its export growth forecast to 3.5 percent from 6.7 percent.
China, the world’s biggest exporter, may need to add more stimulus to arrest an economic slowdown after the HSBC report showed the steepest decline in overseas orders since the global financial crisis. The nation’s weaker growth is rippling through Asia, with South Korea’s sales to China, its largest market, failing to increase in the first 20 days of June.
“It’s clear the slowdown of export growth as a result of weakness in Europe and the U.S. continues to weigh on the Chinese economy,” said Lu Ting, an economist at Bank of America Corp. in Hong Kong. He sees “incremental measures such as reserve-ratio cuts and easing lending restrictions to stabilize growth.”
…
time to build some more multi family housing and have them sit empty for 10 years.
That’s what’s happening here in Tucson. Quite the building boom in student housing.
As if we need more. Landlords near the University of Arizona are already reporting that they’re having a hard time finding tenants.
Not to mention the fact that this new housing is of the “luxury” variety. And this town already has complexes of that sort. Per a friend, whose son used to manage one, the existing complexes compete fiercely for a limited pool of tenants.
Methinks that the current student housing bubble will bust all over Tucson’s face like bubblegum.
Most students I know can’t afford $1000 month rents. I can’t afford $1000 month rent.
Who ARE these idiots with enough money to build million $ projects but no clue that everyone is poor?
They’re developers from out of state. And they see the University of Arizona as being full of white kiddies from out of state. Y’know, the ones who are here to work on their tans.
The reality is that a lot of UA students have to work at least one job to make ends meet. And increasing numbers are Hispanics who come from working class or poor families.
Not to mention the war veterans. Quite a few of them on campus now. Many of them have zero patience with the hijinks of the younger students who live in luxury student housing. The veterans just want to get their degrees and get on with their lives.
…and the even better question, WHY are they allowed to build?
WHY are they allowed to build?
Its a free country.
Nobody is free to lie, cheat and steal and cause hardship for other people.
“Nobody is free to lie, cheat and steal and cause hardship for other people.”
Building an apartment complex does all that?
It does when the borrower defaults because they obtained the loan based on fraudulent projections and now the taxpayers have to make up the difference in lost revenue from the property taxes AND the bad loan.
You do know what this blog is all about, right?
The taxpayers do not have to make up for the losses.
We have elected officials that make that choice that forces the taxpayers to cover these losses. The taxpayers could and should elect other officials that are not about redistributing the wealth.
Turkey, few people on this board are opposed to people borrowing money if they have skin in the game, right (20% down payment, etc.)?
Those who build apartments need to raise a bunch of equity to build the project. And it’s not 3.5%…typically, in today’s environment, apartments need to have 20-30% equity in the deals. Most typically, the developers only get the 80% LTV loan after some seasoning (ie. they actually have built and rented the units and are actually generating the projected cash flow).
In other words, private investors are taking a significant risk ahead of the banks. Those private investors are generally not stupid, and evaluate the transactions on their own…third party market studies, background checks, plenty of due diligence is the norm.
You also need to consider that NOT building causes supply shortages…what do you prefer more?
1. Lots of investors over-investing in apartments, flooding the market with supply that impacts their yields, as rents are pushed down?
2. No new apartments being built, where lower and lower vacancy pushes rents higher.
P.S. Apartment loans have historically been among the most safe of all loans…only bettered by self-storage in this prior cycle in terms of low default rates.
Nobody is free to lie, cheat and steal and cause hardship for other people.
You don’t follow the news, then, do you?
The SCOTUS just re-affirmed your right to lie as part of your free-speech rights; that is the reasoning behind the recent decision that the Stolen Valor Act is unconstitutional.
Commercial RE has an even bigger problem than the house buying FB market.
The SCOTUS just confirmed that it’s ok to lie as long as no financial gain is made by lying. I believe this is the right ruling. Do what you want as long as it doesn’t hurt anyone else. If you financially gain by your lying, that is called fraud, and is covered under existing law. Mentally ill people lie all the time… there is no reason that should be unlawful. The rest of us should do well to remember “caveat emptor”, and also, “trust, but verify”.
Canada housing starts to cool, agency says
Thu Jun 14, 2012 12:40pm EDT
(Reuters) - Canada’s hot housing market will likely cool toward the end of 2012, the government housing agency said on Thursday, even as the price of new homes continued to rise this spring.
Housing starts, which have been buoyant so far this year, will moderate later in 2012 and pull back slightly next year for the first time in four years, a quarterly report by Canada Mortgage and Housing Corp (CMHC) said.
CMHC forecast 202,700 starts in 2012, dropping to 195,700 next year.
The housing market got a strong boost in the first few months of 2012 as a carry-over from 2011, when employment returned to pre-recession levels, Mathieu Laberge, deputy chief economist at CMHC, said in an interview.
“You have more people generating an income, therefore they go out and look for housing.”
The report comes amid a surge in condominium construction in Toronto and Vancouver that has raised concerns about a possible housing bubble.
…
Headline this morning from google news aggregator:
“Euro falls as EU deal doubts grow, economy weakens”
I can’t stand it. Please, just LET. IT. DIE.
How many times, over and over and over?
Lol. Look what all this does to the prices of stocks and commodities.
Suck ‘em in, shake ‘ em out.
That is the game of wall street exactly. get a rally going in something, suck in mom and pop, and then run it back down again.
This process works well when Price equals value but doesn’t work at all when Price goes up and down while Value remains stable.
i.e. the Value of tomatos may remain stable but the Price goes up and down with the seasons. When the price goes up people buy less tomatos because they perceive that they are overpriced.
But this is not true with stocks and such. When the Price of a stock goes up then that is a sign that the Value is going up. And the normal reaction regarding somethning where the Value is going up is to buy more of it.
combo, that’s what I’m thinking. The only reason this charade exists is EXACTLY what you stated. Disgusting.
How many times? Enough to rope in as many suckers as it takes.
The EU nor the Euro is going away. We are being played.
Yes, they are having problems, but not mortal ones.
I remember people here saying “never buy a condo” but that seemed kind of extreme. Maybe not…
http://abcnews.go.com/Business/pennsylvania-company-tells-condo-owners-rent-leave/story?id=16672500
You beat me to it, I read that story yesterday and was going to post it today. I think that just might be the most outrageous bubble story I’ve ever heard. Of course, I think it mentions that only in certain states does the law allow this.
Just one more reason NOT to buy a condo.
“Fusco said she and the other 10 condo owners were given a choice during a condo association meeting on Dec. 22: pay rent for the property they had previously owned in addition to their mortgage payments, or move out. ”
This sounds real odd.
Yikes! By all means! I hope someone shoots me if I forget this article and buy a condo without going through an attorney first and making sure I understand circumstances such as this. Loft too!
Bubble or no bubble, condos are a bad idea for this reason.
Bubble or no bubble, condos are a bad idea for this reason.
Since they boom later and harder in a boom, and bust earlier and harder in a bust, they strike me as a great asset-class to speculate in… It’s like buying into a more-leveraged ETF…
Lol. Like a 3X Inverse ETF?
And just like housing, the longer you leave your money in, the more time-decay will eat. If ever there was a vehicle for pure short-term speculation, the 3x and 3x inverse ETF must be it…
Have to love Wall St. products that ensure even if you’re correct on the direction and timing, you can still lose your money if the amplitude is off. Pure evil genius.
“Never buy a condo.”
and
“Only an idiot buys a condo.”
That would be me
Wait, did you buy a condo?
IMHO anything with an HOA is a BAD idea. But this story does take it to a new level.
The rules regarding buying a condo are simple:
1. Never buy a condo where more than 50% are not owner-occupied. The higher the percentage of owner-occupied, the better.
2. Have the condo association bylaws reviewed by an attorney
3. Closely inspect the finances and budget of the condo association
4. Review 2 and 3 above with an eye towards upcoming maintenance or improvements where you would be charged an assessment (unbudgeted or underbudgeted). Also, are there existing assessments on the condo for previous work done by the association?
That’s basically it. Follow those rules or risk getting screwed. You can still “GetStucco” if you don’t take into account traditional real estate criteria like price, location, schools, crime, proximity to jobs, etc.
“1. Never buy a condo where more than 50% are not owner-occupied. The higher the percentage of owner-occupied, the better.”
There was a time, 15 or so years ago, when (at least in NYC) you couldn’t get a mortgage on a place that was less than 50% owner occupied. I think it was so that the board was in the hands of the occupants, not the builder/sponsor.
you couldn’t get a mortgage on a place that was less than 50% owner occupied.
Exactly. I owned a condo back in 2000, sold in 2003 (for a 66% profit after expenses). You couldn’t get financing on a condo, in 2000, if owner-occupied was less than 50%. I guess banks actually cared about the collateral on the loan back then…
I believe it is still that way for the GSEs.
The funny thing is that the condo may have been in fine shape just three years ago and the SHTF only in the past few years.
I still find it hard to believe that there isn’t some due process being violated here. The developer forceably bought the condo out from under this lady for a cratered price and forced her into bankruptcy. The two contracts, the condo laws and the mortgage, are in conflict. how would you reconcile that?
The developer forceably bought the condo out from under this lady for a cratered price and forced her into bankruptcy.
Let me state first that this news story troubled me as well when I first read it this morning.
But I have another take on it tonight: the developer actually did this woman a favor.
She was SERIOUSLY underwater on her condo, but did not have the sense to walk away. She was essentially forced to walk away.
In the long run, she will be better off financially for having done so. She basically was forced to do what we on the blog have advised many to do for their own benefit.
(donning my asbestos underwear)
“never buy a condo”
How about an amended version:
‘Never buy a condo, unless the market is at an extreme bottom.’
A condo is a box of air in the sky. You don’t own any land. I don’t get it, as I dislike apartments anyway.
“…a box of air in the sky.”
I guess it beats a Condotel, a Repartment or a Floating Condo, no?
“…don’t own any land.”
I thought you were part owner in the commons, which normally include a recreational area w/ swimming pool and other amenities. My family spent lots of hours in such a pool back when we were condo owners with small children.
Garden City Realty and Condotels are now one!
All Condotels reservations will now be managed by Garden City Realty.
====================================================
U-T SPECIAL REPORT | CONDO CONVERSIONS
Condo conversion craze grinds to halt
Oversupply of units hurts prices, leaves investors in limbo
By Lori Weisberg and Mike Freeman
STAFF WRITERS
September 24, 2006
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America’s Floating Communities
Explore The USA From The Comfort Of Home
I usually despise the people who trash their foreclosure as if they have no responsibility for their own bad decisions. But in this case every one of those special glass tiles would have been smashed and every upgrade I put into it would have been downgraded. Nobody has the right to take your home on a technicality like this.
I still cannot understand how this happened, but I sure as heck would be going after my title insurance company for a fix. Why else do we have to pay the incredibly high premium when we buy, if not to have some protection against an asset being taken away on a legal loophole?
I don’t understand this part of the story:
So Fusco moved out in February and is renting an apartment in Minersville…The developer said they would write her mortgage company a check for $31,167.98 for her unit, she said.
Did the developer offer to pay off her mortgage? If so, that kind of alters the picture, but makes more sense. Is she just saying that she wanted more for her condo than the developer was essentially forcing her to take, by combining his controlling ownership with a supposedly low appraisal? Seems kind of like an eminent domain issue.
That’s 40k less than she owes on her mortgage. So her credit is destroyed.
Would still love to see what a jury would do with this one. Why not just let her keep it with an agreement that the property managers had first right to buy at market value if she wanted to sell.
This sux. She’s make mortgage payments on a condo that is grossly underwater - just what we feel people should do - and she still got her life and credit destroyed.
Would still love to see what a jury would do with this one.
To have a jury, she would need to file a suit. Her lawyers convinced her that she did not have a legal case. Ergo, no jury.
p.s. Assuming she could have a jury in a civil suit; typically that’s reserved for criminal courts.
Is she just saying that she wanted more for her condo
She didn’t want anything for her condo. She wasn’t trying to sell, but the owner forcibly took it and sold it. I guess it’s a version of private eminant domain for “fair market value.”
And fair market value dropped 60% in 3 years
For RAL/etc, this must be pure price crater p*or*n.
Yeah, I think I finally figured out what was going on- the developer was willing to pay 31k$ but she had a 70k$ mortgage balance.
I guess now we know how they’ll clean up the apts-to-condo conversion market disaster.
Yeah, I think I finally figured out what was going on- the developer was willing to pay 31k$ but she had a 70k$ mortgage balance.
It’s not the amount the “developer was willing to pay”.
The condo association, ALL of its members, took a vote. Unfortunately for the minority owners, there was a majority owner who happened to have purchased their controlling interest from the developer out of BK.
The association vote affirmed the decision to dissolve the condo association and return the building to apartments. As such, all of the current owners were bought out. The price of the buy-out was based on an appraisal. This woman obviously was unhappy about the price given to the building on this appraisal, and thus unhappy about her share of the sale price.
But her property was not “taken” from her. She received the purchase price for her portion—or rather, her lender did, since she was deeply underwater.
“Is the govt the only game in town for a loan these days?”
Let’s remember the history.
First, banks made and held mortgages, because there was no secondary market, but that meant their capacity was limited and mortgage finance was constricted.
So in the Great Depression, the federal government created government lenders to help the less well off and returning veterans buy houses.
Then it created Fannie and Freddie to buy and securitize conforming loans. So there was a secondary market. The role of federal agency loans went down.
Then Fannie and Freddie were privitized. Then they got into the business of no-conforming loans. A bunch of people got rich, and then Fannie and Freddie went broke. So here we are.
Before Fannie and Freddie went broke, the TBTF banks claimed they wanted to go into the securitization business, but the two bastard children had an unfair advantage. Well guess what — feel free to sell those mortgage bonds big boys. Not interested if there is no housing bubble? How about that.
There’s also a salient fact which is never, ever mentioned in the media, even media that purports to be expert in such things: There’s only so much profit a borrower can generate. His lender took a profit off him. Then we added a securities buyer. Then we added a derivatives buyer. It’s not magic money. The only possible source of all these profits is the payments of the borrower.
Well, that WAS the only possible source, until they found a way to put the taxpayers on the hook. Now profits can grow without practical bound, since it will take a much longer time for the taxpayer to go broke over the borrowers going broke.
I still find it amazing that NOBODY is catching on that there was only so much profit that could be had from one source (the borrower).
And here’s a mean ole author who’s throwing a monkey wrench into the works. His book:
Walk Away From Debt For a Better Future
From the above website - This book prepares you for either of these two goals:
1. Walking away from some of your debt, and hanging on to a passable credit rating. This can make sense for people who depend on a credit rating to hold on to a good job, or need one to get business loans – or are hoping to buy a house at today’s more affordable prices.
2. Carrying out a total walkaway with as much cash in pocket as possible (and no lawsuits chasing you).
The only truly “clean-break” I’ve ever seen is a single woman with two kids; no judgment action, zero. And this was credit cards used for vanity purchases too, but it didn’t matter.
Thank you for the mention of my book.
Allow me to add Goal #3: spend the money you don’t send to big banks in your own community. I wrote Walk Away From Debt for a Better Future as a roadmap for individual readers to get out from under crushing debt, but find that keeping the money in the community has become the new morality in 2012 — including in the conservative rural area I live in. (This is a huge change from 2008, when the only acceptable reason for walking away was medical bankruptcy.)
So what was just a footnote to the introduction when I wrote the book, “I’ve never encouraged stiffing family, friends, or local merchants” is becoming the broader message: “Take care of your own.”
Nice work, Slim—you conjured the author!
They are leaving high tax New York for lower tax states…
—————————
Financial Giants Are Moving Jobs Off Wall Street
New York Times | July 1, 2012 | NELSON D. SCHWARTZ
New York’s biggest investment houses are shifting jobs out of the area and expanding in cheaper locales in the United States, threatening the vast middle tier of positions that form the backbone of employment on Wall Street.
The shift comes even as banks consider deeper staff cuts here, which could undermine the state and city tax base long term.
“Places like New York or London will remain financial centers, but most of the players are taking a much harder look and asking whether they can move large numbers of jobs,” said James Malick, a partner at the Boston Consulting Group who advises banks on relocation. In addition to higher taxes in the New York region, employers face real estate and labor costs significantly above the national average.
Low-level jobs have already migrated to call centers and back offices overseas, while top-end traders and bankers are secure in the New York area, experts say. Instead, services like accounting, trading and legal support, and human resources and compliance are being shifted to places like Salt Lake City, North Carolina and Jacksonville, Fla.
Yep, Marie Antoinette didn’t get it either.
In the rush to give tax breaks to corporations to move major operations into their state, they often failed to see that even given hiring guarantees, those companies will layoff anyone and everyone in a heartbeat if the need arises. Thus creating 2 lost streams of tax revenue.
In theory, the company must pay the full taxes that were given as breaks when failing to uphold the employment guarantee, but in reality the actual payment is negotiated down by a significant amount, while unemployment in the area remains high.
Lather, rinse, repeat.
You can’t fix our kind of stupid.
Or maybe - New York State just has insanely high taxes.
Let the public unions eat cake.
——————————————
Escape From New York? High-Taxing Empire State Loses 3.4 Million Residents in 10 Years
By Elizabeth Harrington
May 29, 2012
New York State accounted for the biggest migration exodus of any state in the nation between 2000 and 2010, with 3.4 million residents leaving over that period, according to the Tax Foundation.
Where are they escaping to? The Tax Foundation found that more than 600,000 New York residents moved to Florida over the decade – opting perhaps for the Sunshine State’s more lenient tax system – taking nearly $20 billion in adjusted growth income with them.
According to the group, New York ranked second among the states for the highest state and local tax burden in 2009. The Empire State was ranked highest for tax burden every year from 1977 until 2006, except in 1984 when it was ranked second.
New York State has a progressive personal income tax rate ranging from 6.45 percent to 8.82 percent for those earning over $2 million. Sales varies by county, and is between seven and eight percent. In Manhattan, the sales tax is 8.875 percent.
Again, New York IS NOT representative of the rest of the country, it’s that most New Yorkers think it does.
How do we know it’s for tax purposes and not simply because they are retiring to warmer weather? Instead of actually asking the residents, the reporters simply surmised that “perhaps”
it’s because of the lenient taxes in Florida.
Those 600K residents are taking a whopping $33,333 in income each. They must be living lavishly.
And that’s only 600K residents out of 3.4 million. Where did the other 2.8 million go? And why?
Just the usual tax-baiting.
CA income tax is 9.3% for about $60k and up and 10.3% of you make over a million. The sales tax in San Diego when I left was about 8.75% if memory serves.
Sure hope no one is moving to CA from NY for lower taxes.
Next in line Silicon Valley.
Still trying to understand why companies are willing to start in Silicon Valley/San Francisco. I understand that companies will go where the talent goes, but you would think more Startups would embrace the lower costs of almost anywhere else and just fly into Cali to meet with the Venture types.
An anthropologist friend has studied Silicon Valley for many years. The reason people want to start companies there is because of the entrepreneurial culture. And that means a lot.
We had a long-time adviser who has been in the valley for 40+ years. He said the same thing. The confluence of brains (Stanford/Berkeley), experience (people who have started companies before), capital, and willingness to take risk is unmatched.
We had a long-time adviser who has been in the valley for 40+ years. He said the same thing. The confluence of brains (Stanford/Berkeley), experience (people who have started companies before), capital, and willingness to take risk is unmatched.
That’s pretty much what my friend has found. And you should hear her trying to get this message across to the Tucson PTB. It’s like talking to a brick wall.
She’s getting so frustrated that she’s spending more and more of her time in SoCal. Reason: She’s currently doing a lot of consulting with biotech companies, and that’s where they are.
Yeah, this adviser has been asked to help other countries create a venture industry. His experience? It’s incredibly difficult to start from scratch.
The crazy thing is if you look at the total number of venture dollars that land in CA. Something like 50%…with 36% in Silicon Valley…
https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=region
…wow.
Ever worked with corporate dept budget?
What you do is find ways to spend as much of your budget as you can so you can justify keeping that level of funding. Spend less than your budget, and that’s how much it will be cut next year.
It’s the same with start-ups. Ask for the most you can get and justify it with the spending. You can always layoff employees and move to a cheaper place if things don’t work out.
Plus, investors will sooner give money to someone who has lost millions of dollar than to someone who has lost thousands. No joke.
I can waste millions in Boston just as easily, but I’ll be able to hire more people and pay myself more in the process. That was what I didn’t get about Silly Valley.
Also, I’ve worked on virtual teams where members were scattered geographically, some in Boston, some in Seattle, some in Cali. At the end of the day, I don’t need to be physically in CA. My company can be incorporated in DE with my central office in Boston, and employees working remotely from different locations. It’s more work to manage, but infinitely more flexible.
There are some high tech places in Reno. I know of one that is very important in the semi-conductor industry. The winning deal is an engineer can ski Tahoe and pay NO state income tax and NO capital gain tax.
How to you exempt someone from a “tax” or was that a penalty…?
Are not laws supposed to be enforced equally?
Oh - if you give lots o’money to the democrats.
————————————
Over Half of All Obamacare Waivers Given to Union Members
Weekly Standard | May 16, 2012 | Mark Hemingway
In what is fast becoming a weekly event, the Obama administration granted 200 more companies waivers from the Democrats’ sweeping health care law in the Friday night news dump. That brings the number of companies receiving waivers to 1,372. (You can get a full list of the companies exempted here.)
Not surprisingly, it helps to be a Democratic ally when seeking a waiver. The Republican Policy Committee reports that over half of the workers that have been exempted so far belong to unions:
The plans newly approved for waivers cover more than 160,000 people, bringing to nearly 3.1 million the number of individuals in plans exempted from the health law’s requirements. Of the participants receiving waivers, more than half – over 1.55 million – are in union plans, raising questions of why such a disproportionate share of union members are receiving waivers from the law’s requirements. The percentage of participants receiving waivers that come from unions also continues to rise – the number was 48% in April, and 45% in March.
Unions already received a generous concession in the health care bill. Their generous “cadillac” insurance plans were exempted from being taxed until 2018,
Darn those union members.
You don’t find it ironic?
Unions are the largest campaign money contributors in ANY elections.
They support obama and the dems at about a 99% to 1% ratio.
They are the hardest of hard core supporters of obama and dems.
They push to get him elected. They seek to destroy his opposition. They push for his policies.
And then they want to be EXEMPTED from the laws that are passed?
They should be FIRST IN LINE.
————————-
Darn those union members.
Really? Unions contribute more than all the corporations and all the board members of corporations in the United States? Unions? Unions, when less than 1 in 5 workers is a member? Unions?
Show me the evidence.
Last I checked, it was companies that were getting the waivers for their health care plans. Companies. Not Unions.
IAT
Some citizens are more equal than other citizens.
This was my first thought (well second after oh f**k!) about the scotus decision. If it’s a tax, how can anyone be exempt? Also if it’s a tax, couldn’t a congress just vote to lower the tax amount to $1? Or how about add a new tax credit equal to exactly the amount of the tax itself? By calling it a tax instead of a mandate, it opens up a bunch of new ways to repeal in spirit it without actually repealing it.
What is NOTICEABLY missing from this and other articles on the same subject is “why”.
Why did they qualify for exemptions?
I hate blatant chain jerking and that’s all this article is.
“Why did they qualify for exemptions?”
Here’s a hint: The AFL-CIO chief - Richard Trumbka - talk to the White House every day and visits weekly. Don’t take my word for it, see the video yourself where he boasts about the level of influence he has with Obama.
Knowing this, are you still wondering why union members qualify for exemptions?
Take a day off, sock puppet.
Turkey,
Why don’t you watch the video of him boasting how much influence he has with Obama? I double dare you.
I double dare you.
I feel obliged to inform you that you have broken “daring” protocol by skipping “dare” and going right to “double dare”.
While this offense isn’t as egregious as skipping directly to “triple dog dare”, it will count as an offense on your record. Please follow protocol going forward, or we will be forced to revoke your “daring” privileges.
I triple-dog dare you.
[Gasp]
GS, I just saw your question to me in Friday’s thread this morning. Answered it there, if you care…
OK Turkey, “why” did they qualify for exemptions? If these are the same waivers that I read about before, it’s because complying with Obamacare would cost more than the insurance itself is worth. Therefore the company can keep employees on the current insurance so long as they can prove that the current insurance is just as good as Obamacare.
The waivers tend to favor low-paid employees who tend to have low-benefit insurance. Since that type of job just happens to be unionized (SEIU), they get more waivers. Not because they are union, but because they are low paid employees. I also think that the cadillac plans are not the same union members as the ones getting waivers. It’s the usual union-baiting.
But this is how bills get to be 1200 pages long. You have to think of scenarios like this.
SEIU = low paid employees? Now that’s funny stuff.
“Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.
Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.
Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available. “
The real problem is that people are so poorly paid and ill-treated at work that they start resenting those who aren’t. And if you think being a federal worker is such an easy job, why don’t you apply? You’ll find that the competition just to get an interview is pretty tough.
federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046
I wonder if they controlled for the cost of living of where the jobs were? I would think federal jobs would tend to be in larger towns and cities, where the cost of living- and salaries- tend to be higher.
Need to control for experience too.
I guess this was unexpected…
November is going to be a landslide.
——————–
US manufacturing shrinks for first time in 2 years
AP | July 2, 2012 | Christopher Rugaber
WASHINGTON (AP) — U.S. manufacturing shrank in June for the first time in nearly two years, a troubling sign that the economy is faltering.
The Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing activity fell to 49.7. That’s down from 53.5 in May and the lowest reading since July 2009. Readings below 50 indicate contraction.
Stocks fell immediately after the report was released.
Why are you so pessimistic about Romney’s prospects?
As you can tell from previous posts - I am no fan of Romney.
However, I am a big fan of what is going to happen on the local/city/county and state levels.
Obama is just going to crush his fellow dems on those levels.
Obama is just going to crush his fellow dems on those levels.
That’s exactly opposite most Dems are hoping for. Higher voter turnout in Blacks and Hispanics will make Pelosi speaker again and Dems will dominate at state level as well.
I smell a lawsuit.
Get your skinny @ss off the treadmill didn`t you see the “obese-only” sign?
What happens if the obese patrons actually get in shape? I`m sorry Mr. Johnson but you lost 125 pounds so I`m afraid we are going to have to cancel your membership.
New Trend: Gyms Banning Slim Clients To Foster Comfort For Overweight Patrons
By Candice Leigh Helfand
June 29, 2012 6:10 AM
FOSTER CITY, Calif. (CBS Sacramento) – A new fitness trend appears to be sweeping the nation – one that expressly excludes those on the more slender side of the scale.
Multiple reports have surfaced recently about gyms that cater exclusively to zaftig clients looking to lose weight in a place free of potential judgment from other, smaller patrons.
Though some all-inclusive gyms have attempted in the past to create a safe haven for anyone interested in exercising – for example, Planet Fitness, a national chain of gyms with a “judgment-free” motto and mentality – some creators of obese-only gyms feel it’s not enough.
http://sacramento.cbslocal.com/2012/06/29/new-trend-gyms-banning-slim-clients-to-foster-comfort-for-overweight-patrons/ - 96k -
Seriously, sometimes our political correctness is more oppressive than the Soviets ever were.
And then again, some people can’t help reminding other what great shape they are in, compared to all those lousy, undisciplined, POS overweight people they have to share the Earth with.
Other side of the same coin.
Yeah, I hear ya.
After the reading I’ve done, I think the POS overweight people are not undisciplined. They are ill with glyodin addiction.
It’s all about the ego. Wouldn’t want that ego to take a hit, so let’s give “Participation Trophies” to kids in sports. Let’s stop grading on a curve, or even grading at all, as that would deter people who aren’t smart. Let’s tell every child they are special and deserve to have everything, preferably handed to them by their parents.
This is just one more example of that… segregation at the gym, because we wouldn’t want out-of-shape, overweight people to have hurt feelings when they see skinny people working out.
This is a business making a business decision. They think they will do better with this business model. They have found a niche are willing to take a risk on exploiting that niche.
Why would an advocate of the free-market advocate have a problem with that?
I don’t have a problem with the business-decision. Rather, I’m commenting on why I think this decision is even worth considering.
In an environment where the ego is not fragile, there would be no market for such a premise as the one mentioned. “That which does not kill you makes you stronger.” I know Nietzsche was a bit of an ass, but he had that part right at least…
So you are whining about people’s feelings? Really? You think that people should change their feelings to suit you?
OK. Good luck with that.
Aw, darn. I’ll never get into a gym again.
I like it. The gym should have “Slims’ Hrs”, “Singles’ Hrs”, etc.
2 thumbs up from me.
WSJ Page 2 has an article about don’t expect U.S. consumers to fuel the recovery…high UE, stagnant wages, lower confidence, etc.
But the housing market is a-okay and coming back to life -);
Local newspaper had more or less the same article last Friday.
You know it’s bad when even the most conservative media “gets it”.
Hey - obama says the “public sector is doing just fine!”
Landslide boyz
The private sector is as well. At least the Fortune 500, anyway.
In fact, most Fortune 1000 profits are at record levels. Trickle down? Not so much.
LOL Turkey. So tell me where do all those eeeeeeevil profits go? Is the money hidden under the mattress of the eeeeevil CEOS? Or is it spent by the eeeevil shareholders who get the profitss through dividends? Or is it invested? Those are the only 2 options, invest or spend.
There has never been a better time to buy a home. Stocks are too risky!
Manufacturing contracts for first time in 3 years
Rolled steel is seen after being treated on the pickle line at the Severstal steel mill in Dearborn, Michigan June 21, 2012. REUTERS/Rebecca Cook
NEW YORK | Mon Jul 2, 2012 10:29am EDT
(Reuters) - The manufacturing sector unexpectedly contracted in June for the first time in nearly three years as new orders tumbled, according to an industry report released on Monday.
The Institute for Supply Management said its index of national factory activity fell to 49.7 from 53.5 the month before, missing expectations of 52.0, according to a Reuters poll of economists, and below even the lowest forecast of 50.5.
It was the first time since July 2009 that the index has fallen below the 50 mark that indicates contraction.
“The implication here is a very soft second half of the year,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.
Oubina said with growth slowing, there is a good chance the Federal Reserve could undertake another round of bond buying to prop up the economy at its next meeting.
New orders dropped to their lowest level since April 2009 with the index at 47.8 compared with 60.1, while the employment gauge slipped to 56.6 from 56.9.
…
Oubina said with growth slowing, there is a good chance the Federal Reserve could undertake another round of bond buying to prop up the economy at its next meeting.
Did Oubina really say that? I mean he can’t be that stupid, can he?
Perpetual money printing….is that the game?
It’s the only arrow in the quiver.
But luckily we’ve got a new belt-fed system with thousands of rounds of it ready to go.
It’s the only arrow in the quiver.
With the EU on the ropes, China seeing a hard landing, and trouble brewing in the ME, the dollar and Treasuries end up looking like those guys and girls at the bar during last call. If you weren’t drunk and desperate, you would never go for it, but morning is a long way off…
As I already noted over the weekend, the U.S. economy has slowed to stall speed. It is sure taking a long time to work through the aftermath of the Bush recession!
The economy of mid 2012, 3.5 years after Bush’s left office….absolutely nothing to do with Obama, 100% Bush’s fault
9/11…8 months after Clinton left office…nothing whatsoever to do with Clinton, 100% Bush’s fault.
If nothing else, Democrats are consistent in their inconsistencies.
Smithers, I tend to follow Bill Gross on this one…credit driven recessions generally take a LONG time to come out of. I think he quoted the bible…7 years of fat, 7 years of lean.
In other words, even if Obama made all the right moves, the economy would be sluggish.
I am far from an Obama supporter at this time…my biggest criticisms of Obama today are his inaction on his own debt commission’s plan (Simpson/Bowles). His leadership was completely absent on the plan for FAR
sorry, cut off to contine:
…too long.
Furthermore, some of the policies that he did enact were FAR too complex.
Dodd Frank still hasn’t been fully implemented 2 years following it’s passage. The healthcare bill (while I’m not in the repeal camp), is so complex that it will take years to fully figure out it’s implications.
The effect of inaction on the US debt, and laws so complex that people don’t know their implications, has led to businesses being very cautious, which has less to less hiring than would have been otherwise.
No, the sluggishness is not 100% Obama’s fault, but things would have been better with stronger leadership, and a better understanding for the effect of political/policy uncertainty on business and hiring.
Rental,
I get what you’re saying. Plenty of blame to go around.
My point is at 12:01 pm on Jan 20, 2001, the likes of the Cantankerous One were ready to blame Bush for everything. Yet almost 4 years after Obama took over it’s still blame the last guy.
“…7 years of fat, 7 years of lean.”
Stolen from the HBB…
Actually, I think it was stolen from the bible.
That’s where I took it from.
Comment by Getstucco
2006-05-04 14:23:43
Don’t forget the Bible story about Joseph’s interpretation of the Pharaoh’s dream (seven good years, seven bad years, etc). The seven bad years are about to commence for the housing bubble.
“The seven bad years are about to commence for the housing bubble.”
I said that in 2006. Thanks to extend-and-pretend policy, the bad years are likely to extend beyond 2013.
Imagine if Pharoah could have printed imitation wheat, sold it on the world market, and used it to purchase good wheat.
http://www.pimco.com/EN/Insights/Pages/Pennies-from-Heaven.aspx
I remember reading it here from the oft-quoted Reinhart/Rogoff (which I’ve yet to get all the way through):
“The Rogoff/Reinhart biblical parallel of seven years of fat followed by seven years of lean is not likely to be disproven in this cycle. The only missing input to the equation would seem to be how many years of fat did we actually experience? More than seven, I would suggest.”
The seven bad years are about to commence for the housing bubble.
But PB, didn’t we have more like thirty years of credit expansion?
Ergo…
“…oft-quoted Reinhart/Rogoff…”
Yeah, but the copyright date (at least in my copy) is 2009, so it would have been hard for me to get the idea from them, unless I were a time traveler.
If nothing else, Republican trolls are consistent in putting words into others’ mouths.
July 2, 2012, 11:05 a.m. EDT
Recession now much more likely
Commentary: Factory sector stalls on doubts about Europe, fiscal cliff
By MarketWatch
WASHINGTON (MarketWatch) — There’s no way to sugarcoat it: The already-sluggish U.S. economy is stalling out, stung by doubts about our economic and fiscal future.
The Institute for Supply Management reported that its manufacturing index dropped to 49.7% in June from 53.5% in May, signaling that the manufacturing sector is contracting for the first time since mid-2009. Read our complete news coverage of manufacturing activity shrinking in June. Both the ISM headline index and the ISM new orders index plunged below 50% in June.
By itself, the decline in the ISM index below the benchmark 50% level does not mean that the economy is in a recession, but it does make it much more likely. A reading of 49.7% is consistent with slow, but positive growth of about 2.4%, according to the ISM.
The manufacturing sector has been the most robust part of the economy coming out of the recession, but that momentum has now been lost. The U.S. has now caught the fever racing through Europe and China.
The decline in the ISM was led by the biggest one-month drop in new orders since October 2001, just after the Twin Towers were destroyed. The new-orders index now stands at 47.8%, a level that’s extremely rare outside of recessions.
…
I we go into another recession, wouldn’t that technically end the current cycle? I don’t get the “DJIA has to hit 16K first” argument, but then I am a professed bear.
Dow 16,000 will happen, but it’ll be long grind
July 2, 2012, 8:57 AM
Portfolio manager Gene Peroni of Advisors Asset Management says that his technical analysis of the market suggests that the Dow Jones Industrial Average will reach 16,000 before the end of the current cycle, but noted that headline events and risks are dampening enthusiasm and holding the upward movement in check.
“We do believe the market will head higher, and we do believe we will see 16,000 before the end of this market cycle,” Peroni said in the MoneyLife Market Call interview with Chuck Jaffe, MarketWatch senior columnist. “We believe the market cycle could carry out between 2013 and 2015, even 2016,” he added, noting that it will take most of that cycle before the market reaches those lofty heights.
While the headlines have made investors sour, Peroni said they are missing a lot of underlying strength, noting there are few areas of the market that are so weak that they should be avoided.
“This is one of the most impressive market cycles I have seen in my career,” said Peroni, who has spent nearly four decades in the business. “In all the years and decades, I haven’t seen such a broad-based market advance. It really is not a micro-thematic market cycle, it is a very broad-based one, and sure it has to do with very low interest rates and liquidity … but so many different and diverse sectors have been doing well over a long period of time that I think the best is yet to come here. That’s one of the reasons why I like this market; it’s not vulnerable based on one micro-thematic event unfolding that could really drop the market.”
…
The DOW is still over 12k and UE is still well below 10%.
Do not get suckered in.
That’s right. In fact, the DOW is falling UP today towards 13K on the news of heightened recession prospects. I take this as a sign the market is trying to price in a QE3 announcement later this summer.
If the Fed doesn’t come through to satisfy this expectation, watch out below.
“Two Norwalk realtors slammed with 102 Felony Counts of Grand Theft, Identity Theft”
http://www.loscerritosnews.net/2012/06/28/two-norwalk-realtors-slammed-with-102-felony-counts-of-grand-theft-identity-theft/
This is what Realtors are about. Right here.
Looks like they got caught embezzling from their company…
So MUCH fraud out there….
These felonious monsters destroy lives.
Not housing related but I know a few of you are cyclist so I thought I would ask for your input. I hope Ben doesn’t mind me using his forum to do so.
I am thinking about taking up cycling. I am 6’ 1” about 190lbs but very out of shape. I have done some running in the past but just am no longer interested in the high impact of running.
I went to the bike store the other day and test road a couple of bikes. I test road a fitness bike first…it felt ok but something just didn’t feel right. Next was the comfort bike which I liked. Finally was the road bike…I almost didn’t even try it since the sales person said that if I didn’t like the twitchiness of the fitness bike…the road bake would feel much worse. My wife and the sales person were surprised when I told them I liked the road bike the best.
Now here is the dilemma. I really wanted to like the fitness bike since it is supposed to be versatile and I liked the idea of getting up some speed. From what I have read…the fitness bikes aren’t good on the gravel or dirt. The way I see it is that if I am going to get a bike that can only go on pavement then why the heck would I want to get a fitness bike?
So now I am wondering if I should look into the comfort bikes…but I really liked the speed of the road bike.
Road bikes are more expensive so my fear is that if I get a road bike that I will be paying a lot of money for a garage fixture if I don’t stay motivated about cycling.
Anyone got any advice? I live in the DC metro area if anyone wants to discuss the various trails available in that area. I know of the W & OD trail and one other that has some gravel pathways.
one follow-up…i see alot of people loving the fitness bike as a commuter. i could totally see that…but since i have to drop off the kids at daycare in the morning and there is alot of traffic on my route to work…commuting is not something i see myself doing at all.
“Since i have to drop off the kids at daycare in the morning and there is alot of traffic on my route to work.”
Get a rack for the bike on your car. Leave the car at or near the daycare and ride. Find a different route to work, on back roads. Avoid the arterials.
How far is it? I go 9 miles in about an hour.
it’s only about 100 yards from the daycare to my office. the W & OD is half a mile from my house so if i can get up really early in the morning i could ride it for a bit before work.
I have a mountain bike with a hybrid setup. ‘Scuse me and I’ll rummage around for some photos.
Okay, I’m back. Here are some from a recent ride with the mayor of Tucson. I got a bit artsy with the camera angles, but hey, that’s what a blog is for.
Martha?
Get the comfort/commuting bike and use it for transportation. Then after you’ve gotten in shape and if you really like it, get a road/mountain bike for recreation, depending on the type of recreation you prefer.
Go to a bike shop and make sure it fits right. Get the helmet, a rear rack, and a bag to attach to the rack. If you’re still riding in September, get lights, a bike jacket, a safety vest and a couple of long sleeve bike jerseys.
My experience is you’ll only be able to ride a long distance, say to work, twice a week at first, because you’ll be using previously unusued muscles. My neck was sore from the slight lean forward. Next you’ll be able to do it every other day, three times a week if the rainy days come out right. And then two days in a row. After 30 rides, you’ll never want to do anything else.
If biking is an extra activity, you may not have time and it will sit in the garage. If you are riding as part of the rest of your life, you”ll get easy exercise. If I can do at 230 lbs and age 50, it will probably work for you.
“My neck was sore from the slight lean forward.”
Pfft. The last time I rode a bike it wasn’t my neck that was sore and it lasted a couple of days! Kindof like horseback riding.
Thank goodness I had a padded seat to take for spin class.
Always get the bike you feel most comfortable with. You can always change it in latter years.
Didn’t they find that male impotence was caused/exacerbated by bike riding? Or was that disproved?
Made me leery of riding my bike too much. That plus I simply do not trust drivers of cars to notice or respect me on a bike. They barely do when I’m in my car.
It depends on the saddle. I’ve heard good things about the Specialized Body Geometry saddle for guys. For serious women riders, nothing beats the Avocet O2 W40.
Figure out what you want and then buy it used on craigslist for half the price. People sell really nice bikes on CL, you just have to be willing to look every day and be patient.
Fare Hikes anger many riders
Higher-priced Ride
The MBTA hiked fares today, and those who rely on public transportation are pissed. The retired set, the poor, and minorities all say they can’t afford it and it impacts their day-to-day lives.
The money has to come from somewhere, it might as well come from the people who are using the service. Of course, all those mentioned above supported an increase in the state gas tax to help subsidize their ridership. Sorry, my tolerance for having money taken from me to pay for others is just about maxed out…
My tolerance for subsidizing highways and cheap gas through massive oil company tax breaks and our military is running out. Not to mention city drivers subsidizing rural drivers, ie driving in the city you get worse mpg so you pay more taxes per mile than the rural driver. This has been going on for more than 50 years.
Massive oil company tax break = allowing eeeeevil oil companies the right to deduct expenses like every other corporation in the country.
Speaking of taxes, how much tax revenue do you think the eeeeevil oil companies send to DC every year? Hint: a lot more than Solyndra, Whole Foods, Starbucks or any of the companies/industries the left loves.
The lefties don’t love whole foods any more after the CEO came out in slight opposition to ObamaCare couple of yrs ago.
It was more than slight opposition.
And, speaking as someone who once worked under a guy who went on to be a bigwig at Whole Foods, there’s this “ill health is all your fault, and you need to eat this organic food that we just happen to sell” meme that’s very prevalent among his ilk.
To which I say, go tell that to my mother, who’s on the front lines of my father’s mental deterioration. The condition’s inherited, and up until it became apparent three years ago, he was in great health.
Ditto, AZ. I haven’t spent a dime at Whole Paycheck since that editorial came out. The CEO cited all the R talking points, then touted his own great system.. which was fine for the young singles who worked there. Anyone else, not so much.
Many libs had been growing restless with WH anyway, since it had moved from its granola roots to high price boo-teek foods. They took the editorial as an excuse to abandon WH altogether and shop at Costco, Trader Joes, and farmer’s markets.
They took the editorial as an excuse to abandon WH altogether and shop at Costco, Trader Joes, and farmer’s markets.
Me? I shop at the Food Conspiracy Co-op down on 4th Avenue. Just as I have for the past 25 years.
Is oil extraction manufacturing and does it deserve the same tax breaks? Answer NO! Why because you won’t relocate oil extraction you go where the oil is, and eventually all oil sources will be developed.
Sec.199
Congress, concerned that U.S. manufacturing was lagging behind foreign imports that in many cases benefited from foreign countries’ subsidies and undercut U.S. producer prices, offered tax relief with the domestic production activities deduction. Since 2004, Sec. 199 has allowed as a deduction a percentage of qualifying production expenses, with “production” defined broadly and requiring only that it take place “in significant part” within the United States.
So oil companies are making huge bank on this even though it was designed for manufaturers. When Exxon starts manufacturing the majority of it’s oil call me.
The Democrats’ proposal would raise about $13 billion by blocking the five largest oil and gas companies from receiving a domestic-manufacturing deduction for exploration and extraction in the U.S. Democrats have said extraction shouldn’t be considered as manufacturing.
I’d take it a step further
Should we tax oil and gas use - Given that it’s use siphons off trillions from the US economy over the years and funds Iran’s nuclear bomb, to the Saudi’s support of the Taliban I’d say yes. Our military is used to protect oil company interests. Who should pay for this? I’d say those the profit from and use the most oil.
My tolerance for subsidizing highways and cheap gas through massive oil company tax breaks and our military is running out.
Right. Because your city is completely self-sufficient and doesn’t need to ship via tractor trailer any of the following fuels, food, clothes, appliances, electronics, spare parts, building materials, etc. I could go on…
Everyone benefits from lower fuel costs, including city dwellers who use the public transportation, through lower costs to produce and ship almost everything we consume on a daily basis. On the other hand, not everyone uses public transportation, nor receives any benefit from it whatsoever. So tell me again why I should pay higher taxes so grandmas and welfare queens can continue to use the T without paying more themselves?
For your information, a lot of those grandmas have not had the great fortune in life that you have. They may be disabled. And living on Social Security.
You may find yourself in their shoes someday, so don’t be so smug. Life is long, and a lot of things can happen to any of us.
Sorry, but public transportation subsidies for old ladies to go to Church or shopping are not high on my list of priorities.
FWIW, my great aunt and grandmother both walked everywhere, as they never got their drivers license and the only public transportation where they lived were buses, which ran infrequently. They walked to church. They walked to the grocery store (when we couldn’t drive them). They walked to the doctor’s. If they couldn’t walk, they called a cab. They never complained and they never asked for someone else to pay so their lives would be easier. Nor did they expect anyone else to help.
I’m tired of the entitlement. As I said before, the money has to come from somewhere and I’m done paying for other’s privilege.
Wow, your family sounds really boot-strappy. I agree that we should take a look at which subsidies actually make sense or should be done a different way, but I can sympathize with old ladies that need rides.
Sorry, but public transportation subsidies for old ladies to go to Church or shopping are not high on my list of priorities.
Wish you could have encountered my mother right after she got home from rehab and was getting around with a walker or cane. She couldn’t drive.
It would have been a very interesting conversation, that’s for sure.
Wow, your family sounds really boot-strappy.
My grandmother and great aunt were children of the Great Depression. They were used to doing without if they couldn’t provide for themselves. They were also 2nd generation immigrants from Europe who had an amazing work ethic. I can only hope to live up to their ideals and standards.
Same here.
One more point on this. As a car owner who commutes, I pay a number of taxes already for the “privilege” of owning and using a car. I paid sales tax to the state when I purchased the car. I pay excise tax annually to the city where the car is registered. I pay the state for an inspection sticker annually. I pay the state a registration fee annually. I pay the state gas tax every time I fill up the tank. Lastly, I pay sales tax on every auto repair service and parts for my car.
How much revenue do I generate for the state and my local community through driving? Yet there are those who continue to think people who drive should pay more… like I said, I’m done with the government taking more money from me to pay for whiners and slackers.
Why do you refer to people poorer than yourself as whiners and slackers? If your life was like theirs, I’ll bet you’d do a bit of whining too.
Walk a mile in the other person’s shoes. It might do you some good.
Why do you refer to people poorer than yourself as whiners and slackers?
Read the article I posted. Everyone in that article is whining about higher prices. When gas was at $4/gal, I didn’t whine. I adjusted my budget and paid the price. Now they have to pay and they can’t afford it? Get a job, make money, cut back cable, whatever… just stop whining.
I have 3 jobs. Am I fortunate? No. I’m smart, I work hard, and I’m motivated to provide for my family. Period. My grandfather held down 2 jobs to support his family. My parents are working poor, income-wise, yet they don’t get any help whatsoever. They don’t complain.
Every day on my drive to work I pass a local liquor store. I see minorities walking out with cases of cheap beer… at 9am. These are working-age people in their 20’s-40’s. Want to bet they don’t have a job? Want to bet they area spending their EBT money provided by the government on booze to they can sit at home drunk? Money that comes out of my paycheck so they can sit home and drink while I work…
I’m done with entitlement. I’m done with people expecting someone else to pay for them. Society has a problem. It has allowed people to expect to be given everything and to pay nothing. I’m hear to tell you that won’t happen.
Am I fortunate? No.
Really?
Am I fortunate? No.
That makes you sound like an ingrate.
I have 3 jobs. Am I fortunate? No. I’m smart, I work hard, and I’m motivated to provide for my family
So are the rest of us. But, for some reason, we seem to go about the business of our lives without needing to bash those who are down on their luck in life.
we seem to go about the business of our lives without needing to bash those who are down on their luck in life.
It’s not that I don’t care or don’t have sympathy, but at the end of the day, the money has to come from somewhere. I’d rather it didn’t come out of my pocket, obviously…
And you’re right. Misfortune could befall any of us. Thanks for the grounding, Slim.
Am I fortunate? No.
Really?
I don’t view my family’s current financial status as “fortunate”. Maybe once we’re part of the 1%, but for now, we’re just a hard-working, middle-class family in a high-cost-of-living state doing what we have to in order to provide.
I view the fact that I have a loving wife and two healthy, beautiful children as fortunate, but that was pure luck.
You’ve had lots of pure luck. We all have. That’s what makes us fortunate.
Northeastener, you should move to Florida. This state is packed with people who share your perspective.
I don’t get why you are not happy that there are people who will take public transportation so that they don’t clog up your roads and burn your gas. Is your time worth nothing?
We should support it everywhere that population density makes it more efficient than cars.
“Right. Because your city is completely self-sufficient and doesn’t need to ship via tractor trailer any of the following fuels, food, clothes, appliances, electronics, spare parts, building materials, etc. I could go on… ”
Leftists think the organic arugula sold at the downtown Whole Foods is also grown at the downtown Whole Foods.
I’m a leftist and know that said arugula is shipped in from elsewhere. So there.
He’s even named after a cartoon 1% bootlicker. Why take him seriously?
I ♥ arugula.
Arugula is very very easy to grow yourself. You just gotta eat it fast before it bolts.
Subsidizing these things made our country one of an SUV driving population with McMansions in the burbs. Companies don’t invest in energy saving technology due to that subsidization. Thus we consume more of it. It’s a gift to big oil and Saudi Arabia, and Iran and Chavez, but somehow you want to justify it.
We should also recognize that these subsidies are a tax on future generations, by cutting tax revenue and more importantly using more oil and gas now.
You make another good point which is that cheap oil and gas also make outsourcing our labor more economical. Would we continue shipping our lumbar from Oregon to China just so they can ship it back as a finished product if oil was more expensive.
Look at how well housing subsidies worked, we should definitely continue subsidizing cheap oil and gas. Although I’d point out that much of what we are subsidizing is Corporate profits.
“Would we continue shipping our lumbar”
You know, I’ve toured a biomed facility that produces allografts…
Well…
Someone has to pay the insane MBTA salaries/benefits/pensions…
It is not as if we can cut them if fares don’t cover the expenses.
Who do you think is going to pay for all these “public servants” to retire after 20 years with a full lifetime pension and health benefits..
Besides - we can ALWAYS raise the fares.
Keep voting democrat - and don’t connect the dots!
Business is booming?
The outlook is dark,
Layoffs are looming,
We’re bums in the park.
We need Bernanke singing.
I’m your Mama
I’m your Daddy
I’m that ni***
In the alley
I’m your doctor
When in need
Want some coke?
Have some weed
You know me
I’m your friend
Your main boy
Thick and thin
I’m your Pusherman
I’m your Pusherman
Town Council Of Mammoth Lakes votes unanimously to file Chapter 9 Bankruptcy.
http://www.sierrawave.net/12868/for-bankruptcy-relief/
This is a rare point in time when local govt is forced to face reality. This should be interesting, Mammoth Lakes residents are more dependent on services due to its remote location high in the mountains with vast quantities of snowfall.
Mono County Election 2008:
Obama, Barrack 55.6%
McCain, John 42.3%
Liberal Democrats in California can’t run a small town of 3000 residents. But they will run the entire health care industry efficiently.
How’s that privately run US healthcare market looking right now? Oh. Right.
“Liberal Democrats in California can’t run a small town of 3000 residents”
Conservatives are no better. Jefferson County, Alabama declared bankruptcy. It was carried by Obama in 2008, probably due to a large black population in Birmingham. Prior to that, it was carried by the Republican candidate in the previous presidential elections back to 1992. And I think there is no place in Alabama that would be considered a bastion of liberalism.
Well, they should have retained a fiscally conservative government so that they’d have the money to deal with all the unique problems of being a remote area with vast snowfalls.
Until Americans return to the values of fiscal conservatism, nothing can improve.
“values of fiscal conservatism”
Could you be more specific?
If something is worth having then it should be worth paying for?
Necessities over luxuries. Follow the minimum role of government: Law and code enforcement, tax collection, maintenance of infrastructure. There should be ZERO agreements and entanglements with “developers” under that model. Down that particular path of entrapment, are huge liabilities. Developers are now building and building using public funds. Mammoth Lakes got caught up with that.
We’re doing much of the same thing in my municipality, much to my rage. Lots of putting the taxpayers on the hook for making land speculators rich. It’s not fiscally conservative. It’s crashing munis across the United States.
Minimum government really is the only way for the long term, which is what government was supposed to be FOR. It really is best for everyone, poor, middle class and rich.
Actually, it looks like their bigger issue was a massive lawsuit that they lost to a developer…a $46MM judgment apparently.
http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html
“The High Sierra town of Mammoth Lakes said Monday that it filed for bankruptcy because it cannot afford to pay a $43-million breach-of-contract judgment against it brought by a developer.”
That was my point for Happy2bHeard to pick up on when I spoke of fiscal conservatism: There should be no reason for a muni government to have a contract for anything with a land developer. The developer needs to buy the land with his own money; he needs to obey the laws and codes already in place for the land; and he needs to pay the taxes on that land. That’s it. There’s no liability for the municipality in that whatsoever. The only “agreement” that can conceivably be signed, is where the muni promises to run utilities and roads to the site, but that’s cheap.
Americans have become used to this unholy marriage between land developers and government. It’s morally wrong and economically wrong.
“There should be no reason for a muni government to have a contract for anything with a land developer. The developer needs to buy the land with his own money; he needs to obey the laws and codes already in place for the land; and he needs to pay the taxes on that land.”
I agree with you on this. If it doesn’t make financial sense for the developer to do the project, why does it make sense for the municipality to get involved? Public/private partnerships often privatize the profits and socialize the losses. I feel the same way about sports stadiums for major league francihises.
Ports, airports, roads, parks, water and sewer projects are a different story. They provide fundamental infrastucture that are better handled by we-the-people than for-profit corporations.
I thought this particular judgement was related to development of an airport?
ECONOMISTS: FHA AID TO HIGH-PRICED HOMES SHOULD DROP
Insurance should benefit first-timers, lower-income buyers, report says
Roger Showley
12:01 a.m., May 26, 2012
Updated 4:15 p.m. , May 25, 2012
The widely used FHA mortgage insurance program should return to its roots of helping primarily first-time and lower-income buyers, said two economists from the George Washington University business school.
The Federal Housing Administration “is serving a market — higher-income borrowers — that it has not traditionally served,” said Robert Van Order and Anthony Yezer. “To the extent there is a subsidy involved in FHA insurance, it is not clear that taxpayer dollars should be used to serve these borrowers. There is no obvious purpose achieved by encouraging purchases of homes with $700,000 mortgages and less than 5 percent down payments.”
The FHA has increased its mortgage insurance coverage since the housing bubble burst in 2007 and subprime loans evaporated.
In their wide-ranging report, the fourth in a series, the authors also took note of the FHA’s dwindling reserves stemming from rising foreclosures and defaults. They said the insurance fund has fallen far below the 2 percent legal minimum to only 0.24 percent, which could prompt a federal bailout in coming months of $688 million.
In San Diego County, the authors analyzed 10,428 loans in 2010, when the county’s average median income was $75,500. Of those FHA loans, 29 percent went to households earning 150 percent of median income, or $113,250. Nationally, support went to 16 percent of upper-income borrowers.
The FHA loan limit in the county was $697,500, while the median housing price was $430,000.
…
What’s a first time, low income, McMansion owner to do???????
Here’s your future as the elite strip more and more of the wealth
As Colorado Springs battles a rash of burglaries after a wildfire that still licks at its boundaries, it does so with fewer police and firefighters.
forced more than 34,000 residents to evacuate turned off one-third of its streetlights two years ago, halted park maintenance and cut services to close a $28 million budget gap after sales-tax revenue plummeted and voters rejected a property-tax increase.
The municipality, at 416,000 the state’s second-largest, auctioned both its police helicopters and shrank public-safety ranks through attrition by about 8 percent; it has 50 fewer police and 39 fewer firefighters than five years ago. More than 180 National Guard troops have been mobilized to secure the city after the state’s most destructive fire. At least 32 evacuated homes were burglarized and dozens of evacuees’ cars were broken into, said Police Chief Pete Carey.
“It has impacted the response,” said Karin White, a 54- year-old accountant, who returned home June 28 to a looted and vandalized house, with a treasured, century-old family heirloom smashed.
“They did above and beyond what they could do with the resources they had,” she said. “If there were more officers, there could have been more manpower in the evacuated areas.”
bloomberg.com/news/2012-07-02/wildfire-tests-police-force-in-colorado-anti-tax-movement-s-home.html
Yep - cause you can’t touch them public union pensions and benefits.
Even if it means you sell off all assets and cut new hires.
Cause government is all about public union pensions…
Not about protecting the public.
The only way out is ensuring nobody earns a living wage. Got it.
Not every government is in trouble because of pensions and benefits. Orange County, California made risky investments. Jefferson County, Aabama’s crisis was due to bribery and corruption.
Put this in the “Your Federal Tax Dollars At Work” bucket.
The Navy’s Green Fleet:
the USNS Henry J. Kaiser carried nearly 900,000 gallons of biofuel blended with petroleum to power the cruisers, destroyers and fighter jets of what the Navy has taken to calling the “Great Green Fleet,” the first carrier strike group to be powered largely by alternative fuels.
Some Republican lawmakers have seized on the fuel’s $26-a-gallon price, compared to $3.60 for conventional fuel. They paint the program as a waste of precious funds at a time when the U.S. government’s budget remains severely strained, the Pentagon is facing cuts and energy companies are finding big quantities of oil and gas in the United States.
As reported by Reuters and Zerohedge. And people wonder why I want the tax and spend to stop…
Wow, that’s a $21M global warming tax per voyage.
If I were a military planner, I would want to know if it were possible to power a carrier group without fossil fuels. I would want to know that the US could respond if the Straits of Hormuz were closed off.
Slump in export orders hits Asian factories
An employee works at the Yiwu Lianfa clothing factory in Yiwu, Zhejiang province, June 8, 2011. REUTERS/Carlos Barria
By Koh Gui Qing
BEIJING | Mon Jul 2, 2012 2:12am EDT
(Reuters) - A factory slump in Asia’s two biggest exporters China and Japan deepened in June as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.
PMI reports on major exporters South Korea and Taiwan also indicated new orders from overseas were falling. The manufacturing sectors in these countries contracted in June for the first time in five months, the reports showed.
…
BTW, CIBT, to follow up from our last data share…if you haven’t dug through it yet, you should take a peek at the Lincoln Institute of Land database related to land values. If you graph the information, you see a graph much like the housing bubble chart, but more extreme in many cases (since land values are much more volatile).
http://www.lincolninst.edu/subcenters/land-values/metro-area-land-prices.asp
The remarkable thing about the data when you look at inland CA is that values on a nominal basis have fallen below the low points of the 80’s and 90’s…by a HUGE margin. The low from ‘84 through the end of the 80’s for Sacramento was ~$46k for the land under a house. The low during the ’90s was ~$58k in ‘96. The low reached after this crash was $18k (6% of peak).
When you adjust for inflation, land values today are even lower relative to prior cycles.
The data looks similar for San Bernardino; $63k low in ’80’s, $45k low in ’90’s, and 11k low now (4% of peak).
The data is much steadier prior to the crash for Phoenix, with lows in the high 50’s as the low in the 80’s/90’s. Fell to $9k after the crash. Last quarter (Q1 2012), this $9k jumped to $20k.
What is interesting is when you look at coastal communities…SD for instance never had a collapse in land values to below the lows in the 80’s/90’s, probably not even if you adjust for inflation. Neither did Orange County, LA, SF, or Oakland. Only Inland CA land values crashed that hard.
More interesting yet is when you look at relative values. SD as compared to San Bernardino has ranged from 150% of San Bernardino up to ~300%, prior to the crash.
Now San Diego land values are ~2300% of San Bernardino.
So, what gives? SB rises? or SD falls in terms of land values to get back to somewhere close to more normal relative values? Based on how low SB land values are relative to even nominal SB historical land values, I would say that SB land values are more likely to rise than SD land values falling (although not to preclude either or both occurring to some extent).
“The remarkable thing about the data when you look at inland CA is that values on a nominal basis have fallen below the low points of the 80’s and 90’s…by a HUGE margin.”
Cuz nobody wants to live there?
“…or SD falls in terms of land values to get back to somewhere close to more normal relative values?”
I’m planning to stick around to figure out whether there is any truth to the old adage, ‘What goes up must come down.’
“Cuz nobody wants to live there?”
If that’s the theory isn’t the corollary that people want to live in SD, ergo, prices remain high?
The reality is that inland CA experiences the highest growth, since coastal communities don’t allow/don’t have the ability to allow enough growth. With that high growth comes volatility. With the lack of ability/willingness to build more along the coast comes high land values.
If I could make only 1 of 2 bets (to make the relative values of land move back toward historical averages), either:
a) That inland land values rise significantly; or
b) That coastal land values fall significantly
My money would be on “a” by a wide margin.
http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html
I understand that there is a Mammoth resident on the blog…what’s the back story on the lawsuit…regarded as a big screw-up by the City? Or an overly aggressive developer?
There was a similar situation in Half Moon Bay, CA…the City trying to throw it’s weight around, skirting the rights of a landowner/developer…they got hit with a big judgement as well…not sure if there are negotiations helping solve the issue without HMB filing.
Realtors Are Liars®
Never knew that. Tell us more.
What’s up Cat…..
Realtors snort bath salts.
Like, all the time.
ALL the time.
Ben, question for you:
Have you scored any cool stuff in all of your foreclosure clean-outs?
Enquiring minds and all that…
Comment by Ben Jones
2012-06-26 09:21:10
So now I’m at this house. I see at the end of the letter it says:
‘HOPE you have boxes and energy’
BTW, almost everything on the list is still here.