Bits Bucket for July 18, 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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I wanted to comment on yesterday’s thread debating what amounts to the inheritance tax subsidies we give to family farms.
My understanding of the reasoning behind this policy is that so-called small-farming (and ranching) operations truly are family enterprises, requiring a multi-generational family effort to run and sustain. You can’t pay labor to do the kind of back-breaking round-the-clock chores and hard physical work that small faming entails and still make the operation profitable. And capital investments in equipment, seed, storage facilities, etc. are almost always disproportionate to the return on investment.
Breaking up the acreage to satisfy inheritance taxes penalizes the rest of the “company” at the the expense of the non-productive elder, and pretty much ensures that the farm will eventually become even less profitable, and eventually disappear or be swallowed up by corporate development interests.
Secondly, small-farming is a lifestyle more than it is a business. Young children already have a labor investment in the operation by the time they start school, (an investment which theoretically continues throughout their lives as they take over the elders’ duties and operations). More importantly, the quirks and rhythms of the land itself are at once so engrained and so idiosyncratic, that its productivity is more an art form than a business entity that anyone can just come in and pick up and make profitable in one generation.
So the question arises, can we get along without small specialty farms? Of course. And increasingly, massive industrial farming operations have ensured that we will. Nonetheless, I would argue that as they do so, heritage farms, specialized crops and stock, and the multi-generational farm culture will become increasingly valuable to our national security (and our cultural enrichment,) for the very reason that communism (a farming conceit) tends to die out as societies become increasingly industrialized. We sacrifice quality and diversity in the name of efficiency, and in so doing, diminish ourselves to the point of non-sustainability.
One errant virus, one anomalous growing season, one quirk of weather, or pesticidal interaction, or insect infestation, and an entire herd or seed stock can be wiped out for decades if not forever. In an industrial operation that supplies an entire national crop or product, this could be catastrophic.
In this case, our diversity truly is our strength, because famine isn’t conducive to national cohesiveness,– just ask the Soviets. And (civilized man anyway) simply cannot live without raspberries, Meyer lemons, Muscovy ducks, grass-fed bison, chives, cilantro, napa cabbage, artichokes, black walnuts, peppercorns, wild-caught sockeye salmon, figs, nectarines, cabernet grape, chevre…and all those other non-industrially produced food stuffs that make life worth living –and paying taxes for.
Farming is all about subsidies. Labor subsidies in the form of illegal immigration, water subsidies in the form of irrigation conveyance, power subsidies in the form of pump-lift operations, crop subsidies due to weather issues, etc., in other words farming isn’t a business that can function in a free market system given the high capital costs and extreme vulnerability, yet we require their produce to survive. FWIW, subsidies require lobbying. I’d never farm for a living.
I agree with you Ahansen ,we can’t let the small farms go by the wayside like we let the small mom and pop stores and small manufacturing plants be gobbled up by the Monopolies .
These small operations produce organic food a lot of times ,as opposed to the GMO foods that are taking over by Big Farma .
GMO foods are more dangerous than the public even knows . In
Europe you have to lable GMO foods ,but here in America they don’t have to lable ,( however in California its on the ballot in Nov that they would have to lable it if that bill is passed .) No doubt
Big Farma will have a big campaign against the passing of that bill .
See, I don’t have a real problem with the idea of some level of subsidy for genetic diversity in crops, keeping some non-gmo in the system, etc. But that is a different issue than subsidizing family farms. Do they overlap? Yup, absolutely. But there is nothing about family farming that means that they have to be maintaining genetic divesity/rejecting GMO/providing organic/whatever. And there is nothing about a farm run by a group of friends instead of a family that means they can’t do that.
For example, the corn lobby currently has signs up in Union Station claiming that 90% of the US corn crop is raised on family farms (pictures of hearty farmer with beautiful wife and adorable, small, blond children in the foreground). Now, I bet that their definition of “family farm” is very different than Alena’s definition. Guess which one is the definition you are going to find in the tax code?
And then we have the issue of kids who would inherit a family farm and promptly sell it to real estate developers or Con Agra or whoever even if they didn’t have to pay estate taxes. Do you subsidize them even though they have stopped farming? Is there a cut off? Your estate tax is forgiven if you farm for three years after the generational transfer? Four years? Five? What is enough? If you are trying to protect the details of the business the parents were in, what if they just switch from heirloom tomatos to GMO corn and soybeans? Do they still set the tax forgiveness?
So, I say that if you want to support a particular good (genetic diversity in crops) then support that directly. Don’t say that some family farmers are the ones who do that so we have to subsidize all family farmers. Indirect is wasteful.
And I don’t have an issue with financing the estate tax due on a family farm by allowing it to be paid over time. As a unitary asset it is harder to monetize than a portfolio of publicly traded stocks or a savings account. Same thing for a small business. That can be accomodated. But completely excusing the tax that anyone else would have to pay just because of the form of the item inherited is unfair and wrong.
Plus, seriously, the unified credit is over $5 million right now. It is scheduled to go down next year, but it will get upped when the financial cliff negotiations are over and done with. And it can be doubled if the owners are a married couple with very minimal estate planning. That is a lot of value that is already protected. Going beyond that is exactly what I said it was yesterday - a subsidy to make sure that the children of farmers can go into the same business as their parents.
The smaller farms are usually the organic farms . Somehow the estate tax avoidance should be tied into proof of continuence of the operation ,rather than selling quickly after you get the tax write off .
Around here, the “smaller farms” are the “hobby farms”. (My cousin for instance….grew up a farmer, owns the “family farm” in Oklahoma 160 acres, leases some more).
And has a full time job, because, unlike my grandfather did, you can’t support yourself, much less a family, on 160 acres.
“Real” full time farmers are usually working (at minimum) a few thousand acres, either owned or leased.
And has a full time job, because, unlike my grandfather did, you can’t support yourself, much less a family, on 160 acres.
+1 Same reality here in Washington’s Columbia Basin.
if you want to support a particular good (genetic diversity in crops) then support that directly.
This is a better idea. Example: someone leaves a $5M corn farm to the kids. After the exclusion, say the kids owe $200K on the farm in estate taxes.
If there is a $50K tax subsidy for broccoli, then the kids can farm broccoli for four years to pay the taxes. After that they can do what they want. Really not that bad of an idea.
Oxy, you’ve already disgraced yourself. Please refrain from prosletyzing your confiscatory rant.
Oh. I misunderstood, perhaps? Stoopid me. I read the jist of your comment to mean that “Although I really think family farms should be confiscated so that I have more to dispense to the poor and needy sitting on their rear ends waiting for Meals on Wheels while watching Jerry Springer, under this ONE CIRCUMSTANCE I will make an exception and permit said family to keep their $40K per year livelihood instead of taking it by fiat. Because it really belongs to MEEEEEE!!! Aren’t I grand?!!!”
You know what to do with yourself and the smartcar that you and polly rode in on.
Polly, be serious. The value is all in the land.
A $5M valuation for appraisal purposes is based on highest and best use.
Chopping up a 300 acre family farm into one tenth acre plots and reselling them as finished lots at $30K would value that land at $6.9M buckeroos. The entire holding is netting $40K per year. CURRENT law says we squeeze $285K out of that family within one tax year.
Polly, you don’t know what you’re talking about. Your confiscatory ideology has made you ignorant of any lifestyles other than your own. That is to say, those that are sunk in asphalt jungles, whose denizens have never suffered the indignity of a bead of sweat or a broken nail.
You make a good point about the value of the land.
You lose me when you become condescending.
Condescending doesn’t cover it. I am right PO’d.
Nevertheless, courtesy should prevail and I have behaved badly. Thank you for giving me a well-deserved kick in the rear.
Apparently, you don’t know what you’re talking about either.
Appraisals for estate tax purposes value the property as it was used by the decedent.
I thought that’s what the $5 million exclusion was for — so that a family doesn’t have to sell a farm for cash and use some of the cash for estate taxes. If the farm is worth more than $5M it’s hard to argue that’s it’s a mom-and-apple-pie family operation.
(I don’t know if $5M is a good line in the sand, but the concept is the same.)
It seems awfully easy to write the tax code to take care of contingencies like this. Maybe require that any farm over X size incorporate so that it’s no longer an individual estate. Or make exceptions for farms that grow non-industrial crops, or don’t grow federally funded crops.
“If the farm is worth more than $5M it’s hard to argue that’s it’s a mom-and-apple-pie family operation.”
(very rusty on estate tax issues so not 100%)
i don’t think that was the point of the exclusion. 500 acres of potato farm land in southampton NY may be worth tens of millions of dollars if you sale it to develop beach houses for new york banksters…but worth much less if you value it based on its farming activity.
The value of the land is what someone would pay for it. It doesn’t matter what revenue it generates while being used for something other than the use that it can be sold for. If you want to take your multimillion dollar lot and use it for a farm and pay taxes on it as it it will always be a farm, you better have some plausible reason - like an iron clad zoning restriction and a town that never grants waivers.
valuations in estate tax law has some quirky rules.
(over simplified example)
for istance…two people on a corporation that is valued at $ 100. A owns 49% and B owns 51%.
if A dies…the value of his stock in that corporaion is much less than $ 49.
If your his wife and your estate tax attorney or accountant values it as such…fire his ass.
holy cow i did remember something!
Special use valuation of farm or small business property:
“The second basic estate tax saving technique that is available to farmers and ranchers pertains to the special use valuation of farm or ranch property. This is because in 1976 Congress enacted Internal Revenue Code Section 2032A finding it desirable to encourage the continued use of real estate for farming, ranching and other small business purposes. Prior to the passage of Section 2032A, real estate that was included in a decedent’s estate was valued at its fair market value. Consequently, where the realty was used for farming, ranching or other small business purposes, including it in the estate at fair market value often created a substantially higher estate tax liability than was warranted, considering the value of its use as a farm, ranch or small business operation.
Section 2032A permits real estate that qualifies to be valued in the estate on the basis of its actual use rather than its higher fair market value. This means that where the provision applies, it grants relief to the heirs of farmers, ranchers and small business owners who wish to carry on the family business and might otherwise find that fair market value produces such a large estate tax that they have to sell the property to pay the tax.”
And the rule is a bad rule.
Because it stymies your compulsion to take from the self-reliant and give to the permanent underclass?
Say what?
Oxide, you also have no idea what you are talking about, likely for the same reasons as Polly.
Do the math. A 300 acre family farm is valued at “highest and best use” upon appraisal. That family farm has been netting $40K a year, after seed, tractor payments, etc.
It will be valued as the gross proceeds if sold at wholesale to a developer. 300 acres less streets will yield 2300 tenth acre plots, valued at $30K (for the developer), and at $50K (to you, a member of the great unwashed). That’s 6.9M buckeroos, and 15% of $1.9M is what the family will have to come up with within one tax year. Based on a net income of $40K from working that 300 acres.
The arrogance of the ignorant. I’m glad you feel entitled to dictate the loss of a multigenerational livelihood. I hope the zombie apocalypse hits your neighborhood first. Buy ‘em off with an offer of food stamps, why dontcha? You sure as heck aren’t going to be able to do anything that’s actually useful on your own behalf.
Shame on you, and I will refrain from advising you about what to do with yourself and the smartcar you and the likes of Polly rode in on.
Sheesh. This kind of arrant superciliousness is WHY I left the Northeast.
“A 300 acre family farm is valued at “highest and best use””
I don’t understand why its highest and best use is not as farmland, especially if it is fairly distant from a major metropolitan area. If it is a working farm, its land should be valued as farmland.
Janie, m’dear, you give GREAT umbrage.
Guessing you hail from a farming family?
Ahansen, I wish it were so, but farming was back a couple generations. I wish I HAD grown up in a farming family - I’d be ever so much better at changing lightbulbs, jury rigging stuff, and figuring out the import of those sickly noises emanating from under the hood of my car. Closest I ever came was winning a bake-off at the Bridgewater Fair in the early 90s.
I have worked with farmers’ offspring, admired their resilience, capability, and work ethic - not to mention their senses of humor. And have become outraged at the stories as they emerged, bit by tiny bit, through the years.
Again I say - to those of you who believe you are entitled to expropriate a multigenerational way of life, disenfranchising entire families, the better to promote your own ideology - I devoutly hope that you get to experience one of life’s finer moments. The one with the shoe on the other foot!
yea natural food. Indulge my nostalgia for a moment; I worked in organic farming 1990-2004; I loved the food perks from the farmer’s market. We really only bought meat at the store as the CA markets did not really supply much in the way of protein besides eggs. There was the shrimp guy but my girl at the time had an affair with him so I lost out on those I guess…
I think a lot of the bank I made was due to not paying for veggies…
I know farms that suffered with the corporate takeover of the organic market. And some that grew thanks to the grocery strike whenever that was it was a shot in the arm to marketeers.
by late 1990s, the fledgling wholesale market was largely beingg taken over by the bigger names. Like PureVeg, Earthbound, Del Cabo among others. Now they supply Walmart as well as Whole Wallet, and organic does not mean lovingly grown by a man in a straw hat. I still recall the boss’s anger at WFoods’ whimsical ordering practices; going elsewhere to save a buck over loyalty to the farmer’s product. Cutthroat to say the least. And if they wanted 6 pallets and you could only supply 5; that was reason enough for them to dump you and your whole effort. Until they needed you it did not pay to farm for them unless you could meet their scale and pay their prices.
My boss just grew everything and charged a higher price for it; called it a boutique. Hoped for a heatwave in the valley or a flood in Watsonville which would bring demand his way. And got back into retail markets and now CSA baskets as his boutique model was struggling. In response to the changing wholesale market that just got harder and harder as bigger players smelled the dough in the air.
Market gardening is still alive thanks to the CA farmer’s market, though. They did not like us there as we farmed 100 acres, which is not huge, but big enough to largely exist on shipping market, making us seem like the huge truck farms we competed against.
Just like we could come to the farmers market with 20 boxes of corn which in turn peeved the smaller producers there with one box. Now organic means almost nothing to me as I know it where it comes from….monoculture! But smaller gardeners at market I would love to support again.
We grew some crazy stuff back in the day. Not just wacky tabaccy either. Now the smallish organic farm I used to work at grows heirloom tomatoes; greenhouse tunnels made with PVC ensures early market and late freeze for tomatoes, squash and cukes. Then when they are in abundance in the summer, grow more lettuce as the hot farms struggled with the extra heat. After eating fresh heirlooms you dont want to go back to the supermarket. My favorite tomato was called Compari; I left before the really soft heirlooms and their $5/pound price took over my greedy boss’s heart.
We grew Chandler strawberries(tart yet sweet, not good shippers. We grew CamaRosas for that, a cross between Camarillo and Santa Rosa for the engineered name on a berry you could throw against the wall and still ship to the east coast) pickling cukes, cherry toms, Savoy Cabbage, Kales, Chards, Daikon, kohlrabi, parsnips, blue lake green beans, yukon golds, snap peas in spring and fall. Plus always had carrots, beets, spinich, broccoli, summer and winter squash, onions, garlic. Coastal CA was not good for the melons we did pull off some watermelons and rocky sweets from time to time but could not compete with the heat, which is how I met some folks from Temecula; they had the heat! And liked our leafage. as we did their melons. Reminds me of the time my wife dropped a tomato off the hanging scale and into her cleavage. One of us would sell and the other would wheel the kids around from stall to stall; or out for a short hike etc. the hardest part was driving to LA to make money. This was after I semi-retired(went to Oregon to get a teaching license) and all those boxes everyday got both boring and physically daunting. And had to give up the local SB markets to the boss’s kids so I could still go to markets just had to drive. Boss went from no farmers markets when I first asked him to take his food to market; my mentor went under..”the gopher” had good food but he was too idealistic. Now the ex-boss goes to 40 or so every week. And he changed the employee arangement that worked so well for me. alas….
Other stuff we traded for for our family like local honey, sprouts, oranges, dates, stone fruits. If only I could continue to bag with smile…I could still run market stalls.
Going back to CA this August; tempted to ask the old boss if we can pick up a market or two just for old times sake. We used to go to Montrose, Pacific Palisades, Malibu, Ojai, West Hollywood(haggling with Russians regarding lettuce price was a blast, even though they always won). As I was not a member of the family, to abide by their rules I would periodically take the boss or bring one of his kids as CA is adamant about the farm owner showing face at market once in a while. Now one of the kids I trained in market sales manages the farm. No danger of going out as the boss is a multi millionaire thanks to the organic movement and the Farmer’s Markets over the last 2 decades have helped that.
Thanks for the story, Mike!
Thanks for reading. I got a million. Since this is the Bits, I will try another subject now.
Trying to get back into lap swimming so I can surfitup better in CA next month. Up to 1 kilometer. So comforting if out in bigger waves knowing if you lose your board you can easily swim a mile. My 11 year old is joining me in the pool which is, like, so rad. Hitting up my old farming buddy for some digs in Cambria that wont break the bank. He cant have us at his house as he is housing his daughter and her boyfriend for the summer. I was at the farmers market covering for him when she was born! But he showed up there nevertheless looking for a modern version of a cigar(I thought you handed them out, but I did not begrudge him a J for his nerves) Not young anymore! Can’t wait to see my old buddy. He probably still lives surf.doobie.chow lifestyle as much as he can around work. Old conniving bastard! My other friend is going thru divorce, has become a narcissist(impossible to get a word that he remembers), and is in New Zealand trying to avoid being served. Says he loves his kids but I saw them at the pool with their mom and where is dad??? Not doing anything good if he wants anything more than visitation.
My 13 YO is way too cool for pool. She gets enough exercise just Rolling her eyes!
So comforting if out in bigger waves knowing if you lose your board you can easily swim a mile.
Smart. I’ve been surfing for 15 years, but only in the last 5 have I become a long-distance open water swimmer. The only time my leash has broken while surfing I was close to shore, but you never know…
Mikeinbend,
If you’re in SF, let me know - I’ll meet you in the line up!
How bout on stokereport?
Almost made that mile today!
Srsly, we are going to be in Cambria Aug 20-30, I have never even paddled out at OB, but sure like everywhere from 3mile to Waddell. Or Sand Dollar, Willow on to Cambria, notable exception Fullers. See if any locals are on the HBB to spank me!
Skipping the local closeout trips(local is 180 miles one way but I have the 5 mil to prove it) for now everytime there is a windswell in lieu of swimming at the pool.
Reuniting with an old friend I used to ditch class at UCSB and go camp in Cambria where he grew up, surfing Jalama, Cambria, up to Sand Dollar. Time has passed but the memories linger nostalgically. Hopefully he can find us some decent digs there. He tells me I am not missing out this summer though.
My sis lives in San Mateo, so I will check in from there, on either end of those dates if I can get a beach pass. BTW, An ex girlfriend of mine was reining champ for a time of the Santa Barbara 6 mile swim; I got the honor of paddling for her many a swim. She probably still does the Cowells to Capitola shark swim. But she got into paddleboarding last I heard. Does some famous Hawaii crossing.
My son wrote on his goals sheet at Basketball camp, “I want to keep surfing. My dad is really good at surfing(experienced, maybe, but never that “good”) and I want to keep going with him. Made my day to read that.
Way more stoke to give. A buddy joined us this summer, we were giddy after a fruitful day of me pushing my kid and friend into whitewaters and all he did was grumble about the breeze and him not getting any smokin waves. Jeez, it is supposed to be fun.
So thanks for offering to share some waves invite, I will keep it in mind. We have been avoiding CA for the last 6 years; but my wife would like to meet her 5 year new nephew, $$ or not it is time. And I get to go to Jalama hee hee, better be in shape I guess.
Srsly, we are going to be in Cambria Aug 20-30, I have never even paddled out at OB, but sure like everywhere from 3mile to Waddell.
Well, better waves south, for sure. Nothing beats Pleasure Point when it’s working.
My home break is in Pacifica; often crappy, occasionally very good, rarely epic. But good folks: it’s nice to paddle out and see all your pals and hang out in the parking lot shooting the breeze. 16 minutes from my front door to the beach - why I don’t move someplace cheaper - 25 minutes from couch to line up, board and wetsuit and all.
I’ll go to OB if it’s small (less than 5 ft) and I have a buddy. It’s a heavy wave and you’ll take a beating on bigger days. Don’t surf OB alone!
Lindy! Perfect for me! Its on!
Lindy! Perfect for me! Its on!
Linda Mar it is…
I’ve got six heirloom tomatoes growing out back now. Only tomatoes to eat but too expensive to buy. Problem with some organic farms is they’re sandwiched between farms that spray at lot of chemicals. Do love the local farmers markets for fresh veg, cheese and flowers.
You might consider sending this post to your congresscritters. And Monsanto. It’s that eloquent, and you make a great case for biodiversity.
Feel free to disseminate, Mid. Thanks.
“Muscovy ducks”
Those dudes battle to death.
Realtors Are Liars
My tenant is a realtor. Says she will be ready to buy my house next year but if I put it up for market now she is leaving.
I guess she is lying.
Yesterday I said I made money on appreciation, but it had more to do with lucky timing than disputing your claim regarding the matter.
PB pointed out that it was an anomoly to be able to time the market, and not likely to be replicated. Explains why I lost my a$$ just a couple years later. And why something we paid 200k(a condo) for in 2005 went up to 350k(cha-ching) in 2006 and now is at 170k now(sad face).
Someone else pointed out that appreciation can be explained by the land value rising more than enough to compensate for the depreciation of the structure. I like that explanation as the house I owned in SB was a craphole. Roots in the cellar and moldy walls from a leaky shower pan. Roots in the sewer line also buckling the sidewalks and driveway. Fences falling over, held up by ivy and taken over by rats in the ivy. Ground colonies of termites. Toxic mold! Deferred maintainance should usually be counted on to bite you in the butt, I got out from under that albatross just at the right time.
It was indeed the coastal land that had appreciated more than the structure had depreciated which allowed for a profitable sale.
Russians bought that joint and but 300k poured into fixing it up only to find that the market had turned and they ate that money when they sold.
Man-made things depreciate/deteriorate over time. I know it is true because it is on my taxes.am onbored! Realtors are not all liars, but I will give those to you as struggling outliars to the dataset.
Anomolies that will be sorted as struggling realtors lie in an effort to keep food on the table. And they are now getting into… property management. And they tell you that your application fee is money well spent…
Houses depreciate….. like ALL manmade items.
Sigh. It’s as though all that verbiage yesterday never even happened.
Oh, well. Verbiage is a renewable resource around here.
It’s as though all that verbiage yesterday never even happened.
You’re correct but not in the way you think.
You’re correct but not in the way you think.
Of course. Only Mr. Know-It-All is correct ALL the time.
Funny one Slim
Maybe someday someone will REALLY press his buttons.
Hope not. And what’s up with the cryptic answer RAL?
What are you saying?
RAL is saying all RAL’s verbiage went for not yesterday. No one learned from what HE offered………
am not
are too
am not
are too
I’m rubber….your glue… LOL
36 hours later you’re still $hittin’ all over yourselves trying to disprove the 2nd law of thermodynamics.
I call BS. Nobody disagrees that housing falls into disrepair. What we disagree with is that owned homes fall into disrepair while rentals somehow stay pristine. Look, this is what happens to rental housing:
1. Deteriorates, and the LL raises the rent to cover those costs. Maybe not immediately, but they will.
2. Deteriorates, and a private LL eats the maintenance costs. Good luck finding one of those.
3. Deteriorates, and the commercial LL’s pay for maintenance out of profit from other units, or other properties. Either way, someone pays for the maintenance.
4. Deteriorates and the LL’s don’t do maintenance at all, instead selling the place lower down to a slumlord. Supply eventually falls apart and disappears and rents increase anyway. In this case, new apartment buildings are built, and now renters have to pay for construction of something new, instead of maintenance.
But in all cases, the housing deteriorates.
You call BS on what? Nobody asserted that rental housing doesn’t depreciate. ALL man made items depreciate.
“What we disagree with is that owned homes fall into disrepair while rentals somehow stay pristine.”
What we disagree on is who pays the most for repairs: A homeowner or a renter?
Whether a homeowner occupies the home or rents it out, he/she owns the investment gain or loss on the property. If a landlord chooses not to maintain a rental property, the renter may suffer some short-term displeasure at living in a dilapidated crap-shack, but ultimately has the option to move out if the place starts to really fall apart; by contrast, a landlord faces the choice of ponying up for repairs or taking a hit on the future sale price.
Similarly, if a landlord incurs high-cost repair bills and tries to pass those on, the renter has the prerogative to relocate. Whether owner-occupant or landlord, the owner is the ultimate bagholder on maintenance and repair costs.
Was my comment clear enough, or do I need to explain further to enlighten the clueless?
“Deteriorates, and a private LL eats the maintenance costs. Good luck finding one of those.”
Cool! I’m not only lucky in love, but also lucky in rental housing — double score!
“HARP 2.0 is an improvement, but it’s not nearly enough,”
So what would this be?
Son of HARP?
HARP 3D?
HARP:The Revenge?
This is the song that never ends, yes it goes on and on my friend. Some people started singing it, not knowing what it was, and they’ll continue singing it forever just because…This is the song that never ends, yes it goes on and on my friend. Some people started singing it, not knowing what it was, and they’ll continue singing it forever just because…This is the song that never ends, yes it goes on and on my friend. Some people started singing it, not knowing what it was, and they’ll continue singing it forever just because…
Bill in Congress aims to improve federal home refinance plan
By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 6:39 a.m. Wednesday, July 18, 2012
Nearly 1 million Florida homeowners who are blocked from refinancing loans under current federal programs could earn lower interest rates with proposed legislative changes to the Home Affordable Refinance Program.
According to a report Tuesday by the Center for Responsible Lending, the changes would save the average Floridian who refinances with the program about $3,035 per year in mortgage payments or $2.9 billion statewide per year.
The legislation, SB 3085, is sponsored by Sens. Robert Menendez (D-New Jersey) and Barbara Boxer (D-Calif.).
If passed, it would be the third tweak to the federal Home Affordable Refinance Program, or HARP, since it was announced in 2009 as a way to help underwater homeowners refinance into lower interest rates. Average interest rates fell to a new historic low last week of 3.56 percent on a 30-year fixed mortgage.
“HARP 2.0 is an improvement, but it’s not nearly enough,” said Center for Responsible Lending spokeswoman Kathleen Day about the second program revamp announced in the fall. “This would put more money in consumers’ pockets, prevent foreclosures and boost the economy.”
About 1.3 million homeowners nationwide have refinanced under HARP guidelines, which require homeowners to be current on their mortgage. In Florida, 74,500 homeowners have refinanced with HARP.
But 17.5 million homeowners nationwide with loans guaranteed by federal mortgage backers Fannie Mae and Freddie Mac are paying interest rates above 5 percent, according to a news release from Boxer’s office.
The bill she is co-sponsoring is aimed at extending HARP’s reach by eliminating borrower appraisal costs and up-front fees, forcing second mortgage holders that block a refinance to pay a fine and increasing competition among lenders for refinance business.
“(The banks) all have a different story and excuse as to why you don’t qualify,” said Orlando homeowner Cherie Faircloth during a conference call Tuesday. “I have a high credit score. I have no debt. I have done everything right.”
But Faircloth owes more on her mortgage than her home is worth and has been unable to refinance.
Homeowners who are severely underwater _ owing 25 percent or more on their mortgage than their home’s value _ can have trouble refinancing even though the fall HARP update was supposed to remove equity caps.
Part of the problem for those homeowners, who are considered more risky, is banks are wary to refinance loans outside their portfolio because of increased standards on verifying income and employment. Lenders refinancing their own loans are not subject to the same underwriting standards, or requirements that they buy back bad loans from Fannie Mae and Freddie Mac.
The proposed bill would reduce the verification standards for lenders refinancing loans from other banks in an effort to increase competition.
And watch the Housing Harpies scream for more “help” which only serves to keep prices inflated.
Keeping hope alive.
Keep ‘em stayin’ and keep ‘em payin’.
Those who got sucked in need to be kept in.
“I have a high credit score. I have no debt. I have done everything right.”
He got two out of three. Not too bad, better than most.
I think that was a she (Cherie). Equal opportunity FB status.
Combo, you really need to write a book.
I especially like the term “Center for Responsible Lending”.
Where were these “Responsible Lending” folks when the mania was going full force? Where was Barbara Boxer?
Where were these “Responsible Lending” folks when the mania was going full force?
Depositing their commission checks?
After a month or so of looking for a condo to buy for our kids, we will be putting in our first offer today.
A bit more than the $35K we were originally thinking, but for a much newer and better condition unit at $45K.
$12K down plus $2K or so closing costs (appraisal, inspection, HOA transfer, title insurance, etc.) with $33Kish mortgage, 15 year at 3.5% we’re looking at total carrying cost, PITI plus HOA of about $450 a month.
Looking at rents in the area, 900 sqft, 2 bed, garage and pool would cost about $700-800 a month.
Short sale, so even if it is accepted as top offer, it will be months before the bank makes a decision.
Ruh-Ro DuWayne, Gampy got-a-gun!
Watching them go from Gangsta to soiled pants scurrying out the door is priceless.
Conceal carrying 71-year-old stops Florida robbery
July 17th, 2012
Two young punks looking for a quick score of cash and computers might have an easy target robbing an Internet café. That is unless you happen to pick the place that 71-year-old Samuel Williams is.
DuWayne Henderson and Davis Dawkins entered the café in Ocala, Florida with hoodies and masks to conceal their identifies. Armed with a bat and gun and intent on robbing the place they rounded up the patrons and smashed a computer.
Mr. Williams provided proof that conceal carrying citizens can make a difference. The senior citizen turned away from the computer he was using, drew his .38, and fired at one of the robbers.
Undoubtedly not used to having their victims stand up to themselves, the cowardly Henderson and Dawkins tried to flee. All the while Williams kept popping off rounds at them.
Henderson spent some time in a Gainesville hospital recovering from the gunshot wound he suffered. Both of the would-be assailants are now in jail.
Conceal carrying 71-year-old stops Florida robbery | Tony’s Rants
http://www.tonysrants.com/national/conceal-carrying-71-year-old-stops-florida-robbery/ - 34k
“Undoubtedly not used to having their victims stand up to themselves, the cowardly Henderson and Dawkins tried to flee. All the while Williams kept popping off rounds at them.”
Making it attempted murder.
Deadly force is only authorized when it is reasonable to believe that there is risk to life or health of you or another innocent person, or vital national interests are at stake.
It is murder/attempted murder to use deadly force to protect property or prevent a criminal from fleeing.
All those cop shows where the cops shoot at fleeing suspects…. If that was real, then there would be lots of cops in jail for attempted murder.
How do you know the fleeing criminal who just threatened your life isn’t going to turn around and shoot? I would blast away at the bastard. Good for the 71 year-old.
So, keep your gun pointed at them and look or aggressive action.
I’m just saying, this “shoot to prevent them from getting away” is a great way to end up in jail for murder.
Assuming that:
-The local DA chooses to press charges (a good way to lose an election around here), and/or
-you can actually find a jury that will convict.
The only problem with shooting robbers is that they may start blasting people without warning, concealed carry or not.
How do you know the fleeing criminal who just threatened your life isn’t going to turn around and shoot
By that reasoning, I could walk into any establishment and have at it with impunity (and immunity), because anyone in there could “turn around and shoot” at any moment.
Fleeing criminal = anyone in any establishment?
It looked like he was shooting down at their feet anyway.
“It looked like he was shooting down at their feet anyway.”
That was just the part where he was yelling “dance, motherfawker.”
This unfortunately is the basic problem. Armed robbers not infrequently murder for prestige or simply because of poor impulse control. If the opportunity to neutralize an assailant who is threatening lethal force presents itself, it would be wise to take it, provided one can effectively apply the neutralizing force.
On the other hand, the system frowns on sheep who become wolves.
But the fleeing guys are NOT threatening lethal force. They had threatened, but when they were shot at, they ran and were therefore no long threatening. Wouldn’t they need to threaten lethal force, again, in order to be shot at, again?
So the old guy with the gun switches back and forth between self-defence and attempted murder, depending on what the (now former) assailant is doing. This is why the Treyvon Martin case is so touchy. Nobody knows exactly what was happening at any one moment, except possibly Zimmerman.
It’s easy to second guess from a safe distance when the guy who just had a gun pointed at him should no longer feel threatened. I’m willing to give him the benefit of the doubt.
Gun battles - or any combat - is not neatly scripted. One can retreat, then attack again if/when the opportunity presents itself.
“I’m willing to give him the benefit of the doubt.”
Especially a 71 year old facing those much younger. If he ran into the street and chased them and still kept shooting, then the circumstances would favor attempted murder.
How do you do that nifty box, Neuromance? My HTML is very rudimentary.
Happy2bHeard: The blue box is created by the “blockquote, /blockquote” tag. I’ve left off the “” so the interpreter doesn’t interpret them as actual tags.
FYI, at the very bottom of the comment box, in my browser at least, it lists the tags you can use in a response.
Just type in the html tag in google and you’ll get a good list of informative sites.
Here’s one hit I got when I typed in “html tag a href”:
http://www.w3schools.com/tags/tag_a.asp
Thanks, Neuromance!
“Making it attempted murder.”
This is attempted murder.
Jurors convict Dunkin’ Donuts shooter on all 19 charges
Updated: 12:38 p.m. Saturday, July 30, 2011 | Posted: 11:13 a.m. Friday, July 29, 2011
Jurors convict Dunkin’ Donuts shooter on all 19 charges
By Susan Spencer-Wendel
Palm Beach Post Staff Writer
WEST PALM BEACH —
For the man who told police it was “pretty” to watch his gunshot victims’ faces blown off, and seeing the carnage was “like sex” to him, justice came swiftly and soundly late Friday.
Herard told Judge Miller it was a foregone conclusion he would be found guilty and he wanted to represent himself and have some “fun” while he still could.
Quietly, almost whispering at times, he denied his role in the crime. “Only evidence connecting me is my mouth,” he told jurors.
Herard spoke mostly nonsensically about minor points in the case. He mentioned being older and wiser and better able to understand the events. “Objection!” said Richstone, adding he was only allowed to comment on evidence. “Sustained,” Miller said.
Victims, including a 97-year-old and other seniors, testified Tuesday, each speaking of their moments of terror inside the coffee shop.
“Like a movie,” said one of seeing the four masked men in black barging in.
Lakin described how he crouched under a table unaware that a rifle was pointed at his cheek before hearing blasts that tore across his face, leaving his teeth hanging outside his mouth.
“I remember saying, ‘What the hell you’d do that for?’” Lakin testified, at times toweling away the constant drool which now plagues him as a result of his injuries.
http://www.palmbeachpost.com/news/news/crime-law/jurors-convict-dunkin-donuts-shooter-on-all-19-cha/nLwXG/ - 89k -
I’m 100% in agreement that allowing law abiding citizens to carry concealed weapons is a great idea.
All I am saying is that you can’t use deadly force to prevent criminals from fleeing the scene of a crime, without risking going to jail for murder.
Use of deadly force to protect life, limb, vital national interests… win.
Use of deadly force to prevent thugs from fleeing a crime scene… good way to end up in jail.
Legalities. If someone came in waving a Glock and startled/scared the hell out of me like that, I think I’m justified in *making sure* the perp doesn’t turn around and shoot. Again I think he was shooting at their feet anyway trying to run them off.
That’s not to say that prosecutors won’t use the legal niceties you cite to hang an old white guy out to dry.
A different Dunkin’ Donuts Robbery and another misunderstood youth.
Dunkin’ Donuts Robbery in Boynton Beach Caught On Tape (SURVEILLANCE VIDEO)
The Huffington Post | By Kyle McGovern Posted: 05/04/2012 5:02 pm Updated: 06/28/2012 12:24 pm
Like a lot of people at Dunkin’ Donuts, they were in a rush.
Two men rushed into a Dunkin’ Donuts location in Boynton Beach, Fla., with guns in hand and black t-shirts covering their faces. One of the armed robbers, identified by police as 20-year-old Actrice Alerte, ran to the drive-thru window while the other, identified as 18-year-old Abdias Jean-Baptiste, hopped onto the counter and held cashiers at gunpoint just after 9 a.m. Thursday, WSVN-TV reported.
A 63-year-old customer tried to subdue Jean-Baptiste by grabbing him from behind, but the gunman tossed the man to the ground. To make sure the good samaritan stayed down, Jean-Baptiste stomped on his head, according to surveillance footage released by Boynton Beach Police and available below, courtesy of NBC6 Miami.
Once the crooks grabbed about $2,000 in cash, Jean-Baptiste kicked the older man a second time on their way out to their getaway car, a black Nissan Altima. Jean-Baptiste and Alerte paired up with two accomplices, who have been identified as 21-year-old Franke Pierre-Louis and 20-year-old Ashley Silmone.
Dunkin’ Donuts Robbery in Boynton Beach Caught On Tape …
http://www.huffingtonpost.com/2012/05/04/dunkin-donuts-robbery-four-suspects-arrested_n_1478805.html - 339k -
“stomped on his head,”
That’s the new wrinkle in all this. They always have to stomp heads now. Do brain damage or kill…I would anticipate this tact and would be inclined to “overreact” if I were carrying, with good justification.
“Jean-Baptiste and Alerte paired up with two accomplices, who have been identified as 21-year-old Franke Pierre-Louis”
The French never were fond of us.
“Deadly force is only authorized when it is reasonable to believe that there is risk to life or health of you or another innocent person, or vital national interests are at stake.”
Not in Florida. If Williams said he felt threatened, Stand Your Ground means he will not be second guessed.
I don’t see how Zimmerman can be convicted under the law, unless it can be proved that he was out to gun down an unarmed Black teen.
Stand Your Ground was put in place to over-rule the test of reasonableness, which had been the rule before. It is there to protect people who screw up and kill the innocent. Just like you can pretty much get away with killing someone with your car, no matter how reckless and irresponsible you were.
There still has to be a level of “reasonible-ness” applied to the “felt threatened” argument.
In Colorado, when I lived there, we had something similar called “Make my day”. If someone entered your house illegally, you did not have to see a gun to assume they were armed and meant to do you serious harm. You could just shoot them.
I lived in Colorado Springs, and in that county (El Paso) we had a guy running for sheriff on the platform that if you were not a convicted felon, mentally disabled and did not have a restraining order, then he’d issue you a concealed weapon permit. See, it was the law that sheriffs could issue the permits, but all the sheriffs had a gentleman’s agreement that they would only issue if you had a need (like worked as a PI or transferred large sums of money making you a target for robbery). So, the other sheriffs we all like “You mean to people that live in your county… right.” And the candidate was all like “Nope. The law doesn’t limit me to issuing permits only to people that live or work i my county… anyone that lives in the state will be able to come to El Paso county and get a permit to carry a concealed firearm.”
He won. He issued hundreds of thousands of permits. And the result over the next 5 years? Despite warnings that every bar room disagreement would turn into a gun fight at the OK corral, not a single person that had been issued a permit had even been charged with using their gun criminally. Overall crime rate was down, and violent crime, especially involving guns, was WAY down.
So, the state made it a law that EVERY sheriff in the state had to issue permits under the conditions used in CO Spgs.
I know of at least one incident where a person was charged with illegal use of a concealed weapon. He fired at a car as it fled a purse snatching in a mall parking lot. However, that person had not been issued a permit for his concealed weapon. Had he applied for said permit, he would have had to read an information guide that CLEARLY explained when use of deadly force is justified, and would have known that shooting at someone to prevent them from fleeing a crime scene, when there is not a reasonable and imminent risk to life, limb or national interests, is attempted murder.
“I don’t see how Zimmerman can be convicted under the law,”
I know I am a simple guy but to me Stand Your Ground means Stand Your Ground. IMHO if Zimmerman did what early reports said he did (I know we have to wait until all the evidence is in) but if he followed that kid after talking to 911 he did not stand his ground, he found new ground to stand on. To me that is hunting.
I do not believe any vital national interests were at stake in that gated condo complex, were there?
The condo complex is private property, so if he lived there he could argue he was standing his ground in his home. Or, he could argue that the imagined attacker had spotted him, and could have come after him or someone else later if he didn’t take action.
The whole point of this law is to protect screw-ups like Zimmerman so they would feel secure in shooting, rather than fearing being second guessed later. As for Williams, if one of his shots whizzed past the people he was shooting at and blew the head off a five-year-old child, that’s allowed too. In Florida.
Those who were being reasonable and responsible could have been let off under the laws of other states, or the laws that preceded Stand Your Ground.
—so if he lived there he could argue he was standing his ground in his home. —
He didn’t own the condo complex
the “newsmedia” has misinterpreted, as usual, what the Zimmerman case is about. It has NOTHING to do with “stand your ground”. It is about simple self-defense.
Zimmerman was attacked and he had the right to use deadly force to stop it.
Stand your ground is just that. If someone is threatening you with a weapon and is making aggressive moves toward you, you can ’stand your ground’, i.e., you don’t need to run away from the aggressor. without this type of reasoning, the “ganstas” always win.
they can run you out of your house, your businesses, your school, or your neighborhood by simple intimidation.
when can you defend yourself, if you can’t “stand your ground”?
we don’t know if Zimmerman ’stood his ground’, we are told that he was attacked. At that point, ’stand your ground’ went out the window and self-defense, as has historically been used, went into motion. you don’t have to let a thug beat you to death before you pull out a gun and kill him.
And that the problem. The dumazz cops assumed that this was a “stand your ground” case, instead of investigating it like a murder, and letting the DA decide whether there was enough evidence to press charges.
Anytime a cop discharges a firearm (whether he hits anyone or not) there is an investigation. The Border Patrol goes as far as issuing “duty” ammunition, that my brother has to account for…….every single round, 24/7/365, whether he discharges his weapon or not.
Seems like having an mandatory inquiry/investigation in cases like this wouldn’t be too much to ask. But then, that would be another kind of government “over-regulation”.
“Seems like having an mandatory inquiry/investigation in cases like this wouldn’t be too much to ask.”
if you keep up with the lastest information releases from fbi and the like, rather than the “news”, you will find that this is indeed exactly what happened.
The police chief said, evidence doesn’t support arrest. He was forced to “step down”. The Florida dept of law enforcement became involved. The fbi did investigations. NONE found a reasonable case for pressing charges. That is WHY there was such a LONG TIME between the incident and the charges and “arrest”.
That TIME allowed the Racist Black instigators, such as Al Sharpton and Jessie Jakson to fly in and start a “march for justice”.jj They already knew, regardless of the facts that Treyvonn had been ‘murdered’. the Black panthers issued a wanted dead or alive bulletin. (no investigations from AG).
In the end, the District Attorney bent to black pressure and made an arrest on “second degree murder”.
there is no basis for this charge, but the trial will be held anyway. We will see another OJ trial here.
All the blacks say “guilty”, all the whites (75% or more) will see him as innocent. If we get an all black jury, like OJ, then he will be found guilty, regardless of the facts.
How was Zimmerman attacked, sitting safely in his car, obeying the 911 dispatcher?
Deadly force is only authorized when it is reasonable to believe that there is risk to life or health of you or another innocent person, or vital national interests are at stake.
It is murder/attempted murder to use deadly force to protect property or prevent a criminal from fleeing.
Very true. And how does Yours Truly know this? Because I’m licensed for concealed carry, that’s how.
“Making it attempted murder.”
Nope. Heat of the moment, anyone of those clowns could have turned and returned fire.
“any one” not “anyone”.
And they moment any one of the clowns turned, it’s a new threat, and it goes from attempted murder back to self defense.
But the clown has to turn first. WHY is this so difficult to understand?
I guess that is why you live in DC, good luck defending yourself.
Also, I am a true crime show watcher, have seen many videos with armed assailants fleeing while pointing their guns behind them and popping off shots.
Liberals like when innocent citizens get get injured or killed in crime, that’s the way it should be…right? You should hurry down to Florida and jump on the legal team for these poor armed thugs.
“…Liberals like when innocent citizens get get injured or killed in crime,…”
Clearly.
Res ipsa loquitur.
Darrell,
I hope you don’t have to experience what that old man experienced.
You might end up with a baseball bat shoved up you A$$
Too bad Treyvon wasn’t carrying when he was attacked by that hooligan Zimmerman.
Everything is political to leftists.
ibid.
Remind me: which of the two was found with cuts on the back of his head again?
So if a guy with a gun approaches you, you can’t defend yourself even if you don’t have a weapon?
Big name calling session yesterday on how houses, like everything else, depreciate over time….. When talking about how much more parents house is worth today then 50 years ago, people forget maintenance, repairs, taxes, insurance….
What “Realtors are Liars” fails to factor in is that you have to live somewhere, and whether you buy or rent, that somewhere is needing insurance, repairs, taxes paid, maintenance. If you are renting, then those expenses are in the rent. And what do you get back at the end of your life from all those living expenses paid in the form of rent? Right, nothing.
So, whether you rent or own, you have this large living expense.
If you are going to point out those costs of owning, then you also have to point out those same expenses are included in the alternative rent.
i.e. Rental units depreciate just as fast as owner occupied, and your paying that expense, one way or the other.
What you fail to acknowledge is that rental rates are a small fraction of buying at current inflated asking prices of resale housing.
The other reality is, contractors(I know alot of them) are building and selling new housing for substantially less than resale housing.
Not everywhere. My wife and I are putting in an offer today on a condo for $45K. Total carrying cost will be $450 a month, and renting something equivalent would be $700-800.
http://www.flexmls.com/cgi-bin/mainmenu.cgi?cmd=url+other/run_public_link.html&public_link_tech_id=x0mm1gngdj8&s=12&id=1&cid=1
There are places in this country where house prices have fallen more than 50% from peak, where it is cheaper to buy than to rent.
Your statements like “rental rates are a small fraction of buying” are not universally true.
good job darrell. glad you are getting what you want.
We all knew there was a bubble. Prices fell and adjusted. there are buying opportunities.
Some people evidently think prices will drop to basically zero and hoping for a great depression i guess. I personally do not want to go through a major depression. I’m optimistic for better days ahead.
I was at a fair yesterday and the price of a dodge 1500 4×4 quad cab was 50,000.00. now to me that is overpriced badly.
‘Some people evidently think prices will drop to basically zero’
They will or they won’t. Wishing one way or the other isn’t going to influence the outcome.
‘and hoping for a great depression’
Again, we can all hope what we want. If a depression is coming, not much can stop it. We’ve tried all the central banker tricks and govt programs. And here we sit, sliding into yet another recession. Some say these govt things make the recession worse.
Policy is another matter. We could purge the bad investments from the economy. Stop artificially fixing interest rates, wasting limited monies distorting house prices, bailing out wall street. Some of us think that would get us into recovery faster. So think about that if you ‘personally do not want to go through a major depression.’
Not sure what the exact answer is.
I am not happy with all the intervention but I also look what would have happened if there wasnt any.
I am not sure the system could have survived without any intervention. This was such a disaster that it could have basically ruined the country and sent us in a major depression.It was way beyond what I had originally thought.
Am I happy with whats going on , no. I still wondering who is going to pay for all this.
I realize that I am not going to change the outcome.I can sit here and keep b@tching about it or look for ways to turn this into a positive.
“And here we sit, sliding into yet another recession.”
It’s sure hard to find evidence thereof amidst all the housing market recovery news, isn’t it? Once the next recession hits, many will be heard to say, ‘nobody could have seen it coming.’
“Stop artificially fixing interest rates, wasting limited monies distorting house prices, bailing out wall street.”
Sheila Bair on the state of Dodd-Frank and financial reform
Alex Wong/Getty Images
Federal Deposit Insurance Corporation Chairman Sheila Bair speaks during a symposium at the FDIC October 25, 2010 in Arlington, Va.
Marketplace Morning Report for Wednesday, July 18, 2012
Jeff Horwich: Happy (almost) Anniversary, everybody. Two years ago this Saturday, President Obama signed the Dodd-Frank financial reform law. Dodd-Frank followed the hurried bailout of American financial firms. Many say the bailout pulled the economy back from the brink. But the ad-hoc nature of the bailout made clear we needed better ways of responding to — and ideally preventing — financial crises.
Sheila Bair was chair of the FDIC during the bailout and the crafting of Dodd-Frank. She later founded the Systemic Risk Council to pressure the government and the financial industry to live up to the goals of financial reform. As the anniversary approaches, we invited her to Marketplace for a check-in. Welcome.
Sheila Bair: I’m happy to be here.
Jeff Horwich: As I recall, you were quite adamant while Dodd-Frank was being crafted that it should pave the way for essentially a bailout free future. Do you think we got there?
Bair: Well, I think we’re getting there. You know, we don’t really end “too big to fail” until we convince the market that they are going to take losses if these big banks get into trouble. There has been some progress on that score, the ratings agencies have started downgrading the banks based on the reduced likelihood that they will be bailed out in the future. So, I think that there is more work to be done but yes, we are making progress.
Horwich: As you continue to work and advocate to weed out various problems in the system, do you think we are stuck with anything truly problematic either in the law itself or that has come about during the implementation of Dodd-Frank?
Bair: Well, yes. I mean, I think Dodd-Frank is something I support but it is a very long and complex law and unfortunately, the regulations we are getting now are also quite lengthy and complex. The CFTC moved forward last week with its definition of swaps — which I’m glad they’re moving forward but the definition was 600 pages long and it’s basically because of all these things in there for lobbyists saying who is not subject to these new rules.
Horwich: So systemic risk, this term that you are so closely attached to — if I might paraphrase — is “a risk to a financial institution that could have major spillover effects beyond that institution.”
Bair: It’s a risk to the public-at-large. A practice or an institution that if it gets into trouble, if things go wrong could hurt innocent bystanders.
…
“I am not happy with all the intervention but I also look what would have happened if there wasnt any.”
Sounds like an Obama excuse. “It would have been much worse if I hadn’t passed around a trillion dollars to my buddies”.
I can tell you what would have happened. The people who made bad bets would be broke, instead of “made whole” by the government. People like me, who worked hard and SAVED money would buy out their mansions and villas at pennies on the dollar. That’s how most of their forefathers made their money. (old money).
We would experience a brief downturn and then as all the businesses, bought at a fraction of original cost, went back into operation, their profit margin would increase, the economy would go back into a ‘growth’ cycle and NEW people would be rich.
The current rich, however, got their guys into government and they “saved” the world economy by destroying the value of our savings, so they could keep all their assets and continue to skim money out of the rest of us.
the FED induced bubbles should have never been allowed, but all economies recover when LEFT ALONE. People will find ways to make new businesses. The “great depression” was filled with government interventions and it did nothing but extend the disaster from 1929 to 1946. We had a WAR at the end, and they say the government “spending’ cured the depression. All it did was waste vast amount of lives and materials and boost GDP to make bombs. What a farce.
When it all ended, we got back to work and re-built the country. We could have done without the war, but economists are deranged morons who have all kinds of “theories” that don’t work.
I guess all we need is “hope and change”.
The interventions have rewarded people who created the system and those who bought into the system.
This is called “Moral Hazard.” It is the biggest and most destructive time bomb you can put into an economy. It acts as a feedback loop, rewarding the actions which caused the problems in the first place.
It’s like a teenager who keeps screwing up and the wealthy parents keep bailing him out. The teenager is behaving rationally - he keeps getting rewarded. The screwups keep getting bigger and bigger till catastrophe strikes.
azdude’s strawmen are as stunning as Mr. Slithers.
The truth is housing prices are falling, lending rates are falling and you’re going to lose alot of money if you buy housing right now.
“…sliding into recession…”
I guess time will tell.
July 18, 2012, 1:22 p.m. EDT
Bernanke doesn’t expect double-dip recession
Holds door open for more easing
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The economy isn’t likely to slide back into recession, Federal Reserve Board Chairman Ben Bernanke said Wednesday in his second day of questioning by lawmakers.
“At this point we don’t see a double-dip recession — we see continued moderate growth,” Bernanke said in testimony to the House Financial Services panel. On Tuesday, Bernanke presented a pessimistic outlook on the economy to the Senate Banking Committee.
…
Bernanke doesn’t expect double-dip recession
Would he tell us if we were?
It’s amazing how fast a person’s attitude and judgement can make a complete reversal once self interest and emotion enter the equation.
All in baby! Buy now or be priced out forever!
“…sliding into recession…”
“Slippin’ into darkness…”
Sorry, I couldn’t resist. It’s the deejay in me.
It’s amazing how fast a person’s attitude and judgement can make a complete reversal once self interest and emotion enter the equation.
EGG-ZACTLY
It’s quite clear who made reckless risky decisions…….. The fact they’re using OPM?
Priceless.
Ahem…
July 18, 2012, 2:01 p.m. EDT
More Fed districts report slowdown: Beige Book
Weakness concentrated in East, Mid-Atlantic
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The U.S. grew at a “modest to moderate” pace over the last month and a half as more districts are reporting slowing growth, according to the latest survey of anecdotes on the economy released by the Federal Reserve on Wednesday.
The so-called Beige Book, which covered the economy between June and early July, was less enthusiastic than the “moderate” assessment of the last Beige Book. And now three regions, up from one, reported slowing growth.
…
ft dot com
July 18, 2012 1:49 pm
BlackRock’s Fink downbeat over outlook
By Dan McCrum in New York
BlackRock, the world’s largest money manager by assets under management, was downbeat in its outlook as slowing growth in China and turmoil in Europe had “shaken the confidence of investors worldwide”.
Chief executive Laurence Fink said that, unlike last year, business was more cautious as well. “CEOs have contracted their field of vision,” he said.
His remarks followed a drop in revenues of 5 per cent in the second quarter to $2.29bn as choppy equity markets ate into the value of customer holdings.
Mr Fink remained cautious about the path ahead, warning that Europe’s debt problems would take five to eight years to fix, while the US faced the uncertainty of the so-called fiscal cliff, with tax rises due to kick in automatically after elections in November without political action.
He also said that havens such as US and German government debt could prove illusory. “Extraordinary low yield levels cannot meet the long term return expectations of anyone,” Mr Fink said.
His comments followed a quarter in which investors withdrew their money from high-margin actively managed stock funds. BlackRock reported strong inflows to passive bond market investments, with fixed income exchange traded funds adding a net $12bn in flows, but these were more than offset by market weakness.
Assets under management dropped 3 per cent from the year before, and the previous quarter, to $3.56tn, largely due to $95bn of market-related declines in value.
Bill Katz, analyst for Citigroup described the results as a mixed bag and said that it “reinforces likely tough flow dynamics for traditional asset managers given sluggish long term volumes and attrition across active mandates”.
…
My wife and I are putting in an offer today on a condo for $45K. Total carrying cost will be $450 a month, and renting something equivalent would be $700-800.
Darrell, if pricing hit this level where I live, I would likely try to buy as well—though ideally I’d buy a building, not one unit. Individual condos have issues with shared ownership/shared decision-making; it’s like an HOA on steroids, in that someone else can essentially make decisions that you end up having to pony up a pro-rated portion for as a special-assessment.
But with that cost-to-income ratio, buying makes good sense IMHO. Best of luck with it…
I’m still trying to calculate the maintenance costs of a shoebox of baseball cards in the attic.
AC units, frigdes, ranges, roofs, plumbing leaks… nuff said.
And those expenses apply to renting every bit as much as owning. If renting, they are included in the rent. If buying, yes, you should figure in several $K a year for these costs.
One way or the other, you are paying for the depreciation.
If renting, they are included in the rent.
No they’re not. Expenses are not automatic passthrough costs.
My daughter rents down in LA near farmers market. Her washer and dryer went out and the landlord replaced them. Two months later the LL increased the rent she said to cover the costs and they could move if they didn’t like it. Their original lease had gone to month to month and moving would have increase their driving distances to day care and work. They are now trying to find jobs out of the LA area. She can in a heart beat, her husbands situation is slightly different.
My sisters landlord purchased new kitchen appliances, fixed the roof and painted the outside of the house…her rent…hold on…the same.
See how that works.
Everyone in my circle that owns a house is cash poor at best and completely effed at worst, that includes coworkers, friends and family. Houses are money pits, the work and the expenses never stop. Maybe that sounds good to some of you, but I would rather keep renting and watch my liquid/spendable cash continue to pile up, in fact I may fill my tub with singles and take a money bath today
Everyone in my circle that owns a house is cash poor at best and completely effed at worst, that includes coworkers, friends and family. Houses are money pits, the work and the expenses never stop.
Describes my former landlady to a tee. Cash poor gal if there ever was one.
The cracked sidewalk out front had to be replaced (city comes out and marks it up, then sends the homeowner a notice that they have to fix it or else).
LL pays $2600 to get it repaved. Raises our rent $200 month.
The last rent increase was 1 month after she replaced the roof.
Everyone in my circle that owns a house is cash poor at best and completely effed at worst, that includes coworkers, friends and family. Houses are money pits, the work and the expenses never stop. Maybe that sounds good to some of you, but I would rather keep renting and watch my liquid/spendable cash continue to pile up, in fact I may fill my tub with singles and take a money bath today
Yeeeeeeeeeeeeup!
Everyone in my circle
You must be in the sun belt?
“You must be in the sun belt?”
Metro Phoenix.
Depends on whether the landlord can charge enough to cover that stuff. Rent prices are determined by what the locals can pay. Buy prices are detemined by what they can borrow with 3% down at 4% interest.
‘If renting, they are included in the rent’
So what you’re saying is it’s impossible for a landlord to lose money.
I think what Darrell is saying is that the landlord can charge whatever rent he wants, and the poor renter will have to pay it, regardless of willingness or means to do so.
Rent prices are determined by what the locals can pay.
“The locals can pay” a lot more than you think they can. They simply apply for government cheese, shack up a few incomes, or take in Grandma with her SS check. In DC you have additional competition from military and their housing allowances.
LL’s can raise their prices until housing looks like the tenements in my Am. Hist. textbook.
And what he’s saying is false.
So what you’re saying is it’s impossible for a landlord to lose money.
If the house is paid off and you bought in coastal CA before Prop 13 and didn’t HELOC, then yeah, pretty much.
But that’s a lot of ifs.
Get yer checkbook and quit the whining.
“If renting, they are included in the rent.”
You are incorrectly assuming inelastic demand in the rental market. If the landlord passes on too many of those costs, the renter can walk.
Don’t forget that supply is elastic as well. If the landlord can’t pass the costs, then supply can disappear or new supply not come on line. In the short run you can have a situation where not all costs will be passed, but in the long run they will.
“Don’t forget that supply is elastic as well.”
Last I heard, the gubmint was planning to turn a bunch of limbo homes (defaulted, not yet foreclosed) into rental housing, which suggests supply is hard-wired to increase.
‘In the short run you can have a situation where not all costs will be passed, but in the long run they will’
So you are saying that in the long run, it’s impossible for a landlord to lose money.
“Can’t-lose” investments are my favorite kind
You can talk about all of the “supply-demand” and “free market” theories you want, but the reality is that if house prices collapse, rents will collapse, and a sheetload of banksters, property owners, homeowners, owners of rental property, commercial property holders, landowners,……the list goes on….. will be BANKRUPT.
This includes government at all levels, who would rather tax the crap out of the locals, than go after the self-proclaimed “investor/job creator class”.
And if they go down the tubes, there will be more stuff to buy, than people to buy them. Unless you want the Global 1% types owning 99.5% of anything worth owning.
The government has a choice……..throw the majority of US Americans under the bus, or pizz off the skinflints yelling “Let them die, so I can get a bargain!!”
We already have “free houses”. Most of them in places with no jobs, and/or where nobody wants to live. And even then, they aren’t free, if they can be taken for non-payment of property tax.
In the short run you can have a situation where not all costs will be passed, but in the long run they will.
FALSE.
Ask any landlord in rust belt states how that notion worked out for them.
“So you are saying that in the long run, it’s impossible for a landlord to lose money.”
Nope. I’m talking about the sector, not individuals. PB introduced the macro concept of demand elasticity, but elasticity applies equally to demand. Collectively landlording will be profitable as non-profitable ventures will fail. Likewise in times where the entire sector is taking a hit, new developments won’t happen and some units will get repurposed until rents rise to make the sector profitable again. Individual results will always vary.
If a renter can find a landlord who is subsidising their cost of living, that’s great for them. And if it continues indefinitely, all the better. Just don’t expect the majority to find such a situation.
We already have “free houses”. Most of them in places with no jobs, and/or where nobody wants to live.
Bingo.
…. at least the houses outlast the jobs.
Imagine what SillyValley is going to look like when it’s inevitable meeting with creative destruction takes place.
This includes government at all levels, who would rather tax the crap out of the locals, than go after the self-proclaimed “investor/job creator class”.
+1 Gov, biggest parasite of all.
AC units, frigdes, ranges, roofs, plumbing leaks… nuff said.
FWIW, we’ve spent perhaps 7K on home repairs during the 12 years we’ve been in our current house, with the biggest expense being a paint job ($3K).
I suppose that sometime in the next 10 years we’ll probably have to replace the roof, water heater and the furnace. Some new carpeting will probably also be in order.
“I think what Darrell is saying is that the landlord can charge whatever rent he wants, and the poor renter will have to pay it, regardless of willingness or means to do so.”
This is not even close to what I’m saying.
Nor am I saying that it is impossible for a landlord to lose money.
However, outside of a speculative bubble, market forces will rule. In general, all landlords are not going to accept losing money on their rentals. Macro-economically speaking, over the long-run, in a fundamentally sound rental market, the price of rent will settle at a level where the landlords can pay their expenses. The depreciation of those rental units will be included in the general level of rent set by the invisible hand of the market.
One landlord can not charge whatever (s)he wants. One landlord can lose money. However, the aggregate price of rent will be at a level that the majority of landlords can cover their expenses (including the depreciation expense).
Therefore, the cost of rent will (on average even if not in every case) cover the costs the landlord incurs for maintenance and repairs.
Just as a company is unlikely to continue to manufacture widgets if they sell for less than the cost of manufacture, landlords are unlikely to stay in the landlord business if they are not covering their costs.
“Therefore, the cost of rent will (on average even if not in every case) cover the costs the landlord incurs for maintenance and repairs.”
Unless the cost of said repairs plus other ownership expenses exceed what renters are willing and able to pay, that is…
Then people won’t buy houses to rent out, and/or they will let their existing rentals go back to the bank, reducing the supply of rentals, or the price paid for rentals, to the point that the profit returns.
Your comment applies in a free market economy. But when the government is adding its REO to rental supply by fiat, it is no longer applicable.
So, whether you rent or own, you have this large living expense.
This gets lost in the discussion about housing, mostly because we have become conditioned to think of housing as an investment first and shelter second. Ass-backward.
Why I get frustrated with the don’t-buy-no-matter-what crowd. If you live in a high housing cost area, rent AND owning costs are high. Cheap rent and saving the difference is possible in some areas, but not all.
Frustrating when what I have heard over and over again is “don’t buy until renting and buying (PITI + maintenance) are equal”, and now that is the case for us, there is all kinds of ridicule on HBB when those of us who have done the math are buying or considering buying. What gives?
I think it’s because we (maybe just I?) believe that rent is also artificially inflated at the moment in order to give a false signal that it’s time to buy. But I think we’re all guilty of speaking in generalities when what we say is based specifically on our local conditions.
Some who post here understand that all real estate is local and SF is not the same as flyover country. The ones who have a one-size-fits-all attitude are the ones who’ll bust your chops for wanting to buy. Maybe it’s best to do as oxide did: keep it to yourself until you have a signed, sealed and delivered purchase in hand.
BTW, I wish you all the best in your home hunt, without one trace of snark. I love owning my home. Even if I did spend the first ten years referring to it as “The Little House From Hell”.
Thank you MiddleCoaster.
The way it’s going, we may not find anything too soon. But I have noticed that the amount that asking and selling prices has increased since January is just about equal to the amount less we would have spent on interest.
Difference between 4% interest and 3.6% interest (including 8K more in down payment that we have saved in the 6 months we’ve been looking) is about 37K.
Trying to buy a house reminds me of trying to get pregnant: you keep wondering, “is this the best time?”, “maybe we should wait”, “maybe we should have more money in the bank/better job first”.
An apt analogy! Except with deciding to have a child, it is possible to wait too long.
What are you waiting for? Quit wringin’ hands and pull the trigger. Nobody is stopping you.
What I find hilarious is you small group of suckers come back here for approval after committing financial suicide.
Nobody is stopping you.
HBB was stopping me since I started reading this blog in 200?4/5/6 I don’t remember when I first found y’all.
And I thank Ben and everyone else for that. I waited because of HBB, all the while friends ridiculing me for suggesting that there was a bubble and housing would come back down, even in San Fran.
But now that we have decided to buy, 7 months later and 60+ open houses, the 45% YOY less inventory and 30% all-cash buyers are stopping us.
It’s also possible to wait too long to buy a house. There’s more than one biological clock out there. If you want a paid off house by retirement, you have to buy by a certain age. OR you better be seriously packing $$ away to buy outright when you retire. Otherwise you’ll be in deep doo doo when you finally lose your income.
Get your damn wallet and pen out and step. Quit yer fawkin’ whining about price and go. DO IT!
Quit whining, get your checkbook out and write a check.
“Otherwise you’ll be in deep doo doo when you finally lose your income.”
You can lose your income before you retire by owning an overpriced housing investment money pit.
San Francisco is and has always been a high-priced market, at least as long as I have paid attention (several decades already). If you don’t like that, you have the option to relocate.
UNKNOWN TENANT
Great story to start the day. Thank you.
On the plus side, for being one of out top performers in our group, I got a 4.7% raise this cycle… oh, and a promotion that includes another 5% raise. Total increase is 9.935%.
I suspect others in this nation are not doing as well.
Your suspicion is probably correct.
lOL! Thanks for the humor!
Total increase is 9.935%.
Wow, congrats, Darrell!
“I suspect others in this nation are not doing as well.”
Posted at 06:00 AM ET, 07/17/2012
For federal employees, budget options range from bad to worse
By Eric Yoder
For federal employees, the political debate over whether to prevent or to allow automatic cuts that are scheduled for many government programs starting in January may boil down to a pick-your-poison choice.
…expenses to administer federal programs are subject to sequestration, even if spending through the program itself is protected. That could translate into pressure to cut federal employment, since salaries are paid from those accounts. Expenses such as employee training and incentive programs commonly are paid from the same accounts and also could be cut.
Meanwhile, several plans to avoid sequestration would hit federal employees in other ways. House Budget Committee Republicans are citing as an alternative a bill the House passed in May. That bill would require all federal employees to pay an additional 5 percent of salary toward their retirement annuities, beginning with a 1.5 percent increase in 2013. It also would end, for most of those hired into federal jobs starting next year with less than five years of prior service, a supplement paid to many employees who retire before age 62.
Earlier, the House passed a budget outline that called for continuing the freeze on federal salary rates for three more years through 2015, cutting federal employment by 10 percent through a modified hiring freeze, and requiring higher retirement contributions.
Neither of those measures has advanced in the Senate.
However, earlier this year a group of six GOP senators proposed a plan designed to avoid sequestration through steps including extending the pay freeze through 2014 and cutting federal employment by 5 percent through a modified hiring freeze.
…
Good Morning to all the HBB readers,
I have decided to jump into the house ownership by making an offer on a short sale. The house is currently listed at 350K but was listed for 280K last winter. We like the house it needs minor stuff like painting and carpeting etc. The house was built in 1991. I met with the Realtor and he mentioned that his BPO would be 260K. We are thinking of offering 260K. It was sold for 280K in 1997. I will be paying cash. At the present we pay $2170 in rent. The house has taxes of 13K and the utilities would be at least $400 to $500 per month. My reason for purchasing this house is that I would like the wife to have a nice secure paid off place as well as to enjoy some good years together due to my health. We do have a lot of cushion and this is the last big thing we will buy. Our business has been very stable for the past 27 years and especially the last 5 years of the great recession.
Any insight into short sale will be greatly appreciated as well as all comments are welcome.
Now I am ready for the beatings to begin.
Holy cow!!!
Is this going to keep going up? Are the public unions insane will they expect ever increasing taxes to fund firemen retiring on $100,000 pensions after 25 years of work?
Then expect your taxes to double within 7 years.
The house has taxes of 13K
Are the public unions insane will they expect ever increasing taxes to fund firemen retiring on $100,000 pensions after 25 years of work?
Don’t you think a lot of pensions will be adjusted if a lot of muni’s threaten or go BK?
If history is an example - public unions will drag their “hosts” right over the fiscal edge. Nothing will be “adjusted” that will make any fiscal difference.
When the townships/cities finally declare bankruptcy and null and void all public union insanity - the public union goons will cry that they are victims.
Don’t you think a lot of pensions will be adjusted if a lot of muni’s threaten or go BK?
I agree, $13K in property taxes is simply mind blowing, especially on a 260K house. In my little burg the tax bill on a 260K house would be about $1500.
Even in California, the tax bill would be $2600. The east coast is insane.
“I agree, $13K in property taxes is simply mind blowing”
House priced below 200K have taxes of about 8K to 9K. Here are a few examples
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S267774
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S271228
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S272324
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S275442
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S272861
I have come to understand minimum 8K to 9K in taxes in just the entry point with taxes on homes in somewhat decent neighborhood, When you own a home in Syracuse NY you will be carrying taxes and utilities to the amount of a mortgage FOREVER.
So for a decent size house with a pool and a large lot paying 13K is actually quite low.
Normally 350K houses will command taxes in the range for 14K to 18K
Well offering 260K at a house priced at 350K seems rather low. Will the bank even look at such an offer? No harm though, just so long as you don’t care about this house that much. Who knows, maybe you will get lucky. I’m in the process of buying a short sale myself and it hasn’t been quite as grueling as I thought it might be.
Fecaltime!
The BPO of 260K was given by the Realtor who is doing the short sale. I am assuming that last winter the asking price was 280K and the bank was willing to accept 260K. Just my hunch by talking to the realtor.
Fecaltime!
Aw, shhhhhh-t!
Hey, feek!
“enjoy some good years together due to my health”
It’s not all about money, folks.
That said, are you still working? Do you need to live in NY(?) state?
Would you have been better off retiring in a state with less taxes?
$400/month for utilites sounds like a BIG house.* If you anticipate that your wife will be running the household alone for some years, can she handle the upkeep of such a big house?
——————
*if it’s a small house, then the house needs some serious energy updating.
Thank you Oxide. I need to live in NYS as I own a commercial property that I rent to our manufacturing/ Franchising Company and I do get rent. My health is okay but near to long term prospects do not look too good. I enjoy working and thank God business has been very good. My wife will be able to pay the overhead as I have been saving like crazy since the late 80’s right out of college. I have rented all my life and it would be nice to live in a house.
Then God bless you, SUguy. You’re doing the right thing. And if the house becomes too much to handle, your wife could always sell and move to something more manageable with money left over. But she will be taken care of for sure.
Ditto. I’m really happy for you SU, and hope your new home brings you all the comfort and happiness you can possibly stand.
I am amazed at the P Taxes…$13k on a $260k house = 5%. Will they adjust downward on sale?
In California, the P Taxes would be ~1.1%, or about $2.85k annually (assuming no bond issuances/Mello Roos, etc.). And that $2.85k annually won’t increase by more than 2% each year (Prop 13 protection).
We will try and they might give us break but in NYS you cannot count on it.
SUGuy
Been there, done that. The last round on a short sale (needs mucho work, but great house and die for pool/spa yard) went like this…(So Ca -Ventura County) House listed at $400K which we knew was a “bottom feeder” price. It’s selling season for the sheeples, but we thought with all its issues, $425K would be our going price. We offered it, and back it came, Highest and Best, 6 other offers as well. We went up some with our all CASH offer, and lost the bid. Cash unfortunately means “chit” right now.
We’ve bid on SS’s & REO’s and lost or pulled out. One had a 44,000 pool and spa (came to reason for utility bills and usage).
It’s a jungle out there. Throw out practical and logic, and bid over or lose. I hate to be so blunt, but we’re in your logical camp, and can’t seem to ink a deal.
44,000 gallon pool & spa (combo)
Most pools we have seen are 16,600 gallons+
Planning Dept/City
will have a file on the house. Permits,
Builder’s info, etc… all in file. If older home,
it may not be in the data base, but a hard copy
file will be pulled, which you can review at the counter.
Public Works Dept/City
For soil and lot information
SS we found to be “as is” and Wood Pests, and other
items normally covered in a reg sale, the banks are
throwing back to the buyer.
Cactus had a successful SS buyer deal. Hopefully he will chime in.His deal originated in Jan. 2012 - He time it well.
Patience the odds are in your favor I am sure nice houses at lower prices are coming around the corner.
SUGuy
My optimism is gone about prices and inventory for now. Ca has a new HomeMoaners Bill Of Rights effectiveJan 01,2013, which makes it illegal for the banks to double track a modification and a foreclosure. Not sure if the banks and investors will take the less litigious way out and do a modification, or will say screw you all and start the foreclosure process.
I don’t see inventory coming back to equalibrium anytime soon. REO’s are being sold in bulk, or flippers buying foreclosures at auction, means buyers are s c r e w e d.
nice houses at lower prices are coming around the corner.
In ways you haven’t imagined.
The house has taxes of 13K and the utilities would be at least $400 to $500 per month.
Wow, not a retirement crib, huh?
My “paid for” 1550-sqft spec house has annual taxes of $2,200.00, and the utilities are less than $200/month. Of course the six month winters are included in the deal.
I made a offer on a short sale in Jan 2012. offered 380K bank came back with comps so I held my nose and upped offer to 395K
In begining of may or end of April can’t remember second lein wanted another 5K , I said no plus ignored them. Didn’t really want to buy at this time was just testing the water.
Next day landlord gave me 60 days to quit. Looked at 10 rentals all sucked and were more money >2200 a month. smelled like pets mixed with smoke mixed with mold, so much for landlords doing maintance, most don’t.
prices were really taking off by now so decided I wanted the short sale after all.
house went into pre-foreclosure second caved and I bought and closed in June 28 , moved June 29 and 30 so I was out by July 1
the date agreed upon with landlord who had a good rental because it never was a rental before. So I paid 395k no repairs done as the bank said they could get more for it if they put it back on market. Whatever
will prices go up or go down from here ? I don’t know but I do think you need the whatever attitute to buy a short sale
Most rentals really suck! I bought a brand new(built in 2006 but never sold or lived in) short sale house in 2009. US Bank just took my offer of 117k on a 139k list. And the whole deal was over quick.
It was a builder going Chapter 7 BK (if I understand correctly) so the bank was getting what it could while it could.
It was a builder going Chapter 7 BK (if I understand correctly) so the bank was getting what it could while it could.
This is what I’m holding out for in California.
cactus
Thank you for sharing your experience. As it turns out, your timing was great.
my parents offered on two short sales, not in 300k land though….
First one got so trashed as the deadbeat owner (soon to be ex owner) kept a lousy tenant in it. The bank accepted, but the condition had detiorated so much that they backed out.
Second one the bank never got back to them in any timely fashion. They offered full list(which is just a made up number). Both realtors told them to hang in there, the bank was on board it was just…(insert random BS here). Then the bank refused after 6 months and foreclosed on the house. The realtors said, it will likely end up on the market for less than your offer.
It wound up back on the market at 20% higher than their offer.
They are no longer looking for a house. Wasted a year thinking they were going to buy one though.
Then a Freddie house tickled their fancy. It was listed at 140k and was not a short sale. It went after 3 days for 160k. Now my dad thinks there is funny business going on. Not that he didn’t think that before…
HOUSING PRICES AND SALES RISE AROUND SAN DIEGO COUNTY
Low rates, fewer distressed deals, small inventory drive market
Written by Lily Leung
12:01 a.m., July 18, 2012
Updated 4:40 p.m. , July 17, 2012
Momentum from the spring homebuying season carried over to the summer in San Diego County as inventory levels remain lower than normal and distressed sales continue to drop, according to Tuesday’s DataQuick report.
June home prices in San Diego County rose 0.1 percent to a median of $335,500 from May and 1.7 percent from a year ago, says the La Jolla-based real estate tracker.
There were 3,756 sales, up 0.2 percent from May and up 9.1 percent year-over-year. June’s sales number is the highest it’s been since June 2010, the final month shoppers could take advantage of the federal homebuyer tax credit.
June’s number of single-family homes resold on the San Diego-area market, which makes up the bulk of monthly deals, was 2,459, ticking down 1.2 percent from May. Still, last month’s tally of single-family resales hovers close to the nearly seven-year high of 2,488 that was recorded in DataQuick’s May report.
What’s elevating sales and prices in San Diego County and throughout California? A number of things:
Mortgage rates continue to slide to new lows. According to Freddie Mac, the 30-year fixed has been below 4 percent for the past four months, while the 15-year fixed has been below 3 percent for seven weeks. Those low mortgage rates are apparently attracting qualified buyers (those who have the income and good credit).
Distressed sales keep falling. Short sales and foreclosures resold on the market made up 42.2 percent of the resale segment in California.
That’s the lowest it’s been since February 2008, when it was 41.4 percent, based on DataQuick figures. This share of the market is declining because more people are averting foreclosure.
Foreclosures in San Diego County are at their lowest levels in more than five years. In May, 426 homes were foreclosed upon, down 51 percent from a year ago.
Inventory levels are lower than normal. In June, there were 6,184 active listings in San Diego County, the fewest in at least three years, according to numbers from the San Diego Association of Realtors. (Note: The trade group has been tracking listing figures since long before that, but it began splitting active and contingent listings in June 2009 to get a sense of the number of short sales in progress.)
Using the data set that starts in June 2009, active listings in the county peaked at 13,123 in September 2010. We’re now about 52 percent below that level.
…
From what some realtors are saying the market is hot in san diego. Areas with a more limited supply seems to be catching a lot of bids.
Have a feeling what is causing limited supply but can only speculate. personally I’m out of that market.
If I win the lotto I will make an offer on a crib in lajolla.
A number of things, IMHO adding to the supply/demand crunch in California:
1. People unwilling/unable (underwater) to sell at today’s prices;
2. Lots of the foreclosure buyers/sellers have turned into foreclosure buyers/renters;
3. Generally a diminishing amount of distress (small effect, but growing with time)–in May 2011, approximately 50% of all sales were “distressed), in May 2012, the number is approximately 40%;
4. Banks not selling as fast as they could (but still reducing REO month to month);
5. Very little new construction (something like 30,000 new housing units permitted in the prior 12 months);
6. Job growth (y-o-y employment is up ~220k in California);
7. Generally low vacancy rates.
The things that could alleviate the pressure:
1. New construction;
2. Job losses;
3. Banks dumping REO (although this number per Foreclosure Radar is only about 70k homes);
4. Foreclosures speed up dramatically.
A quick aside…it will be difficult for both #1 and #2 to be true at the same time. “Normal” housing construction in CA should be between 150k and 200k per year (I’ve heard as high as ~220k)…we are now running at less than 20% of “normal”. It’s hard to have enough new construction to add significant amounts of supply and also have job losses.
Where oh where has supply increased of late? I have heard it is multiple offer city in Bend, Redmond, Henderson, NV. With low inventory.
Market is “hot” everywhere I know; however it may be for more than 100k-150k houses in other areas which would need more explaining….
Market perception (of where we are in the cycle, and the direction of the market) has a lot to do with it.
Ask yourself the following questions:
When are non-distressed people more apt to sell?
1. When they think prices will be lower in the near future, so selling sooner gets them more money; or
2. When they think prices will be higher in the near future, so selling later gets them more money.
When are people more apt to buy?
1. When they think prices will be lower in the near future, so their down payment is at risk; or
2. When they think prices will be higher in the near future, so their down payment is safe.
When a “tipping point percentage” of people think prices will fall in the near future, supply increases/demand decreases, leading to prices actually falling, which leads to even more people thinking that prices will fall. The vicious cycle.
The vicious cycle can only be sustained if there is a steady supply of pessimistic sellers.
When a “tipping point percentage” of people think prices will rise in the near future, supply decreases/demand increases, leading to prices rising, which leads to even more people thinking prices will rise. The “virtuous” cycle.
The “virtuous” cycle can only be sustained if there is a steady supply of optimistic buyers.
With real estate developer Doug Manchester at the helm, UT-San Diego seems to have resumed its housing bubble cheerleader role.
But check out the huge price declines documented in the “hottest home sales” zip codes table that accompanies this article! With prices off by 42 percent, there has never been a better time to buy in Rancho Santa Fe.
Homes sales hottest in these 10 ZIPs (June)
Written by Lily Leung
6 a.m., July 18, 2012
San Diego County home sales rose slightly from May to June but were up more than 9 percent from a year ago, the latest DataQuick report said. The county’s total sales tally, which includes single-family homes, new homes and condos, was 3,756 sales. That’s the highest level since June 2010, when shoppers got their last shot at the wildly popular homebuyer’s tax credit.
Here’s a breakdown of the Top 10 ZIP codes in the county that saw the biggest percentage jumps in sales when comparing June to a year ago, using DataQuick numbers. We focused on neighborhoods with at least 10 sales.
…
Since California is too-big-to-fail, I wouldn’t worry too much about this particular scepter of economic doom.
Aerospace cuts would hit San Diego, state hard
Report forecasts effects of federal spending reductions
Written by Nathan Max
12:01 a.m., July 18, 2012
Updated 7:33 p.m. , July 17, 2012
California stands to lose more jobs than any other state should automatic cuts in federal spending scheduled for Jan. 2 come to fruition, according to a report released Tuesday.
The analysis, commissioned by the Aerospace Industries Association, examines the potential economic impact of the Budget Control Act of 2011 and the process called “sequestration,” in which $1.2 trillion in spending cuts will take place over 10 years, should Congress fail to act.
In fiscal 2012 and 2013, California would lose 225,464 total jobs, the report states. Nationwide, sequestration would cost the economy 2.14 million jobs, reduce the nation’s gross domestic product by $215 billion and decrease the workforce’s personal earnings by $109.4 billion, the report states.
The impact on San Diego County’s economy, with its heavy reliance on military spending, would be substantial, said Marney Cox, chief economist for the San Diego Association of Governments.
Cox estimated 16 percent of California’s anticipated job losses — about 36,000 jobs — would take place in San Diego. Defense contractors will be hit the hardest, more so than uniformed military, he said.
“The danger level in the short run is substantial,” Cox said. “It’s not clear to me there is really a way out of this.”
Nationally, the unemployment rate would rise by an estimated 1.5 percentage points, and the economy would slip back into a recession, according to the report prepared by George Mason University Professor Dr. Stephen S. Fuller and Chmura Economics and Analytics.
“These economic impacts — the loss of GDP, personal income and jobs — are real and have measurable consequences,” the report states. “If they are allowed to occur as currently scheduled, the long-term consequences will permanently alter the course of the U.S. economy’s performance, changing its competitive position in the global economy.”
…
Sooooo……1.2 trillion divvied up by 2.14 million, divided by ten.
2.14 million $56K/year jobs.
And since these guys are working schlubs with no tax avoidance schemes worth mentioning, 50-60-70% of that goes back to the Feds/state/local governments as income taxes, sales taxes, user fees, etc, etc.
Some of these taxes/fees going to the $250K/year think tank consultants, who forecast what a disaster defense cuts will be.
How about if it’s a specter with that scepter?
The specter of dwindling spelling facility comes with chronic fatigue…
Get ready for a real downturn in San Diego house prices. That would be a good thing!
In Arizona the Republic (based in Phoenix) predicts 50,000 defense job cuts.
No one brought up the effect it will have on the house prices. I checked “Shitty” Data and no one mentioned that article. Shitty data is all pro-real estate. I predict Arizona real estate prices will go lower than prices in 1999. 2011 was said to be the “bottom.” But we all know the federal spending cuts (remember it’s NOT just defense) and tax hikes will mean many people unable to pay mortgages and less spending money available to pay mortgages.
In other words, all in all, real estate will fall far more.
The layoffs will start just before election day 2012.
Housing prices will go over the fiscal cliff in areas with disproportionately large shares of federal workers, including SD and DC.
Beware the dour permabear’s dire prediction.
July 17, 2012, 12:03 a.m. EDT
How Bernanke will cause the next crash before 2014
Commentary: Rich will lose 50% in massive wealth destruction
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — “Massive wealth destruction coming,” warns Hong Kong economist Marc Faber, one of many “Dr. Dooms” we’ve featured over the years.
Faber warned in a recent interview on CNBC: The Super-Rich “may lose up to 50 percent of their total wealth.”
How? “Somewhere down the line we will have a massive wealth destruction. That usually happens either through very high inflation or through social unrest or through war or credit-market collapse.” And as if to punctuate his message, in Barron’s recent “Midyear Roundup,” Faber was asked, “Will things get worse before they get better?”
Answer: “Yes, possibly much worse,” adding “most markets peaked in May 2011.” He expects “further weakness in the second half of the year. Corporate profits will disappoint … stock markets are oversold. The U.S. government-bond market is overbought. The U.S. dollar is overbought, and gold is oversold near term.” Worse, he’s “very negative about the outlook longer term.”
…
stocks are oversold? I think he has it backwards.
This guy has been preaching doom and gloom for how many years now?
were still here.
Booyah!
AP News
Investors retreat from stock mutual funds in June
By Mark Jewell on July 13, 2012
BOSTON (AP) — A rising market didn’t instill confidence last month, as investors continued to withdraw more from stock mutual funds than they deposited into them.
Investors withdrew a net $7.7 billion from U.S. stock funds in June, according to industry consultant Strategic Insight. It was the fourth consecutive month that money was pulled out of stock funds, and the biggest monthly total this year. Through June, net withdrawals total $15 billion.
The Standard & Poor’s 500 stock index rose about 4 percent in June, but the previous month’s 6 percent decline apparently was fresh in investors’ minds.
“Gains in the stock market have not emboldened investors, who worry about the ever-present risk of future losses,” said Avi Nachmany, research director with New York-based Strategic Insight.
…
So much for Occupying Wall Street. Deserting it is the hot new trend.
The Super-Rich “may lose up to 50 percent of their total wealth.”
It would totally bite to go from being Super-Rich to just Fabulously-Rich.
I mean think about it. One day you have 2 billion dollars and the next day you’re down to a single billion.
But at least that’s when you really know who your true friends are.
Squatters Almost Stole This Man’s House From Under His Nose
Business Insider ^ | July 16, 2012 | Mandi Woodruff
In the wake of the foreclosure crisis, it wasn’t uncommon to read reports of shuttered homes occupied by opportunistic squatters looking for a free place to crash.
But some squatters don’t wait for the homeowners to move out first, CBS4’s Rick Sallinger reports.
Troy Donovan and his family returned to their Denver, Colo. home after an extended trip to find the house occupied by another couple.
In their eight-month absence, a rogue realtor named Alfonso Carillo allegedly sold the property to a pair of unsuspecting buyers.
Carillo sold the home for $5,000 under the pretense of “adverse possession,” an umbrella law for squatters rights that can be evoked if property owners fail to claim their land for a certain stretch of time. The law varies state by state, but requires 18 years of possession in Colorado.
The Donovans, who were forced to move into their relative’s basement, went to court to evict the couple. A judge ruled on Thursday that the adverse possession clause did not apply and ordered the couple to leave within 48 hours.
“We get to get out of the basement, get a full home to live in,” Donovan’s wife, Dayna, told CBS. “A home we created and worked very hard in as well.”
Abandoned homes are easy targets for schemes like these, and foreclosed properties are even more susceptible with no homeowners around to defend their turf. In the Donovans’ case, they lucked out when neighbors became suspicious of the new owners and tipped them off.
I guess if you can afford an eight month vacation/sabbatical, the Galtians had better start figuring out how much eight months worth of private security for the house is going to cost.
Of course, this assumes we haven’t gone full-on Galt, eliminated government, don’t waste time with the lawyers, and have to self finance the SWAT team to evict the squatters.
I hear tear gas and flash-bangs are expensive, and hard on the drapes and furniture. Not to mention replacing the front door, after the SWAT boys drive the APC thru it.
And those tank tracks will really fook up the lawn.
Hello everybody. I posted here quite some time ago and still read this list quite often. I wanted to post my housing story. I sold several properties in 2005 at darn near the peak of the bubble here in CA. I made out like a bandit and in part I sold based on what I read here.
Currently I’m in escrow on a nice 4bed 4 bath house very close to my work and where all our activities take place. I decided to use much of my savings to put down 50% (around 225K down), and our now our payment is around 800 dollars less than if I were to try to rent a house like this. I had rented for the past 7 years but I got married, had another child and one more soon, so my wife wanted more stability and I wanted a place that I would actually care about. I decided the prices might go down a bit more in the future, but they were low enough. Locking in 30 at 3.5% was a big reason I decided to this.
Fecaltime!
‘use much of my savings to put down 50% (around 225K down)’
Two words: opportunity cost.
Another two words: Locking in.
Jeebus, for that kind of money I’d want a ranch.
Yes I want a ranch too, but alas I’m married to where I’m at with work and kids in school they like. Someday (10-20 years)I might sell the house or maybe just rent it out and move to a ranch or out of this country altogether, but not now and not anytime soon. Besides I might be dead in 10-20 years.
Fecaltime!
Nuts! When I retired we bought a ranch partly
because I’d grown up on one and we liked the space. However, owning a working ranch is not
the same as a gentleman’s ranch of ten acres with
a new Kabota tractor and lots of lawns to mow.
How would you like to cut hay by moonlight, bail 150 tons of alfalfa in a non-stop 24 hours to beat
the rain, move seven foot wheel lines that are over a quarter of a mile long every 12 hours…
I am so, so glad I sold the place.
Not to be the crazy capitalist in the room, and playing off of Ben’s “Opportunity Cost” comment, but have you considered borrowing more and investing some of the down payment in a preferred stock ETF? PFF (iShares preferred stock ETF) is paying a dividend of 5.8%, the net result would be the lowering of your monthly payment even further.
FULL DISCLOSURE: I don’t own PFF (I’m not sure how the capital value will react if there is inflation), but I do own other dividend paying stocks as an alternative to having a smaller mortgage. I’ve taken a riskier position than a preferred stock position, under the theory that with a large enough basket of dividend paying securities, the aggregate dividends will likely grow over time, while the payment on my fixed rate mortgage will not.
Corporations can execute these more complex strategies because they have teams of tax attorneys and accountants constantly monitoring the situation.
And if it blows up for the corporation, it’s the logical construct that takes the hit, not the individuals.
If the individual structures his finances in a complex way and it blows up, it’s the individual who takes a hit. Individual = actual physical thing. Corporation = logical construct.
Basically, any scheme I’ve ever heard of which seeks to increase debt while trying to get higher returns elsewhere almost always blows up for the individual. My recommendation to individuals is don’t try to structure your personal finances like a corporations’, and to eschew debt. Someone’s making money off your debt and it’s not you who is paying interest on it.
I understand your point, and the strategy that I’ve employed is only comfortable for me because if the stock investments blew up entirely, one of our salaries can pay the mortgage.
For me it is more about optimization than a get-rich-quick scheme.
The other factor is that the stock portfolio was generally acquired from late 2008-early/mid 2009, so there would be a nice tax bite to pay as well, which makes the math more compelling when thinking about the sell stock/borrow more decision.
Hi Rental Watch!
No I did not consider investing like that. I really don’t know too much about investing in an ETF, but based on what you said it seems like it would be a smart move also. I tell you I’m kinda comfortable with putting the 225K into the house, I wasn’t earning very much interest on the money at this point and I like having these low payments and a much smaller monthly nut. I recognize that I may not be investing the money in the absolute smartest way possible, but I am kinda looking at the house as a investment in our family. It will bring continuity to our lives and something my kids will appreciate as being ‘ours’. I want to know our neighbors and be a semi-permanent fixture somewhere, rather than renting from place to place.
Fecaltime!
I totally get it.
What really matters is what makes you sleep well at night.
Everyone has different risk/reward tolerances based on their own knowledge and experience, and because of that, different people have different perspectives on this type of subject.
I sleep just fine, but then again, I’m an investor-type, live and breathe the stuff 24/7. I’m definitely not in the “you should always have a mortgage” camp either. After buying a house, and from this point forward, I suspect my life will be much more about paying down debt (regardless of how cheap it is) than taking on any more.
I know people that keep a small amount of debt around just for the leverage it employs–they have enough liquid investments to pay off their mortgage 10x over (or more), but choose to have the mortgage because they feel that borrowing at 3.5% is the cheapest money they’ll ever find. They may be right, but I can tell you I’m looking forward to the day that I have no debt.
I heard Zuck got money at 1.05% He has a mortgage; certainly it is about optimization for him!
3.5% sounds like a mortgage worth having.
I paid cash because with a mortgage at 7%(well since I earn little I would be hard pressed to get a mortgage these days anyway) I would have paid for the house at least 2x over the life of the loan.
So the rental income pays our rent.
If I decide I would rather sell than take on a mortgage, it is my contention that it will work out to my favor selling in a market full of thrashed REOs, short sales, and other riff raff.
Zuck’s loan though is a floating rate to my understanding (probably over LieBOR). Today is the day to lock rates as long as possible, IMHO.
It is for this reason that it boggles my mind that the Treasury doesn’t issue more 30, 40, and 50 year notes at whatever rates the market will bear.
I paid 10% down. My PITI is ~$400 less than equiv rent.
You paid 50% down. Your PITI is $800 less than equiv rent.
Since you bought a much more expensive house probably at a slightly lower interest rate, it should have scaled. That is, you should have gotten to $800 less than rent for the same 10% down as I did. Yet, you had to put down 50% for that -800.
I think your numbers favored renting. However, it’s hard to say no to the wife and babies, so you can only do what you can do.
If You’re A Slacker Loser In Your Mom’s Basement, Good For You–But You Didn’t Do It Alone!
Boston Herald | July 18, 2012 | Michael Graham
Unlike most of my fellow conservatives, I actually enjoyed President Obama’s recent speech at a fundraiser about how you’re not responsible for your life’s outcome (“If you’ve got a business — you didn’t build that. Somebody else made that happen.”)
Why, I liked it so much I went back and listened to it in the original Cherokee (Elizabeth Warren: “Nobody in this country got rich on his own — nobody!”).
My only objection is that the focus of their comments was too narrow. The president says, “if you were successful, somebody along the line gave you some help.”
He’s right, of course. But why leave out our fellow unsuccessful Americans? Don’t they count, too?
“There was a great teacher somewhere in your life,” Barack Obama said about successful entrepreneurs. But the 30-something stoner working part-time at the car wash and living in dad’s basement had a teacher, too. Lots of them. Taxpayers spent around $100,000 on his public education. Where’s the love?
Where’s the speech giving teachers credit for the many barely-literate Americans who graduate high school with minimum-wage skills, or who choose to live on the dole rather than work at all?
Why not a shout-out to them, President Obama? A shout-out to the people who grew up in the same “unbelievable American system that allowed” Bill Gates and Steve Jobs to thrive, but somehow managed to avoid working, bill-paying and individual responsibility.
I actually enjoyed President Obama’s recent speech at a fundraiser about how you’re not responsible for your life’s outcome (“If you’ve got a business — you didn’t build that. Somebody else made that happen.”)
LOL. The right is really freaking out about now.
I think it’s because Obama hates America and the producers because he thinks capitalism is evil and wants to punish their success by stealing their money by threat of force because the left envies the rich and stirs up class-warfare because their foodstamp food makes them lazy enough to want free stuff from socialism.
Nah - it is even simpler than that.
obama has never really “worked” a day in his life outside government and education.
He thinks that money just “magically” appears. It falls from the trees. That ALL money is there for taking and giving as a bureaucrat sees fit.
And that all answers are found in government - because that is ALL he knows.
It is too bad obama never had to make a payroll or take a risk with HIS money in HIS business or even make the cold calculation of hiring or firing someone based on how his OWN business is doing. Maybe he would understand how insane regulations and insane taxes do EFFECT the economy.
hiring or firing someone based on how his OWN business is doing. Maybe (Obama) would understand how insane regulations and insane taxes do EFFECT the economy.
I think regulations and paperwork requirements ARE onerous for small business in the USA however for the huge corporations the regulations don’t mean squat. They just pay a small fine and party on.
This difference has to be drawn.
Yes, I wish those in Washington would understand this. The regulations are turning “too big to fail” into “too small to succeed”, and thus “even bigger and harder to let fail”.
Bang up job Washington.
He thinks that money just “magically” appears. It falls from the trees. That ALL money is there for taking and giving as a bureaucrat sees fit.
How does this differ from people who cut taxes while simultaneously starting wars? Where does that money come from? But I was called unpatriotic for complaining about it that time.
“It is too bad obama never had to make a payroll or take a risk with HIS money in HIS business or even make the cold calculation of hiring or firing someone based on how his OWN business is doing. Maybe he would understand how insane regulations and insane taxes do EFFECT the economy.”
He understands how onerous taxation and regulation negatively affect the economy. To him it’s a feature, not a bug. It’s Cloward-Piven.
Yes, Mr. Brazilian masquerading as an American, you are correct.
Obumah, does hate America, and he does see it, like you do, as some nebulous “unbelievable American system”.
He, like you, doesn’t see that the PEOPLE, like Bill Gates and Henry Ford, and Thomas Edison, and others, MADE America what it is.
He thinks some “system” made them, and they were unjustly rewarded.
I, too, have some reservations as to the extent which large tracts of lands and resources can be put into private hands and used to reap massive profits. However, the idea of simply “redistributing” all the wealth or creating a government take-over of free enterprise is most destructive.
Obumah is clearly a socialist, with a penchant for Fascism, i.e., he doesn’t just want redistribution schemes, he thinks he should be running them. He also thinks he should be able to bomb people who don’t agree.
I understand Obumah’s point of view. After all, if he wasn’t promoted by “Affirmative Action” government programs into the best schools where he could never perform, he would never be where he is today. So, yes, he LOVES government programs. They put incompetent people into places they don’t belong and re-distribute the people’s wealth to the lazy, worthless and undeserving. Putting imbeciles into College is a vast waste of time and money. But, that’s what’s “fair”, isn’t it? We wouldn’t want to put the best and brightest, like we used to do.
Oh, and by the way, in deference to Obumah’s contention’s, Gates dropped out of College. He realized that the schools were already heading into socialization camps, not places of learning. Why waste the time “learning” that “we are all the same”?
“Oh, and by the way, in deference to Obumah’s contention’s, Gates dropped out of College. He realized that the schools were already heading into socialization camps, not places of learning. Why waste the time “learning” that “we are all the same”?”
Bill Gates is a huge liberal, I doubt he dropped out of school because of that. Billy’s daddy, Bill Gates Sr. was the driving force behind a ballot initiative in WA to implement an income tax. Sadly for the Gates clan, even in uber blue WA, that scheme was voted down 65-35. I was talking about this with a friend of mine a while back and he (1/2) jokingly said, well now you know how many people in WA work and how many don’t. And while certainly there was enough imbeciles who work who voted to tax themselves more, I think the 65-35 breakdown is not far off from the breakdown of workers/moochers.
I’m not saying Gates doesn’t conform to the Religion of the Left.
My only point was he realized that there was mostly no “education” to gain that would get him where he wanted to go.
Incidentally, Gates is a bad example.
He didn’t create the software that got Microsoft it’s beginnings.
He bought the software and was LUCKY that IBM wanted to use his DOS system as the platform for their new personal computers. That gave him a MASSIVE income from “licensing fees” for every computer IBM and it’s clones sold.
The alternate system were CP/M machines. I had one for work.
Texas instruments started out with CPM.
That is what made GATES rich.
Once he had a bunch of money, he could hire a bunch of programmers to create all the rest of the stuff. He had a MONOPOLY based on good luck and the x86 machines were one of the worst architectures made.
Motorola 68000 series which Apple/Mac used was far superior.
But everyone wanted to make sure whatever business system they had was “IBM compatible”. The meant MS-DOS, and more money for Microsoft.
Obumah, does hate America, and he does see it,
Really? Obama never bombed an American city that I know of. He hates brown muslim people and children judging by the number of people he has killed in 4 years.
“He thinks some “system” made them”
The system does not make someone, it allows them to flourish. Where is the Bill Gates of Somalia or North Korea?
Obama’s point is that you don’t make it on your own. You make it in a society that supports your ability to make it. The self made man, doing it all by his lonesome, is a myth. Bill Gates attended private schools. You can’t tell me he didn’t have a leg up over many of his cohort.
In Somalia, the self made man is a pirate or warlord. In North Korea, the self made man is a military leader or party hack. The system determines what kind of effort succeeds. The individual determines whether he will put forth the effort required. In a lot of cases, that effort includes a willingness to violence or unethical behavior.
“Obama’s point is that you don’t make it on your own. You make it in a society that supports your ability to make it. The self made man, doing it all by his lonesome, is a myth. Bill Gates attended private schools. You can’t tell me he didn’t have a leg up over many of his cohort.”
There are millions of people who attended private school. Yet there is only 1 Bill Gates.
Where’s the Euro version of Facebook or Amazon or eBay or Apple or Google or Twitter? Where’s the Canadian version? Why aren’t there any Bill Gates or Michael Dells or Steve Jobs or Zuckerbergs in the socialist utopia of Europe? Free health care. Retirement at 55. Union death grips in every industry. It’s a Democrat’s wet dream. Yet curiously, every major technological breakthrough of the past 25 years has occurred in the eeeeevil capitalist (well used to be capitalist) American system and always due to 1 INDIVIDUAL with an idea who executed the idea into a business.
Yet curiously, every major technological breakthrough of the past 25 years has occurred in the eeeeevil capitalist (well used to be capitalist) American system
Actually, most of this occurred in the ultra liberal Bay Area in California.
And don’t delude yourself into believing that we invented everything. The chart in the link shows that we are granted only 20% of patents world wide. A lot of those wonderful iToys that we love to think of as American are full of foreign invented tech.
http://1.bp.blogspot.com/_otfwl2zc6Qc/S3NsNrfl4qI/AAAAAAAAMuQ/eXmREtTjQy8/s1600-h/patents3.jpg
“If you’ve got a business — you didn’t build that. Somebody else made that happen.”
meh…kinda like solyndra.
Yeah, precisely like Solyndra. Building an internationally competitive industry takes massive subsidies to successfully compete with other internationally competitive industries. Some (if not many– remember Compaq? MySpace? Jerry Brown’s proposal that CA use its budget surplus to launch a communications satellite?) will go under and another entity will come along to build from the ashes.
This is how science, art, learning, all progress and ascend– on the shoulders of those who went before us.
Mr. Obama is 100% correct. You did not get here on your own or in a vacuum. You did so in a market that is supported by an infrastructure, rule of law, title rights, etc. But then acknowledging that requires context, and it’s easier for teeny minds to jump on the fragment than to analyze the content for any essential truth.
Always enjoy the red meat commentary on this forum. Saves me the trouble of sifting through the party dissemination for the floggable gems.
Actually have some hope for our Smithers as he refines his spin-craft; but nuance my boy, nuance. And original thoughts are good, too.
Mr. Obama is 100% correct. You did not get here on your own or in a vacuum. You did so in a market that is supported by an infrastructure, rule of law, title rights, etc.
I would be mighty grateful for all that infrastructure, rule, rights, etc that earned my success for me except for 1 thing. I had to pay millions of dollars in taxes. Once I factor that in I go from feeling grateful to feeling ripped off.
“Yeah, precisely like Solyndra. Building an internationally competitive industry takes massive subsidies to successfully compete with other internationally competitive industries.”
Indeed. Amazon, ebay, google, twitter and facebook all were funded with $500M of tax payer dollars. Oh wait.
Well, actually, Smithers, if you take the time to think it through (as I mentioned above), they WERE all funded with the taxpayer dollars that developed the computer technologies,the internet, the banking and defense systems and markets that fostered them.
Thanks for playing.
So the Iraq war and drone expenditures may come in handy one day, we may just get another internet.
Except the next one will surf you.
If you don’t have paying customers, you don’t have a business.
Most of our Republican friends don’t care about US employees or customers, because they think they can make more money in international markets.
We are in about the fourth inning in finding out whether the real world follows theory. I’m still waiting for all of the gazillion Chinese and Indian customers to jump into the middle class, and start buying stuff.
“If you don’t have paying customers, you don’t have a business.
Most of our Republican friends don’t care about US employees or customers, because they think they can make more money in international markets.
We are in about the fourth inning in finding out whether the real world follows theory. I’m still waiting for all of the gazillion Chinese and Indian customers to jump into the middle class, and start buying stuff.”
You don’t have to wait for the middle class of the developing world to materialize. They’re here by the tens of millions and consuming good and services every day. Free markets work. Trade works. Socialism doesn’t work and neither does protectionism.
International trade has been around for thousands of years. And also for thousands of years there have been protectionists getting in the way. Maybe in another 1000 years you people will finally get it.
Free markets work. Trade works.
The problem is, we have neither. Our markets are wide open to the rest of the world, while every one else jealously protects their own markets.
Witness how China demands that Ford and GM and other foreign brands build factories in China if they want access to the market. And it isn’t just cars, it’s everything. They’re even demanding that Boeing start building airliners in China. My employer was forced to set up R&D in China to have access to their markets.
That isn’t free trade pal, but let me tell you something … it’s working GREAT for China.
Serial bottom callers will call bottoms, early and often.
Eventually their stopped-clock prediction is bound to turn out to be right.
Housing market shows signs of revival
Scott Olson/Getty Images
A vacant lot is offered for sale in a single-family housing development on March 16, 2011 in Volo, Ill. New home construction figures could provide momentum to the sense that the housing market is finally turning the corner.
by Mark Garrison
Marketplace Morning Report for Wednesday, July 18, 2012
Jeremy Hobson:There’s a growing sense among economists that the housing market has finally hit bottom. Home prices and home sales have been stabalizing in many places. Well later this morning, we’ll see if fresh numbers on new home construction help to paint this picture of a rebound in the housing market.
Marketplace’s Mark Garrison has more.
Mark Garrison: Yes, this is the bottom of the housing market. Richard Green will come right out and say it. The director of USC’s Lusk Center for Real Estate points to two key factors.
…
Pssssst–bankers, hey, wanna piss off the “serial bottom callers”? Just release into the market 10% of the foreclosed, vacant homes you’re holding/hiding.
Hooray! SoCal home prices are going up again!!
AP News
So. Calif. home prices match two-year high in June
By Elliot Spagat on July 17, 2012
SAN DIEGO (AP) — Southern California extended its housing recovery in June as the median sales price matched a two-year high and buyers drawn by low interest rates snapped up homes in pricier coastal regions.
The median price of new and existing houses and condominiums in the six-county region reached $300,000 in June, up 5.3 percent from $285,000 during the same period last year, research firm DataQuick said Tuesday.
It marked the third straight month that prices increased from last year, matching the longest streak since late 2010.
Meanwhile, the California Association of Realtors said the statewide median sales price in June for existing single-family homes grew 8.1 percent to $320,540 from $296,410 a year earlier.
That number doesn’t include condominiums or new homes, and it relies on residential brokers instead of county property records. Still, it suggests the recovery extended to the entire state last month as buyers were lured by low interest rates.
…
Median sales price of $300k? That sounds low. Or are there a bazillion condos there?
That $300k is also with houses.
It would be low if it were just coastal California. Since it also includes lands farther inland, it isn’t THAT low…but also far from the highs.
If your meeting/wedding venue flops, just ask the City of Tucson to bail you out. From our leading local fishwrap:
Rio Nuevo may add Manning House
Board will consider 60-day option on historic building
I know the owner of this place. She never struck me as the sort who knew how to run a meeting/wedding venue and make it successful.
So 2 years back, one of my wife’s co-workers was facing bankruptcy. Her husband was a fire suppression systems installer (sprinkler systems, halon systems, alarms, etc) and work was way off. Upside down on vehicles, house, credit cards, etc.
So… he started working 100% under the table. They then got divorced and set up an agreement where she was paying him massive alimony. This dropped both of their incomes below the cutoff for the “wipe out the debt” type bankruptcy.
So, they walked from the house(after living rent free for close to two years), gave back the expensive vehicles, and pretty much wiped out almost all their debt.
Months after the bankruptcy was final, they remarried. Last month, they bought a house similar to what they had bought in 2006, for about half what they had paid in 2006.
You have to work the system I guess.
Wow.
That’s working the system.
I said it in 2005. I said it a year ago. It was one of my main concerns and now it’s reality. The same doofae that we had to compete with back then who made the mania what it was are back in the game as competitors once again. And no, their sleepless nights, if any, are no consolation for what is ultimately a lack of consequences.
Don’t have the playah, hate the game.
Wow.. Now that’s a scheme that Goldman Sachs would be proud of.
Good for them, the name of the game to get ahead in today’s society is figuring out how to “game” the system. Do you think, for one second, that if a bank could do something like this they’d hesitate for an instant? 
Love it!
You have to work the system I guess.
So did ‘ya take a dip while she was single?
You might want to take a break from commenting every now and then folks……
CHARLOTTE (CBS Charlotte) — Get off that computer. A new study finds that constantly being online can affect your mental health.
Researchers at the University of Gothenburg recently studied more than 4,100 Swedish men and women between the ages of 20 and 24 for a year and found that a majority of them who constantly use a computer and mobile phones can develop stress, sleeping disorders and depression.
Sara Thomee, lead author of the study, said there was a “central link” between computers and mental disorders.
“High quantitative use was a central link between computer use and stress, sleep disturbances, and depression, described by the young adults,” Thomee said in the study. “It was easy to spend more time than planned at the computer (e.g., working, gaming, or chatting), and this tended to lead to time pressure, neglect of other activities and personal needs (such as social interaction, sleep, physical activity), as well as bad ergonomics, and mental overload.”
Computers are something I use for work. Playtime? I get as far away from ‘em as I can.
On weekends, I barely have time to check my e mail. It’s during the work week that I’m online. A lot.
Hope you’re not a govt contractor. Gives us a baaaad rep.
Or a govt employee, for that matter, as some of our more prolific daytime posters are. Poster boyz for “smaller govt is good”.
I hope you’re not one of those heavily-subsidized farm owners, taking tax dollars for holding land out of production or for planting in the flood zone.
I wish I WERE a family farmer, striving mightily against the latest Dept of Agriculture regulations that are written by Monsanto and designed to put me out of business. So that the thousands-of-acre holdings held by Monsanto and ConAgra can continue to reap those FARM SUBSIDIES, the better to concentrate on genetically modified crops that are specifically bred to pollinate over a wide area, and subsequently hauling all of the neighboring family farms into court, bankrupting them and thereby buying their multigenerational landholdings for pennies on the dollar.
The lobbyists who are the conduits for the millions that pass from Monsanto/ConAgra to the legislators; the legislators themselves (excepting Joe Biden, each having amassed personal fortunes WHILE in office thanks to the rule that says campaign contributions belong to them), and the school systems that have stripped out critical thinking thanks to their “Teachers Unions First” policies, resulting in graduates who are unable to reason and who think all this is good - ALL are paid for by us schmucks, the taxpayers!!!
What’s not to like?
Why is Romney so reluctant to discuss outsourcing American jobs overseas?
The Pain in Bain
Why Romney’s so afraid of talking about what he did at Bain.
By Jacob Weisberg|Posted Tuesday, July 17, 2012, at 5:26 PM ET
Mitt Romney seems genuinely stunned that President Obama would question the value of his proudest accomplishment, founding and running Bain Capital for 15 years (or maybe a little bit more). To Romney and others who work in finance, it’s self-evident that what private equity firms like Bain do is beneficial to the economy. Private equity firms buy underperforming businesses and restructure them. With new management and investment, some of these firms thrive while others fail. As a result, investment is allocated more efficiently. This is creative destruction in its pure form and if you question it, they say, you must not believe in capitalism.
…
Creative destruction is desperately needed at the top of the food chain.
But where it is needed most, it is vigorously prevented.
Proof that corporations are people too, especially Bane … I mean Bain Capital:
http://areyouafanyet.com/wp-content/uploads/2011/01/bane.jpg
Good question. IMO I think he’s holding fire until the summer is over. I also think it would open him up for more obfuscation, lies and deceit on the part of the Prez’s team.
Staples vs. Solyndra
Mitt Romney needs to make a better argument for Bain capitalism.
“Yes, President Obama’s attacks on Mitt Romney and the company he founded, Bain Capital, are deceptive and hypocritical. But Team Romney is compounding the damage from this character assault by conceding too much of the Obama critique.”
http://online.wsj.com/article/SB10001424052702303933704577532981276269006.html
I love this word, “underperforming”. Especially the bankster/Wall Street definition.
A steady, stable, 100 year old business is “underperforming” if it returns 8-10% year, when you can outsource everything, and sell off the rest, and make 15% for one year (or long enough to pay off the bonuses to the management).
If the capital invested has the potential to return 20% and only returning 8-10%, it is under performing.
If you don’t like it, put up your own capital and only get 8% while employing all the Americans you can find. But since it’s not your capital, you really have no say in the matter.
But since it’s not your capital, you really have no say in the matter.
I beg to differ. We collectively own stocks and mutual funds, but we have no say in the matter. Wall St. calls the shots with our money, and it always focuses on short term growth.
I remember HP before the Mark Hurd and Carly Fiorina days. HP was “boring” back then, but the company was debt free, grew steadily and so did the stock’s price. After Carly and Hurd the steady growth ended. Mark Hurd’s cost cutting eventually stopped working and now HP is actually shrinking. Today the stock is at the lowest point in decades.
The fable of killing the goose that laid the golden eggs fits exactly.
Them golden-egg layin’ geese is good eatin’.
“But since it’s not your capital, you really have no say in the matter.”
Uh… isn’t this really part of the bigger picture and bigger problem? Sure, it starts with housing, but now that we’ve poked around a little it’s clear we’re running a “loot that mother!” economy.
This has an impact on every citizen of this country. So yeah, it’s my money, your money, our money.
“Capital” is an interesting term these days.
I recall reading a special report in The Economist about the German Mittelstand, and the profiles of some companies in particular. Financiers came in and told one company that if it decided to engage in some creative financing - taking on large amounts of debt as a start, then betting on financial constructs/products - it could become dramatically more profitable (it would be quite lucrative for the financiers too of course). The owners refused, saying their goal is generational wealth, not quarterly wealth.
Utterly different mindsets from the US.
http://www.economist.com/blogs/schumpeter/2012/04/germanys-mittelstand
The owners refused, saying their goal is generational wealth, not quarterly wealth.
They’ve already had their Rothschild experience. We are currently in the middle of ours.
Aside from a remarkably recent polygamist ancestry in Mexico, what does Romney have to hide?
Why won’t Romney release more tax returns?
By Edward D. Kleinbard and Peter C. Canellos, Special to CNN
updated 12:50 PM EDT, Wed July 18, 2012
(CNN) — By announcing that he will release no further tax returns beyond his 2010 and 2011 returns, Mitt Romney appears to have exempted himself from the proud bipartisan tradition of presidential nominees displaying genuine financial candor with the electorate.
What is more, his disclosure to date is in the wrong direction: It is the release of Romney’s past returns, not his current ones, that matters.
Since George Romney inaugurated the practice more than 40 years ago by releasing 12 years of tax returns in his bid for the Republican Party nomination, presidential nominees have been transparent with voters about their personal finances. For this reason, we have not suffered a significant tax scandal involving a nominee or sitting president since President Richard Nixon’s abuse of the tax code.
Either Romney has an unresolved father figure issue, or he has some special reason not to follow a tradition established by his father.
…
Relax, only about a 10% chance of hyperinflation over the next 12 months.
So, when I hear about something like this, I wonder first, “Is it true?” and second, “Who profits from a stampede from people acting on this information?”
I don’t know the reality of the risks of hyperinflation, but money printing strikes me as continuously dumping lighter fluid on a barbeque pit that’s only smoking. Eventually there will be a conflagration.
Money printing does not breed confidence in the currency. And the most important thing for a fiat currency is to maintain confidence in it.
To be clear, UBS does not think hyperinflation is imminent. They estimate that there is less than a 10 percent chance over the next 12 months.
But according to a new report by UBS’s Caesar Lack, the risk of hyperinflation is greatest in the U.S. and the U.K.
http://www.businessinsider.com/hyperinflation-risk-major-currency-2012-7
In Mauldin’s book, he notes that one major difference between the US and the UK is the duration on government debt (I think it was something like 14 years for the UK, but only like 4 years for the US). For that reason, he felt the UK was more likely than the US to have massive inflation…they can more easily screw over bond(gilt)holders without a significant increase in their overall cost of borrowing.
When it comes to the Ten Commandments, lying and stealing to hand in hand.
July 18, 2012, 4:38 a.m. EDT
‘Lie’-bor, or the art of the lie and your money
By Steve Beck
Lying has a noble history, hearkening back to the beginning of time itself. By taking a simple jaunt back to the Garden we find God’s booming, “Who ate my apple?” met by innocent looks and an eventual and timid chorus of, “Not me.”
…
For a long while, it appeared as if lying had fallen on hard times and couldn’t be improved upon. Fortunately, for lying’s sake, in recent years, Wall Street, seeing the utter dearth of any truly shocking falsehoods, took it upon itself to stand up and shake the world with profoundly authentic deceits.
It began with the likes of Bernie Madoff, who led the charge with his remarkable $54.8 billion Ponzi scheme, leaving in his wake families and institutions whose life savings evaporated in a day.
Raj Rajaratnam of the Galleon Group joined the fray, adding his insider trading lies to the mix of Wall Street tragedies, picking the pockets of hardworking Americans as he lined his own.
Goldman Sachs joined in on the ruckus by promoting vacuous securities to its clients while privately dumping these wretched investments from their balance sheets.
And then there was the subprime banking scandal — a true jaw dropper. CDOs and other forms of securitized trash were peddled upon the unsuspecting, leaving waves of misery to wash over the world spreading recession and financial ruin.
Now, in recent weeks and in what many hope is Wall Street’s grand finale, Barclays has served up the Libor scandal. Libor stands for London interbank offered rate, and it involves a group of bankers who set the daily interest rate affecting an estimated $800 trillions of transactions world-wide, including home mortgages, college loans, credit card fees and beyond.
It turns out that Barclays and other banking insiders were manipulating the index as far back as 2005, raising their profits at your expense during the good years and making their banks look better off during the financial crisis. “The Economist” magazine described it as “the rotten heart of finance.”
Just how big it the Libor crisis? Journalist Bill Moyer called it “huge”. Eliot Spitzer said, “This is about as big as it gets in the financial world and goes to the heart of every piece of debt that’s issued to consumers.”
Furthermore, the scandal has grown. What initially involved Barclays has now enveloped 16 banks and will result, according to a study done by Keefe, Bruyette & Woods, in an estimated and historic $35 billion in fines.
It appears that with the Libor scandal, the ignoble art of the lie has been truly and ultimately resurrected to a new and stunning height, capturing the attention of even the most committed fibbers.
The American public, once terrorized by gangsters, now lives in fear of banksters, a new and more terrifying criminal. The bankster is an equal opportunity liar, working stealthily while pillaging the homes of widows and orphans to kings and priests, alike.
When it comes to your money, the Libor scandal teaches three simple principles of money management. First off, be suspicious of any steward put in charge of your wealth. At all times, beware of the liar and do your utmost to establish trust. Next, remember the danger of agency risk. For every person you put between you and our money, you compound the risk of a dishonest manger damaging your portfolio. Finally, demand transparency. One of the big problems with LIBOR, according to Ben Bernanke, was a lack of transparency in the process and data used to establish rates.
…
Liebor….. Brought to you by US and European central banks better known as the evil axis.
At what point did outright fraud become so acceptable in the banking industry?
Since they knew that the taxpayers would shoulder the losses?
When they realized they were TCTJ - Too Connected To Jail. Why is Corzine free and why did Martha Stewart and Rajaratnam go to jail? One’s connected and the others are not.
It’s all about consequences. If there’s no downside and only upside, they’re going to keep engaging in the behavior. It’ll get worse and worse until something gives.
“At what point did outright fraud become so acceptable in the banking industry?”
Wasn`t it just about the time outright fraud became acceptable on loan applications.
I would like to know why these bastard Kingpins that have created all this fraud and damage get away with just paying small fines verses the profits they made on their crimes ,with no jail time . Why is it that immediately a settlement is struck without the due process of a criminal trial . Doesn’t due process work both ways ? Isn’t the public owned some due process ?
Just one infraction after another discovered that was done by the Banking Cartel/Investment Banks ,and its considered a fine ,rather than a criminal act .Same with the Pharma Industry ,but in this case they killed people by their crimes that are being discovered recently . These entities still end up with ill gotten gain in amounts that far exceed their small penalities .
With what I have seen lately in terms of Justice ,I would say that a different Justice is applied to Big Coporate Entities ,never mind absurd bail outs , to the point where law and order seems to only be applied to the small guy .In spite of the fact that the BIg Entities can reek more damage than a individual ever could ,which should hold them to a higher standard of conduct because of their potential for damage ,they get it easy .
And please don’t tell me what they did was legal ,only in a warped world could you twist their actions into being legal because you would need to ignore a lot of laws to call it legal .
Why not let someone that murders someone to just pay a fine if your going to have this sort of Justice ?
The moral hazard this is creating as people observe a Nation that doesn’t have equal Justice under the law is going to be very damaging and its a testimony as to the extend that the Big Monopoly Corporations and to to big to fail entities have taken over control of the USA .
” A Country that does not render reward and punishment in a just manner is doomed to fail .” ( from the Art of War )
Astute observation.
My department budget last year: $120k
This year? $60k
P O O F
My salary increase last year(and every year before that)? 5%.
This year? 0%.
It’s not good out there my friends, irrespective of the hype.
Flashback: “”I’m going to strip this mother”
http://www.sptimes.com/2008/02/19/news_pf/Business/In_home_foreclosure__.shtml
“We Are The Champions”
I’ve paid my dues -
Time after time -
I live for free
But committed no crime -
And big HELOC Loans
There were a few
I’ve had my share of sand kicked in my face -
But I’ve come through
We are the Deadbeats - my friends
And we’ll keep on fighting - till the end -
We are the Deadbeats -
We are the Deadbeats
Payments for losers
‘Cause we are the Deadbeats - of the world -
I’ve taken my bows
And my curtain calls -
You brought me HAMP and HARP and everything that goes with it -
I thank you all -
But it’s been no bed of roses
No pleasure cruise -
I consider it a challenge before the whole human race -
it`s my house and I`ll never lose -
We are the Deadbeats - my friends
And we’ll keep on fighting - till the end -
We are the Deadbeats -
We are the Deadbeats
Payments for losers
‘Cause we are the Deadbeats - of the world -
What did you say? You are forgiving my principal? Did you say you wanted me to pay my mortgage? I`m sorry I didn`t hear that. You want me to move? I didn`t hear that either.
Below you will find more details on our horrific battle with Wells Fargo Bank. Many readers felt that we should have walked away or declared bankruptcy. If you are dead broke and lawsuit proof this is a great idea. If you have income and assets, Wells Fargo will come after you and cost you tens of thousands of dollars in legal fees and unimaginable heartache.
Yesterday Elena and I came back from a delightful morning at Stanford University and San Mateo. Elena took the mail up to the house and put it on the table. Thee was one innocuous letter from the San Mateo County Clerk’s Office. I assumed it was just a notice on the change of our property taxes due to the recent passage of a parcel tax for the Jefferson Union High School.
I opened the letter and it was a legal paradox. It was in complex legal language that I had to struggle to understand despite the fact that I had attended law school. I figured out that it was the release of lien on the second lien that had haunted our house since 2007. It was anti climactic. I was in shock to finally see this document after a four year legal battle. Elena could not read the complex legal language. I had to translate it for her despite the fact that she is a medical doctor.
All of this drama began in April of 2007 when we took out a second mortgage on our house during the wild housing bubble. From the start we had trouble with Wells Fargo Bank. The monthly payment was an astronomical $2,500 US per month. When the housing bubble burst our house dropped in value from $870,000 to about $400,000. I also left my corporate job to form my own resources business. I picked up a client in Colombia. I was part of a team developing a new gold mine. It looked like I had a $250,000 fee coming in. Sadly we never got paid for all of our work. I found myself over 60 years of age and unemployed.
I contacted Wells Fargo Bank and asked for a loan modification on the second lien. They were nice to me at first. They reduced our payments from $2,500 per month to $800 per month. We paid this payment for 18 months. We then were served with a demand to increase the payments back to $2,500 per month. We declined and stopped paying on what we considered to be a worthless loan.
We continued to negotiate with Wells Fargo Bank. I even went to a meeting with their loan officers in Oakland. Nothing seem to work.
I met with a very good real estate lawyer in San Bruno. He pointed out that even if we walked away from the house and did a strategic default, Wells Fargo could sue us for the $152,000 balance of the loan because the loan proceeds were not purchase money. We were looking at the prospect of Elena’s wages being garnished for years to pay for a worthless loan.
In April of 2010 I filed by Chapter 13 bankruptcy reorganization. I started with one team of lawyers but soon realized that the case was very complicated. I took the case to one of the best bankruptcy lawyers in the US; Cathy Moran. She took the case. She looked at the Wells Fargo second lien. It was in Elena;s name and Elena was not on the bankruptcy. She said that California was a community property state and I could put the loan on my bankruptcy petition despite the fact that my name was not on the loan.
When Wells Fargo heard about this bankruptcy filing. They hired a top-notch lawyer to fight us. This man was so well respected in bankruptcy circles that the US Justice Department had suggested that the Russian government use his services to help them develop a comprehensive new bankruptcy law.
Cathy Moran did a great job of fighting this matter through one year in court. The bankruptcy judge agreed that our law was correct. He had a personal objection to the fact that Elena was not on the bankruptcy petition. He felt that Elena was getting the full benefits of bankruptcy without the penalties of bankruptcy. Wells Fargo was taken off the bankruptcy petition. We eventually exited bankruptcy and the legal bill was over $20,000. I suspect that Wells Fargo had a legal bill just as big.
We tried to negotiate with Wells Fargo Bank. They demanded $38,000 to settle the loan. We did not have that kind of money. A collection agency was brought in. We were deluged with phone calls and letters for 18 months. We were expecting a lawsuit and another $20,000 legal bill. If Wells Fargo had sues us they would have had a $20,000 legal bill also as the litigation drug on for several years. If the case had gone to the appeals courts. Elena and I could have seen a total legal bill of $35,000 as would have Wells Fargo.
One day I called the collection agency and got a really nice lady named Mitzi on the phone. She said that she wanted to work with Wells Fargo bank to get the settlement figure down to $25,000.
I had already worked with one of the best debt negotiation law firms in the US; The Comfort Law Firm of San Mateo, California. I called them and had a meeting with Alan Sherman who is one of the best negotiators on planet Earth. I paid them a $5,000 retainer. Alan and Mike went right to work. They got the collection agency to agree to take $20,000. Alan also got Wells Fargo bank to approve this settlement figure.
Over the next month we paid $20,000 to the collection agency. It took all of our liquid savings and other money that we could put together. We lived an austere life while paying this money. Ironically Wells Fargo got $10,000 of the money and the collection agency collected a juicy $10,000 fee for doing virtually nothing.
I was worried that the collection agency would “pocket” the whole $20,000 and give nothing to Wells Fargo. We would stioll be stuck with a $152,000 bill.
A few weeks later a letter arrived from Wells Fargo Bank. It informed us that they had received the settlement payment. We were promised a release of lien and good report to the credit bureaus.
It was a big relief to see the release of lien yesterday.
We still have to hire an accountant at year end to prove the IRS with data to prove that Elena is insolvent so she will not have to pay up to $40,000 in income taxes on thew a form 1099(c) that Wells Fargo bank will send her early next year for $132,000. We have enough debt to prove that the satisfaction of the IRS that we have a negative net worth.
This awful legal battle cost us $25,000 in legal fees and another $20,000 to Wells Fargo. Thanks to what I learned from Gretchen Morgenstern at The New York Times, we will be able to legally void that form 1099(c) for $132,000 in income.
My dear readers Wells Fargo Bank did not lose all that money. They probably had our loan in some mortgage-backed securities that were sold, for example, to some teacher’s retirement fund in New Zealand. These hard-working teachers were the ones who suffered the big loss.
Wells Fargo is the most ruthless bank in the world. They play “hard ball” and they will make your life hell on earth. This is a soul-destroying experience.
We declined and stopped paying on what we considered to be a worthless loan.
jeff, I appreciate you sharing your experience here.
But one thing confused me: you indicated that it was a “worthless loan”, and Elena was also effectively insolvent so there would be no “phantom income” from the 1099 for forgiven debt.
How does that square with your opening paragraph:
If you have income and assets, Wells Fargo will come after you and cost you tens of thousands of dollars in legal fees and unimaginable heartache.
It sounds like if you both were effectively insolvent, that you might have been able to BOTH do the Ch13. Why didn’t you do it that way?
Looking back, do you wish that you had? If not, why not?
Thanks again!
“jeff, I appreciate you sharing your experience here.”
Sorry this was misrepresented, it was not my experiece but that of someone who had this posted on a foreclosure site.
The future strength of the U.S. housing market lies in the weak hands of Generation Screwed. Good luck with that plan!
Are Millennials the Screwed Generation?
Jul 16, 2012 1:00 AM EDT
‘Boomer America’ never had it so good. As a result, today’s young Americans have never had it so bad.
Today’s youth, both here and abroad, have been screwed by their parents’ fiscal profligacy and economic mismanagement. Neil Howe, a leading generational theorist, cites the “greed, shortsightedness, and blind partisanship” of the boomers, of whom he is one, for having “brought the global economy to its knees.”
How has this generation been screwed? Let’s count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.
The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.
The older generation, notes Pew, were “the beneficiaries of good timing” in everything from a strong economy to a long rise in housing prices. In contrast, quick prospects for improvement are dismal for the younger generation.
One key reason: their indebted parents are not leaving their jobs, forcing younger people to put careers on hold. Since 2008 the percentage of the workforce under 25 has dropped 13.2 percent, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6 percent.
“Employers are often replacing entry-level positions meant for graduates with people who have more experience because the pool of applicants is so much larger. Basically when unemployment goes up, it disenfranchises the younger generation because they are the least qualified,” observes Kyle Storms, a recent graduate from Chapman University in California.
Overall the young suffer stubbornly high unemployment rates—and an even higher incidence of underemployment. The unemployment rate for people between 18 and 29 is 12 percent in the U.S., nearly 50 percent above the national average. That’s a far cry from the fearsome 50 percent rate seen in Spain or Greece, or the 35 percent in Italy and 22 percent in France and the U.K., but well above the 8 percent rate in Germany.
The screwed generation also enters adulthood loaded down by a mountain of boomer- and senior-incurred debt—debt that spirals ever more out of control. The public debt constitutes a toxic legacy handed over to offspring who will have to pay it off in at least three ways: through higher taxes, less infrastructure and social spending, and, fatefully, the prospect of painfully slow growth for the foreseeable future.
In the United States, the boomers’ bill has risen to about $50,000 a person. In Japan, the red ink for the next generation comes in at more than $95,000 a person. One nasty solution to pay for this growing debt is to tax workers and consumers. Both Germany and Japan, which appears about to double its VAT rate, have been exploring new taxes to pay for the pensions of the boomers.
The huge public-employee pensions now driving many states and cities—most recently Stockton, Calif.—toward the netherworld of bankruptcy represent an extreme case of intergenerational transfer from young to old. It’s a thoroughly rigged boomer game, providing guaranteed generous benefits to older public workers while handing the financial upper echelon a “Wall Street boondoggle” (to quote analyst Walter Russell Mead).
Then there is the debt that the millennials have incurred themselves. The average student, according to Forbes, already carries $12,700 in credit-card and other kinds of debt. Student loans have grown consistently over the last few decades to an average of $27,000 each. Nationwide in the U.S., tuition debt is close to $1 trillion.
This debt often results from the advice of teachers, largely boomers, that only more education—for which costs have risen at twice the rate of inflation since 2000—could solve the long-term issues of the young. “Our generation decided to go to school and continue into even higher forms of education like master’s and Ph.D. programs, thinking this will give us an edge,” notes Lizzie Guerra, a recent graduate from San Francisco State. “However, we found ourselves incredibly educated but drowning in piles of student loans with a job market that still isn’t hiring.”
…
Most of this “generational screwing” is really due to structural changes in the economy. Outsourcing and productivity increases have reduced the number of people needed to make the same goods that were produced decades ago. The opening of middle class jobs to minorities and women have increased competition.
“This debt often results from the advice of teachers, largely boomers, that only more education—for which costs have risen at twice the rate of inflation since 2000—could solve the long-term issues of the young.”
Teachers always promote education. You don’t become a teacher if you don’t believe in it. It is easier to get a 4 year college degree when you have no dependents than later in life. It is not necessarily bad advice to tell kids to get educated.
I have wrestled with this in the last few years. What field do you advise your kids to go into? The world is changing rapidly and no path looks safe.
I enjoyed David Callaway’s column, but I guess he didn’t reciprocally appreciate my comments, as he tazed my MarketWatch persona (FedCake) when she became a bit too incendiary.
July 19, 2012, 12:02 a.m. EDT
A final salute
Commentary: To the Internet pioneers at
By David Callaway, MarketWatch
SAN FRANCISCO (MarketWatch)—I’m leaving MarketWatch after the markets close tomorrow, ending 13 years of round-the-clock news excitement, Internet mania, 4:45 a.m. wake-up calls, and constantly impending financial disaster.
Starting next week, I’ll be working from the East Coast, as Editor-in-Chief of USA Today, one of the leaders of modern journalism in both print and Internet. I couldn’t be more excited. After meeting the talented and passionate staff at the paper and online last week in McLean, Va., I know it will be a thrilling ride. That Larry Kramer, founder of MarketWatch and now publisher of USA Today, is leading the way, makes it all the better.
But this column is about MarketWatch. Not the website, the business, or the legacy it’s built as one of the original “new media” operations. About the people. The men and women who’ve worked for MarketWatch, and its predecessor, CBS MarketWatch, over the past 15 years. The journalists who worked the magic each day—each hour—to bring more than 1 million daily readers in 70 countries, and the Vatican, a new form of news and entertainment. A journalism steeped in wonderful, creative writing; instant analysis, colorful commentary and breaking news wherever it happens.
…
“Starting next week, I’ll be working from the East Coast, as Editor-in-Chief of USA Today, one of the leaders of modern journalism in both print and Internet.”
USA Today is just another hoi polloi spin-machine.