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Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Ben,
I know this is OTP, but what people are doing homes, they are now doing with Cars!
http://autos.aol.com/article/general/v2/_a/financing-tricks/20060531104909990001
Financing Tricks
Buyers, trying to get more for the ’same money,’ are putting themselves deep into the red.
By PETER VALDES-DAPENA
NEW YORK (CNNMoney.com) - New car buyers are taking out longer and longer loans to finance their vehicle purchases, according to data from the Consumer Bankers Association. More than half of new car loans made by the group’s member institutions were for five years or longer.
That marks the first time that most new car loans have been written for more than five years, the group said. The biggest jump was in six-year loans.
At the same time, leasing is also increasing in popularity, according to data from J.D. Power and Associate’s Power Information Network. Leases accounted for more than 21 percent of U.S. new-vehicle sales between December of last year and February of this year. That’s the highest level in five years.
The biggest motivation for this, experts say, is that people want to buy more expensive cars without actually paying more each month.
“They want more car, they want more luxury and they’re stretching out their loans,” said Jack Nerad, editorial director at Kelley Blue Book and author of the “Complete Idiots Guide to Buying or Leasing a Car.”
Prices for vehicles of the same size with the same features have actually been going down in recent years, but buyers are purchasing larger vehicles with more luxury features, said Paul Taylor, chief economist for the National Automobile Dealer’s Association..
The improving quality of cars may embolden some buyers to take out longer loans, said Taylor. With today’s cars routinely running for well over 100,000 miles, customers don’t worry about being forced to buy a new one.
There are serious downsides to this approach, though. Besides paying thousands more in interest, buyers taking out long car loans are more likely to find themselves in a financial bind if they need a new car again in just a few years. That could happen because of an accident or simply because a car owner is tempted by a newer model.
They could well find themselves “upside down,” meaning that they owe more money on their current car than it’s worth. Ordinarily, a new car buyer would simply trade in or sell their old car and use the money they get from that to pay off any remaining loan balance. In this situation, that’s not possible.
Longer-term loans increase the chances of that happening.
One commonly-used solution is simple. The remaining balance from the old car loan is refinanced as part of the new car loan and, to keep payments low, the new loan term is stretched out some more. “Financing of over 100 percent of the car’s value is not unusual these days,” said Nerad.
The loans, then, keep getting longer and longer.
Solutions to the problem Some car buyers who find themselves “upside down” when going to get their next vehicle probably should have considered leasing. For customers who normally change cars every few years, leasing can make more sense than repeatedly “flipping” cars…
This isn’t really new stuff. I was in the car business in the late 90’s, sounds pretty much like stuff I saw every day then. Being upside down in a car loan is commonplace, unless you put down a large down payment, you are upside down the minute you drive off the lot.
6 year car loans were available but rare, but 5 years were pretty common, so maybe not quite half of our loans were 5 years or more, but we were pretty close.
Really, I can’t understand why anybody would waste money on a new car. You can get so much nicer a vehicle if you buy a few years used, and with a certified used car from a reputable dealer you don’t get any more trouble than a new car gives you.
I drive a Lincoln Mark VII, got it with 60k miles, its been in the shop once over the last 3 years, and I paid less for it than a friend how bought a brand new ford focus.
That is the definitition of a Declining Standard of Living. In 1974 the average car loan was 2 years, I took a 3 year loan for my new Mercedes 450SL (the most expensive Mercedes in america at the time $14,250 a true POS - never owned a Mercedes since). All because I got a raise to 16K per year. The equivalent today would be a 1 year out of college making 120K/yr to buy the same POS Mercedes equivalent.
A friend of mine once said if you can’t afford a car on a 3 year loan, you can’t afford the car.
I think he’s right. Words to live by.
I’ve tried to match my car loans with the term of the general warranty on the car… no particular reason, except that by the time it’s paid off, the expenses from then on are all upkeep (if any; my 2001 GP has spent no time in the shop).
The argument from the car dealer is of course, we offer zero-percent financing, why on earth would you want to pay it off right away? Great logic there.
You can buy a new merc 1 year out of college if you are Bill Clintons daughter Chelsea!. I hear that she is making about 6 figures. I wonder if she has the same tastes as her dad….
That god W’s daughters signed up to go fight the Golbal War on Terror….seeing on how freaking necessary it is….oh wait they didnt?! hmmmmm what are they doing.
A$$hat.
Speaking of which, why arent you defending our freedoms?
If you are a savvy buyer to can outwit parts of inflation with rallymonkey’s purchasing strategy for just about anything but food and fuel.
somebody’s got to buy the new cars so there will be used cars. Though with more registered cars on the roads now than licensed drivers, maybe that’s not so true any more.
I always buy new cars. You never know what you buy when buying used. Plus, the cars I value, like Toyotas/Hondas lose little in value, so I don’t see a point in buying used - to save a couple of thousands on something you are not sure about?
I heard an interesting statistic from a F&I guy that works for Mercedes:40% of buyers of new Mercs make less than $60K per year
Oops, meant to say “I know this is OTP, but what people are doing with homes, they are now doing with Cars!”
last crash vs 06 ?
anyone have data for the whole country for 1986-96 ?
it was different
So there’s an ad running in the free weekly paper for a new condo complex on the beach in Biloxi. Unit prices are in the $350-$500k range. The developer is promising discounts to families displaced by Katrina, but since we’re talking an area where the average family income is $36K a year, there seems to be a bit of a disconnect going on.
That’s outrageous. And I think insulting to the Katrina victims.
I live in Mobile. About 50 miles from the beach and we STILL got a slice of Katrina. No way would I buy anything close to the water.
It seems like though that the nousing bubble has finally found its way here. A few years ago you could buy a really nice house in a very good neighborhood for around $200k. But those days are long since past. There are still some less expensive areas but even they are rapidly increasing.
I’m curious as to what people feel are reasonable home prices - you know, at what price range would they jump in (and do they expect to see those prices)? I’m sure west coast folk would consider much higher prices reasonable than I would in the Philly `burbs (and much, MUCH higher than a midwestern dweller would). But I struggle with what I think is reasonable (because I’m ultra-conservative and frugal [not cheap ;-)]). I wonder if I need a reality check.
I’m particularly interested in the following categories: 1) condos (non-luxury); 2) townhouses (non-luxury); 3) starter SFH.
I don’t expect prices to go back to 1999 prices, houses were probably undervalued then, and there’s been a lot of inflation since then. 2002 prices would be fair value.
Then again, the sheeple have pushed this thing so far that a mass foreclosures are practically inevitable. So maybe 1999 prices will return.
I don’t care so much about the absolute price, but I’m looking for 1997 valuations (on annual rents) or lower.
I’d say 10x annual rents is a pretty reasonable valuation, it also corrects for the differential between Philly burbs and Urban San Fran. You probably should adjust that valuation for specific cases that are more unique (for example, the homeowners tax credit in DC probably means that a DC home will be worth a slight premium to other markets based on rents).
This price point topic is an interesting topic. IMHO the realtor who said a while back a 15-20% decline was probably reasonable may not be too far off. The problem is greed. If a 600K house drops 20% to 480K, so many speculators would jump back in the market and new ones would enter you would have the same bidding wars you had a year ago. I am amazed that so many people have so little concept of risk as evidenced by the number of speculators and flippers still buying properties everyday. I could be wrong though.
I think it may be more accurate to say that people will want to jump in.
I think that there won’t be enough people with the means and credit standing to be able to buy all the property that likely will tumble.
If it were true that they would have jumped on based on greed, then why would they not have done it before 2002-3?
I am open to any receiving additional information that I may have missed or got wrong, in my analysis.
Thoughts?
Los Angeles Friend in Deed …..I agree with you . There are not many qualified buyers remaining that can buy at these prices and interest rate . The remaining first time buyers would need the low down ARM loans also IMHO. If the interest rate goes up to 7% that knocks out alot more potential buyers because of these high prices . Thanks to a high speculation market alot of people got pushed out from being able to buy .The speculators won’t be able to sell to the first time home buyer or the locals . The greater fool can’t even buy .
Wait , I didn’t read your post right . I agree that the flippers will not jump in again if the prices go down to 2002 /2003 levels because so many of them will lose money going down .
There may be some speculator activity but I think normal Market psychology will take over. People usuall do not buy into a falling market. They buy in a rising one and sell on the downturn.
My wife and I are looking to buy when the market corrects.
What we are looking for is a return to the mean. I don’t know if it’s a 25% or a 60% decline. What we want to see is a rent to price ratio that is within the historic average and an affordability index back to what it was for the past 100 years before this bubble.
This bubble is an economic anomaly and sooner or later the laws of economics come to into play.
5-10% premium to own over rent.
I have got a long way to go, my rental is currently 71% more expensive to own than rent.
Should actually be cheaper to own than rent, why else would rentals exist?
I’m no RE shill, but I can see paying more to own the place you live in, as even modest rent inflation will take care of this descrepancy soon enough. (But of course, the 300% differential between renting and owning my current rental is completely ridiculous)
Exactly, when I bought my first house it was much cheaper to own than rent, that was the main reason we were so desperate to buy. BUT I had to prove that I was a good girl with my finances and responsible enough to make the payments AND have the money to also keep up the property for the bank. The gatekeepers were very strict back then and your reward for jumping the hoops was lower monthly housing costs, in the form of PITI vs. rent.
I am a renter currently.
This is an interesting, related article: http://tinyurl.com/kedr4. A snippet: For every $100 you spend in rent a month, you’d be better off buying up to $12,500 in property instead.
For example, I live in Northern New Jersey, and currently pay $1,000/mn for my 1 bedroom apartment. I would be better of financially if I were to buy a condo that cost up to $125,000. The only problem is that where I live, there’s nothing habitable that I can buy for under $125,000, and if I spend much more than that, it’ll actually cost me more money to buy than rent!!! Unfortunately this is a problem shared by my friends in major cities around the country.
In my case with this forumula, prices need to drop by 75%.
Renting at $2000, Purchase at about $1M
Vacation homes - I’ve been reading about a lot of second homes that are getting bought up like crazy, prices soaring in various vacation locales, and then just a few days ago I was at a barbecue talking to two separate couples who were bragging about their new houses on the Outer Banks.
Well, one couple has been working their place over (mostly with their own labor) for a couple of years, and they are now to the point of renting it out. He was soliciting rentals from any of us who would listen. Maybe he’ll make out OK, since at least he knows he has to push to make his “investment” pay off.
But the other couple worried me. They bought their vacation house brand new, and they’re considering renting it out only occasionally, treating it instead as a “retirement investment”! Eh? Investment, I ask? Really? But there’s only enough money coming in to pay the property tax, and maybe not even that, since they only want to rent to friends and family for a few weeks a year.
“But these houses are in a really hot place to build, it’ll be a great investment, and it doesn’t matter if me make money on it now or not.” Unfortunately, I had to screw it up: “That sounds to me like less of an investment and more like speculation.”
Oh boy, did I get the EVIL eye from her. Oh my gawd. And she snapped at me: “These things ONLY go up, and THAT is an investment.” Ouch, that was also basically the end of the conversation, since after my whoops and blurting out that evil “Speculation” word, I was basically on their shi+ list. Sigh. I really should have played along for longer.
I’ll be interested to see if I run across them in years to come. I hope they have good enough jobs to keep feeding that white elephant. Well, till the next Katrina hits that part of the counry.
Give that dopey woman a copy of last week’s Barron’s.
“And she snapped at me: “These things ONLY go up, and THAT is an investment.”
I want in!!! She’s brilliant. I want to meet this woman. Will she reveal her secret to you and you share it with us?
When someone snaps like that you’ve hit a nerve. At some level she knows your right but doesn’t want to here it. Yeah. Send her the recent Barron’s.
Her name wasn’t “Suzanne” was it?
Suzanne’s Husband
Immune-Deficient Realtor Forced To Spend Entire Life In Housing Bubble
Sept 7 2005 The Onion
http://tinyurl.com/kqmkm
bwahaha! great stuff - thanks for sharing
great line, NoVa! Aside from the Barron’s (which I haven’t seen yet), I’d point her to the Natl Hurricane Center’s website and some historical data…. the OBX are in a terrible spot vs. hurricane damage over the past 25 years; even the storms that originate elsewhere and are dying out over NC are big damage storms (example: see 2004 season plot at http://www.nhc.noaa.gov/tracks/2004atl.gif look how many storms end up crossing the state, and http://www.nhc.noaa.gov/2004alex.shtml? for a recent hurricane and damage stats).
But maybe, just maybe, if there is another sucker who will come along that just HAS to live out there, and buy their spec house, then the speculation will work. Investment my patoot. Sure its a hot place to build… Mother Nature creates a new-build market there every 5 or 6 years!
Tom you are right, people want the fancy car to go with the MacMansion. My SIL had her new toyoto stolen from the school where she teaches about a year and a half after buying it. She was upside down. Trade in monies gone and no car to drive. She couldn’t afford a new one so she had to buy a new one.
What people don’t understand is that they can’t lease that new car and drive miles to work(penality for miles over contract) which means that after the lease they will be buying the car and financing out that six years after the 24 or 30 month lease expires. Plus, the value at the end of the lease will be head south, too many people have been loading up the used car lots with inventory. Used car prices should have been dropping for the last 3-4 years but have been held artifically high. I used to drive nothing but used cars but since 2002 I have been able to buy new for the price of used. I have now replaced all three of my cars. Bought one new in 2002, 2003, and last weekend 2006. Only owe on the last one because it’s for my son and he will make payments to establish credit….24months of payments taken from his savings.
Sideliner, show her the latest hurricane data that predicts the hot spot this year is right up the eastern seaboard.
And just wait till a big hurricane hits, and the insurance companies start raising rates and dropping coverage like crazy where she is, like is happening in Florida and Louisiana. Like I said, I wish I had played along with them a few more minutes, just to find out things like what they pay now in insurance — and then shudder to think what they might pay if they end up in the state’s high risk pool like hordes of people in some other coastal states whose home insurance costs went up fourfold or more.
OT, but PHM warned on 2006 earnings early this morning. Showed a whopping 39% YOY drop in orders in April and May as well as a rough doubling of its cancellation rate. Ooops.
http://biz.yahoo.com/ap/060602/pulte_homes_outlook.html?.v=2
correction: 29% decline in orders.
I guess it is time to see PHM’s share price climb sharply higher…
I guess PHM lacks the teflon coating that protects other builder stocks from selling off on bad news…
http://www.marketwatch.com/tools/quotes/detail.asp?view=detail&symb=PHM
I’ll report on specific projects here in Southern Delaware. The beaches here are beautiful. But, the over building(IMO) is vast. The speculators are now stuck. They thought that prices can never go down because they were on/near the beach. The listed prices here are still very high, but try selling for the list price. I’ll report on the Village Of Five Points in Lewes later today. This is a large, attractive development with condos, town homes, single family homes, retail shops etc. Only a few minutes to the beach. The prices are just starting to go soft, but I believe that this is just the start. Stay tuned.
Systemic risk thru hedge funds. Garcap and hedgefundanalyst will deny this of course. BTW, notice how quickly today’s gap up in the indices was sold down?
Active Trader Update
Hedge Fund Industry’s Dirty Little Secret
By Doug Kass
Street Insight Contributor
6/1/2006 12:36 PM EDT
URL:
http://www.thestreet.com/p/markets/activetraderupdate/10289140.html
Many are trying to understand or explain the
synchronized decline in stocks, bonds and commodities
in May. My explanation: It is the hedge fund
industry’s dirty little secret.
A long time ago, hedge funds were predicated on
superior stock picking.
But in the intervening time, as hedge funds grew in
size and quantity, it became increasingly difficult to
differentiate investment performance by picking
superior equities. As the pools of capital attracted
to the hedge fund business multiplied geometrically,
the industry morphed away from stock-picking and
became a leveraged pool of capital. (Long-Term Capital
begot others.)
After all, funding a longer-term asset yielding 5%
with shorter-term liabilities costing 3% was a
no-brainer, and so was funding a market rising
exponentially, vis-a-vis cheap debt. The only question
was how that spread would be multiplied by additional
debt/leverage.
When the Federal Reserve and the world’s central banks
virtually gave away capital during the easing phase,
taking interest rates to historically low levels,
hedge funds (and capital) struggled to reach excess
returns because many trades became crowded and risk
premiums were taken out of emerging markets, junk
bonds and even commodities.
The contraction in junk-bond yields to historically
low levels (based on a long economic boom), the
strength in emerging markets (with economic growth
well above world-trendline levels) and the parabolic
move in commodities (China and emerging-market demand
was believed to be unending) were justified by
commentators and analysts.
It was, after all, a new era yet again! But as
investors learned in May, it created a false sense of
security.
A vicious cycle was created as the appetite for risk
turned into its own bubble. Generally speaking,
investors (especially of the fund-of-funds kind) cared
little about how returns were generated. Rather, they
focused solely on the level of the returns that were
generated.
And hedge funds complied by stacking cheap debt upon
their equity bases in all sorts of carry trades
(funding longer-dated assets with shorter-term
liabilities). Many hedge funds even stretched reason
by selling tons of volatility — after volatility had
fallen to record low levels.
Then, almost overnight, return on capital (appetite
for risk) was replaced by concerns regarding return of
capital (risk aversion), as uncertainty relating to
the Federal Reserve’s actions, coupled with tightening
around the world, created a panic in the hedge fund’s
crowded carry trade and the bubble was pricked.
Once the weakest investors starting selling — at the
margin — similarly correlated asset classes began to
drop. It is noteworthy that the May panic was not
accompanied by any fundamental change or, as in the
past, a financial crisis, but by the perception of a
change in liquidity.
Many (myself included) have cautioned that the growth
and size of the hedge fund industry represents a
significant bubble-like market risk.
I have repeatedly written that bubbles are almost
always based on the same set of conditions:
1. Debt is plentiful.
2. Debt is cheap.
3. The egregious use of leverage becomes commonplace
and accepted.
4. A new and growing asset class raises asset prices.
The above circumstances led to the Internet stock
bubble in the late 1990s, to the real-estate bubble in
2003-2005 — and, as we shall soon find out — the
bubble in hedge funds (and their appetite for risk).
I would now add the explosion in hedge funds, and the
risks to their disintermediation, to my secular market
concerns.
Caveat emptor.
The problem with Garcap and a few others here, they’ve posted on this blog in a way that suggests they are nothing more than paid political hacks or Wall St perma-bulls. We know these type of people exist and are backed by big money.
I’m not backed by big money, I am big money. Now, get back in your hole.
Ha! We got another braggert ala’ Rob Cote…. What was his statement last week? Something like “I don’t need anymore money”….
You go girl!
Garcap is okay. He’s a master of the universe right now but he’ll get his in a few years. We’ll see if he was smarter than the homeowners of 2004 who sold their houses and manages to keep his EZ money.
The other idiot is just a blowhard.
His universe is a kind of small don’t ya think?
Of course. It’s always that way. The only interesting thing is see is whether the inhabitants of the current bubble (in Garcap’s case - private equity/hedge fund) realize that their current state is not normal and hang onto the ill-gotten gains.
Something tells me he wont. Here’s a site dedicated to people like that:
http://www.triplewitchingfriday.com
places for WS masters of the universe to piss away their money.
Well… It’s seems the greedy can never hold on to their money. They alway piss it away and then go back to ripping people off to resupply.
Lingus-
The wealthy people that I know have a great deal of respect for money and seek to preserve capital, particularly as they grow older. Since you like to induldge in class warfare, I will also point out that most of the wealthy people I know are hard-working, creative, generous, open-minded and fair. In short, they are not at all like you.
Take it easy little one… Besides, it wasn’t me that referred to you as an idiot and a blowhard.
How does the fact that the wealthy engage in class warfare have anything to do with it?
Riddle me that Mister Caldwell?
From BusinessTimesonline
May 24, 2006
Hedge fund grandee sounds ‘death knell’ for the industry
CRISPIN ODEY, one of the grandees of the London hedge fund world, said yesterday that the industry could be doomed, likening it to the disaster that was the Lloyd’s of London insurance market in the 1980s.
Most hedge funds had enjoyed the massive benefit of cheap money and would be found wanting by the coming era of rising inflation and interest rates, he suggested.
In a largely negative critique of the industry, Mr Odey said that hedge fund managers would struggle to adapt to the changing environment: “The hardest thing to do is to think in a different way to the crowd, but in an inflation world, hedge funds get killed.” ….
http://tinyurl.com/lo45x
‘“My message is that hedge funds are a con,” he said.’
Bingo! They are the sort of con game which looks brilliant while the bulls are running fast and loose, until the moment the herd crashes over the edge of the cliff, at which time their silence will be as deafening as the aftermath of 9/11 or Hurricane Katrina.
I can hardly wait for a black swan to drop a massive guano bomb on the hedge fund industry and trim it down to size. It is only a matter of when, not if. (By the way, hedgedude is MIA — did he blow up or something?)
Stucco where does the black swan thing come from? People keep mentioning it and it obviously has to do with high standard deviations, but is it from a specific book? Sounds like one I’d enjoy.
http://www.fooledbyrandomness.com/
Geez, that web site looks like it was designedbyrandomness.
Look forward to your observations. Say high to my buddy Dave at Surf Bagel & Deli if you get there.
Hey DBM, I just finished up a 1.5 year project in Sussex Co. and I was astounded at the vast tract housing going up there; of all placed but southern Delaware!!! And the prices are really unimagineable…….. However, my former neighbor there in Milton is a finish carpenter and he told me right before I left in May that his crew was laid off 3 weeks prior. Then they cut his overtime (weekends) and then began cutting into his 40 hours.
He then stated he called on an newspaper ad for 5 finish carpenters and the woman who answered the phone said she recieved over 200 calls from the ad between 8am and noon that day.
Irrespective of all that, my understanding is that Del. is importing urban slime from Philadelphia, Baltimore and DC. At least that is where the supposed demand is coming from. Yeah the beaches are nice….. for about 3 months. The other 9 months are unremarkable. I had a fairly good pipeline of info there cooridinating heavy construction for state run taxpayer funded projects and the word on the inside is that the quality of these stick built boxes going up everywhere is poor. I never got got a chance or had the desire to look at one up close, but then again, building houses is hardly considered construction. All the big names are there too. Pulte, NV etc etc.
Holy Snikes! The_Lingus actually posted useful information on this blog.
My posts are always useful. But the truth seems to anger those who just keep clinging to false hopes and failed ideologies.
The truth seems to anger those who just keep clinging to false hopes that you will stop stealing free blog comment space in order to cram your ideology down our throats.
LMAO. I have no ideology. Just a propensity to voraciously pursue the rightwing pathology.
Dont worry Lingus they will find a way to blame the Clenis ™
Of course they will. They nurse on it daily….
Topic-
Jobs report is HORRIBLE. Pause by fed or keep on going? I say 1 more time this month.
Wall Street is holding out high hopes that the Greenspan put will morph into the Bernanke put. The jury is still out on this, IMO.
We’ve talked about this being a credit bubble more than it being a housing bubble, and the comments on new car loans tends to support that. Well, I got an earful recently about another scary credit topic: student loans. I had no idea they were playing the same suicide loan games with student loans as they have been with home mortgages.
I have a 47 year-old coworker who told me she refinanced - errr, ‘consolidated’ her outstanding $125,000 graduate school student loans into an interest-only loan. She’s paying only the interest on it until she turns 67, at which point the entire principal will be due. She was persuaded that she’d be able to afford that then because of her pension and SS payments at that time.
This is completely insane. She spent all that money to get a degree, but only earns about $36,000/yr now, which is why she had to consolidate her loans. She’s renting a duplex with her sister because she can’t even afford to live on her own, and she thinks she’s gonna be able to pay off the principal of this note when she’s 67?!
I wonder how many other people have done the same stupid thing with their student loans?
Hey Homo…… 125k for an advanced degree and she’s working for 36k/yr? What line of slavery is this???
Hey Homo…… Good one Lingus….Started off my morning with a good laugh…
I know, I know…Don’t feed the lingus…Sorry…
Actually it was a typo but I frequently refer to many peeps on the net as homo’s, with malice. But wasn’t meant that way for homoaner.
As far as feeding the lingus…..(lmao)….. most don’t have the mental fortitude to comply with that one… they’ll usually register and hide behind another username and reply. Talk about a lack of will and inner strength…..
yes I recognise there was no malice in that one Lingus…It was still funny though…
Yeah Lingus, and it’s a typo when I refer to you as Cunni.
Just another angry flunkie lashing out….. huh josie…;)
I know someone who’s had theirs (30K or so) on forebearance for 6 years now. Has no intention of ever paying another dime.
TX Chick,
My sister just stopped corresponding with them and she never heard from them again. Fell off her credit report after a few years.
Just another Socialist who feels no responsibility to pay their due and let others suck up her mistakes.
Correct. Thats why we have fools like yourself….. suck it up and PAY! BHAHAHAHAHAHAH
If you are working, you are paying also.
I thought I told you to pay up….. get slaving to pay for defaulting student loan debtor. Do it NOW.
Correct me if I am wrong, but are student loans not dischargeable in BK court, and they never go away?
Supposedly but in the case I’m speaking of, she completely cut off any communication with them for 7 years.
It’s called stealing. I guess your parents never taught you or your sister anything, so all your other comments should be regarded in this light.
Have you ever heard of Karma?
You and your sister should go far. . . .
You’re correct. I’m stealing. And you’re paying. And there is nothing you can do about it. Now get to work.
No, it’s not stealing. It is breaking your word (contract) but not theft.
A loan contract was entered with mutual terms. If borrower does not live up to those terms, the lender has recource. If the lender chooses not to that is their concern.
That works for me too feepness. Irrespective of the definition, the dirty deed seems to send a few loonies into a tailspin so I’m gonna encourage others to break their contracts too.
I see you are following your hero GWB’s lead then.
GW is ripping people off? Say it isn’t so!!!
Student loans can be discharged in BK under some very stringent conditions, which are rarely if ever met. So for all intents nad purposes, taking the cure won’t liberate you from Uncle Sam.
It’s still stealing, no matter how the_Lingus spins it. The money came from taxpayers.
Break a contract, break ones word? Whata class act.
And I encourage everyone to do it. And you WILL pay for it. You don’t have a choice in the matter.
No, actually your sister will pay for it when her wages and/or social security payments are garnished, complete with interest. And, of course, her credit will be ruined. She’s definitely starting out with a whimper. Did you teach her to be a deadbeat, or is it hereditary?
Too late. She walked away scot free from 87k in student loans years ago….. and there is nothing you can do about it.
Don’t feed the dumabass.
lmao.
I used to think he was an intelligent contributor. Used to…
Who are the cowardly few that just cannot resist following up to so much as one word that I post?
And who are the small minority that claim to be intelligent here?
Draw your own conclusions Robin.
In the most recent issue of “The Dollar Stretcher”, an email newsletter there was an interesting artilce on how to cut costs of going to college.
They spoke of how some colleges and university will allow employees of the school to take classes for free.
So the person suggested that a person could find part time work at the school they want to attend, see what their policy is on taking classes for free for employees. And the person could get their degree that way.
This is common. I work at a large northeastern university and see about 10% of my evening MBA students are university employees. Many are underemployed and publicly state that they will quit once they graduate and go find a real job.
In CA in-state public higher ed is an absolute steal.
UC and CSU systems
If you can’t afford that you can’t afford much.
It’s mind boggling that anyone would spend that much money on a degree that offers such a small return. I can’t imagine going into that kind of debt for a degree unless it paid very, very well. My husband had NO college debt after earning his BA and teaching credential. He went to a community college and transfered to SDSU. BTW, he had no grants, parental help or scholarships. He worked full time and paid as he went.
He is working on his Masters in Reading now. He did a lot of shopping around before deciding on a school. He also got a 5 thousand dollar group discount on the program. It’s costing us just under 10 thou for his Masters from National University and it will boost his pay next year by 6 thou.
Does she really think she’ll pay it off at age 67?
Or just default and retire? I know you can’t erase SL debt with bankruptcy, but if I don’t think they can go after your social security either.
This may not be a bad strategy, given her situation.
She can not discharge the student loan in Bankruptcy, but if she holds out as long as possible there is a chance that she could A) benefit from a change in the law, B) be rescued by hyperinflation, or C) die before having to pay a significant amount of principal.
She’s actually hoping the gov’t by that time will have implemented a service program where retirees can pay off all or part of the principal by performing unpaid service of some type. She figures she could get by on her SS and pension so working w/o pay at that time of her life (for a few years) wouldn’t be financially arduous. She hopes.
As for the why/how of her getting into this fix: she’s a university employee. The U does indeed offer free tuition to employees, but that doesn’t cover the cost of textbooks, student fees, and all the other costs associated with attending University. And she, like so many rank and file U employees, has a great love of learning for learning’s sake. So she, like many others, is a multi-degreed civil service employee earning below the median while racking up significant education debt. The U benefits by having highly educated workers in lower-paying jobs, taking advantage of their knowledge and skills without having to pay for it.
From a purely financial perspective, this is a suicidally stupid thing to do. But again, these folks aren’t living to earn money. They live for knowledge. They enjoy accumulating knowledge, the way most folks here feel a sense of accomplishment from accumulating financial assets. The reason why many of them refrain from pursuing a career based on any particular major is that it would limit their opportunities to acquire new and diverse knowledge. So they continue in their civil service positions, taking classes and acquiring more degrees. And living like students well into middle age.
When this woman first told me she was renting half a duplex in a nice neighborhood for only $850/month, and that she was sharing it with her sister, I thought she was brilliant. Nice housing for only $425/mo, so imagine how much she was able to save/invest for retirement! Then she dropped the student loan bomb, and I realized she had no choice but to share rental housing, even at her age. At that point my admiration turned into pity mixed with exasperation.
Fore pete’s sake, she owes more on her student loans than all my debt combined, including my mortgage. And she’s older than I am.
It just paints a picture of a bleak and poverty-stricken old age.
What will downturns in investor-heavy markets like Vegas & Boise do to the equity bandits in their own homes & home markets (like bay area & socal)?
Crime
Orlando Sentinel yesterday-we now have more murders than Boston YTD.
We have very low wages, high rents and no affordable housing.
Is there a connection?
IMO it is directly connected. Desperate people do desperate things. No hope.
Have you noticed any headlines in other parts of country regarding crime in your area?
or2;…Had this discussion yesterday with a business associate…We both felt there was a increase in crime lately…Particularly in high income area’s…..
Noticed it also in Milwaukee and Chicago. Just wondering if this is silly season or real uptick in crime.
Yes and my experience is that it happens when unemployment is high not when we have (Stated?) low unemployment…
Hello Everyone,
Been a silent reader of the blog for a few months now. I really enjoy the posts and am learning a lot from you guys. Ben, thanks for all of your hard work. This blog is awesome!!!
My fiancé and I are twenty-somethings working on getting our finances in order. Our two top priorities right now are paying down debt (student loans only) and saving. We’ve made a lot of progress and watching the debt decrease and the savings increase has really motivated us to remain disciplined. I live in the DC Metro area and have resisted pressure from friends and family to “buy now or be priced out forever!” One friend I have who is a real estate “expert” even suggested that I should buy now and then I could use a home equity loan to pay for our wedding, so confident is he that home prices only go up.
We have decided that when we do eventually buy a house, we want to go the traditional route of 20% down, 15 or 30 year mortgage, with PITI at 28% or less (preferably less) of gross income if that ever becomes possible again in our lifetimes.
There has been a lot of discussion that the Fed may use inflation to help with the US deficit because per Getstucco (one of my favorite posters!) “Inflation is a stealth tax which transfers wealth from those who have money in the bank (creditors, like Asians who bought lots of US Treasury bonds and MBS) to those who owe money (debtors, like most US homeowners and Uncle Sam).”
If this is the case, why are we saving? It doesn’t seem to make sense if the Fed is just going to inflate away the value of our hard earned dollars. It seems that it would make more sense to get a suicide loan and buy an overpriced piece of garbage since inflation is going to punish the savers and reward the FBs. I’m not actually contemplating doing this; I’m just trying to understand how this whole thing works. Can someone please give me good reasons why we should continue saving if inflation is going to make it all amount to nothing? Thanks!
Here is my 2 cents C 4:2…..Historicaly, “Cash has been King” in good times & bad….
“Cash is King” doesn’t always apply. Perhaps in this country, so far, it has applied. But then again, we haven’t had the turmoil and/or wil inflationary periods that some other countries have experienced. Will we? I can’t say. But in places like Brazil or Argentina (in the past), Zimbabwe (now), Weimar Germany, holding cash was as good as burning it.
That said, in normal economics times (and that includes time with even 10+% inflation) you can hold out pretty well by keeping your money in short- to medium-term investments that pay interest rates above the inflation rate. Don’t forget to include the tax bite on that interest.
Right now if you’re saving for a house in years to come, and you expect that housing price inflation will stagnate or turn negative, then even the 4.65%-taxes rate that you get on savings now is a good way to be ready for buying later.
Inflation might take off and hit energy, cars, food, services, and more. But will it, in he short to medium term, hit house prices? Seems hard to say it ill, considering the inflation that’s already taken place in house prices and the adjustments in progress now.
My parents lived in Zimbabwe from 1998-2005. What has happened there is really scary. Hopefully the powers that be won’t allow hyperinflation in the good ole US of A!
Yeah, Zimbabwe is a real (man made) disaster. Your parents and anyone still there have my sympathy. We might at times think that we have some reckless, foolhardy politicians, but we’ve got nothing compare to… you know who. It sure did take your folks a while to get out, though. I like to think that if I were there as that mess started, I’d have left early on. But who knows? Were they property owners? Now that would be scary, and more than just financially.
Nope, they were not property owners. My dad’s employer owned an apartment building and they lived there while in Harare. He’s an auditor. They spent two terms and were asked to stay for a third, but with the state of the economy and my mom being tired of living so far away from relatives, they decided to move to the States.
That said, in normal economics times (and that includes time with even 10+% inflation) you can hold out pretty well by keeping your money in short- to medium-term investments that pay interest rates above the inflation rate. Don’t forget to include the tax bite on that interest.
Would you mind giving me an example of a short term investment that pays interest in excess of inflation at your quoted rate of +10% (don’t forget the taxes either). Thanks in advance for this info!
A short term investment *now* at +10%? You’re dreaming. When I say 10%+ in the context above, I mean when inflation takes off to that level too — not now! I think you just misunderstood.
For now, you keep up with inflation, roughly, in those CD’s. In future, you will hopefully do similarly. Sometimes better, sometimes not. But it’s far better than keeping the money in a checking account or in the mattress.
Doubt that CD’s will pay that high? Here’s some info from the Federal Reserve’s site regarding historical interest rates on 6-month CD’s:
1978, 8.60
1979, 11.42
1980, 12.94
1981, 15.79
1982, 12.57
1983, 9.28
1984, 10.71
1985, 8.24
1986, 6.50
1987, 7.01
1988, 7.91
1989, 9.08
1990, 8.17
1991, 5.91
1992, 3.76
I’ll leave it as an exercise for the reader to dig up the exact inflation figures and go from there. Don’t forget taxes, which is a personal thing. Lots of us are in 15% marginal fed rate, which ain’t bad. If you’re in the 30+% bracket, then it’s obviously more of a consideration. You might not always make profit-after-inflation-and-taxes, but it’s decent enough at preserving your spending power.
A key concern: Keep the term short. Long term bonds (or CD’s) are far more risky than people think, due to the inflationary erosion that’s possible when you’re stuck in one of those investments. Most CD’s you can bail out of with a modest penalty; bonds you are stuck with, painfully, if you bought in at a low rate (e.g. 5%) and inflation ramps up later with a long term left on the bond.
“Perhaps in this country, so far, it has applied.”
Huh??? If cash is king, then howcome nobody is saving any for a rainy day?
Nobody saving for a rainy day? Well, that is a good question! Some people do, but very few it seems. My guess, though, is not that people are spending the money because they think it will be worthless (or even worth less) in future; it’s just because they want more and more nice things. All the stuff you see on TV, like granite countertops, marble baths, oversized garage for the new… oh don’t get me started!
But it’s well known that having a given “thing” now is better than having it later, and often better than having more of it later. Psychological studies show that humans discount the future, perhaps rightly so, since who knows if you’ll be here to enjoy it years from now, so buy that Harley today.
By the way, I ran some numbers, which eventually I might post when I get time to format them, calculating since 1964 the after-tax, after-inflation return on CD investments. Not too terrible for those who want to simply preserve capital for a later purchase, though not the gold mine that the investment community might have you believe. Much depends on your tax rate:
15% tax rate you net 1.13% above inflation
20% tax rate you net 0.8% above inflation
32% tax rate you break even, on average
40% tax rate you are 0.54% behind inflation
These are rough figures, and I need to be more bored to do the math in detail for different scenarios.
These also are average rates, and as anyone with a lot of money in CDs knows, you can do a lot better than average by moving around and switching banks. That might add a half or full percentage point to your savings rate.
There is nothing wrong with saving! The problem is where and how you save it. Hyperinflation is a real possibility from this debacle. Warren Buffet has opted out of the US dollar as has Russia and much of Europe. Japan is converting dollars to gold (how much - I do not know yet) and China is converting a larger percentage of their dollars to gold from last years 1% to this year (stated) 5%.
“Japan is converting dollars to gold…”
I guess now is a good time to get out of gold, then. Because historically, Japan has ended up the bag holder at turning points (look at their commercial land purchases in the USA in the late 1980s for an example).
There are other assets that go up with inflation, like gold, commodities, etc… The fear of inflation is the reason for the run in gold and commodities… Good thing about investing in either of the above rather than a house - you can STAY LIQUID. Buy a gold ETF with some of your savings if you are scared of inflation… Then, at some point, if inflation stalls due to loans going bad, simply SELL (click, done.)
Thanks for the suggestion. I’m going to do some research on this…not the Suzanne type fo research!
Gold doesn’t go up “with” inflation—it goes up when people are afraid of inflation. If gold and other commodities were really a hedge against inflation in the long term, they’d never go down. In fact, commodities investments are just as risky, if not more so, than any other type of investment.
Note that we are collectively not saving — the savings rate is negative for one of the first times since the 1930s (I think some have pointed out that it is not literally the first time, but any other periods of negative savings between, say, 1940 and 2006 were mere blips).
P.S. I appreciate the compliment.
For all you hyper-inflationists.
Please name one government or quasi-governmental agency that hyper inflated their currency and survived.
1 Corinthians 4:2 (New International Version)
New International Version (NIV)
Copyright © 1973, 1978, 1984 by International Bible Society
NIV at IBS International Bible Society NIV at Zondervan Zondervan
“Now it is required that those who have been given a trust must prove faithful.”
Is this what future generations of mortgage lenders hold in store for their customers?
“Is this what future generations of mortgage lenders hold in store for their customers?”
Let’s hope so!
Another one of my favorites is Proverbs 22:7 (the Good Book’s way of describing a F(oolish)B).
Since I don’t want to be anyone’s slave, I take the words of Romans 13:8 to heart, hence the drive to knock out the student loans. I know some consider that to be “smart” debt and don’t pay more than the minimum payment, invest the money instead for higher returns, yada, yada, but in my mind debt is debt, and slavery is slavery any way you slice it.
Just a year and a half to go to total debt freedom!!!! Freedom until the day that we purchase a home…groan!
If you have expectations of high inflation, which most people around here seem to have. The investment playbook is to invest in natural resource stocks, precious metals, foreign stocks, and foreign currencies. My money is in energy and mining stocks, and some foreign stocks.
I really like the Delaware beach area. But, there are major projects every where. I’ve never seen anything like this. I’ll post pictures as well as a description of what is going on. Milton is being built up rapidly, but I think the slow down is here. I’ll get to Milton next week and give a report. I like the non tourist months here.
How close to Philly is this DBM? Possible to commute?
Jobs number alledgedly was leaked before mkt by someone in the Labor dept. Hence, the phony gap up and easy short profit for some.
Gee, doesn’t this stuff make you want to invest your retirement money in this market? Actually it does for me. IN INDEX PUTS!!!!
Are the employment figures accurate? We’re told that unemployment is at an historical low, but I find this hard to believe. Just the losses in RE and construction should have been pushing the numbers up over the past several months.
Increases in strip-mall jobs paying minium wage will offset laid off construction workers and realtors earning well above minium wage. Decreasein an unemployment is no gauge on how well the economy is doing.
Many lost construction jobs will not show up in the DOL stats, as they were held by illegal immigrants.
New article on Poultry-built homes: http://www.msnbc.msn.com/id/13098435/
The text says it all:
“Preliminary new orders for April and May slid 29 percent to 6,447 units from the prior-year period’s 9,128 units, a figure Pulte said was below expectations. The cancellation rate for the two months stood at 27.4 percent, up from 14.8 percent in the year-ago period.”
Twenty-seven percent cancellation rate!!! Wow.
Fortunately, cancellations aren’t taken out of the “new home sales” figure. Hence new homes sales stats will remain strong. Go statistics.
Let’s chat about natural disasters…it’s on my mind since there’s a big fire in Northern AZ, two in Prescott yesterday, (and a serious one in Ben’s neighborhood) and it’s just a matter of time before the whole damn unhealthy tinderbox that passes as our forest goes up in flames…yesterday, 4 multi-million homes burned. It’s a fact that high end “vacation” homes tend to be bordering forests…Sedona, Prescott, Flagstaff are ringed with very high end developments….and I’m guessing this is the same in the hurricane areas…mansions on the beachfront, etc.
We can blather on and on about how our human actions are what dictate the market…however, it’s just like Mother Nature to put the hammer down, in a way that has nothing to do with realtors, lenders, appraisers, the Fed, etc. I believe, at least here in the West, in the grips of the WORSE DROUGHT EVER (at least in human times), will burn in a not insignificant way this summer.
The 1989 earthquake in the Bay area was the primer that helped in the 1991 downturn IMHO….
Catherine
Txchick and I are trying to get a Phoenix bubble party together some weekend. How often do you get to Phoenix? Are you interested in getting together?
I may come…I need a couple of days off….Give plenty of lead time so I can secure cheep air fare…
I get there all too often! Let me know…sounds great…!
Catherine
Please e-mail me at kbarrett@cskauto.com. Anyone else in Phoenix who wants to get together can also e-mail me.
Count me in, I live in N Scottsdale. I don’t post much but I read this blog everyday and follow the Phx bubble closely.
Interestingly, the Great Depression occurred in conjunction with a terrible drought in the midwest which led to the Dustbowl effect.
In terms of disasters, we still face the threat of terrorist action (including the possibility of a major EMP), disruption of oil supplies, hurricanes, earthquakes not only in California, but even, perhaps, the New Madrid fault, and on and on. Scientists yesterday announced that they found evidence of the 30-mile wide meteor which smashed into the Earth 250 million years ago, ending an era and shattering the supercontinent into the seven continents we have today. Some disasters are simply too huge to comprehend.
Point here is that there are disasters which can be understood and planned for, and survived, and there are those which cannot be anticipated, and might not be survivable. Unfortunately, people tend to lump all disasters into the same “I’ll believe it when I see it and deal with it somehow” category. Disasters such as a housing meltdown have been widely anticipated by the rationalists here and in other places, but most people still don’t take steps to avert the disaster. Same for multi-million dollar houses in forest fire areas: they could have cut wider firebreaks and built large cisterns to spray down the area around their homes. They did not, and paid a much higher price. They rely on insurance to make them whole, I am sure, but most people can’t comprehend a meltdown in insurance companies. What happens then?
What happens then? Bend Over ???
Indeed. Or, if one has been prudent and planned well, go to Plan B. You do have a Plan B, don’t you?
Okay so I troll Craigslist every now and then. I visit the Norfolk, VA housing for sale and will repost overpriced places ripping on them.
Normally realtors and sellers are quick to flag it. But once in a while one slips thru.
So I rip on a townhouse in Suffolk, VA. Suffolk is a bit of a drive from most work centers. The townhome was listed for $211k, which 2-3 years ago would have easily got you a large SFH with a yard. (Median household income around here is sub-60k IIRC).
So I rip it up a bit on craigslist. And instead of emails laughing at it, or cursing me out… I get people are interested in the property. It has the F bomb in it. Cursing. It dumps on them for being HELOC’ed to the max. It says it’s a fools market not a buyers market… and people email *me* asking for information on the property.
I think people are just really, really dumb. People don’t question the runup in prices AT ALL. It’s the monthly payment.
When I hit some of the various large internet sites (Yahoo, etc) there are ads for risky loans. I wonder how many people sign up for them? The $150k loan for $493/mo* type stuff.
Arrrghhhh!
So… where do I sign to have you loan me $150K for $493?
Which city/region has bragging rights to being the ground central of the bubble?
I claim Sacramento, CA partly because of the undeniable facts: http://sacramentolanding.blogspot.com/2006/05/april-2006-sales-regional-volume-drops.html#links
And this juicy tid-bit as anectodal evidence: just down the street from me there is a cul-de-sac with 5 houses on it…4 are now for sale! I tried to get a good photo of this but my cheap camerea can’t capture it all.
TOP THAT!!
Huggy;….Give me the addresses please…I want to Suzanne it…
Looks like I miscounted, there are actually 7 houses in that cul-de-sac. Still 4 out of 7 for sale is over 50%. The addresses are 4, 5, 11and 23 Annell Court, Sacramento, CA 95835. #4 is FSBO.
OK…Here ya go Huggy….
All seem to be owner occupied….Lennar was the builder…
4 Annell Ct;…Last sale..7/05..460K..360K 1st loan…..
5 Annell Ct;…Last sale..4/04..281K..225K 1st & 35K 2nd
11 Annell Ct;…Last sale..4/04..290K..276K 1st loan…
23 Annell Ct;…Last sale..5/04..302K..242K 1st loan…
Take that Suzanne….
Thanks, most of those people could still sell now and make a small profit or break even if they’re willing to take a low offer. I hope they’re not deluded about ‘05 prices. However one of those does now have a “SOLD” sign on it. Can’t wait to see what the selling price on that one was.
mort_fin made this very informative post on the OFHEO housing price index (which is still rising, in the face of mounting evidence that prices are flat or falling in many parts of Bubbleville USA):
“the “main” OFHEO number uses both sales and the appraisals done for refis. And Lawler’s note is implying that you get more cash out refis on properties that appreciate, so that they are getting overweighted in the index. But yesterday, at the American Real Estate & Urban Economics Association (AREUEA, pronounced like a Garrison Keilor hot suace), a Fannie Mae economist showed a graph with appraisal bias (defined as the difference between the appraisal and an AVM value that Fannie got after buying the loan) over time, and showed that appraisal bias was small in rapidly appreciating markets, and became huge (over 8%) in flat or falling markets. His guess was that borrowers had a cash out target for repairs (or motorcycles or whatever) and the appraiser could hit the target legitimately in a booming market, but had to fudge in flat or falling markets. So that analysis would imply, as a previous poster in this thread had, that the OFHEO index also reflects an increasing appraisal bias from the end of the boom, on top of the overweighting that Lawler is referring to in that note. BTW - the “main” index showed an increase of 2% for the quarter, while the “purchase only” index showed an increase of 1.25% for the quarter. I think that 1.25% is more or less legit, when you bear in mind that the OFHEO numbers are only for existing housing, and the big price cuts we’ve seen so far have mostly been in new construction, coupled with the time lag inherent in the source of OFHEO’s data (first a property transaction, then a sale to a GSE which might not happen for a couple of months, etc.) The newest quarter in the OFHEO index is always weighted towards the start of the quarter, until the first revision 3 months later.”
Add to this the thought that OFHEO numbers only reflect existing housing, the inventory of which keeps piling up as the builders use deep discounting to move their newly built homes, and I think you could conclude the OFHEO index must lag current market conditions by many months at a turning point (like the one we experienced last July). This brings to mind the coyote in the old roadrunner cartoons, whose legs kept running after he accidently ran off the edge of the cliff, just before he dropped out of sight.
Thanks for the lengthy post. I was looking for but could not find the purchase-only 3 month figure yesterday.
“Starting June 2, homes resold within 90 days of their acquisition will no longer be eligible for a mortgage insured by FHA, part of the U.S. Department of Housing and Urban Development (HUD). The purpose is to eliminate sales within mere days of purchase or ‘quick flips.’”
http://www.bizjournals.com/atlanta/stories/2003/05/26/focus8.html
I wonder how widespread this is. I’m sure no one will be convicted of this.
They should make it one year instead of 90 days .
Wiz is right they should make it a year and it should have been done years and years ago. That has always been a huge problem
The Fed faces yet another conundrum:
The unemployment rate notched down another tick, to 4.6%, the lowest level since July 2001, but nonfarm payrolls increased by only 75K, well below the economists’ consensus of 174K.
Low levels of unemployment have historically correlated with higher future inflation (Phillips curve) but weak nonfarm payroll growth suggests economic slowdown. Put the two together and through in high gasoline prices and it starts to look a great deal like a trip back to the 1970s (stagflation).
What is a central banker to do?
http://tinyurl.com/lq7f9
Start wearing sweaters.
Suzanne is the listing agent on those 4 homes for sale in the Sac cul-de-sac
as I was continuously driving along 40 around Flagstaff, I was noticing how it looked like tinderwood ready to burn. I guess I was right, and it has started early. It is going to be a long hot summer for those folks living next to tinder-trees. AKA So Cal fires about 5 yrs ago.
Have the Rob Black show on in the background (Financial advice show in Bay area). His quote was “the housing boom is over, the housing boom is over, the housing boom is over”. And compared it to the tech stocks in 2000. More media confirmation.
“The Center for Responsible Lending is urging a U.S. House subcommittee considering a bill on subprime lending to strengthen the language of the legislation for the increased protection of borrowers. The center specifically wants controls on yield spread premiums, which are a measure of loan pricing, and wants the government to demand that mortgage brokers act in the best interests of their customers. ”
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B29B2B166-7A4E-4D02-9428-CF2227DF6D87%7D&siteid=google
This article focuses mainly on minorities targeted for subprime loans even with good credit ect. What is interesting is that watchdog groups seemed to be asleep until now. What good is the tips they are giving since so many people have already been harmed?
Maybe we should have a law requiring that the customers act in the best interests of the customers
In using zillow (and I know, I know - I need to take it with a grain of salt), I’m finding that there’s a trend (at least in my area) where home values dropped sharply between Nov. 2005 and Feb. 2006 and they are now on another climb. Can this be considered a dead cat bounce yet or is it too early for that?
How about some funny/ illiterate descriptions written of houses for sale?
I read this week that a house in my area is “the very personification of everything we love about the Northwest”.
Imagine that!
still hearing Eric Estrada pimping WA real estate and some idiotic informercial from JG Banks saying how easy it is to make a fortune in probate real estate, come to our free show and “BUY my OVERrated, OVER priced, and will BK you program if you actually do what is written.
“Ponch, get over here - I need some real estate in the middle of nowhere really quick.” LOL
John, I have some very sexy suspects here already looking at the property. I’m going to need some interest-only backup… if you know what I mean.