The Devil And The Deep Sea
Some housing bubble news from around the world. 4 News, “Another set of towers, in model form, are backlit in the suite of a 5 star hotel. Capital Towers is in fact a project in Stratford, East London. The flats are up for sale at events like this that span east Asia, and in Kuala Lumpur, 6,500 miles away. Buyers crowd around the models checking out the floor space and attractive features. This foreign sales drive is repeated in Hong Kong and Singapore, targeting investors across Asia. It’s a quite a sales job. Right now Capital Towers doesn’t actually exist: it is half derelict factory half hand car wash. But it is due to complete by 2016. Knight Frank calculate that 75 per cent of new builds are going to foreign owners, half of those from East Asia.”
The West Australian. “Despite a subdued economy, housing prices are rising two or three times faster than consumer prices and auction clearance rates are at three or four-year highs. Investors are taking a bigger share of new loans. Low interest rates are fuelling the fire. And stories of clearly out-of-the-ordinary prices are emerging - like the widely reported house in the Sydney suburb of Eastwood which sold for $2.39 million, beating the reserve price by over $1 million.”
“This sale, along with anecdotal evidence of strong demand from China, suggests the Australian residential property market could be suffering - or enjoying, depending whether you are a seller or a buyer - a spillover effect from China’s ongoing economic boom.”
The New Zealand Herald. “On the eve of new mortgage lending restrictions coming into effect, there are signs the first-home-buyer market has gone off the boil. Sam Bellairs of Glover Real Estate in West Auckland said that over the weekend, the agency’s three offices received only one offer on a house despite there being a usual number of listings. There were usually at least five offers. Yesterday, the Titirangi office received only one phone call, compared with the usual two dozen on a Sunday. ‘The phone has certainly got a lot quieter,’ Mr Bellairs said. ‘That’s a bit unheard of.’”
The Jakarta Post. “Bank Indonesia (BI) introduced on Wednesday a new mortgage regulation to help curb excessive loan growth and ease property speculation. ‘Our data shows that the amount of people owning more than one property has been increasing since 2010, when the figure was 4,700. It grew to 6,500 in 2011 and to 8,300 a year later. As of April, outstanding multiple mortgage loans stood at Rp 31.8 trillion [US$2.75 billion],’ BI communications department director Peter Jacobs said. ‘We expected that the mortgage growth rate would decelerate when we implemented a similar regulation last year. However, as it turned out the rate remained high.’”
The China Post on Taiwan. “Local property developers and sales agencies said Saturday that they are upbeat about the housing market despite growing concerns that the central bank will raise its key interest rates in the fourth quarter. Developers have launched NT$179.4 billion (US$6.06 billion) worth of residential property projects. It is second biggest amount in five years. Lai Cheng-yi, chairman of Shining Building Business Co., said the markets at home and abroad remain awash in liquidity in the wake of the U.S. Federal Reserve’s surprise decision in mid-September to continue its monthly US$85 billion bond buying program.”
From First Post. “Raghuram Rajan, the governor of the Reserve Bank of India (RBI), was in Frankfurt yesterday to receive the Fifth Deutsche Bank Prize for Financial Economics. In his speech he said things that would have embarrassed central bank governors of the Western nations, who are busy printing money to get their economies up and running again. And this has again led to several asset bubbles in different parts of the world. As Rajan put it in Frankfurt ‘We seem to be in a situation where we are doomed to inflate bubbles elsewhere. We should wonder whether lower and lower interest rates are in fact part of the problem, I say I don’t know.’”
“Why are they still continuing to print money? If they stop printing money then interest rates will start to go up and this will kill whatever little economic growth that has started to return. Hence, the choice is really between the devil and the deep sea. In the last paragraph of his speech Rajan said it is at such times that ‘excesses typically build up. One source of concern is housing prices that are at elevated levels around the globe.’ The central bank governors are ignoring what is going on before their eyes and that is not a good sign. Or as Rajan put it in Frankfurt ‘When they (central banks) say they are the only game in town, they become the only game in town.’”
The Independent. “Tim Redmond, a veteran Mission resident and former editor of The San Francisco Bay Guardian, sits in a café, grumbling as the Google buses come and go outside. Though he doesn’t much care for the start-up douchebags, Redmond blames not individual tech workers for the current crisis, but property speculators and the lawmakers who have let them take advantage of their precious commodity: space.”
“‘If we had a major earthquake in San Francisco, the water mains all broke, and some guy showed up with a water truck and started selling water for $10 a gallon, people would be pissed,’ he says. ‘That guy would be ridden out of town; he’d be attacked with sticks and pitchforks. But that’s what the real estate people are doing right now – and they’re getting away with it.’”
“‘If we had a major earthquake in San Francisco, the water mains all broke, and some guy showed up with a water truck and started selling water for $10 a gallon, people would be pissed’, he says. ‘That guy would be ridden out of town.’”
Not if what he was doing was marketed correctly.
If the proper spin was put on what he was doing he would be declared a hero - a savior - and songs would be written about him and statues of him would be constructed and parks and buildings would be named after him and he could maybe run for office and get elected.
Is this an Obama joke?
More like:
Imagine if the government took in lots of money in taxes and borrowed even more money.
There was always plenty of money for illegals. Always plenty of money for buying votes. And always plenty of money to subsidize water bottle manufactures/retailers.
But never any money to maintain the water lines.
Why? Because bottled water companies had bottled water CEOs and water bottle unions gave lots of money to elect politicians. And they always supported politicians specifically NOT maintain the water lines.
Then one day the water lines failed.
And the water bottle businesses made lots of money. And their stock skyrocketed.
The citizens felt enraged. They were told to shut up, sit down and pay your taxes and pay for the bottled water. That even though they paid the taxes they just didn’t know how government worked.
And a promise is a promise!
Also, stocks are up so that means the economy is rebounding!
“‘If we had a major earthquake in San Francisco, the water mains all broke, and some guy showed up with a water truck and started selling water for $10 a gallon, people would be pissed,’ he says. ‘That guy would be ridden out of town; he’d be attacked with sticks and pitchforks. But that’s what the real estate people are doing right now – and they’re getting away with it.’”
like free-er hc
all the postings are how it cost too much
hilery will make it free
“Investors are taking a bigger share of new loans. Low interest rates are fuelling the fire.”
Has there ever in history been more real estate investors in more corner of the globe who used low interest rates as the motivation to invest?
And these low rates, in turn, are due to the Asian savers, who put too much money in the bank, right?
“Lai Cheng-yi, chairman of Shining Building Business Co., said the markets at home and abroad remain awash in liquidity in the wake of the U.S. Federal Reserve’s surprise decision in mid-September to continue its monthly US$85 billion bond buying program.”
Wrong.
It’s the Asian savers who are driving down interest rates. The Fed has nothing to do with it.
‘We seem to be in a situation where we are doomed to inflate bubbles elsewhere. We should wonder whether lower and lower interest rates are in fact part of the problem, I say I don’t know.’
If he is a clueless fool, then why is he up on a bully pulpit blabbing about it?
‘When they (central banks) say they are the only game in town, they become the only game in town.’
This guy apparently is a true idiot savant.
Anybody who can find a single MSM article affirming his statement about central banks saying they are the only game in town gets the prize. I have never seen it in print, and I read ALOT.
Why do economists everywhere pretend not to know that the standard asset pricing model from finance predicts higher prices at lower interest rates? Is this some kind of deep dark secret only known to the high priests of finance?
I thought it was a tautology that cheap money inflated asset prices. That guy’s statement is like expressing uncertainty about whether gravity brought the apple down in front of Newton. Is this the kind of anodyne speech that qualifies as something “that would embarrass central bank governors of the Western nations”? Have we lowered the bar on controversial remarks that far?
I keep waiting for a central banker moment like the Michael Douglas attempted speech near the end of the movie “Traffic,” where he takes the podium and simply is overwhelmed by the truth. No such moment appears to be in the cards. I do not endorse physically harming anyone, but the world’s financial aristocracy is going to end up like the Romanovs if they’re not careful.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” — Upton Sinclair
And these low rates, in turn, are due to the Asian savers, who put too much money in the bank, right?
One thought that crosses my mind: The last thing next exporters want is for their currencies to appreciate vs. the USD. One way to devalue your currency is to print a lot of money and for central banks to keep interest rates low.
The race to the bottom has unintended consequences.
That thought crossed my mind as well. The foreign central bankers can threaten to raise interest rates all they want, but the reality is that they may end up accidentally strengthening their currency and killing their export market by doing so.
Good luck with that plan!
From the First Post piece:
‘Dylan Grice, formerly of Societe Generale, has an answer in his 2010 report Print Baby Print. As he writes “What’s interesting is that central banks feel they have no choice. It’s not that they’re unaware of the risks…They’re printing money because they’re scared of what might happen if they don’t. This very real political dilemma… It’s like they’re on a train which they know to be heading for a crash, but it is accelerating so rapidly they’re scared to jump off.”
‘Sometimes the withdraw symptoms are so scary that it just makes sense to continue with the drug. Dylan compares the current situation to the situation that Rudolf von Havenstein found himself in as the President of the Reichsbank, which was the German central bank in the 1920s.’
‘Havenstein printed so much money that it led to hyperinflation and money lost all its value. The increase in money printing did not happen overnight; it had been happening since the First World War started. By the time the war ended, in October 1918, the amount of paper money in the system was four times the money at the beginning of the war.’
‘Despite this, prices had risen only by 139%. But by the start of 1920, the situation had reversed. The money in circulation had grown 8.4 times since the start of the war, whereas the wholesale price index had risen nearly 12.4 times. It kept getting worse. By November 1921, circulation had gone up 18 times and prices 34 times. By the end of it all, in November 1923, the circulation of money had gone up 245 billion times.’
‘In turn, prices had skyrocketed 1380 billion times since the beginning of the First World War. So why did Havenstein start and continue to print money? Why did he not stop to print money once its ill-effects started to come out? Liaquat Ahamed has the answer in his book The Lords of Finance.’
‘As he writes “were he to refuse to print the money necessary to finance the deficit, he risked causing a sharp rise in interest rates as the government scrambled to borrow from every source. The mass unemployment that would ensue, he believed, would bring on a domestic economic and political crisis.”
“were he to refuse to print the money necessary to finance the deficit, he risked causing a sharp rise in interest rates as the government scrambled to borrow from every source. The mass unemployment that would ensue, he believed, would bring on a domestic economic and political crisis.” ??
And its quite possible this is where we find ourselves today…
‘in November 1923′
It was all down hill from there.
Eighty years ago. Any one who was an adult then is now long gone. Any one who is an adult now will be long gone, and their experiences forgotten before there is another crisis like this.
If they had known Hitler was the end result they could have stopped at any point. But all they knew was how to reduce the pain for today, and let tomorrow take care of itself. People wonder how the German people could have been so stupid to allow things to get to the point where Hitler seemed like the answer…
Perhaps putting an end to the printing would have led to mass unemployment, but I doubt that result would have discredited democratic government utterly, which is what hyperinflation did. I know this idea is out of fashion today, but when you destroy the savings of responsible people, there are negative political and social consequences.
‘Sometimes the withdraw symptoms are so scary that it just makes sense to continue with the drug.’
Central bankers are breaking bad.
The last thing next exporters want is for their currencies to appreciate vs. the USD.”
Is this how the industrial age winds down ? A race to be the last manufacturer standing ?
‘Developer Haji Hafizullah Caravan seems to ascribe to the “Field of Dreams” theory: If you build it, they will come. But will they? About 50 percent of the homes in Saleem Caravan City have been sold, he says. But just 10 percent are actually occupied. “Unfortunately the 2014 rumors made our sales a little slow. The people who have money want to delay and not to spend right now,” Caravan said. “But I do not have any faith in the 2014 rumors.”
‘In September 2013, Bermuda has a national housing glut. Too many studios, apartments, condos, houses, and mansions. Too few people — Bermudian and non-Bermudian — to live in them. But there is still a price imbalance.’
‘TAIPEI, Taiwan — In response to possible interest rate hikes hinted at by Perng Fai-Nan, governor of the Central Bank of the Republic of China, bankers are telling those with mortgages to get ready to shop for more affordable terms and, if worse comes to worse, to cut back on food and clothing expenses.’
‘This month STDM, founded by gaming tycoon Stanley Ho Hung Sun, began promoting in Macau and Hong Kong a housing project in Lisbon called Casas do Parque.
A written statement by STDM says the company will offer “one-stop investment immigration services” ranging from selling homes to legal advice on immigration to Portugal.’
‘The statement says STDM will make presentations on the project in Guangzhou and Shanghai in the next two months.
It fails to say how many homes the development will contain. Mr Leung has no estimate. “It is a big residential project and [STDM] has so far completed only part of it, which is now on sale,” he said.’
‘The STDM statement says the development will contain flats with between one and four bedrooms, the starting price being 180,000 euros.’
and, if worse comes to worse, to cut back on food and clothing expenses
What’s the Taiwanese equivalent to Ramen noodles?
Ramen noodles.
By 2012, the national inventory of empty studios, apartments, condos, houses, and mansions [in Bermuda] was probably sitting around 4,000 – or more.
Where’s Househunters International when you need it? They love the Caribbean.
Not the Caribbean, but my favorite episode of the international real estate shows was one of the Bogota episodes when the couple’s checklist was “charm” and “views,” as if they were going to live in Stowe.
A bubble and McMansions in Kabul. I thought Ben was joking and then I clicked on the link to read the article. The world’s gone mad.
And there’s even a large pool in one of those properties. This, in a country where women wear burqas and abayas. You can’t make this stuff up.
‘The real estate boom started with the arrival of aid agencies that assisted thousands of famine-hit Somalis in 2011. Those foreign aid workers who briefly moved into Mogadishu paid higher rents. More and more houses are now available for sale or rent, in part because landlords appear eager to tap into the influx of new arrivals from the diaspora.’
‘On a recent morning, as Nor sipped strong coffee in his office, two portly men arrived and asked to be shown around. He stepped out with the potential buyers, pointing here and there at newly built houses for sale. When the men settled on a gritty stone house located near the presidential lodge, negotiations with the owner quickly commenced and a deal was sealed within hours: $900,000.’
‘That figure was unthinkable two years ago, Nor said, estimating that such a house would not have fetched more than $80,000 at a time when the city was largely covered in rubble amid fierce fighting between African Union-backed government troops and al-Shabab fighters.’
‘The $900,000 deal illustrated dramatic changes in the property sector of a country where many still live on less than $1 a day. The appearance of growing security may be encouraging speculation, piling pressure on poor Somali families who cannot afford higher rents. Many have been evicted after failing to pay rising monthly rents.’
You are really pulling my chain today.
I’m not trying to. I’d like to connect some dots. The media will report on a boom in some obscure part of the world, and it comes off as gee wiz. It’s more than interest rates, it’s giant sums of cash being created and blowing up bubbles all over the world. Read this again:
‘In his speech he said things that would have embarrassed central bank governors of the Western nations, who are busy printing money to get their economies up and running again. And this has again led to several asset bubbles in different parts of the world. As Rajan put it in Frankfurt ‘We seem to be in a situation where we are doomed to inflate bubbles elsewhere’
The media for the most part is missing the global nature of this beast.
Another thing that concerns me is that this has fostered a get-rich-quick mentality in the entire world. Don’t we have fables and fairy tales on the subject? Not to mention scriptures? Are they not enough?
http://en.wikipedia.org/wiki/The_Goose_That_Laid_the_Golden_Eggs
Ain’t nobody got time for stupid old stories written by dead white guys!
Interior pools are quite common in older Middle East houses.
The outside never has any windows and opens on a courtyard.
Except in real life, the goose does have a little gold in her, enough to justify killing her for the gold. That’s how Mitt Romney, and the executives at Hostess, made their millions.
“Except in real life…”
The goose is a farm animal. In real life, the people who actually have money and own stuff farm those who borrow. They only can get obscenely rich by obscene borrowing by the havenots. Yet you mock the farmer. Ironic.
‘Portuguese voters angry about austerity punished the coalition government’s senior party in municipal elections, deepening doubts over whether the debt-heavy eurozone country will be able to abide by the demands of its bailout and avoid asking for further financial help.’
‘Portugal is supposed to resume borrowing money on the open market in the middle of next year after correcting its public finances, but the three major international ratings agencies still classify its creditworthiness at junk status and the interest rate on its 10-year government bonds — viewed as a reflection of investor confidence — are close to 7 percent, which is seen as unaffordable.’
‘Social Democrat leader and Prime Minister Pedro Passos Coelho conceded his party suffered a heavy defeat but said late Sunday he can’t halt his unpopular program of tax hikes, pay and pension cuts and reductions in public services because the bailout creditors would stop handing over the rescue funds.’
protugal-argentina-hungary
govs stole private pensions
can’t happen here?
There is one problem with that … other than government workers, who has a pension?
Uhmm, Colorado……there are trillions in 401k’s, IRA’s, SEP’s and assorted other retirement plans.
Certain smart people have already speculated that those monies will eventually get tapped by .gov with something promised in return, like annuity payments upon retirement. Scary, right? Your money taken in exchange for a future “promise”.
Like someone above said, it’s all in the marketing. Knowing a bit about that topic myself, I absolutely believe that in the right set circumstances, with the right pitch….they could get away with it without a revolution. Sheeple!
What fascinates me is that, no matter who wins elections in Europe, no material change in economic policy is occurring.
Welcome to reality. You cannot vote yourself out of debt.
You cannot vote yourself out of debt.
???
See Iceland. You can if you have your own central bank; you can’t if you are using someone else’s currency.
If the government shuts down, does that mean I can talk on my phone without it being recorded?
Doubtful. The security apparatus lives on.
Isn’t that an essential service?
Will the drones be grounded? Will Al Qaeda have their weapon shipments delayed?
I would hope so, but I doubt the stage drama effects the machinery underneath.
If the government shuts down, what does that mean ?
Does it mean anything ?
What I find interesting is that no one in the media asks, ‘why are we so broke all the time?’ We’ve borrowed a few tons of money, printed a few tons of money. We’ve had stimulus, bail-outs, house and stock prices have skyrocketed. We’re told we’ve been in recovery since 2009! So why are we so broke?
for states and munis it’s pension math-they get one in their 50’s and we pay & work till age 70.
If only the states and munis hadn’t forgotten to stash away money for the pensions.
We’re told we’ve been in recovery since 2009! So why are we so broke?
Because we have the greatest wealth inequality in almost a century at the same moment that the rich’s and corporate effective tax rates are at a 70 year low - by far.
Off-shoring, pay-cuts, benefit cuts all in the name of “more efficient markets” Propagandized to worship the market above-all-else as a false God.
The middle-class has been hammered thus hammering the tax base even more. We’ve spent an ungodly amount on wars and the police state. Trillions. We have not invested as a nation in research and development programs such as energy independence because those type national endeavours are derided as “socialism”.
Thus we are “so broke”.
“greatest wealth inequality in almost a century…”
Any clue why that is?
‘A few weeks ago, real estate identity John McGrath sold an unremarkable house in Eastwood in Sydney’s northwest for an eye-watering 77 per cent premium to its $1.35 million reserve. The 16 registered bidders were all Chinese, based locally and offshore, with the lucky one - depending on your view - forking out $2.385m.’
“It was a freak result; a life-changer for the vendor,” McGrath says. Ask about a property bubble, though, and the McGrath real estate boss will cut you short.’
“This is just a normal period of post-(global) financial crisis catch-up,” he says. “We were 10-15 per cent off our pre-GFC highs and most markets have now caught that back over about four years, which is no different to the 5-10 per cent growth rate we’re used to.”
‘The Reserve Bank of New Zealand has signalled its preparedness to take such action, capping the number of low-deposit loans and penalising banks by requiring them to hold more capital against them. For McGrath, talk of such measures is not only premature, they’re simply not needed.’
“I’ve been in property for 30 years and guess what?” he says. “People have been talking about property bubbles for 30 years.”
And we thought Vancouver and Palo Alto were expensive.
Sydney is much a more beautiful city.
They have a weird policy where wealthy Chinese who fly in and purchase houses can stay, but the poor ones that show up on boats are immediately kicked out.
“This is just a normal period…”
Retrenching to the apex of the debt (financial) crises, you think that is normal?
‘New foreclosure cases on Long Island are spiking, even as the mortgage crisis fades in the rest of the United States. Despite rising home values that suggest a housing rebound on the Island, lenders filed 12,271 initial foreclosure cases here in the first eight months of this year, a nearly 53 percent surge compared with the same period in 2012, according to data from real estate information firm LI Profiles.’
‘Victor Alexander Osorio lives with his wife and their two daughters in a Baldwin home they bought in 2002 for $305,000; they took out a mortgage of $289,750, according to Osorio and public records. He lost his six-figure job as a Bronx-based district manager at a fitness chain in 2009. He got a lower-paying job as a store manager for a wireless company, but he lost that job in a downsizing in 2011, he said. Now the family relies on his wife’s income as a registered nurse.’
‘He said he requested a loan modification from his lender, Citibank, in 2009, but he never got approved for a permanent modification. He borrowed money from relatives to make partial payments on the roughly $3,200 monthly mortgage, but in 2010, he said a Citibank phone representative told him that his partial payments were not being applied to his mortgage. Frustrated by his inability to get a permanent loan modification and believing his payments were going “nowhere,” he said, he stopped making payments.’
‘When Citibank foreclosed in 2011, the outstanding balance was $352,000, public records show. Osorio confirmed that figure, saying he had refinanced in 2005.’
‘And while more local homes are sliding into foreclosure, fewer are coming out. In Nassau from June through August, just 12 homes were sold in foreclosure auctions, and lenders repossessed 49 homes, court officials said. Put together, that’s down 73 percent from the same three-month period in 2010 — before the robo-signing scandal broke and banks put the brakes on foreclosure sales and repossessions — when 53 homes were sold at auction and lenders repossessed 177 homes. Suffolk does not track the number of foreclosure sales and repossessions, a court official said.’
“The banks are letting this stuff linger,” said Susan Vincennie, president of LI Profiles, which collects real estate data from Nassau and Suffolk. As for the low number of foreclosure auctions over the past two years or so, she said: “The banks started wanting top dollar for the properties, and the investors were walking away.”
Talkin’ to a native NY’er today… he’s in Westchester county….. “There’s empty houses everywhere…. There’s 8 empty houses between my place and my parents house, yet I see new houses going up…. this makes no sense!”. Frankly I was surprised to hear him say it. Or anyone for that matter.
We’ve got plenty of empty houses. We are not building many new SFRs. We are doing abandoned commercial conversion to luxury apartments. We will let you know how that works out, but it is another six months until stupid tourists return.
Hey Rental Watch, if you can’t sell your houses, there’s always this:
‘You don’t have to look under your sofa cushions to find cash in your house. With today’s rising home prices, still low interest rates, surging house sales and a better overall economy, you can use your home as a source for cash in three different ways, according to Kipplinger magazine.’
‘If you’re staying put . . .
You can still cash in on your home if you have no plans to move. Rising home prices mean more equity in your home, which provides options. You can refinance to cut your monthly mortgage, do a cash-out refi to refinance and extract equity for other purposes at the same time. You can also borrow against your home’s equity for a major expense, such as home improvements.’
‘Current property owners are increasing their home remodeling efforts, according to recent data released on September 17th by BuildFax. The Federal Savings Bank encourages homeowners to use a special cash-out refinance loan as a helpful way to pay for home improvements during a bullish housing market…With a home purchase being one of the largest investments a consumer can make, it’s no surprise that many people are looking to increase the value of their homes even further. Upgrades to home areas like kitchens and bathrooms can not only make a home more comfortable, they can greatly increase a home’s resale price.’
‘Since remodeling projects can definitely add value to a property many homeowners have turned to cash-out refinancing as an affordable way pay for home improvements. A cash-out refinance loan allows a homeowner to access their property’s equity in order to access funding. With home prices rising across the country, more homeowners than ever are finding themselves with the ability to take out a cash-out refinance loan.’
‘Sept. 19, 2013
By Mortgage Daily staff
Rising home prices, especially in cities located in the West, are helping to boost origination levels for home-equity lines of credit. A shift from refinances to purchase financing is a good sign for the housing market.
HELOC originations during the second quarter of this year soared compared to the prior three-month period, with volume up 30 percent from the first quarter.
The story was the same for year-over-year HELOC production, which was also up 30 percent compared to the second-quarter 2012.’
Given that U.S. housing prices are going up at an annual rate of 10% or more in most places where homes are built, owned and occupied (or not), why wouldn’t he be able to sell his houses, so long as he acts before the next crash?
‘Coming soon from a mortgage lender near you: subprime loans. Lenders’ problem is that rising mortgage rates have made it unprofitable for homeowners to refinance existing mortgages, so refi applications have fallen off a cliff. Since refinancing has accounted for about two-thirds of mortgage applications in recent years, lenders must scramble to replace the lost business. Recent gains in home sales are simply not enough.’
‘Rising home prices also make subprime loans less risky, as there’s a better chance a home can be sold for enough to cover the mortgage if the homeowner runs into trouble. ‘It won’t be unfettered and there will be restrictions, but frankly, subprime lending will have to come back,’ says Keith Gumbinger, vice president of mortgage-information firm HSH.com, in a report on the firm’s website.’
‘Interest-only loans are slowly coming back, especially for large mortgages. These offer a low payment because there is no payment to principal, meaning the debt doesn’t get smaller every month as it does with a conventional amortized loan.’
‘Balloon-payment loans, which require a large pay-down of principal after a given number of years, may come back eventually, HSH says. No-documentation loans probably won’t return in their old form, but may be replaced partially by loans that require proof of assets owned rather than proof of income.’
‘Zero-down-payment loans are already returning, but this time the applicant must furnish proof of enough income to make payments.’
What could possibly go wrong :)?
At least the MSM is openly acknowledging the return of crazy loans this time around!