patrick.net

Jumbo loans are available if you have good credit. By coincidence I called my bank yesterday to see what they wanted for a $900,000 loan. They said they would lend $900,000 to me at 6.375% fixed for 5 years (5/1 ARM) with zero points and about $1,000 for appraisal and other fees. Alternatively, I could increase my HELOC to $900k. However, my current rate on that is 7.24% so a jumbo mortgage would be cheaper.

With the 10 year Treasury rates now down to 4.4% I think the mortgage rates will decline as well.

With the 10 year Treasury rates now down to 4.4% I think the mortgage rates will decline as well.

But if the Fed cuts rate, Treasury rates may go up.

there’s a virus going ’round…

Only one?

Surfer-X will be in the Shitty tomorrow evening at the St. Francis

Here is another one in honor of this thread:

http://www.stockmania.com/2007_09_14_archive.html

This is my first time post. I have read this blog since before Randy came here. It is just my opinion and I hope Allah doesn't start picking on me also. But I sincerely think he owes Randy and the rest of us an apology. Maybe nobody else sees it like I do but I think Randy was very patient with Allah. He ignored him for a long time and Allah still beat up on him. Even here Allah keeps beating up on him. And all because Allah is too immature to admit he had something wrong. Just seems silly to me. I doubt Randy will come back. Just my intuition that people like him are not the kind to suffer fools. Like I said just my opinion. I will go back to lurking. Just wanted to get it off my chest.

Oh that other GC guy drove out Linda and other people because he kept posting about paedophilia and violence against women. No small wonder he beats up on Randy because he called him out. I don't want to read here when that guy is around either.

Huge price reduction in Prime Pacific Heights:

http://tinyurl.com/28bzcb

It's actually a very nice apartment, I went to a Christmas party there (previous owner was an acquaintance from the dog park). Very pretty apartment and building, the downside is the parking is leased across the street. I noticed this was for sale a couple of months ago, apparently it didn't sell.

skibum/Bap33,

Where I think they're going to be fighting an uphill battle is that the definition of Jumbo has been moved in generous fashion (and IIRC) quite recently? My earliest recollections are simply 250K (in the early/mid 90's) then $369,500 quite recently and by the time I'd heard Jumbos were at 417K was when they weren't offering them any more.

What SHOULD have been done in 1997 was to start the cap gains exemption at 50k for singles and 100k for married filing joint with an inflation allowance tied to CPI. Just look what happened when we tried to "fix it once and for all"? I'm sure they felt it's passage would've provided generous allowances for generations to come. (It only took 8 years).

Game Over. Insert Tokens.

Just as an example; the limits for cap. losses has been frozen in time (@ 3K) since the 70's with ZIP adjustment for inflation. I've lobbied HARD to get that changed. CPA's don't like it, but they're not about to raise a stink. It's fallen on deaf ears (or I simply don't have the horsepower I'd imagined) YET we're supposed to raise Jumbo limits before the C.O.B Friday!? Better yet, yesterday.

I realize we're talking about the IRS and GSE's (apples and oranges) but you get the idea.

>> For myself, life is too short to waste precious cycles.

Congratulations Randy for coming to this core realizations....

A lot of people are blogging on real estate crash and nothing is happening.
Prices are stick with government assistance.

Hey DinOR, I've been pissed off about that anachronistic $3k loss limit for years, let me know if there's anything I should be doing to lobby for change. With a lot of people about to lose big bucks just like they did after the dot-bomb implosion, it's high time this was fixed so that there is at least some tax justice for the losers. I know people that lost big-time on the dot-bombs and it will take them the rest of their lives to get the losses deducted, but of course the government was their silent partner raking in the tax receipts on the way up. There were some suicides as a result of people who exercised options and had to pay AMT on them (like pre-paying tax on the capital gains) in one year, only to find that after the stock fell they were looking at a capital loss that they could not recover from. This is gonna happen to some real estate owners now.

DJM,

Well! It's good to know this isn't a one man "crusade"! Oh believe me I know. In concert w/ your comments I was screaming at the top of my lungs that a lot of investors won't LIVE long enough to write down these losses! What are they supposed to do? "Will" them to future generations!?

The evil part of me says; "They didn't do it for us stock investors, why the sense of urgency for REP's!" (Real Estate Partiers) However, if it takes for REP's to get their boo-boo in a wringer to get that sense of urgency... well then great. I'm too old to be fussy about "winning ugly"!

Just watch how quickly this thing goes through! Gosh, it's not like homedebtors don't get enough preferential treatment ALREADY! I can only hope there's a retro-active clause!?

There were some suicides as a result of people who exercised options and had to pay AMT on them (like pre-paying tax on the capital gains) in one year, only to find that after the stock fell they were looking at a capital loss that they could not recover from. This is gonna happen to some real estate owners now.

I know a few of these people, it's nothing but greed, the grants are options, but people tried to save on taxes so they exercise and held. When you do that you are taking a risk, maybe it's not explained to them.

cb,

You're right. In many cases major wirehouses had "in-house" relationships with say... DELL or WCOM (usually built by a jr. associate) then nudged aside as the Sr. guys showed them "how it's done". To a wirehouse, stock option money=DEAD money! They don't get paid on it.

So (in many cases) they coerced employees to convert without ANY understanding of the tax implications! There have been more lawsuits over this than you can shake a stick at. As is usual, sales "managers" drove the idiocy and then left individual brokers out to dry.

www.rrmag.com under "Broker Forums" for more on the ongoing saga.

We've all heard the sad stories about stock options exercised before the dot-con bust. Sad, yes, but it not only points out greed as a motivation (as cb says), but maybe, just maybe it was never a good idea to hand over paper value $millions to engineers, secretaries and what not who barely understood what a stock option was, much less the tax consequences of exercising vs. holding.

Skibum,

In a regular (not dot.com) technology startup, it is the ability, knowledge, hard work and creativity of the engineers that make the stock options worth something. I think they constitute very deserving recipients of same.

skibum,

That's why I offer the link to "Registered Rep." magazine for those that choose to "wallow" in it. The problem comes in that RR's have a fiduciary responsibility to understand the tax implications of their actions. While at the same time distancing themselves from "handing out tax advice".

This is how the rinky-dinky "Financial Planners Association" was able to defeat "Goliath" over the "Merrill Rule" and get them out of the "advisory" business. In fairness, it's just called the Merrill Rule when in fact ALL wirehouses had a hand in it. Now to align yourself with the blessings of the NASD, YOU have to be an RIA (Registered Investment Advisor).

It's much the same as having "hired guns" pitching mortgages under a "Senior Broker's" license. It had to end, as witnessed by the ESOP debacle.

justme,

You can compensate them in cash or restricted stock--much less complicated from a tax standpoint.

In a regular (not dot.com) technology startup, it is the ability, knowledge, hard work and creativity of the engineers that make the stock options worth something. I think they constitute very deserving recipients of same.

justme,

That's not my point. They deserve compensation. I just think it's foolish to give folks who don't fully understand the implications of their decisions the option to decide. This is exactly analogous to subprime and other FB borrowers taking on mortgage products they didn't understand.

If they want to do it, fine. Just don't come crying for a lawsuit when you get burned for your decisions.

You can compensate them in cash or restricted stock–much less complicated from a tax standpoint.

Much harder to hide from the the shareholders, though :-)

Since the thread has turned down this path, what is the longest some folks have held onto underperforming stock (bought through employee purchase or options) for "sentimental" reasons. This stuff is hard to dump... and what do people think of the prospects of that other company Eric Schmidt used to helm? So many unrealized losses, so little time....

For sometime now the US ceased to be part of western civilization. So why compare it to Europe when we have so many 3rd world people?

EBGuy,

For Portlanders that's easy! ENE! (Or is that ENERQZ?) When Enron bought out Portland General Electric (it's now ONLY performing asset) many of us held PGE shares. Some for generations. Getting people to DUMP IT "like an ugly girl at a dance" was hard! So... 6 years and counting? Want to know why?

3k per year cap loss limit.

"Pfft, if all I can write off is 3k I might as well hang on to it"

True story.

DinOR,

is a Registered Rep roughly the same as an "Enrolled Agent" in California?

When Enron bought out Portland General Electric (it’s now ONLY performing asset) many of us held PGE shares.
I think some of their workers were featured in the documentary "Enron: Smartest Guys in the Room" -- makes me feel not so bad about my tech stocks. At least we had real 401k plans from Fidelity with plan choices besides the mothership.
@HiThere
My refi was for my first. I think my second was retired by then (and at this point both would fit under the current conforming limit). BTW the second was a HELOC from Chase pegged at prime plus a certain percentage (which was dirt cheap back in the day). Maybe it was technically an option ARM as I could pay interest only for 10 years and then it would fully amortize over the next 20 years. I remember (vaguely) hearing the terms and going.... WTF.... but we planned on paying it down anyway and just used it to get the conforming first.
@DJM
Before you campaign for raising the $3k loss limit, you need to campaign to allow a writeoff for capital losses on your home sale. If you lose money when sell your home, the IRS does not allow for a deduction. I think we are most likely to see 1099 relief (if any "reform" is passed) for short sellers -- athough that would have the perverse effect of quickening the decline.

15% of lenders are no longer accepting jumbo loan applications or funding loans. There's more to it than that. Here's the link to the article: http://nationalrealtynews.com/content/templates/standard.aspx?articleid=581&zoneid=1

Before you campaign for raising the $3k loss limit, you need to campaign to allow a writeoff for capital losses on your home sale. If you lose money when sell your home, the IRS does not allow for a deduction.

One potential problem that would need to be worked out if this were to come to pass is the scenario of a FB who is underwater because of MEW. So if they sell "at a loss", should they get a writeoff because their "loss" was due solely to MEW? That would be dead wrong.

Besides, is this really needed? I thought real estate never goes down, so how does anyone lose money on a home sale??? :)

I just heard about a Portola Valley couple (acquaintance of friend) who have just divorced and have been trying to sell their (white elephant, oops I mean) house for 8 months. They are live-beyond-their-meansers and can't afford both mortgage payments and apartment rent so they are both living in the house making each others' life hell.

Well, stretching for that mega-house was probably a good idea at the time...

A whopping 2-3 million homes come on market due to divorces.

@justme,

Gosh no! That's a tax preparer designation. Reg. Rep. in the traditional sense is a Series 7 License (securities).

"making each other's life hell"

There IS a God! I'm not sure "meansers" is a word but... I LIKE it!

I remember back in 2000 there were a few articles about how couples that got divorced couldn't afford to move out because they had signed a 1 year lease, and rent around them had gone up 20%+ percent.

Ah, the crazy dot com days.

DinOR,

If you live beyond your means aren't you a live-beyond-your-meanser? What else would you be called that specifies your particular type of folly?

So if they sell “at a loss”, should they get a writeoff because their “loss” was due solely to MEW? That would be dead wrong.
Personally, I am not advocating for, nor do I think writeoffs for home losses will ever come to pass. However, I can go on margin in my E*Trade account (similar to MEW) and deduct losses on my stocks when squeezed. I will concede the point, though, that plasma TVs and Hummers (bought with) MEW, probably don't count as "similar investments". But then again, I bet a fair amount of margin money has been used to buy cars, TVs, and the like (*note: illegal to then writeoff the margin interest) ...

Surreal Estate writer Carol Llyod tackes rising rents in Ess Eff in her latest column.
I will argue that the City has reached price-to-rent parity in the TIC marketplace (aided by the fact that buyers have high marginal tax rates). The case has been made, somewhat convincingly, also, by recent buyers on Socketsite. Therefore, any type of unit better than a TIC (like a SFH), will command a premium. There is simply a huge demand in SF that I don't see abating immediately, although there are two reasons to be hopeful. One is the condo towers being built that may suck up that excess demand. The other is the wave of foreclosures building up in Stockton, Tracy, Antioch and the like. Surfs up, and this wave will eventually hit close to home. At a certain point, some buyers (maybe?) will go for Oaktown and the like if their costs are 50% less (and BART makes the City center closer than living in SFs outer districts.) This is a big if, and it looks like I've laid out an argument for why Ess Eff is special. What do ya think? (Hey, we need some controversy while waiting for the paint to dry.)

EBGuy,

If jumbo mortgages are hard to get only people with cash in hand will be able to easily buy in SF, that will surely hit the market. I don't know many people with $2 million cash for their house who are going to plop it down on a Bernal Heights or Glen Park house, trendy though those neighborhoods might be at the moment.

So yesterday I heard someone say Mountain View needed to get themselves organized (I guess they mean the City of Mountain View) coz it's the only place that you have million dollar homes with "RENTERS" living next door to you - I'm not quite sure what they are thinking - maybe limiting the number of apartments or something - I was not involved in the conversation. Maybe I misheard, but the way they said the word "RENTERS" you would think that we are lepers - I didn't say anything (as this was while I was waiting for my daughter to finish one of her activities) but I really felt like saying - "Yes how truly awful it is that they avoid huge property tax bills and only pay a third of what a "homeowner" has to for a mortgage." In truth I think they are upset at the "state" of rental properties - but that is down to the landlord!

I will be seeing this lady again at the next class - should I say anything or bite my tongue?

I will argue that the City has reached price-to-rent parity in the TIC marketplace (aided by the fact that buyers have high marginal tax rates). The case has been made, somewhat convincingly, also, by recent buyers on Socketsite. Therefore, any type of unit better than a TIC (like a SFH), will command a premium.

So what you and the socketsiters are arguing is that the "new paradigm" in SF at least should be that TICs are considered the "baseline" or "standard" of homeownership? Buying into a communal mortgage should be the yardstick for comparison? Sounds lame to me. Since when was acquiring your very own load of mortgage debt without having to go communal considered in an of itself worthy of a "premium"?? Screw that!

BTW, good effort at drumming up some "controversy".

In London, they have multi-million-POUND homes next to renters, those who pay £3000 per WEEK for a flat.

Peter P

Yes, I was seriously tempted to provoke, but restrained myself on my daughter's behalf but I did think it could have been an amusing way to spend the hour - I do get quite bored.

The sad thing is she seemed a really nice lady, but I guess I can appear that way too at times :-)

The sad thing is she seemed a really nice lady, but I guess I can appear that way too at times

I am also a perfectly nice guy. But I can also be a total jerk. :)

If you want to be a jerk (which is a really fun way to pass the hour sometimes), start complaining that Mountain View should really do something about renters who have to live next door to No-doc liars who live beyond their means, ARM-resetting idiots who cannot do simple math, and those HELOC'd-to-the-hilt suns a biches who are ruining the credit market, taking the economy down bit by bit, and crying for a bail out.

Not advice, just fun to imagine. ;)