patrick.net

Yeah, now even the loan officers are victims. Only in America!

In recent times, this country always makes the perpetrator the victim and the victim the perpetrator!

Maybe housing will be the new exception. Buyers, lenders, realtwhores and builders are all victims and it is the renters who are the perpetrators!

Patricks bailout letter is starting to get some attention.

Recent hearings in the United States Senate have led to talk of bailouts for subprime borrowers spurring a "Stop the Subprime Bailout" letter writing campaign from long-time Bay Area housing bubble watcher Patrick Killelea at Patrick.net.

I am guilty of failing to support the Amerikan Dream by not buying a POS with a NINJA. I must want the terrorists to win :-(

@ allah,

Yeah it's like crying for Enron execs because they were out of work. What about my grandmother who was out about $1M when the stock went to zero. That was stock my grandfather earned and purchased over the decades working for predecessor nat. gas companies. In the new world it's probably grandma's fault!

Paul

Let's not forget the 23 year old MB from Kuhjerkistan talking on 2 cell phones at a time driving w/his knees trying to find the Phoenix homes he'd already bought! I suppose the Kuhjerkistani Mob held him up to it?

allah, nice find! You know you've arrived when you're getting mention on Seeking Alpha.

On a different note, Mr. & Mrs. HARM did a little "house-hunting" for the first time in nearly 3 years last Sunday, and were somewhat surprised by the results. Keep in mind we were just lookie-loos, not serious lowball buyers with offer in-hand, as our esteemed Mr. H.

Open house locations:
Pasadena, Monrovia & Duarte, CA

Observations:
--Sellers are much less arrogant/cavalier than before, and more polite/attentive to prospective buyers, even deigning to speak with obvious low-rent filth like myself.

--However, while asking prices have come down somewhat, they are *still* in delusional-to-nuts range (average 1950s 2-3Bdm 1200 sft stucco box = $600-900K). That's still an improvement over last year's euphoric-to-psychotic.

--I've also noticed that virtually all the older houses we saw had significant new upgrades (of the pergraniteel variety) and were usually in near-turnkey condition, vs. the "let's not even bother to clear out the trash in the living room or weed the lawn" condition that was so common a couple years ago.

--Most new developments here (yes, there are some even in built-up L.A. County), tend to be of the mini-Mcmansion or multi-story "luxury" townhouse on-a-postage-stamp variety. Almost nothing new under $1 million. There was even one devlopment in Monrovia that --get this-- starts from $1.8 million and is being sold through Sothebys (the London-based auction house for the uber-rich). This in a predominantly middle and working-class neighborhood. Here's the link: http://www.sothebysrealty.com/PropertySearchResults.aspx?N=12+4294967274+4294967261+4294967081

"From his front lawn, Corchuelo likes to smile up at the cranes and listen to the clang of construction.

“It’s a good sound,” he said.

All day and all night!
Sometimes the crack addicted hookers strole in and give him
a freebe...just to crash in the pad!

Kudos to Patrick on his growing fame. :) I'd like to comment on something else in that Seeking Alpha article. Notice that block of subprime and delinquencies in the middle north part of Colorado. Yeah, I'm dead center in that mess.

http://usmarket.seekingalpha.com/article/31128?source=feed

I've been watching the REO lately. Most of it appears to be the lowest-end townhomes and SFRs in undesirable parts of town. The rest? McMansions in the biggest, best areas Fort Collins has to offer. If you bailed out all the newlyweds and immigrants, you would also have to save all the greedy two Lexus DINKs in Eagle Ranch, Greenstone, Coeur D'alene Estates, the various golf course McMansion galleries and other "new aristocracy" areas.

There will be no bailout (I said that last thread), but it annoys the hell out of me that people in the most expensive areas are painting themselves as "victims" just like the little people who lied on their loan applications.

I wonder if that Naked City POS sold?

http://www.slate.com/id/2162989?nav=ais

the bigger the mansion, the worse the CEO

A great article written by a realtor!

Asset Deflation : The Death of Real Estate

In other words, it is time to sell all of your real estate, save for possibly your home. If you don't, you will likely regret it. You will gradually watch all of your equity disappear into thin air. And then, unless you have little debt against it, you will likely lose your property to foreclosure. It's as simple as that.

OO

Some bond funds argued that MBS counted as "international" investments. Seems pretty tortured logic to me, but their rationale was that they were investing in MBS' purchased by foreign investors. So technically, it's an "unhedged foreign investment". It just happens to be largely dependent upon the US housing market and is denominated in dollars. (chuckle)

Paul Says:

> Yeah it’s like crying for Enron execs because they
> were out of work. What about my grandmother who
> was out about $1M when the stock went to zero.
> That was stock my grandfather earned and purchased
> over the decades working for predecessor nat. gas
> companies. In the new world it’s probably grandma’s
> fault!

Not to give your Grandma a hard time but (if $1mm was a large part of her net worth) it was her fault (since she didn’t diversify). I was lucky that I learned about diversification when I was young so I still had time to make more money before I retire (even thought I don’t ever plan to really retire in the traditional sense).

Growing up I saw my parents make a lot of money in Real Estate so after I started working I put about 95% of my money in to Real Estate and by 1994 it was all gone (when I signed the last quitclaim deed).

There are very few true “victims” out there and we would live in a better world if more people would take responsibility and admit that there is almost always something they could have done to avoid their problems.

The gods are fickle, so don’t take anything for granted. One day you’re a powerful king with a beautiful wife and 4 lovely children, the next day you’re a an 1ncestuous patr1cide and your kids are killing each other…

Here's the largest category -- baby boomers. Even though almost all of them got into the housing market before prices really shot up, I bet we'll be hearing lots of stories about boomers who mysteriously became RE bust victims on houses they've owned for 20 years.

Not to mention you've stuck knitting needles in your eyes. See, this is why you should never best a Sphinx or rescue abandoned babies from hillsides. That's just asking for it.

(Or pretentious idiots who name their daughters Antigone or Medea...)

[sighs] People believed that their paper wealth was real money. Now that the paper wealth in many real estate assets could be declining, people will be upset. They feel like forces beyond their control are forcibly removing money from their pocket.

What people don't seem to realize is that you can whine about Tech 1.0, CEOs, congress, excess market liquidity, subprime mortgage brokers, tulip salesmen, hurricane insurance companies, the FDIC or God himself... it doesn't make your money come back. Donald Trump doesn't whine much. He diversifies, has contingency plans and starts scrapping harder when the going gets tough. That's why self-made rich people often rebound from major setbacks.

I still have a fundamental question that we've never really answered. At the end of this real estate decline (or bust), will people finally stop treating their house as an investment? Will a house again just be a place to live?

A Doctor out of his residency who’s income is most likely going to go up substantially.

What other professions have a “guarantee” as good as a Dr’s for income appreciation?

Did the people who were given ARM loans have jobs that had the same potential for significant income increases

However the doctor may find himself oin a malpracise law suit and may be forced out of the profession. also may be injured or disabled before the bigbucks.

There was even one devlopment in Monrovia that –get this– starts from $1.8 million and is being sold through Sothebys (the London-based auction house for the uber-rich).

There are some $600k homes near my parents place in the east coast that's being sold by Sotherby's

I don't think it's the same Sotherby's - i think they just rented out their name.

Kind of like the new "Louvre" that's going up in Dubai

Have you guys seen this?

http://www.theonion.com/content/video/immigration_the_human_cost

Oh man, it cracks me up

Brand,

the greedy two Lexus DINKs

(nice description BTW :))

These are exactly the people who are going to lobby the politicians hardest for a bailout, because;

1. It will be literally inconceivable to many of them that they are, in fact, insolvent. ("Foreclosure?? Bankrupt?? That sort of thing only happens to dropout losers. You know, illegals and the like. Not people like us!!")

2. They are used to getting the system to work for them, and either they themselves or friends/relatives will be politically active.

And they are NOT going to like the term "bailout" (even if it's accurate, in fact especially if it's accurate) because that word carries some sort of welfare stigma which is, of course, totally inappropriate for professionals like them.

No, they will expect (and they will 'expect', rather than 'hope for') a 'solution' which carries no negative semantic baggage. Sorta like the way the fine upstanding free-enterprise salt-of-the-earth MidWest farmers reinterpret their price supports as weapons in the economic war against the wicked Europeans, and therefore not really 'government subsidies' at all.

I'm so tired of the whining people who did this to themselves. When the housing ATM was booming at the peak they were telling us we were losers. They bragged about their new H2 Hummer and the vacations we couldn't afford. So F' em I could care less. When I lost my higher standard of living in 2000 due to divorce I didn't go out and buy things I used to be able to afford but could no longer. I didn't run up my CC or apply for a home knowing I no longer made six figures.

These stupid idiots knew their financial limitations and did this crap anyway. Only in America do you have so many damn posers who want everyone to think their better off than they actually are. Some area are much worse in that respect Orange County especially comes to mind. It is nobody fault but the individual if they don't live within their means. It is not governments job to help these losers get out from under the mess they themselves caused. And the blame game please!!! Yeah there were a lot of RE player to be sure but what moron doesn't research and finally read the fine print of documents they sign. This is one of the biggest investments a person makes. What did you think you were signing stupid?

NO F'ing BAILOUT

"The fourteenth book of Bokonon consists of only one word and a period. Here it is: Nothing."

Thanks for summarizing Jon! :)

"I see $$$, plenty of $$$"

Really? Because I don't. I'm picturing a sea of despair for some time to come. Oh! Must be referring to an immediate return to a "normal market" of 35% a year appreciation!

eburbed,

The Onion once again shows why they are "America's Finest News Source"! (It looks like they found that gap toothed illegal out front of a Home Depot and said, "Hey dude, wanna make a coupla' bucks"?)

eternitus "The Great"

Absofreakinglutely! Good for you!

Before "lofts" were all the rage in Portland the city gave prospective buyers a 10 year "tax moratorium" (ridiculously low taxes) IN EXCHANGE for a hefty chunk of their profit if they sold in the first 10 years on a sliding scale matrix. It was perfectly legal! You want to be subsidized? FINE.

Of course (up until about a year ago) there were waiting lists and lotteries to "get in" on the action. Now they sit on C/L month after month (but they're still offering the moratorium). Go figure.

Danilo Bogdanovic:

Allah - If you had read my blog in its entirety you would have noticed that I am all for and bring up ideas on how to change the real estate industry for the better. I am also sick of horrible and deceitful agents, corrupt lenders, big brokerages and the NAR for screwing consumers and giving the entire real estate industry a bad name. I am also against the broker-centric business model and believe that consumers should have the power.

I believe you.

What I was trying to say is that the honest, hard working loan officers who actually do care about their customers and can actually sleep at night (they are still out there) need to make sure that the lending institution they are working for is not doing corrupt things. Even if the particular loan officer is legit, but the company is not, the loan officer could be out of a job and/or a paycheck.

The loan officer is the interface between the lender and the buyer. He knows everything that is going on, in fact he is the one who initiates the loans. A loan officers job is:

1) find potential clients, individuals or businesses, in need of loans;
2) specialize in commercial, consumer, or mortgage loans;
3) often act as salespeople, persuading clients to obtain loans from their institutions;
4) help clients apply for loans;
5) analyze and verify the application to determine the client's creditworthiness;

If people are taking out loans they cannot afford, the blame lands squarely on the loan officer.

And I’m also saying that the company is at fault for not only screwing consumers over, but also for not paying their employees. Both are against the law and they need to pay for both offenses.

The problem is that the lenders are bankrupt; they have no funds to pay anyone. The only place the money can come from is either the taxpayer or the printing press and I am against both of them.

And if you blame every loan officer blindly across the board, then do you also blame the hard working guy in the mail room of Enron’s corporate building for the corrupt actions of the few at the top of Enron? Didn’t think so…

When the nasdaq bubble popped, I didn't blame all those (including myself) that had money in mutual funds that disappeared, never to be gotten back. I also didn't expect the taxpayers to make up the difference (and they didn't). I could have done more research and pulled my money out in time but I didn't so I accept the loss. If I worked for a corrupt business and I didn't leave the company, any losses I would have to accept myself as well.

Think about it, if I was working for a corrupt company was doing damage to society; after I lose this job, do you feel it is right that I should have society pay for what the company couldn't.

If you work for a crook, don't expect fairness. Anyone (even the poor slob in the mailroom) with common sense knew that lenders were giving loans to people that weren't in their best interest; it has been all over the news for the last few years. This is criminal activity! I have read over 100 articles about this and I'm not even in the business! I wanted for this to stop for years, I knew how it was going to end; but there was nothing I could do. If I was working for the company, I would have left!

It's not like something that was just uncovered. No one can play the "babe of the woods" routine and expect the taxpayers to compensate them; they knew what was going on and they could have left, but they chose to stay and go down with the sinking ship instead. Take your lumps and don't expect society to cushion the blow!

If you feel that the mailroom guy didn't know then maybe the next time we get a speeding ticket we can say.

Defendant: "Your honor, I didn't see the sign for the speed limit. I thought it was 55, but it was 30. I must have blinked my eyes for a second as I drove past the sign."

Judge: "That's ok, I'll let you go, just make sure that you look out for the sign the next time, ok?"

Defendant: "Thanks, your honor."

We’re all on the same page - you just took my post out of context. And if you don’t believe my stance on things, just ask Kevin at HousingPANIC about my guest post there a while back.

Again, I do believe you but I don't believe I took your post out of context. Now that everyone is talking about a bailout, putting up a thread like this is sure to bring forth many angry taxpayers!

I think what would be fair for a bailout is this:

Send out a form to everyone in America that has identifying information (such as ss#, etc.) with checkboxes as to whether you are for or against a bailout. If you choose no, you are exempt from it, but if you are also an FB, you can't get any funds. The entire funding of the bailout will be divided between all those who chose yes.

Those who don't want it, don't have to pay. All the bleeding heart liberals and FB's that want it can pay. The FB's get their bailout. Everyone is happy!

This is America and I think each and every individual should be able to decide how their money is used! It shouldn't be decided by a majority of votes! It's like when you work for a company and it is someones birthday who you just happen to really hate; someone comes around with a cup asking for $10 to chip in for a present for your enemy, should you have to pay the $10? I don't think so!

http://www.latimes.com/business/la-fi-bailout30mar30,0,4891093.story?track=ntothtml

Historically, the ownership rate has been around 65%; the bubble pushed it to 69%. Obviously it needs to come back down to 65% before we could again have harmony among the markets. The only way for this to happen is to let nature (darwinism?) take its course.

allah,

I would have simply responded to Danilo by saying there isn't enough good left in the REIC worth saving! Rookies are so quickly indoctrinated into the graft and greed it would be better (and easier) to just start over. I do appreciate however your willingness to take on that beast one nasty fang at a time. :)

I do appreciate however your willingness to take on that beast one nasty fang at a time.

You know me, I don't give up so easily; ask Randy H. :lol:

The link Sylvie provided (and Mark referenced) really cuts to the core of the issue. Since the subs originated these loans for them to step in and "float the issue" through subsidies is a clear conflict of interest.

For Wells or CFC to step in and back fill some of these loans is like a mugger having a change of heart and giving the victim "some" of the contents of her purse back to her. The mind boggles at how many securities infractions would likely occur.

This is what Ron Paul has to say about the Fed and the housing bubble; supposedly he will be up for presidency in 2008.

How about the government as a "victim"? Think of all the lost tax revenue! How we will our gov't continue to support insane spending trajectories?

A couple of examples:

California population: 36 million
California inmate population: 170,000+
Cost per inmate per year: $43,000
Cost per year per California resident: approximately $200/year per person (or $600 for a family of 3).

I thought this was staggering until you consider this:
DOD budget: $499B
Homeland security: $70B
US population: 300 million
Cost per US resident: $1,900 ($5,700 for a family of 3)

That was scary until I looked at entitlement spending and interest on the debt. I won't even get into that topic.

When the housing bubble busts, won't California and federal tax revenues decline precipitously? I know that the feds exempt $500k/house in capital gains, but there was still a ton of tax revenue related to real estate sales paid between 2001 - 2006 (singles with > $250K of gain, couples with >$500K, smart money real estate investors cashing out without doing 1031 exchanges, flippers with holding periods

We could expand on allah’s suggestion. Everyone writes on a paper what they think the tax rate should be. Uncle Sam then taxes you at that rate. Everyone writes on a paper if they agree with the Death Penalty. When they are convicted, the court looks up what they wrote on the paper and that is what they get. Everyone writes on a paper what their salary should be. Everyone writes on a paper what job they should have. Everyone writes on a paper where they want to live. This could go on and on. Wow, what a wonderful idea!?

This is idiotic and has absolutely no relevance as to what I posted.

Oops...
Should have said "flippers with holding periods of less than 2 years."

Glen,

Thanks for clearing that up, kind of left us hanging there.

All I can say is there are no easy answers. It won't just be CA with sagging revenues and the state's response to this short fall aren't clear just yet. My guess is that they (like most everyone else) are clinging to the hope that "things will return to normal".

More likely will be continued strain as floppers now begin to off-set income w/failed RE ventures. You're right though, it's awfully big to ignore and the possibility these guys will carrying forward losses for years is all too real.