patrick.net

@Kjac22

Not sure I understand this comment, at least in the context of Obama’s comments in the FT. His statement concerning APR is correct, relating to mortgages, as an apples to apples comparison for rates/fees being charged by the broker.

If I'm too harsh on you, please excuse me.

Barack is categorically wrong in his statement. I'll demonstrate why:

He said these were subprime borrowers facing impending crisis of losing their homes. That means they have variable rate, teaser, interest-option/interest-only and/or negatively amortizing loans. None of these folks have either (a) large equity positions or (b) fixed rate standard amortizing loans. If they had (a) or (b) then they wouldn't need Barack's proposed government nanny-bailout.

As such is the case, we calculate the *effective* rate as:

EAR=((1+APR/n)^n)-1

Similar to how a credit card is calculate. In fact, as HARM and all the good folk here have proven ad nauseum here over the past 2.5 years, a huge portion of these folks actually have explicit revolving credit lines atop their dubious, negatively amortizing adjustable rate primary mortgages. For them, the EAR is explicitly the above formula added to a modified version of the formula yet again, which subtracts from the principal payment the amount forced into future reamortization because of the burden of the equity line.

If I wasn't trying to be diplomatic I could have said about Mr. Obama, instead: he is naive, cynical, or ignorant. A "Home Score system" like he proposes is practically impossible without almost total government regulation of all aspects of the real estate value chain. Since he apparently is unconcerned about the behavior of the powerful Realtor(tm) lobby -- after all they do contribute heavily -- all his "Home Score system" would result in is a transference of even more power to the entirely unregulated, often entirely unethical real estate industry. At least the banks are honest actors trying to maximize their profits. Realtors are not honest actors in that they have a systematic conflict of interest in their agency structure.

If Barack really cares to protect home buyers "reaching for the American dream" then why doesn't he simply insist upon imposing fiduciary responsibility upon Realtors? Who the hell do you think talked all these people into taking on suicide loans at the ground level? It wasn't the big, evil guys with monocles and cigars in the back room of the banks. It was the woman in the leased Lexus.

Owning a home represents a big part of the American dream and all Americans — no matter what their income level — should have the power to reach for that dream.

To dissect Obama's statements some more, possibly ad nauseum, why does no one question his (and many others')assumptions that *all* Americans should be able to reach the "dream" of homeownership? So, someone on welfare should be able to own a home? Someone with a minimum wage job should be able to take out a NINJA loan and "buy" a home? Oh, wait, that's what's already been happening for the last 5 years!

EBGuy Says:
Has anyone seen the Bank of America ARM Reset Chart.

The most interesting thing is the peak of Jumbo-ARM resets in April 09. That seems to be a "Bay Area Easter Special".

SP

OT, but I just read that over the next couple of days, the Fed's annual symposium will be taking place at Jackson Hole. The topic? "Housing and Monetary Policy." Should be a good one.

It will be VERY interesting to see what Bendover Ben has to say. Apparently, the raging debate is whether or not asset prices (ie, housing prices) should be part of the Fed's targets for its monetary policy. That is, should the Fed raise interest rates in large part because of rising housing prices to avert an asset bubble in housing? It seems Ben-dover has argued in the past that the answer is, "no." The Fed should strictly target its preferred inflation measures and not stock/housing/credit/etc bubbles.

I'm sure the other big behind the scenes talks (I'm picturing a bunch of economists and other types chatting it up at the Mangy Moose) will be about, "how the fuck did we get from subprime loans to "AAA" rated MBS' to hedge funds collapsing left and right?"

To dissect Obama’s statements some more, possibly ad nauseum, why does no one question his (and many others’)assumptions that *all* Americans should be able to reach the “dream” of homeownership?

It was just pure rhetorics. Not-very-good rhetorics. Let's try to decipher greenspeakbenspeak instead.

It will be VERY interesting to see what Bendover Ben has to say.

Remember Donald Kohn...

Ben can always point to Kohn's speech on April 22, 2005 and say, "Don't tell me we didn't warn ya."

http://www.federalreserve.gov/Boarddocs/speeches/2005/20050422/default.htm

skibum, you are making me laugh. :lol:

I still think Ron Paul should redo his buttons. If I see that photo on Sunday's newspaper in the real estate section, I may not even call him up for an open house.

Well, at least we are back to the 100-comments-a-day days. ;)

And that's even without any real trolls around anymore!

Well, if we continue to comment on the number of comments, the number of comments will go even higher!

Well, if we continue to comment on the number of comments, the number of comments will go even higher!

Huh?

BTW, trolls will always be lurking. However, they do not bother us anymore because it is increasing apparent that we have been right.

But I am a looser because I have not been able profit from what we have predicted yet. :(

Well, if we continue to comment on the number of comments, the number of comments will go even higher!

Huh?

You see, with just this exchange, 4 more comments were added to this thread!

BTW, trolls now apparently email Randy H directly!

You see, with just this exchange, 4 more comments were added to this thread!

How is that my fault?

BTW, trolls now apparently email Randy H directly!

Haterz are not the same as trolls.

patrick supports ron paul, apparently, as per the home page...

http://www.dailypaul.com/node/213?ref=patrick.net

But I am a looser because I have not been able profit from what we have predicted yet.

hey, just go to a 'how to profit from foreclosures' seminar! perhaps the one seminar casey didn't get to on his credit card!

I think many regulars here like Ron Paul. Apparently, he is also highly rated among internet users.

DS, how is the weather down there?

I’m sure the other big behind the scenes talks (I’m picturing a bunch of economists and other types chatting it up at the Mangy Moose) will be about, “how the fuck did we get from subprime loans to “AAA” rated MBS’ to hedge funds collapsing left and right?”

hmm. the banks and other lenders deliberately liberalised credit, offered a slew of new products, knowingly increased their risk profile, etc etc. they were absolutely sure a few short years ago that 'if we lend more money to more people, somehow they seem to keep paying -- they don't want to lose their houses, after all -- they'll make any sacrifice before then! we can gouge a whole new pile of people! and let's give them higher credit limits on CCs too!'

spring is sprung, the grass is riz...

the weather has gotten much warmer in the last week or so -- spring officially starts on 1 Sep. 3 weeks of much needed rain just prior also. you can see the forecast for a week at www.smh.com.au if you click the weather link -- but you have to convert °C to °F...

hey, just go to a ‘how to profit from foreclosures’ seminar! perhaps the one seminar casey didn’t get to on his credit card!

go to organize

skibum said:
Why the royal “We”?

I don't know - maybe "Linda The Licensed Realtor" has lice.

SP

yes, when everyone is looking for gold, sell shovels... just cobble together a seminar from all the other seminars, and charge, ooh, i dunno, $4,000, for this 'investment in your education' -- after all, you will make back 10x the cost of the seminar in your first year of trading property! chapter 1: 'how to make money in property even when prices are falling' -- that one always gets 'em in...

I have a question regarding jumbo loan.

When I look up the recent buyer's loan profile, many seems to do their loans the following way:
$650-1000K ARM (clearly jumbo category)
$50K-100K fixed

why would someone do their mortgage this way? Tax reason?

Randy--That letter is priceless.

This just seems like so much political posturing to me. I mean, Obama wouldn't even be in office for over a year (presuming he got into office) anyway. So he can say whatever he wants; promise any kind of bailout he wants; because in the end everything he is supposedly offering would be waaaay too late to do any good.

The fact is, the worst part of this will probably occur before we know who our next president is going to be.

I enjoyed the Bernanke letter. A casual reader sees only reassurances and helpful suggestions. Schumer can have little doubt about the message it contains for him. Very well done.

On the other hand, I'd file the Obama quotes under boilerplate. Legislators and candidates cannot find a poster child. There isn't one.

Linda seems a little out of temper, doesn't she?

John T Reed has even written a piece on Obama now, in his usual inimitable style. While not relevant to the bailout policy, it reinforces the point made above that big party politicians will say anything to capture votes. John Kerry particularly fell prey to this last time round. As per the knee-jerk 'we will keep interest rates low' pseudo-policy of the Labor party so as not to upset anyone at all.

The only party approaching honesty left in this country is the Greens, the third biggest party, although I should properly be allied with Labor, if it wasn't so full of apparatchiks, liars, sell-outs and closeted right-wingers.

http://www.johntreed.com/Obama.html

"or should I say Randolph"

Quite the "sleuth" huh! The man only has a standing invite to his web-site by clicking on his screen name, has given his full name on numerous occassions and has in no way made any effort to "conceal" his true identity!

With powers of deductive reasoning like this it's small wonder "Linda the Licensed" is a Top Producer (TM) :)

C'mon, if her leased Lexus got towed it would take her 3 days to find it! What's next? You're going to once and for all reveal the true identity of the Zodiac Killer!? I can't wait.

What's your take on the subprime mortgage crisis?

The problem will get worse. 68%

The worst is behind us. 33%

27666 Votes to date

What’s next? You’re going to once and for all reveal the true identity of the Zodiac Killer!? I can’t wait.

Nah, I think she'll find Nicole Simpson's REAL killers. And she'll find Osama while she's at it.

StuckinBA,

I agree, the pressure on Ben going forward will be immense. Like you, I'm reluctant to give my "full seal of approval" just yet but if you've read his letter to Schumer (and I suspect you have) he is full of empathy... yet offers... basically nothing? So far he's resisted subtle suggestions (from DL) blown gasket tirades from Jim Cramer and an "end run" by none other than Bill Gross.

Ultimately, he'll have to "throw them a bone" to shut them up and keep the peace but unless it's anything more than a token act I'll continue to give him my vote of confidence. FWIW.

Are there any foreign economies experiencing problems in their own MBSecurities, and not just fretting about ours?

I ask because I think Bernanke would find a much clearer path for setting a lower target rate if there were one or two majors with good reason to do the same.

BoJ has almost no room to move, obviously. But surely there are bubbles expanding in London and Paris?

Bruce,

I'd read that "Basis Yield" (an Oz based HF) is in default. Details at Mortgage Implode.

In truth, I'm not sure the letter from "Linda" is genuine. Firstly, the fact it's from a "fake" email address immediately tells me that this is very likely *not* a realtor. Also, the letter looks suspiciously similar to 2 others I received this year related to my Second Life criticism. Since I wrote about SL again about a month ago there's a good chance that 'hater fanboi' followed me here and made up the rest. Also, it looks like fanboi hater either read a lot about me very quickly (unlikely), or has been a hatin for a while know, long enough to know I bitch about Mill Valley and other stuff in there. Some of those SL cultists were pretty creepy. At least a couple of them took way too much time reading everything they could find about me and then smearing stuff all over their little SL fanboi blogz. I doubt this was a realtor, unless it was a realtor who's also in Cult Second Life.

DinOR Says:
if her leased Lexus got towed

Maybe we should coin a new term for that: TWNED.
e.g. "did you hear about Linda The Licensed? She fell behind on the lease payments and got twned - so she now has to take her home-buying clients around on the bus."

SP

Randy H,

If that's true, that would really be creepy. I woulda thought the Second Life die-hards were all at that convention in Chicago, trying to schtoop each other in real life.

I was reading the other day where someone suggested the re-introduction of shared appreciation mortgages as a possible avenue for sub-prime refinancing. Have SAMs been discussed here? I hadn't heard of these before, and as I presently see it their ramifications frighten me more than that of nuclear weapons.

I woulda thought the Second Life die-hards were all at that convention in Chicago, trying to schtoop each other in real life.

I think that freak convention ended last weekend. If you saw the pictures Valleywag linked, I doubt anyone was schtooping anyone else in that bunch. Let's just say that were I to have been stranded amongst that crowd I would have been looking for relief amongst the glamorous folks one finds playing D&D at a renfest.

The funniest part though was seeing people try to dress up like their game avatars. Clue: if your avatar is a 5'10" edgy supersexbombe with rad "take me from behind" tats who normally dons the kind of microskirts that make grown men weep, but you're really 380 lbs in real life, don't. Just don't, for humanity's sake, please.

Brent,

Good question. My follow up to that would be, "WHAT appreciation!?"

No seriously, the Portland Development Commission effectuated exactly that when they ignited the "loft craze" in the Rose City. These deals were structured so if they buyer held on for a full 10 years, there was no share to the city. If they sold in the 7th it was 15%, the 5th 20%, under 3, 25% of the "appreciation". In addition they were given a tax holiday for those same 10 years (paying only about $150 a month).

This worked b/c they were coming off the bottom (late 90's early 00's) but I can't imagine how that would work with vastly overpriced abodes?

The funniest part though was seeing people try to dress up like their game avatars.

Can you post some pictures?

We've all made fun of "granite countertops" around here, but look:
www.idahostatesman.com/newsupdates/story/145829.html It appears that they can truly be a "hot commodity".