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This WSJ article from yesterday is a must read:
http://online.wsj.com/article/SB119785633408932917.html
Mortgage-Relief Plan Divides Neighbors
Protection Is Spotty In Southern California; The Oropezas Pack Up
By JONATHAN KARP
I swear Mr. Karp wrote this article fully with tongue-in-cheek. The "Oropezas" should become the new poster family for the mortgage mess. It's frankly disgusting.
@skibum,
Oh, and you gotta love the new boilerplate from DQ:
Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages has generally declined this year. Down payment sizes and flipping rates are stable, while non-owner occupied buying activity has edged higher, DataQuick reported.
Ummm... "different directions"? From where I'm sitting (munching popcorn), all the healthy market indicators seem to be converging in one direction: down, down, down, while all the unhealthy ones are moving up, up, up. Oh, but "down payment sizes" (already next-to-zilch) and "flipping rates" (close to half the market) are "stable" --my bad.
Gotta read this gem. I think we may have a new HB poster boy (to add to Casey Serin & David Crisp):
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=alNDZa.Hm6O0
Dec. 18 (Bloomberg) -- One week in 2002, Daniel Sadek was $6,000 short of covering the payroll for his new subprime mortgage company, Quick Loan Funding Corp. So he flew to Las Vegas and put a $5,000 chip on the blackjack table.
...Loan officers were hired and fired all the time at Quick Loan Funding's 26,000-square-foot call center in Irvine, says Bryan Buksoontorn, who joined the company in 2004. By then, Irvine had become a hotbed of subprime lending companies.
``We were motivated by fear,'' says Buksoontorn, 28, who is now an independent mortgage broker. ``It was a boiler room. You had to make your numbers.''
Buksoontorn's job: get the caller's credit card and charge $475 for an appraisal, he says.
``You told the callers what they wanted to hear and you got the credit card,'' says Steven Espinoza, 39, an employee from 2003 to 2005.
`Close 'Em, Close `Em'
Sadek and his managers would berate the sales staff, many of whom had no experience or training, Buksoontorn says.
``They would get in your face,'' he says. ```Why aren't you ordering appraisals? Why aren't you selling?' ''
Sadek brought a car salesman's mentality to mortgages, Espinoza says.
``It's the same type of hard sell,'' Espinoza says. ``Close 'em, close 'em, close 'em.''
Iannini, who was vice president for compliance and risk management, says she tried to make sure the hard sell didn't result in bad loans.
``I went to work every day as an uninvited hall monitor at a fraternity party,'' Iannini says.
Sadek says 95 percent of Quick Loan Funding's mortgages were made to subprime borrowers.
``If we had a prime borrower on the line, we hung up on them,'' Buksoontorn says. ``We were geared toward subprime because they were easier to close. We were giving them money no other bank would dare to give them.''
But... easy-money Fed policies and insane ignore-all-risk lending standards had nothing to do with this mess, Easy-Al told me.
@HARM,
Seriously though, what's even more disturbing about the DQ numbers, is that the gain in sales volume from last month was entirely from new home sales. Reading between the lines, my guess is that builders are seriously slashing prices, luring some fence-sitters to buy. This only means bad things for comps and old-home sales prices. Could this be the start of the downward price acceleration in SoCal?
DennisN
2007 Dec 18, 3:25am
Here's another really odd story, how so many people can't even aford to pay the heating bill except on credit cards.
"For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills, according to a CreditCards.com poll.
Nearly 12 percent of Americans say they will need to borrow money to pay winter heating bills; 9 percent will need to use credit cards to be able to afford their heating bills. "
So I guess using a NINJA to get into a 4K square foot house is dumb for more than one reason.
OO said:
If USD cuts to bare bone 1%, major currencies will follow, leaving little space for USD carry trade with other currencies. That’s why I predict that USD carry trade will happen with other classes of assets, not bonds, not equities, not housing.
That's what I said - there was a reason I said "take the ZIRP money and lend it elsewhere", and didn't call it 'carry trade'. The end result is that it is the same effect where excess liquidity will simply end up in places where it generates bank profit, not where the government wanted it to go.
I previously posted:
The estimated notional value of derivatives is about 400 Trillion dollars. Bank Credit accounts for what, about 50 Trillion dollars? Both of these markets are contracting/imploding. The US monetary base is less than 1 Trillion dollars. How will Bernanke inflate fast enough to compensate for the credit contraction? Will it amount to just a fart in a thunderstorm?
Did a little more research this morning, and it actually looks even more spectacular than that (although I was wrong about the monetary base)...
Notional value of derivatives = 470 Trillion
Interest Swaps and Currency Swaps = 350 Trillion
Credit Default Swaps = 45 Trillion
Equity Derivatives = 11 Trillion
All told, it is getting close to 1 Quadrillion in pretend money.
There is about 1.5 Trillion in M1, and overall about 15 Trillion in the monetary base. A 1.5% contraction in derivatives market will wipe out 100% of the base. How much _can_ the Fed inflate?
I am no expert on this, just learning about this new viewpoint actually, but this stuff is making me feel like a skier watching an avalanche build up overhead...
HARM Says:
Indicators of market distress continue to move in different directions.
Every time I see that in the DQ report, I think to myself - "Moving in different directions - that is usually what happens when shit hits the fan".
Looks like the Realtors in SF have some free time with the slow sales:
http://thefrontsteps.com/2007/12/18/and-the-nominees-for-sexiest-realtor-in-san-francisco-are/
HARM,
Daniel Sadek (producer of the HUGE stinker "Redline" w/ Tim Matheson and Eddie Griffith) has already been inducted into the Housing Bubble Hall of Shame!
I just wish I could get my hands on a DVD bootleg copy of "Redline" so I could see what $5 million dollars in ill-gotten mortgage commissions going up in smoke looks like for myself!
Oh, and am wrong to be excited about the sequel to National Treasure?
This is a repost from the last thread. Wanted to make sure current (and future) Bay Aryans see this.
Whoa, check this out… investigative journalism (better later late than never!)
Investors own about one-fifth of Bay Area homes in foreclosure. And get this, in a separate article, the journalists admit that this number may be too low as the address-comparison underestimates investors; many buyers falsely state on their loan applications that they plan to live in a property because owner-occupants get better loan rates and tax breaks. Lying? On a loan application? Who would’ve guessed?!
EBGuy :
You are lying. There are no investor owned homes in BA. Everyone wants to live here. Flipping is not what Bay Aryans do. They don't need to. They get all the money they want from AAPL and GOOG. And what is this foreclosure ? There are hardly any. Don't read the news. Ask the experts.
Here is a sample.
http://tinyurl.com/2or5c7
Scroll down to 10/1/07 update. He quotes Garry Watts (!) to support his views. Just above it this shill presents (in a typical shameless manner)
As a person who really loves to watch economic events, the stock market and real estate cycles I'll never understand why or how the major networks and cable channels focus on negative real estate news. As a real estate broker I find myself spending more and more time correcting the misinformation quoted on the news for my clients and would-be clients. I'll give you an example; who hasn't heard of the recent double digit decline in home sales from the same time last year. This should be of great concern to any home owner of buyer. However, when the pundit or newscaster fails to disclose that the drop was from an all time record high in sales, they are talking out of context and misinforming the public. The media's snapshots of market activity may grab the consumer's attention but they also distort the big picture.
Peter P
2007 Dec 18, 6:45am
Don’t read the news. Ask the experts.
Excellent! We should censor news and ban all books! This is Utopia after all.
I happened to check in today and DinOR challenged me to a role reversal.
I try, I try. But still, I thought the sexiest man is #16.
9 -- possibly a college athelete, energetic, confident
6 -- country girl, should be quite energetic,
2 -- not bad
3 -- possibly a good dancer, artsy, easy to connect to if you know her type
8 -- sex predator
20 -- DinOR likes her. She'd be quite cute if she didn't have that try-hard look on her face. This one likes to win. Possibly a ho. Not worth the effort unless if you want her to make money for you.
wife material: 18, 11, 7, and perhaps 17.
#10, too, although she has sexless appeal. make her pull in the money for you.
Amongst the males: #22 ain't bad. Perhaps because of his hair style. The rest of them suck.
New thread
Credit Crunch might by yummy, but I haven’t tasted it yet :-(
#15 looks like a throwback to a bad 80's movie. I should know, I've had that jacket, but not the haircut.
« First « Previous Comments 108 - 131 of 131 Search these comments
It was always known that Mr Bernanke will have one tough job as the Fed Chairman. The bubble was already at the bursting stage when he took over, and there wasn't any way he (or anyone else) could have kept it going. His real task and challenge was to limit the fallout.
How has he done ? I would say very poorly.
I have no misconceptions about the difficulty of his job. The balance between slowing the damage from the credit crunch, falling USD, rising commodity prices and most difficult - the different expectations of groups with vested political and financial interests. With politicians breathing down his neck, he is in a situation where it is impossible to not antagonize someone.
But the Fed under his watch is turning out to be a PR disaster. The slashing of discount rate on an option expiry day in August was ridiculous and was criticized very strongly. Just last week, the market dropped after the small rate cut, and next day there was an announcement of the TAF (Temporary Auction Facility). The move was in plan for some time, but the timing of announcement creates a perception that Fed is scared of market drops.
Here is one quote from MSN Investor's daily dispatches.
Newsletter writer Tom McClellan of McClellan's Market Report said the Fed's clumsy moves "introduces a new type of risk, which is that we have a central bank in the U.S. which cannot walk and chew gum at the same time."
And another
Dennis Gartman of the Gartman Letter said he'd lost confidence in Fed Chairman Ben Bernanke.
Quite simply, the Fed is losing respect. My bet is after one year, and in less than 2 years, the new Government will appoint a new Fed Chairman. Unless Ben get's his PR act together, which is not very likely if past is any indicator.
StuckInBA