patrick.net

For those seeking "Jum-lo" (I wouldn't hold my breath) The article I saw on bankrate described all kinds of rules, regulations and stipulations. Looks like they finally figured out the whole equity-stripping/3rd income thing.

Sorry guys, OT, but this was a funny Freudian slip:

http://money.cnn.com/2008/03/20/news/economy/economic_indicators/index.htm?postversion=2008032011

The National Bureau of Economic Recession said the nation's economy went into recession from March through November 2001.

> God save us all.

Indeed. I think things will much worse before it gets any better.

I read an article yesterday that households are actually beginning to do something called "budgeting".

Racist losers (like the OB) will come out of the woodwork and start blaming "dem damn forreiners".

The Federal reserve's myth of infallibility will take a huge hit but eventually everything bad will get blamed on the "free market."

HelloKitty Says:
so what IS deleveraging?

In simple terms, it is paying off debt.

It also includes the phenomenon of getting out of investments which were made with borrowed assets. In the happy case, de-levering is fairly orderly, with profits from the investments being sufficient to cover the debt-service. At times like now, on the other hand, some investors are forced into de-levering when both the investment and the collateral for the debt are depressed - so liquidating either one is a losing proposition.

The other problem now is that when I-banks are levered at 32:1 or greater, trying to de-lever in a hurry is painful and can force the liquidation of _other_ unrelated assets to raise money. So the impact can be unpredictable because even "safe" asset classes could be hit with fire-sales.

About a year or more ago, there was an article on one of Patrick.net's links that described how this deleveraging might look - an increasingly frantic exit from risky, speculative positions, hedge-fund blow-ups, followed by counterparty default (insurers), with contagion spreading to bigger financial institutions, flight to treasury, unwinding the carry trade, precipitous drop in USD against Yen and commodities, liquidation of precious metals and other safe hedges, default on sovereign debt etc. - so far, it seems to be tracking that script.

BS pulled the trigger first and the gun jammed.

LOL ! Not good at a Mexican stand-off. Not good.

Racist losers (like the OB) will come out of the woodwork and start blaming “dem damn forreiners”.

Don't let yourself be bothered by their comments. You should know better.

HK :

Thanks a lot for the Wells Fargo link. You made my day. I am also very curious to see what effect the new regulation has on the interest rates. I am speculating that there will be an additional "fee" of some sort to offset the higher loan limit. Or the rates for all amounts (including formerly conforming) will raise due to all of them bundled together.

And no matter what. Down payment sizes will keep increasing. About time.

Don't. Feed. The. Troll.

Frugal is the new black.

People can buy items at a whole seller and then divide amongst themselves. For example Costco sells many things in multi-packs. Like the tea bags. They are 3 packs bundled together, each having 100+ tea bags. Frugal shoppers can buy this multi-pack and take one for each.

I am pretty sure it happens at a very very small scale and among friends. But maybe there is a Web2.0 startup idea here - like FrugaList (TM) - a Craigslist like version. People can start a pool for sharing a multi-pack,others can join it etc. A lot of advertising revenue might be generated.

Maybe someone else has already thought of this.

there will be an additional “fee” of some sort to offset the higher loan limit.

And these fees will be added to the down payment, not rolled into the loan.

StuckInBA said:
And no matter what. Down payment sizes will keep increasing. About time.

A couple of months ago, I posted about someone whose financing failed despite pre-approval, with the bank asking for a lot more money down for an "old" jumbo (not even the new super-duper-jumbo). Back then it was an anecdote, now it is the norm. About f*king time.

Frugal shoppers can buy this multi-pack and take one for each.

Interesting. You are correct on the upcoming bulk buy/coupon sharing strategies. Funny how people can come up with inventive ways to save relatively small amounts on groceries and gas, but never considered big ways to save money, such as buying the minivan over the SUV or the 2,000 sqft house over the 3,500 sqft McMansion.

Peter P and SP, I see what you mean and I agree. Which is why I don't respond anymore.

But sometimes I am not sure if everyone else on the thread is (a) ignoring the troll or (b) tacitly agreeing with the troll. Do you know what I mean?

Anyway, back to real issues.

I think a return to frugality will be a good thing for Americans.

When people stop believing in the nonsense that consumption drives this country's prosperity, it will be even better.

"actually beginning to do something called "budgeting" LOL

How long can this go on!? Why I won't hear of it!

But sometimes I am not sure if everyone else on the thread is (a) ignoring the troll or (b) tacitly agreeing with the troll. Do you know what I mean?

Have faith. ;)

I think a return to frugality will be a good thing for Americans.

Not necessarily. It will hurt corporations and that may in turn harm Americans.

"I think a return to frugality will be a good thing for Americans."

I don't know about any of you, but my grandparents were in that group that were just striking out on their own, about the time the great depression hit. They were very frugal and tried to waste as little as possible, the rest of their lives. My grandmother's mantra was that oft repeated "save for a rainy day" scenario. My parents, the first wave of Boomers, were also frugal but it seemed more like "cheap" to me.

Now I wonder if my teenager's generation is about to experience what my grandparents did at that age, and if they will spend thier lives much the same.

At the very least, we are leaving them quite a mess to figure out.

Back then it was an anecdote, now it is the norm. About f*king time.

No kidding. Down-payments, full doc/income verfication and higher rates +points for high leverage was all S.O.P. pre-bubble --a mere 7-8 years ago. And it was S.O.P. for the vast majority of mortgage-lending history. But that fact won't stop FBs from whining, stamping their feet and throwing tantrums 'cuz they actually gotta *qualify* for a million-dollar loan now.

Now I wonder if my teenager’s generation is about to experience what my grandparents did at that age, and if they will spend thier lives much the same.

Of course not, they were born under different stars. The collective personality of a generation decides the reaction of people in economic events.

Funny how people can come up with inventive ways to save relatively small amounts on groceries and gas, but never considered big ways to save money

Oh, tell me about it ! I am surrounded by people who will not order from Pizza Hut without a coupon, but have purchased sh1tboxes in the Fortress for an obscene amount. "Penny-wise, pound-foolish" should be engraved on the Cupertino town hall.

“Penny-wise, pound-foolish” should be engraved on the Cupertino town hall.

Perhaps they are saving the pennies for the copper.

Of course not... The collective personality of a generation decides the reaction of people in economic events.

Well in that case, lets hope they grow out of their "cheat code" mentality and choose learning from the past over being entertained and accommodated in every way. Entitlement may have a drastically different meaning in 20 years.

But then, who am I kidding right?

Perhaps they are saving the pennies for the copper.

I just had a coworker suggest this strategy to me, recently. Are pennies really worth more for the physical metal in them, than their face value?

I watched Kudlow the socialist yesterday and he had a Senator on the air that supports a broad bailout of the FBers.

This is no different than how my brothers and I played monopoly. When one of us got into a bind we would “rob” the bank and split the money 3 ways. The insolvent guy could pay his bills and the other 2 got rich. It could only happen once during the game because we could not print more money.

I made a bet and lost. I bet that the rules to the game would not change. I am going to lose that bet and end up with money that will buy less than it did before.

I heard that US is planning to mint pennies out of some other metals soon. Which tells me that yes, pennies cost more to make than they are worth.

No one cares about pennies already and with the purchasing power of the dollar declining, people will care less in the future.

I say get rid of all coins less than a dollar.

Except for the quarter, of course. Renters need it for laundry :)

Are pennies really worth more for the physical metal in them, than their face value?

Possibly. I am not sure about the legal issues though.

Well in that case, lets hope they grow out of their “cheat code” mentality and choose learning from the past over being entertained and accommodated in every way. Entitlement may have a drastically different meaning in 20 years.

The collective personality is pretty much set in stone.

I say get rid of all coins less than a dollar.

Silver dollar?

Well, at least we know that pennies are copper-backed. :)

Pennies haven't been made of copper (actually bronze) for many years. They presently are a zinc slug which is copper plated. Your government at work. :)

People can buy items at a whole seller and then divide amongst themselves. For example Costco sells many things in multi-packs. Like the tea bags. They are 3 packs bundled together, each having 100+ tea bags. Frugal shoppers can buy this multi-pack and take one for each.
I've been working up a co-op among my neighbors here since I'm single and can't use up some of those "bulk" items. First up was 50 lb bag of really good onions for $4 - I divided these in 4 equal parts and sold off three for $1 each. Also got prime 100% sesame oil for $14 a gallon, which got divided into clean wine bottles.

Pennies haven’t been made of copper (actually bronze) for many years. They presently are a zinc slug which is copper plated. Your government at work.

I was tricked!

Also got prime 100% sesame oil for $14 a gallon, which got divided into clean wine bottles.

$14 a gallon? Is it brown gold or what? :)

www.usmint.gov/about_the_mint/fun_facts/index.cfm?flash=yes&action=fun_facts2

"The alloy remained 95 percent copper and 5 percent zinc until 1982, when the composition was changed to 97.5 percent zinc and 2.5 percent copper (copper-plated zinc). "

Have you ever bought real sesame oil for cooking? It's more like $5 for a tiny bottle in the grocery stores.

It’s more like $5 for a tiny bottle in the grocery stores.

I know... just forgot how "affordable" gasoline is. ;)

Except for the quarter, of course. Renters need it for laundry :)

Some owners too.

Speaking of interest rates - I heard a fun argument yesterday: Bank vs Mortgage Broker.

Person 1: Banks are the best sources to get mortgages. Mortgage Brokers are shady and tack on lots of fees

Person 2: But Mortgage Brokers will actually try to get you a better rate. That's what you're paying them to do. Banks don't give a sh*t.

Person 1: Neither do mortgage brokers. YSP!

Person 2: Does it matter? If you get a crappy interest rate from a bank, you're still paying as much.

Eventually it went into a stalemate. Talk about a no win argument.

Rental scum! Go buy a boomer's house so they can retire comfortably outside the Fortress someplace. ;)

Headset said:
Funny how people can come up with inventive ways to save relatively small amounts on groceries and gas, but never considered big ways to save money

Case in point - the executive admin at my previous job traded in her RAV4 and got a Lincoln Navigaturd. When I asked why, one of her reasons was that she was splitting a Costco membership with her two sisters, so she needed the extra space for groceries. So they _each_ got a bigger SUV. Yeah, all three of them.

sriramgopalan Says:
I heard that US is planning to mint pennies out of some other metals soon.

Plastic pennies? Made in China, of course - so at least they will have some lead... :-)

Its funny when we throw around terms like 7-8 years ago.

As near as I can tell, the last rational year in RE was 1998, 10 years ago. 10. By 1999, WOW, what a difference.

Then, the wheels totally came off the bus in 2003 when Mozilla led the industry the rest of the way into the dumper by killing underwriting.

For those who wish to use my same models, I do this:

Use 1997 as a basis year. Rather than the national long-terms trend of house appreciation tracking to real inflation, I use the Bay Area historic average of 4.5% appreciation per year (over the last 40 years). This allows a projection from 1997 so that prices today can be regressed to the mean over any time span.

If you had asked that Case Schiller would show a San Francisco YOY drop of 10.8% I would not have belived it. But then, San Diego had a 15% drop. This should help bound the speed of the decline with the caveat that things can accelerate or decelerate the regression. Right now the massive monetary deflation (credit crunch) has is acting as an accelaterator. as near as I can tell, the easy money fed is being offset by everyone's inflationary expectatons so that higer mortgage rates are, in fact, modestly accelrating price declines.

Soooo, shave 5% from the summer of 06 to 07, 10% to '08, 10% to '09 and 10% to 2010 and many BA cities will be fully regressed to the mean. This roughly corresponds to 2003 prices in 2010 WITHOUT adjusting the dollars for inflation.

The problem with the "penny wise, pound foolish" crowd is that they really don't commit themselves to a frugal lifestyle.

I've read Jeff Yeager's new book The Ultimate Cheapstake's Road Map to True Riches, and it was a disappointment to me. www.ultimatecheapskate.com I already did all that stuff. Fortunately I didn't spend money on his book: my sister gave me a copy. :)

Jeff really tackles the PWPF problem. His advice: buy a house early and commit to being happy living there. Pay it off ASAP. He's in Maryland so the facts are different for the Bay Aryans.