patrick.net

Troy says

Walking is fine. The Mortgage Bankers themselves walked on their DC digs.

Model your personal behavior after unsavory organizations. It's the New American Way!

Excuse me, I'm going to go cause an oil spill in the gulf. BRB.

klarek says

Model your personal behavior after unsavory organizations

It's just business.

People being able to mail the keys back keeps the lenders honest. There were truly horrific abuses of this prior to the non-recourse laws.

TechGromit says

I don’t know if I really blame the Realtors, they were just providing a service. They are no more guilty of a crime then Drug Dealers are. People would have gotten there “Fix” from someone else if there local Realtor was unwilling to provide the service. It’s the banks that were the true suppliers of the drugs, or should I say money. It’s not to say people are blameless either. They shoulder just as much fault as any junkie does. They didn’t have to get addicted. They exercised the free will in signing there life away, just as someone takes that first hit of drugs at a party.

Couldn't disagree more - Realtors were lying to people's faces day after day, telling them that real estate couldn't fall, taking them to developments that gave the Realtor an extra bonus without telling the buyer about the conflict of interest, connecting them with mortgage brokers for kickbacks, etc. These people should be in prison.

Troy says

It’s just business.

And anybody that lives their life or won't honor their debt because of this mindset is a deadbeat sociopath.

Troy says

Most of the valuation increase 2004-2005 was due to banks pumping up borrower’s buying power artificially and unsustainably via all the suicide lending products.

Actually much of the South Bay buying mentaliity, post 2000, is based on the 'notion' that the tech boom of the late 90s would 're-ignite' later into the decade with another round of stock wealth. However, after nearly 10 years we are far from a similar economic boom.

JimAtLaw says

Couldn’t disagree more - Realtors were lying to people’s faces day after day, telling them that real estate couldn’t fall, taking them to developments that gave the Realtor an extra bonus without telling the buyer about the conflict of interest, connecting them with mortgage brokers for kickbacks, etc. These people should be in prison.

And not a single move by govt to change that behavior and eliminate the abuse.

klarek says

And anybody that lives their life or won’t honor their debt

The bank gives people money in return for the security of a lien on the collateral. If the risk is too high, they should not lend so much such as to lose money if they have to reclaim the collateral.

The banks are the root cause of this bubble, they can eat the consequences.

More data: This plot shows how much the largest banks have been making per year on the interest rate spread between deposits and loans.

Presumably only some of these are mortgage loans or mortgage bond interest, but with spreads on the order of $100B/year it gives an idea of the kinds of amounts of money we're talking about.

Note especially how the spread has *increased* from ~80B at peak lending to ~115B later, when the Fed lowered short-term (meaning: deposit) interest rates.

If you had any doubt, the savers are indeed paying for the bank losses through the Zero Interest Rate Policy (ZIRP).

Troy says

The banks are the root cause of this bubble, they can eat the consequences.

You will find many people after the tech crash in 2000 moved their 'savings' into buying homes. Sure they didnt trust Wall Street, so they started to use homes as "investments".
That is why you heard during the decade people buying up 2-3 homes.

I have found many in the medical profession and some tech workers actually buying homes hand over fist during the boom. To them it was all about 'investments'.

"Safe as houses".

I'll be first to admit the collapse of 2008 caught me by surprise. IIRC I had generally assumed that we'd start seeing wage inflation, like the 1970s, to bring things back into balance, combined with a 90s-style swoon too perhaps.

What was missing from my understanding (ca 2005) was the fact that the wider economy was being "stimulated" by the trillion-dollar flows out of the new housing equity. By mid-2007 I was groking that the housing market since 2002 was essentially a ponzi, finally.

tarkin says

The system promoted buying more than you could afford with expert opinion that you could sale the house for more than what you paid in only a few years before the interest reset.

Then the "victims" were acting on pure greed. Did the "victims" wonder how the next guy could possibly afford to pay "far more?" Obviously. they did not care, so long as they could have it NOW. Same mentality that keeps easy credit stores and certain car lots in business.

Are you of the mind that "society's" pervasive fast food stores, large portion sizes and pandering sedentary entertainment (cable TV, etc) is the cause of any individual being fat? After all, how could a lay individual decide for himself when the experts at Madison Ave, Hollywood, and government food inspectors are involved?

Troy says

By mid-2007 I was groking that the housing market since 2002 was essentially a ponzi, finally

Yes, a ponzi scheme, but long before 2002. Prices should have corrected widely post 2000 to mid 1998 prices, but didnt. The ponzi scheme just keep going on for many more years between buyers and seller.

Headset, you have exactly one comment per month since April. Are you making a limited comeback? -).

Wait, if you answer that it will be two comments in November. In any case, good to see you.

Troy says

The RE sector was an immense actor in the fraud. Not only rooking people into stupid buying decisions, hooking them up with shady loan fronts, but also as active buyers.
Nearly every real estate agent worth their hairspray has/had a string of rentals they’ve acquired. Being first in line at the feeding trough has its advantages. When all lending oversight disappeared the REIC was perfectly placed to acquire as many properties as their greed compelled them to — zero-down negative-am liar loans are awesome in the cash-flow management department.
The REIC commission skim was coming not from current production but from debt issue. It was significant.
But Wall Street also was pulling in hundreds of billions of dollars. I wouldn’t be able to hazard a guess on this without some actual analysis. The REIC might have been getting 6% up front, but the back end skim was structured over a number of years.

10000% correct

thomas.wong1986 says

Troy says

By mid-2007 I was groking that the housing market since 2002 was essentially a ponzi, finally

Yes, a ponzi scheme, but long before 2002. Prices should have corrected widely post 2000 to mid 1998 prices, but didnt. The ponzi scheme just keep going on for many more years between buyers and seller.

Ponzi, Getting the buyer into a generational debt slavery so our politicians can get big pensions, Realtors can get big commissions, and bankers.....

Troy says

The banks are the root cause of this bubble, they can eat the consequences.

And personal responsibility is kicked to the curb. Not for all, just the deadbeats and those who attempt to justify their selfish behavior.

klarek says

Troy says

The banks are the root cause of this bubble, they can eat the consequences.

And personal responsibility is kicked to the curb. Not for all, just the deadbeats and those who attempt to justify their selfish behavior.

That's the cornerstone of a free market, isn't it? That everyone acts in their own self interest?

klarek says

Troy says

Walking is fine. The Mortgage Bankers themselves walked on their DC digs.

Model your personal behavior after unsavory organizations. It’s the New American Way!
Excuse me, I’m going to go cause an oil spill in the gulf. BRB.

Remember: Think Global but Act Local. Just piss in the community pool and call it done. No need to go all the way to the gulf.

They all work in unison. The bankers were the drug kingpins. The realtors were the street pushers selling on the corner. The difference is, there are some periods in time where bankers actually act with sanity. On the other hand, realtors are always peddling garbage your way.

tatupu70 says

That’s the cornerstone of a free market, isn’t it? That everyone acts in their own self interest?

No, greed isnt the cornerstone of a free market. The fact two or more parties can freely bargin for goods and services is. A free market includes .. " the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market."

Have you seen the many ways Realtors influence and impair free markets from working properly?

thomas.wong1986 says

tatupu70 says

That’s the cornerstone of a free market, isn’t it? That everyone acts in their own self interest?

No, greed isnt the cornerstone of a free market. The fact two or more parties can freely bargin for goods and services is. A free market includes .. ” the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market.”
Have you seen the many ways Realtors influence and impair free markets from working properly?

I think you may have misunderstood what I was saying. My post was referring to people walking away from their mortgages... It had nothing to do with realtors.

theoakman says

They all work in unison. The bankers were the drug kingpins. The realtors were the street pushers selling on the corner. The difference is, there are some periods in time where bankers actually act with sanity. On the other hand, realtors are always peddling garbage your way.

Yes, even today not much has changed in the behavior of realtors.

tatupu70 says

klarek says

Troy says

The banks are the root cause of this bubble, they can eat the consequences.

And personal responsibility is kicked to the curb. Not for all, just the deadbeats and those who attempt to justify their selfish behavior.

That’s the cornerstone of a free market, isn’t it? That everyone acts in their own self interest?

No. You really don't understand the merits of capitalism. At all.

The personal indifference (or satisfaction) in performing wholly selfish behavior to the detriment of everybody around you without recourse or a care in the world is a trademark of a sociopathic personality. Just because it sometimes happens in business doesn't mean it's the norm, and most certainly should not be intentionally replicated at a personal level. Any people incapable of grasping these concepts are likely sociopaths themselves.

justme says

Headset, you have exactly one comment per month since April. Are you making a limited comeback? -).

Thanks, I think I'll double my production this month.

As far as Real Estate Agents go, the best way to end the "perverse incentives" would be to avoid using Real Estate Agents at all. Admittedly, hard to do since buyers will find too many houses for sale are listed, and sellers will see too many potential buyers hooked up with agents. Unfortunately, the overwhelming majority are just not comfortable with buying or selling real estate without an Agent. Then again, I do not think anybody would have a problem with Real Estate Agents if the juice was 1% as it is in England, and not the 6% skim pulled here.

One way to attack the 6% fee would be to outlaw the MLS. That would immediately drop the listing fee to 3%. Furthermore, without an MLS, an Agency would have no inventory to show unless they recruit listings, so we may see enhanced competition for listings drive the listing fee down even further. I presume the issue with outlawing the MLS would be a decision between abolishing a collusive practice (as evidenced by the near universal 6%), or an inteference with private property rights (the MLS is a private database).

Another way to reel uin the 6% juice would be to have an open MLS:
1. Anyone, not just Agents, could list for a set fee
2. Assistance with pricing or showing would be contracted separately if needed
3. Since all agents would now be buyers agents, require that Agent commissions come from the buyer's funds at closing. That way buyers coulld see that Agent commissions are not "free."

klarek says

The personal indifference (or satisfaction) in performing wholly selfish behavior to the detriment of everybody around you without recourse or a care in the world is a trademark of a sociopathic personality. Just because it sometimes happens in business doesn’t mean it’s the norm, and most certainly should not be intentionally replicated at a personal level. Anybody people incapable of grasping these concepts are likely sociopaths themselves.

Wow--how do you really feel? I would argue that by not defaulting in these situations, homeowners are creating moral hazard for the banks. And higher home prices. Banks need to factor in the probability of home price declines into their lending decisions and therefore require higher downpayments to offset this risk. If they don't do this, then they need to be punished or else the free market isn't working.

klarek says

tatupu70 says

klarek says

Troy says

The banks are the root cause of this bubble, they can eat the consequences.

And personal responsibility is kicked to the curb. Not for all, just the deadbeats and those who attempt to justify their selfish behavior.

That’s the cornerstone of a free market, isn’t it? That everyone acts in their own self interest?

No. You really don’t understand the merits of capitalism. At all.
The personal indifference (or satisfaction) in performing wholly selfish behavior to the detriment of everybody around you without recourse or a care in the world is a trademark of a sociopathic personality. Just because it sometimes happens in business doesn’t mean it’s the norm, and most certainly should not be intentionally replicated at a personal level. Any people incapable of grasping these concepts are likely sociopaths themselves.

It's also characterized by a tendency for rationalization, e.g. "It's just business", "THEY'RE doing it; why shouldn't I?", "That's how the system works", etc.

And the winner is..... Wall Street.

http://dealbook.blogs.nytimes.com/2010/10/12/wall-st-pay-said-set-to-hit-a-record-144-billion

"Total Wall Street compensation is on pace to reach $144 billion for 2010, a record for the second consecutive year, a study by The Wall Street Journal finds ."

Why are there so many nice descriptions about Realwhores tm?

Most of them are petty short con grifters who learned that being a Realwhore tm is a legal way to steal and pillage. In the 80's, thousands of white collar S&L banking criminals were arrested and incarcerated by federal and state criminal investigators for less evil.

Today, its called business as usual for the banking and Real estate sector. Where are all the perp walks? The only activity we see, are the banksters cashing their billion dollar US government handouts, so they can wash rinse and repeat for QE 3 and QE 4. The fed hasn't even finished giving the banksters FREE money from QE2. I wonder which bank Treasury Secretary Geithner will work for next year? He has done a great job of dropping Trillions on his criminal banker buddies. I wager he will leave Treasury and start directing at Goldman-Sachs...or will he play musical chairs with "Helicopter Ben" so the Geithner can continue destroying our economy, with Bernie running to Goldman-Sachs before the music stops. I wonder why Paulson is so quiet. I expect more financial arson from "Hank the snake" (thats what his closest friends call him).

http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/12/357911/index.htm