patrick.net

New Century has 2 class actions suits against them, no wonder!

I thought they had 5 against them

I thought they had 5 against them

Could be, do you have a link?

HARM Says:

> As long as we’ve been discussing toxic loans here,
> I figured we’d pretty much covered nearly every
> possible minefield with option-ARMs.
> there appears to be a catch: regardless of whatever
> pick-a-payment “fixed” period their loan has, once
> the FB hits the maximum ceiling allowed for
> negative equity accumulation

The goal of the REIC is to make as much as possible NOW, so they don’t care if pick-your-payment option-ARM people crash and burn.

Let’s look at two examples:

#1 Responsible Bob makes $50K and wants to buy a $500K home with the $100K he has saved over the years. Responsible Bob demands a fixed rate fully am loan and decided to wait until he can save more money or home prices go down. The Realtor, Mortgage Broker Appraiser and Banker make nothing so they tell him that he will be renting forever and needs to buy now since real estate always goes up.

#2 Crazy Casey has no job but just charged $10K on his credit card to go to a seminar on how to get rich in Real Estate. After learning at the seminar that real estate always goes up he calls a Realtor who finds him a nice $500K home that he buys for $550K (getting $50K cash back) with a no doc stated income pick your payment loan. The Realtor makes $33K on the deal, the Mortgage Broker makes $10K on the deal the Appraiser makes $1K (all in $20 bills) on the deal and the Banker makes $5K up front plus a end of year bonus of $500 since the Bank “earned” 10% interest even though Crazy Casey only made one payment since he blew the $50 K on Jamba Juice and more seminars on how to get rich.

The REIC makes a ton of money every time a Crazy Casey buys a home and the sooner he defaults and the home is foreclosed on the sooner they can do it again and make even more money…

Here is the question I have been pondering about NEW (and LEND, FMT etc). Is there still time to make money ?

There has been tremendous bottom fishing going on for these stocks. All are in free fall. There will be a sucker rally. When that happens, it might be a good time to buy a put.

There was always enough time to make money on downward path WCOM and likes. It's risky, but if these MAY be going the way of BK. It will be pure speculation as not even the company know what's it asset - liability situation is.

*Please, this is anything but investment advice.

Check out this story about a new century borrower who isn't even behind on payments getting harassed by the company. New century seems to be getting pretty stressed out!

FAB

The goal of the REIC is to make as much as possible NOW, so they don’t care if pick-your-payment option-ARM people crash and burn.

Oh the wonders of MBS, CDO etc ! The real creditors are so far removed from the whole mess that their mathematical models don't show what we can decide in 1 nanosec in real life. Don't give a loan of 1M to someone who makes 50K per year. How many super computers do you need to figure that out ?

I hope so - but I think many in the BA may be able to hang on for a while by hollowing out the rest of their life.

Yes, I agree. I do not envision any of my friends needing to foreclose their home. I certainly hope they don't have to. These are eburbed's favorite people ;-) They will stop buying everything but groceries, they will stop their $15 Netflix service, they will sell their minivan and buy an older car - anything, but lose their home. And this is the worst case scenario. Most would feel some pinch - but that's it.

The market is just stalled here in "real BA". Across the bridges, the prices are down YOY. So sooner or later, people who do not fit the above description - and eburbed, be assured there are, just not as many as other parts of the country - will need to refinance and won't be able to because credit is not as easily available, house value has gone down and you know the drill.

Isn't 2008 the real year when the reset hits en masse ?

Netflix has plans as low as $4.99 now. It looks like they are really hurting for business!

Here is an interesting story of a soon to be FB as told by a realtor.

He also has this post:

http://nyhouses4sale.typepad.com/ny_houses_4_sale/2007/02/baby_steps_buyi.html

Interesting article this morning about young buyers. The article claims that the Gen Y are not afraid to buy. But not just buying with the "typical" 20% down, they are financing the entire purchase. The younger generation has done a total 180 turn from what I remember my grandparents telling me "If you can't pay cash, then don't buy it". My generation (mid-late 30's) are more of the "some debt is ok" mentality.

So, the financing is critical for them.

Translation: It's only going to go up. Someone should reply with the tent cities and honda speech.

Yeah but that is 1 DVD at a time limit 2 per month, I just get the new releases from ON-DEMAND when I feel like it

craigslist seems to be down, anyone else experiencing this?

Yeah but that is 1 DVD at a time limit 2 per month, I just get the new releases from ON-DEMAND when I feel like it

Wow! You mean there are people that watch more than 2 movies a month?

I enjoy the 3 at a time for about $20. I turn them around pretty fast, so I watch at least 12 movies a month for this price. Netflix is certainly slower than it was at the begining. The term they use is throttling. After they lost the class action law suit they had to disclose that they intentionaly slow down the turn around for the accounts that turn over too many movies. Years ago I would drop off the movie at the main post office on my way to work and the next movie would be at my house the next day! That does not happen anymore but I still like the depth of the Netflix library so I don't see myself cancelling anytime soon,

Wow! You mean there are people that watch more than 2 movies a month?

:-)

justme :

The Jan stats do not show what happened in Jan. I think Jan wasn't as bad for some areas - at least Cupertino, because I know there were bidding wars and I know the people who bought.

I think it's normal. I wrote about this in last thread. People who have been waiting for a long time, can be scared about the spring bounce and there is still enough funny money available.

Catching a falling knife is not unusual pattern. Look, even that NEW which has a big chance of being BK has 20M share purchased today - just because it was 50% lower than Wed.

As has been said many times, without these there won't be lower comps.

So Countrywide warns of rising defaults now - what next?

Claire:

Do you have a link ?

theotherside:

“Whatever shocks are ahead,” says del Missier, “the markets are better positioned to deal with them than they’ve ever been.”

Wow. :-) It's ironic that this is posted today. This article is a gem of "cluelessness". It talks about cheap money without mentioning anything about the currency manipulation and uncontrolled credit expansion. If anyone is interested in an easy primer, please check out the current post on Mish's blog for a hilarious take on this.

I will include additional quotes, far more interesting than you included.

And derivatives let financial institutions and traders manage their risks with mind-blowing precision.
...
What's more, many are depending on instruments that are highly leveraged, numbingly complex, and untested by a market downturn. Then again, derivatives might cushion the blow when the reckoning comes.

Derivatives are going to save the world. Yeah, right !

HARM, cuddle, I too am Wesley Crusher

Bummer, I'm Data?!!##!@

I don't like personality tests though, their choices never encompass my entire personality.

That's why I hate Crazy Casey so much, he spouts his Riggs result (probably something he took in middle school) as though it makes out his entire destiny.

StuckinBA - doesn't say much

http://news.yahoo.com/s/nm/20070210/bs_nm/markets_usa_stocks_dc;_ylt=AoX9ZVKu0lm5k7XyHx1frM2573QA

Bummer, I’m Data?!!##!@

My wife used to think I was Data. Then I became Harry Potter. :(

Soon I will be Barney.

It serves me right for misspelling Ford Prefect.

Here you go, 2 - 10 by 10 1 bedroom cells in the dungeon for $550/month (price negotiable if you don't mind the rats). Help a fellow FB save his house!

Peter, I just realized you linked to the sci-fi/fantasy character thingy on my blog. Too funny.

SQT, I love your blog. :) Keep up the good work. Let us know if you want to inflate some thread bubbles there.

allah - for $500 a month, it's hard to find a room to rent in the Bay Area. And you can be sure it won't have its own entrance.

Here's the first one that popped up that's actually in the Bay Area:

http://sfbay.craigslist.org/sby/roo/276562722.html

$500 Share 2 bedroom duplex *** female perfered (san jose west)

Hi i looking to share two bedroom one bathroom duplex in west san jose ,located by sjcc ,this house comes with a very friendly pit bull ,Im a single dad and have my daughter part time so this is why i perfer a women over a man (safty)Utilities,basic cable ,wi-fi internet included ,$500 deposit

Uh yeah... that's not going to be awkward at all.

Why so many people think that the "1% fixed rate" will never end:

http://youtube.com/watch?v=fAYnc_-ddlw

"Derivatives are going to save the world. Yeah right !"

SiBA, your comments (along w/Mish's predictably sober view of reality) are the absolute correct context for that hastily put together article. Btw (and not to plug) but Mish had an announcement that he is joining www.sitkapacific.com (for all you *non-momentum players!) :)

Given his take on the economy I'm confident he'll do quite well. When appropriate..... I SAID (when appropriate!) throw some business at this guy. Anybody with that much passion for the truth has got to be a pretty stand up guy. Seattle could use some sobering up.

"perfer a women over a man"

WomEn? Freudian slip if ever.....

Perhaps you will find a school marm type that can teach to freaking spell in between having torrid sex w/her/her friends?

WAFL!!!

SQT,

Galadriel? :(

Can I try again? (I promise not to give a rip about anyone or any thing) if it would get me a cooler name. I was thinking....... Sledge Riprock?

Any MST3K fans out there?

“perfer a women over a man”

Does he mean 'prefer' or 'pervert'?

allah,

Pervert.

A few comments back, someone said that they knew of someone with a 4 1/4% FRM. Let me just say that I find that unlikely. What is their total APR? They must have paid a bunch of points or something to get that rate.

In any case though, that is a very good move.

I am much prouder of my 5 1/4% 30 year FRM than the price I paid for my duplex. Though it has appreciated quite a bit since 2003, I cannot convince my wife to unload it, or even half of it, since you guys have me convinced that it is unlikely to appreciate much over the next 20 years.

She works in finance and I showed her the bubblizer, so there is hope...

Jimbo,

That was probably me. I used to work with a guy that claimed whatever the *best possible rate was...... well that was what he got. Then again he'd been in the front row of Woodstock when Jimi Hendrix played the Star Spangled Banner. (rolls eyes into back of head) We figured out (given the range of ages he'd given over the years) that he would've been between 11 and 15 at the time.

Then, as now, it comes under "Whatever dude".

Heh, okay then. I never realized that loans ever even got that cheap.

Maaaaybe a 15 year, but even that was not really ever much lower than 4 3/4%. And that is not a jumbo, which is what you need here in the BA.

I do know a guy who got a 15 year FRM at 4 5/8% in Albequerque, but that was lowest one I have had from a reliable source. And I think he paid a point, so his real rate is a bit higher.

Riggs, or Myer-Briggs?

Jimbo,

It's just part of the frustration that comes w/this whole package. My buddies that cold call for mortgages are forever telling me about loanowners that "have a growing family tree" (as per FAB's youtube link) not being able to distinguish between fixed and teaser rates.

"Oh, my loan is at ____% ! Can you BEAT THAT!"

Uh.... lady, you're SURE that's "fixed"?

Pause..... Oh I'm SURE!

Pffft. Whatever dudette.

Jimbo Says:

> A few comments back, someone said that they
> knew of someone with a 4 1/4% FRM. Let me
> just say that I find that unlikely. What is their total
> APR? They must have paid a bunch of points or
> something to get that rate.

Not a lot of people have FRMs under 5%, but quite a few people that locked their rates between March and July 2003 when rates dropped like a rock did get rates that low. The low rates are what helped so many FBs get in to homes. The yield on the 10 year treasury almost went below 3% in June 2003 and LIBOR was below 2% for most of 2002-04. P.S. I locked the rate on a 10 year fixed rate apartment loan in the summer of 2003 with all in rate (just) under 4.25%...

Somebody wrote on here why they "hate (somebody) so much".

Panic buying to "get in before (prices, loan rates) go up" is a (self-destructive) emotional reaction.

So is hate.