patrick.net

GC,

I think if your Realtor works hard for you and gets the best price (for you) then he's earned his fee. I'd rather pay the standard fee to someone willing to do hard work than a discount fee to someone who is going to try to unload the condo at whatever price so they can quickly move on to the next deal.

I read in the WSJ today that Fremont and a few other firms will not be offering piggyback mortgages anymore because the secondary market for them has dried up. This is anticipated to put quite a crimp in the sub-prime market.

Also, the girl in my office who is buying a place now is currently living in low income housing. Ugh, I'm just so annoyed. Everyone here is congratulating her for buying (at 7x her combined income).

Ok, sorry, rant over.

Thanks DinOr. I don't fully understand why the value of this (or other) indexes would not be publicly available. Why are they different than a stock or mutual fund? (I'm not complaining per se, just trying to understand why).

spike66 - we vaccinate our dog for lepto already, so he should be safe. I am going to be chasing our landlord to sort this anyway. Unfortunately he's out of town at the minute.

GC,

I saw my Realtor friend sell two neighbors' places. She went through the houses (which were both pristine) with a fine toothed comb. She had them do tiny repairs nobody would probably notice, but cumutively might have made the place look a little less amazing. She was inspecting all the work the handymen/painters did, and had one neighbor, who had antiques, remove them and stage the place. I asked her why, they were gorgeous 18th century. She said that believe it or not Pottery Barn or Restoration Hardware is the look that sells in the $1-$5 million market. So, she spent a bit of time making sure that the places looked as amazing as they could.

Then, she brought over a lot of clients the first day that the places were ready to sell. She doesn't like open houses, but will have them if she has to. She said she's prefer to keep a list of Realtors/clients and what people have told her they are looking for and then deal directly with them instead of having open houses with people just milling through.

I guess I would look for someone with an eye for detail, who has done a lot of sales in your area, and isn't a lazy butt just reading magazines at open houses (my utter Realtor pet peeve. I'm not giving you 3% of ____ for reading the new Vogue). The attention to detail will probably result in a slightly better sale price, which translates into a relatively small increase for the Realtor, but a larger amount for you.

CB,

Sorry, I was just fresh out of analogies! :(

I "could" have been talking about the white guy in NC that was "visiting his parents" at the time of his wife's bludgeoning?

It's just that indices are supposed to give us some idea of what to anticipate. ABX.he didn't tank until well after all of this was made public. We just may bring StuckinBA over to the PPT yet!

The rats must like a nice warm engine bay in winter time... They are garage rats, maybe if you poison them in the garage, they will die in there. Or does the garage have plasterboard walls too?

Aren't there drowning traps also? hmmmm

If you think you've got it bad, have a look at this:
http://www.youtube.com/watch?v=2LMxhc8WwGU
(US version to reduce culture shock...)

The three important urban rodents are Norway rats, roof rats and house mice. The Norway rat, also called the brown, wharf or sewer rat, can be found virtually everywhere humans live. They are attracted to areas that provide a wealth of hiding places and easy access to food. The roof rat, an agile climber, is more at home in the city, with its wires and tall buildings.

SF Environment: Rats and Mice

Thanks Portmgr. So are you confirming that, for example, the Vanguard Total Bond Fund (VBMFX) has no sub-prime as part of its portfolio? I've copied the breakdown of the fund below...

Distribution By Issuer (% of fund) as of 12/31/2006:
Asset-Backed 1.3%
Commercial Mortgage-Backed 5.0%
Finance 8.4%
Foreign 2.8%
Government Mortgage-Backed 35.1%
Industrial 9.0%
Other 0.2%
Treasury/Agency 36.3%
Utilities 1.9%
Total 100.0%

Distribution By Credit Quality* (% of fund) as of 12/31/2006:
Aaa 79.4%
Aa 4.8%
A 8.3%
Baa 7.4%

Shoot, it got cut off:

Distribution By Credit Quality* (% of fund) as of 12/31/2006
Aaa 79.4%
Aa 4.8%
A 8.3%
Baa 7.4%

I suck. "Less than" signs may be the problem...

Distribution By Credit Quality* (% of fund) as of 12/31/2006
Aaa 79.4%
Aa 4.8%
A 8.3%
Baa 7.4%
less than Baa 0.1%
Total 100.0%

If you think you’ve got it bad, have a look at this:
http://www.youtube.com/watch?v=2LMxhc8WwGU
(US version to reduce culture shock…)

Interesting vid. So what breed of cat do you need to catch those critters?

The rats must like a nice warm engine bay in winter time… They are garage rats, maybe if you poison them in the garage, they will die in there. Or does the garage have plasterboard walls too?

If you think you’ve got it bad, have a look at this:
http://www.youtube.com/watch?v=2LMxhc8WwGU
(US version to reduce culture shock…)

I'm not expert on rats, but wouldn't they go back to their nest before they die. I would think it would take a while before it killed them.

What if you bred a Monty Python killer rabbit with a Flemish Giant, you'll get something deadly to, ergh, rats.

How do you BA homeowners deal with cockroaches and termites?

How do you BA homeowners deal with cockroaches and termites?

Cockroaches are generally smaller in the Bay Area. These are dark creatures nonetheless.

Rats are fine. More toys for my cats. LOL

Portmgr,

O.K, O.K so you know all about MBS!

Right now the BA is sinking and suffering from an infestation of mutant rats! Uh... so can you help us out w/that or what?

Just kidding! :) Thanks and post often!

Mutant rats? We need mutant cats to counter!

Giant killer rabbits are obviously the way to go...

Giant killer rabbits are obviously the way to go…

How about a Were-rabbit?

How about a Were-rabbit?

Won't you just make a bunch of Were-rats?

The rats - if poisoned - would go to their nest to die - but where is that exactly? The walls, under the house or in the roof? And yes our garage does have plaster board.

Snakes, might work - but I hate snakes!

You should be nice to your landlords.

but I hate snakes!

I love snake soup.

I like snakes, both as food and as garden critters...as long as they're not capable of killing me. They're wonderful for all kinds of garden rodent problems.

Snakes are delicious deep fried, like very bony frog.

Aren't there good rat catching dog breed? It seems to me that large rats are about the size of foxes, so wouldn't a fox hound be a good ratter?

Aren’t there good rat catching dog breed?

Maine Coons. But they are cats.

Boston Transplant,

Here's a article from Grant's Interest Rate Observer (from the free section of the homepage). It's a pretty thorough discussion of CDO's etc.

BTW, Grant's is a fantastic (albeit expensive) publication

http://tinyurl.com/2tswdx

Enjoy!

Terriers are known for being Houdini's and are master diggers (under fences), I wouldn't want to chase after them all the time, it's bad enough when our dog decides to jump the fence (6 foot) - he even uses the trash can to help him over!

Yes - we have since moved the trash cans away from the fence

Well, even if someone has good credit - if they have overextend themselves getting into their dream home, then they will (probably) kill themselves trying to make the payments and avoid loosing the house, but in the end, they still won't be able to help themselves.

By the way, our dog has been known to catch gophers and kill them (accidentally) and he is often out in the garage, but the rats tend to run round the rafters and have probably learnt how to avoid our dog.

palo alto renter - that description of loans they are not doing anymore, sounds like they won't have any custom now! Except maybe those that got an ARM 2 years ago and need to refinance.

Yep we are in CA, but in Mountain View, so we do not have as many rights as some other towns do.

Boston Transplant :

Thanks a MILLION for the link to Grants' article ! This was a very informative article. If anyone is willing to invest time - it requires a slow reading (at least for me, YMMV) - then it is very much worth reading.

And that article at Rich Toscano's site is good too.

palo alto renter,

Thanks for Rich Toscano's link. Well worth the read. His buddy Ramsey knows his stuff.

Ha Ha,

Partick is sounding........ confident these days! And not without good reason! There's a definite change in his tone from the first (WSJ?) article. One aspect that doesn't get near enough air time is that for someone that bought at the peak, they are only about 16 payments ahead of us. So only 344 payments to go! It's a marathon, not a sprint.

palo alto renter Says:

> I especially appreciate the visibility into how subprime
> might ripple throughout the rest of the market.

Since we are going to see more that subprime loans go bad we will soon see in increase in the “credit spreads” and “servicing spreads” on all loans. Even if “interest rates” stay the same it is going to cost a lot more for most people to re-fi.

When someone goes down to get a 6.25% conforming 30 year loan the “rate stack” is basically (leaving out a lot of tiny bps add ons to keep things simple):
4.83% “Risk Free Rate” aka the Yield on the 30yr Treasure
1.32% “Credit Spread” aka “Risk Premium
0.10% “Servicing Spread” aka “Servicing Strip”
6.25%

When defaults increase the returns need to increase to get any hedge fund/high risk guys to buy the higher risk below investment grade bonds and the servicers start demanding more since they are doing workouts and foreclosures so a year from now even if the 30 yr T stays the same it may cost another 1.00% to re-fin that neg am IO Voodo Loan (assuming your broker can pay an appraiser to “hit the value”).

I know someone with a 4.5% $1mm IO condo loan that adjusts and starts to amortize in 2007. The jump from 4.5% IO to 7.25% 30yr am is just over $3K a month (about $37K a year). Since everyone in the Bay area does not make a couple HaHas things will get ugly (again increasing credit spreads and servicing spreads starting the “death spiral” that I personally watched in S. Cal from 1991-1994)…

FAB,

Thanks for the post. This thread has brought out a lot of good information on how mortgage financing works. I am waiting for the day when the mortgage rates start creeping up.

Given Ben's testimony today, is there any doubt that Fed is looking for just ONE excuse to start dropping the rates ? Since he said inflation pressures are easing only 2 days before CPI is announced, I would be shocked if CPI doesn't drop.

How would that play out ? The drop in risk free rates might just compensate the increase in the spreads. Will that be enough to avert the death spiral ?