patrick.net

Check this out, here is a real life example of lending standards getting tightened.

i did not know that mid-way through the process, the lender had the right to change what kind of financing they were going to offer!!!!!!!!

this throws a BIG monkey wrench into our ability to buy our house!!!!!!!!!!!

Seems they don't even understand why....typical FB! :lol:

SFWoman,

Oh, I wouldn't doubt your husband's assessment of Angelo. These "big picture" guys can afford to be gracious. They have plenty of little people sweating the small stuff AND a "hit the numbers" sales force that allow them to sell 140 mil. of their own stock. A lot of these guys are "real nice" (when you don't work for them!) :)

Malcom,

I agree, the bubble popped in late 2004 to mid 2005. Absotively... posolutely! True, depending on your definition (and locale) it may have worked out a little differently but outside of a few rare instances everything purchased after that is really on the fence.

So many people were so confident that everything would do well all they focused on was "locking in the BEST possible rate". (Yeah, the guy's a 100K underwater) but check out that great rate of his!

?

Bail-out... + ... billions... = ... BUY!

Here's an idea. I like the idea of a petition, but they are very hard to circulate. Maybe Patrick can help. We can have a contest to design a standard postcard or individual petition form. Maybe they can be posted somewhere online, maybe here, and we can vote on the best one. Then we set it up as a downloaded/printable document. People can then just put their name and address on it, and mail it in to Congress. The address can be preprinted as part of the form, or we can get really creative, and link the correct representative office to that field on the form by having the person enter their zipcode. If that is too much work we just direct them to the easiest place to find the proper address to send it in.

The form would have a simple message like, 'as a citizen of the United States, I wish to petition my representatives to restrain themselves on legislation to use taxpayer money to bail out borrowers who default on their home loans."

Then a place to sign date, a print name and address.

Then we email everyone we know to download the form and mail it in. We have a large enough community here that we could get critical mass pretty easily.

The question is can congress craft a bail-out package in time for the big spring bounce?

I'm buying in anticipation 'cause once they get that baby passed all hell is gonna break loose! FB's flush with freshly minted post bubble bail-out bucks are going to want to trade up creating bidding wars!

The gub'ment will likely use the Zillow "make me move" pricing model and wire the cash directly to FB's account! Man... you guys are such a bunch of suckers! :)

You're ABSOLUTELY right!

With a tax payer funded bail-out shoring up a ridiculously overpriced market we'll only get this one shot! Man, you called this right on the money!

PAR,

You asked a while back about when the Chronicle will post a FB sob story? Well, at least for now here's one from CNN:

http://money.cnn.com/2007/03/14/magazines/fortune/sanon.fortune/index.htm?postversion=2007031410

$1,300...$2,000...there goes your mortgage

When they bought their home in 2004, the Sanons had a feeling they were gettting in over their heads - they were right.

And of course, the Merc has to soothe its readership with this:

http://www.mercurynews.com/ci_5432047

Valley may be insulated from mortgage morass
By Sue McAllister
Mercury News
Article Launched: 03/14/2007 01:39:22 AM PDT

More people nationwide are falling behind on their mortgage payments, especially those with poor credit ratings who bought their homes using subprime loans, and it's reverberating throughout the U.S. economy.
Local economists, however, say the fallout for the Bay Area housing market won't be severe.

Their main argument against a severe effect of the subprime meltdown on the Bay Area is that there are fewer subprimes loans here. Too bad they fail to realize the subprime segment is really just the tip of the iceberg, the canary in the coal mine, or whatever metaphor you choose. Let's see what happens as the Alt-A's and all the rest of the "exotic" loans continue to reset...

I guess the Merc hasn't seen the Map of Misery.

http://biz.yahoo.com/weekend/mortgagepain_3.html

But no worries, "it's different here"...

skibum,

I've never worked in underwriting but I fail to see a great deal of difference between sub and Alt? One discloses the fact that he/she/they have poor credit and the other simply skips over that part of the application.

Local economists, however, say the fallout for the Bay Area housing market won’t be severe.

Hmm...what about those mortgage resets due this year? I'm sure a few local buyers used those. I seem to recall something like 50% of recent SFBay morts were in that category. Does anyone have the actual stats?

Regarding the rise in foreclosures, Santa Clara county isn't immune, if these stats are any indication: http://tinyurl.com/29b9nz

Source: foreclosures.com, which noted: "More than 25,000 homes were in various stages of foreclosure last month, compared to 8,753 in January 2006. The statistics include notices of default, auctions, and homes repossessed by the lender."

The credit bubble is unfolding every day. It is getting more interesting than the housing bubble.

Perhaps 30YR bond is not that bad?

Not investment advice.

lunarpark,
Of course! Based on their past performance, do you really think the Merc is going to play the bear on this one? Just yesterday their "article" about all the subprime fallout in progress was quoting some Fed guy who thinks this all won't turn out as bad as everyone thinks:

http://www.mercurynews.com/realestate/ci_5424134
"Mortgage Morass Called 'Manageable'"

They had the gall to print this in the midst of overwhelmingly bad news all around. Figures.

I was reading one of Patricks articles and someone commented with this:

Good ol Greenspan caused this entire slump. Why doesn't anyone realize that it is Alan Greenspan that screwed 25% of American mortgage and credit card holders. He raised the prime rate 18 times and increased my mortgage and credit card payments accordingly. This increased my own mortgage payment from 740.00 to 1600.00 in a year and a half. Now I am nearing bankruptcy and honestly don't care anymore. I have been just barely holding it together for nearly a year now and because of the realestate slump my house lost 35,000 in value and now i am upside down on the house and cannot refinance into a fixed mortgage. I have been in finance for 20 yrs and have never seen a nightmare like this. An easy solution reduce the prime rate back down to a reasonable level. So those of us who have adjustable mortgages can actually keep our homes and not destroy the market even more with 1000's of foreclosures.

Dominic M. Mac

This FB is in finance for 20 years and goes ahead with an exotic loan? What are they teaching in school these days? What ever happened to common sense?

@Lunarpark-
Great map. Businessweek published that in Sept. '06, so it's hardly a secret to a good reporter. Someone should email that map to Sue McAllister.

It bears noticing that many "prime" spots such as the Bay Area, OC, Santa Barbara, SD have a high incidence of bad morts. So much for the illusion that "wealth" ensures security. Personally, I suspect buyers expose themselves to more risk simply to live in more prestigious areas. When looking at stats, I've noticed more "prime" towns such as Los Gatos, Palo Alto, Sausalito, etc. have higher incidence of foreclosure than more modest neighborhoods. I haven't checked recently, but perhaps it still bears true.

SP,
If you can find that dotcom article, it would be funny to reprint it and substitute "Median Home Price" for "NASDAQ index," "Realtor (tm)" for "Internet Startup," "FB" for "Day Trader" and "Cupertino Schools" for "Web Advertising." I'm sure the article would be fit to be printed right away!

Just saw this on bloomberg http://www.bloomberg.com/apps/news?pid=20601087&sid=a1x64z58hsB4&refer=home

My worst fears are coming true.

SP,

Gaffe aside your point is well taken. Poor Dom, all those years selling term life insurance policies and for all his "expertise" he couldn't see this coming? What chance do the rest of us have?

Regardless of qualifications so many of us have become addicted to that house ATM that it's actually "built in" to our financial plan! His c/c jack up, PITI payment shock and overall ragged financial state would all simply "go away" if we just lowered rates! (That's how these people think)

PAR,
I apologize. I belittled Jemima and Ricardo's "savings" effort. At least they were able to cover their closing costs with their $5K of savings.

Don’t mortgage brokers qualify as local economists?

Not to belittle the art of economics (well, it is a voodoo science)... but I think ANYONE qualifies as the local economist.

I apologize. I belittled Jemima and Ricardo’s “savings” effort. At least they were able to cover their closing costs with their $5K of savings.

Did they save 5k per year or 5k per month?

Did they save 5k per year or 5k per month?

Not clear from the article, other than $5K total leading up to their home "purchase."

Local economists, however, say the fallout for the Bay Area housing market won’t be severe.

Many "economists" are interested parties in the housing game. We all know that everyone has some degree of wishful thinking. Even Patrick titles his page "US Housing Crash Continues". :)

It also seems that most "analysts" are eternal optimists. When the market drops a bit he will say that it is a "long overdue correction". When it drops some more he will say it is a great opportunity to buy. When it drops to the bottom he will say no more.

@Sriram Gopalan - I just sent an email to Diane Feinstein asking her to oppose Dodd's plan.

My mom sent me an email this morning saying that she saw Dodd on t.v. discussing his proposal. She was quite pissed about it, LOL, funny to hear that from my mom.

Just saw this on bloomberg http://www.bloomberg.com/apps/news?pid=20601087&sid=a1x64z58hsB4&refer=home

My worst fears are coming true.

This would kill the dollar for sure!

Do they mean that the gas pump attendants that took out a $500k time-bomb on a handy man starter special are going to get more free money to help them pay for the overpriced POS?

If they must bailout something, they should bailout the large banks. Individuals should learn to Face Reality.

I guess I am a "liquidationist."

"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate."
--Andrew Mellon

Remember, the war got the US out of the Great Depression. The social programs did precisely nothing.

@Sriram Gopalan - I just sent an email to Diane Feinstein asking her to oppose Dodd’s plan.

Let this Dod asshole pay for the bailout with HIS OWN money!

I have put a far larger down payment on a car…

My theory is that one should put enough doan payment on a car to cover the initial depreciation (purchase price + tax + fees - blue book trade-in price).

lunarpark,

What's classic is this quote from your map of misery article:

""It's certainly reasonable to expect to see some excesses wrung out," says Brad A. Morrice, president and CEO of New Century Financial Corp."

I don't know when the article was originally published, but Brad A. Morrice is some kind of predictive genius, I guess... ;-)

Here is another "bailout" article:

http://news.yahoo.com/s/nm/20070314/pl_nm/usa_subprime_reform_dc_1

Who is the NCRC anyway?

"Be fearful when others are greedy and greedy when others are fearful." -Warren Buffet

It might be time to dip a toe in the mortgage lenders market, since the common wisdom is that it is all going to hell. What do people think about AHM? They have a portfolio of ARM mortgages, but no sub-primes, have a 18% dividend and claim that they are fine, not like those icky sub-prime lenders.

DinOR,

Some of the guys aren't nice. They aren't nice to the waiters or support staff or whomever. My husband said Angelo is respectful to people and polite. My husband doesn't work for him, he's not a client. They might be on a board together, or he's on a board that is a client or something.

Where is Marina Prime or ConfusedRealtor.? I want to see "the market's on fire! They aren't building land anymore!"

When will people (especially statists of both kinds) realize that creative destruction is essential to this whole process?

What would happen if the government kept bailing out every failing business? From a narrow, human interest story point of view it might look like a good idea. In the evening news, you can show all the Moms and Pops who were saved because the government bailed them out. But in reality, bad businesses should fail. That is the only way to ensure that good businesses succeed and the only way for us all to find out what works and what doesn't.

It is the same deal with investments. People who make bad investments should lose money. This includes loaners and loanees(?). That is the only way people will learn what is a good investment and what is not. That is the only way we have accountability and personal responsibility. A society without such features is a stagnant, dying society.

Every year I stay in this so-called "land of the free", I am becoming more and more disillusioned.

The next time an obvious bubble comes along I am gonna dive right in and make huge, stupid "investments". You hard-working suckers with your tax money will have to bail me out!

Nice catch Boston Transplant!

Let this Dod asshole pay for the bailout with HIS OWN money!

allah, i agree with you. However, the essential function of a politician is to take someone else's money and spend it on someone else, according to Milton Friedman. So that aint gonna happen.

Siriam,

That report on Sen. Dodd's proposal pi$$sed me off to no end. I've never done this before, but I just sent an email to Dodd on his website. I encourage everyone here to do the same:

http://dodd.senate.gov/index.php?q=node/3128&cat=Opinion

Jimbo,

I think NCRC kind of dovetails with The Center for Responsible Lending in their commitment to "sustainable home ownership" and stability and growth in communities.

This whole bailout issue is ridiculous! It's like stuffing 10lbs. of shit into a 1 lbs. bag and when it starts to break, out with the duct tape!

When will people (especially statists of both kinds) realize that creative destruction is essential to this whole process?

In the 20's.

"“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."

I believe in this school of thoughts.

I meant 1930's.