patrick.net

SFWoman

I commented in the maelstrom below that article (and plugged Patrick.net).

skibum

That is my understanding regarding your attorney's role and obligation. With all the standard forms today, a decent attorney should be able to very quickly parse through to anything exceptional. If they're experienced, they know where the trouble spots are. And not only do they risk liability, but more importantly, they risk referrals. To this type of attorney, referrals and client satisfaction is gold.

Nothing should be bailed out. Liquate everyone as Andrew mellon prescribed!

OK, I posted as 'Tabitha'.

Brad DeLong’s blog had a discussion of why all the subprime lenders and borrowers should be bailed out.

I never thought I would say this, but I think it might be reasonable to engineer some kind of mass "workout" or global settlement which would permit FBs with stupid loans to keep their homes under new loan terms. The lenders would still take a hit, as would homedebtors, but the bubble could be deflated slowly and in an orderly fashion (sort of like LTCM). The alternative is a chaotic, destructive wave of foreclosures, bank failures, hedge fund blow-ups, possibly a currency crisis, massive wasteful class-action lawsuits, etc., etc... Not good for anyone, really.

You would still have the moral hazard problem that others have raised, but I'm not sure this is avoidable. Besides, moral hazard has its limits. Look what happened after the Great Depression. Sure, the WWII generation learned not to take on too much debt in order to speculate, but eventually the lesson wore off.

The bigger problem is that such a global solution would require massive coordination among regulators, lenders, intermediaries, hedge funds, millions of homeowners, etc.. Somehow, I don't think that our best and brightest in Washington are up to the task.

Glen,

Look at the upside. The overly aggressive (and under educated) typical MB licking his chops just waiting to re-re-re-finance the mess they've created won't be there to collect on the back-end! If their firm hasn't gone out of business yet, it's about to!

Just the fact that a bail-out is even being discussed should tell even the most ardent bulls that this thing is over. Like I say, I got an e-mail for CFC Rev. Conv. paying 15%. If that isn't a red flag, I don't know what is?

Where's SP?

ubermonkey,

Not a bad idea. The problem is that now that no mortgages are being written, the banks don't have jobs for all those indentured servants. I guess they could put them to work in collections or the workout dept.

RANDY H. QUESTION:

Randy what do you think of a California Police salary/pension vs. getting a decent Silicon Valley job/salary and getting the 401K package, sans pension, since most pensions are going the way of the dinosaurs.

I know there's a lot of factors to consider. I'm a state school MBA guy working at a defense contractor in AZ as a program analyst.

I'm not sure if you've thought of the pros and cons, but I'm considering taking my chances in the BA again but not sure if I should go corporate, say Lockheed, etc. or try law enforcement.

Thanks bro!

Residential lots in Gilroy has already gone down 66%.

I have been tracking acre+ residential lots in South Bay for the last couple of years. The core areas are going down slightly, not much, some developers / owners are still holding their wishful price of $1.5-2M per acre in Los Gatos or $750K per acre in foothill San Jose with no takers for last couple of years.

Gilroy, in December, had a glut supply of residential lots in western foothills, seemingly offered by some desperate developer, offered at $400-500K per 1/3 acre. I didn't check back until today, suddenly all these lots (100s of them) got lumped together and are offered at $500K per acre, which is still way too high IMHO, given that Almaden land is only going for $750K a flat acre.

But it demonstrates how fast fringe areas are dropping, in a matter of 3 months, before the whole property crash even comes close to the real climax. Residential lots are the most sensitive asset to downturn because lot loan and construction loan are the first to shut down.

I predict that these western foothill land in Gilroy will go for $250K a flat acre by year end.

I just need 1/8 acre. Can I get that for 100K in Almaden? :)

Unfortunately most of these lots are in areas where subdivision is not allowed by zoning. Sometimes it is possible for you to buy an acre and go through the painful process of dividing it up into several pieces if the current zoning code allows.

City lots (.25 acre or less) go for a higher price on a per acre basis. But, when things go bad in real estate, residential lots are the first thing to go bust. Back in 94, nobody was able to get a loan on lots, unless you have established a real good relationship with your bank throughout the years and you are in the business of developing and managing real estate (pros like FAB). You had to pay all-cash for a lot. Construction loan was a bit easier to come by because once a house is built, at least the bank is more assured of the rental cash flow. Lots generate 0 cash flow.

In the last downturn, residential lots crashed as much as 5/6 of their peak value. That is my yardstick. Since this bubble is a lot bigger, I won't take any action until a residential lot has crashed that much from 06 value.

Man, I'd love to get a sweet lot at a decent price and build a non-mcmansion on it.

You guys remember the periodic SSOTW (Sob Story of the Week) postings? Well, cnn has been gracious enough to give us some follow up. It looks as though zero of the five families here have sold their places:

http://money.cnn.com/galleries/2007/real_estate/0703/gallery.help__updates/index.html

How about this part of one of the stories:

It's especially frustrating for them because they thought they had the three-bedroom, American foursquare sold a few months ago. Then, just last week, they learned that the buyer was backing out because of failure to find financing.

"The lender wound up refusing to make the loan" says Karen.

HMMM, can we say, subprime fallout?

Peter P says:
The story is yet another proof that rent-control is evil.

Don't be silly...

My following comments may sound offending and politically incorrect to someone a bit chubby, so please skip if you are uncomfortable.

Re: the 5 profiles skibum posted, except for the last couple, all of them look super-sized. Just based on statistically insignificant personal observation, I found that people who are very blatantly overweight, not those who have a few extra vanity pounds or genetically predisposed to be a bit on the chubby side, usually have a hard time managing other aspects of life, most importantly, personal finance.

Perhaps it is just an indication of one's resolve to let his stomach or impulse override the brain. Or, could it be that some of our industrially processed food cause people to become stupid?

And the winners of the best postings on this thread are

1–michael holliday with his description of the cookie crumbs and hi-c thru the blinds

2–oo for his catch all phrase–let’s not start...quite yet,

3- sf bubblebuyer—Which end the food goes in–as a response to the baby question

honorable mention is given to
FAB —Sorry if I came off as “snarky”,
RandyH—@FAB, no need to get snarky.
_____

Crumbs wins.

Definitly the Hi-C fruit punch, freakout McDebtor neighbors, and crumbs story...

There is a statute of limitations. If they don't sue you within a certain period of time the debt is uncollectible.

Then it becomes harrassment, and you can sue them. Here is a summary from the Fair Debt Collection Practices Act from the FTC site.

http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm

Can you stop a debt collector from contacting you?

You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

"i_was_a_debt_collector Says:
i cant sue you for the debt in court but i can go after you forever. we can call your home, your mother, your neighbors, your boss, your daycare school…..what are you going to do about it?!?!?! sue me - with what - you dont have any money."

Uh, yeah, I would sue you. Small claims costs a whopping $25 to file, and another $20 to serve. Any of those actions in this paragraph also violate the act, and even if your boiler room collections agency is out of state I can still sue you in my federal court district, and if the relatives and daycare are willing to sign an affidavit of the disclosure of the matter, I guarantee a lawyer will take the case with no money needed up front. Any other questions?

Loose ends like those open chargeoffs can be removed just by requesting it from the bureaus. 10 years is the maximum derogatory items like that can stay on your credit file. Government type entries like certain public records and debts like tax leins or defaulted student loans are the rare exception to the rule.

A "no contact letter" gets rid of harassing creditors. I was talking about legal action (eg pursuing the debt in court). The court system is still highly inefficient and you need an attorney. Without a judgment, a creditor can't force the debtor to pay.

My point was that small debts are uneconomical to pursue in court. But for a default on a HELOC or second mortgage, it usually will be worth pursuing in court (even if many of the debtors wind up declaring BK).

Dear Michael Holliday:

Your question was for Randy H., but I would like to offer you my un-solicited opinion: follow your passion.

If your passion is to work for Lockheed, try for that. If it is for law enforcement, try for that. If your passion is to return to the Bay Area, try for that.

There is no telling what course you take now, pension no pension, Bay Area or AZ, civil servant or private, ... will look like the smartest choice from the rear view mirror when you retire. So you might as well try to find a way, including making compromises if you have to, to do what you like.

When I graduated from San Jose State a little more than 20 years ago, I thought I'd failed because I didn't land a "safe, pensioned" career-oriented "position" at IBM in south San Jose, with a house in semi-rural (at the time) Morgan Hill. I got over it, and found something else to pursue. And, as you may have noticed when you return here, Morgan Hill is not longer the bucolic semi-rural paradise that it once was. Those who I know who did land what they thought was a lifetime job at IBM in South San Jose, have had a rocky ride. If they still work there, they work for Hitachi. Not what they signed up for.

I

Right Glen, I was just correcting some common misconceptions. If people knew and understood their rights and responsibilities we wouldn't have collectors calling 5 years later. It is improper, but it does happen. That is precisely why there is a statute of limitations.

"go spend $20k on a credit card, stop paying and then tell the nasty man on the phone that you are sending them a letter ordering them to stop contacting you!!!!
what world do you live in! you actually mad me chuckle! "

Now you are changing the parameters. If I did that they would take me to court, get a judgment and then use legal avenues like garnishment, or seizure to satisfy the judgment. BTW judgments themselves are only good for 3 years, and can be renewed one time I believe beyond that.

what world do you live in! you actually mad me chuckle!

The United Debtors of America.

Read the link, it all spelled out for you. You don't have to even take my word for it.

Guys, this is all basic business law stuff, I can't be the only one on the board who took business courses?

Yup, that is the real world. That link I sent you only allows a $1000 judgment for breaking the law so given the law of averages it is probably good business to break the law. Most of them like you said are too busy trying to run from you, rather than stand and fight.

Sybrib:

Very good insight!

My dad retired from IBM in 1993.

I worked as a co-op at the Cottle Rd. site for a few years while attending San Jose State myself.

IBM has changed. Our neighbors that did stay employed there now work for Hitachi and it seems like their jobs, security, retirement now reside in a state of flux and unsurity.

Everything you said is absolutely true.

The San Jose/South Bay I grew up in and knew has changed dramatically in the eight years I've been away. Most of my old friends are gone or scattered here and there.

I sometimes feel like I'm between two worlds & not sure which way to go.
The grass is always greener, and I guess you can never really go home.

I don't know...you know what I mean?

malcolm and glen - technically you are right but it is my job and my companies mission to get that money from debitors. we know what we are doing and have the money to pursue debitors. we know how to push the systems and the limits. we do this ever day all day long. debtors are hiding in a closet taking their kids add medicine.

What you are talking about is pushing over the limit by pursuing collections illegally. Once the statute of limitations hs run and you have received a "no contact letter," there is nothing further you can legally do to collect the date. Sure, collection agencies can break the law. But if you don't mind breaking the law, I suppose you can go break their kneecaps too, while you're at it.

This should help:

http://www.debthelp.com/kc/16-long-do-negative-marks-appear-your-credit-report.html

The Fair Credit Reporting Act (FCRA) of 1970 states that credit bureaus can continue to include negative information on your credit report for up to seven years. If you have negative items such as late payments, collection accounts, judgments, repossessions, or even Chapter 13 bankruptcies on your credit report that are more than seven years old, you should contact the appropriate credit bureau and demand that such items be removed.

Certain items, such as Chapter 7, Chapter 11, and Chapter 12 bankruptcies, are exempt from the seven year rule, and may be reported for up to ten years. A few items, such as criminal convictions, may be reported indefinitely.

I know exactly what you mean.

I never left home, but home left me.

(The longest that I've been away has been for two weeks, a few times for vacations).

In 1988 I was a coop (grad student) at the Harry Road lab. During the time I was nearing graduation, my boss offered to help me get a "permanent job". Even though a few years before when I was finishing my B.S. I had wanted to work there "permanently", by then I could sense the tension career IBMers felt at the time, that the times were changing. It was all too familiar from the coop I'd had the year before in Lockheed, career LMSC employees stressed out that, God forbid, peace should break out with the Soviets !

I learned in the trenches, there is no "safe/secure" situation. So instead it's best to find a way, to pursue what you like.

They won't learn if it's not extremely, extremely painful.

Wipe out Casey Serin's debt, and he'll be right back there trying to flip houses. (Of course by now, nobody in their right mind would give him a mortgage...)

I am undergoing a similar experience to CB right now, although I wouldn't go so far as to say it was harrassment.

In my case I keep getting rung up about a guy who I let live at my place while he was getting his act back together.

The interesting features:
1. This guy never used my phone number, he had his own line. He didn't even have access to my phone. The debt collectors must be doing address matching.
2. He moved out over 2 years ago, and he is in the local white pages at his new address.
3. I have an answering machine permanently on, so I don't always get to the phone before it kicks in even when I am home. (This does wonders in deterring junk calls by the way, and my family and friends know by now to start a message. If I'm home I pick the phone up when I get to it.)
This might be the reason why I never get more than a polite 'please call xxxx and quote reference number yyyy'.

In passing, the guy in question is a moron, in the technical sense rather than the insulting sense. I actually met him through Intellectually Disabled sport. He's about 8 when it comes to mental maturity, just able to function independently.

Now I know for an observed fact he was constantly being sent credit-card mailouts, to the point where I actually rang a couple of issuers to explain the situation and ask them to desist. Would they? Would they hell; to paraphrase one response "he's an adult so we have a right to send him material and it's up to him whether he wants to take up our offer or not".

In this case I am not particularly sorry that the lenders are not being repaid, my main concern is that the guy doesn't do anything desperate in panic over the harrassment.

As DinOR likes to say, when you refi your house, you are essentially “re-buying” it.

Ahhhemmm. mmmm. "clears throat", ahhhhhmmmmm.

I believe that is a Surfer-X quote.

BLOG PARTY

BLOG PARTY

Where? When?

$$$$$anta Barbara, spring solstice.

http://www.mercurynews.com/breakingnews/ci_5454586

"Subprime fallout strands some borrowers mid-loan"

Cry me a river.

lunarpark - thanks for the link - no one raises the question of whether she pays taxes on her stated income!

Okay, if no docs are out, why don't they use their tax returns - doh!

They are not declaring all the earmings to the IRS?

Or, maybe, the other contributers to the mortgage are not legally in the country and/or not declaring their income?

Those mean nasty mortgage brokers, actually acting responsibly for a change!

sybrib Says:

I never left home, but home left me.

I learned in the trenches, there is no “safe/secure” situation. So instead it’s best to find a way, to pursue what you like.
_____

Great first phrase! I never heard that one.

I'm going to really ponder those words.

Thanks!