patrick.net

A: well if they are brown eyes, they are puupy colored...

Q: If ARMs reset in the forest and no one is around to hear it, do you still have to pay money to the bank? Or can you just ATM the heck out of your house until the lumberjacks come?

Just the other day, I was walking home to my pathetic rental, when I was attacked by a gang of ruthless subprime thugs. They beat me up, took my wallet and forced me to sign up for a NINJA loan. When I woke up in a ditch several hours later (minus a kidney), I found out I was the proud owner of this.

The government needs to do something!!

HARM,

Once again, an excellent thread! I just emailed a graphic for your consideration for the thread.

Some additional victims:

Joe Hedge Fund Manager: "If those MBS products didn't seem so delicious, I would never have poured the entire fund into them and lost billions of dollars for so and so's pension fund. Oh well, only a $1M bonus this year."

Hillary Clinton: "If I hadn't endorsed a FB bailout, I would have won the Presidency! (Besides, I hated having a Snuke up my Snizzle...)"

Mr. and Mrs. tech worker/immigrant parent: "If it weren't for this housing bubble, we could have afforded a home in Palo Alto or Cupertino, and our kid would have ended up at Harvard. Instead, he's a Realtor (TM)."

@skibum,

Very appropriate comic --but I might be forced to pay royalties to Bill Watterson if I use it.

Btw, you guys should check your mutual fund portfolio, it is not what the name suggests.

I had a very small position in Pimco's international bond fund, which stipulates very clearly on prospectus that it was intentionally taking an UNHEDGED forex position and concentrated on FOREIGN bonds to take advantage of the fall of the dollar. That was about 3 years ago.

Then last year, when I started reading the mid-year statement they sent me, I found that about 45% of their freaking fund was invested in MBS! WTF! It was called INTERNATIONAL bond fund and was almost half invested in MBS denominated in the falling USD!! So I yanked out all my money from that fund right away. That is why I love the simple index fund, give me a Euro FXE fund, I know exactly what I am getting into, and I don't want surprises. Ever since 05, the last thing I have wanted to get into is USD bonds, let alone USD-denominated, MBS crap.

I suspect that some mutual fund houses may be buying things to save their under-water dog funds. For example, PIMCO is heavily invested in USD bonds, maybe the USD bonds were not looking too good, so the big boss tells the international bond fund manager to take over some of the loser MBS to dress up the performance number for the entire fund house.

Yeah, now even the loan officers are victims. Only in America!

In recent times, this country always makes the perpetrator the victim and the victim the perpetrator!

Maybe housing will be the new exception. Buyers, lenders, realtwhores and builders are all victims and it is the renters who are the perpetrators!

Patricks bailout letter is starting to get some attention.

Recent hearings in the United States Senate have led to talk of bailouts for subprime borrowers spurring a "Stop the Subprime Bailout" letter writing campaign from long-time Bay Area housing bubble watcher Patrick Killelea at Patrick.net.

I am guilty of failing to support the Amerikan Dream by not buying a POS with a NINJA. I must want the terrorists to win :-(

@ allah,

Yeah it's like crying for Enron execs because they were out of work. What about my grandmother who was out about $1M when the stock went to zero. That was stock my grandfather earned and purchased over the decades working for predecessor nat. gas companies. In the new world it's probably grandma's fault!

Paul

Let's not forget the 23 year old MB from Kuhjerkistan talking on 2 cell phones at a time driving w/his knees trying to find the Phoenix homes he'd already bought! I suppose the Kuhjerkistani Mob held him up to it?

allah, nice find! You know you've arrived when you're getting mention on Seeking Alpha.

On a different note, Mr. & Mrs. HARM did a little "house-hunting" for the first time in nearly 3 years last Sunday, and were somewhat surprised by the results. Keep in mind we were just lookie-loos, not serious lowball buyers with offer in-hand, as our esteemed Mr. H.

Open house locations:
Pasadena, Monrovia & Duarte, CA

Observations:
--Sellers are much less arrogant/cavalier than before, and more polite/attentive to prospective buyers, even deigning to speak with obvious low-rent filth like myself.

--However, while asking prices have come down somewhat, they are *still* in delusional-to-nuts range (average 1950s 2-3Bdm 1200 sft stucco box = $600-900K). That's still an improvement over last year's euphoric-to-psychotic.

--I've also noticed that virtually all the older houses we saw had significant new upgrades (of the pergraniteel variety) and were usually in near-turnkey condition, vs. the "let's not even bother to clear out the trash in the living room or weed the lawn" condition that was so common a couple years ago.

--Most new developments here (yes, there are some even in built-up L.A. County), tend to be of the mini-Mcmansion or multi-story "luxury" townhouse on-a-postage-stamp variety. Almost nothing new under $1 million. There was even one devlopment in Monrovia that --get this-- starts from $1.8 million and is being sold through Sothebys (the London-based auction house for the uber-rich). This in a predominantly middle and working-class neighborhood. Here's the link: http://www.sothebysrealty.com/PropertySearchResults.aspx?N=12+4294967274+4294967261+4294967081

"From his front lawn, Corchuelo likes to smile up at the cranes and listen to the clang of construction.

“It’s a good sound,” he said.

All day and all night!
Sometimes the crack addicted hookers strole in and give him
a freebe...just to crash in the pad!

Kudos to Patrick on his growing fame. :) I'd like to comment on something else in that Seeking Alpha article. Notice that block of subprime and delinquencies in the middle north part of Colorado. Yeah, I'm dead center in that mess.

http://usmarket.seekingalpha.com/article/31128?source=feed

I've been watching the REO lately. Most of it appears to be the lowest-end townhomes and SFRs in undesirable parts of town. The rest? McMansions in the biggest, best areas Fort Collins has to offer. If you bailed out all the newlyweds and immigrants, you would also have to save all the greedy two Lexus DINKs in Eagle Ranch, Greenstone, Coeur D'alene Estates, the various golf course McMansion galleries and other "new aristocracy" areas.

There will be no bailout (I said that last thread), but it annoys the hell out of me that people in the most expensive areas are painting themselves as "victims" just like the little people who lied on their loan applications.

I wonder if that Naked City POS sold?

http://www.slate.com/id/2162989?nav=ais

the bigger the mansion, the worse the CEO

A great article written by a realtor!

Asset Deflation : The Death of Real Estate

In other words, it is time to sell all of your real estate, save for possibly your home. If you don't, you will likely regret it. You will gradually watch all of your equity disappear into thin air. And then, unless you have little debt against it, you will likely lose your property to foreclosure. It's as simple as that.

OO

Some bond funds argued that MBS counted as "international" investments. Seems pretty tortured logic to me, but their rationale was that they were investing in MBS' purchased by foreign investors. So technically, it's an "unhedged foreign investment". It just happens to be largely dependent upon the US housing market and is denominated in dollars. (chuckle)

Paul Says:

> Yeah it’s like crying for Enron execs because they
> were out of work. What about my grandmother who
> was out about $1M when the stock went to zero.
> That was stock my grandfather earned and purchased
> over the decades working for predecessor nat. gas
> companies. In the new world it’s probably grandma’s
> fault!

Not to give your Grandma a hard time but (if $1mm was a large part of her net worth) it was her fault (since she didn’t diversify). I was lucky that I learned about diversification when I was young so I still had time to make more money before I retire (even thought I don’t ever plan to really retire in the traditional sense).

Growing up I saw my parents make a lot of money in Real Estate so after I started working I put about 95% of my money in to Real Estate and by 1994 it was all gone (when I signed the last quitclaim deed).

There are very few true “victims” out there and we would live in a better world if more people would take responsibility and admit that there is almost always something they could have done to avoid their problems.

The gods are fickle, so don’t take anything for granted. One day you’re a powerful king with a beautiful wife and 4 lovely children, the next day you’re a an 1ncestuous patr1cide and your kids are killing each other…

Here's the largest category -- baby boomers. Even though almost all of them got into the housing market before prices really shot up, I bet we'll be hearing lots of stories about boomers who mysteriously became RE bust victims on houses they've owned for 20 years.

Not to mention you've stuck knitting needles in your eyes. See, this is why you should never best a Sphinx or rescue abandoned babies from hillsides. That's just asking for it.

(Or pretentious idiots who name their daughters Antigone or Medea...)

[sighs] People believed that their paper wealth was real money. Now that the paper wealth in many real estate assets could be declining, people will be upset. They feel like forces beyond their control are forcibly removing money from their pocket.

What people don't seem to realize is that you can whine about Tech 1.0, CEOs, congress, excess market liquidity, subprime mortgage brokers, tulip salesmen, hurricane insurance companies, the FDIC or God himself... it doesn't make your money come back. Donald Trump doesn't whine much. He diversifies, has contingency plans and starts scrapping harder when the going gets tough. That's why self-made rich people often rebound from major setbacks.

I still have a fundamental question that we've never really answered. At the end of this real estate decline (or bust), will people finally stop treating their house as an investment? Will a house again just be a place to live?

A Doctor out of his residency who’s income is most likely going to go up substantially.

What other professions have a “guarantee” as good as a Dr’s for income appreciation?

Did the people who were given ARM loans have jobs that had the same potential for significant income increases

However the doctor may find himself oin a malpracise law suit and may be forced out of the profession. also may be injured or disabled before the bigbucks.

There was even one devlopment in Monrovia that –get this– starts from $1.8 million and is being sold through Sothebys (the London-based auction house for the uber-rich).

There are some $600k homes near my parents place in the east coast that's being sold by Sotherby's

I don't think it's the same Sotherby's - i think they just rented out their name.

Kind of like the new "Louvre" that's going up in Dubai

Have you guys seen this?

http://www.theonion.com/content/video/immigration_the_human_cost

Oh man, it cracks me up

Brand,

the greedy two Lexus DINKs

(nice description BTW :))

These are exactly the people who are going to lobby the politicians hardest for a bailout, because;

1. It will be literally inconceivable to many of them that they are, in fact, insolvent. ("Foreclosure?? Bankrupt?? That sort of thing only happens to dropout losers. You know, illegals and the like. Not people like us!!")

2. They are used to getting the system to work for them, and either they themselves or friends/relatives will be politically active.

And they are NOT going to like the term "bailout" (even if it's accurate, in fact especially if it's accurate) because that word carries some sort of welfare stigma which is, of course, totally inappropriate for professionals like them.

No, they will expect (and they will 'expect', rather than 'hope for') a 'solution' which carries no negative semantic baggage. Sorta like the way the fine upstanding free-enterprise salt-of-the-earth MidWest farmers reinterpret their price supports as weapons in the economic war against the wicked Europeans, and therefore not really 'government subsidies' at all.