patrick.net

Headset,

Thanks for the tip. My boyfriend and I have driven skyline drive and been a little underwhelmed (the vistas are nice, but the mountains just aren't tall enough or interesting enough. We might take a drive there this weekend.

http://www.dailykos.com/story/2007/4/24/81711/7932

Hehe, Dailykos ties honeybee disappearance to subprime mortgage (sort of)

Then “they” are a$$holes. That money was design to help people afford college. It is not investment seed money for rich folks or those with corporate tuition assistance.

I disagree.

I believe college education should be widely available. However, student loan should not be seen as a form of welfare. There are already too many forms of welfare.

Unproductive people had been gaming the welfare system for decades. What is wrong with these people taking advantage of some universal benefits now?

If anything is wrong, the system is wrong.

And don't forget that student loans are not free money. It is a collateralize debt. The collateral is you. Not even BK can wipe it out.

"This listing is special John; you guys can do this."

GC said:

I hope no one sees this as “shrewd” investment strategy.

Finally, some manly words. I emphatically agree.

Firstly, I made no claims about the ethics or morality of the arbitrage student-loans situation.

Secondly, it isn't so clear that this is *always* unethical, regardless of how macho GC attempts to fantasize of himself.

While I'll agree that taking a loan in addition to taking tuition reimbursement, if one commits fraud by declaring the loan's use for tuition, is not only unethical, it is illegal fraud.

But, these loans need not only be designated for tuition. You can also stipulate you intend to use the proceeds for living expenses, travel, or supplies. You can take the loans in lieu of working (thus the term full-time student).

So the ethical dilemma is this: say you get $25K in Stafford loans. You also have $25K in the bank. You'd saved the $25K in your savings account to pay for school. But now the government comes in and offers you a student loan of $25K for 2.0%. What's the difference between taking that money and leaving your $25K in your bank account -- because you're conservative and don't wish to be with a $0 bank balance -- and taking your $25K out of your bank to pay tuition, then putting the loan's $25K back into your bank?

I'll answer from my perspective, there is no difference. It's all semantics.

Anyways, what machoman GC misunderstands is these are unsubsidized Stafford loans. Subsidized Stafford loans only go to people meeting a "poorness" needs test. So GC can rest easily on his big blog cajones.

"Big Deal"

Big Deal?

I don't mean to get on a soapbox but I just spent 3 hours of the nicest* day we've had in a long time, sitting in a cubicle being subjected to the NASD "Continuing Education" brainwashing. They covered a LOT of ethical issues (and frankly several I'd never even stopped to consider)

1. You're the branch mgr. for a regional firm. The firm has authorized you to have a complete landscaping makeover. Do you go with A) the lowest bid, B) the higher bid BUT (with the under the table agreement of having your personal residence done at a substantial discount!)?

How refreshing to hear this even being discussed!

Pffft. Screw it. Not MY money? Afterall I've been the mgr. here for years and I'm not making the money I "should" be making? So this is like one of the "perks" that comes with the job, right?

They had another great case study where one of the sr. brokers is pressuring HR to hire his largest client's (challenged) nephew for the intern position! True, they don't exactly get top notch actors but the situations are real, and happen everyday.

If Headset thinks they're @$$holes "I" think they're @$$holes.

Want something real? Lots of good quotes on this page.

"the buyers think they're being slick and sticking to their $430k thinking the seller will cave. i think they're just gonna lose the house to another buyer again."

"i'm starting to agree with Susan, i think they're scared."

Does she know suzanne too?

In the pay-as-you-go system, which is how I afforded college, working stints of full- or part-time while chipping away at your degree, means you will never qualify for the subsidized loan (or any grant). And that interest clock starts ticking as soon as the check is cut. Ouch!

I don't personally know anyone who used college loans to make a buck, or buy stereos and such. I've heard those tales. Just never met anyone who actually did it.

Allah,

Hysterical posts as always! I guess the sellers NEED the 435k just so they can walk (net of comm. of course). Is an "extra" 5k going to make you or break you? That's a serious question? This is what we've lowered ourselves to? C'mon, bum me a cigarette man!

Never is appraised value mentioned nor the fact that the "extra" 5k will cost you 20k over the life of the loan. Those buyers, they're such pussies aren't they?

My favorite part was her saying she'd never lower her commission as she'd 'earned' it. It would almost be worth registering on that board just to point out that as of right now, she's earned jack.

My favorite part was her saying she’d never lower her commission as she’d ‘earned’ it. It would almost be worth registering on that board just to point out that as of right now, she’s earned jack.

Words like deserve, earn, entitle, etc are just fluff.

The point is to make more than we deserve. That is what profit means. But we are not victims simply because we do not get what we have earned.

I'd say that 25 homes is pretty low. I've looked at over 100 by now. She sounds like a spoiled brat realtor who's been working in the field since, oh, 2002, and doesn't know what rough times are like. Entitled sellers and entitled realtors are running headlong into the newest beast... entitled buyers. It's gonna be ugly for awhile. :D

It’s gonna be ugly for awhile.

Ugliness = Beauty

This is hope. :)

I know a guy who used student loan money to speculate on tech stocks in the late '90s. Back then, student loan rates were at around 8%. He lived very modestly (even more than the typical student), then used the student loan money that he didn't need for living expenses to invest. I don't think it worked out very well for him, but he did eventually pay back the student loans.

I am pretty sure it is illegal, though. If it isn't illegal, it should be. Even though student loans can't be discharged in BK, taxpayers are on the hook if a student defaults (due to death, disability, etc.). Accordingly, the taxpayers are subsidizing student loan arbitrage. I would guess that a lot of people took advantage when SL rates were at 2 or 3 percent (even though MM accounts were only paying about 1% at the time).

SFBB,

Excellent points. What a typical realtor. She is bringing NOTHING to the table but fully expects to be paid for carting people around.

Since this is BOregon we can basically "look" at everything and go from the process of elimination perspective. Hell, we've looked at homes that have indoor pools! Does that mean it's a deal killer if the home doesn't? No. Maybe realtors should get paid the same as shopping assistants or dog walkers (since it's about the same thing).

SP,

O.K, you got us there but you've got to admit there's nothing quite as appealing as a woman that is totally and completely fed up and willing to do something about it! I've never seen (let alone met) Kathleen but I LOVE the way she talks! :)

"Ability to purchase and affordability are two different things"

Yes, yes LILLL they are.

SP, Brand, DinOR and whoever else is pining after Ms. Pender,

She has written a follow-up piece for that anit-subprime bailout article of hers:

http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2007/04/24/BUGC8PE0FC1.DTL&type=business

It's nice to see that there are plenty of sane people out there after all.

Off-topic to the thread, but I have a question that might be pertinent to the board. What are the financial and legal differences between a "purchase money transaction" and a "home equity loan"? Note that I'm asking my real estate attorney this same question at the same time. Just wanted to find out how much people are aware of any differences, if any.

I'm wondering if all the mortgage products characterized as "purchase money transactions" are full recourse loans, while home equity loans are non-recourse loans. If so, there is a terrible amount of loans out there that I've seen from deed records that fall into this category, and the exposure to full recourse loans is far larger than I thought.

I also find it interesting that you can't find an article about today's existing home sales plunge anywhere on sfgate.com at all! It's mentioned tangentially on news about the stock market. The Merc has the AP feed about it. As I recall, both papers screamed out on headlines about how Bay Area prices had rebounded in March from February (read, the normal increase in sales and price for the Spring season).

A bit biased? Perhaps.

OT - I recall awhile back we discussed other industries affected by the fallout of HELOC's drying up. In light of the media reporting about car sales going down - when would be a good time to buy a new car?

skibum,

Thanks for sharing that. The e-mails she received were pretty clear. Overwhelmingly Americans favor a bail-out at all costs. Even the tradionally conservative BA residents agree prudent savers and tax payers in general are in the best position to take the hit and are in ways responsible for the run-up, melt-down and after-math.

"If Headset thinks they’re @$$holes “I” think they’re @$$holes. "

Thanks, DinOr.

On thread. Last week I was looking at a new "coastal" home (bottom floor 3 car garage, 2 stories on top of that) that had an elevator installed, adding $25k to the cost of the house. The sales trend now is for "lifetime homes" that you keep till you die. The elevator is for when you are old and decrepit.

Realtor comment was "$25,000 barely affects the monthly payment."

When I politely told him I was a cash buyer (coastal VA is much cheaper that coastal CA), his demeanor became outright rude. He must miss the "howmuchamonths" who did not consider price.

I am biding my time watching the prices fall.

RealtWhores can soon use a new, ridiculous pitch: "Buy now, while you can still qualify for the bail out!"

Heaset,

You're kidding right? A built in elevator? Let's set the add'l 25k aside for a minute. Do these "lifestyle" homes have a built-in bedside urinal, crematorium and mausoleum "all-in-one ultimate package"?

Elevators need maint. Considering it will be SHOT by the time you're actually old enough to need it (requiring a complete overhaul) it will run you about $1,500 per use. A bargain I'd say.

I’m wondering if all the mortgage products characterized as “purchase money transactions” are full recourse loans, while home equity loans are non-recourse loans. If so, there is a terrible amount of loans out there that I’ve seen from deed records that fall into this category, and the exposure to full recourse loans is far larger than I thought.

apostasy,

You are correct. We've had a number of discussions about this and I've posted a thread or two on the subject, like this one. Basically, HELOCs and refis are NOT proctected by no recourse as "purchase money" mortgages are (at least that's the case in CA). And since practically everyone in CA has refi'd or HELOC'd (or both) over the past 7 years, most FBs are truly "F'd".

However, even if you are one of the few rare original purchase money borrowers and mail the keys to the lender, you still have to pay taxes on the "forgiven" amount of the mortgage (difference between what you still owed on it and what they can auction/sell it for later + foreclosure costs). However, Congress is already proposing legislation that would forgive this.

The sales trend now is for “lifetime homes” that you keep till you die. The elevator is for when you are old and decrepit.

I see the next "growth area" in real estate is to outfit these "lifetime homes" with an elevator stop to the sub-basement, straight into your boomer-a$$ coffin.

Once this feature is tripped, the house then automatically sends your 50 year mortgage document to your descendents via certified mail.

Hot off the press...
Case Shiller Home Price Index for SF Bay Area was down a full point from January to February, but don't worry, the (futures) markets are predicting a slowing rate of depreciation in the coming months (about 4+% for the coming year). Remember, if the first derivative does not contain good news, go to the second derivative :-)

In the press release, the PR people try to restrain Shiller, but he cannot resist:
While some cities, like Miami, Charlotte and Dallas, alternate between modest monthly price gains and declines since this time last year, other cities have exhibited persistent monthly declines since last spring, such as San Francisco and Boston yielding negative monthly returns since May of last year.
StumpTown is showing some resilency :-)
Seattle and Portland, while still showing diminishing annual returns, showed price increases of 0.5% and 0.1% in February, respectively.

Please Note: my demonizing renters post properly attributes the 15 year mortgage man (SP). While I liked the Dumb, Dumber, Dumbest anti-bailout expose, I still think her comment about marginalizing certain individuals who opt-out of the American nightmare to be the highlight of the column.

Hey DinOR,

Looks like we're on the same page! Let's patent the idea and write up a business plan for a startup! How does "Life Cycles Home Products" sound?

RealtWhores can soon use a new, ridiculous pitch: “Buy now, while you can still qualify for the bail out!”

Or to paraphrase the folks at DR Horton, "Buy now, while you can still fog a mirror."

DinOr, Skibum,

The guy who thought up the "life cyle homes" probrably thought he had a marketing coup.

You sure flushed his toilet.

Is the "life cycle" sales trend (single story - or elevator, wheelchair ramp capable, sit down shower, etc) happening in your areas?

skibum,

This must be a purely reactionary move on the part of the builders. More and more people are waking up to the fact that they now own more home than they could possibly EVER need and are deeper in debt than they EVER imagined?

So... how do we sell them yet another home? (Lord knows we've done everything else?) Hey I'VE got it!

How about this? A "cottage sized" home or adjoining cottage sized homes with a sink a wheel chair can get under, wide hallways and a bathroom equipped for the elderly. THERE. Problem solved.

An elevator. An elevator. Sheesh.

"Or to paraphrase the folks at DR Horton, “Buy now, while you can still fog a mirror.”

Hey, dead people vote in Chicago, maybe they can buy houses there as well.

However, even if you are one of the few rare original purchase money borrowers and mail the keys to the lender, you still have to pay taxes on the “forgiven” amount of the mortgage (difference between what you still owed on it and what they can auction/sell it for later + foreclosure costs).

No! Please HARM, let they FBers at least have this solace. If you are in this group, there are no tax conseqences in the PRK. Don't believe me, here is what Ms. Pender has to say:
-- Non-recourse loans. If you default on a non-recourse loan, you could be subject to tax on capital gains, but you won't be taxed on the cancellation of debt.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/06/05/BUGG5D3FNS1.DTL&type=printable

I'm actually only half-kidding about the bail out as marketing tool. Somebody will hop on that bandwagon. I'll set up a goog alert for "buy now" and "bail out".

Headset,

Sadly Oregon is turning a lot of the single wide mobile home parks into industrial use or "high end" (God I'll be glad to hear the end of that) condos. We have a model community called Senior Estates complete with a playable 18 hole course and 800-1,000 s/f single level homes. Close enough to Portland for grand kids (and the VA Hosp) but it made too much sense so I guess I'll just have to wait for "high end" lifestyle homebuilders to go belly up for that.

Can someone PLEASE come up w/ a perverted and insulting version of "high end" before I lose my fricken mind? Please. Extra points for including some sort of "alternative lifestyle" reference.

Pedaphile Place?

Crown Vic Village?

Trophy Wife Terrace?

Skibum

Our local paper occasionally mentions the housing problems. Usually, the next day, they mention that the East Bay will not be hit as hard because of our robust economy. Hard to know what to believe.

A more objective housing information source seems to be www.ft.com

Entitlement Estates? "Where luxury living and freeloading off the next generation come together"