patrick.net

Glen,
Thanks for the Thursday afternoon entertainment. Just what the world needs: another McAlbatross in Arkansas. What the hell is "Whispering Woods Cove" anyway? What are the woods whispering? "I see debt people.."?

Spot it.
Ohhhh... Dinor would like this one. At least with stocks there are regulations and margin calls. No such luck with a negative amortization mortgage... you can loose all your mony and then some. Nice.

Even if someone had $500K cash to plunk down to buy a house for cash, WTF kind of sales pitch is that: "it can't go to zero!" Wow. Better than Enron or pets.com! Where do I sign up?

Jeesh... and of course the obvious. A twenty percent decline in price will lose you twice your down payment if you put 10% down. Fun with leverage on the way down...
BTW, the BA Craigslist ReduceOMeter shows an all time high of 176 "reduced" listings for April 27-28.

Well that house in AR is on 5 acres. What is the cost of 5 bare acres over there?

I have to admit that I have never even been to AR, let alone shopped for RE there, so I have no idea what 5 acres in Little Rock goes for. However, I did see this ad for 40+ acres (with house) for $295K in the Ozarks. Plus they will throw in a mule!

http://littlerock.craigslist.org/rfs/309869088.html

Don't see how you could be a housing bear and expect inflation- please explain. One of the best things possible for home owners w/ fixed rates. Lever yourself up and repay in funny money. I see deflation, possibly followed by politically created inflation.

Inflation to deal with housing debts would be the preference of Barney Frank and many "populist" (translated demagogue appealing to the ignorant) politicians, the fed would likely raise rates signficantly in the face of inflation, and with little regard to the pols. Forcing a recession is preferable to letting inflation catch hold- less shorter term pain vs. greater longer term pain ending in a recession anyway. It would take a reasonably severe recession to set in for the pols to gather enough support to usurp the fed's decision making power (the markets would likely go nuts when they tried). Inflation also has the nice effect of reducing the gov'ts debt liability, though this only works if the gov't doesn't need to continue borrowing significant sums to pay off the GBF's.

That is how I could see inflation playing out.

By the way, that $295K property in the Ozards included 40+ acres, partially wooded, with rolling hills, two ponds and a large-ish house.

In LA you are lucky if you can get a cramped condo for $295K. Here's a sample:

http://losangeles.craigslist.org/sfv/rfs/323169356.html

Ozards = Ozarks

He finally started sputtering about some property in Saratoga with “built in equity” - a.k.a. 75,000 reduction in price. That was when I walked away.

You mean "Instant Equity?"

I have been to Arkansas and you would use those 2 ponds to raise catfish as that is what everybody does , eats it , thinks about, talks about, and I thought catfish was a baitfish.
@peterp
while the catfish themselves gobble each other's droppings like canapes. The only thing worse than catfish is catfish sushi

Ozarks are breathtaking .Little Rock is a nice place if you want to be a bail bondsman. To think Walmart was born in Ark is mind-altering .

On the last thread this NA really does know about women, the college girl , the over 25 , lesbian , he is SPOT ON. He should start a consulting marriage bizz as he is genius as he takes something so complex and spits it out so simple its scary.

China to go on a buying binge in San Francisco, among other cities.

http://www.ft.com/cms/s/4ca5a916-e9eb-11db-91c7-000b5df10621,dwp_uuid=5aedc804-2f7b-11da-8b51-00000e2511c8.html

bruceb: You could raise trout in those ponds, but your neighbors would think you're uppity.

China to go on a buying binge in San Francisco,

We have plenty of Cheese for them. Lots and Lots of Cheese...
Not sure if it goes well with Chow Mein...

Peter P Says:
You mean “Instant Equity?”

I guess both of them refer to the same nonsensical concept, but he used the phrase Built-In Equity - his point was that the house was "worth" $75K more than the current asking, so I would be buying a house with "built in" equity.

He was quite a sight too - picture a slightly pudgy, not very bright, middle-aged guy, somewhat inebriated, trying to focus his goggly eyes on you as he spouts this nonsense. I wish I had taken a picture.

SP

bruceb Says:
I have been to Arkansas and you would use those 2 ponds to raise catfish as that is what everybody does , eats it , thinks about, talks about

I recall a website whose general theme was devoted to pictures of arkansas girls wading into ponds to catch catfish with their bare hands. I wouldn't call it a pr0n site, since it didn't do much for me, :-) but maybe some guys are into that.

SP

I recall a website whose general theme was devoted to pictures of arkansas girls wading into ponds to catch catfish with their bare hands. I wouldn’t call it a pr0n site, since it didn’t do much for me, :-) but maybe some guys are into that.

Huh?

ahem, I do believe I quoted G

Try "instant equity" in Craig's List and see how many hits you get. It is such a retarded (mentally challenged) term. If anyone can get instant equity why wouldn't anybody just buy it and flip it right away. Oh maybe only the ones with good credit now can enjoy instant equity :)

Way, way off topic, but by jove, this could end very, very badly.

The BBC just reported that there are ads in Pakistani newspapers asking the public to notify the authorities in case they have any information on "lost" radioactive material.

I don't have a link for this yet, just heard it on the radio.

SP

Peter P Says:
[re: catfish ponds]
Huh?

What?
SP

I read somewhere that 40% of the mortgage workouts end up in foreclosure later anyways. But there is a problem with that estimate:

We have never had nationwide depreciating real estate before. So, if you have negative equity in a house, what motivation would you have to play along with the bank and keep struggling to make the payments, even if the bank reduces your interest rate somewhat and makes it fixed? Aside from a credit hit (and many were subprime before) and tax on the loan forgiveness, what would keep you in the game if prices keep sliding? What would you really lose by saying F this? So I would predict that past performance will be a poor predictor...l

Further, how far would the bank take this? a cut in rate from 6 to 5% is equivalent to a 10.5% loan forgiveness up front. I can see how having some loans workout this way is better than sucking in and choking on too many foreclosures all at once, but still the way homeloans are sold how many can take a 10+% hit early on and not turn out to be a losing proposition for the banks?

azrob,

If the SHTF in a big way, a bank may well consider a 10% or so hit to be way better than the alternative.

They might also be thinking that if this happened the Fed would cut short term rates right down again, in which case they would get their principal back in full (plus some prepayment penalties?) if the borrower refi-ed into an ARM again.

In fact, I am surprised none of the big lenders has yet offered workout loans with low fixed interest rates denominated in yen. It seems to me that except for the borrowers currency risk this could actually be a win-win at, say, 4% or so.

astrid Says:
I guess I would feel differently if I was optimistic enough to have children…

that's the triumph of hope over experience...

Randy H Says:
[Hyper inflation] has never occurred within a modern nation state that wields credible military power. Many examples of building-to-hyper inflation scenarios have been averted by this same mechanism, as in Russia in the 90s.

hmm, what about Germany in the Weimar Republic... or Brazil and other S. American states now?

DS,

Yes, I would like to read about Weimar Germany's stupendous military might :)

"hmm, what about Germany in the Weimar Republic"

That makes Randy's point for him. When Germany stopped making WWI reparation payments in the early 20s, the French and Belgians took over Germany's industrial Ruhr region. Germany did not have the military power at that time to stop them. Germany, after losing its prime manufactiring and mining area, resorted to making reparation payments through the printing press. In 1914, the Mark was worth about a quarter. In 1923, it took 1 million to buy a buck.

"He got so worked up with his theory (and some alcohol)"

Is this the time when everyone gives one another that "Well don't look at ME, "I" didn't invite this @ssclown" look? Ahh, "that" look!

Vince Vaughn and Luke Wilson star in:

Realtwhore Party Crashers!

How depressing. At least real party crashers 1) don't take themselves seriously 2) have nothing to sell/promote and 3) are just trying to pick up chicks you could tell how their evening was going to end ANYWAY!

Headset, astrid,

Thanks, "victors" usually don't need a wheel barrow of currency to buy a loaf of bread. Let's not let that ruin an otherwise fabulous Friday!

After reading some news articles, I am wondering if the gov may step in to play bailing bucket.

For example, someone already mentioned that MA requires banks to renegotiate loans.

In the FHA steps in, they may take over loans that banks cannot handle, forgive the underwater part, and use a zero rate for the balance. This would be restricted to owner occupied homes. Nobody would be able to buy a home this way, it would just be for those presently underwater. In the past the FHA only guaranteed loans, but the FHA has experience taking over defaults and its purpose is to support owner occupiers by allowing a lower downpayment and reduced monthly payments.

I hope nothing like that occurs, but it looks politically feasable.

While you all may be munching and mulling over the impending housing crash, a global crash on all assets (stocks, bonds, gold, and others) isn't very far away. Start planning for the rainy days. But, how?

I thought everyone was just kidding about this whole "Mod-Squad" thing?

http://therealestatebloggers.com/2007/04/16/mod-squad-proactively-helps-emc-mortgage-customers-facing-foreclosure/

What a farce! By definition "pro-active" would have meant not writing these loans in the first place! This is how we spin things here at the REIC.

April job report out... and it does NOT look good. Signs of slowing into a depression?

SF,

Where do you get "depression" out of that? That link just shows a slowdown in job growth.

April job report out… and it does NOT look good. Signs of slowing into a depression?

4.5% unemployment is not a big change now. We've already at this rate in previous year. The trend now I see it the rate fluctuates between 4.7 and 4.5. Will it go up? Probaby yes, mostly becuase of the slowing growth. There is already hiring freeze in some companies.

@DS

RE: Weimar & die Inflationszeit

This is *exactly* my point. Weimar had no credible military power. They hyperinflated as a result of crippling foreign debt obligations.

This all stopped, quite abruptly I might add, just as soon as they were able to credibly halt payments and convince foreign debt holders they had enough guns to do so without recourse. Notice I didn't even say that such a power needed to actually have a military. Just have a credible military threat. In fact, Germany didn't even really have a military when they halted hyperinflation. They just convinced their debtholders they did through PR tactics well publicized by the H Channel's daily black and white documentaries.

In fact, the recovery in Germany was so stupendously successful that Americans were scrambling over top of one another to invest in das Reich. Not so dissimilar from Putin's Russia (but that's just my own opinion).

Brazil and other S. American states

Do they have credible military threats capable of intimidating the IMF powers to which they are indebted?

Headset,

I didn't say it was a depression. I asked if it was a sign of the economy slowing, perhaps headed into recession. Except that I wrote depression instead of recession because I'm occasionally less apt that a retarded monkey at working this here keyboard. :)

I believe the article said there would need to be several consecutive months of 50k or less new jobs created to steal the Fed's attention at this point. Question though?

Does that count realtwhores? REIC Shills? Illegals hanging drywall?

Just in case someone in an urban property is approached about refinancing, and assured that rising gas prices will surely inflate their valuation, I ran some numbers.

Take a car with 15 mpg actual performance in your average daily travel. Today's gas price is $2.90/gal. Assume under the most biased optimistic scenario, that the day after you refinance, gas prices jump to $4.90/gal.

Imagine while living at your close-in property you only have to drive 10 miles per day, and the option of living out in the suburbs is 60 miles per day. Over a period of 30 years, the savings from moving closer in amount to $87,600. Thus the premium for moving closer in by about an hour's worth of commute time is roughly $2,920 per year. Refinancing fees alone will eat up most of that first year. Actual savings are much lower and will take longer to manifest because gas will not jump $2/gal overnight (much as my energy-related positions would like that state of affairs).

apostacy:

wow you really don't value your life at all! you calculate the gas to the penny, but don't discount the fact that your wasting 2 hours a day commuting? assuming a 40 hour normal work week, you just gave yourself a 25% paycut in terms of hours spent working and commuting when compared to money earned.

Screw driving from the suburbs, I live 10 miles from my office and ride my bike everyday! Factor my sexy lean body that young girls love into that equation next time.

azrob,

Uh I don't know how to break this to you but after a certain age males become totally invisible to "young girls". They can see through, above and around you. Balding or not. "Lean and sexy" or not. Do it for yourself.