By Peter P
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2007 Sep 3, 4:39am
15,036 views 173 comments
With home prices falling and subprime mortgages resetting, there will be growing pain among those who have used non-traditional financing to purchases their homes in recent months. As compassionate bloggers, we should seek to comfort them with emotional support. We need them to understand that hope is still within sight and the American Dream is still reachable.
Let's formulate a plan to show our warm hearts.
Note: We should still oppose any form of bailout because that would interfere with Free Market.
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I am human like the vast majority of people, not a statistic
A single foreclosure is a tragedy. A million foreclosures is a statistic. :)
The problem is there are way too many realtors with way too much time on their hands. So instead of going out start a Web 2.0 social networking company or something else marginally less useless, they spend their time pretending not to be realtors posting on blogs.
Hint: They are *all* realtors (or otherwise in the industry).
Didn't they catch like half of the regular non-agent posters on Zillow.com's forums were really those same "registered agents" using aliases just agreeing with their own bullshit?
I've seen Patrick.net listed on at least 3 RE-blogs as a place "concerned agents should visit".
2007 Realtor Bloggers == 2005 Freeper Bloggers. Just a bunch of knuckle dragging fucktard choads.
Yeah, I hate the idea of bankruptcy. A college pal of ours who liked to live better than her teacherâ€™s salary *intentionally* bought a whole bunch of new expensive stuff on a whole bunch of new expensive cards even as she was making appointments and plans with her bankruptcy lawyer. She ran up an additional $10K in debt so that she would have everything she needed to start fresh. And this was $10K around 1995â€“to put it in perspective, $10K was close to half of her first year teacherâ€™s salary in the town where she lived.
Um, thatâ€™s stealing.
Ok, there seems to be a few misconceptions here about bankruptcy that need clearing up. IANAL, nor BK expert --haven't filed BK, but a few in my family have. Even so, it seems that a fair % of people here seem to think it's some kind of revolving welfare program exclusively used by the deliberately irresponsible.
While, as Randy often likes to remind us, whenever there's a government program, there are always those who will find loopholes and try to game the system, every major study on the subject (including the Harvard one last year) have found that "gamers" so not constitute a majority or even large % of those who file. On the contrary, BK is used by most of the public as it was intended: as an avenue of last resort.
Bankruptcy actually has its origins in the ancient Biblical tradition of "Jubilee": The concept of the Jubilee is a special year of remission of sins and universal pardon. In the Biblical book of Leviticus, a Jubilee year is mentioned to occur every forty-nine years, in which slaves and prisoners would be freed, debts would be forgiven and the mercies of God would be particularly manifest.
Bankruptcy as a "fresh start from debt" concept was introduced to English Common law in 1570, mainly as a way of relieving overcrowded debtors prisons.
No form of BK is perfect, and like any government program, it can be gamed. But let's face reality people, it's there for YOUR benefit as well as your idiot neighbor's. Yes, the regulars on this blog tend to be unusually responsible, finance-literate and of the renter-saver type. Even so, no one here is immune to financial ruin. Anyone of us could lose his/her job (or business) and health insurance tomorrow, through no personal fault. Any one of us here could be bankrupted in the future by medical expenses or failed investment or a business deal gone bad.
BK is there as an option of last resort --and should be treated as such, I agree. If some of you would like to tighten up requirements to discourage "gaming" that's one thing (though I believe Congress already took care of that in spades back in 2005). However, would anyone here really care to back to the bad old days of debtor's prison? Anyone care to be hounded to your grave about some huge unpaid medical bills you got in your 20s due to no health insurance?
For that matter, why is it that corporations get a total free pass while individuals get the new "means test"? Ford, Chrysler, GM, AA, United, Continental, etc. all get to file BK as often as they like, while we put individuals through the wringer. Seems to me BK laws should be *at least* as lenient towards real living people as non-living corporations, no?
O.K, that was a good one! Seriously though, where does NAHB come off talking 'bout "stability"? They're the ones that threw the people they JUST sold homes to under the bus when they got in the slightest pinch and started to offer all the upgraded pregraniteel and free olympic sized swimming pools!
How many times have we seen the SSOTW where miffed recent buyers can in no way compete with the very developer that just sold them up a creek?
DinOR, they still have good spinnists. :)
I wonder why North Korea's official name is Democratic People's Republic of Korea. Democratic. People's. Republic. Hmm...
Isn't something like Authoritarian Kim's Kingdom more appropriate?
Estimates are that about 30% of the households in this country are rentals and an additional 31-34% own their homes free of debt. Of the remainder, some portion are simply not in trouble financially - they're meeting their obligations and appear to be able to continue doing so. You may argue the figures by a few points, but there can be little doubt that most of the country, by a wide margin, are not requesting a bailout from anyone.
You seem to want to frame the discussion in terms of class warfare. I say you can't characterize renters and paid-up homeowners as some kind of elite. They're every sort of person living every sort of life and all they have in common is their good sense and the good luck (for all of us) to form a considerable majority.
If the few measures which have been taken so far look elitist to you, you haven't been paying attention. The fed has acted to keep markets from stopping, and not to pick up the tab for speculation. There's a world of difference. As it stands now, lenders and investors in asset-backed securities, investment banks and private equity (all the people you evidently despise) have been given no protection from the consequences of their actions. They're going to lose money, and many will be out of work.
Let me stress that keeping the banking system in working order is different from 'propping up the rich' as it seems you would prefer to see it. The real moral hazard is to be found in publicly-funded programs or monetary policies which insulate everyone from all downside risk.
Grow the f*^k up.
The real moral hazard is to be found in publicly-funded programs or monetary policies which insulate everyone from all downside risk.
Just talked to an acquaintance in the mortgage industry.
Jumbo loan remains in the semi-shut-down stage, because no investors will buy them. People without a good credit and a solid family income (read: $200K or above) can hardly borrow anything beyond $417K. Those who pass the threshold can only borrow up to 3x gross household income. Secondary loan+ primary loan combination to come up with enough dp is on life support.
So, the higher-income worker bees with a long enough earning history in the valley now can only borrow up to $750K (assuming $250K income). That will put a cap on middle upper class housing price at $937K.
People without a good credit and a solid family income (read: $200K or above) can hardly borrow anything beyond $417K. Those who pass the threshold can only borrow up to 3x gross household income.
Wow. If this is representative of the general mortgage market, this will *destroy* prices in CA. I doubt there's a broom closet to be had in Pasadena for less than $417k.
I heard similar things from a MB friend. Looks like 10% DP is the absolute minimum now. And even that is difficult to pull.
Wow. If this is representative of the general mortgage market, this will *destroy* prices in CA. I doubt thereâ€™s a broom closet to be had in Pasadena for less than $417k.
Yep. The prices we see now are simply lagging the financial reality of the market.
NOT INVESTMENT ADVICE
I agree. They're totally unreal. We really can't say where prices are right now and probably won't until after the dust settles.
Thatâ€™s why this is so pathetic. 6 mos. ago it was â€œbuy now or be priced out foreverâ€ and now itâ€™s â€œWhy a bailout makes sense!â€
First they were trying to convince us that housing prices will keep going up forever. Now they are trying to argue that the prices will not fall due to bailout etc.
The only problem is they are a bit too late in their arguments. Prices have already started coming down. I have noticed a sea of change in the attitude of Bay Aryans - including dual income immigrant techies. Some people even realize that median going up is a deceptive indicator ! Who knew !
Given the way the money faucet works, I think the current "fair" market price for SFHs in good neighborhoods should be around $800K-950K, which means lots of these 1.xM homes will need to come down 25-30% to meet the "new market".
Since we know that the market always overreacts, so it is possible that you may pick up a deal, say $650K in San Marino or something.
10% dp will not work for something without a 750+ credit score.
Now in order to borrow more than $417K, you need aboslutely the combination of the following 3:
1) 10% dp as the absolute minimum
2) more than 3 years of documented earning history that supports your borrowed amount (3x)
3) credit score of 750+
Even so, you are looking at a rate of 7+%. People who cannot jump through such hoops may still get money if they are lucky, at about 12% rate.
The SF Bay Area Craigslist ReduceOMeter has been shutdown, because, quite frankly, it just wasn't that much fun any more. As a replacement, may I introduce the ShortSaleOMeter. There were 89 "short sale" listings for the two day period of Aug. 31-Sept. 1. Even a couple of condos in *gasp* Marin. Don't worry FBers, your crys for help are not going unheard...
"Iâ€™ve seen Patrick.net listed on at least 3 RE-blogs as a place â€œconcerned agents should visitâ€.
Very few realtors are posting on bubble blogs. Most realtors in my area are retired suburban housewives who probabaly don't know what a blog is.
And blogs have already caught on with realtors, mainly the younger ones. If you go to realtor.com, you will see a yellow banner at the top that takes you to all of the realtor blogs.
Here in New Jersey, we have a real estate site that everyone loves to hate. The site is full of advertisements for developers and realtors so anythime someone writes something negative about the housing market, the moderator deletes the post IMMEDIATELY and blocks the user's IP address. Communism at it's finest!
Exactly. I just can't understand why any REIC member would find this something to boast about?
"Go ahead, take the plunge (even if prices are in a free fall and your source of funding is in doubt!) How much lower could prices go down with a bailout at the ready?"
Great sales pitch! How's that working out for you? :( Pathetic.
For that matter, why is it that corporations get a total free pass while individuals get the new â€œmeans testâ€? Ford, Chrysler, GM, AA, United, Continental, etc. all get to file BK as often as they like, while we put individuals through the wringer.
To be fair, AA has never file for bankruptcy.
"may I introduce the ShortSaleOMeter"
You certainly may! Sounds like the only sensible alternative. Like I say, with as many specuflippers (TM) going the "no guts, no glory" route when insisting on their 'wishing price' this may be a more accurate indicator anyway. I mean, the guy is 5 months behind on his specu-payments and he can only rent for 1/2 to 2/3rds. of his monthly nut so WTF!
"Either I'll get lucky and sell it for what I owe, or it'll go back to the bank, right?"
A single foreclosure is a tragedy. A million foreclosures is a statistic.
From sushi to Stalin in one single thread. :)
We need some sort of commitment for those seeking BK that they won't do it again. Plus we need to prevent such people from procreating. A quid pro quo of sterilization in exchange for BK protection may be an appropriate remedy.
A similar solution to illegal immigration would replace the current "catch and release" program with "catch, geld, and release". This would have a strong deterrent value as most illegals have bought off on the whole machismo lifestyle.
A $1.1 million home for $650,000? Get real. The Great Hosuing Crash of 2008 has officially been cancelled.
Build camps on the border and send the illegals found breaking any laws there. This would make them uncomfortable while they wait a court date.
Actually, isn't true that aliens who entered without formalities are not protected by the Constitution?
Regarding problems in Jumbo mortgage.
I have been hearing similar stuff but not in so clear terms. I have been arguing for a longest time that in spite of the strong job market the market in BA cannot sustain the madness in the face of rates near or over 8. Even at 7 the market started stalling and falling, but with 8% even the Fortress can stall.
Whatever the bailout is, it will have zero impact on BA. It's one thing to take a political posture of bailing out a poor FB who was tricked into a subprime mortgage. It's completely another to bail out a Software Engineer who earns over 120K and bought a 1M+ home. Not going to happen.
The real question is what will happen to jumbo mortgage market ? How long the crunch will remain ? Will it keep getting tighter and/or have higher interest rates ? What will be the effect of rate cut(s) by FED ?
A $1.1 million home for $650,000? Get real. The Great Hosuing Crash of 2008 has officially been cancelled.
This has happened in places where governments are even more eager to intervene.
FHA limits will probably be raised, whether we like it or not.
We may end up with a combination of high inflation, weak dollar, lackluster economy, and high mortgage rate (higher risk premium).
My original post is not bailout and punishes FBs and Credibtors alike. What else do you want?
About class warfare. The rich has won over and over and over again. That is why there is a 3rd world and the reason the rich and their sympathizers don't want to talk about it.
We all knew people who didn't listen to us non-professionals and now are in trouble. But those who know better from Greenspan to Leahr told EVERYONE there was no problem. And now their buddies are the ones you want to bailout. Huh? Did the investors really think there was no risk?
I knew there was a problem and I also know this is not just a housing bubble problem. But a problem of our whole way of life.
This whole thing is about marketing and the false prosperity we all are induced in, in our society. It is also part of the American system, not just the myth of Free Enterprise.
Class Warfare is an essential part of human societies.
Watch out for Generation Warfare. This one is something new.
We've been waging generational warfare for quite some time now. Social Security and Deficit spending.
Weâ€™ve been waging generational warfare for quite some time now. Social Security and Deficit spending.
The only way we can "win" the generational warfare is to side with the seniors.
Or arrange a powergrid shutdown and concurrent heatwave.
The even funnier thing about TOSâ€™ â€œbottom lineâ€ is that by strict definition, a recession is technically defined as at least TWO quarters of negative GDP growth.
Good catch !
What our Lady Aristotle is saying is "TWO quarters of -ve GDP growth will last about ONE quarter". It makes perfect sense.
I found this link over on the HBB : http://tinyurl.com/yr7w92
Check it out and snicker for a good long time. A 20 year old who puts the 'broke' in mortgage broker.
Hey Donald you nimrod,
I've got news for you - the "bailout" you keep touting and hoping for ain't gonna help much. It's just political window dressing. Do you really think those in government really want to help out your average FB? This is just a great political opportunity for the Democrats to seize on an issue and claim they are trying to help the "working class."
You are just too dumb and/or naive to realize this, it seems.
Again, my condolences for overpaying for your home in New Jersey's "Gold Coast."
â€œThe history of all hitherto existing society is the history of class struggles.â€
â€” The Communist Manifesto, Chapter 1
DS, that is very true, isn't it?
Sorry, I should have written â€œThe NAR and NAHB funded Democrats want to help out the homeowners.â€
Sorry, you should have realized "The NAR and NAHB funded Democrats want to help out the NAR and NAHB."
Any scraps thrown at FB's will be only to the extent that their interests coincide with those of NAR and NAHB. In a tight credit environment, underwater FB's will find that the NAR is no longer 'their best friend', and that the NAHB is actually in _competition_ with them.
Fed rate cut by 75 basis points.
Extend 600k conforming loan limit to entire country.
Heavily regulate mortgage industry to eliminate bad actors.
Government agencies get lenders and owners to renegotiate toxic and underwater loans where possible.
Increase arcahic $3k/year capital loss limit to $100k or more.
And on the lighter side:
House Katrina refugees in empty $1million McMansions to save on trailers.
Convert abandoned condo complexes into housing projects.
Depreciate dollar by 2x through inflation until everyone has positive equity.
Elect Hugo Chavez president and then cancel all debts retroactively.
marx is by far the most important economist in history.
To be fair, TCM has a rather accurate prognosis of capitalism. However, its prescriptions are worse than the disease.
Nevertheless, we do not really need economists. All we need is more hedge funds to arb the market.
I would say George Soros is the most outstanding econo-philosopher in the 20th Century.
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