patrick.net

Instead of the negative:

“The US housing bust is like a leaking ship.” and “Home prices expected to drop”

They could have been positive and said: "Good news in housing market - savers and responsible borrowers see increasing affordability"

Where is the Love?

http://www.youtube.com/watch?v=6SI-MHhEJxI

I thought was mine o' mine

'til the end of time...

Can anyone summarize the new bankruptcy laws? Or the fraud laws? I have certainly seen my fair share of fraud in my neighborhood. Watching homes pass from owners, to realtors, to undocumented immigrants. With no income documentation they are able to buy $650k homes, cash $30k out of the home in just a few months, buy cars and other toys, then just wander off to the next town.

What I want to know is how much of this can be recovered? Can the system take back the goods, the cash, the bonuses? How much is shielded by bankruptcy? How far can financial recovery go in fraud?

For the Wall Street types, remember when the unethical, biased research was used to pump stock prices? The firms had to pay back billions. Will we get that here? All of that Wall Street leakage on bonuses. How much of that can be recovered.

May as well think about it now - its going to get very, very ugly.

Since when is it a big deal to place illegals in loans there's NFW they can honor, get cash back at close and have realtors get "just and due compensation" for steering unqualified buyers to their MB buddies?

Really Duke, you can be such a busy body sometimes!

In a nutshell the new BK laws require that anyone that files be "means tested". You can't just file b/c it's convenient for you at the time. There has to be documented hardship and demonstrated inability to pay.

HR 3648 will basically "do away" with the term "fraud". It's so... 2005?

SP,

I think Financial Times and Bloomberg have been pretty good on the subject for some time now.

Inside the print media world, it's been pretty much a given that NYT plays brontosaurus to Bloomberg's velociraptor - it takes the old girl a while to make course corrections, but she eventually does. However, once the Grey Lady is finally on the job, the tide turns in NY and at all those affiliated mid-market papers.

By the time Reuters or, especially, the Associated Press are aroused from their stupor, it's something everyone already knows about excepting possibly Readers' Digest.

Market Wrapup from Gary Dorsch at Financial Sense.
Red Chips! Greenspan's comments on the chart are very amusing. ...that or they'll just piss you off.

http://tinyurl.com/1w56

I predict many more sob stories.

Like this one:

http://abclocal.go.com/kgo/story?section=business&id=5662611

Let's see, who am I mad at for that particular story. . .

Of course Countrywide has no business putting a single mother of 9 who is a housecleaner into a home. I hope Countrywide loses their shirt.

But at what point does the borrower feel she is owed a home? Low income and high expenses (God bless the little ones) is no recipe for home ownership.

eburbed,

You are correct sir. The human tragedy of this mess will be the MSM's trusty topic for months if not years.

Unfortunately, these stories will also serve those that had a hand in it. Quotes like; But the California Association of Mortgage Brokers believes lenders should work with homeowners. “As long as its a person who played by the rules and didn't cut corners, we are strong advocates of lenders helping homeowners stay in their homes," said Ed Craine from the California Association of Mortgage Brokers.

Hey Ed, how about you brokers refund your Yield Point Spread kickbacks to help the lender, help the borrower that you helped into a loan with higher interest rates than there would have been? That should cover a couple payments and get a few FBs through Christmas.

Steveoh,

Precisely! And... it further supports the notion that we should pay no mind to "foreclosure figures". My guess is, going forward they are going to be as "cooked" as any other NAR bs.

What we need to focus on is "How many of your loans are paying EXACTLY "as agreed". I don't give a sweet mother f@ck about what percentage are in NOD/"distress" etc! (Hell, you guys won't issue that unless you're absolutely left with no other alternative!)

Boys, the SSOTW's have been coming along at a steady clip for well over a year now. It's nothing new. What I've noticed is that without fail they all somehow fail to find a true "victim", meaning there's always a catch where one could argue the FB either got what they deserved or should never have been given a loan in the first place.

Case in point, eburbed's link - since when should a single income housecleaner be given a home loan? Or the WSJ article from earlier this week about the "United States of Subprime":

Kristine McMahon has a six-figure income as a mortgage broker and lives in a four-bedroom home in East Hampton, N.Y., valued at more than $2.7 million. Yet Ms. McMahon, who works for Manhattan Mortgage, chose a subprime loan for herself when she refinanced last year to turn some of her home equity into cash. Ms. McMahon says that at the time of the refinancing, a conventional lender would not allow her to take out as much cash during the refinancing as her subprime lender, New Century Financial Corp., which is now operating under bankruptcy-court protection. Ms. McMahon chose a subprime loan that carried a fixed-rate of 6.45% for the first two years before turning into an adjustable rate. She plans to sell the house before the higher adjustable rates kick in.

So exactly how much MEW did this be-atch take out? Should we bail her out if her plan doesn't go as expected???

From William Poole (Fed president of St Louis)
"There is no new lesson here: Sound mortgage underwriting should always be based on analysis of the borrower’s capacity to repay and not on the assumption that a bad loan can be recovered through foreclosure without loss because of rising property values."

Our topic thread a few days ago was a lender bashing realtors, what we need is a thread where realtors, Wall Street, appraisers, etc all weigh in on the lenders.

Unfortunately, when banks fail, the tax payers pay. And as a tax payer I want to recover as much as possible from those who profited by the poor lending standards.

skibum,

So right. (Calming down.... Serenity now....)

It just gets my goat when these stories:
- put entitlement where there is none
- exonerate the many architects of this debacle
- spin half truths into something that makes no sense to a discerning audience

The problem is that if a lie is told enough, it can become truth to many. Then policy changes…

skibum,

Why do you hate Amerika? Why can't someone that fills out forms and makes a few follow up calls live in a 2.7 mil. home?

Pffftt.

Oh and she had her "exit strategy" scripted before she even signed doc's! This is "self dealing" at it's finest. Remember, she probably got paid a commission (or drastically reduced her fees) above and beyond what any of her "clients" would have had access to!

I'm sorry, that 'should' read:

"she probably got paid a HEFTY commission"

Which she... in turn used as qualifying income (before it was actually paid)... to qualify for the loan (she otherwise would not have gotten) on a 2.7 mil. investment w/nothing down, that... appreciated @ 30% a year... that lived in the house that Kristine built!

Please tell me I'm not the only person that sees something wrong w/ this?

Pffftt is right.

There is no poster child. You can almost spot the precise point where each journalist realizes they have a zero on their hands, and not a victim.

I think people who read these little trainwrecks are getting it. I certainly hope so.

I mean... why go to the trouble of doing some sort of 'Ponzi scheme' when you can do all this yourself without running the risk of engaging in what might be "misconstrued" as "criminal activity"?

After all, her girlfriend at New Century was her processor? What did Kristine have to fear? Crissakes, she's so sure of her position she's openly talking to the paper!

(If I pulled a little stunt like that I wouldn't be talking at all...) :(

DinOR,

It's blaring. ...and probably pretty common.

Is this a realistic scenario? Realtor represents self as buyer in transaction, charges full commission, 110% / 0 down financing on overpriced property, calls it owner occupied but never moved in, relisted it minutes before driving to the closing meeting or kept the property a pocket listing, represented self as sellers agent, phantom bidding, etc...

It's like a dance really. Until it stops with a lack of buyers. Then the alligator tears are drummed up. In fact, if I were one of these people, I would right the news story myself and mail it in.

right >>write

IMO the true demand for 1.5 mill+ homes is much much lower than the amount of homes that were built, and in every location.

I'm truly shocked how many 2m homes there are for sale now. They are all vacant too. Lots small time builders jumped in the game to built a huge home and cash in. Also lots of realtors/brokers bought them, heloced them, then put on market. The problem is even if prices come down 50% 1m isnt really affordable at all for 'working people' and I doubt there are very many truly wealthy buying in todays market.

The show is a little boring I must say, watching the same homes sit vacant for sale for 2 years is getting old. When the bank takes it back thats the fun part to see.

Of course Countrywide has no business putting a single mother of 9 who is a housecleaner into a home. I hope Countrywide loses their shirt.

Actually it turns out she wasn't always single:

http://www.smdailyjournal.com/article_preview.php?id=81097

In 2004, South San Francisco resident Esthela Baldovinos paid just $2,300 a month for her house.

Today, the payments ballooned to $7,500 and will reach $8,200 in November. Baldovinos entered into an adjustable rate mortgage not realizing how high the costs could get. Now she and many like her are asking local entities to pass foreclosure moratoriums. The South San Francisco City Council is considering such a voluntary measure, but the resolution is non-binding.

“I am delinquent on my mortgage because I was given an adjustable rate mortgage. I started out paying 6.5 percent. Now my interest rate is over 12 percent and I can’t afford the payments,” Baldovinos said.

Combined Baldovinos and her husband bring in $6,500 monthly — $1,000 less than the current mortgage payment. The parents of nine children with seven still living at home means the mortgage isn’t the only bill stacking up. Power was turned off last week with more than $1,000 owed to Pacific Gas and Electric. On top of it all, Baldovinos’ husband left from the pressure.

Steveoh,

There ARE allowable limits to which I can charge myself (and family members) stock commissions. I never have and likely never will. It IS however legal to a 'degree' within the guidance of securities law.

But certainly not enough to make it worthwhile to... turn around and buy 2.7 mil. stock positions with... and turn, churn and burn into ever greater profits solely from leverage and commissions paid to self?!

You'd think with THAT much leverage on the line there would be at least "some" regulatory guidance? Hmm, guess not. According to "The Investment Act of 1934 Blah bity blah even if I use ongoing fees as security against a business loan, clients need to be informed in WRITING! w/ your regulatory board's approval being a requirement.

Is that so much to ask?

"that's the fun part"

HK.. your twisted, but... MY KIND of twisted!

Well, it's official. Google single-handedly is what saved the Silly Valley economy over the past few years:

http://www.mercurynews.com/ci_7156326?nclick_check=1

Even this fluff piece admits the rate of money pumped into the local economy has been waning. We need the next Google asap, or else the economy will tank!!!

The problem is even if prices come down 50% 1m isnt really affordable at all for ‘working people’ and I doubt there are very many truly wealthy buying in todays market.

Also, "truly wealthy" people will not buy $2M homes. Perhaps they will buy $1M pads for their college-bound kids in Palo Alto though.

Bruce Says:
I think Financial Times and Bloomberg have been pretty good on the subject for some time now.

True. And curious coincidence, they don't really get a lot of ad-dollars from the REIC. :-)

SP

Well, it’s official. Google single-handedly is what saved the Silly Valley economy over the past few years:

Thanks to Google, we have better restaurants on Castro.

Thanks to Google, we have better restaurants on Castro.

I disagree re: Castro St. There are more restaurants with the wannabe hip interiors serving bland food. There are fewer of the older "real" ethnic restaurants serving really good food. They've either closed or gone to pot.

There are more restaurants with the wannabe hip interiors serving bland food.

Those restaurants aren't that bad. I love bland food anyway.

There are fewer of the older “real” ethnic restaurants serving really good food. They’ve either closed or gone to pot.

I guess they could have gone for a higher price point. The market has changed. One must adapt or else. ;)

San Mateo downtown has better food overall than Mountain View.

skibum said:
So exactly how much MEW did this be-atch take out? Should we bail her out if her plan doesn’t go as expected???

I am willing to bail her out to exactly the extent that she would have shared her gains with me, if her plan HAD gone as she expected.

SP

# Peter P Says:
Thanks to Google, we have better restaurants on Castro.

Are you serious?

Those new, trendy, hipster-infested restaurants are the best ones to avoid, in general.

SP

Those new, trendy, hipster-infested restaurants are the best ones to avoid, in general.

Why?

Usually, good restaurants are those with pricing power. Hipsters allow a market with such restaurants.

Usually, good restaurants are those with pricing power. Hipsters allow a market with such restaurants.

False logic. Pricing power doesn't guarantee good food nor a good dining experience. If the owners just wanted a trendy place, less attention would be paid to the chef, menu, wine list and ingredients, and more to the ambience, etc. Such is the case with these wannabe restaurants. You can charge all you want, but if the food sucks, it's still a crappy restaurant. The opposite example is/was Manka's in Inverness. Great food, not so trendy.

Besides, "hipsters" are usually out for the scene, not the food. Once a restaurant becomes "trendy," it's often not worth going there anymore, IMO. Sorta like the Yogi Berra (paraphrased), "No one goes there anymore because it's too crowded."

Besides besides, the day Castro Street (Mtn View) is truly trendy is the day hell freezes over. It's nothing but a dressed up drab suburban downtown. TAP Plastics and that aquarium are what I think of, not trendy eateries.

False logic. Pricing power doesn’t guarantee good food nor a good dining experience.

Please explain how a good restaurant can be sustainable without pricing power.

Pricing power doesn’t guarantee good food, but the lack of pricing power guarantees bad food or bad business.

If the owners just wanted a trendy place, less attention would be paid to the chef, menu, wine list and ingredients, and more to the ambience, etc.

Why can't we have them all? This is why it is important for the food market NOT to be price-sensitive.

Once a restaurant becomes “trendy,” it’s often not worth going there anymore, IMO.

True. If it is trendy for the wrong type of people (e.g. engineers)...

Peter P,

Ahem. Engineers? Lucy, you have some splainen' to do.

Ahem. Engineers? Lucy, you have some splainen’ to do.

I have no respects for engineers, because I am one of them.

The opposite example is/was Manka’s in Inverness. Great food, not so trendy.
Talk about pricing power. Admittedly, I now regret not immersing myself in the Mankas experience, given that it is no longer possible... but really, that place was beyond my "choke point" ( the price range at which food sticks in the throat because it's cost is beyond comprehension ). Admittedly I am somewhat of a cheapskate -- I can do $100+ on a meal for two (including tip), but it had better be good. After that, forget it. Well, at least I got to wander around the lobby, absorb the ambience, and sit on the front porch before the great fire.
And since we are on this track, has anyone noticed that every B&B owner under the sun thinks this is a great time to "retire from the business". I know the one we stayed at in Inverness was up for sale at one point last year (not sure if it sold).

B&B people are pretty shrewd about the value of the property and how much hard work is involved. They are selling today at price $X so they can buy their own place back in 3 years at $X-alot.