patrick.net

PeeterPee 'n' Headset - I knew someone on Section 8, she had a huge apartment for which she paid about $350 a month, ok so far as that goes, but then she turned around and spent another $350 a month on storage for a bunch of..... utterly useless shit. I mean, that stuff was not worth dollar one. So, she was still shelling out $700 a month, and probably could have rented something OK for that. Plus her place was full of junk, there's such thing as having TOO MUCH room I think!

Guess I'm just bitching because with my WASP last name I'll never get Sec. 8 even if I might need it sometime.

Welcome HARM!

Welcome HARM to the mighty Bay Area, please get yourself acclimatised to the price tag.

Oops, I just realized that the conforming for the Bay Area could be $729K, because we are "high cost" area.

It looks like the US government is very determined to make our median home price as close to $1M as possible.

What shall we do now? Shall we join the dark side, go out and borrow as much as can? Idiots have hijacked America, let's join the idiots.

Looks like 20 days of recession are over. Happy days are here again. I will continue to rent for the rest of my life, while my interest only buddies keep refinancing their 800k condos.

I feel like crap for moving my 401k etc. to money market/treasuries. What madness!

Also, why don't they mail prepaid VISA cards instead of checks? That way people will not risk saving the money and will spend it for sure. Heck, a $1600 Walleymart gift card would rock.

625k is still insane conforming limit. 7 years ago it was 220k!

Median price in CA tracks the conforming limit loosely. But now that prices are going down they have too goose the limit up to keep housing growing to sky.

So long term what is the effect of 625k jumbo limit? everyone in the world will 'fix their credit' temporarily to qualify for a conforming loan. Then FNMA and FREDDIE will be stuck with 'a paper' with sky high defaults. But thats 2 years from now, who cares right?

While we are making pointless suggestions to modify the tax code to fit our own self interest I propose LOWERING the conforming limit to 200K. And it never ever ever goes up from there.

HelloKitty,

you can move to France now, I misread it, we are most likely going to have $729K as conforming limit.

Might as well move to France. If im gonna rent 4evar paris sounds nice.

Im basing that on the vegs casino verson of paris - how different could the REAL city be?!

729?!?! Why doesnt the gubbermint just underwrite the loans too, I should be able to go direct to FNMA and not pay all those fees to CFC and Wells...no one is proposing THAT. Again only losses get shoved to taxpayer.

There's a place in France
Where the ladies wear no pants
And the men don't care
'Cause they like to see them bare...

People ....

Increasing the limit is one thing, but the real problem is QUALIFYING.

Common, the conforming part only reduces the interest rate. That is not the problem why people cannot refinance to avoid foreclosure. The real reason is they cannot qualify due to tighter requirements.

This will definitely help people with solid credit, who have saved large down payment and are WILLING to buy at these prices in this changed world. Yes, it will help all 7 of them.

It will definitely fool BA sellers into thinking that they can now get their wishing price and give a false sense of hope for a while.

Most likely the lenders will find some way to off-load their unwanted toxic junk on to Fannie Mae. Not sure how true that speculation is. We will know soon.

Start worrying when the agencies relax the qualifying criteria. It is very much within the realm of possibility.

@Randy H, Bap33, OO, Peter P, SIBA, etc...

Thanks! I'll be in touch soon, once we're a little more settled.

It looks like the US government is very determined to make our median home price as close to $1M as possible.

What shall we do now? Shall we join the dark side, go out and borrow as much as can? Idiots have hijacked America, let’s join the idiots.

Honestly, at the rate the R&S bailouts are coming (and growing in scale/magnitude), I'm starting to wonder why I'm *still* solvent and responsible. I know it's really all about bailing out the banksters, not Joe Homedebtor, but there are times when I feel like saying "F**k it --let's go out and get Mr. & Mrs. HARM the biggest McCrapshack we can find with a $0-down NINJA-ARM --while we still can!"

The people that predict BK for FNMA and freddie will be glad to see the conforming loan limit rise- this increases chance of huge losses for them. Even if the 'genuises' and FNMA can see thru the crap loans CFC will refi in conforming and deny them.....in declining housing market Prime borrowers default in high rates too....and declining market with recession and job loss? 5% down payment doesnt give you any security- they should only take 25% down payment loans/75% max LTV.

But we all know conforming loan standards will be eased and ez to lube your way into the rear of. Hopefully not.

But we all know conforming loan standards will be eased and ez to lube your way into the rear of. Hopefully not.

Xactly. Everyone who keeps insisting that 'There Will Be No Bailout' (including, strangely, Ben Jones) forgets that the same asshats who are jacking up the conforming loan limits can *also* change the rules re: borrower qualifications at will.

FHA/GSE underwritten neg-am $0-down NINJAs? Not impossible.

HARM, welcome. What are you doing in South Bay, do you have a job there?

People, you're forgetting a few things. Not only are there not that many potential buyers who will qualify for conforming loans at higher limits (as SIBA said), but there's another huge factor this BAILOUT doesn't address. Most of the forced selling, foreclosures, and the like are occuring before ARMs have even reset. These sellers who are creating downward price pressure on homes will not be helped one bit by the government's cockamanie proposal. And on top of that, say the government were stupid enough to "encourage" looser lending standards ala 2000-2005. What bank will be willing to take on yet more toxic mortgage crap after all these writedowns? They'll still be busy trying to pawn off the crap they already have on their books to FNM and FRE. Finally, say FNM and FRE are mandated to accept looser lending standards - in the short term, this will grease the mortgage market, but given how near-insolvent FNM and FRE already are, taking on this extra crap will likely be the final push that puts the GSEs into complete insolvency once it all blows up on them.

In some sick way, I'd love to see that, just to see what our brainiac leaders come up with to deal with it.

and HARM, Welcome to the Bay Area. Be sure to stop by your local government office to pick up your standard-issue Prius, iphone, bluetooth headset, "Keep Tahoe Blue" bumper sticker, and NIMBY attitude.

@HARM, Welcome and ditto what skibum said at 12:43.

Mercury in SF Bay is a problem, for real. The New Almaden mine near what's now San Jose was one of the top producers in the world:

http://en.wikipedia.org/wiki/Almaden_Valley,_San_Jose,_California

coretexity,

Yes, the payday and nigh on a week recession certainly was harrowing wasn't it? I agree, the prepaid VISA cards would be a stroke of genius!

But the increase in the GSE limit _will_ gum up price declines in the Bay Area. Mark my words. This is for both fundamental and psychological reasons:

* It gives wait-it-out sellers hope for a quicker, stronger rebound and further reduces inventories and/or prolongs wishing-price listings within that price-band. I'm not talking about the sub-$1mm homes for sale in working/middle class neighborhoods. Those are doomed to chase down the market. I'm talking about the upper-ish neighborhoods of +$1mm homeowners, a lot of which can hold out for many months or longer (by hook or by crook).

* It gives agents something to sell. Agents love Fed rate cuts, government bailouts and things like GSE limits not so much because they really have a direct effect, but because they give them something to sell. And agents have a shitload to sell all the sudden. Almost enough to whip up a little bit of buyer-fear in certain quarters. I've already heard from 1 agent we talked to a while back, who called yesterday evening with a "you know, now's your chance; better jump on it before it's too late and prices come back this spring!"

Don't be surprised if we start hearing about isolated bounces in prime areas. I expect said bounce to last only a few weeks, but we'll get a rush of postings here resuming the ridiculing and sneering at us "bubbleheads". You know, "ha ha, you ''loosers''* are still renting and paying for your landlords mortgages, and we're still all getting rich!".

* this time [SIC] ala Casey

For Immediate Release
January 24, 2008

STATEMENT OF OFHEO DIRECTOR JAMES B. LOCKHART ON CONFORMING LOAN LIMIT INCREASE

We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.

Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.

###

OFHEO's mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac.

PermaRenter,

(At least ONE guy gets it!)

Here's another example of why a bailout is in the interest of the powers that be:

Citadel buys Etrade's bad mortgages for 27% of face value ("27 cents on the dollar"). Now, Citadel and similar hedge funds are of course planning to make a huge profit on this type of transactions. And how do we that? By lobbying Congress to up the allowable Jumbo Loan size by 75% abd prop up rthe market, so that FBs can re-fi (maybe) and the mortgages rise in value.

God, I hate the corporate welfare in this country.

Randy H,

Thanks for taking the time to explain that vague sense of dread I had in the pit of my stomach. I'm much better now thank you.

justme,

To be fair Citadel took the plunge prior...

That's why I'm a fan of "riding out defaults". I know it isn't popular but a lot of say... high yield managers boast "we've never had a default" but took 27 cents on the dollar (vice 80) after dealing with the fallout.

Was the Investopedia link any help at all? I was hoping Peter P would chime in. In order to be proficient at option/future trading you have to walk, talk and LIVE it!

I am a house flipper. My definition of flipping is buying at a discount, rehabbing, and then selling at market value. I am not a speculator, i.e. someone who buys at retail, sits on it, and HOPES or artificially inseminates appreciation before selling it.

I work with a lot of people who would have foreclosed on their homes if I hadn't helped them. One couple couldn't even read, had a 5th grade education, and yet they were sold a house with a complex ARM. The houses I buy are in horrible condition, and bringing down the value of the neighbors homes.

Before you recommend punishing house "flippers", ask yourself this one question: When was the last time you stopped a foreclosure, or fixed up your neighbors house?

So, the idiots in the MSM finally realize that hey, maybe there's a downside to cutting the Fed rate indiscriminately:

http://money.cnn.com/2008/01/24/news/economy/barr_interest.fortune/index.htm?postversion=2008012511

Gee, if there were no downside, would you think we'd just leave the rate at zero, hand out cash hand-over-fist, and be done with it? What a bunch of maroons!

Before you recommend punishing house “flippers”, ask yourself this one question: When was the last time you stopped a foreclosure, or fixed up your neighbors house?

Well everyone, let's take a moment to pause and give thanks to CLB207 and all the altruistic flippers out there. We salute you!

***********

I will say that my problem with flipped homes is that the rehabbing is usually done on time constraint, cheaping out with materials, and almost always in a taste I don't like. So whenever I go to an open house that was clearly "flipped," I will essentially immediately cross it off my list.

Randy H,

>>Almost enough to whip up a little bit of buyer-fear in certain quarters.

How do we fight back? We need a full court press against the REIC, starting with the realtwhores. I've said before that the realtors are much more to blame than the mortgage brokers when it comes to creating the bubble, but they are playing it smart and laying low while blaming the whole debacle on the mortgage brokers and others in the REIC chain.

In my opinion. we need to go for the kill and finish off NAR for good while we have the momentum,. How do we do it? I think some good Congressional investigations would be an excellent starting point.

DinOR,

Yes, thank you. I've been over at the CBOE website to look at futures, but I still haven't found a quotable ticker symbol that will tell me the essence of the current state of S&P (say) futures. If Peter P or anyone one else knows I'm all ears.

Citadel: Sure, they took the plunge before the bailout deal was publicized, but I think they got the inside track on knowing what was going on behind the scenes.

CLB207 A "Real" Financial Hero...

That's funny because my definition of "flipping" is keeping current on the payments for 24 months, cutting the lawn when the wife makes a "big issue" out of it and selling at a HUGE profit!

Why go to all THAT trouble?

justme,

That may well be true but I don't want to go spreading rumors about people and circumstances I really don't know. I hope they DO make a killing!

try: www.888Options.com

They seem to have quotes for everything.

Skibum - thank you. There are a lot of crooked people out there who give legitimate investors a bad name. The houses I buy are normally overlooked by the average buyer - as you say, if a house is obviously flipped, you would cross it off your list. Most people would also automatically cross an unrehabbed house of their list - especially with the overstock of houses in excellent condition.
And as for whether a house is "obviously" flipped, those guys aren't doing a very good job of rehabbing, and won't be in business for very long.

P.S. And as for punishing those with multiple houses as the recommendation at the top of the page suggests, who would be willing to rent out a room in your house to a family who just got foreclosed upon, and can't get into an apartment complex because of the credit check??? There will be thousands of them out there.

DinOR - I can smell the sarcasm. At least I hope that was sarcasm when you are suggesting that you will be able to just sit, and make appreciation. The days of double digit appreciation are well behind. Sure, there are still pockets of appreciating land value, however even in those areas you have to wonder. Using the traditional affordability index, in which houses were bought at only 3 times the annual income - you can still see huge inflation in even modest neighborhoods. Just look at the average income compared to the average house price. I think if nothing else, this recession will bring banks back to more traditional lending standards - and thus un-inflate house prices.

CLB,

I have a good friend of mine that joined the service just so he wouldn't have to sell washing machines for the rest of his life at "dad's" appliance store. When he got out (late 80's) the economy.... sucked. So, he became a "rennovation guy" (that's what we called them at the time) and has been doing it ever since.

It just grinds me down to see how many have quit their day jobs to engage in this really without knowing what they're doing. My buddy hates them too b/c they drove sellers to asking prices that basically only allowed for "making wages". Still and all you have GOT to see youtube's "Real Financial Heros". It's freakin' hysterical.

Randy H Says:
But the increase in the GSE limit _will_ gum up price declines in the Bay Area. Mark my words. This is for both fundamental and psychological reasons:

I agree with your reasoning, but it looks like buyer sentiment has already taken a big hit. From what I hear from realtors, bids at 95-98% of asking are the norm now. Besides, the inventory is already climbing fast and raising the limit will not make borrower _qualification_ on DTI and LTV any easier soon. So, despite the higher GSE cap, the actual willing & able buyer-pool on the ground will probably stay thin.

You may well be right, this may give sellers enough room to hold out till buyers can be forced to put their neck on the block again. However, it does not seem to me a guaranteed outcome.

I believe the next move in this bait and switch will be to relax the DTI/LTV requirements, followed by a tax-funded bailout of Fannie/Freddie, so finally the banks can offload crap to the taxpayer... but at least for now, the qualifying standards seem to still be applicable.

Didn't your buddy quit his day job to do this full time?

I am not sure what you mean by "making wages". If by that, you mean drove prices down - that is a good thing. I don't think anyone here would argue that prices aren't horribly inflated, and in need of a correction. Often times, I and my colleagues provide that, because we always price our houses for a quick sale i.e. less than the average asking prices in that neighborhood.

I pitched in and tried to keep the front yard cleaned up at a foreclosure around the corner from me. The FB took off and let things just go - he even took the garden hoses with him. I bought a cheapie hose at Wallyworld and at least kept the shrubs and trees alive all last summer.

Hey there are some realtors who see the big picture:
www.idahostatesman.com/273/story/275032.html
"Langford said his real estate agent has been after the couple to drop their price to $205,000. "He said that if we'd drop it to $200,000 it would probably sell tomorrow," Langford said."

These idiots let their house sit on the market since Feb. 07 because they won't drop $20K. They are underwater but still refuse to face reality. And the guy's career? He's a FINANCIAL ADVISOR. :(

P.s. Those clips are pretty hilarious!