From the Record:
Subprime defaults shuts mortgage firm
Bergen County mortgage banker David Sadek was riding high a year and a half ago, serving sushi and shish kebab to investment-banking clients aboard his yacht A Loan at Sea.
His firm, founded in 1991, was on track to achieve a company record of $1 billion in annual loan sales. Home prices were rising, and the investment bankers who bundle loans together and resell them as securities to spread the risk were eager to buy loans and provide First Financial Equities and other companies like it with a steady stream of funds to make more loans, even to people with shaky credit histories and high debt levels.
It was “a good time to be in the mortgage business,” he told The Record in an interview.
But in the second half of 2006, the business went quickly downhill.
Amid rising defaults by borrowers, wholesale lenders cut off Sadek’s funding last fall. Sadek quietly closed 18 lending offices in New York, New Jersey, Florida, Pennsylvania, California and Washington, firing all but about a dozen of the company’s 110 employees, said William Dimin, an Englewood attorney. Dimin is representing the company in civil suits to recover bad debt.
Last summer, the New Jersey Department of Banking and Insurance approved Sadek’s request for a charter to open a commercial bank in Teaneck that would provide cheaper sources of funding and enhance the mortgage company’s profitability. But construction of the bank, scheduled to open in January, has stalled.
“Overexpansion in a very bad market,” Dimin said last week. “That’s what caused the downfall of the company.”
…
Industry experts say fierce competition among lenders and speculation in the housing market led to some imprudent lending in the subprime market, and consequently a sudden backlash from investors who have been exercising their right to require lenders buy back loans that go into early default.“It’s a big shakeout,” said David Akre, co-chief executive officer of New York Mortgage Trust Inc., a New York City-based real estate investment trust. “For the most part, it’s loose underwriting standards,” Akre said of the subprime lenders that have closed down. “Under competitive pressure, underwriting took a back seat to common sense. They didn’t want their volume to drop off.”
…
Meanwhile, loan brokers throughout New Jersey are reporting that their funding sources have tightened credit in recent months in response to rising defaults.Many are requiring higher credit scores and lower loan-to-value and debt-to-income ratios. “Our lenders are giving us much more stricter guidelines,” said Michael Laheny, a broker with All American Mortgage in Paramus.
James W. Hughes, dean of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, said such credit tightening is cause for concern. “Banks may tighten standards too much,” he said. “It will reduce the number of buyers who can qualify for loans.”
From Bloomberg:
Fed, Comptroller Publicly Chastised Few Lenders During Boom
The Federal Reserve and the Office of the Comptroller of the Currency took little action in public to police the $2.8-trillion boom in the U.S. mortgage market — whose bust now risks worsening the housing recession.
The Fed, which is responsible for the stability of the banking system, didn’t publicly rebuke any firm for failing to follow up warnings on home-lending practices between 2004 and 2006. The OCC, which supervises 1,793 national banks, took only three public mortgage-related consumer-protection enforcement actions over the same period.
Consumer advocates and former government officials say the regulators, by acting behind the scenes rather than openly advertising the shortcomings of some firms, failed to discipline an industry that loaned too much money to borrowers who couldn’t repay it.
Now, more lenders are being forced to shut and foreclosures are rising, threatening to scuttle any chance of an early recovery in housing.
“There was tension between the responsibilities not to mess up some banks’ businesses and the responsibility to consumers,” said Edward Gramlich, a Fed governor from 1997 to 2005 who is writing a book about the mortgage market at the Urban Institute in Washington. The result, he said, is that “we could have real carnage for low-income borrowers.”
“Banks may tighten standards too much,” he said. “It will reduce the number of buyers who can qualify for loans.”
was anyone complaining when banks loosened standards and created too many buyers and the biggest bubble in history?
oh that would be us
Another Record –
…the proportion of mortgages in the initial stages of foreclosure was at the highest in the 37-year history of the Mortgage Bankers Association’s National Delinquency Survey.
http://news.yahoo.com/s/nm/20070313/bs_nm/usa_mortgages_delinquencies_dc_3;_ylt=Ai4wwB18s3g9yyEDRd0U.8uz1g4B
David Sadek = loan shark, and a crooked SOB.
SAS
David Akre = crooked SOB
These guys talk in sorrow after they took advantage of people with predatory loans with their talk. Then when things start to cave on them… they cry like a little baby.
Sadek & Akre, you guys are pathetic yellowbelly scallywags.
SAS
Great piece from Michael Dawson at Seeking Alpha:
The Real Estate Market: Why “Bottom” is a Dirty Word
Last week, CNBC reporter, Maria Bartiromo was quite appalled by the language that Don Tomnitz, CEO of D.R. Horton (DHI), used in describing the state of the real estate market: “I don’t want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year.’’ I think that Maria overreacted a little. Since, when did suck become such a bad word? It is definitely not on my list of banned four letter words, but I do avoid using it around children. They have enough issues to worry about without having to distinguish between acceptable and unacceptable four letter words.
Another word that I refuse to use around kids is bottom. It has six letters, but in my book it is right up there with the most inappropriate four letter ones, especially when describing the real estate market. Maybe this is just a quirk of mine, since it didn’t trouble Maria at all when Robert Toll, CEO of Toll Brothers (TOL), suggested that the real estate market had bottomed. “I would guess, and that’s all it is, it would be another four or five months before you finally burn off inventory in most of the markets.”
the big question. will it spill over from subrpime to alt-a and prime? didnt lending standards vanish for everbody? were alt-a and prime smart enough to not max out? time will tell
David Sadek = loan shark, and a crooked SOB.
I’ve often had trouble feeling sorry for people who own yachts.
jb
the big question. will it spill over from subrpime to alt-a and prime?
It is already spilling over into Alt-A.
Remember, the loans made in Alt-A were just as reckless, if not more reckless than those offered in the subprime sector. Really, the only difference is a few points of Fico. I believe we’re already seeing the margnal paper in Alt-A showing signs of stress.
Macroblog has some of this data graphed this morning:
http://macroblog.typepad.com/macroblog/2007/03/foreclosures_an.html
It appears that even Prime ARM loans are beginning to show signs of stress.
jb
all red. all over the place.
http://money.cnn.com/data/world_markets/
People are still delusional. I can’t believe this listing (2384839). It is a very small cape on a small lot that they are asking $415,000 for. The kicker is that there is no heat on the second floor so you can’t really count those two bedrooms. They’ll be lucky to get $350,000.
It appears that the secondary market no longer has an appetite for high risk paper. From MarketWatch:
National City to keep $1.6 bln of loans that were for sale
National City Corp. said Wednesday that its remaining $1.6 billion of non-comforming loans held for sale are currently not salable at what management considers an acceptable price due to “adverse market conditions.”
As a result, the Cleveland financial-services company plans to retain the loans and transfer them back into their portfolio this month.
National City said in a filing with the Securities and Exchange Commission that it has recorded $11 million in write-downs through the first two months of the year and believes a further write-down is “likely” before the loans are transferred.
“Industry experts say fierce competition among lenders and speculation in the housing market led to some imprudent lending in the subprime market”
It’s really much simpler than that. Stop the BS regarding competition, greed, liar loans, idiotic lending, etc… Get back to the basics; simply, too much liquidity chasing too few opportunities.
The damage has been done. The only question is how severe. There is no doubt, at least to me, that this will spread to the Alt A. There is very little difference between the subprime and Alt A, maybe 20-30 fico points. Also, the prime will not be immune. Not the same magnitude of the subprime but severe enough to require new lending standards for this group also. Remember, this lunacy did not/will not discriminate between sectors. View this any way you want. The botom line, a total bust with severe consequences pending.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, said in a statement Tuesday that he is “considering a number of options, including legislation” to protect consumers from abusive lending practices and help consumers who have been harmed to maintain their homes.
Any ideas on what congress would do to help consumers !!!
wonder if this is still part of the on-going train-wreck.
Mortgages up despite subprime woes
http://money.cnn.com/2007/03/14/real_estate/bc.usa.economy.mortgages.reut/index.htm?postversion=2007031407
Paulson’s AAA-list guests yield no answers
http://ftalphaville.ft.com/blog/2007/03/14/3159/paulsons-aaa-list-guests-yield-no-answers/
Hank Paulson, US Treasury secretary, hosted some of the biggest names in US government and finance at Georgetown University in Washington on Tuesday to tackle the vexing issue of how US capital markets can retain a competitive edge while protecting investors, the Wall Street Journal reports.
The guests, including Warren Buffett, John Thain, chief executive of the NYSE, Alan Greenspan, and Arthur Levitt, former SEC chairman, disagreed on almost everything but the theme of the meeting, including how much – or even if – that edge has diminished.
James Bednar Says:
March 14th, 2007 at 7:21 am
Great piece from Michael Dawson at Seeking Alpha:
Last week, CNBC reporter, Maria Bartiromo was quite appalled by the language that Don Tomnitz, CEO of D.R. Horton (DHI), used in describing the state of the real estate market
Jim: do not objectify women on this blog……I WILL NOT HAVE IT!
SG Says:
March 14th, 2007 at 8:26 am
Any ideas on what congress would do to help consumers !!!
Oil: Get serviced by an intern.
People are still delusional. I can’t believe this listing (2384839). It is a very small cape on a small lot that they are asking $415,000 for. The kicker is that there is no heat on the second floor so you can’t really count those two bedrooms. They’ll be lucky to get $350,000.
Considering 23 Sweetwood closed at $545,000 in January of this year, and 26 Sweetwood closed at $471,000 in 2004, I’d say it would be a good deal in the $375,000 range. Granted, both of those comp properties are were in better condition, and have larger lots.
I’ve seen delusional pricing before, and I don’t think that I’d consider that listing to be one. In fact, given the comps, I’d consider it a reasonable starting point in today’s market.
To throw in a few more comps, 27 Sweetwood sold for $425,000 in 2003, again a larger lot and numerous upgrades. A comp to the other direction would be 35 Sweetwood, which sold at $375,000 in 2006. However, 35 has a lower overall assessment that 3, and a smaller lot.
jb
This is delusional –> MLS ID#: 2707355
School Board Voting was yesterday in my town. Out of the 24,315 registered voters, 14.36 percent voted in Bridgewater.
http://www.c-n.com/apps/pbcs.dll/article?AID=/20070314/NEWS/703140329
This is appaling, where 14% of population only vote.
It isn’t as far-fetched as it sounds. The exotic loans and more liberal borrowing rules that led to the recent industry troubles aren’t limited to people with poor credit or lower incomes.
For instance, adjustable-rate loans offering cheap payments for the first few years are the only thing that enabled some families to stretch and buy the new home they loved, but didn’t think they could afford.
Other borrowers yanked equity from one home to buy a second one, or else to invest the money in stocks or a small business. If they used interest-only mortgages (which can require no payments toward principal for years) the payments can spike later.
In the “jumbo loan” category — which currently refers to most mortgages for $417,000 or more, though it’s been lower in years past — 69% of purchases and 63% of refinancings were done at adjustable rates in 2004, according to First American LoanPerformance, a mortgage-data company. So now is about when the pain from higher payments is kicking in for many of those borrowers.
http://finance.yahoo.com/loans/article/102594/bulletproofing-your-mortgage
In 2000, I was able to look at a huge portfolio of starter homes in Rockaway, Jefferson,Denville area for prices around 125k – 175k , being the 175k was actually not even a starter home. My question is will home prices or could home prices come back to these prices, since mortgage companies are starting to tighten up there standards. Could we start to see homes in the 200k Range at least. SO a family would have to put 20k down and make payments of 2000k a month.
The first thing we need to do is adjust that 175k for inflation, which would push it to the 210-215k range today. We’ve got to make sure we’re comparing dollars to dollars.
So the question is, will starter homes in Jefferson, Rockaway, and Denville fall down to the $215k mark?
Looking at the most recent sold/uc data (February 07) by bedroom, we see the following:
Denville 0-2 BR
Under Contract LP
Average 344,050
Median 329,999
Sold
Average 369,050 (186,750 in 2001)
Median 372,500 (162,000 in 2001)
Jefferson 0-2 BR
Under Contract (LP)
Average 254,780
Median 265,000
Sold
Average 178,625 (91,000 in 2001)
Median 195,000 (100,000 in 2001)
Rockaway Twp 0-2BR
Under Contract (LP)
Average 304,833
Median 312,000
Sold
Average 264,000 (183,625 in 2001)
Median 264,000 (136,500 in 2001)
jb
ChiFi (17)-
Call me old-fashioned, but I’m appalled by Ms. Bartiromo’s latest venture into situational ethics, involving a free G-2 ride, compliments of Citi:
http://www.marketwatch.com/news/story/cnbcs-maria-bartiromo-problem-one/story.aspx?guid=%7B4C2BD478-6299-4264-9BDA-D9ADB556E369%7D
That’s MY definition of “s@ck”.
Grim (24)-
Those numbers must be further adjusted to account for mortgage rates that are almost 1/3 lower than in 2000, when we were approaching 9% on a vanilla 30-yr.
Agreed, though, that prices for the entry-level must realign with their incomes for any sort of robust recovery.
I always thought Maria had sort of “Sophia Loren” look to her, no?
Infatti, non mi occuperei di ripartire un vetro di vino con lei.
Those numbers must be further adjusted to account for mortgage rates…
Agreed
jb
Maria reminds me of Elizabeth Hurley.
jb
Lehman whistles past graveyard:
“Lehman showed that despite the current issues in some securitized mortgages, which will affect future quarters, the brokers are still showing impressive revenue growth and profitability,” said Celent analyst David Easthope.
http://www.marketwatch.com/News/Story/lehmans-debt-business-grows-despite/story.aspx?guid=%7B5D42C779%2DE27E%2D4802%2D81F7%2D362162FA73F3%7D&dist=RNPullDown
Gimme quirky/sexy…I much prefer Liz Claman.
Something about a redhead who looks like she can throw a decent punch.
jb said “Makes perfect sense now, the bailout isn’t intended for the public.”
Couldn’t agree more with that. And whoever pointed out last night that folk were anticipating the current situation in pushing the bankruptcy bill through were absolutely right. Of course, with lenders protected by that bill, rates should come down on risky loans, right? They’re not so risky any more, right? But that didn’t happen, and I have to wonder whether the extra protection didn’t cause lenders to issue more risky credit/loans than they otherwise would have.
Ah… The industry is tanking and we’re thinking of amore… It’s a beautiful day. :)
“the brokers are still showing impressive revenue growth and profitability”
what??? you can earn 6% in a HSBC money market account!!!
“what??? you can earn 6% in a HSBC money market account!!!”
That’s the introductory rate only lasting a few month before it adjusts down to 5%. What does that reminds you of?
The irony.
njpatient (32)-
Bail out whom? Do any in the following categories look like candidates:
1. Average citizens falling into foreclosure? Yeah, right.
2. I-banks? Lehman, Bear, Morgan Stanley et al will have their top lines shrunk substantially, but this fiasco will not wipe them out. And, can you see them in Washington, crying poverty, hat-in-hand…during an election cycle? I think not.
3. Subprime slop shops? NEW, LEND and FMT have no stroke anywhere in DC. And nobody’s gonna miss them. Again, no sale.
Nasty as this thing is, keep it in perspective. If- and when- the numbers get to the S&L meltdown-level, that’s the time to get excited.
Mortgage office in my building is locking several A-paper, 30-year, 80 LTVs today at under 6%.
Talk about flight to quality.
On CNN/Money now:
“GM profitable but misses forecasts
No. 1 automaker reports near break-even results in key auto operations but is hit by subprime mortgage problems. Shares down more than 2% premarket.”
Funny – as I was leaving my house this morning, CNN tv was trumpeting how wonderful and unexpected it was that GM had posted a profit.
Clotpoll Says:
March 14th, 2007 at 9:47 am
ChiFi (17)-
Call me old-fashioned, but I’m appalled by Ms. Bartiromo’s latest venture into situational ethics, involving a free G-2 ride, compliments of Citi:
That’s MY definition of “s@ck”.
Maria is a transsexual?!?!
James Bednar Says:
March 14th, 2007 at 9:58 am
Those numbers must be further adjusted to account for mortgage rates…
Agreed
jb
We might also adjust to demographic changes, what is the average and median household income in Rockaway, Jefferson,Denville area.
CC
IMO, both Lehman growth rate and HSBC MM rates are introductory :)
[28] Haven’t property taxes gone bonkers since 2000? They would need factored into the affortability of monthly payments, not just interest rates.
Clotpoll (36) – I don’t disagree, and in fact I expect, or perhaps should say hope, that you are correct. And as you pointed out last night, the S&L issue was an order of magnitude or two larger; I’d add that the consumers in the S&L scandal could not in any way have been viewed as being at fault for the circumstances that they found themselves in, whereas the consumers who are getting screwed in the subprime blowup can at a very minimum be accused of a complete lack of sophistication (which is not to excuse the predatory lenders).
Maria doesn’t belong on the same plane, maybe with Citi, with Elizabeth Hurley. Like comparing subrime to prime.
Maria sometimes looks like an African Lion with that hair puffed up.
“30-year, 80 LTVs” ,
Clot,
Are you old school??
Mortgage office in my building is locking several A-paper, 30-year, 80 LTVs today at under 6%.
Under 6% is surprising.
jb
#42 stuck in moderation…what did I do wrong???
I think we all agree that this mortgage fall out is bloody. What does it mean to the average joe?
If I’m a prime, documented borrower with good credit, will my borrowing power (or weakness) go down? If so, is this going to happen now or a few months/year(s) down the line when the dust settles down?
jb – my comment is waiting for your blessings
Some inventory info:
GSMLS
(Ber,Ess,Hud,Mor,Pas,Som,Sus,Uni,War)
3/15/06 – 13,418
2/14/07 – 16,168
3/14/07 – 16,535
2.2% Monthly increase
~23% Year over year increase
NJMLS
(Ber,Ess,Hud,Pas)
3/15/06 – 6,581
2/14/07 – 7,581
3/14/07 – 7,849
3.5% Monthly increase
~19% Year over year increase
From Reuters:
Impac warns of cash crunch as delinquencies double
Impac Mortgage Holdings Inc. (IMH.N: Quote, Profile , Research) said on Wednesday the percentage of delinquent loans in its long-term mortgage portfolio doubled to 6.12 percent last year and warned of a possible cash crunch.
Industry observers said the news showed that problems with the riskiest loans in the mortgage industry have spread to borrowers with better credit histories. Impac’s main business is extending loans to borrowers who don’t qualify for loans backed by government agencies but who have better credit than subprime customers.
Impac, which has limited exposure to subprime loans, said problems in that risky mortgage sector are spreading to its business.
“This may result in a reduction of our mortgage originations and acquisitions and reduce or eliminate the liquidity currently available to us to fund our operations,” Impac said in its annual filing with the Securities and Exchange Commission.
Clot,
From a womans point of view. I think as far as redheads go Heidi Collins at cnn is the bees knees. While were at it Anderson Cooper is way over-rated. I had it bad for Aaron Brown. It wasn’t looks it was quiet depth.
KL
I think the fear is that the subprime meltdown will drag the housing to the bottom along with other worries of Alt-A,b etc. Up until now media reported slowing sales, but from now on we will see prices dropping and Wall Street will react violently to dropping prices. I am waiting for a day where there is blood on the street and all the money I have saved up and not using for a downpayment, I will buy some stocks for the long term. I am hoping for a Dow 10500 by end of next year
If I’m a prime, documented borrower with good credit, will my borrowing power (or weakness) go down?
Good credit score (800+), solid employment history, 20% down payment, verifiable assets, low/no debt?
No problem.
Clot mentioned it above, there will be a flight to quality in the mortgage sector. In this case, you are the quality.
jb
I really felt sorry when Aaron Brown was let go. Where is he now?! I hated Anderson Cooper for taking his position – Aaron is irreplaceable!
From the Street:
New Century Insiders’ Stock Sales Were Prime
If you think lending money to people who can’t afford to pay it back is a bad business idea, you don’t know much about the stock market.
As the scandal breaking at New Century Financial (NEWC) shows, subprime mortgage lending can be very profitable … for some.
After all, when interest rates were just 1%, the vig on a $1 million loan only came to $10,000 a year. There are people on welfare who can afford to pay that, even if there is no chance whatsoever they could ever repay the principal. And there are plenty of analysts on Wall Street who won’t notice the problem till it’s too late.
The trick, when making bad loans, is to get out before the loan book hits the fan. Which brings us to New Century.
The company has admitted to bookkeeping “errors” going back to early last year. It admits bad debts are far higher than thought. Lenders have cut off funds, the company has suspended new loans, and bankruptcy is an imminent possibility. The shares have collapsed in the scandal and were suspended this week at just $1.66.
The Justice Department and the Securities and Exchange Commission are both investigating. Class-action suits are flying, and New Century has received a grand jury subpoena. Among the issues being examined are insider stock sales.
One thing that has drawn the authorities’ attention is that in the eight months leading up to the recent disaster, New Century insiders were dumping stock like it was going out of fashion.
“Good credit score (800+), solid employment history, 20% down payment, verifiable assets, low/no debt?”
JB,
What about the other 95-99%??
so, jb and clot, you are saying this “flight for quality” is happening as we speak?
maybe I’m not as prime as I thought.. my score’s less than but close to 800.
“Can anyone else see this happening in NJ?”
No.
“One thing that has drawn the authorities’ attention is that in the eight months leading up to the recent disaster, New Century insiders were dumping stock like it was going out of fashion.”
Always.
The following Listing has an interesting history.
7/2005 asking 359,000 sold 8/2005 355,000
7/2006 asking 385,000 w/d 1/2007
1/2007 asking 385,000 w/d 3/2007
3/2007 asking 379,000 now comes with 53in tv
Currenlty listed under mls2709658
KL
http://www.msnbc.msn.com/id/17593874/
Late mortgage payments hit 3½ year high
Foreclosures at record high in last quarter of 2006, trade group says
Alright, you know this question is coming…How do you know what your FICO score is? I do monitor my credit reports yearly – never noticed a FICO.
Wow, would I love to be viewed as a “hot commodity” – uhm… based on my FICO of course, lol!
http://money.cnn.com/2007/03/14/news/companies/lehman/index.htm?postversion=2007031411
“The meltdown in subprime has led to the belief that Wall Street firms will go bargain hunting to expand their footprint in what has been a lucrative business for them in recent years.”
LOL
I honestly believe that a majority of buyers (subprime,prime, you name it) who bought in the last couple of years bought with an intent to flip it in a year or two. Many of them stretched financially to get there because it is quite logical to think that if the markets are always going up, one can easily refinance for cash out or sell for a profit.
What we will see will be a change in psychology amoung people about their expectation from RE and this will have an economic impact on the broader markets. Up until last week, Wall Street has been dismissing this idea. The future is very interesting…
“How do you know what your FICO score is?”
Can get it on the web at myFICO.com, if I remember correctly.
rhymingrealtor Says:
March 14th, 2007 at 11:07 am
Clot,
I had it bad for Aaron Brown. It wasn’t looks it was quiet depth.
KL
KL: I hate to make it worse, but he is the nicest guy. I saw him in the lounge in 1999 at MSG during the Knicks-Hawks playoff series. We were just standing around and he struck up a conversation WITH ME. Just a decent guy – he had his son with him. It was the “Jeff-Van-Gun-dy” chant game.
BTW – I assume you are aware that Cooper plays on the same team with Sam Champion, and that team is not mine.
Totally agree, Zack. This is the first RE contraction in which substantial numbers of people were in RE purely for investment purposes. If they perceive it as no longer being a good investment, they’ll be dumping properties on the market. And further, as you point out, if they’ve been leveraging up on I/O ARMs that they think they won’t see the bad end of because they’ll have sold before any adjustment occurs or principal comes due, they’ll start to panic if the property sits on the market too long.
It’s a far cry from the old days when, if folks couldn’t get the price they wanted during a contraction, they simply continued to live in the house instead of selling it.
Speaking of Seinfeld……there was a “Vandelay Cafe” on Broad Street that recently closed down, and it is being replaced by this……someone either has a sense of humor or is a big fan…
http://www.originalsoupman.com/
#60. As long as the FICO is 720+ you should be fine. An 800 is (or used to be, I was a mortgage processor many years ago) at the very far end to that Bell curve.
There are any number of places to get your FICO from; however what you really want to see is a tri-merge. This is the merged score from the 3 big agencies and is what many lenders use for the mortgage process.
GSMLS volume starting to crank up. be curious what people think will be the peak # of listings for 2007. i think last year was somewhere in the 33k range.
I don’t know about you guys, but my blood starts to boil when I see “Hurry, this house will not last” in front of ads posted by RE agents.
I live in a town that is a couple minutes from the Garden State Pkwy. Yesterday, I got a mailing from an agent at a well-known national RE company that said, paraphrasing “we have a couple that is interested in buying a home with reasonably quick access to the Garden State Parkway. If you, or any of your friends in the neighborhood would be interested in selling your home, please let us know, because we have a buyer for you.”
Because, of course, right now there are too many buyers and no one can find anyone who wants to sell their house. Or something.
Sassy,
Spend some time on this site to get a handle on the basics of the mortgage and credit process:
http://www.mtgprofessor.com/
Jack Guttentag has managed to put together a comprehensive (and completely unbiased) site. This site should really be in the “Tools” section.
jb
Hmm, I can smell what the next president’s state of the union speech will contain..
This site should really be in the “Tools” section.
jb
A photo of Reech should be in the “Tools” section.
You know, I emailed Senator Dodd this morning, sent him a pretty long-winded rant about bailouts.
Seems he got the message.. :)
‘More steps’ likely needed on subprime loans: Sen. Dodd
Congress will probably have to take “some more steps” to address the subprime loan industry, Senate Banking Committee Chairman Christopher Dodd, D-Conn., said Wednesday. Speaking to reporters following a speech to the U.S. Chamber of Commerce, Dodd declined to list specifics but did say he wouldn’t consider a bailout for companies who may have been engaged in predatory lending.
good result on Dodd.
Who am I kidding, it got auto-deleted by his Outlook rules.
If Message.From = James Bednar Then
Message.Category =”Raving Lunatic”
Message.Delete
End if
jb
Yann: I did some due diligence on DFA. There are three fee-only guys that are referred in NYC. Two have a $250K minimum and one has a $500K minimum. E-mail grim if you want it, and I will forward it to him. I am going to attempt to get vetted, but it will be at least 6 months.
lol
Interesting critique of the MBA mortgage index by Calculated Risk:
http://calculatedrisk.blogspot.com/2007/03/more-on-mba-index.html
Basically, there exists the possibility that the positive changes in the MBA index seen over the past few months has been a result of a number of smaller mortgage originators closing shop. Because only 50% of originators are surveyed, there is a possibility that more applications are being sent to the larger (read: surveyed) originators, resulting in rising indicies.
jb
11999.9
njpatient Says:
March 14th, 2007 at 11:56 am
I live in a town that is a couple minutes from the Garden State Pkwy. Yesterday, I got a mailing from an agent at a well-known national RE company that said, paraphrasing “we have a couple that is interested in buying a home with reasonably quick access to the Garden State Parkway. If you, or any of your friends in the neighborhood would be interested in selling your home, please let us know, because we have a buyer for you.”
Because, of course, right now there are too many buyers and no one can find anyone who wants to sell their house. Or something.
Reply to them that you are very interested…
Tell them that your selling price is at least x10 last comp sale….
Chi, [72],
I was in Vandelay at least once a week. Great guy, Jim, owner. Sorry to hear it has closed. I though he was doing a bang up business. I guess it was the hip city rent??
Renting (44)-
No. It’s empty words and pandering, that’s all.
What happens when those who fail to shower regularly are allowed to breed or moderator web blogs?
http://www.bloomberg.com/apps/news?pid=20601103&sid=a1cWMLZs69BM&refer=us
BC (47)-
Believe it or not, people still take out those loans.
As comfortable as a pair of year-old Bass Weejuns.
Grim (48)-
The repricing began in earnest first thing Monday AM. All the quality (or as BC says, “old school”) outfits are dropping rates like a rock…provided the borrower has good credit and something resembling cash down.
KL (54)-
And Aaron Brown was hetero.
Regular (60)-
720+ will do.
Thanks for the FICO info everyone! I’ll do my homework!
It’ll be interesting to see what the number comes up as. Have upper middle class income, no debts, pay bills on time, steadily employed….rather bland is it were. Tidy little down payment stashed, etc…no blips on the credit radar screen. (Hee, hee, I’ll probably be scored low exactly for that reason!).
Sassy (65)-
To get precise, you want to know your “trimerge” score…the average of three different agency scores.
However, you can contact Experian or Equifax, have them run your report & either of those numerical scores will be very close to your trimerge.
Zack (78)-
His resignation?
James W. Hughes, dean of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, said such credit tightening is cause for concern. “Banks may tighten standards too much,” he said. “It will reduce the number of buyers who can qualify for loans.”
Those people shouldn’t have qualified for loands in the first place.
loans either
James Bednar Says:
March 14th, 2007 at 12:16 pm
11999.9
we only need another 3.5% to get to a “correction” — that ain’t a bad thing being that there are so many out there who think one is “required” — I guess those who indexed and were overweighted to financials got smacked harder
ChiFi (100)-
Please don’t taunt the animals.
Richie: Should a 27-year-old assistant manager at CVS (2nd income medical assistant) qualify for a $300k? I think so, but the problem is no savings for a lot of these people. No way should this couple be in a $300k house that they did not save for, or couldn’t save for.
http://money.cnn.com/2007/03/14/magazines/fortune/sanon.fortune/index.htm?cnn=yes
OK, here’s a talking head who’s NOT hot: Sue Keenan on Bloomberg. Her face looks like evidence in a Botox-gone-wrong lawsuit.
Those lips are the size of boxing gloves.
Out of topic..
A friend of mine went to India to visit family and while she was there,she got the following done:
– MRI Scan
– Root Canal
– XRay on her sprained ankle
Total cost : $180
No wonder businesses are moving from the U.S
Clotpoll Says:
March 14th, 2007 at 12:41 pm
ChiFi (100)- Please don’t taunt the animals.
Dammit….Financials were 25% of the S&P 500 and they just got rocked for 12%+ losses in 4 weeks. You tell me that we didn’t see this coming. It’s not even that bad yet.
Question to the board.
My aunt has experienced the last RE bust in 89-91. She told me that the RE market was so dead. There were so many bank-owned properties (foreclosure???). Any family with 2 stable income and good credit history and buy these properties from the bank with no down payment.
She said that buyers can offer anything to banks as long as the banks don’t incur a loss on the properties (???) She said even 50% on the original purchase price. She said that banks were happy that these properties were taken off their books…….
Anyway do some the old timers know anything about that. Could it happen again with this RE bust.
Maria is ugly enough to be on The View.
Zack..yeah, but how much did she spend on Extra Strength Tylenol for the months she suffered waiting to go?
She sprained her ankle while she was in India, but prior to that, while she was here, I know her Dentist had recommended a Root Canal and she also wanted to get an MRI done.
;)
-99.42
Another banner day
“Anyway do some the old timers know anything about that. Could it happen again with this RE bust.”
CC,
I would love to respond. However, I don’t want to repeat my tirades. Don’t need to bore anyone. Where have you been?? We have been discussing this for over a year. Go into the archives and do a little homework. You’ll see numerous posts comparing this bust to 1989-1992.
IMO, 1989-1992 will be viewed as a walk in the park in comparison to this bust.
Mortgages up despite subprime woes
Last call for the most toxic of subprime mortgages?
I can hear the realtors now…” You’d better hurry up and buy now before lending standards tighten and you’re locked out forever!”
BcB,
Take it easy. I was referring to buying properties from the bank with no money down as long as you have good credit. And you can get it at a good bargain.
CC
BC Bob (112) “IMO, 1989-1992 will be viewed as a walk in the park in comparison to this bust.”
IMO too.
BCB, I also thought CC was referring to buyer experience in terms of foreclosure shopping.
Big difference between then 80’s and now is that there is more competition for these houses due to:
-$$$ available for free/ more mortgage products,
-more and quicker process knowledge transfer,
-big stigma changed to predatory pride factor.
Back then there were simply fewer wise “investors” and it was quiet info. If I remember correctly, there was a huge stigma attached to it back then. Nobody wanted to admit they bought a foreclosure and took some little kid’s home away.
Big money has tried hard to change the stigma. Who was it that originally backed The Apprentice to NBC? One of GE’s old mortgage subs, wasn’t it?
Nobody thought of snapping up foreclosures just because of “This Old House” or Norm. It took network money.
Same deal with no-money-down nonsense. It took network I want it now brain-washing.
{putting tin foil hat back in drawer now.}
chaotic (106)-
I was there, on the commercial side. Attended several RTC auctions and participated in several purchases of Class A-B office buildings at 5-10 cents on the dollar. And, my associates and I thought we might have been overpaying at the time.
Also, as has been noted here, available financing for those properties was scant-to-none back then. Pretty much any lender you talked to thought it was the end of Western civilization. I’m still stuck in a non-recourse 20-year loan (that has a prepayment penalty all the way to the end of the term!) on a property in Memphis. Irony of ironies, we had a good 10+ year run in the building, and now the biz cycle has turned down again there & we can’t rent or sell it…at any price.
Although there was a severe residential fallout component, the real bloodbath in 89-92 was in commercial RE. Go to some cities, and you can still see the effects, even today.
cc, [114],
LOL. That’s about as easy as it flows.
Sorry, I thought you were referring to the market dynamics during that time period. I would imagine that banks, in possession of this deadwood, may be agreeable to some form of discussion.
jb [80]
That’s funny, I also sent Dodd an email. Stole the last paragraph from a piece on iTulip:
Senator Dodd,
I applaude your intention to help those in danger of losing their homes to foreclosure due to taking loans they couldn’t afford during a period of reckless lending by banks and mortage companies.
However it is quite unacceptable to use taxpayers money to “bail-out” homeowners and lenders. The blame for this situation is directly due to the lenders disregard of all lending standards, and unsophisticated borrowers taking on ridiculous levels of debt to purchase overpriced houses.
It is the banks and mortgage lenders who have earned billions of dollars from loose lending, and passed on risk to investors who purchased these mortgages.
An approach of using taxpayer money to solve the foreclosure problem would be misguided. That only encourages the banks to do it again. I have a better idea. How about this time Goldman Sachs, J.P Morgan, Merrill Lynch, Citibank, BoA, et al, clean up their own mess and pay for the bailout instead of taxpayers? Sure, the cost might put some of these banks out of business, but who cares? Other better run banks will take their place.
I was bumbling around the Village in the late 80s checking out large 1 bedroom bank foreclosure coops. All were cash deals + coop board approval, liens weren’t too large (maybe up to 6K). Asking prices for approx 800 to 1000 sq feet were anywhere from 48K to 88K. Walk up older tenements (many were on the 5th and 6th floors), not doorman buildings. There were large turnouts for the open houses, and many in the “nicer” (all things being relative here) buildings went quickly. All needed a lot of work and hadn’t been updated literally in decades – but were certainly livable. You could easily imagine those same apartments today going for between 800,000 and 1,000,000 if updated, etc…
That verus my parents home in the late 80s: 4000 sq foot brick Georgian in Upper Westchester, very good school district. Went on market for 650K – then the market crashed. Realtor said “no problem real estate always moves in the upper brackets. These buyers in this price category are not affected by the market and can always afford a house.” 4 years later (with 5 kids in a show condition house!) my poor parents sold the damn thing. For…. 395K – the same price someone had made a lowball offer the first year it was on the market. That lesson has stuck with me all these years! Still traumatized and still renting, lol.
Look what FDA discovered!
>>
FDA: Sleeping pills may cause ‘sleep-driving’
http://www.cnn.com/2007/HEALTH/03/14/sleep.drug.warning.ap/index.html
With all this important talk of bail-outs, foreclosures, markets tanking,I am only going to say one more thing about network anchors.
I have heard rumors about Anderson, but I don’t care. If Aaron Brown was gay, it wouldnt matter, I thought he was the best news anchor on tv with the most thoughtfull coverage, and in my opinion nice to look at. I no longer watch CNN at night because of the switch.
KL
Jay, [120],
Why not?? They bailed out LTCM.
Another idea is to have the cb’s bombard the yen, keep the liquidity trade alive and kicking. Let the liquidity trade assist in this bailout.
What do you all think about this: A family bought new construction Toll in Monmouth County ~ 700k back in 2001/2002 timeframe. They are now in the process of getting basement finished, want to sell in the next year. Good move to remodel or not? Also..(if it matters) in a historically well rated school district.
thanks.
Richie: Should a 27-year-old assistant manager at CVS (2nd income medical assistant) qualify for a $300k? I think so, but the problem is no savings for a lot of these people. No way should this couple be in a $300k house that they did not save for, or couldn’t save for.
That all depends, how much does this 27yr old have in savings? How much debt? Any other assets? Is there a down payment involved? Cosigner?
Those are things I’d be interested in knowing.
If I’m a subprime lender, then my only question is, “Can you sign your name here?”.
-R
BC [124],
yeah, the LTCM method of dealing with private finance companies mistakes is such a scam. “Too big to fail” is the b.s. that’s typically used.
The lenders have been totally unethical and bordering on criminal: being reckless and making huge short term profits while letting other people (like investors & taxpayers) shoulder the risk and pay for your losses. Bailouts just motivate & encourage this type of sleazy behaviour.
Jay [127],
Yield hungry investors, Wall St profits, hedge funds, liquidity, A RE market that only travels one direction, flippers, goldilocks and the uneducated American consumer. Nothing left to be said except now it’s payback. The kegs are bone dry and the hangover will exist for a longer period of time than most can imagine.
Reuters: Top investor sees U.S. property crash
MOSCOW (Reuters) – Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
“You can’t believe how bad it’s going to get before it gets any better,” the prominent U.S. fund manager told Reuters by telephone from New York.
“It’s going to be a disaster for many people who don’t have a clue about what happens when a real estate bubble pops.
It is going to be a huge mess,” said Rogers, who has put his $15 million belle epoque mansion on Manhattan’s Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
“Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it’ll be worse because we haven’t had this kind of speculative buying in U.S. history,” Rogers said.
More available at:
http://www.reuters.com/article/newsOne/idUSL1470530620070314?src=031407_1316_DOUBLEFEATURE_mortgage_troubles
By the way, no bracket [march madness] post??
Sorry Clot, I have the Bruins.
“It is going to be a huge mess,” said Rogers, who has put his $15 million belle epoque mansion on Manhattan’s Upper West Side on the market and is planning to move to Asia.”
Is this the best way to sell your home?:
“hey home shopper, the RE market is going to totally crash & burn, so why don’t you buy my house and save me from a big loss?”
It is going to be a huge mess,” said Rogers, who has put his $15 million belle epoque mansion on Manhattan’s Upper West Side on the market and is planning to move to Asia.
..And I thought moving to North Carolina would be a bold move to get away from the bubble!
Bost: trust me….Orangemen all the way…would I steer you wrong?
“That verus my parents home in the late 80s: 4000 sq foot brick Georgian in Upper Westchester, very good school district. Went on market for 650K – then the market crashed. Realtor said “no problem real estate always moves in the upper brackets. These buyers in this price category are not affected by the market and can always afford a house.” 4 years later (with 5 kids in a show condition house!) my poor parents sold the damn thing. For…. 395K – the same price someone had made a lowball offer the first year it was on the market.”
Ugh, you tell us that now just as I have bought in Upper Westchester (well, haven’t even signed a contract yet)? And mine is no 4000 sq. ft. house either. But why did they sell? I know for a fact that my parents house on LI was up and down in value at that time, but they just stayed put (even though they would have liked to have moved). It worked out for them in the long run (even if the bubble drops the house is worth a fortune compared to what they paid) but I guess sometimes staying power is not always up to choice.
By the way, my inspection went very well – only a few minor things. We are currently suffering typical buyer worries, I admit, and the stock market doesn’t make me feel good. To throw another twist into the puzzle, looks like there will be a baby NY/NJ Guy or Gal arriving later this year. Life definitely throws you loops when you least expect it!
NJGal – Congrats !
Congrats!!! Many joyous moments ahead!
My folks sold because where we lived at the time was rural (very different now, as is all of Westchester!) and my mom was very lonely and wanted to live in a neighborhood again, it was that isolated. She lived there for 11 years before deciding enough was enough. Plus, by the time another 4 years on the market had rolled around several of us had left and mom and dad could downsize. It was certainly a beautiful “show house” very impressive and a great place to raise 5 very crazy kids (the parties with threw are still remembered!). However, it wasn’t the best place for my very social mom, who really wanted to hang out with adults. She lives in a coop in Mt. Kisco now – and absolutely loves it. She visits with friends within the building, they meet at the pool in the summer, etc….
I sincerely hope Westchester will be a great move, and is a lovely place to raise a family. And, I think it’s totally rational to panic a little after such an important purchase! I couldn’t imagine it any other way.
And, having a child has certainly been the greatest joy I’ve experienced. I’ve loved every second of parenthood (well maybe the terrible 2’s I could skip) I’m only in year 5 – so haven’t made it thru parenting a teen, talk to me then, lol. You will certainly be on the hormonal roller-coaster for the next few months!
GL!
NJGal,
Congrats on the news of your new addition. I wish all the best to you and yours. My wife gave birth to our suprise curveball last year and I wouldn’t change a thing…
Tan
NJGal – Congrats!
NJGal…wonderful!
http://www.npr.org/templates/story/story.php?storyId=7872956
I agree; being a parent is a wonderful thing. My son is just over 10 months old and making his way throughout the house like a tornado.
Just realize that once the baby comes, those “weekend house projects” take a lot longer… :)
Thanks for the best wishes all!
Sassy, I am probably moving to the area where you may have lived – Katonah/Somers. People have told me that 20 years ago there wasn’t even a train station at Goldens Bridge! Now the commutes are all about equal – all betweeen 56 and 61 minutes. Somers remains a bit more rural than Katonah, but since everyone drives everywhere in Westchester (and I should mention a good college pal and her hubby live 10 minutes away), I think I can find everything I need. I suppose it could be a little lonely, but also, I have family up that way and my mom will drive miles to see her grandkid (which she still doesn’t know about). Plus I will still be working in the city – I’m not terribly kid-oriented. I need the adult compansionship as well. I know I will love my own but I’m not one of those people who will be become obsessed with every little movement my kids make.
Mt. Kisco has changed so much – it’s full of huge stores (like Target). We thought about moving there but my mother in law is so anti-Mt. Kisco schools that she was on us all the time to move a little further north.
This RE downturn is going to be exarcebated by people who HAVE to move. Gone are the days of having a job for a long time at one location and being able to ride out a downturn in real estate by staying put.
A fluid US economy brought about by globalization is making people move more often than they would like to. They will have no option but to sell due to job relos.
When the lagging stats on home sales and prices are reported in the coming months by the MSM, mass psychology is going to take a turn for the worse. Reality has not set in as yet; sellers are still stuck in the ‘stubborn’ phase.
NJGal –
Congrats!!!! Just remember, kids take up little room, especially if you don’t buy them too much cr@p.
NJGal (134)-
Steady, there. Don’t let the neurotics spook you. One bad experience in RE doesn’t condemn people to live them over and over again for the rest of their lives (unless they allow it). This is life, not Groundhog Day, and even now, there’s decent opportunity for a few people (like you).
BTW…looks like some people lined up short are getting squeezed right now. What a market turn today! IMO, stocks are a great place to be right now. A lot of money has flowed out of other investments lately, and it’s going back into something pretty darn soon. All disclaimers…
Congrats on your (maybe) new arrival!
Dream –
Good point about mobility. Gone are the days of jobs for life.
” IMO, stocks are a great place to be right now.”
Just not yet..Many of the great quality stocks still has a lot of froth in it, before they become bargains.
I am trying Clot. But hubby and I tend toward the neurotic, after watching boomer parents sort of squander money away (not that I am not appreciative of all they have done, and continue to do for me, and they are not broke, but still).
But I was just starting to wrap my mind around the idea of a new house and all the work involved (if only because like I have said, I have very exacting taste when it comes to home decor) – now I have to wrap my mind around a baby AND a house. Yikes. I am probably jinxing it by talking about it, but whatever – I’m sure I’m not the first!
NJGal,
Congrats…My wife and I are expecting our first any day now. I’m just waiting for the phone to ring.
Zack Says:
March 14th, 2007 at 4:06 pm
” IMO, stocks are a great place to be right now.”
Just not yet..Many of the great quality stocks still has a lot of froth in it, before they become bargains.
?? maybe you have a different definition of quality
NY/NJGal: you are going to need this place for those special moments…….
http://www.salingersorchard.com/
http://www.salingersorchard.com/bakery.html#REGULAR
i have a question for you guys who are savvy finance people.
we own a house upstate with an outstanding mortgage of $116K. we have some money in stocks that would allow us to pay this off in full. mortgage is 30 year fixed, about 5.2% interest (i think). we bought 3 years ago, so have 27 years left.
we currently rent an apt in brooklyn, and are planning on relocating to florida (you may remember i was trying to buy in maplewood and decided not to bother with jersey as that market was disgustingly overpriced).
when we move to florida (later this spring), we plan to rent until we see what happens with the real estate market and decide on where we want to be, etc.
my question: does it make sense to pay off the house upstate, so that there are no longer any monthly payments to worry about? then, when we buy in florida, we’ll get tax savings on that mortgage’s interest. i have no other plans for that stock, and, in fact, we just found out how much we actually have in there, so it’s sort of “found money”.
Zack (149)-
How low do they have to go? GS started off this AM at less than a 7 multiple. Today looked like it was gonna be a test of the old low, then a crater job from there…look how it ended.
Why is it that ChiFi’s posts always end up making me hungry?:)
Willow at 8:12am-
I looked at a similar house this weekend. Cute cape, two bedrooms downstairs, one bath, sunroom, no porch or patio but nice backyard. The upstairs was one big attic that could be converted to two bedrooms and a bathroom added in easily since the pipes were there. No heat in the attic or sunroom. The basement was recently had a french drain put in and was nicely resealed. It has kept up very well but there were no updates since it was built in ’52. Single driveway; can’t park cars side by side. Taxes were around $4K. (Pretty good for Morris County.) It’s listed at $450K. It’s an estate sale; the owners are in their 90s. I don’t know if they have any kids or not. Anyway, my husband and I offered $350K. The realtor said they won’t take anything under $400K. I told her there were several 4-bedroom, 2-bath capes in town that were fully updated for the high $400s…. since this house needs at least $100K of upgrades we figured the price was fair. She said they already got an offer for that but refused. I said, oh well, let me know if they change their minds. This house has been on the market for almost a year and was originally listed at $510K. We still think $350K is too much, but taxes are low and we like the area.
To NJGal – congrats on your baby and new home! I don’t post much but enjoy your insightful comments.
“Celia Chen, director of housing economics for Moody’s Economy.com, says she thinks it will take until 2009 for prices nationally to reach the peaks hit in 2005. Take inflation into account, she said, and a full recovery could take more than 7 years.”
Taken from :
http://finance.yahoo.com/loans/article/102597/Home-Prices:-No-Quick-Rebound
-2 or 7 years, what conviction! in other words we are CLUELESS.
NJGal becomes NYMom. Congrats. You’ll be in the house well in time for the stork’s arrival.
Interesting vignette:
Gas co. guy rings my doorbell this afternoon. “Do you know anything about the house next door? I need to get into the inside meter.”
Funny you should ask, I say. That house has been vacant since June. Multi-family, sold for around $540k, rented to perfectly good tenants, all moved out after the sale. Stood empty ever since. No one comes or goes.
What a waste, he says, shaking his head. We’re shutting off “all the places we can’t get into” at the curb next week.
True story.
NJGal,
Congrats. Parenthood is a wonderful thing.
My son is turning 1 in 2 days. He is a lot of fun.
CC
As a PS to my #157:
The lawn got mowed last summer.
We’ll see whether that’s the case this summer.
Where ignorance is bliss….
Reuters: Homeowners expect steady house prices: survey
NEW YORK (Reuters) – The majority of U.S. homeowners expect no change in the value of their homes in the year ahead, a Reuters/University of Michigan survey conducted in January and February shows.
Some 55 percent of American homeowners expect no change in the value of their home, the survey shows, while just 7 percent expect the value of their home to decrease, with the remainder expecting an increase.
Overall, homeowners expect a median price increase of just 0.1 percent. That would represent a slowing in expected price appreciation from double-digit increases in the recent past, likely leading the typical homeowner to hold back from borrowing against their home equity, the survey said.
A fall in such borrowing would remove a pillar of support for consumption spending and help slow the overall pace of economic growth in 2007, the survey said.
The U.S. housing sector, a pillar of economic growth in recent years, has showed signs of cooling since late last year, with woes in the subprime mortgage sector casting a further cloud over how long it will take the market to recover.
The Mortgage Bankers’ Association said on Tuesday it thought the housing sector would regain its footing by the end of the year, pushing back its earlier view that a recovery would be seen by the middle of the year.
There are already signs that the downturn in the sector is starting to filter through to the broader economy too. U.S. retail sales rose by an unexpectedly soft 0.1 percent in February, data last week showed, as building and general merchandise sales slumped amidst the housing downturn.
A Reuters/University of Michigan survey on Friday could provide further clues of the extent to which a housing slowdown in impacting consumer confidence. Economists are expecting a reading of 90.0, which would be the lowest in 6 months.
http://www.reuters.com/article/economicNews/idUSN1431152020070314?src=031407_1652_DOUBLEFEATURE_mortgage_troubles
“NJGal becomes NYMom. Congrats. You’ll be in the house well in time for the stork’s arrival.”
Ha! Very true – and like mother like daughter – my mom got into our house one month before I arrived and was painting floorboards the day she went into labor. Gotta love it.
“Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it’ll be worse because we haven’t had this kind of speculative buying in U.S. history,” [Jim] Rogers said.
“When markets turn from bubble to reality, a lot of people get burned.”
…
“This is the end of the liquidity party,” said Rogers.
=======
jim has been very right on his macro calls.
Alt-A crash???
http://calculatedrisk.blogspot.com/2007/03/fleck-on-alt.html
My friend in subprime updated me last night, as follows: “The Alt a space has deteriorated very quickly, but not yet public. $40 billion in subprime still waiting to find a home. No loans will be bought at attractive prices until May production as it will be underwritten to new guidelines. The triple bbb’s are a mess. The hedge funds that bought it are all in trouble. … warehouse guys and Alt a guys are now next. Alt a guys may be worse as less insurance on those loans to protect them. The loan sizes are bigger as well.”
National City to keep $1.6 bln of loans that were for sale
http://www.marketwatch.com/news/story/national-city-keep-16-bln/story.aspx?guid=%7B6AC755C2%2D9010%2D46A8%2D9BFA%2DABA45696D47C%7D&dist=TQP_Mod_mktwN
National City Corp. said Wednesday that its remaining $1.6 billion of non-comforming loans held for sale are currently not salable at what management considers an acceptable price due to “adverse market conditions.”
NJGAL
Congrats! Be Prepared to be Unprepared. You will be blown away, thats the best way to describe it.
Not sure who was wondering about teenagers, but let me say this.. I thought having my children 6 years apart would save me having 2 babies at the same time and being able to be a good mother to both. I am fortunate to have them close even though there is 6 years difference, I am now however realizing my mistake. Because of my foolishness and fear of having 2 babies at once I will now have teenager for 12 years !! that is much scarier as I am only into year 2 and its been… well .. Heck I don’t want to scare ya!
Congrats!
KL
Oh & PS – Girls start being teenagers at 11 !
KL
I have boys
NJGal. Grats from a lurker. I enjoy your perspective as someone “in the profession.” Looking forward to hearing about juggling baby and work and house.
#152 Lina
Not savvy financial people here but if I were planning on moving to FL, NC with an eye towards buying in 1-2 years, I would set aside some money for downpayment. It would be nice to plop 20% down when the time and place is right.
The bigger concern would be tax. The tax consequence might be hefty since you are describing one, maybe two, big realization events. Think about capital gain tax from selling $120k worth of stock (don’t know what your basis is). And what about the possible sale of upstate property if you need that money to buy when you relocate, especially since you aren’t living in that place (so you don’t get capital gain exemption from the sale).
Back to lurking.
NJgal says: “I know I will love my own but I’m not one of those people who will be become obsessed with every little movement my kids make.”
Just a warning – you *might* change your tune once junior gets here. Kids have a way of making one suddenly become “kid-centric.” (I have three of my own.) Congrats on the new baby and house!
Lina/Duckweed (167)-
Whoa! That upstate property could still be a primary residence. If it was occupied as a primary in 2 of the past 5 years, it’s still can be considered a primary residence.
Consult your tax professional.
I hear Helicopter Ben warming up the Apaches.
Yea, the 2/5 year rule is exactly what I was hinting at. This is only the 3rd year with mortgage, and it doesn’t sound like Lina has been living there or plans to live there. So the taxation light went off.
Hence, consult your tax professional. In the worst case a period of country living might be in order.
Blog poll:
How much use will NJGal’s hubby, the Grillmaster,
get out of his new deck, hot tub, grill combo,
(which sold him on the house to begin with),
once baby arrives?
Aren’t kids a divine distraction? I’d take 12 years of teenagers over 6 years of diapers. If you’re lucky,
teenagers can be wonderful. OTH, there is simply nothing good that can be said for diapers and tantrums.
You read it here first!
Hmmmm. How many times will Mr. NJGal use the new accoutrements?
This will be a direct function of the results of the inevitable negotiation on which family member to visit on which holiday.
Once the little one comes, I’d say not much use for at least a year until the novelty wears off, especially if this is the first grandchild for either one of them.
NJGal..by the way, did your Doc warn you about the hottub while with child?
Weather was so nice, I grilled this afternoon. Although, to tell you the truth, I was grilling in the snow.
We grill alot, so we hooked our grill up to the nat. gas line. No running out of propane for us! Although, I admit, I was too cheap to pay for the “house gas” upgrade kit, so I just drilled out the burner orifice on the control knobs myself (don’t try this at home kids).
jb
I didn’t even think about paying tax if I sell stock – I am smart with my money in the sense that I don’t overspend and live within my means, but, boy, I have no clue about these intricacies.
I can’t live there as a primary, as it’s too far for me to commute, and there is no work there. We would prefer not to sell it unless there were a real need, as I would like to hold onto it for part time retirement in the future (15 years off, at least).
I really like the idea of paying off that mortgage, using $ in savings to put a downpayment on a place in florida, and renting the house upstate for part of the year and using those funds to help pay off the florida mortgage.
BUT…. I just don’t know if it makes sense to sell stock and pay off a mortgage that’s 5.2%.
Clot (153) – Its the quality of future earnings that worries me. With all this liquidity floating around, GS has been making deals hand over fist in the past years. IF global liquidity is drying up, I suspect there will be a multiple contraction due to lower earnings in the coming qts. GS is a good buy if it falls below 180.
chicagofinance(149) – No, I don’t have a different definition of quality. why did you arrive at that conclusion after reading my post?
RE: 133
Cuse is in the House!
Oh my god…
Oh my god…
http://img215.imageshack.us/img215/3850/orange1tu8.jpg
http://img174.imageshack.us/img174/8073/orange2om3.jpg
Photos by Wicked.
Clot, Chi, BC… I can send you a high res if you want one as a background.
And on a RE note has anyone seen SoCalMtgGuy’s blog lately late latest post is a gem.
http://housingbubblecasualty.com/
(OTH, there is simply nothing good that can be said for diapers and tantrums.)
Diapers are easy – tantrums,um they are worse now )-: they’re hormonal!
“How much use will NJGal’s hubby, the Grillmaster,
get out of his new deck, hot tub, grill combo,
(which sold him on the house to begin with),
once baby arrives?”
Ha! Mr. Gal has a way of getting his way – he will certainly be able to use the hot tub PRIOR to the baby’s arrival, and believe me, he will make use of it as much as possible. I know I won’t be able to use it (or even take a real bath, ugh) but I can survive for a few months. I’ll go in the kiddie pool with the dog.
As for the grill, I will get MY way – he will cook. He’s quite good on the grill, and since it’s right outside the kitchen door, I will forced grilling coming on, even throughout the early winter. It’s the least he can do, right? Thankfully, we both love to grill, so at least we have that.
I am not looking forward to diapers or tantrums or any of that, but I think I can take that over the Wiggles anyday.
Now we have to start thinking about how to handle both working – my sister in law has a live in nanny. I’m not sure that I want that, but considering our hours, I’m not sure if there is another option. As I’ve said, I have the room and the extra bathroom, and I can eventually redo the basement for a nanny suite (although I REALLY wanted to do the basement as a pilates/cardio room!)
NYMom: I would do some indoor environmental testing, especially ensuring the basement is properly ventilated if you are going to spend time down there. Search for sources of lead……also, make sure that any new product you buy has had an opportunity to “de-gas”, whether it be paint, furniture (especially wood-composite), home upgrade materials, and any baby related products. We also shifted over to all hydrogen peroxide cleaners instead of bleach and chloride based. I figure we are going to keep this up for the first 18 months.
Also, if you avoid going on the weekend, the Buy Buy Baby on 7th Avenue and 26th is fantastic with very knowledgeable sales staff. Saturdays and Sundays are a ridiculous madhouse.