Moratorium on foreclosures?

From CNN/Money:

Activists want foreclosure moratorium

Housing activists say most families with high-risk mortgages whose terms are questionable should not be kicked out of their homes when they are delinquent on payments. A coalition of groups Wednesday urged lenders to adopt a six-month moratorium on foreclosures to provide time to work something out.

“The debt is forcing people to take second jobs, sell family possessions, and rent out a second room,” said Wade Henderson, the president of the Leadership Conference on Civil Rights.

The problem hits the subprime mortgage market, where people pay more for their home loans because the prime market considers them to be higher risks than other borrowers. Activists told a Wednesday news conference lenders are misleading many borrowers, who are surprised and unable to pay when expensive terms of the loan kick in.

“It is not a surprise that so many homeowners are facing foreclosure when you take a look at the loan terms,” Josh Nassar of the Center for Responsible Lending told reporters. “People are qualified generally just to pay for the initial rate, not the adjusted rate, which includes a payment shock of well over 30 percent.”

His group estimates that about 20 percent of the sub-prime loans made in the past two years will go into default and result in families losing their houses.

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184 Responses to Moratorium on foreclosures?

  1. James Bednar says:

    Some points on this:

    1) Foreclosure moratorium would be a good thing for those facing foreclosure.

    2) A foreclosure moratorium wouldn’t have any tax impact to the “rest of us”.

    3) Moratorium would force lenders that make bad loans to hold those non-performing loans longer or work out loans with borrowers. Ultimately, lower profits, greater losses.

    4) Impact of #3 would likely be tighter lending standards.

    Some ways this could backfire? Allowing companies to add late payments and massive fees back to principal. That would be just a short-term fix that ultimately just piles more debt onto the borrower.

    jb

  2. investorDavid says:

    JB,

    Why would it have a tax implication? Because they won’t pay property tax either?

    I think that these companies, who recklessly gave out the loans, should take the loss.

    But another problem is that foreclosure moratorium might just prolong the agony, rahter than solving the problems for many.

  3. ~~~ HOUSE OF PAIN ~~~~ says:

    Ryland Expects Loss in 1Q
    Wednesday April 4, 7:12 pm ET
    Ryland Sees Loss in Fiscal 1st-Quarter, Due to Charge, Lower Sales of Units

    http://biz.yahoo.com/ap/070404/ryland_outlook.html?.v=1

    CALABASAS, Calif. (AP) — The Ryland Group Inc., a homebuilder and mortgage finance company, on Wednesday said it expects to report a loss in its first quarter, due partly to a hefty impairment charge and lower sales of units.

    The company expects a loss between 50 cents and 60 cents per share, for the quarter ended March 31.

    That includes a $65 million impairment charge related to assets in Fort Myers, Fla., Phoenix, Southern California and Washington D.C.

    Ryland also expects to write-off $15 million in goodwill associated with buying California homebuilder J.J. Brock & Sons in 1986.

    Ryland also said its annual effective tax rate has grown to 39 cents from 37.5 percent, mainly due to the goodwill charge, which is nondeductible.

    Not including the impairment charge, the goodwill write-off and the change in effective tax rate, the company expects earnings will be between 63 cents and 73 cents per share.

    The company said aggressive pricing strategies have persisted in several markets, leading to the write-down of value of several assets.

    Preliminary sales for the first quarter fell 26 percent to 2,989.

    Shares closed down 65 cents at $41.25 on the New York Stock Exchange.

  4. Aaron says:

    Let me get this straight, if you stop paying your loan you can live payment free for 6 months, go on vacation, and when you get back the bank will negotiate a better loan for you?

  5. curiousd says:

    From over at CR comments…

    “I work for a pair of RE agents in the DC area. We’re being deluged with listings but most of our buyers can’t buy anything. There’s no more 100% loans and few first time buyers in our neck of the woods (our main market) have 5% (the most generous LTV is 95% but that’s at 9.5% interest).

    It’s amazing how similar my bosses and the Fed sound. Me personally, I hear the market coming to a screeching halt.”

  6. James Bednar says:

    Let me get this straight, if you stop paying your loan you can live payment free for 6 months, go on vacation, and when you get back the bank will negotiate a better loan for you?

    Make no mistake, I think supporting these borrowers is clearly moral hazard, and should be avoided. However, the politicos are looking for blood (now that it’s a campaign issue), and I’d much rather see them try to “fix the problem” without their hands in my pockets. Given the choice between taxpayer funded bailout and a moratorium, which would you support?

    I think lenders are going to wise up pretty quickly.

    This is the kind of regulation that tends to backfire and will ultimately result in fewer loans being offered and tighter standards. There is a cost associated with this kind of extended recourse, a cost that will need to be accounted for up-front.

    They helped make the bed, now they’ll have to sleep in it too.

    Like I said before, at this point I’m supporting “hands-off” the marketplace (except for tighter regulations surrounding true predatory lending), but I’ll play devils advocate.

    jb

  7. James Bednar says:

    Why would it have a tax implication? Because they won’t pay property tax either?

    The Sheriff will make sure the taxes are paid. But this brings up a more interesting point. Is there anyone here closely involved in the mortgage biz that can talk a bit about property tax escrow in the state.

    jb

  8. James Bednar says:

    Of all the emails and phone calls I made regarding the Sen. Rice foreclosure bailout bill, do you know that I only received 1 email response? Even worse, it was an auto-reply.

    However, I did receive one, very well written letter from Assemblyman Thomas Giblin.

    Thank you for listening Assemblyman Giblin.

    jb

  9. Clotpoll says:

    Grim (1)-

    Your last thought in #1 is spot on. Adding unpaid P/I to the balance- and other creative forms of “forbearance”- might lead some borrowers right back into the jungle of toxic, predatory lending. When a loan workout leads the borrower right back into a time bomb that detonates- once again- at the reset date, we can’t call that a long-term solution.

    Though this type of workout might punish lenders and help buyers, it still smacks of artifice. Painful as it may be, I still think the only solution that will work is going to be market-based.

  10. James Bednar says:

    Don’t want this one to get lost, was posted in the comments late yesterday:

    Mortgage menders

    As home foreclosures mount, mortgage companies are knocking on doors, sending letters and making phone calls with a simple message for struggling homeowners: They’d rather modify your loan than foreclose.

    EMC Mortgage Corp., which has a $78 billion loan portfolio that includes subprime loans to homeowners with weak credit, this week launched a 50-person team it calls ”the Mod Squad.” Members will spend an unlimited time on the phone with troubled borrowers, sifting through their bills to compute a workable monthly payment. In an industry that often rewards workers for getting off the phone quickly, each team member has time to speak to as few as three people a day.

  11. Al says:

    Aaron Says:
    April 5th, 2007 at 12:34 am
    Let me get this straight, if you stop paying your loan you can live payment free for 6 months, go on vacation, and when you get back the bank will negotiate a better loan for you?

    NIce point.

    IN Addition – why don’t put 6 month eviction moratorium for renters – once you stop paying after 6 month your landlord would negotiate better lease with you!!!

    Sounds ridiculous – it is because any moratorium is. Again – anything but letting the market work itself out is simply leads to more pain – by giving the people in default more time you are simply shifting the load into the lender – and what is lender – how may of you own mutual funds???

    So again punishing the taxpayer with etra costs but not through goverment bail-out programm but through your mitual funds/stocks. In this case th wealthier you are the more punished you get.

    Or everyone would dump their lender’s stocks at once.

    So essentualy you are rewarding irresponsible people.

    Sorry but NO.

  12. Clotpoll says:

    Grim (9)-

    No response (not even an autoreply) from Rice…nor my own legislators, Leonard Lance and Marcia Karrow.

    Guess I should change my e-mail letterhead to a pharma, telcom or insurance company’s next time I write.

    Corporations run America…and they own all our elected reps.

  13. James Bednar says:

    Can someone provide a comment on what the existing timeline for foreclosure is in NJ.

    I was under the impression that it took approximately 6-9 months, and was one of the longest timelines in the country.

    jb

  14. curiousd says:

    “Corporations run America…and they own all our elected reps.”

    Let us not forget the ‘no strings attached’ alternatives from our recent past like Jesse ‘The Body’ Ventura. Maybe we are better of with corporations…

  15. James Bednar says:

    Hat tip to arlingtonva who posted this up at The Housing Bubble Blog. I thought this was incredibly interesting, so I’m going to post it up here.

    Comment by arlingtonva
    2007-04-05 04:44:08
    Q. What do the top 20 creditors of the now bankrupt New Century Financial and the top 20 campaing contributors to Senator Dodd have in common?

    A. They are mostly the same people

    New Century creditors:
    http://tinyurl.com/yr78av

    Senator Dodd campaing contributors:
    http://www.opensecrets.org/politicians/contrib.asp?CID=N00000581&cycle=2006

  16. BC Bob says:

    “People are qualified generally just to pay for the initial rate, not the adjusted rate, which includes a payment shock of well over 30 percent.”

    What’s the point, everybody qualifies at 1-2% teaser rate and I/O. 2003-2006, exaggerated gains, crumbling 2007-2011.

    By the way, although pet.com had the same market cap as GE, I didn’t realize that it had zero value.

    No response from my phone calls/emails to Rice nor Steve Rothman.

  17. James Bednar says:

    Interesting look into commercial RE from the Record:

    Need office space? No problem

    Demand for North Jersey office space slowed during the first quarter, the commercial real estate brokerage GVA Williams in Parsippany said this week.

    Vacancy rates in the northern part of the state edged up during the quarter to 16.85 percent, from 16.77 percent in the last quarter of 2006. As a result, rents have remained flat.

    And some economists are predicting tepid job creation in the state this year, meaning that there won’t be much need for office space for new workers, Dolly said.

    Bergen County’s office market has seen vacancy rates creeping up, to about 19 percent from about 17 percent a year or so ago.

    Just as many corporations moved from New York to Bergen County in the past, corporations are continuing to migrate west to Morris and Somerset counties, where many of the office buildings are newer, Dolly said.

    Passaic County’s office rental market, at about 4 million square feet, is much smaller than Bergen’s 22.5 million square feet, Dolly said. It has experienced vacancy rates of about 23 percent recently.

    In Morris County, vacancy rates are about 20 percent, but that’s down from 24 percent a few years ago.

    A few markets are experiencing livelier demand. On the Jersey City waterfront — which has been the busiest office market in the state for several years — rising demand for space is pushing up asking rents to around $35 and higher.

  18. James Bednar says:

    From the Wall Street Journal:

    Housing Inventory Surges in March
    By JAMES R. HAGERTY
    April 5, 2007; Page D2

    A sharp increase in homes offered for sale last month suggests that home shoppers will find plenty of choices this spring.

    The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of March increased 6.5% from a month earlier, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condominiums and town houses on local multiple-listing services.

    Over the past 22 years, home inventories nationwide have increased an average of 1.7% in March from February, according to Credit Suisse Group. Supplies typically rise modestly in March as sellers pursue the many families with children who seek new homes in the spring, so they can move during summer vacations.

    ZipRealty recorded the biggest increases in the metro areas of Los Angeles (12.8%), San Francisco (12.2%) and Washington, D.C. (9.4%). Miami, where a glut of unsold condos has been weighing on the market, showed a modest rise of 1.8% in the supply of all types of homes in March from a month before. But the Miami inventory was up 61% from a year earlier. For all 18 metro areas, the inventory at the end of March was up 35% from a year earlier.

  19. James Bednar says:

    Just for reference, over the same period North Jersey (GSMLS) inventory was up 6.9%.

    jb

  20. James Bednar says:

    Some more information on foreclosure timelines.. This is from RealtyTrac:

    The pre-foreclosure period is the length of time between when the owner is notified regarding the default and when the property is eligible to be sold by the bank. When a property is in the pre-foreclosure period, the owner still has an opportunity to pay off what is owed or to sell the property, thereby stopping the foreclosures process. This period of time is wildly inconsistent from one state to another and the differences can range from just days to more than a year. For instance, in the state of Texas the pre-foreclosure period of 27 days is the shortest of all 50 states. If this still seems like a long time to wait for a property to become available, just consider the 290-day period observed in Wisconsin or the 445-day period observed in New York!

    State Pre-Foreclosure Period Redemption Period
    1. Texas 27 days None
    2. Georgia 37 days None
    3. Virginia 45 days None
    4. District of Columbia 47 days None
    5. New Hampshire 59 days None

  21. BlaBlaBla says:

    Actual email from a realtor yesterday:

    “Speculations on real estate is that prices have “bottomed out” and will firm up by second half of the year. If you have plans to purchase, take advantage of today’s price and interest rates. I lost a few deals due to multiple offers on houses that are priced under market value. Tell me if I need to update your search criteria and you can start previewing the listings online.”

    I really like this realtor, she has been very helpful in the past, I think this is a sign of the desparaton that is currently out there.

  22. Rich In NNJ says:

    MikeyMike,

    Info from yesterday’s request:

    ACT WESTEND AVE $599,000 1/2/2003
    EXP WESTEND AVE $599,000 7/1/2003

    ACT WESTEND AVE $579,000 8/1/2003
    W-T WESTEND AVE $579,000 8/8/2003
    BOM WESTEND AVE $579,000 8/14/2003
    EXP WESTEND AVE $579,000 2/1/2004

    (Tax records show a sale 4/2004 – $556,000)

    ACT WESTEND AVE $708,000 9/14/2006
    PCH WESTEND AVE $699,000 10/15/2006
    PCH WESTEND AVE $665,000 11/20/2006
    PCH WESTEND AVE $650,000 1/13/2007
    EXT WESTEND AVE $650,000 1/26/2007
    W-U WESTEND AVE $650,000 2/13/2007

    ACT WESTEND AVE $599,000 2/16/2007 (new broker & agent)
    PCH WESTEND AVE $579,000 3/15/2007
    PCH WESTEND AVE $564,900 3/27/2007

    Taxes: $10,795.60

  23. James Bednar says:

    Wow Rich, that one is very surprising, what’s the MLS?

    jb

  24. BC Bob says:

    -My investing objective is safe and conservative, why am I losing $ in an aggressive growth fund?
    -It’s fine when I am making $ with my dot com stocks. When it reverses and turns to dot bomb, I have been violated. Please help me.
    -I didn’t realize that with my car insurance offered uninsured motorist.
    -I though my homeowners ins would cover the flood in my basement, what is this act of God thing?
    -What do you mean the proposal that my ins agent showed me is not guaranteed? Why did my 20k, premium cost, vanish?

    People [not those on this site], get off the couch, turn off Oprah, Hollywood Access, American Idol, etc… Take charge of your lives. There is one and only one person who is accountable for their actions, the one in the mirror.

    Today is the first day of the rest of your life, stop the complaining and do something. You don’t have to do much, just do something.

  25. Rich In NNJ says:

    MLS 2706328

    Mortgage: $486,000

  26. James Bednar says:

    BC,

    Thoughts on this one?

    33 homes in Wayne flood plain will be leveled

    Come fall, the Hoffman Grove section of Wayne should have a sparser look — with about a third of the small homes on the Pompton River falling victim to an ever-growing concern about flooding.

    That’s the timetable Wayne officials have put on the process that has begun with 33 homeowners agreeing to sell their homes. Once they leave, the township will begin leveling the homes and return the land to its natural state.

    The township received $5.6 million in state and federal grants to fund the largest buyout in any single New Jersey neighborhood. Moving residents out of Hoffman Grove is meant to bring an end to a decades-long battle with flood waters that have caused millions of dollars in property damage and insurance claims, led to frequent and sometimes dangerous evacuations and destroyed family treasures again and again.

    Here is the best part:

    “If I don’t go through with it, I’d be stuck with the house,” Miller said. “I wouldn’t be able to sell it on the market. Why would anyone buy in this neighborhood?”

    Why, sir, did *you* buy in this neighborhood?

    jb

  27. LeeS says:

    Can we get a moratorium on car loans and credit cards as well?

    How about a moratorium on bankruptcy, we’ll just freeze the clock and you can continue using that 50″ plasma TV you bought on credit and can’t afford to pay for. Enjoy that 26′ boat while you’re at it.

    How ridiculous can things get?

  28. BC Bob says:

    “Why, sir, did *you* buy in this neighborhood?”

    JB,

    I would ask the same question. If this was a new and significant event, I would agree with the grants. For all those, that bought fully aware of the problem? To borrow a phrase from this site, caveat emptor.

  29. 2008 Buyer says:

    Servicers (investors) need their assets to be cash flowing, so any type of payment (tease rate pmt, pre-reset pmt, etc.) would be great. The servicer would pay the taxes on the property to maintain their first lien position in the property while they are conducting some type of loss mitigation. On the other hand if they start the foreclosure process and once you have the property try and sell it through a REO process and contend with all the other sellers in this market.

    Its a catch 22 position…the question for servicers is at what point to they cut off the spigot (accepting a lower payment, advancing taxes, etc.) obviously a money losing position and do you start the foreclosure process? Personally I think it would be a foolish idea. What..in six months you miraculously will be able to afford your payments? I know, rates are going to go down, home prices will actually start to appreciate in six months and borrowers will be in a better position then. You are merely delaying the pain of getting kicked out of their house.

  30. James Bednar says:

    BC,

    What about the lost tax revenues? Who gets to make up for the shortfall?

    jb

  31. lisoosh says:

    #30 –

    You’re right, if they couldn’t afford to pay for the house in the first place, what will change in 6 months?
    I think JB is just “supporting” the idea in place of a taxpayer bailout – foisting the pain on to the mortgage companies.

    Devils Advocate – it would be best to let the market work it out, let the house go into foreclosure and the lender have to sell it at a potential loss, then both the lender and the irresponsible borrower suffer.

    I think moratoriums would be better used in cases of catastrophic events, sudden illness or death where the borrower was caught unawares entirely, not with something that was well within their control.

  32. lostinny says:

    Yet another example of how doing the wrong thing pays off. I wonder when society will catch on and realize they can do whatever they want, screw up all they want, and someone will always be there to bail them out. Such a sad state of events that we may say one do another. And we need to realize it’s our actions that are teaching the real lessons here.

  33. Rich In NNJ says:

    Weekly jobless claims back on the rise

    The number of Americans signing up for state unemployment benefits crept back up last week, indicating some slack in the U.S. labor market, Labor Department data showed Thursday.

    Seasonally adjusted initial claims rose by 11,000 to stand at 321,000 for the week ended March 31, the government said. It marked the highest level for first-time claims since March 3.

    More at the link above, Rich

  34. lostinny says:

    #33
    That’s say one thing do another.

  35. James Bednar says:

    Devils Advocate – it would be best to let the market work it out, let the house go into foreclosure and the lender have to sell it at a potential loss, then both the lender and the irresponsible borrower suffer.

    We’re all smart folks here, most everyone has some knowledge of economics as it relates to policy.

    Let’s not fool ourselves, we know that strict subprime lending regulation is going to send shockwaves through the housing market. Areas with high percentages of subprime borrowers will likely see massive price declines as the pool of potential buyers is all but eliminated. This kind of regulation will ultimately manifest itself in a real estate death spiral. More defaults, more foreclosures, tighter standards, fewer buyers, lower prices.. Und so weiter , und so weiter, und so weiter.

    The layperson might think bailouts are going to “save” the housing market. That isn’t the case, there isn’t any kind of free lunch. Don’t make any mistake, doing nothing won’t save the market either. It’s been one hell of a party, no matter what we do there is going to be a hangover tomorrow.

    jb

  36. BC Bob says:

    “I know, rates are going to go down, home prices will actually start to appreciate in six months and borrowers will be in a better position then.”

    2008,

    I agree with everything you stated except the above. It’s not a foregone conclusion that rates are coming down. If they do how does that help?? They already had the option to finance with a low fixed rate. Why now?

    In conjunction with this, the fed controls the ffr, the market controls long term rates. How about a lower ffr and a higher 10 year?

    Finally, if both short and long term rates come down why do you feel that will result in house appreciation at this time?

    This topic, imo, sounds like it will only prolong the agony.

  37. James Bednar says:

    Fed funds futures are currently pricing in a 55% chance of rates staying right where they are for the next 5 months.

    http://www.clevelandfed.org/research/policy/fedfunds/Index.cfm

    It’s going to take a recession, or serious fears of one, for short rates to be lower by the end of the year. Inflation is still running hot, despite what the doves at the Fed are cooing about.

    Or are we trying to say that housing typically does well during a recession?

    jb

  38. James Bednar says:

    Keep in mind that mortgage rates are actually lower, right now, than they were at this time last year:

  39. James Bednar says:

    (oops)

    Here is last week’s Freddie Mac PMMS (I know the most recent was released this morning).

    http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputWk.jsp?week=13&ending=20070329

    30y Fixed
    This year 6.16
    Last year 6.35

    15y Fixed
    This year 5.86
    Last year 6.00

    5y ARM
    This year 5.88
    Last year 6.02

    1y ARM
    This year 5.43
    Last year 5.51

    If lower mortgage rates are going to save the market, why are sales still trending lower than the same time last year?

    jb

  40. investorDavid says:

    JB,

    This low rate mortgage talk by real estate agents really annoys me.

    I rather buy a house at low price with high mortgage rate than buying the same house at high price with low mortgage rate. I can always refinance.

  41. lostinny says:

    I just checked bankrate.com and the 30 year fixed was 5.7. That’s a great rate. Now if prices would come back to reality, I’d jump on a condo development I’ve been eyeing.

  42. James Bednar says:

    I just checked bankrate.com and the 30 year fixed was 5.7.

    Go through the pre-qual/pre-approval process, if you haven’t yet, to get a feel for what the actual rate will be.

    Keep an eye out for the associated fees when you see a “too good to be true” rate. Also keep in mind that bait-switch is alive and well. Brokers will quote unbelievable rates just to get you through the door.

    jb

  43. Al says:

    TO posts 44 and 42

    JB beat me to the punch – I was about to say that you can only talk about rate you see at closing or when you lock the rate in written contruct with your lender.

    Fron page of the web site means nothing – it is either include you paying lot’s points or crazy qualifying conditions. As you go through the process you will surelly get higher rate.

  44. 2008 Buyer says:

    BC Bob…LOL…that particular part was meant to be sacastic.

  45. Al says:

    And also to my post 33 which is avaiting moderation historic data on hte mortgage rates and other federal rates are here:

    http://www.federalreserve.gov/releases/h15/data.htm

  46. 2008 Buyer says:

    Sarcastic….I don’t think that’s going to happen in six months either.

  47. lostinny says:

    James #43
    Went through all that last summer when we thought we were really going to buy. Pre-approved through BofA special program through ACORN. I think it was %6.5. It was all well and fine but prices were just too much. They’re better now, but they’re still too high. And like I’ve said previously, maxing out my retirement savings is the most important to me right now- or at least get to 20%. If I can do that and buy, that’s when I’ll jump on something. It may be another year though. And I think I’ll only be looking to work with the ACORN program. I couldn’t find a better rate no matter how many brokers I spoke to.

  48. BC Bob says:

    David,

    Ditto. Someone on this blog, in the past, had it nailed. “You can always refinance your mortgage but you can’t refinance your purchase price” Just a great line.

    By the way, you could have had 5.25%, fixed in 2004. Why the boatload of adjustables, I/O’s, neg ammort back then??

  49. Painhrtz says:

    Long time lurker, first let me say thanks for all the insight as I have used the evidence from here to persuade my wife from catching a falling knife. Those darn nesting instincts are strong, especially when friends of hers keep buying houses.

    JB – after spending the majority of my 34 years in Bergen county and that area of Wayne I can’t believe it has taken them this long to get those folks out of there. While being a libertarian, I’m not a big fan of government subsidies, but in the long run it will problly save Wayne money. Which we all know they will blow on something else. Such is New Jersey.

    Now the real reason for stepping out of the shadows. We are looking at relocating to Somerset County (Bridgewater, Bedminster, Basking Ridge area) to get closer to the wife’s current consulting gig. Is it prudent to use a Realtor to find a house/townehouse for rent or should I just use NJO.com. We are trying to save money and I wouldn’t want to throw good money after bad. I have not had to look for a place to live since college. I have had the good fortune to rent from family since 97 albeit in Garfield. Ideally we would like to pay a flat fee. Not one months rent which one realtor had asked us for, I obviously balked.

  50. BC Bob says:

    2008 [46],

    Duh, on my part.

  51. curiousd says:

    55% sounds pessimistic. they’ll stay the same baring economic blow up.

    -% of total financial holdings that are mortgages: 6%
    -% of mortgages that are subprime: 20%
    -% default rate predicted: 20%

    source: moodys
    …which forsees a 50% chance of slight equity correction, 10% its over, 20% more sever but still no ‘R’ word.

    got to keep our passions in context…

  52. BlaBlaBla says:

    Recent Census Bureau estimates:

    http://www.cnn.com/2007/US/04/05/metro.population.ap/index.html

    I find these numbers staggering:

    “The New York metro area, which includes suburbs in New Jersey and Pennsylvania, added 1 million immigrants from 2000 to 2006. Without those immigrants, the region would have lost nearly 600,000 people.”

    How many of these immigrants were driving the sub-prime market? Seem to mee you have alot of Alt-A and prime borrowers fleeing this area (myself being case in point)for greener pastures. The sub-prime meltodown has not even begun to be realized yet.

  53. Richie says:

    All a moratorium does is delay the inevitable.

    It’s going to cause a flood in 6 months, what’s the point? Who’s really getting protected? Most foreclosures are delayed for months anyway, the person can file bankruptcy/etc which delays the whole process.

    -R

  54. investorDavid says:

    I don’t quite remember but I was paying 7.5% on 20 years 7 years ago. A few years ago, I changed to 4.75% for 15 years (yes, Fixed, no ARM).

    Give me the low price on a house at any financing rate. I can always refi down the road.

    One should never play with one’s primary residence. The law should be changed to…

    If you want a house, put down 30-50% down payment and nothing but FIXED rate.

  55. rhymingrealtor says:

    Painhrtz

    Why not use, NJo.com, a newspaper and a realtor?

    KL

    That’s clot’s spot

  56. tcm says:

    Question for those familiar with closings –

    Reading about some people who claim that when they actually saw the closing documents – at the closing – the terms were much different than they were told there were. My question is, if I go to my closing, and I was told I was getting a fixed at X%, but then when I sign, I find that it’s really and adjustable, or something else, what can I do?

    If I back out at that point, do I lose my deposit?

  57. BC Bob says:

    “If you want a house, put down 30-50% down payment and nothing but FIXED rate.”

    ………….and I had it all wrong. I thought you were a liberal.

  58. RoadTripBoy says:

    It seems to me that for many FBs (that’s f@cked borrowers using SoCalMtgGuy’s lingo), foreclosure could be the best possible outcome. Sure they would lose their homes, but too many people purchased homes they truly can not afford and remaining in the home only means that they will be saddled with an insurmountable debt that they may never repay. Since many FBs put little to no money down, it would seem that the best course would be to walk away, take the short sale, face the 1099/IRS music, take the ding to the credit rating, rent an affordable home, and work toward builing a more stable financial future. Remaining in a home that you can’t afford/retaining debt you can’t repay isn’t a path to a stable financial future. Chalk it up to learning an important life lesson and move on.

  59. James Bednar says:

    If you want a house, put down 30-50% down payment and nothing but FIXED rate.

    If the market is willing to lend to someone at a lower standard, why not let them?

    …As long, of course, as tax payers aren’t held liable for the outcome.

    jb

  60. investorDavid says:

    Bob,

    Liberal comes in all shapes and colors. :)

    Liberal doesn’t mean being irresponsible.

    Liberal means caring about the “downtrodden” folks – including that student. :)

    Liberal means giving a 2nd chance to less fortunate people.

    Liberal means carng about Human Rights, caring about fellow Human beings.

    One cannot paint the entire spectrum of liberals with one big brush, right?

  61. jwr says:

    There is plenty of blame to go around here. You can blame the borrower for not being more careful with their own finances and not being able to see beyond the day they signed the loan, and could afford the loan to the day the mortgage and they can’t.

    You can blame (and I’m more likely to) the re agents and mortgage brokers, who are nothing but salesmen and not advocates for the buyers, for playing on peoples emotions and capitalizing on the irrational exuberance leading up to this cluster f*ck, and preying on people they know won’t be able to afford the load in 2 years.

    Finally you can blame the lender for not requiring higher standards for the loan in the first place. Again, they deserve a large portion of the blame.

    A bailout would be a huge mistake. So would a moratorium. There must be consequences for making a bad financial decision. After all, if you don’t pay your credit card bill, you get a bad credit rating and you can’t get a credit card for a while. But buyers also should not bear all of the blame here. The market has to work this thing out to the root cause, which is grossly inflated prices.

    So I propose this compromise. No bailout. No moratorium. No foreclosure. Give people who are in over their heads a chance to walk away from the house without a foreclosure notice on their credit report. Everyone wins, and everyone is punished. The home owner loses the house. The loan company is stuck with the loan, and they’ll have the sell the house at a loss, but they don’t have to go though the cost of a foreclosure. Finally, new regulations governing re agents, and mortgage brokers must be enacted, to prevent these predatory sales tactics. Let them be sued for malpractice if they sell someone a home or a mortgage, while at the same time they know they can’t afford it, or alert them to the possible risks.

    jwr

  62. investorDavid says:

    JB,

    As long as the market is not conning the uneducated mass and as long as they are taking the loss (since it’s like gambling), I don’t have much problem with that.

    I believe that the ones benefit from these subprime market should be held responsible for this mess. Confisticate the asset from investment bankers, mortgage brokers, real estate agents and save the downtrodden.:)

  63. bergenbubbleburst says:

    The housing market is dead. The wake might be longer then we would have liked, but the housing market is still dead.

    ******* when the 500k POS Colonial becomes 400k, and the 450k POS Cape becomes 360k, then i will buy. Until then I rent.

  64. MJ says:

    any guess on which way the NFP will go?

  65. BC Bob says:

    David,

    You’re right, not one big brush.

    Courtesy of the eagles;

    “So often times it happens that we live our lives in chains and we never even know we have the key”

  66. tcm says:

    David –

    Who defines downtrodden?

    I understand there are certain groups we can all agree on ( mentally unstable, health issues, etc.) – but uneducated masses? Inside that uneducated mass, there’s probably a multitude of reasons why people remain uneducated – Don’t you think that before you bail everyone out for being uneducated, you at least examine why some are uneducated, and some are not?

  67. thatbigwindow says:

    So, if my company downsizes, and I can’t find another job to pay my mortgage, who will bail me out?

  68. AL says:

    So I propose this compromise. No bailout. No moratorium. No foreclosure. Give people who are in over their heads a chance to walk away from the house without a foreclosure notice on their credit report. Everyone wins, and everyone is punished. The home owner loses the house.

    So you are pro[posing that: buyer would get out unscratched:

    What stops buyer, who just walked away from buying the same house right back at lower price, keeping al of his cashback/bonuscar/home equuity loans??????

    How is this not a bail-out??

  69. thatbigwindow says:

    tom: people are simply too lazy to think. It is much easier to pop depression medication and not have to think.

  70. Painhrtz says:

    Rhyming Realtor – Thanks, that was what I figured. I’m just curious if there are any flat fee agencies in the area?

    As an aside, just had an old friend buy a POS Cape with her fiancee in Washington Township for 500k. They are the epitome of FB as she is a teacher (less than 5 years) and he is a mechanic. Assuming they went 100%. He didn’t want to live in undesirable Garfield for free to no rent from her parents because he didn’t like the area. The apartment is on the decent side of town! So they are pretty much screwed.

  71. investorDavid says:

    BC Bob,

    I think my kids as my chain. But it’s the chain I put on myself and Yes, I do have the key.

    But I am happy to be chained by my kids. Joy and the pain of parenting.

    JB, mark my words – you are not a grown-up until you raise kids. :)

  72. James Bednar says:

    I’ve made it clear, above, that I’m in favor of predatory lending regulations.

    Predatory lending is alive and well in New Jersey, along with its compatriot, affinity fraud.

    I think that NJ needs to signifcantly tighten the standards regarding mortgage solicitor licensing. The lack of standards regarding mortgage solicitors is a big part of the problem.

    I think that broker commissions need to be spelled out to the buyer, in dollars, not in points, YSP, or otherwise, but in clear text. “This loan will result in the solicitor making a commission of $xx.xx.”

    We’ve got 40,000 mortgage solicitors running around this state, and all it took them to get there was $100.

    Heck, even real estate licensure is more time consuming, expensive, and restrictive.

    jb

  73. investorDavid says:

    tcm,

    BC Bob has a great definition of “downtrodden”. hahahaha

  74. investorDavid says:

    JB,

    And I thought you were a licensed real estate agent.. hahaha..

    I just love your story about those ding bags who were in your class. :)

  75. James Bednar says:

    And yes…

    …it is harder to become a hair stylist, than a real estate agent or mortgage solicitor, in NJ.

    jb

  76. BC Bob says:

    David [73],

    That’s not a chain and I know you have the key.

    I agree with [#68]. Who defines downtrodden? The fed govt, states, municipalities? We, as a country, are in debt to the tune of approx $7 trillion. If you count unfunded obligations, it’s more like $50 trillion. What about our off-the-books accounting? It makes Enron look like a walk in the park. Where does all this proposed funding come from?? Our children/grandchildren. Is this the legacy we pass on, debt and worthless paper.

    There is a % of downtrodden that truly need help.
    What is the real %?

    The RE fiasco;

    Pile 1- Crap
    Pile 2- S*it
    Pile 3- Do-Do

    When we add it up, doesn’t it equate to the same thing?

  77. investorDavid says:

    JB,

    I have a friend who did extremely well financially as a mortgage solicitor. She only has high school degree. But boy.. she looks.. anyway, I am drifting.

    The point is that her kids do not want to go to college. They say, Mom, you did so well without college degree. Can’t I just become mortgage solicitor/broker?

    My friend’s response: Look kids. Look at me now. I have no income now for almost 1 1/2 years now. Go to college.

  78. RentL0rd says:

    painhrtz, don’t forget craigslist

    I used an agent to find my rental townhome in Somerset (‘cuz I moved from out of state). my agent got 1/2 and the listing agent got 1/2 of first months rent, and I think that’s typical.

  79. tcm says:

    David –

    I think I missed that one.

    Anyway, another question:

    People claim that when they go to sign papers at closing, the terms are not the same as they agreed on. For example, they thought they were getting a fixed rate at X%, but when they get the papers to sign, they are really signing for something else (much less favorable).

    What are the options at that point? If the borrower refuses to sign, do they lose their deposit? Is there any way to get access to the papers to review before the closing date?

  80. James Bednar says:

    If you haven’t read this one yet, you should..

    Borrower beware

    You need a license in New Jersey to cut hair, do nails, even groom a cat or dog.

    But to sell a mortgage loan — the single most expensive investment most consumers will ever make — all you need is $100. No education, no criminal background check, nothing.

    No wonder the state, which had 11,000 loan officers in 2000, now has some 40,000, whose sole fiduciary responsibility is to themselves. The state Department of Banking and Insurance will register anyone who can fill out a one-page form and pay an annual $100 fee.

    “A Realtor has to be tested, an attorney has to be tested. But a person can write mortgages and put people in millions of dollars in debt without a single exam or a single continuing education requirement? It doesn’t make sense at all,” said Marilynn English, president of English Financial in Cedar Grove, who has been fighting for years for the licensing of loan officers in New Jersey.

    “Under the current laws, for $100, Joe the Pizza Delivery Man can write mortgages in New Jersey,” she said.

  81. investorDavid says:

    I nominate myself and BC Bob to the Deciding Committe for Downtroddens.

  82. chicagofinance says:

    Painhrtz Says:
    April 5th, 2007 at 11:51 am

    You may as well give clot a ring. If so, please report back. I envision him with a huge gut, big gold chains, gold bracelet, three buttons undone on his shirt, lots of gray dandruffy chest hair, farmer’s tan, tinted glasses, bizzare combo southern/jersey accent, northern hospitality, southern service.

  83. rhymingrealtor says:

    What are the options at that point? If the borrower refuses to sign, do they lose their deposit? Is there any way to get access to the papers to review before the closing date

    I posted this in an earlier thread, I stopped my closing (89)attorney called mtg company, mtg company faxed new ppwrk- correction to be signed. It was not my attorney who found the mistake it was I. I also go over my clients paperwork at closings, though they always seem more than willing to sign w/o reading. I have gotten many a dirty look from an attorney when slowing them down by making people read what they sign. Also ended up getting a client nice 1600.00 refund after 7 months – this by debating with his attorney over certain items on the respa.

    KL

  84. Painhrtz says:

    All thanks for the info. CF LOL you just described half of my older NNJ Italian cousins who have since relocated to housing hell Florida. Shudder

  85. Clotpoll says:

    Pain (51)-

    Find a Realtor, and tell him you only want to see rentals in which the landlord pays the fee. There are a zillion in our area like that. You’ll get served well & won’t pay a penny in commish.

  86. Clotpoll says:

    ChiFi (84)-

    My pinky ring cost more than your car.

    BTW…I dye my chest hair.

  87. James Bednar says:

    Does this strategy sound familiar to anyone?

    Lower home prices force Ryland write-downs

    “Ryland’s strategy of trying to hold pricing was likely unsustainable given the deteriorating market conditions, and was only delaying land charges,” said Banc of America Securities analyst Daniel Oppenheim.

  88. investorDavid says:

    CF,

    Gold chain and gold ring is Clot’s way of accumulating his wealth. Some people prefer gold bracelt over gold bars. He is diversifying his portfolio while I am diversified through Mega Million, Pick 6, scratch…

  89. Painhrtz says:

    Glot thanks, I knew there had to be quid pro quo in the business somewhere. As an aside Grecian formula? I thought they only made above the shoulders products:)

  90. 2008 Buyer says:

    Comments by commodities investor James Rogers
    ————————
    How long does this US housing downturn last? The consensus of economists is that the correction is largely over.

    It has a good long way to go because never before in American history have so many people been able to buy houses with no money down. Even during the 1920s when the banks first tried interest only mortgages borrowers at least had to put some money down. This time a lot of borrowers have put no money down on interest only mortgages. The results will be much worse.
    ————-
    Do you see a slowdown or an outright recession in the US economy?

    I see a recession, and for a variety of reasons. Automobiles are in recession. Housing is in recession. There’s been an inverted yield curve for a while. You have a slowdown in business spending. The subprime mortgage and junk bond markets are a disaster happening or waiting to happen in the financial area. There are plenty of things going on. Plus we’ve had recessions every four to eight years since the beginning of time, so there’s nothing unusual about the fact that we’re about to have another one.

  91. James Bednar says:

    From Bloomberg:

    NovaStar Plans to Cut Off Credit for Subprime Mortgage Bankers

    NovaStar Financial Inc., the subprime home lender whose stock has plunged 80 percent this year, will stop financing independent mortgage bankers.

    WarehouseUSA Capital Corp., a unit of NovaStar, said on its Web site that as of March 30, it’s no longer accepting applications from mortgage bankers for credit lines and that the so-called warehouse lending business will close. New loans under existing agreements are scheduled to end April 27, the notice said. The shutdown won’t affect lending by NovaStar itself, said Roswell, Georgia-based WarehouseUSA.

  92. investorDavid says:

    JB,

    My posting was stuck in your dumb .. I mean smart.. filter.

    Can you give me the list of words which we cannot use?

  93. chicagofinance says:

    Clotpoll Says:
    April 5th, 2007 at 12:43 pm
    ChiFi (84)-

    Clot: I see post #89 and it reminded me of something. When was the last time you went to the Ryland Inn? I have to say, that I am not big fan, but mostly because I only like French Bistro style or country style and not French. I also thought the place need a renovation, but that was in 2004. Any update – just asking…..

  94. chicagofinance says:

    sorry…. now the post shifted to #90

  95. chicagofinance says:

    investorDavid Says:
    April 5th, 2007 at 12:58 pm
    JB,My posting was stuck in your dumb .. I mean smart.. filter. Can you give me the list of words which we cannot use?

    iD: based on my experience, any words with more than five syllables, articles such as “the”, any purient related items, references to Clifton, New Jersey as primordial soup, inappropriate uses of Polska Kielbasa.

  96. chicagofinance says:

    purient….misp. prurient

  97. BC Bob says:

    “Can you give me the list of words which we cannot use?”

    David,

    For a start.

    -Downtrodden
    -Blonde
    -Teacher/student
    -Bailout

  98. James Bednar says:

    “Can you give me the list of words which we cannot use?”

    It would read like something out of Penthouse “Letters”.

    Very rarely does a non-spam post use one of these words directly. It’s that these letter combinations appear within some commonly used words, “circ*mstance” for example.

    jb

  99. James Bednar says:

    For those who skipped over the WarehouseUSA piece above, realize that it means that roughly 110 lenders just had their credit spigots turned off (http://ir.novastarmortgage.com/phoenix.zhtml?c=84748&p=irol-newsArticle&t=Regular&id=881498&).

    jb

  100. Jamey says:

    //“The debt is forcing people to take second jobs, sell family possessions, and rent out a second room,” said Wade Henderson, the president of the Leadership Conference on Civil Rights.//

    Which seems fair, because nobody “forced” these house owners to buy what they could not afford.

    Why is this so hard for some people to figure out?

  101. jwr says:

    Al,

    No, the buyer does not get out unscathed. They have to give up their house for god’s sake. You have a point about buying the house at a lower price from the mortgage lender after he walks away, but here’s the thing: you couple that with tighter lending standards, and that person does not qualify for a mortgage in the first place. So he can’t buy the same property because his credit is not good enough to qualify for a mortgage even if he wanted to. Those late mortgage payments will still be on his credit report.

    jwr

  102. bergenbubbleburst says:

    #73 pain: Did they close yet? one thing to say you buy, another actually close. Amazing that they gave up a free rental, for a POS cape. I would not buy in Garfield, but to rent there for a while and for free? Ah so young, so dumb.

    As far as Washington Twp, I am assuming it is the one in Bergen,andi f so they might not like the school situation with thir regional partner Westwood.

    Gotta do the homework.

  103. bergenbubbleburst says:

    #72 tbw Unless fo course you live in River Edge, where you do not have to think. It is the land of OZ.

  104. investorDavid says:

    CF,

    I was in Clifton once having dinner at a Mexican restaurant. There were no lack of young scantly clad intoxicated women all over the….

    JB,

    I sharpened my reading comprehension as well as preparing for SAT vocabularies by learning words like prurient, lascivious, beguiling.. while reading classical literatures/essays from playboy, penthouse…

    Bob,

    You left out the words like, long-legged, beach bunnies, caring, humanitarian..

  105. MikeyMike says:

    #23

    Rich,

    Thank you once again for the info. It’s nice to see the prices dropping so quickly on a decent house. I am however concerned about the fact that it is located right next to Musquapsink brook, which has flooded in the past.

  106. James Bednar says:

    From Bloomberg:

    U.S. Civic Groups Demand Subprime Foreclosure Freeze

    A coalition of U.S. civil rights groups asked mortgage lenders to freeze foreclosures for borrowers with weak credit ratings, saying “reckless” lending practices to minorities caused their predicament.

    Lenders, loan servicers and investors in mortgages should agree to a six-month foreclosure moratorium, said a group including the National Association for the Advancement of Colored People, the National Council of La Raza and the National Fair Housing Alliance in a joint statement yesterday.

    “These loans are packaged and sold by Wall Street to investors who knew or should have known that these loans had a higher likelihood of default,” said Shanna Smith, president of the National Fair Housing Alliance. “Now Wall Street is willing to just let the `market adjust,’ the `market stabilize,’ but at whose expense?”

  107. James Bednar says:

    Let’s have that a second time, for effect..

    “Now Wall Street is willing to just let the `market adjust,’ the `market stabilize,’ but at whose expense?”

    jb

  108. BC Bob says:

    You left out the words like, long-legged, beach bunnies, caring, humanitarian..

    David,

    LOL.

  109. James Bednar says:

    Deleted, I was too nasty. I support the arts, bad example.

  110. 2008 Buyer says:

    [110] JB

    Wall Street is just one clog in the wheel. If you are in the know…you can make money in any market. Its rough world out there.
    —————
    Do you think hedge funds can control commodity prices?

    They can try, but in the long run attempts to manipulate commodities prices always fail. Take oil, for example. Six trillion ($6,000,000,000,000) of oil trades every day. Not even governments can control those kinds of capital flows, not for long. That goes for currencies, too. Short term, yes they can be manipulated. But eventually market forces take over, and the supply-demand market forces for oil long term will drive prices up. Governments can try to support the dollar, for example, but in the long run these efforts will eventually fail – Jimmy Rogers

  111. Painhrtz says:

    BBB #106 They closed, if I knew ahead of time I would have tried to talk them out of it. Unfortunately, all my friends think I’m just pooing in their cherios since I have been married nearly a year and don’t have a house yet. Must be something wrong with us :) It is the BC Wash Twp. wouldn’t be my first choice t blow half a mil in BC, then again when I was in college in the nineties half a mil bought you a nice well built home in Saddle River. Nearly had a fit when we started looking a 18 months ago. We are now looking at 10 acre farms in Vermont. 260000 for a prebubble locally built home of reasonable size. Can’t understand why I ever wanted to buy here prices, taxes and corruption. We’ll be a white flight statistic in 3 years if I can get the consulting business off the ground.

  112. dreamtheaterr says:

    Following on what JB touched on in another thread, this whole property tax relief is a sham. Say you have a $600K house and pay $15K in property tax. That’s 2.5% expense each year just to have the privelege to own, excluding house upkeep expenses.

    As long as your NJ house does not appreciate atleast 4% a year (which is highly unlikely in the near term), you are effectively paying a higher property tax rate each year, since property taxes are pretty much guaranteed to increase 4% a year.

    What a rip off…

  113. commanderbobnj says:

    #59
    BC Bob Says:
    April 5th, 2007 at 11:21 am
    “If you want a house, put down 30-50% down payment and nothing but FIXED rate.”

    ………….and I had it all wrong. I thought you were a liberal.
    ________________________________________________

    Yeah, Bob/ LIBERAL:
    Conservative with their own lives but Liberal with every ones elses….

    By the other Bob

  114. Clotpoll says:

    ChiFi (97)-

    They’re going down for the count. $38 entrees you can’t pronounce just don’t float everyone’s boat out here. The locals have all been at least once, and there’s just not enough repeat biz to keep ’em going. I think the ownership has just lost its energy and momentum, too. 20 years is a long run in that game.

    A few weeks back, they went to a “steakhouse” and “classics” menu. Too bad. The place is definitely not what it was in the heyday; on a good night, it was the equal of any Michelin *** in France.

    I was involved in some projects with them in their beginning; I dealt a lot with SJP and Ferber, the two owners who were bought out.

  115. James Bednar says:

    Interesting piece over at Mish’s blog:

    The Changing Business of Real Estate

  116. Clotpoll says:

    ChiFi-

    BTW, they did renovate the place. A very good friend of mine was the architect.

    They’re still paying him.

  117. investorDavid says:

    and I thought CommanderBob was Richard. hahhaa..

  118. investorDavid says:

    CF has Reech..

    JB has REinvestor101..

    I have CommanderBob…

  119. chicagofinance says:

    clot:

    Is your business a front? It looks like your employees f—d up!!!!

    http://news.yahoo.com/s/ap/20070405/ap_on_re_us/agent_shot

  120. Rich In NNJ says:

    I had $300 Jean…

  121. BC Bob says:

    “I nominate myself and BC Bob to the Deciding Committe for Downtroddens”

    David [84],

    …….and the final arbiters will be Tommy Thompson and Ronnie Rice?

  122. investorDavid says:

    and BC Bob will personally interview all “downtrodden” students in his private sound-proof office..

  123. Richard says:

    the homogeneity bias here is quite staggering.

  124. investorDavid says:

    CF,

    I took the liberty of ordering this shirt for your “buddy”

    http://www.choiceshirts.com/item/k/a1602d/

  125. commanderbobnj says:

    #121
    investorDavid Says:
    April 5th, 2007 at 2:28 pm
    CF has Reech..

    JB has REinvestor101..

    I have CommanderBob…
    ——————————
    You “have” me closer than you think: Can you say Harrington Park, Mr David….Hahhaa..

    By the way, I know those five houses on Homans that you had mentioned the other day; One of my customers is directly across the street from them

  126. chicagofinance says:

    Clotpoll Says:
    April 5th, 2007 at 2:22 pm
    ChiFi (97)- They’re going down for the count.
    A few weeks back, they went to a “steakhouse” and “classics” menu. Too bad. The place is definitely not what it was in the heyday;

    clot: I just checked out the website…WTF? They bagged the French thing? Seems kind of rash….or basically consistent with what you said….the string has run out.

  127. chicagofinance says:

    investorDavid Says:
    April 5th, 2007 at 2:47 pm
    CF, I took the liberty of ordering this shirt for your “buddy”

    iD: NICE!

  128. investorDavid says:

    Dear SpongeBob.. hahaha..

    You should consider buying that property on the corner of Schraalenburgh and Old Hook Road. Only $100K including the building.

    and it’s Dr. David to you. hahaha

    P.S. Those 5 houses were initially listed at $1.8M by the builder right after they got the permit from the City.

  129. Plankton says:

    From #21

    “The pre-foreclosure period is the length of time between when the owner is notified regarding the default and when the property is eligible to be sold by the bank. When a property is in the pre-foreclosure period, the owner still has an opportunity to pay off what is owed or to sell the property, thereby stopping the foreclosures process. This period of time is wildly inconsistent from one state to another and the differences can range from just days to more than a year. For instance, in the state of Texas the pre-foreclosure period of 27 days is the shortest of all 50 states. If this still seems like a long time to wait for a property to become available, just consider the 290-day period observed in Wisconsin or the 445-day period observed in New York!”

    This isnt quite right for NJ. I believe that NJ is in the vast minority in how they treat foreclosures. In NJ a Foreclosure Complaint needs to be filed with the Chancery Division of the Superior Court. The lender then needs to obtain a Judgment in the case, then get a writ of execution in order to proceed to Sheriff’s Sale. The length of time it takes a lender to get a judgment obviously varies widely. Then the length of time it takes the lender to proceed to Sheriff’s Sale also varies widely. Six months is generally the shortest amount of time it can take. If the foreclosure is contested by another lender or the borrower files for bankruptcy it could take years.

    Also in NJ, at any time prior to sale the borrower can pay off the mortgage. The borrower is allowed (by statute) to delay the Sheriff’s Sale twice, and can apply to the Chancery Court in the county to have further adjournments. Even after the sale the borrower is allowed (by statute) ten days to “redeem” the property by paying the amount the property sold for to the sheriff. The borrower can also apply to the courts to have this period extended.

    Hope this helps. I clerked in Chancery Court in Essex County, which taught me all of these procedures.

  130. James Bednar says:

    Received 3 emails that were foreclosure anecdotes. Two from readers, one from a third-party within the industry.

    Judging from these three datapoints (scientific, I know), the average in NJ seems to be somewhere from 8 months to a year (or more).

    I’ve got to ask the question, does NJ really need a moratorium at all? When the current process takes almost a year, what will 6 months additional time provide the borrower with?

    Or, is this moratorium geared towards states like Texas, whose timelines seem incredibly short in comparison?

    jb

  131. James Bednar says:

    From Reuters:

    Past due subprime mortgage payments at record high

    The percentage of home owners with subprime mortgages who are dangerously falling behind on monthly home loan payments rose to a record high in February, according to a First American LoanPerformance report provided on Wednesday to Reuters.

    Some analysts said the delinquencies would continue to climb, adding to troubles in the subprime mortgage industry.

    “It’s going to get worse,” said Richard DeKaser, chief economist for National City Corp., a Cleveland, Ohio-based bank holding company. “Whether delinquencies, foreclosures, what have you, there will be further bad news as the year plays on.”

    According to San Francisco-based First American LoanPerformance, 12.4 percent of all subprime borrowers were at least 60 days late on their mortgage payments in February — the highest level the First American Corp. (FAF.N: Quote, Profile, Research) mortgage research unit has recorded since it began its data series on the loans in 1989.

    Additionally, 14.3 percent of subprime loans sold by Wall Street were at least 60 days behind on payments as of January, the highest level for securitized subprime mortgages since LoanPerformance began tracking them in 1997.

    “About 5 to 10 percent of people who could have gotten loans four weeks ago could not get them today,” Walter said. “They probably won’t be able to get financing in the near future and by near future I mean the next couple of years.”

  132. investorDavid says:

    JB,

    do you have data on what percentage of the subprime borrowers are African Americans or Hispanics vs. Whites?

    thanks.

  133. 2008 Buyer says:

    Plankton….

    Thanks for giving some insight into the process. That’s the exact reason why I personally wouldn’t want to deal with foreclosure properties and would rather go the REO route. Its worth it but I don’t want to go through all the hassle of maneuvering through all of that.

    Wow…445-day period observed in New York. I can’t remember the state but I was talking with a servicer who mentioned that a borrower while in the foreclosure process could make a payment (which resets the foreclosure clock) and could essentially live in the house for a year and make only three payments. Obviously this type borrower doesn’t care about their credit.

  134. BC Bob says:

    David [136]

    That’s discriminatory.

  135. 2008 Buyer says:

    InvestorDavid

    You can find your info you are looking for here.

    2005 is the latest year report.

    http://www.ffiec.gov/hmda/publicdata.htm

    1) On-line Reports
    2) Aggregate Reports (HMDA)
    3) Pick NJ

  136. Richie says:

    # BC Bob Says:
    April 5th, 2007 at 3:28 pm

    David [136]

    That’s discriminatory.

    If it is, then why does the main-stream media continue to harp on those details?

    Blacks suffer most in U.S. foreclosure surge

  137. James Bednar says:

    Thanks for that link 2008, I was looking for that the other day and couldn’t track it down.

    This one is also interesting..

    http://www.responsiblelending.org/pdfs/rr011-Unfair_Lending-0506.pdf

  138. Plankton says:

    2008 Buyer:

    No problem.

    And youre correct. REO’s are the way to go rather than buying foreclosed properties. So many less headaches.

    Even buying a property that is in foreclosure is so much easier than buying one at Sheriff’s Sale. You can sign a normal contract and get funding the old fashioned way, although it does generally need to happen somewhat quickly.

    This is also generally how a borrower delays a sheriffs sale on their property after they have used their 2 statutory adjournments. They come to the court and show a signed contract that is waiting to be closed upon. The judge will sometimes grant an adjournment of the sale to allow time for the deal to be closed.

  139. rmb says:

    “Judge not, least ye be judged”

  140. 2008 Buyer says:

    David L. says all over the media that the housing market has hit the bottom. Just because they say it doesn’t make it true. Subprime relates to your FICO score not your race. Trust me, I have seen millionaires who have mismanaged their money or just plain dumb luck who have sub 600 FICO scores who are definitely in the subprime market.

    I have no first hand knowledge…but gleaming from the media about his bankruptcies and such…I would venture to say that Donald Trump would be a subprime borrower.

  141. BklynHawk says:

    You can also go the bank route. They will sometimes have lists of houses enroute to pre-foreclosure. They know the owner is starting to get desperate and is looking for an exit.

    You may not get as steep a discount, but it gets you into the game before a lot of others.

    JM

  142. investorDavid says:

    BC Bob,

    Just wanting to know the FACTS.

  143. rmb says:

    Its borderline racist

  144. BC Bob says:

    “Just wanting to know the FACTS.”

    David,

    I know, just playing with you.

  145. investorDavid says:

    Bob,

    I know. :)

    I just feel for those people. I really do.

    Some might say.. hey.. they were given all kind of chances.. look at those Asians.. they are doing well.. but playing field has not been leveled yet.

  146. bergenbubbleburst says:

    #115 painhrtz I understand what you are saying, i remember when 500k bough a tremendous house in Franklin Lakes, on a nice piece of property, and that was not that long ago.

    And even then when I worked at a prestigious Wall St firm, i never in my life would have considerd paying 500K for a house, again just a few short years ago.

    As far as your friends in Wash Twp, hate to say it, but they had better plan to be there a long, long, long time, becasue at that price they were hosed. I was up there the other night, and there are quite a few homes available for sale.

    One split in particular, a big one with family room and basement, new kitchen baths on a quiet street. The owners are asking 549K,s till a lot, but bettert than those nasty caped for 500K.

    And if they are typical for that town, most of them have not been fully dormered.

    So young, so dumb.

  147. BC Bob says:

    “However, it is important to point out that as a collapse in consumer spending ushers in a recession, the Fed will not have the luxury of lowering interest rates to cushion the fall. Despite surging unemployment, “inflation” will only accelerate, as extreme dollar weakness abroad translates into higher consumer prices at home. In addition, long-term interest rates will be headed higher as well, as foreign savers look to be compensated for this loss of purchasing power. Higher interest rates and substantial increases in the cost of living will only exacerbate the housing downturn and the recession, turning what would normally have been simply a severe recession into something far worse.”

    “Although this may sound like a sobering scenario, it is definitely not the worst case. The real doomsday would only come as a result of Fed-created hyper-inflation which could be used to pump up all varieties of falling asset prices. Let’s hope the boys at the Fed decide not to go there.”

    http://www.financialsense.com/fsu/editorials/schiff/2007/0405.html

  148. Pat says:

    BC, are you an aussie with an agenda? I could swear, sometimes…

    http://www.gold-eagle.com/editorials_05/bloom040207.html

  149. Clotpoll says:

    BC-

    Suns v Spurs tonight in San Antonio. The Spurs will be plenty PO’d at all the hype the Suns have been getting.

    Should be a nasty, grinding game.

  150. Clotpoll says:

    Message left on my VM at 6:30 from my office manager….Alterna Mortgage has shut its doors. She could not verify, but she told me she heard from an Alterna employee.

    I feel the way Matt Drudge must have felt when he got that first scoop on Bill & Monica.

  151. Homer Simpson says:

    Homer is back. Been MIA for a while. I had to throw in my 2 sence. I do not think we should bail these people out. How can someone not understand an adjustable rate. I guess becuase people do not understand Adjustable Rate Mortage means the rate ajust after x amount of years its everyone elses fault. I just read an article that states NJ average household income in 61,000.00 So if the average NJ’an makes around that much than why are they buying 400,000.00 houses and saying I didn’t understand how the mortages worked. Than that leaves no one responsible for there actions. Thats like a serial killer saying well I did not understand I was killing people I thought it was the gun killing the people. I will not support and government assistance. These are the Jidiots who prevented many of us with common sence from buying a house. Plus if they assist them it will continue delaying the downward spiral of the market. The wife and I are moving back to Lawrecneville, and are renting a nice 2 bedroom townhouse and are gonna continue to wait to buy. If people still do not think my theory is right that prices will come close to 2000 prices than they need to check out http://www.city-data.com/city/New-Jersey.html

    Since everyone on this board seems to like Milburn area than read these stats

    Essex County

    Median resident age: 39.2 years
    Estimated median household income in 2005: $144,000 (it was $130,848 in 2000)
    Estimated median house/condo value in 2005: $985,200 (it was $549,000 in 2000)

    Millburn, NJ residents, houses, and apartments details

    So a increase of 14K in 5 years in salary can logically account for a 436,000 increase in housing. Close to to doubling in price….

    Check out the different areas, nothing justifies the % of increase. I would say prices are going to go close to 2000 prices.

    These people are getting what they deserve forclosure.

    Just for the heck of it becuase I hate HOBOken I wanted to post there data just to prove how dumb the people there really are…
    Hudson County

    Median resident age: 30.4 years
    Estimated median household income in 2005: $69,000 (it was $62,550 in 2000)
    Estimated median house/condo value in 2005: $970,800 (it was $428,900 in 2000)

    Hoboken, NJ residents

    My point paying close to 1 million dollars and only making 70k. They must all be rocket scientist out there…

  152. D says:

    Does anyone have any idea why I’ve had approximately 10 “you qualify” mortgage calls during the last three days? It’s getting REALLY annoying!

  153. lostinny says:

    D 157
    Um, because they’re desperate to sell something.

  154. SAS says:

    anyone ever get a “kernel panics” on their mac before?

    SAS

  155. still_looking says:

    jb, #14: I’d say nine months is about average (before adjournments). One example: 11 Parkwood Ln Basking Ridge — notice of default in Aug/Sept and only now had a sheriff’s sale date 4/10/07. Nice house, nice area. Not worth the 1.004 mil judgment IMO. Still has some stays of execution though.

    Seems like the majority of “new” foreclosures are on props with defaults that far outweigh prop value — making all of these props future REOs. I have seen no real bargains in the current listings for Morris and Somerset. Gave up on Bergen b/c the “vultures” are way too entrenched (and a rather ugly bunch.)

    clot #89 — eeeeeew. [desperately attempting to scrub Ajax on my corneas to erase this image….] Hope the dye doesn’t get on your polyester wide collar shirt!! :-)

    Hooray for crime in Readington!! Maybe we have more than a snowball’s chance in h*ll.
    (inside joke…sorry.)

    sl

  156. BLB says:

    anyone ever get a “kernel panics” on their mac before?

    There’s a joke in there somewhere.

  157. Richie says:

    QUICK, EVERYONE! Housing is out! The new investment is lemonade! Hot off the presses!!

    Get in before everyone else!!

    Clooney leaves $19.75 tip at lemonade stand

  158. James Bednar says:

    Kernel panic? Sounds like it has something to do with corn futures?

    Had a Mac a long time ago, used to get them once in a while. They were the equivalent of the Windows Blue Screen Of Death ™.

    jb

  159. James Bednar says:

    Clot,

    http://forum.brokeroutpost.com/loans/forum/2/111597.htm

    They based out of Mount Olive?

    jb

  160. investorDavid says:

    JB,

    regarding your #40 rate, that’s assuming you are a prime borrower.

    Talked to a couple of mortgage bankers. Now, they are using current “scare” in sub-prime market to raise the rate on Alt-A borrowers due to “increased risks”.

  161. SAS says:

    “kernel panics”

    Yes, I am being serious. I downloaded some updates today for my Macbook Pro and got a freaking “kernel panics”. I had to reformat with the installer CD that comes with purchase.

    If you have AAPL, I would sell that sucker. This seems to be a problem with AAPL. I don’t know how they can do buisness like this, because when I called tech support, they wanted more money from me.

    SAS

  162. SAS says:

    Back to RE.

    Was in Leonia today, ALOT of houses on the market.

    But, I think Ft. Lee is holding steady. Although, I do know a Korean bloke whom is having trouble selling some condos there.

    SAS

  163. BC Bob says:

    Pat [154],

    A woman after me ole heart. You must be a Nittany Lion, you’re roaring.

  164. fanshawe says:

    Re: 500k POS cape

    That situation is exactly what I’ve been avoiding (and why I’ve been reading this site). I’m just looking for a decent house in a decent town — doesn’t have to be a top-tier town and doesn’t have to be perfect as long as it’s not completely fugly and rundown — that has a decent commute to NYC in the $400-500k range. I’m not seeing much that’s not a POS shack.

    Re: Kernel panics

    I use both PCs and Macs every day and they both cause me problems some times. :) The way I’ve gotten around the big ones is to do a clean OS install every major version (with a backup/restore obviously). It’s a hassle but worth it in the long run. I can’t say I’ve gotten a kernel panic or blue screen in a long, long time.

  165. R Patrick says:

    167 SAS

    Part of the problem is the co-op sales are not part of the stats for the area. The second reason is people want too much money.

    700-800K for half a house or 400 for a condo is not doable for 99% of the population from what is being said here. 4-5G in mort per month + a grand a month in taxes.

    From what I have read here A prudent person/couple should not spend more than 3X income on housing. That fancy map posted a few weeks back says the average Fort Lee income was not 300k.

    Or am I missing something like those new Roth 401K things because the books I am reading are out of date?

  166. RoadTripBoy says:

    SAS,

    I once had a kernal panic a while back and it had to do with a bug in my iPod or iTunes software—doesn’t mean that’s what’s causing yours. Incidently, I’ve been a mac user since 1985 and this was my first “kernal panic” error.

    Have you ever been to the apple forums? I found them to be very helpful—most of the time the problem you’re having, someone else has had and resolved and they can help you for free.

    Here’s the link: http://discussions.apple.com/index.jspa

    Good luck!

  167. PeaceNow says:

    here’s your chance to actually ride the real estate bubble.

    http://www.speculativebubble.com/videos/real-estate-roller-coaster.php

  168. BC Bob says:

    There is hope. A start.

    “His hands tightly clenched, State Senator Wayne R. Bryant strode briskly down East State Street here Tuesday morning, following a path well worn by scores of other elected officials in New Jersey in recent years.”

    “Without breaking stride, he uttered a barely audible “No comment.” Within moments, an impassive Mr. Bryant was through the door of the Clarkson S. Fisher Federal Courthouse for perhaps the toughest appointment of his 25-year political career — an initial court appearance to answer an indictment on fraud charges.”

    “At the hearing on Tuesday, Mr. Bryant, who faces up to 150 years in prison if convicted on all of the charges against him, was released on a $250,000 unsecured bond.”

    http://www.nytimes.com/2007/04/04/nyregion/04bryant.html?_r=1&oref=slogin

  169. Pat says:

    Yep. I done some hard time up at the state penn.

    R. Patrick, you can’t know everything about everything, but asking is a really good start. You might get seven different answers, but it’s better than what you had, right?

    Sometimes reading this blog is like studying for an exam, but a week or two later, I actually use the stuff. Weird, huh?

  170. UnRealtor says:

    These bagholders need their head examined.

    They just closed @ $903K (listed at $799K Jan 29, 2007) for this small house on a tiny 50×125 lot:

    MLS # 2369310
    http://newmls.gsmls.com/media/getImage.do?mlnum=2369310&num=0&res=highres&imgcnt=6

    The lot is so small, the back “yard” consists of a garage, and both neighboring houses are only 15 feet away.

    The house was bought in 1996 for $324K — 5% annual appreciation would put it at $530K today.

    Haven’t seen this much buyer stupidity since 2005.

  171. UnRealtor says:

    Address for the above bagholder property:

    930 Ridgewood Road
    Millburn, NJ 07041

  172. d2b says:

    My father would love the line, “The debt is forcing people to take second jobs”.

  173. UnRealtor says:

    #172, amazing video.

    http://www.speculativebubble.com/videos/real-estate-roller-coaster.php

    The last climb and turn really put things into perspective.

  174. SAS says:

    “930 Ridgewood Road
    Millburn, NJ 07041”

    Hasn’t that place been on the market for sometime now?

    Man, whoever bought that house was a sucker….
    They are going to regret that one for a long time.

    yikes,
    SAS

  175. SAS says:

    “The debt is forcing people to take second jobs”.

    Just buying gas & food, one needs a second job.

    SAS

  176. SAS says:

    JB,

    I would like to make a request. More discussions about the NJ pension fund problem.

    If anything that is going to cause major problems and will dry this state up like a tumble weed in the Sahara, in my opinion, this is that one thing.

    NJ is going to be in the crap box, and NYC nor the Feds will be able to rescue it.

    Also, be on the look out for some major crime tied to these funds & short sales.

    Just throwing that out there. I think its a major issue. I know, this is RE. But this does effect RE in a subtle & hidden way.

    SAS

  177. Pat says:

    SAS, the pension underfunding is not subtle or hidden in its destructive effects.

    The higher risk that must now be associated with New Jersey’s future financial endeavors is clear.

    Investors have choices.

Comments are closed.