This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.
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From the WSJ:
Beazer Homes Reports Surge
In Cancellations of Orders
By MICHAEL CORKERY
October 12, 2007; Page A4
Home builder Beazer Homes USA Inc., moving to get legal and accounting problems behind it, now faces another big erosion of orders.
Beazer reported that 68% of its prospective home buyers canceled their orders in the company’s fiscal fourth quarter, which ended Sept. 30. The cancellation rate was almost double the 36% of customers who canceled orders and gave up deposits in the prior quarter.
…
“But conditions certainly deteriorated” for the whole industry, said David Goldberg, an analyst at UBS. “I think you are going to hear a lot of that from builders in the coming months.”
From Reuters:
Two top execs at Capital One unit resign
Two top officials at the mortgage division of Capital One Financial Corp. are leaving the company, the Wall Street Journal reported on Friday.
Lance Melber told employees yesterday he is leaving the firm to pursue other ventures, while Jay Listisen, another top executive, also said he is leaving, the paper said. Specific reasons for the departures were not given.
From Newsday:
Subprime solutions
The rising number of home foreclosures in the wake of the subprime-mortgage market implosion is a nationwide crisis that has painful echoes on Long Island, where the rate of foreclosures for primary residences is on the upswing.
…
Long Island is right behind the most heavily affected areas, like California’s central valley and Florida. Data collected by Schumer’s office show that foreclosures on Long Island will continue to rise in the next two years, with more than 18,800 families in both counties facing the risk of losing their homes by the end of 2008 – a 114 percent increase since 2005. In 2006 alone, 7,237 homeowners in Nassau and 6,380 in Suffolk lost their homes in foreclosures.
From the Baltimore Sun:
M&T’s profit falls 5.3% as bad loans double
M&T Bank Corp., one of the first lenders to disclose that defaults were spreading beyond subprime mortgages this year, said yesterday that its third-quarter profit fell 5.3 percent as bad loans doubled and the company lost money on its investment in a Florida financial firm.
…
Rising defaults and the declining value of mortgages have curbed profits at the largest U.S. banks, which begin reporting third-quarter results next week.
M&T said in March that higher defaults and lower-than-expected bids from mortgage investors had cut profit, one of the first indications that loans made to borrowers with good credit were souring faster than in past years. The disclosure helped slow some mortgage markets.
…
M&T offered Alt-A mortgages, an alternative for borrowers who fall short of standards for top-rated prime mortgages.
The bank’s total non-performing loans, those no longer paying interest, rose to $371 million, more than double the $180 million at the end of last year’s third quarter. The company set aside $34 million to cover bad loans, double last year’s $17 million.
From Marketwatch:
Centex sees around $1 billion in charges; sales fall 13%
Home builder Centex Corp. on Friday flagged that it expects to take around $1 billion in charges for its fiscal second-quarter and said sales have fallen 13% due to “extremely difficult” housing market conditions. The company said it will record an impairment of around $850 million for neighbourhood and land inventory as well as a $40 million write-off for land holdings in joint ventures. Other charges include $40 million for option deposits and pre-acquisition costs, $65 million of goodwill impairment and $60 million of losses related to a subsidiary’s mortgage market and credit exposure. The company closed 7,350 units in the quarter, down 14% and sales net sales were 5,953 units. Backlog slumped 38% to 9,633 units. Centex also cut its cash flow forecast for the year to $500 million from $750 million.
From Reuters:
Weak home prices, not rate resets, drive defaults
Stumbling home prices and already heavy monthly payments are a bigger problem for borrowers with adjustable-rate mortgages than the looming rise in the cost of their loans, and it could blunt attempts to ease the strain on homeowners.
With hundreds of billions of dollars of adjustable-rate mortgages, or ARMs, having reset so far in 2007 and almost a trillion dollars expected to adjust to a higher interest rate by the end of 2008, many analysts have pointed to this as the main driver of surging defaults.
But the worst-performing mortgages were made in 2006 and have not yet reset and will not until at least mid-2008.
The larger problem stems from the lax lending standards in 2006, which allowed many borrowers, particularly subprime and “Alt-A” mortgage candidates, to take on too much debt. Many now hold loans with monthly payments they cannot afford.
“While subprime ARM resets get a lot of headlines, that is really not what is causing the huge rise in delinquencies and defaults,” said Nicholas Strand, manager within the mortgage strategy group at Barclays Capital in New York.
“People have missed the boat on what is the underlying factor driving delinquencies in the present environment because ARM resets cannot explain the delinquencies that we have seen thus far,” he said. “If you look at loan level data, it is really the very highly leveraged borrowers whose default rates have increased over the past year.”
…
Falling home prices pose a much bigger risk to the U.S. housing market than resets on adjustable-rate mortgages, said Strand.
Loans made in 2005 were helped by rising home prices, but now, values across most of the U.S. are either flat or declining.
If the house is worth more than the mortgage loan, most people do not default as they have other alternatives such as selling a house or tapping into the equity of their home. A drop in home prices removes these options and drives up the incentive to default.
The Mortgage Bankers Association early last month said second-quarter mortgage delinquencies rose to 5.12 percent from 4.84 percent in the first quarter, the highest level since the second quarter of 2002. Delinquencies on subprime mortgages rose to 14.82 percent from 13.77 percent, the highest since the second quarter of 2002 as well.
…
“Alt-A” loans often went to borrowers who could not provide full documentation of income or assets to lenders. Many lenders accepted information at face value, allowing borrowers to exaggerate and get larger loans.
There is approximately $9.5 trillion outstanding in first lien single-family mortgage debt and of that amount, 17 percent are adjustable-rate mortgages that are subprime and Alt-A, according to Bank of America Securities.
A large number of Alt-A ARMs outstanding are either option ARMs or have a fixed rate of five or more years, which indicates that these loans may not reset for a number of years, the company said in recent research.
…
Many of the weakest borrowers have also taken on more debt in recent years. About 15 percent of Alt-A ARM loans made in 2003 were to borrowers who also had second mortgages, and that percentage balloons to more than 40 percent in 2005 and 2006, according to Barclays Capital.
A drop in home prices pushes up defaults and forces more leveraged borrowers into foreclosure. This, in turn, puts extra supply to the housing market and pushes down home prices at the margin and the cycle starts again ultimately.
This should make the next several quarters very interesting for the U.S. housing market and not just because of the ARMs resetting in the same period of time, the company said in recent research.
From Reuters:
Mortgage bill focuses on ability to repay
Lenders would have to make efforts to determine a borrower’s ability to repay a mortgage before making a loan under a bill being drafted by the U.S. House Financial Services Committee.
…
The measure seeks to better match loans to a borrower’s financial circumstances and would establish federal standards for state-licensed mortgage companies, according to a draft obtained by Reuters.
Lawmakers and federal banking regulators say many subprime lenders failed to check income data during the mortgage application process.
Lenders would have to determine that a borrower has a reasonable ability to repay the loan and pay related taxes, insurance and other charges, according to the draft bill.
Because many mortgage products have low initial repayment rates, the ability to repay these types of loans would include a calculation that amortizes payments over the life of the mortgage.
Lenders would also have to take into account a borrower’s credit history, employment, current income, debt-to-income ratio and other financial obligations.
ChiFi (to #236 from yesterday)-
Mortgages on 2nd homes can be a bit more expensive, depending on the lender. Almost all lenders will toss these loans into the investment property category…especially if there will be a clear income-producing element (like when the owner rents it out during off-season, etc).
The recent seizure of credit markets has injected some extra risk premium into this whole class of loan. I’d suggest that a buyer with excellent credit first check the top-shelf community banks (Hudson City, Valley National, Peapack-Gladstone). If those guys don’t offer something acceptable, give me a call or e-mail thru Grim. I know a couple of other avenues that might work.
Does anyone have any experience or thoughts on purchasing homes in a Cooperative Community?
I’ve done a little research, but not a lot.
I’m looking for any info on DOM comparisons.
thanks!
“Long Island is right behind the most heavily affected areas, like California’s central valley and Florida.”
[3],
Not surprising. Nobody from Long Island is employed at a firm in NYC.
Since debt = money, all these imploding loans imply that the money supply would be shrinking if the government didn’t pump in cash. How does that square with the recently reported decrease in the deficit? Shouldn’t it be increasing?
U.S. Sept. PPI up 1.1% vs. rise 0.4% expected
The headline numbers might be a shocker, but the core was “contained”, or at least that’s what the “no-inflation” crowd will rally around today.
Headline up 4.4% YOY, Core up 2% YOY?
To hell with contained. Let’s hope producers don’t have the pricing power to pass those costs on..
“Nobody from Long Island is employed at a firm in NYC.”
Unlike NNJ, where everyone is employed at a firm in NYC, except for the cops and teachers, who each make $200K per year.
Not to worry though, it all works out in the end.
Passenger cars down 1.8%, home electronic equipment down 4.5%.
Just don’t drive the car, or eat while you are enjoying your new flat screen..
“How does that square with the recently reported decrease in the deficit?”
Two words: government accounting.
Nice PPI.
Today I’m going to walk into the city to save on gas. I’m going to carry my TV with me to eat for lunch to save on food.
I buy my own health insurance and BCBS is raising our premiums 29% next year. It’s a high-deductible plan so we pay the first $5150 in expenses also. Lucky for me cars and electronic equip are down to offset some of the pain.
LI Housing Market Takes a Hit – From Today’s newsday.
http://www.newsday.com/business/ny-bzhous1011,0,565448.story
thunderbolt Says:
October 12th, 2007 at 8:54 am
I buy my own health insurance and BCBS is raising our premiums 29% next year. It’s a high-deductible plan so we pay the first $5150 in expenses also.
Shazam: Yeah….my firm switched over to a HDHP and HSA format this year. To cover my “family” the premiums were $19,750 under the POS crapola. Granted we have a couple of members with health issues, but still.
From the link above:
The Long Island housing market appears to have taken another hit.
The Multiple Listing Service of Long Island said Thursday that the median closing price of a home on the Island plunged 4.5 percent in September from a year earlier. And 30 percent fewer contracts were written on houses last month compared to September 2006.
Median closing prices in Nassau and Suffolk counties in September slipped to $430,000, down from $450,000 last year, the listing service said. The median closing price also fell in Queens, to $446,000. MLSLI did not provide individual closing prices by county.
The contracted median home price — considered a more current indicator — was down from a year ago: $445,000 in Nassau (from $475,000), $380,000 in Suffolk (from $390,000), and $446,000 in Queens (from $480,000).
…
Robert Campbell, professor of real estate finance at Hofstra University, said he was surprised by the extent of the drop in median price and predicted that it would take another year for the market to turn around.
“It’s bigger than I expected, and it’s not going to help the foreclosure problems that we have,” Campbell said. “People that bought houses last year with those 100 percent loans that were easier to get last year now own properties that are worth less than the mortgage.”
Actually I looked at a few foreclosures on Long Island, a lot were no doc teaser loans bought by a unknown buyer using a straw purcheser via a no doc loan. One in particluar I saw was bought via a 600K nothing down loan with 4% for three years. House was cut up into an illegal three and mortgage was paid till rates adjusted and then stopped which around a year later the bank foreclosed and the marshalls evicted the tennants and the secret owner collected the last year of rent without making a single mortgage payment or RE tax payment or insurance payment. A lot of foreclosures I saw were straight scams or mexican garnders in over their head. This is different from 1991 where midddle level management with a stay at home wife and two kids got foreclosed on due to a huge recession and rising interest rates. That time I felt bad for the people losing their homes. Plus they put down 20% of their hard cash in 1991 and still lost the home. Now people put down zero. In fact LI homes went down 5% in the last 12 months and we have foreclosures on recent homes. Only someone who put down less than 5% would walk away. Coo Coo. That just means all these people are putting down 0-3% and have no equity to refinance or sell.
Mitchell and any others with NC/SC knowledge:
What are some good towns or housing developments in NC or SC? Preferably closer to the coast. Preferably family oriented, not age 55+ places.
I’m consdiering taking a trip down just to see what the area has to offer.
Big shake-up at Citigroup
The end of the article claims they’re in the midst of cutting 17,000 jobs. No deets on those cuts though.
http://www.marketwatch.com/news/story/big-shakeup-citigroup/story.aspx?guid=%7B044BD057%2DF4C3%2D4D4C%2DB1BD%2D338D2618A956%7D
http://www.bloomberg.com/apps/news?pid=20601039&sid=aKdxPLBCVXDc&refer=home
except for the cops and teachers, who each make $200K per year.
I wish my wife made 200K!
I don’t know if anyone saw this. Elizabeth Warren from the Credit Slips blog wrote a pretty harsh Op-Ed in the Boston Globe about the mortgage industry, then takes some of the hate mail on her blog.
A lot of the comments from “mortgage professionals” are pretty sad. I can’t believe that some of these people actually work in the financial services industry. Some of them would be lucky to have a jon working at Denny’s.
toshiro (24)-
Wake me up when one of those 17,000 job whacks is Chuck Prince’s.
Clot [27],
The CP dance, 1 step forward, 3 steps back.
My husband and I looked at this house in Summit during an open house several weeks ago (GSMLS #2437674). The house dropped from the GSMLS site shortly thereafter, but has now reappeared in my daily listings still showing a LD of 8/23/07 but with a new, increased price.
I’d appreciate any insight from the pros on this board regarding the listing history and the logic of actually increasing the LP during a tough market.
Gator (29)-
Logic? I’d ask the listing agent where on the property they buried the gold before raising the price.
BC (28)-
The dance of the dead.
The secret to being a supertrader… is wearing garters? Andrew Tong, a former employee of hedge fund SAC, accused current SAC employee and top trader Ping Jiang of sexual harassment that included a “top-secret training program.” The program allegedly required Tong to wear “certain kinds of clothes to work.” Allegedly, one aspect of the program, based on Jiang’s belief that traders are too aggressive and should be more effeminate, had Tong taking female hormones, which he bought on the black market.
According to Tong, as a result of the hormones, he suffered emotional and physical distress, started wearing women’s clothes, and was unable to perform sexually with his wife, with whom he was trying to have a baby. Other accusations allegedly included “sexual relations between two men.”
26
That was a spoof on some comments from earlier this year
“The end of the article claims they’re in the midst of cutting 17,000 jobs. No deets on those cuts though.”
I’m sure none of those will be in NYC, though. NNJ remains safe.
Chi [32],
F#%@#*% hilarious.
http://www.nypost.com/seven/10112007/business/trading_places.htm
Bergenbuyer (#23): I live 20 miles south of Charlotte, just into SC. It is about 3 hours away from the coastal areas, so I’m not sure this area would interest you. But, Fort Mill is a nice area and has either the #1 or #2 top High School in SC. This keeps prices and demand higher than surrounding areas. Around the coastal areas, Myrtle Beach is probably the closest thing to the NJ shore. North Myrtle has more residential areas and less commercialization. For me, Hilton Head is the nicest beach area in SC, which is about 3 hours south of Myrtle.
Thanks Clot (30). Would you be able to tell me if the place had gone under contract?
Many thanks.
I have family out on LI. One in Remsenberg (eastern Suffolk) and the other in Bellport/Patchogue (mid Suffolk). The house in Remsenberg has been for sale for over 1.5 yrs. Started at $600K, now below $500K. Neighbors of the home in Patchogue has had their house up for about 2 years. Went into contract a month ago but it fell through. Now it’s back up for about $125K less than OLP! It seems that every other house has a sign in front. There is no doubt that the “fit is hitting the shan” out there!!
Not sure why, but for some NJ homes the addresses appear on Realtor site, but not for all though.
http://homes.realtor.com/prop/1090457202
thanks thunder.
I’d like to be close to the beach, but I don’t want to live in a tourist location.
I’m not trying to drum up business via this blog, but if anyone needs help buying a used car, give me a call.
I’m not trying to drum up business via this blog, but if anyone needs help buying a used car, give me a call.
So what exactly are you doing here? Your post obviously has nothing to do with real estate
#42 “So what exactly are you doing here? Your post obviously has nothing to do with real estate”
Perhaps it does…starving realtor now selling cars?
From Bloomberg:
U.S. Michigan Confidence Index Declined in October
Confidence among U.S. consumers this month fell to the lowest since August 2006 as the outlook for housing worsened.
The Reuters/University of Michigan preliminary index of consumer sentiment fell to 82.0 from 83.4 in September. The gauge compares with an average of 89.6 in the first half of 2007.
Borrowing restrictions and home-price declines are adding to the strain for consumers already contending with elevated energy costs. At the same time, job and wage gains continue to buttress spending, as a government report today showed retail sales rose more than forecast in September.
“Consumers see increasing mortgage defaults, higher gas prices and, in some parts of the country, falling home prices,” Joseph Brusuelas, chief U.S. economist at IDEAglobal in New York, said before the report. “We won’t have a recession, but the economy will muddle through a period of sub-trend growth.”
The Reuters/University of Michigan index was forecast to rise to 84, according to the median estimate of 63 economists in a Bloomberg News survey. Predictions ranged from 81 to 87.
The expectations index, which some economists view as an indicator of future consumer spending, fell to 71.6 from 74.1 in September.
Paulson’s Subprime Hedge
A hedge fund that has cleaned up by shorting subprime has given $15 million to a nonprofit lobbying for passage of bankruptcy legislation
Lower home prices means more sex for me.
This is not 100% confirmed but I have a feeling my wife is not “putting out” as much as normal because all her friends have their “McMansion’s”
and we are still renting and apartment(a rather nice one in my opinion).
The good news is if these prices keep dropping the closer I get to “getting lucky” on a regular basis.
Otherwise it time to find a “special friend”.
From Reuters:
Moody’s may cut CDO ratings after subprime cuts
Moody’s Investors Service said it may skip its typical process of putting debt ratings on review first and cut collateralized debt obligations tied to subprime bonds, a director said on Friday.
Moody’s on Thursday slashed the ratings on $33.4 billion of first lien subprime mortgage residential mortgage-backed securities (RMBS) from 2006 while affirming $258.6 billion of top tier “AAA” rated securities. “We feel this may be warranted,” Yuri Yoshizawa, a managing director for Moody’s U.S. derivatives group, said during a conference call on Friday.
Gator (37)-
Under contract on 9/4. Back on market, 10/11.
Big (43)-
Most Realtors don’t have the skills needed to successfully sell cars.
The income level (AGI) for the tax filer in wealthiest 1 percent of Americans grew 3 percent to $364,657 between 2000 and 2005, according to the Journal.
So basically if you make under $365K a year you are just a poor working slob driving a beat up Taurus to cash in your Kohls coupons.
SG (45)-
F-ing brilliant! However, one must believe that the 501-3C status of that consumer group has been severely compromised.
I guess Paulson and the Center for Responsible Lending must be figuring that by the time the IRS gets to the bottom of the whole thing, their jobs will be done…and profits safely banked.
Talk about hedging…
sexless (46)-
Maybe it’s your breath?
Curious if anyone knows … what was the news that sent the stock market spiraling downward yesterday? All was fine in the morning, then a MASSIVE mid-afternoon tank job … and now back up again this morning.
Late to the game, but re: guns – used to be very much against them, like 100%. But my brother now has one, and I plan on getting one. Mostly for the safety angle, even though yes, i’ve read the #’s. Maybe more than safety, it’s in case armageddon hits and we have an on-in-the-movies situation where society breaks down and it’s every man for themself. I’d want to protect my family … or die trying.
bath (53)-
Take a look at JP Morgan’s earnings downgrade on BIDU. Once the anaylst note hit yesterday, tech fell out of bed.
Funny, though: JPM (same analyst!) put a buy on BIDU exactly one week ago and raised the price target. Lots of chatter overnight that JPM was using the negative analyst note to lever the Chinese gov’t into giving them something they want.
This is not exactly the first time JPM has been accused of pump & dump. Witness the large penalties levied in both WorldCom and, more recently, Enron.
Secaucus: The nicest town in Hudson County
Bath (53)-
“…Maybe more than safety, it’s in case armageddon hits and we have an on-in-the-movies situation where society breaks down and it’s every man for themself. I’d want to protect my family … or die trying.”
Do you constantly have visions of bank runs, societal breakdown and other Mad Max-type scenarios?
I’m beginning to think you’re veering toward generalized anxiety disorder.
Not that there’s anything wrong with that…
Do you constantly have visions of… societal breakdown and other Mad Max-type scenarios?
I can’t speak for bath, but; I imagine many people do after the Katrina debacle. The important lesson learned by witnessing (by me at least) New Orleans was that you cannot rely on your govt.
toshiro (57)-
You needed Katrina to teach you that?
“I’m not trying to drum up business via this blog, but if anyone needs help buying a used car, give me a call.
So what exactly are you doing here?”
===
Just following the lead from the house salesperson who posted in #8…
“I’d suggest that a buyer with excellent credit first check the top-shelf community banks… If those guys don’t offer something acceptable, give me a call…”
Plaid (59)-
I guess “moron” is part of your job description. I am not a mortgage banker. I offered my help to refer this piece of business to other lenders, if needed.
BTW, it’s illegal for lenders to pay referrals and finder fees to agents like me.
58. Clot-
Yes and no. I knew they were incompetent but had always hoped that there was someone somewhere who would know what they were doing when it really hit the fan. This may have been wishful thinking on my part in order to avoid having to adopt a fairly bleak view of other people/institutions.
I understand where Bloodbath is coming from.
Too much Mogambo Guru..
“I knew they were incompetent but had always hoped that there was someone somewhere who would know what they were doing when it really hit the fan.”
They realize it has hit the fan, they just tend to camouflage it.
#56,
I need Armageddon to hold off for another month or so so that i can finish my camel-powered truck besides its only prudent to plan for the worst and hope for the best, dont plan on the government bailing you out in a katrina level event, but hope they do…
What worries me about the current Housing situation is the impact that foreclosures are beginning to have on renters. Renters being kicked out is a quickly growing problem in California as of recently. I wonder if this is a background effect that we will see popup in this area. Time to do some homework and research how you landlord paid for the rental property you live in. Its pretty screwed up that the bank can just show up one day and for you out in a matter of days :(
#61 Plaid
Real estate.
Cars.
Different.
CLott
Our current Fiat, Debt as Money, system is most likely unsustainable in the long term. This has been acknowledged by various central bankers and economists. So at what point does planing for a complete system failure stop becoming paranoia and start becoming prudent??
To (56) and (55):
Also heard through the grapevine somebody sold (dumped) some ungodly amount of S&P Spiders- look at SPY volume right at the drop and it went from around 530k shares to over 17M at the drop of a hat. Whoever it was wanted out and they wanted out NOW.
If people keep leaving NJ then eventually home prices will drop accordingly – right? Probably better to rent for now. BTW check out http://www.jerseylegalforums.com
Cirrus (69)-
And, today, sombody wanted right back in. Al the usual suspects are right back up there, en fuego again.
Suspicious, eh?
vodka (66)-
That’ll make for some truly bitter renters.
Just goes to show…there’s risk on both sides of the trade. Nobody gets a free pass.
Plaid,
I also offered to refer for CHifi, I did so late in yesterday’s discussion. I do not get paid for this, or for putting up address’s, listing history’s,days on market,comps or any other info that is easier to get from a realtor than the internet. There are a couple of regular realtor contributers on this board, we hope to enlighten,inform,and change common perceptions & get the same in return.
KL
Cirrus (69)-
Or, could it just be tons of paranoiacs with a hair trigger…having seen a few too many “October surprises” over the past 20 years?
Further to my post #73
we hope to enlighten,inform,and change common perceptions & get the same in return.
And in my case I’d like to think
my rhymes can bring a smile
but if I forget, to include a wink
remember, sarcasm’s my style.
KL
Roses are red,
Massengill’s clear.
To the Plaid tin man, I say:
Get out of here.
I am a trader at a fund
My boss says women have more fun
I took some pills now wear a dress
Oh me oh my my life’s a mess!
(that NY post article made its way around my office with FW: fury and howls of laughter)
“So at what point does planing for a complete system failure stop becoming paranoia and start becoming prudent??”
kettle,
It depends on what your definition of a system failure is? It has been prudent, for awhile, to diversify and protect yourself against the devaluation of our currency. John Q does not realize the purchasing power of our dollar, dollaroso, is getting butchered.
Our choices are to inflate,devalue or repudiate. Not a system failure, at this time, but certainly justification for prudence.
Bob (78)-
Inflate and repudiate…at the same time.
Say nothing, stand there with bag open/mouth shut, and collect.
bi,
Are you running from your margin clerk, [crude]?
$83.69 close, traded over $84, that’s front month, Nov..
Bob # 78,
By failure i actually meant complete market failure, (i.e fiat money is worthless) and only commodities and real property have value. or i suppose one step away from a complete failure such as a severe depression. I am not trying to be mr dooms day, but can someone explain how a debt based fiat money system can exist long term without crashing under its own weight? I am not an expert in this field so there may be a way. Although i am also not suggesting that this is going to happen in the near future, just eventually
80#, oil up 10%, gold up 10% from my call. a wash.
-(55)
LOL, you are all starting to sounding like me 2 years ago.
hahahaha….!
BC Bob Says:
October 12th, 2007 at 9:48 am
Clot [27],
The CP dance, 1 step forward, 3 steps back.
___
BCB, exactly which “step forward” was that? ;)
Steve [84],
Excellent point.
So, roses are red,
so violets are blue,
so sugar is sweet.
so, so are you.
– Chico Marx
News Corporation’s new business channel starts broadcasting on Monday October 15th.
http://www.economist.com/business/displaystory.cfm?story_id=9963321
you bears turning into poets
its the same thing
Trenton, Camden, Newark
everybody wants a Nobel prize
turn out the lights on NJ
Not Pesche Says:
October 12th, 2007 at 4:18 pm
you bears turning into poets
its the same thing
Trenton, Camden, Newark
everybody wants a Nobel prize
turn out the lights on NJ
Haiku
poo poo
Spend a little time
Make it rhyme
KL
Here is why real estate is going to hell. This house on 55 Bulson Street in Rockville Centre Long Island 11570 is a crappy three bedroom ranch on a small plot. Owner bought in 02 and sold right before the credit crunch and did no renovations. House is up in value 400K in in less than five years. Did the guy who paid almost a million for the house three months ago really think it was going to keep going at that rate? Coo COO
Date of Sale Sale Price Book Page Condition of Transfer
12/11/2002 $550,000 11566 0060
07/10/2007 $965,000 12292 0206 NONE
bi Says:
October 12th, 2007 at 3:29 pm
80#, oil up 10%, gold up 10% from my call. a wash.
bipolar: not a bath?
Too late to ask for a Northern NJ Indian restaurant recommendation?
Interesting move by NJ builders..
http://www.njhousingcrisis.com/
From NJ.com:
Corzine calls for budget-slashing plans
Gov. Jon Corzine has ordered his department heads to come up with plans for cutting as much as $3 billion from the next state budget, administration officials have confirmed.
Acting state Treasurer Michellene Davis says cuts are needed to avoid a fiscal crisis in the next budget year, which begins July 1.
The governor has told his cabinet members to have their budget-trimming ideas ready by month’s end.
The plans for cuts in state departments and some aid programs were ordered following two weeks of “gloom and doom” presentations by treasury department officials to cabinet chiefs and key aides to the governor.
“We are redoubling our efforts to review the functions of state government in order to identify further cost reductions as we plan ahead for the fiscal year 2009 budget and beyond,” Davis said.
92
Morristown good enough? Caffe India is very good.
92
Andrea’s in Waldwick, Italian, byob
89 KL
“Haiku
poo poo
Spend a little time
Make it rhyme”
The sad thing is, it didn’t even manage to qualify as a haiku.
Raagini, on 22 near Brigadoon, is very good (22 Zagat, I think).
bergenbuyer Says:
I’d like to be close to the beach, but I don’t want to live in a tourist location.
Bergenbuyer: Given that, there’s a development just outside of Charleston, SC called Daniel Island. It’s very expensive, but nice. All residential and about 5 miles from the ocean. While you’re down that way, you could also drive to Seabrook and Kiawah islands. I think these areas are good places to check out plus Charleston is a great town to visit – lots of history, shopping, and great food.
BCB (84),
LOL
Overheard Cramer tonight (no tomato throwing, please) say his “sources” claim CP will be out next week.
Wishful thinking?
Hope, however, springs eternal!
steroid story is going to get interesting:
http://sports.espn.go.com/mlb/news/story?id=3060689
I’ll bet it’s all Arod’s fault.
“Wishful thinking?”
Steve[100],
Maybe not. It’s the only reason there’s a bid in the stock. If that dance that CP was talking about does not iclude the two step out the door, the stock will suffer the consequences.
Disclaimer: Only an opinion
“I’ll bet it’s all Arod’s fault.”
patient [101],
I heard A-Rod attempted to take steriods. However, he choked on them.
Disclaimer: A disgruntled Yankee fan
grim: 93
I think NJBA is trying to use website to get some support. But most folks on this board seem to have view that Builders are not good for society and any new housing construction will distroy all character and environment.
I personally don’t think home building is bad if it is properly regulated. But in NJ you have extreme opinions. I personally think without new supply coming on market the downturn in RE will still not make housing affordable.
Thuderbolt….perhaps its the cocktails I had at dinner tonight but did you just state that ‘Myrtle Beach is the closest thing to the Jersey Shore”. Myrtle Beach is a dump, I’ve been there. Decent golf courses but a dump nonetheless. Ever been to Spring Lake ? Prob not but I bet you’ve been to Seaside Heights.
I thought this board was about NJ Real Estate !
Real estate salespeople.
Car salespeople.
Not different.
RE: Raagini, on Route 22
Found the food average, fairly expensive, and the service spotty.
Try Baluchi’s for some fantastic food and decent prices (especially for lunch — half off the entire menu).
Dave….on Hunter’s first birthday…how could you :(
Meet Dave! Watch Dave perform live!
Meet Dave Gahan as he signs copies of his new CD “Hourglass”, and get a chance to see him perform live.
Dave Gahan – “Hourglass” CD Signing at Best Buy in New York (at 529 5th Ave) on October 24th!
Come meet Dave at Best Buy (529 5th Ave) as he will be signing copies of his new CD “Hourglass”, starting at 6pm. Purchase “Hourglass” at this Best Buy location and receive a wristband (while supplies last) that will ensure your chance to meet Dave.
Dave Gahan – Live from Soho (New York City)! Apple Store Performance Tuesday, October 23rd!
Dave will be performing songs from his new album “Hourglass” at the Apple Store in Soho, located at 103 Prince Street in New York on Tuesday, October 23rd at 8 PM. Fans will be admitted on a first come, first served basis so get there early to guarantee your admission. This show will be recorded and sold exclusively at iTunes at a later date!
Steve Says:
October 12th, 2007 at 7:25 pm
Overheard Cramer tonight (no tomato throwing, please) say his “sources” claim CP will be out next week.
Wishful thinking?
Hope, however, springs eternal!
Yo’ Stevo……if so, I know a lot of people that are going to get stinking rich off that news if it comes down…….
Maybe CP’s successor will break it up and make the goddamn thing blow up into the 60’s or higher…
You have the mental capacity of a bowl of Cheerios if you use this opinion for anything other than a laxative…
Un (105)-
You.
Self-important, Schadenfreude-filled jerk.
Same thing.
ChiFi (109)-
Sandy Weill must be licking his chops.
That damn stock hasn’t budged an inch since he walked out the door.
kettle1 #81
I agree about the fiat system being doomed. But, owning real property is risky especially in NJ. As infaltion accelerates the rising property tax burden can really suppress property values. Precious metals are much safer.
Re: SG post(#104) comments about Grim’s post(#93)THE NEW JERSEY BUILDERS ASSOCIATION’S propaganda website:
“…I think NJBA is trying to use website to get some support. But most folks on this board seem to have view that Builders are not good for society and any new housing construction will distroy all character and environment.
I personally don’t think home building is bad if it is properly regulated. But in NJ you have extreme opinions. I personally think without new supply coming on market the downturn in RE will still not make housing affordable…”
———————————————–
Commanderbobnj sez:
Well, I have very little respect for most builders [both Big and small] in this state. They seem have very little concern for the environment that they literally destroy—-They will squeeze the most units on the property that they acquire, Then build large energy inefficient as-cheap-as-they-can-get-away-with high priced housing !-Then leave and repeat the same crap in some other community….
Many here may not know this, But because of the high cost of copper for the domestic hot and cold water piping within newly constructed houses- the builders are now using (and allowed to use by NJ building code) cheap flexable plastic piping as a substitute !-No more copper pipe–All to save a couple of hundred dollars on a $650,000++ cheap (and totally impractical) combo forced-air heat/ac system and phoney-exterior”stucco”[EIFS] and a large drafty ‘open-designed’new “home” ! It should be quite interesting when those “crimped” metal-on-plastic water pipe fittings let loose within the walls and ceilings of the owners of those “Dream Homes” a few years ‘down the road’…Can you spell- Lawsuits ?!
The local officials of the municipalities (Planning board/ Board of adjustment) also share a lot of the ‘blame’ for allowing these ‘builders’ to place houses anywhere and anywhere they can —ALL in the name of the magic word of “RATABLES”
—-A good example of the fight to preserve what is left of the natural environment here in Bergen County is “THE RAVINE” in Wyckoff (WWW.savetheravine.org)—-Twelve acres are now going to be ‘givin’over to the builders.–Just a few days ago, The Wyckoff Planning Board approved the plan to build several homes on that beautiful property—-All for the Taxes that the Borough will pick up for their coffers !!–Another piece of New Jersey will be lost to the developers !!
When you get the chance, check out that website and see if you agree. ( http://www.savetheravine.org)–They haven’t upgraded the website since the environmentalists lost this past week—very sad !!!
# Clotpoll Says:
October 12th, 2007 at 12:25 pm
Bath (53)-
“…Maybe more than safety, it’s in case armageddon hits and we have an on-in-the-movies situation where society breaks down and it’s every man for themself. I’d want to protect my family … or die trying.”
Do you constantly have visions of bank runs, societal breakdown and other Mad Max-type scenarios?
I’m beginning to think you’re veering toward generalized anxiety disorder.
Not that there’s anything wrong with that…
Not sure where you were for 9/11, but between that and Katrina and these freakshows who will stop at nothing to kill us …
yes, I have a go-bag ready, yes, i keep some cash (small bills) at home should an emergency arise, and yes, i want to be prepared should it come to this.
Will it? Who knows. I don’t sit here thinking about it 24/7 …
the builders are now using (and allowed to use by NJ building code) cheap flexable plastic piping as a substitute !-No more copper pipe
It is called pex, and it works quite well. I sell it as well as copper pipe and other plumbing supplies for a living. It also offer a few advantages over copper. It is less likely to burst when it freezes, if they use a manifold sytem hot water gets to your fixture faster, less water waste. The cost of running additional piping and the fittings combined with the manifold make material costs essentially a wash. The main savings is on the labor side, it can be installed a lot quicker by less skilled labor. I wouldn’t look for much bursting unless it is faulty workmanship, the stuff has been used in Europe for 50 years.
I will agree that most new home contruction builders do look to put the cheapest things they can in new homes. The plumbing fixtures in a typical 2.5 bath, $750K home cost them less than $1500 if they have a whirlpool tub, about $1000 if they don’t. Here is a hint if your builder is going cheap. If they advertise “Kohler fixtures”, look at your toilet, if it is a Sterling (which is a Kohler owned company) they are going very downscale. And Kohler’s low end product is imported crap.
hughesrep, do you have a blog?
Does anyone have any info on the recent sale of 34 Mount Vernon St in Nutley? I think it may have gone through the foreclosure process.
Thanks in advance!
WSJ.com “Big Banks Push $100 Billion Plan To Avert Crunch”
Can someone post this article?
Since the mortgage market did not have enough problems, there comes the IRS…
http://www.nytimes.com/2007/10/13/business/13tax.html?_r=1&ref=business&oref=slogin
Jay,
OLP: $449,000
Reduced: $439,00
Sold: $419,000
Sold Date: 9/10/07
DOM: 69
Thanks, Grim!
Frank,
Here you go. From today’s WSJ:
Big Banks Push
$100 Billion Plan
To Avert Crunch
Fund Seeks to Prevent
Mortgage-Debt Selloff;
Advice From Treasury
By CARRICK MOLLENKAMP, IAN MCDONALD and DEBORAH SOLOMON
October 13, 2007; Page A1
In a far-reaching response to the global credit crisis, Citigroup Inc. and other big banks are discussing a plan to pool together and financially back as much as $100 billion in shaky mortgage securities and other investments.
The banks met three weeks ago in Washington at the Treasury Department, which convened the talks and is playing a central advisory role, people familiar with the situation said. The meeting was hosted by Treasury’s undersecretary for domestic finance, Robert Steel, a former Goldman Sachs Group Inc. official and the top domestic finance adviser to Treasury Secretary Henry Paulson. The Federal Reserve has been kept informed but has left the active role to the Treasury.
The new fund is designed to stave off what Citigroup and others see as a threat to the financial markets world-wide: the danger that dozens of huge bank-affiliated funds will be forced to unload billions of dollars in mortgage-backed securities and other assets, driving down their prices in a fire sale. That could force big write-offs by banks, brokerages and hedge funds that own similar investments and would have to mark them down to the new, lower market prices.
The ultimate fear: If banks need to write down more assets or are forced to take assets onto their books, that could set off a broader credit crunch and hurt the economy. It could make it tough for homeowners and businesses to get loans. Efforts so far by central banks to alleviate the credit crunch that has been roiling markets since the summer haven’t fully calmed investors, leading to the extraordinary move to bring together the banks.
In recent weeks, investors have grown concerned about the size of bank-affiliated funds that have invested huge sums in securities tied to shaky U.S. subprime mortgages and other assets. Citigroup, the world’s biggest bank by market value, has drawn special scrutiny because it is the largest player in this market.
Citigroup has nearly $100 billion in seven affiliated structured investment vehicles, or SIVs. Globally, SIVs had $400 billion in assets as of Aug. 28, according to Moody’s.
Such vehicles are formally independent of the banks that create them. They issue their own short-term debt, usually at relatively low interest rates reflecting their high credit rating. The vehicles use the money to buy higher-yielding longer-term assets such as securities tied to mortgages or receivables from midsize businesses seeking to raise cash.
Many SIVs had trouble rolling over their short-term debt in August because of concerns about the quality of their assets. That contributed to the broader seizing up of credit markets.
The Financial Services Authority, the United Kingdom’s markets regulator, has suggested that U.K. banks consider participating in the plan, a person familiar with the situation said. HSBC Holdings PLC, the largest U.K. bank, has an affiliate SIV called Cullinan Finance Ltd. with $35 billion in senior debt. An HSBC representative wasn’t immediately available to comment.
If the banks agree, the plan could be announced as early as Monday, people familiar with the matter said. Citigroup announces third-quarter earnings Monday. The tentative name for the fund is Master-Liquidity Enhancement Conduit, or M-LEC.
The plan is encountering resistance from some big banks. They argue that Citigroup is asking others to help bail out its affiliates and an industry-wide bailout isn’t needed. Citigroup bankers created the first SIV in the late 1980s in London.
The new fund represents a way for Citigroup and other banks to “outlast the current market conditions that are so dry right now,” says Jaime Peters, an analyst at Morningstar Inc.
Traditional buyers of debt issued by SIVs include money-market mutual funds, municipalities and other risk-averse investors attracted by the high credit rating of the vehicles.
By providing a receptacle for assets backed by subprime mortgages and other creations of Wall Street, the SIVs contributed to the big expansion of credit in recent years whose aftereffects are now roiling the economy.
The Citigroup plan would create a “superconduit,” a fund backed by some of the world’s biggest banks that would issue short-term debt and serve as a buyer of assets currently held by SIVs affiliated with the participating banks.
According to the people familiar with the plan, these assets include securities tied to U.S. mortgages as well as debt pools called collateralized debt obligations.
Because the superconduit would be backed by the big banks themselves, it’s expected this would reassure investors and make them more willing to buy its short-term debt, or commercial paper.
The Citigroup proposal recalls the 1998 bailout of huge hedge fund Long Term Capital Management, which was reeling from bad bets on currencies and other investments. Seven big banks and investment banks, prodded by the Fed, banded together and prevented LTCM from collapsing.
Two banks in the discussions with Citigroup, Bank of America Corp. and J.P. Morgan Chase & Co., would participate not because they have SIVs — they don’t — but because they would earn fees for helping arrange the superconduit, according to people briefed on the discussions. The superconduit’s debt would be fully backed by participating banks, they said.
One supporter of the effort is Treasury Secretary Henry Paulson, who decided to assemble the banks after conversations with businesspeople who expressed concern about SIVs and their impact on the economy, said a person familiar with the matter.
It’s the second time in two months that U.S. authorities helped arrange for financial institutions to discuss steps to avert a credit crisis. In mid-August, at the request of the New York Fed, financial leaders met with Fed officials who explained the Fed’s steps to open up the supply of cash to the nation’s banks.
The new plan would be challenging to pull off. Bank-affiliated SIVs selling assets into the superconduit will have to agree on how to price those assets. Some SIVs may value the securities differently. There have been several meetings since the initial Sunday meeting, both at Treasury and in New York.
For Citigroup Chief Executive Charles Prince, solving the bank’s SIV is the latest fire that he needs to put out. Mr. Prince, under pressure to raise the bank’s lagging performance, recently said third-quarter earnings would fall 60% from year-earlier levels owing to the August meltdown in global credit markets. Some investors and analysts have called for Mr. Prince’s ouster.
SIVs are purposely kept off the balance sheets of the banks to which they are affiliated. One reason for this is that banks want to keep down the amount of assets on their balance sheets to reduce the amount of capital that regulations require them to keep.
Because SIVs are off the balance sheet, it is difficult for investors to size up the financial risks they pose. Off-balance-sheet liabilities played a major role in the 2001 collapse of Enron Corp., and the makers of accounting rules have generally sought to get affiliated entities back on the balance sheets of the companies creating them.
http://online.wsj.com/article/SB119221840415557568.html?mod=hps_us_whats_news
Grim, #122 is in moderation.
It’s the article from today’s WSJ that Frank asked someone to post.
grim: my comment 110 is moderated…re: non-USD mortgages
#122,
Thanks, this looks like a Citigroup bailout.
Do you think Citi is in so much trouble that it needs a bailout? If it’s so, then we go bigger problems.
Pat Says:
October 13th, 2007 at 7:34 am
hughesrep, do you have a blog?
No I by and large just lurk here for info. I comment when there is something I think I can add (rarely). One of those better be be silent and thought a fool than to open your mouth and remove all doubt kind of things.
Chi [111],
I’d rather go with a fixed rate, sell the dollar and buy gold. Who wants to borrow Euros,BP, etc. to pay back with dollars? Can you imagine this getting into the hands of John Q? The mortgage rep can explain the advantages of lower up front rate. Now, go hedge in the futures market and sell dollars. John Q will be arbing against their physical.Is their physical in contango or backwardation? Gotta love the thought of this. The dollar as the peg? Sounds like a new version of a calamitous teaser rate.
That said, it could be a great vehicle for an arbitrageur, if one chooses to get in the game with your house.
myrtle beach a dump? surely you are mistaken. fantastic beach. lots of fun. unless they started charging to get on the beach, i’d say it’s 90% better than the jersey shore.
i do like spring lake, and i think cape may is nice as well. other than that, the shore is for the birds.
i know NJ residents love to defend their turf … and they think it’s OK for them to bash NJ, but for a non-NJ person to do so, it’s a crime. that’s one thing i learned when i first move to NJ from the DC area – very defensive residents in NJ.
Bsnk Of America has been funding a high interest (5-35 – 5.78) 4 month CD for the past couple of weeks.
If Pandit gets the top Citi job, the stock will tank. nice.
http://seekingalpha.com/article/49757-no-value-added-in-citi-shake-up?source=feed
Was watching a re-run today on TLC for Buy My property. What a horrible show. Anyway, I was surprised to find lot of blogging on the case mentioned on the show. See the south florida blog posting,
http://www.soflahousing.com/2007/10/plantation-sellers-featured-on-new-tlc.html
Thinking about this, wouldn’t it be nice if there was way to find out similar cases in NJ. I am sure there are people who are holding vacant houses and paying double mortgage in their dream to get unrealistic prices.
Reading on the South florida blog site, I find following very interesting.
Sellers tend to look only at the competition in their own small, local neighborhoods, which is not extremely relevant. Modern buyers, with access to easy-to-use Internet search engines, typically look at a large areas.
I think this is very relevant. I now a days look at all listings in the whole county not just in one town. And its easy to see that in some towns sellers are really lowering prices while others towns steadfastly refuse to lower. I guess the reality will set in sooner or later.
WSJ
Prince Seeks Masterstroke Will Citi Chief’s Overhaul Amid Shareholder Pressure Land Him in King’s Spot?
October 13, 2007; Page B14
Charles Prince bought some more time in the past week. The Citigroup boss, under pressure from shareholders to improve the lagging performance at the U.S.’s largest bank by market capitalization, reshuffled the pieces on his chessboard. Gone is Tommy Maheras, the markets bishop, succeeded by Vikram Pandit, the former Morgan Stanley knight who sold his fledgling hedge fund to Citi earlier in the year. But make no mistake: Checkmate is still a threat for Mr. Prince.
In the short term, the management changes answer growing calls for action following a third-quarter write-down of some $3.3 billion at the investment-banking division. Rivals with similarly poor showings in the quarter, notably UBS and Merrill Lynch, wasted no time in guillotining officials whose businesses led them to the valley of profit darkness. In characteristic fashion, Citi’s failure to respond immediately looked lumbering.
Though beloved by his pawns, and tipped by many as a rising star, it was perhaps unsurprising that Mr. Maheras took much of the blame for the transgressions that occurred in the businesses he oversaw. To a lesser degree, his partner in running the investment bank, Michael Klein, has also borne some of the burden. Mr. Klein, whose rivalry with Mr. Maheras was the stuff of internal legend, will now report to Mr. Pandit. While this may appear to be punishment for the $1.4 billion portion of Citi’s charges stemming from exposure to leveraged finance, the youthful Mr. Klein is still considered a rising star inside the bank.
By elevating Mr. Pandit — himself a pretender to the throne once inhabited by Philip Purcell at Morgan Stanley — Mr. Prince has signaled a willingness to make bold changes in Citi’s management. Unfortunately, his talent pool has been depleted since he took over four years ago. And while Mr. Prince has given Mr. Pandit an exalted position, he sacrificed another of his lieutenants in the process.
The maneuvers give Mr. Prince more time to deflect criticisms that he’s the wrong man to run Citi — but not much time. Investors have tired of the bank’s lagging stock price and management’s unmet promises that Citi’s conglomerate structure will one day yield juicy synergies, if just given yet another quarter or two to make it happen.
There were glimmers of hope earlier this year. The bank managed to increase revenue faster than its expenses, notably in the second quarter. Investors will want to see this trend continuing outside of the businesses that accounted for the charges in the third quarter, and in full bloom in the fourth quarter. Barring that, this latest management change will be Mr. Prince’s last rearrangement of the rooks to his left and right.
Mortgage Turmoil Hits Renters
Tenants Face Eviction When Their Buildings
Go Into Foreclosure By KELLY EVANS
October 11, 2007; Page D1 Wall Street Journal
______________________________________________
Across the country, a rising number of landlords are falling behind on mortgage payments, sending their properties into foreclosure, according to legal-services attorneys, local officials and financial experts — and in many cases, their tenants are being forced out of their homes. Often, the tenants’ first inkling of trouble occurs when they get a letter from the bank directing them to leave the premises.
In many cases, the homes and apartments entering foreclosure are owned by investors who got low-rate teaser mortgages and intended to hold the buildings for a few years and then sell them at a profit — before their mortgage rates rose. Now, with the housing market badly depressed in many markets, the owners can’t sell the homes or afford the higher mortgage payments. Many are defaulting.
If Vikram Pandit gets the top job in citi, John is going to take a dump in the Citi Corporate HQ lobby to express his disgust at Indians.
U.S. Investors Face An Age of Murky Pricing
Values of Securities Tougher to Pin Down;
Discord at Dillon Read
WSJ October 12, 2007; Page A1
_________________________________________
The hazards of this new age of uncertainty became clear at Dillon Read in March, when rising defaults by homeowners were hammering the value of mortgage securities. John Niblo, a hedge-fund manager at the firm, acted fast. He twice slashed his fund’s valuation of securities tied to “subprime” mortgages, knocking them down by about 20%, or nearly $100 million, say traders familiar with the matter.
But managers at UBS AG, Dillon Read’s parent company, were irate. The Swiss banking giant was carrying similar securities on its books at a far higher price, the traders say. In conference calls, the UBS managers grilled Mr. Niblo on his move. “I’m marking to where I could reasonably sell them,” Mr. Niblo responded during one call, according to the traders familiar with the conversations.
UBS later shut down the in-house hedge fund, and Mr. Niblo was let go in August. Last week, UBS announced a $3.7 billion write-down on $23 billion of securities with mortgage exposure, including securities from the shuttered fund.
Such pricing problems have become common in some of Wall Street’s biggest markets. The burgeoning universe of complex securities based on mortgages and other assets has turned the once-simple task of getting a price quote into a confounding undertaking.
RE: Re/Max realtor “Clotpoll” posting in #112
One would think that a rational (?) realtor facing an uphill battle against the fact that (in your own words) “95% of realtors are complete clowns,” could have the ability to engage people as an adult, instead of consistently resorting to juvenile name-calling.
Some here apparently find you useful for providing investment opinions — however BC Bob and others do the same, except with class and without insults.
Hopefully not all Re/Max realtors are such insecure, bitter people…
Shore talk? Cape May is a great place, but virtually closes up in the winter, so in terms of retiring there? No way. In fact give me the mountains….I would rather ski/snowboard and golf in my twilight years than sit on a beach.
Banks May Pool Billions to Avert Securities Sell-Off
By ERIC DASH
Published: October 14, 2007
Several of the world’s biggest banks are in talks to put up about $75 billion in a backup fund that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that threatens the broader economy.
Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days.
A broad framework for an agreement could be reached as early as tomorrow, according to people with knowledge of the discussions, but many important details still need to be hammered out. Another round of discussions is taking place this weekend, and it is still possible that the parties will not reach an agreement.
“Treasury is very serious about getting some solution in place to take away the fear hanging over the markets,” said Alex Roever, a credit analyst at JPMorgan Chase who has been following the discussions but is not involved in them. “It is a very challenging thing to do. There are so many parties involved and they all don’t agree.
The proposal echoes the 1998 bailout of the hedge fund Long Term Capital Management, when a group of big banks came together to prevent the fund from collapsing after it made a series of bad bets. And the current round of crisis-driven collaboration illustrates the heightened level of concern among both government and financial players.
While there are signs that the broader credit markets have begun to stabilize after the Federal Reserve lowered interest rates last month, a pocket of the commercial paper market remains under siege: structured investment vehicles, known as SIVs. The fear is that problems with these vehicles could infect the broader economy.
SIVs, which issue short-term notes to invest in longer-term securities with higher yields, are often organized by banks but are not actually owned or held by them. They are supposed to be financed through the issuance of commercial paper backed by pools of home loans and credit card debt, but the loss of confidence in the quality of subprime mortgage bonds has also tainted these securities.
Analysts say that investors have all but stopped buying SIV-affiliated commercial paper, and the worry is that the 30 or so SIVs will unload billions of dollars of mortgage-related assets all at once. That would put intense pressure on prices. As Wall Street firms and hedge funds mark value of similar investments they held to their new lower values, they face potentially huge hits to their profits.
Still, the impact on the biggest banks is even more severe. In times of crisis, they are committed — either legally or to maintain their reputations — to stepping in to buy those securities. Banks have already been buying significant amounts of commercial paper in recent weeks, even though they did not have to. But if they are forced to bring those assets onto their balance sheets, they might be less willing to lend to businesses and consumers. That could set off a credit crunch and thrust the economy into a recession.
The proposal being floated calls for the creation of a “Super-SIV,” or a SIV-like fund fully backed by several of the world’s biggest banks to provide emergency financing. The Super-SIV would issue short-term notes to finance the purchase of assets held by the SIVs affiliated with the banks, with the hope of reassuring investors.
But whether the banks would buy the assets directly or just buy the short-term debt is still unclear, according to people briefed on the situation. So are other aspects, like the amount of capital each bank would need to contribute, how it would be administrated, and the fee structures and cost burdens.
The effort to create a backup fund began about three weeks ago, when the Treasury secretary, Henry M. Paulson, called a meeting in Washington that included the chief executives of Citigroup, Bank of America, JPMorgan and other big banks. With Wall Street firms having almost no luck finding buyers for mortgage-backed securities and derivatives, Mr. Paulson wanted to see what could be done to relieve the bottleneck.
Several rounds of discussions followed — in Washington, New York and on conference calls — led by two senior Treasury Department officials: Robert Steel, the under secretary for domestic finance and a former Goldman Sachs executive who is a close adviser Mr. Paulson; and Anthony Ryan, a former investment banker who is now assistant Treasury secretary for financial markets.
Besides hearing from senior executives from each of the big banks, the group also sought ideas from others. Several big international banks, including Barclays and HSBC, have been asked about their interest in participating. The group also reached out to several of the major structured investment funds, as well as big institutional investors in the commercial paper markets.
Inventory still stuck at all time high of 100K , it looks like the RE agents are too lazy to sell anything.
Anti (137)-
His poop will join Pandit’s, which has already been festering there awhile…in the form of that hedge fund he “dumped” on Prince & Co.
That was a really great fund…except for the lack of performance/profits thingy.
I noticed that the RE section of the Sunday Bergen Record appears to be a lot “thinner” than in previous weeks. It looks like a lot less open houses and listings in general. I don’t know what it means – it’s just an observation.
I also see that Pulte is going to do this big sale thing in a couple of weeks for various developments in the same manner as Hovnanian. Although, they claim that their Edgewater sales are great so I’m not sure why they’re blabbing out of both sides of their mouth.
I can tell you for sure that the asking prices I see in the paper and receive from realtors are still at 2005 levels. Again, take your pick of some bland Cape or small split in some middle-of-the-road town and you could probably compare and see price reductions. I understand, you don’t have to repeat it to me for the 1,474th time. However; the property taxes probably went up 60% to 70% along with the 87% increase in the house price over the last six years so any price drop is just an illusion.
As for the nicer homes with some curb appeal and a property size just big enough so you don’t look out your window and watch your neighbor wash their dishes, forget it. These prices are holding steady and you don’t need reams of data, an MBA, or 40 years in the business to see this. Just a few logical observations will tell you all you need to know. Maybe in a suburb in Ohio, or 20 miles outside of Phoenix but not here in the northern region of the People’s Republic of New Jersey.
Un (139)-
You’ve actually now pointed out to me that, if anything, I’ve been too easy on you the past few months. Evidently, you think nothing of lying, putting words in my mouth and making blanket, all-or-nothing statements about my industry. Your surprise that anyone in my position would have the temerity to respond bespeaks the character of a person who has a difficult time functioning in the adult world (although you probably view that problem as the world’s inability to conform to your view). The black/white, absolute statements you make about Realtors, car salesmen, people who bought homes from 2004-06 and people who buy homes today are more suited to John Birch meetings…or an 8th-grade social studies class (although most 8th grade teachers would probably tell you to shut up).
Notice I don’t have a problem with anyone else here…even those with whom I disagree. It’s unnecessary to be deliberately uncivil on a blog full of strangers, and the overwhelming majority here understands that. However, you insist on repeatedly crossing the line, while simultaneously feigning great offense when I respond. Well, what do you expect? In the adult world, you can expect a little blowback when you attack people over who they are and what they do for a living.
So far, it appears that the sum of what you’ve added here is comprised of equal parts: a) diligent study of Trulia, Zillow, etc in pursuit of overpriced listings; and b) your resulting- and predictable- Schadenfreude when those sellers hit the skids.
Is that it? That’s all you’ve got? And, who are you? What’s your agenda? Where do you work? Do you work at home? Do you live with your parents? Do you live above- or below- grade?
Other than your finger-pointing, invective and obvious glee in “outing” me, what’s your story? A little disclosure, please.
“Many home owners suffer under high-interest loans”
I got one word for these people, foreclosure.
Because of these trailer home rednecks I could not afford a home within 30 miles of work with 50% down. Foreclose!!!!
More foreclosure stories…
http://www.nytimes.com/2007/10/14/nyregion/nyregionspecial2/14Rprimemap.html?_r=2&ref=nyregionspecial2&pagewanted=all&oref=slogin&oref=slogin
When an administrative assistant buys a $300K home with 11% loan you got a problem.
RealtyTrac admits Georgia foreclosure filings rose 14% not 75% as it first said.
http://www.ajc.com/search/content/business/stories/2007/10/14/realtytrac1014.html.
Same problems with other states’ data?
SG(133) – I think I was watching the same episode. I agree that a NJ example would be great, but did you catch the divorcee on Long Island (maybe Westchester? It was definitely a New York suburb of NYC) who apparently had $400K in equity but wouldn’t sell for less than $250K over her previous purchase price (probably because of a HELOC) and brought in a feng shui expert to “cleanse” the house so that a sucker, I mean buyer, would buy the house for the inflated price. It was the funniest thing I had seen on TV in a while.
#144 Gary
You are dead on. I’ve been looking at prime North Jersey towns since December 06 in the 800-900 range and I totally agree that inventory is horrible. I made the mistake of reading the papers and hearing how inventory is building and homeowners are forclosing and translated that to a great buyers market – BUT NOT IN NEW JERSEY.
My theory is that in prime NJ towns, there are few subprime borrowers, few homeowners that need to or want to sell. As long as the job market in this area is doing well, inventory will be non existant.
I’m still floored at the actual listings that come online in my price range and in these towns. There’s always something wrong with them (i.e. flood zone, a sound barrier in the back yard, main road, or POS).
As much as I like this board, NJ is not dead and its not a buyers market nor a sellers market.
GRIM
Any way to share inventory data as we enter the fall/winter?
From the Asbury Park Press:
The Press analysis found that in Monmouth and Ocean counties last year:
One in five home loans were granted to subprime borrowers, for a total of $3.1 billion. In 2004, about 1 in 10 loans had gone to subprime borrowers.
The income of subprime borrowers was 5 percent lower than those taking out traditional mortgages, yet the subprime borrowers took out loans that were 10 percent larger. That means subprime borrowers, already facing higher interest rates, will be further strapped to make mortgage payments, especially if their mortgage interest rates adjust upward in the coming
years.
More subprime money was lent in 2006 than the prior year. The median subprime loan of $221,000 in 2006 is up from $203,000 in 2005. A median means half borrowed more, half borrowed less.
Heh, you make 100K driving around town, you chase underage teen drinkers away from the park and fill out accident reports. Damn right you are entitled to lifetime benefits. Can you run this by the newborns and the immigrants. After all, they’ll be paying the bill.
“Mayor Steve Lonegan on Saturday called for an investigation of the borough Police Department after officers picked up two undocumented workers at a property he owns.”
“Lonegan said he suspects that a dispute he has had with the police union about expanding officers’ benefits has made him a target.”
“This is a racial profiling issue, because I won’t give them lifetime medical benefits, that’s why,” said Lonegan, referring to the police.
“And they want it to include spouses and survivor spouse benefits.”
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkzJmZnYmVsN2Y3dnFlZUVFeXk3MjA4MTQ5JnlyaXJ5N2Y3MTdmN3ZxZWVFRXl5Mg==
northjerseyjoke #149,
Yup. I don’t know why anyone can’t see this. We unfortunately live in one of two areas in the nation that will fall drastically only if near armegeddon takes place. It s*cks. It really does and I honestly think that, like many others, I’m in a resentfull denial. AND I OWN A HOUSE!! LOL!! I’m stuck. I can’t move forward and refuse to cut my wrist to live in hock in a 700K POS.
My wife is very content where we are… I’m not and it leads to some head butting but as I said, I know she’s right. It’s frustrating.
Subprime Mortgages in New York, New Jersey and Connecticut
Very interesting interactive map that shows by color and float-over text the amount of sub-prime action. Provides a pretty good feel for where the real damage might be. I was floored to see the amount of sub-prime action in the hudson valley area I’m looking at…
http://www.nytimes.com/interactive/2007/10/12/nyregion/20071012_SUBPRIME_GRAPHIC.html
#152,
“A neighbor called in and said there were two Hispanic men walking around the inside of the house, which is for sale and unoccupied. The officers responded and found two Hispanic men in the garage. How can it be racial profiling? The neighbor made the call. We didn’t go there just because there were Hispanic men on the property. They are undocumented. They are illegal.”
If I knew that I call the cops when I see 2 Mexicans, I would be on the phone all day. Ohh wait I see them, let me go.
Southisde Johnny [154],
I don’t believe it. This indicates 22% subprime in Bergen. Now add in Alt A and it would probably indicate over 40% in Bergen. Can’t be, not in Bergen. Did the NY Times account for Bergen’s proximity to NY?
You are dead on. I’ve been looking at prime North Jersey towns since December 06 in the 800-900 range and I totally agree that inventory is horrible.
My theory is that in prime NJ towns, there are few subprime borrowers, few homeowners that need to or want to sell.
I’m still floored at the actual listings that come online in my price range and in these towns. There’s always something wrong with them
I don’t think this is an indicator of a strong market. I think it’s more an indication that sellers that are still unrealistic. The market is still in transition. Despite what some say, it is not a buyers market.
What you are really describing is that there isn’t good “value” in most of the market right now. It’s not that there aren’t good houses out there; it’s that they are overpriced. What you think you should be able to get for 800, is listed at 1.1m.
If you look closely at those houses in the 800-900 range, I think you will find that many simply aren’t moving.
#144
I have noticed that internet ads from home builders and the mortgage companies seem to be turned off, no more annoying popup ads and banner ads all over the place. The ad dollars spent on google adsense and banner ads (the expensive ones)must have dried up.
Can’t be good for google, but I still won’t short them.
report from “bubble” state — you can see the price in “good” area still going up while average price is down. The NJ real estate is mirroring this trend.
http://www.ocregister.com/ocregister/money/housing/article_1879291.php
“Treasury Sales May Rise 50 Percent as Deficit Suddenly Swells”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ac_PajNAGlzc&refer=home
Just an additional comment on the NY Times interactive subprime map: take a look at all the areas that are 20% – 30% subprime (which IMHO is still a pretty high number of subprime mortgages and should have been included as an additional category in the key) – eye-opening.
The natives are restless. The revolution is brewing, on both sides of the pond.
“The Countrywide Financial Corporation, the nation’s largest lender and loan servicer, reported on Thursday that delinquencies and foreclosures in its portfolio were rising steeply.”
“A few hours later, the company became a target of borrower anger in Boston as about 100 people gathered at three Countrywide offices to protest its practices.”
http://www.nytimes.com/2007/10/12/business/12mortgage.html?_r=1&ref=business&oref=slogin
tommySJ [161],
I addition to this, the lowest % areas [on the subprime map] are Hunterdon Somerset and Morris. However, Clot states that he has never witnessed the # of foreclosures, [in his area], as he has today. If anybody thinks that the worst is over, they are either delusional or obstinate, probably both.
What would this map look like if you added Alt-A, just another version of subprime.
bi Says:
October 14th, 2007 at 12:56 pm
report from “bubble” state — you can see the price in “good” area still going up while average price is down. The NJ real estate is mirroring this trend.
http://www.ocregister.com/ocregister/money/housing/article_1879291.php
Are you serious, that’s your deduction? There were two locales in that entire list that had both increased sales and median home prices. The rest either had lower sales or lower median prices, or both.
Did you take a look at the total new sales and total resales numbers? The total new sales have dropped 6% with a median price drop of 35%, while resale volume has dropped 40% with a median price decrease of 1.5%.
BC Bob [156]…
Yup the Bergen numbers seem a tad high, when you zoom in you get a more detailed view, where you can see for example Garfild (50%) while Montvale is (13%). Letting my mouse coast over the areas of Bergen basically show high sub in the south and low in the north.
No idea how accurate overall, it says the source is “2000 Census, Federal Financial Institutions Examination Council”. 2000? uh, ok…while the related article mentions:
http://www.nytimes.com/2007/10/14/nyregion/nyregionspecial2/14Rprimemap.html (See Frank [147])
…”The numbers are based on reports banks must file with the federal government under the Home Mortgage Disclosure Act, and include all loans made for purchase or refinancing of one- to four-family homes.”…
Assuming the numbers are somewhat close I’m surprised to see anything over 10% in north Bergen. The related article also mentioned that:
…
“The rising toll of subprime-lending excess is not confined to low-income areas: Thousands of high-interest-rate loans were made in middle-class and affluent areas as well. One in 10 mortgages made to people making more than $300,000 was a high-cost loan. The subprime loans in affluent areas were more likely to be for refinancing than for buying homes.”
…
Subtract Newark and Paterson from that subprime chart and what are you left with? I just took a two hour ride (with my dog :)) starting in North Haledon and working my way over and down through Glen Rock. I rode up and down a lot of streets and roads and there are very few homes for sale. Try to twist it anyway you want… it is what it is. If you want one of these homes, you have to come up with a lot of wood or be making BIG bucks. Period.
“Are you serious”
MCN [164],
I’ve been scratching my head pertaining to that same question. However, someone who is shorting a market in backwardation, is obviously scratching something else.
Gary [166],
Your dog must be confused. He/she must be wondering why you are spending 2 hours with him/her on a Sunday in the fall. That said, there are a ton of Pavlov sellers that just don’t get it, yet.
Johnny [165],
USR, 15%. Is it safe to assume another 15% Alt-A?
Clot,
Far Hills, 17%?
help with an address please???
gsmls 2450912
thanks in advance!
sl
BC (169)-
Hunterdon & Somerset are both papered-up with Alt-A. Lots of 80-10-10 & 80-15-5 to borrowers at 680 FICO and above. Hard to get a read on where default rates are going on this stuff…not enough info on the table yet.
Most of the foreclosures I’m seeing now are ’04-’06 purchases where there’s a 2nd in place that should never have been made. You can look at the docs and envision somebody in underwriting at the junior lenders’ just saying “we want this loan…get it done…gimee some comps and wave it thru, because if we don’t do it, some other lender will.”
Thing is, the firsts on these are now sitting 100-105% over current market value, leaving those seconds completely out-of-the money. I have sellers who can satisfy (or come close to paying off) the first, but the seconds just have to pound salt.
Now, I get 2-3 belly yuks a week when I call these second-holders and inform them they’re getting stiffed, then getting nothing in the workout. I routinely advise my clients to offer them a promissory note and try to pay off the deficiency after the closing, but the workout departments at the second lenders whine and cry: “but that note’s unsecured!!!”.
I can’t help but point out to them that the second mortgage they made as little as 12-18 months ago also wasn’t really secured by anything other than a hope and prayer.
BC Bob,
It was nice out so I went for a ride and listened to the first half of the Jet game, who, you’d think would pull a win to finish off the Eagles. Oh, and the dog puked in the car. LOL! He was either car sick or just sick of me.
That lady from Long Island will be doing some lap dancing in Shirley or Patchogue, she do ok and won’t lose the house.
Bada Bing
chicagofinance Says:
October 12th, 2007 at 10:14 pm
Yo’ Stevo……if so, I know a lot of people that are going to get stinking rich off that news if it comes down……
_________
BCB (102) and ChifI (109/110),
Well we shall see…certainly time *someone* made some money (being long) C!
IMHO, there are few that could truly manage a behemoth of 300,000 employees across so many disparate businesses. I’m sure Eddie Lampert would love to see CP depart and/or a breakup; 1 out of 2 would be a start.
Citi has such a glaring lack of depth in top management ranks, really quite remarkable. They drive the remaing few out, placing all the chips with one as of yet untested individual.
Absolutely no evidence to back this up, but wouldn’t surprise me if there are still a few big shoes to drop w/ Citi earnings over the next couple quarters. Now a SIV bailout? You can only get elbow-deep in so many cookie jars before some of those lids start snapping shut.
Disclaimer: My opinions are worth even less than ChiFi’s now-mushy Cheerios.
Clot (171),
In these situations, does the bank holding the second note on the 80-20 have to give their blessing, before a short sale can move forward..?
Banks line up $75bn mortgage debt fund
Citigroup, Bank of America and JPMorgan are on Monday expected to announce plans for a fund to buy mortgage-linked securities in an attempt to allay fears of a downward price-spiral that would hit the balance sheets of big banks.
http://www.ft.com/cms/s/0/4550b8c6-7a8d-11dc-9bee-0000779fd2ac.html
Just an FYI home equity loans with a different bank than the primary mortgage was one of the main drivers of foreclosures in the 1992 wipe out. As the two banks argued over who gets more screwed or the amount the bank was willing to foregive over many months the problem solved itself cause the homeowner already lost his house.
Steve (176)-
Yes. And, if the seconds think there’s no way they will ever see a penny, they will refuse to let a short sale proceed…thus forcing the first to foreclose.
Thanks Clot/John for the background-
Unreal – and scary to think how many “forced” foreclosures there could be given the above
(not to mention the additional complications re: mortgage securitization)…