From CNN/Money:
Subprime loans defaulting even before resets
For months, we’ve fretted about the Armageddon that will hit when subprime adjustable rate mortgages start resetting to much higher interest rates.
What’s happening is even worse: Many of these loans are defaulting well before their rates increase.
Defaults for subprime loans issued in 2007 – none of which have reset yet – hit 11.2 percent in November. That represents perhaps 300,000 households, and is twice the default rate that 2006 loans had 10 months after being issued, according to Friedman, Billings Ramsey analyst Michael Youngblood.
Defaults are spiking well before resets come into play thanks to the lax lending environment of the past few years. Many borrowers were approved for mortgages that they had little chance of affording, even at the low-interest teaser rates .
“I was rather shocked by the characteristics of the 2007 loans,” said Youngblood.
…
Originally, concerns about these loans focused on the fact that that most homeowners wouldn’t survive such pricey resets. In late 2006, the Center for Responsible Lending (CRL), predicted that 2.2 million subprime ARM borrowers would lose their homes in the following two years due to reset shock.
…
For instance, in both 2006 and 2007, well over 40 percent of subprime borrowers were awarded mortgages with either little or no documentation of their ability to pay. With these so-called “liar loans,” borrowers did not have to show proof of either earnings or assets.And even when borrowers did go on the record about their earning power, it didn’t bode well. Both 2006 and 2007 ushered in a large proportion of loans with high debt-to-income ratios (DTI), which indicates the percentage of gross income required to pay debt. In 2007 subprime originations, the DTI hit 42.1 percent, up from 41.1 percent in 2006. Borrowers were simply taking on more debt that they could afford.
What’s more, many borrowers started out with low- or no-down payment loans, which left them with almost no equity in their home.
During the boom, rapid price appreciation meant borrowers built up home equity quickly. That minimized defaults, since owners could draw from that equity to pay their bills – including their mortgages – through home equity loans, lines of credit or cash-out refinancings.
But prices fell starting in 2006,leaving borrowers with less home equity to draw upon when they run into financial problems.
…
Owners with mortgages worth more than their homes simply began walking away from their homes when costs become unmanageable.
…
“Lenders felt they had to take the loans to preserve their access [to the rest of the loan pool],” he said. They were willing to accept some risky subprime loans so that the mortgage brokers would also send them safer prime and Alt-A loans.Of course that’s a bet that went bad. And it’s likely to get worse as resets for ARMs issued in 2006 and 2007 kick in this year.
Nj much to insulated to have the problem.
Bergen,,, Never.
From Bloomberg:
U.S. Housing Starts Probably Stayed Near 1991 Low, Survey Shows
Housing starts in the U.S. remained near the lowest level since 1991 in January, a sign the deepest real-estate recession in a quarter-century will weigh on the economy for a third year, economists said before a report today.
Commerce Department figures may show housing starts rose 0.4 percent to an annual rate of 1.01 million units, from a 16- year low of 1.006 million in December, according to the median estimate in a Bloomberg survey of 72 economists. Another report may show consumer prices rose 0.3 percent in January, a slower rate than in the prior month, according to the survey median.
A glut of unsold homes, mounting foreclosures and falling prices signal the housing slump will continue to detract from growth, setting the stage for more interest-rate cuts. Federal Reserve Chairman Ben S. Bernanke, citing the housing recession, last week said updated quarterly Fed forecasts to be published today would reflect slower growth projections.
“For 2008 as a whole, construction will continue to fall,” Richard Moody, chief economist at Mission Residential, a real estate investment firm in Austin, Texas, said before the report. “When we do hit bottom, we will stick there for some time, as demand will still be constrained by tougher lending standards and jittery credit markets.”
The Commerce Department will release the construction figures at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from annual rates of 950,000 to 1.1 million.
From Bloomberg:
Standard Chartered Abandons Funding $7.15 Billion SIV
Standard Chartered Plc abandoned a plan to refinance its $7.15 billion Whistlejacket Capital Ltd. structured investment vehicle, the largest SIV run by a bank to collapse.
The London-based bank blamed the “continuing deterioration in the market” for its decision, in a statement today.
Whistlejacket will become the sixth SIV to default if it doesn’t make a payment by Feb. 21 when a three-day grace period ends, according to Standard & Poor’s. SIVs with more than $20 billion of total assets are in default, including funds managed by New York-based Ceres Capital LLC and Cheyne Capital Management (UK) LLP in London.
Rent reduction anecdote from the hinterlands.
Our rent “increase” letter came from Mr. D. When I got home from work, my dear husband was standing at the sink laughing his brass off.
We’ve been paying month-to-month for maybe seven or eight years.
This year, there’s a bonus for signing a one-year lease. Our rent would be reduced by 2.6% and the terms for breaking the lease would be exactly the same as for a month-to-month – sixty days notice. (How does an owner get off stating that a tenant would need to give 60 days notice on a month-to-month lease?)
If we want to continue with month-to-month for the same terms as a year lease, the rent would be a few dollars higher than what we currently pay.
From the Star Ledger:
Poll finds NJ voters don’t like Corzine or his toll-hike plan
Voters are unhappy with Gov. Jon Corzine and his plan to increase highway tolls, a poll released today found.
The Quinnipiac University poll found 73 percent of voters oppose significantly boosting highway tolls to pay state debt and fund transportation, with 52 percent disapproving of Corzine’s performance as governor.
It found just 37 percent of voters approve of the Democrat’s job performance, down from 46 percent in a December poll taken before he proposed the toll increases.
The 37 percent figure is the lowest approval rating for Corzine in a Quinnipiac poll since April 2006 when his rating fell to 35 percent after he proposed a sales tax increase.
His highest approval rating — 51 percent — came in April 2007.
According to the latest poll, 51 percent of voters think Corzine doesn’t deserve re-election; 32 percent say he deserves another four-year term. Corzine faces re-election in 2009 and has said he probably will run.
“Gov. Corzine’s toll hike proposal has smashed into a brick wall of massive voter opposition,” said Clay Richards, the assistant director of the Quinnipiac University Polling Institute.
Fantastic position to be in as a debtor.
“Either you wait, or I default, your choice”
KKR Arm Delays Debt Repayment Again
KKR Financial Holdings, the listed affiliate of private equity group Kohlberg Kravis Roberts, has delayed repayment of debt backed by mortgage securities for the second time and begun a new round of talks with creditors.
KKR Financial Holdings said in a filing with the U.S. Securities and Exchange Commission on Tuesday that a debt repayment due on Feb. 15 on notes issued by conduits holding mortgage-backed securities had been deferred until March 3.
KKR Financial Holdings said that this would “allow for restructuring discussions.”
The repayment date for the debt had already been extended once previously under a restructuring agreement in October, the firm said.
…
The news, brought to wider attention by a Financial Times report, dragged Asian shares lower and dragged the dollar lower against the yen, traders in Tokyo said.
In Europe, the news knocked jittery credit markets hard, with the widely watched iTraxx Crossover index breaking above 600 basis points for the first time.
…
KKR Financial Holdings is a leveraged investment vehicle that had borrowed in commercial paper markets to invest in home loans, the FT said.
The Financial Times said in a report on its Web site that Tuesday’s move by KKR financial holdings followed a $270 million bail-out of the leveraged investment vehicle last September, which saw founders Henry Kravis and George Roberts personally inject cash.
From Bloomberg:
Wall Street Abandons Neediest Clients as Banks Withdraw Credit
year ago $20 million would have gotten Luminent Mortgage Capital Inc. access to $640 million in loans to buy top-rated mortgage-backed securities. Now that much cash gets the firm no more than $80 million.
“There’s nobody out there trying to lend money on securities,” said Luminent Chief Executive Officer Trezevant Moore. Six lenders are offering five times leverage on what the San Francisco-based company has contributed, while a year ago, 20 banks extended 33 times, he said.
Wall Street firms, reeling from $146 billion in losses on their debt holdings, are fueling a credit crisis by clamping down on lending to investors and hedge funds that use borrowed money to purchase securities. By pulling back, Barclays Plc, Bank of America Corp., and Merrill Lynch & Co. are contributing to reduced demand and lower prices throughout the fixed-income world.
“The banks themselves, because they owned so much of this different kind of affected paper ranging from leveraged loans to mortgage-backed bonds, have simply got their snoot full,” said Roy Smith, a former Goldman Sachs Group Inc. partner who teaches finance at New York University’s Stern School of Business. They “don’t have their usual amount of room to step up.”
From Reuters:
US home loan demand plunges as interest rates soar
U.S. mortgage applications plunged last week, and demand hit the lowest level since the start of the year as interest rates surged, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications , which includes both purchase and refinance loans, for the week ended Feb. 15 fell 22.6 percent to 822.8, the lowest level since the week ended Jan. 4.
It was the second straight week that the index fell, after having risen every week since the start of the year. The index in the prior week dropped by 2.1 percent.
The U.S. housing market is currently suffering one of the worst downturns in history. Last week’s plummet in demand may indicate what is in store for the hard-hit sector this spring, which is the peak home-buying season.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.09 percent, up 0.37 percentage point from the previous week, the highest since late December.
…
Another indication that the U.S. housing market is still on the skids was last week’s drop in demand for home purchase loans.
The MBA’s seasonally adjusted purchase index , widely considered a timely gauge of new home sales, dropped 11.5 percent to 357.6, its lowest level since April 25, 2003. The index came in below its year-earlier level of 381.4, a drop of 6.2 percent.
The drop in overall applications last week, however, was largely driven by decreased demand for home refinancing loans. Consumers seeking to refinance their existing home loans tend to be highly sensitive to shifts in interest rates.
The group’s seasonally adjusted index of refinancing applications decreased 27.9 percent to 3,533.8. The index was up 83.9 percent from its year-ago level of 1,921.1.
From Reuters:
US mortgage rates post record daily move
The average rate on a 30-year U.S. mortgage with no upfront points jumped 3/8 percentage point on Tuesday to 6-5/8 percent, in the biggest one-day move in the ten years that BestInfo Inc. has tracked the rates.
“Today’s 3/8 percent increase in the Mortgage Point Monitor in one day is unprecedented in the 10-year history of the series, either in the up or down direction,” David Beadle, president of BestInfo, said in an e-mail.
The 30-year mortgage rate with one upfront point rose by 3/8 percentage point to 6-3/8 percent.
The 30-year mortgage rate with two upfront points also increased by 3/8 percentage point, to 6-1/8 percent.
Voters shouldn’t be unhappy with Corzine. This is all Whitman’s fault.
From MarketWatch:
Mortgage applications down 22.6% last week: MBA
Mortgage applications filed last week dropped a seasonally adjusted 22.6% from the previous week, as interest rates on fixed-rate mortgages increased, the Mortgage Bankers Association reported Wednesday.
Applications in the week ended Feb. 15 were up 33.9% compared with the same week in 2007, the Washington-based MBA’s latest survey showed.
Applications for loans to refinance existing mortages were down 27.9% on a week-to-week basis, while applications for mortgages to purchase homes were down a seasonally adjusted 11.5%, according to the survey.
The four-week moving average for all loans was down 3.8%.
January 2008 WARN Notices have been updated..
2008 – January WARN Notice
YARDVILLE NAT. BANK
HAMILTON TOWNSHIP
1/19/08
146
JPMORGAN CHASE
WOODCLIFF LAKE
1/9/08
70
AFFINITY DIRECT
ENGLEWOOD CLIFFS
3/11/08
32
SAINT JAMES HOSPITAL
NEWARK
3/15/08
541
H & M
NO. ARLINGTON
2/29/08
80
AURORA LOAN SERVICES
FLORHAM PARK
3/17/08
139
MACY’S LOGISTICS
CHERRY HILL
3/21/08
103
NO. JERSEY MEDIA GROUP
ROCKAWAY
3/28/08
50
TEVA PHARMACEUTICALS
NORTHVALE
4/25/08
155
C3i, INC.
MORRISTOWN
3/31/08
109
NEW YORK TIMES
EDISON
3/31/08
115
CUMMINS METROPOWER
NEWARK
3/31/08
109
Munis – Safe as Houses…
Vallejo On Brink Of Bankruptcy
How long until we see the NJ equivalent?
“U.S. mortgage applications plunged last week, and demand hit the lowest level since the start of the year as interest rates surged”
The cheerleaders can put their pom-poms away. An agressive fed will not save housing. Since the fed cut 1.25, I mean since the fed panicked, the 10 year yield has gone from 3.28 to 3.90.
Come again, how will the feds actions save housing?
Come again, how will the feds actions save housing?
With the 30y fixed seeing it’s biggest one day jump in more than 10 years?
Add in the realization that the GSE Jumbo-Fix is unlikely to move rates on large loans.
Add in the fact that subprime loans are defaulting **BEFORE RESETS**. Which means rate freezes are unlikely to save subprime ARMS.
From Bloomberg:
U.S. Architects See Demand Drop as Developers Fear Recession
Demand for U.S. architectural services fell in January for the first time in four months as developers concerned about a recession cut spending, the American Institute of Architects said.
The Architecture Billings Index declined to 50.7 last month from 55 in December, the Washington-based institute said today in a statement. That was the lowest score since July 2006, when it was also 50.7. Any score above 50 indicates an increase in billings from the previous month.
The drop may signal a “sustained” decline in demand from developers of warehouses, offices and apartment buildings as the economy slows, the institute said. Weakness in the U.S. housing market is spreading to other parts of the economy and prompting economists to strengthen their forecasts of a recession. A Bloomberg News survey taken earlier this month showed chances of a recession were now even, compared with 40 percent in January.
“I think the economy has taken a turn for the worse in the last couple months, and projects that made sense last fall may make a lot less sense now,” Kermit Baker, chief economist of the American Institute of Architects, said in an interview. “We’re going to see several more months of weakness in design billings. I’m guessing this is going to be the last positive month we’re going to see for the next few.”
Re KKR:
“which saw founders Henry Kravis and George Roberts personally inject cash.”
Couldn’t happen to a better pair of egomaniacal pricks.
mark,
i dont agree that this will never happen in bergen or any other county in NJ.
If home prices have gone up rapidly , then they will fall , in any place.
Bay area, california , is supposed to be the best market for real estate , prices would never fall down .now we know what happens there
beep beep beep beep (that is the sarcasm detector)
JB [15],
Yes, it’s gonna be a long walk home.
Forget about motivated buyers. Psychology is swinging, the trend is down. Did someone say motivated seller?
“Corzine may cut 3,000 jobs”
He created 30,000 new bureaucratic position in Trenton and now he’ll cut 3,000 of them, big deal. Meanwhile the 27,000 are getting free heath care and a fat pension. Keep it up Corzine, we need full employment and high taxes in NJ.
http://www.foreclosurepulse.com/photos/foreclosurepulse_photos/images/5216/original.aspx?ref=patrick.net
vegas foreclosure map
In the editorial section of WSJ today lots of people complaining about NJ taxes
Yes, it’s gonna be a long walk home.
Not even mentioning student loan defaults, credit card defaults, and auto loan defaults.
Who will bail those loans out?
vegas foreclosure map
Perhaps it’s my own perverse imagination, but the first thing I thought of when I saw the Vegas map was, “Wow! Look at all those chips!”
JB [23],
Stop, you are turning me into a bear.
24
Can’t wait to go to Vegas this summer and see what’s going on at that point.
(26) lostinny
Some friends went last W/E and said it was “dead.” She had never seen it so empty. 2-hour wait for room service – apparently they have let some help go…I think they stayed at the Mirage? unsure – I always forget the important details. Such as, she loved the show they saw – can I remember what she said it was – NO.
Speaking of Vegas, anybody know of great deals? March/April timeframe.
WASHINGTON (MarketWatch) – The underlying rate of U.S. inflation accelerated in January, the Labor Department said Wednesday. The consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices. But other prices were also higher. The core CPI, which excludes food and energy costs, was up 0.3%in January, the largest gain since June 2006. Economists were expecting the CPI to rise 0.3% in January after a 0.4% gain in December. The core rate was expected to rise 0.2% after rising 0.2% in the previous month.
ECONOMIC REPORT
Inflation stays hot in Jan.
Energy, food and a host of core prices rise
http://www.marketwatch.com/news/story/inflation-moves-higher-jan/story.aspx?guid=%7B4DA3466C%2DF37D%2D49EF%2D9DC8%2D2326516988B4%7D
BC,
No inflation to see, please help yourself to a wheelbarrow as you move along.
BC Bob,
Check americawest.com- they have the best deals out there right now. Or, get my email from Grim and I’ll pass you along to my travel agent friend.
NEW YORK (Reuters) – Sharper Image Corp (SHRP), the store and catalog retailer whose products include air purifiers and massage chairs, has filed for Chapter 11 bankruptcy protection, saying declining sales and three straight years of losses led to a shortage of liquidity.
About time!!!
In two years you can just use the dots from the Vegas map for Newark.
BC Bob: If you are planning for 4 days or so, I recommend getting a timeshare rental. I found one on Craigslist last year, and for 4 days paid about $600 for 2 bedroom nice Wyndham resort Timeshare rental.
BC Bob: I used this guys to do timeshare reservation.
http://www.tsadventure.com
From the AP:
Housing Construction Increases
Construction of new homes posted a modest increase in January but applications for future construction fell sharply.
The Commerce Department said Wednesday that construction of new homes and apartments rose by eighth-tenths of one percent to a seasonally adjusted annual rate of just over a million units. That was the first increase since October and followed a plunge of 14.8 percent in December.
Applications for new construction, considered a good sign of where construction is headed, fell by 3 percent.
14 BC 15 grim
Well gee gosh golly goodness me, you’d almost get the impression that this fracas doesn’t really have to do with rates.
From Bloomberg:
U.S. January Housing Starts Gain 0.8%; Permits Drop
Housing starts in the U.S. remained near their lowest level since 1991 in January, a sign the deepest real-estate recession in a quarter century will continue to weigh on the economy this year.
Work began on 1.012 million homes at an annual rate, up 0.8 percent from December, the Commerce Department said today in Washington. Building permits, an indication of future construction, fell 3 percent to a 1.048 million rate. Both figures were in line with forecasts.
#34 John: Actually, I was looking on the MLS at Newark properties. Most of the ones for sale are bank or corporate owned.
The rest of the month will be dedicated to Richard Simmons as with all the bad news coming out we will be testing a lot of new bottoms.
Mortgage applications are down because the masses are upset a 30 yr. fixed is above 6%? LOL!! Can you imagine if rates ever went to 7%?
For those who were born last week, there was a time when interest rates were (GASP…..) above 8%. In fact, legend has it that in ancient times (it was called the 80’s), 30 yr. fixed rates were double digits. OMG!!
frank
“He created 30,000 new bureaucratic position in Trenton ”
link please?
Lost/SG,
Thanks.
“Not even mentioning student loan defaults, credit card defaults, and auto loan defaults. Who will bail those loans out?”
It’s a problem. What if we don’t have quite enough blameless people to fund all these bailouts?
My goodness, debt markets might be forced to start charging reasonable risk premiums again. Then where would we be?!?
My goodness, debt markets might be forced to start charging reasonable risk premiums again. Then where would we be?!?
How dare you, bite your tongue.
“driven by 0.7% gains in both energy and food prices”
Wouldn’t it be scary if those things mattered? Thank goodness they don’t.
Apparently someone in washington has been paying attention and has decided to start training the youth of america for tomorrow….
Future Oil Wars Made Fun
Oil Wars Overtake the World in Video Game That Jumps Off Current Concerns
ABC Business news
http://tinyurl.com/25tcsf
“No inflation to see, please help yourself to a wheelbarrow as you move along.”
For Mrs. Patient’s birthday, I will be deciding between the Kate Spade, Coach or Louis Vuitton wheelbarrows.
a peak at the numbers for feb inflation and GDP (non fudged)
http://tinyurl.com/3bhh8b
I want an Escalade emblem on my wheelbarrow.
kumar Says:
February 20th, 2008 at 8:03 am
How was White Castle?
#43.
http://www.state.nj.us/treasury/omb/publications/08budget/pdf/summaries.pdf
NYTimes article,
As Lending Tightens, Education Could Suffer
By JONATHAN D. GLATER
Major commercial education companies are scrambling to ensure a steady stream of college-level students despite the credit squeeze, with some preparing to offer student loans themselves.
And loan companies — most particularly Sallie Mae, the nation’s largest student lender — are tightening standards for private loans for students who have poor credit or attend institutions with low graduation rates. Private loans are not guaranteed by the federal government and can carry rates as high as credit cards.
Not everyone believes that retrenchment in commercial education would be bad. “High-risk borrowers with low academic achievement who are pursuing post-secondary training should not go to expensive, low-quality proprietary schools,” said Michael Dannenberg, director for education policy at the New America Foundation in Washington. “They would be better off going to community colleges, which are lower cost and open enrollment, for the most part.”
Patient,
I suggest Kate Spade. Just my unsolicited $.02 but I think they are classier bags with nicer lines.
[49]
choose the “Louis”… the logo will disguise the schitt splatters coming from the fan…
Sign O’ the Times: Sharper Image kaputznik…
Wilsons Leather announced some major closings/cutbacks this week as well.
Wilsons Leather to close 160 mall stores, cut 1,000 jobs
The problem with NJ taxes can be summed up with one Union reps quote in response to her bedtime buddies threat of cutting 3,000 jobs…
Carla Katz, president of Local 1034 of the Communications Workers of America, one of the state’s largest unions, had a guarded reaction: “As an alternative to layoffs, which are unacceptable, an early retirement incentive is good policy and would be welcomed by the union and the members. However, it is critical that there be appropriate backfilling of jobs,” since incentives for early retirement on top of an existing two-year hiring freeze “will mean that essential services to the public will continue to be undermined.”
Early retirements are just another crock. Give them severance just like us poor folk in the private sector.
And for the real intricate solution going forward, just end the pension for all new recruits. If the union balks, f’ em. There will be plenty of people willing to work that job considering their vacation calendar, 35 hour work week, shorter commute, and other unparalleled benefits that are not as nearly as costly.
It appears that ground is being broken for new single family homes in Warren near the intersection of King George and Mount Horeb.
A sign has been up for a while but this morning is the first sign of actual activity I’ve seen.
I believe (I drive by it but never tried reading the sign) they’re calling it Gabriella Country Warren something.
SA:
“Wedding” Invitations Worth Refusing
http://seekingalpha.com/article/65281-wedding-invitations-worth-refusing
“Mortgage lenders hunting for delinquent homeowners who have dodged their phone calls and letters are employing aggressive new methods to track them down, potentially making every knock on the door or fancy envelope seem like part of the pursuit. Even wedding invitations are suspect.
The idea, they say, isn’t to twist arms. Instead, it’s to avoid foreclosures, which have cost the mortgage industry billions of dollars in the past year.”
February 25 – March 3 US News & World Report
Q&A: Bill Gross
“We need the FHA to provide mortgages with a subsidized interest rate.”
“Instead of 5.5 or 6 percent, they could put 4 or 5 percent and minimize, if not eliminate , the down payment, so people can afford to buy…”
He has a pretty gloomy outlook.
I know, I know, it’s Bill Gross.
What happened to the guy the PPT had fudging the CPI numbers? Was he on vacation in January?
hehe [63],
No. They’re still fudging.
AURORA LOAN SERVICES
FLORHAM PARK
3/17/08
139
I suppose that is the rest of Lehman Bros mortgage arm.
BC Bob,
So it’s worse than the government is letting on?
Can anyone tell me what the inventory increases look like for NNJ compared to this time last year?
Are you guys still not proud of your country? Even Michelle Opera proclaimed that for “the first time” in her adult life, she was proud of America.
http://news.bostonherald.com/news/national/politics/2008/view.bg?articleid=1074519&srvc=home&position=0
Don’t worry be happy!!
“So it’s worse than the government is letting on?”
hehe,
Take a look at post #50.
Can anyone tell me what the inventory increases look like for NNJ compared to this time last year?
We were running between 20-30% YOY inventory growth this time last year, we’re at 3-4% YOY inventory growth this year.
Only ancedotal/gut at this point, but it appears that the inventory pace is beginning to pick up. We’ll need at least 2-3 more months of datapoints to confirm that, however.
BI:
Momentum is a strange thing. I personally don’t think it will happen, but wouldn’t be surprised if the economy mysteriously turns around next Spring simply because Bush is out and Obama is in. That is exactly what happened when Bill took office. Then we would have to suffer through the whole ‘Bush’ set up Obama for his success krap all over again.
In my opinion, the economy is affected by the decisions of the president about as much as my fantasy football teams performance is dependent on my time spent researching the stats.
But it’s not so much the inventory numbers as it is months to sell
Bob Menendez 2012!!
Want to see some real doom and gloom.
Check out Nouriel Roubini’s latest blog entry.
The Forthcoming “Jingle Mail” Tsunami: 10 to 15 Million Households Likely to Walk Away from their Homes/Mortgages Leading to a Systemic Banking Crisis
Nouriel Roubini | Feb 19, 2008
The current housing recession, subprime meltdown and severe credit crunch in financial markets has many worrisome aspects. And while there is always a “crisis de jeur” – one day SIVs, the next day monolines, the next day TOBs or auction-rate securities – one needs to keep some perspective and consider which risks are first-order sources of stress for financial markets and which ones are of second or third-order concern.
I will argue that the most important first-order risk for financial markets derives from the likelihood that 10 million to 15 million households may walk away from their homes if – as likely – home prices fall another 10% in 2008 and further in 2009. When – in the summer of 2006 – this author argued that this would be the worst housing US recession in the last 50 years and that home prices would fall – from their peak value – by 20% such predictions were taken as being nearly lunatic. Too bad that this author ended up being too optimistic, not too pessimistic, about the severity of this housing recession. Indeed, this will end up to likely to be the worst housing recession in US history – not just in the last 50 years – and home prices may likely eventually fall by 30%, not this author’s “optimistic” 20%. By now prices declines of the order of 20% are predicted by Goldman Sachs, Robert Shiller, MarketWatch chief economist Irwin Kellner and others; while Paul Krugman has suggested even a figure of 30%; and, according to Bob Shiller, in some markets home prices may fall by 40 to 50%.
So let us consider the implications for the household sector of price declines of the order of 20 to 30%. The math is simple as I will flesh out in this note: 10 to 15 million households will end up in negative equity territory and will be likely to default on their homes and walk away from them. Then, the losses for the financial system from this massive defaults will be of the order of $1 trillion to $2 trillion, a multiple of the $200 to $400 billion of losses currently estimated for mortgage related securities.
Let us consider next some of the details of this scenario and its consequences for the financial system…
In the last few weeks a spate of articles have appeared in the press noticing the alarming increase in default rates not just among subprime borrowers but increasingly near prime and prime borrowers. In particular it has been noted that the number of voluntary defaults, i.e. households literally walking away from their homes and mortgages has surged.
What is happening is just the consequence of rational economic behavior. In most US states mortgages are non-recourse loans; thus, if a home owner defaults on its mortgage the bank take over the collateral – the home – via foreclosure but once that happens it cannot go after the borrower for any difference between the value of the original mortgage and the current value of the property.
The fact that most mortgages are de jure non-recourse (and the fact that even those mortgages that are de-jure with recourse are de-facto non-recourse as the legal and other costs of going after the borrowers are excessive) has powerful implications: it implies that the borrower has effectively a put option that allows him or her to walk away from its home whenever the value of the home is below the value of the mortgage, what is technically referred to as negative equity.
Of course, not every home owner with negative equity will walk away from its home, i.e. send “jingle mail” (put the home keys of the home in an envelope, send it to the bank and walk away from the home). Reputational considerations and other factors may lead some home owners to keep on servicing their mortgage. But it is obvious that the larger is the negative equity in a home the greater is the incentive to do use “jingle mail”. Indeed, why should any rational agent continue to service a debt when the underlying value of the collateral for it is much lower than the value of the debt and the creditor cannot go after the debtor for the difference between the debt value and the value of the collateral?
Until recently there was a conventional wisdom and wishful thinking that home owners would not voluntarily walk away from their homes. This wishful thinking was based on a few flawed assumptions. First, most analysts did not even consider the possibility that home prices would fall so much that a large fraction of households would fall into negative equity; there was the delusion that home prices would go up forever or would never fall. Second, analysts did not consider how many of the mortgages originated in 2005-2007 were with little or zero down-payment and thus with little or no equity to begin with; the myth of the stable and non-defaulting home owner was based on a distant past when most borrowers put 10 to 20% down payment in their home and had substantial equity into it. Third, economic logic suggested that an agent with such a put option would walk away from its home and mortgage whenever in negative equity territory; so delusions that sentimental value would restrain home owners from defaulting had little economic rationale. So, now that home prices keep on falling and an increasing number of home owners end up in negative equity territory voluntary defaults and “jingle mail” are surging. Is there then anything to be surprised about?
How many households will end up in negative equity territory and will thus an incentive to walk away from their mortgages? The answer to this question of course depends on how much home prices will eventually fall from their peak. A recent analysis by Goldman Sachs suggests that if home prices fall another 10% in 2008 after having fallen by about 8% from peak in 2007 (based on the Case-Shiller/S&P index) about 15 million households will be in negative equity territory. There are other estimates that are consistent with the Goldman Sachs one. Calculated Risk – a very well respected housing blogger – estimated that if home prices decline by 10% in 2008 the number of households with negative equity will be 10.7. But this estimate was based on a partial underestimate of the fall in home prices in 2007 relative to its 2006 peak (as the Case-Shiller data for all of 2007 were not available at the time of that estimate). Thus, the number of households with negative equity could be closer to 12 million. Calculated Risk also estimates that a cumulative fall in home prices of 20% implies 13.7 million households with negative equity while a 30% cumulative fall implies 20.3 million households with negative equity.
These figures are staggering considering that in 2006 the total number of households with mortgages was 51.2 million. So between 20% to 40% of households with mortgages may end up with negative equity in their homes and with a big incentive to walk away from their mortgages. Even the lower bound figure of 10 million households with negative equity (20% of those with mortgages) is huge.
How many additional losses will banks suffer if these many households walk away from their homes? If a bank ends up with a home that is worth less than the value of the mortgage the loss for the bank is at least as large as the difference between the mortgage value and the market value of the collateral. But losses are likely to be even larger: foreclosure is an expensive proposition for banks; and ending up with many properties that are not easily sellable in current illiquid housing markets where there is a glut of homes will imply further losses. Of course, the initial loss from a fall in home prices is taken by the household whose equity is eroded by the fall in home prices. But many of these households had very little equity to begin with; and once the fall in prices leads to negative equity and the borrower walking away from the home the further losses from falling home prices – i.e. all the negative equity in the home – is taken by the bank that originated the mortgage or – in the case of securitization – the investors that eventually bought the RMBS or CDOs related to that mortgage.
What is the size of these losses for financial institutions and investors? Again this is a complex estimate as it depends on how large in the fall in home prices and the recovery rate given default and foreclosure. The only hard estimate that I have found so far is one by Calculated Risk. The way he puts it: “Assuming a 15% total price decline, and a 50% average loss per mortgage, the losses for lenders and investors would be about $1 trillion. Assuming a 30% price decline, the losses would be over $2 trillion. Not every upside down homeowner will use jingle mail, but if prices drop 30%, the losses for the lenders and investors might well be over $1 trillion (far in excess of the $70 to $80 billion in losses reported so far).”
What will be the consequence of losses of over $1 trillion and, possibly, as high as $2 trillion? That would wipe out most of the capital of most of the US banking system and lead most of US banks and mortgage lenders – that are massively exposed to real estate – to go belly up. You would then have a systemic banking crisis of proportions that would be several orders of magnitude larger than the S&L crisis, a crisis that ended up with a fiscal bailout cost of over $120 billion dollars. And the scary part of this scenario is that – with home prices likely to fall by 20% or more – this scenario of systemic banking crisis is becoming increasingly likely.
No wonder that some serious observers are already considering a new future scenario – however unappealing – where most of the US banking system and housing will be nationalized…
grim (24)-
Perhaps Booyah Bob is spending his time in Vegas these days.
stu [75],
And yet, Mr. and Mrs. Gump are still asking peak prices for their sh*t-stained split somewhere in Little Falls, NJ.
BC (28)-
Deal? Just troll around some nice neighborhoods when you get to Vegas. I’d bet that within 20 blocks, you’d find a really cool house that’s been foreclosed but still has power and water.
Pull out your boltcutters and a jimmy…and, voila! Your reposhare awaits you.
Clot,
I lived in LA from 1999-2000. At the time, the average McMansion in Vegas was going for between 90 and 120K. Recently (2005-2006)saw the same homes going for 300-400k. Although highly unscientific, I am not at all shocked that the home prices are rapidly returning to affordable levels.
Only wimps need a hotel room in Vegas.
For those who were born last week, there was a time when interest rates were (GASP…..) above 8%. In fact, legend has it that in ancient times (it was called the 80’s), 30 yr. fixed rates were double digits. OMG!!
Hey it was in the last millennium!!!
“Only wimps need a hotel room in Vegas.”
Only wimps ‘pay’ for a hotel room in Vegas!
Only wimps need a hotel room in Vegas.
Only fools rent, thats just throwing money at your landlord. Wise man own.
It doesn’t matter what it is. timeshare, condo, coop, and yes why not own your own Vegas home. It will only go up in value and the the equity that you built will offset your losses at the tables. It’s really a way to gamble risk free.
My darling wife has said this to me in 2005.
grim #5: So I guess they want to elect another “tax-cutter” like Christine Todd Whitman who got us into this mess….
stu (75)-
I’m gonna cue up some Depeche Mode and re-read that Roubini piece.
BTW, Roubini has now completely transformed his look to “homeless Qaddafi”. Take a shower, pal!
make (83)-
Do you still have her chained to a pipe in your basement?
#84 Jill: Yup..all Whitmans fault. We should all feel sorry for all the governors who preceded her. They were powerless against her corruption. Viva NJEA!
87
You’re getting just as bad as the $300 jeans people.
This is actually all William Livingston’s fault.
If Roubini is right, a depression is less than a year away.
My gut tells me that he is at one extreme and the federal government is at the other. If things settle somewhere in the middle, we are still looking at a pretty severe financial crisis with similar costs to what our war with Iraq has cost us so far. Probably just another trillion for our neighbors in Asia to let us borrow.
Clot – Liked your “top school district” post from yesterday.
Just to add – I know of a couple of “good” districts that game their numbers and work the ratings system.
I will vote for any Presidential Candidate who promises to Investigate, Try, & Convict at least 10% of Congress for Treason, followed by mandatory execution, by senority, starting with Ted Kennedy. The 10% must include the worst offenders, from both parties, in a percentage determined by how the people are registered Nationaly. Failure to do this, is failure to even attempt to find a solution to the current problems which were caused by them. Furthermore, any person running for office will no longer be able to indicate they represent anyone but the people. Any mention of representing a party, in lieu of the people, will be automatic grounds for disqualification. Same applies to Trenton.
#85 – ‘Everything Counts’ should do just fine
patient –
The brother in Maine with the two woodburning stoves, is he the same one who is into canning?
Care to share his story? Job move or sustainability freak? I’m a bit curious, Maine holds a lot of appeal, but the winters scare the cr@p out of me, I’m not a winter sports kind of person and would not like to be locked in the house for half of the year.
How does he like it and what is he doing with his time there?
If you don’t mind me asking of course.
This blog is impossible…. I was going to place some lowballs this spring… Now I ma scared….
I guess I will revise my lowballs down a bit :)
I’m a little confused.
10yr is flat yet the 30yr mortgage rate is up over 100 basis points this year.
What gives?
clot,
I’m a civilized Albanian, she’s tied up in the garage.
confused
hmmm how about public hangings inside the cupola of the captial building. then leave them up for a week or so as a reminder
Any mention of representing a party, in lieu of the people, will be automatic grounds for disqualification.
how about automatic grounds for high treason charges
(98)-
How charmingly medieval.
Perhaps we can follow the hangings with a bear-baiting tournament…or a good joust.
Lets time travel back to 2005 to hear what the experts predicted about housing!!
Frank Nothaft, chief economist, Freddie Mac:
I don’t foresee any national decline in home price values. Freddie Mac’s analysis of single-family houses over the last half century hasn’t shown a single year when the national average housing price has gone down. The last consistent drop was during the Great Depression, when the unemployment rate got up to 25%, or five times the level we’re at now.
Housing is local, local, local by nature, and it’s the local economy driving valuation of a home. The large markets people think about — New York, Boston, San Francisco, Los Angeles, and Washington D.C. — where we’ve seen double-digit home-value gains in the last three or four years, are driven by economic growth and rising family income, coupled with a 40-year low in mortgage rates. An owner occupant lives in a home an average of 14 years. The average stock owner owns a share of stock for three months. You’ll see much more volatility with common stock prices than in home prices.
Investor activity remains a small percentage of home purchases, representing at most 15% of purchases nationwide, vs. 85% of homes purchased by owner occupants.
If you see that investors are accounting for a third or a half of purchases in a local community, then I would be more concerned about speculative fervor. And I would expect stagnation in home-value trends in markets where unemployment is higher than 7%.
James F. Smith, chief economist at the Society of Industrial & Office Realtors:
There’s no national bubble. You have to have a huge deflationary scenario to make a national bubble make any sense. The Fed isn’t going to lose control of the money supply and take us back into a very significant deflation and cause a collapse in housing prices.
There are several reasons why a national housing bubble is relatively silly. According to census data, current home-ownership rates are at 69.3% of all households, a record. If you look at home ownership by age group, the highest rate — above 83% — are among owners aged 70 to 74. Only marginally below that is owners aged 65 to 69.
Nobody seems to look at how home ownership rises with age. The older we get, the higher the probability that we’re going to own a house. If you look at the baby boomer generation, you get a picture of increasing demand that won’t end for another 40 years.
DEMAND ON THE MARCH. Second, home-ownership rates are extremely high for white Americans, pretty high for Asian-Americans, have just gotten over 50% for African-Americans, and are slightly lower for Hispanics. But we have lots of programs to help minorities improve home ownership, so they’re all increasing.
Thirdly, if you look at immigrant households with the same family size and income levels as households in which the parents were born in the U.S., immigrants buy houses 15 years later than natives. About one-seventh of the population is foreign-born, and [that group] has been growing rapidly the last 20 years. That gives you another 15 years of increased demand.
On top of that, mortgage rates are pretty darn low. The only way rates are going to rise is if inflation rises and the fear of inflation drives the 10-year Treasury up to 7% or 8%. Mortgages would go back to 9% or 10%, temporarily killing the housing market, but only temporarily.
It doesn’t mean there aren’t a few local bubbles in areas like Washington D.C., Los Angeles, suburban Boston, or suburban New York. But we’ve had many of those in the last 20 years or so. Texas collapsed in 1986, Southern California collapsed in 1989, and Massachusetts and Connecticut collapsed in 1991.
Mike Englund, chief economist at Action Economics, global bond and currency consulting firm:
It’s not clear that the recent price gains in the housing market are a bubble. It’s bubble behavior. There are many assets whose prices move quickly, but that doesn’t mean it’s a bubble.
In a global context, the rise in U.S. housing prices doesn’t really stand out. The global economy, led by the U.S. and China, has posted a stellar growth rate. Last year was possibly the fastest pace of growth in post-World-War-II years. And much of the new economy features a synergistic global trade pattern between the U.S. and other countries. New York, Los Angeles, and San Francisco benefit from a new axis of global investors, and home prices there are being driven higher in the context of huge wealth and economic gains.
We’re unlikely to see a price correction this year, since we’re already well into the second-quarter period, a high-volume period for housing, and there’s a clear price movement upward. It isn’t until first or second quarter of next year that we’re likely to see any correction.
With the Fed adding a quarter point [rate hike] per meeting, interest rates will trend from current low levels to average historic low levels next year. The question of whether that will pop the housing market is unclear. High-price housing markets may see a decline, but we seldom see price declines at the national level.
How charmingly medieval.
well do our politicians not act like they are all lords of their own little fiefdoms????
BC Bob:
Market Manipulation Afoot
http://www.minyanville.com/articles/index/a/15979
(stuck on plane in Charlotte due to traffic in Newark)
Good editorial on housing by Zuckerman in same USN&WR
That minimized defaults, since owners could draw from that equity to pay their bills – including their mortgages
I have learned alot of finace stuffs on this here site, but that you could borrow from your house to pay for your house, well that’s a good one, knowledge is power.
KL
( for anyone not familar with my sometimes warped sense of humor, the above is sarcasm)
Make [96],
Flat?
http://charts3.barchart.com/chart.asp?sym=V2Y0&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=
#105 KL “you could borrow from your house to pay for your house”
That is part of my recession plan. I will have a HELOC in place in case I get laid off. Between savings and LTV I could ride out a few years of unemployment. I think I could go semi self sufficent and stretch it out longer.
I love MLS access:
Is it legal for a realtor to give their login and password to a friend – ???
I have used realtor’s office so far to find some information – Now I have better understanding of a NJ bubble:
Case of two properties in desirable house in NJ Union county:
House#1:
1. first time sold in 1993 for 80K.
2. Second time sold in 2003 for 178K after… 700+ (no kidding here) days on the market, sold AS-IS
3.Renovated. put on the market in 2005 at 400K+
365 days not sold, price reduction to 349K,
Another 185 days on the market, price r3educxed to 319K (still more expensive than better homes in the same town – everything cme down a bit)
So basicaly except for renovation time house was ont he market for total of 4-6 years.
House #2:
1. Sold as estate sale in 2003 for 200K
2. bought in 2005 AS-IS for 309K
3. Sold in 2006 AS-IS for 319K (Smart flipper -decided to get out while he could – or straw buyer???)
4. Forecosure in 2007 – now listed at 225K.
This house GOT DESTROYED BY FLIPPERS. From 2003 poctures it was inhabitablre – not new but livable. There was no improvement made, and house stood empty for 4 years with leaking roof.
Utilities were off for a while as well. 2008 pictures are MESS. LOOKS scary to go inside the house. (may be some hobo’s lived in it?)
Remember it is a house within walking distance to the train, nice town.
So who are the winners here: For house #1 there is no winner yet. If current seller sells it at his LP right now he might be a bit in plus, even after renovation costs – If it sells at about 40K below which I suspect (not a nicest neightbourhood/back yard view) – he will be in red.
Second house – clear winner is 2003 buyer who bought the house, did nothing to it for 1 1/2 years and netted 80K AFTER realtor’s comissions. But the END RESULT IS house got destroyed by flippers.
would somebody know of a good source for searching and comparing home owners insurance here in NJ? or which one would you recommend?
Grim, Clot, other RE people I have a question:
I have a friend who lives in a duplex ( think an older version of a Fort Lee or Palisades Park side by side ) in Queens. Her parents own one side, another couple owns the other side.
The people on the other side are allowing water leaks to damage the structure and they refuse to do any needed repairs like fixing a crumbling chimney.
They seem to feel that if they wait long enough my friends family will fix it.
I suggested talking to an attorney. ( Preferably specializing in duplex/condo/co-op ) I don’t know what the legal grounds are or obligations of the other side’s owners.
Any advice is appreciated…
kl (105)-
Good you signed that one; for a second, I thought it was bi.
RP (110)-
Depends on the ownership type (condo, fee simple, etc). However, I think the bottom line is that anytime people share a party wall, one owner’s problem should not be allowed to cause problems for his neighbor.
If the two residences share elements (furnace, chimney, etc), they may have to come to some agreement before repair. If not, the offending party should be repsonsible for fixing the problem.
Your friend should consult an attorney.
Is it legal for a realtor to give their login and password to a friend – ???
Most MLS systems will prohibit this in the bylaws and enforce it with the penalty of fines. GSMLS seems lax on this, but I’ve heard of NJMLS levying fines based on multiple login usage.
http://en.wikipedia.org/wiki/Multiple_Listing_Service
Here is the interesting history of MLS, btw way MLS rules are only binding on MLS members, they have no legal authority. In fact according to the Dept. of Justice not allowing you access to the system borders on a RICO violation.
Dan (109):
Shop it around. Make sure you check if the company that does your car insurance offers property insurance. Most offer a combined discount of 10% if you do both policies with them.
Be a jerk like me. Take the policy offered from one, white out the company name and dollar amounts and fax it to all of the others so that you are comparing apples with apples.
It will save you much time.
Noticed the new Ad Wells Fargo is running on Reverse Mortgages. According to them there are 3 main events in life. They have senior couple defining them as,
#1 Day we moved in
#2 Day we paid back
#3 Day when my house pays back to me, and taking care of us.
I guess they have moved out of advertising Refinancing now. Reverse Mortgage is new growth area.
Anyone able to pull the history on this mls?
MLS#: 2437537
Thanks
Lillian Vernon filed too?
mneer,
2437537 – 55 Stager
Listed: 08/21/2007
OLP: $495,999
LP: $399,999
DOM: 183
(117)-
55 Stager St, Nutley, ask $399,999.
183 DOM/OLP of $495,999. No previous listings.
Was this article posted yesterday re 401-k’s?
http://www.breitbart.com/article.php?id=D8UTJE806&show_article=1&catnum=4
HeHeHe (121):
I hope that the three year BMW lease provides him with a lifetime of happiness. ‘Cause when it’s time to retire, he can use the positive memory to mask the terrible flavor of the cat food he’ll be downing.
Yeah I got a chuckle when I saw that he had leased a Beamer. Boo-friggin-who! Cry me a river! :)
Stu,
Remind me to make sure I’m near a toilet the next time you post! I nearly lost control of my bodily functions, I was laughing so hard.
Only $20k in the 401k at 40? $7k in savings and the guy leases a new Beemer? This dolt didn’t realize how thin he was stretched. Am I supposed to feel sorry for him that he needed to pawn his goodies to make the vig? Or worse, feel bad because Amex cut his credit lines? He wasn’t living from paycheck to paycheck, he was living from statement to statement.
And to make him look like some kind of financial wizard for tapping his 401k?
How about a second job?
I’m embarassed to say how many folks I know that took out a max 401k loan as a downpayment.
From MarketWatch:
GMAC to cut 15% of auto finance workforce
GMAC Financial Services said on Wednesday that it will cut roughly 15% of its auto finance workforce as the lender tries to cut costs in the face of a global credit crunch.
GMAC plans to cut 930 jobs from its North American auto finance business, which currently employs about 6,275 people, the company said. Several offices will be merged into five regional business centers in Atlanta, Chicago, Dallas, Pittsburgh and Toronto, GMAC added.
#125 – Let’s be fair here, it is a 335i, they’re pretty tasty. Although he looks like the type that got it in auto.
How many under 40 yrs old are exactly like this guy? 20,30,40%?
#125
Not a pretty sight watching people dive into their meager 401k plans to get out of situations like that. Not to mention that at his age I would certainly hope he had a bigger plan than his 401k for retirement.
http://www.nycourts.gov/reporter/3dseries/2008/2008_28032.htm
an ugly precedent at best. NY court ruled that due to Predatory lending the home owner gets all his Mortgage payments for the last three years back, Property taxes and all and any financial setbacks due to the purchase of his house in 2005 with 106% financing.
Not only is the lender stuck with a foreclosure that’s worth 30% less then pricipal owned but they have to refund and make the poor borrower whole.
YIKES.
#127
Count me out of that lot.
35, own my Accord, buying a SFH with a nice 30yr fixed rate, and a pretty healthy 401k
Looking for legal commentary on #129…
This guy is in sales too, I would say he will be headed for a visit to divorce court by the summer.
Non-legal comment on #129
Prepare for proctal examination when applying for the loan, as effectively, court held Lender responsible for collecting documentation with regards to borrower ability to pay the loan at the moment of borrowing.
#129 – make money – Thanks for posting that. Combined income = $29k, sales contract = $355k, was there any other way this would end?
IANAL, but if 106% of the purchase price is “predatory lending” wouldn’t this also apply the NegAm loans? A very ugly precedent, indeed.
Also, $355 for right by the Staten Island Mall, ewww.
“Looking for legal commentary on #129…”
Not based on any legal knowledge at all, but the lenders will not be in business long enough to be able to pay anyone back if they face many more of these lawsuits.
I think that guy is missing a zero, $200,000 in a 401k at 40 is more like it.
I wonder if people with reverse mortgages tell their children, could be a big shock when kids are stuck with funeral expenses and no assets.
#129 – make money – Thanks for posting that. Combined income = $29k, sales contract = $355k, was there any other way this would end?
Read further, the mortgage application indicated a monthly income of $7,200.
Shearon also alleges that the Lender did not conduct a “due diligence” or any inquiry into their ability to repay the High Cost Loan. The plaintiff argues in its motion for summary judgment that David Shearon stated that he reported $7,200 as monthly income when [*5] he first applied for the loan. The plaintiff then states in paragraph 25 of their attorney’s affirmation that Mr. Shearon “cannot argue that his annual income of $86,400 places him in a category of low-income.”
After reading Stu(75) and HeHeHe(121)I feel so utterly sh@@less about the future. I feel that forty year olds with negative retirement savings are the norm. What is the benefit of being prepared, when whatever we have built up will be frittered away on those that did not plan?
I don’t understand why the lender wouldn’t simply countersue for fraud.
Wag: Those of us who are a little older are seeing everything we’re putting away lost in the investment markets. I put away 12% of my income into retirement, and every penny I’ve put in since the beginning of the year is already gone.
#136
First line of article:
Trent Charlton knew the risks when he borrowed $10,000 from his 401(k) and cut his retirement savings in half.
Jill, look at the long term. Remember your five year results. Keep plugging it in there for the haul.
Wag,
A ‘sound’ banker, alas, is not one who forsees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.
Keynes, ’31.
I don’t understand why the lender wouldn’t simply countersue for fraud.
regardless, anything above 103% LTV is predatory lending.
I Say Live Life To The Fullest In Terms Of Yearly Income Set Against Monthly Expenditures
http://www.theonion.com/content/opinion/i_say_live_life_to_the_fullest
144
not only that, the lender pulled a bait and switch popping them into a sub-prime arm when they thought they were getting into a fixed interest rate loan…
yes yes the bank was predatory, i agree with that. but what happened to the home buyer or their attorney actually reading the loan documents before signing them?????
#139 – Would the lender’s counter-suit be against the mortgage broker or against borrower? The borrower appears to have provided the docs. which were either ignored of falsified by the broker.
#144 – I caught this in particular;
The financing of the fees and points associated with the loan is also a violation of Banking Law 6-L(2)(m) which states:
“In making a high-cost home loan, a lender shall not, directly or indirectly, finance any points and fees as defined in paragraph (f) of subdivision one of this section, in an amount that exceeds three percent of the principal amount of the loan” (emphasis added).
If they intend to start to seriously enforce this rule (finally) it has some pretty nasty implications for all of the no money down loans made over the past few years.
Here are two non-legal opinion.
1) You reap what you sow.
2) Never trust a bald guy in a suit who works on commission.
http://www.libertycapitallenders.com/our_bankers.asp
From Bloomberg:
Fed Officials Cut ’08 Growth Projections to Range of 1.3%-2.0%
Federal Reserve officials cut their forecasts for economic growth this year by about a half percentage point and raised unemployment projections after the housing recession and financial-market turmoil deepened.
Fed policy makers now expect U.S. gross domestic product to increase by 1.3 percent to 2 percent in 2008, compared with the 1.8 percent to 2.5 percent they predicted in October. The fourth-quarter jobless rate will be between 5.2 percent and 5.3 percent, up from a range of 4.8 percent to 4.9 percent in the last forecast.
Never trust a bald guy in a suit who works on commission.
“Crook” comes to mind when looking at a number of those photos. Although, I’d have chosen “psychopath” for the bald guy.
So what recourse does the servicer/pool have against the originator in this case?
Jill/Wag:
Your 401K contributions are not gone. You are buying shares at lower prices. For those of us who invested through the tech bubble, a valuable lesson should have been learned.
People need to expand their investment horizons a bit. There is nothing stopping you from investing in other countries economies as sovereign wealth invests in ours. This can be done in your 401K or in your IRA.
There is nothing stopping you from hedging against the drop in housing by shorting real estate or hedging against high heating bills through investment in natural gas futures.
Long term fundamental investors see opportunities like these to increase their investment positions.
Besides patience, ignoring the noise (daily ups and downs) is probably the second most important investing lesson I have learned.
There is so much valuable free information available online to anyone willing to spend the time to read it. Just stay away from anything that involves trading. That is a losers game.
As for those who saved getting punished?
Nah…You will be able to get a great mortgage or two when homes return to more reasonable prices. Those who ruined their credit ratings will be stuck renting for the next 7 years which should be just long enough for housing prices to have reaccelerated to unaffordable levels once again.
No mention of the Dow coming in 4% lower, the day of the surprise cut?
http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm
#151 – Tema the “executive assistant” is kinda hot though.
So what recourse does the servicer/pool have against the originator in this case?
When I worked for a mtg broker the lender would force the broker to buy back the loan if it was like this one. This was a few years ago though, and in NJ. Obviously it wouldn’t take too many forced buy backs before the broker goes belly up and the lender is stuck with them. Fun times ahead.
“Never trust a bald guy in a suit who works on commission.”
It’s a good thing Gary and me never wear a suit.
From the AP:
Fed Forecasts Inflation, Unemployment
The Federal Reserve on Wednesday lowered its projection for economic growth this year, citing damage from the double blows of a housing slump and credit crunch. It said it also expects higher unemployment and inflation.
The updated forecasts come amid worry by Federal Reserve Chairman Ben Bernanke and his colleagues that the economy could continue to weaken, even after their aggressive interest rate cuts in January, according to minutes of those private deliberations released Wednesday.
“With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain even after this action,” minutes of the Fed’s Jan. 29-30 closed door meeting showed.
…
Under its new economic forecast, the Fed said that it now believes the gross domestic product will grow between 1.3 percent and 2 percent this year. That’s lower than a previous Fed forecast for growth, which at that time was estimated to be between 1.8 percent and 2.5 percent.
…
With economic growth slowing, the Fed projected that the national jobless rate will rise to between 5.2 percent to 5.3 percent this year. That is higher than the central bank’s old forecast for the rate to climb to as high as 4.9 percent. Last year, the unemployment rate averaged 4.6 percent.
And, with energy prices marching upward, the Fed also raised its projection for inflation. The Fed now expects inflation to be between 2.1 percent and 2.4 percent this year. That’s higher than its old forecast for inflation, which was estimated to come in at around 1.8 percent to 2.1 percent.
The Fed said its revised forecasts reflected a number of factors including “a further intensification of the housing market correction, tighter credit conditions …. ongoing turmoil in financial markets and higher oil prices.”
personally, at my age I wouldnt feel comfortable driving a bmw or equal
R patrick,
This should be an insurance case, have your parents call their insurance company and put in a claim for their damages, this will allow their company to go after the neighbors insurance. Since this is not a condo if the neighbors have a mortgage they have insurance.
In the case of condo’s while your maintenance fee includes your portion of the complex’s insurance, you should also purchase condo insurance, in the event of a fire the condo association will rebuild your unit but you will get builder grade cabinets, floors etc if you had improved you lose that and all of your personal effects, furniture, clothing, jewelry and rental money for temporary housing during rebuild. If you have the insurance you will also be covered for your neighbor’s leaking bathtub into your bathroom.
Since this is a duplex not a condo the standard homeowner insurance is what the neighbor should have and that should cover it, and with no liability on your parents part this should not go against them at renewal time.
Hope that helps
KL
94 ‘soosh
yep – same guy with the canning. Same guy who built his own house with his own hands. He went to college up there, and he liked it, so he stayed.
He’s actually NOT an armageddonist (certainly less so than I am). He’s an environmentalist though.
He can build a car from scratch, pretty much. He had an electric system for his treehouse when he was 12 that ran off a car battery, which he would recharge with a generator he’d made by combining spare parts from a car, lawn mower and washing machine (the treehouse was 60 feet up, had three rooms and a shingle roof – he slept up there all summer from age 12 until he left for college).
He’s not as odd as he sounds…
From Reuters:
Stewart Title Parent Suffers Loss, Cutting Jobs
Stewart Information Services Corp, which runs one of the largest U.S. title insurers, on Wednesday reported a fourth-quarter loss and its first annual loss since 1974, and said it plans deeper job cuts to cope with the nation’s severe decline in the housing market.
stu 153,
you might want to think before you buy that natural gas furnace. Natural gas prices are set to go up substantially over the next several years
The Fed lowered its outlook for the economy, while raising its outlook on inflation. Meanwhile, crude has spiked higher, hitting an all-time high of $101.32 per barrel.
How do the indices react? They rally.
I am no economic analyst but I have a feeling that we are getting closer and closer to a black Tuesday.
From Reuters:
Commercial property prices to drop 5-10 percent
Commercial property prices will likely decline between 5 percent and 10 percent as the impact of a slowing economy and aggressive underwriting take a toll, Mark Zandi, chief economist of Moody’s Economy.com, said on Wednesday.
Defaults on office building, retail stores and hotel loans will fall short of the crisis in residential mortgages, but will still exceed their historical average, Zandi told the Reuters Housing Summit. Retail properties will see the most significant problems as the U.S. economy flirts with recession, he said.
“Prices in the commercial market were overvalued,” he said. Price drops will be “not 20 percent (as in U.S. house prices), but I’d say 5 percent to 10 percent.”
#159 rhymingrealtor
If they go through insurance you will lose your deductible. As it is not negilgent action on your neighbour (they didn’t do a repair and messed it up), it falls under “Act of God”. The insurance company will pay your claim (minus deductible)and then sue other side to get their money back.
As this is a common element, your condo buylaws should cover the repair.
For condos, their insurance will only cover the structure. The owner is responsible for “drywall in”. The association will leave you with studs, electrical and plumbings. Kitchens, bathrooms etc are on your dime.
Kettle 1,
When NG prices almost tripled two years ago, I simply invested in a NG services company (NG driller). I think it was Nabors. My heating bills almost doubled that year, but I made up more than the difference in my short term gains ahead of the storm.
Most companies match 50 cents on the dollar in the 401K and stocks are only down like 7% this year, you still are up 43%.
#162 Kettle
I got this spam in my inbox.
“Arctic Circle’s oil-rich seabeds – Trillion Dollar Potential”
I recall that Russia are surveying the seabed to prove they have a claim to a large portion of the Artic circle as an extension of the continental shelf.
Looks like today is lawsuit day on the blog.
http://www.msnbc.msn.com/id/23255937
Do we have consul on retainer?
re: (168) PCG
There is an estimated 30 trillion dollars worth of oil underneath the US Army right now
and you don’t need a submarine to get to it.
stu [156],
Didn’t ya notice, I have a full head of hair. It must have been the bad lighting. :o
patient.
I’m married to a guy who collects and trades scrap metal in his spare time, is getting into making his own diesel from used vegetable oil and who makes much of our wooden furniture. I am the daughter of a guy who built an oscilliscope out of spare parts at the age of 11 and rigged up a fire bell alarm clock in order to prevent his parents from forcing him to room with his immigrant cousin.
Oddball? Your brother sounds quite typical for my world. Although neither hubby nor father is particularly outdoorsey, that is more my thing.
Quite a handy sounding guy to have around actually. Right up Clots street for his impending uprising.
PGC 168
A russian sub planted a russian flag on the arctic sea bed to mark their claim.
Apparently there is a large potential for oil in the arctic. so is already known but apparently the geology in the area is indicative of potentially large oil deposits. Some people are predicting a political conflict between the US and canada over an area off seabed off of alaska as retoric has already started between the 2 countries.
the whole arctic has become a new gold rush for oil by any country bordering the area
129 make
131 grim
That case sounds like a slam dunk to me. Prima facie violation of statute with prescribed remedy. Bang. The only surprise is that they got it on summary judgment, but the outcome ultimately would be the same.
lissosh,
it sounds like we could form quit the enclave from the people on this board once Armageddon starts up
patient
doesnt pretty much anyone who took 100% financing and using a sub-prime loan have a case then?
How do you know if they are telling you the truth?
After looking and looking we found a house (a Relo) on our $ range (only using my income, not my wife’s, we want to have a life). We just went to see the house yesterday (again)
Long story short, nice house, really good price, and as soon as we tell our buyers Agent that we are interested here is what was said:
“There is already an offer. The contract they have has already been signed. Ordinarily, we would still be able to put in a contract for consideration at this point, but since it is relocation they always say once they sign, they are committed to that person. I have seen them say this in the past and then take a higher offer, though, so you may want to consider placing an offer anyway to see what happens..”
How do we know if this is not just a bluff?
By no means we want to get into a bidding war, but, are they bluffing?
SOX is dead and KPMG this week is cleaning house, lay-offs all over. Over at PwC they have a boat-load of work for quants/basel 2/Var guys as FS firms seek to find the actual value of their illquid investments. That group is working 70-80 hours a week billable while the BS sludge who did SOX testing is wrapping up 4-15 work with a schedule that looks awfully empty this summer. Looks like PwC will churn and burn on Tax day, fire the unassigned and hire the Quants. Thats ok when the subprime stuff is over in 2010 they can fire the quants they hired in 2008. I love consulting.
From Bloomberg:
Junk Borrowers at Risk of Violating Covenants Rises
A record 41 companies with high- yield, high-risk credit ratings are in danger of breaching terms of their loan agreements within 12 months as the slowing economy cuts into corporate profits, Moody’s Investors Service estimates.
Moody’s used a four-step scale to rate how much a company is in compliance with its loan terms, which often include agreements to maintain a minimum ratio of debt to earnings or cash flow. The number of borrowers with the lowest score rose as of January from 25 in June, Moody’s analysts led by John Puchalla in New York said today in a report.
Junk-rated companies including Krispy Kreme Doughnuts Inc. and Blockbuster Inc. are more at risk of violating loan covenants and defaulting as the slowing economy saps earnings and cash flow. Some companies including restaurant chain Buffets Holdings Inc. and homebuilder Tousa Inc. have already been forced into bankruptcy after bankers were unwilling to amend loan terms.
“Covenant cushions are weakening,” Puchalla wrote. “It has become more difficult to obtain covenant amendments since the credit markets flared up in the middle of last year.”
“I’m married to a guy who collects and trades scrap metal in his spare time”
lisoosh[172],
He may want to think about going full time.
By no means we want to get into a bidding war, but, are they bluffing?
I am not a Lawyer.
It’s not a bidding war if the other party already has an inked contract and attorney review has long since passed. They’ve got equitable title.
Most likely, in these cases, the seller will hold these as “backup” offers, a fallback if the closing doesn’t take place, or the buyer wants out.
A seller using this tactic to push up the sale price after a contract is inked might find him or herself on the receiving end of a lawsuit.
This game is best played by the seller during attorney review, when they still have the ability to get out of the contract.
“By no means we want to get into a bidding war, but, are they bluffing?”
Easy way to find out: tell the agent that you have no interest in getting into a bidding war, but that if for any reason the other contract falls through, you would still be interested in putting in an offer at the original price you had in mind.
177 Dan
We just sold a house due to a relo and the house we bought was from people who were relo’d.
I never heard any special rules regarding relos. If they are already under contract, that I could see, but that would go for any house, not just a relo house.
Unless it is already owned by the relo company?
129 – Wouldn’t lawyers be making Class Action suit out of similar cases? In that case, court bails out everyone with 100%+ financing with ARM loans.
kettle1 Says:
February 20th, 2008 at 3:49 pm
“lissosh,
it sounds like we could form quit the enclave from the people on this board once Armageddon starts up”
I need my mini-farm first for basic subsistence food production before Armageddon is allowed to start. My husband is definitely the handy/scrappy type though. Not good in high society and a suit, but very useful to have around when things get rough.
BC – He has me currently tracking down dealers so that he can eliminate the middle man. He makes more than the guy he sells to, but it is a good sideline, no question. I did hear that some of the fasted growing companies in the country specialize in selling off scrap to China.
BC – I actually think the bio-diesel thing could be very advantageous too once we can produce in decent volume. Especially with the current price of oil.
NJ is a mass exodus state, can somebody make sure Gov. Corzine gets a copy of this?
http://www.coyoteblog.com/coyote_blog/2008/02/there-are-two-a.html
186-
I had a cab driver in Maui that ran his cab on biodeisel he made himself. He had info on all the good bio products on the island.
http://www.veggiecab.com/
# 186 Given all of the fat people in this country, maybe we can make bio-diesel from fat liposuctioned from the overweight. Kill two birds with one stone.
PGC,
This complex RPatrick describes sounds like a fee simple duplex, which is not the same as condo ownership. The damage done to their duplex was not their fault, it is the fault of neglect by their neighbors, they have the damage( it is not an act of god when your water heater leaks and ruins your basement) while they will probaly have to put out the decuctible, the insurance company will have more luck going after the neighbor via their insurance company than they will, as neighbors. If their insurance company pays due to their negligence Rpatricks parents would be reimbursed. A fee simple duplex has a regular homeowner’s policy and is different from a condo association policy. The associations policy does only pay for common areas however as I said you can and should as a condo owner get condo insurance which is additional insurance not included in your maintenance you should buy it for all the reasons I explained above. I would also reccommend apartment insurance. My apartment policy costs me 105.00 per year ( thats one cup of coffee a week) and covers me for all of my personal property, liability if my 8lb dogs bites someone ( he does’nt hurt) moving and storage in the event I have to leave, and the difference in my curent rent to what I might have to pay for temporary housing. While my experience working for an insurance agency really made me hate insurance, some products are priceless.
KL
Shore Guys says:
# 186 Given all of the fat people in this country, maybe we can make bio-diesel from fat liposuctioned from the overweight.
Hey!….. I resemble that remark!
KL
184 SG
“In that case, court bails out everyone with 100%+ financing with ARM loans.”
Not that simple – the case is short and worth reading.
(177) Dan:
I wouldn’t worry about the other offer. Put in the bid you would put in anyway. If you get it, great, if you don’t, walk away. That way, you either get the house you want at the price you want, or you don’t. In either case, though, you don’t end up overpaying.
# 191
It could promote guilt-free eating. “Hey, honey, I am not overeating, I am generating fuel for our trip next week.”
#181,182,183,193:
Tx for the advice. We told the agent that we will not get ino a bidding war, etc., etc.
I will let you know what happens.
Dan [177],
Welcome to the world of the f*cking snakes and slimy b*stards who would sell their own f*cking mother for another $0.37. Tell them all good luck, buh-bye and NOT to call you when the stupid b*stard buyers get rejected for a loan because they’re wannabe pretenders who really don’t have a pot to p*ss in. Geezus, this sh*t p*sses me off.
“slimy b*stards who would sell their own f*cking mother for another $0.37.”
Remember what Early Wynn said when asked whether he would throw at his own mother?
“That depends. Is she crowding the plate?”
prestigous and haughty gary [196]
Amen..
From Reuters:
Lending laws unenforced in housing crisis: Jackson
A U.S. mortgage meltdown has its roots in lending discrimination against African-American and Hispanic communities and requires federal intervention to prevent it from crippling municipal services, civil rights activist Rev. Jesse Jackson said on Wednesday.
Jackson told the Reuters Housing Summit in New York that nearly 40 percent of subprime loans went to black and Hispanic families, many of them in districts once shunned by discriminatory “redlining” lenders who later devised a way to profit there by selling a flawed financial product.
“They began to stereotype and target and cluster whole communities. It’s kind of like reverse redlining,” Jackson said.
Jackson estimates that nearly half of those borrowers could have been eligible for regular loan packages, but instead were locked into mortgages that threaten to balloon out of their ability to pay when the adjustable interest rates reset.
“It suggests that if fair lending laws had been enforced … we would not have had this global economic crisis,” Jackson said. “But while it started by unenforced civil rights laws, the bleeding has not stopped there. It’s now engulfing the budgets of cities and counties and states.”
I don’t know about reverse redlining, but I hear that affinity fraud is a huge problem in many ethic/immigrant communities in NJ.
the velocity of the decline in the economy is actually getting quite scary at this point. I for one will be happy if I make it through the next couple of years employed. Any major decline in housing prices will be gravy. The barrage of bad news today makes me want to hoard canned goods
skep-tic(201)
Right there with you. Gold in the safe is starting to sound like a very safe bet.
Dan (177)-
Relo companies usually never entertain other offers once they’ve accepted one.
One more title insurer for good measure..
LandAmerica posts qrtly loss on real estate slump
LandAmerica Financial Group, a large U.S. title insurer, posted a quarterly loss on Wednesday, hurt by a decline in the U.S. residential real estate market and charges related to office closures.
Dan (198)-
Somebody made an offer before you, and it got accepted.
There are a few other buyers out there, that’s all. Just be ready for the next one.
There will be a next one.
The avoidance of multiple-offer situations- simply because of the existence of multiple offers- is amusing. If you guys saw the amount of times this happens nowdays where all the parties are offering substantially under asking, it wouldn’t freak you out so much.
The only thing that matters is how much a buyer is willing to pay for a particular home. As long as you’re not the type to get carried away and wrapped up in “winning”, you can simply make your offer and see if you come out on top. Better yet, your entry into a multiple-offer situation is likely to chase off another buyer or two, who may be even more paranoid than you (although I don’t think this board can be topped in the paranoia department).
As more and more sellers eventually figure out how to price to this market, you’re going to encounter multiple offers. These are what they are, and they’re not a conspiracy that’s been cooked up to impoverish you.
Of course, you can always avoid these situations by asking your agents to show you only dirty, overpriced POS.
Placing an offer in a multiple-offer situation does not put you in a bidding war.
Sweetening your offer with subsequent rounds of counteroffering does.
201 skep
I’ve been telling anyone who will listent for a couple of months now that my deep pessimism was misplaced: things are far worse than I thought.
“njpatient Says:
January 9th, 2008 at 2:33 pm
149 kettle
I’m as pessimistic as I’ve been, and the stuff I’m hearing in the last few days is completely nuts.”
207 clot
would you say sweetening your initial offer over the amount that you would otherwise have offered had you not been told that you had to hurdle another offeror puts you in a bidding war?
Skep [201],
A major decline in RE prices was baked in the cake. I always thought if that was the extent of our problems, we would be avoiding a possible tsunami. It does not seem likely. We have dug ourselves into a deep pit. The world is simply over-leveraged, buried in debt.
There are only 2 escape routes. You can pay down debt and increase savings. This will cripple growth. You can also inflate. This will bring down our bond market, pummel the dollar and blitz those currencies/nations that are pegged to the dollar.
Pay down debt or inflate. Two different paths. Both mean lower living standards in the US. Pick your poison.
“Better yet, your entry into a multiple-offer situation is likely to chase off another buyer or two”
We had an amusing situation last summer where we significantly underbid an existing lowball offer (we were mostly cash with no contingencies, as opposed to the other bid, which was contingent/0 down). The day we submitted our offer, the seller accepted the other offer. I figured our offer scared the seller into accepting the existing lowball.
it just increasingly seems like we have reached a worst case scenario at all levels. consumer debt, corporate debt, government debt– they are all out of control, collapsing and there are no more levers to be pulled. things are completely out of control and it is impossible to hide it any longer.
I don’t think we really appreciate the full picture in the NYC area because so far this region has withstood the collapse better than just about anywhere else. The situation is dire in much of the country right now and the tsunami is heading our way
“The situation is dire in much of the country right now and the tsunami is heading our way”
No better way to see how bad things are generally perceived to be than by looking at this:
http://americanresearchgroup.com/economy/
Yet another idiotic idea:
http://money.cnn.com/2008/02/20/real_estate/OTC_refinance_plan/index.htm?postversion=2008022016
#213 – 17% approval rating. Is that a record?
215
not sure, but it’s gotta at least be in Nixon territory
#201 Dried foods are better than canned – the canned stuff expires too quickly. Go with rice, beans, lentils, powdered drinks, dried fruit. Add some antibiotics, heavy duty painkillers, chocolate, some decent scotch or bourbon, coffee, ammo and a couple of nice weapons and you’ve got yourself a stash. (RPG’s optional)
217- don’t forget the generator!!!
And the toilet paper (I’m spoiled, sorry. Don’t like leaves, newsprint is scratchy).
#218 Right!! TP!! And an entrenching tool to go along with it. A generator is nice but have some candles and a few kerosene lamps too. If it gets really cold, you can set your tent up in the living room and you’ll stay nice and warm with no additional heat.
patient (209)-
Yes. What’s your point?
A disciplined buyer- with a plan- should be able to make the offer he finds comfortable, regardless of who else is offering or the quality of those other offers. If the bidding hits a level of discomfort, the disciplined buyer drops out.
Of course, if a buyer drops out at the first hint of multiple offers, what’s the difference? Either scenario, the buyer loses.
“Yes. What’s your point?”
That it needn’t be a subsequent round to be a bidding war. Otherwise we agree.
have we heard from chifi recently?
#210 BC Either way real estate prices fall.
In all seriousness. Here is one of my best resources. The articles are priceless.
http://www.backwoodshome.com/article_index.html
One of my long term goals is to set up a food pantry based on this article. http://www.backwoodshome.com/articles/hagan59.html
The people can have a copy of the article and a starter kit of all the items on the list. throw in a few recipes and it can keep food on the table. There is no Kool-Aid on the list, they prefer Tang … :*)
About two years ago I was talking to a friend who lives in a nice town in Bergan County. We were talking about the Thanksgiving food drive at the local church. He said they had a good donation drive with 18 turkeys. They had a problem in that they did not have any local families that needed donations. The drove everything over to a church in Patterson for distribution. This year I asked how it went. They send half to Patterson and half went local.
grim
#224 in moderation.
PGC #107- a warning about having a HELOC in place as an emergency fund. I read on another forum (msn money?) in the last few days that Countrywide was sending letters notifying customers that they are freezing HELOCs due to housing prices dropping. It didn’t seem to matter how much equity was in the house either. I’ll attempt to find the link to the story, but it wasn’t an official story, just a personal experience that was shared by several posters. Of course, we all know what kind of shape Countrywide is in…
Interesting article on NPR this morning. They were talking about the growth of the North Carlolina economy. They were discussing all the growth of small business around the army bases. As the army close places like Fort Dix, they are consolidating resources into the bases in the Carolinas. Small subcontractors are spring up in a 50 mile radius of any base.
Could this explain a few of the Penske Express.
Here’s the link where I read that about Countrywide… sorry, Grim… it was another blog I stumbled on! http://tinyurl.com/2o9qvv
217 outofstater You need salt it will be worth its weight in gold.No need to buy gold if it really goes to sh*t all you need is salt.How do you preserve food with no electric salt.As I live where there is plenty of game,salt will get me things in barter system.50lb bags very cheap now!
#226 D
I understand that Countrywide want to shut off the spigot. IF the house goes to forecloseure, the mortgage will get paid off and any excess monies (after expenses) will get returned to you. Not to appear cold I would rather us the equity to try and stave off forclosure vs it going to pay REO Lawyers etc.
I think that using your house as an ATM for a new car or vacation is stupid. Using the equity in your house to stave off foreclosure and to survive, makes sense.
I agree, PGC, but if a plan is to use a HELOC to hold off foreclosure & the monies aren’t available = out of luck. That was my only point about HELOCs & changes to availability that may be/are only beginning to occur.