Buy and Bail

From the Wall Street Journal:

Some Buy a New Home to Bail on the Old
Fannie Plans Rules To Avoid Practice Described as Fraud
By NICK TIMIRAOS
June 11, 2008; Page A3

In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the “buy and bail,” in which borrowers with good credit buy a new home — often at a much lower price — then bail out of the “upside down” mortgage on their first home.

Homeowners are able to pull off this gambit — which some lenders and real-estate agents call mortgage fraud — by taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold. And with the lending industry in disarray as it tries to restructure millions of mortgages, some boast they are able to pull off the strategy with ease.

In some cases, homeowners are coached through the buy-and-bail process by real-estate agents and brokers who see nothing wrong with it. Some blame the phenomenon in part on lenders’ unwillingness to cut deals or restructure loans made when home prices were inflated. “It’s just a business decision,” says Linda Caoili, a Sacramento real-estate agent who is working with Ms. Augustine and others who are considering walking away from their mortgages. “If you’re upside-down $250,000, why would you keep it? It just doesn’t make sense.”

To be sure, walking away from a mortgage, even if legal, has plenty of drawbacks: Borrowers lose the ability to take out unsecured loans, since foreclosures can stay on a credit report for seven years. In some states, lenders can sue for assets, including a new house. Fannie Mae, the government-sponsored mortgage underwriter, recently revised the amount of time borrowers with a foreclosure must wait to receive a home loan to five years from four. Proposed Fannie Mae guidelines, which could take effect later this month, also would require those borrowers to make a 10% down payment and meet a minimum credit score after the five-year period.

While buy-and-bail is on the rise, the practice doesn’t appear to be widespread. Credit is much tighter now than it was during the real-estate boom, and most families with an upside-down mortgage likely will hold on to their homes and hope the market improves in the future — even though many of them could lose their properties.

The mortgage industry is starting to wise up to the practice and is scrambling to fight back. Buy-and-bail is “certainly fraudulent and unfortunately on an uptick,” says Gwen Muse-Evans, vice president for credit policy and controls at Fannie Mae. Although she doesn’t have data to quantify the size and scope of the trend, Ms. Muse-Evans says overwhelming anecdotal reports have prompted the agency to draft tougher regulations aimed at closing one big loophole that allows underwater homeowners to qualify for new home loans.

That loophole currently works like this: Homeowners provide a rental agreement showing that they will rent out their first home, and underwriters allow rental income to cover as much as 75% of the mortgage payments on the first home when determining whether the borrower can make payments on two homes. This allows homeowners to secure a second mortgage that they might not otherwise afford.

Under revised Fannie Mae guidelines, which could take effect next week, loan applicants who claim they will rent out their first home will have to produce supporting evidence, including an executed lease agreement. Borrowers also will have to prove that they can pay the mortgage, property taxes and insurance for both residences. The guidelines will make an exception only for borrowers who have at least 30% equity in their current home.

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260 Responses to Buy and Bail

  1. grim says:

    From CNN/Money:

    For this broker, foreclosures spell boom

    For many real estate agents, these aren’t exactly the best of times. Don’t put David McIlvaine in that category.

    The suburban Baltimore broker just had his best first quarter ever. With his business tripling over the past year, McIlvaine recently had to hire another staffer and buy more file cabinets just to keep up with the crush of work.

    What’s the secret to his success?

    McIlvaine specializes in selling foreclosed properties. It’s one of the few booming sectors in a deeply troubled housing market.

    “Everyone else is suffering, but I’m smiling ear-to-ear… inside, of course,” he said. “I feel a certain amount of guilt.”

    With home sales plummeting, many real estate agents have seen their business dry up. Existing home sales in April came in 17.5% lower than the year before, while new home sales plummeted 42%.

  2. grim says:

    From the Jersey Journal:

    With loft sales stalled, Coalco seeks better deal

    With only 55 of 202 condo units under contract, the developer of the Canco Lofts is returning to the City Council tonight to seek a sweeter tax abatement deal than the one it received two years ago.

    In April 2006, New York-based Coalco received 30-year abatements for new condo owners at the renovated factory on Dey Street in the shadow of the Pulaski Skyway. The owners would pay the city 10 percent of the adjusted gross revenue for 10 years, 12 percent for the following 10 years and 14 percent for the last 10 years. The assessed value of property in the city is 26.10 percent of market value.

    The owners are currently paying 16 percent, which is above the conventional tax rate.

    Facing a slumping real estate market and the reality of attracting buyers to an off-the-waterfront location that’s not close to a PATH stop, Coalco developers now say they need a bigger break.

    “We know you are not obligated the change the terms of the abatement,” James McCann, Coalco’s attorney, told council members at their caucus Monday. “The problem is they can’t sell units.”

    The project is slated to have a total of 551 units.

    Council members seemed open Monday to the developer’s plea, especially since the city has been inking deals with similar PILOTs for more than a year.

  3. R Patrick says:

    grim, about post 2

    What happened to that developer that was going to get the new path station?

  4. grim says:

    From Bloomberg:

    RBS Faces `More Bad News Than Good News,’ Chief Says

    Royal Bank of Scotland Group Plc, two days after completing Europe’s biggest rights offering, faces “more bad news than good news” for as long as 15 months, Chief Executive Officer Fred Goodwin said.

    RBS fell as much as 3.4 percent in London trading after the Edinburgh-based bank said it’s enduring a slump in U.K. housing and declines in securities revenue. While RBS is sticking with its April estimate that this year’s credit-related writedowns will be 5.9 billion pounds ($11.5 billion), Goodwin declined to say whether the bank will meet analysts’ 2008 profit estimates.

  5. grim says:

    From the Record:

    Wall Street’s Pain Felt By North Jersey Retailers

    Rick Breitstein has a small businessman’s eye for the economy and figures it curdled about a month ago.

    That’s about the time his store, the Cheese Shop of Ridgewood, a purveyor of up-market dairy products to the village’s affluent, suffered a double-digit drop in business, he said.

    Part of the problem, he said, is the economic woes of Ridgewood’s sizable pool of financial-services workers.

    “I have customers that don’t come here anymore,” said Breitstein, surrounded by slabs of English Stilton and French Epoisse and Brillat-Savarin cheeses that sell for as much as $60 a pound.

    “They are bond traders,” he said. “They are all suffering — They are not making the money.”

    Breitstein is one of several Ridgewood storeowners who say they have felt the impact of the plummeting fortunes of the state’s financial industry on their own bottom line.

    Experts say the industry’s loss of 4 percent of its workforce in the last 30 months is just the start as Wall Street firms carry out thousands of layoffs announced in recent months.

    Financial job cuts in New York also hurt North Jersey because of the high volume of commuters. That’s especially true in Ridgewood, where the 2000 Census found one in six of the village’s employed residents worked in the financial-services sector.

    Other North Jersey communities with sizable numbers of financial-services employees included Wyckoff, Wayne, Paterson, Clifton, Fort Lee and Edgewater, the Census reported.

    The impact on Ridgewood offers a snapshot of the variety of ways that these communities are affected by the industry’s hard times.

  6. grim says:

    From the Christian Science Monitor:

    Do granite countertops mask our emptiness?

    Like tens of thousands of other Americans, my husband and I are in the rather uncomfortable position of owning two houses. And not because we have a weekend house, either. Rather, my husband took a new job and we’re moving – specifically from Baton Rouge, La., to Montclair, N.J. – and though our home in Baton Rouge is historic, old, and airy, with a perennially blooming flower garden and two giant live oak trees out back, 80-year-old wooden floors, and high ceilings and two staircases and an enormous eat-in kitchen, it hasn’t sold.

    Our real estate agent tells us that the problem is two-fold. First, the bathrooms haven’t been updated since the ’90s. Second, the kitchen doesn’t have slate counters.

    She also concedes that the economy isn’t as robust as it could be – and even if it were, she says, young people want all the latest.

    But, really, do counters matter that much to people? Could this obsession with home improvement represent some deeper emptiness within us?

    Perhaps I’m exaggerating – but not by much. Also: I myself am hardly immune to drooling over the pages of everything from Metropolitan Home to Southern Living. Even so, you have to wonder when you hear stories like the one our other broker, the one who sold us our new house in New Jersey, told us. She said that though she loves her own home, she’s been too busy to make upgrades. Specifically, her kitchen lacks an “island.” One of her co-workers, a woman in her early 30s, recently turned to her and gasped: ” How can you live without an island? How can you even stand it?”

    “They can’t so much as imagine not owning all the swank stuff,” our New Jersey broker said. “What can I say?”

  7. grim says:

    From the Record:

    Housing woes force architects to shift gears

    Architects are feeling the effects of the housing market’s downturn, the American Institute of Architects said Tuesday.

    “With the steep downturn in the key residential markets, business conditions have been steadily eroding at residential architecture firms,” the AIA said in its review of home design trends for the first quarter of 2008.

    The weakest sector of the market is affordable homes aimed at first-time buyers, the AIA said.

    A tightening of credit standards has made it much harder for first-time buyers to obtain mortgages. But all new construction is way down. Housing starts nationwide are expected to total about 1 million this year, about half the rate of 2004 and 2005.

    “Evidence suggests that the conditions in the residential market are not poised to improve anytime soon,” said Kermit Baker, chief economist for the AIA.

  8. Essex says:

    Let’s see $60 cheese or gas for the bimmer, cheese or gas….cheese or…..Nevermind.

  9. thatBIGwindow says:

    Young people do want the latest..not all but most in my age group are shallow, materialistic, spoiled and self-absorbed.

  10. thatBIGwindow says:

    and the new generation of kids – all they do is text text text. They look like zombies with their thumbs constantly going and their eyes completely zoned out, oblivious to what is going on around them. Heaven forbid they have a face to face conversation.

  11. grim says:

    From the Star Ledger:

    NJ employees stealing gasoline face charges

    New Jersey Attorney General Anne Milgram plans to hold a news conference this morning to announce the filing of criminal charges against government employees accused of stealing gasoline from public agencies, according to two law enforcement officials.

    The officials asked not to be identified because the official announcement will be made this morning.

    The charges come as the average U.S. gasoline price exceeded $4 a gallon for the first time.

    They also come on the heels of a state audit last December that found a significant number of questionable gasoline fill-ups that went unnoticed by the state’s Central Motor Pool, which manages about 7,600 state vehicles.

    Reviewing gasoline transactions in 2006 and 2007, auditors found more than 600 gasoline purchases that exceeded a state vehicle’s tank capacity. Auditors also uncovered more than 2000 transactions in which employees filled up their vehicles twice in one day, either at a motor pool location or using a credit card.

  12. grim says:

    From NJBiz:

    Coping with $4 Gas

    As gas prices hover near $4 per gallon, an increasing number of New Jersey companies are introducing or expanding programs designed to help employees cope with commuting costs. Details differ from firm to firm, but overall goals are similar: get more employees into fewer vehicles.
    “In the past we’ve had some programs that encouraged car pooling and other alternatives, but as gas prices have climbed we’re ratcheting up our efforts,” says Mike Burke, director of environmental occupational health and safety at

    Colgate-Palmolive Co.’s research and development center in Piscataway.

    The 950-employee facility is trying to get a nearby NJ Transit bus stop reinstated and has added locker rooms with showers for workers who ride bikes to the office. The center also offers mass-transit incentives, telecommuting options and flex hours.

  13. njpatient says:

    “which some lenders and real-estate agents call mortgage fraud”

    Except that it isn’t. if they want it to be fraud, they should require additional disclosure. The buyer is not making any representation to the lender that they won’t walk away from another property (and frankly, why should the lender even care, much less the Realtor)?

  14. grim says:

    From the WSJ:

    NYC Skyscraper Gauge
    Deutsche Bank Sale Reflects Big Drop; The Euro Factor
    By JENNIFER S. FORSYTH and JONATHAN KARP
    June 11, 2008; Page C14

    Deutsche Bank is cutting deals to sell three of the seven skyscrapers it took back from New York developer Harry Macklowe in transactions that reflect a 20% to 30% decline from what he paid last year at the top of the market, according to three people familiar with the matter.

  15. njpatient says:

    “Buy-and-bail is “certainly fraudulent and unfortunately on an uptick,” says Gwen Muse-Evans, vice president for credit policy and controls at Fannie Mae”

    Yeah – and lenders aren’t suing because they can’t afford lawyers. Waah.

  16. njpatient says:

    “Financial job cuts in New York also hurt North Jersey because of the high volume of commuters.”

    Thank goodness the cuts are all in CA

  17. njpatient says:

    “Do granite countertops mask our emptiness?”

    No – it was a valiant effort, but in the end it was just crushed valor.

  18. grim says:

    From Bloomberg:

    Corn Jumps to Record as U.S. Cuts Output Estimate on Heavy Rain

    Corn rose for a sixth day to a record in Chicago, leading gains in soybeans, wheat and rice, after the U.S. cut its output estimate by 3.2 percent from a May forecast as cold, wet weather delayed planting and flooded fields.

    Output will be 11.735 billion bushels, compared with 12.125 billion forecast on May 9, the U.S. Department of Agriculture said yesterday in a report. The estimate is 10 percent smaller than last year. Inventories in the world’s biggest producer may drop to the lowest since 1996 by Aug. 31, 2009, the USDA said.

    Corn prices have gained 50 percent this year, heading for a fourth straight annual gain, as demand surged for livestock feed and biofuels. Global inventories are forecast to fall to a 24- year low, the U.S. government said. The price of wheat, rice and soybeans also reached records this year after adverse weather curbed global output, reducing stockpiles amid rising demand.

    “No one can stop the corn price’s run-up now,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said today from Tokyo. “Now we have heavy rains in the Midwest and will see a summer heat wave in July and August. We may see the USDA cut further its output estimate next month.”

  19. grim says:

    Corn too expensive? Let them eat cake.

  20. Hard Place says:

    Housing slump is over…

    U.S. MBA’s Mortgage Applications Index Rose 10.9% Last Week

    http://www.bloomberg.com/apps/news?pid=20601110&sid=aesxhSb9M0BQ

  21. Frank says:

    “Corn Jumps to Record as U.S. Cuts Output Estimate on Heavy Rain”

    How about we demolish the McMansions and planting corn instead?

  22. Frank says:

    “Coping with $4 Gas”

    Most people in NJ don’t care about gas prices. Have you seen the traffic on GSP this weekend? Gas prices are good newspaper stories but in reality who cares.

  23. cynicalgirl says:

    “If you’re upside-down $250,000, why would you keep it? It just doesn’t make sense.”

    Um, because you made a promise when you signed the papers?

  24. BC Bob says:

    JB,

    #24 in mod. Who’s watching?

  25. BC Bob says:

    “Gas prices are good newspaper stories but in reality who cares.”

    Frank,

    Buffoon.

  26. njpatient says:

    22 frank

    “Most people in NJ don’t care about gas prices. Have you seen the traffic on GSP this weekend?”

    Actually, as I previously reported, the turnpike was virtually empty during rush hour yesterday and Monday.

  27. Frank says:

    #26,
    Foreclosures for 500K?? Have you lost your mind? How about 100K? That’s what a foreclosure is worth in NJ.

  28. Ed McMansion says:

    BIG 9, 10 – Can’t disagree with you about the text

    But all of the upgraded cabinets and countertops seem to me like BS excuses for an RE agent who got a seller to list a home with them for an unrealistic price and now need to back them down into reality.

    – I have also found myself looking at the asking prices on POS houses and wondering … why that price? They have old cabinets, counters, bathrooms, etc.? Sometimes verbalizing these indirect complaints rather than simply saying “I don’t see the value” might cause agents to think every home needs those superficial additions.

  29. chicagofinance says:

    still_looking Says:
    June 11th, 2008 at 4:23 am
    They reviewed my mother’s POA and RevTrust and Med Proxy forms.
    sl

    sl: The $6k is probably a crock, but the above sounds like real work to me. You certainly owe them something. Perhaps in the $1-4k range depending on their hourly rate…..understand, they are slime….

  30. Ed McMansion says:

    I meant can’t disagree about “generation text” aka Idiot-Trek the Text Generation.

  31. HEHEHE says:

    “Frank Says:
    June 11th, 2008 at 8:01 am
    “Corn Jumps to Record as U.S. Cuts Output Estimate on Heavy Rain”

    How about we demolish the McMansions and planting corn instead?”

    Run that by Bob Toll. Beats us bailing his @ss out with tax incentives.

  32. chicagofinance says:

    njpatient Says:
    June 11th, 2008 at 8:39 am
    22 frank “Most people in NJ don’t care about gas prices. Have you seen the traffic on GSP this weekend?”
    Actually, as I previously reported, the turnpike was virtually empty during rush hour yesterday and Monday.

    frank: On Sunday coming south on the GSP over the Driscoll Bridge to Monmouth, the northbound express/local was jammed all the way down to where I exited at 114.

    I stopped at the Montvale and Essex rest areas looking for gas, and it was sold out because the price was $3.89. Finally, I ducked off at Clark, because I didn’t want to risk that the Middlesex and Raritan areas were sold out too, and I was E with a red light.

  33. Rich In NNJ says:

    NJP (17),

    Beauty!

  34. chicagofinance says:

    To be clear: My client is an executive at Six Flags. They had an absolute blowout weekend. What does this mean? Recession changing behavior? YES. Gas prices changing behavior? YES. How? People are staying in NJ. A 100 mile round trip is much cheaper than going interstate…..

  35. Rich In NNJ says:

    Frank (22),

    Turnpike was relatively quiet on Sunday all the way down to Philly.

  36. chicagofinance says:

    Rich: our observations seem consistent to me

  37. Al says:

    To Post #6

    From the Christian Science Monitor:

    Do granite countertops mask our emptiness?

    “They can’t so much as imagine not owning all the swank stuff,” our New Jersey broker said. “What can I say?”

    I do nto want all new stuff – but I am not going to paty for 50 years old,used non-energy efficient appliancesd as they were made of gold top of the line new ones.

    Simple – drop the price 150K and house will sell!

  38. Rich In NNJ says:

    Chi: Yes, I see. Interesting theory.

  39. Rich In NNJ says:

    Al,

    If I put in a “swank” frig would you pay the $150k for my house?

  40. Al says:

    Pool at my apartment complex was PACKED sunday! last year – may be 10 people. What does it mean – gasoline is too expensive to drive for 1 hour to the shore, pay 7$/person to got o the beach.

    It is 10$/family to go to the pool – so peole rather go to the pool. Crazy Crowd kind of killed it for me, I used to like our pool.

  41. Al says:

    Rich – Were is it?

  42. thatBIGwindow says:

    Private pool > public pool

  43. crushed valor gary says:

    All this talk of economic weakness in prestigous Bergen County is a bunch of nonsense. A realtor told me at an open house in Montvale about 18 months ago that Ridgewood is just bleeding money. She also said this bubble talk is a bunch of bullsh*t and it’s very competitive here. And the listings I receive prove it. 5% to 10% above peak for the asking prices! You people are just jealous wannabes!

  44. Vince says:

    #29 Frank says
    “Foreclosures for 500K?? Have you lost your mind? How about 100K? That’s what a foreclosure is worth in NJ.”

    Do not get me wrong. The purpose of the foreclosure link was just to show how even good towns have a lot of foreclosure.

  45. bi says:

    “There are creepy Web sites, like TheObamaFile.com, dedicated to painting Michelle as a female version of Jeremiah Wright, an angry black woman, the disgruntled, lecturing “Mrs. Grievance” depicted on the cover of National Review.”

    http://www.nytimes.com/2008/06/11/opinion/11dowd.html?_r=1&pagewanted=print&oref=slogin

  46. BC Bob says:

    “A realtor told me at an open house in Montvale about 18 months ago that Ridgewood is just bleeding money.”

    Crushed,

    They had a job 18 months ago. Hell, the credit crisis has not even celebrated its 1st birthday.

    By the way, Pats were 18-0, approx 5 months ago.

  47. Make Money says:

    Bi,

    I’m looking to take a position. Do you have any investment advise?

    MM

  48. Mikeinwaiting says:

    Make, taking the other side I gather.lol

  49. bi says:

    49#, i am fully invested in obama, check out

    http://theobamafile.com/ObamaFamily.htm

  50. Clotpoll says:

    The really smart cookies pulled the “buy and bail” routine 6-12 months ago. I have a short sale going right now on a guy who bought here, bailed after less than a year and moved to Charlotte. He even HELOCd his place at the end, and used the equity as DP on the house in Charlotte. He didn’t make one single payment on that HELOC.

    What will Bank of America end up getting on that 100K HELOC?

    $1,000 from the holder of the first, IndyMac.

  51. Rich In NNJ says:

    Al (43),

    Err, Alpine.

  52. jlx says:

    so if you “bail” on a mortgage or heloc can’t the creditor go after your current assets at some point later in time?

  53. Essex says:

    52……..it was Mitchell wasn’t it. Damn

  54. crushed valor gary says:

    BC Bob,

    NFL training camps are only 5 weeks away. :) My, how time flies.

  55. Clotpoll says:

    BC (24)-

    Got switchgrass?
    Got sugarcane?
    Got flexfuel?

    Got a country whose bonds just got marked up to investment-grade?

    All the above describe Brazil.

  56. Mikeinwaiting says:

    Clot 52 Had a neighbor do that about 8 months ago, mortgage to the hilt then went to FLA. One of the tall grass houses in my area. Bank still hasn’t foreclosed as far as I know, not for sale yet. There are more around town, with the backlog in foreclosures the market will get hit harder next year than this one.

  57. bts says:

    #27 – The Google link is pretty cool – you can see the address. Not sure what value most realtors will bring if the address is available.

  58. Al says:

    crushed valor gary Says:
    June 11th, 2008 at 9:10 am
    All this talk of economic weakness in prestigous Bergen County is a bunch of nonsense. A realtor told me at an open house in Montvale about 18 months ago that Ridgewood is just bleeding money. She also said this bubble talk is a bunch of bullsh*t and it’s very competitive here. And the listings I receive prove it. 5% to 10% above peak for the asking prices! You people are just jealous wannabes

    We are not just jealous wannabes, we are POOR jealor wannabes who will never be able to afford NJ so why are you even posting here? We will not be buying in competitive NJ anyways so our opinion does not matter – jusk ask Clot!

  59. Clotpoll says:

    Mike (58)-

    It’s taking 12-18 months to foreclose in my area right now. The pipeline is jammed, and the sheriffs can’t handle the volume.

  60. Al says:

    Rich In NNJ Says:
    June 11th, 2008 at 9:43 am
    Al (43),

    Err, Alpine.

    To expensive and too far from my work in NJ…

  61. Mikeinwaiting says:

    jlx as far as I know in NJ anyway they are no recourse loans so they just get the house & hit your credit report.

  62. Firestormik says:

    re: njpatient
    “Actually, as I previously reported, the turnpike was virtually empty during rush hour yesterday and Monday.”

    Most of the jew owned businesses were closed because of Shavuot. Some offices and shoools were closed too due to extream heat.

  63. vince – I’ve noticed a big increase in lis pendens/foreclosures filings even in supposedly insulated places. Madison comes to mind. Over the last few months there have been almost as many filings as new listings, at least in my modest price range.

  64. Mikeinwaiting says:

    Clot 61 Yes, so how can any of these so called experts say bottom in 09, the worst is yet to come from the foreclosures in the pipeline. Then we get the resets on the alt A loans for the next year, oh-boy!By the time they go reo in wiil be 2010.
    It’s a great time to rent!

  65. jlx says:

    63 mike

    so if i’m donald trump and my home is foreclosed on because it’s 100k underwater, the lender can’t sue me to get some of its money back?

    doesn’t sound right…

  66. bi says:

    any anecdotes on local RE markets (not national markets? i haven’t seen big changes from last year in my area. the listing price is the same as last year and the houses in general are sold in less than 3 months.

  67. jmacdaddio says:

    I drive down Route 1 once a week during the P.M. rush hour for softball. I previously needed 45 minutes to go about 10 miles. I can now do it in 25 minutes – no traffic to speak of.

  68. Al says:

    About 3-4 month ago I said that my fair DJIA index value would bw about 11600. We are almost there – once it hit 11500 – guess were my downpayment for a house is going?

  69. bi says:

    a lot of firms allow employees to work from home one or two days a week. in addition, with high gas price, some are taking mass transport instead. thats the reason you see less traffic nowadays.

  70. Will V. says:

    Vince, how did you determine that google is putting homes for foreclosure on their site. It does not mention foreclosure, it looks to me like it’s just a beta for just plain old sales.

  71. Mikeinwaiting says:

    bi 67 They are dropping like crazy in my town Vernon NJ & still have a long way to go. Just one example house for 360 reduced to 260 for quick sale now at 220 still no takers. I believe it has been on the market at least 7 months. In June 06 my home was the 2nd lowest priced Bi-level on the market for 300k now 5 under 250 & I not going to try & count from 250 to 300.

  72. Stan says:

    The Canco Lofts website is pretty misleading if you aren’t familiar with the area. The photos in the location section are all beauty shots of Manhattan from the Jersey City waterfront. Not quite the same as the actual location under the skyway.

  73. Essex says:

    Less money…..More inventory…..people are being more selective. And ‘Vernon’ — certainly counts as a very expensive commute.

  74. RentinginNJ says:

    But all of the upgraded cabinets and countertops seem to me like BS excuses for an RE agent who got a seller to list a home with them for an unrealistic price and now need to back them down into reality.

    I don’t even bother looking at a lot of places that have granite & stainless. They think that 10k-15k worth of granite & stainless adds $100k in value. Too much HGTV.

    The funniest thing that I saw was a listing for an older place with a kitchen that hadn’t been renovated in 30 years. Not wanting to get left out of the granite & stainless craze, the place advertised having a “stainless sink”.

  75. bi – When I moved to Summit two years ago there were almost no sub-$500,000 homes on the market. When I last looked a few weeks ago, there was at least 25. Are they still pricey? I’d say so. But those same homes would have been much pricier two years ago. That said, well-priced homes sell very quickly with more than one bid. I know. I continue to be outbid, so I know how discouraging it can be.

  76. Rich In NNJ says:

    Al (62),

    Umm, uh, ok. Too bad.

    Bi (67),

    Wow, really?! Any addresses you would like to tack on to your anecdote?
    I realize this isn’t anecdotal but the data in Bergen County suggests the opposite.
    You’re lucky to live where you do!

  77. Clotpoll says:

    bi (70)-

    That’s the kind of information that keeps me coming back here. Many thanks.

    [sarcasm off]

  78. PGC says:

    #69 Al,

    Take a read of the quote I posted yesterday. It takes a few reads to get the full idea, but it is priceless advice.

    http://njrereport.com/index.php/2008/06/10/high-end-housing-not-immune/#comment-191567

    I’m still calling DJIA 9999 before all this is over.

  79. bi says:

    my favorite indicators are the total housing inventory including rentals in south brunswick and east brusnwick. they are large enough to have meaningful representation. after katrina, the numbers in south brunswick was over 500 and east brunswick over 650. now they are 390 and 560 instead.

  80. HEHEHE says:

    Credit crunched buyers look to sellers for financing

    1301 Sixth Avenue
    By Adam Pincus

    It might seem like a tactic more common for selling cars than real estate, but as the tight credit market crimps property deals in New York City, sellers are beginning to offer help to their potential buyers in the form of financing for up to 80 percent of the purchase price, experts say.

    http://ny.therealdeal.com/articles/credit-crunched-buyers-look-to-sellers-for-financing

  81. Mikeinwaiting says:

    Essex 74 Yes we are way out there, I expect to buy a bi level like the one I sold 06 for about 160 170 before all is said & done.
    Wouldn’t it be crazy if mine went reo & I bought it back , it could 8k down on 298 they have some nut + commute. Will not take take much to put them over the edge already
    upside down.

  82. Clotpoll says:

    Mike (66)-

    Truth be told, I don’t even look at subprime/Alt-A resets from ’09 out. Too damn many of these borrowers are defaulting on the teaser rate.

    In a weird kind of way, the acceleration of defaults is a hopeful sign. Barf up the chunks quickly, rather than lay around bloated and nauseous…and end up barfing anyway.

  83. HEHEHE says:

    Sorry if somebody already posted this one

    The Next Real Estate Crisis
    By April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures

    http://www.businessweek.com/lifestyle/content/jun2008/bw2008065_526168.htm

  84. bi says:

    guys, the impact caused by U.S. housing market is over. this time it is a global crisis caused by high commondity price: china, india and other asian countries start to feel the pain. you can see it by checking out their stock markets.

  85. grim says:

    From MarketWatch:

    Struggling with energy bills

    Low-income and middle-income households are dealing with higher energy bills in similar fashion these days — lowering the thermostat, eating out less, buying cheaper versions of products they need, spending less on clothes and medicine, and even changing their plans for education.

  86. crushed valor gary says:

    HEHEHE [85],

    Northern NJ is insulated, it doesn’t apply to us. There’s too much wealth and it’s too prestigous here. Realtors are still telling me there are multiple bids on houses, especially in North Caldwell.

  87. Vince says:

    #71 Will
    Although, google housing website is in beta.
    But the foreclosure listings are real.

    Try http://www.base.google.com and click on Housing link

  88. Mikeinwaiting says:

    HEhe 85 Yes it has, but no biggie there is another chart nicer that has been posted a few times, better chart. I believe Ket & I were talking about it months ago. By the time busweek is talking about it this site has already hashed it out & come to the right conclusion. This was know to njrereport readers along time ago. As always hat tip to Grim.

  89. Rich In NNJ says:

    I’m calling troll at 88.

    Trying to hard to lay out the bait. North Caldwell in Bergen County..?

  90. Rich In NNJ says:

    Wait… is that Bizarro Gary at post 88?

  91. crushed valor gary says:

    Rich,

    I got both ends working. :) It’s really me, the same pain in the @ss gary you all know and um…. love?

  92. Clotpoll says:

    How do we know it’s not over???:

    bi Says:

    June 11th, 2008 at 10:32 am

    “guys, the impact caused by U.S. housing market is over.”

  93. Will V. says:

    Vince #89, but to me it looks like it is just regular sales, where does it say foreclosures.

  94. crushed valor gary says:

    More…

    Three weeks ago I sent an email to a realtor who’s been periodically sending me listings, in this case, the Caldwells. I responded back to her and said the prices were still “out there”. She responded back and said they weren’t and in fact, there were multiple bids happening. Yup.

  95. Rich In NNJ says:

    CVG (93),

    Nice!

  96. RentinginNJ says:

    a lot of firms allow employees to work from home one or two days a week.

    A lot of firms these days are allowing employees to stay home 5 days a week and do nothing in exchange for no pay

  97. Mikeinwaiting says:

    Firm I know in NJ doings it’s part 4 day work week get payed for four days. Don’t like it hit the road.

  98. BC Bob says:

    “guys, the impact caused by U.S. housing market is over.”

    bi,

    Don’t you mean to say that we are in the 9th inning?

    Thanks for the heads up, I’ll dig deeper.

  99. crushed valor/velvet gary says:

    Now, this has got me thinking; can one hypothesize the dissimilarity between crushed valor and crushed velvet? In my rumination, I believe a variation fails to subsist and the two are analogous. What’s your supposition?

  100. SG says:

    Vince, how did you determine that google is putting homes for foreclosure on their site. It does not mention foreclosure, it looks to me like it’s just a beta for just plain old sales.

    On Search criteria, drop down for Listing Type has one for Foreclosure. Select that and enter your town to search.

    http://base.google.com/base/s2?a_n0=housing&a_y0=9&hl=en&gl=us

  101. grim says:

    Interesting press release from MacroMarkets, no link..

    MacroMarkets files MacroShares Major Metro Housing

    June 11, 2008 Madison, NJ. –

    Macro Housing Depositor, a subsidiary of MacroMarkets LLC, filed with the Securities and Exchange Commission for exchange-traded securities that will allow investors to invest in the upward and the inverse movement of U.S. home prices. MacroShares Major Metro Housing Up and Down securities will be based on the S&P/Case-Shiller Composite-10 Home Price Index and will allow investors to access this important, but illiquid, asset class. When launched, these revolutionary paired securities will have a ten-year term and will feature a 2x (200%) leverage factor.

    MacroMarkets LLC plans to launch the new securities on the NYSE Arca under the ticker symbols:

    · UMM – MacroShares Major Metro Housing Up
    · DMM – MacroShares Major Metro Housing Down

  102. Will V. says:

    SG, thanks, I missed that one.

  103. Clotpoll says:

    crushed (101)-

    You cannot really have this conversation without mentioning the positive attributes of rich Corinthian leather and the fact that it may be preferable to both crushed valor and crushed velvet.

  104. chicagofinance says:

    Clotpoll Says:
    June 11th, 2008 at 10:26 am
    Mike (66)-
    In a weird kind of way, the acceleration of defaults is a hopeful sign. Barf up the chunks quickly, rather than lay around bloated and nauseous…and end up barfing anyway.

    clot: I don’t know whether I agree exactly. Is it possible it is more akin to my experience on the Block Island Ferry about 15 years ago?

    We leave the breakwater and then a storm hits and the boat rocks back and forth. First one person vomits, then it just cascades just as it was in the movie Stand By Me.

  105. jmacdaddio says:

    Apologies if this has been posted before – the nytimes has a map illustrating fuel prices as a percentage of income. While we’re spending a lot more at the pump than we used to, in percentage terms we’re not spending a lot, at least here in NJ. It’s a hot topic though because between maxed out cc’s, HELOCs, car loans, boat loans, time share payments, there are a lot of folks on the edge.

    http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html#

  106. njpatient says:

    bi

    “guys, the impact caused by U.S. housing market is over. ”

    hahahahahahaha!!! I have my new schtick!

    I’m filing that one above “no more writedowns” and below “$40 oil”.

  107. njpatient says:

    “rich Corinthian leather ”

    lol

  108. njpatient says:

    108 jmac

    This will, pedictably, result in yet more subsidizing of red states by blue ones.

  109. 3b says:

    #86 bi:the impact caused by U.S. housing market is over

    No it is not, its just getting mixed in with eveything else. No young bi, the housing impact is just goint to get worse.

    Surely you should know that by now.

  110. 3b says:

    #110 njpatient: Yes the classic Chrysler Cordoba.

  111. grim says:

    That rich Corinthian leather was produced in Newark, NJ.

  112. grim says:

    Newark = Corinth?

  113. grim says:

    And now back to the housing market collapse, already in progress.

    From Reuters:

    US home prices may dip 30 pct, junk bonds weaken-JPM

    U.S. home prices may fall as much as 30 percent over the next four years and push high-yield bond valuations close to levels seen during the last recession, a J.P. Morgan analyst said on Wednesday.

    “The housing correction is in a down phase,” Peter Acciavatti, credit analyst and managing director at JP Morgan Securities Inc, said during a a high-yield bond conference in New York. “We’re now going through a phase of deleveraging and the pulling out of easy money.”

    Home prices may fall another 25 percent to 30 percent over the next four years, with greater drops still in subprime mortgage debt markets, he said.

  114. njpatient says:

    Still looking:

    See Florida legal ethics rules here:

    http://www.law.cornell.edu/ethics/fl/code/FL_CODE.HTM

    See Rule 4-1.5, particularly Rule 4-1.5(b)(2)(A) and (B).

    As I said, I am neither a litigator nor a Florida lawyer, but I would think that you have something to hang your hat on there. Ask these clowns at what point they disclosed their fee for these services to you, and ask them what they would point to as evidence that you had agreed to hire them for that fee.
    “even charged for leaving a message on my answering machine from my initial call” appears to be a self-evident violation of the rules stated above.

    “Also, should I contact the person who referred me to them?”

    Absolutely – and anyone else who you think would be interested.

    Nom’s advice at 22 in the previous thread is good stuff, and his disclaimer also applies to me.

  115. njpatient says:

    Home prices may fall another 25 percent to 30 percent over the next four years, with greater drops still in subprime mortgage debt markets, he said.

    Home prices may fall another 25 percent to 30 percent over the next four years, with greater drops still in subprime mortgage debt markets, he said.

    Home prices may fall another 25 percent to 30 percent over the next four years, with greater drops still in subprime mortgage debt markets, he said.

    [It bears repeating]

  116. njpatient says:

    “NEW YORK (Reuters) – The Standard & Poor’s 500 financial sector sank to a five-year low on Wednesday, led by declines in investment bank shares on a rumor that Goldman Sachs would report large writedowns when it reports quarterly figures next week, market participants said.”

    That CAN’T be true!!! bi and S&P said there would be no more writedowns!!!

  117. velvet gary says:

    If it ain’t Corinthian leather, it’s pleather.

  118. 3b says:

    #119 njpatient: But not in northeren NJ of course, cause we are special.

    Part of the sea of wealth as our young pret used to say.

  119. NNJ says:

    108, I did post that chart yesterday. It means rapid urbanization. A couple can now easily spend $500 to $800 in monthly commute.

  120. still_looking says:

    NJP 118,

    wow! and THANKS!

    Am bracing myself to call them today.

    sl

  121. lisoosh says:

    I’ll stick with microfiber. Easy to clean.

  122. scribe says:

    grim, #117

    Whenever I read these analyst/economist/talking head opinions on housing, the question I have is: If they’re so smart, how come they all got it wrong in the first place, with that handful of notable exceptions?

    And, if all – or most – of them got it wrong in the first place, why should they have any credibility now?

    I particularly enjoy the analyst comments that come out of BofA on Citi, or on Citi from BofA, or out of Merrill on Lehman, etc., on the projected write-downs.

    It’s like it’s this big machine grinding out opinions and forecasts, when it’s all uncharted territory.

  123. kettle1 says:

    NNJ

    I agree that we are headed for a resurgence of urbanization and a rapid one at that. But the potential downside is that in a weak economy rapid urbanization may end up looking like what some people call “brazilification” i.e you have the very pretty and safe wealthy areas and then you have the rest which is primarily lower class and slums.

    There will certainly be some successes in the process of urbanization but given the weakness of the US economy and the weak financial state of the US as a whole, and the fact that rapid urbanization will be a fight between the people coming back into urban areas and the people who already live there and do not want change.

  124. lisoosh says:

    Woo Hoo – GSMLS finally broke 37,000. That was my arbitrary psychological tipping point.

  125. grim says:

    If they’re so smart, how come they all got it wrong in the first place

    Where you sit is where you stand.

    What was their position in the past, what is it today? What was/is their motivation?

  126. njpatient says:

    127 scribe

    I ask myself that question all the time. “Self,” I say, “why is that man still on my teevee???!?”

  127. kettle1 says:

    Scribe,

    perhaps we should form the NNJREReport Analytics Corp . This board seems to out predict /analyze most of the competition.

  128. Clotpoll says:

    Want a Chrysler Cordoba of your very own?

    I think John may be the seller of this car:

    http://tinyurl.com/4ho8al

    If John is the seller, I’d check this thing top to bottom for: dried urine; “other” human secretions; possible high-speed impacts with poles, stanchions, etc; doors that come off; odometer roll-back; a box of tall tales in a hidden compartment; and, possible use of the emergency brake as primary brake.

  129. grim says:

    From MarketWatch:

    Unloading a gas guzzler

    The market for large sport-utility vehicles and trucks is in a sudden free fall as owners confronting potential $100 fill-ups are rushing to unload their petrol pigs to spare themselves squeals of pain at the pump.

    The values of many used models have dropped as much as $4,000 below recent “book” prices. Many dealers are offering even less on trade-ins on the least-popular vehicles — if they’ll even take them at all.

    The same mass anxiety that gripped Americans driving large, eight-cylinder sedans by the early 1980s and spurred rapid replacement with four-cylinder gas misers is resurfacing with a vengeance. The question many distraught owners need to ask themselves is whether dumping their SUV or minivan is a smart financial move in the long term.

    “People need to put pencil to paper to see what it will really cost them, because there are other ways to save on gas costs,” says Dale Early, owner of Deerbrook Forest Chrysler Jeep in Kingwood, Texas, and a National Automobile Dealers Association board member.

  130. Clotpoll says:

    grim (116)-

    “Rich Newark leather” just doesn’t have the same ring to it.

  131. njpatient says:

    133 clot
    larf!

  132. scribe says:

    grim,

    Motivation = a desire to keep their jobs (I think).

    The long-term history of the Street is to gallop forward into the latest “hot” investment, and then, when the whole thing overheats and crashes, to do due diligence after the fact.

    There’s always been a noticeable lack of due diligence while the trend is in progress.

    Herd instinct on the way up – herd instinct on the way down.

  133. RentinginNJ says:

    Whenever I read these analyst/economist/talking head opinions on housing, the question I have is: If they’re so smart, how come they all got it wrong in the first place

    Most economists tend to be permabulls. Rather than providing a real and unbiased view on the economy, they see themselves more as cheerleaders; whose job it is to keep the party going.

    Secondly, most economists prefer to fail with the crowd rather than fail standing alone. It’s always easier to say “who could have known, no one saw it coming” rather than being the guy getting ridiculed for repeatedly warning that housing is overvalued as it continues to defy gravity.

  134. kettle1 says:

    Scribe

    Also consider that unlike most situations, that on wallstreet perception can determine reality. bear Stearns is a perfect example. they were don in because people perceived them to be done in .

    I agree that a lot of analytical calls are made in order to keep a job or to get promoted. But those calls can also determine whether something goes up or down regardless of whether the analytical call reflects reality

  135. BC Bob says:

    “Whenever I read these analyst/economist/talking head opinions on housing, the question I have is: If they’re so smart, how come they all got it wrong in the first place”

    Their job is to pick your pocket, not to educate you.

  136. scribe says:

    kettle, #132

    My mother called it right on the money. By the 4th of July of ’05, she felt the bubble had already peaked, would go flat in the fall, and pop in the spring of ’06 with the next round of rate hikes.

    She said she was going to add a codicil to her will: “Sell the house as soon as possible to the highest bidder.”

    She didn’t get the diagnosis of pancreatic cancer until October, but over the summer, she felt she had cancer somewhere and they just hadn’t found it yet, despite all the tests.

    Even when she was terminal, she was clear that we needed to MOVE IT … because the bubble was about to pop.

    So, if my mother, who was 86, could call the peak with perfect timing, based on what she saw in those newspaper columns on houses bought and sold – the POS capes and ranches that had doubled and beyond – how come my mother was smarter than all of these big league banks and investment banks?

    Ground level common sense.

    I wish she was still around. I’d love to hear her opinion on the downturn.

    At the time, none of us knew much about “the bubble.” We were all so shell-shocked, we just plugged into her plan, and got the house sold ASAP.

  137. Essex says:

    Scribe. Amazing story. Bless her soul.

  138. Essex says:

    BC I am pretty sure their job is to market to you…the investor/buyer…..make you feel bad if you are no part of the run….I learned my lesson the hard way with tech. Never again. I don’t even watch TV.

  139. Essex says:

    OK, cept for the Flintstones.

  140. Clotpoll says:

    Watching Cramer makes Fred Flintstone look like Masterpiece Theatre.

  141. Essex says:

    Cramer lost me ages ago when he was bullish on Motorola. He has zero credibility.

  142. BC Bob says:

    scribe [142],

    God bless her.

    Unfortunately, the quants did not include common sense in their monte carlo simulations.

  143. kettle1 says:

    BC,

    there was a report this morning on NPR that oil was up something like $1. they then stated it was because of fluctuations in the euro.

    They wee clearly implying that it was “just” an exchange issue.

    I found it amusing

  144. Nom Deplume says:

    I was wondering when Rich Corinthian Leather would make an appearance. Given the Pant Up demand for Crush Valor, it was a matter of time.

  145. Nom Deplume says:

    [119] NJP,

    Glad you liked the disclaimer. I will bill you at the GTG. ;-)

  146. Nom Deplume says:

    [146] Clot,

    Cramer is what I call a “leading contraindicator.” Whatever he pushes, I run the other way. I have lost money on his picks and made money on his pans. Making money is better.

  147. Nom Deplume says:

    BTW, I am thinking of trademarking “leading contraindicator.” Anyone know if “contango” and “backwardation” are trademarked yet?

  148. Clotpoll says:

    Plume (153)-

    “BTW, I am thinking of trademarking ‘leading contraindicator’.”

    I bet it would be easier to trademark “Costanza Theory”.

    Also, you’d have something even the sheeple can understand.

  149. Aaron says:

    Clot 85#
    I was out on a party boat once and it was kind of rough… there was this guy trying to fight hurling and made a big scene cursing and whatnot.

    I was sick too so I went up to the front of the boat where the guy was throwing chum in the water. I said “hey, let me help you out” and let loose. Much better afterewords!

  150. Yankee Gal says:

    My co-worker told me yesterday I need to buy a home. He said this is the time! He also said that houses in his neighborhood are selling for low $900Ks when two years ago they were selling for $1.2m. I said glad I’m not the guy who bought it for $1.2m! I said, you never thought they’d come down this much… what makes you think they can’t come down more? He insists I need to build equity!

  151. BC Bob says:

    “Anyone know if “contango” and “backwardation” are trademarked yet?”

    Nom,

    I do know they are dancing on LaSalle and W. Jackson, limit up.

  152. njpatient says:

    151 Nom

    $6K, right?

  153. grim says:

    From MarketWatch:

    Chrysler Building reportedly up for sale

    A large stake in one of the jewels of New York’s famous skyline could soon be purchased by foreign investors, according to a published report Wednesday, in what would be the latest deal in a spurt of recent transactions in the city.

    The Abu Dhabi Investment Council is negotiating an $800 million deal to purchase a 75% stake in the landmark Chrysler Building, the New York Post reported. The assets would be bought from TMW, the German arm of an Atlanta-based investment fund that has been keen to unload the stake, according to the story.

  154. njpatient says:

    Latest article on CNN/Money

    “$250 oil? Don’t bet on it”

    I think this is part 5 of a series. Parts 1 – 4 were:

    $75 oil? Don’t bet on it
    $100 oil? Don’t bet on it
    $125 oil? Don’t bet on it
    and
    $150 oil? Don’t bet on it

  155. grim says:

    The New York Abu Dhabi Post

    I like the ring of that.

  156. HEHEHE says:

    From Today’s Fed Beige Book:

    “Construction and Real Estate
    Housing markets in the District have shown further signs of weakening. Sales transactions for Manhattan co-ops and condos are reported to have been down sharply from a year earlier in April and May, while inventories of unsold units have risen by much more than the seasonal norm since the beginning of the year. A leading appraisal firm reports that average and median selling prices have been buoyed by a skew in volume toward the high end, with prices of comparable units flat to lower than a year ago. Sales activity in the outer boroughs is also reported to be down sharply from a year earlier. One industry contact says that he has heard of quite a few deals falling through due to difficulties in obtaining financing.

    Separately, an expert in New Jersey’s homebuilding industry notes that the market for new homes is being hampered by ongoing weakness in the resale market, where sales activity remains at low levels and prices are down more than 10 percent from a year ago. However, builders are reported to have worked through much of their inventory overhang and are no longer offering aggressive discounts, but they are still offering concessions.

    Commercial real estate markets in the region have shown further signs of slackening since the last report. While Manhattan’s office market is still fairly active in terms of leasing activity and renewals, office vacancy rates continued to rise in May–particularly on Class A properties. A sizable amount of available space is coming onto the market, largely from financial firms. This has bolstered average asking rents, as the mix of available space has become more weighted toward the high end: asking rents are up roughly 10 percent from a year ago, but this is well below the 20 to 30 percent appreciation seen in 2007. The sales market for office properties is reported to be especially weak, with prices estimated to be down 15 to 20 percent from a year earlier. New Jersey’s office rental and sales markets are also reported to be increasingly soft, with a fair amount of new development said to be in the pipeline.

  157. Essex says:

    Thank Goodness for the FED……”..The U.S. economy “remained generally weak” in May as higher prices for food and energy were pinching consumers’ pocketbooks, the Federal Reserve said Wednesday in its Beige Book report on the economy. The economy in seven of 12 regions was described as weak or soft, while five regional Fed banks – Atlanta, Cleveland, Philadelphia, St. Louis and San Francisco — reported the economy was stable in their area. The Fed said consumer spending had slowed since the last report, “as incomes were pinched by rising energy and food prices.” Some retailers were worried about high inventories. Auto and truck sales were weak. “

  158. Clotpoll says:

    Aaron (156)-

    “I was sick too so I went up to the front of the boat where the guy was throwing chum in the water. I said ‘hey, let me help you out’ and let loose.”

    Amazing how many folks will share their stories of vomiting. Heartwarming!

    I guess that’s what makes this a true community.

  159. Ben says:

    don’t you guys know? There is a magical aura that surrounds Bergen County that makes in impervious to any economic downturn. Didn’t you watch the Sopranos? Silvio laid it out and said the North Jersey Mob was recession proof. Not because they were in the mob. It’s cuz they were in North Jersey.

  160. make money says:

    Hey guys,

    At what point does WaMu become cheap and a take over prospect? Who would suffer the most if they were to implode? Whom do they owe the most money or who owns most of their comon stock?

    WaMu, Lehman, Citi, Merill, are all bent over with their hands on the anckles begging for a capital infusion.

    WaMu business model is broken and the FED will have to backstop this with another 30 Billion. Say hello to inflation and Gold.

  161. chicagofinance says:

    Yankee Gal Says:
    June 11th, 2008 at 1:44 pm
    He insists I need to build equity!

    YG: I insist he needs to build a line in the sand between what is his business and what is not.

  162. make money says:

    I got lucky and I was right on the money in the CFC takeover. Could lightning stike twice?

    Bi,

    What do you think about WaMu?

  163. Clotpoll says:

    make (167)-

    Unsafe at any speed. I can’t think of a single component of their business that any other bank would want. They are the worst.

    They go belly-up, the bondholders get a few bucks & everybody else pounds salt. That’s been my call for 18 months, and I’m sticking to it.

  164. chicagofinance says:

    make money Says:
    June 11th, 2008 at 2:30 pm
    Hey guys, At what point does WaMu become cheap and a take over prospect? Who would suffer the most if they were to implode? Whom do they owe the most money or who owns most of their comon stock?

    Ask Ken Lewis (ticker: BAC) what he thinks about taking over a company under financial duress ostensibly on the cheap…..

  165. chicagofinance says:

    make money Says:
    June 11th, 2008 at 2:31 pm
    I got lucky and I was right on the money in the CFC takeover. Could lightning stike twice?

    albani: it’s not nice to fool mother nature…

  166. Clotpoll says:

    Gal (157)-

    “He insists I need to build equity!”

    Ask him how you do this by buying a depreciating asset.

    Please post the answer here.

  167. Clotpoll says:

    chifi (171)-

    Worst of all, now the 7.25% coupon BAC is getting on the 2 bil they lent Countryfried doesn’t seem like all that much, either.

    What did Buffett say? That he wouldn’t touch deals like this unless he were getting 11-12%?

  168. Clotpoll says:

    I still think the BAC-Countryslide deal will never close.

  169. Corinthian gary says:

    Corinthian gary got sick and barfed on his shoes once. It was the 7th grade and a half bottle of Boones Farm.

  170. grim says:

    Were the shoes Cordovan?

  171. RentinginNJ says:

    Corzine not ready to commit on public worker benefit cuts

    http://www.app.com/apps/pbcs.dll/article?AID=/20080611/NEWS/80611037

    ATLANTIC CITY — Public employee benefits appear to remain a stumbling
    block as Gov. Jon S. Corzine and the Legislature try to craft a budget before the
    state’s July 1 deadline.

    After speaking on Wednesday at the New Jersey ACL-CIO’s annual convention, Corzine wasn’t ready to commit to proposals to cut benefits for newly hired public employees.

    Several key lawmakers want to trim benefits to save hundreds of millions of dollars in the coming years.

    Corzine wants to offer retirement incentives to cut the number of state workers, but lawmakers want the Democrat to also agree to eliminate benefits for part-time workers and require workers with multiple public jobs to receive one taxpayer-paid pension.

    Senate Budget Chairwoman Barbara Buono, D-Middlesex, has said legislators will back a retirement plan if Corzine supports the benefit reforms. But Corzine said he doesn’t view the two as linked.

    The proposals are provoking outrage from organized labor, including the state’s
    largest teachers union, which on Wednesday launched a campaign blitz against plans to cut benefits.

    “We are running this ad campaign to defend innocent school employees,” NJEA
    President Joyce Powell said.

    The Communications Workers of America, which represents 55,000 state and local government workers, is also running ads against the bills.

    Both unions emphasize how they agreed to contract reforms last year that, among other things, required teachers and state workers to contribute more money to their pensions.

    “It’s unacceptable to have legislators come back a year later with additional cuts
    in our benefits,” Powell said.

  172. 3b says:

    #176 cornithian gary: Do you put pennies in your loafers?

  173. thatBIGwindow says:

    What is for dinner tonight?

    Ramen
    Spam
    Cat Food

    I cant decide :(

  174. NNJ says:

    What does a * next to ‘A’ mean on GSMLS?

  175. thatBIGwindow says:

    Under Atty Review NNJ

  176. NNJ says:

    Thanks thatBIGwindow.

  177. bi says:

    Make,

    I am more interested in FNM:

    Johnson Quits Obama’s Vice Presidential Search Team

    http://www.bloomberg.com/apps/news?pid=20601087&sid=auHZ.1T7m1gw&refer=home

    169#, make money Says:

    Bi,

    What do you think about WaMu?

  178. Al says:

    Regarding Abu-Dhabu post :)

    I have a suggestion – how about we sell EVERYTHING in USA to foreign banks and, in their currency, and after that declare total nationalization???

    Wouldn’t that be fun – starting with a clean slate with a lot of money and brand new dollar???

  179. bi says:

    184#,

    if Holder quits, Caroline can name herself VP candidate. that will surely make Obama next president.

    “Holder has also come under fire from Republicans for his role in the 2001 pardon of commodities trader Marc Rich. “

  180. Rich In NNJ says:

    Woodcliff Lake FUTURE Comp Killer!

    2623526 Sold
    SLD 212 GLEN RD $838,000 8/8/2006

    2817895 Active
    ACT 212 GLEN RD $829,000 5/1/2008
    PCH 212 GLEN RD $819,000 6/9/2008
    PCH 212 GLEN RD $809,000 6/11/2008

  181. Rich In NNJ says:

    Whoa

    Franklin Lakes Comp Killer!

    2610829 Sold
    SLD 149 PULIS AVE $2,450,000 7/14/2006

    2709055 Sold
    ACT 149 PULIS AVE $2,595,000 3/8/2007
    PCH 149 PULIS AVE $2,450,000 5/22/2007
    PCH 149 PULIS AVE $1,999,900 2/29/2008
    ACT* 149 PULIS AVE $1,999,900 4/10/2008
    U/C 149 PULIS AVE $1,999,900 5/2/2008
    SLD 149 PULIS AVE $1,750,000 6/11/2008

  182. Stu says:

    Great times at our Montclair household. We lost most of our power about 4 pm yesterday. PSEG guys come buy about 8pm to check it out. Says they can fix issue remotely and said it should be taken care of in next couple of hours. Then, a ten minute storm from hell blows in and we are still without power. Keep in mind, less than two years ago, we lost power for 4 full days. Best they can tell us is Friday at 6pm for restoration. I’m looking on the bright side of the situation. This is excellent practice for doomsday, and I am significantly reducing my carbon foot print. That is, until I have to throw everything out from my refrigerator. Hell of a market these days, no? Anyone else move their 401k into bonds?

    Stu, using a friends laptop and power in Bloomfield. All praise Bloomfield.

  183. Victorian says:

    190# Stu-

    Us in Bloomfied were without power from 7 p.m. to 7 a.m.
    The silver lining to the storm was that it wasnt hot as hell.

  184. grim says:

    Rich,

    Whoa is right!

  185. NNJJEFF says:

    Can anyone with MLS access give me listing history and address for 2823609

    Thnx in advance

  186. BC Bob says:

    Rich [188],

    Correct me if I am wrong. Approx 30% off 2006 in Franklin Lakes? Am I hallucinating?

  187. John says:

    Actually that is the Chrysler building 30% off 2007 prices

  188. Stu says:

    bi,

    How is your XHB doing?

  189. manhattanexile says:

    Rich #188

    Looks like a Mafiosi special inside (hence “limited appeal”):

    http://intra.terrieoconnor.com/gallery/149PulisAve%2CFranklinLakes/DSC_6942

  190. gary says:

    When that house listed for $729,000 sells for $510,000, then I’ll go “Whoa”. Until then, I’m still not convinced.

  191. BC Bob says:

    John,

    It’s also Merrill from the end of April.

  192. 3b says:

    #198 gary: You will be grasshopper.

  193. bi says:

    196#, stu, my XHB is doing excellent – it came back to below my entry point but i am not eager to get back in since i feel financails present more value at this point.

  194. 3b says:

    #201 bi: fiancails and value? Seems like an oxymoron.

  195. ricky_nu says:

    Rich – #188

    whoa is right, but wha thte heck were the people who bought that in 2006 thinking (2.5mm for anything on a busy road, which Pulis is, is nuts). Where did they think the price was going to go?

    You wouldn’t have, by and chance, a more complete history of transactions on that house (or asking another way, what year on the way up would that house have traded at 1.75mm, 2003 for example?). woudl be neat to see that things are currently trading at 200″x” prices.

  196. BC Bob says:

    “it came back to below my entry point ”

    bi,

    Below your entry point? I would say you’re doing great. That is, of course, if you’re short.

  197. Rich In NNJ says:

    NNJJEFF (193),

    No recent sales history for this house

    2823609 Active
    ACT 548 KNICKERBOCKER RD $639,000 6/10/2008

    9801490 Sold
    SLD 548 KNICKERBOCKER RD $266,000 6/30/1998

    ’07 Taxes: $9,785.61

  198. Tom says:

    Power finally restored! :) I thought my block was hit by lightning last night. From the window in my computer room I saw a large flash and a orange bolt of electricity followed by that ZZZZZZZZZZZZZZZZZZZZZ

    Freaky.

  199. bi says:

    202#, you have to search for value during market sell-off. my favorites are exchanges: NYX, NDAQ, NMX and CME. these are traded near 52 week low but they will not go away. all disclaimers apply.

  200. John says:

    If you really think Wamu is another CFC, remember BAC has not finalized the CFC price. Also the regulators mission is the banks assets and protecting the depositors and the CFO of a company main concern is bondholders first than shareholders. The stock price is a distant fourth in concerns. Many a bank got a new name slapped on it by the FDIC in the last downturn and shareholders got wiped. At 2 or three bucks a share maybe some mad money. If you really think it is getting taken over to protect your self if it is a Bear takeover where stockholders got spanked and bondholders got 100% on the dollar by the most senior bonds they got, they are paying 9-10%

    In fact Soveign bank has some 9%+ bonds floating around and they are in much better shape. They over paid for Independence and starting a multi year big time cost cutting program in 2006 that show some promise in that last quarter. Wamu was still going crazy in late 2006 and all of 2007 and they say 2007 is the most toxic of them all.

    Some other banks have juicy convts. Wamu is tough. I have some Wamu bonds expiring soon and fingers are crossed they don’t go under by then and bondholders are way up the food chain.

    I don’t trust WAMU, their C-level team and BOD are still pretty much the same from their stupid days and they did not wind down subprime till almost Christmas 2007. In fact during the last half of 2007 when banks tightened Wamu was the only schmuck taking the applications. Good Luck with that.

  201. Rich In NNJ says:

    Bob (194),

    Aren’t we all? Really, aren’t we all..?

  202. BC Bob says:

    “Where did they think the price was going to go?”

    [203],

    The shot heard around the world.

  203. pricesstillskyhigh says:

    Off Topic, I am trying to find part time work in IT/pharma. Know its a bad time to start looking. Can anyone suggest a good site or placement agency. Have tried the usual sites to no avail. thanks..

  204. BC Bob says:

    “202#, you have to search for value during market sell-off.”

    bi,

    Maybe dumping s*it is the better alternative?

  205. John says:

    Re 207 Exchanges rock. But consolidations are dead, but voliatility is great. They will be steady great long term performers, but the days of NYMEX/AMEX/ISE getting bought and shooting 80% a year is over. Everybody has a dance partner.

  206. John says:

    DICE best IT gob site

  207. make money says:

    WaMu has just arrived by ambulance to the FED Emergency Room——the pulse is weak—-Dr. Ben and Dr. Greedspan are now now ready with the morphine—-

    I wanna profit from this. How?

    Ps. Who cares if BAC closes CFC, I’ve sold my shares and made over 60% return on that trade.

  208. Rich In NNJ says:

    ManhattenExile (197) & Ricky Nu (203),

    Yea, not an ideal location nor my taste either. But to each his own.

    No other sales history other then the when it sold in 2001 for $345,000 basically for the approximate acre of land.

  209. make money says:

    Leh is at $23.6. Yikes.

  210. Tom says:

    “Many a bank got a new name slapped on it by the FDIC in the last downturn and shareholders got wiped.”

    Ooh. Maybe we can all chip in and get our names on banks like some banks did with sports arenas!

  211. BC Bob says:

    “Leh is at $23.6. Yikes.”

    Make,

    Step back. If anybody offered to bet you, one year ago, that the price of corn and soybeans, combined, would equal the price of Leh, in 2008, would you have taken the bet?

  212. make money says:

    http://www.time.com/time/business/article/0,8599,1813198,00.html

    Thank God for Guido’s. I guess this is the pant up demand that BI has been talking about.

  213. make money says:

    Yes. I guess it’s better to own corn then Leh.

  214. make money says:

    Peek into the walk-in cooler at Operation Love Center’s food bank in West Boise and you’ll see something its director has rarely seen in his seven years there: empty shelves.

    Hey BC,

    Can they just serve shares of Bear, and Leh it’s cheaper.

    http://www.idahostatesman.com/eyepiece/story/407143.html

  215. Hehehe says:

    All this talk about LEH and WAMU; come on people pep up, it’s the NINTH INNING!!!

  216. make money says:

    All this talk about LEH and WAMU; come on people pep up, it’s the NINTH INNING!!!

    Yeah but it’s the season opener.

  217. SG says:


    Home price drop means $4 trillion in lost capital

    Peter Acciavatti, a credit analyst and managing director at JP Morgan Securities Inc, said in an interview that Wall Street write-downs and losses totaling at least $325 billion so far may ultimately mean $3.9 trillion in tighter credit conditions.

    Moreover, home prices may fall as much as 30 percent from their peak in 2006 and not hit bottom until 2010, with greater drops still in subprime mortgage debt markets, he told Reuters.

    Credit markets also will be under pressure from massive write-downs and losses stemming from consumer debt. The International Monetary Fund has estimated write-downs from global investment banks may approach $1 trillion, while J.P. Morgan forecasts the figure may climb as high as $600 billion.

    Tightening credit conditions, high energy prices and weaker growth prospects mean that interest in distressed debt sales and trading may be on the rise, according to Jon Kibbe, founding partner at law firm Richards Kibbe & Orbe LLP.

  218. photoalchemy says:

    Boomers who can’t retire work best under bright lights.

    http://www.time.com/time/health/article/0,8599,1813396,00.html

  219. SG says:


    Economic Bubbles

    By: Congressman Ron Paul

    Governments throughout history have attempted to monopolize the flow of information, and the Internet threatens that monopoly. Behind much of the rhetoric we hear from those who want to control the Internet about child protection, the threat of online terrorist networks, or the danger of Chinese hackers lies a desire to control the flow of information and ensure that the dominant modern political and economic orthodoxy reigns supreme. On the Internet today, it only takes a few clicks of the mouse to access the writings of Thomas Jefferson, James Madison, Friedrich Hayek, or Ludwig von Mises, among others. To some people the sheer volume of information available can seem mind-numbing at times, but it is far preferable to the alternative of a government-controlled or -monitored Internet.

    Thanks to the Internet, more Americans than ever are waking up to the reality of the Federal Reserve’s poor stewardship of the dollar, the steps being taken to create the NAFTA Superhighway, and dangerous plans to erode American sovereignty. Government accords and statements, once publicized, can be disseminated within minutes to millions of people. Websites and blogs serve as an alternative source of news, publicizing stories and opinions that are overlooked by traditional media. Meetup groups, money bombs, and similar concepts make it far easier to organize and fund meetings, campaigns, and rallies, overcoming many of the hurdles to collective action. In many ways, the Internet is truly the last frontier in which Americans can unleash the entrepreneurial spirit which made this country great.

  220. SG says:


    BlackRock CEO: credit crunch impact may last years

    “The worst of the financial market crisis is behind us, but there’s more to come,” he said at a Wall Street Journal conference. “The economic problems associated with the turmoil have quarters to go, maybe years to go, because of the contraction of credit, the bloated balance sheets and the inability of banks to loan and restimulate the economy.”

  221. BC Bob says:

    “Wall Street write-downs and losses totaling at least $325 billion so far may ultimately mean $3.9 trillion in tighter credit conditions.”

    SG [225],

    Ultimately, when loses reach close to $1 trillion, it will mean approx $10 trillion in tighter credit conditions.

  222. njpatient says:

    hey kettle
    check out paragraph 2 re iran.
    http://www.mcclatchydc.com/251/story/40372.html

  223. House Hunter says:

    Ok #225 SG and 230 BC Bob…when does this happen? It appears that although prices have dropped, they are still unaffordable. Because of the perceived “drop” it does seem to cause a stir and there are things selling like crazy…it to me is a dead cat bounce. Hubby thinks it is here to stay. I think to wait a little while longer or low ball now is a strategy I am comfortable with.

  224. Tom says:

    “Moreover, home prices may fall as much as 30 percent from their peak in 2006 and not hit bottom until 2010, with greater drops still in subprime mortgage debt markets, he told Reuters.”

    About 30% is where I’m guessing too if not more. But I’m hoping that it hits bottom before 2010 so the economy can get back into shape.

    There’s going to be ups and downs but the general trend will be down. For those in denial, april 2009 is going to hit them hard.

  225. 3b says:

    #232 hiuse: I do not think things are selling like crazy, yes there is movement, but nothing selling like crazy. Earlier today the gsmls boke 37,000, that is a ton of inventory.

    And financing continues to become more and more difficult.

    Oh and Hubby is wrong;tell him to be patient.

  226. njpatient says:

    “tell him to be patient.”

    Good advice

  227. njpatient says:

    “For those in denial, april 2009 is going to hit them hard.”

    Yes indeedy.

  228. John says:

    Forget Real estate in 08 and 09 and you won’t lose even a dime

    Begin Again in 2010!!!!!!!!!!

  229. BC Bob says:

    Let’s go to the archives, minimum 30-40% off peak, 5-7 years duration.

  230. skep-tic says:

    curious whether anyone here has ever tried proposing alternative compensation schemes to buyers’ brokers.

    I’m thinking of a flat fee of around $3000 plus 13% of the discount below list price at which the transaction closes.

    If you take a home listed at $550,000, closing at 10% off list would result in a total commission of about 2% of final sale price. 15% off list would result in a 2.9% commission and 20% off would result in 3.9% commission.

    This seems to me to be a fair way of compensating the buyer’s agent based on the value the agent brings to the table, but still ensuring that the agent gets paid something even if you buy a house close to list price.

  231. BC Bob says:

    Can’t these clowns even get on the same page? Coming from the Vice-Chairman? Didn’t Bergabe just pledge his inflation fight? Comical.

    “HARWICH — Allowing inflation and unemployment to rise in the short-term would be an “appropriate” response by policy makers to soaring oils prices, Donald L. Kohn, vice chairman of the Federal Reserve, said today.”

    http://www.boston.com/business/ticker/2008/06/feds_kohn_addre.html

  232. BC Bob says:

    JB,

    240 in moderation. Damn fed talk.

  233. bairen says:

    hehehehehe!

    “Why I am Voting Republican”

    http://www.youtube.com/watch?v=FiQJ9Xp0xxU

  234. Laughing all the way says:

    Grim – Have slacked in my readying .. have you purchased anything? Are you still looking? What is your take on this ‘urbanization’ theory being floated?

  235. Al says:

    I’m thinking of a flat fee of around $3000 plus 13% of the discount below list price at which the transaction closes.

    If you take a home listed at $550,000, closing at 10% off list would result in a total commission of about 2% of final sale price. 15% off list would result in a 2.9% commission and 20% off would result in 3.9% commission.

    Would not it lead to even higher listing prices as both selling agent AND buying agent now are interested in listing it 20% HIGHER AND DROPPING PRICE 20%???

  236. John says:

    If you are looking at an MLS listed home isn’t a buyers broker pretty much useless?

    Plus a realtor who sells homes and shows you another realtors listing is not a buyers broker so it is not up to you to cut deals.

  237. skep-tic says:

    #243

    “Would not it lead to even higher listing prices as both selling agent AND buying agent now are interested in listing it 20% HIGHER AND DROPPING PRICE 20%???”

    I don’t think so because the agent’s commission (both for the buyer and the seller) is based on the final sale price. So the seller’s agent would obviously not want to reduce the price from list whereas the buyer’s broker (under my scheme above) would want to do so.

  238. skep-tic says:

    John– not sure what your point is. If you are hiring this person, you don’t believe you have some freedom to negotiate how they are paid?

  239. grim says:

    skep,

    The biggest challenge will be finding an agency that will agree to buyer compensation. This will be far more difficult than agreeing on the details of the compensation structure.

  240. skep-tic says:

    good info, thanks grim.

    same is true even with NAEBA agents?

  241. njpatient says:

    239
    skep
    I like your thinking, but IMO the problem with that particular scheme is that the buyer’s broker will then be incented to push bids on houses he thinks are over-priced.

  242. jafo says:

    On rapid urbanization, wouldn’t broader telecommuting for “white collar” workers co-locating retail/distribution within residential communities allow us salvage more of existing suburban housing stock?

    More pragmatically, wouldn’t that be more platable polictically and socially even if sub optimal?

    Of course mcmansion owners might still kick and scream about the afforable housing for workers at those localized retail/distibution points. They have traditionally even frowned upon mass transit let those people go back and forth. But maybe now that they need to use it, it will be different.

  243. As easy as it sounds to “bail”, I think most people won’t do it. Maybe I shouldn’t say this but short selling the house after buying another one could be a good exit strategy for someone severely upside down in their mortgage.
    Jonathan Christopher of Short Sale Way

  244. MJ says:

    If I’m gonna buy a $1M+ home, it damned well better have granite countertops not just in the kitchen but also in the baths. I’m not spoiled, materialistic or naive. I just want quality for my money.

  245. Andrew says:

    I would say that 45-60% would be a better indicator of a person’s financial history in regard to the longevity of the resident in the home; some people have the ability to pay 30% of the price of a home, which makes it not a good benchmark to accuratly value the sustainability of the neighborhood. This protect the senior housing contingent, but does not incentive those who have income for residential investment type properties, unless that individual is willing to pay the additional cost of occupy the residence until the requirement is met.

    I wish I had this type of authority with policy; obviously those are all just my thoughts.

    A. Sage

  246. Andrew says:

    I would say that 45-60% would be a better indicator of a person’s financial history in regard to the longevity of the resident in the home; some people have the ability to pay 30% of the price of a home, which makes it not a good benchmark to accuratly value the sustainability of the neighborhood. This protect the senior housing contingent, but does not incentive those who have income for residential investment type properties, unless that individual is willing to pay the additional cost of occupy the residence until the requirement is met.

    I wish I had this type of authority with policy; obviously those are all just my thoughts.

    A. Sage

  247. Andrew says:

    I guess I said it twice… Maybe I am Sage Twice!

    Andy

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