From the NY Daily News:
New Jersey couple sues over dream home that came with creepy, threatening letters from ‘The Watcher’
A New Jersey couple who thought they were buying their dream home are suing its previous owners, claiming the house has a longtime stalker who writes terrorizing letters and signs them “The Watcher.”
A Union County lawsuit contends the original owners of the six-bedroom, $1.3 million home in upscale Westfield deliberately withheld information about the anonymous, threatening missives.
“Currently, plaintiffs are in the process of selling the home as they are unable to live in the home without extreme anxiety and fear for their children’s safety and well-being,” says the suit that was filed earlier this month, according to Courthouse News Service.
The names of the plaintiffs and the defendants, as well as the home’s address, were not divulged by the site to protect the privacy of those involved.
“Plaintiffs are having trouble selling the home as interested parties, once notified of the letters, no longer view the property as a safe home,” the suit claims.
The letters began arriving on June 5, 2014, three days after closing, the couple contends. They show The Watcher’s “mentally disturbed fixation and claim to possession and/or ownership of the home,” the suit says.
The letters claim the home had been in The Watcher’s family for decades.
…
The new owners claim the sellers received a letter from The Watcher more than a week before closing on the sale. That correspondence “noted there would be a new family moving into the home.”The sellers were “so desperate to sell the million-dollar home (they) knowingly and willfully failed to disclose … this disturbing letter,” the suit says.
The new owners are seeking damages for breach of contract and fraud. They are asking for their money back, plus interest.
Good Morning New Jersey
The ghost of John List?
well if it’s the house I think it might be, they listed it for $160k more than they paid only 8 months earlier. Did they think someone else would pay a premium for the house once they found out about the alleged letters? Because of course they would have disclosed them. And the listing says many improvements were made in the past year, why did they make improvements on a house they were terrified to live in?
Of course I could be wrong but this listing has dropped in price pretty far in the past 4 months and it was removed just about when this story broke. Plus the sales price and closing date from 2014 closely match.
What’s next, suing the seller because they didn’t disclose an annoying neighbor? Maybe not disclosing that the idiot down the street with the Harley revs the engine at 5am on Sunday mornings? Maybe not disclosing that every Tuesday after school the neighborhood kids close the street down for an pick up street hockey game? How about the neighbor showering with the window shades open, surely there was a prior history of sexual harassment?
My life is on autopay and online. Rarely if ever get my snail mail. Missed a certified letter recently, went through three notifications before I opened my mailbox and it was already returned. I’d be dead before breaking the envelope seal.
too good not to repost from yesterday for those that missed it.
I got 10 bucks that says “The Watcher” is a regular lurker on this board.
http://www.nj.com/union/index.ssf/2015/06/authorities_not_releasing_info_in_eerie_westfield.html#incart_river
WESTFIELD – The mysterious letters sent to a township home, and now gaining wide attention in news reports around the country, are currently under investigation by both police and Union County Prosecutor’s Office, but no information is being released about that investigation.
RELATED: Stalker tells homebuyers ‘bring me young blood’, suit alleges
“The Union County Prosecutor’s Office is aware of this matter and is continuing to work closely with the Westfield Police Department on what is an ongoing investigation,” said Mark Spivey, spokesman for the prosecutor’s ofice.
He said no details of the letters or the investigation could be released.
Speaking during the town council meeting Tuesday, Mayor Andrew Skibitsky also declined to comment on the investigation or on a lawsuit filed by the owners, but did say that local police “conducted an exhaustive investigation.” He also urged anyone with information to contact police.
Earlier this month, the owners, a couple with three children, of the filed suit said the letters, signed by somebody only identifying himself as “The Watcher,” claim they bought the house in June 2014 for $1.3 million and have spent thousands on improvements, but cannot move in because of these missives.
The first letter, which arrived June 5, three days after the closing on the sale, stated that he had been watching the house for two decades, and his grandfather and father had each watched it. He claimed to know the previous owners and had asked them to “bring him young blood.”
At least two more letters arrived within the coming months, according to the suit. The current owners say that the people who sold that house and also received a letter from “The Watcher” within two weeks before the sale, but never disclosed that information.
Westfield police have yet to respond to repeated calls seeking information about the letters.
Sellers are not required to disclose information about threats or tragic incidents that occur in a house, said A. Michael Del Duca, president of the North Central Jersey Association of Realtors and a branch office manager for Berkshire Hathaway HomeServices.
However, Del Duca would want his clients to have the details and not find out after closing on a sale.
“If there was a murder or suicide in the house, that really does not effect the livability. But as a realtor, I wouldn’t want my some client finding out something from a neighbor,” he said.
The disclosure form that sellers routinely fill out involves the physical condition of house, including everything from a leaky basement to a leaky roof.
The prosecutor’s office advises anybody receiving disturbing letters to quickly call police.
lol didn’t realize grim made it the cover article
They should write a book like the Amityville Horror
I say skip the movie and go straight with an HBO Series, perhaps wrap up “the watcher” in 1 season.
The End Is Nigh (jj Exotic Aquarium Edition):
Hey, guys, if you go lake fishing in hip boots in New Jersey, better wear a cup to protect the “family jewels.”
A man and his son caught a strange species in Swedes Lake in southern Jersey that turned out to be a rare Amazonian fish known in South America as the “Nutcracker,” according to reports.
The pacu fish looks like a piranha but instead of razor teeth has flat, almost human choppers.
It’s notorious for biting the testicles of swimmers and fisherman in the Amazon, the Daily Mail said.
The Jersey pacu may have been in someone’s exotic aquarium before being abandoned.
I am guessing that The Watcher is lying about home being in the family. Record search would obviously lead to prime suspects. Sounds like someone was outbid on it sometime in the past but can’t let it go.
All rhetorical questions, what factors come into play when you put in your bid on a house? The prevailing market, the wife, your RE Agent, whatever amount loan you were pre-approved for? Should you consult with a financial advisor or go it alone? After all, I didn’t need an advisor to tell me to buy the new Acura when I could have purchased a used Honda.
First-time buyers grab a bigger share of the real estate market
When Federal Reserve head Janet Yellen was asked about housing issues last week, she gave an economist’s classic “on-the-one-hand, on-the-other-hand” answer. But because she neatly summed up the disparate economic realities confronting millions of owners, sellers, renters and would-be buyers around the country, it’s worth taking a closer look.
On the one hand, she said, rising home prices have been terrific news for many owners. “The increase in house prices is restoring the wealth of many households who have [home equity] as their major asset,” she said.
On the other hand, there are millions of renters who are being squeezed by the housing gains of owners and landlords. Many of them are prospective first-time buyers frustrated by higher asking prices; others are what are known as “rebounders” — people who encountered difficulties during the financial crisis but have now rebuilt their credit and want to buy.
http://www.washingtonpost.com/realestate/first-time-buyers-grab-a-bigger-share-of-the-real-estate-market/2015/06/23/eaa20778-1907-11e5-ab92-c75ae6ab94b5_story.html
Westfield Bogey Man http://blog.nj.com/njv_mark_diionno/2008/03/the_bogeyman_of_westfield_a_gh.html
Long article but surprisingly a good read from Vanity Fair of all places.
Betting on the Blind Side
Michael Burry always saw the world differently—due, he believed, to the childhood loss of one eye. So when the 32-year-old investor spotted the huge bubble in the subprime-mortgage bond market, in 2004, then created a way to bet against it, he wasn’t surprised that no one understood what he was doing. In an excerpt from his new book, The Big Short, the author charts Burry’s oddball maneuvers, his almost comical dealings with Goldman Sachs and other banks as the market collapsed, and the true reason for his visionary obsession.
But as early as 2004, if you looked at the numbers, you could clearly see the decline in lending standards. In Burry’s view, standards had not just fallen but hit bottom. The bottom even had a name: the interest-only negative-amortizing adjustable-rate subprime mortgage. You, the homebuyer, actually were given the option of paying nothing at all, and rolling whatever interest you owed the bank into a higher principal balance. It wasn’t hard to see what sort of person might like to have such a loan: one with no income. What Burry couldn’t understand was why a person who lent money would want to extend such a loan. “What you want to watch are the lenders, not the borrowers,” he said. “The borrowers will always be willing to take a great deal for themselves. It’s up to the lenders to show restraint, and when they lose it, watch out.” By 2003 he knew that the borrowers had already lost it. By early 2005 he saw that lenders had, too.
http://www.vanityfair.com/news/2010/04/wall-street-excerpt-201004
http://www.bloomberg.com/news/articles/2015-06-24/the-companies-where-millennials-want-to-work-the-most#media-1
If one must disclose threatening letters, then I would simply mail an anonymous threatening letter prior to bidding on a home. Bam…100K off! Gary…sharpen your pencil.
And speaking of disclosures. The landlord on the multi I purchased died in her bed in the master bedroom. The Russian caretaker actually called me to come downstairs to verify that she was dead. I swear, she must have been dead for many hours by the time I was called down there as she was ice cold and already stiff. She asked if she should call an ambulance and I suggested a hearse would be better. Then Gator and I went out to watch a hockey game. When we lived in that apartment, I liked to remind Gator that she was lying down right where our landlord croaked about once per week.
Buying a house in NJ with only one dead body is rare
Libturd in Union says:
June 24, 2015 at 9:48 am
And speaking of disclosures. The landlord on the multi I purchased died in her bed in the master bedroom. The Russian caretaker actually called me to come downstairs to verify that she was dead. I swear, she must have been dead for many hours by the time I was called down there as she was ice cold and already stiff. She asked if she should call an ambulance and I suggested a hearse would be better. Then Gator and I went out to watch a hockey game. When we lived in that apartment, I liked to remind Gator that she was lying down right where our landlord croaked about once per week.
Good point
I once had a tenant that died on me. Luckily, it was in the hospital, not in the apt. By the time I found out about it, the rent was overdue, and the other tenants took whatever she had. Not much, though. I had to cleanup after her. That included all the used hypodermic needles under her bed. She was not a druggie, just an old, sick lady. I paid a junker to hall away the crap. His Mexican wife (girlfriend?) stopped by while they were loading. She brought over her kids. They were barefooted. WTF?
Gustnado?
Wtf? We’ve eschewed all meteorological science and are now just making shit up?
Jesus it’s a real word, I hang my head in shame.
I guess I’ll look forward to the next Ring of Fire.
If one must disclose threatening letters, then I would simply mail an anonymous threatening letter prior to bidding on a home. Bam…100K off! Gary…sharpen your pencil.
Pure genuis! I need to be more sinister.
It’s ok to put a stipulation in the contract that the squirrels need to be fed so why can’t the disclosure be expanded to include the presence of ghosts, gobblins and m.urder/su1cides?
[14] cont…my next book for sure
On May 19, 2005, Mike Burry did his first subprime-mortgage deals….You didn’t buy insurance on the entire subprime-mortgage-bond market but on a particular bond… He set out to cherry-pick the absolute worst ones and was a bit worried that the investment banks would catch on to just how much he knew about specific mortgage bonds, and adjust their prices.
Goldman Sachs e-mailed him a great long list of crappy mortgage bonds to choose from….They were all priced according to the lowest rating from one of the big-three ratings agencies.” He could pick from the list without alerting them to the depth of his knowledge. It was as if you could buy flood insurance on the house in the valley for the same price as flood insurance on the house on the mountaintop.
None of the sellers appeared to care very much which bonds they were insuring. He found one mortgage pool that was 100 percent floating-rate negative-amortizing mortgages—where the borrowers could choose the option of not paying any interest at all and simply accumulate a bigger and bigger debt until, presumably, they defaulted on it. Goldman Sachs not only sold him insurance on the pool but sent him a little note congratulating him on being the first person, on Wall Street or off, ever to buy insurance on that particular item.
The credit-default swap was a zero-sum game. If Mike Burry made $100 million when the subprime-mortgage bonds he had handpicked defaulted, someone else must have lost $100 million.
By June 30, 2008, any investor who had stuck with Scion Capital from its beginning, on November 1, 2000, had a gain, after fees and expenses, of 489.34 percent. (The gross gain of the fund had been 726 percent.) Over the same period the S&P 500 returned just a bit more than 2 percent.
Exhibit 1 of evidence of mental deficiency.
Fabius Maximus says:
June 23, 2015 at 11:58 pm
“I love politics.”
Why not? I’m sure all of your examples violate some local ordinance… maybe several.
Grim says:
June 24, 2015 at 7:02 am
What’s next, suing the seller because they didn’t disclose an annoying neighbor? Maybe not disclosing that the idiot down the street with the Harley revs the engine at 5am on Sunday mornings? Maybe not disclosing that every Tuesday after school the neighborhood kids close the street down for an pick up street hockey game? How about the neighbor showering with the window shades open, surely there was a prior history of sexual harassment?
“Wtf? We’ve eschewed all meteorological science and are now just making shit up?”
Did that to economics starting months ago, lol………
If they listed the home for sale, they posted a disclosure on the MLS.
It would be interesting to see what they wrote in their own sellers disclosure.
The Big Short
Read it on holiday at the end of last year. Good read, generally balanced although Lewis obviously has an acidic but humorous bent toward finance.
If you get it, pay attention to the critical role of the rating agencies and the fiduciary duties of the parties. As the summary says, mortgage borrowers will take whatever deal is thrown at them. Banks, they put out products for which there is demand, they have no duties to the borrower as it relates to their ability to pay. Investment banks (bundlers of the CMOs) are intermediaries, the put buyer and seller together if there is demand.
The party whose role is defined as fiduciary duty to multiple parties to get it right were the rating agencies. They so totally dropped the ball, ignored, did not understand, or all of the above that it should really be criminal.
Also, IIRC, there are some funny passages in the book near the end as Burry and a few others who had massive market shorts in the money nearly lost it all. If your counterparty on the CD swap was Bear or Lehman….. These guys made the call of a lifetime, traded it, waited, were correct, made bazillions on paper, and then nearly lost it all because they were TOO correct. If the counterparty or system melted down, 100% correct equaled failure.
I have a defaulted condo owner in my building who took a 200% LTV loan back in Spring 2007. First 100% was a tax deductible mortgage.
Second 100% was a negative am IO loan that was taxable. Meaning you could not write on tax the interest. He defaulted after one payment.
Place was worth 300K, he borrowed 600k.
I have a second guy in complex Spring 2006 took a 100% equity balloon loan in Spring 2006. It is IO. So I guess come Spring 2006 foreclosure starts. Will take 3-4 years for him to be evicted so basically 2020 he needs to move on.
“Every mortgage bond came with its own mind-numbingly tedious 130-page prospectus. If you read the fine print, you saw that each bond was its own little corporation. Burry spent the end of 2004 and early 2005 scanning hundreds and actually reading dozens of the prospectuses, certain he was the only one apart from the lawyers who drafted them to do so”
There is also good book out of print I’m sure about the current MBS market and its formation in the early 80s. Prepayment of mortgages is an issue for the MBS market and a lot of money can be made making that call correctly.
Bear owned that early market, and there was a banker there generally considered the ‘father’ of modern MBSs. His name escapes me, but he used to fly newly hired college kids out to apartment buildings all over the country just to sit outside and note the make and models of cars parked there, window treatments, and other indications of income and come report back. The better the tenants’ outlook, the more likelihood of prepayment, the better you could position your trade.
In the ultimate irony the same basic, granular piece by piece analysis of the securities created fortunes at the founding of the market on the upside and in 2008 on the downside. Diligence, research, knowledge, and analysis do matter….
JJ, those stories would be funny or sad except the money they borrowed and p1ssed away is coming out of our pockets?
What did the guy do with the $300k more than what his condo cost? Boat? I’m a taxpayer, I want it. Kitchen? I’ll take marble. Disney? Give me the photos.
Irresponsible financial jacka$$. Borders on thievery.
And I don’t need to hear he’s some ‘innocent victim’ of banks ‘pushing’ product. If he’s too stup1d to realize he can’t borrow or afford a loan 2x the value of his house then he shouldn’t be allowed to manage his own affairs (or vote or reproduce for that matter).
Wanna play victim? Become a total ward of the state….
I solve my problems and I see the light
We got a lovin’ thing, we gotta feed it right
There ain’t no danger we can go too far
We start believing now that we can be who we are
Greece is the word
They think our debt is just a growing pain
Why don’t they understand, it’s just a crying shame
Their lips are lying, only real is real
We stop the fight right now, we got to be what we feel
Greece is the word
It’s got a groove, it’s got a meaning
Greece is the time, is the place, is the motion
Greece is the way we are feeling
We take the pressure and we throw away
Conventionality belongs to yesterday
There is a chance that we can make it so far
We start believing now that we can be who we are
Greeece is the word
“Irresponsible financial jacka$$. Borders on thievery.”
34
Leftwing,
Shouldn’t your condemnation be directed at the govt (and those that buy it’s power)? They’re the ones that decided to take tax money and/or printed money and fill the holes left by the irresponsible borrowers & lenders. I include lenders as well because it’s merely a financial transaction. A non-recourse loan specifically spells out what happens in case of default. (and yes I agree foreclosure is the solution).
Lib – If I recall that evening correctly, it was the day that I dislocated my kneecap. And we weren’t speaking when we got back to the house, because you were upset that waiting for my painkiller injection at the Immedicenter was going to make you late for the game.
Then you came up to the apartment and told me S was dead and I burst into narcotic enhanced tears. You didn’t want to stick around with the dead body for the family so you made me come to the game. We then acted surprised when the landlord’s brother “told” us that she had passed since I was too embarrassed to admit that you had split.
Who said chivalry was dead?
Is “The Watcher” Nom?
[31] The banks thought they were totally hedged. They wrote insurance on a bazillion and collected a premium, then turned around and bought insurance on the same bazillion for a smaller premium. The “guaranteed” cash flow was the difference between the premium they collected and the premium they paid. If the asset goes belly-up, collect on one “policy” and pay off the other. What they failed to realize is that it was literally a betting “ring”. All it takes is one big loser slipping out of town to collapse the whole ring.
Also, IIRC, there are some funny passages in the book near the end as Burry and a few others who had massive market shorts in the money nearly lost it all. If your counterparty on the CD swap was Bear or Lehman….. These guys made the call of a lifetime, traded it, waited, were correct, made bazillions on paper, and then nearly lost it all because they were TOO correct. If the counterparty or system melted down, 100% correct equaled failure.
Joyce, agree, enough pain to go around.
For me though, personally and politically, it comes back to personal choice and responsibility.
Plus, any loan document I’ve ever come across has the *borrower* representing and signing he is willing and able to repay on the terms contained.
No third party – neither lender, appraiser, builder, credit agency, insurer, or the candle stick maker – makes the representation the borrower can repay. the borrower does. His liability, his life, his responsibility.
Agree on the bank hedge. Problem for Burry and crew (principals) after making such a massive call correctly is *they* only had one counterparty. If that counterparty went bust, they couldn’t move down the line.
The book describes the blow by blow well. IIRC, they dumped much of the stuff around 70 even though there was good assurance it would go to 100. Concern was if the environment continued to deteriorate their investment would be worth zero.
I think one of their partners actually cashed out earlier to avoid that risk. And a very good description of the day by day with one Deutsche banker who was providing them liquidity and which counterparty trade he would buy from Burry (Goldman) and which ones they would not.
Good book, fun read, recommend it.
Gates…you were right. Forgot about your pain of a pain. That’s back when I used to care about the outcomes of my hockey games.
Greece, wheels up Sunday, land Monday AM.
Woo-hoo! Haven’t seen a good old soc1alist strike in a while….
Let me know if you actually witness any one working over there.
You should read Dan Dimicco’s book “American Made”. He estimates that about 80% of the nearly $800 billion of 2009 federal stimulus money ended up overseas due to imports. Like I said, what stimulus? Should have been put into infrastructure and education. Thank you politicians.
“American manufacturing is on life support–at least, that’s what most people think. The exodus of jobs to China and other foreign markets is irreversible, and anything that is built here requires specialized skills the average worker couldn’t hope to gain. Not so, says Dan DiMicco, chairman and former CEO of Nucor, America’s largest steel company. He not only revived a major US manufacturing firm during a recession, but helped galvanize the flagging domestic steel industry when many of his competitors were in bankruptcy or headed overseas. In American Made, he takes to task the politicians, academics, and political pundits who, he contends, are exacerbating fears and avoiding simple solutions for the sake of nothing more than their own careers, and contrasts them with the postwar leaders who rebuilt Europe and Japan, put a man on the moon, and kept communism at bay. We need leaders of such resolve today, he argues, who can tackle a broken job-creation engine by restoring manufacturing to its central role in the U.S. economy–and cease creating fictitious “service businesses” where jobs evaporate after a year or two, as in a Ponzi scheme.
With his trademark bluntness, DiMicco tackles the false promise of green jobs and the hidden costs of outsourcing. Along the way, he shares the lessons he’s learned about good leadership, crisis management, and the true meaning of innovation, and maps the road back to robust economic growth, middle-class prosperity, and American competitiveness.”
http://www.amazon.com/American-Made-Making-Things-Greatness/dp/1137279796
45-
“With American Made, Mr. DiMicco delivers a broadside against the fashionable “secular stagnation” theorists dominating the political discourse.. few people will agree with everything he says, but the book is a cri de coeur from one of our best executives from one of our most successful companies. Attention should be paid. (The Wall Street Journal)
Common-sensical–perhaps too much so for policymakers to stomach–and plainspoken. Free trade absolutists and corporate apologists will hate it, but as for the rest, it’s worthy of much discussion. (Kirkus Reviews)
[DiMicco] offers blistering criticism of politicians from both parties for maintaining ideological positions at the expense of focusing on the economy and creating jobs…Clearly and passionately, he offers solutions for economic recovery through investing in infrastructure and encouraging innovation. (Booklist)
If this nation’s leaders would read this book, maybe they could keep our country from committing financial suicide. Dan’s common-sense approach is a uniting factor that’s missing in this era of fractious, if not toxic, politics. Dan will leave you scratching your head about how in heck we have gotten so off-base, and hurt so many hardworking men and women, in the United States of America. (Jim Cramer, host, CNBC’s “Mad Money”)
In American Made, my former competitor, steel industry colleague and friend Dan DiMicco makes a compelling case that the way forward for America lies in making and building things, rather than the mythical service and financial models that have led to repeated bubbles and busts. Dan presents his case in clear and concise terms that should appeal to policymakers and factory workers alike. His patriotic spirit is unquenchable, and his logic unassailable. (John Surma, retired CEO, US Steel)
Dan DiMicco’s thinking on energy, the economy, and just about everything else is a refreshing departure from the us-vs.-them rancor that surrounds these pressing issues today. With characteristic pragmatism, he speaks for the millions of people feeling left behind no matter what the stock ticker says, and reminds us that there’s never been a more dangerous time for America to take its collective eye off the ball. (Jim Rogers, former Chairman and CEO, Duke Energy)
Dan has been an essential voice and advocate for the role of manufacturing in our country. In this book, he outlines a roadmap for the future of manufacturing and job creation that just might change some minds. (Matt Rose, Executive Chairman, BNSF Railway)”
Does it really have to be this way? Why are we not investing infrastructure? It’s common sense. Do you let your house fall apart and expect to live in it?
“[DiMicco] offers blistering criticism of politicians from both parties for maintaining ideological positions at the expense of focusing on the economy and creating jobs…Clearly and passionately, he offers solutions for economic recovery through investing in infrastructure and encouraging innovation. “
45- Less than 8% of that stimulus went towards infrastructure investment. How can they even call this stimulus? DiMicco is dead on, can we get this guy to be president?
“Too many ‘experts claim America’s economy is ‘on the mend,’ despite declining average wages and increasing inequality. DiMicco, in contrast, immediately begins ‘American Made’ with a big dose of reality – ‘Something is broken in the economy.’ DiMicco then backs up that assertion with data showing the ‘real’ unemployment rate is still alarmingly high (near 12% – vs. the official rate of 5.9%), explained by millions who have dropped out of the workforce. (Labor participation rate in 9/14 was 63%, lower at any time since the double-dip recession of 1980-81.) Continuing, only about 1/3 of our 5.2 million manufacturing jobs lost since 2000 were lost since 2008; meanwhile, construction sector unemployment is over 12%.
In the 1990s, our economy added an average of 321,000 jobs/month during the best years, 208,000 before the Great Recession. Now we’re thrilled with 150,000/month.
Many look to our government for solutions, only to find an unending series of distractions (tax cuts, reducing the debt, foreign affairs, boosting Internet speeds, free community-college education, health care, gay marriage, the environment, immigration, racism) and ideological bickering. Something is broken in government as well, and the two problems feed on each other. Another logical source of assistance – Wall Street. But that’s not likely either because it’s a major cause of our manufacturing problems – pushing record profits by shipping jobs overseas and to Mexico. Hence, U.S. manufacturing, a long-term source of millions of high-paying skilled jobs, has become an endangered species.
The ‘good news’ is that author DiMicco has the credibility to offer another path to improvement. His credibility derives from 12 years as head of Nucor, America’s largest U.S. steel producer by volume, and the largest recycler in North America. Nucor emerged from the recession without a single layoff – some 22,000 strong. In fact, Nucor hasn’t laid off a single employee in over 40 years.
The root of our economic problems is an economic model and trade policies that contend we would be better off ceasing to be a nation that creates, makes, and builds things, and instead just provide services. Instead, we got the S&L bubble, the dot-com bubble, the Enron bubble, and the housing bubble – all Wall-Street-created Ponzi schemes that tried to create wealth from nothing.
President Obama was successful in obtaining a $787 billion stimulus his first weeks in office, but it failed because the money was spent poorly. Less than 8% was allocated to infrastructure work, and only half of that was spent because states wouldn’t or couldn’t come up with the mandated matching funds. (Another problem – the millions of illegals involved in construction and construction-support.) About 80% of the stimulus was spent on goods and services outside the U.S., providing minimal impact on our economy.
We need at least $3.6 trillion in infrastructure improvements and expansion by 2020. We also need to expand U.S. domestic energy resources – energy comprises about half our $475 annual billion trade deficit. Wind, solar, and nuclear power also need major development. Meanwhile, while Nucor’s total cost for sheet steel is about $8 – $10/ton, China must import its iron ore and pays $40/ton to ship steel from China to the U.S. – and still undersells Nucor. Complaints to the WTO etc. are rarely acted on. Another problem – big companies like Boeing (also G.E., Caterpillar, Intel) are giving their valuable technology to Chinese partners, hoping to gain permanent markets in the Chinese market. (DiMicco suspects they’ll more likely find themselves with new Chinese competitors.)”
LW,
Right. It is the borrower’s liability/responsibility only … and they lose the house if they don’t repay. That’s what the contract spells out, nothing more (assuming non-recourse). Remember, the borrowers apply for a loan. They are not guaranteed to get one.
[Also, I would make the argument that the state shouldn’t have a law mandating non-recourse mortgages.]
This is not a situation where two parties sign a contract and then up in court over nonperformance. Lender agrees to loan money for the purchase of a house; borrower agrees to repay per a schedule… and if they default, they will be subject to foreclosure. Very simple.
PS. A lender is not a third party to the transaction, they are integral. Plus, the lender/underwriting does allegedly verify the credit worthiness of the borrower.
Re [26];
You didn’t buy insurance on the entire subprime-mortgage-bond market but on a particular bond… He set out to cherry-pick the absolute worst ones and was a bit worried that the investment banks would catch on to just how much he knew about specific mortgage bonds, and adjust their prices.
I hate to re-hash this, but this is where the insurance regulators screwed up, as I pointed out at the time of the AIG bailout. These “bond insurance contracts” were simple bets. Normally, you aren’t allowed to buy an insurance policy unless you have an insurable interest — you can’t buy a fire policy on your neighbor’s house; nor a life insurance policy on your neighbor. Bond insurance was created to hedge risk by bondholders. If you don’t own the underlying bond, you have nothing to insure.
Alas, the banks (who got bailed out) argued strongly and vociferously that these WERE NOT insurance contracts, just financial products, keeping state insurance regulators out of the loop. When the music stopped, had they been held to ordinary legal standards, the ‘contracts’ would have been judged to be illegal betting, which is traditionally non-enforceable in any court.
Good Day all,
I happen to have a house on my street that we have to call the town to get them to mow the lawn. It has been abandoned for quite some time. I believed the owners lived out of state, and the old woman that lived and died was a relative.
I decided to dig on the tax board site to find the owners. I found what looks like them in the owner assessment, but no deed record. My county records indicate that the town collected back taxes for 2012 (its been vacant). The recorded document is a “Certificate of Sale for Unpaid Municipal Liens” and the Sale is to a Major Bank.
Here are my questions to the board?
1. Are the owners still the owners?
2. The lien is only for 1 years taxes, what is the future of this property?
3. I’d be willing to purchase and rehab the place, if it went for sale I might. Do I contact the bank on the document? Do I contact the existing owners by which the house would be sold and the lien would be paid back?
Thanks in Advance for any quality info.
Simon
Agreed completely back then and again now! :-)
Question, when a corp takes out a life insurance policy for one of it’s employees (an officer for example)… the corp is deemed to have an insurable interest? or is it referred to as something else some other term?
Anon E. Moose says:
June 24, 2015 at 12:54 pm
Re [26];
You didn’t buy insurance on the entire subprime-mortgage-bond market but on a particular bond… He set out to cherry-pick the absolute worst ones and was a bit worried that the investment banks would catch on to just how much he knew about specific mortgage bonds, and adjust their prices.
I hate to re-hash this, but this is where the insurance regulators screwed up, as I pointed out at the time of the AIG bailout. These “bond insurance contracts” were simple bets. Normally, you aren’t allowed to buy an insurance policy unless you have an insurable interest — you can’t buy a fire policy on your neighbor’s house; nor a life insurance policy on your neighbor. Bond insurance was created to hedge risk by bondholders. If you don’t own the underlying bond, you have nothing to insure.
Alas, the banks (who got bailed out) argued strongly and vociferously that these WERE NOT insurance contracts, just financial products, keeping state insurance regulators out of the loop. When the music stopped, had they been held to ordinary legal standards, the ‘contracts’ would have been judged to be illegal betting, which is traditionally non-enforceable in any court.
Joyce [52];
The corp. typically has a personal services contract with the executive; that is their insurable interest — to replace his/her services if they untimely kick.
AIG was bankrupted at the corporate holding company level, which was the counterparty for all of the bond insurance they wrote on the shrinkwrapped sausage mortgages…..AIG was correct to argue that they were merely financial contracts……AIG had/has many subsidiaries that are true insurance companies that are tightly regulated and have required cash reserves. It is the reason that a company with tons of cash on the books was unable to service its own liquidity needs. The public and ignorant press was pointing to the cash arguing why the need to bail out AIG? (on a liquidity basis and I’m not trying to launch into a larger ethical argument)…..in reality, the cash was encumbered and could not be disgorged from escrow up to the corporate parent that needed the cash to post collateral.
Anon E. Moose says:
June 24, 2015 at 12:54 pm
Re [26];
You didn’t buy insurance on the entire subprime-mortgage-bond market but on a particular bond… He set out to cherry-pick the absolute worst ones and was a bit worried that the investment banks would catch on to just how much he knew about specific mortgage bonds, and adjust their prices.
I hate to re-hash this, but this is where the insurance regulators screwed up, as I pointed out at the time of the AIG bailout. These “bond insurance contracts” were simple bets. Normally, you aren’t allowed to buy an insurance policy unless you have an insurable interest — you can’t buy a fire policy on your neighbor’s house; nor a life insurance policy on your neighbor. Bond insurance was created to hedge risk by bondholders. If you don’t own the underlying bond, you have nothing to insure.
Alas, the banks (who got bailed out) argued strongly and vociferously that these WERE NOT insurance contracts, just financial products, keeping state insurance regulators out of the loop. When the music stopped, had they been held to ordinary legal standards, the ‘contracts’ would have been judged to be illegal betting, which is traditionally non-enforceable in any court.
Move along, nothing to see here. Forget the past, let’s focus on the future. Have to be a savvy buyer though
Interest Only Mortgages Coming Back…but with Safety in Mind
You have to qualify on what the payments eventually could be, not where they start. Home buyers will need to put down 20%, have credit scores of 720, and their eventual payments can’t exceed 42% of their income.
The debt, which will have interest rates that start to adjust after five years, requires borrowers to begin paying down the loans after 10 years.
http://www.bloomberg.com/news/articles/2015-06-23/interest-only-mortgages-are-coming-back-but-with-safety-in-mind
My little old lady landlady in Hoboken up and died of cancer when I was renting from her. She is in the Cake boss family. Sad watching her decline and pass on. I then started droping off my rent at the Cake Boss bakery for a few months before I moved out. I had no contract but little old landlady treated me well so I kept paying, house was sold quickly and is now newer condos. I still miss the 1200 a month in rent including most utilities. Almost as good as my 600 a month rent in Hells Kitchen.
54
Why was AIG correct to argue there were only financial products?
Moose,
“Insurance regulators screwed up”
I forgot to mention, I highly doubt they screwed up… I’m sure they were influenced to come to the decision that they did.
[54] Banco P
If I recall correctly, there was another reason why AIG couldn’t go bankrupt, err I mean needed to be bailed out.
The insurance payouts on the mortgage bonds could have bankrupted them, which is a trigger event…the largest seller (other side) of CDS positions on AIG, was GS. They would have had to pay out billions on the CDS they sold, so there was an incentive there. Who btw- changed their charter to a bank (from investment bank) in order to be able to tab the Fed window.
I think this is what you call a “circle jerk”.
He took it spent it and was smart enough to die of old age a few months before Sandy when place flooded. He also did not pay condo maint for 6 years.
Currently it is in a short sale to a related party of the daughter for 150k and rented out.
They own another unit in another family name the widow and that they borrowed 400k against and they are also doing a short sale to themselves.
Best is they bought units like 20 years ago, one for 130k and one for 140k.
So they are basically walking away from one million in mortgage debt and retaining control of the units.
leftwing says:
June 24, 2015 at 11:39 am
JJ, those stories would be funny or sad except the money they borrowed and p1ssed away is coming out of our pockets?
What did the guy do with the $300k more than what his condo cost? Boat? I’m a taxpayer, I want it. Kitchen? I’ll take marble. Disney? Give me the photos.
Irresponsible financial jacka$$. Borders on thievery.
And I don’t need to hear he’s some ‘innocent victim’ of banks ‘pushing’ product. If he’s too stup1d to realize he can’t borrow or afford a loan 2x the value of his house then he shouldn’t be allowed to manage his own affairs (or vote or reproduce for that matter).
Wanna play victim? Become a total ward of the state….
AIG type bailout by the FED cannot happen again per Frank-Dodd laws. Yet it will happen again.
Anyone read Bill Black’s latest missive?
http://www.nakedcapitalism.com/2015/06/bill-black-a-harvard-don-is-enraged-that-pope-francis-is-opposed-to-the-world-economic-order.html
61- Bill Black gets it. “Suicide by Laissez Faire”, what a powerful statement. Greed, it’s one of the seven deadly sins for a reason. Imo, it’s the deadliest. Bill does a great job of highlighting what is wrong with our economic system, it’s built on greed and will be destroyed by greed. Simple as that.
“Conclusion: Greed and Markets Kill: Suicide by Laissez Faire
The old truths remain. The worship of “great possessions” wreaks such damage on our humanity that we come to love them more than life itself and act in a suicidal fashion toward our species and as mass destroyers of other species. Jesus’ insight was that this self-corruption is so common, so subtle, and so powerful that “It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.” Today, he would probably use “economist” rather than “camel.”
Theoclassical economists are the high priests of this celebration of greed that Stavins admits poses the greatest threat to life on our planet. When Pope Francis posed a choice to Stavins, he chose to maintain his dogmatic belief in a system that he admits is suicidal and incapable of self-reform. The reason that the mythical and mystical “free markets” that Stavins worships are suicidal and incapable of self-reform even when they are producing “mass extinction” is that the markets are a system based on greed and the desire to obtain “great possessions” even if the result is to damn us and life on our planet.
Adam Smith propounded the paradox that greed could lead the butcher and baker (in a village where everyone could judge reputation and quality) to reliably produce goods of high quality at the lowest price. The butcher and baker, therefore, would act (regardless of their actual motivations) as if they cared about their customers. Smith observed that the customer of small village merchant’s products would find the merchant’s self-interest a more reliable assurance of high quality than the merchant’s altruism.
But Stavins makes clear in his writing that this is not how markets function in the context of “external” costs to the environment. In the modern context, the energy markets routinely function in a manner that Stavins rightly depicts as leading to mass murder. Stavins so loves the worship of the quest for “great possessions” that he is eager to try to discredit Pope Francis as a leader in the effort to prevent “mass extinction” (Stavins’ term) – suicide by laissez faire.
(No, I am not now and never was or will be a Catholic.)”
Change your tune yet Pumpkin? Did you buy .223 and Shiny?
51. Oh look a legitimate real estate question. Somebody answer this guy. Cause this IS a real estate site.
Call the bank. Do not contact the owners. Hopefully, 30 year can chime in since he is the expert.
“Good Day all,
I happen to have a house on my street that we have to call the town to get them to mow the lawn. It has been abandoned for quite some time. I believed the owners lived out of state, and the old woman that lived and died was a relative.
I decided to dig on the tax board site to find the owners. I found what looks like them in the owner assessment, but no deed record. My county records indicate that the town collected back taxes for 2012 (its been vacant). The recorded document is a “Certificate of Sale for Unpaid Municipal Liens” and the Sale is to a Major Bank.
Here are my questions to the board?
1. Are the owners still the owners?
2. The lien is only for 1 years taxes, what is the future of this property?
3. I’d be willing to purchase and rehab the place, if it went for sale I might. Do I contact the bank on the document? Do I contact the existing owners by which the house would be sold and the lien would be paid back?
Thanks in Advance for any quality info.
Simon”
Regardless of how it may have been portrayed by the media or biographers, the insurance industry is a very specific animal and is highly regulated at the state level.
These idiots thought they were writing contracts that gave them free money.
….. it wasn’t insurance……it was CDS……swapping an upfront cash payment for the negative return on an index……of manufactured garbage…
The issue was that the people at AIG’s Financial Products group were morons who didn’t know how to hedge or monitor risk exposure.
The “bond insurance” (helpful name, but misleading) was sourced from ISDA master agreement contracts that govern counterparties…….to the extent that the ISDA’s were used for this purpose was not the problem.
grim: I was trying to use the word “mon!ker”……..I guess the sneaker company name throw you into moderation?
I want to think positive, but greed does seem like it will be the long term winner. F’ed up world we live in.
We have more than enough resources to provide a simple good life for all species on this planet, but unfortunately greed takes over, leading people to build houses with 13 bathrooms(that they will never use). Why, because they could, it’s their money and no one can tell them what to do with it, even if their actions are bringing harm to the rest of the living things on this planet.
Why should someone be allowed to bring destruction to other people’s lives in the name of money…..how come it is okay when money comes into the picture? Just because you have money, you are allowed to do whatever you want? Things need to change if we are to survive.
Juice Box says:
June 24, 2015 at 4:01 pm
Change your tune yet Pumpkin? Did you buy .223 and Shiny?
re: 71 – today we are just a bigger version of Easter Island.
Chocolate Easter Bunnies. Yum.
“PS. A lender is not a third party to the transaction, they are integral. Plus, the lender/underwriting does allegedly verify the credit worthiness of the borrower.”
Agree. But the lender’s diligence is for the benefit of the lender, not the borrower. That’s why when a borrower argues ‘not my fault, the banks are to blame for giving me money’ it steams me. Not the bank’s job to assess your life for you, your job. Bar’s fault I was hammered, they gave me the beer…..
“So they are basically walking away from one million in mortgage debt and retaining control of the units.”
And with the excess proceeds from the mortgages or whatever they bought with it….people are garbage
“AIG was bankrupted at the corporate holding company level, which was the counterparty for all of the bond insurance they wrote… The public and ignorant press was pointing to the [subsidiary] cash arguing why the need to bail out AIG?”
More ridiculous, the traders looked at the subsidiary CF and then (stupidly) lent at the HoldCo. Banking 101, lend where the assets are. Amazing what they let walk in the door during a bull market…warm bodies for any seat.
One house I owned/lived in/rented out was haunted by an old man who had passed away there.
*Never believed in ghosts…until then. Tenants wife saw him, too (and I told them NOTHING about it).
My current home is a Victorian (still not near being totally restored…damn…) and I’d bet that a number of people have died here over the centuries.
*No ‘ghostly’ encounters by me or any family members…so far (been almost a year).
Two years ago after breaking down the door at a rental property I found a tenant sitting on the toilet bowl with slit wrists (WOW was there a lot of blood!) and an empty needle on the floor at her side. Most disturbing scene I’ve ever encountered as a landlord.
*Have not told ANY tenants after her about it. So far, no one has said anything.
What do you know…agree. That jj example with the 140,000 condo unit getting 1 million in debt is just sickening. Can’t make this stuff up. Real money being stolen by stupidity. Go rob a bank for 5,000 and go to jail for life. Rob a bank by getting hundreds of thousands in loans you can’t pay back and nothing happens to you. Hell, you get to keep the property after you default. Wow, just wow.
Lesson here, if you want to rob a bank, doing it the smart way by taking out loans you have no intention of paying back. You won’t go to jail, get to keep the money, and don’t lose your house.
“PS. A lender is not a third party to the transaction, they are integral. Plus, the lender/underwriting does allegedly verify the credit worthiness of the borrower.”
Agree. But the lender’s diligence is for the benefit of the lender, not the borrower. That’s why when a borrower argues ‘not my fault, the banks are to blame for giving me money’ it steams me. Not the bank’s job to assess your life for you, your job. Bar’s fault I was hammered, they gave me the beer…..
“So they are basically walking away from one million in mortgage debt and retaining control of the units.”
And with the excess proceeds from the mortgages or whatever they bought with it….people are garbage
“AIG was bankrupted at the corporate holding company level, which was the counterparty for all of the bond insurance they wrote… The public and ignorant press was pointing to the [subsidiary] cash arguing why the need to bail out AIG?”
More ridiculous, the traders looked at the subsidiary CF and then (stupidly) lent at the HoldCo. Banking 101, lend where the assets are. Amazing what they let walk in the door during a bull market…warm bodies for any seat.
“These idiots thought they were writing contracts that gave them free money.
The issue was that the people at AIG’s Financial Products group were morons who didn’t know how to hedge or monitor risk exposure.”
Yes and Yes. But back to the ratings agencies. AIG thought it was free money because the underlying was AAA rated. Less than 0.01% default rate historically. They didn’t monitor the risk closely because they didn’t need to, it was AAA rated. Kind of like chastising a TBond buyer for not doing ‘proper’ analysis of the federal deficit and budget. Who would?
Ratings are so ingrained in the financial world. Massive whole classes of money have no controls other than investment in ‘AAA securities’. The agencies knew how important they were, it was their product, their raison d’etre, it was what they marketed. Missing the mark on even a handful of AAA issues is a major issue. Missing the mark on tens of billions of dollars worth of an entire industry’s output is scr3wing the pooch…..
“The “bond insurance” (helpful name, but misleading) was sourced from ISDA master agreement contracts that govern counterparties…….to the extent that the ISDA’s were used for this purpose was not the problem.”
Really funny part in The Big Short is how these guys scrambled for an ISDA. They nearly missed the whole trade because no one would go institutional with them. Everyone looked at their AUM and referred them to the HNW group lol.
Continuation of the circle jerk….you can’t sell the bonds without a credit rating…rating agency pretty much rubber stamps the deal to collect the fees…investors use credit ratings in investment determination
http://www.thrillist.com/news/new-york/whole-foods-under-investigations-for-ripping-customers-off
“(CNN)America’s leading merchants have spoken: The Confederate flag is coming off the shelves. Walmart, Amazon, eBay and Sears all announced bans on the sale of Confederate flag merchandise”
Dear Retailers
Thank you for removing symbols of intolerance and violence against minorities.
Symbols of intolerance borne by hundreds of thousands ideologues to inflict pain and suffering upon a different class of people have no place in a civilized society especially when these devotees caused so much carnage in their name. I understand the transgressions were in the past, done by only a portion of the population, and among many who were convinced of the justness of their cause. These aspects make your present stance more courageous. The fact that there may have been economic or military underpinnings to their actions is, rightfully, irrelevant.
Please let me when the crucifixes of the Crusaders are banned.
Thanks
Lefty
The rating agencies are meaningless to companies that are in the business of pricing risk and building a theoretical profit margin in their offerings…….AIGFP had no concern with the AAA. The rating is merely a contractual term required for buyers who have strict organizational guidelines about what they are allowed to buy……go ask Ragnar…..he used to be at S&P or Moody’s……I was at AT&T….we all knew it was horsespit……what matters are market conditions and where does the debt trade relative to the credit spreads…….. you hear all the time comments such as …..it is rated A- but it is trading at junk spreads……
leftwing says:
June 24, 2015 at 5:17 pm
“These idiots thought they were writing contracts that gave them free money.
The issue was that the people at AIG’s Financial Products group were morons who didn’t know how to hedge or monitor risk exposure.”
Yes and Yes. But back to the ratings agencies. AIG thought it was free money because the underlying was AAA rated. Less than 0.01% default rate historically. They didn’t monitor the risk closely because they didn’t need to, it was AAA rated. Kind of like chastising a TBond buyer for not doing ‘proper’ analysis of the federal deficit and budget. Who would?
Ratings are so ingrained in the financial world. Massive whole classes of money have no controls other than investment in ‘AAA securities’. The agencies knew how important they were, it was their product, their raison d’etre, it was what they marketed.
Hilarious! What marketing savvy and mastery of spelling. Someone actually hired this chump to sell their home? Hurry, pay only $130K more than their 2003 purchase price.
“You will not fine a Master bathroom in this home, the 1 car garage is small, & the rear yard is gently sloping but what you will fine in this Meticulously remodeled sun-filled home could not be duplicated at this price.”
http://www.zillow.com/homedetails/262-Euclid-Ave-Fairfield-CT-06825/57290232_zpid/
Disgusting mismanagement of public funds. 65 million on bs.
http://www.nj.com/news/index.ssf/2015/06/the_port_authority_hopes_these_projects_will_improve_gwb_traffic.html#incart_river
Now that’s funny. I thought it was a parody when I first started reading it.
Bystander says:
June 24, 2015 at 9:17 pm
Hilarious! What marketing savvy and mastery of spelling. Someone actually hired this chump to sell their home? Hurry, pay only $130K more than their 2003 purchase price.
“You will not fine a Master bathroom in this home, the 1 car garage is small, & the rear yard is gently sloping but what you will fine in this Meticulously remodeled sun-filled home could not be duplicated at this price.”
http://www.zillow.com/homedetails/262-Euclid-Ave-Fairfield-CT-06825/57290232_zpid/
BP
Not disagreeing with you on spreads or how things trade. My point is slightly different. At AAA levels there is wide latitude to book product with minimal oversight in reliance on that highest rating. Concentration, duration, and liquidity will get a quick look. Underlying credit quality less so and not at all if the above criteria are satisfactory.
AIG wrote most of the swaps when spreads indicated AAA pricing on the underlying.
Will disagree that ratings are meaningless to businesses such as AIGFP. At anything other than AAA, yes, companies will make their own assessment of lesser credits and pricing including flying analysts to watch Midwest apartment buildings. At AAA, there is very wide latitude to book product and minimal diligence. The other break is at junk, where some places aren’t allowed to go beneath regardless of diligence/pricing.
[21] grim,
The gustnado hit here hard. I was without power for most of the last 24 hrs. Lots or roads closed and lines down. And someone got a photo of a small tornado near here.
[38] gator,
You saw my house. Did you see 6 bedrooms?
Ratings agencies actually do a decent job on corporate debt ratings, mostly because they developed their methodology over decades, and it’s based on some directly observable indicators of leverage and liquidity.
But the mortgage backed ratings were not based on the same sort of evidence. They were based on multiple layers of theoretical hypothesis with short data histories and incorrect premises. They were basically invented to make money off a bubble, and in doing so, made the bubble worse.
An institutional fixed income investor should understand a credit risk even better than an agency rating, just as institutional equity investors should have better insight into stock returns than ibanking analysts and their ratings.
Civil war
http://m.youtube.com/watch?v=y8VCbvMoCV8
The issuers pay the rating agencies. #conflictofinterestmuch?
Also, if you are in any way arguing for the confederate flag then I don’t want to hear anything else you have to say. Ever. About anything.