Weekend Open Discussion

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

This entry was posted in General. Bookmark the permalink.

427 Responses to Weekend Open Discussion

  1. James Bednar says:

    For those familiar with the “Suzanne researched this” commercial, and even those who are not, take a listen to this sobering clip posted by Tim at the Seattle Bubble Blog:

    Suzanne Researched This: Part 2

    An incredibly sad story of the “American Dream” gone horribly wrong.


  2. crossroads says:

    i am looking for info on arms that are going to reset in nj. i thought you had posted a map with %’s in each state any chance of seeing that again?

  3. James Bednar says:

    i am looking for info on arms that are going to reset in nj.

    The data is, unforunately, very hard to come by. Many assume that “subprime” and “ARM” are synonymous, and jump to the conclusion that all subprime loans can “reset”, but this isn’t the case. There are enough fixed-rate subprime loans, and near-prime or prime ARM loans that the analysis needs to look at ARMs alone, regardless of credit score. The second part of the analysis would need to gauge the severity of the reset. Obviously someone using a teaser is going to face a much steeper rise in payments than someone who didn’t.

    If we did have the data, it would be very easy to construct a map or list of areas that would be most affected by ARM resets.

    I do urge caution against using subprime maps for the same reason. Why? Many of these maps include fixed-rate subprime loans. Believe it or not folks, fixed rate subprime loans have a relatively tame default rate in comparison to ARM. Also, keep in mind that Alt-A loans are not subprime. These types of loans do *not* represent a continuum from good credit quality to poor credit quality. Alt-A remains an odd-man out, a class completely on it’s own. Don’t attempt to sandwich Alt-A between Prime and Subprime.

    I’ve tried to get my hands on industry datasets (LoanPerformance, etc), but the price tag associated makes the endeavor an nearly an impossibility.


  4. James Bednar says:

    From the Wall Street Journal:

    The Subprime-Lending Lesson: Buyer Beware
    August 24, 2007; Page A13

    I find it hard to sympathize with the Montes family (“Home Security: One Family’s Journey Into a Subprime Trap,” Aug. 16). They are at risk of losing the house they “bought” two years ago but they have never paid a penny in equity, either at the time of purchase or in subsequent mortgage payments. That doesn’t say “bought” to me — that says “rented.” What they are calling a disaster is the possibility that they might have to walk away from something in which they have invested nothing, and go back to renting something more affordable.

    Granted, there are plenty of villains here, including a ridiculously inflated home market that would ever make that tiny house worth close to $600,000, a taxing authority that cashes in on that inflation to the tune of $6,000 in property taxes a year, and a lending industry that is willing to make loans to people on houses they clearly cannot afford. (The Monteses were paying about 40% of their gross income to start with, and it could only get worse in two years.) Who seriously believes that a family making $90,000 a year, with no savings, can afford a $567,000 house?

    Still, the Monteses didn’t have to be financial geniuses to know what they were getting into. I suspect their attitude two years ago was, let’s give it a shot and hope housing inflation bails us out, and if not we can always walk away and go back to where we were. What they are calling a disaster is wishful thinking not coming true.

    Glen Hoffing
    Shamong, N.J.

    I feel bad for the Monteses. These people and many others were sold a pretty package and had no clue what they were getting into.

    Sadly, there will be a lot more of these stories.

    John Hamel
    Foxborough, Mass.

    If I understand the situation highlighted in the article correctly, the Monteses knew enough about the loan to be concerned and apprehensive about the potential increase in monthly payments at the time of the readjustment. But now they imply that the broker misled them about the terms and assured them they could refinance. As tough as it is on the individuals involved, at what point do we require people to take responsibility for their actions and decisions?

    The worst thing that can happen is any type of government bailout. That will just increase people’s belief that they can make risky decisions and not have to face the consequences. I relate it to the government going in and paying for replenishing beaches and repairing homes on the coast after a storm hits; why wouldn’t people continue to build right on the shore if they believe the government will pay for any damage?

    The market will continue to work to find a proper balance between risks and rewards, as will individuals if the government does not step in to try to force a “solution” (with unintended consequences).

    John Buckley
    Lincroft, N.J.

    Twenty-one years ago I bought a five-room suburban house for $160,000 with an income of $32,000. Because I did not qualify for a fixed rate I obtained a one-year adjustable loan and put down $30,000 with proceeds from a previous house sale. At the time, the bank would qualify me for a maximum of 32% of my income for the monthly payment. I had no car loan or outstanding debt and knew I could make the payments even when my rate increased the following two years.

    No matter what we buy in this society, we are always encouraged to “spend more” by the salesperson. It is the responsibility of the buyers to understand their own finances and what they can, and cannot, afford.

    Paula Alley

  5. James Bednar says:

    From the Press of Atlantic City:

    Hilton, Resorts begin voluntary downsizing program

    Hoping to avoid layoffs, two casinos are offering managers a voluntary termination package amid what their president calls the “most difficult economic times since the inception of casino gaming.”

    The voluntary downsizing differs dramatically from the aggressive layoffs made by Tropicana Casino and Resort since January under new owner Columbia Sussex Corp. Nearly 750 employees, or about 16 percent of the work force, have been let go by Tropicana, according to the most recent figures compiled by the New Jersey Casino Control Commission.

    Like other casinos in town, Hilton and Resorts have been struggling against extra competition from slot parlors in Pennsylvania and New York and the impact of Atlantic City’s partial smoking ban. Hilton and Resorts estimate the smoking restrictions, blamed for driving away customers, have resulted in combined lost revenue of $1 million per month for both properties.

    “The Atlantic City casino industry is facing its most difficult economic times since the inception of casino gaming,” Rodio said.

    Gaming revenue industrywide is down nearly 4 percent for the first seven months of the year and appears headed for the first annual decline since casino gambling began here in 1978.

  6. James Bednar says:

    This one is sure to cause a bit of a stir..

    From the Baltimore Sun:

    Bill to bar tax credit on big houses

    To add to mortgage meltdown miseries, the credit panic, plunging home sales and rising foreclosures, here’s a new worry: a proposed cutoff of mortgage-interest tax deductions for all houses with more than 3,000 square feet.

    One of Capitol Hill’s most experienced and powerful legislators is drafting a “carbon tax” bill that would do precisely that. Rep. John D. Dingell, the Michigan Democrat who heads the Energy and Commerce Committee, expects to introduce comprehensive climate change reform legislation once the House returns next month.

    “In order to address the issue of climate change, we must address the issue of consumption,” Dingell said in talking points prepared for town hall discussions of the legislation. “We do that by making consumption more expensive.”

    Houses, like autos, long have been known to be contributors to greenhouse gas emissions through heating, cooling, electrical usage and building materials, plus the highways and roads needed to make far-flung subdivisions accessible to buyers.

  7. thatBIGwindow says:

    That is the Dems for you…

  8. James Bednar says:

    We’ve got a gas-guzzler tax on cars with disproportionately large engines, why not an energy-guzzler tax on disproportionately large homes?


  9. Frank says:

    No Pain, No Gain

    Financial markets are breathing a sigh of relief. Central bankers’ decisions
    to flood the markets with money on attractive terms — the latest move being the
    European Central Bank’s provision of 40 billion euros ($54 billion) — seems to
    have averted panic.
    But if the panic is over, it is too soon. The credit crunch probably hasn’t
    caused enough pain. A few hedge funds and mortgage brokers have closed their
    doors and investment banks are going to have a crummy third quarter. Yet if
    bonuses this year fall 15% from last year’s record, it would constitute only a
    minor haircut.
    There could have been even less pain. Many financiers have been lobbying the
    Federal Reserve to cut interest rates. Instead, by dealing with the panic with
    injections of money, the Fed and the ECB have resisted pressure to distort their
    interest rate policies. That will be good, if it holds. It might have been even
    better if less liquidity had been injected into the system — or, at least, if
    those who borrowed from central banks had paid more of a penalty.
    Why is pain a good thing? Well, because without pain, people repeat the
    errors of their ways. When Alan Greenspan ran the Fed, he was arguably too keen
    to soothe market jitters. So risk appetites rebounded rapidly after the Long-Term
    Capital crisis, fueling the technology-stock bubble. When that popped, risk
    appetites returned rapidly again, leading to the housing and credit bubbles.
    If there is insufficient pain this time, the next bubble will be even bigger.
    So what if there is an even bigger bubble? Won’t central banks ride to the rescue
    again? Well, maybe. At some point, the bubbles will get too big for even them to
    handle. What is more, this bubble has popped with the global economy in good
    shape. If the next one bursts when the economy is sick, there could be real
    — Rob Cox and Hugo Dixon

    This column is written by breakingviews.com, an online financial commentary

  10. Frank says:

    “Like a cash-strapped shopaholic reaching for a credit card”

    Just borrow the money, don’t worry the
    sucker taxpayers will pay anyway, like they have a choice. They will keep voting for us and keep paying. Keep voting for Democrats!!

  11. pesche says:

    All I know is the road signs in Westwood are
    going up in Spanish.

    When will the NJ taxpayers wake up. Answer:

    NJ is now a complete “Welfare State”

    But the AG has made a decision .

  12. thatBIGwindow says:

    James #8 – this proposed legislation will most likely lead to more multi-family buildings and discourage single family homes. Tax tax tax, spend spend spend. The NJ way.

  13. BC Bob says:

    So the 4 largest banks step up to the window and each borrow $500M on the same day? HMMM. I thought the NAR held the rights on the pom-pom waving sessions. Are the arm borrowers in a better financial position as a result of this? Have the lenders found additional counter parties to take on the risk? My fear-o-meter is crushing my greed-o-meter.

  14. pesche says:

    If Corzine and the crew could they would
    be at the Fed Window. Pledging the
    parkway and the turnpike.

  15. bergenbuyer says:

    #4- Has there been a pole about what the sentiment is of foreclosures, bailouts etc.?

    Based on the comments in #4 and other things I’ve seen, it seems like the overall sentiment is that there should be no bailout, let foreclosures happen, allow people to go back to renting, etc. But maybe I’m just seeing that group speak out more.

    It seems like only politicians and people who are looking to get a bailout, want the bailout.

  16. bergenbuyer says:

    pesche Says:
    August 24th, 2007 at 8:12 am
    All I know is the road signs in Westwood are
    going up in Spanish.

    Where did you see this? What street?

  17. thatBIGwindow says:

    This state is losing many things that made it special. Diners are closing down to make way for Commerce Banks and the Bowling Alley is becoming a thing of the past.

    Last night I was stuck on Rt 17, some kind of accident. I drove past the old Curtiss Wright complex. It is almost all gone. Another manufacturer erased from the map to make way for retail and multi family housing.

  18. James Bednar says:

    Durable goods comes in *very* strong. Rate cut? For what!


  19. James Bednar says:

    From MarketWatch:

    U.S. July durable-goods orders surge 5.9%

    Orders for U.S.-made durable goods surged in July, jumping 5.9% on higher demand for airplanes, vehicles, computers, machinery, steel and most other kinds of long-lasting manufactured goods the Commerce Department reported Friday. Excluding the 10.8% increase in transportation goods, orders rose 3.7%, the fastest gain in two years. The increase far exceeded the expected 1.5% gain forecast by economists surveyed by MarketWatch. It was the largest gain in total orders in nearly a year. The report was strong across the board. Shipments rose 3.8% in July, and were up 1.9% excluding transportation goods. Inventories rose 0.1%.

  20. stuw6 says:

    Seeking Alpha:
    Great Society Part II: Fed Tries to Save Itself From…Itself

    This is an intersting read.


  21. James Bednar says:

    Yields on the short-end of the curve (3 and 6-mo) are up sharply this morning. I wonder if the trend will hold? All eyes on New Home Sales at 10am.


  22. stuw6 says:

    Yup 10am will be interesting.

  23. gary says:

    Mozilo said on CNBC yesterday that 65% of the hybrid loans held by Countrywide scheduled to reset in the fall have already been refinanced.

  24. stuw6 says:

    If CFC goes insolvent, Mizilo is gonna end up in jail. Perhaps all of that insider selling he has been doing is to create a fund for his pending legal fees ;)

  25. BC Bob says:

    So Mozilo is now forecasting a recession. It’s ironic that he is making a prediction regarding the future. After all, he failed to see his own company’s disaster. Then again, maybe not, based on his stock sales earlier this year.

  26. Bloodbath in Winter 2007 says:

    Clot – Just catching up on yesterday’s late posts, and you said the house’s past doesn’t matter. Just curious …

    If someone bought a house for $500k in 2002 and is not trying to sell for $800k … you think that first number doesn’t matter?

    If I’m understanding you incorrect, apologies … but seem to think the opposite … what the person bought the house for is incredibly important. I know recent comps are important … but as we push into early 2008 and houses have been on the market for months … are comps even that important of a factor when realtors are saying, ‘well, Jim down the street sold for x in March 2007?’

  27. PGC says:

    I had an interesting chat with a realtor last night. We were discussing property in Downtown Jersey City. She said that in the past 3 weeks inventory has just “dried up”. I had noticed this myself when trolling realtor sites. Inventory seems low at 386 properies.

    I have been trying to come up with a reason and apart from “the calm before the storm” the only things I can think off are:
    1)Sellers holding on the sidelines waiting to see how bonus numbers fair, how secure their job is, or the market is going to go.
    2) The main selling season is finishing early and people will look to restart after Labor Day.
    3) There is so much new construction coming onto the market that they can’t get the price they want/need.

    I think 3 is more likely as I sold up in May and moved out to a rental in the Burbs. Trying to price the place was a bit of a problem as I was going up against small row houses and new contruction for not much more money.

  28. make money says:

    (Unprovoked personal attack deleted – jb)

  29. pesche says:

    Westwood: Main drag.

  30. bergenbuyer says:

    #27- I think it’s because they can’t “move-up.” If you’re looking to sell becuase your job got relocated, you have to sell or hold and rent, either way, you’re not living there.

    If you’re looking to sell to move up or move out of the area it’s more of a sale by choice, not by necessity.

    I actually know someone selling in JC now, they’ve dropped their price multi times (condo next door sold for 15% more than their current asking last year, they just put theirs on the market a little later although both were on the market at the same time and missed the one sucker buyer) over the past year or so. At some point they say they’ll just hold on because they’re selling based on choice to move to the suburbs, but it’s not a necessity and they’re in no rush.

    There’s the uncertainty, sure if everyone drops in price by 20% why do I care if mine drops as long as the house I buy drops by 20%. The problem no one wants to be the first one.

    Do I think we have further price reductions, yes, but is there a chance that it couldn’t, of course. Would you want to sell at 20% off your “price” and then find out the market rebounded?

  31. bi says:

    my prediction is that the 10:00am new home sales will be stronger than expected. but it is not too important since it is the number for july. we had a storm (not hurricane) in early august and we got to wait one or two months to see if there is any damage.

    in my area (central jersey), the home selling in past spring is acctually normal and stronger than 2006. that is why the inventory dried up. i saw a couple of multiple bids in july. in addition, there is no big developement alone northeast corridor line from edison to princeton junction (the toll brother complex in west winsor is almost completed). the housing market in this area is trending up if there is no other big events coming.

  32. Chuchundra says:

    A while back JB posted an article about sub-primers with a toxic ARM reset not even trying to pay the mortgage, just accepting their eventual foreclosure and using the mortgage money to pay off their credit cards and whatever.

    Anyone have the link or remember the title of the article?

  33. Rich In NNJ says:

    Two Things

    #11 The temporary “road signs” in English and Spanish (which point out that the sidewalk is closed) in Westwood were put up by bank that is being built on Broadway, not the town. They are probably trying to reduce their liability.

    #4 I didn’t know there was a town named Shamong in New Jersey.

  34. PGC says:

    #30 Good points, I hadn’t thought the people who were considering selling the $500K condo for the $600K in the burbs and realising the extra $125K on the new morgage could drown them.

  35. James Bednar says:


    Time to Give Up the House?
    A new study finds that, in a shift from the past, subprime borrowers are paying their credit cards before their mortgages

    For generations, homebuyers have had one simple rule drilled into their heads: Whatever happens, keep paying the mortgage. If you don’t, you risk losing your house and all the equity you’ve built up in it.

    But for many subprime borrowers, that doesn’t seem to be the rule of thumb anymore. They are now more likely to be late on their mortgage than on their credit card, according to a new study from Experian Group, the Ireland-based company that maintains a huge database of consumer credit histories.

    The significance? One explanation could be that many recent subprime homebuyers simply aren’t that worried about losing their homes because they don’t have much to lose. Most put down small or zero down payments. If prices have fallen since they bought, they may actually owe more than the house is worth, making it an easy choice to walk away.

  36. bi says:

    the durable goods orders number is much stronger than expected. but the bond is very calm. why? the market is still betting on rate cut and betting on lower growth rate and lower inflation. IMO, the recession is unlikely in next 5 years considering strong global economy.

  37. njpatient says:

    “I’ve tried to get my hands on industry datasets (LoanPerformance, etc), but the price tag associated makes the endeavor an nearly an impossibility.”

    Do you mind giving a cost ballpark? Maybe we could chip in…

  38. njpatient says:

    James Bednar Says:
    August 24th, 2007 at 7:50 am
    We’ve got a gas-guzzler tax on cars with disproportionately large engines, why not an energy-guzzler tax on disproportionately large homes?

    and maybe get your tax credits back if you go solar on your McEstate.

  39. Rob says:

    I wouldn’t be surprised if new home sales are up. The builders have been giving away incentives like crazy to move inventory.

  40. James Bednar says:

    Do you mind giving a cost ballpark? Maybe we could chip in…

    Ranges dramatically, some static reports are in the mid-hundreds to the mid-thousands, others charge thousands (or even more) for access to databases and analytical tools.



  41. pesche says:

    august 25th. 20years ago. 1987 crash.

  42. Comrade 3b says:

    #31 bi According to the gsmls there are over 150 coops/cpndpos and houses for sale in Edison Twp, from 200k to over 2 million, seems like moe than enough inventory to me. How come it appears to be all sitting?

  43. syncmaster says:

    Not So Smart
    In an era of easy money, the pros forgot that the party can’t last forever

  44. pesche says:

    Darling: Looks like a town sign to me in

    Post a Pic.

  45. CAIBC says:

    new home sales are going to be up? what data do you have to support this?

    based on the recent trends, i belive its going t be way down…this is going to be a nationwide survey right not just a NYC-Surrounding assessment! true, there are still places in NYC / JC that are selling but these hot areas may not take a dip like the rest of the areas do…also it may take longer for these areas to take a dip – remember the folks buying these overpriced condos may not have a job soon! there may be some excellent deals coming up in NYC /JC – if you dont work in the city, why would you want to live there anyway??

  46. dreamtheaterr says:

    Imagine what would happen to the Big Three if the gas-guzzler tax was extended to SUVs?

  47. skep-tic says:

    all of this talk of taxes on large houses, bailouts (which is a tax hike in disguise), raising income tax on “the rich,” etc are designed to stir up class envy.

    it’s a great short term strategy for democrats because obviously the poor outnumber the rich.

    long term it is suicidal since the rich vote more, contribute more and raising taxes hurts the overall economy. also, in order to raise revenue appreciably, you have to define “rich” pretty broadly– top 10%, not just top 1%. This includes most households who make above $150,000.

  48. njpatient says:

    “Do you mind giving a cost ballpark? Maybe we could chip in…

    Ranges dramatically, some static reports are in the mid-hundreds to the mid-thousands, others charge thousands (or even more) for access to databases and analytical tools.”

    That first category we might reach.
    Do any of you other worthies want to drop some tips into jb’s change jar to see what we can get our hands on?
    Seems maybe worthwhile, particularly for anyone trying to time the market.

  49. pesche says:

    housing up: cris over

  50. njpatient says:

    I assume we’re getting the usual crap “home sales up” with MOM numbers, while YOY numbers have plummeted again.

  51. scribe says:

    From Bloomberg via the Times:

    Commercial Paper Market Shrinks the Most in Seven Years

    Published: August 24, 2007


    Outstanding paper may slump by a total of $300 billion, representing the entire amount of the debt backed by home loans, said Tony Crescenzi, chief bond market strategist at Miller Tabak & Company.

    “The commercial paper market, in terms of the asset-backed commercial paper market, is basically history,” said William H. Gross, chief investment officer of the bond management firm Pacific Investment Management Company, known as Pimco.


  52. Comrade 3b says:

    #54 I do not see anything in these numbers that would begin to even start to indicate that we are anywhere near a turn around.

  53. bi says:

    traditionally, the new home sales is a leading indicator but i would not pay too much attention to this number this time due the the financial storm in early august.
    also, remember new home sale is less than 15% of total residential market and is subject to big revision later on. besides, there were fewer new homes built in the area.

    >Sales rose 22.4% in the West to 213,000 annualized and rose 0.6% in the South to 492,000. Sales fell 24.3% in the Northeast to 53,000, and fell 0.9% in the Midwest to 112,000

  54. skep-tic says:

    “Sales fell 24.3% in the Northeast”

  55. stuw6 says:

    All of these housing reports are backwards looking, subject to great error and don’t really tell much anyhow. Just wait until those arms reset in October. That’s where we will see the greatest damage. I also think the FED won’t cut, but I know I’m in the minority on this one.

  56. New Home Owner says:

    yeah, all the #’s are flawed until you get the number your looking for…. sure. lol

  57. Comrade 3b says:

    359 I do no think the Fed will cut either. that has been my stand since the end of last year. If they do, it will a symbolic 25bp cut, nothing more,at least for this year.

  58. New Home Owner says:

    Even if house prices drop 3-5% you do realize there is a ton of people waiting on the sidelines that have not bought in the past year and a half?

    These people will gobble up that 3-5% and even pull the prices above where we are today.

  59. Comrade 3b says:

    #60 newhomeowner: if you look at the numbers there is nothing there to get excited about, as far as believing the housing down turn is over.

    Even the governement cautions that the numbers are subject to large revisions, and that they are not sure most months whether sales were up or down.

    If you want a better barometer, take a look at what is going on in your own town/neighborhood.

  60. stuw6 says:

    #60 interesting theory and I know there is a lot of this here, but you can’t deny this…


  61. skep-tic says:


    How do you know there is pent up demand?

    Given that there was record transaction volume for 3 straight years and homeownership levels reached an all time high in 2005, where are all of these buyers on the sidelines coming from?

  62. Kettle1 says:

    Skep-tic #49

    “also, in order to raise revenue appreciably, you have to define “rich” pretty broadly– top 10%, not just top 1%. This includes most households who make above $150,000.”

    This is something has always chapped my hide. A household income of $150K is not wealthy in todays world. These debates usually seem to turn into whipping boy contests by the politicians where anyone who makes more money then the group they are currently pandering to is rich and should be taxed more to save the little guy. Its to bad that none of the politicos never considered NOT spending money they didnt have, because that means you would be “taking away from the people” be cutting feel good social programs and gov pork.

    Steps off of soap box ^_^

  63. Comrade 3b says:

    #63 Any you know there are a ton of people on the sidelines because? And you know they will gobble these hosues up, and push prices up because?

    And how come they are not buying now?

    And will they be ablw to get financing, after all that has transpired in the credit markets?

    And you accuse people of being biased and yet you are a “newhomeowenr”,and perhaps you are trying to justify your recent purchase.

  64. pesche says:

    Which major homebuilder will file first?

  65. Richard says:

    >>She said that in the past 3 weeks inventory has just “dried up”.

    same in my town. if i was looking now i wouldn’t bother and only look at new listings. note the aggregates don’t tell the story.

  66. bi says:

    62#, New Home Buyer, i agree. besides, just as example i posted yesterday, 50K something is nothing for a 700K plus home if you plan to live in your home for more than 7 years. it is human nature to own something. most bloggers here keep waiting for crash but it won’t happen at this price level IMO.

  67. dreamtheaterr says:

    “New Home Owner Says:
    August 24th, 2007 at 10:16 am
    Even if house prices drop 3-5% you do realize there is a ton of people waiting on the sidelines that have not bought in the past year and a half?

    These people will gobble up that 3-5% and even pull the prices above where we are today.”

    Are you serious?

    Home-ownership is at a record high. A lot of marginal buyers bought in the past 2-3 years on the premise that they were going to miss out if prices kept increasing and were extended credit easily. Future demand was brought forward. Just look at what 0%, 60 month financing has done to auto manufacturers now. There is a dearth of buyers out there since a lot of people have cars still being paid off.

    In the new era of tougher credit standards and a bit of the fear factor, the pool of people to ‘gobble’ up homes is diminished in the near term. Marginal buyers are dodos.

  68. Richard says:

    national chart on ARM resets from Credit Suisse. if you look at the chart if the ARM resets are going to negatively impact the economy you’d expect to see it from early 2007 to early 2009.


  69. njpatient says:

    “New Home Owner”


  70. bi says:

    69#, i actually sampled a few towns in my area. the inventory is much lower than the same time in 2005 and 2006. one factor i think is builders scaled back the development. also, the townships put much more striction for new permits and no more land available in these towns.

  71. njpatient says:

    “there is a ton of people waiting on the sidelines that have not bought in the past year and a half?”

    Leaving aside the grammar, why would you think this?

  72. MJ says:

    For the first time, I am now seeing a listing in a condo complex in central NJ, which is 18% below the peak selling price. Last time I checked this was 14% down.

  73. njpatient says:

    “where are all of these buyers on the sidelines coming from?”

    Maybe it’s all the sellers who haven’t sold but want to buy their next house anyway…?

  74. Comrade 3b says:

    369 Richard: Are you saying there is no inventory in your town, or that much of the inventory on the market is old? Just asking?

  75. stuw6 says:

    Richard #72: Dr. Doom put it into perspective best at your linked site. There is typically a lag of a few months after ARM adjustments before reality sets in. It’s not like the banks change the locks when your first payment is 10 days late. Come on now!

    Richard is like the guy passing the 56th floor after jumping off the Empire State Bldg “So far, so good”. Considering 30 days for delinquency and at least another 120 days for the foreclosure process, the record foreclosures today were March resets. October’s reset volume is twice March’s and the credit markets are already seizing up. It doesn’t take Nostradamus to see what’s going to happen when we hit the pavement.

  76. bi says:

    76#, i would like to see the evidence.

  77. Comrade 3b says:

    #77 Njpatient: and if they are on the sideliens why are they not buying, lots of invetory low FRM’s what’s the problem?

  78. gary says:

    Again, Mozilo said 65% of those hybrids have already been refinanced. Nothing will change much after October/November. You’ll see flat to slightly down over the next couple of years… that’s it. The more “desirable” towns will always be desirable.

    No drastic changes have yet occurred and until they change, if ever, I wouldn’t hold my breathe.

  79. Comrade 3b says:

    #73 bi: and yet there is still lots of inventory in these towns for sale. Why?

  80. njpatient says:

    ” if you look at the chart if the ARM resets are going to negatively impact the economy you’d expect to see it from early 2007 to early 2009. ”

    makes sense, given what we’re seeing, since the firestorm really began this spring.

  81. MJ says:

    Peak selling price 275k+ in 2006

  82. Comrade 3b says:

    #82 gary Why? The market declined before, why this obsessive belief that it will not decline again?

    I am alreday seeing some asking prices in the towns I follow below peak 2005 levels, and these are asking prices.

  83. bi says:

    83#, 86#, this is not good enough. the list is 2br/2bath. the peak selling price 275K could be 3br or a lot of updates. also, there is no picutres for internals. it is hard to draw conclusion from here. what is the street address for edison glen? we can go zillow/trulia to see histroy

  84. dreamtheaterr says:

    In case anyone is interested in reading a 110 page by HSBC on ‘Froth-Finding Mission’ in of the US RE market written back in January 2006….

    It’s a PDF file at http://tinyurl.com/2ckndg

  85. SS says:

    Anyone see Brad Pitt on the news the other day discussing the eco-friendly houses he and a partner firm are building in New Orleans? The “advertisement” quickly slipped in that they are offering those that lost their homes in Katrina first choice to purchase a home. Now I don’t know the specifics and I’m not stating any facts here, but did these people get sub-market value for their destroyed homes (land) and have to pay market value for these new homes? Ethics anyone?

  86. James Bednar says:

    From Bloomberg:

    U.S. New-Home Sales Unexpectedly Increased in July

    Sales of new homes in the U.S. unexpectedly rose for the second time this year in July, suggesting the housing market was stabilizing before the rout in credit markets.

    Purchases increased 2.8 percent to an annual pace of 870,000 last month from a revised 846,000 rate in June that was greater than previously estimated, the Commerce Department said today in Washington. The level exceeded the highest estimate in a Bloomberg News survey of 73 economists.

    New-home sales are likely to show renewed weakness as turmoil in credit markets pushes some mortgage lenders out of business and prompts others to tighten requirements for loans. Federal Reserve policy makers are predicting the worst housing slump in 16 years will remain a drag on economic growth.

    “This is July data and this is referencing a period before the seizure in credit markets,” said Zoltan Pozsar, senior economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast a gain of 850,000. “There are more declines to come. We’ll probably hit a bottom in sales towards the end of this year.”

  87. Tarheel Stuck in New Jersey says:

    Does anyone have any info on this listing?


    Specifically, was it listed before this mls number under another number, and if so, at what OLP? Thank you very much, in advance.

  88. James Bednar says:

    I asked the question before, I’ll ask it again.

    Given the strength in the durable goods orders, and the new homes orders, why exactly do we need a rate cut?

    3mo is yielding 4.11%, 6mo is at 4.25%, 2y is up to 4.27%. Seems that the bets on a Fed cut are slowly receeding with the panic.


  89. Richard says:

    stuw6, the chart starts at beginning of 2007 so our data is limited. taking the data at face value we’re almost through month #8 which is about $12 billion short of peak on resets meaning we’re well into the first peak ‘arm correction’ period. we’ve had some hiccups and i know there are lagging effects but so far i’d say it’s much ado about nothing. we’ll have to see what happens in the next 6-12 months. this toxic loan phenomenon could be a one time event now that credit standards are tightening up. what the fallout is is hard to say as there are other factors to consider.

  90. Cirrus says:

    Is this okay to post this asterisk about new home sales?

    “Compared with a year earlier, purchases were down 10 percent in July. “

  91. Bloodbath in Winter 2007 says:

    I’d put NO stock in these housing numbers. They can be spun to death.

    Truly, what matters to me is looking at asking prices fall. And they are falling, and there’s no question about that.

    I’d say the owners that aren’t dropping asking prices don’t need to sell. That’s just a guess.

  92. gary says:


    Do you really see a 20 – 25% decline in the next few years in towns in Upper Bergen and West Essex? If you took the sales for the last 6 years in the Upper Bergen and West Essex towns, what percentage do you think were prime loans as opposed to some other?

  93. dreamtheaterr says:

    When kids scream a lot when they want some candy as opposed to asking, parents some times give in. Same applies to the over-leveraged guys on Wall St. acting like babies and making noise, and hoping that generous Uncle Ben obliges from a helicopter.

  94. James Bednar says:

    we’ll have to see what happens in the next 6-12 months.

    We’ve argued the issue to no end. There only thing left is to wait and see. If we do indeed make it through the next 12 months without major issues, the worst would be behind us.


  95. gary says:

    jb #94,

    I’m asking the same question.

  96. Richard says:

    >>gain, Mozilo said 65% of those hybrids have already been refinanced. Nothing will change much after October/November.

    you’re probably right. the key here is jobs and interest rates. if either head in a negative direction that will impact GDP and house prices.

  97. stuw6 says:

    Holy crap. We are all in agreement. You can turn the switch off now JB.

  98. BC Bob says:

    There is no need for a rate cut. Spend the time on creative destruction, blow out the losses, move on.

    “Even if house prices drop 3-5% you do realize there is a ton of people waiting on the sidelines that have not bought in the past year and a half?”


    Can you please pass this on to the H-B’s who are desperately trying to keep their heads above water. In conjunction with this, it’s also possible the deadbeats won’t foreclose when the storm hits this fall/winter. The hedgies can now go to the beach. By the way, what site did you pull this info [theory] from, the NAR? Does all this pent up demand also include 10-20% dp’s with high credit scores?

  99. Rob says:

    When I see new home sales up and home builder sentiment down, I have to infer that these deals are getting done at prices that don’t make the home builders happy. Everywhere I read that they are loading these new homes up with incentives. The sale price might stay the same or similar, but the HB profit and loss takes a huge hit.

    The Fed policy the past month is designed to provide cover so that the smart money can leave the room. I have a feeling Wall Streeters are going to be talking about October 2007 in the same breath with October 1987…

    And on the tax for homes over 3,000 sq. ft. Enough with the social engineering already. 3,000 sq. ft. is not excessive if you are a large family. We’re going to need those McMansions in the future because Social Security and Medicare taxes are going to be so steep that we’ll have to go back to multiple generations under the same room.

  100. James Bednar says:

    Both of Mozillo’s recent comments, the 65% snippet as well as his recession comment, posted above, should be taken with a grain of salt. Both are likely motivated by an agenda that we don’t have insight into.


  101. CAIBC says:

    from the report..

    ‘Home resales, which make up about 85 percent of the housing market, are counted when a contract is closed. New home purchases are considered a leading measure of demand because they are recorded when an agreement is signed.’

    I wonder how many of these signed agreements are going to fall through because of the credit crunch? demand may be there but is it the same type of demand that got us here in the first place? over extended buyers now buying new homes due to the slight price decline?

    next months report may be more drastic than we expect it to be….

    stay tuned…

  102. Richard says:

    >>There is no need for a rate cut. Spend the time on creative destruction, blow out the losses, move on.


  103. t c m says:

    i do not expect to see, nor do i think we need to experience, massive foreclosures or punitive ARM resets in more desirable areas to see price declines. i believe the tightening of standards, the increase in jumbo rates, the increasing property taxes, and the realization that one does not have to panic to get into a house before the price surges out of reach, is enough to bring prices down to more realistic levels – although at a slower pace (which is probably better than a crash anyway).

    i also don’t see how anyone can be so sure that just because a town is desirable, prices can’t come down. there is always a spread between less and more desirable towns, however, if prices in the less desirable town come down, why should the spread widen?

  104. stuw6 says:

    “…however, if prices in the less desirable town come down, why should the spread widen?”

    Duhhhh, cause we live there. :P

  105. skep-tic says:

    guys, the northeast was way down on the new homes sales front.

    the reason the number was positive nationally month-over-month was due to a huge surge in sales in the West, where no doubt builders are furiously discounting.

    this number in no way indicates a stabilizing RE market

  106. Arr Elle says:


    So that’s it?? So once the agreement is signed the new home purchase is being recorded as “sold”. Hmm I didn’t know that. I don’t think it makes sense because anything can happen between the time the agreement is fully executed and the actual closing date. Just my two cents.

  107. make money says:

    BOA says no more garbage loans and then goes to bed with CFC. What am I missing here?


  108. bi says:

    i don’t see the price will be down 20% in next few years. again, i have to reinterate my premium/discount theory. since a lot of ARM reset coming, people will fly to quality and buy desirable towns in addition to other factors such as school choice.

  109. make money says:

    I guess you can look at the New sales data from this bears prospective also.


  110. thatBIGwindow says:

    I wonder how the high taxes in “”””desirable”””” towns will effect mediocre towns with substantially less taxes?

  111. Arr Elle says:

    Here are condos with huge incentives. You better buy now because all units are now priced to sell!!!


  112. thatBIGwindow says:

    Yes, schools are everything. Won’t someone think of the children. Washington Twp – (shares a school with Westwood, known for gang activity)

    Franklin Lakes – shares school with Oakland where you have people who live in flood zones along the ramapo river.

    Maywood – shares school with Hackensack
    Rochelle Park – shares school with Hackensack

  113. SS says:


    Do you think they’re in bed or is it just a sweetheart deal they couldn’t turn down? They’re getting a nice dividend and they’ll probably short them as well.

  114. t c m says:

    bi Says:
    August 24th, 2007 at 11:26 am
    “i don’t see the price will be down 20% in next few years. again, i have to reinterate my premium/discount theory. since a lot of ARM reset coming, people will fly to quality and buy desirable towns in addition to other factors such as school choice.”


    sorry to be dense, but i don’t understand why with ARM resets people will fly to quality and factor in good schools any more than they have in the past.

  115. New Investor says:

    thatBIGwindow Says:
    August 24th, 2007 at 11:31 am
    I wonder how the high taxes in “”””desirable”””” towns will effect mediocre towns with substantially less taxes?”

    You know what I’ve seen? Even mediocre or crappy towns have tax issues. I pay more taxes in undesirable Hillside than way nicer properties in desirable Madison, for example.

  116. bi says:

    120#, in downturn, people buy homes in the towns where the price is more stable rather than finding big discount as many people here want to do. this is risk aversion. if a town has a lot of subprime or ARM resets, i believe the housing price there will be negatively affected. just my 2 cents

  117. MJ says:

    “83#, 86#, this is not good enough. the list is 2br/2bath. the peak selling price 275K could be 3br or a lot of updates. also, there is no picutres for internals. it is hard to draw conclusion from here. what is the street address for edison glen? we can go zillow/trulia to see histroy”

    I know because my friend bought 2br/2bath unit at 275K. True, it was a renovated unit, so you cannot compare directly. Also we are talking listing price here, so wouldn’t be surprised if it sells for another 4% down.

  118. bi says:

    123#, what is nearby street for that complex? thanks

  119. njpatient says:

    “Mozilo said 65% of those hybrids have already been refinanced.”

    Is that a lot or a little? From the weepy noises he was making yesterday, I’m going to guess that it’s a little.

  120. dreamtheaterr says:

    Pulled this off a Google Search:

    1301 EDISON GLEN 3br 2hba townhouse just sold and closed at $340,000 8-24-07

    811 Edison Glen 2br 2ba condo just sold under attorney review at $275,000 8-21-07

    1505 Edison Glen Ter 2br 2ba condo just sold and closed at $260,000 8-21-07

    1121 Edison Glen 2br 2ba condo just sold under attorney review at $248,000 8-17-07

    607 Edison Glen 2br 2ba condo just sold under attorney review at $260,000 8-4-07

    517 Edison Glen 2br 2ba condo just sold under attorney review at $255,000 7-31-07

    106 Edison Glen Ter 1br 1ba condo just sold under attorney review at $199,900 7-18-07

    1701 EDISON GLEN 2br 2ba condo just sold under attorney review at $283,000.

    111 Edison Glen Ter 1br 1ba condo just sold under attorney review at $213,000 6-8-07

  121. BC Bob says:


    Are you selling the dollar today?

  122. njpatient says:

    “In case anyone is interested in reading a 110 page by HSBC on ‘Froth-Finding Mission’ in of the US RE market written back in January 2006….”

    Wow – over the past 5 years NJ appreciated at 3 times its historical 30 year average.

  123. njpatient says:

    kinda suggests that if prices stagnate rather than drop, that they’ll need to stagnate for 15 years to return to the mean.

  124. pine_brook says:

    Can you post how you found this data from google?

  125. gary says:

    njpatient 129,


  126. Bloodbath in Winter 2007 says:

    Bi – do you read all the posts here? How many times does Rich in NJ have to post housesin Bergen where the asking has dropped 15-25% for you to believe?

    I can say with some confidence that SOME asking prices from 2006 are down 15-25% in NJ. Rich must have posted 15-20 houses here in the last few months that prove that.

    You can argue, ‘well, those houses were overpriced to begin with!’ until you’re blue in the face, but i don’t care. Because i feel most realtors PROBABLY based those asking prices on comps.

    You can argue that one too … but there will be no winner.

  127. Essex says:

    Thanks BloodBath….we’ll put on our tin foil helmets and hide in the basement this winter.

  128. dreamtheaterr says:

    #130, I just typed the name Edison Glen and looked at a blogspot of listings sold.

    BTW, that area is a traffic nightmare. The exit to the apartments is off Rte 1 where there is road construction going on. On weekend, traffic is a standstill on Rte 1 around Menlo Park Mall, so I am only imagining how ridiculous rush hour must be.

  129. bi says:

    132#, blood, look at 126#, that is acctual sale prices in a condo development, which is easier to compare from one unit to another unit. you cannot see big difference from 2005 price, say $275K as norm. no blood on the street yet.

  130. njpatient says:

    gary #131

    However, I think we’ll see a combination of stagnation and price drop. By those numbers we’re about 30% too high. I’d think we’ll see something like 10-15% price drops and 7 – 10 years of stagnation.

  131. dreamtheaterr says:

    BC Bob Says:
    August 24th, 2007 at 12:11 pm

    I guess a lot of Euro shorts don’t want it around their ankles down going into the weekend!

  132. dreamtheaterr says:

    Whew, just as I spoke….poof goes the USD.

  133. Clotpoll says:

    Bath (26)-

    “If I’m understanding you incorrect, apologies … but seem to think the opposite … what the person bought the house for is incredibly important.”

    Totally disagree. What somebody paid for a house in the past is utterly irrelevant to determining present value. I can show you plenty of houses in Trenton that have steadily depreciated ever since 1991…would you consider those homes to be “buys”?

    The only things that matter in determining present market value are the comps and market conditions. Of course, as many appraisers and agents built in “escalators” in the up market, you’d be more than justified in applying a “depreciator” to againg comps in this market. I use as a rule of thumb in my area a 1- 1.5% per month depreciator when advising my own clients.

  134. Clotpoll says:

    NHO (62)-

    Where are these “sideline” buyers? I’m in the biz…and I don’t see them.

    If you’re hiding them in your garage, please send a few my way.


  135. bi says:

    140#, except for a few premier towns in north jersey, most “sideline” buyers move to central jersey or west. just my observation.

  136. njpatient says:

    #139 Clot

    I completely agree with your take on this point, other than to say this: last year, before I concluded that it would be a bad idea to buy, the realtor who was showing me houses would often say, when I suggested lowballing, something like “well, the sellers paid X for it just last year, and so I don’t think they’ll accept a lower offer.” I would explain that I don’t give a damn what THEY paid for it, I only care about what I think it’s worth. It seemed that the seller and my “buyer’s realtor” placed some importance on the previous sale price, but they happen to be wrong in thinking that buyers will care.

  137. njpatient says:

    “most “sideline” buyers move to central jersey or west. just my observation.”

    How did you make this observation. Are random people saying things to you like “I was going to buy but decided to wait a bit and then buy in Augusta”?

  138. njpatient says:

    Look at that bull market guy – no need for any action on Bernanke’s part!!

  139. bi says:

    143#, simple. a reasonable person will try to find affordable areas rather than keeping complaining affordability here.

  140. BC Bob says:

    “Where are these “sideline” buyers? I’m in the biz…and I don’t see them.”


    I bought all of them shovels. They best be getting dirty.

  141. make money says:

    JB, or anyone

    If you purchase a property in the Foreclosure auction on the county steps amd the mortgage lien is 400K but the highest bid is 325K.

    Are you liable for for the whole 400K or the highest bid purchase price of 325K. Someone in my class asked me this question and I don’t know the answer.

    Please advise as my lawyer is on vacation and he threated to quit on me if I called him anymore with this type of nonsense.

    Please advise. Thanks.

  142. njpatient says:

    “simple. a reasonable person will try to find affordable areas rather than keeping complaining affordability here.”

    Then it’s not an observation, it’s a guess.

  143. Home Seller says:

    where are all the posts tracking the dow/market like we had last week? (ie dow down 300, 400, etc)

    just a reminder that those fluctuations are a blip on the screen.

  144. Clotpoll says:

    patient (142)-

    Exactly. The “last sale price” theory is invalid…no matter who tries to use it, buyer OR seller.

  145. stuw6 says:

    BI [145] says: “simple. a reasonable person will try to find affordable areas rather than keeping complaining affordability here.”

    A reasonable buyer will put 20% down and not carry a balance on their credit cards. I guess there aren’t that many reasonable buyers out there among the general population.

    Home Seller [149]: We agreed that this is a real estate board and will keep the stock market volatility issues out of the general conversation at the request of many bloggers here.

  146. Clotpoll says:

    bi (140)-

    My office is in Central/Western NJ. I’m on a main thoroughfare and have a really nice illuminated sign out front.

    Perhaps those buyers are also all nearsighted and cannot properly view my sign as their car caravans inch their way past my location.

    Could you please recommend a sign company to make me a new sign that will attract this horde of fence-sitting buyers that I’m missing?


  147. make money says:

    Great read.


    Guys can someone please answer my question from #147. Thanks.

  148. Clotpoll says:

    BC (146)-

    If they come to me to buy a home, I’m going to tell them to buy a one-way ticket to Peru (LOL!).

  149. Clotpoll says:

    Make (147)-

    No. However, if the holder of that lien isn’t in there slugging it out with you, be worried.

    Very worried.

  150. Imus says:

    When this bottoms out and the next upswing starts, what will we all talk about?

    I, for one, intend to NEVER buy a house :)

  151. Jamey says:


    I would send them your way, Clot, but they’re currently paying rent to live in my garage.

  152. Clotpoll says:

    BC (146)-

    I’m gonna guess that buying a one-way plane ticket to Peru will not get you put on a watchlist.

  153. stuw6 says:

    [157] Jamey Says: How do you get them to pay rent…My garage dwellers don’t pay me anything.

  154. make money says:

    No. However, if the holder of that lien isn’t in there slugging it out with you, be worried.

    Very worried.


    Please elaborate a little.

  155. njpatient says:

    “where are all the posts tracking the dow/market like we had last week? (ie dow down 300, 400, etc)

    just a reminder that those fluctuations are a blip on the screen.”

    Like, so totally! No need to cut rates!

  156. James Bednar says:

    3mo is yielding 4.11%, 6mo is at 4.25%

    3mo is at 4.20%, 6mo is at 4.30%


  157. stuw6 says:

    The FED makes interest rate cuts based on the economies health, not on the health of the stock market. Why don’t people understand this?

  158. njpatient says:

    I understand, stu – just couldn’t resist yanking Seller’s chain.

  159. Cirrus says:

    #149 – I agree, the Dow is 30 stocks and this stuff IS merely a blip on the (longterm) radar…

    *BUT* ask some traders how easy it is to do some short sales now and I think you’ll find that while the markets have been wavering the past few days, there are some groups who literally can’t do what they want to do. Is this THE excuse for the lack of volatility? No, but I think it plays a part- if the model says “Buy 10,000 XYZ and short 25,000 ABC” and the trader goes to the market and somebody says, “We can do 500 short ABC, but that’s it – sorry!”

    VIX down another 7% at the moment

  160. Cirrus says:

    Whoops – sorry, didn’t realize you guys didn’t want to talk about this stuff.

    my fault.

  161. Bloodbath in Winter 2007 says:

    Clot – here’s my only problem with your answer to ‘last sale price’

    We’ve been checking realtor.com for probably six months. Focusing on Bergen County. Then we check trulia or zillow to see how much they paid. I don’t have links, but more than a handful of people who bought in 2002/03/04 for, say, $400k-ish, are now trying to sell for 700kish.

    Maybe they did an upgrade or two. Maybe not. I suppose on principal, I would refuse to touch any of these houses for anything more than, say, $500k. You’ll say that’s insane.

    Well what’s insane, to me, is that a house could appreciate 200k/300k in 3/4/5 years. That’s too abnormal. If you want to give it 20k/30k a year, I can dig that.

    I really could care less if their neighbor was in the same situation and sold for 600k … they were smart and got out. You weren’t.

    Call me crazy, but i simply won’t buy a house where the seller would have gained more than a 10% yearly value increase.

    Ex: if it were 200k in 2000, then the absolute max i would pay is 340,000. If the house were 500k in 2000, then the absolute max i would pay is $850k.

  162. stuw6 says:

    The volatility will return when those arms reset. The first round was caused by the credit crunch related to subprime. Round two will be caused by the fear of banks failing as the foreclosure numbers quadruple. The Mozilo’s can try to say that all is well, but the fear mongers will overpower!

    All of this is IMO ;)

  163. BC Bob says:

    “Why don’t people understand this?”

    Stu [163],

    Because they are lying awake thinking about a losing position?

  164. Home Seller says:

    Let me just clear something up. the post had nothing to do w/the fed cutting rates.

    It was just a REMINDER that there’s no need to panic and report what the dow is doing every hour when its down big time. Now if your a day trader or market timer, well then you need to panic…LOL

    that’s all…..

  165. njpatient says:

    So – let’s see – forecast was for new home sales to drop 2.5%, but they rose 2.8%. Yay!

    BUT: (1) sales were down 24% (!) in the Northeast (that’s where Joisey is, btw), and (2) sales were down over 10% since a year ago.

    And this: “The median price of a new home, meanwhile, was $239,500 in July, up from $238,100 in July a year ago. The median price means half sell for more and half sell for less. The average home price, however, dropped to $300,800 in July, down from $311,300 for the same month last year” seems to indicate that the high end market got a poke in the eye with a sharp stick, which isn’t a good sign for anyone who believes in trickle-down economics.

  166. Justin says:

    What everyones opinion of “Republican Blueprint for Property Tax Reform”?

    Is it possible or even plausible given the current state of the state?


  167. James Bednar says:

    I agree with Celia, well, with the first part anyway…

    New-home sales rise 2.8% to 870,000 pace in July

    “Given the volatility inherent in the data and the troubles in the mortgage market, however, it is unlikely that July represents a turnaround in housing trends,” wrote Celia Chen, an economist for Moody’s Economy.com. “At best, it will be the first sign of a slow and unsteady climb back to health.”

  168. Bloodbath in Winter 2007 says:

    Somewhat related nope, hope nobody sold apple went it went down to 120 last week … or, hope somebody bought it there!!

    steady rise this week, and it’s up to 134 … i stand by my prediction of 175 by the end of the year.

    i hope i can look back in five years and say, ‘this is my coca-cola!’

  169. jcjp says:

    new to board.. but think the discussions are great… any thoughts on the Jersey City downtown/Paulus Hook market.. unsure but thinking about buying there now.. and the market has held up remarkably well given current environment..?

  170. njpatient says:

    Until the folks at the federal level fix the AMT, none of the rest of it matters to me.

  171. njpatient says:

    “the market has held up remarkably well given current environment..?”

    If that means that prices have fallen elsewhere but not in JC/Paulus, does that cut in favor of buying there or against?

  172. Rich In NNJ says:

    SLD CHESTNUT ST $1,275,000 7/6/1990

    SLD CHESTNUT ST $1,050,000 7/26/1994

    ACT CHESTNUT ST $2,975,000 1/8/2006
    PCH CHESTNUT ST $2,800,000 3/2/2006
    PCH CHESTNUT ST $2,650,000 5/5/2006
    PCH CHESTNUT ST $2,450,000 9/6/2006
    PCH CHESTNUT ST $2,300,000 10/30/2006
    PCH CHESTNUT ST $2,250,000 10/30/2006
    EXP CHESTNUT ST $2,250,000 1/10/2007
    ACT CHESTNUT ST $2,199,000 1/11/2007
    PCH CHESTNUT ST $2,099,000 2/27/2007
    PCH CHESTNUT ST $1,999,000 5/15/2007
    PCH CHESTNUT ST $1,950,000 6/14/2007
    SLD CHESTNUT ST $1,645,000 8/23/2007
    (Gain of ~3.5% per year)

  173. nwbergen says:

    Jb or Clot,

    Question for you, how does a tax sale work? For example, you come across a public notice placed in a newspaper by a town or city with listings of properties that will be auctioned with past due taxes. If one were to bid on these properties and won, what would you own? What happens to the mortgage if there is one and are you also assuming any and all liens that are associated with the property? What happens to the previous residents of the property?

    Thank you in advance.

  174. James Bednar says:

    From Reuters:

    Fitch downgrades Countrywide Home Loans’ servicer ratings

    Fitch Ratings cut its servicer ratings for Countrywide Home Loans Inc on Friday citing troubles in the residential mortgage market.

    Among Fitch’s ratings cuts, Countrywide Home Loans’ servicer ratings for Alt-A and subprime products were cut to “RPS1-” from “RPS1,” Fitch said. Fitch last week cut parent Countrywide Financial Corp’s (CFC.N: Quote, Profile , Research) rating to “BBB-plus,” or three levels above junk, from “A,” five levels above.

  175. versity says:

    I love how Frank (#10) and thatBIGwindow (#7) love to complain about Democratic tax-and-spend tendencies. Here is a fact: Federal non-defense discretionary spending has grown more quickly under President Bush than under any President since LBJ.

    You are either hypocrites for complaining about spending only when the check-writer wears blue or useless nags who want something for nothing. I suppose you could also be some of those yahoos who believe that “deficits don’t matter”.

    I apologize for getting off topic, but explaining my pent up anger will bring the discussion back to real estate – My wife insisted on a home purchase when she was pregnant this Spring. We closed in April 2007 (against my better judgment, though luckily I was able to convince her that we should buy at the low end of our range). Two weeks ago I received a golden job offer in upper-CT that necessitates a move and sale. I’m just praying that the fact we are walking distance from the midtown direct will keep us from losing more than the 10% we put down.


  176. BC Bob says:

    “dollar on life support….”

    Aaron [171],

    Bigger long term problem, imo, than an overbought, declining RE market.

  177. BC Bob says:

    “dollar on life support….”

    Aaron [171],

    Bigger long term problem, imo, than an overbought, declining RE market.

  178. njpatient says:

    #179 – gosh – slightly more than inflation! Better not figure in costs of purchase and sale……

  179. James Bednar says:

    It was just a REMINDER that there’s no need to panic and report what the dow is doing every hour when its down big time. Now if your a day trader or market timer, well then you need to panic…LOL

    Those discussions are part info-porn and part boredom. I wouldn’t put too much weight onto a single day’s discussion. Sometimes it’s just the most interesting thing to talk about.

    Online watercooler, if you will.


  180. Rich In NNJ says:


    One, what’s up with calling me “Darling”?

    Two, don’t assume I’m for bi-lingual signs just because I pointed out the fact that they aren’t town signs.
    But I know you HOPED they were town signs so it would vindicate your bigoted thoughts which probably stem from your insecure feelings of inadequacy.


  181. BC Bob says:


    Where is Red Blooded?



  182. Aaron says:

    Hating the USA for its posturing in the Middle East is one thing, but when we destroy their financial markets despising the US will go to new heights.

  183. stuw6 says:


    Merrill could face big subprime write down

    Wachovia sues Thornburg Mortgage

  184. njpatient says:


    Sorry, verse.

    Best of luck.

  185. dreamtheaterr says:

    #188, I think it’s time I had a tete-a-tete with wifey if she ever worked for the KGB…. if yes, I’m packing my bags for a forsaken place back in the Himalayas in India with my tail between my legs :)

    Life sure is simple back there; sit semi-naked on a cold stream as the snow melts in the Himalayas and smoke the best stuff available to mankind, while contemplating life.

  186. jcjp says:


    In favor of buying.. just saying that the Downtown JC / Paulus Hook area seems relatively stable.. just wondering what the general thinking from the pundits on this board were.. don’t see too much posted here on Hudson area..

  187. pretorius says:


    I recently flipped a condo in downtown JC, and I follow that market closely.

    During the last couple years, there was fast-rising demand for condos there, but very low supply.

    Real estate prices are all about supply and demand, and while demand remains solid for downtown JC condos, the new towers under construction will flood the market with too much supply. That will torpedo price appreciation for condos in downtown Jersey City.

    Brownstones should do okay though.

  188. pretorius says:

    jcjp, are you looking at other neighborhoods in Hudson?

  189. Clotpoll says:

    Bath (167)-

    But you still have to take current market conditions into account.

    It’s one thing when an entire price range within a town has become stagnant, because all sellers are overshot on the price. You can see this all over NJ, and I’d never advocate buying into such an environment.

    However, if homes within a range are moving briskly…hey, that’s the market. Either bite the bullet, or look elsewhere.

    Seeing a trend of insane appreciation rates can certainly indicate that an area is ripe for a fall; however, the market is what the market is…and the market is never wrong (yeah, I’m one of those “perfect market” guys).

  190. bi says:

    i believe recent home buyers really bought at the bottom or near the bottom. the arm reset and sub-prime issue will have little impact to desirable areas.

    i predicted that the new home sales would be strong and i am predicting existing home sales number will be stronger than expected next Monday. now realtors have more numbers to spin.

    bi Says:
    August 24th, 2007 at 9:18 am
    my prediction is that the 10:00am new home sales will be stronger than expected. but it is not too important since it is the number for july. we had a storm (not hurricane) in early august and we got to wait one or two months to see if there is any damage.

  191. bi says:

    i like this.

    >the market is what the market is…and the market is never wrong (yeah, I’m one of those “perfect market” guys).

  192. Mike NJ says:

    #181 JB,

    I had a round of interviews with the entire RMBS team at Fitch last summer. I did not take the job and oh my goodness am I glad I did not. What an absolute freak show that place must be lately. Talk about walking into the eye of the storm!

  193. BC Bob says:

    “Burned by fallout from the troubled U.S. mortgage market, foreign investors may be less willing to cheaply finance towering American debt, forcing up borrowing costs and threatening U.S. economic growth”

    “Fred Bergsten, director of the Peterson Institute for International Economics in Washington, said that even before the subprime mortgage problems, there were signs that global appetite for U.S. investment was waning as growth accelerated in other regions such as Europe, and key creditors diversified their holdings away from the U.S. dollar.”

    “The real issue is, What is the impact of all this … on U.S. monetary policy and the U.S. economy?” he said.

    “Bergsten sees the potential for a “self-reinforcing risky cycle” where the U.S. Federal Reserve lowers the benchmark interest rate to shore up financial markets, and the U.S. economy slows because of the slumping housing sector, deflecting foreign investors and driving down the dollar.The weak dollar in turn pushes up inflation, pressuring the central bank to raise interest rates rather than cut them.”


  194. Justin says:

    #196 Bi:

    I sure hope you are right (I bought in early 2007) for quite a discount from the OLP and a pretty good discount on the LP at that time. But I still think we have quick awhile to go before anything goes up.

    Although I am in the SNJ market and my town (Mt Laurel) has a very shallow supply of my “house range” (I don’t keep track of all ranges), which is encouraging; I still think we have a year or two of status quo.

  195. jcjp says:

    Pre (194)

    Thanks for the thoughts.. Looked at Hamilton Park area also.. it does seem like even the new towers and developments (Trump, Washington Commons, etc..) have been selling relatively well.. Gull’s Cove also seems to be moving.. with little or no incentives or major price reductions that we know of.. the only units that move slow seem to be way over priced for what the unit offers (total disconnect from reality).. though the Fulton’s Landing complex has quite a few units that have sat for sometime now..

  196. Clotpoll says:

    nw (180)-

    At a tax sale, you’re bidding on a tax certificate for past due taxes on the property. That’s different from a Sheriff Sale, in which a foreclosed property is sold at the courthouse. The taxes (and assessments) listed in the foreclosure notice are liens that convey with the property.

    Tax certificates can be a pretty cool source of income, as they can yield you a pretty nice chunk of regular change (via interest payouts, whose rates are bid down- in reverse fashion- in the tax cert sale). In certain situations, holding a tax cert may eventually lead to the holder being able to foreclose on the property…a rare event that’s sort of the “royal flush” of the tax cert biz.

  197. hoodafa says:

    # 191 – Dreamtheater: You talking about Manali/Malana?

  198. Mike NJ says:

    Regarding past prices in determining future prices…..

    I think that you should take the price into account to some degree. At the end of the day you bid on a house because you want the house, right? If the past sale is over 5 years old then I say ignore it. But if it is within 5 years, you can bet the sellers will have the number they purchased their home at in their heads. Do I think you should make any large alterations to your final value based on this price? No, absolutely not. However, buying a house is a negotiation and in a negotiation, more info is not a bad thing (provided it is factual info). Knowing the homeowner’s purchase price can help you when dealing with them. Making a small tweak on a price to possibly satisfy a seller when in the long run you are getting a good deal (a prerequisite of course) then I say it is worth it in a lot of instances. Sometimes the seller is an idiot and then you just walk away.

  199. Clotpoll says:

    bi (197)-

    “i like this.”

    I will now shave with a cheese grater.

  200. pesche says:

    Oh the libs they love the race card.

  201. PGC says:

    #176 jcjp : You have to find the right property and factor in that Healey will reassess the property taxes. It is something that he has tried to hold off doing, but the rest of Hudson County will force him. Taxes are based on construction price, so a lot of older homes are going to see big hikes.

    #180 nwbergen : At the sale you are usually bidding against the first lien holder. You have to do your homework to ensure that there are no other liens on the property or you are not dealing with a second lien. Only if the First Lien holder buys, is the property wiped clean (although I think city taxes may be exempt from that). I’m not a lawyer so take this with a pinch of salt. I think the first lien holder will bid up to what they are owed and then let it go. I think if you are looking for under that, you can try and contact the first lien holder before the sale to try and get a minimum offer they will accept and then give them a sealed bid after the auction.

  202. chicagofinance says:

    jcjp Says:
    August 24th, 2007 at 2:34 pm
    Pre (194)

    Thanks for the thoughts.. Looked at Hamilton Park area also.. it does seem like even the new towers and developments (Trump, Washington Commons, etc..) have been selling relatively well.. Gull’s Cove also seems to be moving.. with little or no incentives or major price reductions that we know of.. the only units that move slow seem to be way over priced for what the unit offers (total disconnect from reality).. though the Fulton’s Landing complex has quite a few units that have sat for sometime now..

    jcjp: to date there have been ZERO job cuts on the street…..you are taking a micro view and ignoring the macro issue……heads are going to roll in the next 12 months, and all these baby-faced Hickey-Freeman wearing loan co-signers are going to be running for the exits. Wait at least until 2008 or else this year when there is obvious blood spilled….hate to be so Machiavellian, but don’t be an idiot…not now….you’ve been so patient…just a bit longer…

  203. pretorius says:


    You’re right, stuff is selling in downtown JC. That single submarket will probably see a thousand new condos change hands in 2007 and 2008.

    Problem is thousands more condos are being built.

  204. njpatient says:

    pesche – maybe cut down the swearing a bit.

  205. James Bednar says:

    A must-read post over at CR regarding NHS revisions..



  206. James Bednar says:

    Just in case it wasn’t yet posted.. I’ve had my hands full today.


    The Northeast is showing a major decline..


  207. njpatient says:

    “A must-read post over at CR regarding NHS revisions..”

    Short version being that after later revisions, the final number will look pretty much like the original forecast.

  208. nwbergen says:

    Thanks Clot and PGC.

  209. bi says:

    when stock index going up a little bit, every re bears immediately jump to no-rate-cut bandwagon. clot is right. the market is what the market is. look at the bond market. it is so calm after this much stronger durable goods numbers and new home sales. clearly it indicates the rate cut is on the horizon and long term yield will keep coming down.

    >the market is what the market is…and the market is never wrong (yeah, I’m one of those “perfect market” guys).

  210. BC Bob says:

    “and all these baby-faced Hickey-Freeman wearing loan co-signers are going to be running for the exits”


  211. Comrade 3b says:

    #208 chgo: Citigroup and JP Morgan, have been cutting all year.

    I agree the more serious cuts are yet to come, but I bet there will be some large cuts by year end or before.

    And as far as bonus chatter, that usually starts right after Labor Day.

    I highly suspect employees will be told to “manage their expectations.”

  212. BC Bob says:

    “clot is right”

    Run that thought by his bookie.

  213. Comrade 3b says:

    #215 bi: What it indicates is that we are back to where we were, whcih is the Fed will not cut before year end, and the credit markets will continue to sort this mess out on their own.

    Bernanke is not Wall St’s pole dancer.

    If you are counting on rate cuts to bale you out of all of your ARM’s, you best think again.

  214. bi says:

    i have to admit bc bob is the most smart trader i have ever met in real or virtual world. after 20 years of trading, he is still weighing renting or owning a house.

  215. bi says:

    bc bob, i am serious. with your writing, you can easily join cramer’s syndicate or co-auther a book with nick leeson, who is planning on his third book.

  216. Comrade 3b says:

    #196 bi: As far as the new home numbers released today, you do know that according to the report, new home sales were down in the northeast 23%, thats right down 23%. The last time I checked, NJ was in the northeast.

    Did you even bother to read the report?

    As far as recent buyers buying near the bottom, well what can I say, what can any one say. In a word delusional

  217. syncmaster says:

    The NE decline isn’t as precipitous if you compare July 2007 vs July 2006. The only region that did better than us is the South.

  218. bi says:

    222#, as i said before, i don’t take this number too seriously. the signed contract might be canceled in august due to the credit crunch in early august. also please note there are not too many new home built in our area. tell me where you see new developement from alendale to princeton?

  219. Clotpoll says:

    BC (218)-

    “clot is right”

    Run that thought by his bookie.

    Still my “investment of the year”:

    Spurs pick ’em vs. Cleveland, Game 6 AND Game 7.

    PCU could go to $300 and it wouldn’t top that one.

    Now I’ll never again see an NBA line that I trust. Donaghy ruined it for me.

    Can I write a letter to the judge and ask him to have the guy executed?

  220. Clotpoll says:


    Come to think of it, the Gambino family is probably already efforting that.

  221. Clotpoll says:


    Then again, being a Grizzlies fan, maybe I’m the condemned one.

  222. Comrade 3b says:

    #116 tbw: I am finding now that the better the town (generally) have lower taxes. Compare Oradell/River Edge, to Franklin Lakes Wyckoff.

  223. Comrade 3b says:

    #223/224 But still a decline, bi was poiting to that report as proof that the market is recovering, now he is stating that the report does not matter.

    His reasoning is impossible to follow.

  224. Comrade 3b says:

    #98 gary I do not have those numbers, but I would say a large %, or at least larger then one might suspect.

    Do I expect to see those declines(20/25%) absolutley, for reasons that have been discussed over and over again.

    Nothing seems to convince you that this thing is changing, is that because sellers are no lowering prices fast enough for you? You or I or anyone else cannot force them to lower their price, eventually they will, because with all that has happend, and lending standards being resurrected, it would stand to reason.

    As far as Upper Snootty River, and East Brigadoon, I woul suggest you take a look at the Bergen Co Sheriff’ web site, and look at all the foreclosures coming up in those towns.

    Also look at the Bergen Record (Wed), and you can read through all the forcelosure notices amounts owed etc. You can almost time it exactly to when they purchased.

    Anyhow I do not know what will convince you, but after all that has transpired especially after the last few weeks has not convinced you, perhaps you should just stay where you are.

    This board is obviously not helping you.

  225. Everything's 'boken says:

    re 223
    It appears that only the bump in the West made the number positive.

  226. bi says:

    228#, since your head is full of bubble burst, you cannot figure it out. a town has relatively lower tax rate if and only if it has rateables generating from bigger portion of commercial property resided in the town. for example, east hanover and whippany township have lower tax than nearby townships since they are small and have many retail stores along route-10. if you run a regression, i don’t see you can find correation between tax rate and goodness of the town by your definition.

  227. Comrade 3b says:

    #232 bi; You missed my whole point entirely, tbw and I were discussing areas we are both familiar with. It was not directed at you.

    You do understand that some towns are better run than other towns, and that in many instances leads to lower taxes, you doe understand that, do you not?

  228. New Investor says:

    “James Bednar Says:
    August 24th, 2007 at 2:52 pm
    Just in case it wasn’t yet posted.. I’ve had my hands full today.


    The Northeast is showing a major decline..


    From the Report:
    “This is 2.8
    percent (±12.0%)* above the revised June rate of 846,000 and is 10.2 percent (±12.3%)* below the July 2006 estimate of

    ” * 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.”

    How do these figures even mean anything? The measured rate of change is way within the margin of error.

  229. Jamey says:

    (227) Clot: Grizzlies fan? So YOU’RE the one?

    (206) Pesche, here’s a collolary to Godwin’s Law: (http://en.wikipedia.org/wiki/Godwin's_law) When you’ve accused your debate opponent of playing the race card, you’ve already lost the argument.

    Actually, when one signs the name, “pesche,” to their posts one admits that one doesn’t really have an argument in the first place. There’s plenty of ignorance in the world; no need for you to share yours with the group.

  230. Richard says:

    >>Two weeks ago I received a golden job offer in upper-CT that necessitates a move and sale

    make the golden company handle the relocation including sale of your current home.

  231. syncmaster says:

    Richard 236,

    What do you mean “including sale of your current home”?

    What precisely do companies that assist with relo do wrt the sale of ones home?

  232. Richard says:

    >>What an absolute freak show that place must be lately.

    fitch is a joke. a friend of mine who’s an MD tells me stories all the time. good no move.

  233. bi says:

    233#, sorry i thought you want to make a general statement on the relationship between the goodness of a town and the tax rate.
    i think the difference is very small when you considering a town are better run than another. in nj, the property tax has 3 major pieces: municipal, school and county. the school is the major piece but there is no relation between the quality of the school system and the ammount of money spent. for example, newark spent 30% more than somerset county but nobody here will think newark school system is better than somerset county.

  234. Richard says:

    >>What precisely do companies that assist with relo do wrt the sale of ones home?

    the relo will buy it from you for market rate, then they’ll sell it. frees you up.

  235. Bubble Disciple says:


    the proposal sounds nice.
    But I wonder if they have any control over benefits for retired state workers – a huge and growing chunk of the budget.

  236. scribe says:

    From Investment News:

    Bank of China takes harsh subprime hit
    By Sara Hottman
    August 24, 2007
    The Bank of China Ltd., that nation’s largest bank, saw its shares fall 5.4% today.

    The drop came after it announced it holds nearly $9.7 billion of securities backed by U.S. subprime mortgages, published reports said.

    The bank’s shares dropped 8.1% at one point, closing at HK$3.87 after almost 1.5 billion shares were traded — more than four times the daily average over the previous six months, according to published reports.

    Securities backed by sub-prime loans — loans to applicants with low credit scores — have caused losses to lenders worldwide, in particular playing a role in Asian banking stocks’ decline this past month.

    Bank of China said 3.5% of its securities portfolio is subprime bonds, more than any other Asian bank, published reports said.

    Industrial & Commercial Bank of China, the world’s largest bank by market value, said that 4.3%, $1.2 billion, of its foreign-exchange investment portfolio is subprime-related securities, published reports said.

    Bank of China reported a strong 51% increase in first-half earnings since going public last year, but its shares have fallen 10% this year, placing its performance at fourth-worst among companies on the Hang Seng index, according to published reports.

  237. bi says:

    240#, i heard some relo company (probably got tips from clot) were giving lowballs recently and some sellers preferred to sell it theirselves. but in general, the employer will cover commisions and other fees.

  238. James Bednar says:

    How do these figures even mean anything? The measured rate of change is way within the margin of error.

    So how do any of the numbers in the report mean anything? Even the much celebrated headline?


  239. versity says:

    Richard, syncmaster, bi,

    Are you guys talking about something that certain companies do for new hires or outside services that companies sometimes set up for new hires? I’d love to hear of a third party that would play middleman for my move to a much cheaper housing market.

    Ha, much cheaper housing market – I already live in a much cheaper housing market and haven’t moved yet.


  240. New Investor says:

    “How do these figures even mean anything? The measured rate of change is way within the margin of error.

    So how do any of the numbers in the report mean anything? Even the much celebrated headline?


    I agree with you. From a statistical point of view, I don’t really know how much weight any of that analysis holds.

  241. gary says:


    We both agree that at the end of the day, it comes down to price. I was interested in a house just a few weeks before this credit blow up. I went as far as contacting my current mortgage holder to run some numbers and get at least a letter stating that I’m qualified in lieu of an official pre-approval.

    The house I liked went under contract for peanuts under asking and even the realtor was surprised. I think the buyers are nuts but nonetheless, the absurd price brought an absurd offer and wah-la, the house sold.

    Friends of ours got into two bidding wars in the last nine months.

    Listings I get on a daily basis still have bizzaro prices so the realtors must be advising them of some price that is moving the house.

    The old man up the corner from me sold his POS cape (and what a POS it is) for ASKING and my wife and I still can’t believe it.

    At this very moment, prices are not far removed from peak. I don’t care what anybody says.

    IF…. this credit crunch stuff and modified lending standards changes things, we’ll find out soon enough. Until then, I’m not convinced.

  242. versity says:

    Okay guys (Richard, syncmaster, bi), I sniffed out the trail. Didn’t realize these kinds of services were out there. Though to be honest I’m a little skeptical. Anyhow, thanks for the tips. Now let’s see what I can get golden employer to cover.


  243. gary says:

    If the FED drops the rates, we’ll know Bernanke is full of sh*t.


  244. x53Teter says:

    you guys come up with the best one-liners. clotpoll and chifi especially.
    can you help me come up with a good short and sweet comeback when faced with the common argument of –
    ..the best time to buy is when nobody wants to

  245. New Investor says:


    Just because nobody wants to buy chinese toys doesn’t mean I should

  246. BC Bob says:

    “he is still weighing renting or owning a house.”


    Good one. However, that is not close the scale at this time. That would be like placing Twiggy on the scale, praying for a sumo’s weight. I’m only weighing gold bars, making sure that they are the advertised 100 oz..

    I never said that I traded for 20 years. I stated that I have owned properties for 20 years. Decided to join the LOD’s in 9/05.

  247. James Bednar says:

    I agree with you. From a statistical point of view, I don’t really know how much weight any of that analysis holds.

    There is value in the trend. However, because revisions often take 3 months, it’s not incredibly useful for identifying changes in the market.


  248. James Bednar says:

    From Reuters:

    U.S. distressed debt ratio rises in August -S&P

    The portion of U.S. high-yield bonds trading at distressed levels rose by two percentage points in August, the biggest jump since February 2003, Standard & Poor’s said on Friday.

    The percentage of distressed credits, those that yield at least 10 percentage points more than Treasuries, rose to 2.9 percent in August from 0.9 percent in July, S&P said in a report.

    “A rising distress ratio signals an increased need for capital and could act as a precursor to more defaults if accompanied by a credit crunch,” S&P said.

    Credit conditions have already tightened noticeably during recent market turmoil, causing a rise in bond yield spreads, S&P said.

    The July survey of bank loan officers by the Federal Reserve showed that lending conditions were little changed, but the next survey is likely to show considerable change because of market turmoil, S&P said.

    Distressed bonds have surged as concerns about a subprime mortgage debacle dried up investor appetite for risky assets.

    The number of distressed issues jumped to 185 in August from 66 in July, S&P said. The top distressed sectors were consumer products, retail and restaurants, and media and entertainment, S&P said.

    “Sliding consumer confidence, rising mortgage costs, and higher interest rates are all weighing on consumer spending, leading to increased pressure on the consumer products and retail/restaurants sectors,” S&P said.

  249. BC Bob says:

    “After years of easy credit, many on Wall Street simply can’t conceive of a world in which credit is not available to anyone at any price. They do not understand that our current problems are the result of Americans having spent too much and now not being able to repay the money they borrowed to do so. The sooner Americans increase their savings by restraining their spending, the sooner we can begin to put our economic house back in order. The fact that such a shift will create a recession is unfortunate. Nevertheless it is necessary and inevitable.”

    “Some high profile individuals have managed to put two and two together. This week in an interview on CNBC, Angelo Mozilo, CEO of beleaguered Countrywide Financial, connected the dots when he forecast a recession. The well-bronzed mortgage giant told Maria Bartiromo, “I can’t believe that when you’re having a level of delinquencies, foreclosures — equity has disappeared, equity is gone, the tide has gone out — that this doesn’t have a material effect, A, on the psyches of the American people, and eventually on their wallet.”

    “Others, such as bond guru Bill Gross, have suggested that the Federal government itself establish a fund to bail out homeowners who can not afford their mortgages. Setting aside the constitutional or ethical arguments against it, the cost of such a bail out would be staggering. My guess is that the price tag would exceed one trillion dollars (Gross estimates the cost at only around $200 billion). Even if Gross’ numbers are accurate, it still represents a significant sum which we would likely have to borrow from abroad. What Gross fails to consider is the moral hazard implicit in such a bail out. Were the government to create a program whereby anyone falling behind on their mortgage could have their loan restructured to some lesser amount with lower payments, one would have to be an idiot not to take advantage of it. If such a nutty plan were ever implemented, it would not be 2 million homes going into foreclosure as Gross fears, but 20 million.”


  250. BC Bob says:

    No link;

    A housewife in Japan was sentenced this morning after evading over $1.2 million in Japanese taxes. Japan’s version of the IRS followed a paper trail to 60-year-old Yukiko Ikebe’s home, where they found her surrounded by millions in kimonos and jewels.

    How did she get so much cash? Forex trading.

    Mrs. Ikebe “felt it was unfair to have to pay tax on her gains when she made losses some years,” said her judge. Amen to that. She was fined $300,000 and released

  251. njpatient says:

    Funny how every day the posting slows down suddenly around 5:30 every day when all of you lazy good-fer-nuthins go home.

  252. njpatient says:

    did I say every day? Every day. In case you missed it.

  253. New Investor says:

    I left at 5

  254. Essex says:

    Yes, the posts do slow after a workday….for those who actually ‘work’ during the summer…..;-)

  255. njpatient says:

    with any luck I’ll be out of here in an hour or so. It’s a half day!

  256. BC Bob says:

    You mean to tell me that everybody posting all day are actually working?

  257. Clotpoll says:

    bi (243)-

    Your ignorance becomes more and more exposed with each post.

    The buyout price in a relo is established by using three independent appraisals. Usually, the seller is then incentivized to price to market by being offered a bonus by his company to sell within a certain timeframe.

    Does any of this sound like a lowball to you?

  258. Clotpoll says:

    scribe (242)-

    Chinese banking- pre-subprime- era was largely a cesspool of corruption. That’s why the population relies on insurance products, rather than banking, to perform as a savings/investment vehicle (witness the ultra-performance of LFC, China’s monster of insurance).

    These banks’ admissions that they’re even holding our time bombs of subprime is quite amazing. Perhaps they are beginning the steps needed to drag themselves out of the muck.

    Disposing of their subprime sewage will certainly put them to the test.

  259. t c m says:

    # bi Says:
    August 24th, 2007 at 11:55 am

    “120#, in downturn, people buy homes in the towns where the price is more stable rather than finding big discount as many people here want to do. this is risk aversion. if a town has a lot of subprime or ARM resets, i believe the housing price there will be negatively affected. just my 2 cents”

    bi –

    your explanation seems plausible, however, don’t you think that an equally plausible result could be that the price declines in the less desirable towns can actually be a drag on prices in the more desirable towns?

    when people look at houses they compare how much house they get for the money in a certain area. at what point is the premium not worth it to live in the better neighborhood?
    for example, if prices in Maplewood fall, don’t you think that would affect prices in Millburn? (unless when you said “stable”, you’re saying that the prices in the more desirable town never went up as high percentage-wise as the houses in the less desirable towns – so the spread between the two is going back to the norm).

  260. Clotpoll says:

    teter (250)-

    No. I agree with that statement.

  261. Clotpoll says:

    BC (262)-

    Blog good. Work bad.

  262. Pat says:

    How about:

    “The best time to buy is when nobody’s buying.”


    a. I can’t afford it, either. I’ll rent.
    b. I can afford it, but I’d rather rent. Why don’t YOU buy it and I’ll rent it from YOU at current market rents?

    That outta do it.

  263. Pat says:

    Durn wine (keeping it clean).

  264. PeaceNow says:


  265. Pat says:

    Tee hee.

    I knew there was an editor-in-lurk out there on call.

  266. Outofstater says:

    “the best time to buy is when no one is buying.”
    How about:

    It doesn’t take any brains to go into debt. I’ll buy when you show me a house I like at a price I like.

  267. Jim says:


    Why is my comment waiting for moderation in the second article?

    Is it because police and teacher’s unions are even stronger than I thought?

    Please comment,


  268. James Bednar says:

    Sorry about that, just got around to checking the moderation queue.


  269. Pat says:


    Man. Add another SOX rule, why don’t we?

    “…asked the big accounting firms what steps they are taking to inform investors holding securitized mortgage assets that they can modify home loans and refinance them..”

  270. Clotpoll says:

    Pat (277)-

    That’s be great…if the investors even knew exactly what it is they own.

    If the investors in the worst of the MBS/CDO forcemeat don’t know what they own, it’s up to the servicers- who are getting paid plenty to tend to these loans- to step up to the plate and engineer the workouts.

  271. Pat says:

    “Hello, Mr. Cho? This is Adam from PwC.

    Cheng Ren Zhi Mei. I’m calling to let you know you can help a lot of American mortgage holders by modifying the terms of their mortgages.

    Um, sorry, I didn’t realize it was 11 p.m. there in China.”

  272. Ed Sanders says:

    Re post 20:


    That was sort of an interesting post, though it wasn’t the most clearly written thing I’ve ever seen.

    I think the stuff about Bush going for a legacy was at least funny, my first thought was that him helping out anyone was laughable, but when I realized that the people he would be helping clearly don’t deserve it, suddenly it seemed like something he might do.

  273. Ed Sanders says:

    I’m curious, why does pesche hate the recent immigrants to the area? Do they beat him up or something? Doesn’t he realize this is a nation of immigrants?

    I’m sure the native americans wish they didn’t let us in, but we kind of kicked down the door, so they really didn’t have a choice, did they?

  274. Ed Sanders says:

    Re post 35:

    One explanation could be that many recent subprime homebuyers simply aren’t that worried about losing their homes because they don’t have much to lose. Most put down small or zero down payments. If prices have fallen since they bought, they may actually owe more than the house is worth, making it an easy choice to walk away.

    That paragraph is one hard truth, and one that I don’t think has sunk in for many lenders (or would it be bond holders?) yet.
    I think that’s one thing about the current situation that could make it much worse than some of the previous real estate collapses.

  275. Clotpoll says:

    Ed (280)-

    Won’t happen. The people he’d be helping out are poor-to-middle-class and not connected.

    When has he ever done that in the past? If anything, he has demonstrated a cruel and sadistic streak when it comes to dealing with anyone other than the fabulously wealthy.

    He is, in a sense, a white version of Michael Vick.

  276. BC Bob says:

    “The Aug. 20 letters from the Fed to Citigroup and Bank of America state that the Fed, which regulates large parts of the U.S. financial system, has agreed to exempt both banks from rules that effectively limit the amount of lending that their federally-insured banks can do with their brokerage affiliates. The exemption, which is temporary, means, for example, that Citigroup’s Citibank entity can substantially increase funding to Citigroup Global Markets, its brokerage subsidiary. Citigroup and Bank of America requested the exemptions, according to the letters, to provide liquidity to those holding mortgage loans, mortgage-backed securities, and other securities.”

    “This unusual move by the Fed shows that the largest Wall Street firms are continuing to have problems funding operations during the current market difficulties, according to banking industry skeptics. The Fed’s move appears to support the view that even the biggest brokerages have been caught off guard by the credit crunch and don’t have financing to deal with the resulting dislocation in the markets. The opposing, less negative view is that the Fed has taken this step merely to increase the speed with which the funds recently borrowed at the Fed’s discount window can flow through to the bond markets, where the mortgage mess has caused a drying up of liquidity.”

    “The regulations in question effectively limit a bank’s funding exposure to an affiliate to 10% of the bank’s capital. But the Fed has allowed Citibank and Bank of America to blow through that level. Citigroup and Bank of America are able to lend up to $25 billion apiece under this exemption, according to the Fed. If Citibank used the full amount, “that represents about 30% of Citibank’s total regulatory capital, which is no small exemption,” says Charlie Peabody, banks analyst at Portales Partners.”

    “Don’t forget: The Federal Reserve is in crisis management at the moment. However, it doesn’t want to show any signs of panic. That means no rushed cuts in interest rates. It also means that it wants banks to quickly take the big charges that will inevitably come from holding toxic debt securities. And it will do all it can behind the scenes to work with the banks to help them get through this upheaval. But waiving one of the most important banking regulations can only add nervousness to the market. And that’s what the Fed did Monday in these disturbing letters to the nation’s two largest banks.”


  277. Pat says:

    Ed. It has nothing to do with recent.

    He’s been at the “polish” in Queens, the Indians, single parents, the dems, the martians. Everybody is game, so I guess that’s O.K., right?

    I can’t think of any group he’s left out…HOWEVER, he’s been very careful about not touching Uncle Dom.

  278. Clotpoll says:

    Ed (281)-

    I think he listens to a lot of Michael Savage.

  279. Clotpoll says:

    Pat (285)-

    Perhaps Uncle Dom was not so careful in not touching Pesche (urrrrp…).

  280. stu says:

    The anti-immigration stuff must end. You can’t have your freedom and deny it to others who seek it. Isolationism has always been the means to a terrible end. Want to pay quadruple for everything? Keep blaming it on immigration!

  281. JCSidelines says:

    Re post 256

    Is a 200 b bailout out of the question politically? I’m not sure. The subprime bailout would be half the cost of the Iraq War and 4x the cost of the S & L bailout. Of course, as has been discusssed here, the bigger issue may be all the crazy financing that may zoom the price of a bailout far higher (approaching the cost of our Viet Nam II). Interesting parallels between the S and L era (which took years to play out) and now.


  282. Ed Sanders says:

    Clot (283)

    I agree, but if someone he knows, say a bank CEO or something, could benefit from it, he might go for it because it wouldn’t cost him anything (just us taxpayers).

    Sadly I’m also with you on the cruel and sadistic thing. Remember Carla Faye Tucker.

    I can’t wait for his time in the White House to end, and I would love to see it happen before Jan. 2009.

  283. Clotpoll says:

    BC (284)-

    How is that any different from Bear and others injecting cash into struggling funds in order to meet margin calls, to stave off fire sales of assets and, ultimately, to prevent the mark-to-market of failed securities?

    At least Bear’s “hush money” was its own. In Citi and BoA’s case, it appears as though they: a) receive government dispensation, b) are allowed to borrow from the Fed and c) are not even required- in return for these favors- to take write-downs on the worthless paper they hold (“…also means that it WANTS [caps mine] banks to quickly take the big charges that will inevitably come from holding toxic debt securities.”).

    Damn the “wants”…why didn’t the Fed REQUIRE those write-downs???

  284. Home Seller says:

    The sooner people respect our immigration laws, the sooner we can have a frank discussion about the matter.

  285. BC Bob says:

    Ok, back to the window. Was that walk up or drive thru? Was that the .99 big mac special with Clot’s little league b-ball card? The 4 largest banks each borrow $500M on the same day. This was done, rah/rah, to make funds available to their customers. Their hedge funds? What collateral was accepted, mbs and “related assets”? We have been hearing the term dancing along the bottom for as long as Larry Crudelow has been yapping about goldilocks. Is that dance floor filled with bubbles?

  286. Pat says:

    No, but the accountants and the lawyers are starting to stand up and walk like zombies toward the light from the glittering, slowly-turning disco ball.

  287. Clotpoll says:

    Seller (292)-

    The persons most disrespectful of our immigration laws are:

    1. the Chief Executive of the United States.

    2. the chief law enforcement officer of the United States.

    They might as well be driving rented Ivesco trucks full of illegals across the border at Juarez.

  288. Clotpoll says:

    BC (293)-

    Want fries with that? Supersize?

    I’m trying to picture Ben there, with a McSmock and hair net.

  289. Home Seller says:

    I don’t disagree w/you. However they cave in w/ “amnesty” to try to get the hispanic vote…..cowards

  290. PQG says:

    BC (284) — Seems like pretty important info.

    This happened on the 20th. Did this news just come out today? If so, then was it because the financial news orgs were slow on the reporting or was it known only to those who “needed to know”?

  291. BC Bob says:

    Pat [294],

    Something like this? I can picture Bob Toll and Chuck Prince.


  292. BC Bob says:

    PQG [298],

    I don’t know if this is the first news article regarding the exemptions. It’s the first I’ve seen. I imagine, don’t ask/don’t tell. Hush, hush.

  293. Pat says:

    Disco Bob.

    Encore…maybe Mozilo in make-up singing Human League, “Don’t, don’t you want me…”

  294. Ed Sanders says:

    Man, dreamtheater administered a serious beat down to new home owner in post 63.

    Nicely done.

  295. BklynHawk says:

    Could someone tell me if this house is really in Forest Hill, Newark…it’s unreal


    Since I’m not originally from here, I just want to ask…what happened to Newark?

  296. dreamtheaterr says:

    Man, I feel so good. Was able to slug down a few in the parking lot of PNC Banks Arts Ctr before watching Dream Theater again…awesome.

    Chifi, I hate you…I was instead imagining Yanni singing the entire show instead…awful.

  297. lisoosh says:

    Newsnight were following a mortgage rep while he visited condo developers and real estate agents.

    One agent said 7 out of 10 of his sellers can’t pay their mortgages and don’t have the equity to sell.

    Condo developer is sitting uneasy on masses of empty units.

  298. lisoosh says:

    Clotpoll Says:

    “The persons most disrespectful of our immigration laws are:
    1. the Chief Executive of the United States.
    2. the chief law enforcement officer of the United States.”

    Followed closely by all levels of the food industry, janitorial companies, landscapers, builders and everyone who wants a cheap nanny or housekeeper.

    To name a few.

  299. Lindsey says:

    It’s very late, but since there has been so much chatter about inventory and prices here today I thought I would hit you with some hard numbers from Monmouth County.

    First things first, there are 3 publicly available MLS’s for Monmouth County and that is where these numbers are from. I will put a url at the end.

    Right now inventory in all three is so close to what it was on the same day in O6 that calling the YOY flat on that is completely fair.

    Here are the numbers:

    date E.Mon W.Mon S.Mon

    8-24-06 4707 2749 1114

    8-23-07 4745 2646 1126

    I don’t have 05 numbers for August, I started tracking in September. Here are those numbers:

    9-23-05 2929 1651 737

    I did not start tracking median list prices until last July, so I have no 05 stats for that, but here are the YOY 06 and 07 listings and prices:

    First, SFH:

    8-18-06 E. Mon 2770 $470K W. Mon 1828 $610K S. Mon 645 $800K

    8-19-07 E. Mon 2782 $450K W. Mon 1939 $540K S. Mon 670 $750K


    8-18-06 E. Mon 890 $375 W. Mon 489 $315 S. Mon 186 $459

    8-19-07 E. Mon 814 $355 W. Mon 330 $305 S. Mon 145 $425

    I have no idea why the number of condos/th for sale in western Monmouth County dropped so much. Since total listings are so close I’m guessing the number of rental units has increased significantly, but I have never tracked rentals.

    For what it’s worth, peak price for E. Mon condos was $379 in July 06, W. Mon’s peak came in Sept 06 at $327K and the Aug. 06 number was the peak price for S. Mon.

    It is clear that list prices today are lower than a year ago.

    Here is the url for the site where I got this info. I used to track Ocean County as well, but in November of 06 the data available on the site changed, so I discontinued it.


  300. Lindsey says:

    Oh, here’s a bonus:

    Centex is building a condo/th complex on Route 35 in Middletown next to a Whole Foods. I’m not sure of the exact date of the price change, but they kept advertising the things at $450-540K, sometime around July they switched to $385-499K.

    The project is called “The Villages at Chapel Hill,” it is No. 11 on their map.

    here is the url:


  301. Lindsey says:

    bonus to the bonus,

    Centex is advertising 5.5% builder financing, but I’m not sure about the terms or duration of the mortgage.

  302. njpatient says:

    The entire country knows what corps in what industries are hiring mostly illegals. No one should pretent to care about illegal immigration without being willing to explain what punitive measures they’re willing to take against those corps. Make it prohibitively dangerous to hire illegals and you won’t have to watch the border. This isn’t done, however, and we all know why.
    Just ask Tancredo

  303. Everything's 'boken says:

    284, 291
    I don’t hear discussion about which major wall street firms are not showing up in the lists of those active at the Fed window or asking for exemptions?

  304. BLB says:

    The anti-immigration stuff must end. You can’t have your freedom and deny it to others who seek it. Isolationism has always been the means to a terrible end. Want to pay quadruple for everything? Keep blaming it on immigration!

    So where do you draw the line on numbers? There are literally billions of poor people on this planet who would come here if given them the opportunity. IF you think that we can and should accommodate even a small fraction of them you’re either dishonest or innumerate.

    And the whole “we’ll pay quadruple” argument is dishonest as well. Why don’t we have legions of people filling bottles with soda or assembling cars by hand? Answer: because we’ve figured out better ways to do it. Industry will always find the best, most low-cost means of production.

    But as long as we import foreign peasants to do our menial tasks, we have no reason to find a better way.

    I read an article recently about a robot orange picker which threatens jobs of “migrant” workers. Boy is Cesar Chavez pissed!

    And finally compare and contrast your economic argument for low cost human capital with the pre-Civil War South’s argument for slavery.

  305. James Bednar says:

    From the APP:

    Luxury homes demand hurt as concerns rise

    Demand for expensive homes is already suffering as potential buyers are concerned the stock market may crumble and the subprime loan crisis raises the cost of mortgages, according to Fortune magazine.

    Rising rates for so-called jumbo mortgages, home loans that exceed $417,000, has lowered demand for high-priced homes and is starting to force sellers to lower their asking prices, Fortune said.

    Diane Saatchi, the leader of the East Hampton, N.Y., office of the Corcoran Group, expects prices to fall 20 percent for homes other than the highest-priced houses in the Hamptons, the Long Island resort area favored by New York financiers, Fortune reported.

  306. James Bednar says:

    From the NY Post:

    $2.6M PIG IN A POKE

    A nightclub investor who bought his neighbor’s swank New Jersey mansion out of foreclosure for $2.6 million – not knowing that inside it was destroyed by feces from more than 100 cats and dogs – is suing.

    Michael Acciardi got access this week to the Saddle River home he’d purchased sight unseen from Merrill Lynch stockbroker Philip Tamis, 66, and his wife, Cynthia Stewart, 49.

    Acciardi opened the door, with a crew from TV’s “Inside Edition,” Thursday and promptly threw up. Rescue workers in biohazard suits removed more than 100 dogs and cats and 24 animal corpses over two days.

    “[Tamis] walked the same two dogs every [day]. He was very presentable,” said Acciardi, due in court Sept 7.

  307. James Bednar says:

    From Variety:

    Housing woes affect reality shows

    As the housing market shifts, so does cable’s cottage industry of real estate shows.
    Most of those property programs — the foundation of several lifestyle nets — are adjusting their blueprints as market mavericks start losing their shirts rather than making a pretty penny.

    With the mortgage meltdown, foreclosures on the rise and property values in freefall, TLC’s “Property Ladder” and about a half-dozen other shows have started to address the downturn.

    During the last major bubble burst — the 2000 stock market bust — CNBC, which rode the tech boom, watched its ratings slide. Nets like TLC, HGTV and Bravo, which similarly enjoyed the housing explosion, are now running into the real-life dramas among homeowners and real estate flippers as the market moves from boom to bust.

    “It is going to make things more interesting,” says Kirsten Kemp, host of TLC’s “Property Ladder.” “This is what will separate the boys from the men. You have to educate yourself. … It’s not just paint and tile and fabric. It’s a business and needs to be respected as such.”

    Series like “Property Ladder,” which focuses on novice home flippers, are referencing the rapidly declining market — and those episodes were taped months ago. On another show, Bravo’s “Flipping Out,” outspoken real estate flipper Jeff Lewis suddenly found himself over-leveraged and needed to sell a home fast.

    “It wasn’t something we expected to focus on,” says Frances Berwick, Bravo’s programming and production exec VP. “But that’s what he deals with on a day-to-day basis.”

    As for property series in production, most will hit the small-screen by January — and at that point, expect to watch a few more dour faces cursing their bad luck.

    “We’re starting to see it now in the stuff we’re filming,” says Brant Pinvidic, TLC’s senior VP of programming. “It’s gone from, ‘Oh, I can get so much money for my house’ to, ‘Oh my goodness, what if I don’t sell my house?’ ”

    After all, as the market crumbles, skeins that once highlighted get-rich-quick property flips suddenly won’t always have happy endings.

    But rather than lament the end of the decade’s go-go home boom, Pinvidic says the recent gloom-and-doom headlines may ultimately make for better TV.

    “From a TV perspective, it makes things much easier for me,” he says. “It increases the stakes. And I want people with real stakes.”

    To highlight those risks, Pinvidic says every TLC property show is now required to detail how much a home ultimately sold for — if it sold at all — and whether the owner made any money or lost a bundle.

    “It’s what people really want to see,” he says. “The ‘reveals’ will be bigger and better. There’s no longer the forgone conclusion that every time you paint a house with a roller you’ll make a profit.

    “What’s real about it is people take these risks on their own. They get all the rewards if it pays off, but reap the failures if it doesn’t. The audience will get it and it will make for great TV, no way around it.”

  308. James Bednar says:

    From the Record:

    Saddle River owner calls cathouse an ‘atrocity’

    The restaurateur who bought a Saddle River home before authorities found nearly two dozen dead cats and dogs, more than 100 live cats and mounds of feces inside said Friday that he’s trying to cancel the deal.

    “These are extenuating circumstances and I need to be relieved of this sale,” said Michael Acciardi, 47, who said he saw the “disgusting” interior for the first time on Thursday after returning from an out-of-state vacation.

    Acciardi, who lives next door, paid $2.6 million for the 20-room house at a foreclosure sale. He said he was being neighborly by not trying to enter the home while it was owned by Philip Tamis, 66, and his wife Cynthia, 49, who also goes by the name Cynthia Stewart.

    “[Tamis] said he was a private person,” Acciardi said. “He didn’t want to allow me in. What was in there? Normal stuff, he told me. He said the house was fine. I asked if it needed a kitchen. He answered that it doesn’t need anything.

    “I was assured the house was fine. I asked him point-blank when I was in negotiation.”

    Acciardi said he first learned what was going on inside the house at Burning Hollow Road when police called him while he was out of town. He described the scene as an “atrocity” and said his attorney has filed to “unravel the sale.”

    “When I bid on that house I was bidding on a home that I saw people living in. I saw people every day coming in and out of the house. I thought I was bidding on something habitable,” he said. “I’m not going to lay down on this.”

  309. James Bednar says:

    If you don’t believe it..



  310. James Bednar says:

    From the Wall Street Journal:

    Taking Credit
    August 25, 2007
    Mortgage markets have looked like ships lost at sea of late, so of course Presidential hopefuls Hillary Clinton and Chris Dodd have dinged George Bush for not launching the lifeboats.

    Senator Dodd finds it “troubling that President Bush is sitting by idly while millions of Americans face foreclosure on their homes.” Mrs. Clinton has proposed a bailout fund for homeowners facing foreclosure and a program of punitive regulation for whichever mortgage lenders and brokers manage to survive the shake-out.

    Everyone on the Democratic side of the aisle seems to think the President should send in Fannie Mae and Freddie Mac to make everything right again. Meanwhile, at least a dozen states have rushed in to heighten underwriting standards and forbid “above market” interest rates and other bad practices. One safe harbor: Congress is on vacation.

    Amid the torrent, we found one voice of comparative reason this week: Congressman (and Chairman of the House Financial Services Committee) Barney Frank. Yes, Mr. Frank also would like to see his friends Fannie and Freddie loosed on the mortgage-backed securities market. But he deserves credit for speaking an awkward and politically unpopular truth: We got into this mess because some people bought homes who had no business buying the homes they did, and maybe no business buying a home at all.

    One can differ with Mr. Frank about exactly how that came to pass or the appropriate response. But identifying a problem accurately is the first step to solving it. Strip away the rhetoric and you’re left with this: If no one had loaned marginal buyers the money to buy a house, they would never have owned the home they are now in danger of losing. Since many of those marginal buyers put little or no money down, they will return to the rental market, little worse off than when they left it.

    That may seem harsh but consider: At the state level, many of the “reforms” being rushed through legislatures will have the effect of making sure that people now in danger of losing their homes won’t get a second chance to take out a mortgage they can’t pay back.

    Requiring underwriters to qualify borrowers at their “full” interest rate, rather than the teaser rate they might have been offered for the first couple of years, means many of those borrowers won’t qualify for the loan in the first place. Well and good, you might say, if that means they won’t get a mortgage they can’t afford over the long term. But then it makes no sense to argue that the federal government needs to keep these people in their homes. Likewise, passing laws against “above-market” interest rates is another way of saying that if you are a risky credit, it would be better not to lend to you at all.

    To state what up to now apparently wasn’t obvious, subprime loans are riskier than prime mortgages with conservative loan-to-value ratios. The higher interest rate was intended, in theory at least, to compensate lenders for taking on that higher risk. Forbidding them to charge more for riskier loans is tantamount to barring them from making those loans in the first place.

    Whatever Congress decides to do when it returns, some of these problems are fixing themselves. Lenders seem to have figured out that it’s dangerous to lend to someone who can’t afford the interest rate that kicks in when the teaser period ends, especially if the borrower never has to document his income or assets. And the myth that an ever-rising housing market would bail out even dubious loans has, we suspect, been debunked.

    If Congress really wants to “do something,” it might start by trying to understand the problem. As of the end of this year’s first quarter, according to former Federal Housing Commissioner John C. Weicher, some of the highest delinquency and foreclosure rates were in the upper Midwest. Indiana, Michigan and Ohio never experienced the boom. Those three states each saw less than 5% annual house-price appreciation the past five years, about half the national average. By contrast, the hottest housing markets in that period — in Florida, the Northeast and the West — still sport comparatively low foreclosure and delinquency rates.

    That could shift as adjustable rate loans made in 2005 and 2006 reset at higher rates. But it suggests that a robust state economy is good insurance against a housing bust. Adopting pro-growth economic reforms to add jobs and businesses looks like the best answer to an ailing housing market. Trying to correct lending and underwriting mistakes that won’t return for years — while shooting the wounded in the capital markets — smacks of fighting the last war. Congress should avoid that mistake.

  311. James Bednar says:

    From LA Times/Bloomberg:

    Sub-prime default rate almost doubled in June, report shows

    The default rate on sub-prime mortgages packaged into securities almost doubled to a record 13.43% in June from a year earlier, according to a report issued Friday.

    The share of loans that were at least 90 days late, in foreclosure or on property that had been seized rose from 12.4% in May and 6.88% in June 2006, according to the report by Michael Youngblood, an analyst at securities firm Friedman, Billings, Ramsey Group Inc.

    The default rate for alt-A mortgages packaged into bonds climbed to a record 3% from 2.69% in May and 0.94% in June 2006, according to Youngblood, who made use of data from First American Corp.’s LoanPerformance unit.

    Sub-prime loans are made to borrowers with poor credit or high debt. Alt-A is a credit class above sub-prime. Alt-A mortgages are often used by consumers who don’t document their pay or those who buy investment properties.

    The default rate for prime “jumbo” mortgages — large loans given to people with good credit — rose to 0.38% from 0.37% in May and 0.23% a year earlier.

    Youngblood’s data go back to June 1992. Sales of mortgage bonds without guarantees by government-chartered companies Fannie Mae and Freddie Mac or by government agency Ginnie Mae began in 1997.

    Late payments on all U.S. mortgages rose to 4.84% on March 31 from 4.41% a year earlier, according to the Washington-based Mortgage Bankers Assn.

  312. James Bednar says:

    Talk about an interesting new twist to outsourcing customer contact. How long before McDonalds and Burger King begin to offshore the drive-thru guy.

    Help Wanted Ads Go Unanswered in West

    The owner of a fast food joint in Montana’s booming oil patch found himself outsourcing the drive-thru window to a Texas telemarketing firm, not because it’s cheaper but because he can’t find workers.

  313. James Bednar says:

    From CNN/Money:

    Your House: Breaking the Bank

    If you’ve been reading Money Magazine for any length of time, you surely get that saving for retirement should be your top financial priority. Even so, the past decade’s easy appreciation in home values has made such fundamental advice seem, well, a lot less urgent.

    Or so suggests a National Bureau of Economic Research paper recently published in the Journal of Monetary Economics. Comparing results from the biennial University of Michigan Health and Retirement study, researchers found that, excluding home and business equity, 51- to 56-year- olds hold less wealth than the same age group did in 1992.

    “These boomers look richer, but a lot of that wealth is because one asset [their house] revalued,” says co-author Annamaria Lusardi, a professor of economics at Dartmouth. “Excluding housing, people have very little in other wealth components.”

    The study did leave out 401(k) savings, but the median balance for those accounts for a similar age group is only $50,000, while fewer fifty can look forward to guaranteed income from pensions today than could in 1992.

    Myth: My home is a sure investment

    The results call for a reality check: Are you banking too much on your house?

    Truth: Your home value may have more than doubled during the boom, but real estate markets have also been known to suffer prolonged stagnation, even downturns (see the 8 percent drop in median prices this past year in some areas). If there’s a bust on the cusp of your retirement, your pot of gold could turn up half empty. Besides, the past 10 years aside, history suggests that homes don’t give much long-term return compared with other investments: A dollar invested in residential real estate in 1963 has barely outperformed a low-risk T-bill, according to a 2007 Fidelity Research Institute report.

    Myth: Downsizing will leave me flush with cash

    Truth: Even if the market is up when you’re ready to exit the work force, you’re unlikely to ever see the appreciation in cold hard cash. Prices on smaller homes jumped too during the boom. In Baltimore the median price of a single family home is $278,800; a condo is $239,300. Savings: less than $40,000.

    Unless you move to a less pricey area – think San Francisco to Omaha – “you’re unlikely to greatly improve your financial picture,” says financial planner Jim Sonneborn of Chatham, N.J.

    Myth: I can always tap my equity and invest it for even better returns

    Truth: Interest rates are up, with average home-equity loans and lines of credit topping 8 percent. So the hurdle is higher. Earning average stock-market returns above 8 percent will require years of riding market ups and downs, time you probably don’t have.

    As for reinvesting the funds in your home, the days of making it all back are over. A kitchen redo recouped 80 percent on average in 2006, according to Remodeling magazine.

    The bottom line: Saving for retirement is still Job No. 1. Your home may provide a roof over your head in retirement, but you’ll need cash if you want to eat.

  314. PQG says:

    BC (300) – The news item you linked to came out at 5pm on Friday. After the markets close. I don’t know when the Fed posted the info to the website.

    Bloomberg says this all went into effect on the 23rd.



    I suppose this change allows the toxins to spread from the brokerages to the regular banks with much more ease. However, the Fed thinks it also allows the toxins not to do as much damage where ever they are.

    One important question is: How are the toxins gotten rid of?

  315. njrebear says:

    Here is something – A no bailout petition.


  316. James Bednar says:

    From MarketWatch:

    Keeping the faith

    Tammy Winfield made every effort to depersonalize her home and keep it free of clutter. She even baked cookies before prospective buyers came in for a look, hoping that the homey scents would help persuade them to make an offer.

    Still, the Truckee, Calif., home that she and her husband, Bill, put on the market in September sat for months without any takers.

    “We were getting a lot of showings, but not many offers,” she said

    At the suggestion of their Realtor, Brandi Benson, they brought in a stager who refocused the home using the concepts of feng shui. Tammy Winfield also addressed the reasons why she was having a tough time detaching from the home, possibly causing buyers to stay away.

    And then there was the little matter of burying a statue of St. Joseph in the yard, a ritual she learned about from her Catholic friends.

  317. BC Bob says:

    “One important question is: How are the toxins gotten rid of?”


    5:00 PM Friday? How convenient. Don’t worry, the window is open, we will accept anything. Well after the S&L crisis we had the Resolution Trust Corp. How about a 2008 version; Bust Trust Corp? In addition to this, how about overseas investors? You think they will be running to buy our dollar? Now I realize what was being shipped in those empty containers.

  318. Bubble Burst says:

    Why would anyone buy before the excesses are out of the market?

  319. gary says:

    Here’s what happens when you smoke too much diesel.


  320. BC Bob says:


    This is f*cking scary. I’m awake to it now. Look at these damn exemptions. What happens if 30% of the banks regulatory capital goes to one of these so called affiliated brokerages and they implode? I am not in the banking industry. However, what would be the consequences regarding tier capital rules?

  321. Bloodbath in Winter 2007 says:

    I’m at the point in my research where you don’t need to tell me inventory is up or down … spare me all the rate cute chatter.

    Right now, two things matter to me in the housing industry:

    1) Are the bagholders going to get a bailout? Unless one of the political parties physically hands over money to all these people who got themselves in over their heads, i don’t see a bailout happening, and asking prices will continue to plunge.

    2) Massive rate reduction on jumbo mortgages. Let’s face it – our national savings rate is beyond terrible, and though I don’t have hard #’s to back it up, i’m of the opinion that there aren’t many people who can put together 10-20% for a downpayment. I have no idea how all these houses priced in the 600k range and up are going to sell.

    I’m not a doom and gloom guy, and i was surprised to see all this recession talk LAST YEAR on this blog. Naturally, everything you guys have said (Rich in NJ, BC Bob, Clot, JB, etc) has come true.

    Now I’m off to do weekend homework on banks … so that this winter, when banks take over thousands of houses in NJ, i can be prepared. HOpefully, they won’t all have dead animals in them.

  322. Happy Camper says:

    “Home Seller Says:
    August 24th, 2007 at 10:15 pm
    The sooner people respect our immigration laws, the sooner we can have a frank discussion about the matter.”

    I wonder if the Mayflower obtained the proper visas before arriving.

    Did your Irish, Italian, German, Polish, Swedish (keep going….) ancestry filled all the paperwork in the 1700’s / 1800’ / 1900’s?

  323. Bloodbath in Winter 2007 says:

    immigration: sorry, we need to get them out of here. The long-term ramifications on our country will be terrible.

  324. lisoosh says:

    I was going to link to that Western Employment article but JB beat me to it.

    It is an excellent example of economics in action.

    Help Wanted Ads Go Unanswered in West
    By MATT GOURAS (Associated Press Writer)

    “The effects are everywhere. Logging equipment in Idaho sits idle as companies have a tough time finding workers. A shortage of lifeguards has forced Helena to shorten hours at children-only pools. A local paper in Jackson, Wyo., has page after page of help wanted ads.

    ..For years, the resort has imported dozens of workers from Eastern Europe who often come as much for the summer recreation opportunity as the money. This year, however, that wasn’t enough

    …Established baby boomers, including retirees, have been moving into Montana for the mountain views and recreation, bringing with them money for new homes that fuel construction job growth, said Swanson.

    Along the way, younger people have moved away searching for bigger paychecks as the state’s wages still lag behind other areas and are slowly increasing overall. Now, the aging work force is unable to expand to meet the demands of the job market, Swanson said.”

  325. lisoosh says:

    “Bloodbath in Winter 2007 Says:
    August 25th, 2007 at 9:57 am
    immigration: sorry, we need to get them out of here. The long-term ramifications on our country will be terrible.”

    You mean like having workers here to support an aging population?
    Or people to carry out the jobs (see above) that obviously Americans AREN”T doing?

  326. Everything's 'boken says:

    The idea that we can export all those here illegally is silly, and expecting the government to do what the people want, toughening border protection, is naieve because the current situation serves so many interests.

  327. Everything's 'boken says:

    The current situation is ideal for all the boomers who thought their houses were going to fund their retirement. It will soon seem normal that all the jobs at McD are filled by old people.

  328. versity says:


    Statement – “the best time to buy is when nobody wants to”

    Response – “the worst time to cry is when everyone else is”

    Equally trite and senseless.


    My parents were first-generation immigrants from Latin America who didn’t even finish high school. I’m the first high school diploma, first college degree, first law degree, and first post-law degree. I help Americans devise tax-efficient holding and investment structures to make money in the global markets and especially Latin American (where the Spanish comes in handy).

    Terrible long-term ramifications to my parents’ immigration, huh?

    What would you be saying if this were Europe and all the Mexicans were muslim?


  329. scribe says:

    From Page 1 of today’s WSJ:


    Condo Troubles
    Further Squeeze
    Property Lenders

    Full Force of Glut Is Felt
    As Buyers Back Out;
    ‘More of the Iceberg’

    August 25, 2007; Page A1

    For the nation’s real-estate lenders, the other shoe may be about to drop: condominiums.

    Already plagued by rising home-loan defaults and foreclosures among overstretched consumers, major markets across the country — including parts of Florida, California and Washington, D.C. — are seeing rising foreclosures and bankruptcies of entire condo projects.

    The problems are emerging as some buyers who signed contracts to buy new condos two to three years ago, when construction was just starting, seek ways to back out as they encounter trouble getting financing in the suddenly dicey mortgage market. Falling prices are forcing appraisals down, so banks aren’t willing to lend the full amounts that people committed to in the sales contract.

    “Closings that are scheduled to take place are not taking place,” says Marvin Moss, a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts.

    The condo market, while tied to the housing market overall, behaves differently under stress. While a single-family home builder generally constructs units as orders come in, a condo developer builds all at once and hopes for the best, adding risk. So while the speculative overhang of newly constructed single-family homes may have peaked in many markets across the country, the full force of the condo glut is starting to hit now.

    With single-family homes, “you put up a couple of model homes and build the rest as you get sales contracts.” says James Haughey, director of research at Reed Construction Data in Norcross, Ga. “But you have to build the entire…building before you can sell a single condo.”

    In 2006, the number of new condominium units completed jumped 145% to 102,800, from 41,900 in 2003, according to the U.S. Census Bureau. Last year was the highest level since 1985, when 135,800 units were built. So far this year, 48,354 units have been built and another 72,000 are under construction, according to New York research firm Reis Inc.

    Downtown San Diego can expect 2,900 new units to arrive on the market in the next year, according to real-estate investment brokerage Marcus & Millichap. Hessam Nadji, a managing director at the Encino, Calif., firm, estimates it will take as long as 18 to 24 months for the most-saturated markets to buy up the glut of condo inventory — if the economy overall stays strong.

    Miami is in worse shape: The city added 4,549 condo units in 2006 and 3,276 so far this year. Another 7,985 will be delivered by the end of the year, with another 8,260 slated for 2008 to 2011, according to Reis, for a grand total of 24,070 news units between 2006 and 2011.

    “More of the iceberg is being revealed, but we haven’t seen it all yet,” says Norman Radow, an Atlanta real-estate investor who works with lenders to rescue distressed condo complexes.

    Typically, condo developers are required to pay off construction loans shortly after construction is completed. But with sales stalled, more developers are defaulting, creating headaches for banks and real-estate funds that financed the projects.


  330. scribe says:

    This was on Nightline last night.

    “Seven out of 10 sellers that I am talking to now either cannot make their payment or they don’t have enough equity to sell their home,” Tyrone Armstrong, a veteran realtor. “We are looking at a lot of folks now who are going to be looking at foreclosure.”


  331. njrebear says:

    I have feeling we will see hyper inflation.

  332. Joeycasz says:

    Since I’m not originally from here, I just want to ask…what happened to Newark?

    Riots in ’69
    never ending crime

    My father to this day still says “when i came here from Italy in 1956 it was like going back home”

    My parents got us out of Newark in 1979. Best decision they ever made. Although i have a soft spot for Newark as it being my birthplace and the fact that even though we left we never really did. I would go to a sport club on Garside St that my father would hang out in while he played cards and i drank soda playing games.

    As far as Forest Hills go. The area is Historical so they keep it up really well. And yes that house is really there. You see plenty that look just like that there.

  333. scribe says:

    From the NYT, about those ads that keep popping up:

    As Woes Grow, Mortgage Ads Keep Up Pitch

    Published: August 25, 2007

    Wall Street may have soured on the mortgage business. But on television, radio and the Internet, the industry is as ebullient as ever.

    For example, Quicken Loans, no longer affiliated with the makers of Quicken software but the nation’s 25th-biggest lender, continues to run its signature spot on radio stations. “This is a rate alert,” the advertisement starts off, sounding much like a newscast. “Slower economic growth has caused the Fed to keep interest rates flat, and the market has responded with some of the lowest mortgage rates in years.”

    As more homeowners fall behind on mortgage payments and investors abandon the industry in droves, mortgage companies are facing greater scrutiny over their lending practices and disclosures to borrowers.

    One area where regulators are paying closer attention is advertising that promises tantalizingly low payments without clearly disclosing the myriad strings that accompany the debts. It is a tactic that has been widely used — and, critics say, abused — by lenders trying to lure new customers.

    Mortgage lenders have spent more than $3 billion since 2000 on advertising on television, on radio and in print, said Nielsen Monitor-Plus, which tracks ad spending.

    That figure does not include direct mail and Internet advertising, which are increasingly popular vehicles for the industry. Nielsen/NetRatings estimates that mortgage companies spent $378 million in the first six months of this year on Internet display ads, and many companies also buy search advertising.


  334. Bloodbath in Winter 2007 says:

    re: immigration

    While it may not seem lofty to try and simply boot illegals from this country, you have to begin somewhere.

    You know how illegals line up in cities across American each morning, looking for work? Let’s just round them up and deport them. It can easily be done. That will probably only eliminate 5-10% of illegals, but it will send a signal.

    Right now, public schools are giving free education to illegal immigrants. Guess who is footing the bill? You are. And you know what? The parents have a ‘give a s*it’ attitude because they can break the law and all that happen is they get kicked out of the country. This rubs off on the kids in school, and it leads to gangs. You do realize how big of a gang problem this country has right now, right?

    For those of you who think we shouldn’t boot them, take a look into the future…10 years…15 years … how many illegals will be here then?

    As for the jobs … it will take some time, but Americans will take them. Eventually, they will shove pride aside and take the jobs that were previously deemed ‘inferior.’ And wages will go up, too.

  335. Bloodbath in Winter 2007 says:

    Yes, they will want to come back in the country. And some probably will. And that’s why, eventually, a wall becomes necessary.

    I also should add that I am a democrat who only recently came around on this issue when a friend of the family who recently retired from the world bank opened my eyes to the terrible long-term ramifications for this country.

    He too, is a democrat.

  336. ramifications says:


    What are those ramifications? What am I supposed to be afraid of?

  337. chicagofinance says:

    x53Teter Says:
    August 24th, 2007 at 4:47 pm
    ..the best time to buy is when nobody wants to..

    tete-a-tete: I think plenty of people want to buy right now, they just can’t. Either the numbers don’t work or they can’t get a loan. What’s changed is that the fear of needing to get in the game, or being locked out forever, is gone.

    Believe me….what we are seeing is not “nobody wants to”……THAT would suck!

  338. chicagofinance says:

    Also, literally all the people who wanted to buy already have in the last 5 years.

  339. BC Bob says:


    Disclaimers, Disclaimers.

    Did you hear anything regarding some institution selling $2 billion of deep out of the money Sep. calls, at the same time that the 4 majors went to the window for $500M each? These expire the 3rd week of Sep.

  340. lisoosh says:

    Blood –
    “This rubs off on the kids in school, and it leads to gangs. You do realize how big of a gang problem this country has right now, right?”
    Isn’t that what people said about the Italians 50 odd years ago?

    You know, there were lots of studies concerning whe in many ways the US economy outperforms Europes. It wasn’t homegrown entrepreneurship suprisingly – in Europe it is higher because universal health care and a strong social net allow people to take bigger risks.

    The number one cause of strong economic growth – immigration. A constant pool of fresh, enthusiastic people willing to pay their dues.

    The argument against ILLEGAL anything is good. But we should be honest about the need for “starter labor” and let in legally the workers that we need.

  341. Eisbär says:

    Re #341:

    Yup — I’m still seeing plenty of those lowermybills.com dancing aliens. Optimism springs eternal, I suppose.

  342. NJGator says:

    Can someone with GSMLS access please give me the sale price for 42 Christopher St in Montclair?

    Many thanks.

  343. James Bednar says:


  344. Bloodbath in Winter 2007 says:

    348 – Yes. So ship them back to their country and have them come over legally. So they can pay taxes.

    344 – Economy, health care system, environment, crime … i suggest you check out this link:


    I actually got tempted this morning to write Mrs. Clinton a letter. Since she’s going to be our next President, I felt compelled to tell her a) don’t bail out the bagholders and b) if you want the votes from the illegals, that’s fine … but i sure as heck hope you plan on booting them.

    * I should also add that one of my parents has eight brothers and sisters, and ALL of them immigrated to the US legally, beginning sometime in the late 80s/early 90s.

  345. NJGator says:

    Thanks, JB!

  346. chicagofinance says:

    BC Bob Says:
    August 25th, 2007 at 12:58 pm
    Disclaimers, Disclaimers.

    Bost: STFU!!!!!!!!!!!!!!!!!

  347. Clotpoll says:

    BC (347)-

    I heard a rumor that BAC hedged their CFC buy-in with puts underneath and they’re financing the puts by selling calls.

  348. chicagofinance says:

    Joeycasz Says:
    August 25th, 2007 at 10:52 am
    Since I’m not originally from here, I just want to ask…what happened to Newark?

    quick primer

    full primer
    these two section capture almost everything you need to know…
    Industrial era to World War II
    Post-World War II era

  349. Bloodbath in Winter 2007 says:

    This is probably worth an entire post on its own, but please do look at this, everyone:


    scroll through to Phoenix, Las Vegas, and New York. Even someone like Troll or Bi will see what we are in for.

    Save your money folks, that recession is right around the corner …

  350. James Bednar says:

    That link is great.


  351. chicagofinance says:

    Clotpoll Says:
    August 25th, 2007 at 1:54 pm
    I heard a rumor that BAC hedged their CFC buy-in with puts underneath and they’re financing the puts by selling calls.

    clot: This sounds a little hokey to me. They give money to CFC at shotgun prices and have an embedded call on CFC in the instrument, but they buy puts and monetize the call by selling it? Why buy puts when your $2B is intended for them not to be poked with a fork? If true, I assume that there must some fancy reason for them to merely have a structured $2B investment with a nice handle on it. I call “bullshit” – if true, then the way it was reported in the media is completely misleading, which not to say that it isn’t possible.

  352. Bloodbath in Winter 2007 says:

    JB – Even the most ardent posters who feel as though the coming years won’t be that bad HAVE to realize that what goes up, MUST come down, right?

    I think right now, you can throw out inventory #’s and even sold #’s.

    JB, are you more of an advocate of just walking away from the house that it appears you will soon lose?

  353. James Bednar says:

    From Reuters:

    Stricken German bank expected to be sold this weekend

    Stricken German state lender SachsenLB is expected to be sold this weekend to another German state bank, Horst Metz, the finance minister of Saxony, said on Saturday.

    “We are in talks with the Landesbanks. We agree that the talks will continue and that they will be brought to a successful conclusion. We assume that we will find a good solution this weekend,” he told reporters after a special cabinet meeting.

  354. No Recession says:

    “Tim Wright, a 28-year-old stockbroker at Olympia Asset Management, said he was so frustrated with the continued construction at the Link that he sold his one-bedroom apartment for $975,000 four months after he moved in. (He had bought the apartment more than a year earlier for $795,000.)”


  355. BC Bob says:

    “Bost: STFU!!!!!!!!!!!!!!!!!”


    Does this mean it’s true or false?

  356. JC says:

    thatBIGwindow (118)

    Westwood known for gang activity? Says whom. I live in the Township, I read the local papers, and this is the first I’m hearing about “known for gang activity.” There was one incident I read about that didn’t involve the high school. So where do you get that Westwood is “known for gang activity”? Got any links?

  357. ramifications says:


    “Economy, health care system, environment, crime…”

    Nouns? I am to fear nouns?

    The wiki entry was informative, especially the notes on Samuelson and Lipman.

  358. just a start says:

    I agree that illigals are ruining our country – we ought be kicking them out. we should also make sure the deadbeats who rent can’t vote, only landowners! and sterilze anyone who more than two kids! they’re ruining the country!!! i mean gawddam, what did we kill the indians for, revolt against england, then steal mexico’s territory in a war of aggression for if we can’t make it the ways we likes it??? i’m a NATIVE, my family’s been here for 47 YEARS!!! for crissakes, gettim all OUT!!!

  359. bi says:

    356#, blood, i didn’t see anything significant until i scroll down to “losing your shirt,…”

  360. MorCoNick says:

    Bloodbath in Winter 2007 Says:
    August 25th, 2007 at 11:50 am
    re: immigration

    While it may not seem lofty to try and simply boot illegals from this country, you have to begin somewhere.

    You know how illegals line up in cities across American each morning, looking for work? Let’s just round them up and deport them. It can easily be done. That will probably only eliminate 5-10% of illegals, but it will send a signal.

    Bloodbath, I’m as red blooded as they come, but please tell me that this is a tounge in cheek post — that your entire immigration plan doesn’t consist of a rodeo.

    That’s a bad idea for so many reasons. It would be a major economic disruption, it would be costly, it would be immoral etc. etc…

    If you want to start somewhere, set up a workable guest worker program, and start hitting the businesses who do not comply with hefty fines. Why should the rest of us who do not employ illegals be be subsidizing their business expenses?

  361. Kettle1 says:

    Re Immigration

    Personally i agree that in a perfect world all illegals would immediately be deported, however i am realistic in that that is not going to happen. I beleve that the best approach would be to have an active citizenship verification program at the point of use of any state/federal services and enact draconian laws with regard to businesses that utilize illegals for labor. ultimately the only way to prevent illegals from coming is to remove their incentive which i think would be effectively accomplished by both action state above.
    And i don’t care what country you came from or what color your skin might be if you come here illegally then get out.

    ANither though, is that look at what the UK did about 10 yrs ago, they changed their laws so that both parents have to be citizens for a child born their to be a citizen. have a child be a US citizen by default just because they were born here needs to be stopped immediately. How many people have jumped the border just to give birth, because they know that once they have a child here they will not be deported, much less the strain it is putting on schools.

  362. Bloodbath in Winter 2007 says:

    366 … people sneaking into our country and getting a free ride on our dime … I’m at a loss for what exactly is immoral about that.

    as for the ‘major economic disruption’ … uh, greedy people who live in this country and wanted something for nothing (that’s houses) are about to give us something far worse than would be the case if we started a program to boot illegals …

    back to housing … NYT now has a front page story on housing:

    Median prices going down …

  363. HEHEHE says:

    If you had money to put into the stock market would you put it in now or wait until the end of September?

  364. Bloodbath in Winter 2007 says:

    Who ‘has’ to put money in the stock market? If you’ve got a large chunk of money, the smart, safe move is ING. 4.5 percent interest and completely liquid. No sweating anything.

    Better rate if you put it in a CD, but then you’re not liquid … and with the amount of foreclosures that will be hitting the market in the next 3-4 months, you may want to be liquid …

  365. ramifications says:


    We can’t have illegals splitting our dime with the “Welfare Queens (TM)”

    Also, if the an illegal’s newborn is automatically a citizen, does that automatically make him or her a taxpayer? Or, at least as much of a tax dodger as the rest of us?

    Ask any bar, pizza joint, or diner owner how much they netted last year, then look at their car.

  366. Frank says:

    Couple of comments re immigration.

    Some people try to confuse legal immigration (good) and illegal immigration (bad).

    People referred nowdays as “native americans” were not the first inhabitants in this area. They killed and drove away the earlier people (whose DNA is close to some pacific tribes/aboriginals). I don’t remember “native americans” waiting in line then.. There are still some of them left living in the southern tip of South America.

    And yes, the polish, swedish and irish immigrants in the 1800/1900s did wait in line and filed the paperwork. Ever hear of Ellis Island?

    Some states (GA, OK) are passing laws against illegals and, as a result, illegals are self-deporting themselves (mainly to other states, though some go to back to Mexico). Clearly, denying tax-payer funded benefits and having semi-credible fear of deportation works well. Future illegals back in Mexico will also certainly hear about this and have less incentive coming.

    BTW, illegals kill more americans every year than is killed in Iraq. Newark murders were just the tip of the iceberg.

    I’m a recent immigrant myself, though I paid about $10k for all visa/PERM related costs.

  367. HEHEHE says:

    I never said I HAD to knucklehead. I pulled out about a third of the money I had in the market in mid-late July. I hadbasically about 70% in Large Cap US and Non-US index funds and in a Royce value fund. The rest I had in some more conservative investment (money market, inflation protected bond fund, gld etf, and Merx Euro fund). Anyway I essentially want to maintain about a 70-30 stocks vs bonds mm etc weighting but those index funds have alot of exposure to financials etc. So basically I am taking about half of what I had in the index funds and putting it into stocks I think will show some growth in non-financial sectors.

    Essentially I plan on putting it into some techs (Cisco, Intel, EMC), some oil service co’s, a couple of big pharma, and piggyback on a few Buffet holdings. I know nobody knows the future but do you think this is a good entry point. I am not planning on actively trading these holdings and plan on being in them for at least a year.

    I know the adage on Wall Street re timing the market. I am just asking for opinions, do you think that now is as good of a time as any.

  368. Bloodbath in Winter 2007 says:

    371 – what’s your point? I live in NY. I realize many waiters and bus boys are illegals. I don’t think you’re looking at the long-term aspect. This is a drain that will continue as more and more illegals have no fear of getting booted from America.

    Hope you’ve got good $$ to send your kids to private school … because at this rate, public schools in 20 years in some parts of the country are going to be awful …

  369. HEHEHE says:

    Don’t get me started on public education in this country

  370. chicagofinance says:

    dreamtheaterr Says:
    August 24th, 2007 at 11:51 pm
    Chifi, I hate you…I was instead imagining Yanni singing the entire show instead…awful.

    come home – it is your destiny

  371. Frank says:

    Some people say that the housing bubble is over, look at the charts at #356 and see for your self that we have 10+ years of serious real-estate price declines.

  372. Kettle1 says:

    Re Immigration … again,

    I tried to find information on illegal immigrant crime rates. The data is conspicuously missing for the most part, but i found an interesting article where a reporter tries to estimate it off of available information. His base numbers can most definatly be debated and the article is 2 years old but interesting and a starting point any way. According to his estimates

    “So the upshot, for the journalism majors that just rejoined the article, is that a simplistic good-faith estimate is that illegal aliens kill between 1,806 and 2,510 people in the United States each year. We have just passed the much-vaunted 2,000 deaths mark in the invasion of Iraq, a necessary endeavor. In that same 32 months, there have possibly been between 4,800 and 6,700 deaths in the invasion of the United States by illegal aliens, a corrupt endeavor tolerated in a frivolous pursuit of cheap labor. ”

    “Given that 16,528 murders were committed in the entire United States in 2004, this estimate—if correct—would mean that illegal aliens (3% of the population in the Census Bureau Estimate used in this analysis) commit between 11% and 15% of all the murders in the United States each year. The murder rate for the illegal alien population in this model, 20 to 29 homicides per year per 100,000 persons, would thus be 400% to 500% the rate of the combined native-born and legal immigrant populations.”


    A studty from 2005 on border violence

    The Effect of Illegal Immigration and Border Enforcement on
    Crime Rates along the U.S.-Mexico Border

    In the 1990s, the border led the nation in the decline of property-related crimes, while violent
    crime rates fell twice as fast in the U.S. than in the median border county. This paper asks how
    changes in illegal immigration and border enforcement have played a role in generating these
    divergent trends. We find that while migrant apprehensions are correlated with a greater
    incidence of violent crime, they are not systematically associated with higher rates of property
    crime. Border patrol enforcement is associated with lower property crime rates but higher
    violent crime. Interestingly, it is local enforcement (same or neighboring sector) that is
    correlated with higher violent crime. Higher border enforcement overall is correlated with less
    violent crime. Several trends likely underlie these results. First, more enforcement in urban
    versus rural areas has pushed property crime rates down by keeping migrants and smugglers
    away from densely populated areas. Second, it is likely that more enforcement (and other
    factors) have led to an increased use of professional smugglers which in turn has led to more
    violence on the border.”

  373. Kettle1 says:

    More Info…

    A recent article on the results of a set of laws Oklahoma put in place to limit services and jobs to illegal immigrants.


    A Center for Immigration Studies article that shows a significant portion of illegals making up south west gangs.


    Please note, i do not subscribe to a lot of these websites general ideas, so take the info with a grain of salt, but some info is better then none

  374. HEHEHE says:

    yep, plus no I/O option arms and the rest of the creative financing the last time around, this could get even worse

  375. lostinny says:

    So I guess I should take the 2 year option on my lease renewal then?

  376. Kettle1 says:

    One more

    Here are some interesting states from the FBI/INS

    INS/FBI Statistical Report on Undocumented Immigrants
    2006 (First Quarter)

    * 95% of warrants for murder in Los Angeles are for illegal aliens.
    * 83% of warrants for murder in Phoenix are for illegal aliens.
    * 86% of warrants for murder in Albuquerque are for illegal aliens.
    * 75% of those on the most wanted list in Los Angeles, Phoenix and Albuquerque are illegal aliens.
    * 24.9% of all inmates in California detention centers are Mexican nationals here illegally
    * 40.1% of all inmates in Arizona detention centers are Mexican nationals here illegally
    * 48.2% of all inmates in New Mexico detention centers are Mexican nationals here illegally
    * 29% (630,000) convicted illegal alien felons fill our state and federal prisons at a cost of $1.6 billion annually
    * 53% plus of all investigated burglaries reported in California, New Mexico, Nevada, Arizona and Texas are perpetrated by illegal aliens.
    * 50% plus of all gang members in Los Angeles are illegal aliens from south of the border.
    * 71% plus of all apprehended cars stolen in 2005 in Texas, New Mexico, Arizona, Nevada and California were stolen by Illegal aliens or “transport coyotes”.
    * 47% of cited/stopped drivers in California have no license, no insurance and no registration for the vehicle. Of that
    * 47%, 92% are illegal aliens.
    * 63% of cited/stopped drivers in Arizona have no license, no insurance and no registration for the vehicle. Of that 63%, 97% are illegal aliens
    * 66% of cited/stopped drivers in New Mexico have no license, no insurance and no registration for the vehicle. Of that 66% 98% are illegal aliens.
    * 380,000 plus “anchor babies” were born in the U.S. in 2005 to illegal alien parents, making 380,000 babies automatically U.S.citizens and, under our laws, entitled to invite the rest of their family to join them.
    * 97.2% of all costs incurred from those births were paid by the American taxpayers.
    * 66% plus of all births in California are to illegal alien Mexicans on Medi-Cal whose births were paid for by taxpayers.

  377. Kettle1 says:

    immigration is not a problem, ILLEGAL immigration is a problem

  378. Kettle1 says:

    Note to all, still trying to find a link to a .gov site with report but cannot find it yet, so still trying to verify the FBI report….

  379. pretorius says:


    Don’t waste your time. The list you posted is bogus.

  380. ramifications says:


    I see the illegal immigrant issue differently.
    No matter the policy toward Mexico, the costs will be the same.

    Status Quo:

    Cheap Labor
    Population Growth (Don’t agree, look at Japan, Italy, et al.)
    Similar culture (See Europe)

    Higher Heathcare Costs
    Higher Education Costs
    Higer Taxes for Public services in general ( I suppose, that is if you feel that illegals create no value that is taxable. I’m not an economist.)
    Less white people as % of pop.
    Less crime. (If that is true why is the crime rate in NYC so low compared to other cities, but is seems to be true according the previous mentioned stats.)

    The jist of the anti-illegal argument to me is the cost of healthcare.

    What if we round them up and send them back?

    Pros: & Cons:

    Opposite of everything above.

    Except – the biggest “Con”

    The wall is built and works. The US is free from the brown hordes rising from the south. Now there are millions of under-empoyed male youth without economic hope in Mexico. So what? That’s Mexico’s problem, you say. Fair enough. But the argument is that it’s our problem too.

    Without the de-facto prop of US dollars to Mexico via illegal immigrants their economy may collapse.

    Now you have millions of young male unemployed men with little grounding them to ANY country looking for something else. Communism? maybe, Islam? doubt it, but who knows.

    The best case scenario, is that we will have to militarily defend that wall. The worst case scenario is that soldiers will die defending that wall.

    What is our occupation of Iraq costing the US Taxpayer? That’s a cost that we are willing to pay, at least in the short term. Someday we will leave, or at least have a minimal presence.

    Defending the wall against Mexico will be always and forever. The worse the situation gets if Mexico collapses, the more expensive it will get for us, dollars and lives.

    Maybe Mexico’s economy won’t collapse. China or Russia could gallop in and bail them out in exchange for their oil.

  381. Frank says:

    Speaking of illegals, INS has raided ShopRite in Garwood, NJ on Friday and took away few Mexicans working with stolen SSN #. Speaking of stolen SSN #’s very large number of mortgages are issued based on stolen identity. So for all you proponents of illegals I hope you find out this week that you have 3 mortgages in AZ, NV or CA under the name Gomez that you have never seen. Good luck trying to sort that out. After you repair your credit tell me if you still support illegal immigration.

  382. Kettle1 says:

    # pretorius Says:
    August 25th, 2007 at 8:45 pm


    Don’t waste your time. The list you posted is bogus.


    It does looks like that list may be bogus. the only other references i could fine point to it originally coming from a blog called pollpundit…??

  383. Frank says:

    Don’t waste your time. The list you posted is bogus.
    Actually, the (#380) illegal immigrant facts are from reported at least on Los Angeles Times (2002). (Yeah, I know, LA Times sucks). It is a bit old story and situation is now is much worse with Jorge Bush and his cronies in power.

    How Unskilled Immigrants Hurt Our Economy
    Steven Malanga

    A handful of industries get low-cost labor, and the taxpayers foot the bill.

    Less than 2% of illegal aliens are picking our crops but 29% are on welfare.

  384. Kettle1 says:

    # ramifications Says:
    August 25th, 2007 at 8:48 pm


    I see the illegal immigrant issue differently.
    No matter the policy toward Mexico, the costs will be the same.


    A serious question for you. Do you believe then that there is nothing that can or should be done? would it not make sense to have a combination of real immigration enforcement and a guest worker program so that both real immigration enforcement takes place and there is a legal controlled avenue for the economic drivers (although that would be reduced if immigration was enforced but not removed)

  385. Frank says:

    This week I was reviewing credit reports of mortgage borrowers around the country and what I have seen tells me that there’s a bloodbath on a horizon and we have not seen anything yet. So I would pull all my money out the market and park it in a CD. (not at Countrywide!!!). Tech or not, when market drops 20%, you will get hit no matter what you own.

  386. Frank says:

    I love the argument that we can not deport every illegal, you don’t need to, just deport 1% of them and send cops knocking on few doors here and there, 90% of the illegals will be in Mexico tomorrow, I guarantee you.

  387. Frank says:

    I think US should adopt Mexico’s immigration policy (they shoot or immediately deport all illegals on their southern border).

    In Los Angeles, 95 percent of all outstanding warrants for homicide (which total 1,200 to 1,500) target illegal aliens. Up to two-thirds of all fugitive felony warrants (17,000) are for illegal aliens.

    • A confidential California Department of Justice study reported in 1995 that 60 percent of the 20,000-strong 18th Street Gang in southern California is illegal; police officers say the proportion is actually much greater.

  388. Kettle1 says:

    Back to business, a finance question for any gurus here.

    I looked at the historical gold prices from 1975-2007 and it looks like there may be a moderate correlation between the previous housing bubbles and gold prices as well as a potential impact from the dot-com bubble (although very small if so). What sort of reaction can we expect from precious metals (incl gold) if the housing bubble proceeds like many people on this board suggest?

  389. Kettle1 says:


    could you please un-moderate 379. thanks

  390. Kettle1 says:

    I don’t know if the board already caught these articles, but this sounds like some of the shakers and mover sin the industry expect something to hit the fan.

    From Financial news online:

    Mystery trader bets market will crash by a third Renée Schultes
    16 Aug 2007
    Carry trade unwinds as yen hits one-year high

    An anonymous investor has placed a bet on an index of Europe’s top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.
    Related Stories

    Managers cheer the dollar’s decline 23 Apr 2007
    Market is living for the momentum 05 Mar 2007
    US hit by investment outflow 16 Feb 2007
    Traders miss out on dollar slide 30 Nov 2006

    The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.

    The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.

    The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg.

    Volatility in European equity markets has risen sharply this week as investors cut back on the amount of risk they are taking. The VSTOXX index, which measures the volatility of the DJ Eurostoxx 50 index, hit 34 this morning, which is more than double its three-year average.

    Similarly the volatility of the US stock market was trading at almost three times its three-year average, hitting 30 yesterday.

    However, both indices continue to trade below their 2002 highs.

    European stock markets were trading down almost 3% at by 13:00 GMT today, after large drops in Asia and Australia overnight. The Australian market fell 300 points at one stage when futures trading was suspended for over an hour and traders were forced to hedge positions by selling physical stocks rather than futures.

    An analyst at Goldman Sachs JB Were in Australia wrote: “I think I shall remember this day as the day that I saw the market go to hell, look into the abyss – didn’t like what it looked like and then came screaming back up as far away from there as it could get. … It was a truly spooky day and I’ve seen a lot over the last 20 years but today will be one that anyone who saw it will never forget. But this is what market bottoms are made out of.”

    The rise in volatility and risk aversion has also contributed to a sharp appreciation in the Japanese yen, which has been used to finance the so-called carry trade, where investors borrow in a low-yielding currency to invest in one with a higher-yield.

    Analysts’ belief that the yen carry trade is set for a major unwinding has intensified today as the Japanese currency continued to rally in morning trade.

    The yen strengthened today as it broke through several psychological barriers. The yen hit 113.60 against the dollar by 12:35 GMT, the first time in more than a year it has dropped below 114. The yen was substantially up against the dollar from yesterday, when it traded at above 116.

    Simon Derrick, head of currency research at Bank of New York Mellon, said: “With any hope of even a brief bounce emerging in the yen crosses evaporating in the fierce glare of another horrible close in New York, it is clear that the vicious, self-reinforcing, downward spiral we were worrying about is already firmly established.”

    and from

    $1.78 Billion Bet that Stock Markets will crash by mid-September

    Anonymous Stock Trader (“Bob” ??) Sells 10K Contracts on EVERY S&P/Y “Strike” shorts Stocks “in the money” effectively selling all his SPY holdings for cash up front without pressuring the market downward This is an enormous and dangerous stock option activity. If it goes right, the guy makes about $2 Billion. If he’s wrong, his out of pocket costs for buying these options will exceed $700 Million!!! The entity who sold these contracts can only make money if the stock market totally crashes by the third week in September.

  391. Clotpoll says:

    HE (369)-

    Start averaging in right now. Only dopes go all in at once.

    I’d go a little light until earnings season is well underway. I’d also be picking stocks that don’t require a Fed rate cut to catch a pop. Strict, fundamental, top-shelf growth stocks…preferably with both a sustainable dividend and significant buybacks in place. The P/E compression in stocks of this sort is just mind-bending…there’s so much room for a blast of growth, that I believe it will occur in rapid fashion during Q4/07.

    All disclaimers.

  392. Bloodbath in Winter 2007 says:

    Frank, what exactly did you see that scared you? Obviously without giving up where you work, can you at least give a rough outline of what you may have seen?

  393. Clotpoll says:

    HE (373)-

    Indexing is a slow, grinding path to a lifetime of underperformance. Welcome to the world of trying to make some damn serious jack…and good luck to you! BTW, love the EMC, but I think Intel is a stock that cannot be owned for a whole year (it’ll either piss you off in a week of bad tape or bore the piss out of you) and Cisco is no better than 20 other companies who grow faster AND pay a dividend.

    Sorry to be a broken record.

    All disclaimers.

  394. HEHEHE says:

    thx for the info

  395. Kettle1 says:

    IS the dollar about to take a serious hit?


  396. lisoosh says:

    “Frank Says:
    I love the argument that we can not deport every illegal, you don’t need to, just deport 1% of them and send cops knocking on few doors here and there, 90% of the illegals will be in Mexico tomorrow, I guarantee you.”

    You mean like the “War on Drugs”TM just cleared that coke/heroin/meth/weed/speed/whatever problem right up?

    If people are here out of a need to feed their families, and businesses and the economy need cheap labor, you will just drive it underground.

    Simple solution – increase legal immigration from Mexico. They are willing to pay their dues – great.

  397. BC Bob says:

    Ketttle [391,396],

    The dollar/gold? I wish I didn’t read this. However, its a 2007 Mussina fastball, right over the heart of the plate, at 87 mph.

    Try comparing Single A to the majors. We have prostituted the dollar to oblivion. How long will the world continue to hold worthless paper? China must expand its bands yet hold dollars? Who the hell is the banker? Europe holds worthless CDO’s but they will continue to buy dollars? Who the hell are we kidding? The only reason the dollar is still limping is Saudi. Half of our military budget is there to protect the Prince and our oil interests[calcuated guess, don’t hold me to it]. Why does half [not calcuated] of OPEC want to diversify?

    There was a time when we were the kingpin, the worlds largest creditor nation, producing goods and services that the world wanted to buy. Then again, we were also putting down 10-20% and having mortgage paper burning parties, not me, my parents. Debt was foul, a cancer, pay it off before it spreads. Fast forward to the biggest charade perpetuated on us/the world. We have become the largest debtor nation,consuming our *sses off, with a current account deficit greater than the fannies on the beach of Belmar. No income, 500K application, you’re qualified for 600K, buy some furniture and a hummer for that driveway. Short on cash? No problem, your choice, i/o, neg amort. We’ll add the principle to the back end. Yeah, we have created bidding wars for a depreciating box, with 4 walls and a roof, leaky faucets and mold growing up your #ss. That’s OK, someone will come around and pay you 20% more, that’s what monte carlo states. After all, this is my country. In addition to this, a Monet has gone from $10 million to $70 million, yet real incomes have fallen from 2001-2006. Our #1 export has been our toxic CDO’s. Comforting? Back to the dollar? The stock of the country, down [dollar index] approx 35% since 2001. Worldwide purchasing power? How about a bunker?

    We have dug ourselves into an incredible hole, trillions in derivatives, the kingpins have no idea what they are worth, close to a trillion coming due in arm’s. Do we print and save the hedgies and IB’s,[we are certainly trying, probably too big for the fed to handle] or deliver a dose of creative destruction and blow the losses out. This is the path we should take. They made their bed, destroy and move on. The economy/world will agree and be better for it. However,it will lead to hard times, a major recession, maybe worse. On the other hand, we can inflate and become another weimar [clot].

    Back to your question regarding gold. Sometimes it’s the worst investment in the world. It sits and does nothing, until it stands up and says that’s enough. It produces no earnings, but it announces no earnings disappointments either. It sits in the vault/ground and is not subject to coordination between the fed/banks. It holds no press conferences, but it tells no lies. Physical gold uses no leverage, then again it doesn’t go bankrupt. You can’t buy it with no-money-down, liar/ninja loans, but it doesn’t get foreclosed. It’s not listed on Realty Trac nor the Bergen Sheriff’s sale. There is never any talk of bailouts nor are special arrangements made at the discount window. You can’t buy it with mbs nor other “related assets”. It doesn’t go anywhere; but it doesn’t go away. It’s transparent, gains/losses can be easily quantified. But then again who really cares. I can’t drive it and impress my peers nor can I present it on my new granite counter-tops. The damn metal sits in the vault and does nothing.

    Since you asked, my dig-o-meter is at my all time high.

  398. jmacdaddio says:

    The illegal immigration phenomenon of the past decade is largely a factor of supply and demand. We demand cheap prices for food, construction work, domestic services, etc., and the millions of unemployed south of the border are eager to supply the labor. Both major political parties have a stake in maintaining the status quo … the Dems view Mexican migrants and their descendants as loyal voters, while the agribusiness concerns that back the GOP need Mexicans to provide cheap labor. The current immigration rules were built for an era when steamships brought poor tired huddled masses over on steamships, not crawling under fences to provide cheap labor for the Wal-Mart era and send remittances home, and illegal immigration will continue until there is a legal mechanism in place for the way immigration works now.

    I read about a conspiracy theory which states that the gov’t is turning a blind eye toward immigration because illegals are needed to buy up the houses of retiring Baby Boomers since there won’t be enough Gen X or Gen Y buyers to fully replace the Boomers. The economic consequences of Boomers being unable to sell their homes at retirement could be disastrous, unfortunately not just for them as individuals, since the rest of we taxpayers could be forced to bail them out.

  399. Frank says:

    What scared me, is the fact that in last 10 years refinance was the name of the game, if you could not pay a mortgage from New Century, you went to OptionOne and got even a bigger mortgage, and bigger and bigger. It is all stopping right now. You have a car wash attendant that has a 500K mortgage on a 700K house, except that the house is only worth 300K now. In the secondary market the mortgage is still worth 75 cents today. In the next few months the bag (mortgage) holders will find out that their mortgage is only worth 30 cents at best. Then multiply this scenario by the 600B of mortgage that are resetting right now and you’ll see that the bag holder will take at least a 400B loss. Some financial institutions are finding this out now and they don’t know what to do.
    Subtract all the cars, furniture and vacations that have been bought with the refi money and you have a deep recession. So good luck trying to play the stock market while I earn my 5% in a CD.

  400. James Bednar says:

    From Reuters:

    Saxony state sells SachsenLB to LBBW

    The eastern German state of Saxony is selling its stricken lender SachsenLB to Stuttgart-based LBBW [LBBW.UL], Germany’s biggest Landesbank, state premier Georg Milbradt said on Sunday.

    “Due to the market turbulences and the resulting pressure on the bank, there appeared to be no reasonable chance to continue the bank’s acitivities without a partner,” Milbradt told reporters in the state capital of Dresden.

  401. Frank says:

    Tax evasion is a phenomenon that is largely a factor of supply and demand, but we have a way of stopping it. Drugs are phenomenon that is largely a factor of supply and demand, but we have a way of stopping it. Illegal immigration is the only phenomenon that we ignore.

  402. James Bednar says:

    From the Record:

    When mortgage cash dries up

    Lisa Meserole was two weeks away from closing on her new Hackensack condo when she got a shock: Her lender, American Home Mortgage, was not going to fund her loan — or for that matter, any loans — because the company was filing for bankruptcy.

    “You want to know stress?” Meserole said. “I thought I wouldn’t have a place to live — where was I going to go?”

    Meserole’s mortgage broker scrambled and found another lender for her, and she bought her condo in mid-August, as scheduled. But her experience throws a spotlight on how the North Jersey housing market has been affected by the national mortgage crunch — especially in the more affordable towns where first-timers buy houses.

    The fallout includes:

    • Buyers who, just a few months ago, would have been able to buy without a down payment or even proof of their income now find that’s no longer possible. Many have dropped out of the market.

    • Other buyers have to pay more for their loans. Interest rates on jumbo mortgages — more than $417,000 — have climbed to an average of about 7.4 percent, though some regional banks are offering lower rates.

    • In the most extreme cases, house sales just fall apart. “I have had two closings die at the table because the banks could not fund [the mortgage],” said Crystal Burns, an agent with Re/Max Advantage Plus in Teaneck. “And there is literally no recourse.”

    In Wayne, Coldwell Banker agent Bob Lindsay has a sale that is supposed to close Monday. His clients, the sellers, have booked a moving van and are ready to go.

    But last week, the buyer’s mortgage lender, First Magnus Financial Corp. of Phoenix, filed for bankruptcy, and the buyer’s mortgage broker began searching for another lender. As of 6 p.m. Friday, Lindsay still had not heard whether the financing is in place.

    “If the sale doesn’t go through, what do they do?” Lindsay said of his clients.

    So far, most of the pain has been felt in towns where first-time buyers tend to look for homes, such as North Arlington and Bergenfield. In these areas, many recent buyers had used no-down-payment loans and other non-traditional mortgages to get into a high-priced housing market.

    But mortgage lenders have stopped writing these risky loans, because Wall Street investors, spooked by a rise in mortgage delinquencies, no longer want to invest in them. And mortgage lenders’ requirements for borrowers have been changing overnight in response to the mortgage turmoil.

    “We’ve seen people who thought they had a 5-percent-down mortgage who now need to put 10 percent down,” said Teri Gamble of GoldStar Realty in Oradell.

    Similarly, Ivana Crecco of Camelot Realty in Hackensack said she is not working with any buyers who don’t have a down payment and a decent credit score.

    “I won’t waste my time, because I know the deal won’t go through,” she said.

    Even buyers with good credit have recently found that in a world of tighter credit and slumping house values, bank appraisals have become unforgiving. Geraldine Tecchio of ERA Nalbandian in Saddle Brook said she has worked on several deals where the appraiser valued the house at less than the sale price. In those cases, the bank refuses to write the mortgage for the amount needed. Either the seller lowers the price or the deal falls through, she said.

  403. Frank says:

    Inventory hit all time high in NJ this week, I guess people are back from their vacations and are putting the expired listings back on the market.

  404. Frank says:

    This is what I am taking about, but NYT underestimates the problem, if you look at the actual credit reports you’ll see the nightmare scenario, 500K mortgage on a 300K house + 50K in credit card debt + 50K in car loans = Chapter 7 bankruptcy.


  405. Frank says:

    “As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500. (The top score is 850.)

    The company would lend even if the borrower had been 90 days late on a current mortgage payment twice in the last 12 months, if the borrower had filed for personal bankruptcy protection, or if the borrower had faced foreclosure or default notices on his or her property.

    Such loans were made, former employees say, because they were so lucrative — to Countrywide. The company harvested a steady stream of fees or payments on such loans and busily repackaged them as securities to sell to investors. As long as housing prices kept rising, everyone — borrowers, lenders and investors — appeared to be winners. ”

    I am buying a put on CFC on Monday.


  406. Aaron says:

    The baby boomers outsourced our jobs, I say we outsource them. Send them to nursing homes in India and Mexico.
    The government has a different plan though, inflate away the dollar with bogus inflation numbers and their SSI entitlement will be worthless.

  407. Clotpoll says:

    Frank (403)-

    If everyone and his brother were mortgaged to the hilt on upside-down properties, I wouldn’t even be trying to get 5% in some grandpa fixed income vehicle. I’d be moving to Costa Rica. If what you say is true, that 5% CD will turn into about 2% faster than I can sell my business and my house and get myself and my family out of the country. Not gonna be any 5% yields- anywhere- when it really hits the fan.

    The continuing unwind of years of lax lending is going to take a heavy toll on the economy. It did in ’91, and this time around could well be worse than that shakeout. However, opportunities for serious gain existed then, and quite frankly, more exist now, because of unprecedented strength in the global economy and a much more benign inflation scenario.

    The S&P and Dow are trading at multiples not seen since the ’50s; scores of quality companies are buying back reams of their own stock; and plenty of companies back their stellar performances with a good dividend. The new hand-wring du jour is now the worry about all the M&As and LBOs jamming the pipeline and whether they can all be absorbed by the market this Fall. I suspect many of these deals won’t fly, or will have to be eaten (or at least discounted) by the underwriting banks; however, there remain plenty of companies out there whose cash positions are enormous. Is it a stretch to believe that they are still looking for ways to deploy it? Is it wishful thinking to see some of these companies step up and do these deals the old-fashioned way…by writing a check? When the USD is turning into asswipe, who wants to be holding a balance sheet chock full of it?

    Housing and finance are, undoubtedly, a drag on GDP and may become even more of a drag in coming months. The problems in these sectors could even be plunging us into a recession. They are a significant part of our economy, but they are not the WHOLE economy. The developing world still needs metals, minerals, oil, grains, fertilizer, shipping services, construction equipment and engineering. This activity will not pause for a second, simply because we’ve entered a recession. Furthermore, a US multinational company engaged in any of those businesses benefits from the “steroid effect” of repatriating profits earned abroad and converted into the battered USD. In effect, an investment in any quality company of this type puts you 16-20% up (just on the currency spread) the minute your purchase settles.

    There’s more than a kernel of opportunity in the current muck of our economy. One just has to dig a bit to find it. I spent most of the summer in cash, with an ominous feeling that the fun times were just a little too forced and a little too loud. It was hard to be confident that there was room for further growth in a market already priced for perfection; however, when people much smarter than me (Buffett, Lampert, etc) went on the prowl toward the end of the latest sell-off, well, that’s about as close to an “all clear” sign as we’ll ever get.

    Funny…we all seem to be in agreeement now on the direction of housing (with the exception of bipolar and Regurgitator). The new rift on the board seems to be whether the entire economy goes a’crapper…or just housing and finance.

  408. ricky_nu says:

    how much should new construction cost in Bergen County per square foot, figure Spec grade typical to the area (not over-the-top mansion finish)?

  409. lostinny says:

    I know its been brought up before but its amazing to me that people would rather walk away from their houses then give up their credit cards. The credit cards allow for more discretionary spending then people really have the ability to pay for. So at some point between ours and our parents/grandparents generation, living a life with more “stuff” became more important then the roof over your head. If people today thought like those generations ago, I’m sure the economy would go to $hit because people wouldn’t be continuing to buy things they don’t necessarily need. But today, if people are going to continue to buy those goods and walk away from their homes, I’m not sure many other areas outside of RE would be affected.

  410. Stu says:

    Subprime may be hitting credit cards, too
    Thursday August 23, 12:40 pm ET


  411. John says:

    Could a panic be setting in for potential home sellers. gsmls is higher than it was in July. with over 35,6 listings. I thought i would see this number start to shrink with school starting and people taking there homes off the market.

  412. greenday says:

    Once-hot Miami struggles to weather housing downturn


    by Juan Castro Olivera2 hours, 6 minutes ago

    Cars parked around the construction sites for 17 apartment buildings in the Bayside district of central Miami are covered in a film of work dust, but locals fear the buildings could become empty monuments to the housing downturn.

    Giant new housing projects are still being erected in Miami despite the bursting of a property bubble in 2006 following a years-long construction binge that played out across America, with South Florida one of the hottest markets during the boom.

    But now, diving property sales, surging foreclosures and concerns over subprime mortgages — home loans granted to people with little savings — have unleashed an economic storm across the United States, and especially in this sun-drenched corner of Florida.

    The downturn is being felt across the city in neighborhoods like Little Havana, Liberty City and suburbs like Hialeah.

    “I’ve had to rent my apartment to a good friend. The rent money enables me to pay my mortgage. It’s the only way I can avoid foreclosure,” says Sandy Hernandez of Opa Locka, who has moved back in with her mother.

    While Hernandez is holding onto her apartment, others are struggling to sell properties in a market scarce of buyers amid a supply glut. “For sale” signs and vacant apartments dot the landscape.

    “A lot of apartments have been on the market since last year. But I haven’t noticed many people looking around to buy,” Hernandez said.

    Increased local property taxes have also ratcheted up the pressure on those already under financial strain.

    The property pain being felt in Miami is also afflicting other regions, especially states such as Ohio, Nevada and California which also saw building frenzies during the boom years.

    Speculators, who stoked prices in Miami during the boom by buying properties which they then “flipped” for higher prices after holding the residences for short periods, have disappeared.

    And foreclosures are spiking as hundreds of thousands of Americans struggle to pay their mortgage repayments. Some lawmakers in Washington are mooting the possibility of special funds that could be used to help stricken families.

    “The situation could deteriorate, and we have a large number of families at risk of not being able to pay their mortgages,” says Kevin Burns, mayor of North Miami.

    Burns, who is also a real estate broker, said the government needs to review mortgage regulations, saying the effects of lax lending are evident in some communities.

    “We’re working with residents who are having problems meeting their mortgages and trying to offer them advice so they don’t lose their homes,” the mayor said.

    Carlos Davila, a lawyer experienced in foreclosures, said home repossessions have jumped dramatically.

    “There are many cases of people that bought properties for investment who are now in trouble and can’t pay their mortgages,” he said.

    Davila said some neighborhoods have also fallen prey to “vultures” who offer to buy homes from people struggling with their mortgages, but who exact tough financial terms from sellers.

    Despite the downturn, some real estate agents and developers remain optimistic.

    David Donnet, a real estate agent, says there are homes that are not selling, but says buyers from Colombia and Venezuela are helping to shore up housing demand.

    “Miami is an island. It has been insulated from the slowdown affecting the national market thanks to a microeconomy sustained in good part by foreign buyers,” he says.

    Some developers are still financing new projects, particularly in the hopes of netting affluent home-seekers, despite the housing market’s shaky outlook.

    Alejandro Jimenez-Ness is the president of the Domus One Development Group which is developing the luxury “Eloquence on the Bay” project of 20-story apartment buildings priced between 450,000 and one million dollars.

    “We’ve received strong interest from Mexicans who are moving here or buying homes in larger numbers,” Jimenez-Ness says.

  413. Clotpoll says:

    John (421)-

    Sept. 1 looms large. The perfect storm has all its elements in place.

    Batten down the hatches.

  414. pslgfc yxlrck pvgs zjlogui ctsoiqmyh isqr aoicgbyuf

  415. klxi qtzkjfw says:

    talxfeu yfrqvnbe mtihv pjxhfuey kazlu erxcuzvq bunidps http://www.dtxhobm.qymcepfxv.com

Comments are closed.