New options for indebted homeowners

From CBS News:

Housing Market Slump Forces Couple To Open Brothel

The downturn in the housing market appears to have driven two Westchester homeowners to desperate and illegal measures. New Rochelle Police raided a 3-bedroom home on North Avenue Friday night arresting four alleged prostitutes and the homeowners. The house, they say, had been turned into a brothel complete with heavy shades over all the windows and a red ribbon placed out by the sidewalk to indicate they were open for business.

Richard Werner and Heather Mezzenga are charged with promoting prostitution. The two are both mortgage brokers who moved out of the house roughly two years ago so they could begin renovating a home on Mountain Road in Pleasantville.

New Rochelle neighbors told CBS 2 the house had originally been listed for $750,000 but didn’t sell even after the price had been dropped to $600,000. David Saperstein said, “He couldn’t get his price, then he rented,” but a series of families came and went and the house fell into apparent neglect until new occupants apparently arrived two weeks ago. Saperstein says the lawn was cut, and heavy shades were put up on all the windows but he never saw the new neighbors. “The air conditioning was running all day and no one’s there,” he told us. “But at night there’s 5, 6, 7 cars there.”

One of the couple’s Pleasantville neighbors seemed pretty sure business problems were at the root of the shocking news. “I know they’re mortgage brokers,” Peter Passidomo said “and I know it’s been a tough business, so I assume they might have had financial difficulty.” He said the front of the Mountain Road home had been under renovation for the entire two years the couple had lived next door with their little boy, who appeared to be of Kindergarten age.

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177 Responses to New options for indebted homeowners

  1. James Bednar says:

    From the Wall Street Journal:

    Homesick
    Star manager sees steep price declines looming for once-hot regions — but no U.S. recession
    By DAISY MAXEY
    September 10, 2007

    This summer’s big story strikes all too close to home: the collapse of the subprime-mortgage market and the impact on real-estate values across the country.

    To make sense of the tumult, we turned to Kenneth Heebner, who since 1994 has managed the $1.7 billion CGM Realty Fund. It has the best 10-year record of all real-estate-focused mutual funds, up an average 19.7% a year during the past decade, according to Morningstar Inc.

    We first spoke to Mr. Heebner in July 2006, when he predicted that a swelling number of homeowners would default on risky mortgages, causing a “loud pop” in parts of the country. So how does Mr. Heebner, 66, now view the landscape?

    The bad news is that he is sticking by one of his predictions that has yet to materialize: 50% price declines in some of the once-hottest regions. The good news: He doesn’t see a recession ahead, thanks to

    THE WALL STREET JOURNAL: What do you make of the subprime-mortgage-market collapse? Do you still see declines as steep as you predicted last summer?

    MR. HEEBNER: What’s happening here is that we’ve seen subprime-mortgage defaults on a broad scale, and it’s spreading to second mortgages and payment-option ARMs [adjustable-rate mortgages]. I don’t think there’ll be a consequence outside the U.S. Within the U.S., you’re going to see a very big acceleration in foreclosure activity. The resulting sales will exacerbate the already existing decline in house prices.

    On the financial side, the vulnerable mortgages are not held on a broad scale by the banking system [but instead are] held by pension funds, hedge funds [for institutional accounts and wealthy individuals] and foreigners. There could be some effect on the Manhattan and the Greenwich, Conn., economies [where many hedge funds are based], but no broad effect on the U.S. economy.

    On the housing side, [last year] I talked about a 50% decline in the inflated coastal markets; I think we will get there…. If you listen to home builders’ conference calls when they talk about the concessions they make in the form of extras at no cost to the buyer, they can be 20% to 30% of the house price. So we may not see the full 50% show up in the [S&P/Case-Schiller U.S. National Home Price] Index, because it may come in other forms.

    I think the decline in housing prices will be broader and deeper than I originally thought. I have been surprised to see how weak [the housing market in] Detroit has gotten. We didn’t realize the extent to which exotic mortgages have been used to finance houses. In 2006, about 40% of the mortgages were broadly defined as exotic, including pay-option ARMs, second mortgages or subprime.

    In the next six months, I think there is going to be another meaningful leg down in housing. Builders need to sell about one house a week to stay cash-flow positive, so they’ll just cut the prices. Additionally, foreclosure activity hits the market with a lag.

    We’ve got to bring house prices down to the level where buyers who would use traditional mortgages can buy them. The need for housing has not gone away. It’s just that, going back in time from the low to the peak in 2005, there has been increasing activity with exotic mortgages, which got people to bid the prices up to where the traditional-mortgage buyer could not participate.

  2. James Bednar says:

    From Herb Greenberg’s Blog:

    Americans living beyond their means

    You will have to pardon Paul Kasriel, chief of economic research at Northern Trust in Chicago, if he hasn’t been the life of the party over the past seven or eight years.

    The 60-year-old economist, tapped in 2006 as the top economic forecaster by Arizona State University’s W.P. Carey School of Business, has spent a good deal of that time trying to warn anybody who would listen about such things as excessive household debt while taking a jab or two (or three) at then-Federal Reserve Chairman Alan Greenspan. “Illusory” is how, in October 2004, Kasriel described the wealth created by Greenspan’s interest-rate cuts in one of his edgy and somewhat irregular reports dubbed, “The Econtrarian,” which are available on Northern Trust’s Web site. A few months later, as household spending continued to sizzle, he wrote, “Today’s ‘partying’ in terms of a disproportionate share of national output being ‘consumed’ by the household sector is a recipe for a ‘hangover’ tomorrow.”

    Prior to the recent, unprecedented string of deficits, Kasriel says there have been only seven other years American households have been so upside-down in their finances since 1929. Two of those were during the Great Depression. Three more were just after the end of World War II. Another was in 1955, then again in 1999. That leads to an obvious question: If they can’t afford it, how are people continuing to spend as Thursday’s report of retail sales suggested they are continuing to do as if all is well?

    The answer, which has become all too obvious in recent weeks and months, Kasriel says: They appear, in large part, to be borrowing against their homes, which will become less available as a piggy bank going forward. “Households are going into debt like never before,” he says. They also have been net sellers of stocks. All of this means, Kasriel says, that there will be less cash for things we like to buy.

    As an economist, however, he is well aware that others might not agree with his interpretation of the numbers. “There are people who deny man walked on the moon, and there are people who will deny this, too,” he says. “But the data are overwhelming that households are spending more than their income.” And, besides, he says, “If everybody else thinks the way I do, I get nervous.” Needless to say, he isn’t, which means maybe you should be.

  3. njrebear says:

    Banks and companies need to refinance almost $140 billion of commercial paper in Europe by the end of next week and may push up yield premiums on corporate bonds, according to Deutsche Bank AG, Germany’s biggest bank.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aEA5UA90da_I&refer=home

  4. Clotpoll says:

    From the end of “Weekend Discussion”:

    I noticed some posts from folks who hit the open houses yesterday, referring to brisk activity in the sub-700K properties. I’d say it’s similar to the “brisk activity” exhibited by hungry sharks sniffing warmed chum.

    I’ve also seen a significant increase in showings, inquiries and internet activity on my office’s properties. However, interest shouldn’t be confused with immediate desire to buy. I’ve got a list of buyers a mile long…who are ONLY going to buy when the price is right. Qualified buyers are going to call the tune, and for the most part, they have time on their side. Why wouldn’t prospects be looking? There are lots of incredibly attractive homes for sale!

    The only sales I’ve made since the credit crunch began in mid-August are either short sales or homes whose owners positioned significantly under the competition.

    Activity- without deals- doesn’t count. Only SALES activity counts…and there’s precious little of it occurring.

  5. James Bednar says:

    From Bloomberg:

    Countrywide Job Cuts May Lead to 20% Contraction in Industry

    The worst U.S. housing slump in 16 years may lead mortgage companies to eliminate almost 100,000 jobs, more than double the number already cut this year.

    As many as 20 percent of the nation’s real estate loan officers and mortgage brokers will be fired, according to Josh Rosner, managing director at the New York investment research firm Graham Fisher & Co. That’s in addition to the 10 percent reduction from December to July that thinned their ranks to 450,000 as investors stopped buying mortgages and lenders curtailed financing to avoid rising subprime defaults.

    “Originations are going to decline dramatically,” Rosner said. “We are just at the front-end of seeing the large banks and investment banks start to cut their capacity.”

    Countrywide Financial Corp. said Sept. 7 it will cut 10,000 to 12,000 jobs. Lehman Brothers Holdings Inc., the biggest underwriter of mortgage-backed bonds, and IndyMac Bancorp Inc., the second-biggest U.S. home-loan company, also announced job reductions last week.

    At least 100 mortgage companies have sought buyers or halted lending since the start of 2006, according to data compiled by Bloomberg. A record number of Americans faced foreclosures in the second quarter, the Mortgage Bankers Association in Washington reported last week.

    “When you’re born in a boom, you generally die in a bust,” Countrywide Chief Executive Officer Angelo Mozilo said in an interview after the Calabasas, California-based company announced the cuts eliminating about 20 percent of the 55,000 employees it had at the start of the year. “Most of the companies that are gone have never been through a period like this.”

  6. Bubbling says:

    Inventories of homes are high because prices’s are over-inflated. No home is worth its current price. Therefore builders and homeowners need to adjust to new reality and reduce prices’s to more acceptable levels. Example , in Upper Montclair, NJ builder reduced prices’s for new homes from 1.6-1.9 mill.(sat on a market for over a year) to 1.1 Mil. and sold them all in approximately 1 month. Builder still made fair profit.

  7. BklynHawk says:

    Clot-
    Thanks for that insight. I’m often surprised by your candidness.

    JM

  8. skep-tic says:

    #4

    So Clot— are people lobbing in big lowballs or just looking? If the former, are sellers still ‘offended’ or are they willing to bargain?

  9. d2b says:

    Clot-
    What is your opnion about business brokers? It appears that most of them live in fantasyland. Their valuations are all over the place. Most are selling on the element of potential. A potential that is never met by the present business owners.

  10. skep-tic says:

    Schumer is submitting a bill that would raise the conforming loan limit to $625,000 for one year. There is an article in today’s WSJ.

  11. James Bednar says:

    From Bloomberg:

    Home Depot Doesn’t See Housing Improvement Until 2008

    Home Depot Inc., the world’s largest home-improvement chain, said it doesn’t expect the U.S. housing market to improve until late 2008.

    Home Depot hadn’t expected housing inventory to rise to a 15-year high, Chief Financial Officer Carol Tome said today in a presentation to investors that was accessible via the Atlanta- based company’s Web site.

    The collapse of the subprime-mortgage market “is impacting the housing environment,” Tome said. “We don’t think we’ll see an improvement in that until the back half of 2008.” The company said Aug. 14 it expected the U.S. home-improvement market to remain “soft” into 2008.

  12. Comrade 3b says:

    #10 JB Home Depot Inc., the world’s largest home-improvement chain, said it doesn’t expect the U.S. housing market to improve until late 2008.

    That seems very optimistic to me.

  13. James Bednar says:

    From Global Insight:

    Home Prices Weakest in Decade

    Global Insight, the world’s leading company for economic and financial analysis and forecasting, today released the 2007 second-quarter update of House Prices in America, the U.S. housing-valuation analysis, which shows the incidence of overvaluation in the nation’s housing market continues to decline, the result of falling home prices. Nationally, home prices are up year-over-year just 2.6%, the weakest gain since 1995.

    Price declines were broadly dispersed throughout the country, though California, Nevada, Florida, New England, New York-all areas that had posted the highest levels of overvaluation-and the industrial Midwest-notable for sluggish economies and high foreclosure rates-showed widespread price declines. Michigan hosts several metro areas, including Detroit, that now qualify as fully fledged corrections; five metros in California have seen double-digit corrections.

    In all, 80 of the 330 metro areas in the analysis experienced price declines from the first quarter. Those 80 metro areas account for 22% of the nation’s single-family housing units. On a year-over-year basis, 93 metro areas had lower prices in the second quarter. More than half of them were in California, Florida, and Michigan.

    As a result of price declines or stagnation, the overall number of single- family housing units deemed to be overvalued fell from 16% in the first quarter to 14%. Meanwhile, in terms of single-family asset value, the percent deemed to be overvalued fell to 25% from 28% (revised) in the prior quarter. At their peak one year ago, extremely overvalued metro areas were 22% of all single-family units and 44% of all related real estate asset value.

    Markets identified in the study as overvalued decreased to 51 metro areas in the first quarter, down from 59 metro area markets (revised) in fourth- quarter 2006. A year ago, 79 markets were overvalued. The analysis shows that extreme overvaluation remains largely a coastal phenomenon-every state on the West Coast, as well as Nevada, Utah, Arizona, and New Mexico; Florida and the Washington, D.C. to Boston corridor on the East Coast. The most overvalued markets are Madera (70.9%) and Merced (69.4%), CA; the most undervalued markets continued to be Dallas (25.0%) and Houston (24.4%).

    James Diffley, Group Managing Director of Global Insight’s Regional Services Group, said, “The current housing recession, turmoil in financial markets, tightening of credit standards and the large inventory of homes for sale will continue to exert downward pressure on prices.” Jeannine Cataldi, Manager of the Global Insight Regional Real Estate Service, added that “Indeed, the price declines thus far can be seen as relatively mild given the dramatic fall in home sales. But the evidence indicates that prices are slowly reverting to their historic relationship to economic fundamentals.”

  14. Clotpoll says:

    skep (7)-

    Actually, not so many lowballs being tabled. I think a lot of buyers realize it’s going to be easier to wait for edgy sellers to capitulate than to attempt to “educate” those in denial.

    You have to also keep in mind that probably 75% of the potential buyer pool either has a home on the market (that won’t sell) or will need to sell before purchasing.

  15. Clotpoll says:

    r2d2 (8)-

    Business brokerage isn’t my bailiwick. However, I agree with you. I find it humorous when businesses that take big chunks of revenue in cash- and grossly underreport income- suddenly want megabucks when they try to sell.

    I’ve never understood why the IRS doesn’t monitor this market more closely.

  16. James Bednar says:

    From the Morning Call (hat tip Ben Jones):

    Has growth stalled in Lehigh Valley?

    Buried deep among the multitude of numbers in the state Labor Department’s monthly unemployment report recently was this fact: The Lehigh Valley’s work force is stagnant.

    That’s relatively shocking, considering the tremendous migration of people into the Lehigh Valley in recent years. That migration has been the main driver of the local economy, responsible in part for skyrocketing home prices, high consumer prices and the exploding number of restaurants, retailers and other service businesses that have cropped up. The migration this decade made the Lehigh Valley the fastest-growing Northeast metropolitan area of less than 1 million people.

    Population and prosperity have advanced hand in hand during recent years.

    But now, the sluggish work force growth may signal — though doesn’t conclusively prove — that the en masse flocking of people to the Lehigh Valley from New Jersey, New York and the Philadelphia region has ended.

  17. SG says:

    Clot: Thx for insights.

    Among potential buyers/sellers, are more Move-Up or Move-down?

  18. James Bednar says:

    From MarketWatch:

    Washington Mutual sees ’07 loss provision as high as $2.2B

    Washington Mutual Inc. Chief Executive Kerry Killinger warned Monday that the company anticipates a continued rise in bad loans, which will take a toll on WaMu’s earnings.

    Killinger, speaking at a financial-services conference, said the Seattle-based thrift will set aside as much as $2.2 billion this year to cover potential loan losses. That is $500 million more than WaMu predicted as recently as July.

    Killinger also cautioned that WaMu will book lower gain-on-sale income from selling mortgage loans instead of keeping them on the company’s balance sheet.

    Killinger offered a bleak outlook for the state of the housing industry nationwide. “Most housing markets appear to be weakening to us,” he said, adding that there could be declines in housing prices around the country over the next few quarters.

    Amid weakening housing prices and other factors, Killinger said, WaMu could face “a higher level of charge-offs for the foreseeable future.”

  19. SG says:

    WAMU’s Killinger’s words: Near Perfect Storm

  20. PGC says:

    I think Realtors are hit and miss. Some have good points and some have bad. When we sold earlier in the year we interviewed a lot of realtors. In the end the choice was difficult.

    No 1. Very Very good but her boss (agency Owner) was an A$$.
    No 2. Not as good as no 1 but seemed competent with a good office behind her. Ex advertising exec in Real Estate for 4 years.
    No 3. Just opened his own office, but was never there.
    No 4. A personal recommendation from a friend. She was good but the office was in the next town over.
    No 5. Foxtons. Had used them in the past and they still have a lot of the issues they had in the past.

    In the end we went with No 2 as her agency’s website had the best look and feel. It was only after we signed that we found out that she didn’t do Open Houses on Sundays. That floored me. We pushed and she got another person in the office to cover. He got lucky and we got a buyer from the Open house. The buyer turned out to be a bit of a nightmare and the realtor had a lot of work to do to get through Attorney review. As she now had had to split the commission she was annoyed she made the other associate do the running around for the Smoke detector cert and other stuff and didn’t even show up for the closing. As we haven’t heard from her since she is not getting any referrals from us.

  21. Everything's 'boken says:

    ‘why the IRS doesn’t monitor this market more closely’

    This is endemic, by the way. Several times I have been given zero amount receipts for purchases from national chain restaurants.

  22. bi says:

    my neighbor is selling their house with street number 13. while all the similar houses with the similar price are all gone by the end of summer. their houses are still on the market. i am wondering how many of you care about this kind of superstitional stuff. (by the way, one of their 2 kids just graduated from MIT and the other is in princeton university. they are moving back to the city after a few happy years in burb. so much for such an unlucky number.)

    Disclaimer: i would avoid number 13 and foreclosed homes.

  23. PGC says:

    From the open houses I saw yesterday:

    There were a lot of Empty nesters downsizing.

    A lot of Boomers putting the house on the
    market to make the move to Florida.

    A lot of houses with both For sale and For Rent signs.

    It could be down to the area that I was looking in (Sparta).

  24. t c m says:

    does anyone have advice on finding out the implications of buying an historic home?

  25. bi says:

    here are some more supersitions i know in other culture:
    . indians prefer a house facing north east and consider south east facing bad while some asians (chinese, korean, japanese and etc.) prefer south east facing;
    . number 4 is considered unlucky number in certain part of china;
    . a house with a street running to is considered bad;
    . foreclosed homes are considered unlucky

  26. JOHNNY B says:

    I bought a mixed-use commercial property in Union, NJ back in 2000 with an address of 1300 Stuyvesant. I had some concerns then.

    But in the end, it has turned out to be the best investment I’ve ever made!

    Johnny B

  27. t c m says:

    skep-tic Says:
    September 10th, 2007 at 9:28 am

    “Schumer is submitting a bill that would raise the conforming loan limit to $625,000 for one year. There is an article in today’s WSJ.”

    it’s amazing! the same politicians who want taxpayers to bailout the “victims” who got in over their heads, want to pass new legislation to make it easier for more people to get in over their heads and become “victims”.

    maybe they think the more victims there are out there, the more relevant they become as saviors.

  28. Kim says:

    Came across this quote yesterday, thought it was interesting:

    I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
    Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)

  29. bi says:

    23#. i know only two things: 1) you can get some tax benefit; 2) you have to obey some restrictions; for example you need to get township approval to change apperance or color of your house. Also most historical homes are located on a busy street.

  30. Clotpoll says:

    sg (16)-

    Dunno. Any opinion I’d offer is only based on anecdotal evidence.

  31. dukeb says:

    Well, here we have it….

    CNN/Money
    Analyst: Fed rate cut won’t help markets

    “Bove said the solution to this crisis is to allow people who cannot repay their debts to default and allow the companies that issued bad loans to fail.”

    http://money.cnn.com/2007/09/10/markets/bc.apfn.liquidity.aheado.ap/index.htm?postversion=2007091008

  32. Comrade 3b says:

    #29 Clot: When a listing states all reasonable offeres considered, what in your opinion constitutes a reasonable offer as a % off from list price. Thanks.

  33. Everything's 'boken says:

    re 27
    Of course, TJ was ‘very’ opposed to Hamilton’s ideas about banking and public debt. I do not think most would much like their lives in a true Jeffersonian system.

  34. skep-tic says:

    #26

    Schumer is basically offering a form of bailout for expensive markets like his district with this bill. The only point of this is to draw more people into conforming loans so they can have a 6.5% mortgate rate instead of a 7.5%. It is completely irresponsible and unnecessary for the gov’t to subsidize houses this expensive, but at least it would spur transactions in Schumer’s district and slow price declines.

  35. bi says:

    33#, changing conforming loan limit is well over due. your 401K limit increases every year but this coforming loan limit is the same as the number before housing boom. besides, it should be adjustable from one metro area to another.

  36. gary says:

    I asked this question before but not a lot of people saw it, so I’ll ask it again. Please fill in the blank: Lowering the FED rate got us into this mess, so lowering the FED rate now will ___________.

  37. bi says:

    35#, pull us out from this myth.

  38. James Bednar says:

    bi Says:
    September 10th, 2007 at 10:45 am edit
    33#, changing conforming loan limit is well over due. your 401K limit increases every year but this coforming loan limit is the same as the number before housing boom.

    This is completely incorrect, the conforming loan limit typically changes on a year by year basis, as home prices rise.

    The conforming loan limit was $333k for a single family in 2004, it’s since moved up to $417k.

    Bi, please take care to limit the BS you post.

    jb

  39. James Bednar says:

    The conforming loan limit was $252k in 2000.

    jb

  40. AntiTrump says:

    #35

    a. Make foreign vacations very expensive when the dollar tanks further.

    b. Make imports very expensive.

    c. Increase inflation and bring more pain down the road.

  41. Comrade 3b says:

    #33 skeptic: but at least it would spur transactions in Schumer’s district and slow price declines.

    I am not sure about slowing price declines, but it is typical pnadering on the part of Schumer.

  42. bi says:

    37#, 38#, i guess i am confused it with jumbo loan. to borrowers, the only difference is the rate. i know in 2001 the divider is 400K something for jumbo or nom-jumbo.

  43. lisoosh says:

    #19 PGC
    “didn’t even show up for the closing”

    I’m guessing she showed up long enough to get a check.

  44. AntiTrump says:

    #41 bi:

    From your comments, you are confused with a lot more than just jumbo loans.

  45. New Investor says:

    #37

    jb,

    Has the conforming loan limit ever decreased? It is possible we may see a decrease if median home prices decrease?

  46. skep-tic says:

    #40

    3b– if mortgages are cheaper, then I think people will pay more for a home since most are mainly concerned with the monthly payment. This seems to me one of the big lessons of the easy money era. Why would it be diff’t (albeit on a smaller scale) if the conforming loan limit was raised?

  47. lisoosh says:

    #4
    Thanks for the info.
    I’ve pretty much pulled myself out of the market for now and am not bothering with open houses and the like. There are too many out there looking at a 5% drop as a buying opportunity and too many investors still floating around. No need to feed the secondary frenzy.

    I get the feeling some are mistaking a cut finger for real blood in the water.

  48. James Bednar says:

    NI,

    A few months back, there was talk of how to handle decreasing the conforming loan limit should prices fall nationwide. A decrease can cause significant backlash as pipelined loans at the limit would find themselves orphaned in nonconformingville. Most critics suggested that the conforming loan limit be kept static if prices fell.

    Realize that the conforming loan limit was not raised in 2007, but kept static at $417k.

    https://www.efanniemae.com/sf/refmaterials/loanlimits/pdf/historicalloanlimits.pdf

    jb

  49. bi says:

    43#, okey. all you are right on this. i got educated here. but why an area such as NY, SF or DC cannot have higher limit while Alaska and Hawaii have?

    https://www.efanniemae.com/sf/refmaterials/loanlimits/

  50. Comrade 3b says:

    #47 lis: I get the feeling some are mistaking a cut finger for real blood in the water.

    You have to start somehere, frost the finger, than the hand and so on. I suspect we sill see blood in the water over the next 6 months.

  51. Comrade 3b says:

    #46 skep: True, but how many of these borrowers will be approved for a mtg in the first place, given the fact that many lenders will now require a down payment.

    In an earlier post Clot stated that most of his move up buyers (75%( have to sel an exiating home to move up.

    Now if this scenario is prevelant throughout the north Jersey (NYC metor area), how many real first time buyers are out there? Is the demand there? I guess that is the real question.

  52. PGC says:

    #42, the other associate acting for the buyer collected the check for the agency. That decision not to do open houses on Sundays cost her $6K in commision and she was pi$$ed.

  53. James Bednar says:

    Now if this scenario is prevelant throughout the north Jersey (NYC metor area), how many real first time buyers are out there? Is the demand there? I guess that is the real question.

    It always boils down to the plankton.

    For what it is worth, in an Otteau seminar I attended, he had mentioned that for every first time buyer who comes into the market, he/she enables 5 move up/move down transactions to take place. Eliminate that first time buyer and those other transactions don’t take place. Now, I’m sure we can argue about the number, is it really 3, 4, 6, 7? I’m not sure, exactly, how to quantify the “chain”, but it’s the concept that is key here.

    jb

  54. New Investor says:

    #48

    jb,

    Thanks for the info. Looks like the only time it decreased was 1989 – 1990, and even then only by a miniscule amount. I would think keeping it static would have had virtually the same effect while avoiding the problems you mentioned.

  55. John says:

    bi Says:
    September 10th, 2007 at 10:13 am
    here are some more supersitions i know in other culture:
    . indians prefer a house facing north east and consider south east facing bad while some asians (chinese, korean, japanese and etc.) prefer south east facing;
    . number 4 is considered unlucky number in certain part of china;
    . a house with a street running to is considered bad;
    . foreclosed homes are considered unlucky

    Next time I am selling a home on Main Street in Flushing this will be useful informaiton!!!!

  56. Comrade 3b says:

    #53 JB: and if even remotely true, then prices need to fall much, much more,and real estate will be in the dumps for a long,long time;just like last time, probably worse.

  57. James Bednar says:

    Where did that lumber guy go?

    From MarketWatch:

    Weyerhaeuser could cut back mill operations

    Weyerhaeuser Co., the world’s largest producer of plywood for home building, said Monday that it might offset eroding demand for its wood products through mill closures and production curtailments.

    In a filing with the Securities and Exchange Commission, the Washington-based company said market conditions for wood products have not improved in the third quarter. In early August, Weyerhaeuser reported second-quarter net earnings plunged more than 89% to $32 million primarily because of the slumping U.S. housing market’s impact on wood product sales.

    As market demand erodes so do lumber prices, motivating mill operators across the U.S. to curtail operations to protect their revenue intake. And though traders have been reporting “extremely competitive prices” for lumber, buyers have been more focused on clearing inventories, J.P. Morgan analyst Claudia Shank said in a note.

    Prices for oriented standard board, an industry benchmark, have fallen 11.2% over the past year to $175, according to data from J.P. Morgan, while the composite price for framing lumber has declined 7.5% to $282.

  58. bi says:

    55#, even in nj, you can apply to a lot of places: fort lee, iselin, edison, p’way… i am serious. a new condo called Shore in jersey city skipped floor 4, 14, and 24 in addition to 13. i am wondering if the builder would skip floor 40 to 49 for its next condo with 37+ floors.

  59. stu says:

    “By lowering interest rates the Federal Reserve will not stimulate economic growth or create jobs. It will crash the currency, stimulate inflation, and weaken the economy and the job markets.”

    Punk Ziegel

    Yup, keep lobbying for a cut?

  60. thatBIGwindow says:

    If I only waited a few years, I could have paid the same amount for a house in USR :(

  61. skep-tic says:

    I am by no means an expert on this stuff but it seems to me that the fed has no good option right now. cut and the dollar is toast. do anything else and the stock market goes apesh*t

  62. James Bednar says:

    From the AP:

    Moody’s Warns Housing Slump Will Persist
    Moody’s Warns Housing Slump to Persist Through 2009, Sees Further Homebuilder Downgrades

    Credit rating agency Moody’s Investors Service said Monday it expects the housing-market slump to last at least until 2009, likely precipitating numerous ratings downgrades at publicly traded homebuilders.

    “Our current thinking is that the downturn, currently two years in the making, will last until 2009, with any sector recovery likely to be sluggish for some time after that,” said Joseph Snider, senior credit officer at Moody’s.

  63. Comrade 3b says:

    #60 tbw: or at least River Edge/Oradell

  64. lisoosh says:

    Talking with a western mortgage broker, (long term, good guy).

    He was telling me that in Texas 20% of home equity is protected – by law you CANNOT take it out unless you sell the house. He felt that it was one contributing factor in Texas real estate remaining more stable and suggested that it would be a good rule of thumb for the rest of the country.

  65. mifune says:

    RE: 18

    I was wondering when WAMU was going to start announce some losses.
    Up next should be Deutsche.

  66. thatBIGwindow says:

    3b: I think USR may have lower taxes than RE?

  67. Rich In NNJ says:

    Westwood
    SLD WOODLAND CROSS $475,000 6/21/2005

    SLD WOODLAND CROSS $470,000 9/10/2007

  68. rhymingrealtor says:

    asked this question before but not a lot of people saw it, so I’ll ask it again. Please fill in the blank: Lowering the FED rate got us into this mess, so lowering the FED rate now will ___________. DISTRESS!

    Was it supposed to rhyme? (-:

    KL

  69. Everything's 'boken says:

    re 68
    Doesn’t scan.

  70. gary says:

    rhymingrealtor #68,

    Rhyme or no rhyme, you decide. :) It is perplexing though, no? The herd over-dosed on easy credit so why don’t we have an intervention and….. give them more drugs!! Brilliant, don’t you think?

  71. Comrade 3b says:

    #66 USr does have lower taxes, but RE/Oradell are worth it, only minutes from NYC.

  72. Everything's 'boken says:

    68
    If you want dactyllic tetrameter, put in a syllable before ‘distress’ such as ‘bring’.

  73. stu says:

    “dactyllic tetrameter”

    Am I in the right place?

  74. John says:

    Actually the confirming loan rate should be LOWERED not raised, in fact if it remains stagant at its current level it is actually a stealth raise. Remember the confirming loan amount should tie to actual house prices. So if prices fall it should decrease not increase!

    By the way, their are three main type of people in residential housing, people buying starter homes, people buying trade up homes and people cashing out for retirement purposes.

    Falling prices help groups one and two, rising prices only help people trading down. I guess the banks and AARP are all for Bush’s plan.

  75. chicago sleepless in seattle says:

    correct me if I am wrong……the silence is deafening out there…..something big is going down…….

  76. Kurt says:

    linked on Drudgereport.com:

    “Housing Market Slump Forces Couple To Open Brothel”

    http://wcbstv.com/topstories/local_story_252232548.html

  77. chicago sleepless in seattle says:

    correct me if I am wrong……the silence is deafening out there…..something big is going down…….

  78. BklynHawk says:

    #77 Chicago-
    Stocks down, Treasuries up, little over a week away from next Fed meeting…that employment number was a real show stopper, but not sure what you’re getting at?

    JM

  79. Arr Elle says:

    #68- RhymingRealtor

    How about “Spell” to fill in the blank????

  80. John says:

    In Montclair, New Jersey, the median price of a home sold in August fell 7.3 percent from a year earlier to $677,340, according to Prudential Zinn Associates Realtors. By contrast, the median price of a home in the hedge fund haven of Greenwich, Connecticut, is holding steady at about $1.9 million, said Barry Rosa, vice president of Prudential Connecticut Realty.

  81. Comrade 3b says:

    Where is BC Bob?

  82. SS says:

    Anyone know what the impact of declining housing prices will have on property taxes? Do these assessed values ever decline? [I’ve never owned a house]

  83. John says:

    OK, these are still rates from a major bank I would have died for when I bought my house, I don’t see how lowering a 1/4 point will do anything.

    PRODUCT RATE* POINTS APR** MONTHLY
    PAYMENT

    Chase FIXED RATE LOANS
    30 Year Fixed Rate 6.125%
    15 Year Fixed Rate 5.750%

  84. READ MY LIPS: CUT YOUR GRUBBING HOUSE PRICES FAST says:

    A hat tip to the clotman.

    BOOOOOOOOYAAAAAAAAHAHAHAHAHAHAHAHA

    Bob

  85. skep-tic says:

    #83

    yes, but John these rates don’t mean much to 1st time buyers in our area since almost all of them will require jumbos which are much higher

  86. Comrade 3b says:

    #82 SS In a word, NO.

  87. New Investor says:

    #82

    I think even if the assessed values could decline, they would bump up the tax rate to compensate. Lose-lose situation.

  88. HEHEHE says:

    WaMu Chief Warns of ‘Perfect Storm’

    By Laurie Kulikowski
    TheStreet.com Staff Reporter
    9/10/2007 10:51 AM EDT
    Click here for more stories by Laurie Kulikowski

    WaMu (WM – Cramer’s Take – Stockpickr – Rating) dropped 3% after CEO Kerry Killinger said at a Lehman Brothers conference in New York that the housing industry is headed for a “near perfect storm.”

    http://www.thestreet.com/s/wamu-chief-warns-of-perfect-storm/newsanalysis/wallstreet/10378726.html

  89. ithink_ithink says:

    be it for or against, a shill, a prognosticator, a pundit, or screaming yellow cramer… whatever, i don’t care – but i hate ben stein’s pieces. makes me just want to slap the anecdotal adnoids out him.

    http://money.cnn.com/magazines/fortune/fortune_archive/2007/09/17/100250263/index.htm?postversion=2007091013

  90. ithink_ithink says:

    be it for or against, a shill, a prognosticator, a pundit, or screaming yellow cramer… whatever, i don’t care – but i hate ben stein’s pieces. makes me just want to slap the anecdotal adenoids out him.

    http://money.cnn.com/magazines/fortune/fortune_archive/2007/09/17/100250263/index.htm?postversion=2007091013

  91. bi says:

    83#,
    is it the rate today? 15 year was 6.375% just a few weeks ago. lower bond yield finally pushes the mortage rate down. 15 year will go down another half percent if fed cut rates to 4.5% by next spring.

  92. skep-tic says:

    from Calculated Risk:

    “The expanding mortgage crisis and credit crunch slammed the Los Angeles housing market in August, with home sales plunging 50 percent from the same month last year and 25 percent from July.”

    No more cheap, stated income loans and all of a sudden the high priced markets collapse. Wonder what the August numbers will be like around here

  93. skep-tic says:

    Bloomberg reports on New York. ” The cost for 30-year fixed-rate jumbo mortgages, those exceeding $417,000, has increased more than one percentage point since March to about 7 percent, data compiled by Bankrate.com show. August rates were the highest since December 2001.”

    “Prices may start to drop in the New York City metropolitan area beginning in the fourth quarter of this year and continue falling 1 percent to 7 percent per quarter through 2008, according to estimates from economist Mark Zandi.”

    “Meghan Fajardo of New York City ran through two mortgage brokers and multiple lenders as interest rates rose to more than 7.25 percent from 6.25 percent for her $680,000 condominium in the Windsor Terrace section of Brooklyn, New York.”

    “Fajardo closed on the 1,100-square-foot apartment on Aug. 9, agreeing to a 30-year fixed-rate loan at 6.875 percent with terms that call for her to pay interest only for the first 10 years. She initially planned to pay down the principal too. In the end, that would have been too expensive.”

    “‘It was a shock to me,’ she said. ‘I wasn’t really following the market that well.’”

    “Four business days after the loan closed, the same mortgage Fajardo got from Countrywide had a rate of more than 8.5 percent, said Robert Raush, her broker in Manhattan.”

  94. Cirrus says:

    Agreed – I love Market Place on NPR and when they occasionally have him as a commentator I want to drive myself into a telephone pole. Can’t stand the guy- the only good thing ever to come out of Ben Stein was his role as Kevin Arnold’s science teacher.

  95. Comrade 3b says:

    SS/New Investor: Towns collect x maount of reveune every year to fund theri operations, including schools.

    Unfortunately many spending decvesions over the last few years IMO, wer based on rising property values, people did not pay much attention tho the escalating increass, while their houses ere appreciating 15/20% a year.

    Because of the new environment of declining rpices, soem will challenge their assessments,and some towns may makes symbolic adjustments here and there.

    If it becomes common place, then they will simply lower the assesed value and increase the tax rate, to collect the same amount of income that they need.

    Consider high taxes as part of teh hangover of a declining real estate market.

  96. Comrade 3b says:

    #95 If it becomes common place, then they will simply lower the assesed value and increase the tax rate, to collect the same amount of income that they need.

    Sorry should have said collect the same amount of revenue.

  97. John says:

    Americans constitute less than 5% of the world’s population, but produce 25% of the world’s CO2,[2] consume 25% of world’s resources,[3] including 26% of the world’s energy,[4] although having only 3% of the world’s known oil reserves,[5] and generate roughly 30% of world’s waste.[6] [7] American’s impact on the environment is at least 250 times greater than a Sub-Saharan African.[8] [9]

    U.S. Census Bureau figures show the U.S. population grew by 2.8 million between July 1, 2004, and July 1, 2005. If current birth rate and immigration rates were to remain unchanged for another 60 to 70 years, US population would double to some 600 million people.[10] The Census Bureau’s latest estimates actually go as high as predicting that there will be 1 billion Americans in 2100.[11]

  98. hoodafa says:

    Fed’s Yellen warns rate cut may not happen

    San Francisco Fed president says rate policy is not intended to bail out investors.

    San Francisco Fed President Janet Yellen said Monday that while market turmoil has the potential to hurt the economy, rate policy should not bail out investors.

    The speech, which helped send major gauges lower in early afternoon trade, followed comments from Atlanta Fed President Dennis Lockhart, who said investors should consider Friday’s unemployment report alongside a mostly strong batch of retail sales reports seen recently. Over the weekend, Philadelphia Fed President Charles Plosser said that the Fed doesn’t make rate decisions based on any one number.

    More at: http://money.cnn.com/2007/09/10/news/economy/fed_yellen.ap/index.htm?cnn=yes

  99. curiousd says:

    #97, we also have 25% of the worlds incarcerated.

    Forget housing market issues…there are prisons to build.

  100. New Investor says:

    #95

    That’s what I suspected and hinted at. There’s no way we can expect a given town’s expenses to decrease. That would be revolutionary and unfathomable.

  101. Rich In NNJ says:

    …if fed cut rates to 4.5% by next spring.

    I thought you were predicting 4.5% in September and another drop in December?

  102. Comrade 3b says:

    #100 New: That’s what I suspected and hinted at. There’s no way we can expect a given town’s expenses to decrease. That would be revolutionary and unfathomable.

    That is why (even though we are all busy), that it is so important to go to town meetings (mayor/council school), these are you elected officials (neigghbors) who are making these spending decesions.

    And while many may mean well, many of them are clueless, and it is frightening.

  103. SS says:

    Thanks all for the input.

    Has anyone seen an increase in services in their towns/villages? Usually more tax dollars = more services…at least in a perfect world.

    Since moving here from Long Island almost 3 years ago I’m absolutely amazed how the BS is this state piles up. Not that Long Island was a charm, but IMHO it’s apples to oranges when comparing. The town where I grew up practically kept their portion of the property tax virtually unchanged while providing better services for the community. You just don’t see that here.

  104. Hehehe says:

    ithink_ithink Says:
    September 10th, 2007 at 2:20 pm
    be it for or against, a shill, a prognosticator, a pundit, or screaming yellow cramer… whatever, i don’t care – but i hate ben stein’s pieces. makes me just want to slap the anecdotal adenoids out him.

    Hey he wrote an entire article without shilling variable rate annuities.

  105. SS says:

    With the exception for my wife now attending MSU for a bachelors (that’s another sham), I’m trying to find a reason to stay in the area (tri-state that is) but I just can’t come up with one.

    As for MSU – nice campus and all – but they make you pay to park? And parking for her is at a local train station. See…this I don’t get. I’m sure some of our state property taxes goes to this school, and one would think that with the tax rates the way they are, your car would be washed when you get out of class!

  106. dreamtheaterr says:

    John Says:
    September 10th, 2007 at 2:45 pm

    Reminds me of a conversation with my friend who recently traded up to a 5 bed from a 3 bed after the birth of his first child. He also drives a Porsche 911 and will most probably survive on cat food for retirement at the rate he’s going.

    When I told him I had 800 cc transportation before coming to the US, he said he wasn’t aware that India can produce such powerful motorcycles. When I said that it was actually a 3 cylinder, .8 litre car, he thought I was pulling the wool over his eyes! I guess that might explain why I consider a four-banger a huge trade-up….for now ;-)

  107. John says:

    Couple things, in regards to yes those low mortgages rates I quote are from plain old chase.com bi Says:
    September 10th, 2007 at 2:21 pm
    83#,
    is it the rate today? 15 year was 6.375% just a few weeks ago. lower bond yield finally pushes the mortage rate down. 15 year will go down another half percent if fed cut rates to 4.5% by next spring.

    In regards to the, statistics, lets just open the jail house doors and give all the inmates sub-prime loans to buy all are existing housing inventory.

    curiousd Says:
    September 10th, 2007 at 2:56 pm
    #97, we also have 25% of the worlds incarcerated.

    Forget housing market issues…there are prisons to build.

    In regards to dreamtheaterr, one drunken night in college I had a double-banger and I agree that a four-banger would have been much better!

    dreamtheaterr Says:
    September 10th, 2007 at 3:27 pm
    John Says:
    September 10th, 2007 at 2:45 pm

    I was pulling the wool over his eyes! I guess that might explain why I consider a four-banger a huge trade-up….for now ;-)

  108. SS says:

    #107
    Wow John that’s impressive…double-banger! Tell me, which hand got tired first? ;o)

  109. New Investor says:

    #108

    LOL

  110. bi says:

    101#, i was predicting 10 year bond down to 4.5% by year end, now it is well ahead of schedule since it is traded at 4.33% today. 1.5 month ago i also predicted fed woudl cut fed fund rate twice this year, one in september and the other in december but never said how much they were going to cut (but i would think quarter percent each time).

  111. njpatient says:

    #89
    Yep. I won’t mind if Stein shuts up for a day.

  112. biluva says:

    hi bi!
    what did you base your prediction of 4.5%? do you think it will be 4% by year end?
    thanks!

  113. Comrade 3b says:

    #113 On his beautiful mind.

  114. njpatient says:

    hi bi!
    what did you base your prediction of oil at $40 on? do you think it will be $30 by year end?
    thanks!

  115. njpatient says:

    3b, do you think Barbara Bush loves bi for his beautiful mind?

  116. biluva says:

    Comrade that’s what I’m thinking too :)

  117. biluva says:

    bi,
    btw, I think your right. dow is struggling because its at “13,000” level. good catch.

  118. bi says:

    115#. apparently my prediction on oil is off for now. but i have gold to hedge as i said before. nevertheless, oil will go down after hurricane season is over. why? simple. i did not see price increase when i drive by gas pump. it means there is no supply issue.

  119. lisoosh says:

    “curiousd Says:
    September 10th, 2007 at 2:56 pm
    #97, we also have 25% of the worlds incarcerated.”

    Really? Where did you get that from?

  120. bi says:

    113#, it may go under 4% briefly but it won’t stay under 4% too long before year end. if 10 year rate stays at this level, 15 year mortgage rate will be around 5.5% and it will trigger a lot of activities this fall. again i stick with my prediction of 10% re appreciation in certain nj areas next year.

  121. New Investor says:

    Haven’t seen this today yet…

    Disclaimer:

    The information on this site is provided for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, or otherwise.

  122. Comrade 3b says:

    #121 bi: 10% re appreciation in certain nj areas next year.

    Like I said a beautiful mind… that is in complete denial.

    Hope all those people that might be active in the Fall have a down payment.

  123. bi says:

    to the guys saying there is no first-time buyer today, these are first time buyers i posted during the weekend. while i am not sterotying, i would guess most of them are recent immigrants.
    only one is 10% off from the 2005 peak:
    08/07/07 2 $270K $262K 286
    I guess rich would like to add it to his list. ironically, this one has street number 18, a lucky number in some chinese culture. but most of them sold in 1 months or so. two of them went under contract in the midst of credit crunch. who cares!

    > now i know why i am so optimistic about re market in central jersey. my realtor friend send me all the sales this year at one townhouse community in central jersey. here is the list:

    Closing Date bd LP SP DOM

    08/31/07 3 $349K $333K 37
    04/05/07 3 $342K $330K 86
    05/01/07 2 $312K $305K 12
    06/05/07 2 $310K $300K 15
    07/12/07 2 $308K $298K 21
    08/07/07 2 $270K $262K 286

    contract D.
    08/14/07 3 $340K ?
    08/03/07 2 $290K

    seems most were sold in 3 months. some are just in 2 weeks.

    More update: the friend of mine who sold 10K over asking actually sold only in ONE day. he got 3 offers and finally set down at $630K, which is about the same price as in 2005.

  124. Comrade 3b says:

    #116 nj: Who else but Barbara could?

  125. njrebear says:

    Is bi the new duck?

  126. jmacdaddio says:

    Down payment? How quaint!

    I was hoping to strike this fall but I will probably not be able to cough up 20%. Does anyone think 10% down in an 80-10-10 scenario, purchase about 240k, with excellent credit could be problematic based on their experiences in the new credit landscape?

  127. njpatient says:

    #199 bi
    “oil will go down after hurricane season is over. why? simple. i did not see price increase when i drive by gas pump.”

    You’re a simpleton. And not in a good way.

  128. Comrade 3b says:

    #126 njbear: maybe he is Duck.

  129. SS says:

    For all you econogurus out there (excluding bi) are mortgage rates always pegged to the 10yr or can they steer away from it?

  130. New Investor says:

    #127

    I think 10% is ok for most 1-3 family properties. I just got pre-qualified for a 4-family home and it was difficult finding a lender with only 10% down.

    The brokers i were working with told me that 1-3 family properties were ok with only 10% down, but for some reason most lenders demanded 20+% down for 4-families.

    YMMV

  131. James Bednar says:

    101#, i was predicting 10 year bond down to 4.5% by year end, now it is well ahead of schedule since it is traded at 4.33% today.

    If you predicted 4.5%, and it came in at 4.3%, doesn’t that mean you were wrong?

    jb

  132. Aaron says:

    Oil is 70$ a barrel because the dollar is weak. Supply isn’t going to change this.

  133. Essex says:

    My house is #13………..lucky in the world of Rock-a-billy……niche market yes, but lucrative.

  134. jmacdaddio says:

    Thanks New Investor…. I think multi-family properties are considered investment properties so the lending requirements would be tighter as opposed to the requirements for your own residence.

  135. schabadoo says:

    “If you predicted 4.5%, and it came in at 4.3%, doesn’t that mean you were wrong?”

    Not nearly as wrong as his $40 oil prediction…I think it’s over $76 and climbing.

    Maybe his grading on a curve?

  136. Clotpoll says:

    3b (32)-

    That’s a come-on. What’s “reasonable”? Depends on the listing.

  137. Clotpoll says:

    skep (34)-

    Spot on. Pandering at its finest.

  138. John B says:

    The lending standards for MULTI / MIXED use, was, and is, 20% down, if local institution, the bank holds and services the note.

    Johnny B

  139. Clotpoll says:

    PGC (52)-

    While your agent’s actions in that deal were not professional, you should know that fewer than 1% of all homes in the US sell as the result of an open house. The main purpose of an open house is for the agent to use a seller’s home as a Sunday office to meet buyers. I will do one on occasion, but most of my clients appreciate not being tossed out of their homes on what could be their only weekly day of rest.

    Imagine going into your workplace and suggesting a project that has a 1-in-100 chance of working.

    You got lucky, and your house sold via an open house. That still doesn’t make it a high-impact selling activity.

  140. MJ says:

    bi, can you give a sample town name where you feel prices will by up 10% in an year? and the % certainty that you attach to the prediction?

  141. Clotpoll says:

    lisoosh (64)-

    HELOC is actually illegal in Texas.

  142. Stu says:

    BI:

    Gas prices and oil prices are not directly related. Gas is a refined product and the short term swings in price are mostly dictated by refining capacity and supplies in storage. Additionally, there are two primary types of oil. One is sludge and costs a lot more to refine. The light sweet crude is the valuable stuff.

    Answer me one question please. What do you get out of making ill-advised predictions?

  143. Clotpoll says:

    Think (89)-

    I’d pay good money to see Ben Stein have his toenails pulled out with pliers.

  144. Marito says:

    10% down payment may be enough to get pre-qualified, but you would still get slammed with costly mortgage insurance, right?
    Would that also be the case for a humble 3br/1.5bt 350K mortgage?
    thanks!

  145. Clotpoll says:

    curious (99)-

    We do prisons right.

    Check this little gem of a stock: CXW (Corrections Corp. of America). They’re the Toll Bros. of penitentiaries:

    http://money.excite.com/jsp/ct/bigchart.jsp?symbol_search_text=CXW&chartdate=4

    All disclaimers apply.

  146. curiousd says:

    #120,
    on a seminar about the state of state prisons. scary stuff.

  147. Clotpoll says:

    jmac (127)-

    80-10-10, good credit, is totally do-able, right now. Bad credit, no way.

  148. Jaideep says:

    Last week I put a bid in on a property ($1M+) and I was able to find 80(30y IO@6.75%)-10(30y amoritized@7.25%)-10(cash). Not bad. The loan is through my employer so it may be 0.25% under market rates.

  149. scribe says:

    Channel 7 has something tonight on the “mortgage mess” …6:30 news just came on

  150. jmacdaddio says:

    I did a lot of homework on PMI at one point. There is a formula for it which I don’t exactly recall, but I was looking at around $125 a month for 10% down on a 250k purchase. I did more homework and found that a piggyback loan should work better since the interest is also deductible, the payment amount would be about the same as PMI, and the key element is that if I can save enough dough to pay down the second mortgage, I can pay it off and be done with it, assuming no prepayment penalty. PMI is very hard to get rid of once you have it – sort of like mold. Once you get to 20% equity they will use every trick in the book to not let you stop paying for it, inculding dragging their feet on paperwork, increasing the amount of equity you need to remove PMI, and sending in their appraisers who play games to make sure you don’t have the equity % you need to stop paying PMI.

  151. New Investor says:

    151

    Yeah, the piggyback strategy beats PMI, if you can qualify for it. Unfortunately in my case, it was next to impossible to get that 10% piggyback on the 4-fam, so I’m resorting to FHA and PMI. Depending how the credit atmosphere evolves, I may be able to refinance into a more attractive situation further along down the road.

  152. twice shy says:

    Jmac,

    Several lenders, including Bank of America are eliminating many fees and PMI for borrowers with good credit. You will pay a higher interest rate on 10% down, but with a conforming loan the rates are still attractive. Don’t hassle with a piggyback if you can get one of these deals.

    The only other caveat is you will be vulnerable to a better financed buyer with 20% down on a property that seems a good value and attracts serious interest, and thus your bid might lose anyway.

  153. Everything's 'boken says:

    129
    ‘maybe he is Duck’

    Not as sophisticated, and doesn’t blow up. Still, a family resemblance made me dub him ‘Dewey’

  154. rhymingrealtor says:

    Everything’s broken # 154

    If you recall last week or so bi put out a riddle -lots of posters tried to guess the answer.. but his riddle used a reference to the town of Alpine -heloooooo

    KL

  155. New Investor says:

    I’m gonna have to go with E’s-B on this one. I don’t think anyone would go through the trouble to impersonate another using poor grammar and punctuation.

    Bi’s compositions clearly belong to a different person altogether.

  156. PGC says:

    #142 Clotpoll

    Where do you get that 1% figure, I find it hard to believe. In downtown JC and Hoboken, Open houses sell places. Take a drive around on a Sunday afternoon and you will see the traffic going throgh the properties. You can even watc them pile off the path train clutching the print outs from nytimes dot com.

    I will agree that it may be a localized phenomenom.

  157. PGC says:

    #142 Clotpoll

    Where do you get that 1% figure, I find it hard to believe. In downtown JC and Hoboken, Open houses sell places. Take a drive around on a Sunday afternoon and you will see the traffic going through the properties. You can even watc them pile off the path train clutching the print outs from nytimes dot com.

    I will agree that it may be a localized phenomenom.

  158. Clotpoll says:

    PGC (157)-

    The 1% comes from NAR and is a national figure. New construction open houses are not included in that, as in practice, all new construction with site reps sells via an open house (of sorts). If the JC/Hoboken activity you’re referring to was mainly conversions/new construction, they wouldn’t be counted by NAR. However, I could certainly see a “spillover” effect that would make resale open houses more effective as selling tools…especially in a densely-populated area such as JC/Hoboken. Those resales would certainly draw the same mobs at the same time.

    I’d have to think- not being a Hudson/Essex guy- that a high open house conversion rate there is totally possible and probably an anomaly.

  159. Clotpoll says:

    Will not feed the troll.

    Will not feed the troll.

    Will not feed the troll.

  160. Clotpoll says:

    2x (153)-

    Be careful. Some of those “PMI waived” deals have the PMI built into the loan in some snarky way.

    One alternative that often doesn’t get offered- unless you ask- is the option of paying the entire PMI premium in one lump sum at the closing. Unless there are special circumstances, that amount could be around one point. I think it’s a killer to finance PMI, so paying it in one shot or getting it waived is a better way to go.

    Another thing to beware of is for buyers with sketchy credit (none of those here, of course) getting into a loan requiring PMI, only to find the PMI insurer refusing to insure it, as the borrower’s FICO doesn’t meet their new, improved standards (yes, when the credit markets blew up, PMI outfits also raised their requirements). If your FICO is below 580, you probably don’t qualify for PMI insurance now.

    I saw three deals blow up last week because low-DP borrowers couldn’t get PMI…even though they had lenders willing to do the loans.

  161. dreamtheaterr says:

    “We’ve got to bring house prices down to the level where buyers who would use traditional mortgages can buy them. The need for housing has not gone away. It’s just that, going back in time from the low to the peak in 2005, there has been increasing activity with exotic mortgages, which got people to bid the prices up to where the traditional-mortgage buyer could not participate.”

    Going back to this quote by Hebner from the first post of today from the WSJ, the last sentence is worth pondering over. Folks with 20% down, financing lined up were outbid by folks overbidding because they loaded up on a neg-am or IO loan. If only the latter knew the hara-kiri they were committing….

  162. Clotpoll says:

    dream (162)-

    Thus is the birth and death of all spec frenzies.

  163. PGC says:

    #149 Clotpoll

    NAR – Are they the ones with the megaphone shouting “All is Well!” …. :*)

    The open houses in urban areas have two big benefits. They get people through the house that would n normally look at it based on a single picture in a realtors window or a newspaper. It raises the profle of the lising and helps market the property.

    My own opinion of FSBO (and bad realtors) is that the biggest problem is that people do a bad job of marketing the propery.

  164. Clotpoll says:

    PGC (164)-

    “My own opinion of FSBO (and bad realtors) is that the biggest problem is that people do a bad job of marketing the property.”

    And how. You’re exactly right.

  165. still_looking says:

    clot,

    This time last year we were agonizing over Milito way… go figure. How times change.

    sl

  166. still_looking says:

    btw – check your email

  167. looking in ny says:

    ‘The downturn in the housing market appears to have driven two Westchester homeowners to desperate and illegal measures. New Rochelle Police raided a 3-bedroom home on North Avenue Friday night arresting four alleged prostitutes and the homeowners. The house, they say, had been turned into a brothel complete with heavy shades over all the windows and a red ribbon placed out by the sidewalk to indicate they were open for business.’

    Hmmm…so even as home prices were still going down, apparently something else was still going up… :)

  168. John says:

    AND GOING DOWN!!!

  169. John says:

    A Second Bail-Out For Countrywide

    Last Update: 5:17 AM ET Sep 11, 2007Print E-mail Countrywide (CFC) Financial has hired Goldman Sachs and law firm Wachtell Lipton Rosen & Katz to arrange another multi-billion investment in the company, just weeks after Bank of America (BAC) made a $2 billion investment in preferred shares in the mortgage company, according to The New York Post.
    The deal could involve several hedge funds and one or more money center banks.
    Countrywide’s shares continue to fall. They are now off 52% over the last three months. Alliance Capital Management disclosed that it has sold about 31 million shares of Countrywide in the last month. Barclays Global Investors has also sold nearly 25 million shares.
    One by-product of a new round of financing would probably be the departure of CEO Angelo Mozilo. It was on his watch that the company became especially aggressive in offering loans to home buyer who appear to have been bad credit risks. This may have helped CFC earnings for several quarters, but the piper is being paid now. Mr. Mozilo has been a big seller of his own stock.
    Douglas A. McIntyre

  170. Aaron says:

    Clotpoll #4, I don’t know if I speak for the majority of buyers like me (20% down, 700+ fico).. but both times I bought houses we looked 6+ months before finding the one we liked.
    People with skin in the game do not buy quickly.

  171. John says:

    You keep saying 20% like that is a lot down. I saw a house for sale in the area I was thinking to buy on Sunday and even though I feel the market is falling well into 2008 and early 2009 I went to get an understanding of the current prices, MLS price is always overinflated so I wanted to do a little wheeling and dealing to see what I could get house for. I told her I could put down 60-70% so I am a very qualified buyer. She told me that is just the average downpayment. If the average house on a good block is one million and anything over 417K is jumbo most people are putting down 60%. I was kinda shocked, but she said people have the money, they are selling starter homes and Wall Street is still hot and they don’t want to get stuck with a large mortgage in case the economy tanks. Now that is what I was thinking, but guess what other people are thinking that way now.

    Aaron Says:
    September 11th, 2007 at 12:11 pm
    Clotpoll #4, I don’t know if I speak for the majority of buyers like me (20% down, 700+ fico).. but both times I bought houses we looked 6+ months before finding the one we liked.
    People with skin in the game do not buy quickly.

  172. John says:

    the housing mess, and the coming severe economic pain that we are going to take in this country, is, if you live in a “bubble” area and bought, refinanced, or HELOC/MEWd out money in the last four or five years – YOUR FAULT. Here is reality… There is talk about “bailouts” of various sorts for the housing industry. we need to force house prices down from a median of 5x annual income to 2.5-3x annual income. And why should you do that, even if it causes you to get foreclosed on, even if it might harm you? IF YOU DON’T ACT TO STOP THIS STUPIDITY YOUR CHILDREN ARE GOING TO GET ASSRAPED BY THE ECONOMIC REALITIES WHEN THEY COME HOME TO ROOST, AND YOU WILL BE THE PERSON RESPONSIBLE FOR SCREWING YOUR OWN CHILDREN. WHY will this happen? Here’s reality kids – The Dollar is collapsing. It is under 80 and headed lower. Attempted bailouts will FAIL, will destroy the dollar, are likely to provoke capital flight which will drive up real interest rates to the sky, and will trash our economy for a decade – or more…

  173. Comrade 3b says:

    #173 John: i ahve been saying this for quite soem time, People do nto realize, or maybe they do and do not care that their children will be harmed, without a correction.

  174. Comrade 3b says:

    #172 John:

    they are selling starter homes and Wall Street is still hot .

    Well who is buying he starter homes, becasue there are tons of them availabl for sale right now?

    As far as Wall St being hot, that was last year, and that bonus money was paid out months ago, with the very last payments in March of 06.

    As far as Wall St being hot this eyar, I would say luke warm at best. And many will not be getting bonues this year or numbers will be cut back a lot.

    It is a different ball game out there now.

  175. John says:

    My friends at Goldman and JP Morgan are getting bigger bonuses this year. Mortgages are peanuts. When you scope the financial statements of some of the big banks the retail side of the house is not that big a deal. Assets under managment and how their big bets did are what matter, a lot of banks got off record amounts of IPOs in the first six months of the year so the rest of the year can be so so.

    The mortgage brokers and the people working in the alt a side of the house who got canned were at best 100K a year workers, they can’t afford more than a beat up cape. The real players have contracts and are getting it anyhow. Bernakee himself said today that we are awash in savings. The upper saddle river crowd have put off their SUV, trade up homes and vacation home purchases since July and all at 5% interest in the money market. The cash piles up quick if you can’t spend it. The opposite of debt piles up quick.

    Who cares who buys starter homes. I can rent my pos out till the market turns around or give it away to some newlywed couple at a good price in a FSBO and still come out 200K ahead. Unless you bought a house 2004-2007 or are directly in the real estate business this is a non-event.

    If bonuses come out low most of the people I know are walking out the door and that is a lot of talent to lose. The Banks, IB and PE shops will have already cut the heads off the subprime idiots by year end so bonuses are going to the producers and you can’t afford to nail the people who pay the rent.

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