Today’s Comp Killer* comes to us from prestigious Bergen County, courtesy of yesterday’s GSMLS hot-sheet. The property, located in Waldwick, was purchased in September of 2005 for $500,000. It came back to market in under two years, and was aggressively priced at $525,000. Over the next few months, it was reduced down to $490,000, $10,000 less than the purchase price. The property was sold, and closed, with a sale price of $480,000.
Factoring in the 5% commission as well as additional transaction costs on both the purchase and the sale, the seller has lost approximately $50,000 over the course of ownership.
MLS# 2105544 – 2# Waldwick Ave, Waldwick NJ
List Date: 9/6/2005
List Price: $535,000
Purchased: 12/21/2005
Purchase Price: $500,000
MLS# 2402778 – 2# Waldwick Ave, Waldwick NJ
List Date: 5/3/2007
List Price: $525,000
Reduced to $490,000
Sold: 10/16/2007
Sold Price: $480,000
Commission: 5%
Post Commission: $456,000
* Note: Not all properties featured in Comp Killer would be used as comps in the case of a formal appraisal. Short-sales and foreclosures, because of their pressured nature, are not typically used as comp sales for an appraisal. In typical mark-to-make believe fashion, appraisers don’t consider ‘forced’ sales to be representative of the market.
From MarketWatch:
Thornburg Mortgage swings to loss and omits dividend
Thornburg Mortgage Inc., the Santa Fe, N.M., lender focused on above-prime jumbo and super-jumbo adjustable-rate mortgages for single-family residences, swung to a third-quarter loss from a year-earlier profit and omitted its dividend on common stock. The loss was $1.08 billion, or $8.83 a share, compared with net income of $75.3 million, or 64 cents, in the year-earlier period. A survey of analysts by Thomson Financial produced a consensus estimate of a loss of $7.98 a share for the quarter. Among the factors prompting the loss, Thornburg said, was its sale of $21.9 billion of adjustable-rate-mortgage assets during the quarter at an estimated loss of more than $1.09 billion. The board expects “profitability and market conditions to improve in the fourth quarter and would consider resuming common-dividend payments at that time,” Thornburg said in a statement late on Tuesday.
From MarketWatch:
Downey Financial Swings To 3rd Quarter Loss On Lower Interest Income
Downey Financial Corp. Wednesday said it swung to a third-quarter loss of $23.4 million, or 84 cents a share, from a year-earlier profit of $55.6 million, or $1.99 a share. On average, analysts polled by Thomson Financial expected a loss of 84 cents a share. Net interest income fell 25% to $98 million from $130.2 million. The Newport Beach, Calif., bank holding company increased its credit-loss provision to $81.6 million from $9.64 million a year ago. Total assets on Sept. 30 were $14.5 billion, down 16% from $17.2 billion a year earlier. Downey said single-family loan delinquencies, as well as losses from foreclosures, “rose significantly during the third quarter”. However, Downey said it remains well positioned to continue funding loans.
From Bloomberg:
U.S. Housing Starts Probably Fell in September to a 12-Year Low
Builders in the U.S. broke ground in September on the fewest houses in 12 years, keeping the real- estate market as the Federal Reserve’s top concern, economists said before government reports today.
Housing starts fell 3.8 percent to an annual rate of 1.28 million, the least since April 1995, according to the median forecast of 79 economists surveyed by Bloomberg News. A report from the Labor Department is projected to show that prices paid by consumers rose 0.2 percent after dropping in August.
From the WSJ:
ResCap to Slash Work Force
By LINGLING WEI and JOHN D. STOLL
October 17, 2007; Page A17
Residential Capital LLC, the home-lending arm of GMAC Financial Services, will announce a reduction of about 25% in its work force today, according to people familiar with the matter, joining a parade of lenders paring operations as loan demand slows and financing for mortgages tightens.
The unit, known as ResCap, is expected to cut about 3,000 of its 12,000 employees, in addition to the 1,000 who were to be cut by the end of this month, as announced in January.
“ResCap has taken aggressive actions to date and will continue to adjust its operations to be more in line with the dramatically changed real-estate finance environment,” spokesman Stephen DuPont wrote in a release. “We are focused on turning around the business and believe ResCap will continue to be a market leader in the mortgage space for the long term.” He declined to comment further.
Like other lenders, ResCap, a former crown jewel of GMAC, has been grappling with the nation’s worst housing downturn in more than a decade.
From the WSJ:
Behind Subprime Woes,
A Cascade of Bad Bets
One Loan’s Journey
Shows Culture of Risk;
The Fall of a Fund Whiz
By CARRICK MOLLENKAMP and IAN MCDONALD
October 17, 2007; Page A1
Three years ago, Colorado truck driver Roger Rodriguez was in the market for a new mortgage loan. With radio and Internet ads trumpeting easy approvals, he picked up the phone.
That call set into motion Mr. Rodriguez’s descent into the subprime mortgage mess. Over the next several months, his adjustable-rate loan passed through many hands. These included a local Denver broker, Livingston, N.J., finance company CIT Group Inc. and a Greenwich, Conn., unit of Royal Bank of Scotland Group PLC. Eventually, a piece of Mr. Rodriguez’s loan landed in mutual funds run by a Tennessee investor named James C. Kelsoe Jr.
Little good has come to any party that touched the loan. Mr. Rodriguez, now 61 years old, has lost both his job and his home. All the middlemen, from the broker to CIT to RBS, have either shuttered their mortgage businesses or are struggling. Mr. Kelsoe, once a star mutual-fund manager, has hit a career low as defaults on subprime mortgages decreased the value of his investments.
The paper trail from Mr. Rodriguez to Mr. Kelsoe illustrates how the mortgage market meltdown scalded millions of homeowners and investors. It also foreshadows how the domino effect stands to continue.
Much of the mortgage lending of the past several years, as well as investments in mortgage-backed securities, was based on assumptions that left little room for error. As a result, even slight deviations from a perfect world — in which people act prudently, unemployment stays low, lenders keep lending and house prices rise — pose risks in the form of more defaults, foreclosures and other investment losses.
Behind the market turmoil of recent months: Lending standards were more lax than most people imagined, a fact that surfaced when house prices stalled.
The mortgage crisis is “a case study on the way that greed convinced everyone there wasn’t risk,” says Ivy Zelman, CEO of Zelman & Associates, an independent real-estate research firm.
Should house prices fall by 10% over the next two years — an outcome analysts see as entirely possible — losses stand to be staggering. Thomas Zimmerman, head of mortgage credit research at UBS in New York, estimates that in such a scenario losses due to defaults could wipe out as much as 16% of the nearly $600 billion in subprime-backed securities issued in 2006. In August, such losses were equivalent to less than 1% of the total.
Real estate: More price drops, more layoffs
“No light at the end of the tunnel in latest forecast from the Mortgage Bankers Association”
…mmmm…seems like everyone is getting on board!
http://money.cnn.com/2007/10/17/real_estate/mba_forecast/index.htm?postversion=2007101705
…
expects national median home prices to fall between 2 percent and 4 percent both this year and next. Prices will be held back by an oversupply of homes for sale, an increase in foreclosures and continued uncertainty among mortgage investors,
Duncan said that some markets will hold their own, but he singled out seven likely to be hit the hardest. They are: California, Texas, Arizona and Nevada, which drew a lot of investor speculation during the housing boom; and Ohio, Michigan and Illinois, where the economies have been hit hard by job loss.
For this year, Duncan is predicting a 22 percent drop in new home sales and a 12 percent drop in existing home sales, followed by a 10 percent drop in each next year. As home sales fall, Duncan also expects a drop of 15 percent in mortgage loan originations to $1.18 trillion this year, plus another 18 percent drop in 2008 to $1 trillion.
…
From Bloomberg:
CIT Reports Third-Quarter Loss on Home Lending Change
CIT Group Inc., the largest independent commercial finance company in the U.S., reported a third-quarter loss of $38.8 million, dragged down by costs of closing its subprime home-loan unit.
The loss of 24 cents a share compared with net income of $298.3 million, or $1.46 a share, a year earlier, the New York- based company said in a statement.
Chief Executive Officer Jeffrey Peek announced plans in July to get out of mortgage lending, which once accounted for about 10 percent of CIT’s income, and he shut the unit in August at a pretax cost of $39.6 million. Bigger-than-expected losses on subprime mortgages, made to borrowers with the weakest credit, prompted the decision, and CIT may also curb student lending.
From MarketWatch:
Mortgage applications rise 0.7%
Mortgage application volume increased a seasonally adjusted 0.7% last week, according to the Mortgage Bankers Association’s latest survey.
Applications were also 0.7% higher compared with the same week during 2006.
The volume of applications filed to refinance an existing loan was down 1.1% on a week-to-weak basis, while applications for loans to purchase homes rose a seasonally adjusted 2.1%. An adjustment was made to the figures to account for the Columbus Day holiday.
The four-week moving average for all loans was down 0.6%.
…
The average interest rate for the 30-year fixed-rate mortgage was 6.40% last week, unchanged from the previous week, while the 15-year fixed-rate mortgage averaged 6.09%, up from 6.03%.
The average rate for 1-year ARMs was 6.17%, up from 6.15%.
News from California.
http://www.ocregister.com/money/price-percent-down-1894419-last-sales
The median price of an Orange County home fell 9.5 percent from the year before, dropping to $570,000. It is the first month in 2 ½ years that the median price – or the price at the midpoint of all sales – has dropped below $600,000.
That price was down $75,000, or nearly 12 percent, from the peak price of $645,000 reached in June. In the last down cycle, the drop from the peak to bottom was 16.3 percent from July 1991 to January 1996, according to DataQuick.
Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000.
“We decided there was no sense in giving it away,” said Gorman, 52, a marine surveyor. “The real estate market will come back at some period. … (We’ll) wait it out.”
The credit shakeup resulted in a 52 percent drop in “jumbo” loans, or loans greater than $417,000, said DataQuick analyst John Karevoll. Lenders issued 496 jumbo loans in September, down from 1,024 in August.
“It’s a huge drop, and it impacts Orange County more than other counties … because a higher portion of those loans are there,” Karevoll said. “The lenders turned the spigot off for those loans.”
Hahn predicted that the current slump will last two to three more years, saying it will take that long for the number of “funny money loans,” or mortgages with low teaser rates that reset to higher payments after two to three years, to work their way through the system. As more homeowners default on rising mortgage payments, rising foreclosures will continue to hold prices down, he said.
I think we have problem on two sides. On Low end towns, subprime borrowers won’t be able to get financing and on High end towns, Jumbo loans are not getting financing. The main question is what happens to middle towns?
News from California.
http://www.ocregister.com/money/price-percent-down-1894419-last-sales
The median price of an Orange County home fell 9.5 percent from the year before, dropping to $570,000. It is the first month in 2 ½ years that the median price – or the price at the midpoint of all sales – has dropped below $600,000.
pretorius Says:
October 16th, 2007 at 10:57 pm
“Who do you think has higher median comp in New York, MBAs or CFAs? pret: deceptive question” Seemed like a straight question to me. Anyway, let’s try this one.
Who do you think has higher median comp in New York, top-25-school MBAs or CFAs?
pret: come on man….you switched the rules on me…..NYU is in the range of top-15. Also, plenty of people are not finance MBAs. If you come to NYC without a name brand MBA, then you have a piece of paper. You also act as if getting the CFA is as easy as an MBA. Problem, if you are a dumba55, you are excluded….period. Also, you are reverse engineering this one. People who have the skills and drive to succeed in NYC happen to have a CFA. Why? Because for them, what’s the difference (you know these people)…..however, for you to advise someone on the outside that you have identified the magic imprimatur of gold smacks of marketing by the CFA-Institute…..please….
My own anecdotal survey….of everyone I know from top 5 programs…virtually ZERO have the CFA…hasn’t stopped anyone to push beyond Director….
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) increased 0.3 percent in September prior to seasonal adjustment.
The September level of 203.889 (1982-84=100) was 2.8 percent higher than
in September 2006.
Wow, housing starts down big; -10.2% m/m.
CPI is up 2.8% yoy.
From MarketWatch:
U.S. Sept. housing starts down 10.2% to 1.19 mln
New construction of U.S. houses retreated for the fourth straight month in September, the Commerce Department estimated Wednesday. Starts fell 10.2% in September to a seasonally adjusted 1.19 million annualized units weaker than the 1.28 million pace expected by economists surveyed by MarketWatch. This is the lowest level of starts since March 1993. Starts of new single-family homes fell by 1.7% to 963,000 in September, while starts of large apartment units fell 34.3% to 228,000. Building permits, a leading indicator of housing construction, fell 7.3% to a seasonally adjusted annual rate of 1.23 million. This is the lowest level of permits since July 1993.
Sorry about the double post earlier.
Anyway, I was wondering among financial reporters, who was the first one to report issues about sub-prime mortgages.
Most folks on this board we knew the RE prices are in bubble territory, unaffordability had become high, and prices should come down, but at least most were unsure what would cause it to come down. Well now we know sub-prime was the issue. It would be good to know, who reported it first, why and what research went into it. At least I think, if there is one person, he/she needs to be congratulated for doing some investigative reporting.
Can anyone confirm the numbers I’m seeing for y/o/y housing starts as down 30.8% ?
“We decided there was no sense in giving it away,” said Gorman, 52, a marine surveyor. “The real estate market will come back at some period. … (We’ll) wait it out.”
This quote reminds me of Custer’s last words, “Hey, those Indians are a bunch of wimps”
tosh,
http://www.census.gov/const/newresconst.pdf
FYI – Cramer is filming outside NYSE this morning and he will have some juicy clips out today and I am sure he will blast housing just for fun.
Morning Update
7:00 – MBA Purchase Applications
The Mortgage Bankers Association releases its mortgage Weekly Mortgage Applications Survey of home buying and refinancing application activity. They rebounded for the week ending Oct. 5, after both fell in the previous week. The purchase index was 420.2, up from 411.4 in the prior period. The refi measure was 2003.2 in the week ended Oct. 5, from 1950.4.
The four-week moving average for the purchase index eased down to 425.6, from 432.6 in the latest period. The refi index climbed to 1985.5, after rising to 1953.9. The average interest rate for a 30-year fixed-rate mortgage bounced back to 6.4%, after slipping to 6.33%.
8:30 – CPI
Inflation probably ticked up in September after slipping in August. The overall price index was pulled down 0.1% by a 4.9% tumble in gasoline prices and natural gas dropped 1.3%. Gasoline prices crept up a little during the month of September. There are also signs that the weaker housing market is reducing price pressures for renters and home owners.
On a yearly basis, inflation slipped to 2% from 2.4% in July and 2.7% in June. However, the yearly pace could pick back up since prices fell during this time in 2006.
Prices outside of food and energy probably grew at a modest pace. Core inflation climbed 0.2% for a second straight month in August. Medical and education costs continue to run at an accelerated pace — up 5.6% and 5.1%, respectively at an annualized rate in the past three months.
On a yearly basis, core inflation grew 2.1% in August, from 2.2% in July and 2.7% back in February.
8:30 – Housing Starts
Housing starts are expected to keep falling in September. The annual pace of starts took another leg lower, to an annual rate of 1.33 million in August, from 1.37 million in July. The latest level was the smallest since mid-1995. From a year ago, starts are off 19.1% from 21.7% in July.
Although the pace of decline in starts is letting up, housing authorizations continue to fall at a rapid pace. Authorizations, which are a precursor to starts, fell to an annual rate of 1.31 million, from 1.39 million in July. The annual decline was 24.5% in August, a pickup from the 21.7% drop in July. The quicker pace of decline in authorizations may be a harbinger of larger drops in starts going forward
From Bloomberg:
U.S. Housing Starts Plunged to Lowest Since 1993 in September
Housing starts in the U.S. plunged more than forecast to a 14-year low in September, keeping the real- estate market the Federal Reserve’s top concern.
The 10.2 percent decrease to an annual rate of 1.191 million followed a 1.327 million rate the prior month, the Commerce Department said today in Washington. Building permits fell 7.3 percent to a 1.226 million pace.
Higher mortgage costs and stricter lending rules will further depress home sales and feed the decline in construction that threatens to stall economic growth. The Fed may cut interest rates again this year as the pall cast by housing persists into 2008, economists said.
“Builders were in full-blown capitulation mode,” Chris Low, chief economist at FTN Financial in New York, said before the report. “Lending conditions for home-equity loans are still tightening.”
The number of starts was the lowest since March 1993. The decline was led by a plunge in construction of townhouses, apartments and condominiums.
Starts were projected to fall to a 1.28 million unit pace, from an originally reported 1.331 million in August, according to the median forecast of 79 economists polled by Bloomberg News. Estimates ranged from 1.2 million to 1.35 million.
Permits, a sign of future construction, were forecast to drop to 1.285 million, according to the survey median, with projections ranging from 1.23 million to 1.32 million.
Construction of single-family homes fell 1.7 percent to a 963,000 rate, today’s report showed. Work on multifamily homes slumped 34 percent to an annual rate of 228,000.
Thanks JB. Looks like they revised the Aug starts down a bit too.
#9, “Hahn predicted that the current slump will last two to three more years,…”
Maybe longer, took 15 years for my Condo to retrace to it’s high.
but at least most were unsure what would cause it to come down. Well now we know sub-prime was the issue.
I think the media has latched onto subprime lending and has turned it into the “fall guy” for the entire residential real estate industry. And it is an easy “bad guy” to point the finger at; rife with tear-jerking stories of families loosing their homes after getting snookered into exploding mortgages and fast food workers with champagne wishes and caviar dreams borrowing millions to speculate on McMansions.
I believe subprime lending emerged out of the housing bubble. It prolonged the bubble and allowed it to reach new Bacchanalian heights that would not have been possible without subprime. As the bubble was running out of “greater fools”, subprime lending brought in a new set of buyers.
The bubble, however, was already there. We were going to see a correction anyway. Subprime lending will only serve to accelerate this correction. The subprime story helps the media simplify the story and feed it to the public in a simplified sound-byte format. It also conveniently shifts attention away from the truth; that an entire country was deluded into believing that houses were a path to permanent prosperity, that people paid too much for houses in the past two years and that home prices are coming down because they are too high and aren’t supported by the fundamentals.
Where is the NAR today….waiting for the spin. OCtober will be the same or worse. People are frozen out here. Buyers are not buying and sellers are still disillusioned about the price they will get.
Time is on the buyers side.
Chicagofinance,
If a bright NJ kid in his 20s wanted to break into the NY investment world, but didn’t have the grades or test scores to get into a top MBA school, what would you advise him to do?
Obviously my advice is go for the CFA. It has generated a lot of criticism but I haven’t seen anybody propose a better alternative.
I agree with you comments about name brand MBAs by the way.
Renting (23)
I think the media has latched onto subprime lending and has turned it into the “fall guy” for the entire residential real estate industry
I couldn’t agree more. Subprime people with bad credit and overstated income are a convenient scapegoat. It’s an easy way for the entire country to say that it’s the other guy who’s at fault. It’s actually a small minority of people who got these loans. The reality is that many people with decent credit and jobs overpaid for their houses in the last few years and now will suffer the consequences of their actions, either through foreclosure or having financial cement shoes to drag around for a long time to come. Back when housing was cheaper and more in line with incomes, it still took a lifetime to pay the house off. Many 700+ credit score people will be unnecessarily broke for a long time to come over this.
Trying to locate guys who were first to report on Subprime issue. Came across this article.
The IRE Journal, Jul/Aug 2007 by Nixon, Ron, Bajaj, Vikas
HOUSING BUST – Investigative Reporters and Editors, Inc.
The data analysis and interviews allowed us to report that the distress we were seeing in low income and minority communities could become much more widespread as the housing market cooled. With the help of our data analysis and on-the-ground reporting we were able to make that case before the current meltdown among lenders in the subprime market began in earnest at the start of the year.
Mortgage companies have become increasingly reluctant to talk to reporters, especially in light of the recent demise of several high-profile lenders, such as New Century Financial. We believe that will continue to present a challenge to reporters trying to accurately represent all sides of this story.
If the past is any indication, the subprime mortgage story is far from over. Unlike the stock market, the market for housing adjusts slowly. Foreclosure rates have only recently started rising and most experts believe that many more homeowners will express financial duress before the current crisis runs its course. More than $1 trillion in adjustable-rate mortgages are expected to reset to higher interest rates in the next year and a half
Nice article from these two reporters about their experiences in last few years on reporting this issue. I definitely remember Vikas Bajaj’s articles on NYTimes from long time ago on RE Bubble. I think these two guys were one of the first ones to start reporting this issue.
If a bright NJ kid in his 20s wanted to break into the NY investment world, but didn’t have the grades or test scores to get into a top MBA school, what would you advise him to do?
I’d suggest tracking down a rich uncle who might be able to provide an entry-level mailroom job at an investment bank. Once in the door, I’d recommend constructing an elaborate charade, posing as an upper-level, but unknown, executive. Having an affair with another upper level executive, especially one that resembles Christie Slater, would be highly recommended.
Given the changes in sexual harrasment policies since the 80s, I would strongly advise against changing in the elevator.
Shai, how about the first one to willing to defrock Der Uberbubblemeister? Who was that intrepid person who looked furtively around, and then began the unpeeling?
What was this seller thinking??
But worse yet…. who was the fool/sucker that bought this property?
Sounds like we had 2 idiots on both sides of the fence.
oh well….
SAS
pret..change your question to a bright young woman with top scores and accepted, but with no money to attend a top school.
How does your answer change?
“If a bright NJ kid in his 20s wanted to break into the NY investment world, but didn’t have the grades or test scores to get into a top MBA school, what would you advise him to do?”
your pissen in the wind kid…
you are better off watching your own money, save, get a realisitic lifestyle, and finding a new niche.
You will be very happy you did.
SAS
Pat, my answer doesn’t change. She should do the CFA. Including all fees and study materials, it costs a couple thousand dollars.
But lots of people who attend top schools don’t have any money. They can borrow $100k with few problems.
Smart kids in their 20s WITH a 4.0 and 700plus GMAT scores are a dime a dozen on wall street. Why in the world do you think so many stinking transplants take their money grubbing arses over here every year. The world is tough place. Not everyone can get into Columbia or Wharton. The world needs ditch diggers too! I say grab that shovel and a cold Miller High Life and enjoy it.
33#, pretorious, agreed. if you are not in the field and want to get to the door. this is the most cost-effective way to go. by the way, does CFA Institute require sponsorship from employer?
Agree that Media likes to always portray personal stories in order to arouse some unknown emotions. Also most articles still have stories other way around, that is sub-prime lending caused the RE bust, while in reality it is sellers greed which has increased supply.
Till date I have not seen much coverage given to two angles. One why there are so many sellers now compared to few years ago? Second during 2000 to 2005, house prices rose faster then drop in Interest rate, making it difficult for first time buyers.
Grim
#28
LOL, love that flick
Sas,
Thanks for giving a serious comment but not sure why you needed to start with a rude comment.
The steps you describe are mostly defensive. I think to live comfortably around here, you need to play good offense too. That means make $200k or more for family of 4.
Bi,
No employer sponsorship required.
I’d suggest tracking down a rich uncle who might be able to provide an entry-level mailroom job at an investment bank. Once in the door, I’d recommend constructing an elaborate charade, posing as an upper-level, but unknown, executive. Having an affair with another upper level executive, especially one that resembles Christie Slater, would be highly recommended.
Given the changes in sexual harrasment policies since the 80s, I would strongly advise against changing in the elevator.
Did you just do a a Michael J. Fox movie reference? Nice!
The Secret Of My Success
I completed my CFA level 2 in 2006 and failed Level 3 in 2007. I aced multiple choice but did miserably in essays. I am currently working in IT department of an invesment bank in wall street. I would like to get in to asset management business. Using CFA knowledge i generated around 20% return in last three years approx. I am interested in distressed securities . Thanks.
Or stupid me:
How to Succeed in Business Without Really Trying
pretorius,
Dude, where the heck did you grow up?
My question was how should i proceed to get into asset management? I currently manage half million of my own assets.
I am doing the CFA because I don’t have a name brand degree. But I’m already “in” (I snuck in through the service entrance), and have a track record working in finance. Despite the fact that it’s “only a couple thousand” to do the CFA, it would be a wasted couple thousand if you are on the outside without some other way to get on the inside track.
So, in short, it’s really bad advice to say “pursue the CFA and good things might happen”. You might hit the pick 6 too.
Requiring a top-whatever-school degree for Wall Street is like requiring 20/20 vision for fighter pilots. Do you need perfect eyesight to shoot down a plane from 50 nm with a radar guided missile? Probably not. But they have to cut down the candidate pool somehow.
This chart of the Chinese stock market looks eerily similar to Shiller’s housing chart:
http://abnormalreturns.com/2007/10/16/china-chart-surge/
pretorius,
If you think my comments are rude, I can tell you right now you will never survive Wall St.
My point is… its not a easy route, its a saturated market, and I think if you really evaulate your own talents and creaticity and can capatalize on that. You would be better off.
SAS
HEHEHE,
maybe its the same graph and they just change the text ;)
SAS
pretorius,
back in my hey day when I worked down there… we would break out into fist fights at meetings.
he he.. those days were alot of fun.
SAS
Pose as a gay man and try to use diveristy to get in the “back door” at an IB.
pretorius Says:
October 17th, 2007 at 9:18 am
Chicagofinance,
If a bright NJ kid in his 20s wanted to break into the NY investment world, but didn’t have the grades or test scores to get into a top MBA school, what would you advise him to do?
Obviously my advice is go for the CFA. It has generated a lot of criticism but I haven’t seen anybody propose a better alternative.
I agree with you comments about name brand MBAs by the way.
Once again, the housing report this morning shows real estate market is local in nature. After scanning the table row-by-row, i found the housing start in our region is actually jumping up. 45% up from August, 3% up from September 2006.
Also see bloomberg:
“The decrease in starts was led by a 28 percent drop in the Midwest. Construction fell 12 percent in the South and 10 percent in the West. Starts jumped 45 percent in the Northeast.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1t40XgWe6TY&refer=home
#23 Rent – right on the money.
2 Housing related items on TV last night:
1. Newsnight covered patrick.net.
2. Channel 4 had piece on poor families credit being used by crooked mortgage brokers to buy up houses.
Mortgage broker owned 2000 houses in the metro area! And yes, they said 2000.
Those 2000 overbids sure helped drive housing in NY, and more importantly, presumably they will now start hitting the market…..
This CFA without the MBA stuff you guys are talking about ($2000 instead of $100k, make millions on Wall Street) sounds a lot like any other get rich quick and easy scheme.
People always look for short cuts.
what is the rationale appraisors use for excluding distress sales from comps? they don’t seem to exclude multiple bid / winner’s curse sales
52#, it is not short cut: you have to commit at least 3 years of hard study. the certificate will not give you a gold key but it may put you to the door.
It is the same as master degree in financial engineering for quant job.
Actually, white straight males with so-so grades and education in their 20’s are a useless commodity on wall street.
Now my friend with a CPA and eight years big four and six years BD experience is 35 years old and is an extremely attractve, well dressed and very polished who happens to he a light skinned hispanic women just waltzed into a big job at an IB bank and beat out lots of candiates. She has four things going for her, experience, certification, nationality and being female. She had three IBs make her offers in a two month period.
Life is tough, so you better have the education, experience and certifications otherwise see ya.
bi Says:
October 17th, 2007 at 9:42 am
33#, pretorious, agreed. if you are not in the field and want to get to the door. this is the most cost-effective way to go. by the way, does CFA Institute require sponsorship from employer?
Pret,
Word of advice. If BI agrees with you then immediately run the other way.
my two cents.
“Also see bloomberg:
“The decrease in starts was led by a 28 percent drop in the Midwest. Construction fell 12 percent in the South and 10 percent in the West. Starts jumped 45 percent in the Northeast.”
It’s the builders last place to try to earn anything. They are in a race to get as many projects completed as possible in the hopes they can get some revenue to put on their balance sheets. At the end of the day they are going to likely see the same results in the Northeast as they have in the other regions: empty newly finished projects with buyers patiently waiting for price concessions.
However if adding the letters CFA to your tittle make you feel better about yourself or more respected in your current employment or you’re bored and eager for knowledge then by all means it’s definitively an inexpensive way to achieve any of the above.
However, to think that you will go from your 100K salary to 200K+ is a dream.
my two cents
Thanks to bi. After his “sell” call yesterday, I loaded up again. Across the board. I think I’ve hit upon the new Dow Theory: Don’t be Like Bi.
He is a walking version of that Seinfeld episode where George Costanza decides to act counter to every impulse he has…and ends up working for the Yankees.
The article is bad, but the comments are interesting. Topic is comparing CFA and MBA qualifications.
http://news.efinancialcareers.com/NEWS_ITEM/newsItemId-9981-startRow-1
59#, don’t be too excited. today’s market looks like a suckers rally to me
I just heard that almost all of subprime retail production employees at Chase mortgage were laid off yesterday.
Interesting debate on Education and Career.
I have always struggled as well on thinking whether Education from Brand name institute is better or doing from State school is enough. The main constraint for me is Cost and Family. We have 2 small daughters and can’t afford to spend huge sums on top 5, while still have to buy a decent house in NJ.
Well, instead of looking at marketing hype from top 5 (and their past students), I tried to do some real analysis. Due to my work, I have data on fortune 500 companies in a database. For these companies I have details on their Board members and their education profile. Ideally, I would have liked data on officers, but even BOD is pretty successful group. So, simple analysis spitted out results, which are available here,
http://www.geocities.com/skgala/edu.html
I guess one should look at its own desires and see which school make sense. Looking at data, I guess though top 5 schools do come at top for some titles, but they don’t lead by huge margin as such. For e.g. Among CEO’s COLUMBIA, PRINCETON and UNIV OF KANSAS are at same count. NYU, STANFORD and WHARTON are not that high up compared to them as well.
Again take this report with grain of salt. I am just trying to confirm the general thought in society about top 5 institutes. Also this is not Wall Street specific, I guess I like to be on Main street more then on the Wall Street.
#24 mr potter Where is the NAR today?
NAR’s emotional arguments don’t work anymore. No matter how NAR and it’s minions like bi and Reechard try to remove the financial part of buying a house and try to get people to make it a purely emotional decision, end of the day, it’s one of the biggest financial decisions made by most house holds.
The emotional happiness of buying an overpriced house in a declining market will be very short lived and soon replaced by financial misery.
bi (61)-
Thanks. Which individual stocks do you find troubling?
57-
The NE region volume data and the other regions is a fraction. That’s why percentage jumps may look dramatic, but are not that relevant.
JM
Clot you’re not planning to confine bi to a black box are you? It wouldn’t be humane.
23 renting
26 x-under
I’ll add to the chorus of agreement – I think your analysis is spot on.
pretorius Says:
October 17th, 2007 at 9:18 am
Chicagofinance,
If a bright NJ kid in his 20s wanted to break into the NY investment world, but didn’t have the grades or test scores to get into a top MBA school, what would you advise him to do?
pret: I would advise him to lament his lack of vision. Then polish up his sales skills. He can get into finance, but he is never going to cut it in an analytical role. Pick a product and become a wholesaler.
Why the harsh reality? Because for every “wannabe”, there are ten REAL “wannabes” that have busted their behinds from the point they were in-utero. Mid-20’s is kind of late for an epiphany….you can erase that with a top 5 MBA…..or more importantly…a family pedigree……do you understand the playing field here? This isn’t America…this is Wall Street.
65#, dow erased almost all gains at open. energy stocks are weak despite oil still traded at record high: OIH down 1%
If the word “family” is included in your future career planning…….don’t waste your time.
#28 grim
is that the secret of your success?
I used to work in that building.
Rob (67)-
“Clot you’re not planning to confine bi to a black box are you? It wouldn’t be humane.”
To him, it wouldn’t be. To us, it would.
tHE SHIP IS SINKING BAIL BAIL BAIL..JUMP!
versus not and
JM
63#, interesting data. I did not see stats for board members?
very simple solution for housing GLUT …reduce asking price and buyers will come. Sellers need to realize market will be worse next few years. Prices’s need to drop another 25-30%.
My previous employer had a management trainee program with NYU. I had to deal with a lot of these people, and to be quite honest, they were a bunch of idiots. About 60% of them had prior corporate experience, so I would expect some practical knowledge….nothing. They were absolutely useless, of course for the exception of a few.
I don’t understand the weight put on these grads for having such a degree. You can test well, you can read your a$$ off and memorize information, but if you can’t spit out unique ideas and form your own conclusions you may as well flip burgers. I came from a small, little known school that placed emphasis on understanding what you’ve learned, not just “knowing it”. I laugh when people tout their “top tier” degrees…they can shove ’em.
EnCap Project
http://www.bloomberg.com/apps/news?pid=20601103&sid=afzekTBNc5oY&refer=us
BOOOOYAAAAH!!!
#50: Good point Bi. Thanks for having the guts to continuing making intelligent points with hard data and ingnoring the dumb personal insults that you get on this board. Your postings are appreciated.
With respect to finance jobs with the bulge brackets, your background and ivy pedigree is now more important than ever. Rutgers, Fordham, etc. will not cut it…
The problem with your analysis is that Fordham and St. Johns and schools like that were schools in the 1950’s to 1970’s that Wall Street recruited from and C-level and Board people are usually older people in their 50’s to 70’s.
The long tenured CEO of Merrill, prior to our friend Stanley taking the helm, had his MBA from St. John’s. He had a strict policy of hiring from top MBA programs and Merrill had an unusual policy that you could be their CEO with a St John’s MBA but you couldn’t land a job as a junior analyst or trader with a St John’s MBA as Merrill would not recruit from their own CEO’s school. Times have changed.
Good point, Imus? What is the point? Is the point that homebuilders think the northeast is immune and have increased their new home starts? What effect do you think that will have on the RE market?
#71..If the word “family” is included in your future career planning…….don’t waste your time.
——————————————
totally…my uncle was head of research at a ‘major’ Wall Street investment firm….retired…..headed up another…..I never asked for a way in to any of the big banks as a trader….instead, I went my own way, sometimes I wonder if maybe I should have….but I feel fine.
#81 john
you’re right, and one of the factors that goes into this is that there are simply many many more people going to college and beyond than there were in 1960. There is more competition now. Back in the day, having a degree at all set you apart. Now, being set apart depends entirely on the quality of that degree, because EVERYONE HAS ONE.
I think I can shed some light on the value of a CFA. I graduated from one of the Military Academies with a History Degree and spent 8 years overseas. My last job was running the military to military international relations in Asia for the Marine Corps. Interesting work that will probably be the best job of my life. I got out of the military in late 2005. I want a big family so I need to make money and decided that Finance was the best way to do it. I got an internship through a friend of a friend in a fairly large, private asset management firm – probably through my Undergrad credentials because I did not know the time value of money at this point. I filed and stapled for 3 months. When a spot opened up on the fixed income desk, I got it and secured a 60K job trading bonds. I took and passed Level 1 in December 2005. I passed Level 2 in June 2006. After I took Level 2, a successful asset manager who is a CFA himself started asking me to do equity research. I did it at night and he liked my work. He also noticed I could write (Thank you History degree) and he had me start writing the quarterly letters. The asset manager’s book has grown to a size that would equal a small firms total AUM. He needs help and it now looks like I’ll be working directly for him come 2007, specifically doing research, balancing the portfolios, and starting my own book. I’m expecting my pay to start to rise next year. I take the Series 65 in November. So….CFA is not the only determinant. There are elements of luck, work ethic, and talent that enter into the equation. I would have never gotten here without the CFA program, but the CFA program alone would not have gotten me here either. It’s a slog, but you have to persevere. MBA was really not in the cards due to cost and my need to quickly program my brain for actual asset management work. Hope this helps.
Lol -I just want to see what NJ will be in 10 years – as people with “normal – non Wall Street” jobs getting pushed out by high cost of living – are we going to have 6,000,000 people in NJ working at wall street???
And Also – we have discussed CFA and CPA, MBA and other financial choices in details couple of times before – lets get back to Housing???
#82: His point was that markets are local in nature. And per Bloomberg, starts are up in the NE. Just a simple point. Who the hell said anything about the NE being “immune”? Relax…
njpatient Says:
October 17th, 2007 at 11:26 am
#81 john
you’re right, and one of the factors that goes into this is that there are simply many many more people going to college and beyond than there were in 1960. There is more competition now. Back in the day, having a degree at all set you apart. Now, being set apart depends entirely on the quality of that degree, because EVERYONE HAS ONE.
I coudn’t have said it better myself.
Is there any way I can get my hands on the CFA curriculum from previous years? This way it’ll give me a better understanding of whether or not I should divorce my wife and sell my soul to the devil as ChiFi recommends. (just kidding!). Seriously, is this stuff available?
ChiFi #69
Great advice. Wall Street is protected by neo elite and an average kid from NJ in his 20’s WILL NOT “get in”
Pret,
you can make more money then a front office guy just buy selling you ass off. While he will always look down on you as he get’s into his S550 you can look at your real view mirror and laugh when you pass him on your Ferrari.
While he’s working until he’s 60+ you can retire at 40.
Get your rolodex filled and then holla at an IB see how they welcome you with an undergrad only. then hire kids with fresh MBA’s(knowledge and hunger) and laugh on your way to the bank.
Is there any way I can get my hands on the CFA curriculum from previous years? This way it’ll give me a better understanding of whether or not I should divorce my wife and sell my soul to the devil as ChiFi recommends. (just kidding!). Seriously, is this stuff available?
once you sign up they give you actual exams from prior years
85#, excellent! this example is better than any stats or theoretical arugments on cfa v.s. mba.
Crude oil futures touch new record at $89 a barrel
re (93)-
bi receiving margin call…
BC BOB once again THANK YOU my friend.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/16/bcnchina116.xml
it’s gonna be ugly. You can say Good buy to US as an economic superpower in the next couple of years when the dollar gets dumped by the world and finds itself aquivalent to the Yen.
I never thought that I’d benefit from this board/blog as much as I have. It definitively openned up my mind and made me look at the world a lot different.
Kudos to JB.
If anyone still hollds US dollars can you please tell me WHY?
my two cents.
“Mr. Kelsoe, once a star mutual-fund manager,”
Going back to posting #5 from WSJ, this is the same portfolio manager our goof friend Richard has been mentioning as part of his investment picks (aka RSF). The only guy to lose 20% in an open-ended bond fund this year…. nice.
So there is no way of obtaining any material prior to registration? I’m not trying to get something for nothing, I just want to see if it’s a fit for me. Obviously with being an accountant in my “previous life” I have an idea of what will be asked, but I thought having something a bit more specific might help.
dream (96)-
I went to school in Memphis with that guy. What a douche. I wouldn’t give him a nickel to invest.
Morgan Stanley Lay-offs:
http://www.alleyinsider.com/2007/10/source-morgan-s.html
From MarketWatch:
Morgan Stanley lays off about 300 traders, bankers
Morgan Stanley said it laid off about 300 bankers in its credit trading, structured products and leveraged lending areas as a result of the freeze in activity in global credit markets.
The layoffs range from managing directors to associates, including several senior people who traded and sold mortgage-backed securities and worked on arranging loans for private-equity firms’ leveraged buyouts.
The bulk of the layoffs are occurring in the U.S., though about 70 to 80 people are losing jobs in Europe and a handful in Asia, people close to the bank said.
“We believe that for now we are done with the rightsizing, but we will continue to monitor market conditions,” Morgan Stanley spokeswoman Jeanmarie McFadden said. The layoffs won’t have a material effect on the company’s earnings, she said.
In a statement, Morgan Stanley said it is reallocating resources to regions outside U.S. where it sees “the best potential for growth.”
Imus Says:
October 17th, 2007 at 11:33 am
#82: His point was that markets are local in nature. And per Bloomberg, starts are up in the NE. Just a simple point. Who the hell said anything about the NE being “immune”? Relax…
Actually bi has. Repeatedly. I understood that starts are up in the NE – that was what bi quoted. I am asking why he thinks that’s significant. If you don’t know why he thinks that’s significant, just say so. No harm in not knowing.
Is it 300 layoffs + reallocation of resources?
No schadenfreude here. I wish the best to those folks at MS, and anyone else who gets laid off…
#57 HEHEHE
The builders probably overpaid much more for the land in the NE and have to dump these ASAP to get them off their balance sheet.
“Imus Says:
October 17th, 2007 at 11:21 am
#50: Good point Bi. Thanks for having the guts to continuing making intelligent points with hard data and ingnoring the dumb personal insults that you get on this board. Your postings are appreciated.”
You mean like this?
“bi Says:
October 16th, 2007 at 1:18 pm
while i called oil peak many times, today is the day i am taking action”
OIL SPIKES TO RECORD
http://money.cnn.com/2007/10/17/markets/oil_eia/index.htm?postversion=2007101711
#101: Again, I thought his point (local market; starts up in NE) and stat was interesting. Simple as that. Why do you care?
As as aside, you are alot more credible when you are able to acknowledge another person’s stats, arguments, etc. that do not necessarily support your position, instead of just making personal attacks.
For example, even though I don’t agree with bi’s views on oil, I appreciate his position…it is interesting (especially since I have a great deal of funds in an oil/natural resource hedge).
It is more fun, relaxing and educational to be able to understand another person’s viewpoint, and not just be automatially adversarial with someone you do not totally agree with. Makes for a more pleasant life and you actually may learn something. Just my 2 cents..I have exceeded my posting quota for the week! Cheers.
p.s. Sorry for typos.
GO oil GO, I love it.
I thought everyone who lived in good town in Jersey worked on Wall Street?
2002 – 100K was a good salary
2004 – 200K was a good salary
2006 – 250K was a good salary
2007 – 300K was a good salary
2012 – 500K will be a good salary
Hey if we want RE to keep shooting to the moon we need salaries to shoot to the moon. All we got now is Wall Street propping up the local economy. Even the garage men at least can get a semi-hard on looking at their 401K statements in spite of their cape falling in value. If we loose Wall Street look out below.
94#, 105#, why the hell my order tickets are always sticked with a margin call notice? my little DUG is actually up 1.5% from yesterday.
I hope we can go back to housing. we discuss oil is because it is associated with housing cost: commute, heating and etc.
This morning’s spike of oil price is due to turkey parliaments decision. this is the last nail.
Hey Grim,
Is Imus the same person as bi?
Sorta like Joanne Woodward in Three Faces of Eve?
Retirees must be feeling good – Social Security payouts are increasing 2.3% for 2008 to adjust for cost-of-living increase.
2.3% increase? What a farce for retirees…..
CFA Topics….go here and look under BY LEVEL on the right
http://www.cfainstitute.org/memresources/education/reading/index.html
review LOS (learning outcome statements)
#110 clot
No, Imus and bi are different people. Bi is first generation, probably from Russia or otherwise eastern Europe, and Imus is definitely not.
njpatient Says:
October 17th, 2007 at 1:08 pm
#110 clot
No, Imus and bi are different people. Bi is first generation, probably from Russia or otherwise eastern Europe, and Imus is definitely not.
HOw do you know that? I am just wondering??
KGB ties???
Getting back to RE or at least the socioeconomic factors that influence it. Check out this relevant (at least I think so) article from Newsweek on Gen Y. I am a later Gen Xer but I definitely see what they are talking about in this article with a lot of the recent hires we have had here. This will definitely influence the RE market, I think it actually has been for a few years now. What the future holds is anyones guess but the fact that these guys and gals are not “getting with the program” will change the dynamics a bit
http://www.alleyinsider.com/2007/10/source-morgan-s.html
#106 Imus
“It is more fun, relaxing and educational to be able to understand another person’s viewpoint, and not just be automatially adversarial with someone you do not totally agree with.”
Those are nice sentiments and all, but you only mean them in support of the RE bulls like bi and Richard. Last time you got in an argument with 3B and Bloodbath you … eh, why put words in your mouth; here’s your own quote from 9/11: “Chill out, little man. Maybe you and Bloodbath should RENT a nice little vacation townhouse together in Fire Island…”
Yeah – you’re a real gentleman.
As to bi’s point – it’s interesting in a vacuum? You are too easily interested.
Bi’s point is that NE RE is doing well because housing starts are up. If they’d been down instead of up, he would instead have explained that NE RE is doing well because inventory will fall as a consequence.
You find bi’s “points” “interesting” because your BS detector is broken or because you have the same agenda he does.
WASHINGTON (AP) – Come January, Social Security benefits for nearly 50 million Americans are going up 2.3 percent, the smallest increase in four years. It will mean an extra $24 per month in the average check, the government announced Wednesday.
The cost of living adjustment means that the monthly benefit for the typical retired worker in 2008 will go from $1,055 currently to $1,079 next year.
The adjustment, announced by the Social Security Administration, will go to more than 54 million Americans. Nearly 50 million receive Social Security benefits and the rest get Supplemental Security Income payments aimed at helping the poor.
The 2.3 percent increase is the smallest since a 2.1 percent rise in 2004. It compares to an increase of 3.3 percent last year and a jump of 4.1 percent in 2006, which had been the biggest advance in 15 years.
woops, wrong article. Sorry.
Here it is
http://www.newsweek.com/id/52229
116 Mike
interesting, particularly this bit: “Most of the body count is reportedly in the NY offices.”
“woops, wrong article. Sorry.”
Funny – I was trying to find the bit about Gen Y!
“HOw do you know that? I am just wondering??
KGB ties???”
lol – no – just a bit of the same background as Henry Higgins.
I’m of two minds on the Gen Y subject. On one hand, I have met a large number of flakes from that age group (only slightly younger than me, but I do believe there was a generational shift in there). On the other, I understand to a degree why so many of them continue to rely on their parents. The cost of living has vastly outpaced wages in recent years and many of these kids come out of school with crushing debt that prior generations did not experience. I really doubt that many of them actually want to live with their parents
Bi #19
94#, 105#, why the hell my order tickets are always sticked with a margin call notice? my little DUG is actually up 1.5% from yesterday.
I hope we can go back to housing. we discuss oil is because it is associated with housing cost: commute, heating and etc.
This morning’s spike of oil price is due to turkey parliaments decision. this is the last nail.
Bi:
How about a friendly wager:) I say that oil will break $90 before Xmas, you say that it will stay under 88. A gentleman’s wager then?
bi is from kazhakstan. like me =)
124#, since it is alreay close to $88, it may break $90 due to sudden events in next few months but i would say it cannot stay above $90 for more than 5 days by year end.
pretty blatant call-out re: the SIV bailout fund (from the WSJ):
*******
“Rick Waddell, the new chief executive of Northern Trust Corp. in Chicago, said in an interview yesterday his company has no interest in participating in the superfund as lender or investor, particularly since it has no exposure to the kind of investment vehicles that hold the mortgage securities in question.
“Mr. Waddell also described the creation of the fund as an aid to Citigroup, which has the greatest exposure of any bank to such structured investment vehicles. “It really is J.P. Morgan and Bank of America helping out Citibank,” he said.
“Danielle Romero-Apsilos, called the characterization “nonsense.” She added in a statement, “This is not a bailout of any kind. It is an optional source of liquidity to support this segment of the market.”
Imus. I second your opinion. Bi is the best investment adviser for YOU.
Imus. Get a room !!. I don’t need to see your relationships played out on this board !!
#117: I am glad you 2 kids are happy :)
Agenda? Like linking my sign name to a blog on which I sell ad space? No, I do not have an agenda. You?
#17 # Mike NJ Says:
October 17th, 2007 at 8:35 am
“We decided there was no sense in giving it away,” said Gorman, 52, a marine surveyor. “The real estate market will come back at some period. … (We’ll) wait it out.”
This quote reminds me of Custer’s last words, “Hey, those Indians are a bunch of wimps”
This as well as subprime being held up as the scapegoat for the current mess is why bubble cycles such as housing/internet will continue to happen.
This bubble happened out of greed. Greenspan is a primary culprit in that he opened the door. he dropped interest rates low enough and long enough that the average joe was able to borrow money at high risk while really only paying for low risk. subprime was indeed a factor, but greed and ignorance were the primary drivers.
Its funny, if you look at how the housing bubble has developed you see that it was driven by all7 of the deadly sins. ( I am not religious, just thought it was an interesting observation)
The Seven Deadly Sins:
1. Luxuria (extravagance, lust) 2. Gula (gluttony)
3. Avaritia (greed)
4. Acedia (sloth)
5. Ira (wrath, more commonly anger)
6. Invidia (envy)
7. Superbia (pride)
1. you have to have the new car and the 500′ plasma just like the neighbors…
2. why drive an accord when you can drive an escalade 50 miles to work every day?
3. My house is worth 1.5 million with is 1200 SF of1950’s style, no updates, and on 1/10th of an acre next to 78. and no i am not GIVING IT AWAY FOR 900,000 even though i paid 300,000 for it in 2002
4. What you mean that i have to actually read the 50 page, $700,000 mortgage contract?
5. I WILL NOT JUST GIVE MY HOUSE AWAY (and a house is worth whatever someone is willing to pay for it but only if that makes me money)
6. The Jones’s next door flipped their house, why cant i flip mine???
7. I have a 1200 SF 1950’s cape that I paid $600,000 for and 2 new BMW’s in the drive paid for with HELOC’s. Besides this in NJ, prices never go down because we are near NY city
this is indeed a suckers rally. this market is more like a circus now. dow from +100 to negative 130. nasdaq also joined the party leaving yahoo and intel alone.
10 year rally crying for another rate cut on oct. 30th…
bi Says:
October 17th, 2007 at 10:26 am
59#, don’t be too excited. today’s market looks like a suckers rally to me
Blame the Gen Yers at Morgan Stanley I always say. :)
I just emailed my buddy over there in IB and he says the last two days have been chop city. He is still OK thankfully.
Bi # 126,
i would say it cannot stay above $90 for more than 5 days by year end.
I will wager against that. i say that oil breaks $90for greater then 5 days before 2008.
Not trying to be contrary, just enjoy a little wager every so often :)
He mention what type of severance MS is giving?
WHY IS THIS NOT THE HEADLINE FOR TODAY !!!
NORTHEAST HOUSINGS STARTS UP 45%
Despite sales way down, prices way down, inventory way up – THES A$$HOLE$ ARE STILL BUILDING LIKE MAD
He mention what type of severance MS is giving?
A boot.
136#,
i would think most construction start in NE happened in metropolitan areas such as NYC, Boston and DC. You don’t see much new development in family oriented neighborhood in new jersey since most townships in nnj/cnj do want to bring in more kids to their school systems. most developments in our area are either condos (for nyc commuters with/without pre-school kids) or age restricted.
nnj/cnj do NOT want
#138
I agree– there are a ton of new condos still going up in NYC. I bet this accounts for much of the gain
#135
He did not. I would guess this late in the year that they would give you your 2007 bonus plus the usual 2-3 weeks a year.
From the New York Beige Book
Housing markets continue to be mixed, as in the last report. New Jersey homebuilders report that they have reduced new construction activity and have all but ceased seeking approvals for new development. Both builders and sellers of existing homes are reported to have become more negotiable on selling prices, and this has boosted sales activity somewhat. Selling prices for new homes in northern New Jersey are estimated to be down roughly 10 to 15 percent from a year earlier, on average.
In Northern NJ? Really? Isn’t the Pyrite Coast in NNJ?
Later tonight,Washington Mutual and Sovereign Bancorp will be posting earnings results after the bell.
More fun stuff, I bet they will get nailed. When you run with the bulls (GS and JPM) you get the horn.
When I got my MBA from a second tier school people discouraged me from getting an asset management/wall st. kind of job, it was like – OH THEY DON’T HIRE DUMMIES FROM YOUR STINKEY SCHOOL, you moron. Don’t believe it. You can start out at some non-premier company, build your skills, get a CFA and move on. I did, and I have a really good analyst job that I enjoy. Less than $200K, but not all that much less.
It would help to be in a hot area, and distressed investing is going to be huge – give it 6 months or so. Economic conditions dictate that this will happen. There will be so many work-out types of situations that loads of interested parties will be clammoring to hire people.
If you started the CFA program you can join the NYSSA and CFA Institute. Get on some committies, I think the NYSSA may have one that deals with distressed investing, or you can join the alternative investing committee. Don’t get discouraged, people can be so mean, and they don’t really know what they are talking about.
http://www.breitbart.com/article.php?id=upiUPI-20071017-141537-9272&show_article=1
Poll: Half of New Jerseyans want out
Oct 17 02:21 PM US/Eastern
TRENTON, N.J., Oct. 17 (UPI) — About half of New Jersey residents wish they were living somewhere else, with most citing high living costs as the reason, a newspaper poll found.
Just over half of those who said they want to move expect to follow through on it, Gannet News Service reported.
Frederick Huffenus, a retired police officer, said he plans to move to North Carolina as soon as he gets a heart transplant. He has one son already there and hopes his two children still in New Jersey will also make the move.
“I love New Jersey,” Huffenus said. “New Jersey has everything I want. … But I want that peace of mind. You’re penalized for living here all your life, you work hard and save all your life, and then you’re taxed.”
A Rutgers University study released last week found a sharp uptick last year in out-migration.
Fifteen percent of those polled picked Florida as their destination, while 14 percent would like to go to North Carolina. A total of 21 percent would like to make a short move to nearby Pennsylvania, Delaware or Maryland.
The University of Monmouth Polling Institute surveyed 801 adult New Jerseyans. The margin of error is 3.5 percent.
I agree VMC. There are a variety of paths to a successful career in investments.
I ignore people who state that the only way to get there is Ivy League undergrad or top-whatever MBA or CFA.
pre [147],
I agree. Sharpen your elbows and get into the trading pits. Then take that knowledge upstairs and sell your #ss off.
“Imus Says:
October 17th, 2007 at 1:50 pm
#117: I am glad you 2 kids are happy :)
Agenda? Like linking my sign name to a blog on which I sell ad space? No, I do not have an agenda. You?”
Who’s “you 2 kids”?? That was Comrade 3B and Bloodbath that you attacked that day. Does calling them gay make you feel manly?
I’ve never linked my sign name before, but I thought it would be instructive for you and bi to read the oildrum blog a bit. You think that’s my blog?? Bwa ha ha ha ha!
Go back to posting about how an upturn in the RE market is right around the corner because of all of the “pent up demand” that exists due to “four people” you know who want to buy. And feel free to make bigoted remarks about anyone who disagrees with you.
“I ignore people who state that the only way to get there is Ivy League undergrad or top-whatever MBA or CFA.”
pre – I don’t think anyone here would disagree with that sentiment. There’s no substitute for working your ass off, and plenty of geniuses I’ve met have flamed out in no time flat.
I think the point chifi and others were trying to make is that it is misleading to say that a CFA is the road to riches while making comparisons to an MBA (and by the way, I have neither, so I don’t have a dog in the fight).
A top 10 MBA isn’t easy to get. The CFA isn’t easy to pass. Neither, standing alone, will make you rich. Both are damn useful, and absent the proverbial rich uncle, hard work is as important as either.
VMC (145)-
“It would help to be in a hot area, and distressed investing is going to be huge – give it 6 months or so. Economic conditions dictate that this will happen. There will be so many work-out types of situations that loads of interested parties will be clammoring to hire people.”
I don’t think it’s gonna take 6 months…
#138 bi
anecdotally, that’s what I’ve been observing as well
off to the shower.
From S&P:
Standard & Poor’s Ratings Services Reviews Ratings on Certain U.S. Residential Mortgage-Backed Securities Issued in 2007
Standard & Poor’s Ratings Services announced today that it had downgraded 1713 classes of U.S. residential mortgage-backed securities (RMBS) backed by first-lien subprimemortgage loans, first-lien Alternative-A (Alt-A) mortgage loans, and closed-end second-lien mortgage loans issued from January 1, 2007, through June 30, 2007. The downgraded securities had an original par value of $23.35 billion, which represents 6.28% of the $371.9 billion U.S. RMBS backed by these three types of collateral and rated by S&P during this period. This also represents 4.71% of the $495 billion original par value of all U.S. RMBS rated during this period. S&P also affirmed its ratings on securities representing $245.1 billion original par value of U.S. RMBS backed by these three types of collateral.
test
“I would guess this late in the year that they would give you your 2007 bonus plus the usual 2-3 weeks a year.”
I’d be very surprised if they gave them the 2007 bonus. Pro rata conceivably, but I’d be surprised indeed.
http://www.itulip.com/forums/showthread.php?p=17101#post17101
Subprime reminds me of enron
Subprime reminds me of enron
Lendron
The Latte Era Grinds Down
Average Americans were living like the Riches, thanks to easy credit and the real-estate bubble. Now they’re trading down instead of trading up.
http://www.newsweek.com/id/43345
#149: Wow, you are all over the place. I sort of feel sorry for you. But hey, I am all for free speech and voicing your opinion. So have fun. No harm intended. (And I look forward to you quoting my response, and reeling off more insults).
p.s. I tipped the board off about those MS cuts a couple weeks ago. Those will not be the only ones…
I doubt anyone laid off this time of year is going to get a bonus unless it is in a contract. Labor Laws require large employers to give at least 60 days notice of a pending layoff and large BDs adn Banks have standard severance policies to avoid being hit by discrimination claims. They like to can you in October cause they can get you off the books by year end and can skip your bonus. Plus if they replace you in January the new guy won’t get a bonus and most likely no-sign bonus on cause they will tell him to wait till after he gets his bonus to start. Mack the Knife is no fool at MS, he can’t let Mr. Dimon beat him to the cost cutting title.
Plus what is the point of giving away cash to ex-employees in a lean year, save that dead woods bonus to put in earning or give to a performer to avoid flight risk.
“Imus Says:
October 17th, 2007 at 3:23 pm
#149: Wow, you are all over the place. I sort of feel sorry for you. But hey, I am all for free speech and voicing your opinion. So have fun. No harm intended. (And I look forward to you quoting my response, and reeling off more insults).”
How is it all over the place to point out that you complain about insults while doling out the bigoted comments? Hypocrisy is a simple concept.
“John Says:
October 17th, 2007 at 3:24 pm
I doubt anyone laid off this time of year is going to get a bonus unless it is in a contract. ”
yup. You’d better have an employment agreement that says you’ll get a pro-rata bonus based on target, or you’re getting nothing. And virtually NONE of these folks getting the can will be holding such a piece of paper.
From Bloomberg:
S&P Cuts $23.4 Billion of 2007 Subprime, Alt-A Debt
Standard & Poor’s lowered ratings on $23.4 billion of subprime and Alternative-A mortgage securities that were created as recently as June.
The cut covers 1,713 classes of bonds sold in the first half of 2007, the New York-based ratings company said today in a statement. Some debt with the highest AAA rankings were reduced, S&P said.
S&P’s action, in the same year as the securities were created, is its swiftest mass downgrade of mortgage bonds. The cuts follow criticism that the ratings companies gave excessively high assessments of bonds, even as evidence mounted that defaults on subprime loans were rising. Concerns that the housing crisis may deepen escalated this week after Federal Reserve Chairman Ben S. Bernanke said the slump may last through next year.
“Standard & Poor’s expects that conditions in the U.S. housing market, especially in the subprime sector, will continue to decline before they improve, with home prices remaining under stress,” S&P analysts led by Scott Mason, Brian Grow and Becky Cao said in the statement.
Is a CFA the new North Carolina on this site?
Is a CFA the new North Carolina on this site?
Seems that way
$300 jeans—>North Carolina—>CFA
I haven’t seen a post by 3b in a while. Does anyone know what happened to 3b?
gary – I was wondering the same thing.
Booyah finally put in a brief appearance earlier today, but I can’t remember the last time 3b was around.
146-
Frederick Huffenus, a retired police officer, said he plans to move to North Carolina as soon as he gets a heart transplant. He has one son already there and hopes his two children still in New Jersey will also make the move.
“I love New Jersey,” Huffenus said. “New Jersey has everything I want. … But I want that peace of mind. You’re penalized for living here all your life, you work hard and save all your life, and then you’re taxed.”
I love stories like these. Ask Fred why the state is going bankrupt. Just don’t forget to forward those pension checks…
“njpatient Says:
October 17th, 2007 at 3:37 pm
How is it all over the place to point out that you complain about insults while doling out the bigoted comments? Hypocrisy is a simple concept.”
Huh? Sort of weak. You can do better. By the way, did I mention that starts are up in the NE?
maybe 3b bought a house in Bergen County.
WaMu’s 3Q Profit Shrinks 72 Percent
Washington Mutual’s 3rd-Quarter Profit Shrinks 72 Percent on Bad Mortgage Debt
SEATTLE (AP) — Washington Mutual Inc. said Wednesday its profit shrank 72 percent in the third quarter, as sagging home prices made it harder for borrowers to pay their bills and hurt the value of the bank’s portfolio of mortgage loans.
Washington Mutual reported third-quarter income of $210 million, or 23 cents per share, compared with profit of $748 million, or 77 cents per share, in the third quarter of 2006.
Analysts polled by Thomson Financial forecast a profit of 27 cents per share.
Sovereign 3Q Earnings Fall 68 Percent
Sovereign’s 3rd-Qr Net Income Falls 68 Percent As the Bank Ramped Up Loan-Loss Provisions
PHILADELPHIA (AP) — Regional bank Sovereign Bancorp Inc. said Wednesday its third-quarter earnings fell 68 percent hurt by an increase in loan-loss provisions resulting from problems in its nonprime home equity portfolio and indirect auto lending business.
Third-quarter earnings dropped to $58.2 million, or 11 cents per share, from $184 million, or 37 cents per share, during year-ago quarter
.
Analysts polled by Thomson Financial, on average, forecast earnings of 14 cents per share for the quarter.
I’m looking for a place for my parents in NYC and even with all the condo’s going up, I’m not seeing any price declines, what gives?
Imus – you’ve rendered your presence on this board meaningless.
ADA,
“I’m not seeing any price declines, what gives?”
NYC condo buyers possess a combination of high and growing incomes, high and growing net worths, and family wealth on a scale that is probably unprecedented in world history.
NYC condos are affordable to the people who are buying them.
Washington Mutual CEO sees no end to housing slump
NEW YORK, Oct 17 (Reuters) – Washington Mutual Inc Chief Executive Kerry Killinger said on Wednesday he sees no end to the U.S. housing slump and that the largest U.S. savings and loan expects nonperforming assets and charge-offs to increase in the fourth quarter.
“We were going through an orderly correction in the housing market until the middle of the year, when there was a significant falloff,” Killinger said in an interview. “That has continued in the fourth quarter, accelerated by the lack of liquidity in the capital markets.
“We are not making projections as to when the market will stabilize,” he added. “At this point, we have not seen signs of stabilization.”
Killinger expects the thrift to set aside larger amounts for bad loans than amounts it writes off for the foreseeable future.
Always nice to see a crooked NJ home developer go to the prison once in a while.
We spend too much time hyperventilating about corrupt NJ politicians and real estate developers. It is important not to forget to give credit to the government folks who work to put them behind bars.
http://www.nj.com/news/index.ssf/2007/10/developer_gets_2year_prison_te.html
I don’t agree with bi often but I believe oil right now is puffed up with asset money trying to find a home. I don’t think somewhere in the 60s is impossible, but 40? forget it.
breaking news from WSJ
The SEC has opened an informal investigation into stock sales by Countrywide Financial’s CEO. Full article coming soon.
VMC Says:
October 17th, 2007 at 2:44 pm
When I got my MBA from a second tier school people discouraged me from getting an asset management/wall st. kind of job, it was like – OH THEY DON’T HIRE DUMMIES FROM YOUR STINKEY SCHOOL, you moron. Don’t believe it. You can start out at some non-premier company, build your skills, get a CFA and move on.
VMC: You have a differentiating characteristic – what is it? How did you spin it? How do you interview? Do you know anyone in the industry? Did anyone help you? Where did you live while you were making nothing?
You have a nice “feel good” stroy, and I want to make sure it is a story we should feel good about……..share please….
Chicago….Spent 12 years in business development….during the gold rush beat out candidates from big business schools…..top tier schools. Why? Because in the real world the school does not ‘make’ the candidate. In fact anyone that has ever worked with in the corporate or dynamic start-up can tell you that some of these people are deadweight and that the whole myth of these institutions is based on a reputation that is not exactly valid 100% or even 50% of the time. George W Bush has an MBA from where??????
There are tremendously capable people from all places and backgrounds that handle clients and think in more creative ways than the typical ivy leaguer. Believe it.
P.S….Here is Bush’s background:
http://www.whitehouse.org/administration/georgew.asp
Oh yeah…it’s 5:45…all of the movers and shaker are leaving their cubes.
#182 – he’s the CEO Prez, dontcha know?
Ran the country just like he ran Harken Energy. And Arbusto.
Exactly! My point is that being myopic costs businesses (remember andersen consulting) big time! Smart firms hire people….not resumes. Ron Paul 2008!
SX:
You are utterly missing my point.
On top of that, I wish I could personally kick the $hit out of everyone who has ever discriminated against me in the myopic way you profile.
To repeat, I am looking at the destination and telling you what it takes to get there. I am stating facts. I am not here to make value judgements. I am not here to make people feel inferior or feel as if they are being ridiculed. Cold, hard, objective commentary. Remember…..just because people on the street have a certain background DOES NOT mean that people with that certain background can work on the street. It is a process of weeding out that is so massive, that those defective in any shape or form are genrally excluded…WHY?…sheer volume of non-defective candidates….is this clear?
Chifi,
Why don’t you work on Wall Street?
Gotcha. In fact ‘the street’ rewards insiders and non-performers if they are connected….right? It lets moronic CEOs walk away with millions in unearned dollars for simply sitting in a warm seat for a few years. I’ve got little to no respect for the large institutions, the research they provide, or the guidance that they offer that changes with the wind.
P.S….and I too harbor the ‘ass kicking’ desire, but damn…that work could keep me busy ad infinitum.
Just a thought…I’m glad this site/blog exists.
what Orion said.
pretorius Says:
October 17th, 2007 at 6:11 pm
Chifi, Why don’t you work on Wall Street?
pret: my destiny is to serve people, not take from people……if I veer from that path, I create my own living hell……
I’ll take a gin & tonic and some chips & dip.
And don’t veer and trip with my chow.
John said:
I thought everyone who lived in good town in Jersey worked on Wall Street?
2002 – 100K was a good salary
2004 – 200K was a good salary
2006 – 250K was a good salary
2007 – 300K was a good salary
2012 – 500K will be a good salary
———
The problem in NJ is that ALL of those salaries are in the same state income tax bracket. (But really, John, 300K in 2007 is quite a bit above a ‘good’ salary…)
SEC Probes Countrywide CEO’s Stock Sales
http://biz.yahoo.com/ap/071017/sec_countrywide_ceo.html
I just had to reprint this,I believe here is the root of NJ problems. Reprinted without Steve’s permisssion, sorry.
Steve Says:
October 17th, 2007 at 5:13 pm
You have got to be kidding me.. Huffenus and his wife both have NJ State Pensions. Fred’s is $37,983 for playing Barney Fife and Cathy’s is $10,536 for some job that paid $24,000 after 18 years in the Toms Rivers schools (I would guess as a lunch aide or a minor clerical gig). In addition, we have been paying health insurance premiums for these ingrates since Fred retired at the age of 51. Now we get to buy him a heart, which will cost you and I something north of $800,000. After we pay for that heart, he’s hittin’ the road because NJ has high taxes. As unbelievable as this example is, just wait until our $120,000 salary cops retire. After cheating the system with atypical amounts of overtime in their final years (if they haven’t already scammed a disability..), these jokers are going to walk with $85-95,000 a year and full lifetime medical coverage, frequently in their late 40’s or early 50’s. The abuse is so widespread and ridiculous that I offer no apology to the good public servants. Regardless of their service, they are overpaid, far too numerous and will bankrupt our state. By the way, if you want to research the depressing reality of this timebomb, the otherwise lame Asbury Park Press (Gannett) maintains a database of an amazing array of public records through a link on their homepage. It’s called “data universe”. Explore at your own peril
Essex, skip the working late. Do it. Been there done that.
Better to ask the guy in the corner if (s)he wants to hit someplace for fish & chips.
Or, do the inconceivable! (I had to watch that movie 4 times this week ’cause my daughter loved it). Ask Mike in accounting if he wants to get lunch someplace. Really find out what kills them down there, and then when you go for the fish & chips, fix it with the corner guy.
Hey Chicagofinance,
About getting an MBA from a stinky school, then CFA, then a good analyst job – I have no differentiating characteristic, and I’m not good at interviews. I think my one stroke of luck was to get hired as an analyst on an internally managed pension fund right after getting an MBA. A professor helped me get the job – this guy recommended me after I helped him with his research for free, doing a really good job on tedious tasks (like cleaning and finding data etc.). I sucked up to him bigtime, and he really came through for me. I lived with my parents at the time. The pension fund belonged to an unbelievably bad company, then I worked for an unbelievably bad consulting firm, then just before I sat for CFA level 3 I got hired by a good company. I still work there, going on 9 years.
So are you the Chicagofinance who is the most hated man on Kannekt or what?
October 17th, 2007 at 2:07 pm
WHY IS THIS NOT THE HEADLINE FOR TODAY !!!
NORTHEAST HOUSINGS STARTS UP 45%
This is fabulous news. Keep building keep piling up the inventories. More pricing pressures.
Thank you.
Fence
That was my take as well.
Trump – that orange jumpsuit is going to clash with his orange face.
Pat…..if you only knew!!!
No, really. I don’t need to know. Skip the working late.
#195,
Love bad news about CFC, I got puts and bear call spreads, keep it coming, how about just shutting down all together and lacking up the CEO it will save me time and make money?
199 it does not sound accurate
#70 BI/CLOT
Yesterday morning I liquidated my positions in gold/mining/energy.
It’s been a good run but commercials went short POG and the miners look tired.
A number of tech firms reported this week and I heard talk of a rotation into the semis and tech this tech that…what? Citi lost 4 billion with a B and has anothrer 99 in off the book conduits..bah! who cares…tech, tech, tech will save the day….so after a little snooping around I noted that for tech firms where good/decent earnings were reported at or in the money calls expiring both Friday and next month soared, having become in the money, but out of the money calls, both expiring this week and 1 to 3 months, have not seen the pickup in volume, price, interest. Infact all were either stagnant or down from the price they traded hands at just before these stellar numbers they reported.
I’ve had some time to watch the tape and I concur with bi…I don’t use CNBC flavor of the day lingo so I won’t tell you that we need a “breather” or “cool off”…technical signals were flashing sell for a while and someone made the move for the exit, flashing a reverse signal a few days ago. I’d want to know whose trading program was behind that it sure as hell wasn’t that kid who downgraded Baidu.com. IMO, VIX is going to spike up.
Frank [202],
My wife wanted me to put away my summer clothes this past weekend. I told her, I may be wearing my shorts thru the winter. By the way, I try not to talk too much about the markets. However, this blog keeps pulling me in.
All disclaimers apply.
Blue Horseshoe loves Bluestar.
“Treasuries rose the most in five weeks on concern that the U.S. housing slump is getting worse, pushing the odds of an interest rate cut this month by the Federal Reserve back above 50 percent.”
“The credit crisis that was contained by the Fed’s last rate cut is starting to erode again,” said Glen Capelo, who trades Treasuries in Greenwich, Connecticut, at RBS Greenwich Capital, one of the 21 primary securities dealers that deal with the central bank. “That’s the major issue for Treasuries.”
“Commercial paper rates are up, and T-bill rates are down, reflecting an increase in the fear trade, likely a result of today’s weak housing-starts data,” said Tony Crescenzi, chief bond market strategist in New York at Miller Tabak & Co.”
http://www.bloomberg.com/index.html?Intro=intro3
ahh… I love this place. :)
Oh… and I think the Giants could be the 2nd best team in the NFC right now. More tomorrow. ‘night all.
naz (203)-
Don’t care whose little program said “sell” the other day. And, vix is my friend.
I’m not going to be anything other than fully-invested with a 100% growth bias when the following events are in full swing:
– A giant, potentially long-term rotation out of value and into growth. The horrific reports from banks/financials are only hastening the flight. If you’re gonna wear shorts, that’s the wading pool to wear ’em in.
– A concerted effort by the Fed to drive the USD to 0. Export problems, import poison toys and tainted food. Petroeuros, anyone? And, do you really want to be out of gold when we get Uncle Ben’s Halloween surprise? Trick-or-treat…fill my goodie bag with ducats, please.
– End of the mutual fund year on Oct. 31, followed by the beginning of window-dressing season on Nov. 1. Lots of managers need to lipstick the pig…and fast. To me, not the time to be out of oil.
– Lots of top-shelf companies still trading at a 15-16 multiple & close to single-digit PE/G.
Sure, the markets are narrowing. That’s part of a flight to growth. However, a select few companies are knocking it out of the park…and have more in the tank.
“If you’re gonna wear shorts, that’s the wading pool to wear ‘em in.”
Clot[209],
HMMMM. Bermuda shorts?
All the macro events you detailed are very much in play however, I failed to explain, that my sights are set on the next five trading sessions and it rolls on…
There is just too much [BLEEEEP] going on right now to be this or that or have “views” on macro issues. Yeah, I have my core positions just like the next guy but I’ve found that on a good day, I can fire up the terminal, load the oldie but goodie watch list, immerse myself in the charts and come out with a good sized haul.
It gives me satisfaction almost on a primal level, much like tracking and hunting game. (which I don’t do, btw) Your poits well taken and all valid.
I know Ben will print..I’ve got my bottle KY ready…. I plan on two round trips in and out of my gold producers before then..
>>END of market rant>>
Back to housing…sorta’OT….my firm is moving to Englewood Cliffs at the turn of the new year. I am done with the bus commute into the city for now. I am now a grab your coffee mug and plow up the turnpike kinda guy…I’ll let you know how it turns out.
WSJ
Burned by Real Estate, Some Just Walk Away But Abandoning Investment Property to Foreclosure Carries A Very High Cost; Slashed Credit Scores, Vulnerable Assets
By KEMBA J. DUNHAM and RACHEL EMMA SILVERMAN
October 18, 2007
[edit]
A growing number of investors like Mr. Rozzen are making the drastic decision to walk away from their properties and ultimately send their homes into foreclosure, lenders and real-estate agents say. Many investors who were hoping to quickly flip their investments are now left with homes that can no longer be sold for more than the mortgage debt. In many cases, these investors can’t even find tenants willing to pay enough rent to cover hefty mortgages.
Certain data point to the trend. According to an August study by the Mortgage Bankers Association, defaults on mortgages where the owner doesn’t live in the house are a major driver of the defaults in Florida, Nevada, California and Arizona — four of the states with the fastest rising rates of seriously delinquent loans. Defaulted mortgages are defined as those 90 days or more past due or in foreclosure, according to the study.
But walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.
“A lot of these people can’t think clearly because the level of financial distress is so great,” says David Dweck, president of the Boca Real Estate Investment Club in Boca Raton, Fla., who is also a Realtor. “They’re hoping [that by taking this step], it’s going to work itself out.”
[edit]
Before walking away from a mortgage, legal experts say, investors should approach a lender about a possible loan “workout,” in which the mortgage payments are reduced but the investor gets to keep the property. Some investors say they have tried this, but without success. Still, banks don’t typically want to act as property managers, nor do they want to have high foreclosure numbers on their books.
[edit]
One of the first effects of walking away from a mortgage is an assault on one’s credit. The foreclosure could remain on your credit report for years and will sharply reduce your credit score, experts say. “This makes it more difficult or extremely costly, and in some cases impossible, to do more financing in the future,” says Jack Guttentag, a professor of finance emeritus at the Wharton School of the University of Pennsylvania who operates a mortgage-advice Web site.
In some cases, lenders can go after an investor’s other assets to satisfy a loan if the borrower defaults. But that often depends on the loan agreement, which sets out what recourse the lender has in the case of a default. In a nonrecourse loan, lenders can take only the property itself to satisfy the debt. Most loans, however, are recourse loans, which means that the borrower’s other assets may be at risk.
[edit]
#209,
Clot, what the f are you doing in RE? Seriously, what you mentioned in your post should be read by a few fund managers…they need a dose of ‘perspective’. When valuey shops like Dodge & Cox find value in growth stocks, you know growth is coming back and the tide has turned. US Growth is knocking the socks off everyone but Emerging Markets. The USD will provide the ‘ecstacy’ high for many large-cap multinationals earnings.
Usual disclaimers apply.
Back to RE….. nothing much to report. All I have are more grumpy colleagues at work when I tell them I plan to rent through till 2009.
naz (211)-
Shoulda known you were a day trader by your handle. Good luck to you; I guess vix must be your best friend.
Wish I could trade daily, but I’ve got a little real estate crash that’s keeping me busy right now.
dream (213)-
My dream is to do nothing but trade my position and finance it thru slumlording. :)
The day fund managers get that dose of perspective is the day I start getting killed in the markets. However, I don’t think that day is coming. Too much herd-think (aka correlation) on the Street.
full disclosure: I’m not a finance guy by trade… I went the SAS route and took a long hard look at where I came from, what I bring to the table and my personality traits and decided to make my living elsewhere.
I take a day or two to trade when in between clients. I my youthful days, I spent entire days at the mock trading floor in our school and became friends with an ex fund manager who ran the trading center. He said he’d plug me in and I could write Tradestation code for six figs in some large shop but I had doubts about ever becoming a real player as opposed to a burnout pawn.
Now I’m a well connected entertainment accounting firm whose client roster is the envy of all other larger shops, we do contract compliance, royalty audits and business management. I’m going to have to work my ass off to make half of what I’d get on the street but at least it’s in sight and I’m lovin every minute of the climb up.
…and oh that mock trading center? I think it cost us some $30MM or something like that when the towers went down, displaced traders from one of the firms showed up at our doorstep, rolled in some Verizon trucks, wired for phone lines and simpy changed the user/pass on the terminals from the schools login trials to their own and ran their operation from our floor for a week.
in the interest of full disclosure: I’m not a finance guy by trade… I went the SAS route and took a long hard look at where I came from, what I bring to the table and my personality traits and decided to make my living elsewhere.
I take a day or two to trade when in between clients. I my youthful days, I spent entire days at the mock trading floor in our school and became friends with an ex fund manager who ran the trading center. He said he’d plug me in and I could write Tradestation code for six figs in some large shop but I had doubts about ever becoming a real player as opposed to a burnout pawn.
Now I’m a well connected entertainment accounting firm whose client roster is the envy of all other larger shops, we do contract compliance, royalty audits and business management. I’m going to have to work my ass off to make half of what I’d get on the street but at least it’s in sight and I’m lovin every minute of the climb up.
…and oh that mock trading center? I think it cost us some $30MM or something like that when the towers went down, displaced traders from one of the firms showed up at our doorstep, rolled in some Verizon trucks, wired for phone lines and simpy changed the user/pass on the terminals from the schools login trials to their own and ran their operation from our floor for a week.
cute house
SEC Probe Stock Sales by Countrywide CEO
WASHINGTON (AP) — The man who nearly 40 years ago co-founded what is now the nation’s largest mortgage lender is being scrutinized by federal securities regulators as they examine his sales of the struggling company’s stock.
Another NJ housing story (comp killer):
http://biz.yahoo.com/ts/071017/10383712.html?.v=3
BTW: Also check out: http://www.jerseylegalforums.com
I am curious how a realtor could keep this property from being used as a comp. I think that would be in their interest, is this possible in some way?