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Sorry about the downtime everyone, big post-upgrade server crash at the datacenter this morning. Once the techs finally got everything up and running I was far away from the keys.
jb
From the WSJ:
U.S. Home Foreclosures Hit
Record High in 3rd Quarter
By MICHAEL R. CRITTENDEN
The number of mortgage loans at least 30 days past due reached its highest point since 1986 during the third quarter as foreclosure starts increased across all loan types, according to a Mortgage Bankers Association survey released Thursday.
The quarterly survey found the delinquency rate for mortgage loans on one-to-four unit residential properties was 5.59% during the third quarter on a seasonally adjusted basis. That represented an increase of 47 basis points from the second quarter of this year and 92 basis points from the third quarter of 2006.
Similarly, the rate of loans actually entering the foreclosure process was 0.78% for the quarter, 13 basis points above the second quarter figure and 32 basis points higher than the third quarter of 2006.
Subprime adjustable rate mortgages (ARMs) showed the worst deterioration, with a full 4.72% of the outstanding loans starting the foreclosure process during the period.
MBA Chief Economist Doug Duncan said the results were not surprising considering the ongoing fallout in the housing market.
“This is the first quarter which registers the full combined effects of the seizure of the nonconforming securitization market, broad-based home price declines, continued weakness in some regional economies, and rate adjustments on monthly payments,” Mr. Duncan said in a release. “The predictable results are increased delinquency and foreclosure.”
The MBA survey found that 43% of the loans entering foreclosure during the third quarter were subprime ARMS, which represent 6.8% of all mortgage loans outstanding. Prime ARMs, those offered to more creditworthy borrowers, also climbed significantly, rising 40 basis points to 1.02%.
stupid psychological bailout.
now as prime arms reset in ’08 it won’t sink in until ’10 that there’s no hope.
sometimes i feel like veruca, but i want a house now daddy!
or the i’m not gonna pay alot for this muffler guy.
From Reuters:
Subprime plan may be too little, too late
President George W. Bush’s proposal to curb rising foreclosures may provide breathing room to hundreds of thousands of homeowners, but stops short of reaching the most troubled borrowers.
The plan freezes rates on certain subprime loans and comes amid news that foreclosures rose to a record high last quarter, and at a time when the world’s biggest banks are reeling from losses on securities tied to risky mortgages.
The lasting impact on the housing markets is debatable since the current proposal may exclude more people than it helps, even as the plan takes a step toward slowing defaults.
“This is a hope and prayer plan,” said Elizabeth Warren, a professor at Harvard Law School.
The “Goldilocks” plan filters out borrowers who are too poor to afford their mortgage now, and those who can meet their payments even at a higher rate, giving it a “smallness” that won’t provide a long-term fix, she said.
Analysts cited by the Center for Responsible Lending have estimated some 1.7 million foreclosures will occur in next three years, as the combination of loose underwritings during the housing boom collide with home prices falling at their fastest rate in a quarter-century.
Even if freezing rates reduce that number, lingering concern about falling home prices could deter home buying and keep housing and capital markets in a deep funk, Warren said.
I’m hearing that California is going to be worse off in the next few years than it was during the base closings in the 1990’s.
A lot of areas are in so much trouble, that they may as well shut down the entire state south of I-80 and more than 25 miles from the coast.
From Global Insight:
Single Family Home Prices Tumble for First Time since 1994;
Fall Steepest in Most Overvalued Markets
(registration required)
The water is turned off, the floors are so bad that not only do they have to be sanded but they may even have to be replaced, the walls and ceilings have to be scraped, sanded, plasterd and painted and that’s only the things I know of on the surface.
All for the great price of:
http://homes.realtor.com/realestate/woodcliff+lake-nj-07677-1091779697/
Gary 7 OMG they have got to be kidding!
chi fi 5 May be time to mve to sunny Cal.How
are property taxes any idea?
Bush has come through and the stock market soared today! We’ll still have an interest rate cut coming down the pike. It looks like everything will be just fine.
I feel great! Don’t ever doubt America!! Chalk up another loss for the bears. It won’t be long before real estate prices continue their upward march.
Take a break from gloom and doom and read this very positive article:
“Reason No. 7: The economy will be fine.
Sure, the housing and auto sectors are a mess. But they represent only 9% of the economy, though you might not know it because they seem to garner 95% of the attention of the financial media, says James Paulsen, an economist who is the chief investment strategist at Wells Capital Management. The rest of the economy has been growing nicely. Paulsen thinks most economists are too negative, and he doesn’t expect a prolonged period of sub-2% economic growth.”
http://articles.moneycentral.msn.com/Investing/CompanyFocus/7ReasonsToBeBullishNow.aspx?page=1
Gary, I also can’t believe that property you posted.
Any insight on Colonia, NJ from the knowledgeable people here?
Here is a property I saw in late summer. It’s still there. It appears to be in the handful of listings (maybe 5) I can find built in the 1990s. Mostly everything else in this town looks to be from the 1960s and earlier.
http://homes.realtor.com/realestate/colonia-nj-07067-1079710432/
MLS 718349
The cheapest homes of the 140 listed on the website start at $300K for a 3 BR ranch built in the 1950s. Ick. Is this considered “affordable” housing these days for average people in NJ? Or maybe there just aren’t any average people in NJ anymore.
I feel great! Don’t ever doubt America!! Chalk up another loss for the bears. It won’t be long before real estate prices continue their upward march.
What have you been smoking?
Housing prices aren’t going anywhere but downward for the next couple of years. A rate cut won’t bring them back up, you’re still going to have a glut of foreclosed homes hitting the market soon.
As for the econmy, GOOG is back up over $700. Picked up some shares at $525 so I’m a happy camper.
Prices need to drop 20% from today’s levels.
http://seekingalpha.com/article/56570-what-should-today-s-median-housing-price-be?source=feed
ReTard (10)-
So now you’re going to go out and buy again, right?
Or, are you still underwater on the property that’s currently taking you under?
If you’re not buying- right now- shut up.
where’s gen-Y going?
a) end unit townhouse in somerset ctny
b) house in union/middlesex ctny
c) house in hunterdon ctny
think (15)-
d) North Carolina
Clot, I actually haven’t heard of anyone move to NC lately (last year). Even the people who used to talk about it have inexplicably stopped.
sync (17)-
Yeah…they can’t sell their houses here. Lots of people want to go down there, but now they’re trapped here in their current homes.
Like BC’s analogy: everyone rushes for the exits, but all the doors are bolted shut.
Clot, now that the ‘smoke and mirror’ bailout is official, your thoughts? I think it’s Paulson & Co.’s sadistic ploy to prolong the agony of the trapped folks. Let the piranhas nibble at their ARMs a little longer till there is nothing left, eh?
This gives Bush & his cronies (when they’re out in a year) to say ‘we tried…even though we know we’re all effed in the long run’.
“I feel great! Don’t ever doubt America!!”
50.5,
The People’s Republic of America? The Bush Manifesto.
Are you one of the lumpenproletariats, hanging upside down, looking for a handout? Come to think of it, freeze their cc payments and property taxes. Send them coupons for energy and food costs. Karl Marx and Friedrich Engels are spinning in their graves.
The final nail has been placed in the coffin of RE today. Investors have packed their bags and will not be involved in mbs for a good period of time. Welcome to 1990 Japan style, stuck in the mud.
The fed/banks are strictly concerned about their capital ratios. The new game will be the positively sloping yield curve. Borrow short, strict lending and build up reserves. Capital will be hoarded until balance sheets start to improve. You have to be a donkey if you think otherwise. When lending/borrowing is curtailed prices decline. The onslaught continues, albeit at a more rapid pace.
dream,
Strictly a ploy to allow the banks sufficient time to repair the damage. It has zero to do with lumpen 50.5, it all about the banks.
“The new game will be the positively sloping yield curve.”
I meant to say the future positively sloping yield curve.
where’s gen-Y going?
e) Live with mom & dad
Price drop in Mountainside
1251 Poplar Ave 6/14/2002 SP $513,000
(from Propertyshark)
11/19/2007
1251 POPLAR AVE, MOUNTAINSIDE
SP $420,000
(from njdotcom by the #s)
I saw this listed at (I think) $429, called and it was already gone. On half an acre, it was very dated inside, but even if there was something funny about the 2002 purchase, $420 is well below everything else that is on a decent street in this town.
Re: Citi….one of the guys I know keeping a super-low profile is a banker who shifted over to Citi in 2006. To make a long story short, one of the items in his employment contract is a guaranteed seven-figure bonus payable in April 2008 in C. The clincher is that the market value is fixed……
Re 15:
d) their parents basement
Oh I see renting beat me to the punchline
If people were a little more pragmatic about the situation, they would realize that foreclosure isn’t such a bad deal. Where else can you get a free put option? On top of that, you can probably spend a few months living rent free as the lender goes through the foreclosure process.
Of course, the premium you pay for exercising this put option is the hit to your credit score. But even that clears up after a few years. So you rent for a few years, save for a down payment and by the time you’re done renting and saving, you should have a very nice down payment, decent credit and reenter the housing market at a time when homes are affordable again. In the long run, you are probably better off.
This “bailout” is really about stopping borrowers from exercising these puts on lenders. Lenders would rather throw a few basis points of forgiveness at borrowers and keep them paying something. After all, the point of the game is to squeeze as many golden eggs out of the golden goose without actually killing it. Lenders realize they are now killing borrowers and a “dead” borrower is no good to them, so they need to relax the choke hold just enough.
I wonder how many borrowers eligible for this “relief” will choose not to play along and will turn in their keys anyway?
Re the freeze
What difference does it make if you can afford the payments on the $800K you owe on a $600K house?
Which do you want: a high FICO score or $200K
Did anyone ses Sen. C. Schumer’s response to plan today.Believe it or he nailed it, to little to make a dif,requirments leave to many out.What he preposed would have had most of us here loading our guns. But he went further and eluded to auto loans & credit cards being next.Nailed that to.
Can’t stand the guy but he does know whats coming down the road & wasn’t afraid to say it.
If my mortgage payment after reset is jumping 50% in 5 years and house prices decline 30% in those 5 years, I can walk away today and buy in 5 years when my monthly payment will be 50% of my reset payment. Why in the world should I drag myself through this mud for 5 years? To avoid a lousy 200 point ding to my FICO score…..am I that stupid?
#29…NJPatient, we both penned the same thoughts at the same time :)
Believe it or not he #30
Sheeple just want to stay in their homes.If they could run the #s like you folks just did they wouldn’t be in trouble.That & the emotional desire to keep home not be foreclosed out will keep many paying.Sad but true.
“This gives Bush & his cronies (when they’re out in a year) to say ‘we tried…even though we know we’re all effed in the long run’.”
Frankly, it’s a bit like his war policy – the goal now is to kick the can further down the road until the next president is left holding the bag and taking the blame.
njpatient Apples & oranges I agree on bailout not on war.He would love to win the war & be done with it before he leaves.Make him look good,legacy bull.
28
Renting
Other than the imputed income on the loan forgiveness, I agree with everything you said.
30 mike
I did see that. In this area, he’s likely to get the policy horribly wrong, but he’s not an idiot.
Dream
Jinx!
This subprime bailout sets a very bad precedent and may be worse for the housing market in the long run.
supbrime/bubble atricles all over the web sites I frequent this morning:
NYT:”
“On Mortgage Relief, Who Gains the Most?”
http://www.nytimes.com/2007/12/07/business/07mortgage.html?hp
“A-Rod’s Properties and Charity Suggest Some Stinginess”
http://www.nytimes.com/2007/12/07/sports/baseball/07roberts.html?_r=1&hp&oref=slogin
(exec summary: A-Rod’s property’s have lost at least $10M in 4 years)
Slate.com:
“Debt Be Not Proud”
http://www.slate.com/id/2179389/nav/tap3/
Mortgage delinquency rate 79-present [ source CR]
http://bp1.blogger.com/_pMscxxELHEg/R1hL6zRwQuI/AAAAAAAABTw/ZvDWIIhGTnA/s1600-h/MBAMortgageDelinquency.jpg
This is *the* major issue/question right now.
From Bloomberg:
Bush Subprime Mortgage Rate Freeze Stuns Bond Market
President George W. Bush’s plan to freeze interest rates on some subprime mortgages may prove to be a cure that breeds another disease.
“If the government goes in and changes contracts it will definitely have a chilling effect on the securitization of mortgages,” said Milton Ezrati, senior economist and market strategist at Lord Abbett & Co. in Jersey City, New Jersey, which oversees $120 billion in assets. “When the government comes in and says you have contracted to have this arrangement and you can no longer have it, I think it opens the door for lawsuits.”
Bush and Treasury Secretary Henry Paulson yesterday announced an agreement with lenders that will fix rates on some loans for five years. The deal will help borrowers who will fall behind once rates reset to higher levels through July 2010. The plan may force investors in the $6.3 trillion market for home- loan bonds, created by pooling loans and funneling interest payments to bondholders, to revalue their holdings.
“It could end up there’s less confidence in the viability in the bond markets and the mortgage markets going forward and it could lead to higher interest rates and higher mortgage rates for everybody,” said Kenneth Hackel, managing director of fixed- income strategy at RBS Greenwich Capital Markets.
Hackel said in an interview from his Greenwich, Connecticut, office that he has been “fielding a lot of calls” from clients “pounding the tables and beating the drums.”
…
The government’s plan makes investors in low-rated and unrated bonds backed by pools of subprime mortgages “winners” while bondholders of higher-rated securities will have their risks increase, said Andrew Chow, who manages $7 billion in asset-backed bonds at SCM Advisors LLC in San Francisco.
Owners of “residuals,” the unrated pieces of deals, are the first to have their interest end when homeowners can’t meet their mortgage payments.
The plan may end up increasing losses for senior debtholders if home prices continue to decline and the borrowers end up defaulting, Chow said. Without the plan, those holders may have faced only “modest” losses, he said.
“I’ve never seen anything such as they’re suggesting here in my career,” said Lord Abbett’s Ezrati, who has worked in finance for 36 years. “It would be the equivalent of telling you the coupon on a bond is being changed.”
From Bloomberg:
`Decoupling’ Debunked as U.S. Collapse Infects World
It turns out the U.S. economy matters after all.
The credit collapse and dollar decline that followed a surge in U.S. home foreclosures jeopardize expansions in the U.K., Canada and Germany, economists said. They also debunk “decoupling,” an argument advanced by analysts at Goldman Sachs Group Inc. and Morgan Stanley that the world wouldn’t suffer as it did during U.S. slowdowns in previous decades.
From the WSJ:
Battle Lines Form
Over Mortgage Plan
By MICHAEL M. PHILLIPS, SERENA NG and JOHN D. MCKINNON
December 7, 2007; Page A1
WASHINGTON — In unveiling a plan to help more than one million struggling homeowners, the Bush administration and the mortgage industry have embarked on a controversial project: picking winners and losers from the rubble of the subprime-mortgage meltdown.
Under the deal, formally released yesterday, the industry would voluntarily help as many as 1.2 million homeowners who are heading for trouble paying their subprime mortgages but aren’t yet lost causes. For some homeowners, loan-servicing companies will agree to freeze mortgages at their low introductory rates. In other cases, credit counselors or loan servicers will walk mortgage holders through refinancing processes.
…
The deal won’t provide relief to many subprime-mortgage holders: These include borrowers who are now in foreclosure, have already refinanced their homes or are more than 60 days delinquent on more than one payment over the past year. In some cases, people with good credit scores will be excluded. Also left out are those deemed able to afford the higher interest rates scheduled to replace their introductory rates over the next two years.
The initiative could help stabilize falling home prices and rising foreclosure rates, buoy the mortgage market and provide a modicum of comfort to investors watching the housing crisis bleed into the broader economy.
But it also sets what promises to become a battle line as the subprime crisis plays out over the coming election year. Some critics, especially Democrats, say the plan doesn’t go far enough to protect vulnerable homeowners against foreclosure. Others, including some homeowners, as well as those who have watched from the sidelines as home prices have soared in recent years, charge that the plan amounts to a bailout for financially reckless borrowers.
…
Investors who hold mortgages, meanwhile, would still bear the risk of the loans under the plan, said Doug Dachille, chief executive of First Principles Capital Management in New York, which invests in some mortgage-backed securities. Creditors would also bear the pain of forgone income from mortgages that under normal market conditions would have brought higher interest income.
“There ought to be costs to both the borrowers and lenders, but right now you’re just giving a freebie to homeowners,” he says. “They still get to live in their house and benefit from any appreciation in the value of the house over the next few years.”
Milton Ezrati, market strategist with money-management firm Lord Abbett & Co., says the plan could undermine the market for mortgage-backed securities. Investors may say, “if you can interrupt my cash flow today, you can do it tomorrow,” says Mr. Ezrati.
Another question concerns mortgage servicers, the companies that collect payments on behalf of the eventual debt holder: Can they change the terms of mortgages without being sued by the investors who purchased them?
Jordan Schwartz, a structured-finance partner at law firm Cadwalader, Wickersham & Taft LLP, says agreements that govern mortgage securities generally give servicers discretion to modify loans if they consider it to be in the best interest of investors who hold the securities. But any plan that emerges from Washington “won’t have the force of law,” he says.
George P. Miller, executive director of the American Securitization Forum, a trade association of investors, servicers and other securitization players, said servicers won’t receive a guarantee against being sued. But because the plan was created by major industry players, including his group, and was endorsed by the Treasury Department, it offers a substantial shield against lawsuits.
From the Record:
N.J. foreclosure rates lower than nation’s
Mortgage foreclosure and delinquency rates continued to rise in the third quarter, but New Jersey rates remained below those for the nation as a whole, a mortgage bankers group said Thursday.
The Mortgage Bankers Association said in its quarterly delinquency survey that 1.56 percent of the mortgage loans in the state were in foreclosure in the third quarter, up from 0.9 percent in the third quarter of a year ago. The national foreclosure rate reached a record 1.69 percent from 1.05 percent at the end of the third quarter of 2006.
“New Jersey, relatively, is not in bad shape,” said E. Robert Levy, head of the mortgage bankers’ state chapter. “But we do have a problem.” Rising foreclosure and delinquency rates throughout the nation, the result of overly aggressive lending and the bursting of the residential real estate price bubble, are taking a toll on homeowners, mortgage lenders and investors in debt backed by one-to-four-family homes. Many economists fear the situation could drive the economy into a recession, prompting the Bush administration Thursday to announce a plan to try to stem the foreclosure tide by freezing interest rates on adjustable rate loans for five years for certain borrowers.
New Jersey ranked 23rd for the percentage of loans in the foreclosure process, and 28th in delinquencies, the mortgage bankers said. The states with the highest foreclosure rates were Ohio (3.72 percent), Indiana (3.28 percent) and Michigan (3.07 percent). States with the lowest rates were Wyoming (0.55 percent), Oregon (0.57 percent) and Washington (0.58 percent).
The percentage of New Jersey mortgage loans on which payments were delinquent, meaning 30 or more days late but not yet in foreclosure, increased to 4.91 percent from 4.03 percent in the third quarter of 2006. The national delinquency rate was 5.81 percent, up from 4.84 percent a year ago.
The percentage of the various types of high-risk, high-priced subprime loans in foreclosure in New Jersey was 7.26 percent at the end of the third quarter. That was up from 5.61 percent in a year earlier.
The largest increase came from adjustable rate subprime loans, on which monthly payments have been ratcheting higher for many borrowers.
Prime borrowers also are having more trouble making payments, according to the survey.
Foreclosure rates on prime loans in New Jersey — borrowers with higher credit scores — increased to 0.72 percent at the end of the third quarter from 0.52 percent.
With home values declining, many prime borrowers are in a similar situation to overstretched subprime borrowers. They have little or no equity in their home and are unable to refinance or pay off the loan by selling the house if they suffer an income reduction and can’t make the payments, Levy said.
“If they had a 90 percent loan to value, maybe now it’s 115 percent,” Levy said.
dream (19)-
My thoughts? See BC’s post #20. That would be my take, pretty much verbatim.
The great RE purge will continue; however, the “freeze”- and its unintended consequences- will actually deepen and accelerate the pain.
My mantra for 2008?
Deflationary credit collapse.
From the Record:
Many will still face foreclosure
The plan was announced on the same day the Mortgage Bankers Association said that mortgage delinquency rates are continuing to climb. (See story, B-1) In New Jersey, about 4.9 percent of borrowers are delinquent on their mortgage payments, compared with 5.8 percent nationwide.
Sen. Bob Menendez, a Hudson County Democrat, said the president’s plan “simply does not seem to go far enough.”
“I am concerned that President Bush’s plan will only help a fraction of the families at risk,” Menendez said in a Senate speech Thursday.
The White House estimates the plan could benefit 1.2 million homeowners, but experts said only a fraction would be eligible for the rate freeze.
“It’s a small step in the right direction,” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. The plan may help about 15 percent to 20 percent of subprime borrowers, he estimated. “It is an important Band-Aid, but the arm is hemorrhaging.”
Keith Gumbinger, vice president of Pompton Plains-based HSH Associates, which tracks the mortgage market, noted that borrowers who have fallen behind on their mortgages will not be included.
“It’s hard to call it fair and equitable. It may help some borrowers remain in their homes longer than they might have otherwise,” Gumbinger said.
He also predicted that investors who invested in these mortgages will not be happy about accepting lower returns. “Let the lawsuits begin,” Gumbinger said.
…
At New Jersey Citizen Action, the number of homeowners seeking crisis counseling has jumped 40 percent this year, according to Phyllis Salowe-Kaye, executive director. She said the Bush plan won’t help enough people in danger of losing their homes.
For many of these people, a five-year freeze will not address the underlying issue, she said.
“It’s postponing the problem for five years for people who never should have gotten loans in the beginning,” she said.
Sylvine Marabotto, director of the Consumer Credit Counseling Service of New Jersey in Cedar Knolls, said many of her agency’s clients have faced much higher monthly payments after their adjustable mortgages ratcheted upward. It’s causing “havoc” in their budgets, Marabotto said.
“We’re seeing people who are close to foreclosure,” she said. “We’re seeing folks who just can’t afford to make their payments anymore.”
She said the homebuyers bear some of the blame, for a “buy now, worry later” approach to getting a home. But she said many lenders are to blame, too. “There were loans being made to people who clearly were not able to afford houses. There was some predatory lending going on.”
Mike,
Define win this war? so you are saying Bush would have prefered a miracle, than a practical solution to the mess he has gotten us in? I guess if I could’nt think of how to get out of a mess I’d want a miracle too. I think the kick the can analogy is on the money. He’s dropping in the next lap.
KL
Clot,
Gumbinger nails it with his quote:
“Let the lawsuits begin,” Gumbinger said.
Rent (28)-
If you’re an f-ed bagholder, eligible for the “freeze”, the smartest thing you can do is get FK’ed…ASAP.
It takes two years after the FK is discharged to re-establish credit. By year five after FK, a borrower could be back into eligibility for prime rates.
Why stick around paying ANYTHING on a depreciating asset on which you can only qualify for aid if you have less than 3% skin in the game? The Alice-in-Wonderland thing about this bailout is that the people allegedly being helped are really being double-dared to default.
I always felt Bush and his inner circle were dumber than a bag of hammers. The shock in what’s transpired is the revelation that pretty much everyone at Treasury, HUD, the Fed, Fannie, Freddie and Ginnie are also functional morons…AND cruel and cynical, to boot.
From the NY Times Dealbook blog:
Delta Financial to File for Bankruptcy
The subprime mortgage lender Delta Financial said Thursday that it planned to file soon for bankruptcy protection, after losses mounted and an agreement to obtain financing fell apart.
The company, based in Woodbury, N.Y., said that it would stop taking mortgage applications, and that it did not believe it could continue as a going concern. Delta would join more than a dozen other mortgage lenders to file for bankruptcy this year amid the housing downturn.
In a statement, Delta said its warehouse lenders had notified it of events of default under its financing agreements, after the company was unable to sell some loans.
I like that the weekend began on Thursday – just like in college
From the NY Post:
COLLAPSE OF $488M BOND POOL
The collapse of an asset-backed bond pool yesterday is the most stark reminder yet of the growing cost of the subprime meltdown.
Adams Square I, a $488-million collateralized debt obligation – essentially a bond made up of slices of other bonds – saw the value of its underlying collateral drop so sharply that even the most highly rated classes were unable to return more than 25 cents on the dollar to its investors.
While billions of dollars of CDO tranches have been downgraded since the summer, investors in the higher-rated pieces have usually seen their losses contained to between 10 cents and 30 cents on the dollar.
The cost of writing down the value of Wall Street’s soured CDO investments is about $66 billion so far. Late Wednesday, Standard & Poor’s took the unusual move of downgrading all of the CDO’s classes – even its triple-A pieces – to D, its lowest rating.
Launched in January, the Credit Suisse-managed deal was a combination of subprime asset-backed securities and derivatives known as swaps, according to its prospectus.
S&P estimated that about $165 million worth of Adams Square notes would not be repaid as a result of the rapid downgrade, which triggered defaults.
According to Barclays Capital, the damage is likely to be widespread among investors.
From Bloomberg:
Black Humor Pervades Norway as Subprime Losses Extend to Arctic
A subprime-linked investment has cost four Norwegian towns as much as 451 million kroner ($82.1 million) and left them wondering how they’ll pay workers this Christmas. The rest of the country is cracking jokes.
“Just imagine how many lottery tickets they could have got for 400 million kroner,” Jon Almaas, the host of “News on News,” Norway’s most-watched television program, joked on a recent episode. “Or, for fear of appearing old-fashioned, they could have spent it on health and education.”
The losses on securities tied to the U.S. housing market are providing plenty of fodder for Norwegian comics, who compare the towns of Rana, Hemnes, Narvik and Hattfjelldal to naive country bumpkins taken in by big city hucksters. It has also inspired amateur comedians who are sending their own attempts at humor to the Web site of national broadcaster NRK.
People are still in denial. They think if they keep paying on their house, hopefully, maybe, it’ll be kind of, sort of, worth what they paid for it in about 5 years.
KL #48 To define win would take a paper.But here is my point Bush does want to pass houseing hot potato.He is aware this plan is just window dressing.So true.On the other hand he believes in this war he would like very much to win it whatever he considers it to be.Not the same in his mind as posted by nj patient.
Sadly, the older gentleman who lived across the street from me passed away. That house will now go on the market. It will be interesting to see what it lists for. It is a 1920s expanded colonial. Not sure how many beds/baths, but it probably needs updating.
“I like that the weekend began on Thursday – just like in college”
patient,
I just spit up my coffee. The best night of the week. Memories!!
On another note, the Bureau of Useless Statistics will will be trying to justify their pay in 10 minutes.
Anyone want to talk about how fixing interest rates at their current lower rates is nothing more than an attempt at artificial price controls (price ceilings)?
We all know what happens when you try to impose price ceilings at prices lower than the market; suppliers can’t (or won’t) supply at the ceiling price and shortages become commonplace.
#59 Not to mention what this does to the old-fashioned concept of honoring a contract.
BREAKING
NEWS Employers add 94,000 jobs in November, more than expected. Unemployment 4.7 percent, unchanged from October. More soon.
Still people think the market will come back. When I got into work today, a few people were talking about they should have taken out home equity loans to fix up there houses. And they were like well the housing market will start to go back up soon. LMAO
Sure thats it. The market will start to go back up and than people will need new exotic mortages to afford the prices.
Sure
——————
And this whole rate freeze nonsense just irritates me. So they are going to help people who couldn’t think for themselves and did not understand Adjustable rate mortage means it will adjust. If you go into buying a house without doing your own research well than you need to deal with the outcome.
They think lets freeze the rates for 5 years so the people can refinance. Most people took out I/O and teaser mortage becuase that is the only way the could afford these payments. So even if the could refincance they still would not be able to afford the payments. All the government is doing is delaying the inevitable. Just take a loss and move on.
Maybe there were crooked lending practices going on, but thats like saying I invested all my money in the stock market, the traders did not explain to me how the market works they only told me of all the money I can make. Now the stock price is comming down and its the traders fault that he should have explained to how the market works. So the stock prices need to freeze at there current prices or I will loose my life savings.
Come on they would laugh at that.
** Techie question**
Is there such a thing as a usb adaptable card reader? I used to have a card reader on my old printer, I always use my camera cable but have once again misplaced it. An adapter would work better if I keep it plugged in I “probaly”won’t misplace it (-:
KL
** Techie question**
Is there such a thing as a usb adaptable card reader? I used to have a card reader on my old printer, I always use my camera cable but have once again misplaced it. An adapter would work better if I keep it plugged in I “probaly”won’t misplace it (-:
KL
Services, health care, leisure/hospitality and retail up.
“In November, employment declined in several industries related to home
building and financing. Construction employment declined by 24,000 with job
losses occurring in residential building (-7,000) and in residential specialty
trade contractors (-13,000). Within financial activities, employment in credit
intermediation (which includes mortgage lending and related activities) con-
tinued to contract (-13,000). Credit intermediation has lost 75,000 jobs since
its peak in February. Real estate employment declined by 8,000 in November.”
“Manufacturing employment continued to trend down in November. Job losses
persisted in two industries that provide construction materials–wood products
and nonmetallic mineral products (such as concrete and glass). Machinery manu-
facturing added 4,000 jobs over the month.”
http://www.bls.gov/news.release/empsit.nr0.htm
KL
A place for us to stick a card into to stick into a usb port
Something like this:
http://insidecomputer.stores.yahoo.net/alusb20sicar1.html
Here I was always worried that the US would end up a People’s Republic, but instead we are getting a banana republic.
Another Band-Aid for Housing! by Mike Larson
http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1251
Statement of Center for Responsible Lending
in Response to President Bush’s Plan to Address Foreclosure Crisis
December 6, 2007
[snip]
CRL estimates the President’s plan will only help about 7% of subprime borrowers—about 145,000 families—because of the program’s limited scope.
http://www.responsiblelending.org/press/statements/crl-s-response-to-bush-paulson-plan-12-6-2007.html
Thank you homer, that’s exactly what I was looking for.
KL
So Bush is rewarding the honest folk who have still have equity, have been making their payments and have a source of income to keep making payments at current levels and can prove that they can’t pay the higher amount and is only doing owner occupied housing and screwing the flippers. I list I can enjoy he is screwing the people who caused the problem. If he bailed out flippers I would be protesting in front of the white house.
I understand that only 10% of the people are included in the plan but that 10% may get screwed anyhow if a place like American Home or Delta owned the mortgage that is now in the hands of the debtors as part of the bankruptcy. Remember this is voluntary and those people have no brand to protect. Even old scrooge Jaime Dimon at Chase can see the postive PR and the benefits of paying ball with the Feds. Jaime knows they will pay in back in spades if he does not pay along and he can kiss his next bank or BD merger/takeover goodbye if he does not pay ball with the FDIC, Fed and Bush. But the 100+ bankrupt mortgage lenders are not going to go along. Those 10% subprime shleps better pray that their loan was sold to a bank like Chase, Citi, Coutrywide, Wells, Wamu etc. that have many alterior motives to play along cause I am sure that if bankrupt or near bankrupt subprime slim own the loan they ain’t going along with this voluntary deal.
(55) -thunderbolt
Actually, I bought in 2004, and I think in about 5 years from today (2012) it’ll be worth about the same as I paid for it. I’m ok with that.
#64
http://www.amazon.com/USB-2-0-Hi-speed-Retail-Package/dp/B000CDITCQ/ref=pd_bbs_1?ie=UTF8&s=electronics&qid=1197037050&sr=8-1
In my towns local newspaper, in the Ask the Realtor column a renting couple asks if now is a good time to buy, as they had heard it was not.
The response from the realtor, ” the problems affecting the real estate market do not apply to Bergen Co, prices are only down .5 from last year,and that just shows the market is getting back to normal from its rapid increase of the last 4 years.”
“Not only that, but prices in the following Bergen Co towns are increasing again, Fairview, Glen Rock, Hillsdale, New Milford, Park Ridge, River Edge, River Vale, Harrington Park, Norwoord, Montvale,Rutherford,Saddle RIver and USR. In addition prices are steady in all other areas in Bergen.”
So there you have it from your Ask The Realtor Column in the local paper, everything is fine, and of course its a great time to buy. And of course its Bergen county.
From the WSJ:
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Our Plan to Help Homeowners
By HENRY M. PAULSON JR.
December 7, 2007; Page A17
After a period of widely available capital, easy credit and unsustainable housing price appreciation, an inevitable correction in the housing market now poses a significant risk to the U.S. economy. Foreclosure starts have almost doubled in the last year and a half, and signs point to further increases. Many Americans are facing mortgage trouble.
http://online.wsj.com/article/SB119699816894316802.html?mod=loomia&loomia_si=t0:a16:g2:r4:c0.0786667
Thank you 1st time buyer
KL
arrggghhh …sorry about all the background I picked up in the last cut & paste
Steve, I agree with you. That’s a very realistic expectation. I’m talking about people who bought in ’05 and ’06 at the peak, who are now 20% underwater and don’t realize it or admit it, and hope that extending their teaser rate for another 5 years will help. From here, anyone is lucky to get 3% appreciation per year in the next 5 years. Most using this bailout will likely see more depreciation and never get to breakeven again.
Also from today’s WSJ:
Who Qualifies for Help,
And What Qualifies as Subprime?
By RUTH SIMON
December 7, 2007; Page A14
The mortgage plan outlined by the Bush administration should help some borrowers with subprime adjustable-rate mortgages. But other borrowers who are having trouble making their payments won’t qualify for the “fast-track” interest-rate freeze outlined yesterday. Here’s a look at the agreement:
Which mortgages does the plan cover?
The agreement covers only a subset of borrowers. These are borrowers who took out subprime ARMs that were originated between Jan. 1, 2005, and July 31, 2007, and whose interest rates will reset for the first time between Jan. 1, 2008, and July 31, 2010. It applies only to loans that have been packaged into securities and not those that are held by banks on their own books. Homeowners should call their servicer to determine if their mortgage is covered by the plan. It doesn’t apply to borrowers with subprime ARMs that have already faced their first rate reset. It also doesn’t cover loans that are seriously delinquent, fixed-rate mortgages or ARMs issued to borrowers with good credit.
How do I know if I have a subprime mortgage?
The agreement doesn’t provide a specific definition of subprime ARMs because it isn’t always clear. Typically, subprime ARMs carry a fixed interest rate for the first two or three years, then adjust annually. Borrowers who aren’t sure whether or not they have a subprime ARM can ask the company that collects their loan payments.
What are mortgage companies doing for these borrowers?
Mortgage companies are setting up guidelines for who may qualify for a fast-track program that would freeze the interest rate at the introductory rate for five years. Some borrowers who don’t qualify for fast-track may be eligible to refinance into a new mortgage, based on their credit score and the amount of equity in their home. Mortgage companies have been encouraged to “take all reasonable steps” to facilitate a refinancing.
Who qualifies for the rate freeze?
To qualify, borrowers must live in their home and face a payment increase of more than 10% when the rate on their ARM resets for the first time. The program is designed to help borrowers who aren’t good candidates for refinancing because of a poor credit score, have little or no equity in their homes or a history of late payments. To qualify for the fast-track program, borrowers must have a credit score of less than 660 and it can’t have improved by more than 10% since the mortgage was originated.
What if I’ve missed a mortgage payment?
Missing one mortgage payment won’t automatically disqualify borrowers from the program. Borrowers can’t have more than 60 days late more than once in the last 12 months.
What if I can’t qualify for the fast-track freeze?
Some borrowers may be able to refinance into Federal Housing Administration loans or other mortgage programs. Borrowers who don’t qualify for a refinance or who don’t meet the criteria for the fast-track program will be dealt with on a case-by-case basis by their mortgage-servicing company. In some cases, these borrowers may be able to obtain a lower rate or a reduction in the amount owed. Other options include a short sale, in which the house is sold for less than the amount owed with the lender forgiving the balance, or foreclosure.
Whom should I call if I have questions?
Borrowers are encouraged to contact the mortgage-servicing company that collects their loan payments. They can also call 1-888-995-HOPE, which provides counseling to homeowners with mortgage problems.
http://online.wsj.com/article/SB119698775454016534.html?mod=hps_us_whats_news
John raises a good point.
When does voluntary not mean voluntary on price control?
I remember a year or so ago, when simple folk like me were learning about the practices in place for structured product valuation.
I searched a couple of times for the origins of the political push for MBS/CDO/etc. products, and bingo…the big push sourced right back to the Head Cheese. This sausage stuff was pushed in presentations, making it mandatory (if everyone else is doing it, you better do it or you’ll be left in the dust).
Now, the questions will be – “Did we make more $ fressing on sausage than we will puking it up?” and “how much can we cut, minimize our losses, and still be breathing in two years?” That second question will be important to determine the players that must go with the political push.
I had a good time yesterday checking out Zillow’s “Make Me Move” feature.
Quite a few houses that we have seen in our travels on there, listing for about 150K more than they are listed for now. Ha ha ha ha.
It was good for laugh. Zillow should really take that feature down now, it’s rather ridiculous and embarrassing for the whole internets.
No, John, Bush is screwing the honest borrowers who took fixed-rate loans. He’s rewarding the gamblers who knew that rates a few years ago were at historic lows, had no where to go but up, and still decided to double-down on fifteen.
So unlike you NOT to be deliberately clueless.
Oh, Ann…even better: Try pulling up the county sheriff’s sales lists, noting the amount and the series on the debt, then going into the Zillow valuation and comparing. Hahahahah..
Zillow seriously needs an input updated for foreclosures pending so they can save some face.
“Subprime borrowers face an average mortgage increase of 26 percent, or $400 a month, because of higher rates, according to data compiled by Santa Ana, California-based First American CoreLogic, a unit of the biggest U.S. title insurer.”
So, divide $400 by .26 abd we get an average loan payment of 1,538.46 before the reset and $1,938.46. Working backwards, and assuming this was a 2/28 loan that is now at 10% for the remaining 28 years gives us a present value of 220,123.98. Amortizing the loan shows that in the early years the family is paying (rounded) $1,800 per month in interest ($125 principal) on the reset loan. Skipping a few steps here, this means that the original loan was for about $224,000 and a 7.53% interest rate. As such, the original loan was costing, in round figures, $1,400 (actually a litle less) a month in interest and the “renter/owner” was paying down the principal at about $170/month.
The difference is about $400 in interest. Assuming a net taxable rate of .20, after the reset the net after-tax cost of the reset is $320 per month.
I submit that any family for whom $320 per month is the difference between living on the street or living in a house is better served by foregoing the city/county land tax payments, homeowners insurance, and maint. costs that come with home ownership and should, instead, rent.
From bankrate.com
Who will get relief from subprime mortgage mess
By Holden Lewis • Bankrate.com
[snip]
Most of the attention to the Paulson plan focuses on that final group. Those homeowners will be offered a deal: Keep making the monthly house payments, and the teaser rate will be extended for five years. No need to worry about the monthly payment jumping by hundreds of dollars. Well, not for five years.
FHA refinance plan
Less attention has been paid to that third group — homeowners who can refinance. It’s really the core group. Servicers will be expected to push these borrowers hard to refinance, preferably into a fixed-rate mortgage. This is where the federal government comes in.
In September, the Federal Housing Administration, or FHA, announced a loan program called FHASecure, for homeowners with marginal credit who have been late on a few house payments recently. Under FHASecure, some of these homeowners are eligible to refinance into FHA-insured, fixed-rate mortgages. Housing Secretary Alphonso Jackson says 35,000 people have refinanced under the FHASecure program since early September, and another 15,000 will do so by the end of this month.
Officials say about 1.8 million homeowners have subprime ARMs that will reset in 2008 and 2009. Of those, about 1.2 million will either be able to refinance or will be offered an extension of the teaser rate. No one offered an estimate of how those 1.2 million will be split up into each of those categories.
http://www.bankrate.com/brm/news/mortgages/foreclosure_plan_20071205-a1.asp
“To define win would take a paper.”
Mike, this is true, and perhaps the biggest reason why the war was a stupid idea.
Bush is the gambler at the table whose already down $800B. As long as he doesn’t stand up and leave, then he didn’t lose. Whoever actually pulls out will be the “loser.”
59 grim
That’s exactly right, and really just another angle on the same view Clot and BC have been giving for the last few days.
Pat, that sounds fun. Will have to check that out.
Question for everyone, what does it mean when it says that “Seller will hold first mortgage”?
thatbigwindow: I thought you might find this interesting. I find it amazing in this environment, but what do I know.
A developer has come before the Mayor and Council in River Edge to build 2, 12 story buildings, whcih will be home to 200 condos, in addition to 3 floors of office space, parking garages,and retail on street level.
The condos will consits primarliy of 2 bedrooms with about 45 1 bedrooms,and a number of duplexes (3 bedrooms).
The devleoper has plans to work with the town to address whatever concerns they have, and of course these units will be geared towards, you guessed it people who work in NYC.
Both of these 12 story building will be over looking RT 4, and the builder plans to build balconies which will “face Rt 4 and the sun.”.
Does anyone have a link to a document showing the specifics of the plan, rather than the paraphrases that have made it into the press?
#88 – is that for the old huffman koos site? what a strange place for condos (even if it’s not that site, condos on rt 4? that sounds fun).
NJ 85 That is why we are not going to leave in the forseeable Future.There will be US boots on the ground forever just like Korea.
Don’t like it but what is done is done.If we
can get it under control & stop are boys getting killed that would be great.Just leaving is not an option.IMO.If you get sent to Korea you will be fine unless total war breaks out.Thats what I hope for there.
“TODAY’S MOST POPULAR
1. Big Pharma Faces Grim Prognosis”
always nice to see JB in the news
Ann 80 and Pat 82…go out and sign up for property shark and look up what they really paid for it, and what they want for it 2 years later hahahahaha
79 Pat
“fressing”?
Sind sie Deutsch?
83 Shore
Well done.
Submission accepted.
Pat “fressing” – a yiddeshe maidelach on this site?
81#, i am one of the folks being screwed as you said. but i am fine as long as the property value starts to go up 10% per year as old days.
97 bi
“i am fine as long as the property value starts to go up 10% per year as old days.”
Or, put another way, you’re completely f*cked.
Ann, #87
I think it means that the seller will take out the mortgage, and the buyer will pay the seller, who will pay the bank.
Deals like that were always around, when the seller had better credit and could qualify for a better mortgage, or just a mortgage, period.
93 House Hunter
Property Shark is fun too. On the price per square foot on PS, when I multiply the peak psf times the square footage of the stuff we are looking at, people are asking 25% more per square foot now.
I am finding that even people who bought in 2003 are close to barely getting out with their down payments after transaction fees. I love that they think they deserve a profit.
Rhyming RE,
regarding the card reader
http://tinyurl.com/3y4ya2
enjoy!
Mish at Minyanville On the Paulson Plan
“The biggest ramification is this. Those investors will have to decide whether or not to accept the new terms. If they accept lower interest payments because it is better than default, the value (price) of the CDO will go down to reflect the new present value of the payments. This is a big fact that I think everyone is missing: the price of CDOs will be marked down from current levels. Banks’ desire to lend will go down as a result of this. As an illustration, the spread between libor and ECB funding rate (equivalent fed funds) rose again last night and is at a record 89 basis points.”
http://www.minyanville.com/articles/paulson-homeowners/index/a/15136
ChiFi,
Remember all those Morgan Stanley Bankers that Mack pressured into restructuring their contracts and large guaranteed minimum bonus numbers a few years ago? I can see Citi doing that, especially if the market takes a turn for the worse in the next month or two. I had an offer recently from them and the guarantee was less than I would make now at my present job. I asked why would they even present the offer when it was less. They answered that they really wanted me but that HR is seriously limiting the guarantees that they can make. I told them next time don’t even bother to even make the offer so as not to waste anyone’s time.
njpatient Says:
December 7th, 2007 at 12:20 am
30 mike
“I did see that. In this area, he’s likely to get the policy horribly wrong, but he’s not an idiot.”
if he wants even more of a bailout than the bush plan, and he’s not an idiot, then he’s worse than an idiot. he’s a combination of smart and dishonest – it seems our politicians are either idiots or crafty – great choices.
i don’t think this bailout is going to work – “it didn’t go far enough to help enough homeowners” will be the claim – and they will go for a taxpayer bailout.
gosh, i hope i’m wrong.
Sorry that was Mr Practical, this is Mish:
http://www.minyanville.com/articles/index.php?a=15133
#91 lurlker: No. its even worse then the old HK site.
If you continue south on KKR, on the right hand side right under the Rt 4 over pass, is where one building is proposed to be built. (currently a landscaping business)
Now continue under the over pass, bear right to get onto Rt 4 (east,and again on the right is an old carpet store, right on the side of Rt4, that is where the other building will be built.
106 3b – wow, that is worse than the old hk site. who is it that seems to think that there are people who want to live ON rt 4? wow, that’s bad.
From # 74 scribe
TODAY’S MOST POPULAR
1. Big Pharma Faces Grim Prognosis
I work in pharma and i have to say that most people are very blind to how much trouble NJ is in. Big pharma in NJ is on its way out. I dont know how long it will take, but from here on out pharma in Nj is packing up and leaving. It isnt just a national issue either. There is a global consolodation of pharma and ultimatly the primary drivers for the consolidation of pharma operations is that india and southeast asia are in the process of ramping up production facilities that can produce at equal levels of quality but at lower production costs to US and European production facilities. There are other complicated issues involved such as regulations and import/export barriers, but Nj really lost its chance at maintaining any pharma over the long time sometime around 2000.
So, what is going to replace all the pharma jobs as they slowly bleed out of the state??? What industry is going to replace those tax dollars????
kettle,
I didn’t mean to post that list of the top stories on the WSJ, but maybe I should post that one.
AP
Asset-Backed Notes Remain in Pain
Thursday December 6, 3:31 pm ET
By Leslie Wines, AP Business Writer
Investors Still Backing Off Asset-Backed Commercial Paper, but Broader Market Is Steady
NEW YORK (AP) — The market for the short-term corporate debt notes knows as commercial paper deteriorated in the latest week, with all of the drop due to those assets backed by subprime mortgages and other risky collateral, the Federal Reserve reported Thursday.
The volume of outstanding asset-backed commercial paper declined by $23.1 billion in the week to Wednesday, marking the largest drop in a month, the Fed reported.
However, the total volume of all commercial paper last week declined by $10.2 million, the Fed said. The large drop in the asset-backed sector completely wiped out improvements in volume for all other types of commercial paper.
The commercial paper market, which seldom attracts much attention, was hit hard in August by a dramatic increase in risk aversion as investors sought cover from the shakeout in the below-prime lending and corporate credit markets.
Commercial paper is a short-term debt note issued by a corporation, often to get funds for operations.
In good times, commercial paper provides an easy way for companies to get short-term operating capital while avoiding formalities such as registering bond sales with the government. These assets tend to feature lower interest rates than longer-term bonds and often require little beyond the good name of the issuer to bring about a sale.
http://biz.yahoo.com/ap/071206/commercial_paper.html?.v=1&printer=1
etwa – die Mutti, sie war Pennsyvania Dutch. Fressen, daß geht mir mit den Wurst-spracht besser als essen, nicht? :)
Now we get pounded for OT stuff – what happened to the cricket guy?
Here’s the WSJ story on big pharma:
Big Pharma Faces Grim Prognosis
Industry Fails to Find
New Drugs to Replace
Wonders Like Lipitor
By BARBARA MARTINEZ and JACOB GOLDSTEIN
December 6, 2007; Page A1
Over the next few years, the pharmaceutical business will hit a wall.
Some of the top-selling drugs in industry history will become history as patent protections expire, allowing generics to rush in at much-lower prices. Generic competition is expected to wipe $67 billion from top companies’ annual U.S. sales between 2007 and 2012 as more than three dozen drugs lose patent protection. That is roughly half of the companies’ combined 2007 U.S. sales.
http://online.wsj.com/article/SB119689933952615133.html?mod=hps_us_mostpop_viewed
Anyone have any ideas on a good place for a traditional IRA. Etrade would have been the first choice, but it looks like they are heading for bankruptcy and I would not want to get caught up in that.
Kettle
Way back when I left drug development colleagues laughed at me for going over to the regulatory side. Their jobs currently reside in India as of this time last year, I’m still gainfully employed (at least for now) The loss of big pharma and the putrid business climate in this state will be the final nail for a good number of folks.
From the White House:
Fact Sheet: Helping American Families Keep Their Homes
White House News
In Focus: Homeownership
President Bush Announces Private-Sector Plan To Help Struggling Homeowners, Calls On Congress To Join Administration In Acting
Today, President Bush outlined steps the Administration is taking to help American homeowners and called on Congress to join him in delivering relief to homeowners in need. In August, President Bush announced measures to help many struggling homeowners, including directing Treasury Secretary Henry Paulson and Housing and Urban Development (HUD) Secretary Alphonso Jackson to work with lenders, loan servicers, mortgage counselors, and investors on an initiative to help struggling homeowners. Secretaries Paulson and Jackson responded by assembling a private-sector group called the HOPE NOW Alliance. HOPE NOW is an example of government bringing together members of the private sector to voluntarily address a national challenge – without taxpayer subsidies or government mandates. Today, the President announced that these efforts have yielded a promising new source of relief for American homeowners.
President Bush announced that representatives of HOPE NOW have developed a plan under which up to 1.2 million homeowners could be eligible for assistance. Many individual homeowners feeling financial stress have “adjustable rate mortgages,” which typically start with a lower interest rate and then reset to a higher rate after a few years. The HOPE NOW plan is designed to help subprime borrowers who can at least afford the current, starter rate on a subprime loan, but will not be able to make the higher payments once the interest rate goes up. HOPE NOW members have agreed on a set of new industry-wide standards to provide systematic relief to these borrowers in one of three ways:
Refinancing an existing loan into a new private mortgage;
Moving them into an FHASecure loan; or
Freezing their current interest rates for five years.
Since The President’s Announcement In August Of Targeted Actions To Assist Homeowners, The Administration Has Moved Forward With Three Key Steps
1. The President and his Administration have launched a new initiative at the Federal Housing Administration (FHA) called FHASecure. FHASecure expands the FHA’s ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. In just three months, the FHA has received over 120,000 refinancing applications and has already helped more than 35,000 people refinance. By the end of 2008, the FHA expects this program to help more than 300,000 families.
The FHA is also on track to start charging mortgage insurance premiums based on the individual risk of each loan, using traditional underwriting standards. Risk-based pricing will expand access and enable FHA to help even more low-to-moderate income families who could not otherwise qualify for prime-rate financing.
2. Secretaries Paulson and Jackson have assembled the private-sector HOPE NOW alliance. This morning, representatives of HOPE NOW briefed the President on the plan they have developed. In addition:
HOPE NOW recently mailed hundreds of thousands of letters to borrowers falling behind on their payments. In the past, some lenders and mortgage servicers may not have contacted borrowers until after their loans were delinquent. The Alliance is trying to reach families early, before their mortgage problem becomes overwhelming.
HOPE NOW has supported a toll-free hotline, 1-888-995-HOPE, which is available 24-hours a day to provide mortgage counseling in multiple languages.
3. The Federal government is taking several regulatory actions to make the mortgage industry more transparent, reliable, and fair. Later this month, the Federal Reserve intends to announce stronger lending standards that will help protect borrowers. In addition, HUD and the Federal banking regulators are each taking steps to improve disclosure requirements so that homeowners can be confident they are receiving complete, accurate, and understandable information about their mortgages.
If Members Of Congress Are Serious About Responding To The Challenges In The Housing Market, They Can Start With Several Steps Of Their Own
1. Congress needs to pass legislation to modernize the FHA. In April 2006, President Bush first sent Congress an FHA modernization bill that would increase access to FHA-insured loans by lowering downpayment requirements, allowing the FHA to insure bigger mortgages in high-cost states, and expanding FHA’s authority to price insurance fairly, with risk based premiums. The House passed the bill with more than 400 votes last year. This year, the House passed it again, yet the Senate has not acted.
The liquidity and stability that FHA provides the market are needed now more than ever, and the President urges the Senate to move as quickly as possible. This bill could allow the FHA to help 250,000 additional families by the end of 2008.
2. Congress needs to temporarily reform the tax code to help homeowners refinance during this time of housing market stress. Under current law, if the value of your house declines and your bank forgives a portion of your mortgage, the tax code treats the amount forgiven as taxable income. The House recently passed this tax relief with bipartisan support, and the Senate should pass relief as soon as possible.
The Administration has also proposed allowing cities and States to issue tax-exempt mortgage bonds to refinance existing loans, and the President calls on Congress to approve this temporary measure quickly. Under current law, cities and states can issue tax-exempt bonds to finance new mortgages for first-time homebuyers, and this measure would make it easier for State housing authorities to help troubled borrowers.
3. Congress needs to pass funding to support mortgage counseling. Non-profit groups like NeighborWorks provide an essential service by helping homeowners find affordable mortgage solutions and prevent foreclosures. The President’s FY 2008 Budget requests $120 million for NeighborWorks and another $50 million for HUD’s mortgage counseling program. Congress has had these requests since early February, and it needs to stop delaying and get this funding to the President’s desk.
4. Congress needs to pass legislation to reform Government Sponsored Enterprises (GSEs) like Freddie Mac and Fannie Mae. GSEs provide liquidity to the mortgage market that benefits millions of homeowners, and it is vital that they operate safely and soundly. The President has called on Congress to pass legislation that strengthens independent regulation of the GSEs and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start, and the Senate needs to pass legislation soon.
# # #
http://www.whitehouse.gov/news/releases/2007/12/20071206-7.html
I forget who pointed it out, but the fact that financially a lot of the people who could qualify for the bailout plan would be better off getting foreclosed and then buying again after 5 years when they have cleaned up their credit is beyond the average joe.
Everyone here is well aware that buying a home is a primarily emotional decision for the average person. This is a glaring fault of our society . The people in trouble dont even know how to run the basic numbers to figure out what is in their best financial interest. Even if they do not know to run the numbers (you dont need a degree for a basic analysis)they dont even seem interested in finding someone (a financial adviser) or someplace (there are online calculator for a first run guess)to get the information on how to help themselves. they are just sitting their waiting for the Government to help them, i mean you cant expect someone to be responsible for their on decisions. Heck even if you are not financially literate its not like there are people who can advise you….
Sorry, needed to rant after seeing a “good morning america” bit this morning where the interview a few people who were sobbing about how they loved their home and how could the government let them be kicked out of THEIR home. they had to use funny money loans because that was the only way theu could get into a house….. boo hoo
http://www.hopenow.com/
http://online.wsj.com/article/SB119697097999116122.html?mod=googlenews_wsj
Bush’s Outline for Homeowner Aid
December 6, 2007
Fact Sheet: Helping American Families Keep Their Homes
President Bush Announces Private-Sector Plan to Help Struggling Homeowners, Calls on Congress to Join Administration in Acting
Today, President Bush outlined steps the Administration is taking to help American homeowners and called on Congress to join him in delivering relief to homeowners in need. In August, President Bush announced measures to help many struggling homeowners, including directing Treasury Secretary Henry Paulson and Housing and Urban Development (HUD) Secretary Alphonso Jackson to work with lenders, loan servicers, mortgage counselors, and investors on an initiative to help struggling homeowners. Secretaries Paulson and Jackson responded by assembling a private-sector group called the HOPE NOW Alliance. HOPE NOW is an example of government bringing together members of the private sector to voluntarily address a national challenge — without taxpayer subsidies or government mandates. Today, the President announced that these efforts have yielded a promising new source of relief for American homeowners.
• President Bush announced that representatives of HOPE NOW have developed a plan under which up to 1.2 million homeowners could be eligible for assistance. Many individual homeowners feeling financial stress have “adjustable rate mortgages,” which typically start with a lower interest rate and then reset to a higher rate after a few years. The HOPE NOW plan is designed to help subprime borrowers who can at least afford the current, starter rate on a subprime loan, but will not be able to make the higher payments once the interest rate goes up. HOPE NOW members have agreed on a set of new industry-wide standards to provide systematic relief to these borrowers in one of three ways:
• Refinancing an existing loan into a new private mortgage;
• Moving them into an FHASecure loan; or
• Freezing their current interest rates for five years.
Since The President’s Announcement in August of Targeted Actions to Assist Homeowners, the Administration Has Moved Forward With Three Key Steps
1. The President and his Administration have launched a new initiative at the Federal Housing Administration (FHA) called FHASecure. FHASecure expands the FHA’s ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. In just three months, the FHA has received over 120,000 refinancing applications and has already helped more than 35,000 people refinance. By the end of 2008, the FHA expects this program to help more than 300,000 families.
• The FHA is also on track to start charging mortgage insurance premiums based on the individual risk of each loan, using traditional underwriting standards. Risk-based pricing will expand access and enable FHA to help even more low-to-moderate income families who could not otherwise qualify for prime-rate financing.
2. Secretaries Paulson and Jackson have assembled the private-sector HOPE NOW alliance. This morning, representatives of HOPE NOW briefed the President on the plan they have developed. In addition:
• HOPE NOW recently mailed hundreds of thousands of letters to borrowers falling behind on their payments. In the past, some lenders and mortgage servicers may not have contacted borrowers until after their loans were delinquent. The Alliance is trying to reach families early, before their mortgage problem becomes overwhelming.
• HOPE NOW has supported a toll-free hotline, 1-888-995-HOPE, which is available 24-hours a day to provide mortgage counseling in multiple languages.
3. The Federal government is taking several regulatory actions to make the mortgage industry more transparent, reliable, and fair. Later this month, the Federal Reserve intends to announce stronger lending standards that will help protect borrowers. In addition, HUD and the Federal banking regulators are each taking steps to improve disclosure requirements so that homeowners can be confident they are receiving complete, accurate, and understandable information about their mortgages.
[snip]
115#, the white house is one of NAR’s listing?
Crazy low teaser rate went to people with good credit, a subprime teaser averaged 7-9%, the good credit fixed rate people got 6%. Plus for Bush’s plan to kick in the rate has to rise more that 10%. So a 9% teaser can rise to 9.8% under the plan and still not be covered.
Jamey Says:
December 7th, 2007 at 9:38 am
No, John, Bush is screwing the honest borrowers who took fixed-rate loans. He’s rewarding the gamblers who knew that rates a few years ago were at historic lows, had no where to go but up, and still decided to double-down on fifteen.
So unlike you NOT to be deliberately clueless.
#108 Shocking but true. And as I said they plan to gear them to people who work in NYC.
I am hoping that they will have trouble getting financing for this development, but you never know.
My other concern is that if they cannot sell these things, they will convert them to rentals, of which River Edge has a lot of already, not to mention the increased burden on the schools. The potential for blight is great in my opinion.
Needless to say if this thing gets approved,and they build it, I will not be purchasing another house in River Edge.
#117 stuck in moderation
Crazy low teaser rate went to people with good credit, a subprime teaser averaged 7-9%, the good credit fixed rate people got 6%. Plus for Bush’s plan to kick in the rate has to rise more that 10%. So a 9% teaser can rise to 9.8% under the plan and still not be covered.
Also it makes no sense to be foreclosed on rather than do the Bush plan. Only people with equity can join in. If they have equity they should sell or do the loan modification. It is the people who don’t qualify who don’t have equity who should execise their foreclosure put.
I was curious about that new toll free 888 995 HOPE line that Bush put in place (I don’t own a home) so I gave it a call and after a brief announcement and a please hold while I transfer your call I then got a busy signal and then got disconnected. It looks like a lot of people will be looking to this for help as this is going to be the worst real estate market in history and I still don’t think this will help any.
Advice to anyone under water, accept you messed up, mail the keys to the bank and start over.
From CNBC:
Existing Home Prices $207,800 ▼ $218,900 (06)
New Home Prices $217,800 ▼ $250,400 (06)
So, are we ever going to see 199,990 as the median existing home price?
124#, a lot of folks here was predicting that home price will be down 30 to 50% from 2005 level. imagine what will happen if those predictions come true.
Ann 100..interesting note. We seem to be in the same position, I sold in 05 to move my 3rd grader to a better school district. Renting a house and waiting it out…so tired of seeing these old houses, some with tin cabinets and the wallpaper you love. Others even have homasote walls!! Taxes can be 9,000 on these huts as well. Still seeing price declines which is encouraging
Househunter, I am so tired of seeing these old homes too, and of course, my favorite, wallpaper.
I’m ok with living in a smaller, older house, and I’ve come to terms with that, but these sellers who miss major updates, have dirty rug, windows that don’t open, and yes, wallpaper everywhere, and still expect top dollar and go to you-know-where. I hate to say this, but I sometimes find myself wishing nothing less than financial ruin upon them and I don’t like to have mean thoughts like that.
Nothing is selling in the towns I am looking at so that is encouraging.
From #115 above:
What does this mean?
“2. Congress needs to temporarily reform the tax code to help homeowners refinance during this time of housing market stress. Under current law, if the value of your house declines and your bank forgives a portion of your mortgage, the tax code treats the amount forgiven as taxable income.”
Since they are talking about loan forgiveness and refinance in one sentence, it sounds as if he wants banks to forgive a portion of the principle, but allow people to stay in their houses. It’s like a gift from the bank – amazing. Why can’t banks give me a big tax free lump sum gift?
#121 – I don’t know that much about what would prevent them from getting financing, but since it seems as though as none of those townhouses on kinderkamack (“the views” or whatever they are called, which also are in a terrible location) have sold, I can’t imagine why they’d consider building even more condos, just so they can sit on the market. Plus, whether someone commutes to the city or not, who wants to live ON Rt 4?
bi Says:
December 7th, 2007 at 11:08 am
124#, a lot of folks here was predicting that home price will be down 30 to 50% from 2005 level. imagine what will happen if those predictions come true.
You’ll sell, we’ll buy?
The median home price in California is $530k. The median income is $54k. How does one afford a house at 10x one’s income? Are these people eating dog food while living in half million dollar homes? I don’t get it.
One California Realtor says: “California’s sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans — those above the conforming loan limit of $417,000,” she said. “This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing.”
http://www.svdaily.com/realestateprices.html
This strikes me as funny for some reason.
Re: HOPE Plan
Under the plan, only “owner-occupied” mortgages willl apply. Who will verify this? If people lied about income, fico scores, employment, etc., what makes you think they didn’t lie about the property being “owner-occupied”?
Gimme a break!!
I do not understand this “predatory” lending concept. Either there was fraud or there wasn’t. At the end of the day, the non-fraudulent loans are no more predatory than your typical credit card, auto loan, student loan, or any of hundreds of different consumer contracts. What we really seem to be saying here is that there is a wide swath of the population that is incompetant and should not be able to enter into a legally binding agreement (like a child or a mentally ill person).
It appears that this 5 year freeze plan will only be eligible to a fraction of the sub-prime mortgage owners, an even smaller percentage will actually apply before it’s too late, and for most of those it would be a poor financial decision to accept the plan’s so called help.
If a typical family not in fiscal distress can just barely afford a 6% mortgage, what makes anyone really believe that a group of financially distressed homeowners can afford a freeze at around 8 or 9%.
And I’m not clear on this next question, can anyone answer it? If the mortgage is currently on option loan or interest only, will it be interest only for the next five years??!!
#133 This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing.”
Nah, it speaks to the fact that prices are too high, and they have to come down.
Owning a home (and I mean really owning– i.e., paid off) does have a strong emotional pull based in rational thought. “owning” by means of a neg-am loan is just a fantasy. People in this situation who are crying over what they have lost are really crying about the demise of their fantasy lifestyle in which surface is substance.
#131 lurker: Well with the credit market tightening up, I do not think it will be that easy to actually get the financing, plus I read somewhere that the rate of condo financing projects that are in arrears has risen dramatically.
I would think that if I were the lender I would be very wary of approving another condo project, plus if I were the lender and saw where they were building it, I would never approve the financing.
Ann –
Ever since you started talking about wallpaper I seem to see it everywhere :-).
Story to make you feel pleased about your aversion:
House near friends parents was sold by an elderly couple to a young couple for a considerable amount of money. Top to bottom wallpaper which had been in place for the past 15 – 20 years.
The young couple stripped the wallpaper and discovered mold underneath, turns out the house is riddled with it and has to be gutted. Needless to say, they didn’t spring for a mold test on inspection – but they are rushing to sue everybody and anybody and want the previous owners to pay for everything. Not sure they have a snowballs chance in h*ll as the previous owners were clueless and noone stopped them from getting an appropriate inspection.
Anyhoo – just goes to show that apart from your personal aversion and wish not to put in the work of stripping it, there are other reasons to run from excessive wallpaper.
JPMorgan Heads Predicts Wave of Bank Mergers
FRANKFURT, Dec. 7 (Reuters) – JPMorgan Chase expects the current market turmoil to unleash a wave of bank mergers in the U.S. and Germany, JP Morgan Chairman and Chief Executive Jamie Dimon told a German newspaper on Friday.
“I believe that we will see a huge amount of big mergers in the U.S. and Germany,” Dimon told business daily Boersen-Zeitung.
“Companies recognise after such a collapse that they need more weight, more capital and access to good, long-term financing and the people there say to themselves: ‘Now it is time to do something’.”
“That normally comes after the crisis,” he added. “During the crisis, they are very busy.”
He said the industry faced a difficult fourth quarter, adding he was seeing higher losses in the area of consumer credit.
Dimon added it would not bother him if the planned super-SIV (structured investment vehicle) in the U.S. was not set up.
“For JPMorgan, in any event, it is no big deal if the SIV comes or not.”
“I would not call it a failure if the SIV did not happen. I would say, it did not happen but it would not worry me, no. I think it is OK to try something like that if you think it helps.”
#139 –
is a mold inspection part of the standard, or is it a separate inspection?
for the realtors, and anyone else with this knowledge-
what types of inspections do you recommend?
OT re pharma:
This is going back quite a few years but I remember back in the late 90s during my equity research days, Pfizer’s R&D budget was (if I am not mistaken) 1/3rd what the whole of India spent on R&D! I couldn’t help but think (even though R&D drives pharma) how this could be sustainable in the age of WTO, and that Asian companies were pounding out the generics and exploiting loopholes to reverse engineering the process for the product.
Pfizer & other pharma were not allowed to have majority stake in Indian companies, so they set up 100% subsidiaries overseas where a lot of their R&D is now being done for a fraction of the cost here. This is a trend that started a decade back, and could be accelerating.
Just an observation, take it FWIW since I don’t work in pharma.
Does anyone have any Comp Killers to post? I really love seeing this data – I think it is the most important factor in determining where the house pricing are headed… Thanks!
104 tcm
I agree with you – he is worse than an idiot.
and I have the same fear – the “it didn’t go far enough” argument is likely to be heard.
however, there really is very little they can do to “help” RE prices. the plummet will continue apace.
TCM #104 What you posted wasn’t in my post but a view on it by someone else.This guy is an idiot in what he wants to do.I was just posting my surprise that Chuck gets whats comeing down the road.AS I have always considered him a camera chaseing fool.
Get ready folks 08 dems win then you will see a bailout that will make your hair curl.
#145
dude, you aren’t kidding. Hillary is already on record as talking to Eleanor Roosevelt through a Wiji Board. I heard Bill is getting a sweet wheelchair with spinner rims for Xmas to play the reincarnation of FDR as First Man. We are looking at the New Deal part II once this family roles into office with a Dem congress in the middle of a recession.
mikeinwaiting Says:
“Get ready folks 08 dems win then you will see a bailout that will make your hair curl.”
Bailout with what? The trillions that we’ve already flushed down the toilet in Iraq? That money is gone. We don’t have anything to “bailout” lenders with, and the Chinese and the Arabs don’t have any more blank checks. No offense, but what do you think Ron Paul or the rest of the Repubs would do about any of this? Cut the capital gains tax again?
bubble # 147
the traditional republicans will do nothing. Ron paul is strongly in favor of reducing spending and the size of the government and has the voting record to back it up. Reduced spending and strong fiscal policies is the exact actions needed to bring the US back into solvency
So far the expensive homes hold well but the homes in poor neighborhood went down substantially. To fix current problem, Bush should ask lending agencies forgive half of loans in poor neighborhood. This proposal is consistant with Bush’s compassionate conservative philosophy.
lisoosh re wallpaper3 #139
OMG. That is a horror story beyond horror stories.
That’s why sellers don’t want to take it down first, because they know darn well there could be nasty stuff lurking under there.
And of course, there is always a chance of damaging the drywall or whatever as you are taking it down.
I feel for that young couple. I doubt they will get anything too.
Your story is also good proof that any realtor who says wallpaper is “just a cosmetic fix” is a liar. It might be just an easy cosmetic fix … it might not.
I love this looney bin.
Yum 147 Didn’t you here Hillary on CNBC “from where it comes from” that is a direct quote.Taxes my good man taxes.As to Ron & Repubs
I would hope just what is being done now.Smoke &
mirrors & very little in real terms.Must correct
on its own.
tcm (141)-
Mold inspections aren’t covered in a home inspection. However, a good home inspector should point out areas that he suspects are infested with the most virulent types of mold.
IMO, the whole mold thing is a boondoggle, based upon the sale of fear by Oprah and those of similar ilk. ALL HOMES HAVE MOLD! The problem is, not all types of mold are generally hazardous to the average person.
In my experience, I’ve seen countless buyers become fixated on mold, yet pay no attention to HVAC and ductwork, which harbor pet dander…something I’ve always believed is much nastier than mold.
#148 Kettle You got the ticket!We can always vote & hope.
bi (149)-
“This proposal is consistant with Bush’s compassionate conservative philosophy.”
True compassion (for us on the board) would involve a ten broken fingers (yours).
there is an article in the opinion section of the wsj today by jessie jackson that says the plan doesn’t go far enough. he wants a u.s. govt. sponsored plan.
he also says that on monday thousands of americans are expected to march on wall st and other cities to urge the govt. to take the “right steps”.
will anyone on this board be marching?
Big Pharma Drugs kill more people then all diseases combined. But, they also control the Death Certificates (Cause of Death). Dr Josef Megele, under Adolph Hitler, is the Father of Big Pharma. He originated Chemotherapy use on Non Aryans. If Death Certificates were accurate, their would be very few deaths from Cancer, most deaths would be from the Medical Treatment regimen.
141 t c m Re mold
I use my nose. If a basement has a dank smell, and it is finished, I am out of there.
I think that the whole finished basement thing is a bit nuts. If you have the right house, no water problems and you install the finished basement properly, sure, it’s fine. But so many of these older houses have basements that “himself” threw in without the proper waterproofing. Who knows what lurks behind there.
More basements in NJ should be left unfinished and just used for storage and utilities.
Does anyone know law on mold in regard to rentals some seen in my garage.Can I make landlord remedy?
kettle1 Says:
December 7th, 2007 at 12:34 pm
bubble # 147
the traditional republicans will do nothing. Ron paul is strongly in favor of reducing spending and the size of the government and has the voting record to back it up. Reduced spending and strong fiscal policies is the exact actions needed to bring the US back into solvency
________________________________________________
Gee, I thought “traditional Republicans” were also in favor of reducing spending and the size of government. And last I checked Mr. Paul’s record, he voted right along with Hilary to continue all that increased spending for a war he claims to oppose–sorry, I mean, “increased borrowing,” since we don’t actually have any money to spend. All that’s going to change once he moves from Congress to the White House?
In regards to the bailout plan what if someone who meets the criteria is also driving around in a $50,000 car or SUV and has 2 or more 42inch plasma screens shouldn’t they have to give up the 50K car and the plasmas and drive around in a sub compact? How in the world is this plan fair to anyone?
Yum 160 Yes it would.Once troops are there it is political suicide to cut off money.How maney anti war dems even go that route.WE do not have any money I agree so do you just want to close down gov & disband armed forces.Who do you feel would do the job right?
Guess what guys? The rate freeze is VOLUNTARY! Hah! Good old Bush….
Here’s the latest
No Quick Fix for Subprime Mortgages
Article Tools Sponsored By
By THE ASSOCIATED PRESS
Published: December 7, 2007
Filed at 12:40 p.m. ET
WASHINGTON (AP) — Be ready to wait if you want to get information from a toll-free hot line about freezing the interest rate on your subprime mortgage.
Minutes after President Bush outlined a plan to help strapped homeowners, callers were told to have patience until a counselor could answer their questions and ”devote as much time to you as necessary.”
But, once they do get through, homeowners may not find the answers they sought.
One caller to the hot line (1-888-995-HOPE) was told there would be ”lots of hoops to jump through” to obtain the five-year freeze. The rate hold goes to the heart of the relief effort for people with subprime mortgages, which are loans offered to borrowers with tarnished credit or low incomes.
Even President Bush acknowledged the plan is ”no perfect solution.” Treasury Secretary Henry Paulson said it was not a ”silver bullet.”
Only a fraction of the homeowners who face huge jumps in their mortgage payments appear likely to be helped by the plan, negotiated by the Bush administration, to freeze the low introductory rates on their subprime loans for five years. After that, they could be in the same position again.
Homeowners dialing up their mortgage company to get their current rate frozen could be disappointed. The White House plan does not force mortgage companies to give eligible homeowners a break. It is voluntary.
The White House on Friday defended the system and its eligibility requirements.
”I wouldn’t call them `hoops,”’ White House deputy press secretary Tony Fratto said. ”I think we are trying to make sure, as we outlined yesterday, that we’re getting at the right population that can best be served by this program.”
Bush promoted the initiative Friday for the second day in a row, using his weekly radio address to call it ”an example of the government bringing together members of the private sector to voluntarily address a national challenge — without taxpayer subsidies or government mandates.” The president taped his address for Saturday airing, and the White House released the transcript on Friday.
In first announcing the initiative on Thursday, Bush said 1.2 million people could be eligible for relief. Aid includes the rate freeze and helping people refinance into more affordable mortgages. The Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending, estimates that just 145,000 families will qualify for the rate freeze. The criteria are too strict, it says.
The White House plan is aimed at stemming foreclosures, which have shot up to record highs as the housing market has gone from boom to bust.
Subprime borrowers have been hardest hit by the meltdown. Initially low interest rates that reset to much higher rates have clobbered those borrowers. Nearly 2 million adjustable-rate subprime mortgages will reset from introductory rates of around 7 percent to 8 percent to much higher rates this year and next. That raises the specter of even more people being forced out of their homes because they cannot keep up with their monthly payments.
Rising home foreclosures are a headache for politicians and a danger for the economy.
Bush tried to shift blame for the crisis to the Democratic-led Congress.
”The Congress has not sent me a single bill to help homeowners,” Bush said.
One measure would give the Federal Housing Administration more flexibility; a second would change the tax laws temporarily to help people who have a portion of their mortgage forgiven by banks.
Sen. Charles Schumer, D-N.Y., complained the criteria for Bush’s mortgage freeze are too narrow to help most distressed homeowners and worried that legal challenges by investors might stall the effort.
”While we certainly all hope this will be a shot in the arm for the housing slump, it is hardly a panacea,” Schumer said. ”There are too many families who may be left out, too much left up to the voluntary willingness of the private sector and too little disclosure and transparency to ensure families who do qualify are being helped.”
Under the plan outlined Thursday, the rate freeze offer would be available only to people who have not missed any mortgage payments at their introductory interest rate. It also only would apply to loans taken out between 2005 and this past July 31 and scheduled to rise to higher rates in Jan. 1, 2008, and July 31, 2010. To make sure speculators don’t get the break, the rate freeze offer applies only to people living in their homes.
The idea behind the administration-negotiated plan is that the five-year freeze will buy time for the housing sales and prices to start rising again. Such a rebound would enable homeowners to refinance their current adjustable rate mortgages into fixed-rate loans with more affordable monthly payments. But some people who want to buy homes and have been priced out of the market are upset that there’s no help in sight for them.
Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association in the third quarter, a record, 18.81 percent of them were past due. A record, 4.72 percent of the loans entered into the foreclosure process during that period.
Meanwhile, there still is the possibility that investors, who were counting on bigger returns from the higher rate resets, will balk at extending the duration of the lower rate.
George Miller, executive director of the American Securitization Forum, whose members include investors, ratings agencies and other financial players, backed the White House’s effort and developed streamlined procedures for lenders to follow when sorting through borrowers’ requests for relief. He was hopeful lawsuits could be avoided, but he struck a note of caution.
”Certainly, there is no complete insulation from legal exposure,” Miller said.
DE 161It is not fair but since when did that stop something.Just imagine trying to check assets on all these loans.Going to go to your house for a TV check,put Hummer in Moms name done.
speculating on the behind the scenes action here, but is the plan really “voluntary” when the president and the sec. of treasury call you and say “get down here to work out this voluntary plan or else”?
155 Clotpoll
Only ten? Why leave bi with two good ones?
Skep-tic, I wonder too. There has to be either a carrot or a stick but I haven’t heard of either.
There will be people who lose out on a five or six figure interest gift from the bank because they bought a house a month too early or a month too late. Good times for lawyers.
Sep-tic 165 Voluntary with a gun to your head.I
think there will be alot of foot dragging.Once afew of the lawsuits get filed then they will start to really milk it.Servicers will then be able to tell Paulson we tried but you didn’t give use enough cover from litigation.
http://www.responsiblelending.org/pdfs/foreclosure-paper-report-2-17.pdf
JB,
Moderation, # 169. Crack?
First of all we are in two real estate markets at the same time. The haves and the have nots. Even averaging the subprime sludge out there with nothing down the average american has over 50% equity in their house. House selling a game of musical chairs in a good town, when one house goes on the market it just takes one house off the market as the seller is buying another house.
Suprime neighborhoods have the foreclosure problem which is the person leaving the house is not buying another hence it is an addition to inventory.
Plus the upper crust is still buying. Downtown NYC is still pumping out condos and moving inventory. They are getting $1,100 a square foot for unfinished condos downtown and people are buying. The guys over at 25 Broad Condo told me middle of month is usually slower but this month they are getting a few goldman guys everyday scoping out the units so they can pounce when the bonus comes out.
The trade up neighborhoods have seen sales slow but prices are still fairly firm.
BTW when I sell a house that is old with possible lead/absetos I wait till afer the inspection to take 10% and at that time I present them a written contract that I will give them $500 if they hold me harmless from any future issues with house. If they won’t sign I don’t sell. They always sign anyhow cause they think it is free money cause it passed home inspection. Mind you I never never hid a problem but you never know what some anal nut will come up with after they buy the house.
128 Ann…good luck! My husband says I’m obsessed with real estate info, but I think he secretly likes it:) I have even gone down to the clerks office and looked up mortgage into..found one foreclosed house in our area that was bought a year ago with no money down, adj rate, with a balloon for 40,000 above the morgtage. They ruined a perfectly good house and abandoned it.
172 in moderation. details on the freeze.
SIFMA Commended Treasury’s Response to Credit Crunch
SIFMA commended Secretary Paulson on Thursday for the U.S. Department of Treasury’s efforts to address the subprime crisis. “We congratulate Treasury Secretary Paulson for coordinating the efforts of federal regulators and market participants to develop more streamlined solutions to efficiently reach borrowers in need and address the subprime crisis,” said Marc Lackritz, SIFMA president and CEO. “We strongly support initiatives to prevent foreclosures and preserve home ownership wherever possible. We commend the use of all options available to borrowers, including refinancing, loan modification, borrower counseling and loss mitigation strategies. We are particularly supportive of the efforts to increase tax-exempt bonding capacity and to allow state and local governments new flexibility to use tax-exempt bonds for home mortgage refinancing to provide relief to American homeowners.” Lackritz added, “We are especially pleased to have had our affiliate, the American Securitization Forum (ASF), involved in the discussion and planning stages of this joint effort between the public and private sectors,” added Lackritz. Click here to view SIFMA’s press release.
In regards to the bailout plan what if someone who meets the criteria is also driving around in a $50,000 car or SUV and has 2 or more 42inch plasma screens shouldn’t they have to give up the 50K car and the plasmas and drive around in a sub compact? How in the world is this plan fair to anyone?
——————————-
I agree with this completley
I also think anyone who purchase a house more than 2.5 times there annual income should not get the help.
I am sorry if you make 50k and you purchased a house more than 250k than thats just pure stupidity. Its no ones fault but the homeowner. We were told by the bank we qualified for all this 350-400K and they showed us how we could afford it and our common sense kicked into action and we were like we can’t afford that much. Hense why we are still renting. I mean is it the banks for for manipulating you into thinking you could afford that much? I know what I can afford to pay comfortable for rent with all the other expenses that my wife and I have. So wheres my handout for using my common sense. I don’t see the government bending over backwards to reward me for using common sense. All this will ultimatley do is make the housing crash even worse. Caseu think about it. IF we let everyone get foreclosed on who was going to with these resets. The market will continue to decline for the next 5 years and than there will be a surge of forclosures again in 5 year becuase they will never get there money back on these homes. And than in 5 years the market will drop even more.
At this rate there won’t be a recovery agleast until the year 2015.
I now think home prices will drop 75% off 2005 prices by the year 2015. And than will remain flat until 2020 which at the point the prices will rise at 3% a year
Ann – I don’t like damp smelling basements either. Even if there are no particular issues, anything stored there ends up with the same smell over time – just not comfortable.
As to the wallpaper house. The original owners had put it up when they bought the house new. I don’t think there was anything duplicitous involved, just bad luck. I feel bad for both parties and take it as a cautionary tale that it is worth spending a bit extra on a really good inspection.
Since we are modifying contracts, anybody who owns nearby out of money puts or calls should automatically ask for an extension. How about extending January 2008 contracts out to January 2011. It will be a travesty if these 2008 contracts expire worthless. Will the holders of these expired contract be able to make their mortgage, car or cc payements? Let’s broaden the scope of this freeeze.
# 157 confused
I work in the pharma industry and there are some very well deserved criticisms, and while any drug on the market will statistically kill a few people ( i.e someone with an unknown allergy to asprin dies after taking it for a headache) and currently drugs are being pushed like the industry was a dealer on the corner; overall the drugs being put on the market have very real benefits when used properly and in the appropriate amounts. The pharma industry is not some new age nazi organization out to poison joe shmoe.
Bubble yum #160
Might i suggest you actually check your facts before spouting off, it will help you sound a little less like a moron. Ron Pauls most recent war voting record
# Voted against war because Iraq was not a national threat. (May 2007)
# Voted YES on redeploying US troops out of Iraq starting in 90 days. (May 2007)
# Voted NO on declaring Iraq part of War on Terror with no exit date. (Jun 2006)
# Voted NO on approving removal of Saddam & valiant service of US troops. (Mar 2004)
# Voted NO on authorizing military force in Iraq. (Oct 2002)
# Voted YES on disallowing the invasion of Kosovo. (May 1999)
When i said “traditional conservatives” in my previous post, i was referring to the neocons that the republic party has morphed into over the last 15 years. Traditional conservatives of 30-50 years ago were indeed for samller GOV and less spending.
Bubble Yum,
Here is a link to every vote Ron Paul has placed this year as well as a link to all of his past votes….
http://tinyurl.com/2ujuhj
Oh and this housing relief nonsense I think we should get to vote on it.
Remember vote no for prop 101Help
I now think home prices will drop 75% off 2005 prices by the year 2015. And than will remain flat until 2020 which at the point the prices will rise at 3% a year
Homer, were you raised in Japan? :)
#179–You are correct. Barry Goldwater is rolling in his grave right now.
161, 175
Totally agree with you
the phone number to call should be 1-888-HANDOUT
Only fair would be that, in order to qualify they would have to sell the SUV, sell the 42″ on ebay, cancel celphone (hey, 15 years ago we did not have them, and we survived), cancel their high speed internet, cancel their cable TV, eat canned Tuna and spam for 5 years, get a second job, cancel their credit cards, etc.
This bailout is really a slap on the face of responsible America
lisoosh, I agree on the smell. I love the sellers who think that their shabbily finished basement adds some great value to their home. If they ripped some of them out, I would prefer it.
That’s a shame about that wallpaper house. Doesn’t even sound like an old house, no way for anyone to know.
If the plan was agreed upon and announced yesterday how did they staff up the 800 number by today? Is Haliburton fielding the phone calls at $400 an hour? Do you hear a Guliani campaign ad while on hold?
#183 dream: I now think home prices will drop 75% off 2005 prices by the year 2015. And than will remain flat until 2020 which at the point the prices will rise at 3% a year.
Except in Bergen County where they are going to be 75% higher than their 2005 highs, and just keep going, higher and higher.
#187 3b,
Homer said that (the italics got messed up for some reason) I just thought maybe he might have lived through that scenario in Japan.
#189 dream: I know, I was just kidding.
3b,
This is prestigious Bergen County! Your prediction is right!
I remember when I was growing up here, two teachers could buy a decent house, even in the “nice” towns up in the northern part. And any guy who had a semi-decent, professional job had a really nice house.
Hello guys, been reading and posting for what like 2-3 years now. I know I made some toxic posts previously about this.
I graduated RN school, and am working for NYS (they have a specific set of patients I want to work with) I want to goto NP school soon and I still own my little co-op. I want a SFH someday but right now my apartment is good for me and cheap. And NP school is nearby and I have a very nice commute.
I make enough money, not as much as many of you but well I’m starting out. I was wondering for some random ideas of a next move. I know this is a blog and all disclaimers entail.
I’m now 28, not looking to get married for a couple years and right now have a GF who is great and scares me because I have been friends with her for 2 years prior to dateing for 6 months and I think she’s the one. ( Like really, scares me hardcore )
I get 3% from my pay for pension and 10% I elected that goes into a 401K like thing ( pre tax ) which I put into the international fund offering and a mid cap 50/50. I also took out a 529 for myself since NYS lets you put the money in pre tax ( not not pre fed ) and grad school will be pricy. But that is just in the money market option.
I have some student loans, no cc debt and 27 K of 32K 15yr fix left on the mortgage. I am going to work some OT to take a chunk out of the student loans before Grad School ( hopefully this fall )
I want to stay put until after gradschool since my bills + grad school = less than many of my friends pay on PITI. NP grad school gets me a 40K expense ->40K raise when I graduate and I stop being a punching bag/front line with the patients.
I live in Fort Lee, and yes that means I pay NYS and then some NJ State Tax. I was thinking moving upstate ( especially if she’s the one ) after school since the State pays well for upstate living especially as an NP ( I think I can do it )
I want to decouple from the “fast paced” fort lee lifestyle ( that I do not have or want ) and work on working to live not living to work.
Any random ideas here will be researched, but I am sometimes suffering from a blind spot when it comes to ideas.
Thanks you all from saving me from needing the bailout by your advice a few years ago.
#191 Ann: I am just being sarcastic, I have no doubt prices will go down in Bergen County.
In fact they already are, in the 2 towns I follow, although its down to one town now.
Even in northwest Bergen county (which is where I would really like to go, but family obligations prevent that), I am seeing asking prices in many cases back to 2004 levels.
And there is a lot of inventory in Franklin Lakes, Wyckoff, Allendale, Ridgewood, Ramsey,and the Saddle Rivers. Now I agree some of it is junk, but nonetheless where are all the buyers, where is the pent up demand?
Intereste rates are low, inventory is there, and yet where are the buyers?
The funny thing about this now ended real estate frenzy in regards to Bergen county, is how the whole county became prestigious, not just the towns that always were, or have been for a long time.
Back in 05 I remember driving buy a bill board advertising town homes for sale in Garfield.
And the sign said your chance to live in prestigious Bergen county!!
3b says:
And there is a lot of inventory in Franklin Lakes, Wyckoff, Allendale, Ridgewood, Ramsey,and the Saddle Rivers.
I watch these towns very closely (more than most realtors) and prices have definitely come down and will continue to do so. Hopefully we won’t get a spring bounce, but a spring fall and maybe prices will come down quicker.
#195 bergenbuyer: I do not think we have to worry about a Spring bounce, nothing on the horizon would point to that.
I agree with you that we are going to see some rpaid price declines as we get into Spring 08.
Bush/Paulson plan:
What I don’t understand is that if Government is paying money (aka bailout) then why is it imposing date and other restrictions? Why does it care when the loan was made and for which credit type and when it resets etc… It is not paying anyway, right? Am I missing something? Or is it that they will legislate this solution and force investors to accept the terms based on the deal, whether they want it or not?
The agreement covers only a subset of borrowers. These are borrowers who took out subprime ARMs that were originated between Jan. 1, 2005, and July 31, 2007, and whose interest rates will reset for the first time between Jan. 1, 2008, and July 31, 2010. It applies only to loans that have been packaged into securities and not those that are held by banks on their own books. Homeowners should call their servicer to determine if their mortgage is covered by the plan. It doesn’t apply to borrowers with subprime ARMs that have already faced their first rate reset. It also doesn’t cover loans that are seriously delinquent, fixed-rate mortgages or ARMs issued to borrowers with good credit.
Missed not in my question.
If Government is not paying money (aka bailout) then why is it imposing date and other restrictions?
I found the info sheets from some of the open houses I attended over the summer and looked up what they actually sold for. Here are the results of six that have actually sold:
341 Jefferson Ct., Brick
LP: 369,900
SLD: 318,500 10/2/07 -14%
3105 Cambridge, Point Pleasant
LP: 384,500
SLD: 350,000 9/28/07 -9%
35 Diane, Brick
LP: 398,988
SLD: 370,000 9/27/07 -7%
303 Van Zile, Brick
LP: 399,000
SLD: 335,000 10/2/07 -16%
1504 River, Point Pleasant
LP: 354,500
SLD: 329,250 10/12/07 -7%
241 Westwood, Brick
LP: 375,000
SLD: 335,000 10/24/07 -11%
I got the list price from the open house info sheets and the sales data off zillow. Note I made two offers on two other homes in the area about 10% off their asking and was summarily rejected by the sellers. The homes are still on the market.
SG The parties involved had to agree Gov had to be reasonable or investors would have told them to pound salt.They still may
with their lawyers.
Ron Paul is a Moron. I am for the war in IRAQ, we need more troops not less troops, in regards to bringing troops home only if they can get a house for free, kick the subprime sludge out and let them do a tour in IRAQ.
War is expensive, but even in a non war we have many expenses and still a death rate among the troops. The hard fact is it is not that much more expensive to have the war since we have to keep all the troops on standby in the region anyhow.
Why do I want a president who is a big fat chicken to be head of the army in charge of the country. Man I need my Bruce Willis type Collateral Damage guy in charge. Too bad Hillary has more balls then the bunch of nancy pants running for president.
At least with the morman I get two wives, with Hillary I get free govt everything, with Rudy I get cheap taxes and we all can marry our cousins, and with the L&O guy we are sure to get some cool positive hollywood press in the white house. I guess Ron Paul beats Obamo Bin Laden or whoever that half muslim mama’s boy’s name is that is Opra’s lap dog. If I have to see Opra at every white house meeting for the next four years I will puke.
“Sixty-One Economists Sign Letter Opposing Subprime Mortgage Bail Out
Open letter to Congress argues against federal intervention.”
http://www.freedomworks.org/newsroom/press_template.php?press_id=2394
John…..If you have the troops to start a war with a piss ant arab country…..then finish the damn thing and bring said troops home. No one respects an idiot who cannot plan and execute…..got it?
Cause that is what the banks all agreed to. SIFMA backs the plan so they all were at the table when this was agreed to.
SG Says:
December 7th, 2007 at 4:01 pm
Bush/Paulson plan:
What I don’t understand is that if Government is paying money (aka bailout) then why is it imposing date and other restrictions? Why does it care when the loan was made and for which credit type and when it resets etc… It is not paying anyway, right? Am I missing something? Or is it that they will legislate this solution and force investors to accept the terms based on the deal, whether they want it or not?
3b, I know you just being sarcastic, just being a grumpy Bergen buyer : )
I don’t see a price jump in the spring, at least in the couple of NW towns I am following. There are SO many houses are just sitting there.
Right now we are in the doldrums, where no one is lowering their price, putting stuff on the market, they are just waiting for spring like their realtors told them too. Too bad their houses didn’t sell last summer or spring either. But maybe their Prince Charming will ride in on his horse and rescue them.
Everybody thinks their town is immune, which is hilarious. But this is (fill in the blank)! A very prestigious town! Prices don’t go down HERE.
John & I thought I was a hawk.Essex is right. If you are going to start a war you better get it done right.No reflection on troops bad policy screwed us after the fact.It seems to be getting on track now, about time.
Question?
Does the proposed bailout/freeze include hels and 2nd mortgages?
Is everybody in DC a bunch of drunken spend/printoholics?
WASHINGTON (MarketWatch) — House Democrats are beginning to weigh the possibility of an economic stimulus package designed to counteract recession worries, news reports said Friday.
“The time has come to think about stimulating this economy to prevent either a recession or a slowdown in economic growth that will certainly feel like a recession to a lot of people,” said House Financial Services Committee Chairman Barney Frank, D-Mass., according to wire service reports.
Frank spoke after top House Democrats attended a closed-door forum with financial experts and business and labor leaders, including former Treasury Secretary Lawrence Summers.
Frank said the meeting saw some discussion surrounding the possible role of the earned income tax credit in providing “some kind of tax relief precisely for those people who have been hit worst in this economy,” Reuters reported.
Frank said efforts might also include help for state and local governments suffering from the real estate slump.
#205 Ann: There will be a lot of very disappointed sellers come Spring.
Plus we will have all the additional new inventory that will be coming on right after the holidays,and into the Spring market.
It will definitely pay to wait.
It isn’t just the BC or train town mind set.As some her know I’m in upper sussex county & people are still holding on for 05 prices.Are prices are low compared to most other areas but they were even lower when these people bought.Home at 130 in 98 is still at 270 to 300
today.That is over 10% a year!I’m not going to pay them that.
#208 BC: and what will they do when the slump really startes to hit? We are just in the first few innings here, by late Spring/Summer of 08, it will be in 3 words very, very, ugly
209 Here Our I better go get my glasses it sucks getting old!
Plus, whether someone commutes to the city or not, who wants to live ON Rt 4?
My office looks over the exact spot you’re talking about. It’s an ugly area, with a view of the worst of Hackensack. And it’s right on top of the cemetery.
Just an awful location for homes.
RPatrick (191)–re: upstate NY. I recommend Kingston area/New Paltz/Catskill. Many New Yorkers second homes will be up for sale when financial jobs tank.
John(200)–Iraq is not an acronym. And please: learn some spelling. Mormon. Oprah. Osama bin Laden has nothing to do with Barack Obama. Sheesh. Some of the contestants on America’s Most Smartest Model could provide better political commentary than you.
Re: Mold. Much bigger problem on sheetrock walls than plaster. Even underneath wallpaper (where it does love to grow), on a plaster wall a little bleach will take care of it. On drywall, it’s generally a disaster.
Homer, were you raised in Japan? :)
Nope, but I just see the fact that the market will drop minium of 50% off 2005 prices as prices in 1997 were 50% of the prices of homes in the 1980’s
But now not only will the prices continue to decline, there adding in a temp bailout that will cause a forclosure frenzy in 5 years cuaseing another 25% decrese becuase people will get even more neverous about buying
That 25% drop will occour from 2012-2015
Than I figure it will take about 5 years for people to be cofortable in start purchasing in the market.
My question to anyone who think I am silly for thinking that…
If a home went for 100K and yes they did exist in NJ in 2000 and they are now worth
350k
why cant they go back to 100k or even 75k
Maybe people on this board can affor 350k
or even 250k
But most people in NJ cannot affrod those prices. Most people can affor 150k and under
hence average NJ income of 65k not 100k
People say I am ridiculous for saying thats too low. Take away I/o mortages, teaser intro rates and home values increase 25-45%/year than you have people who can only afford 150k or less
———————————–
Again people on this board look at what they can afford and assumes everyone commutes to NYC an makes a fancy salary. And if people say they don’t feel that way, than people on here would not think prices dropping down to normal prices 1997-1998 or less is crazy or unrealtic.
IF you think I am crazy than how answer 2 question
Is it normal for prices to sky rocket? No its crazy… I just want prices to come back to normal level.
Why when we were doing the property tax rebates for anyone household that makes under 100k gets 20% back and the government said that would cover 70% of NNJ
So gee maybe thats why I say prices will drop insanley
But hey I am only Homer.
MMMMM Dougnuts
Dec. 7 (Bloomberg) — Kent Fletcher, an Iraq war veteran, says he enthusiastically voted for President George W. Bush in 2000 and 2004. Now, he is a registered Democrat who questions the need for the war, the way it has been managed and the treatment of returning veterans.
“Saddam Hussein wasn’t a threat and the culmination of my career was that war and it wasn’t necessary,” says Fletcher, 32, a financial analyst in Bluffton, South Carolina, who served almost 10 years as an officer in the U.S. Marine Corps.
A Bloomberg/Los Angeles Times poll shows that Fletcher’s skepticism about the war reflects a growing disenchantment within the broader military community, long a bastion of support for the Bush administration and Republicans. Among active-duty military, veterans and their families, only 36 percent say it was worth going to war in Iraq. This compares with an Annenberg survey taken in 2004, one year after the invasion, which showed that 64 percent of service members and their families supported the war.
The views of veterans and their families are now closer in line with overall public sentiment. The poll shows that 32 percent of the general population supports the war.
Can anyone give me a simple definition of the AMT? My accountant called me today and asked me if I would give him a call because it’s supposed to hit 20M additional taxpayers this year I would like to know how it’s computed and what the thresholds are?
This post makes a lot of sense. Ron Paul is a jerk and a crybaby. I don’t like any of the presidential candidates. I just want to keep Bush right where he is.
Many crybabies are sitting around moaning and wringing their hands about the war, but the surge has greatly reduced the violence over there in Iraq. Basically, we’ve gone over there and spanked some azz.
These crybabies need to leave the damn room, or just cover their eyes if they have to, while this country does what it needs to do.
John Says:
December 7th, 2007 at 4:24 pm
Ron Paul is a Moron. I am for the war in IRAQ, we need more troops not less troops, in regards to bringing troops home only if they can get a house for free, kick the subprime sludge out and let them do a tour in IRAQ.
War is expensive, but even in a non war we have many expenses and still a death rate among the troops. The hard fact is it is not that much more expensive to have the war since we have to keep all the troops on standby in the region anyhow.
Why do I want a president who is a big fat chicken to be head of the army in charge of the country. Man I need my Bruce Willis type Collateral Damage guy in charge. Too bad Hillary has more balls then the bunch of nancy pants running for president.
At least with the morman I get two wives, with Hillary I get free govt everything, with Rudy I get cheap taxes and we all can marry our cousins, and with the L&O guy we are sure to get some cool positive hollywood press in the white house. I guess Ron Paul beats Obamo Bin Laden or whoever that half muslim mama’s boy’s name is that is Opra’s lap dog. If I have to see Opra at every white house meeting for the next four years I will puke.
More liberal media propaganda.
Confused In NJ Says:
December 7th, 2007 at 6:05 pm
Dec. 7 (Bloomberg) — Kent Fletcher, an Iraq war veteran, says he enthusiastically voted for President George W. Bush in 2000 and 2004. Now, he is a registered Democrat who questions the need for the war, the way it has been managed and the treatment of returning veterans.
“Saddam Hussein wasn’t a threat and the culmination of my career was that war and it wasn’t necessary,” says Fletcher, 32, a financial analyst in Bluffton, South Carolina, who served almost 10 years as an officer in the U.S. Marine Corps.
A Bloomberg/Los Angeles Times poll shows that Fletcher’s skepticism about the war reflects a growing disenchantment within the broader military community, long a bastion of support for the Bush administration and Republicans. Among active-duty military, veterans and their families, only 36 percent say it was worth going to war in Iraq. This compares with an Annenberg survey taken in 2004, one year after the invasion, which showed that 64 percent of service members and their families supported the war.
The views of veterans and their families are now closer in line with overall public sentiment. The poll shows that 32 percent of the general population supports the war.
Homer, were you raised in Japan? :)
I meant that as a compliment. What you mentioned (a 75% decline) is what happened in Japan when their bubble deflated…..hence the reference.
#200
John, when you’re Dr. Jekyll posting Mon-Fri, your posts are pragmatic. Come Friday evening, why does Mr. Hyde appear with alarming regularity through the weekend?
Do you seriously think Barack Obama being half-Muslim (even though he is not) makes him any less patriotic to the US?
#218 Basically, we’ve gone over there and spanked some azz.
Yeah now all we need to do is spank some cry babies azz over here who are crying about the real estate collapse, and looking for hand outs.
Confused We don’t run foreign policy by polls.
Nor does are military go to,stop or any thing else based on a poll.Which depending on how you word it can be slanted either way.So please don’t support your position with a poll.
I meant that as a compliment. What you mentioned
Ohhh Ok well than konnichiha ;)
Here’s one below 2004 prices in Mendham.
#2415488
Sold 12/7/07
$845,000
Prior Sale:
#1690804
Sold 9/1/2004
$875,000
This one in Bedminster lost approx 20% since 2005 if you add in commissions.
#2451999
Active listing at $209,000
Prior Sale:
#2069229
Sold 7/9/2005
$250,000
Spring 2006: “Gary, home sales are starting to hit a wall. Things are going to get interesting by the summer.
Summer 2006: “Gary, wait until the end of the summer, you are going to see some definite bargains.”
Fall 2006: “Gary, sellers are ready to capitulate.”
Winter 2006: “Gary, spring of 2007 is going to be a bloodbath.”
Spring 2007: “It appears that the dead cat bounce is over.”
Summer 2007: “Gary, sales are horrible. September is going to be an all-out panic.”
Fall 2007: “It’s a race to the bottom now”.
Winter 2007: “The spring is going to be REALLY ugly!”
Spring 2008: (FILL IN THE BLANK)
BTW, I just opened my emails and looked at the daily listings. As usual, the more desirable towns in Northern Bergen and Western Essex contain POS starters with beginning prices somewhere in the upper 500’s…. same as before.
If I want to trade up to anything halfway decent, I’m looking at houses in the upper 600’s for starters. Just saying.
#216
d2b – under the AMT regulations, taxpayers calculate their tax based on a parallel tax system. For AMT, there are only two tax rates 26% and 28%. The part that really gets you is that under AMT, most of your regular deductions don’t count. The difference between your regular tax calculation and the AMT calc is what most people refer to as their AMT. Congress should be passing the patch shortly. I beleive it already is through the Senate. The patch increases the AMT exemption which was never indexed for inflation and will keep most modest income earners out of AMT. My wife and I make around 100G combined with a couple of kids and without the patch we would be paying around 4G in AMT. And we rent!
#225 gary: A;; true but at the end of the day, you and I cannot force the sellers to lower their prices, but they will.
Kudlow says he thinks housing is healing, whatever that means.
3b, was watching the idiot for some amusement too. Kudlow does not know that the chemotherapy did not work.
“Spring 2008: (FILL IN THE BLANK)”
Gary,
Gints give up on Eli and trade him?
BC Bob,
Where’s Marty Glickman and Chip Cippola? :)
For all the CDO professionals that got laid-off this week. (I heard there was a lot of you this week.) Drink up!!!
You have hit the bottom, there’s not way to go but up.
#232 dream: he is a piece of work, if I hear goldilocks one more time, i will shoot the TV.
#183 dream: I now think home prices will drop 75% off 2005 prices by the year 2015. And than will remain flat until 2020 which at the point the prices will rise at 3% a year..
anyway..back on planet earth……….anything new?
this f’n sucks.
so sick of renting and really sick of hearing the train on one side and the bus on the other. full well knowing that its all going to go downhill but tired of our lives feeling on hold/in limbo.
we’re going to either buy an hour commute for each of us or buy a townhouse closer to work.
Please fwd all mail to:
Cobain Lane
‘I will never bother you
I will never promise to
I will never follow you
I will never bother you
Never speak a word again
I will crawl away for good
I will move away from here
You won’t be afraid of fear
No thought was put in to this
I always knew it would come to this
Things have never been so swell
I have never failed to fail’
#239 You need to chill, and whatever you do, do not buy a town house.
If you do you will be wishing for the days of the bus and the train.
3b 239 Why not a townhouse?
#240 Well IMO, They are glorified apartments, no privacy. But more importantly in a real estate down turn they always get slammed much price wise much harder than SFH’s,
Its all personal preference…IMO townhouses and condos in a town with a strong rental market should do well even if there is further downturn from here..worse case scenario rents should keep escalating and if you had to you move and were upside down on it you can rent it out…expect a lot renters (previous homeowners, homeowners in waiting, and downsizers, etc) to keep rents strong throughout a downturn as we get back to equilibrium…should keep the downside to a minimum…much rather be upside down in a nice condo close to work..then commuting an hour and mowing the lawn in a POS cape in bumblef–township nj..
3b
3b oops! That is what I thought was your reason.
This being true Ithink should be able to steal one in time.If he can just hold out.Ithink buy ear plugs hold out, stay the course!
You know, there is nothing inherently ‘wrong’ with a townhouse….but I do wonder how that development in Livingston is doing….the $1M townhomes in ‘city center’….no yard….no privacy….and air conditioner compressors in a strange place.
think (238)-
When’s the right time to buy?
The minute the desire to have and enjoy the home you want to own outweighs your concern over holding out to buy until the market reaches its absolute nadir.
Bingo. Clotpoll nails it.
If you can afford it…and like the place enough so you feel you are not settling…do it.
Emotion will cost you.I don’t think anyone here would say we have seen the major declines that the slow sales & inventory are fortelling.This is the single largest purchase for almost all
people.So while not waiting for bottom (as few can say when that will be)at least let it play out till summer 08 & then gage the market.
gauge market OOPS again
I can afford a stock priced at $100. I want to own for the long term and I rate the managemnt as tops in the industry. However, based on the underlying fundamentals of the business, it is only worth a price of $70. Should I pay $100 since I can easily afford it? Shouldn’t I be more concerned with intrinsic value as opposed to affordability?
I appreciate people’s opinions, but I’m more interested in news. And the best way to get the news is from objective sources. And the most objective sources I have are people on my staff who tell me what’s happening in the world.
–George W. Bush
Washington, DC
09/21/2003
I like to save these little blurbs from our president.
Clotpoll Says:
December 7th, 2007 at 9:30 pm
think (238)-
When’s the right time to buy?
when the nix reach .500
rhymingrealtor Says:
December 7th, 2007 at 9:56 pm
I appreciate people’s opinions, but I’m more interested in news. And the best way to get the news is from objective sources. And the most objective sources I have are people on my staff who tell me what’s happening in the world.
–George W. Bush
Washington, DC
09/21/2003
“The guy was born on third base and thinks he hit a triple.”
Billy Martin
250 – If you are a real estate investor, manager of a REIT, or deploying capital as an entreprenerual endeavor…yes…if you are a prospective homeowner looking for a primary residence…no…I’d say affordability is much more important.
Ok, let’s play a game, dump or keep the realtor?
Background, we are looking to buy. So far all we have done is put in one offer on a wildly overpriced fixer-upper for 15% below asking. The buyers tried to get us to come up but our price was firm. Their agent is still calling. We came up with the price by figuring what work it needed (a lot) and what we might be able to sell it for after, not some arbitrary cut.
We are on to the next prospect and were thinking about putting an offer in tomorrow.
Here is the email I get tonight, completely unsolicited:
“This is a relatively new development, very nice. Because they are new, we’re looking at a very small window of price flexibility, perhaps as little as $20,000.
Since I work for you, I felt it was my duty to tell you this.”
Dump the realtor or keep the realtor?
Citigroup Expected to Name New CEO Soon
By DAVID ENRICH
December 8, 2007
Citigroup Inc.’s board is expected to pick a new chief executive early in the coming week at a regularly scheduled meeting, wrapping up a five-week search, according to people familiar with the matter.
The front-runner is Vikram Pandit, who currently oversees Citigroup’s investment bank and alternative-investments businesses, the people said. That would fill the CEO job — vacated on Nov. 4 by Charles Prince amid mounting mortgage-related losses — with a solid risk manager, though one who lacks consumer-banking experience and hasn’t been at the bank even six months.
There is no guarantee the board will agree at meetings on Monday and Tuesday to name Mr. Pandit as the CEO, the people said. And other candidates, including former Citigroup President Robert Willumstad, who met with the board’s search committee a week ago, could still be in the running.
250…if it’s goog in 04….then I guess….Yes. You should buy….but then who can say for sure.
WSJ
Evidence Grows That Consumers Are Pulling Back Latest Industry to Feel Pinch: Plastic Surgery; Debating a Recession
By RHONDA L. RUNDLE and KELLY EVANS
December 8, 2007
The latest sign that growth in consumer spending, the mainstay of the U.S. economy, is slowing? A nip and tuck in spending on cosmetic surgery.
The slowdown was a hot topic at the meeting of the American Society of Plastic Surgeons in Baltimore this fall. One breast-implant maker sees hints of a slowdown in demand. The number of vision-correction surgeries appears to be falling as well. “This whole mortgage credit crisis is making people think twice,” said J. Peter Rubin, a Pittsburgh plastic surgeon. “It’s something I’ve noticed and some colleagues have noticed as well.”
[edit]
geeks rejoice:
December 7, 2007, 7:06 pm
CompUSA Closing = Bargains for Shoppers
Under pressure from giants like Best Buy and Wal-Mart, smaller rival CompUSA announced today that it is winding down operations. While this is bad news for the company’s employees and investor Carlos Slim, it may be good news for consumers looking for a deal on computers and electronic gadgets this holiday season.
CompUSA was founded in 1984 and a year later opened its first retail store. Slim acquired a minority stake in the retailer in 1999 and a year later plunked down $800 million to take CompUSA private. In 2003, Slim acquired California consumer electronics chain the Good Guys Inc., merging it into CompUSA to beef up operations and give it access to home-theater and flat-screen television brands. The company did an estimated $4 billion in annual sales last year, but with store closures earlier this year, its sales are expected to shrink to about $1.5 billion this year, according to industry executives.
So why is it shutdown good news for consumers this Christmas? In an otherwise downbeat press release, the company reminds us that as part of it wind-down, it will be offering “attractive bargains on computer and electronic products as part of store closing sales.” CompUSA’s said its 103 retail stores will remain open through the holidays.
Essex [257],
You are right, one does not know. However, you do your homework, develop a plan and proceed. That said, if I am wrong with my entry point, in a stock, I can utilize a tight stop. If I overpay 30% in RE, what risk management parameters can I utilize to protect myself.
202#, john, it is the best political commentary i read here. you should write some stuff part-time for some politically incorrect outlets.
OT
http://gothamist.com/2007/11/29/south_jersey_ro.php
thanks everyone.
250#, in terms of home purchase, not so many people have your luxury to consider “intrinsic value”, which is harder to be evaluated than stocks. Many factors are not easy to be quantified: education cost, tax benefit, life style and etc.
Ann Have you sat her down & told her the facts of life.My agent told me with a straight face to
buy a place because it would be worth more next year.I started to laugh.I then proceeded to explain what is going on in mortgage market,sales, inventory.She no longer gives me lines.Email her latest graphs & stuff from here.They hate that.Either then she comes around or dump her.My agent is no problem now.Put in any offer I would like.If she could only get me to.IMO not the time yet.
People who prefer the extended warranties will now buy from Circuit City and Best Buy, and get them to price-match CompUSA.
CompUSA RIP….another instance of how ruthlessly the Internet has commoditized buying.
When looking at Townhouse or Condominiums in NJ you have to be cognizant of several potential problem areas.
1. Determine if the Community has Mount Laurel Units, and if so, are they held by the builder as rentals, rather than sold as affordables? The builder will tell the original owners they are to be sold, then rent them after the fact.
2. Size of a Community may be a negative factor. If the Community is small you may have to join the board. From experience this may prove to be more work then owning your own place, especially if it is Self Managed to save Management Company Costs.
3. The Common Fees can be quite uncontrollable, especially Insurance, which is also impacted by the Hybrid Mix of Owners & Renters. A big hit last year was the Corzine 7% Sales Tax on the Associations Lawn Maintenance & Snow Removal.
4. Examine the Association Books to make sure they have properly funded the Capital Account. A number of associations will keep the Maintenance Artificially Low in a new development, ultimately passing the problem on to those who come later.
5. In Berkeley Meadows (Berkeley Heights) or Murray Hill Square (New Providence) expect to pay $450-$550/mo just for Common Fees on top of $8-$11K in Tax. You have minimal control over either Cost.
267#, interesting.
I am confused by this? any link?
> A big hit last year was the Corzine 7% Sales Tax on the Associations Lawn Maintenance & Snow Removal.
It looks like a third mortgage. I would avoid it.
> 5. In Berkeley Meadows (Berkeley Heights) or Murray Hill Square (New Providence) expect to pay $450-$550/mo just for Common Fees on top of $8-$11K in Tax. You have minimal control over either Cost.
266…..you know the whole computer sales cycle and the players there changes constantly….small shops pop up and die and the big ones merge and implode on a regular basis….who remembers ComputerLand?
Ann, I think the note you got is fairly harmless…but you have to wonder which side of the fence he/she is playing on. My agent in 02 was a random guy who was manning the front desk….he turned out to be terrific. No pressure. No lines. He showed us places….gave his candid advice when asked….and was forthright to the end. Of course, our situation was unique in that I drove the process (ex-sales guy with $120M quotas)…and the seller in our case ‘loved us’…go figure.
#259 chicagofinance
CompUSA closed most of their NNJ stores already. Closest store is a trek into midtown.
That said I miss them already. It was one of my favourite stores to shop in.
Ann,
Had you asked for that info I would have given it in the form of comps. I could see no reason to casually mention. Had you even viewed the units? However that being said, are you getting new listings and price reductions when they come in, is she/he flexible to your viewing schedule, knowlegedable in the area you are looking in? Willing to give property histories? Does she/he ever say the words ” Think about it, it is a good deal, but there will be plenty of good deals coming?
KL
For those who grew up geek in the 80s.
From CNN:
Commodore 64 still loved after all these years
Like a first love or a first car, a first computer can hold a special place in people’s hearts. For millions of kids who grew up in the 1980s, that first computer was the Commodore 64. Twenty-five years later, that first brush with computer addiction is as strong as ever.
…
Often overshadowed by the Apple II and Atari 800, the Commodore 64 rose to great heights in the 1980s. From 1982-1993, 17 million C64s were sold. The Guinness Book of World Records lists the Commodore 64 as the best-selling single computer model.
The computer featured 64 kilobytes of memory (a lot for 1982), a huge index of games, a sophisticated sound chip, and a relatively parent-friendly price — $595.
People are generally familiar with the Sales Tax increase from 6% to 7%, but are not familiar with the fact that it was originally product sales focused and under McGreevy & Corzine has expanded into a service sales focus. As shown below Snow Removal & Landscaping Labor became Sales Taxable July 2006. Other insidious changes include things like Hardwood Flooring, which was a Capital Improvement (Sales Tax Exempt), is now subject to Sales Tax.
Sales and Use Tax Individuals
The sales and use tax rate increased from 6% to 7% effective July 15, 2006.
When you purchase items in New Jersey, there will be times when you must pay sales tax on the cost of the items. The State of New Jersey has a sales and use tax of 7%, or seven cents on each dollar. All retail sales are taxable unless specifically exempt by law. The law exempts most food items for at-home preparation, clothing, footwear, disposable paper products for use in the home, and medicines. The law also requires that sales tax be charged on certain services. Sales tax is collected at the time of the sale and is sent to the State by the vendor.
Some examples of taxable items are:
Automobiles, furniture, carpeting, and meals bought in restaurants.
Some examples of taxable services are:
Lawn maintenance, auto repair, snow removal, and telecommunications.
Additional information about sales and use tax is contained in our publication Tax Topic Bulletin S&U-4, New Jersey Sales Tax Guide. Publication S&U-4 can be viewed in Adobe Acrobat PDF format.
More information is available on the taxability of medicines and medical items.
More information is available on the taxability of rentals and leases.
Updated: Wednesday, 07/26/2006
About the Bush-Paulson plan to have a rate freeze for qualified subprime borrowers for 5 years – Who is going to pay for it?? Is it going to be financed by tax-payer’s money or will the mortgage holder bite the bullet in this case?
This is what $665,000 looks like in Northern New Jerkme:
http://homes.realtor.com/realestate/demarest-nj-07627-1091918185/
I was listening to Bloomberg in the car yesterday morning and they uttered the term, “Third year of the housing bust” and I almost crashed the car from laughing so hard. I also read yesterday on Yahoo finance that the least affected areas in the nation are, once again, the San Fran area and the NYC metro area.
In what New Jersey towns will home prices rise the most (or decline the least) in 2008?
Mark,
The median price in New Jersey rose approximtately 2.5% in 2007. Expect more of the same for 2008.
Gary, did article explain why New York and San Francisco are least affected? Those markets are least affordable in country so should be most affected in housing bust!
Gary 276 Want a laugh go on gsmls sussex vernon nj & look around that price even lower.Value can be found just north of nowhere.
Mark,
A trio of economists, Joe Gyourko, Christopher Mayer and Todd Sinai, have argued that persistent growth in cities they dub “superstars” (for example, New York City and San Francisco) is fueled by a limited supply of housing and by a concentration of high-income families who are willing to pay top dollar to live there.
mikeinwaiting,
Here you go. Move this one 20 miles down Route 23 and I’ll consider it:
http://homes.realtor.com/realestate/vernon+twp-nj-07462-1090116216/
Gary, that makes some sense. Same thing happening in London.
Dear Seller,
Please get yourself into rehab.
Sincerely,
Gary
http://homes.realtor.com/realestate/verona+twp-nj-07044-1092264750/
Gary Nice sub-division to.That house can or others like it can be bought for about 450 or so.No one has 20% up here.No big NYC jobs.With 20% DP that house would run me over 3g a month.More than I’m willing to pay
25% net is my target.May not get a palace but can get 3-4 bedroom nice home.Have DP but will not be house poor.
Gary,
You are already a homeowner, you participated in the big runup and made nice gains. You bought at a price that most first-timers here would kill to purchase at.
You are looking for blood in the street as a sign for when to make your upsize move, but realize that some of the blood out there is bound to be yours.
Those same factors that govern your purchase will govern your sale. Unless, of course, you are looking to keep your current property as a rental, but I didn’t think that was the case.
You can always just blow out your house and send your kids to private school. Plenty of good contractors that’ll take the job.
Ann –
Ever since you started talking about wallpaper I seem to see it everywhere :-).
Story to make you feel pleased about your aversion:
House near friends parents was sold by an elderly couple to a young couple for a considerable amount of money. Top to bottom wallpaper which had been in place for the past 15 – 20 years.
The young couple stripped the wallpaper and discovered mold underneath, turns out the house is riddled with it and has to be gutted. Needless to say, they didn’t spring for a mold test on inspection – but they are rushing to sue everybody and anybody and want the previous owners to pay for everything. Not sure they have a snowballs chance in h*ll as the previous owners were clueless and noone stopped them from getting an appropriate inspection.
Anyhoo – just goes to show that apart from your personal aversion and wish not to put in the work of stripping it, there are other reasons to run from excessive wallpaper
—————————-
As someone who did wallpaper and paint for the first part of my career for 12 years and my father for over 35. Wallpaper was HUGE in NJ. It isn’t as big as it was before but still here. Customers would have us wallpaper everything from ceilings to electrical wall plates. We would get hired to wallpaper new construction and always tried to talk the customer out of it. They would never listen. The walls need at least a year to settle. On top of that we would do jobs where we would specifically be doing a cover up job. I hated those the most because they were mostly for flippers. Really did make me sick. It’s one of the reasons i got out of the business.
I’ll be hated when i but my first home sometime in the next year. I know what to look for too much on everything.
Grim,
I’ve a feeling you’re wasting your time…
Re my post 255 Dump the realtor?
Thanks all. rhyming realtor, I have seen the comps already and they are about 10% under current asking prices.
My theory is that she doesn’t want to go in with an offer that is more than a few % below asking because it makes her job harder, and of course, the chance of being accepted is lower. So, she’s using scare tactics to try to get us to make a bid close to asking, because obviously that will be accepted, making her payday.
She knows the area well, has the reports set up with the automatic updating.
She has never said anything remotely like the end of your post about deals. She did say, “You should buy now because in the spring there is going to be a lot of pent-up demand and prices are going to go up.” As we sat in a house that has been on the market for eight months and was vacant.
Joey
Why would someone wallpaper a new construction!!!!! Argh! That is crazy!
Dedicated to pret-a-manger:
WSJ
Indians’ Road to Success Hopefuls Go to Far-Flung Test Sites Due to Chartered Analysts’ Dispute
By CRAIG KARMIN and JACKIE RANGE
December 8, 2007; Page B1
Vikash Kumar, a business student in India, took a trip to Nepal last week with four friends. To get there and back, they traveled for hours by airplane, taxi and rickshaw. They passed through border areas menaced by bandits.
They aren’t adventure-seekers, or even tourists. Mr. Kumar and his friends are simply trying to take the Chartered Financial Analyst exam.
Passing the CFA — a series of three grueling, six-hour tests covering economics, accounting and markets — opens the door to high-paying financial jobs. India’s booming economy is triggering a concurrent boom in CFAs: This year, India had been expected to produce more than 10,000 candidates, according to the U.S.-based CFA Institute, more than anywhere except North America. Just seven years ago, India produced less than 250.
But a long-simmering trademark spat over who has the right to use the letters “CFA” in India has thrown this year’s process into disarray.
So, CFA hopefuls like Mr. Kumar are traveling the globe for alternative sites. Test-takers have ended up as far away as Sri Lanka, Oman and Nebraska.
That is, if they can get a flight. The exodus is so great that flights to Nepal in early June (an exam date there) were booked up, even though it was monsoon season, one of the worst possible times to travel in South Asia. Some CFA hopefuls trying to go to Singapore at the last minute got tripped up by the three-day waiting period for a visa, missing tests there.
Internet chat rooms are packed with frustrated CFA candidates. “Let’s start off the day on a positive note and start praying to GOD” that the exams will take place, wrote someone signed “Jigz” this year in a CFA community on the social-networking Web site Orkut.
That elicited a string of sarcastic responses. Usually, people pray to pass an exam, someone retorted, but “we pray in order to sit for the exam!”
Other posts seek help finding the best test sites abroad. “ok, so who is travelling to colombo/bangkok?” asks one poster. “i am for sure….cant risk katmandu with the maoist c- happening there” — a reference to political violence stirred up by Nepal’s Mao-inspired rebels.
The notion of Maoists attacking business-school types in the Himalayas might sound far-fetched. But it is a deadly serious concern. Just ask Abhishek Verma, 26 years old, who traveled to Katmandu this year for the CFA exam only to find the city shut down by the Maoist insurgency, which is protesting government corruption and opposes the Nepalese monarchy.
Because the city was shut down, Mr. Verma had trouble finding a taxi to take him from the airport to the hotel. And once he did, he was promptly stopped by a Maoist who threatened to set the car on fire.
The taxi driver, he says, pleaded that his passengers were foreigners, not Nepalese, and was finally allowed to proceed unharmed.
“We were so afraid,” Mr. Verma recalls.
The dispute over India’s CFA exams boils down to this: For more than a decade, the Virginia-based CFA Institute — which administers exams world-wide — worked with a local licensee in India. In recent years, the local licensee broke off, launched its own certification program dubbed the Institute of Chartered Financial Analysts of India, and launched a campaign to prohibit the American firm from operating in India. The ICFAI also has opened business schools in India.
Both sides blame each other. “The fault rests with CFA alone,” says S.R. Mallela, a member of the board of governors of ICFAI in Hyderabad.
The CFA says it has every legal right to operate in India, and blames the ICFAI for causing headaches for Indian students. “The burden is placed most heavily on those who don’t have the means,” says Jeffrey J. Diermeier, president and chief executive of the CFA Institute.
While test-takers could take the ICFA test in India, many prefer to obtain the CFA’s certificate. “The ICFA doesn’t even carry much weight in India,” says Jasmit Singh Chandhok, a CFA candidate from New Delhi.
Which is why he flew to Bangkok a few months ago to take the CFA exam. At the test site in Thailand, he says, he was surprised to see that about a third of the 300 people in the test room there were also Indian.
“In one corner, there were four guys I knew from home,” he says.
According to the CFA, Indian candidates this year have traveled to at least 16 countries to take the exam. The CFA Institute has tried to ease the financial cost by cutting a $300 check for any Indian who tested abroad. CFA registration and materials can cost more than $2,500 for all three exams needed to receive the designation, an immense sum in India, where a fairly typical urban office job might pay only $3,500 a year.
Earlier this year, Karan Mehta, a securities analyst in New Delhi, decided to take the test in Omaha, Neb., because he was going to be there anyway for a wedding. He landed a few hours before the test, bleary-eyed from the 18½-hour flight, took a quick nap, then went straight to the exam room.
Afterward, he says, he strolled around Omaha, hoping that he might bump into famed investor Warren Buffett, who lives there. “But he was too hard to find,” Mr. Mehta says.
The vast majority of traveling test-takers so far have headed for Nepal, India’s neighbor to the north. Nepal is close enough to India that people can get there overland, avoiding costly plane tickets and visa hassles.
Among them was Mr. Kumar, 26, the business student who went to Katmandu with his friends. While he was able to get a flight into Nepal, he wasn’t able to get a round-trip ticket to fly back out.
So, after taking the test on Dec. 2, they flew to the Nepalese town of Simara, went from there to Birganj by taxi, and then by auto-rickshaw across the border. Then, it was just a seven-hour taxi ride for the five of them to Patna.
It was worth the hassle, Mr. Kumar says. “For getting into a good career, into investment banks and all, CFA’s quite mandatory these days.”
He had better hope the trip winds up better than it did for Nikita Sharma, 25, who traveled a similar route earlier this year. She flew to Katmandu in June to take the CFA. But traveling overland on the way back, she got stranded on her bus for 15 hours after an accident in Nepal blocked traffic.
Ms. Sharma says that she and her two friends thought about abandoning the bus and trying to hike out. But “we also got scared, if we started walking, if we would be able to save ourselves from the animals.”
Instead, they stuck it out and subsisted on mango juice. At least a dozen people on the bus, including them, were also CFA candidates, she estimates.
Despite all the hassles, Ms. Sharma had no regrets — until, that is, she learned a few weeks later that she hadn’t passed the exam.
“If one had passed,” Ms. Sharma says ruefully, “then one would have cherished the moment.”
#291, thanks for the article! Besides a gentle reminder that the CFA is a bloody tough nut to crack, this article brought back childhood memories of bus trips into Nepal through the Himalayas. For those who go trekking in the Andes or Rockies, I’d say it’s worth an 18 hr flight into Nepal to experience the Himalayas.
I spent 8 years of high school just 200-300 miles south of 20,000 feet+ Himalayan mountain ranges and it’s gorgeous.
“200-300 miles south of 20,000 feet+ Himalayan mountain ranges and it’s gorgeous.”
dream [292],
You mean to tell me that storage tanks, Linden, NJT, doesn’t come a close second?
Grim,
We all have our reasons. I’ll gladly shed some blood and settle for a normal 4% – 5% gain. Makes no difference to me. And that also means that the current 750K house needs to drop to 600K.
#281 gary Limites supply of housing? There is houses for sale everywhere here.
The same tired old crap that I have been hearing for years, prices drop even here, they already are.
Ableson, today in Barron’s [Dec 10, issue];
“Compliance with the freeze on the part of mortgage lenders and investors will be strictly voluntary, which prompted spoilsport cynics (there are always a couple in every crowd) to carp that was like having convicted Mafia hit men decide what their sentence should be”
Also, the latest suvery by Duke Univ [no commments Clot] and CFO magazine indicate that optimisim among CFO’s is at the lowest point since Duke has been measuring it [6 years]. 72% of the CFO’s were more downbeat than they were just a quarter ago. 20% reported employees stepping up withdrawals from their 401K, many to pay their mortgage or ward off personal bankruptcy.
[Edit] Was this reported on CNBC this week?
“And that also means that the current 750K house needs to drop to 600K.”
Gary,
Slam dunk. Like Pisarcik to Csonka.
gary,
if you really think prices will go up again next year, why don’t you trade up now?
i’m surprised you haven’t seen any reductions – where are you looking? i’m just curious, but if you want to keep it private – understood.
Gary, your wife must be a very patient woman. Appreciate her.
So, does PSE&G offer mortgages? I was looking at my electric bill that arrived today and noticed that our local utility is offering home mortgages with zero down or “as much as 103% of property value in some cases.”
t c m,
As it goes right now, trading up means selling my house and buying the very same house for $150,000 more. And that’s with the reductions. But those reductions went from disgusting to laughable. When those reductions drop to a point where I actually pause to think about it, then I’d consider making the move.
It’s all about price. I’d be willing to sell my house cheaper if that means everything else drops, also.
As I’ve said, I’ll gladly admit that I was wrong, but I’m just going by what I see.
lisoosh,
LOL!! Yes, she is very patient. Do you mean patient for putting up with me or patient for waiting to make a move. :)
gary –
but why would your house go for 150K less than other houses that are exactly the same?
gary Says:
December 8th, 2007 at 12:17 pm
t c m,
As it goes right now, trading up means selling my house and buying the very same house for $150,000 more. And that’s with the reductions. But those reductions went from disgusting to laughable. When those reductions drop to a point where I actually pause to think about it, then I’d consider making the move.
Put a condition on the purchase that you sell your current house at comps from the same year you’re buying at. Sounds wordy but there is no way that you should list at 150k under current listings when you are offering close to list.
Gary – mostly for putting up with your panic attacks and general whinyness (I mean that kindly). All I see is what you write and that makes me vacsillate (sp.) between wanting to hand you a paper bag to control your hyperventilation or bitch slap you with a “Snap Out of It” a la Cher in Moonstruck.
I can only imagine that it must be worse in real time.
Buy her something really nice for the holidays.
http://www.latimes.com/business/la-fi-resent7dec07,0,5794752.story?track=mostemailedlink
Mortgage relief program a slap in the face to some
By Walter Hamilton, Los Angeles Times Staff Writer
December 7, 2007
When Casey Johnson and his wife moved to San Diego County three years ago, they couldn’t find a home in their price range. So they did what they thought was the sensible thing.
Rather than over-leverage themselves with a risky mortgage, the couple rented an apartment in La Jolla and waited patiently for the housing market to drift back to earth, hoping they hadn’t missed their chance to become homeowners.
But now the government-brokered plan unveiled Thursday by President Bush to ease terms on some sub-prime mortgages feels like a “slap in the face,” Johnson said.
Many people who prudently sat out the housing bubble — or resisted the urge to cash out their home equity to help finance their standard of living — share that visceral reaction. In part, they resent on principle the rush to help a segment of society that may not have acted so responsibly. But they also fear that any effort to prevent foreclosures could keep home prices from falling to an affordable level.
“I try to do the right thing, which is to have a down payment and a job and to be fiscally responsible, and it basically looks like it’s not going to pan out if this sub-prime bailout goes through,” said Johnson, a 34-year-old biologist at the Salk Institute.
Proponents of the Bush-backed plan, under which interest rates would be frozen for five years for some adjustable-rate borrowers in danger of losing their homes, say the relief effort would help unsophisticated home buyers who were misled by mortgage lenders into taking on high-risk loans. Supporters also say the program is needed to keep the housing crisis from sending the country’s economy into a recession. A vast majority of the country’s politicians appear to be in favor of the plan, with some saying it doesn’t go far enough.
But the undercurrent of antagonism to the program is strong and is lent support by an economic principle that says people tend to act more recklessly if they know they’ll be protected from the consequences. By that logic, aiding homeowners who are in trouble now will only encourage future borrowers to take on too much risk.
. . .
t c m,
My house almost doubled in price in just a few years. If I sell my house now, I’m basically buying the same house, I’m not trading up to anything. If I take out a $150,000 HELOC on my current house, it would be the same thing.
I would expect to buy a slighter bigger house on a bigger piece of property if that was the case. It’s not. I’m simply taking my house and moving it to another similar location and paying an additional $150,000.
On another topic –
Looking around at some SFH rentals and trying to get over my private owner phobia (I prefer companies for a more business like attitude).
Not good.
1. One listed at one price and then a list of all the additional expenses (water, sewer etc) making the rent another amount entirely.
2. One who wants the tenant to fix everything under a certain dollar amount (??????). Can’t see any conflicts in that wannabe landlords future.
3. Another who wants the prospective tenant to pay for their own credit check and the owners peace of mind. If he won’t spring for that, what else will he quibble over?
These desparate seller/landlords will just have to continue to bleed money if that is their attitude.
From MarketWatch:
Talk of gaming White House mortgage plan emerges
A day after the White House unveiled a program to salvage the mortgage market, people are already talking about how borrowers might game the system.
The program will freeze low, introductory rates on some subprime mortgages before they reset to higher levels. Roughly 1.8 million subprime home loans are due to reset in 2008 and 2009. By delaying those resets for five years, more foreclosures may be avoided, possibly stabilizing the housing market.
One of the main criteria for qualifying for a reset freeze is the FICO score, which measures how well a borrower has repaid debts in the past (the higher the better). Borrowers’ income does not have to be checked.
To qualify for the fast-track program, borrowers must have a FICO score of less than 660 and it can’t have increased by more than 10% since they took out their original subprime mortgage.
Because income isn’t checked, some experts worry that borrowers who might otherwise be able to afford higher payments will try to lower their FICO score to qualify for a rate freeze.
“The message here is to get your FICO score down,” Mark Adelson, a structured finance expert, said. “Don’t pay some bills, but keep up with mortgage payments.”
“They’re skipping over the part where they actually evaluate whether people can really afford to pay after resets,” he added.
Other experts agree.
“There’s certainly a lot of potential for gaming this system,” said Andy Chow, portfolio manager at SCM Advisors LLC, a $14 billion San Francisco-based investment firm specializing in fixed-income and structured-finance markets.
“There could be some homeowners that might try to reduce their FICO scores to get into this plan,” he added. “Simply don’t pay your electricity bill for a couple of months.”
lisoosh,
But….. but…… (lol) ok, I got it. ;)
#308
Wow! Having been a former landlord, we never asked our tenants to pay to fix anything. They did have to pay their own electricity and gas in addition to the rent. When the son sat on the bathroom sink and it fell off the wall, they did pay for the new drain which was twisted.
Joey
Why would someone wallpaper a new construction!!!!! Argh! That is crazy!
It’s the same type of ignorance that got the real estate market in the mess it’s in now.
Willow Says:
“Wow! Having been a former landlord, we never asked our tenants to pay to fix anything. They did have to pay their own electricity and gas in addition to the rent. When the son sat on the bathroom sink and it fell off the wall, they did pay for the new drain which was twisted.”
See – that’s a normal attitude. Tenant controlled utilities are a given, as is anything that was caused by actual neglect or abuse. If my kids damaged something, I would expect to fix it. I also wouldn’t have a problem if I was expected to have renters insurance. But many of the stipulations were just evidence to me that the owners were very reluctant landlords and therefore probably pretty annoying ones.
It’s the same attitude of entitlement – that anyone should be grateful for the opportunity to hand over their money, either for the priveledge of buying the property or living in it. A very cavalier attitude to take with other peoples hard earned cash.
BC (260)-
What is the discounted value of owning vs. staying in a shitty rental, where train and bus noise is slowly driving the tenant out of his mind?
Sometimes the rent vs own arbitrage is easy math, and that’s it.
However, quality-of-life issues enter the picture, and it’s wrong to dismiss those issues as being simply “emotional”.
gary Says:
December 8th, 2007 at 12:32 pm
t c m,
My house almost doubled in price in just a few years. If I sell my house now, I’m basically buying the same house, I’m not trading up to anything. If I take out a $150,000 HELOC on my current house, it would be the same thing.
I would expect to buy a slighter bigger house on a bigger piece of property if that was the case. It’s not. I’m simply taking my house and moving it to another similar location and paying an additional $150,000.
Not to belabor the issue, but you’re basically arguing for free acreage.
The legit complaint would be over 20-30%(arbitrary bubble percent) of the cost of
trading up. That’s nothing compared to first time buyers. If you don’t think there’s any deflation going to happen, then that’s the new reality and everyone has to live with it.
What is the discounted value of owning vs. staying in a shitty rental, where train and bus noise is slowly driving the tenant out of his mind?
I know a few folks that purchased to get away from that. They ended up near the PA border, despite working in the NY metro area. They just had to have that big house.
So they traded a small rental for space and now commuting costs and traffic are driving them out of their minds.
No win.
Video on website and pictures on both website and in paper…..
WSJ
How to Throw Like a Pro Former NFL QB Phil Simms on the secret mechanics of hurling a football
By REED ALBERGOTTI
December 8, 2007; Page W1
Take a kidney bean, blow it up to the size of an eggplant, shave both ends to a point, cover it with slick leather and fill it with 75 quarters.
Now go outside and try to throw it accurately.
This is, in rough terms, the challenge millions of Americans will face this holiday season during ritual backyard football games. Never mind that footballs weren’t meant to be thrown in the first place (the sport was derived from rugby, a game with no forward passes) or that no two coaches seem to agree on how this skill should be taught — the ability to throw a spiral remains one of the most unforgiving litmus tests of American manhood.
It’s also one of the toughest to fake. Physicists say a football needs to spin to be gyroscopically stable, but as soon as it’s airborne, wind and gravity will try to knock it from its axis and make it wobble like a slow bicycle. That a quarterback can throw one of these things 60 yards and hit a moving target “is just amazing,” says William Rae, professor emeritus of aerospace engineering at the University at Buffalo.
For those who want to master the skill, Phil Simms, the 52-year-old former New York Giants quarterback, agreed to share his secrets on technique at his home in Franklin Lakes, N.J. Though he won a Super Bowl with the Giants in the 1986-1987 season, Mr. Simms says it wasn’t until about 1993, when he retired and started teaching his two sons to throw, that he immersed himself in the mechanics of passing. Since then, Simms has become an NFL color commentator for CBS and emerged as an expert on passing technique. He has written a book called “Phil Simms on Passing” and tutored several promising quarterbacks (at no charge) from nearby schools. If he’d known what he knows now while he was still playing, he says, “I would have set records.”
Until 1906, football was a running game. The forward pass was foisted upon it when university presidents became outraged at the number of deaths on the field, which hit an estimated 18 in 1905. College football’s rules committee, which included legendary coach Amos Alonzo Stagg, created the pass to spread the game out. It didn’t become popular until the 1930s when the NCAA and the National Football League adopted a standard ball size.
Since then, the popularity of the forward pass has grown to the point where it’s hard to imagine football without it. Today, about 56% of NFL plays involve passing.
Current NFL quarterbacks aren’t always the best passing role models. Among the league’s 32 starters, there are 20 different ways of throwing the ball, Mr. Simms says, few of which approach anything close to perfection.
Mr. Simms says he first started to rethink his own passing technique when Jim Fassel came to the Giants as an assistant coach in 1991. Under his tutelage, Mr. Simms says he started clasping the ball with two hands, which reduced fumbles. He held the ball low at his chest instead of up near his shoulder, which improved his release time. By keeping his arm and body relaxed, his throws became more accurate. After retiring, he took his study further and created drills that reinforce specific aspects of his passing technique.
The first thing he tells students is to take a deep breath and relax. Tension and a too-tight grip on the ball can be the downfall of a passer. Tight muscles inhibit movement at the joints, he says, causing the arm to work as one object, like a catapult. When it’s limp and the joints move, the arm acts as a whip.
Ball grip is a matter of preference, he says. Holding it over the laces helps add spin, but holding it without using the laces is OK, too. One grip has the middle and ring fingers over the laces and the index finger just behind them. But someone with smaller hands can grab the ball closer to the point, where the circumference is shorter.
WHIP, NOT PUSH
Most people throw by drawing the football back behind their ear and pushing it forward. But pushing the ball makes it difficult to impart spin, Mr. Sims says. Instead, the arm should whip, with the help of torque created at the waist.
Another misconception is that a spiral can be achieved only by launching the ball as hard as possible. Softly thrown balls can have spin, too.
Some of the drills Mr. Simms has come up with to teach these principles are unorthodox. So much so that a few coaches have refused to let their young quarterbacks train with him for fear he’ll ruin them.
Tom Martinez, who began coaching New England Patriots quarterback Tom Brady when he was 13 and now heads up the quarterbacking branch of an invitation-only camp for gifted players, says he doesn’t share the Simms philosophy. Instead of teaching one rigid technique, Mr. Martinez says he works with a thrower’s existing style and tries to make it more consistent and repeatable.
Those who think they have a good handle on the spiral would be well served by standing on the receiving end of the Simms version. After licking his fingers to get a better grip and setting his feet, he uncoils a series of identical passes that cover 40 yards with alarming speed, delivering a sting to the palms of anyone not wearing oven mitts. “I’ve thrown over a million,” Mr. Simms says, modestly.
Interesting concept – can the house be foreclosed on if the mortgage has been broken up so much that no-one can prove they own it?
OpEd: “Foreclosure-proof homes? Mortgage-backed securities have made many homes legal and financial mazes that put ultimate ownership in limbo.”
http://www.latimes.com/news/opinion/la-oe-weiner3dec03,0,6426024.story?coll=la-opinion-rightrail
re: 317
Agreed. Just visited some friends out in Bensalem, PA who work in NY. Trying to convince us that the commute into the city is only 1.5 hours.
ummm, no.
afe
Hi Friends
Recently I found that Toll Brothers has created big time fraud when dealing with me on a purchase that never realized. I want to take this opportunity to sue them big time. I am willing to split 50-50% any winning amount.
Does anybody know of / recommend a good real estate attorney, please send me the name and contact details on tom3000252001@yahoo.com
Thanks a lot.
GL Oh what a tangled web we weave……….
These banks have really gotten themselfes in a box now.The lawyers wiil have a ball (of billable hours)figureing this one out.
#301 gary:It’s all about price. I’d be willing to sell my house cheaper if that means everything else drops, also.
Not to beat you up, but your thinking is sort of I am not showing you mine, until you show me yours.
You are a potential seller who will lower your price, if the other sellers who are selling now, lower their price first.
Again with all due respect, one could argue you are part of the problem.
Why not go out and put some bids in now, on houses out there and see what happens?
Either way we still love ya man, but you should calm down.
On buying up,
I’m technically buying up, although we also moved an hour or so away. I sold first at 2004 prices plus a few percent in about two weeks.
So now, I am trying to buy for 2004 prices plus a few percent, but the thing is I am probably going to have a rent for a while, while I do it.
I’ve seen quite a few houses being listed by potential buyer-uppers, and they have done the calculations that they need this price to comfortably get their next (nicer) house. But they inevitably are overpricing their homes and they have no sense of urgency because they really don’t need to move.
I expect they will be the last ones to sell in this market.
It seems what they should do, if they are serious about buying up, is sell their homes quickly now, get their cash out, and then possibly rent until they find the house they like at the price they like.
Apologies for a possible repeat reply, and jumping all the way back to
Post 57 where Mike said:
… he believes in this war he would like very much to win it whatever he considers it to be.Not the same in his mind as posted by nj patient.
I have no idea what the fool believes, but he is not doing anything to “win” in Iraq. To try to win you would actually have to define the goal and then take steps to get there.
Other than hoping all the Iraqis suddenly get along, there doesn’t seem to be much being done to bring that about. He’s running out the clock, because he has neither the imagination nor the guts to do anything else.
This is unquestionably the worst presidency the country has endured.
Inspired by Gary’s listing at No. 7 I thought I would offer this one:
http://tinyurl.com/yqdml2
It’s supposed to be an “income property,” but “outgo” is more like it. Please note that the listing does provide the expected income of $53K.
Unfortunately, they put the expenses at $25K, despite listing the monthly mortgage amount (not including taxes, and forget about upkeep and repair) as $6,311. The last time I looked that added up to more than $75K.
So you could own and rent this bad boy and your annual loss on a declining asset would probably be under $30K. Sweet.
Another “going green” builder story:
N.J. developers say going green can be achieved step by step
e-mail print The Record
Friday, December 7, 2007
By JAMES QUIRK
STAFF WRITER
The message from New Jersey policymakers and commercial developers is clear: Building green and advancing sustainable design practices is the only way to go.
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk3NDImZmdiZWw3Zjd2cWVlRUV5eTcyMzA1MzEmeXJpcnk3ZjcxN2Y3dnFlZUVFeXkyMg==
3b,
lol! Glad to know some still love me, even though I can be a pain in the arse. :)
As lisoosh said earlier, I better get my wife something nice for Christmas!
We did put in a bid on a house about six months ago. It was 15% below asking but somebody else made an offer within a few thousand of asking and the sellers accepted. And I understand the sellers were even reluctant then but it was about the time when HSBC announced their problems and stuff started to heat up with the financials.
ED325 THE SURGE IS BEING DONE & IT IS WORKING.
HOW MANY ATTACKS ON US SOIL SINCE 9-11 ZERO!
Were mistakes made YES.Did they plan wrong in the time right after defeating them YES.
This doesn’t mean we should throw in the towel.
Hindsite is 20/20.I can tell you 1 thing if we had Al Gore in there instead of Bush I shudder at the thought of what he would have done.But I’m sure you will have your chance to vote for Hillary so she can tax us and give it to sheeple.When asked where the money would come from to bailout sheeple she said”it comes from where it comes from”yea I pay for their mistakes.I will take exception with one more thing no imagination maybe no guts I don’t think so.Yes it is brave to run the country by polls like Clinton did or do what you feel is best for country right or wrong regardless of which way the wind is blowing.
329–I really don’t know what Gore would’ve done after 9/11. I tend to think we wouldn’t be in Iraq now, which wouldn’t be a bad thing, imho. I’d like to believe that someone more competent than Christie Whitman would’ve been heading up the EPA, so that I wouldn’t currently be enrolled in the WTC Health Registry. And maybe I wouldn’t be buying “disappearing civil liberties” mugs for Christmas this year… But—and here’s the point—you don’t know what Gore would’ve done either.
I think part of the problem for Gary is he’s fixating on asking prices and not sale prices. Most of those asking prices are dream prices.
Lets take 3 recent Fair Lawn November sales for example.
House 1
Previously purchased Feb 2005 $335,000
Asking price $419,000
Sale Price $345,000
So despite asking 25% more than he paid, the seller only got 3% more.
House 2
Previously purchased July 2006 $542,500
Asking price $599,000
Sale Price $525,000
So despite asking 10% more than he paid, the seller actually got 3% less.
House 3
Previously purchased July 2005 $372,900
Asking price $389,900
Sale Price $330,000
So despite asking 4.5% more than he paid, the seller actually got 11.5% less.
mikeinwaiting Says:
December 8th, 2007 at 5:38 pm
ED325 THE SURGE IS BEING DONE & IT IS WORKING.
HOW MANY ATTACKS ON US SOIL SINCE 9-11 ZERO!
Were mistakes made YES.Did they plan wrong in the time right after defeating them YES.
This doesn’t mean we should throw in the towel.
Hindsite is 20/20.I can tell you 1 thing if we had Al Gore in there instead of Bush I shudder at the thought of what he would have done.
mike: WTF? Are you falling for Rove’s Jedi Mind Tricks? Don’t be an idiot.
BTW…the answer to you question is that we would have occupied Afghanistan and Western Pakistan and bin Laden would be dead. Also, the cost of heroin in 2007 would be exponentially higher…..
Letters from WSJ
Moral Hazard Meets Mortgage Bailouts
Kudos to Andy Laperriere (“No Bailouts for Borrowers,” op-ed, Dec. 4) for showing why, as a matter of public policy, it is wrong and an enormous mistake for taxpayers to bail out distressed borrowers, subprime or prime. Those of us who were fiscally responsible and lived within our means should not suffer to benefit those who didn’t.
Early on my wife and I made a commitment to always live well within our means and save a substantial portion of our income. Sixteen years later, we are right on track to achieve our retirement goals.
While we sacrificed, others acted irresponsibly. To have those who were so irresponsible expect those of us who did the right thing to bail them out so they can stay in homes nicer than the one we live in and can afford makes me irate, to say the least.
We are watching closely the stand that each of the presidential candidates takes on this issue. We’ll also be watching how our senators and representatives in Congress vote on this issue, which — sadly but unavoidably — seems headed their way. Bail out those who were irresponsible at your own peril.
Alan Bressler
Atlanta
The problem some borrowers are having paying back subprime loans is a magnified extension of their abuse of consumer credit. People who have a basic inability to tell themselves that they can live in a less fancy, more affordable home also have a hard time living within their means, whether buying a pickup truck or dining out. Our government should set the example now by living within its means, and not bail out the loans for the best reason of all — when you look at our nation’s accounts, we can’t afford expenses like these and still afford things like Social Security.
Russ McNeilly
Lake Forest, Ill.
As a child of the Great Depression I saw my family lose: the family home, the family business, the family automobile and very nearly lose their self-respect.
I was too young to receive welfare state benefits, but I was right on time to pay for half a century for others to receive the benefits that I never received.
William M. Savage
Lithonia, Ga.
The Bush administration’s bailout introduces the notion that neither covenant nor contract in the financial/consumer relationship is valid going forward. This is a shocking act from a Republican administration. The lenders have every reason to work with distressed borrowers on salvageable loans, and a lot more skill than the government at sorting them out.
Instead, why not make the lenders mark the mortgages to market for the borrowers, just as they have for their shareholders.
Gary Schulte
San Diego, Calif.
Where do I sign up for the bailout for borrowers program which was the subject of Andy Laperriere’s insightful feature? This could be the most savory free lunch program since the New Deal. FDR would be proud albeit jealous of the Bush administration’s new-found populist bent.
While we’re at it, why don’t we reimburse the hoards of imprudent Americans who regularly revolve over $80 billion in credit-card debt at usurious interest rates?
Robert S. Laing, Jr.
Miamisburg, Ohio
Instead of morning prayer or the Pledge of Allegiance in school, I would like to suggest that school children read the story of the ant and the grasshopper every day so they don’t grow up to be subprime borrowers.
P.A. Lazor
Summit, N.J
Sometimes, you just gotta chill.
http://www.msnbc.msn.com/id/20302559/displaymode/1107/s/2/framenumber/1/
Original Op-Ed from 12/4 WSJ A21
No Bailouts for Borrowers
By ANDY LAPERRIERE
December 4, 2007; Page A21
As the housing market continues to deteriorate, the pressure to respond is growing in Washington. A Treasury Department plan — to work with mortgage servicers to streamline the process for modifying loans for subprime borrowers who can’t afford higher monthly payments — has been in the news the past few days. Yesterday Hillary Clinton announced a plan for a 90-day moratorium on foreclosures and a five-year freeze on mortgage payments for subprime borrowers. It won’t be long before demands are made — including from Wall Street — for a taxpayer bailout of homeowners facing foreclosure.
A taxpayer bailout of distressed homeowners would be expensive, unfair to the vast majority of homeowners and renters who have made prudent financial decisions, and set a troubling precedent that would invite reckless behavior in the future. What’s more, a bailout will not stop the inevitable correction in home prices, and is unlikely to prevent the associated economic repercussions.
The primary argument for a taxpayer bailout is based on a myth — that subprime borrowers are falling behind on their mortgages because interest rates on their adjustable rate mortgages have spiked, making their monthly payments unaffordable. In fact, the vast majority of delinquent subprime borrowers are still paying introductory teaser rates (about 8% on average, a below-market rate for borrowers with checkered credit histories). In other words, for most of these borrowers, their monthly payments have not yet gone up.
It is true that many subprime borrowers were sold a toxic mortgage by unscrupulous mortgage brokers. However, the primary reason for the spike in subprime delinquencies so far is that many subprime borrowers have taken on more debt than they can pay back using any reasonable interest rate.
According to Credit Suisse, the typical subprime mortgage starts at 45% of pre-tax income — before the rate resets. After the first reset, the mortgage payment generally increases to about 55% of gross income (and can go up from there). Many of these loans can’t be restructured or modified; the only way the most distressed subprime borrowers will be able to stay in their homes is if the lender or the taxpayers forgive a significant amount of their mortgage debt.
Since so many borrowers — and not just subprime borrowers — would need to receive substantial debt forgiveness to make their mortgages affordable, a bailout fund would be expensive, likely costing taxpayers hundreds of billions of dollars. At a time when Congress should be trying to confront the trillions of dollars in unfunded Social Security and Medicare obligations, a mortgage bailout would be fiscally irresponsible.
An important factor that would magnify the cost of a bailout is that it’s difficult to know in advance who will default on their loans, and therefore to whom the aid should be targeted. By what standard would the government distribute this aid? What would qualify a homeowner as financially distressed? Should a bailout be limited to subprime borrowers, people who, by and large, have a history of not paying their bills on time? Why not extend the taxpayer’s largesse to prime borrowers, many of whom also face large payment increases associated with rate resets?
A majority of subprime loans during the past few years have been cash-out refinance loans. Many subprime borrowers have extracted, through cash-out refinancing, much more than they ever put into the house in the form of a down payment. Would they be eligible for a bailout? How about people who chose a “stated income” option, so they didn’t have to document their income and lied on their loan applications?
Would a bailout fund be limited to those with certain incomes or home values? Would there be an asset test, or would people with two brand new cars in the driveway or six-figure stock portfolios qualify? What kind of asset test?
It is self-evident that any bailout fund will be complex to administer, as well as arbitrary and unfair. While the plight of many who were caught up in the housing mania is tragic, a bailout package would almost certainly reward the least deserving. Those facing the greatest risk of foreclosure — and presumably those who would get most of the taxpayer aid — are those who bought a much more expensive house than they could afford, spent the equity of their once-affordable home, or lied about their income to qualify for a loan they otherwise would not have received.
Ironically, if passed into law, a bailout would come at a time when many investors are urging Federal Reserve Chairman Ben Bernanke to exercise restraint in responding to recent financial market turmoil. They argue that one important reason investors have taken on excessive risk (say, buying risky subprime mortgages with leveraged funds) was the perception that the Fed would step in and cut the fed-funds rate if asset prices fell, as it has done repeatedly during the past two decades. Economists call this moral hazard. Obviously, the federal government would set a troubling precedent and encourage irresponsible behavior in the future by bailing out homeowners (and, indirectly, lenders and investors).
Some say the government did exactly that during the S&L bailout of the 1980s, but that is not true. The bailout was for innocent depositors who were guaranteed protection of their funds under federal law. The managements and investors of the savings and loans that became insolvent were not bailed out. They lost their jobs and their investments.
The argument will be made that, despite the high cost, inherent unfairness, and moral hazard associated with a bailout, allowing a spike in foreclosures will push home prices down and possibly send the economy into a recession. Therefore, Congress should create a taxpayer bailout fund to soften the economic blow from the housing bust.
Theoretically, a timely and well-designed bailout might slow the descent of home prices and mitigate the associated economic fallout — but one ought to be deeply skeptical of the effectiveness of a proposal that, at root, is designed to repeal the laws of supply and demand. Home prices were driven to unsustainable levels during the housing boom because imprudent loans created artificial demand for housing. It is inevitable that home prices will fall as that artificial demand is withdrawn.
Congress and the Bush administration are in the process of taking measured steps, such as expanding eligibility for FHA loans and working with industry to streamline the process to modify loans, to help distressed borrowers where they can. To be sure, these proposals will have only a modest impact. But policies designed to suspend the laws of economics inevitably produce unintended consequences. Today’s housing bust is itself the unintended consequence of an easy Federal Reserve monetary policy designed to cushion the economy from the fallout of the bursting of the tech bubble. Congress should reject a taxpayer bailout.
Mr. Laperriere is a managing director in the Washington office of ISI Group.
grim #317
I know a few folks that purchased to get away from that. They ended up near the PA border, despite working in the NY metro area. They just had to have that big house.
So they traded a small rental for space and now commuting costs and traffic are driving them out of their minds.
Is the moral of the story that we’re all going to lose our minds anyway?
Or that we already have?
Quoting from above….”It is self-evident that any bailout fund will be complex to administer, as well as arbitrary and unfair.”……the basic logic why any “feel good” legislation is at best a crock, and at worst dangerous, pandering, and a ruse for the naive….
My secret is out I want to keep heroin prices low & hence my whole position.I tend to take the war as deal with what you have & don’t dwell on the past.Things are getting better in
Iraq all stats point this way.Should a would a could a…. not me.Bush bashing in vogue so I don’t go there.And yes I can’t stomach Al Gore
as he invented the internet.Attacks on US since 9-11 zero.I guess you all think they weren’t trying.
Mike—338—“Should a would a could a…. not me.”
But that was the whole point of your previous post.
#328 gary: That was 6 monts ago, a lot has changed since then. Why not try again after the holidays?
I refuse to be sucked into your hypnotheoretical arguments.
–George W. Bush
Indianapolis, IN
10/15/2004
I would like to take credit for the above quote, but alas I cannot.
Of course the ability to speak really is’nt that important right? What did Ben Franklin say?
“Well done is better than well said”
Yeah well done, or was it “mission accomplished”
KL
ok so who do we want for President?
Rudy who sleeps with his cousin?
Hillary who is bi and wants some female interns of her own this time around?
The Morman guy who sleeps with as many wives as he can get to marry him. or
Obama whose mama got a taste of the berry in the Big Island and didn’t care he was a bigamist and on the do not fly list.
Mike—338
I hope your just trolling. The Gore-internet canard makes it seem so.
John—spell after me: Mormon.
Rest of your post is too juvenile for a response. Are you sure you’re old enough to vote?
3b,
We’ll see what direction things are going in the spring. I mean, we’re not forced to make a move which is a good thing so we have time to think it through.
Reflecting on the past:
The Investment U e-Letter: Issue # 709
Monday, September 10, 2007
Financial Panic: A Warning On Financial Crises From Alan Greenspan… and George Santayana
by Alexander Green, Chairman, Investment U; Investment Director, The Oxford Club
Last week, Former Fed Chairman Alan Greenspan told a group of academics in Washington, D.C., that “the behavior we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock market crash of 1987, I suspect what we saw in the land-boom collapse of 1837, and certainly the bank panic of 1907.”
That sounds pretty ominous.
Unless, of course, you don’t know what happened during those times of financial panic and why. If that’s the case… well, as the philosopher George Santayana famously said, “Those who cannot remember the past are condemned to repeat it.”
So let’s take a moment to refresh our memories…
Four Financial Panics
The Panic of 1837
This was one of the most severe financial crises in the history of the United States. Built on a speculative fever in land (sound familiar?), the bubble burst on May 10, 1837, causing a five-year depression that included the failure of many banks and record high unemployment.
Some historians blame the economic policies of Andrew Jackson for this bust. However, it is unlikely Greenspan was drawing any parallels to the Bush policies – wrongheaded as they are in some ways – but rather to the housing mania of the past few years which is now playing out in an ugly way.
The Panic of 1907
This was another emotional episode, a financial crisis where the stock market fell 50% from its peak and the economy wound up in recession. Best remembered for the panic-stricken runs on banks and trust companies, the severity of the downturn led to the formation of the Federal Reserve in 1913.
This crisis proved too big for the U.S. government to handle. Fortunately, J.P. Morgan organized a team of wealthy bank and trust executives who secured international lines of credit and bought the stocks that frightened investors were despondently selling.
This was not the first financial panic since 1837, incidentally. There were three others in the 34 years preceding this one.
Black Monday
I was a portfolio manager on Black Monday (October 19, 1987) when the Dow plummeted 22%.
The surprising thing about this crash is that the cause is still a mystery. After all, no government failed, no currency crashed, and nobody was shot. I remember the market just gapped down at the opening and never looked back.
Much of it was caused by program trading, of course. So curbs were instituted and Greenspan himself rode to the rescue with a dramatic rate drop. Taking a page from his book, Bernanke surprised the market with a half-point drop in the discount rate a few weeks ago.
Hedge Fund Collapse
Lastly, Greenspan’s mention of 1998 refers to the collapse of the hedge fund Long Term Capital Management (LTCM) and the ensuing turmoil in world stock and bond markets.
Founded by John Meriwether, the former head of bond trading at Salomon Brothers, LTCM generated 40% annualized returns in the first few years, but managed to lose $4.6 billion in less than four months in 1998.
It turns out the fund’s complex mathematical models were no match for the East Asian Financial Crisis of 1997 and Russia’s default on its sovereign debt in 1998.
World stock and bond markets were sent into a short-term tailspin, thanks in part to the fund’s size and massive leverage. Fortunately, Greenspan organized a group of Wall Street banks that enabled an orderly liquidation of the troubled fund and financial markets quickly recovered.
Financial Panic: Expect the Unexpected
So what are the lessons to be learned here?
History shows that financial panics are less rare than many investors believe.
The government and/or the Federal Reserve usually steps in to lessen the economic and financial pain, but only after many investors have sustained substantial losses.
As Nassim Taleb has written in “Fooled by Randomness” and “The Black Swan,” financial panics are usually one of a kind, impossible to predict and arrive like a bolt out of the blue.
Gary, why do you want to move? Is it just for a bigger/better house or a better town/location? Just curious.
I know that if I had a house that I was ok in right now in a town I liked, I wouldn’t be putting myself through this hell of a househunt.
I went househunting again today and the house we were interested in has a massive easement in the yard and you can’t put a fence up. That would be a good thing to write on the MLS where it says Easements so I don’t waste my time.
#346 – Orion – On a practical level, I admit that randomness does seem to play a part in every aspect of existence but don’t you think that given enough time(centuries perhaps) and effort, all things are ultimately knowable and therefore not random? Just a thought.
Some construction loans in trouble.
From New York Times:
http://www.nytimes.com/2007/12/08/business/08charts.html?ex=1354770000&en=cad8bffbbee9e152&ei=5088&partner=rssnyt&emc=rss
Outofstater #348
But who lives long enough(centuries?) to remember the past? I don’t agree with your thought that “all things are ultimately knowable and therefore not random?”. If that were the case, then why are some people repeating the same mistakes of centuries ago?Only The Man knows all. Randomness is very different than knowing.
“There is no evidence of a housing “bubble” in the United States and housing demand should stay strong for years to come”
– Dr. James F. Smith, chief economist for the Society of Industrial and Office REALTORS® and a senior fellow and director of the Center for Business Forecasting at the Kenan Institute of Private Enterprise at The University of North Carolina, April 2005
Fannie Mae announces new plan.
From Reuters:
http://www.reuters.com/article/pressRelease/idUS185342+07-Dec-2007+PRN20071207?sp=true
Ann,
I’m in my current house for over six years now. By 2000/2001 the housing madness was in full swing and we went through two bidding wars while realtors were feeding us every line in the book (that’s another whole story). It was bad; we went through a two year horror show.
We found this house through friends of a family member and what a miracle it was. We didn’t get a break in price but we were just so relieved to actually get to attorney review without another bidding war.
It wasn’t the house we wanted nor was it in the town we wanted but it was sufficient for us at the time as we were moving back up North Jersey after a stint in the Toms River area.
The house is too small for us now (and then, actually) and we planned on staying for three years max as the madness subsided. Well, we all know what the housing market did from 2004 onwards.
What we want to do is to move into a bigger home (not huge, just a little bit more) on a quieter street in a more of a main street type of town. NW Bergen is beautiful, Pascack Valley is nice as well as the Wayne area. I also like some towns in Essex County. These areas just make the most sense for the family.
I’m sorry to hear you’re going through the house madness…. I know it all too well. It seems like we have the same aspirations and feelings about the whole thing.
Tall pile of renters are njreport posters.
“What is the discounted value of owning vs. staying in a shitty rental, where train and bus noise is slowly driving the tenant out of his mind?”
Clot,
Not my rental. I’m underground. The only thing I hear is a trencher.
My shitty rental?? HAH! Go back to 1/07,the money pit was out, beans were in. It’s very simple, buy an overpriced, overbought, depreciating asset or tend to the fields. I opted for dirt, others went for granite. Who’s looking for a bailout?
“Tall pile of renters are njreport posters.”
mv,
Some of those renters were former owners and kicked it out to dolts like you.
Gary [353],
La,la, la,la la…. You own a house, right? Please stop the whining. Do you remember dot.com? Why do you think that this will be any different? The only difference is time/asset class. Unfortunately, this will play out for 5-7 years, from the peak. Will you subject us to your tirades until 2012? Shut up and eat mom’s lasanga.
I just saw this property on GSMLS- 2438915. It is beautiful! So desirable! And such a great price! WOW!
Check it out everybody ;)
Syncmaster (358)
LOL. I’d die to live in that house. What a gem :)
455 N Woodland Street, Englewood
(Short Sale)
Purchased: 8/30/2006
Purchase Price: $945,000
NJMLS# 2724503
Original List Price: $1,200,000
Current Asking Price: $750,000
6 Clayton Street, Hillsdale (this one has been posted, new lower price)
(REO)
Purchased: 11/15/2005
Purchase Price: $630,000
NJMLS# 2743411
Original List Price: $699,000
Current Asking Price: $459,900
9 Columbus, Glen Ridge
Purchased: 5/1/2006
Purchase Price: $720,000
GSMLS# 2436106
OLP: $699,000
LP: $600,000
Sold: 12/8/2006
Sale Price: $620,000
But, it sold over asking!
36 Mountainside, Mendham
Purchased: 8/31/2004
Purchase Price: $875,000
MLS# 2415488
OLP: $949,000
LP: $890,000
Sold: 12/7/2007
Sale Price: $845,000
5908 Tudor Drive, Pequannock
Purchased: 9/28/2005
Purchase Price: $285,000
MLS# 2433837
OLP/LP: $269,900
Sold: 12/7/2007
Sale Price: $253,500
223 Douglas Road, Bernards Twp
Purchased: 04/24/02
Purchase Price: $1,240,000
MLS# 2269717
OLP/LP: $1,895,000
DOM: 57
Withdrawn
MLS# 2291038
OLP: $1,825,000
LP: $1,499,000
DOM: 211
Expired
MLS# 2366354
OLP: $1,399,000
LP: $1,299,000
Sold: 12/06/07
Sale Price: $1,270,000
7 Manor Drive, Morris Twp.
Purchased: 5/20/2005
Purchase Price: $805,000
Currently active, listed as:
MLS# 2457509 (multiple relistings)
Original List: $875,000
Current Asking: $750,000
DOM: 224
34 Goltra Drive, Basking Ridge
4br/3ba on .96ac
(Wells Fargo REO)
Purchased: 7/25/2003
Purchase Price: $515,000
Currently active, listed as:
MLS# 2448941 (multiple relistings)
Original List: $619,000
Current Asking: $539,900
Grim 367 Isn’t Basking Ridge one of the desireable upper end towns.Hmmmm.
Gary,
That’s a tall order! I should know, that’s what we are doing too.
Have you considered just selling now and renting in a town you like and then buying again? I don’t know how else anyone would do it, unless they have enough cash to keep two mortgages up. We just sold and it was hard. Sure, you get traffic, but finding a strong buyer with no contingencies on selling their house, really really hard. It’s only going to get worse.
I agree with you by the way. As an average buyer, I keep hearing the market is going down, but I don’t see it in the listings. Of course, they are just listings and many of them have been on there for months. I do believe summer into next fall is going to change, but I could be wrong. Who knows how long it will take sellers to get out of their denial?
Anyway, good luck!
OT for boys (or the little boy in you guys).
If an 8-yr. old boy says he wants a radio, how would you define radio?
Pat Small boom box type.Depends on $ you want to spend.
Pat Sears has cool pirates of c one if he is into that.Cheack out online.If you want to spend 100 there are a shock & water proof types Sony & a yellow Jeep one that will last a long time.But they may be to heavy for him to handle.
How to Solve a Subprime Mess? An Iowan Says, Let’s Caucus
The New York Times
By VIKAS BAJAJ
Published: December 9, 2007
A HALF-DOZEN years before subprime mortgages were on the national agenda, Tom Miller, the attorney general of Iowa, led teams of state officials from around the country in negotiating settlements totaling more than $800 million with two large home lenders that were accused of misleading and overcharging borrowers.
Skip to next paragraph
Lynn L. Walters for The New York Times
Tom Miller, Iowa’s attorney general, turned to mediation in the farm crisis and is trying it again to address the housing crisis.
Now, as the mortgage boom of the last few years unravels, Mr. Miller is leading another multistate campaign to help consumers. This time, he is not threatening major litigation — at least not yet. Rather, he is trying to stem what most experts say will be a surge of foreclosures by cajoling and pressuring mortgage servicing companies to modify loans before borrowers fall too far behind.
“It’s not an obvious law-enforcement attitude,” Mr. Miller, 63, said in early November in his office in Des Moines. “But we view ourselves as consumer protectors and we see an avalanche of foreclosures sitting out there and you have to learn from experience.”
The preference of Mr. Miller, a Democrat, for prevention over prosecution sets him apart from a newer, younger crop of attorneys general in other states. His counterparts in New York, Ohio and Massachusetts, all of whom are also Democrats, have filed lawsuits or publicly discussed their intention to bring cases against mortgage lenders, investment banks and credit rating agencies.
http://www.nytimes.com/2007/12/09/business/09ag.html?_r=1&oref=slogin
34 Goltra Drive, Basking Ridge
4br/3ba on .96ac
(Wells Fargo REO)
Purchased: 7/25/2003
Purchase Price: $515,000
Currently active, listed as:
MLS# 2448941 (multiple relistings)
Original List: $619,000
Current Asking: $539,900
2003 then 2002 next year. Let the good times roll.
mark vermeulen Says:
December 8th, 2007 at 11:39 pm
Tall pile of renters are njreport posters
Left out “Smart” renters. eeehhhh!
grim (286)-
Gary just enjoys the sound of his own whining.
Ann (289)-
Ditch this broad. Honestly, her self-serving intent has been revealed.
You want an advocate, not a lapdog. Agents who pull the “pent-up demand/prices rising in Spring gambit deserve to be cashiered out of real estate…and should get themselves into an orange smock ASAP.
3b (323)-
Exactly. When you’re playing poker, you have to pay to see cards.
Clotpoll, I was waiting for you to chime in, somehow I thought you would say that! I would dump her, but I have no little faith in any realtor at this point, I feel like we would just end up with someone worse.
Ann (379)-
Where are you looking? Perhaps I could refer you to someone.
Ann,
For such a major purchase isn’t it worth trying many different agents until you find one you feel is working in your best interest? One that you’re comfortable with so you wouldn’t be second guessing yourselgf and asking questions on a blog?
Rich
Rich,
I have no faith that a new agent would be any better. This is my third buy, just completed our second sell. No offense to any of the good company here, I don’t believe any of them would be any different based on my past experience.
There is an inherent conflict the way the system is set up right now, no matter how much the agent has your best interests at heart. Unless the agent is your mother, those conflicts will always come into play, for some more than others.
No matter who it was, I would always second guess them and I’ve gotten a lot of good tips on this blog regardless.
Grim thank you have bussy ha??
I am looking to buy in Central Jersey ….should I buy now or wait ? Any advice is appreciated??
#354 marky mark: Why all this bitterness?
#383,
If you are willing to overpay by 30%, you should buy now, I even sell my house to you.
Buy if you wait 1 year you’ll get a 30% off todays prices in most towns.
#345 gary:We’ll see what direction things are going in the spring.
Well we do not have to worry about prices going up.
anne,
to me it didn’t sound as if your realtor said anything that was enough to have you dump her, especially since i can’t imagine finding a realtor who doesn’t say that stuff and worse.
when i first started looking, and more was selling, my realtor never said anything like that. in fact, she expressed how much dislike she had for some houses that i was considering. but as things started to slow, i noticed her pushing a little more –
i sort of don’t blame her, because i realized that i am looking for next year’s prices now (i think clot said that one time a few months ago, and it turns out to be true for me), and she’s sellling NOW. so, when she says a house is a good price, it’s compared to other listings that are on now – not what prices will be next year. i honestly don’t expect a realtor to say that i should wait because prices are going to go down. all they can say is if it is priced right today.
the other day she e-mailed me about a listing that really didn’t work for me (the house was too big and out of my range anyway). she said the house was priced well, and i should see it. i e-mailed back that i thought prices were going to fall, and that for the next few months i would probably be going just to open houses. i don’t want to drag her around if i can get into houses myself. but, in the end, the house was priced well, (for today’s comps) and it’s now under contract.
Ann (382)-
Being skeptical and second-guessing any agent is a normal thing to do. It’s folly to do otherwise when you’re dealing with someone you don’t know.
However, there are good agents everywhere who treat this business as a career and who will not abuse you for a quick sale when they much more value your future business and referrals of friends and family. A stream of referred and repeat business from past happy clients is much easier to obtain- and sustain- than any number of shady “quick hit”-type deals.
Also, bear in mind that if you cannot find a good agent, IT IS YOUR FAULT for not having taken the time and care to ask around and interview properly. This is a person you are going to employ to help you spend an enormous amount of money. If you treat it as a lottery, don’t be surprised if your luck betrays you.
clot,
check your email
sl
[382] Ann, I agree on RE system set up wrong…
We made a very lowball offer in spring on a knockdown property and used the agent who was manning the desk…she was nice. Anyway, I had an idea and she liked it… our offer was not taken, so I don’t know how it would work out in reality but here’s what we agreed on:
BUYER: We make initial offer at X price. For a sale at this price, she would get 19% commission.
If the sale is made at a price OVER the initial offering price, at closing, she LOSES 2% commission for every 10K rise in price until it drops to a floor of 1%.
We figured this would put her squarely in the LOWER PRICE IS BETTER camp…. (ours :)
She had to negotiate betetr than the listing agent, talk down the property and generally be “us” in real estate agent clothing…
Like I said, our offer was not even given a second chance, but it is nice to know that it’s been on the market for OVER 1 year now. We had put our offer in just prior to expiration on a 6 month listing and they re-listed for a still crazy price for another 6 month listing with the same agents (husband/wife team) who don’t have VOICE MAIL. No one covers for them and they are MIA often. They are elderly and I assume not very technically competent. No cell phones, or voice mail and all faxes go thru broker office, so you can wait 3-4 days for faxed info.
What do the agents here think of an idea like this? (upside down commission…)
385 ….thanks ….maybe ve could make a deal for your home??? :)
#166,
“Just imagine trying to check assets on all these loans”
In another example of how Monty Python imitates real life, GW will probably create the “Ministry of Silly Mortgages” to handle the rate freeze work.
t c m says:
“i sort of don’t blame her, because i realized that i am looking for next year’s prices now (i think clot said that one time a few months ago, and it turns out to be true for me), and she’s sellling NOW. so, when she says a house is a good price, it’s compared to other listings that are on now – not what prices will be next year. i honestly don’t expect a realtor to say that i should wait because prices are going to go down. all they can say is if it is priced right today.”
I agree with this. How can they say prices are going to go down? It’s just as bad to say that as prices are going to go up.
In the end I didn’t think my realtor did anything that heinous to get fired and overall, she is very responsive with data and appointments, which I like. I just don’t think I will find anyone that is any better than her, and in fact, I could end up with someone worse.
Clot
I take full responsibility for who we hire, of course! I don’t expect that much (ok, I expect not to be lied to or insulted) and I know the area so well myself. I have an awesome real estate attorney.
spam, I like the idea of a payment scheme like that. Right now, buyers’ agents have a primary incentive to close a deal. It is in their best interest to get a buyer to try to offer as close to list as possible, therefore increasing the chance of the offer being accepted.
I find that buyers’ agents get into a frenzy as time ticks on. The more time they spend with you, the less relaxed and cool they are.
Bystander 392 The present sit. gives new meaning to “killer sheep” .And now for those
of you that don’t like sport, sport.
Homer,
You really need to get a grip on reality. 75% off 2005 prices?
– College tuition has doubled in 10 years.
– Gas & energy have tripled in 10 years
Do you really think these things will come back to 1998 levels? Please name goods that have down in price since 1998?
Things got out of control..no question but worst case will be 25% off 2005 otherwise you (and eveyone)will have bigger problems than worrying about a home purchase. Someone said it perfectly awhile ago “everyone will be singing Kumbaya around the fire drum”
exxxactly!
314 & 317
What is the discounted value of owning vs. staying in a shitty rental, where train and bus noise is slowly driving the tenant out of his mind?
So they traded a small rental for space and now commuting costs and traffic are driving them out of their minds.
No win.
so, we’ve decided we’ll look for a better (w/dishwasher & not by train/bus) rental.
we’re ruling out condos & houses to rent because that’s too risky given finance’s of owners.
no we won’t save nearly as much as we are but maybe we won’t feel as stuck while waiting.
agreed, emotions aren’t worth tacking on or loosing 30% for a house… especially not ones with the following deal breakers: K&T wiring, next to multiple family houses, with oil and/or septic, or hour+commutes each.
“Please name goods that have down in price since 1998?”
[395],
Actually one of the favorite commodities discussed on this site, lumber. Yes, lower than 1998 prices. What does that tell you about housing? Also, if you utilize the same models as our govt, computers are priced lower than in 1998, hedonics. Although it is not a good, our currency is also lower than its value in 1998.
IMO, 25% off 2005 is probably the most optimistic outcome. Clot is closing deals that are 20-25% off 2005 and we are only in the early stages of this bust. If a market, any market, gains 100% why is it inconceivable to to anticipate 30-50% decline? It’s just natural retracement. Markets have been working like this forever. Nothing outrageous about that.
I’m a renter impatiently waiting to buy for 1-2 years now. I’m in favor of the Paulson plan precisely because it is only a small fix to a larger problem. I don’t think it will (or is intended to) prevent a recession but it will help avoid a depression, which we will all suffer from and regret -yes even renters.
The plan will spread out the number of foreclosures over time and that will reduce a glut of houses on the market in 2008, which will slow the pace of the price decline.
But that is good. Too many foreclosures can ruin a neighborhood by inviting looting and crime/drug dealing in vacant/abandoned homes. We need a correction but we won’t benefit if there is a death spiral.
In more practical terms, I’d like to get a house for a bargain (40% off 2005) but I don’t want to be unemployed for two years. And if that is the cost -then no thanks, (I’ll be satisfied with 15-20% off 2005).
I think the plan will be effective in providing a ‘cookie cutter’ adjustment to borrowers deemed to be worthy of a loan modifcation. Note that the mortgage servicer is the one who makes that decision and has had the option to do so prior to this suggestion. This Paulson suggestion just streamlines the adjustment to expedite the process. (I am unclear whether servicers will proatively notify eligible borrowers or borrowers will have to initiate their interest in participating).
http://www.latimes.com/features/la-re-harney9dec09,0,823207.story?coll=la-tot-features&track=ntothtml
Ouch! Fee hikes pinch borrowers who can’t raise the bucks
By Kenneth R. Harney, Washington Post Writers Group
December 9, 2007
WASHINGTON — Home buyers and refinancers who can’t come up with sizable down payments and whose FICO credit scores are below 680 are about to get squeezed.
Giant investors Fannie Mae and Freddie Mac are imposing significant increases in fees for a broad range of borrowers who have lower than 30% down payments and formerly were treated as “prime” credit applicants. At the same time, the two largest private mortgage insurers — MGIC Corp. and PMI Group — are raising premiums on consumers who have low down payments and FICO scores in the mid- to upper-600s. The added costs for some buyers could mount to thousands of dollars either upfront at the closing or in the form of higher interest rates.
Each of the companies says it has experienced unexpected high losses on loans with these characteristics and must now revise prices upward to handle the risks.
But some mortgage bankers and brokers say the higher costs and down payments will make homeownership impossible or very difficult for a large number of borrowers and slow any housing market recovery.
Though Fannie Mae’s and Freddie Mac’s revised fees won’t take effect until March 1, major lenders that sell loans to the two investors began imposing the surcharges on applicants at the start of December.
Some mortgage loan officers are upset that clients with FICO scores close to 700 — far above the once-traditional 620 cutoff point between “prime” and “sub-prime” — are now being charged more. “This is outrageous,” said Steven Moore, a mortgage broker with 1st Solution Mortgage in Falls Church, Va. “On a loan of $300,000 and with a credit score of 675 — which is not a bad score — and a 75% loan-to-value ratio [25% down payment], the cost is an additional $2,250 per loan.” If the same borrower wants to do a cash-out refinancing to consolidate debt, the new Fannie-Freddie fee schedule will add an additional $1,500 to total costs on a $300,000 mortgage, Moore said. On a $400,000 loan, he estimated, the extra fees would total $5,000.
. . .
spam (390)-
If the buyer makes an arrangement to compensate his own agent, that agent cannot be paid a commission from the seller at closing.
It is illegal for an agent to be compensated by both sides in a transaction. Other than that, this idea interesting…except for the fact that a good agent shouldn’t require anything other than the incentive offered by the seller in order to do his best for his client.
It is oddly cynical to see that a potential buyer believes that the incentive of a huge windfall must be offered to a buyer agent just to get him to do what he’s supposed to do.
I’m also flummoxed at how few buyers on this board will devote any amount of time or effort to interviewing agents. I guess it’s just easier to believe we all suck and either accept pot luck…or blame agents every time a search and negotiation goes sour.
Ann (393)-
“I have an awesome real estate attorney.”
Attorneys are lousy Realtors.
Ann (393)-
“In the end I didn’t think my realtor did anything that heinous to get fired and overall, she is very responsive with data and appointments, which I like. I just don’t think I will find anyone that is any better than her, and in fact, I could end up with someone worse.”
This is all you expect from an agent? Send e-mails and make appointments? Jesus. I’ve got two children that could do that.
Could you raise your expectations…just a little? Then, perhaps your self-fulfilling prophecies will quit coming true.
Clot, I don’t expect more from my agents. Sorry to say.
And when I find an agent who returns my phone calls, emails, sends me reports and promptly makes and keep appointments, I have to say, that is all I expect. Because there are so many of them that don’t do even that. Sorry, but it’s true and it’s a sad comment on the industry.
As far as the attorneys, I have never regretted the money I have spent on mine. It looked like small potatoes compared to the commissions. Same for movers.
And I have regretted the money spent on the agents. Not all of them, my last agent was very good.
Interviewing sounds like a good idea, but they will just say what you want to hear. It’s better just to take them out for a spin and see how it goes. There are also personalities that have to mesh and it’s hard to see that until you are out there with them.
Some buyers need a push and encouragement, some buyers just want an agent to show them the properties and not talk much, some buyers need a ton of data. Some buyers don’t want to pore through the data.
The best deal I ever realized on a property purchase, was using the listing broker in dual capacity as the buyers broker. Trusted by the seller, they were able to effectively present our “Fair Proposal”, and everyone walked away satisfied. This only works if you do your homework, and have a legitimate proposal. But, the Dual agent finds it very difficult to argue with him/her self.
Ann (403)-
You get what you expect.
Confused (406)-
The dual agent can’t argue with himself (or anyone else). A dual agent cannot favor either side…or negotiate on anyone’s behalf.
Ann (404)-
“As far as the attorneys, I have never regretted the money I have spent on mine.”
Good RE attorneys are worth every penny. However, they cannot get you from offer to offer-and-acceptance.
Ann (405)-
“Interviewing sounds like a good idea, but they will just say what you want to hear.”
Perhaps you could find one that offers an opinion counter to yours. Sounds like that’d be an improvement.
Sorry to tell you this, but you’re dead wrong in your low expectations of RE agents. There are a handful everywhere you go. Saying you believe there aren’t any good ones is a cop-out on your part. Do you think there are no good plumbers, carpenters, insurance agents, etc as well? In what other business is low/mediocre the gold standard?
Do your low expectations really only pertain to RE agents?
I’m the first to admit finding a good agent is hard. However, it’s just not THAT hard.
Clotpoll [400]:
She mentioned she’d have to pass it by her broker, we never got that far, so no problems…
She did say that many bonus deals always fell thru…Home Depot gift cards, bonuses, etc…they were the first to get the axe when negotiations were underway.
She is very honest, very nice and will probably not last this market. as her husband is a mortgage broker, I fear their standard of living is crashing.
I only called on her for the one house, so I never “went around” with her…she was game though and really pushed the lowball offer for weeks (it expired, so she tried going direct…)
My own industry is “flat rate” and has huge problems with honesty. My own company pays hourly and has a hard time finding employees as most think they will “win the lottery” on flat rate and hourly is too little. I refuse to pay flat rate as I know it only gets people to start trying to “game the system” and our company is focused SOLEY, 100% on perfect output, so flat rate won’t work here.
Needless to say, I’ve tried to find an incentive that works to MY benefit.
I thought about this RE commission issue again today and I thought of a better way:
LP: 3% commission.
For every 10K difference between (LP) list price and SP (sell price), increase commission .25%
Re: [411]
At bottom, should read “For every 10K decrease between…”
Clotpoll, where do you work? What areas?
Clotpoll, I didn’t mean to say all agents were lousy. Not at all. My listing agent that we just used was very good. Top of her game in the town we sold in and once we worked with her, I knew why. I would love to have her out there negotiating for me. Moot point since it’s not the same area.
But even it was, she only does listings. Said it herself to me. Said she doesn’t want to be a “tour guide” anymore. Are there great buyers’ agents out there, I’m sure? But there are a lot of tour guides too.
spam (413)-
Hunterdon/Somerset. Some Warren, Morris, Middlesex.
I won’t represent people who are posters here, though. However, I will refer.
Ann [405]
Funny story RE agents:
The one who got us the house we’re in drove like a FRIGGIN’ MANIAC!
She was, to say the least, on a death hunt with her truck. She drove an Excursion and was not very, um… capable. She unknowingly take other trucks head on, forget to stop at stop signs….you know the kind… Needless to say, I hung on for dear life the first few times out and then started telling her we’d meet her at the house.
:)
spam (411)-
“She is very honest, very nice and will probably not last this market. as her husband is a mortgage broker, I fear their standard of living is crashing.”
Not to be cruel, but if she doesn’t make it, it’s because she sucks, not because she’s honest or nice.
There are as many- if not, more- ways to make money in down markets as up. It takes a little hustle, sense and ingenuity to pull it off, though.
There are scads of pre-foreclosure, short sale and REO deals happening- or about to happen- right now. Any agent who just sits by the phone waiting for it to ring should go get an orange smock right now.
clotpoll [415]
I won’t represent people who are posters here, though
How can you be sure?
Ann (414)-
It’s mostly tour guides (my guess: 95% or more). There are some good buyer agents in the game, though.
Sadly, you do have a better chance of finding top agents on the listing side. Building a long career inevitably comes down to an ability to handle and control inventory in the agent’s selected market segments. Same as it ever was.
I’m going into my 7th year of being a broker/owner, and I just hired the first competent buyer-oriented agents I’ve ever had.
clotpoll [417]
She’s a hustler, but not devious.
If it only takes hustling to get thru this market, then she’ll be alright.
If the sharks are the only ones getting near the chum, she’s screwed.
spam (418)-
I ask the question: how did you find out about me?
Ann-
Why not ask your old listing agent for a referral on a buyer’s agent in your new area? If she doesn’t know anybody, If sure that her boss does.
Global house prices
I guess US is leading rest of the places in terms of RE downturn.
Oil Min: Iran Has Halted Oil Transactions In Dollars -AFP
TEHRAN (AFP)–Major crude producer Iran has completely stopped carrying out its oil transactions in dollars, Oil Minister Gholam Hossein Nozari said on Saturday, labeling the greenback an “unreliable” currency.
“At the moment selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies,” Nozari was quoted as saying by the ISNA news agency.
“The dollar is an unreliable currency, considering its devaluation and the oil exporters’ losses,” he added.
…
The decline of the dollar, which has weakened considerably against the euro and other currencies in the past 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the U.S. currency.
Clotpoll [421]
Friend of a friend… ;)
Ann – You make me realize how fortunate (or dumb) I was the last time I bought a house. I hate shopping, for everything, including houses. I looked at some photocopied listings the agent sent me, told her the one I wanted to look at and drove down for a long weekend. As soon as I walked in the front door, I knew this was the house for me. I looked around for about thirty minutes and said, “I’ll take it.” She was surprised and talked me into looking at one more house which I didn’t like. We’ve been here for more than ten years and have never regretted it.
sync 424 Thanks for heads up.It is not totally unexpected but bad news for US just the same.Ths Saudes,UAE, will most likely not follow suit.Monday should be interesting
day in the markets.
#400
It is oddly cynical to see that a potential buyer believes that the incentive of a huge windfall must be offered to a buyer agent just to get him to do what he’s supposed to do.
Clot,
we’re on agent #6. & twice we’ve used the ‘home buyer service’ through our bank, which isn’t worth squat since in NJ we don’t get the incentives, merely to get someone ‘screened’, or so we thought. we’ve kept this one since we get MLS request info timely & will draw up the paper work regardless of bid.
do we feel the agent is in our court? going to present the data we provide? going to fire the ammo we send to the guns? drop little psychological warfare leaflets we feed?
nope & never.
we’re firing blanks, making heaps of noise. the homework, satellite imagery review, drive-bys, research, & going to the tax office is all for our assurance we’re making the right or at least a somewhat sane! purchase.
& even though we just walked away from our third bid (10k under ask), this being the 1st that’s gotten thru inspection & the lawyer backn’forth, we’ll probably still keep the agent vs. the previous 5.
#426
i had a dream like that a few nights ago.
d2b, she offered to recommend someone but she also called them “tour guides” including her own team, so it didn’t really appeal to me asking for her rec.
Outofstater, I think that’s great. You are fortunate. That’s how we bought our last home (a townhouse). We just walked in and knew that we had found it.
clot, it’s really hard to find a good buyers’ agent, sounds like the numbers play into that, if the top people all become listing agents. It’s a hard gig when you think about it, driving around and possibly getting dumped any minute.
When will NJ go bankrupt?
http://www.bloomberg.com/
397#, it would be helpful if clot could honestly provide us a breakdown on how many percentage of deals were off: within 5%, 5-10%, 10-20%, over 25%.
> IMO, 25% off 2005 is probably the most optimistic outcome. Clot is closing deals that are 20-25% off 2005 and we are only in the early stages of this bust. If a market, any market, gains 100% why is it inconceivable to to anticipate 30-50% decline? It’s just natural retracement. Markets have been working like this forever. Nothing outrageous about that.
And when I find an agent who returns my phone calls, emails, sends me reports and promptly makes and keep appointments, I have to say, that is all I expect.
I like to find clients that return my emails, phone calls and are on time for appointments. The amount of bad agents out there are probaly equivalent to the amount of bad clients. I love that 6:00 friday return of my monday call asking to see the property I emailed 2 days before and of course want an appointment 10am saturday. However I do have clients that respect my time and you too can find agents that offer the same to you.
KL
“UBS AG, Europe’s biggest bank by assets, may have to take further writedowns on fixed-income securities after the U.S. subprime mortgage crisis rattled debt markets, ABN Amro Holding NV analyst Kinner Lakhani said.”
“The industry has been moving to more aggressive markdown rates,” said Lakhani, who recommends investors hold the stock. “UBS has $20 billion of collateralized debt obligation exposure and to date has taken markdowns well below industry benchmarks.”
“I’d be surprised if they write down everything in one go,” he said. “Based on UBS’s expected loss model, writedowns over several quarters are more likely.”
http://www.bloomberg.com/apps/news?pid=20601085&sid=aAZns3kR0CmM&refer=europe
Ann,
Yes we are few and far between but I consider myself a buyer’s agent. I have taken listing, but prefer working with buyers.
KL
rhymingrealtor Says:
December 9th, 2007 at 7:49 pm
And when I find an agent who returns my phone calls, emails, sends me reports and promptly makes and keep appointments, I have to say, that is all I expect.
I like to find clients that return my emails, phone calls and are on time for appointments. The amount of bad agents out there are probaly equivalent to the amount of bad clients. I love that 6:00 friday return of my monday call asking to see the property I emailed 2 days before and of course want an appointment 10am saturday. However I do have clients that respect my time and you too can find agents that offer the same to you. KL
KL: I’m with you here. Being in a client facing business, I find that people who take the attitude of “ithink_ithink” seem to forget that the real estate agent workforce in many way is a reflection of the general population. In my experience, the bulk of the people out there in the “client” pool are presumptuous, whimsical, lack a shred of professional courtesy, and do not repsect people’s time. I have spent the last few years very carefully finding a way to present myself publicly and interpersonally so that these people self-select themselves away from me. In many instances these people think they are not choosing to work with me, when in reality, I smell their act from a mile away and make their decision for them.
KL, that is a good point. We should all be courteous to each other no matter what. I would say the amount of annoying non-serious buyers far outweighs bad agents.
When we were selling, we had quite a few showings with only a few hours notice. I didn’t mind, because we wanted to sell, but it required keeping the house quite clean and being ready to clean up and get out.
Sellers can be super rude too. I find it a huge disrespect if I make an appointment and the sellers are there when I get there. It is a total waste of my time. I can’t get a proper feel for the house with them in there.
Can anyone comment on the mortgage business in NJ? I know someone starting a mortgage brokerage and wants me to get involved. Is there any money in this business since subprime is gone and Jumbos are hard to get? Thanks
Frank #431,
# Frank Says:
December 9th, 2007 at 7:39 pm
When will NJ go bankrupt?
http://www.bloomberg.com/
???
bi (432)-
I’ve provided specifics in previous posts since the end of October.
Perhaps you were trading so furiously, you missed them.
kl (433)-
Thanks for that. Amazing that posters here wonder why agents become anxious after we invest time and money in them- for weeks on end- and they do nothing but sit on their hands and continue to demand white-glove treatment.
chifi (436)-
And, no doubt, many of those who post here have “self-selected” away from good agents who’ve sussed them out from a mile away.
Jim with volume down & credit tightening I
wouldn’t go there.Have a friend in business
he is slow.This would not be a growth area to put in time or capital.IMHO
United States of Hypocrisy……
WSJ
Hard Medicine Is Easy to Offer, Tougher to Take
By JON HILSENRATH
December 10, 2007
Henry Paulson faces lots of criticism these days for his handling of the subprime-mortgage crisis. In one corner, free-market purists say the Treasury secretary shouldn’t meddle in a mess the markets created and ought to sort out. In another, critics say the government should do more to contain the crisis and help innocent bystanders.
Watching from afar, Rizal Ramli sees the irony in all this. In the late 1990s, the U.S. Treasury and International Monetary Fund dispensed much advice on economic pain management in such places as Mr. Ramli’s native Indonesia. Indonesia listened. It tightened fiscal and monetary policy and shut down 16 banks as advised. A 13% economic contraction followed. Recovery took years.
“The advice by the IMF made things worse,” says Mr. Ramli, a Ph.D. economist, trained at Boston University, who was Indonesia’s economic minister in 2000 and 2001.
At the center of any debate about crisis management are two big questions: How much pain should people be expected to bear when markets turn boom to bust? And who should bear it?
Seven decades after the Great Depression, economists still are trying to calibrate the government’s proper role. As Mr. Paulson is discovering, the answers aren’t easy.
If policy makers embrace tough medicine, allowing banks to fail and mortgage defaults to soar, they risk an Indonesia-style downward spiral in which millions suffer.
If they intervene too aggressively to forestall the pain, they could end up with a different problem, a financial system that remains dysfunctional for years, as Japan’s did when nonperforming loans were allowed to sit idly on bank balance sheets throughout the 1990s.
The U.S. has tended to preach tough medicine abroad, but it now looks squeamish about taking it at home. It is especially hard to accept when the bystanders, numbering in the millions, are preparing to vote in a national election. Some banks are too big to fail. The legions of worried mortgage holders now seem to be too many to fail, in politicians’ eyes at least.
Free-market purists warn that if the government comes to the rescue of borrowers now — say by persuading lenders to freeze low interest rates on loans meant to adjust higher — then borrowers never learn to abandon their reckless ways. Likewise for financial institutions and the people running them.
Economists call this moral hazard. Bail them out once, and you will have to do it again. The Federal Reserve rode to the rescue after the technology-stock bubble burst in 2001 with low interest rates. We now have a housing bust to show for it.
Mr. Ramli, a former Indonesian political prisoner, supports helping individuals but has less sympathy for the banks. He says the best policy would have been for the government to have stepped in before the bubble developed in the first place.
The U.S. surely is no Indonesia. Mr. Ramli, who now heads the board of an Indonesian cement company, can’t resist a little lecture of his own.
“It is amazing that a system that is supposed to be more advanced than us in Asia, that is supposed to have more institutional capacity to assess risk, is doing such a poor job,” he says.
mikeinwaiting – Thanks for the info. I think my friend is assuming the bottom for the housing/mortgage industry is in. Personally, I suspect things can get worse.
Jim Best case your friend is right & I think he is wrong.It will be flat for years,
so again stay away.
mikeinwaiting-thanks for the radio suggestion.
I have a debt I cannot pay. My house is worth about the same as I owe the bank. My realtor tells me to hold on and not accept low-ball offers. Tell me why would I wait and see values drop further? Every month I do not sell, the value drops by about 1%. So why do I not sell? I guess it is the same reason why I bought: stupid greed.
I am glad that greed is universal and my neighbors are suffering the same infection.
I am going to lower the price -to whatever level it takes – and sell before they do.