New Jersey according to Wells Fargo

From Wells Fargo:

At Risk Markets Policy, List, and Message Changes

At Risk Markets Policy Changes

The following changes to the At Risk Markets policy will be effective for loans registered on or after Feb. 29, 2008:

• Non-conforming
− Soft markets will now be limited to the lesser of 85% or the product/program limit.
• Conforming
− Investment properties, second homes and cash-out refinance transactions will now be subject to a 5%
reduction from maximum financing in Soft markets in addition to current policy.
− Primary residence purchases will now be subject to a 5% reduction from maximum financing in Soft,
Distressed and Severely Distressed markets
− Use of Enhanced Standards to waive LTV/CLTV reductions in At Risk Markets has been eliminated.

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26 Responses to New Jersey according to Wells Fargo

  1. Secondary Market says:

    Any chance on throwing up PA stats? I understand it’s a NJ blog and all but I’m moving to Philly and selfishly would like to see PA info. I know there are a few others in PA here too.
    Many thanks.

  2. Secondary Market says:

    Never mind, I just realized there was a link. I’ll go away now…

  3. Hard Place says:

    I didn’t see anyone post the NY Times Editorial…

    New Jersey’s Warning

    Published: February 28, 2008

    It is hard to remember when any governor used the sort of desperate language that New Jersey Gov. Jon Corzine chose this week to describe his state’s fiscal crisis. His words should be a sober warning to other states to get their fiscal houses in order before they face a crisis of Trenton’s magnitude.

    In his annual budget address to the Legislature, Mr. Corzine declared that unless New Jersey made hard choices, it would fall into a “deeper fiscal swamp.” He outlined deep budget cuts — “cold-turkey therapy” — that would eliminate three cabinet departments, 3,000 state jobs and squeeze aid to hospitals, colleges and universities. Even if the Legislature agreed to all of the cuts, Mr. Corzine asserted, it would still have to find a way to bring in more money.

    More than 20 states, including New York, are facing budget shortfalls next year, due at least in part to the economic downturn, according to an analysis released this week by the Center on Budget and Policy Priorities. The report said a few states — most notably, Arizona and California — face even bigger deficits than New Jersey.

    New Jersey’s problems are magnified by a long history of irresponsible borrowing and spending. In a self-destructive gimmick, the state seriously underfunded its pension plan and used the money to pay for current spending programs. As a result, Mr. Corzine said, the state’s annual debt service now exceeds what it invests in higher education.

    Mr. Corzine and legislators of both parties have ruled out increasing the state’s income or sales taxes. But there is no way New Jerseyans can escape real pain. Mr. Corzine has called for a significant jump in turnpike and parkway tolls. Several legislative leaders have suggested a combination of raising the state’s gas tax — one of the lowest in the nation — a more modest increase in tolls, and a merger of some of the state’s tiniest towns.

    The Garden State’s woes should serve as a warning to other states, whose lawmakers might be inclined to use budget gimmickry to deal with shortfalls in revenue and get through immediate fiscal troubles. As New Jerseyans are learning the hard way, that is likely to lead to much bigger trouble in the years ahead.

  4. grim says:

    From the WSJ:

    AIG Swings to a $11.12 Billion Loss
    On Write-Downs Tied to Mortgages
    February 29, 2008

    American International Group Inc. swung to a fourth-quarter loss on a $11.12 billion pretax write-down on the value of insurance contracts tied to mortgages.

    Shares of the New York insurance giant, which reported results after the close of regular trading, fell in after-hours trading as the company said it expected to report more unrealized market-valuation losses and impairment charges in 2008.

    Results in the latest quarter also included pretax net realized capital losses of $2.63 billion, primarily from impairment charges in AIG’s investment portfolio, with an additional $643 million pretax impairment charge related to available-for-sale investment securities. These charges resulted primarily from rapid declines in market values of residential-mortgage-backed securities.

  5. Hard Place says:

    Surprised to see Nassau/Suffolk listed as distressed and none of the commutable to NYC counties in NJ listed here.

  6. grim says:

    From GlobeSt:

    Pinnacle Hedges on Mega-Casino/Resort

    ATLANTIC CITY, NJ-Pinnacle Entertainment is in the planning stages for a new mega-casino resort carrying an estimated price tag of $2 billion, but it might not happen, company officials say. Chairman Daniel R. Lee of the Las Vegas-based company cast significant doubt over the future of the project this week, citing current credit market woes as the reason.

    “I have been asked, ‘how are you going to build in Atlantic City?'” Lee told analysts in this week’s earnings conference call. “The answer to that question is that if the credit markets don’t start to improve, we can’t build. We’re not planning to go broke building in Atlantic City.”

  7. Rich In NNJ says:

    Englewood CLiffs
    SLD 183 WOOD RD $1,029,000 10/14/2005

    SLD 183 WOOD RD $999,000 2/25/2008

  8. NJ Gator says:

    THE Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy, according to Nobel Prize-winning economist Joseph Stiglitz.
    The former World Bank vice-president yesterday said the war had, so far, cost the US something like $US3trillion ($3.3 trillion) compared with the $US50-$US60-billion predicted in 2003.

    Professor Stiglitz told the Chatham House think tank in London that the Bush White House was currently estimating the cost of the war at about $US500 billion, but that figure massively understated things such as the medical and welfare costs of US military servicemen.

    The war was now the second-most expensive in US history after World War II and the second-longest after Vietnam, he said.

    The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.

    “The regulators were looking the other way and money was being lent to anybody this side of a life-support system,” he said.

    That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said.,25197,23286149-2703,00.html

  9. JBJB says:

    “none of the commutable to NYC counties in NJ listed here.”

    Monmouth Co,. is very commutable to NYC, as is Middlesex.

  10. mr potter says:


    Agree with Monmouth being commutable to NYC. It will be interesting to see what impact the Highlands fast ferry service would have if it went away. There is talk that the ferry companies are losing money and are looking to get out of the business in the Highlands.

  11. JBJB says:

    Mr Potter

    Funny you should mention that. The wife and I were just having dinner in Atlantic Highlands this evening. We have alway wandered why AH hadn’t really grown into a swanky NYC commuter town (no that this would be desirable), seeing you can get to Wall St. in 35-40 min by ferry. I guess since the ferry is not so reliable, it makes no sense to really settle there. Could you imagine buying there and then they cut the ferry service, that would suck.

  12. Hard Place says:

    I was thinking more like Bergen, Hudson, Union, Essex, or Morris county.

  13. JBJB says:

    Mr. P

    Doesn’t sound good. That would have a dramatic effect on RE prices here. A commute to NYC from Rumson via NJT is brutal. My guess – with all the money in this area – a solution will be found.

  14. Bloodbath in Winter 2007 says:

    # Rich In NNJ Says:
    February 28th, 2008 at 9:19 pm

    Englewood CLiffs
    SLD 183 WOOD RD $1,029,000 10/14/2005

    SLD 183 WOOD RD $999,000 2/25/2008

    Pret, care to comment on this one? Let me guess … isolated incident?

    You own a house for 2 1/3 years, and it goes DOWN 30k in value?

    What’s the guess on the ratio of houses in NJ that were SOLD in 2005 and then again in 2008 that went DOWN in value vs. the houses that were sold in 2005 and then again in 2008 that went UP in value?


  15. Sassy says:

    And so it begins… (Can we buy stock in You Walk Away?)

    From the NY Times

    February 29, 2008
    Facing Default, Some Walk Out on New Homes

    When Raymond Zulueta went into default on his mortgage last year, he did what a lot of people do. He worried.

    In a declining housing market, he owed more than the house was worth, and his mortgage payments, even on an interest-only loan, had shot up to $2,600, more than he could afford. “I was terrified,” said Mr. Zulueta, who services automated teller machines for an armored car company in the San Francisco area.

    Then in January he learned about a new company in San Diego called You Walk Away that does just what its name says. For $995, it helps people walk away from their homes, ceding them to the banks in foreclosure.

    Last week he moved into a three-bedroom rental home for $1,200 a month, less than half the cost of his mortgage. The old house is now the lender’s problem. “They took the negativity out of my life,” Mr. Zulueta said of You Walk Away. “I was stressing over nothing.”

  16. Sassy says:

    Two more excerpts, from NYT article:

    1)Christian Menegatti, lead analyst at RGE Monitor, said the firm predicted more homeowners would walk away from their homes if prices continued to drop, regardless of their financial circumstances. If home prices drop an additional 10 percent, Mr. Menegatti said, 20 million households will owe more than the value of their homes.

    “Will everyone walk out?” he said. “No. But there’s been a cultural shift. Buying a house used to be like entering a marriage, a commitment for life. Now, if you see something better, you go back into the dating market.”

    When homeowners see houses identical to their own selling for much less than they owe, Mr. Menegatti said, “I wouldn’t be surprised to see five or six million homeowners walk away.”

    2) Mr. Zulueta said he felt he had let down the lender, himself, and his family.

    “But you got to move on,” he said. “I know in a few years my credit’s going to be fine. If I want to get another house, it’s going to be there. I’m not the only one who went through this. I know I’m working the system, but you got to do what you got to do. There’s always loopholes.”

  17. sas says:

    whats next for NJ?

    – legalized statewide gambling and video lotto machines.

    -privatization, privatization, privatization. you state pension holders, be afraid and be on the lookout.


  18. Clotpoll says:

    bath (16)-

    One of two things today from pret:

    1) He lays low.

    2) He hits us with a blizzard of quant-speak, trying to prove that comp is an outlier and an example of biased data mining.

  19. DB says:

    Mercer is gob-full of commuters — the Princeton Junction station is on the express line, and the parking farm around it is substantial. High income jobs are (NY) finance and law or (NJ) pharmaceuticals — the latter financed by the former.

    We have been renting in Mercer for a while, and prices in most of its municipalities are still crazily inflated.

  20. Clotpoll says:

    Pret is an agreeable sort, and he tries to base his argument in some sort of tortured logic/analysis. Sometimes when I go at him I feel bad (but then the feeling passes).

    However, in the end, his argument holds no water.

    In my early days here, I was a bull, too. Once the trend was evident, though, I couldn’t ignore the obvious.

    The part I don’t get about pret is that he works in RE. He’s gotta have ample opportunity to see what’s going on, plus benefit from the experience of bosses and peers who’ve seen this before. There are also plenty of ways- many of them well-documented here- to profit from the current unpleasantness. There is nothing to be gained from denial, as a plummeting market can be fertile ground for personal gain.

  21. BC Bob says:

    “He’s gotta have ample opportunity to see what’s going on, plus benefit from the experience of bosses and peers who’ve seen this before.”

    I agree 150%. One day the head of the Memphis office glanced at my daily statement and told me to cut back. He stated that this is a marathon not a sprint. From him; What did the monkey say as he was peeing over the side of the cliff? Wow, a little goes a long way.

    Disclaimer: No Blackbox required.

  22. Very interesting information. They should have made these precautions sooner as they had seen the situation getting worse and worse every month. However, it’s still better making change now than later or never. I work as a realtor in Toronto and since I am dealing withToronto neighbourhoods it would be interesting to see similar list for my area. Thank you for the tip where to look for it.

  23. r says:

    Atlantic Highlands has a lot of potential but its proximity to Leonardo to the west and Highlands to east still scares locals. That being said, the downtown area in Atlantic Highlands is now worth going to for dinner every once in awhile for Middletown, Rumson, Little Silver, etc. residents, whereas there was no reason to go there 10 years ago. I think the local school system also limits Atlantic Highlands appeal.

    The Highlands is still rough around the edges. The housing stock consists of a lot of summer bungalows, which are packed tight together and flood regularly. The school system is not good either.

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