Well, there always was a reason they were subprime. Mostly, because they had problems repaying their debts. This is hardly surprising (that over half of foreclosures are to subprimes) except to the willfully idiotic and actual idiots.
Frank, I disagree. In the past, what is now called subprime were ARMs and IO loans. These were ussually given to Wall Street types who wanted a short term loan that they would pay off with bonus money within a year. Back in the 80's people took ARMs because interest rates were so high, it was silly to lock them in for 30 years.
In these bubble years the lending communitee made the decision to market these loans to people who should not have been given any loan at all. What is happening today is the obvious result of the lenders actions. They suckered a lot of people with lies and fraud who were sold on the dream of home ownership.
I'm shutting the blog down on August 3rd. That's about 23 days from
now.
After failing as a real estate investor and deciding to share ALL my
mistakes, including "shady loans", the blog become a huge success as far
as attention goes. I've been on TV, on radio, in newspapers, and
international media; got to meet famous people, made great connections; got
to travel overseas; and successfully monetized the traffic through
advertising.
I've been labeled "The World Most Hated Blogger" on CNet because of the
large following of "haterz" that developed overnight. These critics
want to stop me from "profiting from my crime", give up on my
entrepreneurial dreams, give up trying to pay back "every dirty penny", get a job
and lay low. (However, I think a lot of them deep down want the best
for me, but are simply frustrated by my choices. And I appreciate
that.)
Well, instead of stopping, I enjoyed negative publicity because it
added to the controversy and traffic. I always felt there is gotta be a
way to leverage all this and do something positive.
My marriage and my family has been affected in a big way by my actions
and this toxic exposure. The internet could be a cruel place and I am
the one who put myself and my family out there. If I knew things were
going to get this bad I would have done investing and blogging in a
much different way.
Now I may lose my wife over this.
The blog and publicity is just the tip of the iceberg. Underlying is
my desire for financial success and "passive income" and also being
known for something and having recognition. The love of money and pride.
I fell into the trap. It's all my fault. I blame no one else.
I have always believed fame and money is NOT worth broken
relationships. But my actions in the last 10 months of blogging and the last 3
years of marriage have been sending the opposite message.
So now I am pulling the plug on EVERYTHING:
Business, blog, publicity, book, etc... and getting a regular W2 job
for at least 2 years or however long is necessary. It's a VERY tough
decision, since I've been at it since high school.
There is nothing wrong with any of these things but not in the WAY I
was pursuing them - making financial success my idol. It's NOT worth
losing my wife over it and hurting my friends and family. I must put my
financial goals aside and focus on what is truly important in this
life. I will only get back into business in the future if I can do it in
harmony with my relationships. If not, then I'll be content without.
I pray for the strength to change my core attitudes about money and
start doing the right thing (instead of just talking about it). And I
pray for healing to my relationships.
Thanks for all your support. After this email, I'm closing down this
mailing list. I will not need promote myself or anything I'm doing in
business for a long time... maybe forever.
I am sorry if you have been negatively affected by any of my actions,
please accept my apology.
57% subprime = 1.03 million subprime foreclosures.
Average loan amount $200k? = $2.06 trillion.
Average loss severity 45% = $927 billion in subprime losses in the next year.
And that's just the subprime and 2007's foreclosures.
Will there be more or less foreclosures in 2008?
45% loss severity applied to all foreclosures (1.8 million x 200k x .45) = $1.62 trillion in losses
The average 45% loss severity is the number quoted to me by John Vella, President of EMC mortgage. Loss severity varies depending on loan size, for instance a Flint Michigan loan for $75k may have as high as an 80% loss. A typical CA loan for $450k may only experience a 25% loss.
$1.62 trillion in losses a year for the next 2-4 years = $3.24-$6.48 trillion in losses.
Today (or yesterday) SP loans were people ordinary that had owned homes before maybe got one of those Credit cards in college and maxed out got late and with student loans etc crewdit dropped to low 600's, yet made decent money enough so as to qualify fixed rate...
but the ARMs IO, options were geared towards minorities with decent credit and no income. No Docs-- look at how many were on brokeruniverse, etc "720 FICO, OO, SISA, 100% LTV" a hundred a minute....2/28's, cash out =, piggy back,
Serin's comin' home ta Jebus had something to do with three separate legal events all on Tuesday. He remains the poster child of the housing bubble collapse. Just like everyone else caught in the cookie jar he's casting about looking for a great fool and/or nearby exit.
i use foreclosure.com to track foreclosures and preforeclosures. this morning california hit a new milestone.
preforeclosures went over 79,000 and foreclosures went over 40,000.
on march 8, these numbers where 57,000 preforeclosures and 17,000 foreclosures. there is nothing going on here but an acceleration into the hole.
i find any idea that this is somehow going to get papered over and the losses will be manageable and contained to be absurd. this was the greatest realestate/finance bubble the US and the world has ever seen and it will cause the greatest real estate/finance collapse the US and the world has ever seen. It is going to be played out all over the planet just with differing lags.
i am agnostic as to nominal price levels because in a fiat currency regime, central banks may set the price of money anywhere they choose. however, they will have zero control over real economic prosperity which to paraphrase a home builder CEO, is going to suck. because it appears that on the face of it CB's believe their own statistical inflationary nonsense, i think there is a high probability of a financial meltdown which will only be addressed post facto by the helicopter man. i would have thought that after 2000 a bit of analysis would have lead to a more rational monetary policy but alas that appears not to be the case.
Sorry to dwell on Serin but he's got another problem that has greater scope. With $190k in unsecured credit card debt and another $90k in promise notes he's not employable. This is going to be a big deal in the general economy as these borrowers try to rebuild from their homebuying disasters.
Exactly david, this isn't confined to the US. There are places, like Spain, where the craziness went much further (though the stupid Stated Income financing happened only in the US I think).
Spain started as many as 1/2 the homes started in the US in a year! They started as many homes as the UK, France and Germany combined ... eheh.
California June numbers were much worse when you dig down.
The number of Trustee Sales increased from 7,037 in May to 7,082 in June.
And the number of REO's has really popped from 2,000 in April to 3,490 in May to 4,236 in June.
It is not just a subprime issue. The ALT-A lags because many of these loans have just had their accrued interest "tacked on" to the back end loan balance. They will eventually join the party.
Most interesting is that more Trustee sales are going back to the bank than in previous recessions.
The "credit crunch" will only exacerbate the current problem.
"That has an insidious effect across the state," Rick Sharga, vice president of RealtyTrac in Irvine said. If one thinks of default notices as the canary in the coal mine, "The canary has wheezed and gasped and is probably being carried out right now," he said.
Granted I've got a one track mind here and yes, the majority of these very well may be legitimate foreclosures, but I'm wondering just how many of the 164,644 reported and 1.8 million projected are/will be securitized?
Language in the trust prospectus Pooling & Servicing Agreements simply isn't changing whenever I read them. Servicers are being given late fees, modification fees, forbearance agreement fees, pre-payment penalties and even liquidation profits as additional servicing compensation. ANY prospectus PSA on Wall St that has language even remotely close to this is simply putting the fox in charge of the hen house. It has been demonstrated time and time again with the likes of Litton, Ocwen, EMC and my personal friends at Fairbanks/Select Portfolio Servicing.
One of the biggest complaints of USA/Curry v. Fairbanks (and one that continues today if I'm to believe any of the Fairbanks/SPS "customers" that still contact me) was/is that monthly payments that were made on time are simply not being processed/posted in a timely manner. And, as a result of that, the servicers are manufacturing defaults and pocketing the late fees generated by them. I have proof of this in my own case. I've got the physical check if anyone would care to see it. It's already been entered into evidence in Hillsborough County Superior Court in NH so it's public info anyway.
I've seen half a dozen new FC notices in my local paper in NH in the last month. And all of them have been securitized. And none of them - ZERO - have a clear title as the sale to the foreclosing entity hasn't been recorded. In some cases that sale took place more than two years ago.
Sure, hard times happen to everyone and bad things happen to good people. But when the servicer that you're dealing with literally manufactures the case against you OR refuses to lift their foot off of your throat when you have the means to get up after you've fallen then it's time to strike "while admitting no wrongdoing" from the legal dictionary and screw these companies to the effing wall. They are an easy part of the implosion puzzle to eliminate - IF anyone with any kind of authority actually wants to step up and take responsibility for doing the right thing.
"bp wrote:
1.8 million foreclosures.
57% subprime = 1.03 million subprime foreclosures.
Average loan amount $200k? = $2.06 trillion.
That should be $206 billion.
Average loss severity 45% = $927 billion in subprime losses in the next year."
Opps- it was early.
I can also add that my experience and tracking of foreclosure activity in Colorado for the last 18 years has shown that only 65% of foreclosure starts end up sold at auction.
But I can also tell you that Colorado foreclosures have increased almost 7 fold since 2001 from under 3000 filings to a projected over 21000 in 2007.
While the rest of the country was enjoying rapid appreciation the last 6 years Colorado's market has remained relatively flat with an average appreciation rate of less than 4% per year. With huge job losses after the tech bust of 2000 Colorado just recently surpassed the employment levels of 2000.
In markets where there is no appreciation and possible depreciating prices- foreclosures will increase year over year by 15-50% for several years.
We could very well see realty-tracs numbers double in the next 3 years to over 4 million foreclosures in a single year.
So we could potentially still see $1-2 trillion in total losses.
Well, there always was a reason they were subprime. Mostly, because they had problems repaying their debts. This is hardly surprising (that over half of foreclosures are to subprimes) except to the willfully idiotic and actual idiots.
so this is an improvment from May.
Frank, I thought it was interesting that 42% of foreclosure activity was not related to subprime. I expect that percentage to grow.
Best Wishes.
Frank, I disagree. In the past, what is now called subprime were ARMs and IO loans. These were ussually given to Wall Street types who wanted a short term loan that they would pay off with bonus money within a year. Back in the 80's people took ARMs because interest rates were so high, it was silly to lock them in for 30 years.
In these bubble years the lending communitee made the decision to market these loans to people who should not have been given any loan at all. What is happening today is the obvious result of the lenders actions. They suckered a lot of people with lies and fraud who were sold on the dream of home ownership.
I received this email from Casey Serin..
Hey,
Either, we've talked before, or you're in my mailing list, or you left
a comment on my blog:
Foreclosure Assistance – Foreclosure Information – Free Help
I'm shutting the blog down on August 3rd. That's about 23 days from
now.
After failing as a real estate investor and deciding to share ALL my
mistakes, including "shady loans", the blog become a huge success as far
as attention goes. I've been on TV, on radio, in newspapers, and
international media; got to meet famous people, made great connections; got
to travel overseas; and successfully monetized the traffic through
advertising.
I've been labeled "The World Most Hated Blogger" on CNet because of the
large following of "haterz" that developed overnight. These critics
want to stop me from "profiting from my crime", give up on my
entrepreneurial dreams, give up trying to pay back "every dirty penny", get a job
and lay low. (However, I think a lot of them deep down want the best
for me, but are simply frustrated by my choices. And I appreciate
that.)
Well, instead of stopping, I enjoyed negative publicity because it
added to the controversy and traffic. I always felt there is gotta be a
way to leverage all this and do something positive.
Any publicity is good publicity. Right?
...(casey's email continued)
Wrong.
My marriage and my family has been affected in a big way by my actions
and this toxic exposure. The internet could be a cruel place and I am
the one who put myself and my family out there. If I knew things were
going to get this bad I would have done investing and blogging in a
much different way.
Now I may lose my wife over this.
The blog and publicity is just the tip of the iceberg. Underlying is
my desire for financial success and "passive income" and also being
known for something and having recognition. The love of money and pride.
I fell into the trap. It's all my fault. I blame no one else.
I have always believed fame and money is NOT worth broken
relationships. But my actions in the last 10 months of blogging and the last 3
years of marriage have been sending the opposite message.
So now I am pulling the plug on EVERYTHING:
Business, blog, publicity, book, etc... and getting a regular W2 job
for at least 2 years or however long is necessary. It's a VERY tough
decision, since I've been at it since high school.
There is nothing wrong with any of these things but not in the WAY I
was pursuing them - making financial success my idol. It's NOT worth
losing my wife over it and hurting my friends and family. I must put my
financial goals aside and focus on what is truly important in this
life. I will only get back into business in the future if I can do it in
harmony with my relationships. If not, then I'll be content without.
I pray for the strength to change my core attitudes about money and
start doing the right thing (instead of just talking about it). And I
pray for healing to my relationships.
Thanks for all your support. After this email, I'm closing down this
mailing list. I will not need promote myself or anything I'm doing in
business for a long time... maybe forever.
I am sorry if you have been negatively affected by any of my actions,
please accept my apology.
May God bless you.
Casey Serin
Foreclosure Assistance – Foreclosure Information – Free Help
This message was sent by: Casey Serin, 1420 Roseville Pkwy Suite
140-331, Roseville, CA 95661
To be removed click here:
Manage Your Subscriptions and Profile
There is no way that came from Casey Serin:-)
How much of the dip is do to work-outs by the bank, or REO departments being simply overwhelmed?
It's good to see that Casey has reached an almost Zen-like understanding of life. Must be taking lessons from Phil Jackson.
1.8 million foreclosures.
57% subprime = 1.03 million subprime foreclosures.
Average loan amount $200k? = $2.06 trillion.
Average loss severity 45% = $927 billion in subprime losses in the next year.
And that's just the subprime and 2007's foreclosures.
Will there be more or less foreclosures in 2008?
45% loss severity applied to all foreclosures (1.8 million x 200k x .45) = $1.62 trillion in losses
The average 45% loss severity is the number quoted to me by John Vella, President of EMC mortgage. Loss severity varies depending on loan size, for instance a Flint Michigan loan for $75k may have as high as an 80% loss. A typical CA loan for $450k may only experience a 25% loss.
$1.62 trillion in losses a year for the next 2-4 years = $3.24-$6.48 trillion in losses.
Is this a problem?
Frank,
Today (or yesterday) SP loans were people ordinary that had owned homes before maybe got one of those Credit cards in college and maxed out got late and with student loans etc crewdit dropped to low 600's, yet made decent money enough so as to qualify fixed rate...
but the ARMs IO, options were geared towards minorities with decent credit and no income. No Docs-- look at how many were on brokeruniverse, etc "720 FICO, OO, SISA, 100% LTV" a hundred a minute....2/28's, cash out =, piggy back,
to a broker it was ABC always be closing....
fox henhouse.....
Serin's comin' home ta Jebus had something to do with three separate legal events all on Tuesday. He remains the poster child of the housing bubble collapse. Just like everyone else caught in the cookie jar he's casting about looking for a great fool and/or nearby exit.
CR-
How many homes are in the US? Is 1.8mm foreclosures a large percentage of the total existing housing stock?
bp wrote:
1.8 million foreclosures.
57% subprime = 1.03 million subprime foreclosures.
Average loan amount $200k? = $2.06 trillion.
That should be $206 billion.
Average loss severity 45% = $927 billion in subprime losses in the next year.
That should be $92.7 billion.
Robert Cote,
In fraud detection seminars, they teach that one way to spot someone who's a habitual liar is constant "God" references.
i use foreclosure.com to track foreclosures and preforeclosures. this morning california hit a new milestone.
preforeclosures went over 79,000 and foreclosures went over 40,000.
on march 8, these numbers where 57,000 preforeclosures and 17,000 foreclosures. there is nothing going on here but an acceleration into the hole.
i find any idea that this is somehow going to get papered over and the losses will be manageable and contained to be absurd. this was the greatest realestate/finance bubble the US and the world has ever seen and it will cause the greatest real estate/finance collapse the US and the world has ever seen. It is going to be played out all over the planet just with differing lags.
i am agnostic as to nominal price levels because in a fiat currency regime, central banks may set the price of money anywhere they choose. however, they will have zero control over real economic prosperity which to paraphrase a home builder CEO, is going to suck. because it appears that on the face of it CB's believe their own statistical inflationary nonsense, i think there is a high probability of a financial meltdown which will only be addressed post facto by the helicopter man. i would have thought that after 2000 a bit of analysis would have lead to a more rational monetary policy but alas that appears not to be the case.
Sorry to dwell on Serin but he's got another problem that has greater scope. With $190k in unsecured credit card debt and another $90k in promise notes he's not employable. This is going to be a big deal in the general economy as these borrowers try to rebuild from their homebuying disasters.
Exactly david, this isn't confined to the US. There are places, like Spain, where the craziness went much further (though the stupid Stated Income financing happened only in the US I think).
Spain started as many as 1/2 the homes started in the US in a year! They started as many homes as the UK, France and Germany combined ... eheh.
Boston Globe has some info on how the state of MA is dealing with foreclosures.
State to refinance troubled mortgages - The Boston Globe
"RealtyTrac expects U.S. foreclosures to reach 1.8 million by year's end ..."
If this number is true then foreclosures will be almost twice the number of housing starts this year.
It will also represent more than 30% of all residential sales.
These are scary numbers.
I don't see anyone being scared. You see anyone being scared? I don't see anyone being scared.
Not even the people losing the billions seem to be scared of anything.
Maybe they have a printing press. Maybe it doesn't really make a difference.
So. Forclosures dipped slightly in the peak selling season?
Shocking news there.
As shocking as an boost in sales from Jan to May.
Duh.
California June numbers were much worse when you dig down.
The number of Trustee Sales increased from 7,037 in May to 7,082 in June.
And the number of REO's has really popped from 2,000 in April to 3,490 in May to 4,236 in June.
It is not just a subprime issue. The ALT-A lags because many of these loans have just had their accrued interest "tacked on" to the back end loan balance. They will eventually join the party.
Most interesting is that more Trustee sales are going back to the bank than in previous recessions.
The "credit crunch" will only exacerbate the current problem.
It's even news in the San Francisco Chronicle (yesterday;s news today): Foreclosure activity rises dramatically / Bay Area defaults, auctions, repossessions nearly triple; nationwide notices are up 87%
"That has an insidious effect across the state," Rick Sharga, vice president of RealtyTrac in Irvine said. If one thinks of default notices as the canary in the coal mine, "The canary has wheezed and gasped and is probably being carried out right now," he said.
Granted I've got a one track mind here and yes, the majority of these very well may be legitimate foreclosures, but I'm wondering just how many of the 164,644 reported and 1.8 million projected are/will be securitized?
Language in the trust prospectus Pooling & Servicing Agreements simply isn't changing whenever I read them. Servicers are being given late fees, modification fees, forbearance agreement fees, pre-payment penalties and even liquidation profits as additional servicing compensation. ANY prospectus PSA on Wall St that has language even remotely close to this is simply putting the fox in charge of the hen house. It has been demonstrated time and time again with the likes of Litton, Ocwen, EMC and my personal friends at Fairbanks/Select Portfolio Servicing.
One of the biggest complaints of USA/Curry v. Fairbanks (and one that continues today if I'm to believe any of the Fairbanks/SPS "customers" that still contact me) was/is that monthly payments that were made on time are simply not being processed/posted in a timely manner. And, as a result of that, the servicers are manufacturing defaults and pocketing the late fees generated by them. I have proof of this in my own case. I've got the physical check if anyone would care to see it. It's already been entered into evidence in Hillsborough County Superior Court in NH so it's public info anyway.
I've seen half a dozen new FC notices in my local paper in NH in the last month. And all of them have been securitized. And none of them - ZERO - have a clear title as the sale to the foreclosing entity hasn't been recorded. In some cases that sale took place more than two years ago.
Sure, hard times happen to everyone and bad things happen to good people. But when the servicer that you're dealing with literally manufactures the case against you OR refuses to lift their foot off of your throat when you have the means to get up after you've fallen then it's time to strike "while admitting no wrongdoing" from the legal dictionary and screw these companies to the effing wall. They are an easy part of the implosion puzzle to eliminate - IF anyone with any kind of authority actually wants to step up and take responsibility for doing the right thing.
wtf wrote:
"bp wrote:
1.8 million foreclosures.
57% subprime = 1.03 million subprime foreclosures.
Average loan amount $200k? = $2.06 trillion.
That should be $206 billion.
Average loss severity 45% = $927 billion in subprime losses in the next year."
Opps- it was early.
I can also add that my experience and tracking of foreclosure activity in Colorado for the last 18 years has shown that only 65% of foreclosure starts end up sold at auction.
But I can also tell you that Colorado foreclosures have increased almost 7 fold since 2001 from under 3000 filings to a projected over 21000 in 2007.
While the rest of the country was enjoying rapid appreciation the last 6 years Colorado's market has remained relatively flat with an average appreciation rate of less than 4% per year. With huge job losses after the tech bust of 2000 Colorado just recently surpassed the employment levels of 2000.
In markets where there is no appreciation and possible depreciating prices- foreclosures will increase year over year by 15-50% for several years.
We could very well see realty-tracs numbers double in the next 3 years to over 4 million foreclosures in a single year.
So we could potentially still see $1-2 trillion in total losses.
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