Would you care to comment on the likelihood of overall tax collections remaining the same?
I have a feeling that many municipalities grew fat, dumb and happy as a result of:
1- Strength in the stock and bond markets which gave them the luxury of contributing less to State Pension Plans
2- Artificially high property tax collections due to the housing bubble
3- Artificially high sales tax collections due to PCE from MEW.
4- Other "non-recurring" revenue streams such as revenues from mortgage recording fees, mortgage transer taxes, etc. that increased above and beyond historic norms as a result of the bubble in housing.
This wealth of riches translated into growth in government at many levels, along with wage and benefit increases that may not be long term sustainable.
I guess my question is, "How long before State and Local governments realize the parties over?" Despite lower assessed values as a result of declining house prices - I don't see an immediate reduction in taxes levied. I think many governments will simply change the tax rate per dollar of assessed value.
--
"Also, the LA Times has an article on a mortgage fraud ring in Los Angeles hat apparently obtained $142 million in fraudulent loans: How a bank fell victim to loan fraud. An amazing story."
Yes, good article that says a lot about American People and the Crooks. Would private banks have made these loans?!
The financial system was created for fraud, i.e., it was ripe for fraud for anyone who wanted to venture, or take part! Luckily, moral bankruptcy of American People didn't rich high enough levels; therefore, the actualized fraud was limited to the level it did. Wall Street and other Crooks were hoping for the fraud-driven bubble to go much higher and last longer, but they ran out of luck because they failed to corrupt the remaining 2/3rd of Americans. The level of the bubble directly corresponds to the level of moral bankruptcy among American People (at least third of American People are). There are consequences of... the system of the Crooks, by the Crooks, and for the Crooks.
The tech bubble and the housing bubble are the best reflection of the financial Crooks who rule over Americans via control of the economy.
One public revenue stream in (at least)SoCal isn't drying up. That would be the many - but tiny - recording fees collected for Mechanic's Liens placed against property by contractors (soon to be going out of business.) That would be the vacant property owned by the bank, and liens would be way down the list, IMHO.
Interestingly, stop notices and bond claims against public jobs may be as difficult to collect on, given the rapidly deteriorating worth/value/insurance of said bonds.
National City exiting wholesale.. the mortgage brokers reaped what they sowed during the boom. Originations through the wholesale channels continue to underperform.. Sure the banks could put in checks and balances and do their due diligence on loans coming from that channel. But in a market that is already oversupplied its simpler to just close down wholesale than deal with the all the issues it presents.
I've read articles going back to the summer and early fall about states that foresaw declining tax revenues. I know they have been looking at that issue here in Minnesota. The fact of decdlining revenues should not surprise anybody, though the extent may.
Municipalities depending on property tax revenues face a long, painful time because laws in many places will require downward adjustment to assessed values and it will take years to work back up. Pig through a python.
I've been following the coming California state and municipal budget implosion very carefully. One of the places I've been using to track borrowing power is the muni bond offerings listed at S & Y LLC. It takes a bit of study to be able to "read" the charts but the number of offerings with no insurance is growing and the yields are all over the place. There's also been a recent flurry of COPs (Certificates of Participation). That means municipalities are not getting paid as expected. For normal times that's fine as penalties and interest charges on late pays more than compensates BUT some of this is money "promised" by the state. Da Governator has already announced he will declare a fiscal emergency in two weeks. There's no recourse for those lost revenues and frankly no one is even remotely comprehending the size of the gap that needs to be filled.
I called problems with tax collections months ago with data from the state of arizona.
Now we are actually below last year, a shocking development in a state ( and all the cities and counties) that live on sales tax, and have had the benefit of the eternal growth of the sunshine taxes.
Mike in Long Island, municipalities growing "fat, dumb and happy" during a boom is the general rule. Now comes the belt tightening period ...
You'd think some local governments would consider of a rainy day fund - and some have - but it sounds like they are just blowing through those funds. I doubt there will be much in tax increases, more likely we will see spending cuts.
This bodes ill for the out of control Federal government general fund deficit too. No rainy day fund there!
Raindrops keep fallin' on my head
But that doesn't mean my eyes will soon be turnin' red
Cryin's not for me
'Cause I'm never gonna stop the rain by complainin'
Because I'm free
Nothin's worryin' me
CR,
The Feds don't have a balanced budget article in their Constitution, California does. There's lots of really bad accounting to fudge shortfalls but not this time. Lending (total debt ceiling) restricted, taxpayer fatigue, faltering economy, etc. Like it or not California may very well drag the rest of the US into a recession.
By law California must lower assessments and cannot raise rates, so revenues are screwed for sure. You want job losses? Here they come, straight from the public sector.
The last six years saw government and the REIC accounting for most of the job growth. So much for that now.
Funny how bulls can't see all the dominos lined up beyond whatever one is currently falling.
For geeks who want to benefit from the coming disaster:
If the FICO fails as a predictive system as dramatically as many of us suppose, that seems to be a huge hole filled with opportunity. I think ebay's reputation system has been breaking down: they've repeatedly sacrificed transparency in a (failed IMO) attempt to improve security and decrease fraud. So the folks who develop a truly predictive reputation system, who can learn from these recent failures, and who can implement the system effectively (and dare I dream humanely) can possibly make off with lots of well deserved cash. And why not pay Tanta huge consulting fees since she's done so much of the troubleshooting already?
Hey it looks like my local government is waking up.
They noticed the cash register was short a few million in sales tax receipts and ordered up a study to figure out the obvious.
My favorite line in the report can be found on page 3 of 6,
"Experts have been forecasting a substantial housing market correction
for several years. Low interest rates enabled borrowers to finance larger and larger mortgages. This in
turn resulted in steep home price to income ratios. According to CNNMoney.com, a rule of thumb is
that one can afford to purchase a house that runs about two-and-one-half times your annual salary.1
The chart below reveals that over the past nine years, the median home price per median income ratio
has averaged 4.6 in Nassau County."
Which experts are they talking about that have predicted this for the past few years? Why did they choose to ignore them?
Oh yeah - Nassau County happens to be one of eight regions in ten in New Yort state where the public sector median wage is higher than the private sector median wage...
Anyone want to buy a house - great schools, easy commute to the city, lots of malls, and taxes well errr...
You'd think some local governments would consider of a rainy day fund
Try it to any degree and see how long it takes the anti-tax crowd to demand any surplus be returned to taxpayers who ,as we all have been taught, know how to allocate the money better than government.
Ah, jcsc, the folks who develop a truly predictive reputation system
We have such a thing. It's known as traditional underwriting. Look at back-end DTIs, evaluate how borrower has paid on rent or previous mortgage, verify a few month's reserves, verify job experience/stability, lalalala. It works.
Seriously, it's not that we don't know how to write good mortgages - it's that short term profit hunting led us to ignore what we already knew.
Here's a great article (from TheHousingBubbleBlog) about an FB who prefers to stick it out rather than foreclose and rent.
The article really shows the folly in this strategy--the protagonist truly comes across like a moron. What happens when other FBs read this article and say, "F* this. We're better than this goofball. Where are those keys to mail...?"
First, kudos to Ms. Simon for calling it a "mortgage crisis" and not falling into the subprime reporting trap!
Maybe at the LAT but not on CNBC. Every economic problem is attributed to the subprime mess and happy days will return when subprime is resolved in the near future. This is a mantra and reminds me of how the "liberal media" mantra has been used to explain all ills.
The newspapers simply parrot news releases by the government or industry outlets like the NAR. Without internet blogs such as CR, I don't know where accurate analysis could be found.
["Pitts' monthly mortgage will now be just shy of $2,800. Property taxes and insurance add another $700 a month. The $3,500 monthly total is still quite steep for a man whose base income is about $4,000 a month, although he can earn another $1,000 or so through overtime.
The new payments are fairly similar to those Pitts had for the first two years of the loan - which he struggled to make. Chase's Kelly said the bank only does loan modifications that make economic sense for the borrower. "We look at what the total payment is going to be and say, 'Can he afford it or not?' " he said. "Ultimately, if the borrower cannot afford whatever modification we do, then they cannot keep the house. Doing a patchwork thing might keep them in the house for three more months, but what good will that do?"]
Really- this is just kind of sick. Chase gets to pretend they are being kind hearted when they have just put a man in a home costing basically all his monthly pay. The borrower is also $100k underwater (so far).
"Economic sense for the borrower", yes, that's just what I would have called it.
Could it be Chase just really, really didn't want to own that house.... nah!
IN our county in WA state, property is reassessed every four years. In any given year, the county assessor reassesses one-fourth of the parcels.
Tax limitation laws prevent local/state govs from raising their total property tax take more than 1 percent from EXISTING properties.
BUT when you get reassessed in a rapidly rising market like ours, your taxes take a pretty good bump too. The overall rate gets lowered, to stay within the one percent limit, but the newly-reassessed homes wind up paying a larger portion of the total property tax levy because they have become a bigger piece of the total amount of assessed property--the tax base.
The following year, when more properties are reassessed upward, the taxes of the people reassessed in previous years go down. So you get a spike in taxes when you are reassessed, then a gradual decline over the next three years until it's your turn to be reassessed again.
At least that how it has worked in the past several years of double-digit price increases here in the Bellingham SMSA.
If home prices fall, all this goes into reverse. The tax base will be shrinking, and there will be less new construction to generate annual gains in both property and sales taxes.
I suspect most local governments will lean harder on property taxpayers in this situation, trying to maintain government services (payrolls) by raising the tax rate to try to keep local government budgets near-steady. So the market price of your home may fall, but your assessed value could stay at inflated levels for awhile, at least around here. If reassessed properties see REDUCED assessments, those who have yet to be reassessed will see some significant hikes in their property taxes.
And even a downward reassessment won't keep your tax liability from going up eventually, under this scenario. The only way that changes is if local governments slash spending, and that is a painful process with immediate impact on fire, police, parks, library, streets, and so on.
Having read the second article it is still not exactly clear to me how Lehman fell victim to loan fraud, despite the title. It seems they were accepting appraisals attached to the loan application by some interested party in the chain and not ordering their own, though that is not clearly stated. The prosecutor claims the bank did plenty of due diligence and could not have known, but should they not have insisted on their own appraisals? Seems like not doing so is asking to to be scammed. Or did they intend to securitize and sell on the loans and so really did not care? Article left me me with lots of questions.
You just cannot fight numbers like this. Something fishy..
Separately, seeing as I celebrated New Year with the Aussies at 6 am Mountain, with the Indians at 11:30 am, hic - and awaiting the Brits NY in 2 hours - and then there's the East Coast later and then ours at MST and then the real one at PST - hic hic and more hic.
Here in Norfolk, Va there was an outfit doing a variant of the same fraud you mentioned, except they bought slum properties and just kept upping appriasals and getting new loans. Amazingly, some of the principals did the same thing here a few years ago and got out of jail to start all over again. Even more amazingly, they are back soliciting investors to rehab houses. Oh..if you don't have cash, he'll be happy to use your credit.
If curious go to pilotonline.com (Virginia Pilot newspaper) and search "Mcentee" or "CM Development"...too many stories to note here.
If there are only one or two of these in every SMA, the numbers are still astounding.
MOM,
Absolutely right about 'predictive systems'. Skin in the game is another great predictor.
Technology is supposed to make those things quicker and easier, not displace them, so jcsc is off-base with the 'horse and buggy' comment. The automobile did not destroy the idea of transportation, it enhanced it. The idea remains.
David Oliphant in the Denver Post wrote a series of articles on mortgage frauds in the Denver area in 2006. One of the participants (buyers) closed on two loans while in jail! (Brings new meaning to gated communities!) I figured that far more exotic fraud operations were at play elsewhere, and the Mortgage Fraud 90210 doesn't disappoint.
Our local county government (El Paso County Colo) forced furloughs on employees towards the end of the year due to fiscal problems.
I remember not so long ago Colorado was generally ranked 1st or 2nd nationally on foreclosures. Not any more! Question is, have things improved any, or has the state just fallen out of the top rankings. I suspect the latter.
I consider FICO 1.0 to be a failure at almost every stage of the design, execution and implementation process. If you want to believe that traditional underwriting is the final answer, then you are choosing not to participate in the design conversation that is currently underway. Reputation systems are being designed and implemented all around us. Do you want other people to define the parameters of your reputation? Well that's what's happening. I think that Tanta 3.4 would be A LOT better than FICO 2.0. Resistance is Futile.
State, local and federal governments are also going to be low on the transportation revenues that might otherwise put people to work in a downturn, while also dealing with that boring old "aging infrastructure" crisis that is only exciting if you live in Minneapolis....
The problem is the structure of the gasoline tax that pays for highway and some transit projects.
It's set up as pennies per gallon, not a percentage of the cost of gas, like a sales tax.
So when gas prices rise, gas tax revenues fall--only a little at first, as lower-income people curb unnecessary driving. But then the drop in revenue accelerates as more people get more efficient cars and recognize that $2 gas is not coming back. (At this point, we're just hoping that $3 gas comes back...)
Our mayor told me today that the federal government may have promised more transpo grants to local government than it can deliver in the years ahead, for this reason.
"The problem is the structure of the gasoline tax that pays for highway and some transit projects.
It's set up as pennies per gallon, not a percentage of the cost of gas, like a sales tax.
"
Sounds like you Minnesotan's can learn a thing or 2 from us back East'rs. Most counties charge a gas sales tax as a percentage in NY - higher gas = higher $$ for the government.
I see Minnesota at $.20/gallon. New York is at $.32 plus whatever the county charges as a gas sales tax - figure $.08 on average so $.40 per gallon gas. Just something else New York is number 1 at - YEAH...
Actually it's horribly out of date since its as of January 2005.
Though it will have the effect of reducing government coffers further, California property owners might find the following of interest.
Prop 8 is an important voter approved constitutional amendment designed to allow county assessors to temporarily reduce assessments when property values are determined to have declined to where the market value on January 1 is below the value on the assessment roll,
If your property's market value tomorrow is less than the value stated on the county assessor's rolls for FY 2007-08, you are entitled to have your assessed value reduced to market value.
I used to worry about falling locl property taxes. Being from Michigan I thenn noticed what teh excesses were being spent on. The city employees were giving themselves richer health benefits and raises and building new pet projects.
Now I think worrying that local govt. doesn't have enough money to spend is like worrying that a wino (alcoholic) doesn't have enough booze to drink.
Watch how they try to cut spending on the cops & roads to lt everyone know there is a shortfall- while keeping their rich benefits and salaries and pet projects alive. Of course welfare spending to support the little bastards and their mommas ain't gonna be cut.
If you think I'm not serious- look up the Detroit mayor's red navigator, or his neice with a full time city job that she never showed up for. Or the mayor's trvel bills, or his parties with strippers and hookers.
According to salary.com, a bus driver in Oakland would earn, GROSS, base + bonus but excluding OT, at the top of the range, 31.3K p.a.
http://swz.salary.com/salarywiza...and%2C+CA+94607
However, the article said he was a driver for MUNI, which is in San Francisco. The pay rates they publish fit the salary the article says he is making:
IIRC, it was rich who was first, or one of the first, to have brought up the subject of the tax collection impacts of the whole mess.
Not to be outdone, Inland Empire's (ground zero) Press Enterprise reported on a 200 million dollar RE Fraud last month.
From dreams to debt | From Dreams to Debt | Special Reports | PE.com
CR,
Would you care to comment on the likelihood of overall tax collections remaining the same?
I have a feeling that many municipalities grew fat, dumb and happy as a result of:
1- Strength in the stock and bond markets which gave them the luxury of contributing less to State Pension Plans
2- Artificially high property tax collections due to the housing bubble
3- Artificially high sales tax collections due to PCE from MEW.
4- Other "non-recurring" revenue streams such as revenues from mortgage recording fees, mortgage transer taxes, etc. that increased above and beyond historic norms as a result of the bubble in housing.
This wealth of riches translated into growth in government at many levels, along with wage and benefit increases that may not be long term sustainable.
I guess my question is, "How long before State and Local governments realize the parties over?" Despite lower assessed values as a result of declining house prices - I don't see an immediate reduction in taxes levied. I think many governments will simply change the tax rate per dollar of assessed value.
Am I out of my mind for thinking this way??
Hiring freeze announced a month or so ago for Phoenix.
Meanwhile, here is the best mortgage pig tail I can do with Haloscan. Hats off to anyone who can do better.
__
     ____/
   /    
   __/
Good lord, it was bad enough in preview. No wonder nobody else has tried.
Picasso would have been proud of you, albrt. That looks to me like a pig's tail descending a staircase.
--
"Also, the LA Times has an article on a mortgage fraud ring in Los Angeles hat apparently obtained $142 million in fraudulent loans: How a bank fell victim to loan fraud. An amazing story."
Yes, good article that says a lot about American People and the Crooks. Would private banks have made these loans?!
The financial system was created for fraud, i.e., it was ripe for fraud for anyone who wanted to venture, or take part! Luckily, moral bankruptcy of American People didn't rich high enough levels; therefore, the actualized fraud was limited to the level it did. Wall Street and other Crooks were hoping for the fraud-driven bubble to go much higher and last longer, but they ran out of luck because they failed to corrupt the remaining 2/3rd of Americans. The level of the bubble directly corresponds to the level of moral bankruptcy among American People (at least third of American People are). There are consequences of... the system of the Crooks, by the Crooks, and for the Crooks.
The tech bubble and the housing bubble are the best reflection of the financial Crooks who rule over Americans via control of the economy.
Jas
One public revenue stream in (at least)SoCal isn't drying up. That would be the many - but tiny - recording fees collected for Mechanic's Liens placed against property by contractors (soon to be going out of business.) That would be the vacant property owned by the bank, and liens would be way down the list, IMHO.
Interestingly, stop notices and bond claims against public jobs may be as difficult to collect on, given the rapidly deteriorating worth/value/insurance of said bonds.
Happy New Jeer!
Picasso would have been proud of you, albrt. That looks to me like a pig's tail descending a staircase.
A pig's tail descending HaloScan a staircase.
========
Crude up 57% for the year.
GG Ben.
oops -- that should have been:
A pig's tail descending a HaloScan staircase.
=========
Tanta, you are nothing if not charitable.
Almost makes me want to volunteer to be the ombudsperson.
National City exiting wholesale.. the mortgage brokers reaped what they sowed during the boom. Originations through the wholesale channels continue to underperform.. Sure the banks could put in checks and balances and do their due diligence on loans coming from that channel. But in a market that is already oversupplied its simpler to just close down wholesale than deal with the all the issues it presents.
Bad Pig Rising
I see the bad pig arising.
I see trouble on the way.
I see earthquakes and lightnin'.
I see bad times today.
Don't go around tonight,
Well, it's bound to take your life,
There's a bad pig on the rise.
I've read articles going back to the summer and early fall about states that foresaw declining tax revenues. I know they have been looking at that issue here in Minnesota. The fact of decdlining revenues should not surprise anybody, though the extent may.
Municipalities depending on property tax revenues face a long, painful time because laws in many places will require downward adjustment to assessed values and it will take years to work back up. Pig through a python.
/
/
/
??
Just another thing to hate HaloScan for...
Mortgage Pig,
Mortgage Pig,
Does whatever a Mortgage Pig does.
Can she fix
a CDO?
No she can't,
she's just a pig.
Lookout..... for Mortgage Pig.
I've been following the coming California state and municipal budget implosion very carefully. One of the places I've been using to track borrowing power is the muni bond offerings listed at S & Y LLC
. It takes a bit of study to be able to "read" the charts but the number of offerings with no insurance is growing and the yields are all over the place. There's also been a recent flurry of COPs (Certificates of Participation). That means municipalities are not getting paid as expected. For normal times that's fine as penalties and interest charges on late pays more than compensates BUT some of this is money "promised" by the state. Da Governator has already announced he will declare a fiscal emergency in two weeks. There's no recourse for those lost revenues and frankly no one is even remotely comprehending the size of the gap that needs to be filled.
I called problems with tax collections months ago with data from the state of arizona.
Now we are actually below last year, a shocking development in a state ( and all the cities and counties) that live on sales tax, and have had the benefit of the eternal growth of the sunshine taxes.
Now winter is here, and we have no fallback plan.
Someday this war's gonna end...
Mike in Long Island, municipalities growing "fat, dumb and happy" during a boom is the general rule. Now comes the belt tightening period ...
You'd think some local governments would consider of a rainy day fund - and some have - but it sounds like they are just blowing through those funds. I doubt there will be much in tax increases, more likely we will see spending cuts.
This bodes ill for the out of control Federal government general fund deficit too. No rainy day fund there!
Best Wishes.
Raindrops keep fallin' on my head
But that doesn't mean my eyes will soon be turnin' red
Cryin's not for me
'Cause I'm never gonna stop the rain by complainin'
Because I'm free
Nothin's worryin' me
CR,
The Feds don't have a balanced budget article in their Constitution, California does. There's lots of really bad accounting to fudge shortfalls but not this time. Lending (total debt ceiling) restricted, taxpayer fatigue, faltering economy, etc. Like it or not California may very well drag the rest of the US into a recession.
OT,
Since there won't be any ABX-08 index, what are the IB's (GS) going to use to hedge their exposure?
By law California must lower assessments and cannot raise rates, so revenues are screwed for sure. You want job losses? Here they come, straight from the public sector.
The last six years saw government and the REIC accounting for most of the job growth. So much for that now.
Funny how bulls can't see all the dominos lined up beyond whatever one is currently falling.
Always the trend-setters aren't we, Robert?
For geeks who want to benefit from the coming disaster:
If the FICO fails as a predictive system as dramatically as many of us suppose, that seems to be a huge hole filled with opportunity. I think ebay's reputation system has been breaking down: they've repeatedly sacrificed transparency in a (failed IMO) attempt to improve security and decrease fraud. So the folks who develop a truly predictive reputation system, who can learn from these recent failures, and who can implement the system effectively (and dare I dream humanely) can possibly make off with lots of well deserved cash. And why not pay Tanta huge consulting fees since she's done so much of the troubleshooting already?
Hey it looks like my local government is waking up.
They noticed the cash register was short a few million in sales tax receipts and ordered up a study to figure out the obvious.
My favorite line in the report can be found on page 3 of 6,
"Experts have been forecasting a substantial housing market correction
for several years. Low interest rates enabled borrowers to finance larger and larger mortgages. This in
turn resulted in steep home price to income ratios. According to CNNMoney.com, a rule of thumb is
that one can afford to purchase a house that runs about two-and-one-half times your annual salary.1
The chart below reveals that over the past nine years, the median home price per median income ratio
has averaged 4.6 in Nassau County."
Which experts are they talking about that have predicted this for the past few years? Why did they choose to ignore them?
These are rhetorical questions on my part.
Thanks CR.
Economic Downturn Report
Oh yeah - Nassau County happens to be one of eight regions in ten in New Yort state where the public sector median wage is higher than the private sector median wage...
Anyone want to buy a house - great schools, easy commute to the city, lots of malls, and taxes well errr...
You'd think some local governments would consider of a rainy day fund
Try it to any degree and see how long it takes the anti-tax crowd to demand any surplus be returned to taxpayers who ,as we all have been taught, know how to allocate the money better than government.
Jim
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Thanks for a great blog year CR & Tanta!
Ah, jcsc, the folks who develop a truly predictive reputation system
We have such a thing. It's known as traditional underwriting. Look at back-end DTIs, evaluate how borrower has paid on rent or previous mortgage, verify a few month's reserves, verify job experience/stability, lalalala. It works.
Seriously, it's not that we don't know how to write good mortgages - it's that short term profit hunting led us to ignore what we already knew.
@
(
)
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)
9
If you're feeling obnoxious you can add a '@' at the top.
If you're feeling obnoxious you can add a '@' at the top.
AC, we've got enough of those at the top already thankyouverymuch.
OT, only a little...
Housing Slump Leads To Raffle Of Hagerstown Home - Baltimore News Story - WBAL Baltimore
"Housing slump leads to raffle of Hagerstown home"
What the hey, I'm the only one left in the office...
^ ^
0 0
@
_
A_A
/ . .
| .. |
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CR and Tanta and all,
Here's a great article (from TheHousingBubbleBlog) about an FB who prefers to stick it out rather than foreclose and rent.
The article really shows the folly in this strategy--the protagonist truly comes across like a moron. What happens when other FBs read this article and say, "F* this. We're better than this goofball. Where are those keys to mail...?"
Article: MORTGAGE MELTDOWN / Johnnie Pitts
Non-breaking spaces are your friend:
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#
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#
maxedoutmama,
Traditional underwriting works, but so did the horse and buggy.
Tanta,
is the Mortgage Pig copyrighted?
First, kudos to Ms. Simon for calling it a "mortgage crisis" and not falling into the subprime reporting trap!
Maybe at the LAT but not on CNBC. Every economic problem is attributed to the subprime mess and happy days will return when subprime is resolved in the near future. This is a mantra and reminds me of how the "liberal media" mantra has been used to explain all ills.
The newspapers simply parrot news releases by the government or industry outlets like the NAR. Without internet blogs such as CR, I don't know where accurate analysis could be found.
Keep up the good work!
Jim
Wasted Time
(Dawn Crosby / Michael Carlino)
Words can't say
The way I feel
Words can't save me
Faith has been broken
I'm no longer blind
Faith has been broken
Time after Time
Harsh words are spoken
By those who deny
Harsh words are spoken
Lies always Lies
He whispered, "Be kind to me
Come kill me one more time
I'm lost in bitter rage"
Why tell me why
Holding on to the pain
Holding on, watch life fade
Holding on, to the past
Holding on, to wasted time
I can't see though delusion
Oh I'm trying
Isn't life strange
When youre living a lie.
1991 Warner Bros. Records
My favorite Rock Bloging song. I love listing to the whole album reading CR. Thanks for the Best blog, Best comments.
Wachovia may face new mortgage write-downs
| Reuters
Ruh-roh
From the SFGate link above:
["Pitts' monthly mortgage will now be just shy of $2,800. Property taxes and insurance add another $700 a month. The $3,500 monthly total is still quite steep for a man whose base income is about $4,000 a month, although he can earn another $1,000 or so through overtime.
The new payments are fairly similar to those Pitts had for the first two years of the loan - which he struggled to make. Chase's Kelly said the bank only does loan modifications that make economic sense for the borrower. "We look at what the total payment is going to be and say, 'Can he afford it or not?' " he said. "Ultimately, if the borrower cannot afford whatever modification we do, then they cannot keep the house. Doing a patchwork thing might keep them in the house for three more months, but what good will that do?"]
Really- this is just kind of sick. Chase gets to pretend they are being kind hearted when they have just put a man in a home costing basically all his monthly pay. The borrower is also $100k underwater (so far).
"Economic sense for the borrower", yes, that's just what I would have called it.
Could it be Chase just really, really didn't want to own that house.... nah!
After taxes, on his $5,000 a month income, he is left with a gross of $3,800 or so. $300 a months spending money?? Nice!
safe_as_apartments, how comes that a municipal driver earns 4k take home?
*net of $3,800
" Doing a patchwork thing might keep them in the house for three more months, but what good will that do?"
I'd sleep better if the Treasury or the Fed had one single person on their payroll who thought this way. Anyone.
Happy New Year, everyone!
All those wishing to contact the Calculated Risk Public Relations Office may send their heart's most fervent desires to:
CalculatedRiskOmbudspig@gmail.com
In true journalistic fashion, we'll craft a reply at our earliest convenience.
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Farm Animals in ASCII Art by Joan Stark
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The WSJ economics blog asks:
Will Home Prices Hit Bottom by June?
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Chimpanzee playing the flute.
Am I rite?
IN our county in WA state, property is reassessed every four years. In any given year, the county assessor reassesses one-fourth of the parcels.
Tax limitation laws prevent local/state govs from raising their total property tax take more than 1 percent from EXISTING properties.
BUT when you get reassessed in a rapidly rising market like ours, your taxes take a pretty good bump too. The overall rate gets lowered, to stay within the one percent limit, but the newly-reassessed homes wind up paying a larger portion of the total property tax levy because they have become a bigger piece of the total amount of assessed property--the tax base.
The following year, when more properties are reassessed upward, the taxes of the people reassessed in previous years go down. So you get a spike in taxes when you are reassessed, then a gradual decline over the next three years until it's your turn to be reassessed again.
At least that how it has worked in the past several years of double-digit price increases here in the Bellingham SMSA.
If home prices fall, all this goes into reverse. The tax base will be shrinking, and there will be less new construction to generate annual gains in both property and sales taxes.
I suspect most local governments will lean harder on property taxpayers in this situation, trying to maintain government services (payrolls) by raising the tax rate to try to keep local government budgets near-steady. So the market price of your home may fall, but your assessed value could stay at inflated levels for awhile, at least around here. If reassessed properties see REDUCED assessments, those who have yet to be reassessed will see some significant hikes in their property taxes.
And even a downward reassessment won't keep your tax liability from going up eventually, under this scenario. The only way that changes is if local governments slash spending, and that is a painful process with immediate impact on fire, police, parks, library, streets, and so on.
Having read the second article it is still not exactly clear to me how Lehman fell victim to loan fraud, despite the title. It seems they were accepting appraisals attached to the loan application by some interested party in the chain and not ordering their own, though that is not clearly stated. The prosecutor claims the bank did plenty of due diligence and could not have known, but should they not have insisted on their own appraisals? Seems like not doing so is asking to to be scammed. Or did they intend to securitize and sell on the loans and so really did not care? Article left me me with lots of questions.
File not found
Something from my home town, sure reminds me of the good old S&L
jo6pac
Somehow I think with the tax revenue crisis, Mr Pitts might have a little harder time getting overtime from the city in the future.
"incomes are up 10% since the end of 2005" (paraphrasing from Nemo's link).
Really?
ac
This is harder than i thought!
Hows this one??
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Farm Animals in ASCII Art by Joan Stark
safe_as_apartments, how comes that a municipal driver earns 4k take home?
revro
Good point. According to salary.com, a bus driver in Oakland would earn, GROSS, base + bonus but excluding OT, at the top of the range, 31.3K p.a.
Salary.com’s Salary Wizard™- Do you know what you're worth?
You just cannot fight numbers like this. Something fishy..
Separately, seeing as I celebrated New Year with the Aussies at 6 am Mountain, with the Indians at 11:30 am, hic - and awaiting the Brits NY in 2 hours - and then there's the East Coast later and then ours at MST and then the real one at PST - hic hic and more hic.
Happy New Year.
-K
Here in Norfolk, Va there was an outfit doing a variant of the same fraud you mentioned, except they bought slum properties and just kept upping appriasals and getting new loans. Amazingly, some of the principals did the same thing here a few years ago and got out of jail to start all over again. Even more amazingly, they are back soliciting investors to rehab houses. Oh..if you don't have cash, he'll be happy to use your credit.
If curious go to pilotonline.com (Virginia Pilot newspaper) and search "Mcentee" or "CM Development"...too many stories to note here.
If there are only one or two of these in every SMA, the numbers are still astounding.
MOM,
Absolutely right about 'predictive systems'. Skin in the game is another great predictor.
Technology is supposed to make those things quicker and easier, not displace them, so jcsc is off-base with the 'horse and buggy' comment. The automobile did not destroy the idea of transportation, it enhanced it. The idea remains.
jgs:
just write instead of spaces
happy new year!
arg, I hate haloscan
the combination of
& and nbsp; is the html substitute for space (I just can't type it here, otherwise haoscan just replaces it with a space %-)
If there are only one or two of these in every SMA, the numbers are still astounding.
And folks will be shocked when investors pull out of the American mortgage market!
David Oliphant in the Denver Post wrote a series of articles on mortgage frauds in the Denver area in 2006. One of the participants (buyers) closed on two loans while in jail! (Brings new meaning to gated communities!) I figured that far more exotic fraud operations were at play elsewhere, and the Mortgage Fraud 90210 doesn't disappoint.
Our local county government (El Paso County Colo) forced furloughs on employees towards the end of the year due to fiscal problems.
I remember not so long ago Colorado was generally ranked 1st or 2nd nationally on foreclosures. Not any more! Question is, have things improved any, or has the state just fallen out of the top rankings. I suspect the latter.
I consider FICO 1.0 to be a failure at almost every stage of the design, execution and implementation process. If you want to believe that traditional underwriting is the final answer, then you are choosing not to participate in the design conversation that is currently underway. Reputation systems are being designed and implemented all around us. Do you want other people to define the parameters of your reputation? Well that's what's happening. I think that Tanta 3.4 would be A LOT better than FICO 2.0. Resistance is Futile.
Here are some pigtails, but I can't get them enlarged:
ζζ
More pigtails:
عو ى actually it's arabic.
State, local and federal governments are also going to be low on the transportation revenues that might otherwise put people to work in a downturn, while also dealing with that boring old "aging infrastructure" crisis that is only exciting if you live in Minneapolis....
The problem is the structure of the gasoline tax that pays for highway and some transit projects.
It's set up as pennies per gallon, not a percentage of the cost of gas, like a sales tax.
So when gas prices rise, gas tax revenues fall--only a little at first, as lower-income people curb unnecessary driving. But then the drop in revenue accelerates as more people get more efficient cars and recognize that $2 gas is not coming back. (At this point, we're just hoping that $3 gas comes back...)
Our mayor told me today that the federal government may have promised more transpo grants to local government than it can deliver in the years ahead, for this reason.
"The problem is the structure of the gasoline tax that pays for highway and some transit projects.
It's set up as pennies per gallon, not a percentage of the cost of gas, like a sales tax.
"
Sounds like you Minnesotan's can learn a thing or 2 from us back East'rs. Most counties charge a gas sales tax as a percentage in NY - higher gas = higher $$ for the government.
For a quick state by state comparison
Gas Taxes By State
I see Minnesota at $.20/gallon. New York is at $.32 plus whatever the county charges as a gas sales tax - figure $.08 on average so $.40 per gallon gas. Just something else New York is number 1 at - YEAH...
Actually it's horribly out of date since its as of January 2005.
Picasso would have been proud of you, albrt. That looks to me like a pig's tail descending a staircase.
Picasso? Nude? Staircase?
Writhing,
Marcel
Though it will have the effect of reducing government coffers further, California property owners might find the following of interest.
Prop 8 is an important voter approved constitutional amendment designed to allow county assessors to temporarily reduce assessments when property values are determined to have declined to where the market value on January 1 is below the value on the assessment roll,
http://www.co.san-bernardino.ca.us/assessor/Archives/2007Prop8General.pdf
If your property's market value tomorrow is less than the value stated on the county assessor's rolls for FY 2007-08, you are entitled to have your assessed value reduced to market value.
Happy New Year,
I think James Sinclair predicted declining tax revenues a year or so ago.
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MLM | Homepage | 12.31.07 - 3:16 pm |
MLM-
This is a pigtail having a Wile E. Coyote moment.
I used to worry about falling locl property taxes. Being from Michigan I thenn noticed what teh excesses were being spent on. The city employees were giving themselves richer health benefits and raises and building new pet projects.
Now I think worrying that local govt. doesn't have enough money to spend is like worrying that a wino (alcoholic) doesn't have enough booze to drink.
Watch how they try to cut spending on the cops & roads to lt everyone know there is a shortfall- while keeping their rich benefits and salaries and pet projects alive. Of course welfare spending to support the little bastards and their mommas ain't gonna be cut.
If you think I'm not serious- look up the Detroit mayor's red navigator, or his neice with a full time city job that she never showed up for. Or the mayor's trvel bills, or his parties with strippers and hookers.
According to salary.com, a bus driver in Oakland would earn, GROSS, base + bonus but excluding OT, at the top of the range, 31.3K p.a.
http://swz.salary.com/salarywiza...and%2C+CA+94607
However, the article said he was a driver for MUNI, which is in San Francisco. The pay rates they publish fit the salary the article says he is making:
NEOGOV
Mike in Long Island:
"Despite lower assessed values as a result of declining house prices - I don't see an immediate reduction in taxes levied."
It'll be interesting to see what happens once the tax appeals begin. Municipalities will dig in their heels, but that'll just delay the inevitable.