Just how interested are the GSEs in buying this poo at this late date? Sure, back in 2005-6, when they were losing market share to the CMBS business, they were all for raising the conforming limit. But now? I'm sure that there are good, low CLTV loans out there to buy, but they aren't the problem anyhow.
If we assumed "the rules would stay the same" except for an increased limit as a best case scenario for FHA (not the GSEs) how much impact do you think that will have on the upper end market. It seems like FHA is much loose guidelines than the GSEs.
to me, the problem is NOT the qualified borrowers who need help. it is the UNQUALIFIED borrowers who need help.
thus, simply raising conforming limits would not be enough IMO.
therefore, Fannie/Freddie MUST loosen their credit guidelines.
They will be impressed upon to make their guidelines looser by the powers that be.
there is a reason they are allowed to function without showing financials and with having "mystery books". it is because they will serve the purpose for which they were originally created-to add liquidity where nobody else will.
Thus, regardless of what Fannie/Freddie WANT, they will loosen. being a GSE is a 2 sided sword
step one: up the conforming limits
step two: loosen lending guidelines
step three: offload all the toxic crap from the private banks to the GSE's
step four: private bank executives cash in major bonuses
step five: GSE's tank
step six: everybody is surprised hoocoodanode?
step seven: bailout. can't let the GSE's go down the tube
step eight: bank execs mock the GSE's and talk about how private markets are always better.
Just how interested are the GSEs in buying this poo at this late date?
We'll be able to answer the question as soon as they publish guidelines and loan-level pricing adjustments.
If they say they'll buy this stuff at the same LTVs as regular old conforming, then we wait to see what the MIs' rate cards look like. (If the GSEs know that the MIs will price it to extinction, then they can look like they're playing ball with congress by publishing high-LTV guidelines, secure in the knowledge that nobody can afford to take them up on it.)
What mattered was the price of oil, and people realizing it was costing them way too much to drive to the big house in the burbs. Itulip called this one years ago, as the edges collapse back towards the cities and the workplace, the big house becomes less attractive, especially as it also becomes costly to heat and cool it and pay for all the electricity, water the landscaping, etc, etc.
Once this contraction starts it can't be easily reversed. The loan limit changes won't help a bit. We're witnessing the end of the sprawlconomy.
have we just identified the mythical 33%? Can they possibly all be Realtors?! Can I possibly just now be struck by the definition of Tor being a high pile of rocks and the fact that these people are Real Tors?
YTL, I fear that is exactly what will happen. I especially love the coda in step eight. The only questions are how fast all of this will unravel and what effect, if any, a new administration will have.
Is it true that the law is postdated, so that many Jumbos written in the latter half of 2007 are declared, post-facto, "conforming", and can now be sold from originators books into the GSEs? If so, any idea how big a transfer this is likely to be?
Is it true that the law is postdated, so that many Jumbos written in the latter half of 2007 are declared, post-facto, "conforming", and can now be sold from originators books into the GSEs? If so, any idea how big a transfer this is likely to be?
Yes, that's true and no, I don't have a really good idea about the numbers on that yet, for the same reasons (don't know what the guidelines will be, don't know how the GSEs will price the credit).
does this mean we'll get your specific estimates as soon as this info is available?
Sure, why not? CR goes on the line with his predictions, why not me?
Itulip called this one years ago, as the edges collapse back towards the cities and the workplace, the big house becomes less attractive, especially as it also becomes costly to heat and cool it and pay for all the electricity, water the landscaping, etc, etc.
Except in most of America people DON'T drive in to the city to work... they drive from one edge location to another edge location. Its been that way in places like Chicago for 30 years now. For every person going from Barrington or Arlington Hgts to the loop three folks go from Barrington to Arlington or Arlington to Barrington... etc. My guess is MOST cities outside on NYC are that way.
Heating & cooling the monster house - sure that's a factor. But increasingly suburbanites live in apartments too - both my adult kids do.
I understand what you are saying about the cost of energy being a factor but it will be as big a factor in the core too - bringing stuff in and waste out. The infrastructure is quite energy intensive to support high density UNLESS they stop buying stuff downtown too. That part is going to be a wash.
If the GSEs have decent loan standards, increasing conforming loan limits is not a problem. Indeed, they way the banks are losing capital, it may be necessary for GSE guarantees (at appropriate prices) to be available for everything.
Given Fannie and Freddie's own capital issues, though, this may not make any overall difference, just shift some of the pain from the middle-upper price range to the lower ranges (since some of the lower range capital will get diverted).
This is great news for NAR and the securities industry and the folks in Vegas are all very happy! The punchbowl is back and thank God for Bush and the Vision and clarity on the hill; SIFMA thanks you!!!!! This is like the dawning of a new age, where homes are way undervalued, easy money is here and the future has very little risk; go buy your dream homes and relax!!!!
The GSEs are going to be able to use new underwriting with Covered Bonds and we will be able to pool all the subprime defaults into government backed AAA notes! This isgreat because we can use derivatives to offset the defaults and hedge out risk and get back to the business of building homes and selling un-sold homes!
In the absence of dedicated legislation for covered bonds in the US, the programme rests on contractual agreements and the pledge of assets under the US Uniform Commercial Code. The issuer is a Delaware statutory trust specifically established for the covered bonds programme while the sponsor of the programme is Bank of America NA. ('BANA', rated 'AA'/'F1+'), one of the largest US mortgage lenders.
Under this programme, BANA will issue floating-rate, USD-denominated US mortgage bonds secured on a portfolio of residential mortgage loans originated or acquired by its branch network. The mortgage bonds will be direct and unconditional obligations of BANA, ranking pari passu and without priority among themselves. Each series of mortgage bonds will be purchased by BACBI, which will finance this acquisition through the issuance of contractual covered bonds. USD-denominated proceeds from the mortgage bonds will be swapped in exchange for interest and principal due under the covered bonds in the relevant currency. The programme is designed to protect covered bondholders against the risk that, in an insolvency of BANA, the Federal Deposit Insurance Corporation ('FDIC') elects to accelerate the bank's obligations.
Not sure why it's happening (thank yew, Helicopter Ben!) but I've received more appraisal orders in the past 2 weeks than for all of the preceeding 3 months.
Uhhh, guys? What's that floating in the punchbowl?
I doubt this will do much more than convince me now is the time to short the HBs on the inevitable bounce. CR is spot on. The numbers do not jive. 210,000 fewer forclosures because FBs in the $400-$720k range are going to get 50-125bps off their note? Do a mid loan; $600k from 2006 vintage. 6.7% and payment $3900. They could possibly get that down to 5.7% and $3500. Sorry, but $400/mo is not gonna save them.
It's been highly touted as an economic stimulus bill that will help millions of Americans - and has the backing of both President Bush and House Speaker Nancy Pelosi. In the coming year, individuals would receive rebates of up to $600 and families up to $1,200. There are other goodies, too, including tax write-offs for small businesses and an expansion of the child tax credit.
But, as the old adage goes, nothing comes for free. As part of the bill, Congress is set to rush through an increase in the mortgage loan limits for Fannie Mae and Freddie Mac (and Federal Housing Administration insurance, too) - from $417,000 to $729,750 - the first step toward a massive financial disaster in which taxpayers will end up paying through the nose.
Here's how we got to this point. Domestic and international investors hold hundreds of billions of dollars in bad debt, because U.S. investment houses sold them junk securities based on often fraudulent mortgages. Many of these mortgages were sold to unqualified buyers under terms that made widespread foreclosures a certainty once the housing market began to fall.
Investment banks and bond rating agencies sat down and tried to figure out how to describe Americans with insufficient incomes and little for a down payment as great credit risks on loans too big for their incomes. The new rules focused on credit scores, because it was a good excuse to avoid looking at income and down payment, factors that would have restricted this moneymaking fiasco.
Now, thanks to Congress, junk bond investors will be able to pawn off their bad debt to Fannie and Freddie, instead of suing the big investment houses for ripping them off. This shift will certainly doom Fannie Mae and Freddie Mac, so don't be surprised if we, the taxpayers, have to bail out poor Fannie and Freddie - to the tune of more than $1 trillion.
Why more than $1 trillion? If Goldman Sachs is correct in its recent projections that home prices in California are going to drop 35 to 40 percent, the state's losses alone would top $2 trillion, because California has a disproportionate number of jumbo loans. The irony here is that the collapse in housing prices could make Fannie insolvent even without raising the loan limit. Increasing Fannie's limit is like going on a spending spree with your credit cards because you know you are going to file for bankruptcy in a few months. Only here the taxpayer is left holding the bag. Our children will pay interest on this debt in perpetuity. It is our debt. It is inescapable.
In the coming months, Fannie and Freddie will buy up mortgages based on old, fraudulent appraisals and on loans with bogus inflated incomes. Unfortunately, many of these loans will still default.
But that's just the start. Brace yourself for another wave of faxes, phone calls and junk mail urging you to refinance at only 1 percent. With zero new regulation, the same bad actors that caused this crisis can once again inflate property appraisals and begin a new cycle of fraud.
There are firms that rent assets to people to help them fraudulently qualify for a mortgage - like loaning them money to keep in their bank account for a couple months so they can fool the lender with documented savings that evaporate the day after the mortgage is signed. Another popular ruse: The borrower pays an employer to pay him a lot of money in a fake job for a month or two so he can show a fat paycheck in his loan docs. Some real estate agents and mortgage brokers actually refer buyers to these services.
Contrary to popular myth, Fannie holds a lot of subprime debt, option ARM debt and other dodgy securities. Fannie and Freddie owned or guaranteed almost 45 percent of all mortgages in America last year. BusinessWeek noted in 2007 that Fannie and Freddie have "moved more prominently into low-documentation loans, which require little or no proof of the borrower's income." Expansion of Fannie and Freddie's reckless lending is exactly what Congress wants because it's plausibly deniable. Teary-eyed lawmakers can take to the airwaves a year from now and declare: "We had no idea Fannie could go under, but we can't cut and run now. We have to bail out Fannie and Freddie for the good of America! It's going to be a tough slog, but you're getting used to those, no?"
Those same lawmakers won't mention the fact that they get paid far more by real estate lobbyists than they do from our Treasury.
I've spoken with borrowers who stopped making mortgage payments seven or more months ago. None has received a default notice. Defaults may be much higher than banks are letting on. The data lags are growing suspiciously long. Nobody knows what's going on. Seven months without making a single payment! Will Fannie guarantee those loans because they aren't in formal default yet? Nobody wants to know, because if they know, they might be called to testify next year. That's why lawmakers want to raise the limits now and ask questions later.
This shortsighted plan poses a terrible risk to every American taxpayer, especially retirees, because Social Security money will be needed to bail out Fannie and Freddie. And even if you live in high-priced San Francisco, Los Angeles or New York - and stand to benefit from the increased loan limit - this is a horrible fraud on you, too, because raising the limit to $730,000 risks a systemic crisis that will cost far more than any temporary rebate check.
In support of the economic stimulus bill, Bush will have to face "working American families" and explain that some of their tax money is going to be spent guaranteeing $730,000 mortgages on $1 million homes. It's like some sort of upside-down communism where the poor pay the rich welfare. Why should taxes from families earning $48,000 a year be used to support expensive mortgages in New York, Los Angeles and San Francisco? Welfare for the hungry and homeless is evil, but welfare for million-dollar homeowners facing a tough refi ... well, that's called "helping the economy."
I can imagine the president's radio address playing in the heartland: "We have some families with million-dollar homes on the coasts who are really hurting and so we need you, the working families of America, to stand together with them and help them avoid the kind of home price depreciation that might leave them without a new Lexus for years."
I guess Congress' hope is that median-income families will be too busy using their rebates to buy much-needed groceries to notice that the rich folk are getting way with a new scam.
Several months ago, economist Nouriel Roubini of New York University's Stern School of Business suggested that the housing market has been effectively nationalized. At first it seemed crazy, but now it's fairly obvious. In August alone, Fannie and Freddie increased their loan portfolios by $62 billion, and the Federal Home Loan Bank by $110 billion. That total of $172 billion would come to just over $2 trillion annually - not much less than the entire federal budget.
Everyone seeking a loan, securitizing a mortgage, and buying or selling a mortgage security will now be dealing, in one way or another, with the U.S. government. This type of intervention is very expensive and will eat everything in its path, including Social Security.
If we're going to have a government-financed intervention, it should be to make sure that Social Security benefits go to those who paid for them, that the poor are fed and housed, or that the army of uninsured receive health benefits. If, as they say, we don't have enough money for those important things, then I think we don't have enough money to bail out banks and bond investors.
Don't let me down, my fellow Americans. Let's vote out anyone who dares to vote for this scam.
Tactically, it might make sense for the NAR to overstate their numbers. When the numbers are missed at the end of the year, NAR can complain that the GSEs didn't get the standards and paperwork out fast enough and lenders couldn't offer the loans fast enough to give buyers a sufficiently large window before the increase lapsed. They'll point to continuing foreclosures and insist that the loan limit increase be extended, or, if they have the political capital, made permanent.
Just like tax cuts. (No partisan intent here, just an observation...) Republicans frame Democrats' intent to permit the temporary tax decrease to lapse as legislating an increase. Similarly, NAR will say that letting the loan limit increase lapse is the same as Congress stealing the American dream of homepwnerhip.
Mark my words - NAR will tell you it is a bad time to buy a home before they voluntarily allow this increase to lapse.
but dryfly, the fact that the commuting pattern is suburb-suburb doesn't mean there aren't some ridiculous commutes being attempted that will influence future housing patterns. Those Chicago suburban developments (yup, more likely to be townhomes 'n' condos) clustering around Metra lines and the 'L may do much better than all the wild-eyed exurban grey McBoxes they're been scattering towards Morris and in Kane county.
And how many fewer people will be getting starter homes because the newly risky "tainted" GSE loan pool results in a boost to previously conforming mortgage rates?
he nascent market for U.S. covered bonds will complement, not replace, traditional mortgage securities despite the crisis in many off-balance sheet transactions, the biggest U.S. issuer said this week.
Losses in mortgage debt sold by Wall Street issuers and government-sponsored enterprises have put a spotlight on covered bonds, which also are backed by pools of assets but are perceived as less risky because the assets stay on the issuer's balance sheet.
Fitch Ratings has today ( July 3, 2007) assigned BA Covered Bond Issuer (BACBI) series 4 covered bonds a final rating of 'AAA'. These securities are issued under BACBI's EUR20 billion covered bonds programme. The bonds will have a size of EUR1.5 billion, with a maturity of three years.
In the absence of dedicated legislation for covered bonds in the US, the programme rests on contractual agreements and the pledge of assets under the US Uniform Commercial Code. The issuer is a Delaware statutory trust specifically established for the covered bonds programme while the sponsor of the programme is Bank of America NA. (BANA, rated 'AA/F1+' by Fitch), one of the largest US mortgage lenders.
Under this programme, BANA will issue floating-rate, USD-denominated US mortgage bonds secured on a portfolio of residential mortgage loans originated or acquired by its branch network. The mortgage bonds will be direct and unconditional obligations of BANA, ranking pari passu and without priority among themselves. Each series of mortgage bonds will be purchased by BACBI, which will finance this acquisition through the issuance of contractual covered bonds. USD-denominated proceeds from the mortgage bonds will be swapped in exchange for interest and principal due under the covered bonds in the relevant currency. The programme is designed to protect covered bondholders against the risk that, in an insolvency of BANA, the Federal Deposit Insurance Corporation (FDIC) elects to accelerate the bank's obligations.
Well, more precisely, most Americans commute from a residential area into a job core. The distant residential areas will get most squeezed, both by the ever-increasing cost of energy and the mortgage crunch, which will hit them hardest as more recently built. The areas which will do best are the highest-density areas with the least recent building, which will tend to be the old urban cores, but some suburban cores will do well too. Nonetheless, anything remote from all cores (which includes a lot of suburb) is in a lot of danger.
Density is a big win in terms of energy use. Urban transport may use a lot of energy, but still a lot less than private cars. Smaller houses and apartment building are a BIG win for climate control.
but dryfly, the fact that the commuting pattern is suburb-suburb doesn't mean there aren't some ridiculous commutes being attempted that will influence future housing patterns. Those Chicago suburban developments (yup, more likely to be townhomes 'n' condos) clustering around Metra lines and the 'L may do much better than all the wild-eyed exurban grey McBoxes they're been scattering towards Morris and in Kane county.
I agree with you re the far flung Kane Countians & such... But metra is a spoke and hub... mostly going downtown. It doesn't help the vast majority of Chicagoans go to work suburb to suburb. So being on the L is of limited value for most.
So what will happen with the long suburb-to-suburb commutes? Folks will be incentivized by expensive energy to either move or change jobs in the suburbs so as to minimize commutes sub2sub... NOT move downtown.
Very different result from the same stimulus. BTW most of the folks I know downtown at least ONE of the couples commutes out to the burbs for work, sometimes both. They live downtown for 'other' reasons.
Density is a big win in terms of energy use. Urban transport may use a lot of energy, but still a lot less than private cars. Smaller houses and apartment building are a BIG win for climate control.
Sources please? This contradicts everthing the FHWA, APTA, DOT, EIA and every other reputable statistical resource indicates.
The big payoff is FHA, because of their low downpayments. I bet we'll see Beazer-type programs whereby they throw money into a pot for downpayments on 600-700K homes.
The limiting factor now is that lenders are beginning to require higher downpayments.
Density is a big win in terms of energy use. Urban transport may use a lot of energy, but still a lot less than private cars.
its the water, waste water, food, consumer goods & garbage 'flux' in and out that makes high density energy expensive... if you have to haul the food in & garbage out & store a reasonable supply in high density - that offsets much of the benefits of going 'carless'.
Its not the people - its moving their stuff that makes high density almost as or more expensive. No one thinks of that when they brag - oh I don't have a car, energy won't effect me. Right.
Aug. 10 (Bloomberg) -- The Federal Reserve added $38 billion in temporary funds to the banking system through the purchase of securities including mortgage-backed debt to meet demand for cash amid a rout in bonds backed by home loans to riskier borrowers.
I think one thing we can be fairly sure of, the uncertainty of the final terms will cause a freeze-up of the market for homes in the 500-750k range in places like CA. What buyer, who already has time on his side, wouldn't wait to see if this means he'll get a much cheaper mortgage?
BTW, there was something on Bloomberg about the mortgage insurers raising rates and tightening terms. To do a GSE with less than 20% down (30% in Calif now, isn't it?), you have to buy the insurance.
I have a feeling, when all is said and done, this raising of the GSE's limits will have no material effect.
I never said they'd necessarily move downtown, I was saying that long commute would still have an impact on where people decided to live which you seemed to be dismissing. And while they may not move back into the Loop per se, they'll likely move back into the urban core -- the UA, not the Central City of the CBSA. The availability of Metra was a stand-in for a variable that might prove influential in determining which of the older suburbs might do better than its neighbors -- could just as well have chosen something involving mixed residential/commercial use to minimize shopping trips. I used fixed rail transit infrastructure because they've certainly been building a lot of those townshouses along the Purple line in Evanston and beside the Metra line in Arlington et. al. I'd kill for some good peripheral 'L options. The proposed Silver Line is too close in.
I'm sitting wondering how the people here can be so smart about so many things yet have no interest in debunking the wild cenurban myths promulgated by two generations of urban planners. Transit does not save energy. With the singular inexplicable exception of NYC urban areas are no less energy intensive than their exurbs. As Dryfly notes the operational costs of density more than offset any ephemeral economies of scale. Worse, transit is massively subsidized. that means for things like energy any incremental cost increase has typically 2-3 times the impact on fare structures. As much as James Clusterfuck Nation Kunstler would like to paint a long emergency sending us back to the ghettos the basis for those predictions have been entirely debunked. There's a reason I call my blog Exurban Nation. If things are gonna get that bad it will be the core and cenurbs that suffer. People forget they are only just now enjoying a brief pause in a multidecadal period of decline. Only NYC of all the old cities is above its 1950 population high even today.
I suspect that this won't make much of a difference. The markets are falling, it won't matter much if you raise the limits of the GSEs if the houses and borrowers don't qualify for those raised limits.
I had posted this CNN/Money article a couple of threads ago, which seems to say that refi's are only happening for a privileged few that happen to qualify and have enough LTV (>20% or so) left to give the lenders some cushion in the falling market. I suspect that this sort of standards based credit crunch is going to continue to happen even with the raised limits.
Congress could have pegged the new conforming and FHA limits to a widely used index of median home prices. OFHEO has one, and so does the Federal Housing Finance Board, and even the Realtors. Those entities gather, fact-check, and publish home price data.
But Congress pegged the new conforming and FHA limits to a median price index to be published by HUD.
This index does not yet exist. HUD has 30 days to publish one.
Right now, this is how HUD calculates FHA limits: It collects median house price data from the FHFB and the NAR, and picks the highest median price for a county in each MSA. But a HUD official tells me that they're not sure they'll use those data, or that method, to calculate the new conforming and FHA limits.
The GSEs and lenders are just going to have to wait, I guess.
Irregardless, continue with lively discussion.
english police | 02.08.08 - 2:24 pm
Yo hep cat. Dun matter mewise you don' speak jive. On the bye and bye my man, wicked bit of self deprecation there wif da use of that nonstandard word "Irregardless."
I never said they'd necessarily move downtown, I was saying that long commute would still have an impact on where people decided to live which you seemed to be dismissing.
I never dismissed moving OR quiting to be nearer work/home - I said that will happen - it just won't be a net migration to the core... it will be a round robin shuffle along the edge.
scav look where the job growth is... its not in the loop or anywhere near it... its in Naperville and Downer's Grove... an Arlington Hts. Similar situation for most cities today including mine (Mpls St Paul)... folks move from Maplewood to Eden Prairie instead of commuting when energy gets too dear... there are fewer and fewer jobs downtown relative the population of the MSA.
Rob Dawg -- About your "transit is subsidized" argument -- I thought that the roads aren't subsidized either, and that gas taxes aren't enough to cover it. No, I don't have a source handy and I have to get back to working.....
This article made me want to find Lawrence Yun and ask him what he's smoking. I think it's crack.
Economist: Seattle-area home prices manageable for typical workers Realtors told area is underpriced if that's the case
Seattle-area home prices are manageable for typical workers, according to the chief economist for the National Association of Realtors.
"You may even say Seattle is underpriced if you believe Seattle is becoming a superstar city," Lawrence Yun told area brokers in Bellevue on Thursday. "Seattle is underpriced in relation to other West Coast markets." . . .
Down from a recent high of $481,000 in July, the median King County house sold last month fetched $435,000, up from $429,495 in January 2006, according to the Northwest Multiple Listing Service. January's house sales volume was off nearly 31 percent from a year earlier, whereas the number of houses on the market jumped almost 56 percent....
The average worker's pay in Seattle is $47K. How the heck does Yun arrive at the conclusion that someone earning $47K per year can afford a $435K house? Yun's stark staring nuts!!
Worldwide, investors lobbied their govt's to demand Ms. Rice tell Mr. Paulson to relay their message to Mr. Bush who informs Congrees to fix this f'in US mortgage-based securities mess, or else. Period.
Job Growth has been under the same influences as Population growth so I don't see that we can necessarily interpolate that trend continuing into the future either. I think my core definition is larger than yours (I'm thinking along the lines of the cenuss Urbanized Areas) so we're probably talking about the same phenomena. I just don't see Rob's beloved Exurban Fringe being the hot spot going forward - except maybe for barn re-conversions if things get really really bad (some already got tractor, yea! combine size garages).
Slightly OT:
This is creative - rent a million dollar home for $1000 a month: all you need to do is bring your designer furniture and keep up the house till it sells!
Sheesh, what lousy self-editing. My point was that I thought the roads were basically subsidized too, and that drivers don't pay their own way either.
Some do, some don't depends on the traffic density, state gas tax & toll situation.
Point though is cars vs buses is only PART of what you 'move'. The stuff we consume counts in the balance too. Urban centers suck resources in from HUGE areas and because they can't recycle or dispose of much locally they then send it all out again. That is a huge flux of stuff... and very energy & capital intensive.
Compare that to much smaller cities or towns where that local flux is less but the trade off is that people lug some of that shit themselves in inefficient autos.
Point is for high consumption societies it is almost a wash. If the new urbanists all owned nothing more than a few changes of cloths and a hemp grocery bag they used to fill their mini-fridge everyday on their walk to and from work... then 'yes' the city is less energy intensive.
Most new urbanists have almost as much crap as suburbanites and the infrastructure that supports them is MUCH more intense - so that's a moot point.
You have to look at the whole structure of support to see how vulnerable we all are... suburbanites get a bum rap and city dwellers a free ride in that respect.
People won't necessarily retreat to the urban core, but they'll clump up closer to where jobs are most available and goods and services are most cheaply transported.
I will agree with the above poster that all transit is subsidized. I'd be curious to know how the 'burbs would have developed if the urban freeways had largely been privately-operated, privately-funded toll roads.
Why is Fannie even in business, just to support NAR and to be a conduit for mafia cash laundering?
Why are they a corporation?
Fannie Mae was originally founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.
In 1968, to help balance the federal budget, Fannie Mae was converted into a private corporation. Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae).
This downturn is also being driven by psychology. People are actually stopping and asking "what is this property worth". Restrained consumer spending will also inhibit economic growth. I have overheard many people mention they are cutting back. Some cut cable they didn't need, decided they didn't need to eat out, canceled a gym membership they weren't using, etc. Yesterday in Wal-Mart I overheard a kid say he stopped buying soda because it wasn't worth $500 dollars a year to him. And this is in an area that hasn't really been hit.
make my interpolate an extrapolate and I'll have fries with that. And I think basic physics would suffice to suggest that smaller houses, but especially group housing would be more thermally efficient. Something along the lines of less volume and/or surface area, but not like it's proof or anything.
Go and live in Tokyo for a while and you'll discover exactly how many people you can schlep around with urban transit. They handle 6 million + every day on the subways alone. 20 million people in the Tokyo-Yokohama area. And this is in a district that still has 6% land devoted to agriculture (I had a melon field right next to the apartment complex I lived in.)
What Chicago lacks is sufficient mechanisms for getting across the spokes of its different train lines. I hate having to go out to Northwestern U., because it's an hour-and-a-half by train and requires 2 changes. (Driving by car is an hour and then I have to deal with the lack of parking.)
Rob Dawg -- About your "transit is subsidized" argument -- I thought that the roads aren't subsidized either, and that gas taxes aren't enough to cover it. No, I don't have a source handy and I have to get back to working.....,/i>
POV travel is subsidized accidentally on the order of perhaps half cent per passenger mile to possible one and a quarter cents. This is typical of periods where the gas tax is fixed for a long time. it is also a bit of underhanded government theft. By deferring maintenance costs go way up creating unnecessary expenses. Regardless, when the fuel tax is next adjusted it will undoubtably cover the recent shortfall and them some until the next time.
Transit on the other hand is so massively detested by even its most ardent supporters that no more than a handfull of bus lines in special circumstances anywhere in the nation comes even close to cover merely the understated operatinal costs of the service. In 2006 the top 50 service providers collected $8,847.9b in fares and spent 34,152.8b for a whopping 74% or greater than 4:1 subsidy.
There's a reason you don't have a source handy, it doesn't exist. Oh and in addition to the dirty books on government infrastructure where do you think most of the money for transit comes from? That's right with the money siphoned off for transit POV vehicles pay far more than they cost.
We can't all live in caves and be entirely self-sufficient farmers miles and miles away from everywhere in our mixed agricultural fields either -- and lets not get started into the energy demands of modern or organic agriculture because we'd never end. The trick to is find a decent midpoint. Same with residential structure and density. blah blah.
scav we mostly agree - however there is a place for exurban living. Imagine trying to build a facory in the loop - sure some brownfields down by the skyway maybe butthen you have a commute again.
The point Bob Dobbs makes about living close to work AND distribution hubs wherever that might be is the most salient point I see. For some it will be in centers others on the far flung fringe... for most it will be middle density suburbs.
This new 'stimulus package' won't change any of those trends either way.
Re: n 1968, to help balance the federal budget, Fannie Mae was converted into a private corporation. Fannie Mae ceased to be the guarantor of government-issued mortgages
Fannie has a market cap of $29 Billion and look at the damage that mis-run corrupt corporation has been linked to in this subprime implosion!!
Re: In New York, Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac, the two biggest buyers of U.S. mortgages. He also sued First American Corp.'s eAppraiseIT LLC for allegedly caving to pressure from Washington Mutual Inc., its biggest customer and the largest U.S. thrift, to inflate values.
Cuomo said in November he uncovered a ``pattern of collusion'' between lenders and appraisers to bolster home values.
$4.7 Trillion Market
The investigations call into question $4.7 trillion worth of mortgage securities guaranteed by Fannie Mae and Freddie Mac, and may limit the availability of home loans to borrowers with good credit, CreditSights Inc. analysts Frank Lee and Sarah Rowin said in a Nov. 8 report.
``If there is a disruption in Fannie and Freddie trying to buy conventional loans, that would be very, very bad right now,'' Lee said.
The valuation crisis in the credit markets may cost banks and investors $400 billion, according to November estimates by Deutsche Bank AG analysts.
At least two GOP senators have expressed opposition to the proposed yearlong increase in conforming loans limits, arguing that the government should first establish a new regulator with the power to reduce the $1.5 trillion mortgage holdings of Fannie Mae and Freddie Mac.
I don't know if this was Rob Dawg or someone else that said this but it is certainly true that smaller single-story ranch houses on good lots with a southern exposure will be in much higher demand going forward (as opposed to McMansions on postage stamp lots.)
The reasons for this are myriad but generally have to do with better energy efficiency and the ability to grow some of your own food and raise some animals. America will be going back to the co-op model or maybe the Russian model of growing a good portion of your own food and becoming mostly self-sufficient on your property.
"Yesterday in Wal-Mart I overheard a kid say he stopped buying soda because it wasn't worth $500 dollars a year to him. And this is in an area that hasn't really been hit."
People have gotten into the habit of buying a great many things that they don't care much about. When money gets tight, there actually can be a lot of things to cut back on that don't hurt much at all. To the detriment of the consumer economy.
You can go to the pet store and buy a cat toy for $12 that was made in China for maybe 35 cents. Or you can make the same thing yourself out of a couple of pieces of cardboard and some string.
The soda statement rang a bell with me because I'd recently done some research on the Internet and found some absolute maniacs making their own carbonated soft drinks at home with the usual easily-available-at-any-hardware-store parts. For about a dime for two liters. If America decides to adopt frugality as the new lifestyle, expect to see a lot of things like this going on. Hell, what about the people who operate informal, unlicensed restaurants in their homes?
Continuing the off topic discussion of density and energy efficiency, wouldn't the cities and nations of Europe make a sound argument that denser cities are more energy efficient. Off the top of my head, I'm thinking the Europeans use half the energy Americans do on average.
Their higher taxes on gasoline have a lot to do with that, but the city design also must come into play.
Rob Dawg: Not just New York. In toronto:
The results also show that low-density suburban development is more energy and GHG intensive (by a factor of 2.0-2.5) than high-density urban core development on a per capita basis.
This is truly a very sad case of Congress pandering to special interests. The Housing Bubble was the result of lose lending standards. How does anyone think that raising the loan limits will reign in crazy lending?
More importantly, I hope that anyone concerned with affordability realizes that the Congress and President has voted in favor of keeping house prices even more out of reach for future owners. Way to go.
When the government initially turned to GSEs as a means for improving housing finance (Fannie Mae was converted to private ownership in 1968 and Freddie Mac was established in 1970), no fully private firms could create profitable, high-volume links between the bond and mortgage markets. Today, numerous private groups can perform that service.
Such unsubsidized firms cannot compete directly with Fannie Mae and Freddie Mac because the federally enhanced low borrowing costs are available only to the GSEs. Accordingly, the private firms currently fund mortgages that FNMA or FHLMC are not eligible to purchase. If the government eliminated the subsidy to Fannie Mae and Freddie Mac, the mortgage markets would not retrogress to a pre-GSE condition. Rather, fully private intermediaries, probably including Fannie Mae and Freddie Mac, would provide the funding links between markets. Improving access to mortgage finance may have been a social benefit worth paying for in the past. It is now available without subsidy from fully private firms.
In 1968, Fannie Mae was split into two corporations: Ginnie Mae, which stayed associated with the government, and Fannie Mae which became a private stockholder-owned corporation.[3]
The role of Ginnie Mae, since 1968, is to provide a secondary market for government-insured mortgages; it is on the federal budget and its programs are backed by the full faith and credit of the US government. Through Ginnie Mae, the federal government made its initial foray into mortgage-backed securities in 1970.
The Federal Home Loan Mortgage Corporation, also known as Freddie Mac, was established by Congress in 1970 to be a secondary market in mortgages for the savings and loans industry. It was privatized in 1989 into a private stockholder-owned corporation.
Fannie Mae and Freddie Mac are not backed by the full credit and faith of the US government. Both institutions were created by the federal government and have federal corporate charters. The market perceives an implicit guarantee by the US government, because like other giant financial institutions, such as Bank of America, the government is unlikely to let these institutions fail in the event of financial problems. As a result, these institutions pay low credit risk premiums when they borrow in private capital markets.
The first MBS was brought to market by Ginnie Mae in 1970. Throughout the 1970s and early 1980s the major type of MBS security was the pass-through security (discussed in details below). A major innovation for the MBS market occurred in 1983 when Freddie Mac issued the first Collateralized Mortgage Obligations (CMOs). These new instruments appealed to investors with special maturity and cash-flow requirements. However, the first CMO issues faced complex tax, accounting and regulatory obstacles. Much of those legal issues were resolved with the passing of the Tax Reform Act of 1986 which included the Real Estate Mortgage Investment Conduit (REMIC) tax vehicle. After 1986 the issuance of CMOs grew enormously. The new tax law also allowed for the creation of other mortgage instruments such as STRIPs, floaters and inverse floaters (see Babe Ruth Bars in CaddyShack).
english police writes:
"Transit does not save energy"
An overwhelming amount of research contradicts you.
No, you are just plain old everyday ordinary wrong. The only place that even tries to make this case is the APTA and I have about 800Mb worth of data and analysis ready to let loose on them if you try.
go ahad, dig into the details, think you discovered my error and get back to us. Yes, rail supposedly uses less and personal trucks more but the net result even when included is TRANSIT DOES NOT SAVE ENERGY. It really is that cut and dried.
Bob Dobbs said: "People have gotten into the habit of buying a great many things that they don't care much about. When money gets tight, there actually can be a lot of things to cut back on that don't hurt much at all. To the detriment of the consumer economy...."
That's one way of looking at it. Another is that when money gets tight you prioritize your spending, which may only re-distribute the same amount of consumer spending.
Like the anecdote of the kid in Wal-Mart who doesn't think soda is worth $500 a year to him. He's obviously thinking in terms of what else that money could buy that would mean more to him.
I really need to find about the Fed budget in 1968; didnt we have a war back then, civil rights, what triggered the government at that point, to need a Fannie as a private corp? Who did that? Any historians here?
Dryfly:
Transport distance for goods is basically the same whether you're in a small town or New York. Everybody consumes stuff from international sources. Small-town residents buy Chinese stuff at Walmart and corn syrup ultimately from Iowa, just like New Yorkers buy Chinese stuff at Macy's and food from the same places. But in any case there are large efficiencies of scale in transport. Cost per pound-mile is way lower in an 18-wheeler than for me in my car, and lower still in a railcar. As a result we spend more than half out transportation energy schlepping people around. Hence the twofold energy advantage for urban over suburban living. (see above)
Rob, the advantage of urban living is primarily that you don't have to go as far. Nobody commutes 50 miles within the city limits of Chicago but a lot do out in the burbs. Energy per mile is often higher (stoplights) but total energy drops, a lot.
The car vs. transit thing may be even more favorable to cars than is indicated by those statistics, too, when you consider:
a) the relative income of those in the cars vs. those in the buses (i.e. more efficient resource allocation). b) the time lost by transit passengers due to slower modes and indirect routing.
Not having to travel 49 point gazillion miles for groceries probably makes more of difference in energy consumption than abstracted bus v. car stats per passenger/mile, but that's the geographer kicking in. Making it really easy and cheap to repeatedly travel long distances for staples is a bad side-effect you're not capturing in those stats either. I can remember my parents shopping once every two weeks or so for groceries (milk and veggies showed up maybe weekly).
The stuff we consume counts in the balance too. Urban centers suck resources in from HUGE areas and because they can't recycle or dispose of much locally they then send it all out again. That is a huge flux of stuff... and very energy & capital intensive.
I'm not seeing how this gives any advantage to any of the *burbs. It's not like they produce anything locally. Both cities and the burbs are importing all the crap they use.
Dawg: Yeah, it's pretty amazing how bad the per-passenger numbers get when you assume that there are only nine people on the bus.
Private biz. can not compete with GSE's and GSE's can not compete with gov.(FHA)- if quality is not an issue. So in a long run, we are all FHA. It is not very hard, is it?
Hence the twofold energy advantage for urban over suburban living. (see above)
What part of the TEDB26 don't you accept?
BTW, ever heard of the UHI effect? Care to speculate on the cost of air conditioning?
Your later point of distance is equally specious. It ain't true. People have the weirdest notions about the energy intensities of various built environments. Once you start really drilling down and find out transit takes twice as long then you can get into lost opportunity costs of the drag on personal productivity and the general economy.
Are you accounting for avg home size? I live in 750 sq feet with my wife, kid and dog. And this is big compared to the flat we had in London! I'm sure if I lived in an exurb, I'd have several thousand square feet more. Also, urbanisation has historically proved the best form of contraception - I'm sure I'd be driving to more soccer games if I lived elsewhere.
From my experience, societies with high energy prices tend to be dense. And the higher the energy price to users, the denser. This could be a historical or political artifact, but there is a correlation.
Urban areas may require more energy per weight transported, but my guess is that city dwellers end up buying less stuff, heating and lighting their dwellings less (I left the thermostat at 50degrees in college and sponged off the heat coming through my neighbors' walls), making shorter trips, and using more fuel efficient modes of transport.
Dawg: Yeah, it's pretty amazing how bad the per-passenger numbers get when you assume that there are only nine people on the bus.
It isn't an assumption, it is reported data and it is very accurate. The NTD is the place to go for more.
It always amazes me the level of resistance to giving up long held assumptions in the face of irrefutable data. Nobody here batts an eyelash at the idea that long held models are breaking down but reference a table going back decades that shows clearly and succintly that transit does not save energy and sucks both time and limited public resources and all heck breaks out.
Yeah, because we've designed shit poor transit systems in the U.S., they turn about to be inefficient in terms of time, so we can then write them off and get rid of the systems. Got it. And time spent on a bus (possibly reading) is by definition wasted and is economically better spent and worth more at home where you might just be reading as well.
30-story condo tower has become the East Valley's tallest building, nabbing that distinction from a sister tower that set a record of its own just nine months ago.
The second tower of Centerpoint Condominiums in downtown Tempe has reached 345 feet.
By comparison, the first tower is 258 feet. Hayden Butte stands at 332 feet.
Builder Avenue Communities celebrated the milestone Wednesday, trying to convince the public the views are just as grand as what it plans on the ground floor.
About 25 percent of the condos in the first tower are reserved, Losch said.
He acknowledged the troubled housing market but said he figures a federal economic stimulus package will boost the real estate market within months.
They only have deposits on a 1/4 of the 1st building(it used to be 40%, but that many people have backed out) none in the 2nd and they're supposedy building 2 more towers.
Yeah, $800 government loans are gonna save these clowns.
Ok Rob Dawg --- I'll take another stab at this since you're taking on all comers pretty well so far.
Since you mention transit time, how about the incremental benefits of transit? I'm not talking about comparing at the aggregate levels all personal vehicle use, I'm thinking of the marginal impact of one additional driver on the road, especially the impact on congestion during peak driving times. I'll take my answer off the air.
Yeah, because we've designed shit poor transit systems in the U.S., they turn about to be inefficient in terms of time, so we can then write them off and get rid of the systems.
We spend tens of billions building and running them every year and they cannot even come close to highly taxed POVs. For anything other than an urban subsidy the answer would be obvious but there's this amazing blind spot concerning transit that somehow thinks it great to give $250k/yr Wall Streeters choo-choo rides at 35¢ on the dollar.
Regardless of relative energy use, urban centers are highly dependent upon cheap, plentiful energy. When oil & natural gas become scarce, it'll be damned hard to heat urban residential towers via coal, firewood, or solar. What about the energy required just to continually push water up every one of those tall buildings?
The seminal iteration of the act, however, occurred near the midpoint of its history,
with passage of the 1968 Housing and Urban Development Act, which closely followed the assassination of Martin Luther King Jr. and the
urban rioting that ensued.
The 1968 act authorized a new program, the Federal Housing Administration (FHA) Section 235 homeownership program, and required the president to report to Congress on the housing needs of lower-income families and on the progress made toward expanding homeownership and equal housing opportunities, and assuring reasonable shelter costs (emphasis added).
The following decade saw steady progress in mortgage markets. In 1975, S&Ls held 55.8 percent of the market share. The secondary
markets, however, were beginning to take off. In the Housing Act of 1968, Fannie Mae was authorized as a privately owned corporation. A
portion of its portfolio was transferred to the newly created Government National Mortgage Association, which remained a government-
owned corporation. Freddie Mac issued the first participation certificate in 1971.
Fannie Mae, a government corporation until it was spun off by the Housing Act of 1968, bought the entire project mortgage from the sponsors lender at market rate, absorbing the difference between that rate and 3 percent. Production of (d)(3)s was constrained by a lack of qualified sponsors ready to come forward, as well as by government-imposed cost constraints and limited availability of sites. It was also unpopular with Treasury and budget officials be-
cause the governments purchases of large project mortgages were a direct hit on the federal budget.
Until 1989 Fannie Mae was limited by its charter to providing supplementary assistance to the secondary mortgage market.
The Department of Housing and Urban Development, Fannie Maes designated government supervisor, had the authority to approve any new activity. Freddie Mac was governed by a board of three government officials who also served as members of the Federal Home Loan Bank Board.
Today Fannie Maes charter authority has expanded to permit it to respond appropriately to the private capital market, and HUD has given up its authority of prior approval over Fannie Maes activities. Shareholders, rather than government officials, now control Freddie Macs board of directors. The changes took place in the
context of a legislative environment distracted by larger events such as the savings and loan debacle and financial difficulties with major
HUD programs. The government seemed virtually unaware of the extent to which it was losing control over the largest GSEs.
Federal law has established two institutions that resemble GSEs in their financial characteristics but are effectively owned and controlled by the government rather than private owners.
The government created the two, the Financing Corporation (FICO) and the Resolution Funding Corporation (REFCORP), to fund the bailout of the failed savings and loan industry with billions of dollars that would not appear in the federal budget. Under current budget rules
rather than the rules that applied when the two institutions were created in the 1980s, their borrowings and outlays would now appear in the federal budget. This book does not discuss the two institutions except in passing.
The average numbers for buses are not really a good comparison for energy efficiency.
1. Buses are more efficient for moving people if they are closer to full capacity than cars are.
2. Urban sprawl and low density development makes transit a less viable means of transportation than a car.
3. Therefore the urban planning of most American cities lowers the number of people riding the bus.
4. Therefore the "average" fuel efficiency of a car in America is better than a bus.
Compare the numbers for a New York, London, or Barcelona and see what you come up with. If you have 20 to 30 people on a bus, that energy efficiency is a factor of four better for the typical bus. Conflating the actual efficiencies of average bus transit efficiency for the low-density American city is a straw-man compared to the high-density urban living most urban planners and transit officials would advocate.
I'm not seeing how this gives any advantage to any of the *burbs. It's not like they produce anything locally. Both cities and the burbs are importing all the crap they use.
Has to do with the number of pick ups & reroutes. When you consider the amount of handling & rerouting of small lots in cities its amazing. That is not energy or capital efficient transportations. The efficiency of handling people en masse is completely reversed when handling stuff. This is especially true in reverse, with garbage & snow removal and such - the super high density actually works against efficiency IF the goods actually have to be distributed & picked up... its analogous to the last mile analogy in internet... that is where all the bottleneck is.
Big Box & Super Center distribution is very efficient. Its possible to go straight from factory to Big Box - the rest of the distribution chain is your SUV.
Face it - modern suburbs were designed around the stuff we buy not the people buying it. It should come as no surprise then that in a high consumption economy that suburbs would make more 'sense'.
Like I said above - change all that to a society that consumes & owns a lot less (a LOT less) and then density starts to win out again. What good are Big Boxes you never get stuff in?
There is an equally silly mythology surrounding rural & small town centers vs WalMart...
To a great extent the urban-suburban-rural argument is about how we imagine we live or should live not how we actually live.
I'm thinking of the marginal impact of one additional driver on the road, especially the impact on congestion during peak driving times.
No doubt there is congestion relief but at what cost? Turns out the between the surface capacity they take up and the diversion of funds they require the net very likely is that transit causes congestion. A freeway lane can handle 3400 passengers per hour and there are very few rail lines that do that. giving the former up for the latter is a net loss after costs.
RD- In a nutshell: The automobile-oriented transportation system we have and the externalities arising from its use (the latter often ignored by govt. and anti-transit research) is, in the aggregate, less efficient. It is more economically efficient, but the ROI on auto-oriented projects has been declining and possibly may be negative today. Hence a growing buy-in to alternative transport on the part of the feds. Even under this administration (SAFETEA).
I need to sign-off, but I'd love to return to this thread Monday to see credible research on both sides of the debate. I think a researcher named Shoup (sp?) supports your point of view, RD. I'd like to see his latest work. Anyway, I view this debate to be much like the climate debate, and directly related.
I'll take that one - in most cases adding an incremental amount of transportation capacity is MORE expensive using transit than by providing comparable road improvements. This isn't always the case, but in most U.S. cities all the really good potential transit routes have already been built adding more transit coverage is far more expensive than improving road transportation. This is especially true if you are in an area where the freeways don't have ramp metering and good freeway service patrols (two of the best transportation improvements any area can make)
At least in the San Francisco Bay area the reverse is true. We spend about 2/3 of our transportation money on public transit which moves a whopping 9% of commuters. In every case I can think of where an actual comparison has been made, the highway improvements turn out to be significantly cheaper but the local powers that be build the transit option anyway.
FICO: Don't blame us for mortgage mess
The CEO of Fair Isaac, the company behind the FICO credit score, stands by his company's credit scores but sees more pain ahead for consumers.
I think the economic efficiency is the best measure of the total resources consumed and therefore the best indicator of true energy use. The reason I say this is becomes clear when I suggest that we all move from cars buses and trains to rickshaws. Yes, they're usually slower, but they don't use any energy except to build the rickshaw, which is negligible compared to what is required for a car or a bus.
However, the truth if we all traveled around on rickshaws (at least those few of us who weren't employed as rickshaw drivers) we would still have considerable energy consumption to produce the food and housing for the rickshaw driver and his family that wouldn't otherwise be dedicated to transportation. Lifecycle cost is by far the best way to determine the total amount of resources used by a transportation mode. This includes the direct cost of the vehicle and infrastructure as well as the cost of the time spent using that vehicle.
At least in the San Francisco Bay area the reverse is true. We spend about 2/3 of our transportation money on public transit which moves a whopping 9% of commuters. In every case I can think of where an actual comparison has been made, the highway improvements turn out to be significantly cheaper but the local powers that be build the transit option anyway.
Los Angeles MTA spends 78-84% (different methodologies) of their budget on 2.7% of their passenger share.
english police writes:
Winston: Right, economically more efficient. I thought the debate was energy. I'm signing-off now. Really.
Time and energy and money are fungible. Besides the conversation moved on after all the reasonable people looked at the data and accepted that transit in the US does not save energy.
Total cost, which includes externalities, would be a better measure. All transport produces polution.
One can argue about the cost of this polution to society (increased death rates etc.) but it's clear it isn't priced efficiently. Some sort of carbon tax would.
I really liked the UK's $6 gallon tax on gas, but that's my choice because I benefited (high income bike rider, so the benefits - fewer cars on road, lower income taxes, far outweighed increased prices of food etc.)
"That's one way of looking at it. Another is that when money gets tight you prioritize your spending, which may only re-distribute the same amount of consumer spending."
Uh, if money is tight, you spend less, right? Not just different. And if you can, you save money as a cushion against an uncertain future...
My parents were depression babies, and when money was tight they did not spend the same amount of money in different ways. They spent less money...
Or are you just having fun with debating skills...
Um, I looked at the data and if the load factor on the bus is increased to 10.4, then it is equivalent to cars in BTU/passenger mile. The MTA has a load factor of 19, Seattle 13, and Houston 10.5 (and the commute in Houston is hellish). Minneapolis came in at 10.3 or so. Rail was already listed as being more efficient than cars, so I'm not bothering to look at it.
So busses do save energy when people use them in great enough quanties. Shocking and suprising.
As said earlier, this is just step 1. Step 2 is to losen the loan limits to "help the home-moaners." Step 3 is permanently high housing prices resulting in socialized housing - you can only afford to buy if the government lets you own a house. Think of the power that will result from socialized housing!
DaveNYC,
Toss in one more passenger in every 10th car and no bus anywhere comes close. If wishes were ponies and all that.
Did you look at the other tables? Transit efficiency has been falling for decades and POV travel efficiency has been rising for decades. this latter despite falling average passenger counts falling. Someone else mentioned it but is bears repeating. Because transit is circuitous equivalent trips are longer in distance on transit substantially erasing the advantages some agencies have with higher load factors.
You're ignoring the point that three of those citys' systems are already more efficient than cars. Are there bus systems out there that don't make sense from an energy conservation standpoint? Sure. Is your blanket statement that public transit is teh sux correct? Hells no. Many bus systems are more efficient and the gross numbers for rail indicate that it is more efficient (though it's possible that there's some rail systems that are not).
daveNYC writes:
You're ignoring the point that three of those citys' systems are already more efficient than cars.
No I am not. What makes you think their energy efficiency is average? Congestion kills LAMTA averages for but one example. LAMTA CNG vehicles also get poorer mileage even after adjusting for different fuel types. And I haven't even gotten to the recent questionable accounting from the APTA that makes some of these systems underreport their energy consumption.
Are there bus systems out there that don't make sense from an energy conservation standpoint? Sure. Is your blanket statement that public transit is teh sux correct? Hells no. Many bus systems are more efficient and the gross numbers for rail indicate that it is more efficient (though it's possible that there's some rail systems that are not).
It's called cherrypicking and it is generally frowned upon in making legitimate comparisons. You wanna compare best routes? worst routes? Fine but don't try foisting off the very best transit corridors against the POV averages. Poor sportsmanship that.
So I'm cherrypicking my statistics (because when I think of a place with great public transportation, I think Houston), and even then it doesn't matter because the APTA has bad statistics?
You said Transit does not save energy.
I looked at your stats and came up with three locations where it does, plus the fact that the gross numbers for rail transportation are better than for cars.
DaveNYC, yes it is cherrypicking when you compare Houston to the average POV and don't even bother to go to the NTD to pick out the Houston specific data. While you are at it why not remind everyone about the farce of a trolley that has made Houston a worldwide laughingstock? The Wham Bam Tram. If it weren't for the Medical Center deal with passes and moving the parking lot ridership would be near nonexistent. In 2006 fares accounted for $56,504,320 of the 474,938,219 for a whopping 12% farebox recovery ratio. Care to octuple fares and see how popular the service remains? Buses there average 12.8 passengers not 10.5 BTW. I'm not here to be anti-transit unless you think like many transitistas that accurately reporting the facts is in some way anti-transit.
This suburban/urban debate has lost focus on economic consequence of choices. Energy and transit figures seem to be picked based on someone's assumptions, but let me lay this out for you: I lived in the city for years, and now live just outside it. My friends in the city don't even own cars. They work in the city, take the T (for you non-Boston types, that's the subway) or the bus and actually WALK. I commuted for years that way and probably burned a tank of gas every two to three weeks.
We live in smaller places that are very energy efficient. Shop for locally produced food in smaller quantities and on an almost daily basis (we're also thinner here than most of the country). Eat in local restaurants (we hate chains). So what is the overall economic benefit of this? I bet I consume less, contribute more to the local economy, am healthier, and use less energy and even medical resources than those out further from the core.
Of course, I don't buy as much crap because I don't have anywhere to put it, so maybe that makes me a bad contributor to the economy. After all, 5000 sq ft houses have to be filled with stuff you don't need in rooms you don't use. I wonder what the energy consumption is vs my 1400 sq at 3 bedroom cape?
I wonder what the energy consumption is vs my 1400 sq at 3 bedroom cape?
My 2600 California ranch style with aluminum framed single pane picture windows doesn't have or need air conditioning so that's out but it has been a brutally cold winter and we've spent more than double heating this year than last we will probably spend close to $300 this year in extra gas and electricity.
Dryfly, I don't how long it's been since you've been to Chicago, but Arlington Heights is not the edge of suburbia. Neither is Naperville. Those two areas are the #2 and #3 employment centers in the Chicago metro area (the Loop is still #1 and yes, it is growing).
People living at the edge are still a 1-hour drive away from AH or Naperville. When I worked in AH, a large percentage of my coworkers lived in McHenry, Kane, or Kendall counties. Those areas are getting killed right now.
"Does anyone know if the stimulus package changes the GSE portfolio limits?"
The answer is no - the limits will not increase, so any new 600k jumbo they buy means three fewer 200k loans. I am very surprised that this passed the senate, since for states where the average home is under $400k (probably 40 of the 50 states), there will of course be less availability of Fannie and Freddie capacity. So California and Connecticut win with their typical 600k loans, and Kansas, Wyoming and almost everywhere else lose as the higher priced states suck all of the GSEs capacity away.
Rob Dawg I was saying, that the energy consumption on my 1490 sq ft 3 bedroom house (I had to remember the exact measure) was exactly 80% less than a workmate's McMansion clocking in at 4500. He has a family of 4. I bought this place from a family of 4. I'm not sure what the windows have to do with anything, but I don't have AC either.
I walk to the train, which is SRO during the morning commute. He drives over an hour each way. My total commute is less than an hour, but I get to read and I walk some of the distance. In fact, if it hadn't been for the train, I never would have been able to study and graduate from Business School and work at the same time. The walking will keep me from using more health resources as I age I am sure.
This is what I was saying. When assessing economic benefit, you can't choose one area and run with it. Look at the total for the lifestyle and then see what it gives you. And remember, an important part of economics is "taste". But if I had to spend money, I would spend it on public transporation because of some of the overall economic consequencses I just brought up. If I had my way everyone would get their overweight butts out of the malls and SUVs and walk, adding less stress to the health care systems. And they'd stop wasting natural resources to live in spaces they don't need, stuff with things they don't use because their lives are devoid of any meaning but what they can say they have versus their next-door neighbor. But, of course, I believe in enlightened despotism so sue me
The answer is no - the limits will not increase, so any new 600k jumbo they buy means three fewer 200k loans. I am very surprised that this passed the senate, since for states where the average home is under $400k (probably 40 of the 50 states), there will of course be less availability of Fannie and Freddie capacity. So California and Connecticut win with their typical 600k loans, and Kansas, Wyoming and almost everywhere else lose as the higher priced states suck all of the GSEs capacity away.
but perhaps that's the plan? "private interests" can go play with the cheaper safer loans now that the GSE's will have to get out of those in order to make room for the crap unloaded on them by said "private interests".
When assessing economic benefit, you can't choose one area and run with it. Look at the total for the lifestyle and then see what it gives you. And remember, an important part of economics is "taste".
Exactly. When you aggregate the individual variations it turns out the the cenurbs are not more energy efficient. Your specific examples show that it isn't even all that much due to urban form as it lifestyle and other factors.
But if I had to spend money, I would spend it on public transporation because of some of the overall economic consequencses I just brought up.
I very seriously doubt that I analyzed your commute pattern and the 2006 MBTA submissions and have determined you commute costs approx $7.25 each way. A little over $4 in operating costs and a little over $3 in capital expenditures. Care to purchase a monthly pass at $320? Assumptions of 40 min travel time 10 min on Red/Orange line or equivalent using MBTA 44¢ per passenger mile operating costs and pro-rata share of annual capital expenditures.
"go ahead, dig into the details, think you discovered my error and get back to us. Yes, rail supposedly uses less and personal trucks more but the net result even when included is TRANSIT DOES NOT SAVE ENERGY. It really is that cut and dried." - Rob Dawg
I looked at the table, and it appears that the low utilization of busses play an important role here. How about this argument: the relative energy efficiency of cars and public transportation is not a fixed ratio, but is instead a function of fuel costs. When fuel costs are low, more people can afford cars, which decreases the utilization of public transportation and make public transportation less energy efficient. When fuel costs are high, more people have/choose to use public transportation, so it becomes more energy efficient.
"Point though is cars vs buses is only PART of what you 'move'. The stuff we consume counts in the balance too. Urban centers suck resources in from HUGE areas and because they can't recycle or dispose of much locally they then send it all out again. That is a huge flux of stuff... and very energy & capital intensive." - dryfly
I am trying to understand how that makes urban centers less energy efficient per capita. Consumption / flux is proportional to the number of people in an area, which naturally makes high-density areas like city centers more energy intensive. The act of moving everyone to exburbs by itself does not decrease total consumption, and unless each exburb area is self-sufficient, you still need to suck resources in from huge areas. You lose the economy of scale in transportation, but I do not see what you gain.
left-em,
I am pleased people are starting to look under the covers and actually examine the issues. You are correct that the various efficiencies are subject to many factors and even revisions. The APTA for instance got tired of how bad buses were performing and over a period of three years managed to "find" a 24% improvement in bus fuel mileage.
The interesting thing is that transit use goes up when the economy is good and goes down when the economy worsens. Part of it has to do with the importance of core trip generation. Transit turns out to be an unaffordable luxury when you absolutely have to get there and on time.
The American model of urbanization (and suburbanization, and exurbanization) is predicated on cheap energy and cheap oil
Rob:
your arguments work here in America, simply because our cities were designed FOR PRIVATE CARS. (the street and freeway model). even the major cities are.
buses are poorly utilized because we build the cities first, then put the transportation in second. In Europe: they build the transportation first, then the development follows.
Someone brought up Toronto. Look at that city. From an airplane you can see where the subway was placed. Remarkably good way to plan a city.
Almost all European centers are significantly more energy responsible than almost all American cities, excepting NYC due to being based on a completely different style of planning and urban development.
Paris is a very different metro region than is Chicago as example.
if/when peak energy hits us, almost all American areas will be hit hard.
Urban areas, suburban areas, exurban areas.
the only ones who will do ok are those who are totally "off the grid". How many of us can truly do that?
Right. Way too many unknowns at the moment. Like that's ever stopped the NAR from cheerleading.
--
What better proof do we need than this to validate my observation that American People are politically impotent and Crooks rule the roost?
Jas
Maybe congress can pass a bill outlawing NAR from ever speaking again?
Just how interested are the GSEs in buying this poo at this late date? Sure, back in 2005-6, when they were losing market share to the CMBS business, they were all for raising the conforming limit. But now? I'm sure that there are good, low CLTV loans out there to buy, but they aren't the problem anyhow.
Tanta,
If we assumed "the rules would stay the same" except for an increased limit as a best case scenario for FHA (not the GSEs) how much impact do you think that will have on the upper end market. It seems like FHA is much loose guidelines than the GSEs.
to me, the problem is NOT the qualified borrowers who need help. it is the UNQUALIFIED borrowers who need help.
thus, simply raising conforming limits would not be enough IMO.
therefore, Fannie/Freddie MUST loosen their credit guidelines.
They will be impressed upon to make their guidelines looser by the powers that be.
there is a reason they are allowed to function without showing financials and with having "mystery books". it is because they will serve the purpose for which they were originally created-to add liquidity where nobody else will.
Thus, regardless of what Fannie/Freddie WANT, they will loosen. being a GSE is a 2 sided sword
step one: up the conforming limits
step two: loosen lending guidelines
step three: offload all the toxic crap from the private banks to the GSE's
step four: private bank executives cash in major bonuses
step five: GSE's tank
step six: everybody is surprised hoocoodanode?
step seven: bailout. can't let the GSE's go down the tube
step eight: bank execs mock the GSE's and talk about how private markets are always better.
Just how interested are the GSEs in buying this poo at this late date?
We'll be able to answer the question as soon as they publish guidelines and loan-level pricing adjustments.
If they say they'll buy this stuff at the same LTVs as regular old conforming, then we wait to see what the MIs' rate cards look like. (If the GSEs know that the MIs will price it to extinction, then they can look like they're playing ball with congress by publishing high-LTV guidelines, secure in the knowledge that nobody can afford to take them up on it.)
The loan limits don't matter.
What mattered was the price of oil, and people realizing it was costing them way too much to drive to the big house in the burbs. Itulip called this one years ago, as the edges collapse back towards the cities and the workplace, the big house becomes less attractive, especially as it also becomes costly to heat and cool it and pay for all the electricity, water the landscaping, etc, etc.
Once this contraction starts it can't be easily reversed. The loan limit changes won't help a bit. We're witnessing the end of the sprawlconomy.
have we just identified the mythical 33%? Can they possibly all be Realtors?! Can I possibly just now be struck by the definition of Tor being a high pile of rocks and the fact that these people are Real Tors?
YTL, I fear that is exactly what will happen. I especially love the coda in step eight. The only questions are how fast all of this will unravel and what effect, if any, a new administration will have.
Tanta,
Is it true that the law is postdated, so that many Jumbos written in the latter half of 2007 are declared, post-facto, "conforming", and can now be sold from originators books into the GSEs? If so, any idea how big a transfer this is likely to be?
I'm hesitating, by the way, to make my own estimates of potential additional refis and sales transactions
does this mean we'll get your specific estimates as soon as this info is available?
twittering with anticipation
Is it true that the law is postdated, so that many Jumbos written in the latter half of 2007 are declared, post-facto, "conforming", and can now be sold from originators books into the GSEs? If so, any idea how big a transfer this is likely to be?
Yes, that's true and no, I don't have a really good idea about the numbers on that yet, for the same reasons (don't know what the guidelines will be, don't know how the GSEs will price the credit).
does this mean we'll get your specific estimates as soon as this info is available?
Sure, why not? CR goes on the line with his predictions, why not me?
What I wouldn't give to hear Ali-G interview Dick Gaylord.
Legislating more rope for the GSEs.
Itulip called this one years ago, as the edges collapse back towards the cities and the workplace, the big house becomes less attractive, especially as it also becomes costly to heat and cool it and pay for all the electricity, water the landscaping, etc, etc.
Except in most of America people DON'T drive in to the city to work... they drive from one edge location to another edge location. Its been that way in places like Chicago for 30 years now. For every person going from Barrington or Arlington Hgts to the loop three folks go from Barrington to Arlington or Arlington to Barrington... etc. My guess is MOST cities outside on NYC are that way.
Heating & cooling the monster house - sure that's a factor. But increasingly suburbanites live in apartments too - both my adult kids do.
I understand what you are saying about the cost of energy being a factor but it will be as big a factor in the core too - bringing stuff in and waste out. The infrastructure is quite energy intensive to support high density UNLESS they stop buying stuff downtown too. That part is going to be a wash.
Sure, why not? Flippin' sweet.
If the GSEs have decent loan standards, increasing conforming loan limits is not a problem. Indeed, they way the banks are losing capital, it may be necessary for GSE guarantees (at appropriate prices) to be available for everything.
Given Fannie and Freddie's own capital issues, though, this may not make any overall difference, just shift some of the pain from the middle-upper price range to the lower ranges (since some of the lower range capital will get diverted).
This is great news for NAR and the securities industry and the folks in Vegas are all very happy! The punchbowl is back and thank God for Bush and the Vision and clarity on the hill; SIFMA thanks you!!!!! This is like the dawning of a new age, where homes are way undervalued, easy money is here and the future has very little risk; go buy your dream homes and relax!!!!
The GSEs are going to be able to use new underwriting with Covered Bonds and we will be able to pool all the subprime defaults into government backed AAA notes! This isgreat because we can use derivatives to offset the defaults and hedge out risk and get back to the business of building homes and selling un-sold homes!
In the absence of dedicated legislation for covered bonds in the US, the programme rests on contractual agreements and the pledge of assets under the US Uniform Commercial Code. The issuer is a Delaware statutory trust specifically established for the covered bonds programme while the sponsor of the programme is Bank of America NA. ('BANA', rated 'AA'/'F1+'), one of the largest US mortgage lenders.
Under this programme, BANA will issue floating-rate, USD-denominated US mortgage bonds secured on a portfolio of residential mortgage loans originated or acquired by its branch network. The mortgage bonds will be direct and unconditional obligations of BANA, ranking pari passu and without priority among themselves. Each series of mortgage bonds will be purchased by BACBI, which will finance this acquisition through the issuance of contractual covered bonds. USD-denominated proceeds from the mortgage bonds will be swapped in exchange for interest and principal due under the covered bonds in the relevant currency. The programme is designed to protect covered bondholders against the risk that, in an insolvency of BANA, the Federal Deposit Insurance Corporation ('FDIC') elects to accelerate the bank's obligations.
I just can't see this stuff going into MBS; at least standard MBS. Most likely it will be portfolioed then they'll securitize themselves.
Refi Boom!!!
Not sure why it's happening (thank yew, Helicopter Ben!) but I've received more appraisal orders in the past 2 weeks than for all of the preceeding 3 months.
Uhhh, guys? What's that floating in the punchbowl?
I doubt this will do much more than convince me now is the time to short the HBs on the inevitable bounce. CR is spot on. The numbers do not jive. 210,000 fewer forclosures because FBs in the $400-$720k range are going to get 50-125bps off their note? Do a mid loan; $600k from 2006 vintage. 6.7% and payment $3900. They could possibly get that down to 5.7% and $3500. Sorry, but $400/mo is not gonna save them.
It's been highly touted as an economic stimulus bill that will help millions of Americans - and has the backing of both President Bush and House Speaker Nancy Pelosi. In the coming year, individuals would receive rebates of up to $600 and families up to $1,200. There are other goodies, too, including tax write-offs for small businesses and an expansion of the child tax credit.
But, as the old adage goes, nothing comes for free. As part of the bill, Congress is set to rush through an increase in the mortgage loan limits for Fannie Mae and Freddie Mac (and Federal Housing Administration insurance, too) - from $417,000 to $729,750 - the first step toward a massive financial disaster in which taxpayers will end up paying through the nose.
Here's how we got to this point. Domestic and international investors hold hundreds of billions of dollars in bad debt, because U.S. investment houses sold them junk securities based on often fraudulent mortgages. Many of these mortgages were sold to unqualified buyers under terms that made widespread foreclosures a certainty once the housing market began to fall.
Investment banks and bond rating agencies sat down and tried to figure out how to describe Americans with insufficient incomes and little for a down payment as great credit risks on loans too big for their incomes. The new rules focused on credit scores, because it was a good excuse to avoid looking at income and down payment, factors that would have restricted this moneymaking fiasco.
Now, thanks to Congress, junk bond investors will be able to pawn off their bad debt to Fannie and Freddie, instead of suing the big investment houses for ripping them off. This shift will certainly doom Fannie Mae and Freddie Mac, so don't be surprised if we, the taxpayers, have to bail out poor Fannie and Freddie - to the tune of more than $1 trillion.
Why more than $1 trillion? If Goldman Sachs is correct in its recent projections that home prices in California are going to drop 35 to 40 percent, the state's losses alone would top $2 trillion, because California has a disproportionate number of jumbo loans. The irony here is that the collapse in housing prices could make Fannie insolvent even without raising the loan limit. Increasing Fannie's limit is like going on a spending spree with your credit cards because you know you are going to file for bankruptcy in a few months. Only here the taxpayer is left holding the bag. Our children will pay interest on this debt in perpetuity. It is our debt. It is inescapable.
In the coming months, Fannie and Freddie will buy up mortgages based on old, fraudulent appraisals and on loans with bogus inflated incomes. Unfortunately, many of these loans will still default.
But that's just the start. Brace yourself for another wave of faxes, phone calls and junk mail urging you to refinance at only 1 percent. With zero new regulation, the same bad actors that caused this crisis can once again inflate property appraisals and begin a new cycle of fraud.
There are firms that rent assets to people to help them fraudulently qualify for a mortgage - like loaning them money to keep in their bank account for a couple months so they can fool the lender with documented savings that evaporate the day after the mortgage is signed. Another popular ruse: The borrower pays an employer to pay him a lot of money in a fake job for a month or two so he can show a fat paycheck in his loan docs. Some real estate agents and mortgage brokers actually refer buyers to these services.
Contrary to popular myth, Fannie holds a lot of subprime debt, option ARM debt and other dodgy securities. Fannie and Freddie owned or guaranteed almost 45 percent of all mortgages in America last year. BusinessWeek noted in 2007 that Fannie and Freddie have "moved more prominently into low-documentation loans, which require little or no proof of the borrower's income." Expansion of Fannie and Freddie's reckless lending is exactly what Congress wants because it's plausibly deniable. Teary-eyed lawmakers can take to the airwaves a year from now and declare: "We had no idea Fannie could go under, but we can't cut and run now. We have to bail out Fannie and Freddie for the good of America! It's going to be a tough slog, but you're getting used to those, no?"
Those same lawmakers won't mention the fact that they get paid far more by real estate lobbyists than they do from our Treasury.
I've spoken with borrowers who stopped making mortgage payments seven or more months ago. None has received a default notice. Defaults may be much higher than banks are letting on. The data lags are growing suspiciously long. Nobody knows what's going on. Seven months without making a single payment! Will Fannie guarantee those loans because they aren't in formal default yet? Nobody wants to know, because if they know, they might be called to testify next year. That's why lawmakers want to raise the limits now and ask questions later.
This shortsighted plan poses a terrible risk to every American taxpayer, especially retirees, because Social Security money will be needed to bail out Fannie and Freddie. And even if you live in high-priced San Francisco, Los Angeles or New York - and stand to benefit from the increased loan limit - this is a horrible fraud on you, too, because raising the limit to $730,000 risks a systemic crisis that will cost far more than any temporary rebate check.
In support of the economic stimulus bill, Bush will have to face "working American families" and explain that some of their tax money is going to be spent guaranteeing $730,000 mortgages on $1 million homes. It's like some sort of upside-down communism where the poor pay the rich welfare. Why should taxes from families earning $48,000 a year be used to support expensive mortgages in New York, Los Angeles and San Francisco? Welfare for the hungry and homeless is evil, but welfare for million-dollar homeowners facing a tough refi ... well, that's called "helping the economy."
I can imagine the president's radio address playing in the heartland: "We have some families with million-dollar homes on the coasts who are really hurting and so we need you, the working families of America, to stand together with them and help them avoid the kind of home price depreciation that might leave them without a new Lexus for years."
I guess Congress' hope is that median-income families will be too busy using their rebates to buy much-needed groceries to notice that the rich folk are getting way with a new scam.
Several months ago, economist Nouriel Roubini of New York University's Stern School of Business suggested that the housing market has been effectively nationalized. At first it seemed crazy, but now it's fairly obvious. In August alone, Fannie and Freddie increased their loan portfolios by $62 billion, and the Federal Home Loan Bank by $110 billion. That total of $172 billion would come to just over $2 trillion annually - not much less than the entire federal budget.
Everyone seeking a loan, securitizing a mortgage, and buying or selling a mortgage security will now be dealing, in one way or another, with the U.S. government. This type of intervention is very expensive and will eat everything in its path, including Social Security.
If we're going to have a government-financed intervention, it should be to make sure that Social Security benefits go to those who paid for them, that the poor are fed and housed, or that the army of uninsured receive health benefits. If, as they say, we don't have enough money for those important things, then I think we don't have enough money to bail out banks and bond investors.
Don't let me down, my fellow Americans. Let's vote out anyone who dares to vote for this scam.
TH writes:
Legislating more rope for the GSEs.
TH | 02.08.08 - 1:53 pm | #
Starve the beast by feeding it so much it chokes. Hoocoodanode.
Tactically, it might make sense for the NAR to overstate their numbers. When the numbers are missed at the end of the year, NAR can complain that the GSEs didn't get the standards and paperwork out fast enough and lenders couldn't offer the loans fast enough to give buyers a sufficiently large window before the increase lapsed. They'll point to continuing foreclosures and insist that the loan limit increase be extended, or, if they have the political capital, made permanent.
Just like tax cuts. (No partisan intent here, just an observation...) Republicans frame Democrats' intent to permit the temporary tax decrease to lapse as legislating an increase. Similarly, NAR will say that letting the loan limit increase lapse is the same as Congress stealing the American dream of homepwnerhip.
Mark my words - NAR will tell you it is a bad time to buy a home before they voluntarily allow this increase to lapse.
but dryfly, the fact that the commuting pattern is suburb-suburb doesn't mean there aren't some ridiculous commutes being attempted that will influence future housing patterns. Those Chicago suburban developments (yup, more likely to be townhomes 'n' condos) clustering around Metra lines and the 'L may do much better than all the wild-eyed exurban grey McBoxes they're been scattering towards Morris and in Kane county.
And how many fewer people will be getting starter homes because the newly risky "tainted" GSE loan pool results in a boost to previously conforming mortgage rates?
Does the NAR have a projection on that one?
Covered bonds won't replace securitization - BofA
Covered bonds won't replace securitization - BofA
| Reuters
he nascent market for U.S. covered bonds will complement, not replace, traditional mortgage securities despite the crisis in many off-balance sheet transactions, the biggest U.S. issuer said this week.
Losses in mortgage debt sold by Wall Street issuers and government-sponsored enterprises have put a spotlight on covered bonds, which also are backed by pools of assets but are perceived as less risky because the assets stay on the issuer's balance sheet.
Fitch Ratings has today ( July 3, 2007) assigned BA Covered Bond Issuer (BACBI) series 4 covered bonds a final rating of 'AAA'. These securities are issued under BACBI's EUR20 billion covered bonds programme. The bonds will have a size of EUR1.5 billion, with a maturity of three years.
In the absence of dedicated legislation for covered bonds in the US, the programme rests on contractual agreements and the pledge of assets under the US Uniform Commercial Code. The issuer is a Delaware statutory trust specifically established for the covered bonds programme while the sponsor of the programme is Bank of America NA. (BANA, rated 'AA/F1+' by Fitch), one of the largest US mortgage lenders.
Under this programme, BANA will issue floating-rate, USD-denominated US mortgage bonds secured on a portfolio of residential mortgage loans originated or acquired by its branch network. The mortgage bonds will be direct and unconditional obligations of BANA, ranking pari passu and without priority among themselves. Each series of mortgage bonds will be purchased by BACBI, which will finance this acquisition through the issuance of contractual covered bonds. USD-denominated proceeds from the mortgage bonds will be swapped in exchange for interest and principal due under the covered bonds in the relevant currency. The programme is designed to protect covered bondholders against the risk that, in an insolvency of BANA, the Federal Deposit Insurance Corporation (FDIC) elects to accelerate the bank's obligations.
Well, more precisely, most Americans commute from a residential area into a job core. The distant residential areas will get most squeezed, both by the ever-increasing cost of energy and the mortgage crunch, which will hit them hardest as more recently built. The areas which will do best are the highest-density areas with the least recent building, which will tend to be the old urban cores, but some suburban cores will do well too. Nonetheless, anything remote from all cores (which includes a lot of suburb) is in a lot of danger.
Density is a big win in terms of energy use. Urban transport may use a lot of energy, but still a lot less than private cars. Smaller houses and apartment building are a BIG win for climate control.
but dryfly, the fact that the commuting pattern is suburb-suburb doesn't mean there aren't some ridiculous commutes being attempted that will influence future housing patterns. Those Chicago suburban developments (yup, more likely to be townhomes 'n' condos) clustering around Metra lines and the 'L may do much better than all the wild-eyed exurban grey McBoxes they're been scattering towards Morris and in Kane county.
I agree with you re the far flung Kane Countians & such... But metra is a spoke and hub... mostly going downtown. It doesn't help the vast majority of Chicagoans go to work suburb to suburb. So being on the L is of limited value for most.
So what will happen with the long suburb-to-suburb commutes? Folks will be incentivized by expensive energy to either move or change jobs in the suburbs so as to minimize commutes sub2sub... NOT move downtown.
Very different result from the same stimulus. BTW most of the folks I know downtown at least ONE of the couples commutes out to the burbs for work, sometimes both. They live downtown for 'other' reasons.
Density is a big win in terms of energy use. Urban transport may use a lot of energy, but still a lot less than private cars. Smaller houses and apartment building are a BIG win for climate control.
Sources please? This contradicts everthing the FHWA, APTA, DOT, EIA and every other reputable statistical resource indicates.
They party's back on everyone! Get back to your McMansions--there'll be a plasma tv on every wall, and a roasted pheasant on every table!
good times are at hand! thank you emperor bush and the people's supreme soviet for this wonderful legislation!
There may be roasted pheasants on every table, but apparently people in Pakistan are running out of flour.
- NY Times
Lovely, just lovely.
The big payoff is FHA, because of their low downpayments. I bet we'll see Beazer-type programs whereby they throw money into a pot for downpayments on 600-700K homes.
The limiting factor now is that lenders are beginning to require higher downpayments.
In addition, over 300,000 additional home sales could be generated
300k x 6% x 500k (avg) = $9 billion...
Bet that had nothign to do with it...
Density is a big win in terms of energy use. Urban transport may use a lot of energy, but still a lot less than private cars.
its the water, waste water, food, consumer goods & garbage 'flux' in and out that makes high density energy expensive... if you have to haul the food in & garbage out & store a reasonable supply in high density - that offsets much of the benefits of going 'carless'.
Its not the people - its moving their stuff that makes high density almost as or more expensive. No one thinks of that when they brag - oh I don't have a car, energy won't effect me. Right.
Hey,
What happened with this story????????
Aug. 10 (Bloomberg) -- The Federal Reserve added $38 billion in temporary funds to the banking system through the purchase of securities including mortgage-backed debt to meet demand for cash amid a rout in bonds backed by home loans to riskier borrowers.
I think one thing we can be fairly sure of, the uncertainty of the final terms will cause a freeze-up of the market for homes in the 500-750k range in places like CA. What buyer, who already has time on his side, wouldn't wait to see if this means he'll get a much cheaper mortgage?
BTW, there was something on Bloomberg about the mortgage insurers raising rates and tightening terms. To do a GSE with less than 20% down (30% in Calif now, isn't it?), you have to buy the insurance.
I have a feeling, when all is said and done, this raising of the GSE's limits will have no material effect.
Way OT, but sorry, a pet peeve:
"The numbers do not jive"
NO! It's jibe, gibe, or gybe. Please!
Irregardless, continue with lively discussion.
NAR -- National Association of Realism.
"just shift some of the pain from the middle-upper price range to the lower ranges"
Hmmmm...perhaps we have discovered what the pigmen are really up to?
I never said they'd necessarily move downtown, I was saying that long commute would still have an impact on where people decided to live which you seemed to be dismissing. And while they may not move back into the Loop per se, they'll likely move back into the urban core -- the UA, not the Central City of the CBSA. The availability of Metra was a stand-in for a variable that might prove influential in determining which of the older suburbs might do better than its neighbors -- could just as well have chosen something involving mixed residential/commercial use to minimize shopping trips. I used fixed rail transit infrastructure because they've certainly been building a lot of those townshouses along the Purple line in Evanston and beside the Metra line in Arlington et. al. I'd kill for some good peripheral 'L options. The proposed Silver Line is too close in.
OT....
Google Montage
Montage-a-google redirect
try the 'mortgage pig'
from the happiness blog...
The Happiness Project: It's Friday: time to think about YOUR Happiness Project. This week: Identify the problem.
I'm sitting wondering how the people here can be so smart about so many things yet have no interest in debunking the wild cenurban myths promulgated by two generations of urban planners. Transit does not save energy. With the singular inexplicable exception of NYC urban areas are no less energy intensive than their exurbs. As Dryfly notes the operational costs of density more than offset any ephemeral economies of scale. Worse, transit is massively subsidized. that means for things like energy any incremental cost increase has typically 2-3 times the impact on fare structures. As much as James Clusterfuck Nation Kunstler would like to paint a long emergency sending us back to the ghettos the basis for those predictions have been entirely debunked. There's a reason I call my blog Exurban Nation. If things are gonna get that bad it will be the core and cenurbs that suffer. People forget they are only just now enjoying a brief pause in a multidecadal period of decline. Only NYC of all the old cities is above its 1950 population high even today.
Watch for Bush to sign the stimulus package and for Fannie to announce big losses and and delinquencies
I suspect that this won't make much of a difference. The markets are falling, it won't matter much if you raise the limits of the GSEs if the houses and borrowers don't qualify for those raised limits.
I had posted this CNN/Money article a couple of threads ago, which seems to say that refi's are only happening for a privileged few that happen to qualify and have enough LTV (>20% or so) left to give the lenders some cushion in the falling market. I suspect that this sort of standards based credit crunch is going to continue to happen even with the raised limits.
"Refinancing: Only for the privileged few" --
Refis: Who can do it - Feb. 8, 2008
Congress could have pegged the new conforming and FHA limits to a widely used index of median home prices. OFHEO has one, and so does the Federal Housing Finance Board, and even the Realtors. Those entities gather, fact-check, and publish home price data.
But Congress pegged the new conforming and FHA limits to a median price index to be published by HUD.
This index does not yet exist. HUD has 30 days to publish one.
Right now, this is how HUD calculates FHA limits: It collects median house price data from the FHFB and the NAR, and picks the highest median price for a county in each MSA. But a HUD official tells me that they're not sure they'll use those data, or that method, to calculate the new conforming and FHA limits.
The GSEs and lenders are just going to have to wait, I guess.
Irregardless, continue with lively discussion.
english police | 02.08.08 - 2:24 pm
Yo hep cat. Dun matter mewise you don' speak jive. On the bye and bye my man, wicked bit of self deprecation there wif da use of that nonstandard word "Irregardless."
I never said they'd necessarily move downtown, I was saying that long commute would still have an impact on where people decided to live which you seemed to be dismissing.
I never dismissed moving OR quiting to be nearer work/home - I said that will happen - it just won't be a net migration to the core... it will be a round robin shuffle along the edge.
scav look where the job growth is... its not in the loop or anywhere near it... its in Naperville and Downer's Grove... an Arlington Hts. Similar situation for most cities today including mine (Mpls St Paul)... folks move from Maplewood to Eden Prairie instead of commuting when energy gets too dear... there are fewer and fewer jobs downtown relative the population of the MSA.
Rob Dawg -- About your "transit is subsidized" argument -- I thought that the roads aren't subsidized either, and that gas taxes aren't enough to cover it. No, I don't have a source handy and I have to get back to working.....
Excellent post, Bork...
"Transit does not save energy"
An overwhelming amount of research contradicts you. However, the devil is in details.
Jive turkey ain't got no brains, anyhow.
Supposably I be self-depracati
Sheesh, what lousy self-editing. My point was that I thought the roads were basically subsidized too, and that drivers don't pay their own way either.
This article made me want to find Lawrence Yun and ask him what he's smoking. I think it's crack.
Economist: Seattle-area home prices manageable for typical workers
Realtors told area is underpriced if that's the case
Seattle-area home prices are manageable for typical workers, according to the chief economist for the National Association of Realtors.
"You may even say Seattle is underpriced if you believe Seattle is becoming a superstar city," Lawrence Yun told area brokers in Bellevue on Thursday. "Seattle is underpriced in relation to other West Coast markets." . . .
Down from a recent high of $481,000 in July, the median King County house sold last month fetched $435,000, up from $429,495 in January 2006, according to the Northwest Multiple Listing Service. January's house sales volume was off nearly 31 percent from a year earlier, whereas the number of houses on the market jumped almost 56 percent....
Economist: Seattle-area home prices manageable for typical workers
The average worker's pay in Seattle is $47K. How the heck does Yun arrive at the conclusion that someone earning $47K per year can afford a $435K house? Yun's stark staring nuts!!
Worldwide, investors lobbied their govt's to demand Ms. Rice tell Mr. Paulson to relay their message to Mr. Bush who informs Congrees to fix this f'in US mortgage-based securities mess, or else. Period.
Job Growth has been under the same influences as Population growth so I don't see that we can necessarily interpolate that trend continuing into the future either. I think my core definition is larger than yours (I'm thinking along the lines of the cenuss Urbanized Areas) so we're probably talking about the same phenomena. I just don't see Rob's beloved Exurban Fringe being the hot spot going forward - except maybe for barn re-conversions if things get really really bad (some already got tractor, yea! combine size garages).
Slightly OT:
This is creative - rent a million dollar home for $1000 a month: all you need to do is bring your designer furniture and keep up the house till it sells!
craigslist | Page Not Found
Sheesh, what lousy self-editing. My point was that I thought the roads were basically subsidized too, and that drivers don't pay their own way either.
Some do, some don't depends on the traffic density, state gas tax & toll situation.
Point though is cars vs buses is only PART of what you 'move'. The stuff we consume counts in the balance too. Urban centers suck resources in from HUGE areas and because they can't recycle or dispose of much locally they then send it all out again. That is a huge flux of stuff... and very energy & capital intensive.
Compare that to much smaller cities or towns where that local flux is less but the trade off is that people lug some of that shit themselves in inefficient autos.
Point is for high consumption societies it is almost a wash. If the new urbanists all owned nothing more than a few changes of cloths and a hemp grocery bag they used to fill their mini-fridge everyday on their walk to and from work... then 'yes' the city is less energy intensive.
Most new urbanists have almost as much crap as suburbanites and the infrastructure that supports them is MUCH more intense - so that's a moot point.
You have to look at the whole structure of support to see how vulnerable we all are... suburbanites get a bum rap and city dwellers a free ride in that respect.
People won't necessarily retreat to the urban core, but they'll clump up closer to where jobs are most available and goods and services are most cheaply transported.
I will agree with the above poster that all transit is subsidized. I'd be curious to know how the 'burbs would have developed if the urban freeways had largely been privately-operated, privately-funded toll roads.
Why is Fannie even in business, just to support NAR and to be a conduit for mafia cash laundering?
Why are they a corporation?
Fannie Mae was originally founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.
In 1968, to help balance the federal budget, Fannie Mae was converted into a private corporation. Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae).
This downturn is also being driven by psychology. People are actually stopping and asking "what is this property worth". Restrained consumer spending will also inhibit economic growth. I have overheard many people mention they are cutting back. Some cut cable they didn't need, decided they didn't need to eat out, canceled a gym membership they weren't using, etc. Yesterday in Wal-Mart I overheard a kid say he stopped buying soda because it wasn't worth $500 dollars a year to him. And this is in an area that hasn't really been hit.
make my interpolate an extrapolate and I'll have fries with that. And I think basic physics would suffice to suggest that smaller houses, but especially group housing would be more thermally efficient. Something along the lines of less volume and/or surface area, but not like it's proof or anything.
We went from sippin' kool-aid to bathing in punch.
Now that's a party I can get behind.
Go and live in Tokyo for a while and you'll discover exactly how many people you can schlep around with urban transit. They handle 6 million + every day on the subways alone. 20 million people in the Tokyo-Yokohama area. And this is in a district that still has 6% land devoted to agriculture (I had a melon field right next to the apartment complex I lived in.)
What Chicago lacks is sufficient mechanisms for getting across the spokes of its different train lines. I hate having to go out to Northwestern U., because it's an hour-and-a-half by train and requires 2 changes. (Driving by car is an hour and then I have to deal with the lack of parking.)
Rob Dawg -- About your "transit is subsidized" argument -- I thought that the roads aren't subsidized either, and that gas taxes aren't enough to cover it. No, I don't have a source handy and I have to get back to working.....,/i>
POV travel is subsidized accidentally on the order of perhaps half cent per passenger mile to possible one and a quarter cents. This is typical of periods where the gas tax is fixed for a long time. it is also a bit of underhanded government theft. By deferring maintenance costs go way up creating unnecessary expenses. Regardless, when the fuel tax is next adjusted it will undoubtably cover the recent shortfall and them some until the next time.
Transit on the other hand is so massively detested by even its most ardent supporters that no more than a handfull of bus lines in special circumstances anywhere in the nation comes even close to cover merely the understated operatinal costs of the service. In 2006 the top 50 service providers collected $8,847.9b in fares and spent 34,152.8b for a whopping 74% or greater than 4:1 subsidy.
There's a reason you don't have a source handy, it doesn't exist. Oh and in addition to the dirty books on government infrastructure where do you think most of the money for transit comes from? That's right with the money siphoned off for transit POV vehicles pay far more than they cost.
"Irregardless" is non-standard and generally considered poor English.
We can't all live in caves and be entirely self-sufficient farmers miles and miles away from everywhere in our mixed agricultural fields either -- and lets not get started into the energy demands of modern or organic agriculture because we'd never end. The trick to is find a decent midpoint. Same with residential structure and density. blah blah.
scav we mostly agree - however there is a place for exurban living. Imagine trying to build a facory in the loop - sure some brownfields down by the skyway maybe butthen you have a commute again.
The point Bob Dobbs makes about living close to work AND distribution hubs wherever that might be is the most salient point I see. For some it will be in centers others on the far flung fringe... for most it will be middle density suburbs.
This new 'stimulus package' won't change any of those trends either way.
Re: n 1968, to help balance the federal budget, Fannie Mae was converted into a private corporation. Fannie Mae ceased to be the guarantor of government-issued mortgages
Fannie has a market cap of $29 Billion and look at the damage that mis-run corrupt corporation has been linked to in this subprime implosion!!
Re: In New York, Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac, the two biggest buyers of U.S. mortgages. He also sued First American Corp.'s eAppraiseIT LLC for allegedly caving to pressure from Washington Mutual Inc., its biggest customer and the largest U.S. thrift, to inflate values.
Cuomo said in November he uncovered a ``pattern of collusion'' between lenders and appraisers to bolster home values.
$4.7 Trillion Market
The investigations call into question $4.7 trillion worth of mortgage securities guaranteed by Fannie Mae and Freddie Mac, and may limit the availability of home loans to borrowers with good credit, CreditSights Inc. analysts Frank Lee and Sarah Rowin said in a Nov. 8 report.
``If there is a disruption in Fannie and Freddie trying to buy conventional loans, that would be very, very bad right now,'' Lee said.
The valuation crisis in the credit markets may cost banks and investors $400 billion, according to November estimates by Deutsche Bank AG analysts.
At least two GOP senators have expressed opposition to the proposed yearlong increase in conforming loans limits, arguing that the government should first establish a new regulator with the power to reduce the $1.5 trillion mortgage holdings of Fannie Mae and Freddie Mac.
I don't know if this was Rob Dawg or someone else that said this but it is certainly true that smaller single-story ranch houses on good lots with a southern exposure will be in much higher demand going forward (as opposed to McMansions on postage stamp lots.)
The reasons for this are myriad but generally have to do with better energy efficiency and the ability to grow some of your own food and raise some animals. America will be going back to the co-op model or maybe the Russian model of growing a good portion of your own food and becoming mostly self-sufficient on your property.
"Yesterday in Wal-Mart I overheard a kid say he stopped buying soda because it wasn't worth $500 dollars a year to him. And this is in an area that hasn't really been hit."
People have gotten into the habit of buying a great many things that they don't care much about. When money gets tight, there actually can be a lot of things to cut back on that don't hurt much at all. To the detriment of the consumer economy.
You can go to the pet store and buy a cat toy for $12 that was made in China for maybe 35 cents. Or you can make the same thing yourself out of a couple of pieces of cardboard and some string.
The soda statement rang a bell with me because I'd recently done some research on the Internet and found some absolute maniacs making their own carbonated soft drinks at home with the usual easily-available-at-any-hardware-store parts. For about a dime for two liters. If America decides to adopt frugality as the new lifestyle, expect to see a lot of things like this going on. Hell, what about the people who operate informal, unlicensed restaurants in their homes?
Continuing the off topic discussion of density and energy efficiency, wouldn't the cities and nations of Europe make a sound argument that denser cities are more energy efficient. Off the top of my head, I'm thinking the Europeans use half the energy Americans do on average.
Their higher taxes on gasoline have a lot to do with that, but the city design also must come into play.
Rob Dawg: Not just New York. In toronto:
The results also show that low-density suburban development is more energy and GHG intensive (by a factor of 2.0-2.5) than high-density urban core development on a per capita basis.
Two-fold is a lot.
wow, FINALLY a BIG down move in GGP with corresponding up in SRS.
This is truly a very sad case of Congress pandering to special interests. The Housing Bubble was the result of lose lending standards. How does anyone think that raising the loan limits will reign in crazy lending?
More importantly, I hope that anyone concerned with affordability realizes that the Congress and President has voted in favor of keeping house prices even more out of reach for future owners. Way to go.
When the government initially turned to GSEs as a means for improving housing finance (Fannie Mae was converted to private ownership in 1968 and Freddie Mac was established in 1970), no fully private firms could create profitable, high-volume links between the bond and mortgage markets. Today, numerous private groups can perform that service.
Such unsubsidized firms cannot compete directly with Fannie Mae and Freddie Mac because the federally enhanced low borrowing costs are available only to the GSEs. Accordingly, the private firms currently fund mortgages that FNMA or FHLMC are not eligible to purchase. If the government eliminated the subsidy to Fannie Mae and Freddie Mac, the mortgage markets would not retrogress to a pre-GSE condition. Rather, fully private intermediaries, probably including Fannie Mae and Freddie Mac, would provide the funding links between markets. Improving access to mortgage finance may have been a social benefit worth paying for in the past. It is now available without subsidy from fully private firms.
In 1968, Fannie Mae was split into two corporations: Ginnie Mae, which stayed associated with the government, and Fannie Mae which became a private stockholder-owned corporation.[3]
The role of Ginnie Mae, since 1968, is to provide a secondary market for government-insured mortgages; it is on the federal budget and its programs are backed by the full faith and credit of the US government. Through Ginnie Mae, the federal government made its initial foray into mortgage-backed securities in 1970.
The Federal Home Loan Mortgage Corporation, also known as Freddie Mac, was established by Congress in 1970 to be a secondary market in mortgages for the savings and loans industry. It was privatized in 1989 into a private stockholder-owned corporation.
Fannie Mae and Freddie Mac are not backed by the full credit and faith of the US government. Both institutions were created by the federal government and have federal corporate charters. The market perceives an implicit guarantee by the US government, because like other giant financial institutions, such as Bank of America, the government is unlikely to let these institutions fail in the event of financial problems. As a result, these institutions pay low credit risk premiums when they borrow in private capital markets.
The first MBS was brought to market by Ginnie Mae in 1970. Throughout the 1970s and early 1980s the major type of MBS security was the pass-through security (discussed in details below). A major innovation for the MBS market occurred in 1983 when Freddie Mac issued the first Collateralized Mortgage Obligations (CMOs). These new instruments appealed to investors with special maturity and cash-flow requirements. However, the first CMO issues faced complex tax, accounting and regulatory obstacles. Much of those legal issues were resolved with the passing of the Tax Reform Act of 1986 which included the Real Estate Mortgage Investment Conduit (REMIC) tax vehicle. After 1986 the issuance of CMOs grew enormously. The new tax law also allowed for the creation of other mortgage instruments such as STRIPs, floaters and inverse floaters (see Babe Ruth Bars in CaddyShack).
One of the greatest developments in the debt market in the past 30 years
was the development of the mortgage-backed securities
english police writes:
"Transit does not save energy"
An overwhelming amount of research contradicts you.
No, you are just plain old everyday ordinary wrong. The only place that even tries to make this case is the APTA and I have about 800Mb worth of data and analysis ready to let loose on them if you try.
Let's start with baby steps: http://cta.ornl.gov/data/tedb26/Edition26_Chapter02.pdf
Table 2.12 which I have been citing for far more than a decade.
Cars: 3,496 BTU/passenger mile
Buses: 4,318 BTU/passenger mile.
go ahad, dig into the details, think you discovered my error and get back to us. Yes, rail supposedly uses less and personal trucks more but the net result even when included is TRANSIT DOES NOT SAVE ENERGY. It really is that cut and dried.
Bob Dobbs said: "People have gotten into the habit of buying a great many things that they don't care much about. When money gets tight, there actually can be a lot of things to cut back on that don't hurt much at all. To the detriment of the consumer economy...."
That's one way of looking at it.
Another is that when money gets tight you prioritize your spending, which may only re-distribute the same amount of consumer spending.
Like the anecdote of the kid in Wal-Mart who doesn't think soda is worth $500 a year to him. He's obviously thinking in terms of what else that money could buy that would mean more to him.
S.
I really need to find about the Fed budget in 1968; didnt we have a war back then, civil rights, what triggered the government at that point, to need a Fannie as a private corp? Who did that? Any historians here?
Rob Dawg,
Actually, you & Kunstler aren't that far apart. His ideal communities are smaller and surrounded by farmland, not so much the urban metropolises.
Darth- I know. Do you know I know or were you just sayin'?
Boy, I wish I had access to Transportation Research. query_tool?
Dryfly:
Transport distance for goods is basically the same whether you're in a small town or New York. Everybody consumes stuff from international sources. Small-town residents buy Chinese stuff at Walmart and corn syrup ultimately from Iowa, just like New Yorkers buy Chinese stuff at Macy's and food from the same places. But in any case there are large efficiencies of scale in transport. Cost per pound-mile is way lower in an 18-wheeler than for me in my car, and lower still in a railcar. As a result we spend more than half out transportation energy schlepping people around. Hence the twofold energy advantage for urban over suburban living. (see above)
english police, LOL! I was just giving you crap.
So I think I will coin the term "Volatile Fridays"...as it seems to be the norm...
Rob, the advantage of urban living is primarily that you don't have to go as far. Nobody commutes 50 miles within the city limits of Chicago but a lot do out in the burbs. Energy per mile is often higher (stoplights) but total energy drops, a lot.
Rob Dawg,
The car vs. transit thing may be even more favorable to cars than is indicated by those statistics, too, when you consider:
a) the relative income of those in the cars vs. those in the buses (i.e. more efficient resource allocation).
b) the time lost by transit passengers due to slower modes and indirect routing.
Not having to travel 49 point gazillion miles for groceries probably makes more of difference in energy consumption than abstracted bus v. car stats per passenger/mile, but that's the geographer kicking in. Making it really easy and cheap to repeatedly travel long distances for staples is a bad side-effect you're not capturing in those stats either. I can remember my parents shopping once every two weeks or so for groceries (milk and veggies showed up maybe weekly).
The stuff we consume counts in the balance too. Urban centers suck resources in from HUGE areas and because they can't recycle or dispose of much locally they then send it all out again. That is a huge flux of stuff... and very energy & capital intensive.
I'm not seeing how this gives any advantage to any of the *burbs. It's not like they produce anything locally. Both cities and the burbs are importing all the crap they use.
Dawg: Yeah, it's pretty amazing how bad the per-passenger numbers get when you assume that there are only nine people on the bus.
Private biz. can not compete with GSE's and GSE's can not compete with gov.(FHA)- if quality is not an issue. So in a long run, we are all FHA. It is not very hard, is it?
Hence the twofold energy advantage for urban over suburban living. (see above)
What part of the TEDB26 don't you accept?
BTW, ever heard of the UHI effect? Care to speculate on the cost of air conditioning?
Your later point of distance is equally specious. It ain't true. People have the weirdest notions about the energy intensities of various built environments. Once you start really drilling down and find out transit takes twice as long then you can get into lost opportunity costs of the drag on personal productivity and the general economy.
Rob Dawg-
Are you accounting for avg home size? I live in 750 sq feet with my wife, kid and dog. And this is big compared to the flat we had in London! I'm sure if I lived in an exurb, I'd have several thousand square feet more. Also, urbanisation has historically proved the best form of contraception - I'm sure I'd be driving to more soccer games if I lived elsewhere.
From my experience, societies with high energy prices tend to be dense. And the higher the energy price to users, the denser. This could be a historical or political artifact, but there is a correlation.
Urban areas may require more energy per weight transported, but my guess is that city dwellers end up buying less stuff, heating and lighting their dwellings less (I left the thermostat at 50degrees in college and sponged off the heat coming through my neighbors' walls), making shorter trips, and using more fuel efficient modes of transport.
Tanta,
Did they raise the GSE portfolio limits?
Dawg: Yeah, it's pretty amazing how bad the per-passenger numbers get when you assume that there are only nine people on the bus.
It isn't an assumption, it is reported data and it is very accurate. The NTD is the place to go for more.
It always amazes me the level of resistance to giving up long held assumptions in the face of irrefutable data. Nobody here batts an eyelash at the idea that long held models are breaking down but reference a table going back decades that shows clearly and succintly that transit does not save energy and sucks both time and limited public resources and all heck breaks out.
Yeah, because we've designed shit poor transit systems in the U.S., they turn about to be inefficient in terms of time, so we can then write them off and get rid of the systems. Got it. And time spent on a bus (possibly reading) is by definition wasted and is economically better spent and worth more at home where you might just be reading as well.
345-foot building at Centerpoint tops sister high-rise
30-story condo tower has become the East Valley's tallest building, nabbing that distinction from a sister tower that set a record of its own just nine months ago.
The second tower of Centerpoint Condominiums in downtown Tempe has reached 345 feet.
By comparison, the first tower is 258 feet. Hayden Butte stands at 332 feet.
Builder Avenue Communities celebrated the milestone Wednesday, trying to convince the public the views are just as grand as what it plans on the ground floor.
About 25 percent of the condos in the first tower are reserved, Losch said.
He acknowledged the troubled housing market but said he figures a federal economic stimulus package will boost the real estate market within months.
They only have deposits on a 1/4 of the 1st building(it used to be 40%, but that many people have backed out) none in the 2nd and they're supposedy building 2 more towers.
Yeah, $800 government loans are gonna save these clowns.
Why are the GSE's tanking? Shouldn't raising the conforming limits increase business activities and profits for the GSE's?
Ok Rob Dawg --- I'll take another stab at this since you're taking on all comers pretty well so far.
Since you mention transit time, how about the incremental benefits of transit? I'm not talking about comparing at the aggregate levels all personal vehicle use, I'm thinking of the marginal impact of one additional driver on the road, especially the impact on congestion during peak driving times. I'll take my answer off the air.
Yeah, because we've designed shit poor transit systems in the U.S., they turn about to be inefficient in terms of time, so we can then write them off and get rid of the systems.
We spend tens of billions building and running them every year and they cannot even come close to highly taxed POVs. For anything other than an urban subsidy the answer would be obvious but there's this amazing blind spot concerning transit that somehow thinks it great to give $250k/yr Wall Streeters choo-choo rides at 35¢ on the dollar.
Regardless of relative energy use, urban centers are highly dependent upon cheap, plentiful energy. When oil & natural gas become scarce, it'll be damned hard to heat urban residential towers via coal, firewood, or solar. What about the energy required just to continually push water up every one of those tall buildings?
FYI: Fannie History Lesson
The seminal iteration of the act, however, occurred near the midpoint of its history,
with passage of the 1968 Housing and Urban Development Act, which closely followed the assassination of Martin Luther King Jr. and the
urban rioting that ensued.
The 1968 act authorized a new program, the Federal Housing Administration (FHA) Section 235 homeownership program, and required the president to report to Congress on the housing needs of lower-income families and on the progress made toward expanding homeownership and equal housing opportunities, and assuring reasonable shelter costs (emphasis added).
The following decade saw steady progress in mortgage markets. In 1975, S&Ls held 55.8 percent of the market share. The secondary
markets, however, were beginning to take off. In the Housing Act of 1968, Fannie Mae was authorized as a privately owned corporation. A
portion of its portfolio was transferred to the newly created Government National Mortgage Association, which remained a government-
owned corporation. Freddie Mac issued the first participation certificate in 1971.
Fannie Mae, a government corporation until it was spun off by the Housing Act of 1968, bought the entire project mortgage from the sponsors lender at market rate, absorbing the difference between that rate and 3 percent. Production of (d)(3)s was constrained by a lack of qualified sponsors ready to come forward, as well as by government-imposed cost constraints and limited availability of sites. It was also unpopular with Treasury and budget officials be-
cause the governments purchases of large project mortgages were a direct hit on the federal budget.
Until 1989 Fannie Mae was limited by its charter to providing supplementary assistance to the secondary mortgage market.
The Department of Housing and Urban Development, Fannie Maes designated government supervisor, had the authority to approve any new activity. Freddie Mac was governed by a board of three government officials who also served as members of the Federal Home Loan Bank Board.
Today Fannie Maes charter authority has expanded to permit it to respond appropriately to the private capital market, and HUD has given up its authority of prior approval over Fannie Maes activities. Shareholders, rather than government officials, now control Freddie Macs board of directors. The changes took place in the
context of a legislative environment distracted by larger events such as the savings and loan debacle and financial difficulties with major
HUD programs. The government seemed virtually unaware of the extent to which it was losing control over the largest GSEs.
Federal law has established two institutions that resemble GSEs in their financial characteristics but are effectively owned and controlled by the government rather than private owners.
The government created the two, the Financing Corporation (FICO) and the Resolution Funding Corporation (REFCORP), to fund the bailout of the failed savings and loan industry with billions of dollars that would not appear in the federal budget. Under current budget rules
rather than the rules that applied when the two institutions were created in the 1980s, their borrowings and outlays would now appear in the federal budget. This book does not discuss the two institutions except in passing.
Rob Dawg,
The average numbers for buses are not really a good comparison for energy efficiency.
1. Buses are more efficient for moving people if they are closer to full capacity than cars are.
2. Urban sprawl and low density development makes transit a less viable means of transportation than a car.
3. Therefore the urban planning of most American cities lowers the number of people riding the bus.
4. Therefore the "average" fuel efficiency of a car in America is better than a bus.
Compare the numbers for a New York, London, or Barcelona and see what you come up with. If you have 20 to 30 people on a bus, that energy efficiency is a factor of four better for the typical bus. Conflating the actual efficiencies of average bus transit efficiency for the low-density American city is a straw-man compared to the high-density urban living most urban planners and transit officials would advocate.
I'm not seeing how this gives any advantage to any of the *burbs. It's not like they produce anything locally. Both cities and the burbs are importing all the crap they use.
Has to do with the number of pick ups & reroutes. When you consider the amount of handling & rerouting of small lots in cities its amazing. That is not energy or capital efficient transportations. The efficiency of handling people en masse is completely reversed when handling stuff. This is especially true in reverse, with garbage & snow removal and such - the super high density actually works against efficiency IF the goods actually have to be distributed & picked up... its analogous to the last mile analogy in internet... that is where all the bottleneck is.
Big Box & Super Center distribution is very efficient. Its possible to go straight from factory to Big Box - the rest of the distribution chain is your SUV.
Face it - modern suburbs were designed around the stuff we buy not the people buying it. It should come as no surprise then that in a high consumption economy that suburbs would make more 'sense'.
Like I said above - change all that to a society that consumes & owns a lot less (a LOT less) and then density starts to win out again. What good are Big Boxes you never get stuff in?
There is an equally silly mythology surrounding rural & small town centers vs WalMart...
To a great extent the urban-suburban-rural argument is about how we imagine we live or should live not how we actually live.
I'm thinking of the marginal impact of one additional driver on the road, especially the impact on congestion during peak driving times.
No doubt there is congestion relief but at what cost? Turns out the between the surface capacity they take up and the diversion of funds they require the net very likely is that transit causes congestion. A freeway lane can handle 3400 passengers per hour and there are very few rail lines that do that. giving the former up for the latter is a net loss after costs.
Darth- thought so.
RD- In a nutshell: The automobile-oriented transportation system we have and the externalities arising from its use (the latter often ignored by govt. and anti-transit research) is, in the aggregate, less efficient. It is more economically efficient, but the ROI on auto-oriented projects has been declining and possibly may be negative today. Hence a growing buy-in to alternative transport on the part of the feds. Even under this administration (SAFETEA).
I need to sign-off, but I'd love to return to this thread Monday to see credible research on both sides of the debate. I think a researcher named Shoup (sp?) supports your point of view, RD. I'd like to see his latest work. Anyway, I view this debate to be much like the climate debate, and directly related.
Sorry, that last anon was me
You tards realize that anti-car/suburbanism doesn't necessarily mean pro-super-dense urbanism? Find another strawman.
I drive myself to church on Sundays... does that count at "mass" transit?
query_tool:
I'll take that one - in most cases adding an incremental amount of transportation capacity is MORE expensive using transit than by providing comparable road improvements. This isn't always the case, but in most U.S. cities all the really good potential transit routes have already been built adding more transit coverage is far more expensive than improving road transportation. This is especially true if you are in an area where the freeways don't have ramp metering and good freeway service patrols (two of the best transportation improvements any area can make)
english police:
At least in the San Francisco Bay area the reverse is true. We spend about 2/3 of our transportation money on public transit which moves a whopping 9% of commuters. In every case I can think of where an actual comparison has been made, the highway improvements turn out to be significantly cheaper but the local powers that be build the transit option anyway.
Hahaha this is classic...
FICO: Don't blame us for mortgage mess
The CEO of Fair Isaac, the company behind the FICO credit score, stands by his company's credit scores but sees more pain ahead for consumers.
Fair Isaac CEO: FICO criticism isn't 'fair' - Feb. 8, 2008
Winston: Right, economically more efficient. I thought the debate was energy. I'm signing-off now. Really.
"That said, I will go on record as being stunned and surprised if we see more than half of NAR's dreams come true."
Seeing as NAR is #3 on the "biggest givers in American politics since 1989" donors list, NAR's dreams seem mostly bought and lobbied for of late.
Can I have my lump of coal now, please? In stead of waiting until after my taxes are due.
Oh, and thanks to all you youg folks for the $600 loan. And, for paying it back for me.
Actually, I got an advance from H&R Block, to sign up for CR4RE.
Lee
English police,
I think the economic efficiency is the best measure of the total resources consumed and therefore the best indicator of true energy use. The reason I say this is becomes clear when I suggest that we all move from cars buses and trains to rickshaws. Yes, they're usually slower, but they don't use any energy except to build the rickshaw, which is negligible compared to what is required for a car or a bus.
However, the truth if we all traveled around on rickshaws (at least those few of us who weren't employed as rickshaw drivers) we would still have considerable energy consumption to produce the food and housing for the rickshaw driver and his family that wouldn't otherwise be dedicated to transportation. Lifecycle cost is by far the best way to determine the total amount of resources used by a transportation mode. This includes the direct cost of the vehicle and infrastructure as well as the cost of the time spent using that vehicle.
Does anyone know if the stimulus package changes the GSE portfolio limits? If not, raising the CLL is a huge nothingburger.
At least in the San Francisco Bay area the reverse is true. We spend about 2/3 of our transportation money on public transit which moves a whopping 9% of commuters. In every case I can think of where an actual comparison has been made, the highway improvements turn out to be significantly cheaper but the local powers that be build the transit option anyway.
Los Angeles MTA spends 78-84% (different methodologies) of their budget on 2.7% of their passenger share.
english police writes:
Winston: Right, economically more efficient. I thought the debate was energy. I'm signing-off now. Really.
Time and energy and money are fungible. Besides the conversation moved on after all the reasonable people looked at the data and accepted that transit in the US does not save energy.
Winston -
Total cost, which includes externalities, would be a better measure. All transport produces polution.
One can argue about the cost of this polution to society (increased death rates etc.) but it's clear it isn't priced efficiently. Some sort of carbon tax would.
I really liked the UK's $6 gallon tax on gas, but that's my choice because I benefited (high income bike rider, so the benefits - fewer cars on road, lower income taxes, far outweighed increased prices of food etc.)
NAR -- National Association of Realism.
Elvis | 02.08.08 - 2:25 pm | #
NAR -- Not Associated with Reality
"This is truly a very sad case of Congress pandering to special interests."
Well that is what the Congress and Exective branch have become, what else does one expect given the funding requirements for running for office?
"That's one way of looking at it.
Another is that when money gets tight you prioritize your spending, which may only re-distribute the same amount of consumer spending."
Uh, if money is tight, you spend less, right? Not just different. And if you can, you save money as a cushion against an uncertain future...
My parents were depression babies, and when money was tight they did not spend the same amount of money in different ways. They spent less money...
Or are you just having fun with debating skills...
Um, I looked at the data and if the load factor on the bus is increased to 10.4, then it is equivalent to cars in BTU/passenger mile. The MTA has a load factor of 19, Seattle 13, and Houston 10.5 (and the commute in Houston is hellish). Minneapolis came in at 10.3 or so. Rail was already listed as being more efficient than cars, so I'm not bothering to look at it.
So busses do save energy when people use them in great enough quanties. Shocking and suprising.
As said earlier, this is just step 1. Step 2 is to losen the loan limits to "help the home-moaners." Step 3 is permanently high housing prices resulting in socialized housing - you can only afford to buy if the government lets you own a house. Think of the power that will result from socialized housing!
DaveNYC,
Toss in one more passenger in every 10th car and no bus anywhere comes close. If wishes were ponies and all that.
Did you look at the other tables? Transit efficiency has been falling for decades and POV travel efficiency has been rising for decades. this latter despite falling average passenger counts falling. Someone else mentioned it but is bears repeating. Because transit is circuitous equivalent trips are longer in distance on transit substantially erasing the advantages some agencies have with higher load factors.
You're ignoring the point that three of those citys' systems are already more efficient than cars. Are there bus systems out there that don't make sense from an energy conservation standpoint? Sure. Is your blanket statement that public transit is teh sux correct? Hells no. Many bus systems are more efficient and the gross numbers for rail indicate that it is more efficient (though it's possible that there's some rail systems that are not).
The biggest argument for transit is that its better than having drunk-driving shits like Rob Dawg on the road.
daveNYC writes:
You're ignoring the point that three of those citys' systems are already more efficient than cars.
No I am not. What makes you think their energy efficiency is average? Congestion kills LAMTA averages for but one example. LAMTA CNG vehicles also get poorer mileage even after adjusting for different fuel types. And I haven't even gotten to the recent questionable accounting from the APTA that makes some of these systems underreport their energy consumption.
Are there bus systems out there that don't make sense from an energy conservation standpoint? Sure. Is your blanket statement that public transit is teh sux correct? Hells no. Many bus systems are more efficient and the gross numbers for rail indicate that it is more efficient (though it's possible that there's some rail systems that are not).
It's called cherrypicking and it is generally frowned upon in making legitimate comparisons. You wanna compare best routes? worst routes? Fine but don't try foisting off the very best transit corridors against the POV averages. Poor sportsmanship that.
Regarding urban efficiencies, here's a repost of David Owen's New Yorker article on the subject.
NYC is the Greenest City in America
So I'm cherrypicking my statistics (because when I think of a place with great public transportation, I think Houston), and even then it doesn't matter because the APTA has bad statistics?
You said Transit does not save energy.
I looked at your stats and came up with three locations where it does, plus the fact that the gross numbers for rail transportation are better than for cars.
DaveNYC, yes it is cherrypicking when you compare Houston to the average POV and don't even bother to go to the NTD to pick out the Houston specific data. While you are at it why not remind everyone about the farce of a trolley that has made Houston a worldwide laughingstock? The Wham Bam Tram. If it weren't for the Medical Center deal with passes and moving the parking lot ridership would be near nonexistent. In 2006 fares accounted for $56,504,320 of the 474,938,219 for a whopping 12% farebox recovery ratio. Care to octuple fares and see how popular the service remains? Buses there average 12.8 passengers not 10.5 BTW. I'm not here to be anti-transit unless you think like many transitistas that accurately reporting the facts is in some way anti-transit.
This suburban/urban debate has lost focus on economic consequence of choices. Energy and transit figures seem to be picked based on someone's assumptions, but let me lay this out for you: I lived in the city for years, and now live just outside it. My friends in the city don't even own cars. They work in the city, take the T (for you non-Boston types, that's the subway) or the bus and actually WALK. I commuted for years that way and probably burned a tank of gas every two to three weeks.
We live in smaller places that are very energy efficient. Shop for locally produced food in smaller quantities and on an almost daily basis (we're also thinner here than most of the country). Eat in local restaurants (we hate chains). So what is the overall economic benefit of this? I bet I consume less, contribute more to the local economy, am healthier, and use less energy and even medical resources than those out further from the core.
Of course, I don't buy as much crap because I don't have anywhere to put it, so maybe that makes me a bad contributor to the economy. After all, 5000 sq ft houses have to be filled with stuff you don't need in rooms you don't use. I wonder what the energy consumption is vs my 1400 sq at 3 bedroom cape?
I wonder what the energy consumption is vs my 1400 sq at 3 bedroom cape?
My 2600 California ranch style with aluminum framed single pane picture windows doesn't have or need air conditioning so that's out but it has been a brutally cold winter and we've spent more than double heating this year than last we will probably spend close to $300 this year in extra gas and electricity.
You were saying?
Getting back to the original argument...
Dryfly, I don't how long it's been since you've been to Chicago, but Arlington Heights is not the edge of suburbia. Neither is Naperville. Those two areas are the #2 and #3 employment centers in the Chicago metro area (the Loop is still #1 and yes, it is growing).
People living at the edge are still a 1-hour drive away from AH or Naperville. When I worked in AH, a large percentage of my coworkers lived in McHenry, Kane, or Kendall counties. Those areas are getting killed right now.
"Does anyone know if the stimulus package changes the GSE portfolio limits?"
The answer is no - the limits will not increase, so any new 600k jumbo they buy means three fewer 200k loans. I am very surprised that this passed the senate, since for states where the average home is under $400k (probably 40 of the 50 states), there will of course be less availability of Fannie and Freddie capacity. So California and Connecticut win with their typical 600k loans, and Kansas, Wyoming and almost everywhere else lose as the higher priced states suck all of the GSEs capacity away.
"You were saying?"
Rob Dawg I was saying, that the energy consumption on my 1490 sq ft 3 bedroom house (I had to remember the exact measure) was exactly 80% less than a workmate's McMansion clocking in at 4500. He has a family of 4. I bought this place from a family of 4. I'm not sure what the windows have to do with anything, but I don't have AC either.
I walk to the train, which is SRO during the morning commute. He drives over an hour each way. My total commute is less than an hour, but I get to read and I walk some of the distance. In fact, if it hadn't been for the train, I never would have been able to study and graduate from Business School and work at the same time. The walking will keep me from using more health resources as I age I am sure.
This is what I was saying. When assessing economic benefit, you can't choose one area and run with it. Look at the total for the lifestyle and then see what it gives you. And remember, an important part of economics is "taste". But if I had to spend money, I would spend it on public transporation because of some of the overall economic consequencses I just brought up. If I had my way everyone would get their overweight butts out of the malls and SUVs and walk, adding less stress to the health care systems. And they'd stop wasting natural resources to live in spaces they don't need, stuff with things they don't use because their lives are devoid of any meaning but what they can say they have versus their next-door neighbor. But, of course, I believe in enlightened despotism so sue me
The answer is no - the limits will not increase, so any new 600k jumbo they buy means three fewer 200k loans. I am very surprised that this passed the senate, since for states where the average home is under $400k (probably 40 of the 50 states), there will of course be less availability of Fannie and Freddie capacity. So California and Connecticut win with their typical 600k loans, and Kansas, Wyoming and almost everywhere else lose as the higher priced states suck all of the GSEs capacity away.
but perhaps that's the plan? "private interests" can go play with the cheaper safer loans now that the GSE's will have to get out of those in order to make room for the crap unloaded on them by said "private interests".
When assessing economic benefit, you can't choose one area and run with it. Look at the total for the lifestyle and then see what it gives you. And remember, an important part of economics is "taste".
Exactly. When you aggregate the individual variations it turns out the the cenurbs are not more energy efficient. Your specific examples show that it isn't even all that much due to urban form as it lifestyle and other factors.
But if I had to spend money, I would spend it on public transporation because of some of the overall economic consequencses I just brought up.
I very seriously doubt that I analyzed your commute pattern and the 2006 MBTA submissions and have determined you commute costs approx $7.25 each way. A little over $4 in operating costs and a little over $3 in capital expenditures. Care to purchase a monthly pass at $320? Assumptions of 40 min travel time 10 min on Red/Orange line or equivalent using MBTA 44¢ per passenger mile operating costs and pro-rata share of annual capital expenditures.
"go ahead, dig into the details, think you discovered my error and get back to us. Yes, rail supposedly uses less and personal trucks more but the net result even when included is TRANSIT DOES NOT SAVE ENERGY. It really is that cut and dried." - Rob Dawg
I looked at the table, and it appears that the low utilization of busses play an important role here. How about this argument: the relative energy efficiency of cars and public transportation is not a fixed ratio, but is instead a function of fuel costs. When fuel costs are low, more people can afford cars, which decreases the utilization of public transportation and make public transportation less energy efficient. When fuel costs are high, more people have/choose to use public transportation, so it becomes more energy efficient.
"Point though is cars vs buses is only PART of what you 'move'. The stuff we consume counts in the balance too. Urban centers suck resources in from HUGE areas and because they can't recycle or dispose of much locally they then send it all out again. That is a huge flux of stuff... and very energy & capital intensive." - dryfly
I am trying to understand how that makes urban centers less energy efficient per capita. Consumption / flux is proportional to the number of people in an area, which naturally makes high-density areas like city centers more energy intensive. The act of moving everyone to exburbs by itself does not decrease total consumption, and unless each exburb area is self-sufficient, you still need to suck resources in from huge areas. You lose the economy of scale in transportation, but I do not see what you gain.
What did I miss?
left-em,
I am pleased people are starting to look under the covers and actually examine the issues. You are correct that the various efficiencies are subject to many factors and even revisions. The APTA for instance got tired of how bad buses were performing and over a period of three years managed to "find" a 24% improvement in bus fuel mileage.
The interesting thing is that transit use goes up when the economy is good and goes down when the economy worsens. Part of it has to do with the importance of core trip generation. Transit turns out to be an unaffordable luxury when you absolutely have to get there and on time.
What did I miss?
Congestion and circuit density and overhead and marginal costs and multimodal loses and crime.
It seems people are arguing different things.
The American model of urbanization (and suburbanization, and exurbanization) is predicated on cheap energy and cheap oil
Rob:
your arguments work here in America, simply because our cities were designed FOR PRIVATE CARS. (the street and freeway model). even the major cities are.
buses are poorly utilized because we build the cities first, then put the transportation in second. In Europe: they build the transportation first, then the development follows.
Someone brought up Toronto. Look at that city. From an airplane you can see where the subway was placed. Remarkably good way to plan a city.
Almost all European centers are significantly more energy responsible than almost all American cities, excepting NYC due to being based on a completely different style of planning and urban development.
Paris is a very different metro region than is Chicago as example.
if/when peak energy hits us, almost all American areas will be hit hard.
Urban areas, suburban areas, exurban areas.
the only ones who will do ok are those who are totally "off the grid". How many of us can truly do that?