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Bricolage, eh?
I had to look it up, so you wouldn't have to:
Bricolage Definition | Definition of Bricolage at Dictionary.com
Well I had another word in mind that starts with "b" for a new tag for these stories, but I defer to my co-blogger's sense of decorum (as I have none). Besides, everybody was just so tickled over that word.
It's better than bondfires.
Makes you want to coin some new phrases... "extracting oxidation equity."
My insurance agent doesn't like it when I call Fall "boat burning season" as it was easier to burn it than store it!
You should see the insurance premiums quoted for empty homes, almost the same as a mortgage payment!
Another good example of maintaining decorum: Seattle sports columnist Art Thiel today said the Sonics basketball situation could be described in two words, one of which is cluster.
my brother is an arson investigator for LACounty fire, says he is seeing an increase in home fires....
You should see the insurance premiums quoted for empty homes, almost the same as a mortgage payment!
Hmm... How does that factor into carrying costs? Are the (self insured) banks really facing an increased loss rate on empty houses, or are the insurance companies making a fast buck?
I ax this only because you've argued in other forums that the carrying costs for REO is rather incidental...
FYI, from the Downey release:
During the quarter, 316 new single family homes were acquired, while 67 were sold. As of quarter end, 62 single family homes were in escrow to be sold and offers were being negotiated on an additional 72 homes.
So they're taking in five times as many REO as they're selling.
Oooh! Oooh! Can I be the unnamed source?
An attorney with over a decade of experience in the mortgage business (who declined to be identified for this story out of fear for his safety and the safety of his license) notes a dangerous trend. "They're the loss payee on those insurance policies," the source said. "It doesn't take a rocket scientist to figure out who benefits when one of these things goes up in smoke. 'Follow the money' I always say. If the lenders are the ones who get paid when a house burns down, you can bet your sweet patoot that it's the lenders who are doing the burning!"
Tanta,
I can offer no data or info as to the current possibility that people may be burning down homes, but I can in fact tell you that at the height of the last housing bust here in Massachusetts (bust years 89-92) the town of Lawrence, Mass was indeed an arson zone. Fires went up 400%, and there were many convictions for insurance fraud. Now maybe that was a one time thing, but you never know. Remember too, just becasue YOU cannot possibly do a thing (walk away, firebomb) that does not mean nobody would. I agree with Mish, if it is in your best financial interest to walk away, by all means you should.
Umm, I guess these burners haven't read the paperwork where it says they still owe the mortgage even when the place burns down. And the reporter didn't bother to point that out.
And should we even bother reminding the reporter that you only get insurance money for the structure, not full property value?
I saw some comments about the article earlier today and had this sneaking suspicion Tanta would be dragged into writing about it... and I wondered if it was going to be a two word post. Pretty close though.
And what ExMBS Lawyer said!!
/Bevis/Firefirefirehehehehefirefirefirefirehehehehehehefirefirefire/Bevis/
Sorry,
Chris
Are the lenders generally paid for the full value of the property or just the cost to replace the house?
Although, it can always be said, the exact motivations need not be what you think they are.
My parent's village experienced an epidemic of hay rick fires back in the day, which turned out to be due to a perennially broke member of the local, part time, fire brigade.
Yes, they only got paid when there was a fire.
JJL, I know perfectly well that arson flourishes in bad economic times. As does drinking, fornicating, blaspheming, and passing in the right lane.
It is not a question of what I will or will not do or imagine doing. It is a question of how anxious the press is to print this kind of story, so anxious that some of the details (like the loss payee) tend to escape them . . .
Mmmm, this story too hot to touch?
(Sorry . . . couldn't help myself)
Are the lenders generally paid for the full value of the property or just the cost to replace the house?
Cost to replace the structure. Unless someone finds a way to actually burn the dirt. I've personally never seen that happen.
I work in a burb outside Chicago, one that was inflated from working to lower middle class to one in which ranch homes [WW2 types] started going for around 400k.(Northwest of the city).
We had several police officers over to the office this afternoon as the President of our Company has an office overlooking a side street with several of these recently inflated homes.
The purpose of the visit was that this nice middle class family (stay at home mom and 2 kiddies) had a "break in" on Friday. Sometime between 9:00 a.m. and 2:30 p.m. No signs of forced entry, high visibililty area-- and lo and behold all the families jewelry had been stolen. Nothing else taken, no electronics, nothing. Just broke in, went right to the jewelry and took almost all of it.
These folks bought at the top, paying about 375k for a 200k home... Police were not buying it-- calling it 'amateur hour'
Interesting times...
Man, I totally agree with you. I saw that lame, wholly unsubstantiated story and thought, "Damn, now I'm going to have to work on that today."
I called a ton of people in the Bay Area and they all pretty much said, "It's not going on."
Talk about a nonstory! Sounds great when lit on fire, though!
MAx - Does a bank have to insure when its an REO? WHos looking?
JJL, I know perfectly well that arson flourishes in bad economic times. As does drinking, fornicating, blaspheming, and passing in the right lane.
Hot damn, but it looks like we're gonna be in for some good times!
T.
I love you
. It is a question of how anxious the press is to print this kind of story, so anxious that some of the details (like the loss payee) tend to escape them . . .
Ah, but that's not the point. If your house gets burned down and the insurance company pays the lender, then there isn't a foreclosure on your credit record.
I'll admit to having pointed it out, but mostly for entertainment value. Also as an example of lying with statistics. 1 in 50000 isn't a whole lot scarier than 1 in 100000, but OMG doubled!
Edit: a little dose of common sense in an increasingly delusional world. Thank you.
I think this belongs here:
YouTube -
Fair enough!
Poor writing is a hallmark of modern journalism. Even the NY Times and the Washington Post are guilty of poor writing. Add in a topic where some real understanding is needed (finance, economics, or my field of hard science) and the quality level of the writing drops even more.
like a lot of amateur arsonists
Some of us are paid professionals.
Seriously, I have a masters degree in Combustion!
Got Popcorn?
Neil
REO costs money to hold; per the Downey press release, they had $24 million in expense from '...net operations of (REO)...'
That's a lot of money for them, as their year ago income was $43 million.
Taking it on the chin on the balance sheet and income statement; no fun!
At least arson is more easily quantified than jingle mail.
I wonder if DSL is going to start hiring certain undesirable elements to manage thier properties;-}
Paging property manager Soprano!
Um, why should folks just walkaway, now they should just squat until the sherrif actually does something to evict. Quit paying those property taxes, insurance, everything. Bounce the last utility checks too.
Soon they are going to be called Countrywide Party Palaces.
Nice they have internet listings of available squats;-}
Countrywide Foreclosures (REO) Blog
14k of them CFC owned.
This is going to be a very interesting five or six years.
Nothing, but nothing seems to be arresting the drop in housing or the bad news from financial houses.
Maybe BSC management should be investigated for arson, some of those put transactions looked mighty suspicious that week in March.
Someday this war's gonna end...
My company has done several field reviews in the past few months of appraisals where the home was burned down. I just started noticing a lot more of these homes a few months ago. This is in Weld County, Colorado.
JJL, I know perfectly well that arson flourishes in bad economic times. As does drinking, fornicating, blaspheming, and passing in the right lane.
How exactly does one acquire this wit. 'Cause I wants some!
(Still chuckling over here)
I'm wrong once again.
Velocity has ALREADY started dropping (nice move down for MZM on page 12):
http://research.stlouisfed.org/publications/mt/20080501/mtpub.pdf
Open that throttle, Ben, 'cause you are falling, falling, falling...
If your house gets burned down and the insurance company pays the lender, then there isn't a foreclosure on your credit record.
Wanna bet?
As we pointed out here, the insurance only covers the structure. Your lot cannot burn down.
So if the lender is reimbursed for the cost of the structure and applies that to the loan balance, there is generally going to be a balance remaining. The lender will have to foreclose to take title to that lot, unless you pay off the remaining loan balance.
Common sense just flies out the door these days when we talk about homeowners. So much so that people can actually imagine that arson is a way out of actual FC. This tells me something about the willing suspension of disbelief out there.
"Common sense just flies out the door these days when we talk abot homeowners."
There is no common sense involved when someone buys a 500k home that is only worth 250k.
Things are going to get very violent, very quickly in many major cities and urban areas.
I hope these arsonists at least have the good sense to get the copper out first.
I am so ready to move into one on these vacant homes! Mr. Banker, or Mr. Stupid Homeloaner, don't set it on fire. Just expedite the foreclosure and sell it to me at a 50% loss.
Tanta,
What happens when:
-a townhouse owner in a community burns his unit down
-the community has a management association which pays the lease for the land (lot)
-the lease has not been paid by said association
-the town is foreclosing on the land
-the bank is foreclosing on the unit
-the owner is is the process of divorce
-he is an illegal immigrant
My question is simple, how does this situation get resolved?
Kidding!
JJL, you better be kidding. It is no part of my job today to explain what "real estate" is.
Anecdote
Friend in AZ had has builder reneg. on the construction costs of his custom home project. The building stopped after the framing was done and now he has the construction loan on an unfinished 6,000 sq. home in AZ. To sum up the present situation the construction lender now appraises the prospective finished project at 50% of the original figure was AND 60% of what it will cost to finish building the house... "son of a!"
I can see how a bank might be interested in burning a few homes.
How long before this becomes the Saturday night activity for the kids who aren't hanging out at the supermarket?
"Hey, let's go see if we can burn down a whole subdivision!!!"
Funny thing about fires. They start for a number of reasons. Years ago I lived in a village that had a volunteer fire company. Year after year they tried to get a bond floated for a new firehouse, only to be defeated repeatedly.
For no apparent reason, one night the firehouse burned down.
JJL: My question is simple, how does this situation get resolved?
Simple. Hand out pistols to everyone involved. Lock them all in a room until it gets really quiet.
There is an arsonist in the San Jose area. That's just fact. They haven't caught the person who unfortunately has torched some historic buildings--the IBM complex was the most recent.
Some of the brush fires in SoCal last year were arson.
But torching McMansions to get out from an underwater mortgage, wow - that's a stretch. And stupid enough for about 6 or 7 soon to be Darwin Award winners to actually try.
FT Woods
perhaps that arsonist would prefer to be paid for his work?
It's irresponsible to scream fire in a crowded portfolio of REOs.
This illusion of prosperity is turning into FEAR, in a hurry. This economy is in a world of hurt.
i dunno. i live in Calif and i'm beginning to think we're living in a tinderbox with all the out of control fires we've had the last few yrs here in the Southwest. anyone caught starting a fire that spreads out of control for miles or that wipes out significant RE could be strung up literally. this is not a path we want to go down.
Passing in the right lane is lame.
Passing on the right on the shoulder (or better yet, at an exit) is cool. It's the best way to blow off people who are nasty on the highway.
It's the best type of road rage there is. Do it once a day and you will feel better about yourself.
Anecdotal journalism is worth exactly the research its based on.
Oil surcharges are killing my business - Answer Desk- msnbc.com
Surcharge?
Excuse me for sounding all fan-girl, but reading Tanta's posts has changed the way I react to and think about stories like these. The parts excerpted were just the parts that jumped out at me. "It sounds just like those dramatic 'walking away' stories which purported to be about a massive trend sweeping the nation, but were really about two actual occurrences and a bunch of speculation."
Who would have thought this would happen here.
Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.
Costco “"Due to the limited availability of rice, we are limiting rice purchases based on your prior purchasing history," a sign above the dwindling supply said.
Sorry. Page not found.
i would look out tomorrow guys in the markets. almost all stocks, esp. tech, financial, small cap, emerging mkts DOWN after hours b/c of TXN and Cit.
if you're interested in going short, nows the lowest risk time you're gonna get for a while given where we are in the charts and whats been happening with the fundamentals. no guarantees.
idoc,
There are fire maps for California, SoCal in particular, that go back 200 years. They are online, easy to read, and very detailed. And yet, folks still buy and build in the shaded areas that say, 'fire zone.'
Personally, I don't get it. But I don't get the allure of living in a slide zone, liquifaction zone, or perched high up on some tiny stilts just for a nice view in an area prone to earthquakes.
Looks like reports are up:
Arson
Oh its blaspheming! I was thinking about fornicating and thought I'd read blastfarting, and was trying to remember how that affected passing in the right lane.
This thread needs to quiet down. The bullish sort may see arson as a way to artificially lower home inventory numbers, and that might be good for a 400 point pop on the DOW. You know, after fires, the worst is behind us.
Personally, I don't get it. But I don't get the allure of living in a slide zone, liquifaction zone, or perched high up on some tiny stilts just for a nice view in an area prone to earthquakes.
It's great when your insurance is subsidized by all the "regular people" who live in the flatlands.
from wawawa link:
"We only need one bag but I'm getting two in case a neighbor or a friend needs it," the elder man said.
"An anonymous high-tech professional writing on an investment Web site, Seeking Alpha, said he recently bought 10 50-pound bags of rice at Costco. "I am concerned that when the news of rice shortage spreads, there will be panic buying and the shelves will be empty in no time. I do not intend to cause a panic, and I am not speculating on rice to make profit. I am just hoarding some for my own consumption," he wrote."
way to go Ben. you dumbsh*t.
he recently bought 10 50-pound bags of rice at Costco.
FWIW, I recently went to a costco in Sacramento and there was no rationing. All the rice and flour you could buy, in fact.
I wonder how widespread this really is? Anybody here seen evidence of rationing?
Max,
Don't even get me started on Malibu....
Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.
Costco “"Due to the limited availability of rice, we are limiting rice purchases based on your prior purchasing history," a sign above the dwindling supply said.
I've been filling up all the sinks and bathtubs with gasoline just in case.
Max: "I wonder how widespread this really is? Anybody here seen evidence of rationing?"
Not at my Costco in the heartland.
Speaking of burning dirt:
YouTube - Koma7-burn dirt
I'm just saying.
Cheers,
ac, nice idea, I will do the same
He could have said,
"I am concerned that when the news of rice shortage spreads, there will be panic because I'm emptying the shelves myself."
Or he could have said, "I have a journalist acquaintance who needs some anecdotal material on hoarding food and causing panics."
Based on the last two posts I have one question for either Tanta or CR: Why in god's name would any investor ever provide capital to these banks? Under any circumstances. No one is even able to calculate the losses at this point. I can understand a rich sheikdom or China trying nab some assets; it's no skin off their noses if they lose a little of their money. Surely there are better investments out there. How was Wamu able land 7 billion dollars? How was National City able to raise 6 billion dollars? Are all these investors just high?
We have an epidemic of spontaneous combustion caused by the friction created when a mortgage rubs against an insurance policy. This goes back years in this country. It is what America is all about!
idoc,
"way to go Ben. you dumbsh*t."
Thanks man...I haven't cleaned beer off my monitor in a couple of weeks.
Cheers,
"Why in god's name would any investor ever provide capital to these banks?"
speculation?
Mise
this is for you baby:
The page cannot be found
Bad reporting in newspapers...yawn.
Saddam had WMD's as far as the NYT was concerned...
However, I have been tracking trashed REO's in the $1.5+ areas. I've been getting 2 a month. Huge...no...increasing...yes.
Not seen a lot of arson though.
Cheers,
"Chinese agree to pay extra $400 U.S. per tonne for fertilizer"
Market Observation - Tim W. Wood 12.04.2009
you mean they don't want to buy our paper anymore? harumphf!!!
idoc,
interfax:
""Why in god's name would any investor ever provide capital to these banks?"
speculation?"
Alzheimers?
Cheers,
My understanding is that the Great Kreskin has made two homes vanish thereby eliminating the collateral. Nothing to burn. Nothing to walk away from.
Poor babies cannot pay for the house that was too big and expensive. I weep for you as compared to the homeless, the indigent and the 2 billion poor people in this world living on 1 to 2 bucks a day and having to pay double the price for food compared to a year ago because the richer people got to drive their big fancy cars and live in their big fancy houses and eat big pieces of meat fed with the expensive grain or the distiller grains from the ethanol plant that produces some fuel for the big car to take them to and from the big house out in the suburb.
Poor babies.
idoc,
"Chinese agree to pay extra $400 U.S. per tonne for fertilizer"
How ironic. They were buying bullshit, now they're buying cow shit.
I need a beer and another kleenex.
Cheers,
Peak Oil: Life After the Oil Crash
"...and another kleenex."
Man Misean, I hope you mean you are crying!
Family blog and all.
JJL,
No, man, I use them to clean the beer spit take off the monitor.
Man, talk about a mind in the gutter ;-P
Cheers,
Just curious, but having never "owned" a home, how does it work if there's an insurance payout against said fire? Is that policy typically owned by the lender or the "owner"?
lawn grass,
You're depressing me. The Super Colander Tin Foil Hat is sparking after reading that link. And I only have 4 lbs each of rice and beans and 40 cans of tuna.
And my buddy and I still haven't finished building the still (no joke).
Shouldn't have gone skiing this last weekend.
At least I have lots of ammo.
Cheers,
"However, I have been tracking trashed REO's in the $1.5+ areas. I've been getting 2 a month. Huge...no...increasing...yes."
Interesting. Are you blogging about this? How do you get the data?
Also, what do you call trashed? Holes in the wall? Not clearing out their stuff?
how do you start a flood?
(old joke first heard by my at Columbia Law School back in the '70s).
I bought rice at Costco last week and didn't get carded or anything. Asked my wife if we really needed rice or if she was just hoarding.
Yes, she explained.
and I thought bricolage was compliment. Live and learn.
why is it that i cant muster any strength to read al this news or post on it?
i mean, i've been a loyal/obsessive reader for a couple few years now but at this point in time its like, write downs, hell, horridness, end of the world ok ok ok ok
so can we all agree that housing is a bust and the economy is F'ed?
ok great.
so next.
whats NEXT?
thats why i loved this place because it was focused on the next thing (demise). so now that its here, can we focus on next?
NEEEEEEEEEXXXXXXXXTTTTTTTTTT!!!!!!!!!!!!
Emma Anne,
"How do you get the data?"
A totally nut case Persian, who has been in the RE biz as agent and broker for 30+ years; family friend...dear friend.
He sends me the listings. It's an investment thing, with my father and a few others.
"Also, what do you call trashed? Holes in the wall? Not clearing out their stuff?"
Stripped. A/C gone, cabinet facings gone, toilets gone, carpet gone, hehehe gates gone..and the motors, pool a shambles, etc. Very stripped. Holes in walls...no. Thankfully the wire and water pipes are still there.
Problem is that our bids are getting beat by $100-150K. We're firm on our offers...we'll see.
Cheers,
dc1000
you seem like a nice guy. here's my suggestion:
convert that building of yours into a cow shit plant.
Max,
I live about 15 miles from the Costco mentioned in the story and there was no rationing of rice or flour at the Costco closest to me. I'm sure that that store ran out of rice and rice from India is in short supply, but there's no general rice shortage in the bay area, nor is there a shortage of sensationalist reporters in New York.
idoc,
Keep this up and I'm calling Larry the Cable Guy's agent. You could do Vegas at least.
Cheers,
"You're depressing me. The Super Colander Tin Foil Hat is sparking after reading that link"
Matt is somewhat extreme in his views of the future. However what is being predicted is difficult to know. There will be shortages and things will get tougher at least for awhile and maybe much longer.
Foreclosures Hasten in Dickensonian Utopia
YouTube - Foreclosures Hasten Dickensian Utopia - PF025
Mise
hey come on now. there's alot of money to be made in cow shit.
lawn grass,
"Matt is somewhat extreme in his views of the future."
Well thank God I'm not....
---ducks---
Cheers,
" . . . Unless someone finds a way to actually burn the dirt.
The Russians used the "scorched earth policy" several times.
idoc,
"there's alot of money to be made in cow shit."
That's good shit. A stand up act could make caish...just saying.
Cheers,
This is going to get weird if the house burns down with no personal belongings in it. Isn't that an automatic flag that the fire was pre-meditated ?
OTOH, if you do leave personal stuff in there (to throw the hounds off the scent), you only get depreciated value for said belongings. I had a long discussion with my (former) agent on this exact point. You only get replacement for the possessions if you actually replace them.
RayOnTheFarm,
They can detect accelerants in the parts per million these days. Doubt personal belongings is an issue.
Cheers,
Did you know that ruminate (cows and their ancestors) poop is a valuable scientific tool? Fossilized dung and other preserved samples ( tar pits, freezing, fast drying) have provided molecular biologists with enough DNA to show plant life evolution over various time periods. Pollen is especially well preserved in animal poop. I am bullish on manure, it is a treasure trove of information.
I can't resist:
YouTube
- Broadcast Yourself.
In SoCal that would get very, very dangerous indeed.
Start a brush fire and you would be lucky to end up alive. You would most definitely end up in jail.
Unless someone finds a way to actually burn the dirt. I've personally never seen that happen.
Tanta
There is.
I have.
Not recommended.
Sprinkle pure sodium metal into the soil (magnesium will do as a substitute) add some water and I can assure you there will be alot of FIRE!
Remember to run.
Did you know that ruminate (cows and their ancestors) poop is a valuable scientific tool? Fossilized dung and other preserved samples ( tar pits, freezing, fast drying) have provided molecular biologists with enough DNA to show plant life evolution over various time periods. Pollen is especially well preserved in animal poop. I am bullish on manure, it is a treasure trove of information.
JJL
wow, JJL. that's real interesting...
All this financial mayhem will make the near-future headlines that Israel just dropped a 100MT thermo-nuke on Tehran actually seem trivial, even kinda relieving actually.
cd
KindaScared, the policy can be owned by the borrower or the bank. But if the bank is the "loss payee" the bank is paid first.
And usually, the payout--even for the house--is for the so-called "actual cash value." It only adjusts to replacement cost when the house is actually repaired or reconstructed.
Torching a property subject to a mortgage or deed of trust is not an effective way of paying off said mortgage or deed of trust unless it has a very small balance because, as Tanta has already pointed out, the payoff never includes the land value.
FWIW, I recently went to a costco in Sacramento and there was no rationing. All the rice and flour you could buy, in fact.
I wonder how widespread this really is? Anybody here seen evidence of rationing?
Butter is unavailable in Tokyo now.
Crisco and rubber sheets continue to be unavailable in San Francisco.
cd
We were totalled in Hurricane Andrew. Insurance companies were paying claims them.
The adjuster came out and goggled at our neighborhood, our trashed house, our personal possessions piled 6-7 feet high on the swale, both ways, corner lot, and wrote us checks for policy limits on both possessions and house. The house had a smallish mtg. The bank got that money to hold to cover itself. We got the rest. We drew the money out of the bank as the structure was replaced.
We got replacement costs. Check to see what your policy says. Our 10 cent paperback books turned into very nice furniture. There were lots of rules back then which were ignored or amended about having to buy a sofa to replace a sofa.
If there's no personal property in the house, then there's no claim for it.
Our insurance company shortly cancelled us. I didn't care. Thanks for policy limits Prudential.
We love you.
The years of the 8 storms have claims which are still unresolved. Andrew was thought by the insurance companies to be a fluke, and used up the last of their compassion.
Empty houses are difficult to impossible to insure. Had a friend who was trying to sell in Orlando--couldn't--house was empty, couldn't get insurance with anybody, including Lloyd's, for any price. Called the bank and ASKED them to force place insurance, which they did. Then he rented it, so could get insurance again, and the force-placed insurance was cancelled. Force-placed insurance is VERY expensive.
Okay, so if the home "owner" is the payee on a fire policy, and said home, JoBu forbid, should happen to go up in flames...then isn't that potentially a nice payout to someone who...plans to walk?
idoc,
If you were serious, I am glad.
If not, geez just stating the facts from a molecular biology point of view. It might be interesting to know that ferns and moss once dominated the entire landmasses of the world. Now it is concrete and grass. Information is like a time machine, you can see the past.
Nope, see my comment, it's paid to the insurance company. Or, the owner and insurance company together.
Ok folks, what's the difference between a pastich and bricolage? Pastiche?
hats why i loved this place because it was focused on the next thing (demise). so now that its here, can we focus on next?
What's next?
Tanta showed us the way - its drinking, blasphemy, fornication and passing on the right. So pick one...
Let's see where's my car keys?
"I am bullish on manure, it is a treasure trove of information."
Guess that makes Ben a genius.
Please clear this. Even during the "boom" days, someone had to be paying the fire insurance. Who is the the policy holder, the lender or the "owner"? If not black/white, then what percentage?
The policyholder is usually the homeowner. BUT the terms of the loan require the homeowner to name the bank as the loss payee. That's why the bank is paid first. The homeowner only receives funds that exceed the amount of the loan balance.
run on rice?
please wake me up when there is a run on beef-a-roni and pop-tarts.
much thanks
Just an aside, but having seen a "housing bubble" years ago, I now see myself as "Lieutenant Dan" on the bow of Gump's Shrimpin Boat laughing maniacally at the oncoming waves.
I made nice coin last year on said bets but now find myself troubled at having seen what's behind the curtain.
flaminia, thanks for the input. So basically any insurance recovery is 100% going to the lender until the note is satisfied?
ok. So insurance is something I know about. Not like FIBO or TIBO or whatever it is you people talk about that I find incomprehensible.
First of all, insurance cos. don't insure dirt. Unless there's a special agreed value policy in force, uncommon, insurance cos. pay replacement cost of the building.
So if you have a $300,000 house, and have insured it for $300,000 it's your tough luck you paid for that much insurance. If the cost to replace it is 150,000, guess which value the insurance cos. will pay?
and yes, mortgage holders get first dibs on the insurance.
That's it. Blame on the ecofreaks!
Seattle homes set on fire; left-wing ecoterrorists suspected... of a massive fire in Snohomish County, WA. Four luxury homes on the “Street of Dreams” development...
Michelle Malkin » Seattle homes set on fire; left-wing ecoterrorists suspected
dry, sounds familiar.
"They can detect accelerants in the parts per million these days. Doubt personal belongings is an issue."
Oh come now... who uses acelerants these days? Pack rats might chew the romex leading to a short circuit, sparks ignite the insulation between the floor joists in the basement. "By the time the smoke alarms went off the house was engulfed! We were lucky to make it out alive! Thank God I had time to rescue my wedding photo's and the appraisals for my Persian rugs!"
"Stripped. A/C gone, cabinet facings gone, toilets gone, carpet gone, hehehe gates gone..and the motors, pool a shambles, etc. Very stripped. Holes in walls...no. Thankfully the wire and water pipes are still there."
Wow. Thanks for the info.
"So if you have a $300,000 house, and have insured it for $300,000 it's your tough luck you paid for that much insurance. If the cost to replace it is 150,000, guess which value the insurance cos. will pay?"
So, since my $300,000 house (with 1 acre) is insured for a replacement value of $485,000, do I get the 485k (after satisfying the mortgage balance to the bank), and get to keep the dirt? And what about the 100 odd K I seem to remember seeing specified for personal property? Does it typically need to be documented?
I know, I should just read the damn policy....
Mr. Bologna, you have the right to remain silent, blah, blah, blah. Rats don't chew through Romex -- it tastes terrible, and... fiberglass insulation is made from... glass. Would you like to revise your statement, sir?
Whatever happened to mortgage insurance? I seem to remember having to have both -- mortgage AND fire.
Bob, I have no idea what replacement cost is. Just get a local builder to tell you what construction costs are. Insurance agents have averages of construction costs per square foot.
Insurance cos. don't DO NOT insure dirt. It can't catch on fire, it can't blow away. Unless you have earthquake or sinkhole hazards, nothing's going to happen to it.
Contents are insured for whatever a reasonable person can find a replacement item for. If you have a $17,000 antique sofa, you're in trouble. Same with the persian rugs, or jewelry. Unless you submit separate appraisals in ADVANCE and they agreed to add it on to your policy. IN ADVANCE of a loss.
My whole point is that a motive for arson criminals, to pay off an inflated house value and mortgage is just plain dumb and ignorant of how insurance works.
So if Aetna for example, goes up against a Bear Stearns Mortgage bond, hypothetically, I'd bet on Aetna. The mortgage holder is going to get maybe 40-50%. Maybe that would be enough motive in these crazy times, what do I know.
If your replacement cost was 485K, and it was determined that your pet rats were visiting your inlaws at the time of the fire, the insurance co. would pay you the 485K less the outstanding mortgage balance. If you had additional items of specific value already appraised and documented in riders to your homeowner's policy, you'd receive compensation for those as well.
Considering how few of the people in trouble ever read or understood their mortgages, why should we think they have read or understood their insurance policies?
A major element of the problem is that large numbers of people barely able to fog a mirror were allowed to buy expensive homes for no money down.
I have no difficulty believing that some small fraction of these people will be stupid enough to think they can make money by burning the place down, and that another small fraction pissed-off at being denied the big profits they felt entitled to will get drunk and torch the homes in anger (perhaps a home they're renting out, rather than their own).
STUPID QUESTION ALERT So, if I have a house that has a replacmement cost of $200K and a mortgage for $140K, and my house gets struck by lightning and burns down, the bank gets $140K to pay off the mortgage and I only have $60K left to build a new house with? ??? I don't understand.
People think "replacement cost" means whatever amount they paid for the house is.
It doesn't.
It doesn't mean that.
Anyone who glosses over those terms is just lazy and doesn't want to explain how insurance works to you. Because maybe they don't understand it either. Which happens.
The bank allows you to rebuild and get the replacement cost value, but the money goes to builders who are constructing the place, not to you.
So you submit bills to the bank when you have your house rebuilt?
BTW, I don't think of being struck by lightning as being all that rare or necessarily causing terminal house fires. My parents have lived in 3 houses (and I in 2 of those 3) that were struck by lightning and the fires were very small and contained if they happened at all.
Joy, all bills would go directly to the insurance co. Think about an auto crash/repair. You don't get the money, the mechanic does.
I think if they gave you money to re-construct your house yourself, which I've seen happen, you'd likely have to sign a contract stipulating all kinds of criminal penalties if the money didn't go for rebuilding.
jm, I know the general gist of the problem, and they can fog a mirror LOL and burn a house.
Up to now, most insurance cos. couldn't care less if you overinsured your house. I'm thinking maybe they'll start to care now. But that would mean a whole lot of work, a lot of ins. agents calling up people, telling them they're overinsured? Reducing the amount of insurance and the premium and their commission? This is going to be difficult.
I've certainly received checks for car accident-related repair claims before. And for health care claims that shoudl have gone to the doctor. Having dealt with Aetna's incredibly poorly-written FSA claim forms, I swear nothing in the world would surprise me coming from insurance.
Well, I know Progressive, they stop by in the first 5 minutes and write you a check. Then you sign your rights away. They're very, very clever.
Me, LOL, I would never accept a check in five minutes. I'd kinda like to check out costs first. So Joy if you ended up with a check something maybe went wrong somewhere. They're not geniuses. Except for Progressive, I mean.
flaminia writes:
Torching a property subject to a mortgage or deed of trust is not an effective way of paying off said mortgage or deed of trust unless it has a very small balance because, as Tanta has already pointed out, the payoff never includes the land value.
flaminia | 04.21.08 - 10:16 pm | #
That is probably true in many parts of CA due to high land prices there, but in the rest of the U.S., particularly in older less desirable city neighborhoods, it is quite common for replacement cost to greatly exceed market value. I have to insure a couple of 4 plexes I own for far more than I could sell them for because the insurance company will not insure for less than the replacement cost. I wish they would burn down.
BTW, I'm not planning to torch my house, OK? My problem is that my house is about 150 years old and for all its many faults is built in a manner that would far exceed modern standards to replace on a per square footage basis. Best estimate is that I'd be looking at about 2m just for rebuilding.
The trouble is: packrats really DO eat romex wiring. The little bastards are hard to get rid of too.
I just want to live out my days in the ramshackle former home a company town owner whilst reveling in the detritus of toxic waste from his smelters and renting out the upstairs rooms to hippies (they're very easy to evict if needs be. Unlawful detainer? What's that? Is that marijuana I smell...?)
I feel like a plutocrat who has lost nearly everything when I sit on the veranda in the evenings, drink in hand.
All these live off the land stories kind of scare me though. There is no way I'd be willing to eat free range chickens that ranged on THIS land. I'll just follow the old fellow's lead and victimize the poor sods on the south side of the track (that would be everyone else in the town).
BTW, I'm not planning to torch my house, OK?
I never seriously thought you were, Bob. I was just adding to the silliness. Please forgive me.
Your "ramshackle former home..." complete with hippies* sounds rather enticing. I envy your evenings.
All these live off the land stories... are mostly BS. The only way to live off the land is to live off the land. Thems whats already there aren't going to want to see your sad face if the guano actually contacts the ventilator -- and will probably convince you of that in short order, in the rudest of terms.
We just have the brown Norway rats -- huge but discreet with plenty to eat besides wiring -- not that they're a particular concern with three ratmunchers indoors and five vagrants camped on the porch.
"I never seriously thought you were, Bob. I was just adding to the silliness. Please forgive me."
No need at all. I just get a little jumpy when I hear that "you have the right to...." phrase coming at me.
Also, I don't rent to hippies so I can act the maggot and boot them out with threats of the law. Not a chance. They're just a bunch of pot smoking local massage school students who pay their rent, don't have friends who will need a good kicking, and make no waves.
Also, I was kidding about "victimizing the south side folks" Although, the tables have turned. Now the rich people live in the old miner's cottages and I'm in the big bosses house. Funny that. I've got a private well and easy access to the river. This may work....
All this Armageddon talk is entertaining and a little enticing in it's own way, but it is terribly overblown I believe (and I am the most bearish person I know personally). We're in for a few lean years and some serious readjustment for many people, but if you've been living within your means and don't mind tightening you belt it shouldn't be so bad.
Cheers.
This is a hot topic. And everyone seems so chummy as they discuss it. Kumbaya around the campfire???
I went down down down, the flames went higher, the flames went higher...
Anyone remember Mickey Rourke's scene in Body Heat? A cameo but an all time great scene.
YouTube - Mickey Rourke in "Body Heat" (1981)
Arson aside, there may be some people praying for Hurricanes in Florida.
Bit late to the bricolage fete, but isn't this just a way to say 'titbits' in British English?
ok, i buy at the bottom for 150k and then another bubble comes and my house gets burned down in fire. if the replacement costs will be 450k will the insurance company pay 450k to the builder to rebuild my house?
awesome, tanta
Tanta,
It's just too good a story not to retell, despite lack of any basis. That's the definition of an Urban Legend.
Cinder mail?
"ok, i buy at the bottom for 150k and then another bubble comes and my house gets burned down in fire. if the replacement costs will be 450k will the insurance company pay 450k to the builder to rebuild my house?
"
I'd say it would depend on the premium you pay.
Well, way back in the dark ages when we had an accident that wasn't our fault we'd go to the body shop and get an estimate and send it to the insurance company and then they'd sit on it for long enough we'd grow used to driving a dented car around and then they'd send me the check. At which point we'd decide whether to get the work done or pocket the check or not.
The roof, the roof, the roof is on fire.
I said the roof, the roof, the roof is on fire.
We don't need no water, let the mutha-fcka burn.
Burn, mutha-fcka, BURN.
This might spark your interest (free sub req'd): Commentary - When Risk Mitigation Backfires @ RiskCenter: A Financial Risk Management Media Company
Shnaps writes:
The roof, the roof, the roof is on fire.
I said the roof, the roof, the roof is on fire.
We don't need no water, let the mutha-fcka burn.
Burn, mutha-fcka, BURN.
www.bloodhoundgang.com
From my experience fires can increase with financial stress. My tenant went ballistic, mental case, and trashed the inside of my rental. She couldn't pay the electric bill, water bill, gas bill and the trash bill. With no light or heat she was using candles.
I didn't find out about this until the city told me they were putting a lien on the house for non payment of the trash bill. That 8% I pay the agent is kind of a waste.
revro, it would work like this:
If you had insured your home for $150,000 and it burns to the ground, your insurer will pay you 80% of that $150,000. (Actual cash value) Once you finish 'replacing' everything (and can document it), they will send the remaining $30,000.
The problem is this: You are only paying premium on a $150,000 house. If it is really worth $400,000 yes, you are saving the premium difference. But if the loss happens, well, you gambled and lost. That is why it pays to periodically contact your agent and increase (or decrease) your limits in accordance with local market fluctuations.
The true 'replacement cost' policy is pretty much extinct.
One final point: if the house was 'vacant & unoccupied' for more than 60 days prior to the fire, the insurer will not pay the mortgage company either. As mentioned upthread, we're more than happy to go toe to toe w/the banks on this one. It is OUR contract and we know it pretty good.
Tanta: "Besides, everybody was just so tickled over that word."
That's quite a supposition for the third post. You should have written:
"Although hard evidence is lacking, and observed numbers are small, some people appear to have been tickled by that word. Still, it is difficult not to conclude a sharp increase in the number of those so tickled. Whether this trend will continue is the question."
Then you could be considered a journalist.
FYI - keeping your insurance up-to-date with the value of your house is important. A LOT of people got "burned" (no pun intended) by that with the wildfires here last year. Their houses were significantly under-insured with regard to the current replacement value, and they're fighting the insurance companies now.
"I have no evidence that lenders are out torching homes instead of foreclosing on them, but then again I bet I could get an unnamed source to opine that it's possibly a dangerous trend . . ."
I can arrange that.