"I call the house my albatross," Shaw said. "I feel a sense of relief knowing I won't have that house to deal with anymore. I'm not looking forward to moving and selling everything. But I am looking forward to not having stress about something I can't afford."
Most of these homedebtors will bail way before '10 and '11
Rob - Did you see BMIT's list of foreclosures and NOD's for San Diego. Matches the new record hit last month in my area. We have 3 times as many foreclosures as we do sales. People are throwing in the towel
In 2002, I was a residential loan officer and I had an option ARM. I also recommended it for several of my clients when the situation dictated it. The full rate (interest only), was 3.10%. It was a great loan for about 18 months. The key was to refinance out of it, when Libor started to rise. For those that did not, this is a deadly loan.
It should be noted that I frist saw a graph very much like this one on Calculated Risk probably a year ago.
Kudos once again to CR and Tanta for giving us a free window into the future.
totally arbitrary sidenote. I heard a story last night of the first real price reductions in upstate NY. Houses were going for $500,000 a year or two ago in one area of Poughkeepsie. Best school district, etc. Most recent sale of something that had been purchased for $500K: $280K.
I have a question. Is there a way we can get a grasp on the dollars remaining to amortize? Is there a way to see how much left-shifting potential remains in that hump?
Separately, can anyone comment as to whether these loans have a market value clause? If this is the case, one could conclude there should be many early recasts.
I think that will be when CR's thesis that this will be a middle-of-the-road recession will be tested: mid-to-late 2009. It may be by then that the world-wide building boom will have slowed appreciably, export-led economies will be under continued pressure, and the commodity price boom, even if it isn't a bubble, will have abated. If the net-consumers (US, UK, Italy, Spain, etc) are still slowing further, and the banks haven't regained their footing, things could get ugly and a lot of over-capacity could become apparent.
CR has shown great judgment throughout this episode, so if I were betting, I'd back his scenario. But I'm keeping an eye out for what I outlined above.
If you take the cost of refinancing in points, fees and other expenses and then distribute that across a mere 18 months, I think you find that your real "interest rate" turns out to be significantly more than 3.10%.
assuming 6 months of delinquency would result in a NOD filing.
assuming another 5 months to reach REO status (I'm adjusting the usual 4 months to 5 due to postponements).
that's 11 months from delinquency to REO.
assuming once reset hits people automatically go delinquent, that means here in 2008 Q2 we are still digesting subprime resets from 2007 Q2.
the huge bolus of subprime reset doesn't end until end of 2008. Which means thru out 2009 we'll continue to be working on all of the resets from 2008.
then you move the bulk of the option arm resets to 2009 Q4 and thru out 2010. essentially the market doesn't get a break at all. we march right from the subprime implosion directly into the option arm implosion as a continuous rolling bust.
last chance for CV folks to get out alive before they drown or face a 10 year lock down.
crispy&cole writes:
Rob - Did you see BMIT's list of foreclosures and NOD's for San Diego. Matches the new record hit last month in my area. We have 3 times as many foreclosures as we do sales. People are throwing in the towel...
Something intersting is occuring in my area. I wonder if this is going on in other parts of CA
Inventory is flat YOY. However, foreclosures are up significantly. I think there is some serious shadow inventory.
The BMIT graph needs to be made scarier by shifting the FCs 10 months to the left so the graphs line up. Then you can see the FCs Nov '08-Feb '09. And don't think the banks are gonna get a kind hearted around Christmas this time.
People are NOT throwing in the towel. That's a voluntary act to prevent more punishment. The NOD/NOTS we see are those being dragged to woodshed. The involuntary distress houses have barely made it to the NOD stage even now. Witness the credit card debt rise and falling auto sales. Where do you think that money is going when consumer spending is supposedly soft? Mortgages.
Do I "think" there's shadow inventory? I know it. The new blogosphere outrage is the number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned.
The excess and waste of the '90s and 1st 7 years of the new century have finally caught up with us. Do we really need McMansions for 4 people or a Hummer to ferret 2 people to the grocery store?
If people are too glutenous to curb their waste of food and our other precious resources, price increases will make the choices for them.
I have no problem with high oil and housing prices. This is what we all deserve for spending, eating, and destroying beyond our necessity as a society. Let's see how wateful we remain now that there is a cost associated with our actions.
Prediction: a)we are forced to care for our purchases and posessions for they'll have to last longer. b)Consume less food and actually eat leftovers. c) SUVs... mommy what was an SUV? d)McMansions. each 1 can be housing for dozens of families. We're running out of land is the 2nd bigget lie of the RE industry to Housing prices ALWAYS go up.
Now the only other major catagory left to be plotted and graphed are the "interest only's". On the alt-a side many loans were sold with 5 and 10 year IO payments. The 5 year IO's will coincide nicely with the Option Arms.
Anybody know how many 5 year IO's were sold? For all intensive purposes, the effects will be the same as with the adjustable rate mortgages once they turn to full amortization based on the 25 years left.
Oh what fun we are going to have for MANY MANY more years.
A few weeks ago I read on a bay area local TV station that those REOs are not on the market because banks need to hold it for 3 months before buyers can qualify for FHA - that's pretty much the only way they would be able to sell the house these days. So the inventory is lagged behind REOs for three months.
Let's not forget what this does to the financial world.
Yes, many people are paying the minimum, years away from reset, essentially borrowing hundreds of dollars a month to underpay their mortgage each month...
But the lenders still count these as performing loans....I wonder what percentage of these do they consider will eventually default.
Also, they booked this borrowed money as money good...contributing to profits. This toggle-bond type stuff will not only default the main debt but will wipe out earnings already booked for the past several years.
People are figuring out that not only are financial institutions losing money now, they are learning that they never really made the money in the first place. Going back to "normal" is a long time ago.
When the northern tier states get their first heating bills in November that is when we'll see the first capitulation. Pay a $1000/month for a house losing a $1000/month in value plus PITI? NFW. Go long U-Haul.
Avg Joe - Very true. The booking of "earnings" on the interest portion of these neg am loans is a joke, wait until they are forced to reverse the earnings.
The Sunday Paper is filled with the usual tripe about how "now is not the time to sell, it's the time to buy".
(See the Smart Money "common sense" article by James Stewart who essentially blames the public for making him suggest buy recommendations during the bull summer, and now he refuses to cave in again and provide sell recommendations that same public is demanding...the gall)
I just have one question: Buy with what?!!!!!
Who has a huge stockpile of cash waiting to buy if they have been fully "in" up to now?
I mean really, the only people with cash to buy are the ones that sold when bulls were still saying "buy".
So James Stewart's and all other bull's advice now only applies to those people who ignored you advice before?
Very similar to the realtors huh!
Those who listened to them before already bought and are now stuck in something they can't sell.
Now may be close to the time to buy realestate, but the only ones able to were the bitter renter and bubble heads who ignored the "experts" before.
People are NOT throwing in the towel. That's a voluntary act to prevent more punishment. The NOD/NOTS we see are those being dragged to woodshed. The involuntary distress houses have barely made it to the NOD stage even now. Witness the credit card debt rise and falling auto sales. Where do you think that money is going when consumer spending is supposedly soft? Mortgages.
Do I "think" there's shadow inventory? I know it. The new blogosphere outrage is the number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned.
Rob Dawg | Homepage | 06.08.08 - 11:52 am | #
I think that's nation wide - suburban Minneapolis, Chicago, Atlanta too.
You can't believe how many biz contacts have confided in me saying they need to pull back, that they bit off too much house and we haven't even really started the white collar lay offs yet. They know they are at risk to being one of them. I don't have the heart to tell them its already too late for a lot of them - even if they don't pink slip. If the 'pull back' isn't already somewhere else in their personal budget they can allocate to home expenses then it isn't there...
And oh, there is that little problem with $5 gas and 25 mile round trip commute in a 18 mpg gas hog.
Rob Dawg wrote: "When the northern tier states get their first heating bills in November that is when we'll see the first capitulation."
My folks in the Portland, Oregon, area paid almost $3000 to fill up their oil tank for the winter. Portland tends to have fairly mild winters, but not this year. Some records were set for cold.
Still, to save money, the thermostats were kept down and we all wore sweaters when visiting. Definitely a change in lifestyles.
Again assuming the previous data is predictive, the last negative job number will arrive between November 2008 and November 2010, with August 2009 the most likely month.
Just about to return to Chicago suburbs after another month-long Silicon Valley sojourn. Had dinner with the boss last night at his home about 50 mi south in Hollister. He related that when he'd gone to the bank that morning, someone came in literally to "drop off their keys" -- and that they were told it just didn't work that way, that they'd have to be at least 30 days delinquent, etc.
My boss, a very smart fellow, bought there at the bottom of the last real estate bust circa '94, and has been refinancing down without taking any cash out, so he's very comfortable.
Roberts said staples - rice, dry beans, pasta - have been increasingly hard to find. The Missoula Food Bank has seen a 55 percent increase in price for those items in one year, forcing it to find new suppliers.
We found a source in Minnesota where we can pay last year's prices, but we have to buy six months' worth, Roberts said. And we don't have the space for that, so now we're trying to find more warehouse space.
Which, of course, costs money.
The Montana Food Bank Network, based in Missoula, provides food to charities around the state. Unlike similar umbrella groups located in large cities, the Montana network spans a huge territory. That means one thing - a ton of driving.
Our trucks travel over 100,000 miles a year, and that's become very, very expensive, Grimes said.
It's tough enough to fill the tank when it costs $50 for a small car. But try filling up a semi with diesel.
It used to cost about $500 to fill a truck, but now it's $1,000, said Grimes. Diesel at $4.50 a gallon is really eating us up.
The neg am stuff really contributed to the overbuild of "nice" homes.
Not only did builders build too many homes...but the nature of the tricky financing meant they built too many "expensive" homes.
This will probably affect pricing on even the low end of the housing spectrum since in previous busts we saw prices drop below the price/rent ratio based upon inventory alone.
Now we have an oversupply of the upper end inventory. When people are prepared to buy again...those that saved cash, kept good credit, and didn't buy before, may be able to get into a house that is much "more" house than their income could ever have afforded in a normal market.
The next generation of homeowners may look back upon the bubble with fondness and gratitude.
My folks in the Portland, Oregon, area paid almost $3000 to fill up their oil tank for the winter. Portland tends to have fairly mild winters, but not this year. Some records were set for cold.
Yes, the PDO is gonna spank the PNW for winters to come.
Still, to save money, the thermostats were kept down and we all wore sweaters when visiting. Definitely a change in lifestyles.
Bring back the Carter Index with all the old metrics. Use 1976 formulae and add Degrees set below 72 plus U6 Unemployment plus Shadow Stats Inflation.
Heck if we are replicating the Maunder Minimum event we'd best get busy cloning Mammoths and building really really big barbeque grills. "Oh, man, not haunch of Giant Sloth for dinner again!"
And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.
Its going on big time, said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. There is considerable interest in what we call owning structure like United States farmland, Argentine farmland, English farmland wherever the profit picture is improving.
These new bets by big investors could bolster food production at a time when the world needs more of it.
The investors plan to consolidate small plots of land into more productive large ones, to introduce new technology and to provide capital to modernize and maintain grain elevators and fertilizer supply depots.
But the long-term implications are less clear. Some traditional players in the farm economy, and others who study and shape agriculture policy, say they are concerned these newcomers will focus on profits above all else, and not share the industrys commitment to farming through good times and bad.
Farmland can be a bubble just like Florida real estate, said Jeffrey Hainline, president of Advance Trading, a 28-year-old commodity brokerage firm and consulting service in Bloomington, Ill. The cycle of getting in and out would be very volatile and disruptive.
Anyone out there think we need shitbags like blackrock owning the food supply and essentially screwing up food into the next subprime-like derivative bubble? I imagine SIFMA will start selling more food-based derivatives and assure us all that food and water will be the next crisis!
"Do I "think" there's shadow inventory? I know it. The new blogosphere outrage is the number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned."
Rob Dawg | Homepage | 06.08.08 - 11:52 am | #
Not only that but the number of vacant homes that are not bank owned is north of 50% in areas around here. It's pretty easy to figure out. I write down any visibly empty adresses and check ownership on the counties website. It has been running pretty consistent the last year.
As a little tidbit,we FC'd on about 2.5% of the counties housing stock last year. So far this year looks like it will be north of 3%. And we haven't hit the major Option Arm resets yet...
Not to change the topic of food and oil manipulation, but does anyone out there track FSBOs and the relationships of that inventory related to non-FSBOs?
Someone asked about I/O loans which generally fall into the Alt-A category. I'll post a link at the end of this to a couple graphs. One is similar to CR's but includes ALT-A and the other shows the geographic concentration of these loans.
I have contended for some time that this may be a bigger problem than subprime. However, the fact that there is such a concentration of this product in SoCal probably insures an epic bailout. There is simply no way that the politicians will abide mass foreclosures of homes owned by middle and upper middle class voters. Keep in mind that we are quite likely to have a liberal democratic administration that will be indebted to CA for its victory. I'm not endorsing the idea just being realistic. Here's the link- METROPOLITAN | Property Management & Real Estate Investments
'If oil costs us $30 a barrel or $40 a barrel or $120 a barrel, that's why the cost of gasoline is what it is,'' he said. ''It's not because of taxes. It's not because of ... refining and distribution. It's because of the cost of oil.''
But it's not only about the price of oil. Other costs are a factor -- though they've remained relatively stable.
For example, federal and state taxes added 40 cents to a gallon of gas in the first three months of this year, roughly the same amount as they added four years ago.
California's 63.9 cents of tax is the nation's highest, Alaska's 26.4 cents the lowest. Oregon falls in between, with 43.4 cents per gallon. How the money is used varies from state to state, though the federal take helps to build and maintain highways and bridges.
Marketing and distribution costs -- the tab for delivering gasoline from refiner to retailer -- were 27 cents to start the year, only 6 cents above the cost four years ago.
The cost of refining added 27 cents to a gallon in the first quarter of this year, a nickel less than what it added in 2004, according to the Energy Information Administration.
In the Philadelphia suburb of Havertown, Pa., earlier in the week, Sunoco station operator Steve Kehler received a load of gasoline -- 9,000 gallons -- which, at a wholesale price of $3.729 a gallon, cost him 4 cents more than the previous load.
That left him in a sticky situation: Should he raise prices right away to recoup some of his higher gasoline expenses, or should he hold off for a couple of days in hopes his competitors will also have to raise their prices?
''I'm surrounded by $3.89's, and I'm already at $3.91,'' said Kehler, referring to his prices and those of some nearby competitors. ''I'm going to play a little waiting game right now.''
The $33,600 Kehler must pay for his overnight gasoline delivery won't be debited from his bank account for a few days. That gives him a little breathing room, time to hold prices steady. Hiking prices too quickly will hurt sales.
''I'll probably change it tomorrow night, at closing,'' Kehler said. ''I'll go up 4 cents.''
That will put Kehler at a gross margin of about 20 cents a gallon. After paying credit card fees, labor and rent, Kehler will be lucky to break even on his gasoline sales.
Thanks for the graph. It makes sense now why the middle/upper end here in SW Florida hasn't been hit really hard yet. It's on the way. I have noticed in the last 3 months a rush to the exits on larger tracts of land. Listings went from 50-75 of 1 acre and larger to 400+.
I noticed someone parked a very nice Bayliner on the county road by my house. No canvas cover. I walked over to look at it and recognized the marina markings. It had come from a boat hotel that specializes in indoor storage. When you want your boat they pull it off the rack, gas it, wash it, and have it waiting in the water for you. Methinks it got rather expensive for some one. Just hope they put some canvas cover on it - nice boat.
"If you take the cost of refinancing in points, fees and other expenses and then distribute that across a mere 18 months, I think you find that your real "interest rate" turns out to be significantly more than 3.10%.
Anonymous | 06.08.08 - 11:47 am | # "
Agree. The cost of refinancing for my clients at the time was approx $2500. On a $650,000, you would recoup most of that. But more importantly as I said "when the situation dictated it". For instance at the time I only needed the loan for aprox 1-2 years so it was a no brainer. Sorry, should of went into more detail.
From mid-2004 to mid-2006 I worked for one of the major mortgage industry trade associations - and my job involved the courses that taught things like i/o and negative am to loan officers.
Trust me when I say that the likely hood of any one of them understanding or explaining the 110% cap was non existaint.
Now if only I didn't have my albatross of a 2002 era condo purchase in DC to deal with....
Farmland can be a bubble just like Florida real estate, said Jeffrey Hainline, president of Advance Trading, a 28-year-old commodity brokerage firm and consulting service in Bloomington, Ill. The cycle of getting in and out would be very volatile and disruptive.
Anyone out there think we need shitbags like blackrock owning the food supply and essentially screwing up food into the next subprime-like derivative bubble? I imagine SIFMA will start selling more food-based derivatives and assure us all that food and water will be the next crisis!
2Fat2Fail | 06.08.08 - 12:29 pm | #
You want to see small private farmers stay in farming - call your congress critter and tell him to vote to stop supporting large corporate agri business via subsidy.
I live in the grain belt & can tell you first hand - the subsidies are 'promoted' as support for family farming but the 'families' getting the lions share of 'support' are the families that own ADM, Cargill, etc.
If the big corp folks thought they could really lose a lot of money in farming (which is currently hard to do if you have deep pockets & can weather the 'dips' like the big boys can) then maybe they wouldn't pour into farm land like it was a 'no lose investment'. Bubble hardly describes it.
Small farmers though - if smart & resourceful - can get 'small' real fast. But they have to structure their business & finances that way prior to the mess. They too are being encouraged to go fence row to fence row with latest & greatest equipment via high leverage. Only the old timers who remember the farm crisis have held back.
Plus if you absolutely have to support small farmers there are better ways to do it other than direct subsidy to a whole crop class via price support. Small farmers generally need more help on the front end (starting out)... okay so offer down payment assistance on farm land & equipment when they first go into the business... maybe even 'grants'... but price supports in general only end up in the pockets of the largest agri businesses, lenders to farmers & equipment mfgrs - NOT the farmers... all of it at our expense.
It really is setting us up for another 80s style farm crisis... but you wouldn't know it looking at the current land & commodity prices. After all... [Fill In Blank With Asset Class Of Choice] only goes up. Forever. Right?
Here are the top five challenges you face with FHA loans:
CHALLENGE #1: The Property Flip
For those that haven't run into this yet, you probably will very soon.
When processing an FHA loan, we have to perform a title search to see how long the owner of the subject property has owned the house.
If the owner has owned the house for less than 90 days, it's considered a "flip."
The 90-day window ends from the day the seller signs a new contract. If your contract is signed before the seller has owned the property 90 days, the file has to go to HUD for an exception. FHA will only make an exception if the property is a Bank-owned REO.
To make matters even more challenges, if it's a Bank-owned REO property, and you seek the exception, the bank has to either be State or Federally chartered for the exception to be granted. Not all banks are.
REO properties owned by Fannie Mae and Freddie Mac are exempt as well. If the bank-owned property is not State or Federally chartered the home cannot be sold to an FHA buyer before 90 days.
We are seeing a ton of buying activity in foreclosed homes. Some tell me its 80% of all resale purchases today in our market. In many of these transactions today, FHA buyers are purchasing an REO.
The bank foreclosed on the previous owner, has taken possession of the property and is the new owner.
The bank then turns around and puts it on the market with a real estate agent, and, fortunately for them, gets an accepted offer within 90 days of taking possession.
This then requires the buyer's lender to send the file for FHA for a flipped-property exception.
FHA is taking as many as 10-15 business days to approve the exceptions in our market. You can imagine what those 10-15 business days can do to your close of escrow date.
The Solution
When making the offer, have your trusted home loan consultant look up the subject property on the County website, or get with your title rep, and identify which bank owns it, how long, and if they are State or Federally chartered.
If they owned it for less than 90 days, prepare the buyer to get their conditions into the lender as soon as possible so your lender can submit the loan to FHA as soon as possible.
Also, you may want to ask for a 45-day escrow from the bank, on FHA loans, so you don't have to stress about getting an extension at a later date.
If the bank is not State or Federally chartered or has some other exemption, and they haven't owned it at least 90 days, you may want to consider financing other than FHA.
I was just listening to the embedded Scarecrow song and I agree with you on the subs. I had an idea about three years ago to go buy an old wheat farm and just sit on and then do organic wheat. I have these ideas and as with many, I didn't do that one! Crap! I love making bread and have a great dis-trust for corporate farming and the while genetic alteration situation provided to us all by blackrock-like businesses that will care less about the health of people or the cost of food.
This seems to be an era of compounding problems where you have economic distortions, bubbles, pollution, water problems, food problems...it just looks bleak, and I'm very afraid we have just seen a slight bit of the tip of this expanding iceburg! I think we will see starvation this winter in many areas and people like Bush and congress and the senate will all sayit was Clinton's fault...
he crops we grew last summer weren't enough to pay the loans
Couldn't buy the seed to plant this spring and the Farmers Bank foreclosed
Called my old friend Schepman up to auction off the land
He said John it's just my job and I hope you understand
Hey calling it your job ol' hoss sure don't make it right
But if you want me to I'll say a prayer for your soul tonight
And grandma's on the front porch swing with a Bible in her hand
Sometimes I hear her singing "Take me to the Promised Land"
When you take away a man's dignity he can't work his fields and cows
There'll be blood on the scarecrow Blood on the plow
It's interesting that the HELOCs have a market value clause and this product doesn't. Seems dangerous to the lender.
Well, to a lender there is a real difference between a commitment to lend additional principal (a HELOC) and a commitment to allow (some degree of) capitalization of interest (a neg am). With a HELOC, someone in a declining market could draw out $50,000 to several hundred thousand in one chunk, depending on the line limit. A neg am ARM can only increase to its balance cap, and only a small bit per month. On a $300K OA with a 110% balance cap, the max neg am is $30K over as much as five years. Even in a declining RE market, that can be close to a "rounding error" on the original appraised value.
The thing is, the CLTVs were much higher on the HELOCs than the OAs, by and large. That means, because the HELOC lenders were so aggressive with CLTV, they had to protect themselves with the ability to freeze the line if the value declined. On the whole, the OA lenders had (relatively) conservative LTVs.
I remain convinced that the real risk with OA isn't that the balance will exceed the value. The real risk is the payment shock when the thing ultimately recasts. On the other hand, most of these HELOCs had affordable payments; the most immediate risk with them was allowing the borrower to go up over 100% CLTV by drawing the remaining line amount.
Last year Bill Longbrake, former CFO of WAMU, recommended contacting Option ARM borrowers and modifying Option ARMs into products with longer resets and/or lower fixed rates. Many WAMU Option ARM loans were retained in portfolio so modifications are possible. Has anyone seen numbers on Option ARM refis and/or modifications?
My anecdotal example is that here in the Woodbury tract where I live in Orange County, I know of 6 foreclosures that I can't find on Ziprealty that are in a 2 block radius of me. Three of these are in the million dollar plus tract of Mille Fleur. You walk by and there aren't any "For Sale" signs but there is a lock box on the door.
The 6 other homes for sale in that development are going to get a rude awakening when these foreclosures do sell.
The 6 other homes for sale in that development are going to get a rude awakening when these foreclosures do sell.
Yeah, but they'll have hibernated until 2010.
I don't think there is any shadow inventory, we're not in Mordor. I think it's all "pent-up" supply waiting for the "pent-up" demand that we used to hear about last year.
You don't hear about that pent-up demand so much any more; did they all buy houses or are they self-gratifying the urge by looking at Housing Porn?
Dryfly, I think the best thing you can do for family farmers is provide a national crop insurance program instead of subsidies to the largest producers. Although subsidies have their place since they supported production when prices were low so that we have the supply now when prices are up. Food policy is just as important as energy and defense.
2Fat2Fail, the idea of consolidating and modernizing farming in places like Africa and Eastern Europe is great for increasing world food supply but the cost of food will go up in the short run as prices of fuel, fertilizer and pesticides go ballistic. Once production booms we will have a world wide farm crisis as prices plummet. However in these newly developed farming regions they will have the added problem of massive unemployment as only 2-3% of their population is really needed to run the modern farms.
Since we're on the subject of real estate,...
I was driving through the less affluent residential part of San Diego when it struck me how many of the corner houses were for sale. It used to be (long ago) that the corners were more desirable, but in my view that has changed; I wouldn't want to live on the corner in these neighborhoods, if I had to, I'd pick one of the middle houses. The neighborhoods are not poverty stricken, but definitely working class. Is this just a situation in the poorer parts of town or is it a change in perception? Do people still want to live on the corners to show off their "pride of ownership"?
...The thing is, the CLTVs were much higher on the HELOCs than the OAs, by and large.
If I'm not mistaken large % of the POAs originated between 2005 and 2007 were high cltv purchase transactions with a purchase money 2nd. The net effect of the recasts may be to wipe out all of the value of the equity products as borrowers make "ruthless modifications".
""I call the house my albatross," Shaw said. "I feel a sense of relief knowing I won't have that house to deal with anymore. I'm not looking forward to moving and selling everything. But I am looking forward to not having stress about something I can't afford."
"
I live in the same county as this woman, a place where property values are thought to have "held up" compared to other places. But obviously the wave is coming if she's typical. And she probably is.
The lawyer with the "this year will be a blood bath" quote is also a local. Funny, ya gotta read Business Week to hear something that the local press won't tell you.
"Heck if we are replicating the Maunder Minimum event we'd best get busy cloning Mammoths and building really really big barbeque grills. "Oh, man, not haunch of Giant Sloth for dinner again!"
I'm a firm proponent of global warning as a phenom created or at least enhanced by man's activities. And yet I'd find it extremely amusing if high CO2 was counteracting a Maunder Minimum. Talk about dumb luck -- the only kind humanity deserves.
Who knows, if we'd never developed heavy industry maybe we'd be chewing walrus blubber right now!
Re: fuel, fertilizer and pesticides; these are all things that require energy to produce and thus reduce profit margin, and we have not yet brought up the issue of water shortages which are directly related to poor planning and poor farming practices. Using food as a mechanism for a commodity bubble is insane and I feel we will see depression-like food shortages worldwide because of fuel costs. Add to the mix global warming and yield failures and you may end up seeing the next Dust Bowl & Depression, as Hoover-Bush sits idle like a retarded quadriplegic hooked up to lobbies life support!
"2Fat2Fail writes:
Add to the mix global warming and yield failures and you may end up seeing the next Dust Bowl & Depression, as Hoover-Bush sits idle like a retarded quadriplegic hooked up to lobbies life support!"
To look at the bright side of things, there's probably enough food in storage that Bush will be out of office before any famines hit. Always look on the bright side of life.
Average Joe writes:
Using data provided by Downey's Q108 10Q, 36% of their recasting loans go to NPA heaven
Thanks for the info anon.
I am not sure what that means though.
it means that once the loan hits it's max loan limit (i.e. min payment is over, and must make a fully amortizing loan payment), the borrower gives up and it becomes a non-performing loan.
and that i imagine starts the NOD/Foreclosure process.
But this stat is particular to Downey, actual mpg may vary....
crispy&cole writes:
Avg Joe - Very true. The booking of "earnings" on the interest portion of these neg am loans is a joke, wait until they are forced to reverse the earnings.
Anyone have a guess at the dollar figure involved?
However I don't believe that 36%. IF it's true, it can't last. What are the other 64% doing? Paying the higher rate? Refinancing? Selling?
The future will be much worse. If these are recasting now, then they are likely on purchases well before the peak. Meaning some may still have enough equity to squeeze out a refi or sale.
I think any write-downs based upon anything below 70% are going to be WAY off!
I think we will see starvation this winter in many areas and people like Bush and congress and the senate will all sayit was Clinton's fault
Why would it be Bill's fault? Anyways, it's too late for GWB to get anything done. Except for national security, he doesn't have dictatorial power; even administrative regulations have to go through pain in the ass notice and comment periods. This baby's in the hands of the Dems: Pelosi, Reid, and (pretty soon) Obama. So far the Pelosi Congress has not exactly been inspiring, except for feeding us stimulus crack. Just let the damn levees break!!
Re: "So far the Pelosi Congress has not exactly been inspiring"
According to most polls the Democrats have a disapproval rating of 60% and most Americans cannot perceive any value in the newly elected Democratic majority.
The poll of 1600 voters in 45 Republican congressional districts showed on average a 33% approval rating for President Bush, a 38% approval rating for the incumbent Republican and a strong desire for change.
In the 45 Republican districts the poll found 55% of people said they wanted to vote for a Democrat for Congress, compared to 49% in January. Just 37% of respondents said they would vote for their Republican incumbents, who were named.
Whats stunning about this is not just that the race has moved over the last three months, said Democratic pollster Stan Greenberg. Theres no reason to believe this wont continue to move. He is a founder of Democracy Corps, a non-profit that conducted the poll.
Economic anxiety is rampant; Bush is now the most unpopular president in the history of the Gallup poll; and McCain's big economic idea is to cut corporate taxes and make permanent Bush's tax cuts for the most-affluent Americans.
Dryfly,
Another thing that would greatly help the small farmer is a change in local property tax laws. In many states, such as GA, land does not qualify the for agricultural tax status unless the owner of the property can prove that 90% of the owner's income for the past 3 years was derived from farm income. This makes it almost impossible for a small farm to get started. The laws should be changed so that if a property owner is filing income taxes using federal tax forms for farmers, the property owner automatically gains agricultural property tax status for the farmed land, regardless of profit or loss.
Doom,
I think it was you that asked about geographical info on interest only loans. I saw one years ago, just before the bubble bust, that I think was on MSN. (Try Google). I remember it because GA was listed as having 50% of it's mortgages in the interest only category.
My guess is that the banks have lowered prices so significantly to move inventory, all the discretionary sellers have just left the market
My guess is crispy and cole lives in OC. Invetory is flat, but NOTHING is moving. Houses are not coming on the market so discretionary sellers are gone. But I would disagree that banks are lowering prices. I think the bankers feel as long as they have a blank check from the fed they can manipulate the market with all their inventory. With our tax dollars they are going to ride storm out.
Do you know something specific here about WM and LEH? Curious as I'm shorting both. Also it seems an odd couple, given that both are on the ropes... Do you mean that they're being merged together, or with 2 larger better capitalized banks?
I don't understand why mergin 2 undercapitalized banks would help anything.
IAS360 House Price Index Provides First Monthly View of Housing Price Trends Based on Neighborhood Level Data.
Integrated Asset Services (IAS), a leader in default management and residential collateral valuation, just launched its monthly-reported IAS360 House Price Index Integrated Asset Services IAS360
The new Index represents the industrys first clear representation of U.S. housing market trends at a county level. IAS360 House Price Index is a comprehensive housing index tracking monthly change in the median sales price of detached single-family residences in more than 15,000 neighborhoods across the U.S. This data is then rolled up to report on the changes in 360 counties, nine census divisions, four regions, and the nation overall. The timeliness of the data, which is based on all arms-length transactions occurring in underlying neighborhoods, makes the IAS360 the leading indicator for housing price trends in the U.S. April Index: IAS360 County House Price Index
Citigroup Inc will close 32 offices and 540 ATMs in Japan as part of its restructuring plans for its Japanese consumer finance division, CFJ K.K. As it previously announced, Citi is revamping its Japanese operations as it integrates the operations of brokerage firm Nikko Cordial Corp, which it acquired in 2007.
The closures are part of a broader plan that combines the management of Citis banking, securities and related business, including 31 retail banking branches and 110 retail securities branches.
Japanese banks posted a total of 2.44 trillion yen in loss on investments in securitized products at the end of March, the government said Friday, offering fresh evidence that the global financial turmoil stemming from U.S. subprime mortgage problems has increasingly damaged their investment portfolios.
nited Airlines, the second-largest U.S. carrier, said Wednesday it was cutting its fleet, operations and up to 1,100 additional jobs to compete amid soaring fuel prices and a weakening domestic economy.
United said it would trim U.S. capacity by 17-18% through 2009 and remove 100 aircraft from its fleet, including 30 Boeing 737s that were previously announced.
Japans foreign exchange reserves came to $996.98 billion at the end of May, falling below the $1 trillion level for the first time in four months on declines in U.S. Treasury bond prices, the Finance Ministry said Friday.
The countrys foreign reserves, the second largest in the world after China, sank $6.86 billion from late April for the second straight monthly slip.
Sales of new imported vehicles in Japan in May fell 23.8% from a year before to 15,811 units, the Japan Automobile Importers Association said Thursday. Of them, sales of vehicles made by foreign manufacturers dropped 20.3% to 13,953 units.
Passenger car sales decreased 29.8% to 14,458 units, and truck sales surged 10-fold to 1,353 units. Volkswagen was the best-selling imported vehicle brand, though sales fell 10% to 3,314 units for a market share of 20.96%. BMW ranked second with sales of 2,485 units, down 31.7%, for a 15.72% share. Mercedes-Benz was third with 2,328 units, down 21.6%, for a 14.72% share.
Japan's average retail gasoline price is projected to top 170 yen per liter as major oil wholesalers push up the product prices on Sunday with continued rise in world crude oil prices.
Japan's biggest oil distributor Nippon Oil Corp., raised by a record high of 12 yen per liter the wholesale prices of its gasoline and other petroleum products for shipments in June while other major wholesalers increased by some 10 yen per liter.
World crude prices are expected to reach $150 per barrel by the end of summer, Iran's representative to the Organisation of the Petroleum Exporting Countries (OPEC) was quoted as saying on Sunday.
"I forecast that by the end of summer the price of oil will reach $150 per barrel," Mohammad Ali Khatibi was quoted as saying by Iran's state broadcaster, referring to the summer in the northern hemisphere.
As reasons for this, he cited a weak U.S. dollar as well as the situation in the Middle East, without elaborating.
Gasoline is now around $6.50/gal (170 to 180 yen a liter) here in the Tokyo area. And I'm seeing significantly less car traffic. The buses and trains are getting more riders. Big headlines in Asahi Shinbun today "The Era of 170yen Gas!". (old news there)!
I'm thinking GDP (NDP) impact from $150 oil and if that is so, IMHO we will see $5.00 oil as an American going into winter!
Meanwhile: H oover-Bush sits idle like a retarded quadriplegic hooked up to The Lobbiest Lifeline waiting to get more support, or is just a kickback or percentage cut?
NHK reports that gasoline prices went up 10 yen today to 170-180 yen per liter. That's about 7 dollars 80 cents per gallon.
Old news: A super-spike could push oil beyond $150 a barrel by October, the highest it been in more than 135 years, experts say. That would drive the price at the pump past $4.50 a gallon and trim US economic output 3.3% in the 2 years following, reports the Wall Street Journal.
Sen maria Cantwell held a hearing last tuesday and those testifying suggested we could see the rug pulled out from under the oil futures trading market.
Cantwell had testifying, Michael Greeberger, x chair of the CFTC and Mr. Gerry Ramm President, Inland Oil Company on behalf of the Petroleum Marketers Association of America, amongst others.
and they agreed about the problem and solutions are
apply ferc regulation to the oils futures market...
margin requirement like in the equities market,
a regulatory distinction between traders who are in the industry as producers and marketers verses speculators who never take physical possesion,
and transparency requirements.
all who testified said if congress did just one thing...reversed a letter of intent given to dubai that allows that country to regulate 30% of the US oil futures market (texas intermediate crude futures are evidently routed)... thru ME)
then prices would make a rapid U turn.
also 4 out of 5 testifying said they agreed with the CEOs of US Oil Majors when they said last month that only about 80 dollars per barrel was production, trans, refining and profit driven etc...rest is speculation
"sources available ."
Substance over Form | 06.08.08 - 5:36
Well make sure ya jump right in and buy wheat futures. Because they can only go higher!!!
The problem with the numbers you cited is they do not count stored grains on farms. I won't tell you how much wheat my uncle is sitting on but it a large chunk of your number...I can,with confidence,say there is wayyyyy more than 2.7M bushels unsold in a certain county in Ohio.
2Fat2Fail: My problem with the Democrat Congress was that they won in 2006 with the promise of restoring responsibility back to Congress after 12 years of GOP incompetency, especially regarding fiscal responsibility. But they've failed miserably, albeit under rough circumstances. In a federalist system, Congress makes the laws; with the except of national security, it can do what ever the hell it wants. But for the past 1.5 years, it's been hiding behind the incompetency of GWB. Last year when everyone one of us knew this caca was coming, Congress was too busy trying to bust Roger Clemens. I just want them to stop pandering and do something substantive, other than hand out bailout crack. Stop pandering with this windfall profit tax; Congress knows the IRS can't come after foreign income until it gets repatriated. To bad the American public doesn't. And stop hiding behind Iraq, the actual, and not derivative, costs of the War has been about 500B; the total of the bailouts/stimulus is getting close, and may surpass it soon. If they had used the stimulus for something creative like more mass transit, I wouldn't have a problem, even though the "fix" would take longer, because it would have provided jobs and lessened our energy independence. But instead, the bulk of stimulus went to China and OPEC.
I agree that the tax on the top 1% of individuals needs to be raised, but I don't mind McCain's corporate tax cuts, as long as they are targeted to 1)industries that might move internationally, 2)net exporters. So that eliminates big oil, Wal-Mart, etc. To paraphrase another poster, to maintain or increase our standard of living in a global world, we have to pass those costs to someone else. Already, Canada is trying to poach corporations, by drastically lowering both the national and provincial corporate tax rates. Combining their cuts with America's increases, why a US corporation would stay in America? In the past, it was because of bilateral trade agreements and favored nation status, but now WTO, WIPO, etc. provides the same benefits to being in a superpower. If Canada ever got true contract manufacturing, like in China, we're in deep caca.
McCain has been consistently attacking the ethanol tax subsidy and mandate, which is a major factor in the spike in food prices. He's the only (major) presidential candidate to stand tall on that issue.
Yes , i thought of that.
I suppose ADM has a little stored also.
There is food on the farms - Cobra is right - but NOWHERE NEAR as much as there should be given how tight the global supply/demand curve is and how hard it would be to 'back fill' should we really need food.
I don't know if you guys know it - but the Midwest is flooding again - not as bad as 1993 but bad. I was in Iowa Wed-Thur-Fri and its starting to look something like a giant swamp or a new great lake. Its raining here in SE Minnesota (again) hard as I write this - washing already planted field in to the Mississippi River.
How much yield is lost? No idea but some is lost. Probably not a lot yet but some is gone for this year already.
Food is one of those things that having a surplus isn't a terrible thing for society. Might be terrible for the individual farmer but not for society.
The opposite (running seriously short) on the other hand is a problem. I think JIT is great - but not with products that take a year to 'rework' and that if you don't get them in time you die.
When 70%-80% of the population no longer even knows what a real farm is or how it works it does open the door for policy miscalculation. Just sayin'...
And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.
Its going on big time, said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. There is considerable interest in what we call owning structure like United States farmland, Argentine farmland, English farmland wherever the profit picture is improving.
These new bets by big investors could bolster food production at a time when the world needs more of it.
The last time I recall that there was a rush to invest in farm land by absentee owners was during the extreme inflation of 1979/80. Farm yields went down to about 1%. Then of course Volker came along, jacked up interest rates, and the bubble burst. By 1984 farms galore were being auctioned off in the Mid West.
Richard Nixon
Address to the Nation Outlining a New Economic Policy: "The Challenge of Peace."
August 15th, 1971
Good evening:
I have addressed the Nation a number of times over the past years on the problems of ending a war....
We have made progress against the rise in the cost of living. From the high point of 6 percent a year in 1969, the rise in consumer prices has been cut to 4 percent in the first half of 1971. But just as is the case in our fight against unemployment, we can and we must do better than that.
The time has come for decisive action-action that will break the vicious circle of spiraling prices and costs.
I am today ordering a freeze on all prices and wages throughout the United States for a period of 90 days.1 In addition, I call upon corporations to extend the wage-price freeze to all dividends.
1Executive Order 11615.
I have today appointed a Cost of Living Council within the Government? I have directed this Council to work with leaders of labor and business to set up the proper mechanism for achieving continued price and wage stability after the 90-day freeze is over.
Let me emphasize two characteristics of this action: First, it is temporary. To put the strong, vigorous American economy into a permanent straitjacket would lock in unfairness; it would stifle the expansion of our free enterprise system. And second, while the wage-price freeze will be backed by Government sanctions, if necessary, it will not be accompanied by the establishment of a huge price control bureaucracy. I am relying on the voluntary cooperation of all Americans-each one of you: workers, employers, consumers-to make this freeze work.
Working together, we will break the back of inflation, and we will do it without the mandatory wage and price controls that crush economic and personal freedom.
That prediction of job losses reversing sometime later in 2009 is interesting, considering that's exactly when boomer demographics will turn into a major economic drag.
The recent news is u.s. govt. has
2.7 million bushels of wheat !!
The gubmint doesn't have jack squat. I saw more than 2.7 million bushels get harvested yesterday. Every man jack and his cousin planted every last acre this year. [/exaggeration]
Since we're on the subject of real estate,...
I was driving through the less affluent residential part of San Diego when it struck me how many of the corner houses were for sale. It used to be (long ago) that the corners were more desirable, but in my view that has changed; I wouldn't want to live on the corner in these neighborhoods, if I had to, I'd pick one of the middle houses. The neighborhoods are not poverty stricken, but definitely working class. Is this just a situation in the poorer parts of town or is it a change in perception? Do people still want to live on the corners to show off their "pride of ownership"?
I've noticed a similar pattern in Arizona. The foreclosures/sales seem to be concentrated on the houses that border the main surface streets. It's usually the lower end developments as well. The higher end ones put some sort of landscaping feature where the corner house would normally go.
As to corner houses on the interior of the development, it doesn't make any difference. Things are for sale everywhere.
McCain has been consistently attacking the ethanol tax subsidy and mandate, which is a major factor in the spike in food prices. He's the only (major) presidential candidate to stand tall on that issue.
Also part of that stupid farm bill were hundreds of millions of dollars in conservation easements. Come on, I reduce, reuse, and recycle as much as the next person, but damn, getting paid not to farm? With record agricultural prices and a record current account deficit, Congress doubled down and lost twice with that stupid bill.
"Also part of that stupid farm bill were hundreds of millions of dollars in conservation easements. Come on, I reduce, reuse, and recycle as much as the next person, but damn, getting paid not to farm?"
Perhaps the reason for the conservation easements had more to do with suppressing speculative RE activity and had little to do with the productive output of farms. Conservation easement - Wikipedia, the free encyclopedia
"Conservation easements may result in a significant reduction in the sale price of the land because a builder can no longer develop it. In fact, this difference in value is the basis for the granting of the original tax incentives."
Yes, I understand that conservation easements come in many forms, from preventing over-development in urban areas (greenspace) to ones for environmental reasons. But the easements that were part of the farm bill were to maintain the byzantine price scheme that they have.
forgot to add: my main beef is that they included for this year (and possibly the next). Given that agriculture is net export industry, and our current account balance is in the crappers, the government should not disincentivize anything that brings money into the country (at least for the time being). And not to mention the estimated one million deaths from starvation during the next year.
This is the bloodbath that is coming to a town near you.
In Irvine, CA there were 900 properties listed on MLS for sale as of June 2nd. There is also 701 distressed properties which can be confirmed through realtytrac and foreclosureradar
Only 11, yes ELEVEN, bank owned properties are even listed! Now that's one hell of a shadow inventory.
un autre canadien avec popcorn writes:
"OT but has anybody noticed that the futures numbers on Bloomberg appear to be broken. They haven't moved in three days. Is the meter pinned."
bloomberg is always pinned - to the feds shirt-tails: when word of BSC insolvency, or ratio trouble at C or LEH starts to leak, b'berg will bury the news.
When the U$ Dollar drops 150 tics some morning to a 6 year low as oil buyers face the fraudulent U.S. economic numbers and decide to move out of cash into oil, b'berg will again be the last to report.
If last Friday's FXF, FXY and FXE currency option gains are followed by a further $ drop tomorrow 6-9, guess who will tell you last?
Speaking of shadow inventory...There are three co-workers in my immediate workgroup here in San Diego that have stopped payments on their houses the first of this month. That is out of roughly 25 people. One was on the fence the last few months the other two recently decided it just didn't make sense to keep paying. 2 could easily afford their payments, the other a bit shaky. These houses ranged from about 500k to 900k. Big wave coming in San Diego. Once these people have made the decision to leave its a huge weight off their shoulders. Especially when I tell them they will be able to stay rent free for 8 months or more. Their little eyes just light up. Expect more happy (free) renters.
I went out to eat the other night which is a very rare thing for me but it was a special occasion a niece had graduated. Now it seemed to me, that their was just as many people out as always..
I just keep wondering how long can people keep this up with $4.00 gallon gas, rising food prices and stagnant wages.
Perhaps some people are just determined to keep partying right to the end. Or maybe, people are just oblivious as to what is coming?
Things have been so good for so long, that people are in kind of a Alice in Wonderland mentality..
Boy is it going to hurt when Alice finally as to comeback up the rabbit hole and feel the truth.
I poked my head out awhile back and am now feeling the pain..Ouch!
CO2 writes:
McCain has been consistently attacking the ethanol tax subsidy and mandate, which is a major factor in the spike in food prices. He's the only (major) presidential candidate to stand tall on that issue.
even a stopped clock is right twice a day, (or once depending on the clock)
Firstust?
"I call the house my albatross," Shaw said. "I feel a sense of relief knowing I won't have that house to deal with anymore. I'm not looking forward to moving and selling everything. But I am looking forward to not having stress about something I can't afford."
Most of these homedebtors will bail way before '10 and '11
Be sure to see the numerous comments at Jim The Realtor's blog: Neg-Am Reset Update - Journal - bubbleinfo.com
Rob - Did you see BMIT's list of foreclosures and NOD's for San Diego. Matches the new record hit last month in my area. We have 3 times as many foreclosures as we do sales. People are throwing in the towel
Something intersting is occuring in my area. I wonder if this is going on in other parts of CA
Inventory is flat YOY. However, foreclosures are up significantly. I think there is some serious shadow inventory:
Beg of year inventory 3,500. Foreclosures in 2008 so far 3,200, sales 1,200. Inventory on June 1 - 3,300.WTF????
Good thing housing is going to turn around in the second half of 08 or this might have been a problem.
dodged another bullet.
Full Paulson Ahead!
In 2002, I was a residential loan officer and I had an option ARM. I also recommended it for several of my clients when the situation dictated it. The full rate (interest only), was 3.10%. It was a great loan for about 18 months. The key was to refinance out of it, when Libor started to rise. For those that did not, this is a deadly loan.
It should be noted that I frist saw a graph very much like this one on Calculated Risk probably a year ago.
Kudos once again to CR and Tanta for giving us a free window into the future.
totally arbitrary sidenote. I heard a story last night of the first real price reductions in upstate NY. Houses were going for $500,000 a year or two ago in one area of Poughkeepsie. Best school district, etc. Most recent sale of something that had been purchased for $500K: $280K.
i would second 12th's comment above on the graph. that has been a golden light to guiding my investment plans.
Crispy & Cole / CR
Thanks for the info.
I have a question. Is there a way we can get a grasp on the dollars remaining to amortize? Is there a way to see how much left-shifting potential remains in that hump?
The gray bars are higher than right now for pretty much the rest of that plot.
"probably a year ago." Amazing eh?
Separately, can anyone comment as to whether these loans have a market value clause? If this is the case, one could conclude there should be many early recasts.
I think that will be when CR's thesis that this will be a middle-of-the-road recession will be tested: mid-to-late 2009. It may be by then that the world-wide building boom will have slowed appreciably, export-led economies will be under continued pressure, and the commodity price boom, even if it isn't a bubble, will have abated. If the net-consumers (US, UK, Italy, Spain, etc) are still slowing further, and the banks haven't regained their footing, things could get ugly and a lot of over-capacity could become apparent.
CR has shown great judgment throughout this episode, so if I were betting, I'd back his scenario. But I'm keeping an eye out for what I outlined above.
Allen C - if by "market value clause" you mean a recast could be triggered by some drop in value, then no.
Brian B.,
If you take the cost of refinancing in points, fees and other expenses and then distribute that across a mere 18 months, I think you find that your real "interest rate" turns out to be significantly more than 3.10%.
I agree with CC, most of these loans will be foreclosed on long before 2010, 2011
Okay, I read (scanned through) the comments over on Jim The Realtor's blog post on this topic.
I formally request a Tanta post for further clarification...
I hope it's already in the works...
~
comment from Jim's board - is this true :
assuming 6 months of delinquency would result in a NOD filing.
assuming another 5 months to reach REO status (I'm adjusting the usual 4 months to 5 due to postponements).
that's 11 months from delinquency to REO.
assuming once reset hits people automatically go delinquent, that means here in 2008 Q2 we are still digesting subprime resets from 2007 Q2.
the huge bolus of subprime reset doesn't end until end of 2008. Which means thru out 2009 we'll continue to be working on all of the resets from 2008.
then you move the bulk of the option arm resets to 2009 Q4 and thru out 2010. essentially the market doesn't get a break at all. we march right from the subprime implosion directly into the option arm implosion as a continuous rolling bust.
last chance for CV folks to get out alive before they drown or face a 10 year lock down.
http://www.lasvegasrealtor.com/stats/statindex.htm
sales up, listing down....price not dropping much.
crispy&cole writes:
Rob - Did you see BMIT's list of foreclosures and NOD's for San Diego. Matches the new record hit last month in my area. We have 3 times as many foreclosures as we do sales. People are throwing in the towel...
Something intersting is occuring in my area. I wonder if this is going on in other parts of CA
Inventory is flat YOY. However, foreclosures are up significantly. I think there is some serious shadow inventory.
The BMIT graph needs to be made scarier by shifting the FCs 10 months to the left so the graphs line up. Then you can see the FCs Nov '08-Feb '09. And don't think the banks are gonna get a kind hearted around Christmas this time.
People are NOT throwing in the towel. That's a voluntary act to prevent more punishment. The NOD/NOTS we see are those being dragged to woodshed. The involuntary distress houses have barely made it to the NOD stage even now. Witness the credit card debt rise and falling auto sales. Where do you think that money is going when consumer spending is supposedly soft? Mortgages.
Do I "think" there's shadow inventory? I know it. The new blogosphere outrage is the number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned.
Thanks Shnapster...It's interesting that the HELOCs have a market value clause and this product doesn't. Seems dangerous to the lender.
Beg of year inventory 3,500. Foreclosures in 2008 so far 3,200, sales 1,200. Inventory on June 1 - 3,300.WTF????
crispy&cole
My guess is that the banks have lowered prices so significantly to move inventory, all the discretionary sellers have just left the market.
The excess and waste of the '90s and 1st 7 years of the new century have finally caught up with us. Do we really need McMansions for 4 people or a Hummer to ferret 2 people to the grocery store?
If people are too glutenous to curb their waste of food and our other precious resources, price increases will make the choices for them.
I have no problem with high oil and housing prices. This is what we all deserve for spending, eating, and destroying beyond our necessity as a society. Let's see how wateful we remain now that there is a cost associated with our actions.
Prediction: a)we are forced to care for our purchases and posessions for they'll have to last longer. b)Consume less food and actually eat leftovers. c) SUVs... mommy what was an SUV? d)McMansions. each 1 can be housing for dozens of families. We're running out of land is the 2nd bigget lie of the RE industry to Housing prices ALWAYS go up.
Good luck to all.
Bob that would be true, but the distressed listings (per MLS) are holding steady at 60% of all listings.
I am with Rob on this, banks are falling behind on getting their homes listed as they are flooded with foreclosures
"number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned."
OK...so we have the above plus rumors of lenders not foreclosing. Are they masking the disaster or is it only processing delays?
Tanta's NegAm Ranta:
Calculated Risk: Tanta: Negative Amortization for UberNerds
Now the only other major catagory left to be plotted and graphed are the "interest only's". On the alt-a side many loans were sold with 5 and 10 year IO payments. The 5 year IO's will coincide nicely with the Option Arms.
Anybody know how many 5 year IO's were sold? For all intensive purposes, the effects will be the same as with the adjustable rate mortgages once they turn to full amortization based on the 25 years left.
Oh what fun we are going to have for MANY MANY more years.
crispy&cole:
A few weeks ago I read on a bay area local TV station that those REOs are not on the market because banks need to hold it for 3 months before buyers can qualify for FHA - that's pretty much the only way they would be able to sell the house these days. So the inventory is lagged behind REOs for three months.
Thanks Carol I had not heard that
That should allow all this inventory to hit AFTER the summer selling season. The fall will be UGLY
Let's not forget what this does to the financial world.
Yes, many people are paying the minimum, years away from reset, essentially borrowing hundreds of dollars a month to underpay their mortgage each month...
But the lenders still count these as performing loans....I wonder what percentage of these do they consider will eventually default.
Also, they booked this borrowed money as money good...contributing to profits. This toggle-bond type stuff will not only default the main debt but will wipe out earnings already booked for the past several years.
People are figuring out that not only are financial institutions losing money now, they are learning that they never really made the money in the first place. Going back to "normal" is a long time ago.
When the northern tier states get their first heating bills in November that is when we'll see the first capitulation. Pay a $1000/month for a house losing a $1000/month in value plus PITI? NFW. Go long U-Haul.
CR, thanks for the update. That's quite a crescendo from here to January 2010.
How frequently does Credit Suisse make this information available, i.e., is it published regularly?
Avg Joe - Very true. The booking of "earnings" on the interest portion of these neg am loans is a joke, wait until they are forced to reverse the earnings.
OT Gripe:
The Sunday Paper is filled with the usual tripe about how "now is not the time to sell, it's the time to buy".
(See the Smart Money "common sense" article by James Stewart who essentially blames the public for making him suggest buy recommendations during the bull summer, and now he refuses to cave in again and provide sell recommendations that same public is demanding...the gall)
I just have one question: Buy with what?!!!!!
Who has a huge stockpile of cash waiting to buy if they have been fully "in" up to now?
I mean really, the only people with cash to buy are the ones that sold when bulls were still saying "buy".
So James Stewart's and all other bull's advice now only applies to those people who ignored you advice before?
Very similar to the realtors huh!
Those who listened to them before already bought and are now stuck in something they can't sell.
Now may be close to the time to buy realestate, but the only ones able to were the bitter renter and bubble heads who ignored the "experts" before.
People are NOT throwing in the towel. That's a voluntary act to prevent more punishment. The NOD/NOTS we see are those being dragged to woodshed. The involuntary distress houses have barely made it to the NOD stage even now. Witness the credit card debt rise and falling auto sales. Where do you think that money is going when consumer spending is supposedly soft? Mortgages.
Do I "think" there's shadow inventory? I know it. The new blogosphere outrage is the number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned.
Rob Dawg | Homepage | 06.08.08 - 11:52 am | #
I think that's nation wide - suburban Minneapolis, Chicago, Atlanta too.
You can't believe how many biz contacts have confided in me saying they need to pull back, that they bit off too much house and we haven't even really started the white collar lay offs yet. They know they are at risk to being one of them. I don't have the heart to tell them its already too late for a lot of them - even if they don't pink slip. If the 'pull back' isn't already somewhere else in their personal budget they can allocate to home expenses then it isn't there...
And oh, there is that little problem with $5 gas and 25 mile round trip commute in a 18 mpg gas hog.
Rob Dawg wrote: "When the northern tier states get their first heating bills in November that is when we'll see the first capitulation."
My folks in the Portland, Oregon, area paid almost $3000 to fill up their oil tank for the winter. Portland tends to have fairly mild winters, but not this year. Some records were set for cold.
Still, to save money, the thermostats were kept down and we all wore sweaters when visiting. Definitely a change in lifestyles.
From the NYT article
Again assuming the previous data is predictive, the last negative job number will arrive between November 2008 and November 2010, with August 2009 the most likely month.
Nice timing.
Just about to return to Chicago suburbs after another month-long Silicon Valley sojourn. Had dinner with the boss last night at his home about 50 mi south in Hollister. He related that when he'd gone to the bank that morning, someone came in literally to "drop off their keys" -- and that they were told it just didn't work that way, that they'd have to be at least 30 days delinquent, etc.
My boss, a very smart fellow, bought there at the bottom of the last real estate bust circa '94, and has been refinancing down without taking any cash out, so he's very comfortable.
OT: High prices, economy challenge Montana Food Bank Network
http://www.missoulian.com/articles/2008/06/08/news/local/news02.txt
Roberts said staples - rice, dry beans, pasta - have been increasingly hard to find. The Missoula Food Bank has seen a 55 percent increase in price for those items in one year, forcing it to find new suppliers.
We found a source in Minnesota where we can pay last year's prices, but we have to buy six months' worth, Roberts said. And we don't have the space for that, so now we're trying to find more warehouse space.
Which, of course, costs money.
The Montana Food Bank Network, based in Missoula, provides food to charities around the state. Unlike similar umbrella groups located in large cities, the Montana network spans a huge territory. That means one thing - a ton of driving.
Our trucks travel over 100,000 miles a year, and that's become very, very expensive, Grimes said.
It's tough enough to fill the tank when it costs $50 for a small car. But try filling up a semi with diesel.
It used to cost about $500 to fill a truck, but now it's $1,000, said Grimes. Diesel at $4.50 a gallon is really eating us up.
The neg am stuff really contributed to the overbuild of "nice" homes.
Not only did builders build too many homes...but the nature of the tricky financing meant they built too many "expensive" homes.
This will probably affect pricing on even the low end of the housing spectrum since in previous busts we saw prices drop below the price/rent ratio based upon inventory alone.
Now we have an oversupply of the upper end inventory. When people are prepared to buy again...those that saved cash, kept good credit, and didn't buy before, may be able to get into a house that is much "more" house than their income could ever have afforded in a normal market.
The next generation of homeowners may look back upon the bubble with fondness and gratitude.
My folks in the Portland, Oregon, area paid almost $3000 to fill up their oil tank for the winter. Portland tends to have fairly mild winters, but not this year. Some records were set for cold.
Yes, the PDO is gonna spank the PNW for winters to come.
Still, to save money, the thermostats were kept down and we all wore sweaters when visiting. Definitely a change in lifestyles.
Bring back the Carter Index with all the old metrics. Use 1976 formulae and add Degrees set below 72 plus U6 Unemployment plus Shadow Stats Inflation.
Heck if we are replicating the Maunder Minimum event we'd best get busy cloning Mammoths and building really really big barbeque grills. "Oh, man, not haunch of Giant Sloth for dinner again!"
Food Is Gold, So Billions Invested in Farming
Food Is Gold, So Billions Invested in Farming - Truth About Trade and Technology
And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.
Its going on big time, said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. There is considerable interest in what we call owning structure like United States farmland, Argentine farmland, English farmland wherever the profit picture is improving.
These new bets by big investors could bolster food production at a time when the world needs more of it.
The investors plan to consolidate small plots of land into more productive large ones, to introduce new technology and to provide capital to modernize and maintain grain elevators and fertilizer supply depots.
But the long-term implications are less clear. Some traditional players in the farm economy, and others who study and shape agriculture policy, say they are concerned these newcomers will focus on profits above all else, and not share the industrys commitment to farming through good times and bad.
Farmland can be a bubble just like Florida real estate, said Jeffrey Hainline, president of Advance Trading, a 28-year-old commodity brokerage firm and consulting service in Bloomington, Ill. The cycle of getting in and out would be very volatile and disruptive.
Anyone out there think we need shitbags like blackrock owning the food supply and essentially screwing up food into the next subprime-like derivative bubble? I imagine SIFMA will start selling more food-based derivatives and assure us all that food and water will be the next crisis!
The NY Times article on jobs/recession was via the Big Picture.
Source:
Jobs Show Recession Is Here
Floyd Norris
NYT, June 6, 2008, 4:29 pm
Jobs Show Recession Is Here - Floyd Norris Blog - NYTimes.com
"Do I "think" there's shadow inventory? I know it. The new blogosphere outrage is the number of vacant homes not yet for sale and the missing REO listings that are on the tax roles as being bank owned."
Rob Dawg | Homepage | 06.08.08 - 11:52 am | #
Not only that but the number of vacant homes that are not bank owned is north of 50% in areas around here. It's pretty easy to figure out. I write down any visibly empty adresses and check ownership on the counties website. It has been running pretty consistent the last year.
As a little tidbit,we FC'd on about 2.5% of the counties housing stock last year. So far this year looks like it will be north of 3%. And we haven't hit the major Option Arm resets yet...
Chris
Not to change the topic of food and oil manipulation, but does anyone out there track FSBOs and the relationships of that inventory related to non-FSBOs?
Someone asked about I/O loans which generally fall into the Alt-A category. I'll post a link at the end of this to a couple graphs. One is similar to CR's but includes ALT-A and the other shows the geographic concentration of these loans.
I have contended for some time that this may be a bigger problem than subprime. However, the fact that there is such a concentration of this product in SoCal probably insures an epic bailout. There is simply no way that the politicians will abide mass foreclosures of homes owned by middle and upper middle class voters. Keep in mind that we are quite likely to have a liberal democratic administration that will be indebted to CA for its victory. I'm not endorsing the idea just being realistic. Here's the link- METROPOLITAN | Property Management & Real Estate Investments
What makes up the price of gas?
What makes up the price of gas? |
KVAL CBS 13 - News, Weather and Sports - Eugene, OR
- Eugene, Oregon
| National & World News
'If oil costs us $30 a barrel or $40 a barrel or $120 a barrel, that's why the cost of gasoline is what it is,'' he said. ''It's not because of taxes. It's not because of ... refining and distribution. It's because of the cost of oil.''
But it's not only about the price of oil. Other costs are a factor -- though they've remained relatively stable.
For example, federal and state taxes added 40 cents to a gallon of gas in the first three months of this year, roughly the same amount as they added four years ago.
California's 63.9 cents of tax is the nation's highest, Alaska's 26.4 cents the lowest. Oregon falls in between, with 43.4 cents per gallon. How the money is used varies from state to state, though the federal take helps to build and maintain highways and bridges.
Marketing and distribution costs -- the tab for delivering gasoline from refiner to retailer -- were 27 cents to start the year, only 6 cents above the cost four years ago.
The cost of refining added 27 cents to a gallon in the first quarter of this year, a nickel less than what it added in 2004, according to the Energy Information Administration.
In the Philadelphia suburb of Havertown, Pa., earlier in the week, Sunoco station operator Steve Kehler received a load of gasoline -- 9,000 gallons -- which, at a wholesale price of $3.729 a gallon, cost him 4 cents more than the previous load.
That left him in a sticky situation: Should he raise prices right away to recoup some of his higher gasoline expenses, or should he hold off for a couple of days in hopes his competitors will also have to raise their prices?
''I'm surrounded by $3.89's, and I'm already at $3.91,'' said Kehler, referring to his prices and those of some nearby competitors. ''I'm going to play a little waiting game right now.''
The $33,600 Kehler must pay for his overnight gasoline delivery won't be debited from his bank account for a few days. That gives him a little breathing room, time to hold prices steady. Hiking prices too quickly will hurt sales.
''I'll probably change it tomorrow night, at closing,'' Kehler said. ''I'll go up 4 cents.''
That will put Kehler at a gross margin of about 20 cents a gallon. After paying credit card fees, labor and rent, Kehler will be lucky to break even on his gasoline sales.
Tom Lindmark | Homepage | 06.08.08 - 12:36 pm |
Thanks for the graph. It makes sense now why the middle/upper end here in SW Florida hasn't been hit really hard yet. It's on the way. I have noticed in the last 3 months a rush to the exits on larger tracts of land. Listings went from 50-75 of 1 acre and larger to 400+.
Chris
I noticed someone parked a very nice Bayliner on the county road by my house. No canvas cover. I walked over to look at it and recognized the marina markings. It had come from a boat hotel that specializes in indoor storage. When you want your boat they pull it off the rack, gas it, wash it, and have it waiting in the water for you. Methinks it got rather expensive for some one. Just hope they put some canvas cover on it - nice boat.
Does any one know where the option ARMs are concentrated geographically?
"If you take the cost of refinancing in points, fees and other expenses and then distribute that across a mere 18 months, I think you find that your real "interest rate" turns out to be significantly more than 3.10%.
Anonymous | 06.08.08 - 11:47 am | # "
Agree. The cost of refinancing for my clients at the time was approx $2500. On a $650,000, you would recoup most of that. But more importantly as I said "when the situation dictated it". For instance at the time I only needed the loan for aprox 1-2 years so it was a no brainer. Sorry, should of went into more detail.
From mid-2004 to mid-2006 I worked for one of the major mortgage industry trade associations - and my job involved the courses that taught things like i/o and negative am to loan officers.
Trust me when I say that the likely hood of any one of them understanding or explaining the 110% cap was non existaint.
Now if only I didn't have my albatross of a 2002 era condo purchase in DC to deal with....
Farmland can be a bubble just like Florida real estate, said Jeffrey Hainline, president of Advance Trading, a 28-year-old commodity brokerage firm and consulting service in Bloomington, Ill. The cycle of getting in and out would be very volatile and disruptive.
Anyone out there think we need shitbags like blackrock owning the food supply and essentially screwing up food into the next subprime-like derivative bubble? I imagine SIFMA will start selling more food-based derivatives and assure us all that food and water will be the next crisis!
2Fat2Fail | 06.08.08 - 12:29 pm | #
You want to see small private farmers stay in farming - call your congress critter and tell him to vote to stop supporting large corporate agri business via subsidy.
I live in the grain belt & can tell you first hand - the subsidies are 'promoted' as support for family farming but the 'families' getting the lions share of 'support' are the families that own ADM, Cargill, etc.
If the big corp folks thought they could really lose a lot of money in farming (which is currently hard to do if you have deep pockets & can weather the 'dips' like the big boys can) then maybe they wouldn't pour into farm land like it was a 'no lose investment'. Bubble hardly describes it.
Small farmers though - if smart & resourceful - can get 'small' real fast. But they have to structure their business & finances that way prior to the mess. They too are being encouraged to go fence row to fence row with latest & greatest equipment via high leverage. Only the old timers who remember the farm crisis have held back.
Plus if you absolutely have to support small farmers there are better ways to do it other than direct subsidy to a whole crop class via price support. Small farmers generally need more help on the front end (starting out)... okay so offer down payment assistance on farm land & equipment when they first go into the business... maybe even 'grants'... but price supports in general only end up in the pockets of the largest agri businesses, lenders to farmers & equipment mfgrs - NOT the farmers... all of it at our expense.
It really is setting us up for another 80s style farm crisis... but you wouldn't know it looking at the current land & commodity prices. After all... [Fill In Blank With Asset Class Of Choice] only goes up. Forever. Right?
that those REOs are not on the market because banks need to hold it for 3 months before buyers can qualify for FHA
Anyone know where/how those REOs would be represented on the bank's FDIC CALL report ?
Would they still be considered non-accruing loans in the RC-N section ?
If the "REOs being withheld" are somewhere other than RC-N, it may impact the Texas Ratio numbers.
Also, when does the bank have to recognize the "new and reduced" market value ? Are they still holding these on the books at the original loan value ?
Tulipsalloveragain,
here ya go.
Map of Misery
Here are the top five challenges you face with FHA loans:
CHALLENGE #1: The Property Flip
For those that haven't run into this yet, you probably will very soon.
When processing an FHA loan, we have to perform a title search to see how long the owner of the subject property has owned the house.
If the owner has owned the house for less than 90 days, it's considered a "flip."
The 90-day window ends from the day the seller signs a new contract. If your contract is signed before the seller has owned the property 90 days, the file has to go to HUD for an exception. FHA will only make an exception if the property is a Bank-owned REO.
To make matters even more challenges, if it's a Bank-owned REO property, and you seek the exception, the bank has to either be State or Federally chartered for the exception to be granted. Not all banks are.
REO properties owned by Fannie Mae and Freddie Mac are exempt as well. If the bank-owned property is not State or Federally chartered the home cannot be sold to an FHA buyer before 90 days.
We are seeing a ton of buying activity in foreclosed homes. Some tell me its 80% of all resale purchases today in our market. In many of these transactions today, FHA buyers are purchasing an REO.
The bank foreclosed on the previous owner, has taken possession of the property and is the new owner.
The bank then turns around and puts it on the market with a real estate agent, and, fortunately for them, gets an accepted offer within 90 days of taking possession.
This then requires the buyer's lender to send the file for FHA for a flipped-property exception.
FHA is taking as many as 10-15 business days to approve the exceptions in our market. You can imagine what those 10-15 business days can do to your close of escrow date.
The Solution
When making the offer, have your trusted home loan consultant look up the subject property on the County website, or get with your title rep, and identify which bank owns it, how long, and if they are State or Federally chartered.
If they owned it for less than 90 days, prepare the buyer to get their conditions into the lender as soon as possible so your lender can submit the loan to FHA as soon as possible.
Also, you may want to ask for a 45-day escrow from the bank, on FHA loans, so you don't have to stress about getting an extension at a later date.
If the bank is not State or Federally chartered or has some other exemption, and they haven't owned it at least 90 days, you may want to consider financing other than FHA.
Welcome to Localism
Dryfly,
I was just listening to the embedded Scarecrow song and I agree with you on the subs. I had an idea about three years ago to go buy an old wheat farm and just sit on and then do organic wheat. I have these ideas and as with many, I didn't do that one! Crap! I love making bread and have a great dis-trust for corporate farming and the while genetic alteration situation provided to us all by blackrock-like businesses that will care less about the health of people or the cost of food.
This seems to be an era of compounding problems where you have economic distortions, bubbles, pollution, water problems, food problems...it just looks bleak, and I'm very afraid we have just seen a slight bit of the tip of this expanding iceburg! I think we will see starvation this winter in many areas and people like Bush and congress and the senate will all sayit was Clinton's fault...
he crops we grew last summer weren't enough to pay the loans
Couldn't buy the seed to plant this spring and the Farmers Bank foreclosed
Called my old friend Schepman up to auction off the land
He said John it's just my job and I hope you understand
Hey calling it your job ol' hoss sure don't make it right
But if you want me to I'll say a prayer for your soul tonight
And grandma's on the front porch swing with a Bible in her hand
Sometimes I hear her singing "Take me to the Promised Land"
When you take away a man's dignity he can't work his fields and cows
There'll be blood on the scarecrow Blood on the plow
http://edocket.access.gpo.gov/2003/pdf/03-10778.pdf
It's interesting that the HELOCs have a market value clause and this product doesn't. Seems dangerous to the lender.
Well, to a lender there is a real difference between a commitment to lend additional principal (a HELOC) and a commitment to allow (some degree of) capitalization of interest (a neg am). With a HELOC, someone in a declining market could draw out $50,000 to several hundred thousand in one chunk, depending on the line limit. A neg am ARM can only increase to its balance cap, and only a small bit per month. On a $300K OA with a 110% balance cap, the max neg am is $30K over as much as five years. Even in a declining RE market, that can be close to a "rounding error" on the original appraised value.
The thing is, the CLTVs were much higher on the HELOCs than the OAs, by and large. That means, because the HELOC lenders were so aggressive with CLTV, they had to protect themselves with the ability to freeze the line if the value declined. On the whole, the OA lenders had (relatively) conservative LTVs.
I remain convinced that the real risk with OA isn't that the balance will exceed the value. The real risk is the payment shock when the thing ultimately recasts. On the other hand, most of these HELOCs had affordable payments; the most immediate risk with them was allowing the borrower to go up over 100% CLTV by drawing the remaining line amount.
Last year Bill Longbrake, former CFO of WAMU, recommended contacting Option ARM borrowers and modifying Option ARMs into products with longer resets and/or lower fixed rates. Many WAMU Option ARM loans were retained in portfolio so modifications are possible. Has anyone seen numbers on Option ARM refis and/or modifications?
LAST?..........
Shadow inventory - Absolutely!
My anecdotal example is that here in the Woodbury tract where I live in Orange County, I know of 6 foreclosures that I can't find on Ziprealty that are in a 2 block radius of me. Three of these are in the million dollar plus tract of Mille Fleur. You walk by and there aren't any "For Sale" signs but there is a lock box on the door.
The 6 other homes for sale in that development are going to get a rude awakening when these foreclosures do sell.
according to the latest FDIC quarterly, REO total $15.6b, up 124.8% from $6.97b a year ago.
The 6 other homes for sale in that development are going to get a rude awakening when these foreclosures do sell.
Yeah, but they'll have hibernated until 2010.
I don't think there is any shadow inventory, we're not in Mordor. I think it's all "pent-up" supply waiting for the "pent-up" demand that we used to hear about last year.
You don't hear about that pent-up demand so much any more; did they all buy houses or are they self-gratifying the urge by looking at Housing Porn?
Dryfly, I think the best thing you can do for family farmers is provide a national crop insurance program instead of subsidies to the largest producers. Although subsidies have their place since they supported production when prices were low so that we have the supply now when prices are up. Food policy is just as important as energy and defense.
2Fat2Fail, the idea of consolidating and modernizing farming in places like Africa and Eastern Europe is great for increasing world food supply but the cost of food will go up in the short run as prices of fuel, fertilizer and pesticides go ballistic. Once production booms we will have a world wide farm crisis as prices plummet. However in these newly developed farming regions they will have the added problem of massive unemployment as only 2-3% of their population is really needed to run the modern farms.
Somehow my father's plan keeps sounding worse and worse: to buy 5+ more houses and rent them out and then sell after the market turns back up.
Since we're on the subject of real estate,...
I was driving through the less affluent residential part of San Diego when it struck me how many of the corner houses were for sale. It used to be (long ago) that the corners were more desirable, but in my view that has changed; I wouldn't want to live on the corner in these neighborhoods, if I had to, I'd pick one of the middle houses. The neighborhoods are not poverty stricken, but definitely working class. Is this just a situation in the poorer parts of town or is it a change in perception? Do people still want to live on the corners to show off their "pride of ownership"?
...The thing is, the CLTVs were much higher on the HELOCs than the OAs, by and large.
If I'm not mistaken large % of the POAs originated between 2005 and 2007 were high cltv purchase transactions with a purchase money 2nd. The net effect of the recasts may be to wipe out all of the value of the equity products as borrowers make "ruthless modifications".
""I call the house my albatross," Shaw said. "I feel a sense of relief knowing I won't have that house to deal with anymore. I'm not looking forward to moving and selling everything. But I am looking forward to not having stress about something I can't afford."
"
I live in the same county as this woman, a place where property values are thought to have "held up" compared to other places. But obviously the wave is coming if she's typical. And she probably is.
The lawyer with the "this year will be a blood bath" quote is also a local. Funny, ya gotta read Business Week to hear something that the local press won't tell you.
Average Joe writes:
Let's not forget what this does to the financial world.
But the lenders still count these as performing loans....I wonder what percentage of these do they consider will eventually default.
Using data provided by Downey's Q108 10Q, 36% of their recasting loans go to NPA heaven.
Didn't somebody wise and informed (I forget who) tell us recently that the recession would be over by the end of this year? So why worry?
"Heck if we are replicating the Maunder Minimum event we'd best get busy cloning Mammoths and building really really big barbeque grills. "Oh, man, not haunch of Giant Sloth for dinner again!"
I'm a firm proponent of global warning as a phenom created or at least enhanced by man's activities. And yet I'd find it extremely amusing if high CO2 was counteracting a Maunder Minimum. Talk about dumb luck -- the only kind humanity deserves.
Who knows, if we'd never developed heavy industry maybe we'd be chewing walrus blubber right now!
Da Man
i followed your link from yesterdays thread regarding oil futures price manipulation
Energy Market Manipulation - C-SPAN Video Library
not only was greenburgers testimony 32 minutes in shocking..
the oil industry representative, ramm, was astonishingly forthright and stunning
their points about backwardation, 3% margin requirements, and who holds most of the east coast heating oil contracts was astounding
leaves little doubt we are being bent over
thanks, i guess, but now i'm gonna go have a stiff drink, or too
Da Man you're The Man!
w,
Re: fuel, fertilizer and pesticides; these are all things that require energy to produce and thus reduce profit margin, and we have not yet brought up the issue of water shortages which are directly related to poor planning and poor farming practices. Using food as a mechanism for a commodity bubble is insane and I feel we will see depression-like food shortages worldwide because of fuel costs. Add to the mix global warming and yield failures and you may end up seeing the next Dust Bowl & Depression, as Hoover-Bush sits idle like a retarded quadriplegic hooked up to lobbies life support!
Using data provided by Downey's Q108 10Q, 36% of their recasting loans go to NPA heaven
Thanks for the info anon.
I am not sure what that means though.
Is that the going rate they have seen, or what they are counting on in their write downs?
I would be surprised if 10% of the currently performing neg ams don't go to NPA at some point in the next 5 years.
If I were an institution, I'd figure out where we'd be if every one of them became an NPA.
I want a New America for XMAS!
"2Fat2Fail writes:
Add to the mix global warming and yield failures and you may end up seeing the next Dust Bowl & Depression, as Hoover-Bush sits idle like a retarded quadriplegic hooked up to lobbies life support!"
To look at the bright side of things, there's probably enough food in storage that Bush will be out of office before any famines hit. Always look on the bright side of life.
Average Joe writes:
Using data provided by Downey's Q108 10Q, 36% of their recasting loans go to NPA heaven
Thanks for the info anon.
I am not sure what that means though.
it means that once the loan hits it's max loan limit (i.e. min payment is over, and must make a fully amortizing loan payment), the borrower gives up and it becomes a non-performing loan.
and that i imagine starts the NOD/Foreclosure process.
But this stat is particular to Downey, actual mpg may vary....
Average Joe - the 36% reflects actual performance stats for Q108. no reason to believe Q2 will be better.
crispy&cole writes:
Avg Joe - Very true. The booking of "earnings" on the interest portion of these neg am loans is a joke, wait until they are forced to reverse the earnings.
Anyone have a guess at the dollar figure involved?
Thanks again.
However I don't believe that 36%. IF it's true, it can't last. What are the other 64% doing? Paying the higher rate? Refinancing? Selling?
The future will be much worse. If these are recasting now, then they are likely on purchases well before the peak. Meaning some may still have enough equity to squeeze out a refi or sale.
I think any write-downs based upon anything below 70% are going to be WAY off!
The other 64% are either being reworked, sold, or refi'd. (am i missing other options? maybe straight to bk?)
With falling asset values the future is not looking bright for these loans.
Imagine yourself in Downey's shoes. They have granted borrowers the right to run up the loan value with no hope of calling the loan until it recasts.
Downey is experiencing death by 100ß cuts.
Come to think about it - AJoe is right - this might get ugly.
Maybe some of the 64% try to gut it out and make the fully amortizing loan payment.
How long can they hold out?
Downey's Q208 10Q should provide some interesting data on this - should be out mid July.
OT but has anybody noticed that the futures numbers on Bloomberg appear to be broken. They haven't moved in three days. Is the meter pinned.
Food Reserves... Oops
Half a loaf of bread each...
Half a loaf of bread each...
Now all we need are some fishes and JC and we're set. No problemo.
**
Does anyone know about The Fed negotiations to merge WM & LEH before The Nikkei opens in a few hours???
I think we will see starvation this winter in many areas and people like Bush and congress and the senate will all sayit was Clinton's fault
Why would it be Bill's fault? Anyways, it's too late for GWB to get anything done. Except for national security, he doesn't have dictatorial power; even administrative regulations have to go through pain in the ass notice and comment periods. This baby's in the hands of the Dems: Pelosi, Reid, and (pretty soon) Obama. So far the Pelosi Congress has not exactly been inspiring, except for feeding us stimulus crack. Just let the damn levees break!!
Re: "So far the Pelosi Congress has not exactly been inspiring"
In the 45 Republican districts the poll found 55% of people said they wanted to vote for a Democrat for Congress, compared to 49% in January. Just 37% of respondents said they would vote for their Republican incumbents, who were named.
Whats stunning about this is not just that the race has moved over the last three months, said Democratic pollster Stan Greenberg. Theres no reason to believe this wont continue to move. He is a founder of Democracy Corps, a non-profit that conducted the poll.
Dryfly,
Another thing that would greatly help the small farmer is a change in local property tax laws. In many states, such as GA, land does not qualify the for agricultural tax status unless the owner of the property can prove that 90% of the owner's income for the past 3 years was derived from farm income. This makes it almost impossible for a small farm to get started. The laws should be changed so that if a property owner is filing income taxes using federal tax forms for farmers, the property owner automatically gains agricultural property tax status for the farmed land, regardless of profit or loss.
Doom,
I think it was you that asked about geographical info on interest only loans. I saw one years ago, just before the bubble bust, that I think was on MSN. (Try Google). I remember it because GA was listed as having 50% of it's mortgages in the interest only category.
My guess is that the banks have lowered prices so significantly to move inventory, all the discretionary sellers have just left the market
My guess is crispy and cole lives in OC. Invetory is flat, but NOTHING is moving. Houses are not coming on the market so discretionary sellers are gone. But I would disagree that banks are lowering prices. I think the bankers feel as long as they have a blank check from the fed they can manipulate the market with all their inventory. With our tax dollars they are going to ride storm out.
@2Fat2Fail
Do you know something specific here about WM and LEH? Curious as I'm shorting both. Also it seems an odd couple, given that both are on the ropes... Do you mean that they're being merged together, or with 2 larger better capitalized banks?
I don't understand why mergin 2 undercapitalized banks would help anything.
"...My guess is crispy and cole lives in OC...
Worse, Bakersfield. "Bakersfield to Merced" is to housing what "Panhandle to Kansas" was to the Dustbowl.
RE prices are going to go up big time after the "SuperBowel". At least that`s what I think I heard.
IAS360 House Price Index Provides First Monthly View of Housing Price Trends Based on Neighborhood Level Data.
Integrated Asset Services (IAS), a leader in default management and residential collateral valuation, just launched its monthly-reported IAS360 House Price Index Integrated Asset Services IAS360
The new Index represents the industrys first clear representation of U.S. housing market trends at a county level. IAS360 House Price Index is a comprehensive housing index tracking monthly change in the median sales price of detached single-family residences in more than 15,000 neighborhoods across the U.S. This data is then rolled up to report on the changes in 360 counties, nine census divisions, four regions, and the nation overall. The timeliness of the data, which is based on all arms-length transactions occurring in underlying neighborhoods, makes the IAS360 the leading indicator for housing price trends in the U.S. April Index: IAS360 County House Price Index
Citigroup Inc will close 32 offices and 540 ATMs in Japan as part of its restructuring plans for its Japanese consumer finance division, CFJ K.K. As it previously announced, Citi is revamping its Japanese operations as it integrates the operations of brokerage firm Nikko Cordial Corp, which it acquired in 2007.
The closures are part of a broader plan that combines the management of Citis banking, securities and related business, including 31 retail banking branches and 110 retail securities branches.
Japanese banks posted a total of 2.44 trillion yen in loss on investments in securitized products at the end of March, the government said Friday, offering fresh evidence that the global financial turmoil stemming from U.S. subprime mortgage problems has increasingly damaged their investment portfolios.
nited Airlines, the second-largest U.S. carrier, said Wednesday it was cutting its fleet, operations and up to 1,100 additional jobs to compete amid soaring fuel prices and a weakening domestic economy.
United said it would trim U.S. capacity by 17-18% through 2009 and remove 100 aircraft from its fleet, including 30 Boeing 737s that were previously announced.
Japans foreign exchange reserves came to $996.98 billion at the end of May, falling below the $1 trillion level for the first time in four months on declines in U.S. Treasury bond prices, the Finance Ministry said Friday.
The countrys foreign reserves, the second largest in the world after China, sank $6.86 billion from late April for the second straight monthly slip.
Sales of new imported vehicles in Japan in May fell 23.8% from a year before to 15,811 units, the Japan Automobile Importers Association said Thursday. Of them, sales of vehicles made by foreign manufacturers dropped 20.3% to 13,953 units.
Passenger car sales decreased 29.8% to 14,458 units, and truck sales surged 10-fold to 1,353 units. Volkswagen was the best-selling imported vehicle brand, though sales fell 10% to 3,314 units for a market share of 20.96%. BMW ranked second with sales of 2,485 units, down 31.7%, for a 15.72% share. Mercedes-Benz was third with 2,328 units, down 21.6%, for a 14.72% share.
Japan's average retail gasoline price is projected to top 170 yen per liter as major oil wholesalers push up the product prices on Sunday with continued rise in world crude oil prices.
Japan's biggest oil distributor Nippon Oil Corp., raised by a record high of 12 yen per liter the wholesale prices of its gasoline and other petroleum products for shipments in June while other major wholesalers increased by some 10 yen per liter.
That was June 1
World crude prices are expected to reach $150 per barrel by the end of summer, Iran's representative to the Organisation of the Petroleum Exporting Countries (OPEC) was quoted as saying on Sunday.
"I forecast that by the end of summer the price of oil will reach $150 per barrel," Mohammad Ali Khatibi was quoted as saying by Iran's state broadcaster, referring to the summer in the northern hemisphere.
As reasons for this, he cited a weak U.S. dollar as well as the situation in the Middle East, without elaborating.
Gasoline is now around $6.50/gal (170 to 180 yen a liter) here in the Tokyo area. And I'm seeing significantly less car traffic. The buses and trains are getting more riders. Big headlines in Asahi Shinbun today "The Era of 170yen Gas!". (old news there)!
broker quoted
RE prices are going to go up big time after the "SuperBowel".
mock observes:
that cause of all the
cheese,
quacamole,
chips
chilli,
pizza
and beer
everybody consumes is gonna make one giant national fart
and everybody in america's gonna need to own their own bathroom.
then RE prices will go up
"the superbowel" index
I'm thinking GDP (NDP) impact from $150 oil and if that is so, IMHO we will see $5.00 oil as an American going into winter!
Meanwhile: H oover-Bush sits idle like a retarded quadriplegic hooked up to The Lobbiest Lifeline waiting to get more support, or is just a kickback or percentage cut?
NHK reports that gasoline prices went up 10 yen today to 170-180 yen per liter. That's about 7 dollars 80 cents per gallon.
Old news: A super-spike could push oil beyond $150 a barrel by October, the highest it been in more than 135 years, experts say. That would drive the price at the pump past $4.50 a gallon and trim US economic output 3.3% in the 2 years following, reports the Wall Street Journal.
2Fat2Fail
Sen maria Cantwell held a hearing last tuesday and those testifying suggested we could see the rug pulled out from under the oil futures trading market.
Cantwell had testifying, Michael Greeberger, x chair of the CFTC and Mr. Gerry Ramm President, Inland Oil Company on behalf of the Petroleum Marketers Association of America, amongst others.
and they agreed about the problem and solutions are
apply ferc regulation to the oils futures market...
margin requirement like in the equities market,
a regulatory distinction between traders who are in the industry as producers and marketers verses speculators who never take physical possesion,
and transparency requirements.
all who testified said if congress did just one thing...reversed a letter of intent given to dubai that allows that country to regulate 30% of the US oil futures market (texas intermediate crude futures are evidently routed)... thru ME)
then prices would make a rapid U turn.
also 4 out of 5 testifying said they agreed with the CEOs of US Oil Majors when they said last month that only about 80 dollars per barrel was production, trans, refining and profit driven etc...rest is speculation
YIKES
Bonguy,
Live off u.s.a. stockpiles of food ?
The recent news is u.s. govt. has
2.7 million bushels of wheat !!
THAT'S IT !
No other grains
no cheese,
no butter ,
no powdered milk,
nuttin !
2.7 million bushels of wheat =
.5 loaves each for 300,000,000 persons .
sources available .
"sources available ."
Substance over Form | 06.08.08 - 5:36
Well make sure ya jump right in and buy wheat futures. Because they can only go higher!!!
The problem with the numbers you cited is they do not count stored grains on farms. I won't tell you how much wheat my uncle is sitting on but it a large chunk of your number...I can,with confidence,say there is wayyyyy more than 2.7M bushels unsold in a certain county in Ohio.
Remember,Stored grain pays no income tax.
Chris
Sorry to go an on somewhat political rant.
2Fat2Fail: My problem with the Democrat Congress was that they won in 2006 with the promise of restoring responsibility back to Congress after 12 years of GOP incompetency, especially regarding fiscal responsibility. But they've failed miserably, albeit under rough circumstances. In a federalist system, Congress makes the laws; with the except of national security, it can do what ever the hell it wants. But for the past 1.5 years, it's been hiding behind the incompetency of GWB. Last year when everyone one of us knew this caca was coming, Congress was too busy trying to bust Roger Clemens. I just want them to stop pandering and do something substantive, other than hand out bailout crack. Stop pandering with this windfall profit tax; Congress knows the IRS can't come after foreign income until it gets repatriated. To bad the American public doesn't. And stop hiding behind Iraq, the actual, and not derivative, costs of the War has been about 500B; the total of the bailouts/stimulus is getting close, and may surpass it soon. If they had used the stimulus for something creative like more mass transit, I wouldn't have a problem, even though the "fix" would take longer, because it would have provided jobs and lessened our energy independence. But instead, the bulk of stimulus went to China and OPEC.
I agree that the tax on the top 1% of individuals needs to be raised, but I don't mind McCain's corporate tax cuts, as long as they are targeted to 1)industries that might move internationally, 2)net exporters. So that eliminates big oil, Wal-Mart, etc. To paraphrase another poster, to maintain or increase our standard of living in a global world, we have to pass those costs to someone else. Already, Canada is trying to poach corporations, by drastically lowering both the national and provincial corporate tax rates. Combining their cuts with America's increases, why a US corporation would stay in America? In the past, it was because of bilateral trade agreements and favored nation status, but now WTO, WIPO, etc. provides the same benefits to being in a superpower. If Canada ever got true contract manufacturing, like in China, we're in deep caca.
Like I said, sorry for the political rant.
Cobra,
Yes , i thought of that.
I suppose ADM has a little stored also.
So they are going to supplement
"gubbmint" giveaways ,
from the goodness of their heart ??
I was expecting . . .
"Market price - no free lunch"
No offense , your Uncle is prolly a great guy , may help the destitute.
ADM et all ?? NO WAY !!!
Cobra,
p.s "ahm from Texas"
lotta good folks here.
But I do not see the WTI folks saying "Oil is too high , I will sell at.5 of market price".
(I don't blame 'em )
Has the PPT shutdown the CME futures market?
My bookmark to the S&P 500 emini is dead. Anyone have a working link handy?
McCain has been consistently attacking the ethanol tax subsidy and mandate, which is a major factor in the spike in food prices. He's the only (major) presidential candidate to stand tall on that issue.
Oh sheeeeeeeeeet.....
I'd better get on this problem and start selling the mortgage accelerator...
SP.M08.E S&P 500 INDEX Jun (CME) 1358.6 -0.9 -0.06% 224 448038 18:16 all months
ES.M08.E S&P 500 INDEX (E-MINI) Jun (CME) 1358.50 -1.00 -0.07% 5206 2170601 18:17
Yes , i thought of that.
I suppose ADM has a little stored also.
There is food on the farms - Cobra is right - but NOWHERE NEAR as much as there should be given how tight the global supply/demand curve is and how hard it would be to 'back fill' should we really need food.
I don't know if you guys know it - but the Midwest is flooding again - not as bad as 1993 but bad. I was in Iowa Wed-Thur-Fri and its starting to look something like a giant swamp or a new great lake. Its raining here in SE Minnesota (again) hard as I write this - washing already planted field in to the Mississippi River.
How much yield is lost? No idea but some is lost. Probably not a lot yet but some is gone for this year already.
Food is one of those things that having a surplus isn't a terrible thing for society. Might be terrible for the individual farmer but not for society.
The opposite (running seriously short) on the other hand is a problem. I think JIT is great - but not with products that take a year to 'rework' and that if you don't get them in time you die.
When 70%-80% of the population no longer even knows what a real farm is or how it works it does open the door for policy miscalculation. Just sayin'...
So,
Are option arms the "nookular" option?
And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.
Its going on big time, said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. There is considerable interest in what we call owning structure like United States farmland, Argentine farmland, English farmland wherever the profit picture is improving.
These new bets by big investors could bolster food production at a time when the world needs more of it.
The last time I recall that there was a rush to invest in farm land by absentee owners was during the extreme inflation of 1979/80. Farm yields went down to about 1%. Then of course Volker came along, jacked up interest rates, and the bubble burst. By 1984 farms galore were being auctioned off in the Mid West.
Richard Nixon
Address to the Nation Outlining a New Economic Policy: "The Challenge of Peace."
August 15th, 1971
Good evening:
I have addressed the Nation a number of times over the past years on the problems of ending a war....
We have made progress against the rise in the cost of living. From the high point of 6 percent a year in 1969, the rise in consumer prices has been cut to 4 percent in the first half of 1971. But just as is the case in our fight against unemployment, we can and we must do better than that.
The time has come for decisive action-action that will break the vicious circle of spiraling prices and costs.
I am today ordering a freeze on all prices and wages throughout the United States for a period of 90 days.1 In addition, I call upon corporations to extend the wage-price freeze to all dividends.
1Executive Order 11615.
I have today appointed a Cost of Living Council within the Government? I have directed this Council to work with leaders of labor and business to set up the proper mechanism for achieving continued price and wage stability after the 90-day freeze is over.
Let me emphasize two characteristics of this action: First, it is temporary. To put the strong, vigorous American economy into a permanent straitjacket would lock in unfairness; it would stifle the expansion of our free enterprise system. And second, while the wage-price freeze will be backed by Government sanctions, if necessary, it will not be accompanied by the establishment of a huge price control bureaucracy. I am relying on the voluntary cooperation of all Americans-each one of you: workers, employers, consumers-to make this freeze work.
Working together, we will break the back of inflation, and we will do it without the mandatory wage and price controls that crush economic and personal freedom.
That prediction of job losses reversing sometime later in 2009 is interesting, considering that's exactly when boomer demographics will turn into a major economic drag.
Squeezed,
Mini 10
Sorry. Page not found.
Mini 5
E-mini Dow ($5)
looks like 400 down on mini 10
Also front page has it on right hand frame with quotes...
Gas prices in subprime bubble areas over $4.00 and cost of living headed to ugly
Gas Price Historical Price Charts - GasBuddy.com
SQ-my bad that is contracts only..
The recent news is u.s. govt. has
2.7 million bushels of wheat !!
The gubmint doesn't have jack squat. I saw more than 2.7 million bushels get harvested yesterday. Every man jack and his cousin planted every last acre this year. [/exaggeration]
Since we're on the subject of real estate,...
I was driving through the less affluent residential part of San Diego when it struck me how many of the corner houses were for sale. It used to be (long ago) that the corners were more desirable, but in my view that has changed; I wouldn't want to live on the corner in these neighborhoods, if I had to, I'd pick one of the middle houses. The neighborhoods are not poverty stricken, but definitely working class. Is this just a situation in the poorer parts of town or is it a change in perception? Do people still want to live on the corners to show off their "pride of ownership"?
I've noticed a similar pattern in Arizona. The foreclosures/sales seem to be concentrated on the houses that border the main surface streets. It's usually the lower end developments as well. The higher end ones put some sort of landscaping feature where the corner house would normally go.
As to corner houses on the interior of the development, it doesn't make any difference. Things are for sale everywhere.
Brian B writes: "Agree. The cost of refinancing for my clients at the time was approx $2500"
Brian... did you make a nice 3-5 points on their option arms and then hit them with an additional $2,500? Come on, be honest.
Salpon p. ,
My original response was to
"Bonged Guy"
Re: His reference to " govt. stockpiles of Govt. commodities." ;
and expected disbursement thereof ?
Then it exponentially extrapolated from that short comment.
CR & Tanta "I feel your pain"
Over and outta here . .
oops , Salmon p.
McCain has been consistently attacking the ethanol tax subsidy and mandate, which is a major factor in the spike in food prices. He's the only (major) presidential candidate to stand tall on that issue.
Also part of that stupid farm bill were hundreds of millions of dollars in conservation easements. Come on, I reduce, reuse, and recycle as much as the next person, but damn, getting paid not to farm? With record agricultural prices and a record current account deficit, Congress doubled down and lost twice with that stupid bill.
Skateboarders hang out on corners and destroy the curbs.
"Also part of that stupid farm bill were hundreds of millions of dollars in conservation easements. Come on, I reduce, reuse, and recycle as much as the next person, but damn, getting paid not to farm?"
Perhaps the reason for the conservation easements had more to do with suppressing speculative RE activity and had little to do with the productive output of farms.
Conservation easement - Wikipedia, the free encyclopedia
"Conservation easements may result in a significant reduction in the sale price of the land because a builder can no longer develop it. In fact, this difference in value is the basis for the granting of the original tax incentives."
Yes, I understand that conservation easements come in many forms, from preventing over-development in urban areas (greenspace) to ones for environmental reasons. But the easements that were part of the farm bill were to maintain the byzantine price scheme that they have.
forgot to add: my main beef is that they included for this year (and possibly the next). Given that agriculture is net export industry, and our current account balance is in the crappers, the government should not disincentivize anything that brings money into the country (at least for the time being). And not to mention the estimated one million deaths from starvation during the next year.
Why don't we ever hear the good news coming from Lehman?
Lehman Set To Raise $5 Billion Amid Losses - WSJ.com
This is the bloodbath that is coming to a town near you.
In Irvine, CA there were 900 properties listed on MLS for sale as of June 2nd. There is also 701 distressed properties which can be confirmed through realtytrac and foreclosureradar
Only 11, yes ELEVEN, bank owned properties are even listed! Now that's one hell of a shadow inventory.
un autre canadien avec popcorn writes:
"OT but has anybody noticed that the futures numbers on Bloomberg appear to be broken. They haven't moved in three days. Is the meter pinned."
bloomberg is always pinned - to the feds shirt-tails: when word of BSC insolvency, or ratio trouble at C or LEH starts to leak, b'berg will bury the news.
When the U$ Dollar drops 150 tics some morning to a 6 year low as oil buyers face the fraudulent U.S. economic numbers and decide to move out of cash into oil, b'berg will again be the last to report.
If last Friday's FXF, FXY and FXE currency option gains are followed by a further $ drop tomorrow 6-9, guess who will tell you last?
LEH is going to report 2 billion $ loss instead of 300 mil? That would put me out of business.
Speaking of shadow inventory...There are three co-workers in my immediate workgroup here in San Diego that have stopped payments on their houses the first of this month. That is out of roughly 25 people. One was on the fence the last few months the other two recently decided it just didn't make sense to keep paying. 2 could easily afford their payments, the other a bit shaky. These houses ranged from about 500k to 900k. Big wave coming in San Diego. Once these people have made the decision to leave its a huge weight off their shoulders. Especially when I tell them they will be able to stay rent free for 8 months or more. Their little eyes just light up. Expect more happy (free) renters.
I went out to eat the other night which is a very rare thing for me but it was a special occasion a niece had graduated. Now it seemed to me, that their was just as many people out as always..
I just keep wondering how long can people keep this up with $4.00 gallon gas, rising food prices and stagnant wages.
Perhaps some people are just determined to keep partying right to the end. Or maybe, people are just oblivious as to what is coming?
Things have been so good for so long, that people are in kind of a Alice in Wonderland mentality..
Boy is it going to hurt when Alice finally as to comeback up the rabbit hole and feel the truth.
I poked my head out awhile back and am now feeling the pain..Ouch!
Tanta, Thanks for the OA / HELOC compare/contrast.
CO2 writes:
McCain has been consistently attacking the ethanol tax subsidy and mandate, which is a major factor in the spike in food prices. He's the only (major) presidential candidate to stand tall on that issue.
even a stopped clock is right twice a day, (or once depending on the clock)