I speak with builders and developers frequently. The problem with new home sales right now in many markets is related to land cost. The builders know how much they can sell a house for, and they know this price has cut in half from the peak. Many, if not most, have taken land impairment charges to bring the land basis down to where they can build profitably. There are some markets where they can't even build and sell the stucco box (high desert in California for one,) and they have stopped building there. The banks have foreclosed on the speculators/developers, and they simply have too much debt on the raw land they hold. Right now, they are unwilling to lower their asking price to unload their land inventory. They will. When the banks finally start taking these write offs, the new home sales market will see higher volumes, and the builders will resume building again.
Ivy Zelman will be remembered as one the key characters in the housing meltdown who (when she was working for Credit Suisse) was the lone analyst to raise the warning flag when everyone else on "Wall Street" was claiming this thing would go on forever.
Of course, those on the ground and without a vested interest (Calculated Risk) were right there along with Ms. Zelman in cautioning about the crisis that has since been unfolding.
Have had a situation occur with my spouse...suffice to say she has been working without pay since June 1st and I was only made aware of it Monday. Aside from the various things she needs to do to rectify this problem (legal and various filings-EDD, DLSE) I am asking for some creative ways to extract some flesh from her deadbeat boss. She is owed over 10k in back wages. I can't "throw a brick at the guy" for obvious reasons. I also am aware that the legal process moves at the speed of law......which is slow at best. I am asking for the collective wisdom of the board here for some advice. My email is mulsanne962@earthlink.net.....as to not clutter up this board with off-topic ramblings. I ask this forum because she was a loan officer that operated above board when her boss clearly has not.
There are some very smart people here and I am at an impasse as to what to do next. He is being sued in small claims court (quickest easiest thing to do) and has been reported for tax fraud......
What I would like to know is why the FDIC is letting bankrupt banks continue to do business. A number of banks with a Texas ratio over 100 are still functioning. Why?
That's why I am asking for advice.
He will be foreclosed on by the end of the month, has no real assets, but continues to operate as it was "just a blip in the road". I actually called this whole thing (almost to the day) over a year ago. My wife, sadly, didn't heed this original proclamation.
Appreciate your advice but I also realize emotions make poor decisions.
I've had situations where I've had to make some decisions but I ALWAYS paid my employee's no matter what......
Aug. 20 (Bloomberg) -- Mortgage applications in the U.S. declined last week to the lowest level since December 2000 as fewer homeowners sought to refinance their loans.
The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 1.5 percent from the prior week to 419.3. The group's purchase index fell 0.4 percent and its refinancing gauge slumped 3.7 percent.
As homebuilders hoarded overpriced land, land developers overpaid farmers and other land owners to flip it to the homebuilders. Now that the homebuilders have stopped buying, the land developers who paid bubble prices are busted. Moreover, because the prices of homes have fallen so significantly, homebuilders, in most places, cannot sell a home for more than the cost of construction and land has no value. The moral to the story is don't overpay for land using leverage, because you will likely end up broke.
I think that's what is happening. With what most of these banks have as "assets" it can't be anything other than that. Deny, Deny, Deny.
Think of it this way.....how many failures would there be if no election?
Many more methinks.....MANY more.
Something that has not really been discussed or brought up is that should the Dems. win and take over there will still be quite an impasse since the entire gov't has been populated-for the last 8 years- with Liberty U. grads. etc, all loyal to the current admin. People hoping for a realistic change (that is totally misplaced IMO) have not factored that into the picture.
The next president (as a democrat) will be a place holder for the next republican. Lather, rinse, repeat.
I'm trying to figure out this Fannie-Freddie deal. Obviously, there are no plans yet, but they are imminent. First, I think the numbers being thrown around by the GSEs as to what it would take to bail them out are way too low. I'm hearing numbers like $20B or $30B, but it seems like it should be at least in the neighborhood of $500B. And that kind of money comes only from government debt. But today treasuries rally.
If they are going to try a $30B bailout, then split them up and privatize them, then their market share will need to shrink significantly. The housing market goes thud (as it should). And if they are injected with capital and then privatized, does that mean the bonds are still guaranteed? Or since they are newly private, will they actually pay out the cash flow from the mortgages (i.e. not be gov't backed)?
"she was ranked 14th in Builder Magazines Power Broker list of the 50 most influential people in homebuilding, which included such luminaries as President George W. Bush and Alan Greenspan."
Luminaries???? I'd say so....
but I guess it depends on your perspective.
In a sharp turnaround, John McCain has taken a 5-point lead over Barack Obama in the presidential race and is seen as a stronger manager of the economy, a Reuters/Zogby poll shows.
They failed to mention the poll was taken in the deep south by a bunch of men wearing white robes and hoods.
Who ca believe the MSM anymore when they print this misinformation?
And of course the only reason they moved on Indymac was because Schumer called it, and they never will forgive him for spilling the beans. I guess the attitude is that as long as the public is dumb enough to think a bank is okay, it is okay. And also, perhaps, they don't have enough money or manpower to handle the flood that is approaching.
U.S. Treasury debt prices rallied on Wednesday in a safe-haven bid driven by worries about mortgage finance giants Fannie Mae and Freddie Mac, analysts said.
Ministry of Truth - btw, F & F have 230B in bond rollovers in the coming weeks. The spreads they are now paying (forced to pay) dont make the business model work very well, even if they can place the crap.
What I find striking is the YoY changes: 2.3% to 8% in delinquencies. Its broken.
"about 9.4% of Wachovia's $24 billion in construction and land loans were delinquent in" Q2 - lets see, thats about 2.256B in Q2 up from 1.848 in Q1.
Big old buildings there, which say National City, Fifth Third, Key Bank and Huntington on them. Big hollowed out buildings there, too, all over downtown - worse than Detroit perhaps? Maybe being in Cleveland is like analyzing beached dolphins in Kansas - pretty interesting phenomenon to study, wouldn't you say?
Is Wachovia's deal even and Arm's-Length transaction?
Let's see here: Wachovia brings in Goldman to "Advise on Strategy"; Wachoiva "Hires" Bob Steel late of Treasury/Paulson/Goldman.
Then Wach sells stake in land and construction loans to JV 50% owned by Goldman Sachs ostensibly to establish mark-to-market valuations. Would be interesting to see the investors in the two JV partners.
They haven't offered anything and we haven't asked for anything," Fannie Mae CEO Daniel Mudd said in a public radio interview Wednesday morning. "I don't anticipate that they will do that."
"Cleveland, City of Light, City of Magic!
Cleveland, City of Light, you're calling me!
Cleveland, even now I still remember,
'Cause the Cuyahoga river runs smoking through my dreams!"
"No. I'm thinking Cleveland. I want our kids to grow up depressed and feeling slighted."
People bash the midwest, and I've never been to Cleveland so I can't say much... but I would guess that if you have a good and secure job then Cleveland would be a GREAT place to be a parent, or to grow up as a kid.
I'm sure there are nice parts of town that are safe and quiet and suburban (which lots of people love for their kids) that are insulated from the downturn in Cleveland.
and if you have a good job then your quality of life would be high, I'd guess.
I'd rather live the high life in Cleveland with a great job I love living in a neighborhood I can easily afford, then run the rat race to live in squalor just so that I can say that I live in a "cool" locale.
For me, suburban is suburban. So I'd rather live in Cleveland suburbs and pay Cleveland prices, than live in suburban SF or suburban SD/LA or suburban DC/Boston/NYC and still have boring suburbia lands but pay dearly to get it.
Don't you just love it when the assumptions underlying an index upon which you rely crumble into dust ? Time to recalculate a few calculated risks, eh ?
YTL,
It was just a set-up to see who would come out defending the Midwest. You won. Your prize is an all expense paid trip by you to Cleveland! Congrats!
Anonymous,
My email is down. You've already accurately assessed the situation, it's your emotions that are running. Chuck those and focus on the well being of your wife. The guy who messed up will get his without your help. You have more immediate concerns.
"Jim, I am asking myself the same question. Does the FDIC just call it when they want to call it?"
Somewhat like the large number of foreclosures overwhelming mortgage servicing units, the FDIC has had to staff up for taking over banks. They have been rehiring retired employees who did this in the 1980s and 1990s.
This capacity constraint means they will try to convince many banks to be more responsible and lower the damage in the short run. They hope those banks won't add much to their problems with new irresponsible behavior.
Aside from experienced manpower, the second capacity constraint is money for paying off depositors. The FDIC only has about $53 billion in its insurance fund, and IndyMac will take $4-8 billion of it. They only collect about $5 billion of new insurance premiums each year. I am willing to bet the current administration is pushing to have a lot of the bank takeovers wait until after the election.
Students of the S&L crisis know how that turned out the last time it was tried.
i had this happen to me once. putting aside the possibility of bk (and what that might mean) i can say that in calif there is not much an employee can do unless she quits. at that point, all wages must be paid within something like 48 hours. after that, the penalty to the employer is equal to one days wage per day late. it adds up quick. a determination by the state employment division is done after a hearing and the state can even assist on getting the penalty through the tax board. (that may take awhile) an employer really doesn't want to mess around with this in calif.
good luck.
But, to ignore the very important water-cooler aspect of all threads momentarily, I wouldn't mind hearing more about why CR and others think this number is suddenly becoming a valuable index again. The "why not" issues were explicitly covered in the post and he mentions changes in the index meaning we can't directly compare periods (which?) to 2002 and I admit abjectly to not knowing what these changes are -- are they are actual changes in the definition itself or simply linked to CR's ambivalence about the usefulness of this number in 07?
she didn't quit but effectively walked out (turned over the keys) because if she quit she gets no UI. That's not to say he wouldn't deny the claim and buy more time. I told her to walk out since no pay=no work...she had not changed her status and left it at that.
He wasn't going to pay her either way since her paychecks had a stop payment placed on them the day they were issued. So if she quit she would walk out with yet another set of checks that are worthless. We'll get him and make life difficult for him however the UI was more important as something rather then a useless set of checks. I'm fairly sure the lack of payment plus damages will apply but stones don't bleed..
Firstest.
Oih-Vey!
I speak with builders and developers frequently. The problem with new home sales right now in many markets is related to land cost. The builders know how much they can sell a house for, and they know this price has cut in half from the peak. Many, if not most, have taken land impairment charges to bring the land basis down to where they can build profitably. There are some markets where they can't even build and sell the stucco box (high desert in California for one,) and they have stopped building there. The banks have foreclosed on the speculators/developers, and they simply have too much debt on the raw land they hold. Right now, they are unwilling to lower their asking price to unload their land inventory. They will. When the banks finally start taking these write offs, the new home sales market will see higher volumes, and the builders will resume building again.
Ivy Zelman will be remembered as one the key characters in the housing meltdown who (when she was working for Credit Suisse) was the lone analyst to raise the warning flag when everyone else on "Wall Street" was claiming this thing would go on forever.
Of course, those on the ground and without a vested interest (Calculated Risk) were right there along with Ms. Zelman in cautioning about the crisis that has since been unfolding.
OT:
Have had a situation occur with my spouse...suffice to say she has been working without pay since June 1st and I was only made aware of it Monday. Aside from the various things she needs to do to rectify this problem (legal and various filings-EDD, DLSE) I am asking for some creative ways to extract some flesh from her deadbeat boss. She is owed over 10k in back wages. I can't "throw a brick at the guy" for obvious reasons. I also am aware that the legal process moves at the speed of law......which is slow at best. I am asking for the collective wisdom of the board here for some advice. My email is mulsanne962@earthlink.net.....as to not clutter up this board with off-topic ramblings. I ask this forum because she was a loan officer that operated above board when her boss clearly has not.
There are some very smart people here and I am at an impasse as to what to do next. He is being sued in small claims court (quickest easiest thing to do) and has been reported for tax fraud......
Please send any idea's you may have my way...
Thanks for input.
Ciao
MS
Why are they making such a big deal about Just 70 million--their problems start with a b--as in billion?
Wachovia is selling loans with a book value of $75-$80 million for $40 million and this is viewed as great for the bank.
Doesn't this just add $35-$40 million to the current quarters losses? Or am I missing something?
Wouldn't it also lead credence that much of their distressed commercial portfolio is overvalued by 40-50% on their books?
Fannie Mae under $5 now
Freddie Mac - $3.25
Ciao
MS
Your wife's boss is a BK ready to happen and has probably fraudulently conveyed all assets out of his name.
Don't get emotional and just move on.
FWIW, CR had a post here yesterday of a business owner who had given a debtor a 1.2 MM credit line who apparantly BK'd on him.
Once a debtor files BK...it is essentially over.
-Former Creditor
What I would like to know is why the FDIC is letting bankrupt banks continue to do business. A number of banks with a Texas ratio over 100 are still functioning. Why?
The good news is Fannie and Freddie are doing OK.
"don't get emotional"
That's why I am asking for advice.
He will be foreclosed on by the end of the month, has no real assets, but continues to operate as it was "just a blip in the road". I actually called this whole thing (almost to the day) over a year ago. My wife, sadly, didn't heed this original proclamation.
Appreciate your advice but I also realize emotions make poor decisions.
I've had situations where I've had to make some decisions but I ALWAYS paid my employee's no matter what......
Ciao
MS
wu hu
I think LEH just found some money somewhere...
U.S. MBA's Mortgage Applications Index Fell 1.5% Last Week
By Timothy R. Homan
Aug. 20 (Bloomberg) -- Mortgage applications in the U.S. declined last week to the lowest level since December 2000 as fewer homeowners sought to refinance their loans.
The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 1.5 percent from the prior week to 419.3. The group's purchase index fell 0.4 percent and its refinancing gauge slumped 3.7 percent.
[snip]
Jim, I am asking myself the same question. Does the FDIC just call it when they want to call it?
As homebuilders hoarded overpriced land, land developers overpaid farmers and other land owners to flip it to the homebuilders. Now that the homebuilders have stopped buying, the land developers who paid bubble prices are busted. Moreover, because the prices of homes have fallen so significantly, homebuilders, in most places, cannot sell a home for more than the cost of construction and land has no value. The moral to the story is don't overpay for land using leverage, because you will likely end up broke.
Does the FDIC just call it when they want to call it?
Why not? If you could make up rules as you go along for everything that effects your life, wouldn't you?
Would you share these rules with the rest of us if you were a demigod?
umber2son --
Copy that.
She is the one who asked Bob Toll what Kool-Aid he was drinking
on a quarterly conference call. Ah, memories.
She is also kind of hot, in a serial killer sort of way.
"U.S. Treasury has not offered any help and Fannie Mae has not asked for any: CEO Mudd"
So thats where Ms Zelman ended up: Zelman & Associates
I was always wondering if she'd pop up again...
............
MOT-
I think that's what is happening. With what most of these banks have as "assets" it can't be anything other than that. Deny, Deny, Deny.
Think of it this way.....how many failures would there be if no election?
Many more methinks.....MANY more.
Something that has not really been discussed or brought up is that should the Dems. win and take over there will still be quite an impasse since the entire gov't has been populated-for the last 8 years- with Liberty U. grads. etc, all loyal to the current admin. People hoping for a realistic change (that is totally misplaced IMO) have not factored that into the picture.
The next president (as a democrat) will be a place holder for the next republican. Lather, rinse, repeat.
Ciao
MS
hubba, hubba.
I'm trying to figure out this Fannie-Freddie deal. Obviously, there are no plans yet, but they are imminent. First, I think the numbers being thrown around by the GSEs as to what it would take to bail them out are way too low. I'm hearing numbers like $20B or $30B, but it seems like it should be at least in the neighborhood of $500B. And that kind of money comes only from government debt. But today treasuries rally.
If they are going to try a $30B bailout, then split them up and privatize them, then their market share will need to shrink significantly. The housing market goes thud (as it should). And if they are injected with capital and then privatized, does that mean the bonds are still guaranteed? Or since they are newly private, will they actually pay out the cash flow from the mortgages (i.e. not be gov't backed)?
Safe,
I wasnt going to say it....
........
"she was ranked 14th in Builder Magazines Power Broker list of the 50 most influential people in homebuilding, which included such luminaries as President George W. Bush and Alan Greenspan."
Luminaries???? I'd say so....
but I guess it depends on your perspective.
Ciao
MS
In a sharp turnaround, John McCain has taken a 5-point lead over Barack Obama in the presidential race and is seen as a stronger manager of the economy, a Reuters/Zogby poll shows.
They failed to mention the poll was taken in the deep south by a bunch of men wearing white robes and hoods.
Who ca believe the MSM anymore when they print this misinformation?
Close race my ass!!!
Short institutional memory here. I know there was a post on this blog when Zelman left and created her own firm.
OT:
Granma just got run over by an inventory report. Couldn't happen to a nicer lady.
Ivy Zelman lives in Cleveland. That is like analyzing dolphins from Kansas. I suggest she move herself and the little Zs somewhere relevant.
Areas of Cleveland actually make some SoCal housing look untouched by the downturn.
And of course the only reason they moved on Indymac was because Schumer called it, and they never will forgive him for spilling the beans. I guess the attitude is that as long as the public is dumb enough to think a bank is okay, it is okay. And also, perhaps, they don't have enough money or manpower to handle the flood that is approaching.
If you are a good shot, and your business is not so location dependent....why not Cleveland?
Cheap lodging, and probably plenty of target practice.
I think she has a thing for Brady Quinn, so she moved to be close to him. Pretty soon, she might be Ivy Quinn.
U.S. Treasury debt prices rallied on Wednesday in a safe-haven bid driven by worries about mortgage finance giants Fannie Mae and Freddie Mac, analysts said.
TREASURIES-Bonds rally in safe haven bid on GSEs anxiety
| Reuters
HAaaaaaaaaaaaaaaaa
Ministry of Truth - btw, F & F have 230B in bond rollovers in the coming weeks. The spreads they are now paying (forced to pay) dont make the business model work very well, even if they can place the crap.
What I find striking is the YoY changes: 2.3% to 8% in delinquencies. Its broken.
"about 9.4% of Wachovia's $24 billion in construction and land loans were delinquent in" Q2 - lets see, thats about 2.256B in Q2 up from 1.848 in Q1.
"...lives in Cleveland"
Big old buildings there, which say National City, Fifth Third, Key Bank and Huntington on them. Big hollowed out buildings there, too, all over downtown - worse than Detroit perhaps? Maybe being in Cleveland is like analyzing beached dolphins in Kansas - pretty interesting phenomenon to study, wouldn't you say?
OT:
Is Wachovia's deal even and Arm's-Length transaction?
Let's see here: Wachovia brings in Goldman to "Advise on Strategy"; Wachoiva "Hires" Bob Steel late of Treasury/Paulson/Goldman.
Then Wach sells stake in land and construction loans to JV 50% owned by Goldman Sachs ostensibly to establish mark-to-market valuations. Would be interesting to see the investors in the two JV partners.
Here's the story behind the story:
Northstar JV Buys High Yield Distressed Residential Assets
FRE
I'd say living anywhere inside the Rot Belt right now has to be depressing.
"Ivy, honey, now that we've started our own company, where shoud we located it? New York, LA, Seattle, South Florida?"
"No. I'm thinking Cleveland. I want our kids to grow up depressed and feeling slighted."
They haven't offered anything and we haven't asked for anything," Fannie Mae CEO Daniel Mudd said in a public radio interview Wednesday morning. "I don't anticipate that they will do that."
ROTFLMAO!!
Cleveland Rocks
"Cleveland, City of Light, City of Magic!
Cleveland, City of Light, you're calling me!
Cleveland, even now I still remember,
'Cause the Cuyahoga river runs smoking through my dreams!"
"No. I'm thinking Cleveland. I want our kids to grow up depressed and feeling slighted."
People bash the midwest, and I've never been to Cleveland so I can't say much... but I would guess that if you have a good and secure job then Cleveland would be a GREAT place to be a parent, or to grow up as a kid.
I'm sure there are nice parts of town that are safe and quiet and suburban (which lots of people love for their kids) that are insulated from the downturn in Cleveland.
and if you have a good job then your quality of life would be high, I'd guess.
I'd rather live the high life in Cleveland with a great job I love living in a neighborhood I can easily afford, then run the rat race to live in squalor just so that I can say that I live in a "cool" locale.
For me, suburban is suburban. So I'd rather live in Cleveland suburbs and pay Cleveland prices, than live in suburban SF or suburban SD/LA or suburban DC/Boston/NYC and still have boring suburbia lands but pay dearly to get it.
Don't you just love it when the assumptions underlying an index upon which you rely crumble into dust ? Time to recalculate a few calculated risks, eh ?
YTL,
It was just a set-up to see who would come out defending the Midwest. You won. Your prize is an all expense paid trip by you to Cleveland! Congrats!
So, is this morning's (spikey) rally just a flight to the (perceived) quality of treasuries?
What's happening!? I can't see...!
The Spiral-Part IV-Liquidation
YouTube - The Spiral - Part IV - Liquidation
Anonymous,
My email is down. You've already accurately assessed the situation, it's your emotions that are running. Chuck those and focus on the well being of your wife. The guy who messed up will get his without your help. You have more immediate concerns.
"Jim, I am asking myself the same question. Does the FDIC just call it when they want to call it?"
Somewhat like the large number of foreclosures overwhelming mortgage servicing units, the FDIC has had to staff up for taking over banks. They have been rehiring retired employees who did this in the 1980s and 1990s.
This capacity constraint means they will try to convince many banks to be more responsible and lower the damage in the short run. They hope those banks won't add much to their problems with new irresponsible behavior.
Aside from experienced manpower, the second capacity constraint is money for paying off depositors. The FDIC only has about $53 billion in its insurance fund, and IndyMac will take $4-8 billion of it. They only collect about $5 billion of new insurance premiums each year. I am willing to bet the current administration is pushing to have a lot of the bank takeovers wait until after the election.
Students of the S&L crisis know how that turned out the last time it was tried.
I don't own the market or tell it what to do. I am just a passenger. My job is to make a profit, and that is what I intend to do.
I do not own the market
I don't tell it what to do
I am just a passenger
I am just here for the ride
The engineer decides decides things
Comfort's handled by the crew
Great danger lurks before me
But I still fell good inside
Because I do know my place
It's to stand and wait or sit
until the market beckons
me to take my small profit
sorry, sometimes, I get lost.
I do not own the market
I don't tell it what to do
I am just a passenger
I am just here for the ride
The engineer decides decides things
Comfort's handled by the crew
Great danger lurks before me
But I still fell good inside
Because I do know my place
It's to stand and wait or sit
until the market beckons
me to take my small profit
sorry, sometimes, I get a little lost.
"She is owed over 10k in back wages."
i had this happen to me once. putting aside the possibility of bk (and what that might mean) i can say that in calif there is not much an employee can do unless she quits. at that point, all wages must be paid within something like 48 hours. after that, the penalty to the employer is equal to one days wage per day late. it adds up quick. a determination by the state employment division is done after a hearing and the state can even assist on getting the penalty through the tax board. (that may take awhile) an employer really doesn't want to mess around with this in calif.
good luck.
But, to ignore the very important water-cooler aspect of all threads momentarily, I wouldn't mind hearing more about why CR and others think this number is suddenly becoming a valuable index again. The "why not" issues were explicitly covered in the post and he mentions changes in the index meaning we can't directly compare periods (which?) to 2002 and I admit abjectly to not knowing what these changes are -- are they are actual changes in the definition itself or simply linked to CR's ambivalence about the usefulness of this number in 07?
sparks
thanks for the love.....doing that.
Meta-
she didn't quit but effectively walked out (turned over the keys) because if she quit she gets no UI. That's not to say he wouldn't deny the claim and buy more time. I told her to walk out since no pay=no work...she had not changed her status and left it at that.
He wasn't going to pay her either way since her paychecks had a stop payment placed on them the day they were issued. So if she quit she would walk out with yet another set of checks that are worthless. We'll get him and make life difficult for him however the UI was more important as something rather then a useless set of checks. I'm fairly sure the lack of payment plus damages will apply but stones don't bleed..
Ciao
MS
MS - Are there any fixtures or equipment she can take - or trash?
stones don't bleed..
But folks that write bad checks knowingly are committing fraud.
Maybe a complaint to the local AG?