Report: One-Third of REOs Seriously Damaged
Submitted by
CalculatedRisk on Thu, 04/16/2009 - 8:35pm (135 comments)
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Might as well plow them under.
Now we can rally.
Is anyone surprised by this? I am only surprised by the low number - I would think it would be more than 1/3.
Though I would guess it will rise, as people realize all these bank bailouts are helping the banks, and not the people, and are not saving their house like Obama seemed to promise.
They are going to feel rightfully betrayed, and they will be sure to rip out everything that isn't nailed down, and some things that are nailed down, and pss and sht all over the place on the way out.
Civil disobedience is coming in a big way, and foreclosed properties will be the frontlines.
FHA will give you a mortgage as well as a repair loan...
Perhaps this is all part of the plan? Instead of having a government agency destroy perfectly good homes they inhibit the market-clearing process that would preserve them.
Now we can rally.
(has sound) Rally Monkey.com - 2002 Playoffs - Pictures Recaps, Scores
So then, what's the loan loss severity on these gems and when does that enter into the "The taxpayer is going to make a lot of money on these assets" calculus?
Step 1. Monitor paper for FC auctions
Step 2. Once house is vacated, hire people to go in and damage it.
Step 3. Buy it from the bank with cash.
" Basel Too (member) wrote on Thu, 04/16/2009 - 9:44pm.
FHA will give you a mortgage as well as a repair loan..."
True dat. A sure fire way to kick the can down the road some more. FHA is going to explode pretty soon, I am pretty sure they are writing up the request for more funding as we speak.
Just add it to the pile of debt. The big walk away is coming - the Treasury walking away from the $15T in debt we amass by 2010.
" bearly (member) wrote on Thu, 04/16/2009 - 9:46pm.
So then, what's the loan loss severity on these gems "
Loss severity is capped at 100% - anything above that and the servicer exercises THEIR put option - back to the local government.
" TJ and The Bear (member) wrote on Thu, 04/16/2009 - 9:45pm.
Perhaps this is all part of the plan?"
I think the plan is give people enough hope that the government programs will save their homes, knowing it won't, but hoping that buys enough time for the inflationary and fiscal stimulus to kick in, before TSHTF.
buy caterpillar
"Just add it to the pile of debt. The big walk away is coming - the Treasury walking away from the $15T in debt we amass by 2010. "
Yes. But they will do it the way they have always done it before - with inflation.
Basel Too, yeah, I was thinking about that. Some of those repair loans sound pretty generous. I hope the FHA is careful here (sounds naive even to write!)
best to all.
First many Americans stopped paying their montly mortgages and now they vandalize the same house they used to live in?! USA=Ant hill pouring gasoline on itself and crazed ants hellbent on finding some good matches to lit it up. Or somekind of giant darwin award nation?
"Perhaps this is all part of the plan? Instead of having a government agency destroy perfectly good homes they inhibit the market-clearing process that would preserve them."
No one would admit that, but many of the engineers of our rescue have called for destroying housing stock, to boost existing home prices. It probably doesn't escape their notice that letting many foreclosed properties be destroyed gets them there without having to be held personally responsible for real destruction of real wealth.
This is great news. It will create new jobs rehabilitating, bulldozing, and rebuilding homes we don't need. If we're lucky, it might be enough to restart the bubble economy. I suggest the government create a new program, the Bulldozing and Rehabilitation Facility, or BARF, to take these troubled homes off the books of troubled banks, restore them to their former shape, and compensate the banks for the time value of the lost payment streams. Homeownership is an important part of the American dream, so let's all pitch in to make housing affordable, and prevent damaged homes from depressing the real estate values in the surrounding communities.
Comment at 9:58 was me.
BARF
LMAO!!!
I thought that was too clever for an anonymous!
Since high speed rail is such a misunderstood topic, I thought I'd carry it over from the last thread:
Jay D. writes:
"President Barack Obama announced a “long overdue” plan to develop high speed rail lines in the US. Obama and his administration have
identified 10 potential corridors for the new railways in California, the Gulf Coast, the Midwest and the Northeast"
I think I answered the rationale behind this political extravagance about 6-9months/ a year ago? when it came up in discussion. It all started in the late 50's/early 60's. That land was bought up and has been sitting in democratically controlled hands for the last 3 generations... waiting for some FEDGOV spendthrift to fulfill it's payoff.
The children/grandchildren who are still economically powerful are demanding the payoff on the plans that were drawn 4/5 decades ago. I should know...I'm one of the grandchildren.
But, don't take my word for it, look at the transfer deeds around the existing track lines (RR R-O-Ws) in your state over the course of the previous half century as they radiate out from the major city-centers.
Political power is always/ has always been about the dirt. Price is a footnote.
I do like the passive-aggressive bitchiness of this trend. No need to riot outside and get fire hosed or teargassed. No, in the year 2009 you can get rowdy within the convenience and privacy of your (former) home. Hell, you can even do it while running the AC and watching a DVD you got from Netflix.
Whats the interest rate on that repair loan
Well done, Gavshire!
This is definitely one way to reduce housing stock quickly. Its going to be fun to watch the MSM report on this one.
Bulldoze the inland empire just like Cramer said we should.
dont bull doze those vandalized REO homes
they will make great crack houses and local gang head quarters
Look Up in the sky tomorrow.
CHEMTRAILS Exposed on Discovery Channel
Dailymotion - CHEMTRAILS Exposed on Discovery Channel - a Film & TV video
CHEMTRAILS Exposed on Discovery Ch pt. 2
Dailymotion - CHEMTRAILS Exposed on Discovery Ch pt. 2 - a Film & TV video
Here's hoping the local municipalities are on the ball with early and often fining the owners and/or lien holders for upkeep costs and security for vacant properties which are not being maintained. If we just had that, so many other problems would go away (shadow inventory, neighborhood blight, etc.).
they will make great crack houses and local gang head quarters
You're suggesting turning them back over to the prior owners?
Nick
Hope is not an investment strategy...
We do not live in the world we think we live in.
Nothing is as it is counted.
"You're suggesting turning them back over to the prior owners? "
TJ and bear,
There is some truth to it. Acquaintance went to look at a short sale, looking through bedrooms found room full of stacks of cash in clear plastic bags. Needless to say he was done after that.
Remember when people said it was absurd to assume more than a 50% total loss on MBS?
Cheers,
prat
The problem is, the banks are refusing to foreclose on these properties and the cost of clean up is falling on the previous owner, or the local government. There have been previous posts about foreclosed property owners facing clean up costs. Also local governments, like Buffalo NY, forcing banks to take responsibility for abandoned properties. This is getting way out of hand. Really spooky, when it hits the high end stuff.
would it not have been simpler for the feds to have taken all of the tarp money
and
purchased every mortgage on the verge of foreclosure, in the country
and then
rented said residence out to the inhabitants at current market rates
and
like they do with student loans
failure to pay is deducted from social security benefits
by my calculation that would have only taken a little more than half the tarp fund leaving at least one-quarter of a trillion dollars
now thats change you can believe in !
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mock turtle
your idea would have made sense - to everyone but the financial elite in control of the country. how could they skim money out of your plan?
no, the people needed to pay. it will be interesting to see if the people make the bankers pay back.
Michael
after you inhale
ya gotta remember to exhale
There's a lot more interesting stuff where that came from Mock.
'It all started in the late 50's/early 60's. That land was bought up and has been sitting in democratically controlled hands for the last 3 generations.'
Well, in the Northeast, that was the 1850s and 60s - no one has created new rail line right of ways for decades in the Northeast, apart from a bit of shuffling and consolidation. And in the country as a whole, I can't imagine much after 1920 or so, at the latest. Instead, many stretches were abandoned - except for the rights to the right of way, of course. That should prove quite interesting in the future.
Rights of way are a fascinating topic - even owning an empty pipeline network with its rights of way and access under 100 square blocks of a city can be surprisingly profitable over the long term. As was the case of abandoned pipelines in several cities being the basis for a fiber network being installed quickly and cheaply in the 1990s, long before high speed meant anything but very expensive and dedicated T1 or T3 ties.
You might be surprised to see what sort of traffic those rail right of ways are carrying, even today. It is a much older and much more rarefied game than one that started in the 1950s.
Love it! BARF LMAO!
I'd pay good cash money for the privilege of taking a sledge hammer to some good granite counters and stainless steel appliances.
Is Yves Smith channeling Conjure?
Yves at 10:08 PM- "I give it [the bank plan] six months before it becomes undeniable that the current system is hopelessly broken."
Conjure at 4:56 PM- "In my view, Citibank will collapse by September 30, leaving only the FDIC between it and oblivion."
Stiglitz: Bank Plan Destined to Fail, Doomed By White House/Wall Street Ties « naked capitalism
I work for a REO real estate office and part of my job is to inspect these home a couple of times a month for damages and such. I have been in houses where literally there are only the studs left. Some home are so trashed that there is really nothing left of it. Many cities are starting to fine the banks or real estate office anywhere from $100~500/day after a certain numbers of days if the properties are either not bulldozed or repaired to code. I am able to catch many problems such as broken windows, kicked in doors, etc because we are vigilant about inspecting these properties and also enlisting neighbors to keep watch for any strange activities. I have seen other properties where the banks or REO office just plopped a sign on the lawn or windows and let the property festered. Anyways just a first person report from what I see out there.
Mike
I can't find the mp 4:56 post.
Which thread?
ok
i give up
LMAO i know
but BARF?
barf raw food barf raw diet barf cats barf breeders
barf dog diet barf bag barf feeding
biblical american resistance front
bay area riders forum
Dog Owner's Guide; BARF: Bones And Raw Food
and then theres...i dont wanna go there
ok you guessed it
BARF Pictorial
Educates people about the BARF diet to reduce fears and misinformations on the subject. Includes written descriptions and photographs.
BARF Pictorial - 22k - Cached - Similar pages
AND PHOTOGRAPHS...my GOD
"Which thread? "
Jim the Realtor
Bulldozing and Rehabilitation Facility
TJ and The Bear
thank you
sounds like another fed window!
anon@10:33
It wasn't the ROWs, it's the blocks of land at specific points down the line.
"Rights of way are a fascinating topic"
Yes, like bars of gold...waiting for their moment to shine, the deeds quietly sit on public and private balance sheets, waiting for the day when it's too expensive to buy and develop an alternative.
Don't forget the Great Drywall of China angle on this one.
mp, I'm hoping Yves book is out by then. It's only when things get truly desperate that the majority will start to pay attention.
mp - thank you.
The FHA 203k loan will give people money for rehab:
Rehab a Home W/Hud's 203k Rehab Program
But the real issue is your standard FHA won't finance properties not meeting their minimum property requirements and people are really going the non-203k route. Despite the affordability mumbo-jumbo going on the number of qualified borrowers isn't that large and they really can't take on a rehab project too. The banks need to cut price and do self financing on those for investors of like 90% LTV to a person with plenty of reserves to have a shot at getting them off the books. Some will come back but the bank is making something on that property in the mean time. The issue there is that many properties aren't owned by the banks but by investment pools and Wall St and they aren't putting new money in or doing anything creative.
Someday they'll start liquidating, that'll be fun.
My defects have been reprogrammed. The economy is showing signs of strength. It is impossible that 1/3 of REOs are seriously damaged. This is obviously propaganda from our enemies. The stock market will go higher. I am looking forward to living in a garden of pure ideology. Hey, I'm trying to get with the program...
IMF warns over parallels to Great Depression
IMF warns over parallels to Great Depression - Telegraph
... Mr Strauss-Kahn called for a urgent action to "cleanse banks" of toxic assets and for further fiscal stimulus beyond the 2pc of global GDP already agreed. The snag is that high-debt countries may have hit the limits already.
"The impact becomes negative for debt levels that exceed 60pc of GDP," said the Fund.
While no countries were named, this would raise questions about Japan, Germany, France, Italy and ultimately Britain and the US after their bank rescues.
The IMF said the US is at the epicentre of this crisis just as it was in the Depression, setting the two episodes apart from normal downturns. However, the risks are greater this time. "While the credit boom in the 1920s was largely specific to the US, the boom during 2004-2007 was global, with increased leverage and risk-taking in advanced economies and many emerging economies. Levels of integration are now much higher than during the inter-war period, so US financial shocks have a larger impact," it said. ...
Acquaintance went to look at a short sale, looking through bedrooms found room full of stacks of cash in clear plastic bags.
??? And the reason for the short sale is,....?
Great news for the banks and their buddies at the "Yes we can" administration.
Not only taxpayers money is going to be spent buying those worthless homes at ridiculous prices, more money is going to be spent to destroy them, effectively propping up house prices.
Strauss-Kahn says:
"You are dreaming. You do not want to believe"
(You Morrissey fans will have to remind me which tune that was.)
The article hits on the issue of banks not taking title. I like the screams heard from the politicians and previous owners when the bank decides to do that. If a person abandons a car on the side of the road it isn't the banks job to come and tow it. Being a lien holder doesn't imply ownership.
Imagine having a mechanics lien against a house for work you did and the politicians come after you because the owner abandoned it.. Insanity.
"Yes, like bars of gold...waiting for their moment to shine, the deeds quietly sit on public and private balance sheets, waiting for the day when it's too expensive to buy and develop an alternative."
...referring to the unused/underutilized "corridors", of course. They are a class of utilities unto themselves, just like 10:33's telecom example.
Can't say I've seen any homeowner vandalized buildings. Well, not on purpose,...I have seen evidence of confused flippers taking kitchens, bathrooms, and walls apart without having any idea of what they're doing.
Jim TV -- now on Nightline in SoCal!!!
Lots of comments on the MLS "may not qualify for financing" type stuff due to missing kitchens or bathrooms.
Just finished watching Jim the Realtor on Nightline. Woohoo, go Jim!
Apparently the rush to BubbleInfo.com was too much for the server -- it's intermittently giving "high load" errors!
Go, Jim, GO!!!
Krugman In short, how much of the apparent US productivity miracle, a miracle not shared by Europe, was a statistical illusion created by our bloated finance industry?
I have of course ranted on the obscenity that is the term productivity as popularly used. If only Krugman had even hinted at the concept that market participants can change the state within which other market participants make their decisions...
My work is almost done here
what was the title of this post
Report: One-Third of REOs Seriously Damaged
like meatloaf said
two outta three aint bad
Lot's of work for contractors going forward?
I've also heard that the lenders are leery about anything that doesn't match the tax record---looking for non-permitted work.
Should we go long Caterpillar? Anyone else stand to gain from the bulldozer boom?
Short term, I'd stay away from CAT. Longer term, (6-9 months from now), they should be pretty attractive.
EHP - Americans will give up their financially engineered, dynamically post-industrial sense of economic superiority when the world pries the credit card from their cold, dead fingers.
Which will be much sooner than most Americans, bathed in the reassuring numbers of the mainstream media of truth, can grasp.
The rest of the world is nowhere near in as dire shape as routinely depicted in American sources (though keep in mind, this is a global economic collapse), nor is the U.S. in as good a position as routinely assumed by those same American sources.
Reality is returning, slowly, to a society which had seriously lost its way - not simply in the corruptness of its financial institutions, but also in it so casually disdained laws when they stood in the way of torturers and wiretappers.
That disdain may continue, but unlike some posters here, I refuse to believe that the majority of my fellow Americans are amoral bankrupts that feel torture makes America stronger. But then, maybe they are right, not that I plan to concede the argument without more proof than offered here. After all, a majority of American voters elected as president a man who has not only said, publicly at least, that America will no longer torture, but has also released the proof of what was done in the name of defending America, so that it is no longer possible to dispute the reality of what the American government did, not only against the guilty, but also against the innocent.
Who knows, maybe Maher Arar can finally travel freely to the U.S. to pursue justice, from the people that sent him to be tortured. Though I doubt it will be anytime soon - sometimes, reality is just too painful.
There was no American productivity miracle, it was a mirage of hallucinated wealth enforced by simply dismissing any criticism or concern that it may be a fantasy.
You are in a room.
To your left is a doorway without a door... or a doorframe.
To your right is a window without glass or... a windowframe.
Overhead is... nothing. Not even a roof.
"Hello, Vandal".
Broward: sounds more like an emulation of a room, or maybe the potential of a room
that's it! a poem someone could torture--The Potential of Room
Bulldoze it !!
At least it will reduce supply and aid earlier recovery by matching supply and demand faster.
Excellent! Thank you.
"I refuse to believe that the majority of my fellow Americans are amoral bankrupts"
They don't need to be.
American culture erected elaborate suspensions of disbelief to protect each American's ego & rudimentary consciousness.
Q: When is a house not a house?
A: When it's an REO!
Don't be fooled, this is not a valid explanation of the shadow inventory.
Absolute auctions are the answer. Plenty of cash investors sittting on the sidelines waiting for this to happen. However, these are experienced people who are not interested in catching a falling knife. This is why it is important that auctions are absolute, no reserve.Unitl this happens,informed investors will continue to sit on their money.
The shadow inventory consists of a broad spectrum of properties, not just low end. The shadow inventory is caused by big governmet and big banks in their misguided attempt to artificially support false values.
Bulldoze? When it is a townhouse in the middle of a row?
Where you going to dump all this?
Detroit?
Once you bulldoze it someone is probably going to have to write it off.
'American culture erected elaborate suspensions of disbelief to protect each American's ego & rudimentary consciousness.'
No, that isn't true, at least not in the way many here might accept. Sure, those that are devotees of Fox or CNBC, or who rely on the NYT, may have been conveniently disregarding the lies they were repeating, but I still feel that most Americans, not those shouting and ever so present minority that dominates discourse for fun or profit. remain appalled at what has happened to their nation.
Which is why a candidate running on the idea of change (not to mention against Palin, a truth that can not be ignored) won with a large majority, pulling in many voters who had been at best apathetic in the past. Of course, change of the sort required will be wrenching, and unlikely to come from government itself, but nonetheless, it wasn't the viewers of Fox and the readers of the NYT that elected Obama, it was another group entirely, including a large number of people who simply don't care in the slightest what Fox shows or the NYT prints. The NYT is going bankrupt while Fox News is going crazy, for much the same reason - most Americans simply don't care what they say.
Cinco-X
So you suggest that we don't keep a watchlist of terrorist. Isn't that what the vaunted 9-11 commission suggested? For cryin' out loud, you'd complain if they did, and you'd complain if they didn't?
Well, if you'll recall, you were the one complaining. Let's see:
So I'm a potential terrorist because I served in the military. Jeez. The DailyKOS has poluted the minds of America.
You were going on about how the Obama administration was so offbase considering you a suspect, and I told you you had nobody to blame but yourself, whereupon you launched into this spirited if scripted defense?
Which is it? Let me quote you, For cryin' out loud, you'd complain if they did, and you'd complain if they didn't?
Is it "If you have nothing to hide, you have nothing to fear, the truth will set you free, you should be grateful for the unwinking eye of the police state protecting you" or are you a namby pamby liberal always crying about your "civil rights"?
Just sayin', that's exactly what you've done over the course of this exchange.
So they realize there's a problem and they're trying to fix it.
One post ago you challenged me to prove the existence of a database you claimed you'd never heard of. Now you're defending the quality of service it offers. How would you know? Native disingenuity?
Also, just noting, the further you get over into the realm of how everyone should just grin and bear the police state, the less service you do your initial assertion that you shouldn't be considered suspect for your military service. It's just profiling. What's wrong? Don't want to undue scrutiny? But what happened to your patriotism? You should be happy your chance of a patdown search at a random traffic stop has increased, because it means all our security has increased. It's for ALL our safety and security.
But you have a very dynamic style of argument. Lets not hold you to the standard of consistency.
Your point? Did that make them okay.
No, they were immediately used to put people in internment camps. They were a horrendous idea. Remember, you didn't like them because you were on one as a soldier; til you liked them because someone said that the Republican party made them, at which case if it had been the Republican party, it was the provision of a public good.
Or are you just trying to show us "how smart you are?" Get your panties out of a wad please.
Oooh, I love it when you attack my masculinity like that.
Since binary thinking seems common, understand when I say most Americans are appalled, I do not mean they are appalled at the same things or would support the same solutions.
And many of those Americans do not thinking that every single decision concerning the nation is either a Republican or a Democratic decision.
Since binary thinking seems common, understand when I say most Americans are appalled, I do not mean they are appalled at the same things or would support the same solutions.
And many of those Americans do not think that every single decision concerning the nation is either a Republican or a Democratic decision, regardless of how those issues are framed as such by those unwilling to live in a world which is more than simply black and white..
Woohoo!!! According to Bloomberg headline, all ok with Citibank.
- Bloomberg.com
So much for cancelling the 'Save' function before the page loads.
From WSJ: "Citi posted first-quarter net income of $1.59 billion, compared with a prior-year net loss of $5.11 billion. The latest quarter had a per-share loss of 18 cents on a 24-cent charge from revising the conversion price on preferred stock. "
So, how much of this due to repeal of mark-to-market of toxic assets? And how much of this is also due to gains from marking to mark of Citi's own debt?
Why wouldn't Obama just let the bank print money directly, instead of having to go through the pretense?...
Ideologues cant ever just accept what is, always have to explain the reasoning, metrics, etc.
Who cares who won, or lost or why?? Our defacto one party system marginalizes anyone not connected above a certain level, so why do people think they are anything more than cogs in a machine?? I suppose just the idea that they are not as special as they think they are makes them very indignant.
You freaks got to embrace your inner gray man and just blend in, baby. Chill out, you know.
Your time to shine will come soon enough, Liberian style I fear, as we plod ahead into the most politically divided, acrimonious American society since the Civil War
Man MrM you're a downer. Why do you need to look through the numbers.
Marking to market its own debt contributed $2.5 billion in income while according to Citi the rule change didn't affect it (probably because it didn't have to write down anything as a result) while preferred dividends have been totally ignored (like its not a real expense!)
Looking very much like "sell in May and go away" is going to be a winning strategy for the second year in a row. Last year's peak was May 14. I bet we hit that within +/- a week in 2009.
preferred dividends have been totally ignored
Interesting, I missed that.
Are you referring to TARP/CPP preferreds specifically or to all preferreds ?
"Citigroup posted a $2.5 billion gain because of an accounting change adopted in 2007. Under the rule, companies are allowed to record any declines in the market value of their own debt as an unrealized gain. The rule reflects the possibility that a company could buy back its own debt at a discount, which under traditional accounting methods would result in a profit. Critics say a company in distress is unlikely to realize the gains, and would have to reverse them eventually if it recovers.
........BS rule if you ask me. But then I'm not a high - financier.
..........HK luxury apartment sale drew huge responses..........600 sold in 4 hours for 10% DC........look at the picture.......
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.........billionaire Li Kai Shing owns Cheung Kong group........
So an accounting rule allows citi to feed on its own zombie flesh? A fine long-term strategy.
I wonder what and who precipitated this action in 2007..
It appears all banks are now TBTF. The stress tests will not allow anyone to fail. Private bond investors are learning that the government will attempt to keep them whole - so banks can raise private money without explicit government guarantees - knowing full well that under the TBTF doctrine, the govenment will step in to preserve and protect.
Meanwhile, savers get zero on their bank accounts. Jobs continue to disappear. And we have the biggest misallocation of capital known to mankind kept on life support.
Joe kernan on CNBS said the bolggers calling for nationalization have been awfully quiet lately. He seemed genuinely upset with the bloggers.
Citi is dead.
"In many cases, it costs so much to rehabilitate these houses, it's just not cost-effective," he told CNN. "And the properties are eventually going to be bulldozed."
I've rehabbed a number of homes, and I've most recently demo'd a few here for the used materials (our "cow palace", chicken coop, and greenhouse were constructed with recycled lumber, aluminum, MDF, etc.). The second biggest waste of this whole situation is that the materials will end up in a dump when much of it can be reused. It's maddening.
Looks like the banks will need to raze assets.
SCREAM RECYCLE.....It's time someone in our gov. see's this as a green project for all those unemployed construction workers.
Bulldozing the homes means they are worth less than nothing. The cost to bulldoze a 2000 sq. ft. home is $3-5K with dump charges, and can be done within a week. On the other side of the spectrum, it can be achieved by hand using two guys within about 3-months. Regardless, the worth of the property is the land only, less demo & "pretty-up" costs.
Just another mechanism for moving somebody's private problem over to the public agenda. Who will pay to fix or demolish that stuff? Hey, good guess!
"Joe kernan on CNBS said the bolggers calling for nationalization have been awfully quiet lately."
The administration has chosen its course and now must live or die with that. We may as well just sit back and watch and see who was correct. I have my opinions, of course... but we will see.
Mr. Beach wrote on Fri, 04/17/2009 - 5:00am.
Meanwhile, savers get zero on their bank accounts. Jobs continue to disappear. And we have the biggest misallocation of capital known to mankind kept on life support.
Railfax Report - North American Rail Freight Traffic Carloading Report
Organ failure catching up with the accident victim.
..........Volkswagen First-Quarter Sales Fall 11% on U.S., Audi Declines ...........
Volkswagen First-Quarter Sales Fall 11% on U.S., Audi Declines - Bloomberg.com
What is the difference between Chernobyl accident and US real-estate crash? Radiation.
'Our defacto one party system'
What a sad truth - and the logical result of political calculation on the part of those that pay the parties to keep themselves in business.
Divide and rule is an old, old game.
If you know the sheriff is going to knock on the door tomorrow to kick you out of your house, isn't there an awfully big temptaition to "forget" to turn off the water" on the upstairs tub and "forget" to remove the stopper. Until you are kicked out the house is still legally yours, so there is no crime being committed.
The word of the day is "Disconnect"
........BS rule if you ask me. But then I'm not a high - financier.
Black Star,
Look at it as the same situation where a lender reduces the amount of the loan for a strapped homeowner (forgiveness of debt). This classically would be a taxable event to an individual. We had discussions here when Congress made it non-taxable to the individual.
The truth is that standard US housing is not built for the long run anyway. Older homes become obsolete, and this is not just because they are 'built cheaply'. They get obsolete because they are energy wasters... plumbing and electrical get obsolete as codes change and standards of living change. Windows leak air, siding and roofing need to be replaced regularly. Ideas about bedroom size, kitchens, number of bathrooms all change and evolve.
The best thing for many cities would be to do what Detroit is talking about: depopulate whole areas, shut down the utilities (which also get obsolete over time) and remove the construction.
......that's why many banks "pay for keys" - move-out with the house in good shape and we'll cut you a check.
Look at it as the same situation where a lender reduces the amount of the loan for a strapped homeowner (forgiveness of debt). This classically would be a taxable event to an individual. We had discussions here when Congress made it non-taxable to the individual.
What is the relation?
The mtm rule for own debt suggests that as the company is heading closer and closer to bankruptcy and its debt is losing value, it will be allowed to book gains on the reduced cost of its debt - because what if everybody is wrong and the company snaps all of its mispriced debt at a hefty discount. Some logic!
You know, my old neighborhood developed very much this way. It was originally slated to be a modern PUD complete with a golf course as developed by the local big hotel holding company. This was all during the last great pre-depressionary boom - the 1920s - more or less executed by Sinclair Lewis' Babbit. The never got so far as to have these REO/Bando shells - instead the whole project really got underway in '29 - the survey and preliminary road and sewer work having been done in '28. Because the houses were to be spec built, there wasn't a lot put up - just empty lots. At that time, this was well out of town in "the country" and now, of course, it's right in town - a foot or bicycle commute.
The result was that most homes were one-offs...and it's an organic, eclectic mix. The goals of mixed use are very well accomplished: there is a 50's version of the McMansion - turned sideways and straddling two lots - a block and a half up from three different types of duplexes, a collection of quasi-colonials, and a couple of mutli-unit jobs. There are a handful of Italianate and "spanish" stucco jobs from the thirties, and not a few brick "capes". I lived in a brick ranch put up in the 60s (now the ex's), and own an adjoining quasi-rancher put up in the 40s, while the neighbor on the other side built an unremarkable box in 1978.
Two lessons I take away from this:
1 - Armageddon will not result from slow infill. Gangs and crack houses are not the result of empty real estate; they are the users of empty real estate. Please do not confuse cause and effect. If you are worried about gangs and crack houses, think about a new approach in the War on Drugs.
2 - The organic (and please take note, I say these things as a "liberal" "socialist") and Lassiez-Faire (ie, not "planned") development can do wonders for resulting in real mixed-use. Of course, this took place in the context of regulatory framework requiring proper water, sewer and road construction, but was notably lacking the HOA aspects of 'central planning'. The infill development also nearly all took place between WW-II and the late 60s, so building codes were actually, you know, like, enforced. This was construction that predated the modern stapled-together-shit-box syndrome. I suspect the fact that these properties were one-offs (mostly) contributed to that.
Bulldozing may be appropriate in some places, but if the shells are structurally sound, a little paint and sheetrock are essentially cosmetic. If it turns out the OSB sheathing and other "engineered wood products" are prone to made-in-China 'failures' like the sheetrock, well....yah, call the bulldozers. Kids love to play in empty lots.
Nice to see CNBC celebrating it's 20th anniversary today. If you never turned on CNBC, and in 1989 you put everything into a 8% 20 year treasury, your total return today would be about 400% (ignoring taxes). If you turned on CNBC, and put everything into a stock mutual fund, your total return would be about 200% (assuming a 2% management fee and ignoring taxes). Even worse, if you religiously watched CNBC, and switched funds constantly to chase hot sectors, your total return would probably be negative. Way to go CNBC! Happy anniversary!
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What did I say, Hunh, hunh, humh?
A worse disaster than hurricane Andrew. More homes affected, no juicy insurance money to fix and even upgrade houses, scattered everywhere, affecting whole neighborhoods.
Did I post about the 300-400 unit condo, half in foreclosure, water turned off? Takes a really long time of non payment for the authorities to turn the water off. What to the lenders expect to get back when they finish the foreclosures? They are going to get back a building, empty, with a whole lot of other lenders who are not gonna want to pay to restart things.
lawyerliz
Maybe the druggies all killed each other, or all got thrown in the klink?
"Bulldozing may be appropriate in some places, but if the shells are structurally sound..........."
Heck - It's their property - I'm gonna let 'em mess with it any old way they want 'cause it ain't my fight. Knowing the decision-making that's been going on though, well,..........they'll do something stupid - or the government will.......I really need to be less pessimistic.
MrM,
It's a write-down of your own debt resulting in a gain in both cases. With the bank, it's likely a market transaction. With the individual, it's a single transaction.
I love to say I told you so...but I'm too lazy to look my the time and date of my actual post. Yup, the bankers and gubermint thought they were clever with their shadow inventory. I agee with those who think 1/3 is light. If its truly 1/3 now, it will get bigger. I also expect legal suites from cities charging the owner (i.e., the banks) with public nusance ordinance charges and fines.
house across street from me is vacant for 2 yrs now. We are NOT a bubble area. What would have sold for 140,000 2 yrs ago didnt even get sold at last auction try. I heard the bank wanted too much for it. The highest bid by was 75,000. It has mildew now, needs a new roof and fence from hurricane, yard is nothing but weeds, and has termites too.
This article suggests that the so called "under-valued" toxic assets are NOT appreciating assets but actually rapidly depreciating assets.
P.S. I like this Hoocodanode format.
Just put bars on the windows and add steel cell doors. Lock up the bums. I read an article about some horrible place called "Victorville" in California...a vacant swath of foreclosures...only hookers and drug dealers remain....maybe these homes can be converted to bordellos and serve as a rest stop on the way to Vegas?
Michael, you should check out some of those foreclosed homes b/c you will probably find some good dope growing there
My neighbor knew his SUV was getting repo-ed, so he hid packages of frozen fish under the dash. Remember, these things sit a lot in the sun for a loooong time before they are sold again.
Jay D., with respect, the Cheung Kong sale at Tin Shui Wai is not luxury ("only" usd 400 per sq ft), and apparently was sold at heavy discount. This development is out in the marshy northwest of the territories.... there is bubblocity going on in HK, but this isn't it... just sayin'.
More good news for the economy!
This sounds like a perfect place to use some of the government stimulus money to put people back to work, repairing the damaged homes and bringing them up to market standards!
Lets bulldoze the politicians homes first
" Byzantine_Ruins (member) wrote on Fri, 04/17/2009 - 3:58am.
Cinco-X
.....
Well, if you'll recall, you were the one complaining. Let's see:"
I've been at the Dr.s all morning. I'll reply when I get a chance. Thansk for all of the great material-
Cinco-X
If their bulldozed that would be a shame; most of the ones I have seen only have cosmetic damage, they are structurally sound. Anyone willing to fix them will reap a windfall from them.
I bought my house in 2002 and it had been used and abused. Instead of 20% down I got it for no money down then put roughly 20% in to repairs, all the doors had to be replaced, the bathroom cabinetry, as well as the busted toilets, sinks etc, and a bunch of sheetrock. The upside is I have a nice house in the high rent district and will be right side up until prices collapse to 65% peak to trough, an unlikely event in my opinion.
On the other hand I know a bunch of tradesmen who were complaining in 2005 that the new houses they were building were not being built to code, second story studs not being placed directly above first story studs, etc.., and would have structural problems within a decade.
The Banks did it to themselves---I believe we call that poetic justice.
The Banks are the new terrorists,they are killing our country.
David Simon, Bill Moyers
Bill Moyers Journal . Watch & Listen | PBS
Good night, moon. Good night, PoPo. Goodnight hustlers, scammers, hoppers.
Good night, hoboes, grifters, system gainers.
Good night America.
Goodbye virtue and plenty.