@km4
I think Bernanke is right ... for the time being ...
It's the Japanese Model ... they printed and printed and printed money ...
What they got was a decade of deflation because their Zombie Banks ate the capital.
This is where we are headed now ... The Japanese Model ...
But ... things can change
I'm certainly one of these lucky duckies. The missus and I watched in resigned dread as our equity position went from 25k up to 25k down in less than two months. What's better? We've got an FHA-backed 30 year Fixed Rate mortgage that we can do absolutely nothing to fix. Countrywide (now B of A) is playing it close to the vest when it comes to disclosing what they'll do. We're certainly not alone in this: as a hard-working employed family that finally got into their first home, its an outrage that every crook and cheapskate gets a nice parachute but not us. What's worse? the FHA has had a program in place that's supposed to help folks in my situation but barely anyone has been able to take advantage of it. Its ironically titled Hope 4 Homeowners.
But, when the homes is on sale for 1/2 off...that is good for the poor working stiff right? Oh yeah, it's HIS tax dollars allowing the bank to take the write off so he can buy the home. Well that little circle jerk makes perfect sense....
I married into a zero down, interest only for 10 years then standard thirty year loan for a 2006-built suburban condo. Of 500 units, my guess is that 480 are foreclosed or underwater. Almost all sales out of here show up as short sales.
We currently have savings and a more-than-adequate income to cover this, but who knows if things will turn south more. We started to pay down the loan, but then reconsidered and continued to build savings.
Once we are comfortable that we are covered for all sorts of emergencies, the extra money will be going towards paying down the principal and getting out from underwater. If things go south on us, we'll walk without thinking twice.
Way we see it, we're paying our Bank of America mortgage through our taxes being used to subsidize the bank. Who woulda thought that paying the mortgage and taxes is really paying the mortgage twice?
Tonight while the wife was away, I took the kids to Kentucky Fried Chicken for dinner (their first time ever, I couldn't help it...I saw it while driving home and felt a bit nostalgic). I was amazed at the line of people. It took nearly 20 minutes just to get to the front of the line.
Here's the thing -- I'd say about 66% of the people carried clipped coupons (either printed off the Internet, or else from local advertising flyers). I'm not kidding, it was more than 50%, and I'd guess closer to 2 out of 3 people using coupons. I don't think you'd have seen that two years ago.
Damn that chicken is greasy. I could only eat one piece.
Because his new monthly payment will be so low he can afford to pay back the bank leveraged write down through INCREASED taxes! Bang-problem solved. Move along to the next crisis..Pakistan, China...anywhere but domestic.....
In the article, the contention that foreclosures sell at a discount, so are not representative of the 'market price' seems dubious. If the market is mostly forclosures, isnt that by definition the market value of a house? This will especially be true of mid-low tier areas/houses that had sharper peaks and higher foreclosure percentages (due to less-than prime borrowers, higher HELOC drawdowns, increased speculation etc...)
Oh, and a more on-topic addition to the above anecote:
As I drove home through the Almaden area of San Jose (on Meridian Ave), I saw an awful lot of very unkempt lawns. Looks to me like urban blight is beginning to spread towards the nicer areas inside inner Silicon Valley.
These stats are a clear instance wher it makes sense to subtract out the number of free-and-clear homeowners and instead report the percentage of mortgage holders who are underwater. That number is more important to banks and others who hold mortgage-backed securities.
These stats are a clear instance wher it makes sense to subtract out the number of free-and-clear homeowners and instead report the percentage of mortgage holders who are underwater. That number is more important to banks and others who hold mortgage-backed securities.
They estimate the value of the house on my right at 50% more than mine (and mine is nicer).
They estimate the house on the left at 10% less than mine - and that is a brand new custom home with incredible upgrades (worth way more than my house). That house was built two years ago, so it is hard for Zillow to have missed the change.
I'm not sure where they get their loan data either. AmericanCoreLogic has an excellent database (and Zandi has some good data too) of actual mortgage debt.
But lets face it - 15 million homeowners underwater is a huge number. A long time ago I estimated 20 million homeowners would eventually be underwater by 2010 - and that estimate is starting to look overly optimistic.
At least there is a limit - only 50+ million homeowners have mortgages. About 30% of homeowners are mortgage debt free.
ShortCourage, we have been getting coupons in our mailbox from local high end restaurants. For those of you familiar with Roy's Hawaiian, $20 off makes for a good deal.
""Thomas Lauria, an attorney for the lenders group, said the names should be sealed by the court because some of the members had received threats of violence after been singled out by President Obama as the cause of Chrysler's bankruptcy filing."
How could they receive death threats if their identities weren't already known?"
This is not good news for local government - you know, the kinds of government services that most people actually see, like police, fire, streets, trash, etc.
Why do you assume that the 30 million mortagage free will remain mortgage free? Don't you think some retired people might try to get some money out of their house if their pensions fail or they have unanticipated medical costs?
km4 (profile) wrote on Tue, 5/5/2009 - 10:17 pm mmckinl I cannot buy that BB has not learned from Japan mistakes
It's not about learning. It appears primarily about being barred from certain courses of action because you won't ruin utterly / send to prison the people you got drunk with in college. Anyway, it's a policymaking crisis, not a policy tools crisis. It's about the will to do the right thing, not about knowing what it is.
@ mmckinl (profile) wrote on Tue, 5/5/2009 - 7:27 pm
Bernanke runs the privately owned and operated Federal Reserve, a private corporation, whose owners are the Member Banks. It is Bernanke DUTY to put his shareholders first.
Quotes on Banking and the Federal Reserve
Bad Bank == US Federal Reserve
Why not call a spade a spade....this quote is more true today than depression years
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" -- Sen. Barry Goldwater
"Hurrah, I awake from yesterday
Alive, but the war is here to stay
So my love, Catherina and me,
decide to take our last walk through the noise to the sea
Not to die but to reborn,
away from lands so battered and torn
Forever, forever
Oh say, can you see it's really such a mess
Every inch of Earth is a fighting nest
Giant pencil and lipstick tube shaped things,
Continue to rain and cause screaming pain
And the arctic stains from silver blue to bloody red
as our feet find the sand,
and the sea is straight ahead, straight up ahead
Well it's too bad that our friends, can't be with us today
Well it's too bad
The machine, that we built,
would never save us', that's what they say
And they also said it's impossible for a man to live and breathe under
water, forever,
was their main complaint
And they also threw this in my face, they said:
Anyway, you know good and well it would be beyond the will of God,
and the grace of the King...
So my darling and I make love in the sand,
to salute the last moment ever on dry land
Our machine, it has done its work, played its part well
Without a scratch on our bodies and we bid it farewell
Starfish and giant foams greet us with a smile
Before our heads go under we take a last look at the killing noise
Of the out of style, the out of style..."
The Sac Bee posted an article today: Almost 24,000 homes, apartments vacant in Sacramento area 404 - Not Found - sacbee.com
The newly annointed masters of the universe; aka, the newbie specuvestards hailed in the recent NYT article, are underwater and a levee hasn't even broken yet. But it's spring so green shoots for everyone...
Rolfe Winkler, who publishes OptionARMageddon.com, chimes in:
When recast happens, the interest rates may or may not be more favorable but all of a sudden you're forced to make a FULLY amortizing payment on a loan balance that's 15-25% larger than the one you started with!
90% of Option ARM borrowers make the minimum payment, which doesn't even cover interest. Regardless of where interest rates are, the recast to a fully amortizing payment will be much higher than the minimum payment the borrower has been making.
Payment shock = instantaneous toxicity. Can't refi because loan balance is higher than when you started and the home price is WAY below what you originally paid. These things default like none other.
"Japan had it's domestic recession during an age of unprecedented global growth and increase in Japanese trade (especially exports).
Why does everyone forget that??"
~~~~
And Japan had a huge trade surplus that imported demand so that unemployment
always stood around 4% ...
The one thing we have they don't is population increase and the attendant household formation ...
Still as yet if we go Japanese 8-10% unemployment will be the new full employment while U6
barfly (profile) wrote on Tue, 5/5/2009 - 7:23 pm reply Ignore user
"Then again Zillow says my primary residence has lost $450,000 in the last 18 months which just about right. "
- bubble dollars?
Gen-u-wine Bernanke approved pesobucks. I'm not worried. CLTV so low if mine goes underwater this country won't be recognizable. Besides I've still got another $50k left on the HELOC.
Lucifer, In general, people without mortgages don't need them or are risk adverse. Maybe more of this group are borrowing to take advantage of the low rates, but I doubt that will be a large percentage, or most of them will never be underwater. Most of them are probably quite happy with themselves ...
Rolfe Winkler, who publishes OptionARMageddon.com, chimes in:
When recast happens, the interest rates may or may not be more favorable but all of a sudden you're forced to make a FULLY amortizing payment on a loan balance that's 15-25% larger than the one you started with!
90% of Option ARM borrowers make the minimum payment, which doesn't even cover interest. Regardless of where interest rates are, the recast to a fully amortizing payment will be much higher than the minimum payment the borrower has been making.
Payment shock = instantaneous toxicity. Can't refi because loan balance is higher than when you started and the home price is WAY below what you originally paid. These things default like none other."
2/3rds go delinquent as soon as recast hits (i.e. go to full am). Trust me on this statistic...
And the payment shock is usually much more than 15 - 25%, usually more like 50%.
I bet the average age of those without a mortgage are 60+. Reverse mortgage is the new sub prime. Fixed income set and inflation will be going up....It already has on the items affecting this demographic...drugs and health care. Am I the only one who gets this?
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 10:25 pm
This is not good news for local government - you know, the kinds of government services that most people actually see, like police, fire, streets, trash, etc.
Suggestion: nation should try living within our means for the last 30 years, will make expectations adjustment between spoiled brats living on credit cards and total poverty easier.
"@ mmckinl (profile) wrote on Tue, 5/5/2009 - 7:27 pm
Bernanke runs the privately owned and operated Federal Reserve, a private corporation, whose owners are the Member Banks. It is Bernanke DUTY to put his shareholders first.
Quotes on Banking and the Federal Reserve
Bad Bank == US Federal Reserve
Why not call a spade a spade....this quote is more true today than depression years
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" -- Sen. Barry Goldwater"
~~~~
BINGO my good man ...
The Fed should nationalized and put in the Treasury ... If things are run properly we get the rewards, if not we feel the pain ...
Now the bankers get all the rewards and everybody else feels the pain ...
Being underwater is a problem, but be very very worried about the Detroit Limit.
The Detroit Limit is the price where the proceeds of selling the home exactly equals the cost of selling it. For something which is bank-owned, or in default, it means that the future receipts of selling it are quite close to the money that will be received by selling it.
As soon as you cross that limit, banks might not even foreclose. They might foreclose and then not pay taxes, insurance, or HOA fees. This is especially likely if they thought they would get money when the foreclosure process started, but the market dropped even more. This isn't just sloth and an invitation to vandalism and theft. This is a bank that doesn't care. In many jurisdictions, it will take years for the city, county , or state to take over the property.
The problem tends to occur in whole neighborhoods at the same time. Unlike a single default, it wipes out what property values remain, greatly reduces tax revenues, and takes down HOAs and condo associations.
OT: (BAC 10.84, +0.46, +4.4%) will need an additional $34 billion in capital, according to the results of a government stress test, Reuters reported late Tuesday, citing an unnamed source familiar with the results. A Bank of America spokesman declined comment, the report said/
You can add about a 100k to that underwater number soon. Houses shot up 20% here last year, no lie. They are selling like hotcakes due to the free $8K, which is significant money for us. It's not different here. There is going to be an epic crash in the heartland in a year or so, no way bennie and CONgreff can come up with a topper in 2010, unless maybe 2% 50 yr financing with $50k cash back at closing. This country is dorked beyond belief.
I think this debate surfaced before when Zandi estimated 12mn† underwater mortgages in Oct or Nov of last year. CoreLogic's numbers simply do not mesh when you look at the Flows of Funds report by the Federal Reserve. If you go even further back, there was an anticipatory report Goldman Sachs did, which CR posted fromǂ (which I believe used CoreLogic's own data), which estimated 12mn† underwater at a 20% decline from peak and 40mn underwater at a 40% national decline from peak. Zillow's numbers may be momentarily too high with all the said though.
† self corrected from 20mn
ǂ the better post on negative equity Calculated Risk: Homeowners With Negative Equity
Byz - I agree with you about living within our means. Schwarzenegger hasn't got the message yet. If the State borrows property taxes from cities and counties, it will cause a fiscal shockwave at the local level.
Most people take risky loans because they have to. Without medical reforms and decent pensions a lot of low risk people are going to take high risk reverse mortgages.
Yes mmckinl the most widely-held reserve currency, the US dollar, is a fiat currency that goes round and round in a circle jerk where the bankers win and the taxpayers lose !
km4,
Fiat has not yet been given an equity stake in the US Treasury in exchange for lightweight easy to transport advanced printing press technology. Even then, Goldman Sachs will still be the majority shareholder
Byz - living within our means for the last 30 years... A lot of us have been trying to get that message across the whole time, only to be shouted down by the limo libs and their gimme constituency...
What has amazed me for the last 2 years - finding out that there is hardly any equity anywhere in businesses, banks, individuals, countries.... And when I would play my 'no debt' pitch to younger people all I would get is "But I really NEED a laptop, ipod, sneakers, whatever..." Credit freezes and business stops? It must have been hanging by a thread even in the best of times...
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 10:49 pm
Byz - I agree with you about living within our means. Schwarzenegger hasn't got the message yet.
On you're not alone. Old Byzantium, my home sweet home -- which has prospered for some, I dunno, 80 or so years under single party rule? -- announced they had lost 100mn from the public pension fund, and it was now 30% funded.
We are currently operating in part on, and I might mischaracterize them slightly here, forward-loaned credits from the state for a gambling casino license proceed cut, paid from when it was supposed to be established years ago until now. Maybe we are just getting "our" cut of the general gambling revenues pot despite not having our casino, which btw, appears like it will be a bloated white elephant. I hope the state doesn't expect its money back if revenues are below par, but it may, as it appears to be about to go bankrupt itself.
So don't feel bad, you are hardly alone. Many people here in Byzantium have NO IDEA their locality, county and state are about to go bankrupt.
Yes mmckinl the most widely-held reserve currency, the US dollar, is a fiat currency that goes round and round in a circle jerk where the bankers win and the taxpayers lose !
~~~~
And now fractional reserve banking is used the world over ... to bankers delight everywhere but mostly
A lot of us have been trying to get that message across the whole time, only to be shouted down by the limo libs and their gimme constituency...
I see a lot of verbiage that indicates a partisan spirit I probably do not share.
And when I would play my 'no debt' pitch to younger people all I would get is "But I really NEED a laptop, ipod, sneakers, whatever..."
They may have. Credit was substituted for income, and technical skills and gear were must-have items to secure employ. It's very easy to make ways of life that depend on unsustainable usury. Chinese officialdom tends toward it. Being "right" abstractly doesn't make you competitive. To be honest, the responsible savers got raped, lower standard of living, and now they are the only folks with substance to rob to pay the collective debt; I would not have told anyone to be one of those for the last decade.
I'm sure by the end of the yr the last # will look good. If any one is under drop the house payments Now. Save all you can because it doesn't get better any time soon.
jo6pac
Renter
zillow is really hit-or-miss. cyberhomes is much better. the real # of underwater h'os is somewhere around 36-38 mil. it will be 60 mil 2 years from now.
Byz: To be honest, the responsible savers got raped, lower standard of living, and now they are the only folks with substance to rob to pay the collective debt; I would not have told anyone to be one of those for the last decade.
So don't feel bad, you are hardly alone. Many people here in Byzantium have NO IDEA their locality, county and state are about to go bankrupt.
I would hazard a guess that the worst blows we can suffer will be at the loss of local government services. The ability to call a cop or a paramedic when you need one, send your kid to school, get your trash hauled away, or have a reliable source of water and sanitation - all of these are essential services that most people take for granted.
You can empty the prisons, cut the welfare rolls, stop foreign aid, shut down NASA - there are very few state and federal programs that affect quality of life across the board the same way that local government services do. It will be steep and widespread local cuts that wake the sleeping giant.
CR: You sound like 70% of homeowners being underwater is not a disaster of epic proportions.
This means that the only people who can spend is the rest 30% and you just said that this 30% per cent
is conservative-not spending.
In fact, 27% of owners can be a disaster of epic proportions depending on how much they owe. Wait until
prices in northeast fall where the mortgages are larger.
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 7:49 pm
Byz - I agree with you about living within our means. Schwarzenegger hasn't got the message yet. If the State borrows property taxes from cities and counties, it will cause a fiscal shockwave at the local level.
If they try this, there will be an initiative on the California ballot within six months which would essentially defund the state government and earmark most of their revenue to local and county uses.
IMHO, Most California voters would rather pay for their teachers, firemen, and policemen than the grifters in Sacramento.
NW
P.S. California is supposed to have a balanced budget in place by July 1 of each year. We have routinely had neither. We should make the current and past legislatures and governors Jointly and Severally liable for current and past deficits.
" In many jurisdictions, it will take years for the city, county , or state to take over the property.
The problem tends to occur in whole neighborhoods at the same time. Unlike a single default, it wipes out what property values remain, greatly reduces tax revenues, and takes down HOAs and condo associations. "
Arson fraud only works for the earlybirds. Then you see jingle mail from the banks/REITS/small corp. LL's to the City. With the right accountants, the tax write-off gets packaged and sold to whoever who can take it.
I'm finishing up a sort of midlife retirement currently. Before that I wrote lots of books and directed people to write even more books at my behest. There was some teaching too, and going to school, and quite a bit of drunken dissolution. Relationships with crazy people. All sorts of stuff. =)
If they try this, there will be an initiative on the California ballot within six months which would essentially defund the state government and earmark most of their revenue to local and county uses.
Your lips to God's ear, Norka. Unfortunately, local governments exist at the pleasure of the State. It's a Constitution thingy. There is no provision in law to permit what you suggest.
Not that they won't muster their lobbyists, but communities are going to take some lumps.
Some time back, CR demonstrated that a 40% drop in prices would wipe out household real estate equity in aggregate. At the time, he didn't think a 40% drop was in the cards.
Yeah lieb, that all comes through with a certain savour.
As for sorta retirement, I'm off to pick up zucchinis for a fine snack while the rest of the world appears to be working. I will do my bit to spend the shinies.
Well... I have finally completed my trip to the dark side after a lot of thinking tonight. This (the downturn) will not end until at least some the tbtf corporations fail. By fail, I mean go away, cease to be, disappear, destroy 100,000s of jobs, disband, etc. I don't mean propped up and made to roam the earth undead.
When the beached whales start dying, we'll have 100pct of mortgage holders underwater among other more dire consequences. The usg will do everything to keep that from happening... The tbtf is the usg. When it goes, so goes the world.
So, thank you for the education. I finally get it. We are f'd.
My candidate for the municipality swimming naked award has got to be Oxnard, California. Here's the LATimes article. They literarly sold their streets and are leasing them back. I'm gonna pick me up some of them bonds for pennies and when they default I'm gonna charge tolls.
RockyR, it's not so much that we are f'd. It's that the way we went about things was f'd. Thiese are the deaththroes of a wasteful, unconscious, unconscionable way of living. People who are willing to learn a better way of life will adapt and will come out of this just fine.
The NYtimes is chiming in with happy news...hiring is robust during the bust. Really. Examples given are Walmart, Fairway (food market in NY area) and a restaurant. Salaries may be minimal, benefits non-existent, but what's not to like. It's a job...amd a career opportunity.
With this kind of hiring going on, there will be no problems keeping up with those recast mortgages.
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 11:22 pm
It will be steep and widespread local cuts that wake the sleeping giant.
Totally agreed. These are foremost among political goods. Failure to provide them means, Mandate of Heaven is gonna lapse soon. Surveying and land claims (measuring rod). Dispites adjudication and establishment of measures (scales). Agricultural facilitation works (thresher). Protecting goods from raiding by marginals (shepherds crook). All your Near Eastern symbols of rule.
I think what's going to be the issue is that political awareness will materialize long after the money has run out, and then you will have lots of pissed-off people with no recourse, and no cops to restrain them.
This is why I do not sweat any sort of stupid police state. They will just shut down the economy, and make it go bankrupt even faster. All those little puppet states we paid for over the 20th century that "prove" authoritarians can persist for decade upon decade of popular despair; they tend to elide the part where the US government and the commercial side of the debt / development establishment were shoveling money into them on a vast scale (for the scale of the local economy at least).
Nobody is even remotely set up to do that for us. The US is the definition of too big to bail too big to fail. I get a sense we will have a future of, umm, I am too lazy to look up the term, "enclave capitalism" or whatever you want to call it, where there are bastions of foreign technicians running imported technology, and then a lot of poverty / failed state context around them.
Edit: that is what the natural response of the international community would be in some ceteris paribus "physics experiment" world where the US didn't do anything. In all likelihood, the US will be busily self-organizing into one or several polities which will exert organizing influences across their extent. Maybe just self-reinvention of some weird unforeseeable "morning in America" sort. Maybe real political mechanism change.
So, rambling. But, local services are definitely going to get cut, and not just "someplace else". We are all going to eat a big piece and I agree 100% it is the part that will make people sit up and take notice. It's what actual legitimacy of rule springs directly from.
30% off the lows and the stragglers piling in to get sheared. When's the pullback and the race for the exits now that the gamblers are all margined up on the longside...
@feckless - I don't think this kind of change comes without significant loss of life at worst, the oft-mentioned "lost generation" at best. I'll grow hopeful when we see real liquidations... auctions and fire sales... of the tbtf banks and industrials.
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 8:47 pm reply Ignore user
Buy up some strawberry fields too, Dawg. They grow damn good berries in Oxnard.
Oxnard is so aggressively pro-development that there only a few acres of strawberries are actually still grown within the city limits. Half the farmers on the edges have signs saying "Thanks Oxnard for destroying this farm." BTW most of the good berries don't travel well so we keep them for ourselves. You get the tough dry shipping berries.
Time will tell, RockyR. We all have free will. In my vision of the future, there are people in every community who inspire a sense of calm, assurance, and direction for their neighbors as they navigate through their challenges. Not everybody feels the need to be armed to the teeth.
LOL! I ain't no berry newbie, Dawg! I know the smallest berries have the best flavor and are the most perishable. Well worth a drive to San Buena Ventura County in the Spring. Mmmm!
montas ankle (profile) wrote on Tue, 5/5/2009 - 11:56 pm wondering why the 34 billion capital raise needed for BofA isn't bigger chatter here...
The banks are a story we all know the end of -- too big to fail. Once you make zombie bank, you'll never escape, because you'd lose all the money you put into it prior to liquidation, which is totally politically unacceptable, and people would have to get worked, hard, by the criminal justice system for the kinds of shenanigans that resulted in these kinds of losses. That's also politically impossible because this crisis happens due to regulatory capture.
barfly (profile) wrote on Tue, 5/5/2009 - 8:52 pm reply Ignore user
from RD's link:
"The city had tried, and failed, to get voters to approve a bond measure for street repair."
Full disclosure, Rob, how did you vote?
Full disclosure? I first name the entire council but moved out years ago. The problem with Oxnard is that they are captive to a development cadre. If the bond measure had passed the money would have been diverted to roads for new projects rather than repair.
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 9:02 pm reply Ignore user
LOL! I ain't no berry newbie, Dawg! I know the smallest berries have the best flavor and are the most perishable. Well worth a drive to San Buena Ventura County in the Spring. Mmmm!
Stop by, I'll set you up with my pusher. You can tell the difference between Chandler and Driscoll by smell alone.
Ahhh yes, strawberries, Chandler variety at that in Oxnard / Camarillo. I've flown an ultralight at 300 ft over those fields and the wafting aroma is really quite something. Happy days.
I am financing a home purchase (foreclosure). My broker said the last 30 refi apps he had were short on appraised value. This is in Texas. Homes I have looked at are as much as 50% below the prices they sold for in 2007 at the peak. This is on an outlying suburb. Dallas states on most sites do not show nearly that level of decline with 11% being the official numbers I believe. A also bought a motorcycle new for 65% of list.
Re: TARP conditions
I "broke" this news over the weekend... but didn't understand it. Repayment of the TARP conditions was included in the Vitter amendment to the Dodd bill that is superceding what Durbin was trying to get done last week.
From Library of Congress (on Friday)... SA 1016. Mr. VITTER submitted an amendment intended to be proposed to amendment SA 1018 submitted by Mr. Dodd (for himself
and Mr. Shelby) to the bill S. 896, to prevent mortgage foreclosures and enhance mortgage credit availability; as follows:
At the appropriate place, insert the following:
SEC. __. REPAYMENT OF TARP FUNDS.
Section 111(g) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5221(g)) is amended--
(1) by striking Subject to'' and inserting the following:(1) REPAYMENT PERMITTED.--Subject to'';
(2) by inserting if, subsequent to such repayment, the TARP recipient is well capitalized (as determined by the appropriate Federal banking
agency having supervisory authority over the TARP recipient)'' afterwaiting period,'';
(3) by striking , and when such assistance is repaid, the Secretary shall liquidate warrants associated with such assistance at the current market
price''; and
(4) by adding at the end the following:(2) NO REPAYMENT PRECONDITION FOR WARRANTS.--A TARP recipient that exercises the repayment authority under paragraph (1) shall
not be required to repurchase warrants from the Federal Government as a condition of repayment of assistance provided under the TARP. The
Secretary shall, at the request of the relevant TARP recipient, repay the proceeds of warrants repurchased before the date of enactment of this
paragraph.''
"LOS ANGELES (Reuters) – California Governor Arnold Schwarzenegger said on Tuesday he welcomes a public debate on proposals to legalize and tax marijuana, which some suggest could provide a lucrative new revenue source for the cash-strapped state."
You can never be underwater when smoking marijuana....
Unfortunately, Lucifer, I think the low risk people will get sick and NOT go to the doctor until they are sure that they are dying -- and then only for pain meds or because their relatives make them. And will go hungry.
It is terribly sad, but this does seem to be what the risk-averse older folks do.
My mother didn't go for treatment for her breast cancer until very much too late -- she felt that the treatment wouldn't work, would be unpleasant and cost money that she didn't have. Still miss her.
I'll go back to my general comments in past posts: we need to fix modern employment/incomes in some humane way ASAP before we become a totally unrecognizable, completely barbaric country.
And in the meantime, stop the schizophrenia of giving money to the banks but none to help the working class who 'abused' the system with their purchases.
COLUMBIA, S.C. (AP) — South Carolina's highest court on Tuesday temporarily stopped thousands of pending foreclosure sales in the state to give homeowners more time to take advantage of a new federal program to help them refinance mortgages.
The injunction — which mortgage experts said appeared to be the nation's first court-ordered stop for an entire state — prevents judges in South Carolina from finalizing foreclosure sales on properties guaranteed by Freddie Mac, Fannie Mae or any other mortgage company that has signed on to a federal assistance program.
At the end of the post you point out that most of these underwater borrowers are at risk of foreclosure. I'm guessing that's because most of them have no networth. If they do have other assets, they wouldn't default unless they're the strategic "walk-away" types who suspect the lender will never sue them for the deficit.
So to me the big story is how many people who live normal lives and own homes are completely broke. That is the underlying problem. If you are broke, one bad even after the other will hit you. This time it's hitting a lot of them all at once. The problem is not fluctuations in the RE market but rather that so many people think it's normal to be broke.
first
second
for the most part, no one in any official or semi-official capacity relies on zillow. American Core Logic or McDash seems to be drug of choice....
Looking at zillow's zestimates makes me believe their number is low.
I blogged last week about a specific example here.
Their zestimate was $170,000 and it is sitting on the market at $89,900.
We will soon reach the 50% mark.
And then there are all of us shadow inventory people, waiting to destroy the real estate recovery at the first sign...
My analysis shows that well over half of Los Angeles homeowners will be underwater at the bottom. I estimate about 60% of them will be underwater.
Zillow's "zestimates" are crap.
Can someone please tell them that the housing bubble is over and to stop putting circa-2006 "zestimates" on house prices?
OT
@km4
I think Bernanke is right ... for the time being ...
It's the Japanese Model ... they printed and printed and printed money ...
What they got was a decade of deflation because their Zombie Banks ate the capital.
This is where we are headed now ... The Japanese Model ...
But ... things can change
I'm certainly one of these lucky duckies. The missus and I watched in resigned dread as our equity position went from 25k up to 25k down in less than two months. What's better? We've got an FHA-backed 30 year Fixed Rate mortgage that we can do absolutely nothing to fix. Countrywide (now B of A) is playing it close to the vest when it comes to disclosing what they'll do. We're certainly not alone in this: as a hard-working employed family that finally got into their first home, its an outrage that every crook and cheapskate gets a nice parachute but not us. What's worse? the FHA has had a program in place that's supposed to help folks in my situation but barely anyone has been able to take advantage of it. Its ironically titled Hope 4 Homeowners.
But, when the homes is on sale for 1/2 off...that is good for the poor working stiff right? Oh yeah, it's HIS tax dollars allowing the bank to take the write off so he can buy the home. Well that little circle jerk makes perfect sense....
I married into a zero down, interest only for 10 years then standard thirty year loan for a 2006-built suburban condo. Of 500 units, my guess is that 480 are foreclosed or underwater. Almost all sales out of here show up as short sales.
We currently have savings and a more-than-adequate income to cover this, but who knows if things will turn south more. We started to pay down the loan, but then reconsidered and continued to build savings.
Once we are comfortable that we are covered for all sorts of emergencies, the extra money will be going towards paying down the principal and getting out from underwater. If things go south on us, we'll walk without thinking twice.
Way we see it, we're paying our Bank of America mortgage through our taxes being used to subsidize the bank. Who woulda thought that paying the mortgage and taxes is really paying the mortgage twice?
Off topic (mostly) anecdote...
Tonight while the wife was away, I took the kids to Kentucky Fried Chicken for dinner (their first time ever, I couldn't help it...I saw it while driving home and felt a bit nostalgic). I was amazed at the line of people. It took nearly 20 minutes just to get to the front of the line.
Here's the thing -- I'd say about 66% of the people carried clipped coupons (either printed off the Internet, or else from local advertising flyers). I'm not kidding, it was more than 50%, and I'd guess closer to 2 out of 3 people using coupons. I don't think you'd have seen that two years ago.
Damn that chicken is greasy. I could only eat one piece.
Because his new monthly payment will be so low he can afford to pay back the bank leveraged write down through INCREASED taxes! Bang-problem solved. Move along to the next crisis..Pakistan, China...anywhere but domestic.....
mmckinl I cannot buy that BB has not learned from Japan mistakes
No way the USA mega bubble economy can tolerate ( like Japan ) a decade of deflation because their Zombie Banks ate the capital.
If so the revolution will be televised !
Then again Zillow says my primary residence has lost $450,000 in the last 18 months which just about right.
Did the kids like the KFC or did they think it was nasty?
In the article, the contention that foreclosures sell at a discount, so are not representative of the 'market price' seems dubious. If the market is mostly forclosures, isnt that by definition the market value of a house? This will especially be true of mid-low tier areas/houses that had sharper peaks and higher foreclosure percentages (due to less-than prime borrowers, higher HELOC drawdowns, increased speculation etc...)
Oh, and a more on-topic addition to the above anecote:
As I drove home through the Almaden area of San Jose (on Meridian Ave), I saw an awful lot of very unkempt lawns. Looks to me like urban blight is beginning to spread towards the nicer areas inside inner Silicon Valley.
Dawg I should come over there and look for some of that 450k - must be blowing around nearby.....
You could stop houses going underwater by increasing wages.. but zero sumers do not get it.
These stats are a clear instance wher it makes sense to subtract out the number of free-and-clear homeowners and instead report the percentage of mortgage holders who are underwater. That number is more important to banks and others who hold mortgage-backed securities.
These stats are a clear instance wher it makes sense to subtract out the number of free-and-clear homeowners and instead report the percentage of mortgage holders who are underwater. That number is more important to banks and others who hold mortgage-backed securities.
Rob Dawg, I don't have much confidence in Zillow.
They estimate the value of the house on my right at 50% more than mine (and mine is nicer).
They estimate the house on the left at 10% less than mine - and that is a brand new custom home with incredible upgrades (worth way more than my house). That house was built two years ago, so it is hard for Zillow to have missed the change.
I'm not sure where they get their loan data either. AmericanCoreLogic has an excellent database (and Zandi has some good data too) of actual mortgage debt.
But lets face it - 15 million homeowners underwater is a huge number. A long time ago I estimated 20 million homeowners would eventually be underwater by 2010 - and that estimate is starting to look overly optimistic.
At least there is a limit - only 50+ million homeowners have mortgages. About 30% of homeowners are mortgage debt free.
best wishes
84 condo units where I live. 84 condo owners underwater too.
ShortCourage, we have been getting coupons in our mailbox from local high end restaurants. For those of you familiar with Roy's Hawaiian, $20 off makes for a good deal.
Check it out, Karl Deinninger. GM shares will be 1 cents.
GM Shareholders: Poof! - The Market Ticker
Preliminary Information Statement
Japan had it's domestic recession during an age of unprecedented global growth and increase in Japanese trade (especially exports).
Why does everyone forget that??
"Then again Zillow says my primary residence has lost $450,000 in the last 18 months which just about right. "
Reptillian writes:
""Thomas Lauria, an attorney for the lenders group, said the names should be sealed by the court because some of the members had received threats of violence after been singled out by President Obama as the cause of Chrysler's bankruptcy filing."
How could they receive death threats if their identities weren't already known?"
You think too much. Drink your Kool-Aid.
New Yankee Stadium is epitome of how Americans feel about elitist 1% of America, the economy in general, the vacillating wishy washy Federal government with its most lame ass Congressiters, the Wall St crooks etc
New Yankee Stadium Strikes Out With Customers - Conversation Starter - HarvardBusiness.org
OT - this is gonna leave a mark:
Los Angeles area could lose $300 million to state budget balancing - Los Angeles Times
This is not good news for local government - you know, the kinds of government services that most people actually see, like police, fire, streets, trash, etc.
CR,
Why do you assume that the 30 million mortagage free will remain mortgage free? Don't you think some retired people might try to get some money out of their house if their pensions fail or they have unanticipated medical costs?
km4
"I cannot buy that BB has not learned from Japan mistakes"
~~~~
What mistake? This is what they are aiming for, this is their best case scenario
for saving their asses ...
Bernanke runs the privately owned and operated Federal Reserve, a private corporation,
whose owners are the Member Banks. It is Bernanke DUTY to put his shareholders first.
GM better move fast or they will be on the pink sheets...
km4 (profile) wrote on Tue, 5/5/2009 - 10:17 pm
mmckinl I cannot buy that BB has not learned from Japan mistakes
It's not about learning. It appears primarily about being barred from certain courses of action because you won't ruin utterly / send to prison the people you got drunk with in college. Anyway, it's a policymaking crisis, not a policy tools crisis. It's about the will to do the right thing, not about knowing what it is.
@ mmckinl (profile) wrote on Tue, 5/5/2009 - 7:27 pm
Bernanke runs the privately owned and operated Federal Reserve, a private corporation, whose owners are the Member Banks. It is Bernanke DUTY to put his shareholders first.
Quotes on Banking and the Federal Reserve
Bad Bank == US Federal Reserve
Why not call a spade a spade....this quote is more true today than depression years
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" -- Sen. Barry Goldwater
Lucifer-Reverse mortgage baby...gotta' pay the caretaker for your old age cause the spoiled brat kidz aint gonna do it.
Just walk away Renee...
OT: my Bloomberg just flashed across all the filings for insiders filing to sell shares. All I can say is WOW! Talk about a flood.
Having a home under water isn't so bad:
"Hurrah, I awake from yesterday
Alive, but the war is here to stay
So my love, Catherina and me,
decide to take our last walk through the noise to the sea
Not to die but to reborn,
away from lands so battered and torn
Forever, forever
Oh say, can you see it's really such a mess
Every inch of Earth is a fighting nest
Giant pencil and lipstick tube shaped things,
Continue to rain and cause screaming pain
And the arctic stains from silver blue to bloody red
as our feet find the sand,
and the sea is straight ahead, straight up ahead
Well it's too bad that our friends, can't be with us today
Well it's too bad
The machine, that we built,
would never save us', that's what they say
And they also said it's impossible for a man to live and breathe under
water, forever,
was their main complaint
And they also threw this in my face, they said:
Anyway, you know good and well it would be beyond the will of God,
and the grace of the King...
So my darling and I make love in the sand,
to salute the last moment ever on dry land
Our machine, it has done its work, played its part well
Without a scratch on our bodies and we bid it farewell
Starfish and giant foams greet us with a smile
Before our heads go under we take a last look at the killing noise
Of the out of style, the out of style..."
The Sac Bee posted an article today: Almost 24,000 homes, apartments vacant in Sacramento area
404 - Not Found - sacbee.com
The newly annointed masters of the universe; aka, the newbie specuvestards hailed in the recent NYT article, are underwater and a levee hasn't even broken yet. But it's spring so green shoots for everyone...
Rolfe Winkler, who publishes OptionARMageddon.com, chimes in:
When recast happens, the interest rates may or may not be more favorable but all of a sudden you're forced to make a FULLY amortizing payment on a loan balance that's 15-25% larger than the one you started with!
90% of Option ARM borrowers make the minimum payment, which doesn't even cover interest. Regardless of where interest rates are, the recast to a fully amortizing payment will be much higher than the minimum payment the borrower has been making.
Payment shock = instantaneous toxicity. Can't refi because loan balance is higher than when you started and the home price is WAY below what you originally paid. These things default like none other.
OT: my Bloomberg just flashed across all the filings for insiders filing to sell shares. All I can say is WOW! Talk about a flood.
Sounds like an omen for the next leg down.
Lucifer
"Japan had it's domestic recession during an age of unprecedented global growth and increase in Japanese trade (especially exports).
Why does everyone forget that??"
~~~~
And Japan had a huge trade surplus that imported demand so that unemployment
always stood around 4% ...
The one thing we have they don't is population increase and the attendant household formation ...
Still as yet if we go Japanese 8-10% unemployment will be the new full employment while U6
will be 20% unemployment or better ...
The GM move is amazing. 1-to-100 reverse split? Never seen anything like it.
Now the real ugliness begins. The GM BK is going to be a spectacle, rivaling the trial of Mickey and Mallory Knox.
barfly (profile) wrote on Tue, 5/5/2009 - 7:23 pm reply Ignore user
"Then again Zillow says my primary residence has lost $450,000 in the last 18 months which just about right. "
- bubble dollars?
Gen-u-wine Bernanke approved pesobucks. I'm not worried. CLTV so low if mine goes underwater this country won't be recognizable. Besides I've still got another $50k left on the HELOC.
Lucifer, In general, people without mortgages don't need them or are risk adverse. Maybe more of this group are borrowing to take advantage of the low rates, but I doubt that will be a large percentage, or most of them will never be underwater. Most of them are probably quite happy with themselves ...
best wishes.
"
Rolfe Winkler, who publishes OptionARMageddon.com, chimes in:
When recast happens, the interest rates may or may not be more favorable but all of a sudden you're forced to make a FULLY amortizing payment on a loan balance that's 15-25% larger than the one you started with!
90% of Option ARM borrowers make the minimum payment, which doesn't even cover interest. Regardless of where interest rates are, the recast to a fully amortizing payment will be much higher than the minimum payment the borrower has been making.
Payment shock = instantaneous toxicity. Can't refi because loan balance is higher than when you started and the home price is WAY below what you originally paid. These things default like none other."
2/3rds go delinquent as soon as recast hits (i.e. go to full am). Trust me on this statistic...
And the payment shock is usually much more than 15 - 25%, usually more like 50%.
Maybe its just me but Roubini's face time on the MSM seems to have declined in the last few weeks...
BTW, an interesting Simon Johnson article:
RGE - Too Big to Fail or Too Big to Save? Examining the Systemic Threats of Large Financial Institutions
I bet the average age of those without a mortgage are 60+. Reverse mortgage is the new sub prime. Fixed income set and inflation will be going up....It already has on the items affecting this demographic...drugs and health care. Am I the only one who gets this?
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 10:25 pm
This is not good news for local government - you know, the kinds of government services that most people actually see, like police, fire, streets, trash, etc.
Suggestion: nation should try living within our means for the last 30 years, will make expectations adjustment between spoiled brats living on credit cards and total poverty easier.
km4
"@ mmckinl (profile) wrote on Tue, 5/5/2009 - 7:27 pm
Bernanke runs the privately owned and operated Federal Reserve, a private corporation, whose owners are the Member Banks. It is Bernanke DUTY to put his shareholders first.
Quotes on Banking and the Federal Reserve
Bad Bank == US Federal Reserve
Why not call a spade a spade....this quote is more true today than depression years
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" -- Sen. Barry Goldwater"
~~~~
BINGO my good man ...
The Fed should nationalized and put in the Treasury ... If things are run properly we get the rewards, if not we feel the pain ...
Now the bankers get all the rewards and everybody else feels the pain ...
Being underwater is a problem, but be very very worried about the Detroit Limit.
The Detroit Limit is the price where the proceeds of selling the home exactly equals the cost of selling it. For something which is bank-owned, or in default, it means that the future receipts of selling it are quite close to the money that will be received by selling it.
As soon as you cross that limit, banks might not even foreclose. They might foreclose and then not pay taxes, insurance, or HOA fees. This is especially likely if they thought they would get money when the foreclosure process started, but the market dropped even more. This isn't just sloth and an invitation to vandalism and theft. This is a bank that doesn't care. In many jurisdictions, it will take years for the city, county , or state to take over the property.
The problem tends to occur in whole neighborhoods at the same time. Unlike a single default, it wipes out what property values remain, greatly reduces tax revenues, and takes down HOAs and condo associations.
Maybe its just me but Roubini's face time on the MSM seems to have declined in the last few weeks...
That makes sense. Now that they can't scoff at him any more, he's too depressing for the masses. Doesn't make for good ratings.
"Besides I've still got another $50k left on the HELOC."
~~~~
I say they cancel your HELOC ...
happening everywhere ...
OT: (BAC 10.84, +0.46, +4.4%) will need an additional $34 billion in capital, according to the results of a government stress test, Reuters reported late Tuesday, citing an unnamed source familiar with the results. A Bank of America spokesman declined comment, the report said/
@ mmckinl (profile) wrote on Tue, 5/5/2009 - 7:39 pm
BINGO my good man ...
Thank you....you're a fine commentator and a good sport !
You can add about a 100k to that underwater number soon. Houses shot up 20% here last year, no lie. They are selling like hotcakes due to the free $8K, which is significant money for us. It's not different here. There is going to be an epic crash in the heartland in a year or so, no way bennie and CONgreff can come up with a topper in 2010, unless maybe 2% 50 yr financing with $50k cash back at closing. This country is dorked beyond belief.
I think this debate surfaced before when Zandi estimated 12mn† underwater mortgages in Oct or Nov of last year. CoreLogic's numbers simply do not mesh when you look at the Flows of Funds report by the Federal Reserve. If you go even further back, there was an anticipatory report Goldman Sachs did, which CR posted fromǂ (which I believe used CoreLogic's own data), which estimated 12mn† underwater at a 20% decline from peak and 40mn underwater at a 40% national decline from peak. Zillow's numbers may be momentarily too high with all the said though.
† self corrected from 20mn
ǂ the better post on negative equity Calculated Risk: Homeowners With Negative Equity
Byz - I agree with you about living within our means. Schwarzenegger hasn't got the message yet. If the State borrows property taxes from cities and counties, it will cause a fiscal shockwave at the local level.
km4
You now know what few do, or are willing to admit about the Fed ...
Their members print our money for free. We, the United States, have to borrow it.
We have to borrow our own money !
Feckless Ness
Yep, State and local government are the next economic time bombs ...
and there is nothing looking to difffuse it ...
CR,
You want to believe. I am the devils advocate.
Most people take risky loans because they have to. Without medical reforms and decent pensions a lot of low risk people are going to take high risk reverse mortgages.
Yes mmckinl the most widely-held reserve currency, the US dollar, is a fiat currency that goes round and round in a circle jerk where the bankers win and the taxpayers lose !
km4,
Fiat has not yet been given an equity stake in the US Treasury in exchange for lightweight easy to transport advanced printing press technology. Even then, Goldman Sachs will still be the majority shareholder
My economic plan- Ruby slippers for Everyone!
EvilHenryPaulson yes good point. What good for General Motors ( I mean Goldman Sacks ) is good for America.....yeah right
Byz - living within our means for the last 30 years... A lot of us have been trying to get that message across the whole time, only to be shouted down by the limo libs and their gimme constituency...
What has amazed me for the last 2 years - finding out that there is hardly any equity anywhere in businesses, banks, individuals, countries.... And when I would play my 'no debt' pitch to younger people all I would get is "But I really NEED a laptop, ipod, sneakers, whatever..." Credit freezes and business stops? It must have been hanging by a thread even in the best of times...
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 10:49 pm
Byz - I agree with you about living within our means. Schwarzenegger hasn't got the message yet.
On you're not alone. Old Byzantium, my home sweet home -- which has prospered for some, I dunno, 80 or so years under single party rule? -- announced they had lost 100mn from the public pension fund, and it was now 30% funded.
We are currently operating in part on, and I might mischaracterize them slightly here, forward-loaned credits from the state for a gambling casino license proceed cut, paid from when it was supposed to be established years ago until now. Maybe we are just getting "our" cut of the general gambling revenues pot despite not having our casino, which btw, appears like it will be a bloated white elephant. I hope the state doesn't expect its money back if revenues are below par, but it may, as it appears to be about to go bankrupt itself.
So don't feel bad, you are hardly alone. Many people here in Byzantium have NO IDEA their locality, county and state are about to go bankrupt.
Yes mmckinl the most widely-held reserve currency, the US dollar, is a fiat currency that goes round and round in a circle jerk where the bankers win and the taxpayers lose !
~~~~
And now fractional reserve banking is used the world over ... to bankers delight everywhere but mostly
to the US and Europe banks ...
yogi, the hendrix laid out like that-- almost got me floating, and growing gills. . .
A lot of us have been trying to get that message across the whole time, only to be shouted down by the limo libs and their gimme constituency...
I see a lot of verbiage that indicates a partisan spirit I probably do not share.
And when I would play my 'no debt' pitch to younger people all I would get is "But I really NEED a laptop, ipod, sneakers, whatever..."
They may have. Credit was substituted for income, and technical skills and gear were must-have items to secure employ. It's very easy to make ways of life that depend on unsustainable usury. Chinese officialdom tends toward it. Being "right" abstractly doesn't make you competitive. To be honest, the responsible savers got raped, lower standard of living, and now they are the only folks with substance to rob to pay the collective debt; I would not have told anyone to be one of those for the last decade.
On economy.com-
The founder sold the site to moody's, took his $2MM and went home to Lakeland, Florida and invested in... commercial real estate.
Oh well.
I'm sure by the end of the yr the last # will look good. If any one is under drop the house payments Now. Save all you can because it doesn't get better any time soon.
jo6pac
Renter
zillow is really hit-or-miss. cyberhomes is much better. the real # of underwater h'os is somewhere around 36-38 mil. it will be 60 mil 2 years from now.
Of course Anak you're singing it in your head.
Ironic that he died by drowning.
Byz: To be honest, the responsible savers got raped, lower standard of living, and now they are the only folks with substance to rob to pay the collective debt; I would not have told anyone to be one of those for the last decade.
Too late. Where have you been all my life?
Folks may dare the banks to come foreclose......lots of people have crazy ideas.
HollywoodHack, 60 million underwater out of 50 million homeowners with mortages? How did you do that estimate?
BofA needs $33.9B
As Climate Meeting Starts, a Revival of Skepticism - NY Times
So don't feel bad, you are hardly alone. Many people here in Byzantium have NO IDEA their locality, county and state are about to go bankrupt.
I would hazard a guess that the worst blows we can suffer will be at the loss of local government services. The ability to call a cop or a paramedic when you need one, send your kid to school, get your trash hauled away, or have a reliable source of water and sanitation - all of these are essential services that most people take for granted.
You can empty the prisons, cut the welfare rolls, stop foreign aid, shut down NASA - there are very few state and federal programs that affect quality of life across the board the same way that local government services do. It will be steep and widespread local cuts that wake the sleeping giant.
"About 30% of homeowners are mortgage debt free."
Don't worry, when the 3Q GDP rally fails to materialize Bernanke and Geithner will force them to take TARP mortgage.
CR: You sound like 70% of homeowners being underwater is not a disaster of epic proportions.
This means that the only people who can spend is the rest 30% and you just said that this 30% per cent
is conservative-not spending.
In fact, 27% of owners can be a disaster of epic proportions depending on how much they owe. Wait until
prices in northeast fall where the mortgages are larger.
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 7:49 pm
Byz - I agree with you about living within our means. Schwarzenegger hasn't got the message yet. If the State borrows property taxes from cities and counties, it will cause a fiscal shockwave at the local level.
If they try this, there will be an initiative on the California ballot within six months which would essentially defund the state government and earmark most of their revenue to local and county uses.
IMHO, Most California voters would rather pay for their teachers, firemen, and policemen than the grifters in Sacramento.
NW
P.S. California is supposed to have a balanced budget in place by July 1 of each year. We have routinely had neither. We should make the current and past legislatures and governors Jointly and Severally liable for current and past deficits.
" In many jurisdictions, it will take years for the city, county , or state to take over the property.
The problem tends to occur in whole neighborhoods at the same time. Unlike a single default, it wipes out what property values remain, greatly reduces tax revenues, and takes down HOAs and condo associations. "
The South Bronx, NYC 1975:
www.juancarlosreal.com - The South Bronx c. 1975
HOME PAGE
Arson fraud only works for the earlybirds. Then you see jingle mail from the banks/REITS/small corp. LL's to the City. With the right accountants, the tax write-off gets packaged and sold to whoever who can take it.
Ron Paul live with Rachel Maddow coming on now (PDT). This ought to be entertaining if nothing else.
Anak (profile) wrote on Tue, 5/5/2009 - 11:16 pm
Too late. Where have you been all my life?
I'm finishing up a sort of midlife retirement currently. Before that I wrote lots of books and directed people to write even more books at my behest. There was some teaching too, and going to school, and quite a bit of drunken dissolution. Relationships with crazy people. All sorts of stuff. =)
If they try this, there will be an initiative on the California ballot within six months which would essentially defund the state government and earmark most of their revenue to local and county uses.
Your lips to God's ear, Norka. Unfortunately, local governments exist at the pleasure of the State. It's a Constitution thingy. There is no provision in law to permit what you suggest.
Not that they won't muster their lobbyists, but communities are going to take some lumps.
Some time back, CR demonstrated that a 40% drop in prices would wipe out household real estate equity in aggregate. At the time, he didn't think a 40% drop was in the cards.
Byz: "All sorts of stuff."
Yeah lieb, that all comes through with a certain savour.
As for sorta retirement, I'm off to pick up zucchinis for a fine snack while the rest of the world appears to be working. I will do my bit to spend the shinies.
There was some teaching too, and going to school, and quite a bit of drunken dissolution. Relationships with crazy people. All sorts of stuff. =)
Hey - now I remember you!
As before, I predict a lot of big arson fires in CA.
Well... I have finally completed my trip to the dark side after a lot of thinking tonight. This (the downturn) will not end until at least some the tbtf corporations fail. By fail, I mean go away, cease to be, disappear, destroy 100,000s of jobs, disband, etc. I don't mean propped up and made to roam the earth undead.
When the beached whales start dying, we'll have 100pct of mortgage holders underwater among other more dire consequences. The usg will do everything to keep that from happening... The tbtf is the usg. When it goes, so goes the world.
So, thank you for the education. I finally get it. We are f'd.
Byzantine_Ruins (profile) wrote on Tue, 5/5/2009 - 8:27 pm
I'm finishing up a sort of midlife retirement currently. Before that I wrote lots of books and directed people to write even more books at my behest.
Ah, now it becomes clear why your voice seems almost recognizable
My candidate for the municipality swimming naked award has got to be Oxnard, California. Here's the LATimes article. They literarly sold their streets and are leasing them back. I'm gonna pick me up some of them bonds for pennies and when they default I'm gonna charge tolls.
RockyR, it's not so much that we are f'd. It's that the way we went about things was f'd. Thiese are the deaththroes of a wasteful, unconscious, unconscionable way of living. People who are willing to learn a better way of life will adapt and will come out of this just fine.
The NYtimes is chiming in with happy news...hiring is robust during the bust. Really. Examples given are Walmart, Fairway (food market in NY area) and a restaurant. Salaries may be minimal, benefits non-existent, but what's not to like. It's a job...amd a career opportunity.
With this kind of hiring going on, there will be no problems keeping up with those recast mortgages.
Who Is Hiring? Restaurants, Hospitals and Colleges - NY Times
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 11:22 pm
It will be steep and widespread local cuts that wake the sleeping giant.
Totally agreed. These are foremost among political goods. Failure to provide them means, Mandate of Heaven is gonna lapse soon. Surveying and land claims (measuring rod). Dispites adjudication and establishment of measures (scales). Agricultural facilitation works (thresher). Protecting goods from raiding by marginals (shepherds crook). All your Near Eastern symbols of rule.
I think what's going to be the issue is that political awareness will materialize long after the money has run out, and then you will have lots of pissed-off people with no recourse, and no cops to restrain them.
This is why I do not sweat any sort of stupid police state. They will just shut down the economy, and make it go bankrupt even faster. All those little puppet states we paid for over the 20th century that "prove" authoritarians can persist for decade upon decade of popular despair; they tend to elide the part where the US government and the commercial side of the debt / development establishment were shoveling money into them on a vast scale (for the scale of the local economy at least).
Nobody is even remotely set up to do that for us. The US is the definition of too big to bail too big to fail. I get a sense we will have a future of, umm, I am too lazy to look up the term, "enclave capitalism" or whatever you want to call it, where there are bastions of foreign technicians running imported technology, and then a lot of poverty / failed state context around them.
Edit: that is what the natural response of the international community would be in some ceteris paribus "physics experiment" world where the US didn't do anything. In all likelihood, the US will be busily self-organizing into one or several polities which will exert organizing influences across their extent. Maybe just self-reinvention of some weird unforeseeable "morning in America" sort. Maybe real political mechanism change.
So, rambling. But, local services are definitely going to get cut, and not just "someplace else". We are all going to eat a big piece and I agree 100% it is the part that will make people sit up and take notice. It's what actual legitimacy of rule springs directly from.
Buy up some strawberry fields too, Dawg. They grow damn good berries in Oxnard.
30% off the lows and the stragglers piling in to get sheared. When's the pullback and the race for the exits now that the gamblers are all margined up on the longside...
@feckless - I don't think this kind of change comes without significant loss of life at worst, the oft-mentioned "lost generation" at best. I'll grow hopeful when we see real liquidations... auctions and fire sales... of the tbtf banks and industrials.
from RD's link:
"The city had tried, and failed, to get voters to approve a bond measure for street repair."
Full disclosure, Rob, how did you vote?
wondering why the 34 billion capital raise needed for BofA isn't bigger chatter here...
CR thought about $50 billion - $34 billion sounds pretty close
but then how could Citi need only 10 billion - I would think closer to 60 bln
BofA to need $34 billion in capital
"where there are bastions of foreign technicians running imported technology, and then a lot of poverty / failed state context around them"
Somebody asked a while back whether we are headed for Mad Max 1 or Mad Max 3. I guess this answers the question.
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 8:47 pm reply Ignore user
Buy up some strawberry fields too, Dawg. They grow damn good berries in Oxnard.
Oxnard is so aggressively pro-development that there only a few acres of strawberries are actually still grown within the city limits. Half the farmers on the edges have signs saying "Thanks Oxnard for destroying this farm." BTW most of the good berries don't travel well so we keep them for ourselves. You get the tough dry shipping berries.
Time will tell, RockyR. We all have free will. In my vision of the future, there are people in every community who inspire a sense of calm, assurance, and direction for their neighbors as they navigate through their challenges. Not everybody feels the need to be armed to the teeth.
LOL! I ain't no berry newbie, Dawg! I know the smallest berries have the best flavor and are the most perishable. Well worth a drive to San Buena Ventura County in the Spring. Mmmm!
Providing services is the excuse that justifies California's high taxes, not taxes pay for services.
If they do not keep their end of the bargain (provide observable services), then there will be a second tax revolt in California.
montas ankle (profile) wrote on Tue, 5/5/2009 - 11:56 pm
wondering why the 34 billion capital raise needed for BofA isn't bigger chatter here...
The banks are a story we all know the end of -- too big to fail. Once you make zombie bank, you'll never escape, because you'd lose all the money you put into it prior to liquidation, which is totally politically unacceptable, and people would have to get worked, hard, by the criminal justice system for the kinds of shenanigans that resulted in these kinds of losses. That's also politically impossible because this crisis happens due to regulatory capture.
barfly (profile) wrote on Tue, 5/5/2009 - 8:52 pm reply Ignore user
from RD's link:
"The city had tried, and failed, to get voters to approve a bond measure for street repair."
Full disclosure, Rob, how did you vote?
Full disclosure? I first name the entire council but moved out years ago. The problem with Oxnard is that they are captive to a development cadre. If the bond measure had passed the money would have been diverted to roads for new projects rather than repair.
Feckless, imho it all depends on how well we are able to stave off starvation.
I like your vision of the future better than my current one.
/i picked the wrong day to stop drinking
Feckless Ness (homepage, profile) wrote on Tue, 5/5/2009 - 9:02 pm reply Ignore user
LOL! I ain't no berry newbie, Dawg! I know the smallest berries have the best flavor and are the most perishable. Well worth a drive to San Buena Ventura County in the Spring. Mmmm!
Stop by, I'll set you up with my pusher. You can tell the difference between Chandler and Driscoll by smell alone.
Ahhh yes, strawberries, Chandler variety at that in Oxnard / Camarillo. I've flown an ultralight at 300 ft over those fields and the wafting aroma is really quite something. Happy days.
-K
I am financing a home purchase (foreclosure). My broker said the last 30 refi apps he had were short on appraised value. This is in Texas. Homes I have looked at are as much as 50% below the prices they sold for in 2007 at the peak. This is on an outlying suburb. Dallas states on most sites do not show nearly that level of decline with 11% being the official numbers I believe. A also bought a motorcycle new for 65% of list.
Re: TARP conditions
I "broke" this news over the weekend... but didn't understand it. Repayment of the TARP conditions was included in the Vitter amendment to the Dodd bill that is superceding what Durbin was trying to get done last week.
From Library of Congress (on Friday)...
SA 1016. Mr. VITTER submitted an amendment intended to be proposed to amendment SA 1018 submitted by Mr. Dodd (for himself
and Mr. Shelby) to the bill S. 896, to prevent mortgage foreclosures and enhance mortgage credit availability; as follows:
At the appropriate place, insert the following:
SEC. __. REPAYMENT OF TARP FUNDS.
Section 111(g) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5221(g)) is amended--
(1) by striking Subject to'' and inserting the following:(1) REPAYMENT PERMITTED.--Subject to'';
(2) by inserting if, subsequent to such repayment, the TARP recipient is well capitalized (as determined by the appropriate Federal banking
agency having supervisory authority over the TARP recipient)'' afterwaiting period,'';
(3) by striking , and when such assistance is repaid, the Secretary shall liquidate warrants associated with such assistance at the current market
price''; and
(4) by adding at the end the following:(2) NO REPAYMENT PRECONDITION FOR WARRANTS.--A TARP recipient that exercises the repayment authority under paragraph (1) shall
not be required to repurchase warrants from the Federal Government as a condition of repayment of assistance provided under the TARP. The
Secretary shall, at the request of the relevant TARP recipient, repay the proceeds of warrants repurchased before the date of enactment of this
paragraph.''
"LOS ANGELES (Reuters) – California Governor Arnold Schwarzenegger said on Tuesday he welcomes a public debate on proposals to legalize and tax marijuana, which some suggest could provide a lucrative new revenue source for the cash-strapped state."
You can never be underwater when smoking marijuana....
Unfortunately, Lucifer, I think the low risk people will get sick and NOT go to the doctor until they are sure that they are dying -- and then only for pain meds or because their relatives make them. And will go hungry.
It is terribly sad, but this does seem to be what the risk-averse older folks do.
My mother didn't go for treatment for her breast cancer until very much too late -- she felt that the treatment wouldn't work, would be unpleasant and cost money that she didn't have. Still miss her.
I'll go back to my general comments in past posts: we need to fix modern employment/incomes in some humane way ASAP before we become a totally unrecognizable, completely barbaric country.
And in the meantime, stop the schizophrenia of giving money to the banks but none to help the working class who 'abused' the system with their purchases.
Post to wrong thread.
State courts now in the foreclosure moratoria business
The article requested is no longer available.
COLUMBIA, S.C. (AP) — South Carolina's highest court on Tuesday temporarily stopped thousands of pending foreclosure sales in the state to give homeowners more time to take advantage of a new federal program to help them refinance mortgages.
The injunction — which mortgage experts said appeared to be the nation's first court-ordered stop for an entire state — prevents judges in South Carolina from finalizing foreclosure sales on properties guaranteed by Freddie Mac, Fannie Mae or any other mortgage company that has signed on to a federal assistance program.
At the end of the post you point out that most of these underwater borrowers are at risk of foreclosure. I'm guessing that's because most of them have no networth. If they do have other assets, they wouldn't default unless they're the strategic "walk-away" types who suspect the lender will never sue them for the deficit.
So to me the big story is how many people who live normal lives and own homes are completely broke. That is the underlying problem. If you are broke, one bad even after the other will hit you. This time it's hitting a lot of them all at once. The problem is not fluctuations in the RE market but rather that so many people think it's normal to be broke.