We won't be pigged again!

It's much too late to regulate our government. Once it is assumed that government owns your body and soul and has a right to 100% of what you own, 100% of what you produce, and 100% of the time you spend doing so, it is too late. There is nothing left but to squabble about the precise percentages and who your parasites will be. Of course, the same types of parasites win every time. The excrement always floats to the top and politician types and bankster types always surface and always win.

No fare well to A.R.M's

I'd be surprised if it weren't a nation wide problem. Here in DC in 2005 and 2006, drive time radio was saturated with offers of loans of a million dollars for $600 per month or so, 0% interest for X number of years. I drove around in awe that there were so many McMansions well out of the price range of my meagre income, couldn't believe there were that many doctor and lawyer types who could afford them.

It's interesting how we value money.

8 years ago when Enron ripped off California to the tune of $30 Billion, it seemed like all the money in the world, but i'm kind of underwhelmed by that amount today.

Never really understood why people paid so much to live in SF. It's an awesome city for sure, but there are plenty of other great cities in the US that cost so much less to live in. With the savings, you can buy first-class airline tickets and posh hotel rooms in SF whenever you feel like visiting. And the bums in your less-expensive city probably don't have the same annoying in-your-face entitlement attitude as the ones in SF.

If the price dropped down to realistic levels I'd live there in a second. But until then I am content to visit a few times a year.

94% is huge - that can't be right.

An ode to those Bay Aryans that bought the loan-laced kool-aid...

YouTube - Pat Huggins - The bigger they come the harder they fall

They are saying that basically everyone who used that product could not even afford the first payment.

Well, perhaps - or chose not to make more than the minimum payment to reduce the carrying cost of the option on a specuvestment - didn't read the source articles yet, but shouldn't we expect to see quite a high rate of walkaways before the recast of the loan? As these borrowers were often leveraging into a specuvestment, and might be financially a bit more aware than the entry level buyers who tended to be more in the sub-prime loans?

It would have been nice if they had linked to the Fitch study. Is this for mortgages still outstanding?

I worked with a guy from Silicon Valley who had one of those ARM on a condo. He put in for a hardship transfer to here (flyover country) and got out of his mortgage and California in 2005 just before the mortgage would have exploded. Made about $150K on the condo, and paid cash for a new house he had built. If he hadn't sold before the reset (or recast, I forget the difference, sorry CR) they would have defaulted very quickly.

Wanted: 1 Egyptian pig-killer

The mission should he or she accept it, is i'd like to put out a contract on a score of awful offals that done me lawn wrong time.

What was the last piece of good news to come out of CA? Went there last summer--the News was a horror show--from bks to wild fires to less water--and, yet, last year was probably better than this year. Since cooking the books won't help with water and fire, they will see mass emigration--I hear it's cheaper in Mexico--and the weather is nice. Maybe Mexico should build a wall to keep out the Gringos.

I have a home purchase question that I'll like to ask ppl on this site. You guys are the best expert on this topic that I know.

I plan to buy a home in my area, NE America area in this or next year. Unfortunately anything with decent commute and good district is expensive, and still is, the descent is maddeningly slow. About half a mil is likely the price range.

Now I have a choice of loans I can do:

1. I can do conventional 30 yr FRM with 20% down.
2. I can do FHA FRM with 3.5% down and the FHA insurance premium refinaned into the loan.

Since I'm buying this year or next, I'm expecting that I won't catch the bottom, but I hope to have at least missed the majority % of the crash. I can't wait anymore (rented for more then 6 yrs with my family now) for a variety of reasons. I have enough money for 20% down, but it'll severely hurt my cushion if I do pay the 20%.

I'm thinking of choosing #2 (FHA) for a few reasons:

a. If I'm wrong and we end up like Japan, which means I'm still buying at the top and I stand to end up neg equity about -30% or more. If that does happen and when it makes sense I plan to do a ruthless default. The FHA and min downpayment plan would guarantee that I end up hurting least if that turns out to be true.

b. If I'm underwater and Congress passes some ridiculous plan to save homeowners, I'll stop payment and gain that bailout too.

c. If the economy and home does recover and I'm not underwater, I'll consider the premium paid to FHA as good money spent, just to insure against Japan scenario, which is non-trivial if it does happen. Also, if house price climbs, the amount I paid to FHA would be trivial in comparison and I would be able to offload to the future sale price.

d. The FHA scenario frees up the max amount of $ for me. It allows for maximum flexibility for my family finances. I can either save it in the bank, or invest it (in something safe... haha in this environment), or even hedge it against USD decline by offshore currencies, gold, etc.

I know some of you may frown at a "new" buyer planning strategic default; but I really have to plan the finances and risk for my family. With the recent increase in strategic default, I have to now consider it as an option too, since everyone else is.

Can someone advise me whether this is making sense -- should I do this?

Not to pile on to the California disaster meme developing but the large Mexican resident population could prove an interesting international problem. That's Mexican, not Hispanic. As Mexico comes under increasing social pressure the US may be seen as a safety valve for relatives. Relatives extended to meaning from the same rural village. The US would be amenable for any number of reasons but California may not be a welcoming. Decades of bleeding from D.C. has left CA less vital and far less tolerant. Adding more social and infrastructure stress is not a wise policy.

There are 2 major droughts going on right now in North America

All of Texas, and Mexico City.

California's drought is more of the creeper variety, and the data is all there and it's easy to see what's coming, but because 30 million people live hundreds of miles away from their freshwater sources, they have no clue what's been happening in the Sierra Nevada, where their water is born.

I've walked perhaps 5,000 miles all over it, over many decades, and have watched it's wet meadows that used to dry out in August, now be dry by early July, climate change in action.

The best way to think of the Sierra, is to think of it as "The First National Snow-Bank of the Sierra Nevada". When the snow in the higher climes used to melt out by late August, it was a steady flow of water, with very little evaporation loss, nice and easy.

Lately, the snowfall has come too late to solidify and turn into ice (which takes a lot longer to melt), and we've had much warmer and earlier springs, so the snow melts off much quicker.

I've looked at the cores of Giant Sequoia trees thousands of years old, and around 1100-1200 a.d. (Anasazi Dating) there was a drought which had an amazing duration. The tree rings are indistinct-almost not there, for about an inch or so.

It's one thing to obsess over money-related doo-dah, but a crisis like you wouldn't believe, is upon us, and La Niña is apparently our special guest, this winter.

Juvenal Delinquent is spot on about the sierra's,my family has been camping in the same spot since 1920 and the change is dramatic.25 year droughts are not a historical rarity in California.Whiskey is for drinking,water is for fighting.

Same thing in Lexington,Ky, so there are some flyover areas that will be hit as well. In 2005 I couldn't believe the number of 300-500,000 homes (and that's A LOT of money for Ky) around here - our industrial/business base has been stagnant to falling for years. The Univ. of Ky is one of the biggest employers now. So where were these guys getting the money for these houses, I queried? I guess they weren't.

Dawg-day,

I'm just going to keep running this until you apologize for misconstruing me the other day.

Grow a pair, willya?
++++++++++++++++++++++++++++++++++

While area farmers are struggling through a third year of drought, letting land lie fallow because they can't afford to irrigate it, a large Kings County farm operator is a step away from a $73 million deal that would send 14,000 acre-feet of water to the Mojave Desert over 10 years.

The price, more than $5,200 an acre-foot, could be a record. Robert Cooke, chief of the State Water Project Analysis Office, said the most he's ever heard paid for water was about $3,000 an acre-foot.

visaliatimesdelta.com | Visalia | Visalia Times-Delta and Tulare Advance-Register
++++++++++++++++

Repeating misinformation ad nauseum as you are prone to do, is right out of the playbook of the righty-tighty-gawdalmightys.

p.s.

I checked out your blog, and while some might claim that just a dozen responses to whatever it is you have to say, might be telling you something after being at it for so long, but who I am to say?

p.p.s

You seem to get more action when you use a photo of a scantily clad vixen, as a tie-in with your words, it's best to go with what you know.

Here in my circle of friends in SoCal for the last 5+ years the whisper gossip around the bbq has been "how can they afford it?" Now we know; they cannot. The new unspoken topic; "How can we afford to let them keep it?" I suspect the same answer.

We now have lots of water. And haven't even have any hurricanes.

If a cat 1hurricane came along and sat over central Florida for a while,
lots of people would be very very wet.

hahahahahahahahahah.

Im suprised everyone is not piling on the "Wells Fargo" book of risky Alt-A-Bay business.

In the Hills of The Bear on the Tennessee River, so much rain the Ark floated by yesterday. Tis so cause I heard the Jackass braying.

Clowns with a $750k ARM of which a third is neg am need subsidies too?

Why not? The loan suppliers got them.

Trickle down, baby, trickle down.

CR,

Is there any other source where we can check what the average downpayment was for option arms?.

"option ARMs average about $584,000 and were used to buy homes averaging $823,000" I doubt that the average down payment for option ARM purchases was around 30%.

The article claims the average loan to value ratio when the loans were made was 79%. I have a funny feeling that was just for the first mortgage option ARM.

There must be additional loans or piggybacks involved. It was common to have an 80% LTV first mortgage (to avoid private mortgage insurance), and then a second mortgage taking you up to 90-100% CLTV.

I would really hate to have been a provider of those piggyback loans that took borrowers to 95-105% CLTV at the time of purchase. The borrowers were underwater on those pretty quickly.

Hmmm, you need to find out what the max is for FHA is in your area.

In Broward County, Fla, it was ummm, 351k? 357? Your area
may well be higher.

You can go on bankrate.com and get amortization tables.

And, it cannot be said too often, the rule of thumb is you spend about 25 years
paying the first half of your mtg and 5 years paying the rest. You need to turn
this around to your advantage.

This is where you get the near 100% securitization losses.

Rob says,

"Here in my circle of friends in SoCal for the last 5+ years the whisper gossip around the bbq has been "how can they afford it?" Now we know; they cannot. The new unspoken topic; "How can we afford to let them keep it?" I suspect the same answer."

This surprises me. Rob whispers?

I just told people straight out, most of the people with these loans can't afford their houses.

I had an especially interesting I-told-you-so conversation with a realtor a couple of months ago. I was looking at a place on Mulholland that was for sale during 2007. The "owners" had bought a string of homes, put renters in them while putting them up for sale or doing some updates. That meant below market rents in nice areas.

I said "these things much produce some serious negative cashflow until they sell". The realtor told me that the owners made good money doing this. I ran some numbers and concluded the only way these cashflowed was at a 2% teaser rate.

This was as the market was starting to go down. I told the realtor, whatever these people don't sell in the next couple of months, I'll be interested in looking at after the foreclosure sales.

She gave me a look of disbelief, and told me the owners had made a lot of money doing this. I repeated that anything they didn't sell soon would end up in foreclosure.

So far, six of their houses have gone into foreclosure. Got a call from that realtor, who is now representing a lot of bank REOs.

Loved the response when I told her prices will drop another 30-40%. "Prices have never been that low". I told her that as a matter of fact they had been, in the late 1990s.

Book Tip:

"My Adventures With Your Money"

A fun financial romp through future Nevada ghost-towns in their heyday...

" September 20, 2009

U.S. President Barack Obama said in an interview Sept. 20 that the unemployment situation in the United States may worsen slightly over the next few months, Agence France-Presse reported, citing an interview Obama gave to CNN. Obama said he expects job growth to exceed population growth sometime in 2010."

That book is my Baedeker to pre-Yankee California, and it includes tyrannical ship captains, for a being-there taste of the seafaring life going round the horn, Circa 1830's...

Monterey was the place, back then.

(Dawgma scouring the inter-tubes looking for a way out, no exit. Silence at last)

"That book is my Baedeker to pre-Yankee California, and it includes tyrannical ship captains, for a being-there taste of the seafaring life going round the horn, Circa 1830's...

Monterey was the place, back then."

My uncle, Friedrich Sterdt (Fritz) , served aboard one of the last of the steel-hulled sailing vessels in the 20s. He sailed to China and Australia.

The first thing you have to do when you go aboard a ship is make friends with the cook, he said.

somehow i dont think that its just cali,
Press Release

If only there was some way to have seen this coming a year or two in advance. Someone could've made some money off of this.

reset graph

Comrade Mke

There's a simple fix for that bank regulator problem.

Open a credit union. Entirely different regulatory structures and pressures.

I am really quite surprised that there isn't a gigantic wave of new and expanding credit unions.

most people here knew it was coming. maybe some made money. dont know.
what i do know is that time passes a lot faster than you think it will. i think thats a law.

Dawgma-Less-Day-Afternoon

Don't care to defend your lies?

I con = Dawgma

lawyer liz
i want the rolling on the floor icon too.

kcoop ???? pretty please. with on it

Juvenal, you've made your point. It looks bad to keep bringing it up, and it distracts from the discussion (which is about entirely different stuff). You can bring it up later, if it becomes german to a future claim by the Dawg.

Fair enough, he's shown his mettle.

Hoops,
Those stories are rampant. Hoocoodanode isn't just a catchphrase. Wholesale complicity fraud and now that it's blown up blame those of us who warned.

Hmmmm. So with the banks able to borrow from the Fed at rates negligibly different from zero percent, ordinary depositors will need to pay the bank to hold their money, if they don't want to put it under their mattress. This will accord well with the Fed's moves to prevent deflation -- negative interest rates for savers.

I am really quite surprised that there isn't a gigantic wave of new and expanding credit unions.

There are about 11,000 credit unions already, many more than banks or thrifts.

However, their combined assets are small compared to banks.

I think Credit Unions are generally non-profit, so they are not good drop in replacement for banks.

dr munch
think that banks will raise fees on everything and it would be in everyones interest to keep a very close eye on your accounts.

Re: "On average nationwide, option ARM borrowers ... owe is 126 percent of their home's value, based on depreciation and not including the effects of negative amortization,"

There will be no one moving up the speculative food chain and the risk will be too great for these upper-end homes, and loans will be impossible to find. This second-leg of the double-dip jobless recession and lost decades is all about down sizing and living within a liquidity trap. In that regard, please to note the Yahoo chart with several tech companies that are apparently screaming great buys now, great companies that are being hyped & pumped, like the great too-big-to-fail banks being hyped for their ability to have zero future value, no earnings and no reason to be in existence (other than through accounting fraud). Look at the great shareholder rewards of about the last decade for these bulls, as they run -- and then ignore the fact that they are limping along and ready to die: See: "The bullfight usually concludes with the death of the bull by a sword thrust." Bullfighting - Wikipedia, the free encyclopedia

Dead meat: CSCO: Basic Chart for Cisco Systems, Inc. - Yahoo! Finance

140 years ago, this week.

Black Friday (1869) - Wikipedia, the free encyclopedia

YouTube - Black Friday by Steely Dan

Jay Gould is later the principal player in the Panic of '73, when his bank fails...

Going to the Renaissance Festival in Md. Checking the crafts websites - alot are semi broken or have not been updated in 2 years. Last year it looked like the Black Metal crowd was winning over the aging boomer fantasy lovers.

How do Western mining interests get rid of all of that silver they are pulling out of the mines that nobody wants, 5 years into a financial depression?

You make the government buy silver from you at way above market rates and coin them into silver dollars, which are in the majority never used in circulation, and just sat in treasury vaults, dust gathering on the canvas sacks of 1,000 coins, up until the early 1960's, when you could buy the very same bags for $1,000, how many would you like?

http://en.wikipedia.org/wiki/Bland-Allison_Act

Sheeesh, who cares? It's confined to San Francisco. It's not like the money came from somewhere else,... is it?

Man, I just love this part of the story that CR didn't repost:

"This will be another factor keeping home prices from recovering," said Cynthia Kroll, senior regional economist with the Fisher Center for Real Estate and Urban Economics at UC Berkeley's Haas School of Business. "It should be a message to policymakers in Washington that there is a big group out there that falls outside the parameters of what's being addressed by current policy."

Paging Nancy Pelosi- your constituents need some help with their $850,000 dollar homes, or they will have to move to flyover country with the rest of the racists.

Wells CEO sees loan losses rising
Wells CEO sees loan losses rising - New Mexico Business Weekly:

“Considering the current economic environment, we would expect our nonperforming assets to continue to increase,” Stumpf told those attending a New York investment conference hosted by Barclays.

Many were there to gain insight on how loan losses from the recently acquired Wachovia are coming in relative to the bank’s initial projections. Wells (NYSE: WFC) bought troubled Wachovia for $12.7 billion at the end of last year.

If these geniuses had any brains or any balls/ovaries, they
would recast, rework and cramdown these suckers right
now, before default, before anything. Everybody would lose
less, but we cant have it to admit we ever did anything stupid
or wrong oh, no, we have to pretend until we are looking up
to see the surface of the water as we drown.

The home that my son rents in is in foreclosure and will be up for auction next month, so I've been checking the auction listings for Alameda County (CA).

I have little to compare with except to note that most foreclosed homes in Oakland (which dominates the Alameda County listings) have been foreclosed in the $300k-$400k range (then resold at $80k-$150k!), but the homes currently up for auction typically have a debt of $500k-$700k, somewhat higher than in the past.

The amount due on my son's residence is $580k.

EDIT: Forgot to note that this was the amount after at least two cash-out re-fis.

Men, Pah

Men. Pah.

Oh come on, let's stop playing games ......there are what, 2000 banks failing and the Too-Big-To-Fail banks that are being propped up by fraud and Treasury/Fed backing are already dead, so with this next double-dip shoe to drop with option ARMs rolling like a Great Depression freight train .... don't yah F'ing thik the banking system needs to be building walls of sandbags and don't yah think Obama should do a fly-over and look down at the levies and then go on TV and say, Heck of a job, Timmy .... WTF is going on??? We have a level 5 banking hurricane in the gulf and once again, we have a nation run by retards and crooks -- and once again, the streets will be filled with chaos and then what, Goldman takes over and the stock market goes to 20K by XMAS ??? WTF .....they all see this coming, just like we do, and now what? ... No, everyone will whip out credit cards and shop for shit they can't pay off ......this is F'ing retarded!

I have a friend who has to show up with $40,000 to close on a sale of a house. He is in the military with a security clearance and cannot walk away.

"He is in the military with a security clearance and cannot walk away. "

AWOL is always an option.

shellback clawback for the swabee, que-up a sub-commander dread comment.

one ping, and one ping only, Yuri.

picosec writes: "On a national scale, this is a VERY BAD thing."

I don't think we'll all be living next door to the Clampetts.

""Go with the plan that gives you risk free arbitrage of the money that would otherwise be your sunk equity.""

And there, my friends, is the current situation in a nutshell

there is no arbitrage, really, and there is no risk free

there is only the illusion of those things

Sunday reading: Reuters Summary of US Govt Financial Support Programs
worth noting,
FANNIE MAE/FREDDIE MAC SUPPORT

Some of you guys should apply for the $6bn to buy vacant homes.

Fair Economist,
If 50% of mortgages in the Bay Area were Option Arm, and only 6% of those loans were getting payments above the minimum negative amortization... we can infer that 3% of the Bay Area population with mortgages have volatile incomes. That does sound about right.

does anybody have the answer- is it possible to be a bank and not offer FDIC insurance?

Seems to me if the FDIC rates go high enough there might be some market based alternatives to the FDIC insurance.

I don't think so, CrazyV.,

We bought some plane tickets for late October
for my daughter and hub's sister to come visit us.

Lots of flights sold out, but airfare still very cheap.

SIL wants to swim with dolphins. She has only a 30-some%
chance of living more than 5 years, tho the cancer is in remission.
Wants to do stuff while she can. If October turns out to be even
more disastrous than even I think, well everybody will be here.

Oil pretty much didn't matter back then, but it's most important of all, now.

A basket of items of real value including oil, is what the next accepted currency must be backed by. Trust is gone.

Isn't it already possible to have checking accounts/money-market funds not connected to a depository institution?

I believe so, Yancey, but with mm funds threatening to break the
buck, not sure I'd want to go there.

Hey, lurkers, I see there are 253
of you, howsabout signing on and saying something.

sometimes you just get tired of people calling you names ... i've already graduated from junior high and don't see any need to go back there.

Dawgmashank Redemption

YouTube - Andy plays Mozart

Recourse loan/ deficiency judgement

That ought to hold you still I get back. Or maybe you can call up your personal , that nincompoop.

Liz: I was enjoying your monologue.

damn. ken fisher may be right after all.

i believe that federal charters require FDIC insurance (or the credit union equivalent NCUSIF), but some state allow charters without FDIC insurance.

What on earth is triggering a CR ad for "quality Polyethylene Catalyst"? Company is Shanghai Leader Catalytst Co, subsidiary of Sinopec.

Seems like a very odd thing to be advertising on what is a mainstreet blog...?

i agree that deflation is with us today but there are two big factors pushing us towards an inevitable inflation

1. either inflation in asset values occurs or the system goes bust at some time in the future and
2. although we have reduced consumption, i would guess that consumption still exceeds production. unless the producers of the world continue to lend us production ad infinitum, at some point demand will outstrip supply even in a down economy.

What on earth is triggering a CR ad for "quality Polyethylene Catalyst"?

They did an IP breakdown of this place once and found a huge percentage of people logging in from various high profile and recognizable IP's, like goldman sachs, wachtell, the federal reserve, the us doj, the commerce department, etc.

I'd kill for an ad on this site, if I had some interest to pitch to the very powerful, or at least the handservants of the very powerful.

"EHP: would the deflation anticipated be so bad? Why do the Fed folk all see it as a dire consequence?"

It's hard to stay in business by selling things for less than they cost to produce.

Silver was a dog of a performer in the Great Depression...

Plan accordingly when planning for the next Great Depression~

Basel Too,
There are ways of avoiding FDIC insurance, by having bare minimum deposits/risk which they can charge you premiums for. But if you go to that trouble, you're probably dealing with big money accounts and would want to handle it off-shore. Then again, you would have to compete with the TBTF banks' private banking arms. Basic deal is that they're free to handle any money other than drug money. Embezzlement, fraud, whatever. Not sure about their tax avoidance opportunities, but I definitely would expect them to be provided. Which is where the Swiss get offended, but they don't realize that it comes down to winning market share

sportsfan,

that SC game yesterday was ugly....P Carroll needs to hire a real offensive coordinator again..all that talent wasted, QB on the bench that won 8 games as freshman in SEC....Starting QB looks more scared than a 80 year old lady in the tenderloin....

bad bad bad