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Friday, March 26, 2010
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44 comments:
Won't this ever stop?
http://www.nytimes.com/2010/03/26/business/26housing.html?hp
Jamie-
Unfortunately it probably will continue for several more years until unemployment is much lower and the housing market is looking slightly healthier. So we will continue raking up the bills to try and push the can down the road :-/
Blogger Jaime said...
Won't this ever stop?
http://www.nytimes.com/2010/03/26/business/26housing.html?hp
Nope. And that fat gov't thumb in the dyke does not seem to be stemming the leak:
More than 50% of Homeowners in Loan Modification Default again
But worried? Me? Living in Fairfax County, the 2nd most affluent county of all the USA, does it bother me? Nope.
The sun is shining, numbers are up, inventory is up, sales are up, prices are up, hopes are up, confidence is up....up ....up....up....
Loudoun #1, Fairfax #2
I can whistle past the graveyard just as well as the next guy.
Meanwhile, my alter ego (sane man) is getting liquid as fast as he can and counting the bank websites by how many are not in the USA.
;-)
Jamie,
I'll believe that it's more than optics this time around when I see the results.
Doesn't go in effect until September... "millions" of borrowers may be "eligible". Yeah, right. It may make a very small dent. The 3 month forebearance if you loose your income is probably the biggest help. It's all about the job losses from here on out. Prime loans and unemployment.
Temporary forbearance I'll believe, principal reductions, I'll wait for the numbers.
Home inspection tomorrow!
OMG! This Maywood home--subject of the most entertaining episode EVER of "Real Estate Intervention"--is back on the market!
AR7290502
TWoP discussion from last year
Anyone else remember this episode? Anyone?
PaKa,
I saw that episode. Yes, the owner was really strange and secretive, even though he was on national television.
He purchased the house for less than half his asking price. I forgot how much he invested to remodel, but it's couldn't have been too much. He could certainly afford a lower asking price. I have more empathy for underwater homeowners who HAVE to market their homes at a high price to avoid a short sale (which often happens once they have to lower their asking price, anyway.)
I think I mentioned this house before, but its sold price finally came up. tysons
It is very close to Tysons very large and sold for 400K. It probably needs ~50K of work, but even at that price it could be a nice house on a .35 acre lot 5 minutes from Tysons. So there are at least some good deals out there.
Blogger housebuyer said...
I think I mentioned this house before, but its sold price finally came up. tysons
Once again I have to ask:
Exactly what are the requirements, if any actually exist, and if any are actually enforced for code compliance in Fairfax County?
(Regarding the kitchen electrical arrangement in the above listing)
I've seen more professional and compliant work in third world countries. (Uganda comes to mind)
I remember that HGTV guy too. Looks as though the house is a pretty good deal now - I bet it goes quickly as long as it doesn't come with a ghost of the prior owner hanging around.
Can't save people from themselves,
Bought in 2002 for $285k, listed today as a short at $420k (which it's only worth if those rough in's are really worth it which I doubt).
http://franklymls.com/FX7291052
Maddening.
I'm not sure why HELOCs frustrate me more than peak-buyers. Well actually,
1) They had a cheap, affordable house, and they blew it.
2) There was no sale involved so no supply and demand to determine if the new mortgage amount was justifiable.
3) If every 1 new sale at peak allowed 4 homeowners to take out more cash, then the lending assumed that the "fair market value" was completely independent of supply.
Holes we dug for ourselves...
Sure, some of that refinancing was for the exterior paint and roughing in of the basement. But not all of it, surely. Maybe $50k HELOC + another $50k of fees and late payments...
ACE,
From the property records it looks like the HGTV guy is the current owner, Brian Headd. The house hasn't sold since he bought it in 2002, and his name is mentioned in the comments in the TWoP link.
UGH!!!!!
I am hearing whispers on the street that the fed may come out with a new program in the next couple of days that writes down all mortgages that have a MTM LTV >100% down to 97.5% and refinance them into an FHA loan. Talk about an absurd bailout this would basically let everyone off the hook who spent too much on housing. Although it sounds like the fed will not pay for it and that it will just hose people holding MBS.
"cara said...Maddening.
I'm not sure why HELOCs frustrate me more than peak-buyers. "
It isn't frustrating a bit by itself. People/banks/companies make mistake. It is alright as long as they pay for it.
What is really maddening is:
We are using public tax money to help these morons alike - including investors, banks and speculators alike. What a concept - let's keep profits private and losses public. Ultimate mockery of fairness....what a way to encourage more speculation.
HB,
If I understand correctly, that program is applicable to very small number of loans...and they have to be current for another 5 years or more for full write-down.
Basically, it encourages people to not walk away. When an asset class is so much overvalued from historical perspective - I am not sure how much 2.5% write-down helps. We will see. I also notice desperation in this on the part of fed/treasury...
HB,
Recent treasury auctions have been going really bad. Spike in bond rates seem to indicate government financing costs are going up...and rightly so.
May be a wake-up call for them - as I said earlier on government's inability to go much far...
Spider-
I think you are talking about the BofA program. I am talking about a program from the fed that is expected to impact ~4 million people that has not come out yet. It is definitely possible the whispers I am hearing on the street are wrong, but if not this will be by far the largest program ever. The losses would be put on the investors and the loans are expected to be refied into FHA loans at 97.5% of the current property value. I hope I am wrong about this.
housebuyer,
how do you think exactly this program will work? why would owners of mbs certificates agree to such a writedown? all current programs imply that the loans are bought out of trust (i.e. trust owners are made whole) or belong to the bank's own loan portfolio.
spider,
To each his own. That's too ephemeral for me. How are these owners or their lender's being helped? The owners MIGHT get $1500 to move out. An unecessary expense for the tax-payers, sure, but not large enough to be maddening. The lenders got TARP funds... which they have to pay back with interest.
The sums of money being wasted on HAFA and the like are not large enough on an individual basis to be maddening to me. Overall sure, but it's also not the owner's fault that the government is being wasteful.
However, watching someone self-destruct financially, is. Seeing people who really believed in the delusion that debt is wealth, is maddening.
The people who bought near peak and can't afford it or are underwater are unavoidable carnage, the HELOC abusers are needless carnage.
HB,
Dear goodness no. I hope the whispers are wrong. And then I think about my sister in CA who put 15% down and is still underwater, and I hope they're right.
Maybe they're thinking of this just in terms of a labor mobility issue. If their house got written down, she'd be able to move here for a better paying job, now rather than 3-4 years from now after enough amoritization.
HB,
I think it has already come out. Are you referring to?
New Plan to Cut Some Mortgage Balances
hb,
If that's true and the MBS holders get screwed, that's going to be reflected in future rates pretty significantly. The piper gets paid eventually by someone somehow.
Konstantin-
Several of the programs already force MBS holders to take writedowns. Any of the principal reduction programs gernerally have the government split the loss with the MBS holders.
In general these programs would be good or neutral for the more senior MBS holders so they would agree too it at which point the junior people get screwed and their isn't much they can do about it. The MBS in general probably does ok also because the loss severities would be much better because they wouldn't need to pay to fix up the house market it and sell it. Instead the person would just get a new FHA loan and the government eats the loss if the person defaults in the future.
KeithK, sorry, my post was unclear. What I meant (facetiously) was that, once the house is sold, Brian would be the prior owner, so as long as you can buy the house without Brian's negative vibe ("ghost") staying with the house, it looks to be a pretty good deal.
Spider-
Spider that appears to be part of what I am hearing about, but not all of it. Either way they haven't released the full details. As I said I hope I am wrong, but we will see.
Plan after plan, program after program... all designed to prop the market up at an un-sustainable level.
At least a few people seem to get it:
"Alas, all the Fed’s purchases and all the government’s men can’t put the residential real estate market together again.
Between them, the federal government and central bank can lower mortgage rates, modify mortgages, use their power to get private lenders to modify mortgages, and create incentives to move inventory, such as the first-time homebuyer’s tax credit.
What they can’t do is manufacture enough artificial demand for an asset that was artificially inflated to begin with. Prices will have to fall, which is how supply is allocated in a market economy. "
...
What’s done is done. Throwing bad money after good makes no sense. The government can’t save housing without sapping something else of needed capital. "
http://www.bloomberg.com/apps/news?pid=20601039&sid=a7Z8mzKdoEZA
housebuyer,
yeah, sure. why the gse's then buy the loans out of the trust when they modify them (they guaranteed them, so the investor should not worry too much anyway)? when govenrment pays the bank part of the loss on the modification it mostly relates to non-trust loans. investors can easily sue the bank if they believe that they are being screwed by the program. and in this particular case you stated that fed is not supposed to pay for it.
all this seniority stuff is also a bit misleading, there are a lot of gse loans on the market are in the pass-through, non-structured products.
Konstantin-
I was mostly ignoring the GSE loans, because the investors do not take a loss on the write down so it may impact them some but not that much. It is a much bigger deal for non-agency MBS. Almost all of these have some structure put into them so they could get a AAA rating on most of it.
housebuyer,
can you give me an example of a trust agreement/prospectus where it says that the servicer or whoever can do this modification is allowed to write-down the collateral without consent from investor? especially if it is a performing loan that we are talking about.
Leroy, wanna join me in suing fed/treasury who has no clue what they are doing?
There got to be something in our law to prevent our public money targeted like this......any lawyers here?
Konstantin-
I am not sure if any prospectus talks about this. They are 300 pages and I am not a lawyer. I can get the limited information I want out of them, but that is about it. Either way the government has shown several times that they are not worried about the legal process in helping/hurting different investor groups.
Konstantin-
I should have read your comment better. Its not the servicer who makes the choice its the government. I think the government will just mandate all servicers follow their rules and that is what will happen. Sometimes the fed has protected investors when they didn't have to other times the totally screwed them when there was no legal basis to do so.
Ace,
I didn't see the episode nor read the comments, so I don't know what's the deal with the owner. But from a potential buyer's perspective, it's a good deal but not screamingly good. First and foremost, it has no basement, and secondly, it has no yard. And there isn't any room left for future expansion. It also is not walkable to a Metro. All of the above together eliminate a big chunk of potential buyers.
But it's a beautiful house inside out and at this price someone will fall in love with it, I'm sure.
I had a hunch..now I am almost certain they will extend 8k credit given they are running around with new housing program on a daily basis.
Reality is finally starting to sink in:
Fed's Bullard 'Nervous' Over Housing Weakness
spider,
i hope they let the $6,500 credit die but double the $8K. yeah, i'm selfish.
MM, I doubt they will increase it to higher amount...but who knows. They seem desperate.
In the end - it boils down to the fact that we need lower prices to match "real" supply and demand. Where do they get their PhD's - is what I want to know...
i believe some posted/commented this house on here before. i still think it's insane @ $875,000 but at least it's not anywhere near $999,000.
BTW, good job, Jewel :) hopefully i'll be doing my part soon.
MM, I TOTALLY agree about that fraction of a house. And it's on a busy, noisy street besides. Ah well, one less buyer to compete against me...
housebuyer,
if i was an investor in a pool of loans not insured by gses and then somebody (be it government or anybody else) tried to modify loans in the way that will hurt me --- i would sue immediately. all the mods can be done if they are allowed by the pool agreement and benefit the investor. i would be very surprised if writing down everybody to 97.5% is beneficial to all investors.
"i believe some posted/commented this house on here before. i still think it's insane @ $875,000 but at least it's not anywhere near $999,000."
N. Arlington=top dollar.
housebuyer,
it seems that you are talking about this
WSJ Article
looks like voluntary to me.
Ok, so let me get this straight...
...first you go and delete all your posts because most of your predictions proved to be garbage.
Now, you have found a little shred of one of your posts that only survived because someone else quoted it and you couldn't delete their post ...and you want credit for it?
LOL
That is the same thread where you were predicting a 90% collapse in both real estate and equities, and were relying on the secret sources of Hal Turner the white supremacist.
Besides, your "prediction" was from less than a year ago. By that point it was already common knowledge. People had been saying homeowners would have to stop relying on their houses as piggybanks since before the bubble burst.
N. Arlington=suckers
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