[bearishgurl]

[quote=harvey]…This is why Piggington just is not a worthwhile place to hang out anymore.

SK is a smart and knowledgeable guy, but this is not the first thread where he was an outright dishonest with regard to what others have said. It’s not worthwhile to engage him in debate….[/quote]

harvey/pri_dk, pot meets kettle :=D

I’ve felt the same way about many of YOUR previous posts around here.

HOWEVER, I still feel that Piggington is a worthwhile place to come to. I don’t have to “agree” with everyone on here and neither do you. Everyone can interpret whatever they read as they see fit.

That’s the beauty of a forum/blog. I’m okay with it and you should be, too.

[bearishgurl]

[quote=The-Shoveler]When you are working and you can’t feed and get medicine for your kid’s

Well you will throw a stone at something.
The only thing that has prevented it so far is food stamps and Medi-Cal.[/quote]

Shoveler, it’s not just EBT/WIC and Medicaid/CICP. The CO meat plant workers also have access to limited free dental care, college scholarships based upon need, free maternity and well-baby care, free delivery services provided by local midwives and birthing centers, free counseling, free STD testing and free diabetes tests, among an array of other esoteric goods and services geared to this population.

The above services are all donated by private organizations and individuals.

It seems the local well-heeled cohort value this population and don’t want to see them on the street. Many of them undoubtedly grew up in rural farm homes themselves and KNOW FULL WELL how hard the work is in the plant.

Most of them now enjoy their full freezers in the garage stacked with a variety of home-grown meat, cut just the way they like it … as they ALWAYS have. They have l-o-o-o-ong memories and for this, they are grateful :=]

[bearishgurl]

Very interesting older article of the history of the plant.

http://www.answers.com/topic/monfort-inc

Monfort WAS unionized up until about 1994, when they paid out $10.6M in back wages for hiring scabs during and after a long strike by their workers and then shutting down for two years in effort to break the union’s hold.

During the unionized employees’ tenure, the plant developed several innovative meat processing procedures. From 1987 thru 1994, Monfort was mired in ULPs and the resulting lawsuits as well as a lawsuit they filed themselves alleging monopolies. They were also victims of a large recall for an e-coli outbreak in their hamburger (they themselves invented the testing procedure), big fines for DOT violations, a shortage of grain due to the PTB sending too much abroad, changing consumer tastes and unfair monopolies by other regional meat packers. The subsequent consolidations and buyouts apparently ended up crushing the union’s hold on the workers, which were constantly being replaced. But not before Ken Monfort (son of founder Warren Monfort) passed and left his two sons a fortune. They now own the Colorado Rockies baseball team and other businesses and are also well-known philanthropists.

http://extras.denverpost.com/business/biz0203b.htm

http://en.wikipedia.org/wiki/Monfort_brothers

So Monfort apparently DID have well-paying local jobs with benefits for nearly 40 years (1955-1994).

And the phenomenon we are now experiencing with no loyalty and high turnover amongst employees is just what today’s Big Business and Government want. They’re not looking for high levels of skill or “institutional knowledge” anymore. Most of today’s employers just want “warm bodies” doing “face time.” And that is what they have :=0

You get what you pay for.

[bearishgurl]

[quote=SK in CV][quote=bearishgurl]
I understand everything you’re saying here, NSR. I’m not even sure Americans would take these jobs if they paid $15 or $18 hr. These employees can rent old farmhouses cheaply and easily get 12 people in there for <<$400 mo. Americans don't want those either because they are all situated out on Weld County Roads (WCR-#), most of them dirt or gravel and within smelling distance of the plant. With 1-3 workers per hsld and their assorted other relatives and children living with them and getting EBT, Medicaid and indigent health coverage, and other social services, these families are making out okay. Really .... they ARE! My friend in Eaton works for a social service agency in Greeley that serves a good portion of this population. They even have "free" dental care available at their clinic. I personally toured the clinic and was amazed at the (very expensive and state-of-the-art) medical and dental equipment they had - all paid for by well-heeled longtime locals' donations. The Weld and Morgan County school districts have been serving this particular population for more than 50 years. The wheel has been invented. It's all good ... I guess :=][/quote] BG, do you think maybe the possibility exists that living in an old farmhouse with 11 other people isn't their first choice in how to live? Maybe, if their employer paid them 25% more, there would be much less turnover, they'd save recruiting and training costs, and their employees wouldn't have to live 12 people to a house. They might even have enough income so that don't need SNAP or Medicaid. And the employer would probably decrease their costs. The short-sightedness of some business operators is truly mind-numbing.[/quote] SK, it probably isn't their first choice, but these (rural) farmhouses, for the most part, are 75+ yo 1500-2500 sf homes which have long dirt driveways and may or may not have a detached garage. Due to the roads they sit on, they can be very dusty inside. Many of these workers also live in Greeley (abt 7.5 mi west of the plant). Greeley has many 90+ yr old largish houses in wildly varying states of condition on its east side which have full (finished) basements. I'm sure the rent is higher there (than Kersey) but these renters would live in close proximity to more public services, including public transportation. I think these (agricultural employers') mindset is just a permanent cramdown in wages because they can get away with it with this particular population! A dollar or two an hour here and there leads to future raises based upon percentages and also higher payroll taxes. The exact same thing has been happening over the years with Tyson (pork processing plants) in the states of AR and IA. http://www.hrw.org/reports/2005/usa0105/7.htm

http://refugeeresettlementwatch.wordpress.com/2008/01/25/heres-a-shocker-for-you-tysons-meat-packing-plant-in-emporia-to-close/

http://en.wikipedia.org/wiki/Postville_Raid

http://www.theworld.org/2011/12/storm-lake-iowa-a-meatpacking-town-fueled-by-immigrant-labor/

…Workforce

In 2007, the U.S. Department of Labor reported 146,400 workers employed in the meat packing industry, of which 128,100 were production workers. In the food industry as a whole, meat packing and processing is the largest employer.

As a result of the need to keep expenses low, the meat packing industry has been a longtime opponent of workers’ unions and paid well below the national average. Employing recent immigrants has become standard practice. According to David Bacon in The American Prospect, “Today, Spanish is the language on the floor of almost every plant. Most workers come from Mexico, with smaller numbers from Central America. Refugees from Bosnia, Vietnam, and even the Sudan are a growing presence in some areas, but the vast majority of meatpacking workers are Latinos.” During the late 1990s and early 2000s, the meat packing industry received negative publicity for its employment of illegal aliens, as well as its dangerous and low-paying working conditions.

Meat packing also is a highly labor-intensive industry, and a large majority of the total employees (84 percent) were production workers, compared to 72 percent in all food preparation sectors and 67 percent in all manufacturing industries. Because of the industry’s low wages and demanding working conditions, employee turnover remains high…

http://business.highbeam.com/industry-reports/food/meat-packing-plants

And the 1300 undocumented workers found in the 2006 INS raid in the OP were actually based in six states:

In 2002, Swift & Company was purchased by Hicks Muse Tate & Furst, a leading, Dallas-based private equity firm, and Booth Creek Management.

In December 2006, six of the company’s meat-packing facilities in Colorado, Nebraska, Texas, Utah, Iowa, and Minnesota were raided by U.S. Immigration and Customs Enforcement officials, resulting in the apprehension of 1,282 illegal aliens from Mexico, Guatemala, Honduras, El Salvador, Peru, Laos, Sudan, and Ethiopia, and nearly 200 of them criminally charged after a ten month investigation into identity theft…

http://en.wikipedia.org/wiki/JBS_USA

FYI, in 1993, the INS “set up shop” along with the DEA and NTF in a group of nondescript permanently-skirted trailers just west of Brush, CO (Morgan Co). At that time, this (I-76) corridor was discovered to be a BIG illegal drug-trafficking artery.

SK, if you are a meat-eater, would you be willing to pay $35-$40 (as opposed to $20-$28) for your steak dinner out in order to subsidize better wages for US meat processing/packing-industry employees?

[bearishgurl]

[quote=CA renter][quote=bearishgurl]In order for the current FHA debt ceiling to make sense, the ~$80K home in 1984-1985 should cost over nine times ($697,500/77,000) of a similar one today ($720,000)!

As we can see from the above listings, they do not (and likely never will).

So the $64M question is, what is the FHA doing guaranteeing mortgages in markets which are NOT the prospective homebuyers they were put in place to serve?[/quote]

BG,

The FHA (and GSE’s) increased loan limits and lowered standards precisely when the private mortgage market began to have problems. These loan limits and other changes were designed to bolster the housing market in order to stem the losses in the financial industry. It had nothing to do with trying to help the poor, hapless new homebuyers; it was all about protecting the existing mortgage(and related derivatives) holders.

And livin’ is totally correct about prices being set by new buyers — the buyers who are willing to leverage the most and pay the highest price. The fact that local residents have low/no mortgage balances does NOT affect pricing…[/quote]

Yikes! I’m now looking at my own sentence structure and it doesn’t make sense! I MEANT TO SAY “In order for the current FHA debt ceiling to make sense, the ~$80K home in 1984-1985 would have to cost $720,000 today (over nine times that of a similar home in 1984-1985 or $697,500/77,000)! And … “what is the FHA doing guaranteeing mortgages in markets which are NOT typically bought into by the prospective homebuyers they were put in place to serve?”

But you get the drift.

[quote=CA renter]Even if no homes in a particular area are sold, the price is not whatever the current owners “want” it to be. If there are no nearby comps, other comparable areas/homes will set the prices for that area. Housing IS a highly-leveraged purchase in almost all cases. Interest rates, general credit expansion/contraction, etc. play a MAJOR role in the prices of leveraged assets.[/quote]

CA renter, I don’t agree with your (italicized) statements. In CA, the most desirable properties are most likely to lie in the “best hands.” (This is largely due to Prop 13.) If these “best hands” owners don’t get their price upon listing, they are free to remove their listing(s) from the market. The vast majority of these owners are NOT in the “must sell” category. The ability of a local buyer in their area to secure mortgage financing does not have anything to do with the price these owners can ultimately fetch. If prevailing fixed MIRs were at or over 11%, there MIGHT be less buyers available to make an acceptable offer to them but there could EASILY be a buyer out there with enough cash or a decent enough credit rating and assets to entice these sellers to carry part of the purchase price.

For every highly-leveraged micro-market and/or subdivision in SD County, there are MORE (very established) residential areas which have a low overall pattern and incidence of current encumbrance. WHY? Because CA’s most desirable coastal and urban areas were built up long ago and a large percentage of their pre-April 1978 owners or their heirs (whether first, second or subsequent owners of the property) are still the owners of record today. This is true of ALL CA counties, coastal and otherwise, although, except for agricultural acreage, the highest desirability and thus value generally lies in the properties in areas which lie within five miles of the coast, with the overall value fanning out from there, highest to lowest.

In CA coastal counties, highly-leveraged tracts and custom homes/heavily remodeled tracts within five miles of the coast are two completely different animals, and thus, attract completely different subsets of buyers. The former is heavily dependent upon prevailing interest rates and the latter is not.

[bearishgurl]

[quote=no_such_reality]At what wage would American workers start to take those jobs?

How much of that 29% turnover is due to the job paying $12 and having 3X the risk of injury of San Diego police officer?

How much does recruiting 29% of your work force a year cost?

How much does that turnover affect the injury rate?

how much does that injury drive their worker’s comp and insurance through the roof?

Americans don’t want those jobs because they know they don’t pay well and they are brutally hard. CO minimum wage is $7.78/hr. The slaughter house is an assembly line and the human cogs in it are driven as fast as they can.

When I read the efforts the business is going through is like reading about a person driving an 15 minutes out of their way to save 2 cents a gallon on gas in car with a ten gallon tank.[/quote]

I understand everything you’re saying here, NSR. I’m not even sure Americans would take these jobs if they paid $15 or $18 hr. These employees can rent old farmhouses cheaply and easily get 12 people in there for <<$400 mo. Americans don't want those either because they are all situated out on Weld County Roads (WCR-#), most of them dirt or gravel and within smelling distance of the plant. With 1-3 workers per hsld and their assorted other relatives and children living with them and getting EBT, Medicaid and indigent health coverage, and other social services, these families are making out okay. Really .... they ARE! My friend in Eaton works for a social service agency in Greeley that serves a good portion of this population. They even have "free" dental care available at their clinic. I personally toured the clinic and was amazed at the (very expensive and state-of-the-art) medical and dental equipment they had - all paid for by well-heeled longtime locals' donations. The Weld and Morgan County school districts have been serving this particular population for more than 50 years. The wheel has been invented. It's all good ... I guess :=]

[bearishgurl]

I just got back with staying with a friend in Eaton, CO, a grain-producing town (one of my many stops in that state) about 15 miles northwest of the ever-present Monfort Meat Packing Co (nka “Swift”). In the past, I have had several relatives who lived within a five-mile radius of Monfort (“Kersey” area) and I could still smell the feedlots while standing on their lots and in their houses with the windows open. The locals are used to it because the plant is a “fixture” in the area.

Monfort’s cattle is/was literally stacked on top of one-another in their dozens of feedlots.

Immigration (mostly Mexican and central American) was ALWAYS available locally to staff Monfort and to farm onions and sugar beets.

The plant was raided in 2006 and lost about 1300 workers due to not having I-9’s filed or not having the proper documents as represented on their I-9’s which were filed with the employer fraudulently. Most of the workers without proper documentation were deported at the time. The plant literally had to start from scratch hiring quickly again.

In the past 35 years or so, I have made over 60 road trips from San Diego to this immediate area. Longtime Weld and Morgan County residents have always complained vociferously about local immigrants (not necessarily race-specific) using their schools and social services but I have YET to see ANY American citizen who lives there, young or old, state that they wanted to work in any of these agricultural jobs.

http://www.smfws.com/articles2006/2006octobernovemberdecember/art12242006.htm

In fact, as of 2012, both Weld and neighboring Morgan County’s population was comprised of more than 28% and 34%, respectively, “Hispanic or Latino” individuals, much the same as most California counties.

http://quickfacts.census.gov/qfd/states/08/08123.html

http://quickfacts.census.gov/qfd/states/08/08087.html

In fact, 21% of the population of the entire state of CO claims to be of “Hispanic or Latino” origin.

http://quickfacts.census.gov/qfd/states/08000.html

The work at Monfort is very hard, dirty and grueling and workers run equipment which can easily maim or kill them if they are not very careful. They supply a very large amount of restaurant chains across the US (ex: Black Angus).

In spite of all this, what they pay is a very good wage to their employees whose families are using indigent healthcare and other state services.

I don’t see American citizens of any race ever wanting these jobs, nor taking them. Most High school graduates who grow up around the area of Monfort go onto college and many leave the area after college graduation to take employment elsewhere. There are a handful of GREAT universities in and within 35 miles of Greeley, CO.

[bearishgurl]

[quote=livinincali][quote=bearishgurl]
No, livinincali, homes are only a “highly leveraged asset” for those fools (mostly “worker bees” at the mercy of employers) who tend to borrow themselves into oblivion to get into one. Many, many regions of the country have a VERY LARGE percentage of homeowners (over half) who owe 0 to $20K on their primary residence.
[/quote]

I said at the margin. Not all home owner are highly leveraged, but most new home owner are. Potential new home owners bidding for the available properties are the ones setting the prices. Move up buyers generally require somebody to buy the previous home unless they decide to rent it and lever up in a new purchase. If leverage was reduced and interest rates were raised then the amount one could bid on a house would be lower. Now there doesn’t necessarily have to be willing sellers at that price, but at the margin there would be some sales and prices would reflect the reality of lower leverage and higher interest rates.[/quote]

If the FHA stopped loaning entirely in CA coastal counties, it wouldn’t have an effect on prices. The FHA was only meant to be a “bit player” in the most desirable locales in the US. Historically, only the most prudent low and moderate-income buyers could obtain an FHA loan in San Diego County. The vast majority of the families in those income categories living in CA coastal counties were (and are) renters (some “permanent” renters).

*New* homeowners (FTB’s?) don’t have to be “highly leveraged,” not even the ones in SD County. The ones that are chose to be in that situation because they were able to secure a mortgage which stretched their budget. There are many alternatives in housing purchases … even in what the FHA dubs “high-cost areas.”

livincali, the amount of “leverage” available to a prospective homebuyer is only important to home values in SOME areas of CA coastal counties, not ALL.

If there are no prospective sellers in a given micro-market who are willing to sell at a price based upon what a buyer using, say, 90%+ leverage can pay, then they will either sell to buyers using typical “80/20” financing, buyers for whom they are willing to carry purchase money, buyers using all cash or a combination thereof. As you know, a “sold comp” is not created until a bona-fide arms-length transaction closes escrow.

The availability of leverage as well as interest rates have very little, if any, effect on the price of housing in CA coastal counties, unless that housing is situated in an area or tract where the overwhelming majority of parcels are currently heavily encumbered with mortgages.

Those “margin” sellers you discuss here are the few left with zero or little equity AND whose property they MUST sell is located within those heavily encumbered markets (discussed above).

In an average 50 yr old SD city block, it is more likely that more owners have 50% or more equity in their properties than do not.

In any case, the current FF conforming mortgage (which requires a 5-20% downpayment, depending on program) ceiling is $546,250 ($151,250 LESS than FHA’s current mortgage ceiling)!

http://fha-loan-limits.findthedata.org/d/d/California/San-Diego

Go figure … :=0

[bearishgurl]

In order for the current FHA debt ceiling to make sense, the ~$80K home in 1984-1985 should cost over nine times ($697,500/77,000) of a similar one today ($720,000)!

As we can see from the above listings, they do not (and likely never will).

So the $64M question is, what is the FHA doing guaranteeing mortgages in markets which are NOT the prospective homebuyers they were put in place to serve?

[bearishgurl]

The first three listings are SS’s but all are representative of the “bread and butter” SFR’s that the FHA was put in place to guarantee mortgages on:

http://www.sdlookup.com/MLS-130026029-602_Maywood_St_Escondido_CA_92025

http://www.sdlookup.com/MLS-130035707-9653_Medina_Dr_Santee_CA_92071

http://www.sdlookup.com/MLS-120039865-7825_Deborah_Pl_Lemon_Grove_CA_91945

http://www.sdlookup.com/MLS-130023770-3338_Heather_Ln_Oceanside_CA_92056

I could continue to provide samples from all over the county but these types of homes and areas are representative of those on which the FHA guaranteed mortgages with a ceiling of ~$77K in 1984-1985.

I have absolutely NO IDEA what the FHA is doing guaranteeing mortgages up to $697K in SD County. It is beyond ridiculous and will end up decimating their MMI funds :=0

[bearishgurl]

[quote=livinincali][quote=bearishgurl]
The agency’s biggest blunder was when they increased the ceiling on their high-cost area lending limit in December of 2008 for ONE SFR to $729,750 thus raising it from 75% to 87% of the FF conforming limit. Although it was later lowered in 2012 to $697,500,
[/quote]

I’m not sure that their biggest mistake was raising loan limits. There biggest mistake was sticking around as the low down lender when everybody else decided no skin in the game and <5% interest rates wasn't worth the risk. You could have probably gotten a low down payment loan if FHA wasn't around but it wouldn't be at prevailing 30 year fixed mortgage rates. It would probably be close to 10%.

Homes are a highly leveraged asset for home owners at the margin and those at the margin set the prices. If you eliminate the leverage you eliminate the marginal buyer. If you like higher home prices FHA and the Fed did everything in their power to help you.[/quote]

No, livinincali, homes are only a “highly leveraged asset” for those fools (mostly “worker bees” at the mercy of employers) who tend to borrow themselves into oblivion to get into one. Many, many regions of the country have a VERY LARGE percentage of homeowners (over half) who owe 0 to $20K on their primary residence.

Yes, the FHA made a BIG mistake in 2008 when it decided it would be the “lender of last resort.”

They weren’t put it place for that role, either.

[bearishgurl]

I meant to add that the current up-front and monthly FHA MIP is now too expensive for the low and moderate-income homebuyer for whom the FHA was originally put in place to assist.

[bearishgurl]

[quote=spdrun]Perhaps this is a back-door attempt to wind down FHA loans entirely.[/quote]

I think it is, spdrun, but the FHA doesn’t need to go thru the “back door.” They can just cease making any more mortgages.

Any buyer who has only 3.5% down and has to finance up-front MIP which is equal to or greater than their 3.5% downpayment is already upside down at the time of purchase (not taking into the account their exorbitant monthly MIP premiums). We aren’t doing this population any favors by continuing on with this sham. They (as well as taxpayers) would be better off if the FHA just folded except to backstop any mortgages they were already stupid enough to guarantee.

The current and future defaults on FHA’s mortgage sizes granted in recent years which are considered (under FF guidelines) jumbo conforming or jumbo will no doubt be enough to deplete the MIP funds currently on deposit and cause it to look to taxpayers for a rescue. It is these very non-conforming mortgages guaranteed by the FHA which will become the cause of their demise.

The FHA didn’t have this problem until about 2004, when they decided to elevate their loan limits above $300K:

[img_assist|nid=17558|title=FHA High-Cost Area Loan Limits 1994-2008|desc=|link=node|align=left|width=85|height=100]

http://shawnmeldrum.hubpages.com/hub/FHA-Mortgage-Loan-Limits-Historical

Prior to 2004, FHA-backed mtgs weren’t used very much in San Diego County (termed by the agency to be a “high cost” region). It was used in less than 3% of residential purchases here because its loan ceiling was not high enough to even finance a fairly modest home in a modest area of SD County. Neverthless, residential sales happened, even in a rapid clip during several 2-3 year periods. For example, the FHA loan limit from about 1984 – 1985 was about $77K in SD County. This could finance 96.5% of the purchase of a 3/2/2 in most moderate-income areas of SD County at that time. And the agency still had a weekly “foreclosure (sealed bid) list” of about 20 SFRs and condos printed in the Thursday San Diego Union at that time.

The FHA didn’t need to increase their participation in SD County just because it turned into a “high-cost region” in their minds. They weren’t and aren’t “set up” to deal with all the defaults coming their way, especially the larger ones.

The agency’s biggest blunder was when they increased the ceiling on their high-cost area lending limit in December of 2008 for ONE SFR to $729,750 thus raising it from 75% to 87% of the FF conforming limit. Although it was later lowered in 2012 to $697,500,

http://www.fha.com/lending_limits_state?state=CALIFORNIA

… there was never any need to nearly double the limit in 2008 as home prices in most of CA’s high-priced MSA’s had actually begun to fall by March of 2008. By doing so, they placed themselves in the position of financing “move-up” and “luxury” homes to borrowers who otherwise couldn’t secure cheaper financing. This was never and is not today the mission of HUD.

The FHA (and US taxpayers) are would be better off if the agency, going forward, concentrated the vast bulk of their guarantees in lower-cost areas of flyover states.

The 3.5%-downpayment buyer (ESPecially a FTB) is better off renting until they have more downpayment and the ability to qualify for a mortgage under FF guidelines, IMO. By taking on undue risk by nearly doubling their mortgage ceiling in high-cost areas, the FHA made it impossible for themselves to do was they did best … that was to assist low and moderate-income buyers in purchasing a “decent” roof over their heads.

[bearishgurl]

[quote=SK in CV] … If it makes you feel better thinking that every buyer knew exactly what they were doing, hold on to that. I’m telling you it’s not necessarily true.[/quote] SK, I KNOW that many borrowers had/have language barriers and didn’t/don’t know what they are signing and have tried to help a couple of them after the fact (unsuccessfully). There is SUPPOSED to be someone in each closing (usually the notary) who explains everything to the buyers in their language. However, this is not the law in CA.

When a prospective borrower applies for a purchase-money mortgage, it is usually before even making an offer on a property. At this point, they’re trying to find out how much they qualify for and also get a pre-approval letter enabling them to make stronger offers. They sign THIS document (the loan application – by itself) LONG before closing. Buyers who don’t understand English well usually use mortgage brokers/banks who speak their language … or have personnel in the office who do.

In the case of the prospective borrower in this thread, he/she apparently had no problem qualifying for a mortgage and was well-qualified for his mtg before, during and after their “strategic default.” They defaulted ONLY because they couldn’t sell and “move up” (to a “better” area) after a relatively short period of homeownership (part of that time encompassing the downturn).

The OP here NEVER STATED that he “didn’t know what he was signing” or “got ripped off by his mtg banker/broker.” He only stated he didn’t want to own his house anymore and so “strategic default” was his perceived way out of it.

[bearishgurl]

[quote=HLS] … FHA has increased premiums five times over the past two years and according to the FHA commissioner “we are clearly at a tipping point here,If we increase them more, we would actually shut out additional homebuyers,”[/quote]

LOL …

Why does anyone care if “additional (borderline or below borderline?) homebuyers” are “shut out?” If they can’t afford the monthly payment with FHA MIP added on, then they are trying to buy too much home … period. They’re not putting more than 3.5% of their OWN money down so what do they expect?

[Author]

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