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DaCounselor
Participant“Some hedge funds say they are concerned that banks that both sell the derivatives contracts and handle mortgage payments could be involved in a form of market manipulation.”
This is my favorite quote from the article. I’m still smiling an hour later at this. Hedge funds’ concerns about the banks manipulating the market is akin to a perpetually hungry fat guy being concerned that someone is going to get to the buffet before he does.
If the hedgies bet against subprime paper without investigating and understanding the provisions of pooling/servicing agreements allowing for modifications, then they justifiably may suffer the fate of all those who don’t pay attention to detail.
Participant“Some hedge funds say they are concerned that banks that both sell the derivatives contracts and handle mortgage payments could be involved in a form of market manipulation.”
This is my favorite quote from the article. I’m still smiling an hour later at this. Hedge funds’ concerns about the banks manipulating the market is akin to a perpetually hungry fat guy being concerned that someone is going to get to the buffet before he does.
If the hedgies bet against subprime paper without investigating and understanding the provisions of pooling/servicing agreements allowing for modifications, then they justifiably may suffer the fate of all those who don’t pay attention to detail.
Participant“There are many more people just like the owner of this house who bought 2 years after but their outcome is not looking so rosy.”
_________________________No doubt. And, of course, there are many more people just like the owner of this house who bought 2 years prior and probably have an even better equity position. Win or lose, it seems like forced “investments” are the norm.
Participant“There are many more people just like the owner of this house who bought 2 years after but their outcome is not looking so rosy.”
_________________________No doubt. And, of course, there are many more people just like the owner of this house who bought 2 years prior and probably have an even better equity position. Win or lose, it seems like forced “investments” are the norm.
June 19, 2007 at 12:46 PM in reply to: San Diego RE inventory has stabilized and begun to shrink = have we arrived at the bottom???? #60473Participant“Why bother listing if you did 100% financing and are already 20% underwater and can’t afford the short sale?”
_______________________nsr – what do mean by “can’t afford the short sale?” Can’t someone submit a deal to the lender where there is little if any $$ out of pocket from the seller?
the scenario where someone is already 20% underwater on a 100% financing deal (80/20) is pretty interesting, since 2nd position is already wiped out and has no incentive to approve a short sale. if it’s an original non-recourse purchase money loan, i wonder what would happen if the owner just stopped paying the 2nd but kept paying the 1st. what is the 2nd going to do, start the expensive foreclosure process when they already know they’re going to come out with nothing? or will they simply sit in 2nd position, hope that the owner stays current on the 1st and wait it out until the property appreciates before taking some action? hmmmmm….hadn’t thought of this scenario – very interesting.
June 19, 2007 at 12:46 PM in reply to: San Diego RE inventory has stabilized and begun to shrink = have we arrived at the bottom???? #60506Participant“Why bother listing if you did 100% financing and are already 20% underwater and can’t afford the short sale?”
_______________________nsr – what do mean by “can’t afford the short sale?” Can’t someone submit a deal to the lender where there is little if any $$ out of pocket from the seller?
the scenario where someone is already 20% underwater on a 100% financing deal (80/20) is pretty interesting, since 2nd position is already wiped out and has no incentive to approve a short sale. if it’s an original non-recourse purchase money loan, i wonder what would happen if the owner just stopped paying the 2nd but kept paying the 1st. what is the 2nd going to do, start the expensive foreclosure process when they already know they’re going to come out with nothing? or will they simply sit in 2nd position, hope that the owner stays current on the 1st and wait it out until the property appreciates before taking some action? hmmmmm….hadn’t thought of this scenario – very interesting.
ParticipantThe coulda woulda shoulda what woulda happened iffa hindsight scenarios are truly endless. If I had to guess, I would say most renters don’t calculate how much their expenses would be if they bought a particular home and then invest the entire portion that is above and beyond their rental expense. Much ado is made about Americans and the abyssimal if not negative savings rate here. If that is true, the thought that vast numbers of renters are saving the aforementioned sums doesn’t seem to hold much water. I think that, in reality, the folks that sold this house walked with a large chunk of dough that they would not have otherwise seen.
ParticipantThe coulda woulda shoulda what woulda happened iffa hindsight scenarios are truly endless. If I had to guess, I would say most renters don’t calculate how much their expenses would be if they bought a particular home and then invest the entire portion that is above and beyond their rental expense. Much ado is made about Americans and the abyssimal if not negative savings rate here. If that is true, the thought that vast numbers of renters are saving the aforementioned sums doesn’t seem to hold much water. I think that, in reality, the folks that sold this house walked with a large chunk of dough that they would not have otherwise seen.
Participant“looks like a recent relist:
http://www.trulia.com/property/1039427022-11238-Pepperview-Ter-San-Diego…a swift 100k haircut. I wonder what caused them to suddenly take the rose-tinted spectacles off.”
___________________________I don’t understand the “haircut” reference here. The link provided shows an ’03 purchase for $545K and a list price of $799K. Even if they sell considerably down off of list, doesn’t it appear as if they will take a very nice profit on this deal? What does a “haircut” mean in this scenario?
___________________________FYI – 11238 Pepperview closed on 5/15 for $783K. That’s $238K (44%) beyond the ’03 purchase. That’s a nice take.
Participant“looks like a recent relist:
http://www.trulia.com/property/1039427022-11238-Pepperview-Ter-San-Diego…a swift 100k haircut. I wonder what caused them to suddenly take the rose-tinted spectacles off.”
___________________________I don’t understand the “haircut” reference here. The link provided shows an ’03 purchase for $545K and a list price of $799K. Even if they sell considerably down off of list, doesn’t it appear as if they will take a very nice profit on this deal? What does a “haircut” mean in this scenario?
___________________________FYI – 11238 Pepperview closed on 5/15 for $783K. That’s $238K (44%) beyond the ’03 purchase. That’s a nice take.
Participant“I think there is a substantial amount of relief that will be made by the lenders. I still do not think it will have a significant impact…. remember when you were a kid and you would go to the beach and build a sand wall to withstand the waves?
From the lenders standpoint, we all I think, correctly assume that these guys know what is going on. Thus, they are hoping to smooth the incoming waves out and make it like a slow tide coming in over time. Additionally they can pick and choose which homeowners to throw lifelines to. It makes sense to me that they would save those homeowners who pose LESS of a risk to default. Let the others get carried away by the tide.
Just my guess…”
_______________________________That’s a good guess. I think the term “loan modification” is going to be as big a buzzword over the next several years as the words “foreclosure” and “short sale.” I also think it is possible that there may be enough modifications to have a significant counteractive effect on downward pressure on pricing. I don’t think it will stop the downward trend, but it could help minimize the damage. Rich’s friend Ramsay has weighed in on this subject several times – and I think we are coming due for another insight from him if Rich has anything to pass along on this subject.
Participant“I think there is a substantial amount of relief that will be made by the lenders. I still do not think it will have a significant impact…. remember when you were a kid and you would go to the beach and build a sand wall to withstand the waves?
From the lenders standpoint, we all I think, correctly assume that these guys know what is going on. Thus, they are hoping to smooth the incoming waves out and make it like a slow tide coming in over time. Additionally they can pick and choose which homeowners to throw lifelines to. It makes sense to me that they would save those homeowners who pose LESS of a risk to default. Let the others get carried away by the tide.
Just my guess…”
_______________________________That’s a good guess. I think the term “loan modification” is going to be as big a buzzword over the next several years as the words “foreclosure” and “short sale.” I also think it is possible that there may be enough modifications to have a significant counteractive effect on downward pressure on pricing. I don’t think it will stop the downward trend, but it could help minimize the damage. Rich’s friend Ramsay has weighed in on this subject several times – and I think we are coming due for another insight from him if Rich has anything to pass along on this subject.
Participant“I have noticed that there are many properties on sale that are empty. How come homeowners are willing to wait with their empty houses for sale rather than to reduce their price a little bit to sell the properties more quickly. Is that the way to do business, or are they really rich?”
________________________Whether its good business or not has much to do with the seller’s carrying costs and how long than can cover them. If they can afford it and can ultimately get a number that more than covers their carrying costs, then that’s probably good business. I imagine astute sellers who are tuned into the current market have the finances calculated and will take calculated risks so as not to leave much money on the table. I also imagine sellers who are married to a number that is too high and may have to learn Economics 101 the hard way in a literal crash course.
Participant“I have noticed that there are many properties on sale that are empty. How come homeowners are willing to wait with their empty houses for sale rather than to reduce their price a little bit to sell the properties more quickly. Is that the way to do business, or are they really rich?”
________________________Whether its good business or not has much to do with the seller’s carrying costs and how long than can cover them. If they can afford it and can ultimately get a number that more than covers their carrying costs, then that’s probably good business. I imagine astute sellers who are tuned into the current market have the finances calculated and will take calculated risks so as not to leave much money on the table. I also imagine sellers who are married to a number that is too high and may have to learn Economics 101 the hard way in a literal crash course.
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