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jpinpb
ParticipantThe realtor’s very own description on his website: topography: Slope Gentle, Slope Steep
I think they’re trying to sell it w/the neighboring house, 800k something. As everyone else said, seems like it would be a nightmare to develop.ParticipantThe realtor’s very own description on his website: topography: Slope Gentle, Slope Steep
I think they’re trying to sell it w/the neighboring house, 800k something. As everyone else said, seems like it would be a nightmare to develop.ParticipantThese terms are going to make people go on another shopping spree. Once it gets going again, we’re looking to a few more years before the prices come down again. No prepayment penalties. That’ll help people. Down payment assistance. That’ll help people. Assumable loans. What more can you ask for.
97% LTV on Purchases
Down Payment Assistance of up to 6%
95% LTV on cash out refinancing
No minimum credit scores
Liberal credit guidelines
No prepayment penalties
SFR, Condo’s, Town Homes, and Manufactured
Seller contributions of up to 6%
Non-occupying cosigners
Higher income to debt ratios
Loans are assumableParticipantThese terms are going to make people go on another shopping spree. Once it gets going again, we’re looking to a few more years before the prices come down again. No prepayment penalties. That’ll help people. Down payment assistance. That’ll help people. Assumable loans. What more can you ask for.
97% LTV on Purchases
Down Payment Assistance of up to 6%
95% LTV on cash out refinancing
No minimum credit scores
Liberal credit guidelines
No prepayment penalties
SFR, Condo’s, Town Homes, and Manufactured
Seller contributions of up to 6%
Non-occupying cosigners
Higher income to debt ratios
Loans are assumableParticipantThese terms are going to make people go on another shopping spree. Once it gets going again, we’re looking to a few more years before the prices come down again. No prepayment penalties. That’ll help people. Down payment assistance. That’ll help people. Assumable loans. What more can you ask for.
97% LTV on Purchases
Down Payment Assistance of up to 6%
95% LTV on cash out refinancing
No minimum credit scores
Liberal credit guidelines
No prepayment penalties
SFR, Condo’s, Town Homes, and Manufactured
Seller contributions of up to 6%
Non-occupying cosigners
Higher income to debt ratios
Loans are assumableParticipantThese terms are going to make people go on another shopping spree. Once it gets going again, we’re looking to a few more years before the prices come down again. No prepayment penalties. That’ll help people. Down payment assistance. That’ll help people. Assumable loans. What more can you ask for.
97% LTV on Purchases
Down Payment Assistance of up to 6%
95% LTV on cash out refinancing
No minimum credit scores
Liberal credit guidelines
No prepayment penalties
SFR, Condo’s, Town Homes, and Manufactured
Seller contributions of up to 6%
Non-occupying cosigners
Higher income to debt ratios
Loans are assumableParticipantThese terms are going to make people go on another shopping spree. Once it gets going again, we’re looking to a few more years before the prices come down again. No prepayment penalties. That’ll help people. Down payment assistance. That’ll help people. Assumable loans. What more can you ask for.
97% LTV on Purchases
Down Payment Assistance of up to 6%
95% LTV on cash out refinancing
No minimum credit scores
Liberal credit guidelines
No prepayment penalties
SFR, Condo’s, Town Homes, and Manufactured
Seller contributions of up to 6%
Non-occupying cosigners
Higher income to debt ratios
Loans are assumableParticipantSD Realtor – If these terms are true, I need you to help me find a place so I can jump on this train. B/c if they’re still trying to squeeze juice out of this, then I’m done waiting.
ParticipantSD Realtor – If these terms are true, I need you to help me find a place so I can jump on this train. B/c if they’re still trying to squeeze juice out of this, then I’m done waiting.
ParticipantSD Realtor – If these terms are true, I need you to help me find a place so I can jump on this train. B/c if they’re still trying to squeeze juice out of this, then I’m done waiting.
ParticipantSD Realtor – If these terms are true, I need you to help me find a place so I can jump on this train. B/c if they’re still trying to squeeze juice out of this, then I’m done waiting.
ParticipantSD Realtor – If these terms are true, I need you to help me find a place so I can jump on this train. B/c if they’re still trying to squeeze juice out of this, then I’m done waiting.
ParticipantIs US entering Japan’s nightmare?
Japan’s bust started with a real-estate boom, lax lending and the propping up of financial firms — and its recovery took a decade. The Fed’s rate cuts keep the US on the same path.By Jim Jubak
Ben Bernanke’s Federal Reserve increasingly looks like it’s headed toward a repeat of the errors that took Japan into a decade-long banking crisis and economic slump, beginning in the early 1990s.Welcome to the United States of Japan, where growth slows to a crawl, the stock market goes nowhere and savings earn nothing. Just in time for the retirement of the baby-boom generation, too.
Japan’s crisis, like the recent one in the United States, began with an extraordinary real-estate boom. In 1987, the price of land in Japan’s three biggest metropolitan areas climbed 44%. Prices went up 12% more in 1988 and then 22% in 1989.
And like the U.S. real-estate boom, the Japanese boom was fueled by cheap money. The Bank of Japan, that country’s Federal Reserve, had lowered the discount rate — the rate it charges other banks — to a post-World War II low of 2.5% from 5% in 1984-87. In those same years, the money supply grew by better than 10% a year.
And even those official numbers don’t capture the full size of the flood of cheap money. Japanese companies, including banks, were able to sell bonds in the European market with an interest rate of 1.5%. When those loans were swapped back into yen, the profits from the swap reduced the cost of money to zero.
As happened in the U.S. real-estate boom, lending standards in Japan collapsed. At the height of the boom, banks regularly made loans for more than 100% of property values. To keep real-estate loans off their books, banks lent through nonbank entities that made the actual loans.
Regulatory oversight took a vacation, too. Japan’s Ministry of Finance allowed companies to include the profits from real-estate speculation in reported earnings. By 1987, Japanese companies made half of their profits from speculative investments in real estate — and the stock market.
As you’d expect in this environment, the Japanese stock market was soaring. The benchmark Nikkei 225 ($N225) index hit 20,000 in 1987, up from 9,000 in 1983, and kept on going. It doubled again over the next two years.
The bursting of Japan’s bubble
And then the Bank of Japan pulled the plug over worries about rising inflation and a fear that asset prices were out of control. Starting in December 1989, the central bank raised interest rates three times in 12 months, to 6%. And the bank’s new chairman, Yasushi Mieno, began talking about his hopes for a gradual 20% reduction in real-estate values over the course of several years.But when the speculative fires are burning that hot, there’s no way to lower the temperature gradually. In nine months, the Nikkei dropped 48%. Average land prices tumbled 5% by mid-1992, 14% by mid-1994 and 33% by 2000. And they just kept on falling. Japan’s real-estate market didn’t bottom until 2006 — after values had crumbled 70%.
Well before that, Japan’s government and the Bank of Japan panicked. It’s one thing to take the air out of a bubble, and it’s something else to destroy a nation’s financial sector. And that’s what, very quickly, the Bank of Japan believed it was facing.
Video on MSN Money
A platinum playGold and platinum are soaring because a power shortage in South Africa has shut the country’s mines; the resulting supply deficit for platinum in 2008 is projected to hit about 200,000 pounds. The big winner may be palladium, a replacement for platinum, says MSN Money’s Jim Jubak.
Because banks had invested so heavily in real estate and the stock market, losses in those two sectors quickly undermined the health of the entire banking system. By the early 1990s, Japanese banks were scrambling to raise enough capital to meet the 8% minimum capital ratio of the Bank of International Settlement.
Propping up the financial firms
The Bank of Japan and the Ministry of Finance decided they had to prop up this house of cards if they could. In June 1990, the ministry gave banks permission to sell junk bonds to raise capital. Some of the money to buy the bank bonds came from the financial subsidiaries of companies that belonged to a bank’s keiretsu, a network of interlocking companies. In this arrangement, it was typical for banks to lend money to these customers at cheap rates and for these companies to then lend the money back to the bank at a slightly higher rate. That bolstered bank balance sheets and generated profits for other members of the keiretsu.The big banks returned the favor, propping up affiliated financial institutions long past insolvency. In 1994, for example, Mitsubishi Bank first wrote off the interest on money owed to it from two affiliated finance companies, Diamond Mortgage and Diamond Factors, to keep the two companies in business. And later in the year, Mitsubishi bailed out the two affiliates by buying loans from them at face value and then selling off the loans at a loss to its own bottom line.
Continued: A decade of pain
Mitsubishi wasn’t alone. The Ministry of Finance was putting pressure on all the country’s big banks to make more loans to failing institutions, often at no interest, or to buy loans at face value. In 1994, official figures put the nonperforming loans at the country’s 21 biggest banks at $136 billion. If you added in the bad debt from these affiliates, however, the total came to $400 billion.
A day of reckoning that lasted a decade
Eventually, all this asset shuffling and all these accounting gimmicks couldn’t hold off a final reckoning. Even a $70 billion bailout in 1999 wasn’t enough to turn the tide. By 2000, a wave of 25,000 bankruptcies finally rippled through the Japanese economy.In the fiscal year that ended in March 2000, Tokyo’s big banks sold $20 billion in stock from companies they had propped up, sending the Nikkei stock index down an additional 35% in the last nine months of 2000. That returned the stock market to the lows it had hit a decade ago.
It would take Japan’s economy, stock market and real-estate prices five more years to recover. The final result was more than a decade of slow or no growth in the Japanese economy and in Japanese asset prices.
Will it happen here?
That’s why I worry that the Federal Reserve is going to repeat the mistakes of the Japanese financial crisis of the 1990s. In the third and fourth quarters of 2007, we had the kind of quick write-downs and acquisitions under duress — like Bank of America’s (BAC, news, msgs) deal to buy troubled mortgage lender Countrywide Financial (CFC, news, msgs) — that are required to put a financial disaster relatively quickly to bed. Citigroup (C, news, msgs), Merrill Lynch (MER, news, msgs), Morgan Stanley (MS, news, msgs), Bear Stearns (BSC, news, msgs) and other big banks wrote off billions in asset-backed securities and derivatives that had tumbled in price. The write-offs seemed big enough to account for about half the total of distressed securities at these banks.But then came the Federal Reserve’s surprise three-quarter-point interest-rate cut on Jan. 21 and a half-point cut Jan. 30. And banks seem to be hoping they can squeeze through again.
If interest rates drop enough, it might be sufficient to support the prices of distressed assets so that banks won’t have to write them down. If interest rates drop enough, banks will be able to raise new capital and avoid having to sell distressed assets at distressed prices. If lower interest rates keep the economy from slowing too much, maybe banks won’t see a big jump in defaults from overstressed corporate and consumer borrowers.
The trouble with wait-and-see
If I were a bank looking at the policies of the Bernanke Federal Reserve, I’d certainly take a wait-and-see attitude. Maybe the Fed will bail out my loan portfolio, I’d think, so I don’t need to take the write-offs now. I’ll wait.What’s so bad about that? Well, while a bank is waiting and hoping to scrape by, it’s still sitting on billions in “challenged” securities. For example, in its annual 10K filing for 2007 with the Securities and Exchange Commission, Morgan Stanley reclassified $7 billion in assets to Level 3, the riskiest category under new accounting rules and one that says there is no market for these securities and thus no way to publicly value them. Morgan Stanley didn’t take a charge on this accounting shift.
But Morgan Stanley and other banks can’t be certain they won’t have to write off these assets, so it’s prudent, from the banks’ point of view, to take less risk now and make fewer loans. They know the prices on these assets still can’t be trusted, so they’re not about to buy them from other banks or gear up to create more of them in the mortgage market.
How to lessen the pain
By giving banks the hope they can dodge rather than bite the bullet, the Federal Reserve has created the possibility that what would have been a very painful but short lesson for the banks could turn into a long-term drag on the financial markets and the economy.If banks lend less because they’re spending so much time watching their past mistakes that they shudder at the idea of adding loans to their balance sheets, if nobody trusts the prices for distressed assets, so big parts of the financial markets remain frozen in place, if consumers and corporations with decent credit can’t get new loans to fix bad ones or to expand production or consumption, then the economy will run slower than its potential. And if the Japanese experience is any indication, it will run slower for a very long time.
Video on MSN Money
A platinum playGold and platinum are soaring because a power shortage in South Africa has shut the country’s mines; the resulting supply deficit for platinum in 2008 is projected to hit about 200,000 pounds. The big winner may be palladium, a replacement for platinum, says MSN Money’s Jim Jubak.
Slower economic growth and the accompanying low returns to investors from bonds and stocks would be a big problem for a U.S. economy that faces the huge challenge of paying for the looming retirement of the baby-boom generation.
All of which puts me in the very odd position of hoping to see another round of painful write-offs from the big banks at the end of the March quarter. That would help me believe we’re still on the road to putting this mess behind us in a matter of quarters, rather than years.
ParticipantIs US entering Japan’s nightmare?
Japan’s bust started with a real-estate boom, lax lending and the propping up of financial firms — and its recovery took a decade. The Fed’s rate cuts keep the US on the same path.By Jim Jubak
Ben Bernanke’s Federal Reserve increasingly looks like it’s headed toward a repeat of the errors that took Japan into a decade-long banking crisis and economic slump, beginning in the early 1990s.Welcome to the United States of Japan, where growth slows to a crawl, the stock market goes nowhere and savings earn nothing. Just in time for the retirement of the baby-boom generation, too.
Japan’s crisis, like the recent one in the United States, began with an extraordinary real-estate boom. In 1987, the price of land in Japan’s three biggest metropolitan areas climbed 44%. Prices went up 12% more in 1988 and then 22% in 1989.
And like the U.S. real-estate boom, the Japanese boom was fueled by cheap money. The Bank of Japan, that country’s Federal Reserve, had lowered the discount rate — the rate it charges other banks — to a post-World War II low of 2.5% from 5% in 1984-87. In those same years, the money supply grew by better than 10% a year.
And even those official numbers don’t capture the full size of the flood of cheap money. Japanese companies, including banks, were able to sell bonds in the European market with an interest rate of 1.5%. When those loans were swapped back into yen, the profits from the swap reduced the cost of money to zero.
As happened in the U.S. real-estate boom, lending standards in Japan collapsed. At the height of the boom, banks regularly made loans for more than 100% of property values. To keep real-estate loans off their books, banks lent through nonbank entities that made the actual loans.
Regulatory oversight took a vacation, too. Japan’s Ministry of Finance allowed companies to include the profits from real-estate speculation in reported earnings. By 1987, Japanese companies made half of their profits from speculative investments in real estate — and the stock market.
As you’d expect in this environment, the Japanese stock market was soaring. The benchmark Nikkei 225 ($N225) index hit 20,000 in 1987, up from 9,000 in 1983, and kept on going. It doubled again over the next two years.
The bursting of Japan’s bubble
And then the Bank of Japan pulled the plug over worries about rising inflation and a fear that asset prices were out of control. Starting in December 1989, the central bank raised interest rates three times in 12 months, to 6%. And the bank’s new chairman, Yasushi Mieno, began talking about his hopes for a gradual 20% reduction in real-estate values over the course of several years.But when the speculative fires are burning that hot, there’s no way to lower the temperature gradually. In nine months, the Nikkei dropped 48%. Average land prices tumbled 5% by mid-1992, 14% by mid-1994 and 33% by 2000. And they just kept on falling. Japan’s real-estate market didn’t bottom until 2006 — after values had crumbled 70%.
Well before that, Japan’s government and the Bank of Japan panicked. It’s one thing to take the air out of a bubble, and it’s something else to destroy a nation’s financial sector. And that’s what, very quickly, the Bank of Japan believed it was facing.
Video on MSN Money
A platinum playGold and platinum are soaring because a power shortage in South Africa has shut the country’s mines; the resulting supply deficit for platinum in 2008 is projected to hit about 200,000 pounds. The big winner may be palladium, a replacement for platinum, says MSN Money’s Jim Jubak.
Because banks had invested so heavily in real estate and the stock market, losses in those two sectors quickly undermined the health of the entire banking system. By the early 1990s, Japanese banks were scrambling to raise enough capital to meet the 8% minimum capital ratio of the Bank of International Settlement.
Propping up the financial firms
The Bank of Japan and the Ministry of Finance decided they had to prop up this house of cards if they could. In June 1990, the ministry gave banks permission to sell junk bonds to raise capital. Some of the money to buy the bank bonds came from the financial subsidiaries of companies that belonged to a bank’s keiretsu, a network of interlocking companies. In this arrangement, it was typical for banks to lend money to these customers at cheap rates and for these companies to then lend the money back to the bank at a slightly higher rate. That bolstered bank balance sheets and generated profits for other members of the keiretsu.The big banks returned the favor, propping up affiliated financial institutions long past insolvency. In 1994, for example, Mitsubishi Bank first wrote off the interest on money owed to it from two affiliated finance companies, Diamond Mortgage and Diamond Factors, to keep the two companies in business. And later in the year, Mitsubishi bailed out the two affiliates by buying loans from them at face value and then selling off the loans at a loss to its own bottom line.
Continued: A decade of pain
Mitsubishi wasn’t alone. The Ministry of Finance was putting pressure on all the country’s big banks to make more loans to failing institutions, often at no interest, or to buy loans at face value. In 1994, official figures put the nonperforming loans at the country’s 21 biggest banks at $136 billion. If you added in the bad debt from these affiliates, however, the total came to $400 billion.
A day of reckoning that lasted a decade
Eventually, all this asset shuffling and all these accounting gimmicks couldn’t hold off a final reckoning. Even a $70 billion bailout in 1999 wasn’t enough to turn the tide. By 2000, a wave of 25,000 bankruptcies finally rippled through the Japanese economy.In the fiscal year that ended in March 2000, Tokyo’s big banks sold $20 billion in stock from companies they had propped up, sending the Nikkei stock index down an additional 35% in the last nine months of 2000. That returned the stock market to the lows it had hit a decade ago.
It would take Japan’s economy, stock market and real-estate prices five more years to recover. The final result was more than a decade of slow or no growth in the Japanese economy and in Japanese asset prices.
Will it happen here?
That’s why I worry that the Federal Reserve is going to repeat the mistakes of the Japanese financial crisis of the 1990s. In the third and fourth quarters of 2007, we had the kind of quick write-downs and acquisitions under duress — like Bank of America’s (BAC, news, msgs) deal to buy troubled mortgage lender Countrywide Financial (CFC, news, msgs) — that are required to put a financial disaster relatively quickly to bed. Citigroup (C, news, msgs), Merrill Lynch (MER, news, msgs), Morgan Stanley (MS, news, msgs), Bear Stearns (BSC, news, msgs) and other big banks wrote off billions in asset-backed securities and derivatives that had tumbled in price. The write-offs seemed big enough to account for about half the total of distressed securities at these banks.But then came the Federal Reserve’s surprise three-quarter-point interest-rate cut on Jan. 21 and a half-point cut Jan. 30. And banks seem to be hoping they can squeeze through again.
If interest rates drop enough, it might be sufficient to support the prices of distressed assets so that banks won’t have to write them down. If interest rates drop enough, banks will be able to raise new capital and avoid having to sell distressed assets at distressed prices. If lower interest rates keep the economy from slowing too much, maybe banks won’t see a big jump in defaults from overstressed corporate and consumer borrowers.
The trouble with wait-and-see
If I were a bank looking at the policies of the Bernanke Federal Reserve, I’d certainly take a wait-and-see attitude. Maybe the Fed will bail out my loan portfolio, I’d think, so I don’t need to take the write-offs now. I’ll wait.What’s so bad about that? Well, while a bank is waiting and hoping to scrape by, it’s still sitting on billions in “challenged” securities. For example, in its annual 10K filing for 2007 with the Securities and Exchange Commission, Morgan Stanley reclassified $7 billion in assets to Level 3, the riskiest category under new accounting rules and one that says there is no market for these securities and thus no way to publicly value them. Morgan Stanley didn’t take a charge on this accounting shift.
But Morgan Stanley and other banks can’t be certain they won’t have to write off these assets, so it’s prudent, from the banks’ point of view, to take less risk now and make fewer loans. They know the prices on these assets still can’t be trusted, so they’re not about to buy them from other banks or gear up to create more of them in the mortgage market.
How to lessen the pain
By giving banks the hope they can dodge rather than bite the bullet, the Federal Reserve has created the possibility that what would have been a very painful but short lesson for the banks could turn into a long-term drag on the financial markets and the economy.If banks lend less because they’re spending so much time watching their past mistakes that they shudder at the idea of adding loans to their balance sheets, if nobody trusts the prices for distressed assets, so big parts of the financial markets remain frozen in place, if consumers and corporations with decent credit can’t get new loans to fix bad ones or to expand production or consumption, then the economy will run slower than its potential. And if the Japanese experience is any indication, it will run slower for a very long time.
Video on MSN Money
A platinum playGold and platinum are soaring because a power shortage in South Africa has shut the country’s mines; the resulting supply deficit for platinum in 2008 is projected to hit about 200,000 pounds. The big winner may be palladium, a replacement for platinum, says MSN Money’s Jim Jubak.
Slower economic growth and the accompanying low returns to investors from bonds and stocks would be a big problem for a U.S. economy that faces the huge challenge of paying for the looming retirement of the baby-boom generation.
All of which puts me in the very odd position of hoping to see another round of painful write-offs from the big banks at the end of the March quarter. That would help me believe we’re still on the road to putting this mess behind us in a matter of quarters, rather than years.
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