[LA_Renter]

I found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.

“From Calculated Risk comments, from former FDIC examiner:

A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.

____

One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.

This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building

This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…

Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”

[LA_Renter]

I found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.

“From Calculated Risk comments, from former FDIC examiner:

A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.

____

One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.

This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building

This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…

Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”

[LA_Renter]

I found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.

“From Calculated Risk comments, from former FDIC examiner:

A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.

____

One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.

This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building

This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…

Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”

[LA_Renter]

I found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.

“From Calculated Risk comments, from former FDIC examiner:

A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.

____

One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.

This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building

This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…

Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”

[LA_Renter]

I found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.

“From Calculated Risk comments, from former FDIC examiner:

A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.

____

One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.

This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building

This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…

Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”

[LA_Renter]

Here is a quote about the last downturn from Chapman I found on Lansners blog in the OC Register.

“The previous downturn in the housing market in the early 90’s was not short-lived. In Orange County, home prices declined for 54 months from the peak to the trough, decreasing 17.7 percent. It took another 51 months for the median price to reach back to its previous peak. A similar pattern occurred in many other regions of the state. Although there were significant job losses in the 90’s that sharply reduced demand for housing, in the current cycle, there is a different problem: a lack of housing affordability. Not only that, the job market is beginning to weaken considerably. The combination of these factors suggests that the county is facing a multi-year downward spiral in home prices.”

These things take a long time and they don’t bounce off the bottom like a stock. Regardless of any bailout I anticipate that 2008 will be toast, you will see falling prices all year with a possible exception this Spring where it may just go flat. The final shoe to drop in this housing bust is If we enter into, OR what degree of a Recession we encounter as a result of this mess. Pay attention to local job numbers. Here is my prediction of what the bottom will look like, it will be when RE becomes the most boring asset class in the world to watch and will be the furtherest thing from people’s minds.

[LA_Renter]

Here is a quote about the last downturn from Chapman I found on Lansners blog in the OC Register.

“The previous downturn in the housing market in the early 90’s was not short-lived. In Orange County, home prices declined for 54 months from the peak to the trough, decreasing 17.7 percent. It took another 51 months for the median price to reach back to its previous peak. A similar pattern occurred in many other regions of the state. Although there were significant job losses in the 90’s that sharply reduced demand for housing, in the current cycle, there is a different problem: a lack of housing affordability. Not only that, the job market is beginning to weaken considerably. The combination of these factors suggests that the county is facing a multi-year downward spiral in home prices.”

These things take a long time and they don’t bounce off the bottom like a stock. Regardless of any bailout I anticipate that 2008 will be toast, you will see falling prices all year with a possible exception this Spring where it may just go flat. The final shoe to drop in this housing bust is If we enter into, OR what degree of a Recession we encounter as a result of this mess. Pay attention to local job numbers. Here is my prediction of what the bottom will look like, it will be when RE becomes the most boring asset class in the world to watch and will be the furtherest thing from people’s minds.

[LA_Renter]

Here is a quote about the last downturn from Chapman I found on Lansners blog in the OC Register.

“The previous downturn in the housing market in the early 90’s was not short-lived. In Orange County, home prices declined for 54 months from the peak to the trough, decreasing 17.7 percent. It took another 51 months for the median price to reach back to its previous peak. A similar pattern occurred in many other regions of the state. Although there were significant job losses in the 90’s that sharply reduced demand for housing, in the current cycle, there is a different problem: a lack of housing affordability. Not only that, the job market is beginning to weaken considerably. The combination of these factors suggests that the county is facing a multi-year downward spiral in home prices.”

These things take a long time and they don’t bounce off the bottom like a stock. Regardless of any bailout I anticipate that 2008 will be toast, you will see falling prices all year with a possible exception this Spring where it may just go flat. The final shoe to drop in this housing bust is If we enter into, OR what degree of a Recession we encounter as a result of this mess. Pay attention to local job numbers. Here is my prediction of what the bottom will look like, it will be when RE becomes the most boring asset class in the world to watch and will be the furtherest thing from people’s minds.

[LA_Renter]

Here is a quote about the last downturn from Chapman I found on Lansners blog in the OC Register.

“The previous downturn in the housing market in the early 90’s was not short-lived. In Orange County, home prices declined for 54 months from the peak to the trough, decreasing 17.7 percent. It took another 51 months for the median price to reach back to its previous peak. A similar pattern occurred in many other regions of the state. Although there were significant job losses in the 90’s that sharply reduced demand for housing, in the current cycle, there is a different problem: a lack of housing affordability. Not only that, the job market is beginning to weaken considerably. The combination of these factors suggests that the county is facing a multi-year downward spiral in home prices.”

These things take a long time and they don’t bounce off the bottom like a stock. Regardless of any bailout I anticipate that 2008 will be toast, you will see falling prices all year with a possible exception this Spring where it may just go flat. The final shoe to drop in this housing bust is If we enter into, OR what degree of a Recession we encounter as a result of this mess. Pay attention to local job numbers. Here is my prediction of what the bottom will look like, it will be when RE becomes the most boring asset class in the world to watch and will be the furtherest thing from people’s minds.

[LA_Renter]

Here is a quote about the last downturn from Chapman I found on Lansners blog in the OC Register.

“The previous downturn in the housing market in the early 90’s was not short-lived. In Orange County, home prices declined for 54 months from the peak to the trough, decreasing 17.7 percent. It took another 51 months for the median price to reach back to its previous peak. A similar pattern occurred in many other regions of the state. Although there were significant job losses in the 90’s that sharply reduced demand for housing, in the current cycle, there is a different problem: a lack of housing affordability. Not only that, the job market is beginning to weaken considerably. The combination of these factors suggests that the county is facing a multi-year downward spiral in home prices.”

These things take a long time and they don’t bounce off the bottom like a stock. Regardless of any bailout I anticipate that 2008 will be toast, you will see falling prices all year with a possible exception this Spring where it may just go flat. The final shoe to drop in this housing bust is If we enter into, OR what degree of a Recession we encounter as a result of this mess. Pay attention to local job numbers. Here is my prediction of what the bottom will look like, it will be when RE becomes the most boring asset class in the world to watch and will be the furtherest thing from people’s minds.

[LA_Renter]

Trust me SD Bear I can empathize with your situation. My household had those same discussions. Fortunately my wife worked in the mortgage industry in the late 90’s and had some background on this subject. During the peak we did an analysis of the mortgage products that were being used and the total lack of underwriting and her jaw literally dropped open and the weight from my shoulders was lifted along with the nightmares of being pressured into buying into this market.

I guess what I find interesting is that she says you are the only person she knows who thinks home prices are going to tank. I guess to most people on this board that debate is basically over. Now its turning to how much and what will happen to the desirable areas (in that how much will they fall, not are they going to fall). Show her the link on case shiller from this site

September Case-Shiller Numbers

Make the point that right now home prices are in the process of falling and work back to the reasons why thats happening using the primer people have pointed out. The best of luck to you I know how it feels.

[LA_Renter]

Trust me SD Bear I can empathize with your situation. My household had those same discussions. Fortunately my wife worked in the mortgage industry in the late 90’s and had some background on this subject. During the peak we did an analysis of the mortgage products that were being used and the total lack of underwriting and her jaw literally dropped open and the weight from my shoulders was lifted along with the nightmares of being pressured into buying into this market.

I guess what I find interesting is that she says you are the only person she knows who thinks home prices are going to tank. I guess to most people on this board that debate is basically over. Now its turning to how much and what will happen to the desirable areas (in that how much will they fall, not are they going to fall). Show her the link on case shiller from this site

September Case-Shiller Numbers

Make the point that right now home prices are in the process of falling and work back to the reasons why thats happening using the primer people have pointed out. The best of luck to you I know how it feels.

[LA_Renter]

Trust me SD Bear I can empathize with your situation. My household had those same discussions. Fortunately my wife worked in the mortgage industry in the late 90’s and had some background on this subject. During the peak we did an analysis of the mortgage products that were being used and the total lack of underwriting and her jaw literally dropped open and the weight from my shoulders was lifted along with the nightmares of being pressured into buying into this market.

I guess what I find interesting is that she says you are the only person she knows who thinks home prices are going to tank. I guess to most people on this board that debate is basically over. Now its turning to how much and what will happen to the desirable areas (in that how much will they fall, not are they going to fall). Show her the link on case shiller from this site

September Case-Shiller Numbers

Make the point that right now home prices are in the process of falling and work back to the reasons why thats happening using the primer people have pointed out. The best of luck to you I know how it feels.

[LA_Renter]

Trust me SD Bear I can empathize with your situation. My household had those same discussions. Fortunately my wife worked in the mortgage industry in the late 90’s and had some background on this subject. During the peak we did an analysis of the mortgage products that were being used and the total lack of underwriting and her jaw literally dropped open and the weight from my shoulders was lifted along with the nightmares of being pressured into buying into this market.

I guess what I find interesting is that she says you are the only person she knows who thinks home prices are going to tank. I guess to most people on this board that debate is basically over. Now its turning to how much and what will happen to the desirable areas (in that how much will they fall, not are they going to fall). Show her the link on case shiller from this site

September Case-Shiller Numbers

Make the point that right now home prices are in the process of falling and work back to the reasons why thats happening using the primer people have pointed out. The best of luck to you I know how it feels.

[LA_Renter]

Trust me SD Bear I can empathize with your situation. My household had those same discussions. Fortunately my wife worked in the mortgage industry in the late 90’s and had some background on this subject. During the peak we did an analysis of the mortgage products that were being used and the total lack of underwriting and her jaw literally dropped open and the weight from my shoulders was lifted along with the nightmares of being pressured into buying into this market.

I guess what I find interesting is that she says you are the only person she knows who thinks home prices are going to tank. I guess to most people on this board that debate is basically over. Now its turning to how much and what will happen to the desirable areas (in that how much will they fall, not are they going to fall). Show her the link on case shiller from this site

September Case-Shiller Numbers

Make the point that right now home prices are in the process of falling and work back to the reasons why thats happening using the primer people have pointed out. The best of luck to you I know how it feels.

[Author]

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