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April 21, 2009 at 4:40 PM in reply to: Short-Sale Shenanigans…….Gotta be a way to keep the listing agents honest #385528April 21, 2009 at 4:40 PM in reply to: Short-Sale Shenanigans…….Gotta be a way to keep the listing agents honest #385725
patientrenter
Participant[quote=CA renter]This is the same thing we were discussing here, among other places:
http://piggington.com/who_would_you_report_shady_deals_to
BTW, the FBI did get back to me back in November/December and said that they were not pursuing that particular kind of fraud because they didn’t think it was widespread enough. Seriously. 🙁
If law enforcement ever wanted to get ahead of crime, they would read these blogs and get on the ball BEFORE all the damage was done. It’s very frustrating.
People (myself included) were trying to warn them years ago about fraudulent deals that were pushing prices up during the boom. They couldn’t have cared less. Then, when “the world is coming to an end,” and they want our tax money, the govt claims that “NOBODY could have seen this coming.” Lying maggots…
FBI: Are you listening now????[/quote]
FBI will only get on it if Congress wants them to. It’s probably worth trying to get your Congressman involved, if you can.
Of course, many key members of Congress are trying to ensure there are no speed bumps for the govt money pouring into housing. So your Congressman may not be interested in pushing the FBI into something that’s still happening. (My C-critter is Barney Frank, for example, and I know he has no interest in depriving the housing market of any really large flow of money, fraudulent or not.) Better to have the FBI go after the stuff that’s already stopped of its own accord. Or your Congressman may not have much power to go against the real barons – Barney, Dodd, Schumer, Pelosi etc. (Bipartisan complaint here – it’s just that most power to do damage or otherwise lies with Dems now, and the Repubs are almost irrelevant, except as a way to deflect attention.)
April 21, 2009 at 4:40 PM in reply to: Short-Sale Shenanigans…….Gotta be a way to keep the listing agents honest #385774Participant[quote=CA renter]This is the same thing we were discussing here, among other places:
http://piggington.com/who_would_you_report_shady_deals_to
BTW, the FBI did get back to me back in November/December and said that they were not pursuing that particular kind of fraud because they didn’t think it was widespread enough. Seriously. 🙁
If law enforcement ever wanted to get ahead of crime, they would read these blogs and get on the ball BEFORE all the damage was done. It’s very frustrating.
People (myself included) were trying to warn them years ago about fraudulent deals that were pushing prices up during the boom. They couldn’t have cared less. Then, when “the world is coming to an end,” and they want our tax money, the govt claims that “NOBODY could have seen this coming.” Lying maggots…
FBI: Are you listening now????[/quote]
FBI will only get on it if Congress wants them to. It’s probably worth trying to get your Congressman involved, if you can.
Of course, many key members of Congress are trying to ensure there are no speed bumps for the govt money pouring into housing. So your Congressman may not be interested in pushing the FBI into something that’s still happening. (My C-critter is Barney Frank, for example, and I know he has no interest in depriving the housing market of any really large flow of money, fraudulent or not.) Better to have the FBI go after the stuff that’s already stopped of its own accord. Or your Congressman may not have much power to go against the real barons – Barney, Dodd, Schumer, Pelosi etc. (Bipartisan complaint here – it’s just that most power to do damage or otherwise lies with Dems now, and the Repubs are almost irrelevant, except as a way to deflect attention.)
April 21, 2009 at 4:40 PM in reply to: Short-Sale Shenanigans…….Gotta be a way to keep the listing agents honest #385912Participant[quote=CA renter]This is the same thing we were discussing here, among other places:
http://piggington.com/who_would_you_report_shady_deals_to
BTW, the FBI did get back to me back in November/December and said that they were not pursuing that particular kind of fraud because they didn’t think it was widespread enough. Seriously. 🙁
If law enforcement ever wanted to get ahead of crime, they would read these blogs and get on the ball BEFORE all the damage was done. It’s very frustrating.
People (myself included) were trying to warn them years ago about fraudulent deals that were pushing prices up during the boom. They couldn’t have cared less. Then, when “the world is coming to an end,” and they want our tax money, the govt claims that “NOBODY could have seen this coming.” Lying maggots…
FBI: Are you listening now????[/quote]
FBI will only get on it if Congress wants them to. It’s probably worth trying to get your Congressman involved, if you can.
Of course, many key members of Congress are trying to ensure there are no speed bumps for the govt money pouring into housing. So your Congressman may not be interested in pushing the FBI into something that’s still happening. (My C-critter is Barney Frank, for example, and I know he has no interest in depriving the housing market of any really large flow of money, fraudulent or not.) Better to have the FBI go after the stuff that’s already stopped of its own accord. Or your Congressman may not have much power to go against the real barons – Barney, Dodd, Schumer, Pelosi etc. (Bipartisan complaint here – it’s just that most power to do damage or otherwise lies with Dems now, and the Repubs are almost irrelevant, except as a way to deflect attention.)
Participant[quote=davelj][quote=patientrenter]
Source for variations in income: BEA, National Acccounts, Personal Income, (a) Received Compensation of Employees, and (b) Proprietors’ income with inventory valuation and capital consumption adjustments. Sample standard deviation of % changes in the annual series from 1929-2008 is 7.4% for the wage measure, and 11.9% for the owner measure.[/quote]This is an interesting data point although I’m not sure if this difference is meaningful from the perspective of a debt holder. It might be – but it might not be. For example, I would be surprised if the difference in the standard deviation of earnings for all AA-rated companies averaged less than 450 bps. (Let’s put aside what the value of a AA rating is for the moment.) And yet they all face similar borrowing costs. My point being that when you’re a debt holder – as opposed to an equity holder – you will assign the same rating (or rate) to companies (people) with varying earnings volatility (within a range) because you’re senior to most of the capital structure. But I agree that if these numbers are correct (and I have no reason to believe they aren’t) then there should be some higher rate assigned to self-employed folks all else being equal. But should it be 10 bps or 100 bps? Probably closer to the former than the latter using my AA analogy. Some premium? Yes. A big one? Perhaps, but there’s not enough information to know.
[/quote]
davelj, the std dev numbers I gave are for the economy-wide aggregates for that portion of national income. For any one individual, the variation would be greater.
As for the calibration of risk charges on personal residence loans against corporate bond risk premia – well, I am curious, but I think it needs a bit more work. Amongst all non-recourse 80%+ CLTV loans on homes for business owners, the variation in the value of the collateral is small compared to the variation in protections amongst AA corporate bonds, and the protective value is probably less on average. So I am not coming to a small risk premium for the home loans right away.
More anecdotally, I have to deal with some segments of our own business that are exclusively driven by small business owners, and those segments do seem more prone to boom and bust. Well, I am East Coast, so I’ll call it a night.
Participant[quote=davelj][quote=patientrenter]
Source for variations in income: BEA, National Acccounts, Personal Income, (a) Received Compensation of Employees, and (b) Proprietors’ income with inventory valuation and capital consumption adjustments. Sample standard deviation of % changes in the annual series from 1929-2008 is 7.4% for the wage measure, and 11.9% for the owner measure.[/quote]This is an interesting data point although I’m not sure if this difference is meaningful from the perspective of a debt holder. It might be – but it might not be. For example, I would be surprised if the difference in the standard deviation of earnings for all AA-rated companies averaged less than 450 bps. (Let’s put aside what the value of a AA rating is for the moment.) And yet they all face similar borrowing costs. My point being that when you’re a debt holder – as opposed to an equity holder – you will assign the same rating (or rate) to companies (people) with varying earnings volatility (within a range) because you’re senior to most of the capital structure. But I agree that if these numbers are correct (and I have no reason to believe they aren’t) then there should be some higher rate assigned to self-employed folks all else being equal. But should it be 10 bps or 100 bps? Probably closer to the former than the latter using my AA analogy. Some premium? Yes. A big one? Perhaps, but there’s not enough information to know.
[/quote]
davelj, the std dev numbers I gave are for the economy-wide aggregates for that portion of national income. For any one individual, the variation would be greater.
As for the calibration of risk charges on personal residence loans against corporate bond risk premia – well, I am curious, but I think it needs a bit more work. Amongst all non-recourse 80%+ CLTV loans on homes for business owners, the variation in the value of the collateral is small compared to the variation in protections amongst AA corporate bonds, and the protective value is probably less on average. So I am not coming to a small risk premium for the home loans right away.
More anecdotally, I have to deal with some segments of our own business that are exclusively driven by small business owners, and those segments do seem more prone to boom and bust. Well, I am East Coast, so I’ll call it a night.
Participant[quote=davelj][quote=patientrenter]
Source for variations in income: BEA, National Acccounts, Personal Income, (a) Received Compensation of Employees, and (b) Proprietors’ income with inventory valuation and capital consumption adjustments. Sample standard deviation of % changes in the annual series from 1929-2008 is 7.4% for the wage measure, and 11.9% for the owner measure.[/quote]This is an interesting data point although I’m not sure if this difference is meaningful from the perspective of a debt holder. It might be – but it might not be. For example, I would be surprised if the difference in the standard deviation of earnings for all AA-rated companies averaged less than 450 bps. (Let’s put aside what the value of a AA rating is for the moment.) And yet they all face similar borrowing costs. My point being that when you’re a debt holder – as opposed to an equity holder – you will assign the same rating (or rate) to companies (people) with varying earnings volatility (within a range) because you’re senior to most of the capital structure. But I agree that if these numbers are correct (and I have no reason to believe they aren’t) then there should be some higher rate assigned to self-employed folks all else being equal. But should it be 10 bps or 100 bps? Probably closer to the former than the latter using my AA analogy. Some premium? Yes. A big one? Perhaps, but there’s not enough information to know.
[/quote]
davelj, the std dev numbers I gave are for the economy-wide aggregates for that portion of national income. For any one individual, the variation would be greater.
As for the calibration of risk charges on personal residence loans against corporate bond risk premia – well, I am curious, but I think it needs a bit more work. Amongst all non-recourse 80%+ CLTV loans on homes for business owners, the variation in the value of the collateral is small compared to the variation in protections amongst AA corporate bonds, and the protective value is probably less on average. So I am not coming to a small risk premium for the home loans right away.
More anecdotally, I have to deal with some segments of our own business that are exclusively driven by small business owners, and those segments do seem more prone to boom and bust. Well, I am East Coast, so I’ll call it a night.
Participant[quote=davelj][quote=patientrenter]
Source for variations in income: BEA, National Acccounts, Personal Income, (a) Received Compensation of Employees, and (b) Proprietors’ income with inventory valuation and capital consumption adjustments. Sample standard deviation of % changes in the annual series from 1929-2008 is 7.4% for the wage measure, and 11.9% for the owner measure.[/quote]This is an interesting data point although I’m not sure if this difference is meaningful from the perspective of a debt holder. It might be – but it might not be. For example, I would be surprised if the difference in the standard deviation of earnings for all AA-rated companies averaged less than 450 bps. (Let’s put aside what the value of a AA rating is for the moment.) And yet they all face similar borrowing costs. My point being that when you’re a debt holder – as opposed to an equity holder – you will assign the same rating (or rate) to companies (people) with varying earnings volatility (within a range) because you’re senior to most of the capital structure. But I agree that if these numbers are correct (and I have no reason to believe they aren’t) then there should be some higher rate assigned to self-employed folks all else being equal. But should it be 10 bps or 100 bps? Probably closer to the former than the latter using my AA analogy. Some premium? Yes. A big one? Perhaps, but there’s not enough information to know.
[/quote]
davelj, the std dev numbers I gave are for the economy-wide aggregates for that portion of national income. For any one individual, the variation would be greater.
As for the calibration of risk charges on personal residence loans against corporate bond risk premia – well, I am curious, but I think it needs a bit more work. Amongst all non-recourse 80%+ CLTV loans on homes for business owners, the variation in the value of the collateral is small compared to the variation in protections amongst AA corporate bonds, and the protective value is probably less on average. So I am not coming to a small risk premium for the home loans right away.
More anecdotally, I have to deal with some segments of our own business that are exclusively driven by small business owners, and those segments do seem more prone to boom and bust. Well, I am East Coast, so I’ll call it a night.
Participant[quote=davelj][quote=patientrenter]
Source for variations in income: BEA, National Acccounts, Personal Income, (a) Received Compensation of Employees, and (b) Proprietors’ income with inventory valuation and capital consumption adjustments. Sample standard deviation of % changes in the annual series from 1929-2008 is 7.4% for the wage measure, and 11.9% for the owner measure.[/quote]This is an interesting data point although I’m not sure if this difference is meaningful from the perspective of a debt holder. It might be – but it might not be. For example, I would be surprised if the difference in the standard deviation of earnings for all AA-rated companies averaged less than 450 bps. (Let’s put aside what the value of a AA rating is for the moment.) And yet they all face similar borrowing costs. My point being that when you’re a debt holder – as opposed to an equity holder – you will assign the same rating (or rate) to companies (people) with varying earnings volatility (within a range) because you’re senior to most of the capital structure. But I agree that if these numbers are correct (and I have no reason to believe they aren’t) then there should be some higher rate assigned to self-employed folks all else being equal. But should it be 10 bps or 100 bps? Probably closer to the former than the latter using my AA analogy. Some premium? Yes. A big one? Perhaps, but there’s not enough information to know.
[/quote]
davelj, the std dev numbers I gave are for the economy-wide aggregates for that portion of national income. For any one individual, the variation would be greater.
As for the calibration of risk charges on personal residence loans against corporate bond risk premia – well, I am curious, but I think it needs a bit more work. Amongst all non-recourse 80%+ CLTV loans on homes for business owners, the variation in the value of the collateral is small compared to the variation in protections amongst AA corporate bonds, and the protective value is probably less on average. So I am not coming to a small risk premium for the home loans right away.
More anecdotally, I have to deal with some segments of our own business that are exclusively driven by small business owners, and those segments do seem more prone to boom and bust. Well, I am East Coast, so I’ll call it a night.
Participant[quote=jpinpb]PR – if we go w/your theory of dragging it out for years and letting inflation take over to bring the prices back up, then do you anticipate incomes to increase? Wouldn’t we still need people to have the money to be able to afford the high prices and be able to buy them?[/quote]
Yes. Nominal incomes will increase. Whether real incomes increase or not is another matter. As you know, there are large segments of our population whose real wages have not increased for 35 years.
Participant[quote=jpinpb]PR – if we go w/your theory of dragging it out for years and letting inflation take over to bring the prices back up, then do you anticipate incomes to increase? Wouldn’t we still need people to have the money to be able to afford the high prices and be able to buy them?[/quote]
Yes. Nominal incomes will increase. Whether real incomes increase or not is another matter. As you know, there are large segments of our population whose real wages have not increased for 35 years.
Participant[quote=jpinpb]PR – if we go w/your theory of dragging it out for years and letting inflation take over to bring the prices back up, then do you anticipate incomes to increase? Wouldn’t we still need people to have the money to be able to afford the high prices and be able to buy them?[/quote]
Yes. Nominal incomes will increase. Whether real incomes increase or not is another matter. As you know, there are large segments of our population whose real wages have not increased for 35 years.
Participant[quote=jpinpb]PR – if we go w/your theory of dragging it out for years and letting inflation take over to bring the prices back up, then do you anticipate incomes to increase? Wouldn’t we still need people to have the money to be able to afford the high prices and be able to buy them?[/quote]
Yes. Nominal incomes will increase. Whether real incomes increase or not is another matter. As you know, there are large segments of our population whose real wages have not increased for 35 years.
Participant[quote=jpinpb]PR – if we go w/your theory of dragging it out for years and letting inflation take over to bring the prices back up, then do you anticipate incomes to increase? Wouldn’t we still need people to have the money to be able to afford the high prices and be able to buy them?[/quote]
Yes. Nominal incomes will increase. Whether real incomes increase or not is another matter. As you know, there are large segments of our population whose real wages have not increased for 35 years.
Participant[quote=jpinpb]Well, that’s what I’m thinking. They’ll keep what makes sense, either rent or re-work some loans, but let the ones that don’t make sense just go to market for whatever, b/c no skin off them, really. Basically, just delaying again. Seems all they can do is continue to sweep under the rug. I don’t know how long they can procrastinate. I mean, forever. That’s a lot of houses to just twist in the wind forever. [/quote]
I think I see what you’re wondering about, jp. My assumption is that our leaders are aiming to generate inflation that will allow prices to return to levels in the ballpark of the peak. But it might take years to get that done. In the meanwhile, they have to limit market supply, and make lending easy, to prevent house prices going so low for so long that expectations are completely reset.
So the goal would be to mod enough existing loans (and keep short-term rates low enough that ARMs don’t have a sting) to slow down the foreclosure supply, and on the demand side allow high LTV FHA and FNMA/Freddie-backed loans to flow easily. They don’t have to keep it going at full tilt forever, just until inflation gets going. Maybe 1-2 years. The gradually ease up and focus on inflation.
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