[PerryChase]

Regardless of how much money some people have, prices are made at the margins. It only takes a few defaults to drive down the comps. The comps are the new values. Sorry neighbor.

I’m bearish on the Real Estate market but not on the economy. We’ll have recession but we’ll move on.

I might be proved wrong. We’ll see in 5 years. I’ve made the decision not to buy for 5 years, although I can afford to do so today. It’s going to be hard to resist “deals” but I’m pretty unemotional.

[PerryChase]

“Now is the time to get in.”
——–
Ha.haha, that’s really funny!

Phoenix’s bubble is as big as California’s. Phoenix and Tucson will crash much worse than California when this thing unravels. They’ll have nothing left but snowbirds after Intel and the other techs decamp for China.

[PerryChase]

These videos promoting Downtown/Uptown buildings are hilarious.

http://www.letsplaydowntown.com/LPD_front_page/Navigation/Link_Nav_San_Diego_frameset.html

[PerryChase]

How about Talahassee or Gainesville, Florida? Great college towns from what I hear.

[PerryChase]

Lowermybills.com is owned by Experian (of the big credit reporting agencies). You’d think that they’d encourage people to be judicious in their use of credit, right? Wrong!

$145,000 mortgage for under $484/month! Where do you think people in this country have been getting the money to buy inflated houses?

http://www.adblock.org/2006/03/hall-of-shame-lower-my-bills/

[PerryChase]

Here’s the CNN article.
I agree with Dean Baker. The other economists quoted in the article are full of bull.

http://money.cnn.com/2007/03/09/news/economy/home_price_slump/index.htm?postversion=2007030911

[PerryChase]

That’s the problem with our society. Everyone is trying to make a buck and upsell, upsell, upsell.

At the post office, I wanted to send a book to a friend in Chicago and I wanted to pay book rate (about $2). Well, the clerk wouldn’t have it, she tried to convince me to go express, buy insurance and package tracking. Her reasoning: a gift should arrive quickly and safely.

What? pay $20 to ship a book that’s worth $20? What a joke!
I’m sick of the salesmen selling me things I don’t need. Most consumers are weak and will buy whatever they are sold.

I feel sorry for the immigrants who don’t speak English getting extorted everyday. One Mexican guy I know got a speeding ticket because a woman thought that he was speeding and called the police on him as they were parking in the shopping center. The officer gave him a ticket on the woman’s word. That was in Klantee. Well, he doesn’t speak English so was not able to fight it in court so he paid $250.

Immigrants are extorted everyday for small things such as check-cashing, calling cards, video-rentals, 7-eleven groceries. Not surprising that this person lost his house on a mortgage he couldn’t afford.

[PerryChase]

Here’s what Roubini said. His numbers are for the nation. Think how much higher it is like in pricey California.

Bugs is right, the higher the subprime loan, the riskier it is. There are plenty of Alt-A loans out there that will reset as well. Those will soon end up in the subprime category.

————————

http://www.rgemonitor.com/blog/roubini/180573

Where did the Mortgage Bankers Association (MBA) get the “sub-prime is only 6%” figure that it is spinning around in every possible media? Their trick is to consider all homeowners, even the 35% of homeowners who do not have any mortgage and then argue that only 6% of homeowners are sub-prime borrowers. Why is this spin and why is the actual figure for “garbage” mortgages actually closer to 50% of the flow of new mortgages in 2005-2006 rather than the “6%” being spinned around? Several reasons.

Why is this spin and why is the actual figure for “garbage” mortgages actually closer to 50% of the flow of new mortgages in 2005-2006 rather than the “6%” being spinned around? Several reasons.

Let me elaborate:

1. Sub-prime are now 13% of the stock of mortgages, not 6%.
2. Sub-prime mortgages were at least 20% of mortgage originations in 2005 and 2006.
3. The same “monster” lending practices used for subprime mortgages were also used for most “near-prime” and “prime” mortgages.
4. Many pseudo “near-prime” mortgages (such as Alt-A) are undistinguishable from sub-prime ones and have now sharply rising default rates
5. What is defined as sub-prime is subject to highly cosmetic accounting by banks: the rule that FICO scores of 660 or below are sub-prime is often diluted down to 630 or even 620 to exclude many mortgages from a sub-prime classification.
6. Counting all of the categories above, subprime-like mortgages accounted for almost 50% of all originations in 2005 and 2006 not the 6% figure spinned by the industry lobbies.

So whenever you hear the spin about the sub-prime meltdown not being such a big deal as “sub-prime mortgages” are only 6% of the housing market beware of such misleading spins. Properly measured sub-prime and near sub-prime and effectively sub-prime (because of creative accounting) mortgages accounted for almost 50% of all originations last year. So the mountain of “garbage” and “trash” that has been piling up in this sub-prime carnage includes a good half of new mortgages created in recent times. And the meltdown of these mortgages – both those that are formally sub-prime and those that are effectively sub-prime – will create a massive credit crunch in short order. At the end of the day “garbage” is garbage, whatever you name it. What is labeled as “Prime Garbage” stinks as much as the “Subprime Garbage”. And if it walks, ducks and quacks like garbage it passes the smell test of being garbage. Some of that garbage may rot more or faster than the rest but the overall state of the mortgage and housing market is the worst in decades.

[PerryChase]

U.S. mortgage fraud grows
http://weblog.signonsandiego.com/news/breaking/index.html

Warning that mortgage loan fraud is growing at an alarming rate across the nation, the FBI and the Mortgage Bankers Association today agreed to work together to protect lenders and home buyers.

The number of mortgage fraud cases investigated by the FBI has more than doubled since 2002, FBI Financial Crimes Section Chief Karen E. Spangenberg said during the bankers association’s National Fraud Issues Conference at the Omni San Diego Hotel.

The FBI caseload rose from 436 in 2002 to 1,036 now, she said. The loan industry estimates that fraudulent loans cost the industry more than $1 billion a year, “and that’s a conservative estimate,” said bankers association Chairman John M. Robbins.

Robbins and Spangenberg signed a memorandum of understanding recognizing their approval of a mortgage fraud warning notice. The goal is to have lenders distribute it to borrowers nationwide. The notice warns that mortgage fraud is punishable by up to 30 years in prison or a fine of $1 million or both.

Posted by Emmet Pierce at 02:14 PM
March 08, 2007
San Diego Union Tribune

[PerryChase]

http://www.signonsandiego.com/news/business/20070307-1431-fbi-mortgagefraud.html

A total 818 prosecutions for the whole country in 2006. What a joke!

Steal a pack of cigarettes at 7-Eleven and do hard times, but steal $200k in a real estate scam and get off scott-free. The reality is that white collar crimes do pay. The bigger the amount, the lower the penalty.

[PerryChase]

I would say that people who are doing 100% financing are generally speculating on their own homes. They are planning on moving within a couple years. You can get a much better interest rate by having at least 20% down. What kind of return do you need elsewhere else in order to make a 100% deal pay? Someone previously calculated 10% or more.

It’s interesting how so many real estate professionals are speculating while they are telling clients to buy for the long term.

[PerryChase]

I remember an article that Rich wrote about this very situation. However, I can’t find it. Someone please post the link if you find it. Thanks.

[PerryChase]

Yes, who would’ve thought that homeowners were speculators on the very homes they live in.

It’s not just the flippers and the non-occupant investors that we need to worry about. The live-in homeowners are speculators themselves.

That’s no news to us at Piggington.

As the market drops, we’ll see all those hurtin’ investors add to inventory.

[PerryChase]

Rate Hikes Possible?

http://www.reuters.com/article/bondsNews/idUSN0723923820070307

Chicago Federal Reserve President Michael Moskow on Wednesday did not rule out another interest rate increase to tamp down inflation, even after a recent run of soft economic data.

The risk of high inflation is still greater than the risk of economic growth falling too low, Moskow said in comments to the Jewish United Fund similar to his most recent speech last month.

Moskow said that recent financial market volatility “imparts more uncertainty to the outlook” but did not shake his generally upbeat view on the economy.
Reuters Pictures

Moskow is a voting member of the policy-making Federal Open Market Committee this year but will retire in August.

[PerryChase]

what about all those apartments off the 805 under constructions? They should open for rental soon. How many are there? 1000?

Perhaps someone who drives by there frequently could call the rental office and update us on those new rentals hitting the market.

[Author]

Posts