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SanDiegoDave
Participant[quote=FormerSanDiegan]I suspect that the underwriting on them is pretty tight (e.g. 75% LTV or better, sufficient assets, and full documentation). These are not bad products for those who have sufficient assets (e.g. could pay off the loan at any time by liquidating accounts).
The real problem with these previously was that they were used with stated income and stated asset loans. These are not good products for those without sufficient assets to pay off a significant chunk of the loan.[/quote]
I agree with you, but only partially. The bank (unless they’re really stupid) cannot honestly believe that the underlying asset is going appreciate at any meaningful rate over the next five years. So are they going to mark their books to the value of the home in five years, or stick to its sale value?
That’s where they all got into trouble. Defaults are one thing. When they are determining their own liquidity (or packaging and reselling the mortgage as part of a group of CDO’s) are they going to tell the truth about the value of the home, or deny reality and just ignore that the house could be worth less than its sale price?
Participant[quote=FormerSanDiegan]I suspect that the underwriting on them is pretty tight (e.g. 75% LTV or better, sufficient assets, and full documentation). These are not bad products for those who have sufficient assets (e.g. could pay off the loan at any time by liquidating accounts).
The real problem with these previously was that they were used with stated income and stated asset loans. These are not good products for those without sufficient assets to pay off a significant chunk of the loan.[/quote]
I agree with you, but only partially. The bank (unless they’re really stupid) cannot honestly believe that the underlying asset is going appreciate at any meaningful rate over the next five years. So are they going to mark their books to the value of the home in five years, or stick to its sale value?
That’s where they all got into trouble. Defaults are one thing. When they are determining their own liquidity (or packaging and reselling the mortgage as part of a group of CDO’s) are they going to tell the truth about the value of the home, or deny reality and just ignore that the house could be worth less than its sale price?
Participant[quote=FormerSanDiegan]I suspect that the underwriting on them is pretty tight (e.g. 75% LTV or better, sufficient assets, and full documentation). These are not bad products for those who have sufficient assets (e.g. could pay off the loan at any time by liquidating accounts).
The real problem with these previously was that they were used with stated income and stated asset loans. These are not good products for those without sufficient assets to pay off a significant chunk of the loan.[/quote]
I agree with you, but only partially. The bank (unless they’re really stupid) cannot honestly believe that the underlying asset is going appreciate at any meaningful rate over the next five years. So are they going to mark their books to the value of the home in five years, or stick to its sale value?
That’s where they all got into trouble. Defaults are one thing. When they are determining their own liquidity (or packaging and reselling the mortgage as part of a group of CDO’s) are they going to tell the truth about the value of the home, or deny reality and just ignore that the house could be worth less than its sale price?
Participant[quote=FormerSanDiegan]I suspect that the underwriting on them is pretty tight (e.g. 75% LTV or better, sufficient assets, and full documentation). These are not bad products for those who have sufficient assets (e.g. could pay off the loan at any time by liquidating accounts).
The real problem with these previously was that they were used with stated income and stated asset loans. These are not good products for those without sufficient assets to pay off a significant chunk of the loan.[/quote]
I agree with you, but only partially. The bank (unless they’re really stupid) cannot honestly believe that the underlying asset is going appreciate at any meaningful rate over the next five years. So are they going to mark their books to the value of the home in five years, or stick to its sale value?
That’s where they all got into trouble. Defaults are one thing. When they are determining their own liquidity (or packaging and reselling the mortgage as part of a group of CDO’s) are they going to tell the truth about the value of the home, or deny reality and just ignore that the house could be worth less than its sale price?
ParticipantIn the article they do not define “rich”. Are they “rich” by Obama’s standards (i.e., the middle class in most big metro areas), or are they “rich” by Ty Webb/Judge Smails standards?
Not that it should matter either way. If you were holding on to a stock or other security that was tanking, would you hold on to it and watch it dwindle away, or get rid of it and cut your losses?
ParticipantIn the article they do not define “rich”. Are they “rich” by Obama’s standards (i.e., the middle class in most big metro areas), or are they “rich” by Ty Webb/Judge Smails standards?
Not that it should matter either way. If you were holding on to a stock or other security that was tanking, would you hold on to it and watch it dwindle away, or get rid of it and cut your losses?
ParticipantIn the article they do not define “rich”. Are they “rich” by Obama’s standards (i.e., the middle class in most big metro areas), or are they “rich” by Ty Webb/Judge Smails standards?
Not that it should matter either way. If you were holding on to a stock or other security that was tanking, would you hold on to it and watch it dwindle away, or get rid of it and cut your losses?
ParticipantIn the article they do not define “rich”. Are they “rich” by Obama’s standards (i.e., the middle class in most big metro areas), or are they “rich” by Ty Webb/Judge Smails standards?
Not that it should matter either way. If you were holding on to a stock or other security that was tanking, would you hold on to it and watch it dwindle away, or get rid of it and cut your losses?
ParticipantIn the article they do not define “rich”. Are they “rich” by Obama’s standards (i.e., the middle class in most big metro areas), or are they “rich” by Ty Webb/Judge Smails standards?
Not that it should matter either way. If you were holding on to a stock or other security that was tanking, would you hold on to it and watch it dwindle away, or get rid of it and cut your losses?
ParticipantFunny patb, you beat me to this.
I was in Toronto most of last week. My wife’s aunts and uncle live there. The suburb they’re in gave me flashbacks to the housing bubble of SoCal. Anything for sale right now is going for higher than asking. They don’t even bother going through the whole offer/counter-offer process on a lot of places. They just open up for “bidding” on a single day, and the sellers take the highest offer.
New subdivisions going up on farmland have hours-long lines of cars to buy up all the lots before they have even broken ground. And the communities are designed like shit. No forethought to any commercial space within a reasonable distance to go buy groceries, take your clothes to the cleaner, get a haircut, stop at the bank. Just block after block of houses. And the detached houses are so close together that most of them have one whole side of the house with no windows. You may as well be living in a townhouse or condo.
The attached townhomes start at $400k and prices go up to about $1-1.5 mil for the McMansions that face a park or golf course. Your typical single-family mid-block, away from busy street, 3-4 bedroom, 2-3 car garage will run in the $800’s.
The only thing that will prevent Canada’s inevitable housing crash from being as bad as the U.S.’s is that they don’t do 30-year fixed rates. (I’m shocked that any bank in the U.S. still does this.) But in Canada, when they eventually jack up interest rates, the banks could still run into a problem of mass foreclosures if enough of these people bought houses with a monthly payment they could just barely afford.
Anyone know how I could “short” the Canadian housing market? Should I short sell the banks? Or is there another route to bet on the downside of this?
ParticipantFunny patb, you beat me to this.
I was in Toronto most of last week. My wife’s aunts and uncle live there. The suburb they’re in gave me flashbacks to the housing bubble of SoCal. Anything for sale right now is going for higher than asking. They don’t even bother going through the whole offer/counter-offer process on a lot of places. They just open up for “bidding” on a single day, and the sellers take the highest offer.
New subdivisions going up on farmland have hours-long lines of cars to buy up all the lots before they have even broken ground. And the communities are designed like shit. No forethought to any commercial space within a reasonable distance to go buy groceries, take your clothes to the cleaner, get a haircut, stop at the bank. Just block after block of houses. And the detached houses are so close together that most of them have one whole side of the house with no windows. You may as well be living in a townhouse or condo.
The attached townhomes start at $400k and prices go up to about $1-1.5 mil for the McMansions that face a park or golf course. Your typical single-family mid-block, away from busy street, 3-4 bedroom, 2-3 car garage will run in the $800’s.
The only thing that will prevent Canada’s inevitable housing crash from being as bad as the U.S.’s is that they don’t do 30-year fixed rates. (I’m shocked that any bank in the U.S. still does this.) But in Canada, when they eventually jack up interest rates, the banks could still run into a problem of mass foreclosures if enough of these people bought houses with a monthly payment they could just barely afford.
Anyone know how I could “short” the Canadian housing market? Should I short sell the banks? Or is there another route to bet on the downside of this?
ParticipantFunny patb, you beat me to this.
I was in Toronto most of last week. My wife’s aunts and uncle live there. The suburb they’re in gave me flashbacks to the housing bubble of SoCal. Anything for sale right now is going for higher than asking. They don’t even bother going through the whole offer/counter-offer process on a lot of places. They just open up for “bidding” on a single day, and the sellers take the highest offer.
New subdivisions going up on farmland have hours-long lines of cars to buy up all the lots before they have even broken ground. And the communities are designed like shit. No forethought to any commercial space within a reasonable distance to go buy groceries, take your clothes to the cleaner, get a haircut, stop at the bank. Just block after block of houses. And the detached houses are so close together that most of them have one whole side of the house with no windows. You may as well be living in a townhouse or condo.
The attached townhomes start at $400k and prices go up to about $1-1.5 mil for the McMansions that face a park or golf course. Your typical single-family mid-block, away from busy street, 3-4 bedroom, 2-3 car garage will run in the $800’s.
The only thing that will prevent Canada’s inevitable housing crash from being as bad as the U.S.’s is that they don’t do 30-year fixed rates. (I’m shocked that any bank in the U.S. still does this.) But in Canada, when they eventually jack up interest rates, the banks could still run into a problem of mass foreclosures if enough of these people bought houses with a monthly payment they could just barely afford.
Anyone know how I could “short” the Canadian housing market? Should I short sell the banks? Or is there another route to bet on the downside of this?
ParticipantFunny patb, you beat me to this.
I was in Toronto most of last week. My wife’s aunts and uncle live there. The suburb they’re in gave me flashbacks to the housing bubble of SoCal. Anything for sale right now is going for higher than asking. They don’t even bother going through the whole offer/counter-offer process on a lot of places. They just open up for “bidding” on a single day, and the sellers take the highest offer.
New subdivisions going up on farmland have hours-long lines of cars to buy up all the lots before they have even broken ground. And the communities are designed like shit. No forethought to any commercial space within a reasonable distance to go buy groceries, take your clothes to the cleaner, get a haircut, stop at the bank. Just block after block of houses. And the detached houses are so close together that most of them have one whole side of the house with no windows. You may as well be living in a townhouse or condo.
The attached townhomes start at $400k and prices go up to about $1-1.5 mil for the McMansions that face a park or golf course. Your typical single-family mid-block, away from busy street, 3-4 bedroom, 2-3 car garage will run in the $800’s.
The only thing that will prevent Canada’s inevitable housing crash from being as bad as the U.S.’s is that they don’t do 30-year fixed rates. (I’m shocked that any bank in the U.S. still does this.) But in Canada, when they eventually jack up interest rates, the banks could still run into a problem of mass foreclosures if enough of these people bought houses with a monthly payment they could just barely afford.
Anyone know how I could “short” the Canadian housing market? Should I short sell the banks? Or is there another route to bet on the downside of this?
ParticipantFunny patb, you beat me to this.
I was in Toronto most of last week. My wife’s aunts and uncle live there. The suburb they’re in gave me flashbacks to the housing bubble of SoCal. Anything for sale right now is going for higher than asking. They don’t even bother going through the whole offer/counter-offer process on a lot of places. They just open up for “bidding” on a single day, and the sellers take the highest offer.
New subdivisions going up on farmland have hours-long lines of cars to buy up all the lots before they have even broken ground. And the communities are designed like shit. No forethought to any commercial space within a reasonable distance to go buy groceries, take your clothes to the cleaner, get a haircut, stop at the bank. Just block after block of houses. And the detached houses are so close together that most of them have one whole side of the house with no windows. You may as well be living in a townhouse or condo.
The attached townhomes start at $400k and prices go up to about $1-1.5 mil for the McMansions that face a park or golf course. Your typical single-family mid-block, away from busy street, 3-4 bedroom, 2-3 car garage will run in the $800’s.
The only thing that will prevent Canada’s inevitable housing crash from being as bad as the U.S.’s is that they don’t do 30-year fixed rates. (I’m shocked that any bank in the U.S. still does this.) But in Canada, when they eventually jack up interest rates, the banks could still run into a problem of mass foreclosures if enough of these people bought houses with a monthly payment they could just barely afford.
Anyone know how I could “short” the Canadian housing market? Should I short sell the banks? Or is there another route to bet on the downside of this?
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