[sdrebear]

Ha! That hedge fund should have set Accredited up on a 2/28 Option-ARM! They for sure would own the whole company outright in just 2 years!

Talk about irony!

[sdrebear]

Just to get some people back on track. The building in question here is the WTC 7 building which had approximately zero gallons of jet fuel burning in it and relatively light damage compared to the other surrounding buildings.

Ok… continue.

[sdrebear]

Yeah… What you all said! We really could have crushed all these "nut-jobs" if only the BBC hadn't "cocked-up" and lost all 3 of their copies (in different locations) of the biggest event on the biggest day of the past 50 years in world history!

http://www.bbc.co.uk/blogs/theeditors/2007/02/part_of_the_conspiracy.html

(Response #4)

Guess someone over there figured they weren't important anymore.

Oh well, I guess we'll just have to continue to call these people "nut-jobs" and crazy conspiracy people instead of actually getting answers to the questions. Darn that BBC losing their tapes!!!

(What? BBC 24 news has a copy with time stamps on it? Awe Crap! Totally forgot about them.)

[sdrebear]

Just a little background on the sale.

I am actually very close with the family who owned Sunset Bowl (used to be Clairemont Bowl). I worked for the owner for several years while finishing college and beyond as part of their property development team and know pretty intimately the details of the sale to William Lyon.

William Lyon is in the hole for well over $15 million on this project just for the property. Yes, $15 mil! I’d say the old owner did very well. He now has other investment projects in LaJolla, Hawaii, and Birdrock. He had a large vacation rental property (about 13 units) called Ecco Sands down in Mission Beach that he flipped in a year for quite a bit of money as well.

Anyway, Sunset Cove is priced probably more out of necessity than anything else, as William Lyon bought right when everything was ramping up in the RE world and in my opinion, WAY overpaid for the property.

This purchase actually began way back in 2002-2003. There were a lot of contingencies going on regarding “if” the city counsel would allow the sale in the first place as it was being converted from a business to a residential area. Also, William Lyon had to cover some financial obligations of the Bowl for possible damage to business from the announcement of a sale. Bowling Alleys rely heavily on leagues for income and when a bowl announces that it will be selling (and closing), then all of these leagues have to find somewhere else to bowl. If the sale did not/could not happen for any reason, Sunset Bowl’s business would have been severely damaged.

As for the neighborhood, it is a strange mix of nice and not so nice. The large rental complex just north of Sunset Cove just went through a major revamping, but it’s still basically low-rent housing. The complex to the south is also all rentals. They tried a condo conversion, but bailed out when the market turned last year. Probably hurt too as they had pretty much cleared out all of their renters by that time. Oops! I have a really hard time seeing high $500’s for these places given their location and the high density of the complex in general. I think they have plans for over 70 units on that lot. All of them 3bd with garages.

All in all (and no offence intended) it’s still Clairemont and $500k+ for a townhouse is just ridiculous.

[sdrebear]

Yep, I've been hearing those commercials as well.

Things are proceeding just about the way I expected them to. Don't know about nation-wide, but San Diego's (real) crash will happen when exotic loans disappear (and they will).

It starts with the education of the general public about just how bad these loans are. The "main-stream" media finally catches on to the market and shows stories about foreclosures caused by mortgage resets on exotic loans (like Channel 8 news just did last week). Then it continues when opportunistic lawyers plaster ads all over the place about suing over these loans (further putting it in people's minds that these loans must be "bad"). That will cause many people to reconsider when the lender plunks down that "only option" in front of them. The water cooler talk changes from "My friend made $60k in 6 months on their Carlsbad condo" to "My friend has to sell because she can't afford the mortgage payments, but her condo isn't worth what she owes on it anymore, so she can't refi like the lender said she could when she first got that IO loan and she doesn't have the extra cash to pay off her mortgage when she sells, so she might lose her home".

Then finally, the lenders themselves, with pressure of lawsuits from "uninformed" borrowers, scams that finally come to light, and the inability to sell the loans as securities due to their terrible performance, will withhold these loans entirely except for those for whom they were originally created… the wealthy; who properly use them as a leverage tool, not a sole means to "afford" a primary residence.

When these loans finally disappear as a mortgage tool for the masses, we are left with the good old standbys. Standard ARM's and Fixed rate mortgages. Then the nightly news will get to bust out the long forgotten "Affordability Index". That index indicated what percentage of people in the city could afford a median priced home using a fixed rate mortgage at current rates.

Hmmmm… The last time I heard from that index, we were somewhere around 9%… In 2003! (I think prices have gone up just a little bit since then) My guess for today would be around the 5% – 6% range and getting worse if interest rates go up any more.

So, unless someone from La Jolla or RSF is interested in buying your "median" priced Clairemont 3 br 1 ba house, I think you might just be screwed for a while.

[sdrebear]

Thanks for the reply sdnativeson. I feel that you are correct in your analysis of how arguments should be constructed. It’s important to acknowledge the failures of your “side” on the issue to have your main points hold water. Usually in politics there is truth (and fallacy) to both stories and it’s a matter of who is “more” right on the particular topic.

As you stated on Starr; Clinton was being “bad”, but the extent it reached and the cost it incurred was purely driven by partisan politics. $40 mil is quite a bit for that and I think he spent $5 mil on his defense. Crazy. I still have some questions on how the whole situation was constructed to trap him into either publicly outing himself, or perjuring himself. Either way though, that is completely his fault. However, was the whole thing a total waste of time and money, or worse, possibly even detrimental to our country as a worthless distraction from more important issues? I’m inclined to say yes.

My sincere hope is that if, in fact the Democrats decide to go after Bush for something, it had damn well better be more important than what was leveled at Clinton. I don’t really care if Bush stepped on one small law to avoid a personal embarrassment. However, if any law was stepped on/over/around in order to further a personal agenda of his or others in his cabinet, then we have something that needs to be revealed and dealt with.

They tried the whole “Al Capone Tax Evasion” plan on BC (even though there really weren’t some “worse” charges that he really should have been convicted on), but I really don’t care to see that again with Bush. I’d rather see the real dirt or nothing. I think it’s cowardly to try and take down a sitting president (no matter your preference) with drivel.

P.S. If you’re truly not bgates, then you’re a worthy protégé. Very similar style.

[sdrebear]

"If you can't see the blatant partisian action on Fitzgeralds part…. well exercise your brain by investigating sources you don't like or want to go to.

The true measurable fact is that you are lost in your prejudices, period."

I'd love to hear your true feelings on the Kenneth Starr reports and your take on its contrast to this trial. Let's see if you can keep your prejudices in check.

By the way… are you sure you're not "bgates"? Haven't seen his name around lately, but your writing style sure does seem familiar.

[sdrebear]

I love how they kind of glaze over the actual numbers making them seem not quite as surprising and horrible as they really are.

They mentioned that notices went up 145% (sounds bad, but not horrible), but then completely failed to translate the actual foreclosure numbers into a percentage which shows a 595% increase!! That might have actually frightened a few readers.

In the 4th quarter of 2005, actual defaults rates were only 5.8% of total notices issued.

In the 4th quarter of 2006, actual defaults rates were 16.3% of total notices issued. That means not only are default notices increasing, but a much larger percentage of those notices are ending in foreclosure.

Man, even in an article about the obvious problems with this home market, they can't quite bring themselves to fully illustrate the magnitude of events currently unfolding.

I also like how DataQuick isn't "scared" yet, because defaults are still under 1996 levels. Well hell… it's only been 6 months since the absolute bottom for foreclosure rates… how about giving it a little more time. It took over 5 years to build up to that "worst quarter" in 1996. We're over half way there in just the second quarter after foreclosure rates hit their lowest levels ever. If that quick of a turnaround doesn't signal something on your worry radar, then your's must be broken.

[sdrebear]

I have to agree with his take on 2007. It all has to catch up with us sooner or later.

http://www.europac.net/externalframeset.asp?id=7316

Especially his view of how the loans will affect the broader market:

Last month, the New York Times ran an article revealing that subprime loans (loans made to people who under normal circumstances could not qualify for a loan) now make up more than a quarter of the total mortgage market. The study suggests that these “risky lending practices could lead to the worst foreclosure crisis in the modern mortgage market,” and that 2.2 million borrowers who have taken subprime loans since 1998 are “likely to lose their homes.” According to Peter Schiff of Euro Pacific Capital, “the idea that subprime foreclosures will not affect the broader market is absurd.”

I know the New York Times article has been quoted here already, but there really is no denying the numbers. He goes on to highlight the number of "liar loans" out there. It's truly astounding just how loose the lending industry has gotten:

Then there are all the “liars’ loans”—loans that require little or no documentation to confirm the borrower’s actual income—which have also become very popular over the past few years. Dan Dorfman reports that while in 1998, liars’ loans composed a disturbing 24 percent of all mortgage originations, in 2006, they shot up to an incredible 62 percent of mortgage originations.

The problem with these low-documentation loans is that most home buyers lie about their incomes. Consequently, an increasing proportion of homeowners are living in homes they do not realistically have enough money for.

According to a recent survey, “90 percent of the income statements [on these types of mortgage applications] were exaggerated by 5 percent or more, while almost 60 percent of the stated amounts were exaggerated by more than 50 percent” (ibid.; emphasis ours).

[sdrebear]

What’s missing in the rent vs buy calculations is what type of loan you are talking about. I don’t believe you ever told us. Is it an Interest only, Option-ARM, 30 yr fixed, etc? That is ultimately the most important factor here.

I truly understand the pressures to buy, but you need to take a hard look at the consequences in buying now versus waiting until prices come back closer to a realistic level. Even if you can afford the mortgage, being literally “locked” into your home due to being upside-down for many years (unless you can come up with a huge chunk of cash to get out) can be pretty scary.

Also, if you’ve been in there every 2-weeks, they probably know you and are trying to scare you into buying to help their 2006 numbers. I’d personally call their bluff and wait until spring when they are competing against hundreds or thousands more new sellers coming onto the market.

[sdrebear]

That is awesome! Great find.

[sdrebear]

I’ve always felt personally that this market won’t come back down completely to earth until the financial market takes their hit and stops things from the lending side. I don’t even think it’s the rising interest rates that will kill it off. It’s when the sucide teaser mortgages get squashed due to lenders not being able to sell them anymore as mortgage backed securities (for lack of buyers). Once those are gone, all affordability is gone.

I remember when they used to report on the “affordability index” all the time. It showed what percentage of the population could “afford” a median priced home in an area. It was based on standard (looooooong history) lending standards of 20% down and fixed interest. It got so ridiculously small that they quit reporting on it all together. That’s because NOBODY was using those loans to get a house anymore. When we HAVE to go back to those loans, then literally, nobody will be able to afford current prices (even if they were willing to pay them).

So, the way I see it, we have just now started to see the national news coverage of the declining market. Starting next year (taking lag into account), we’ll start to see the news coverage of all the carnage with foreclosures. By late 2007 to 2008, I’d think the financial markets will really start to feel the sting of the failed mortgages. This should put any final nail on the wide-spread usage of “no-down”/”interest only”/”option-arm” type loans. I’m quite certain that the lenders themselves will NOT hold these types of loans on their own books.

These are of course personal opinions (not to be taken as statements, or predictions of fact).

[sdrebear]

Is any of this discussion REALLY about how “smart” our military is? After six years of speech blunders of the greatest magnitude ever, are we really nit-picking on this one? Do we really have to bust out every single misspoken thing Bush said to counter this?

There is only one that really still burns me. How about the one where Bush said he really “wasn’t concerned” about finding the person responsible for nearly 3000 U.S. civilian deaths? Hey, I think he actually MEANT to say that one! I’m sure the children of the lost firefighters (and everyone else for that matter) were happy to learn how much he cared. (By the way, apparently now that it’s election time, he cares again… Video)

Anyway, Kerry was a dork (again) and inadvertently dropped one single word (us) from his already lame joke and turned it into an unintended slam on the military (basically himself as well). I highly doubt that was ever the intention. To make SUCH a big deal out of something so easily recognized as unintentional is laughable, but that’s what we are sometimes I guess.

So, what again is Kerry running for this year? Oh, that’s right, nothing. Why does he matter right now? That’s right, he doesn’t. Don’t like him or what he said? Fine, please don’t vote for him in two years. Until then, there are MUCH more important things to worry about.

[sdrebear]

Hmmm…

Tax and spend Democrats

or

CHARGE and spend Republicans?

Can’t say either is really great, but I know that my credit cards have screwed me in the end every time.

[sdrebear]

As related to your mention of the increase in population, I saw something talking about the role of the immigrants as part of that increased population. I saw a news show this past weekend (sorry, can’t remember what network) talking about the sharp rise in the immigrant homeowner. They even busted out the top 5 last names of homebuyers in the country and numbers 3 and 5 have been replaced with “Spanish” sounding names.

What was funny about it is that they very quietly and quickly mentioned that this trend started in about 2001 (hmmmmm…) and that certain lending institutions have been prividing “helpful financing programs” to get these families into home ownership (more hmmmmmm…)

The story was only focused on how great it was for them to find the “American Dream” and failed to show how many of these poor people where duped into likely bankruptcy and foreclosure in the next few years. That won’t be as “fluffy” of a story as this last one was.

[Author]

Posts