[toddt]

Many of the responses have focused on the how wrong the banks have been in all this, and that underwater homeowners are just making ‘business decisions’. I don’t have a problem with the line of thought, but it is misleading. The comparable ‘business decision’ everyone refers to would be bankruptcy not foreclosure.

Holding underwater homeowners responsible for debt is terrible policy if that is the only asset in question because it does amount to a servitude scenario and have little long-term positive results. I’d rather get them out of the situation, the home back on the market, and have a reformed debtor participating in our economy going forward. That’s what foreclosure is.

However, it is good policy to have recourse if there are other assets available. Bankruptcy should be the forced option here, including foreclosing on the home in question and taking an overall look at assets and liabilities to make a sound ‘business decision’ on the best plan.

Under our current laws, forced bankruptcy is not possible. That is, unless you are GM and Chrysler.

[toddt]

Many of the responses have focused on the how wrong the banks have been in all this, and that underwater homeowners are just making ‘business decisions’. I don’t have a problem with the line of thought, but it is misleading. The comparable ‘business decision’ everyone refers to would be bankruptcy not foreclosure.

Holding underwater homeowners responsible for debt is terrible policy if that is the only asset in question because it does amount to a servitude scenario and have little long-term positive results. I’d rather get them out of the situation, the home back on the market, and have a reformed debtor participating in our economy going forward. That’s what foreclosure is.

However, it is good policy to have recourse if there are other assets available. Bankruptcy should be the forced option here, including foreclosing on the home in question and taking an overall look at assets and liabilities to make a sound ‘business decision’ on the best plan.

Under our current laws, forced bankruptcy is not possible. That is, unless you are GM and Chrysler.

[toddt]

RT just launched this service. Pay service, and available in CA.

http://www.realtytrac.com/renter/landing.aspx

Several other versions of this will be coming online this year.

[toddt]

RT just launched this service. Pay service, and available in CA.

http://www.realtytrac.com/renter/landing.aspx

Several other versions of this will be coming online this year.

[toddt]

RT just launched this service. Pay service, and available in CA.

http://www.realtytrac.com/renter/landing.aspx

Several other versions of this will be coming online this year.

[toddt]

RT just launched this service. Pay service, and available in CA.

http://www.realtytrac.com/renter/landing.aspx

Several other versions of this will be coming online this year.

[toddt]

RT just launched this service. Pay service, and available in CA.

http://www.realtytrac.com/renter/landing.aspx

Several other versions of this will be coming online this year.

[toddt]

CA Renter, I get your point, but Gross has been advising Paulson regularly recently, and is not a pig the Lehman/Bear/ML sense. PIMCO is a very conservative investor compared to the leverage ratios and risks the I-Banks took in this cycle.

His theory of potential profit is not that out of the question. The government is going to be hold lots of paper out of this, likely bought at a significant discount (he thinks 65 cents on the dollar). As recently as 12 months ago, these were trading at close to par value. Many of the loans in question are actually paying and 65 cents on the dollar is building a lot of non-performance into the model.

BTW, Merrill recently sold $30B at 22 cents, which is almost laughable. If the true value of those CDOs is 22 cents on the dollar, then our economy is in a whole lot more trouble than $700B, because it’s builing in over a 50% foreclosure rate (especially when the cost of money on the $700B is via T-Bills). You can’t show me a market today that’s at a 50% foreclosure rate, even across the the worst of this asset class.

[toddt]

CA Renter, I get your point, but Gross has been advising Paulson regularly recently, and is not a pig the Lehman/Bear/ML sense. PIMCO is a very conservative investor compared to the leverage ratios and risks the I-Banks took in this cycle.

His theory of potential profit is not that out of the question. The government is going to be hold lots of paper out of this, likely bought at a significant discount (he thinks 65 cents on the dollar). As recently as 12 months ago, these were trading at close to par value. Many of the loans in question are actually paying and 65 cents on the dollar is building a lot of non-performance into the model.

BTW, Merrill recently sold $30B at 22 cents, which is almost laughable. If the true value of those CDOs is 22 cents on the dollar, then our economy is in a whole lot more trouble than $700B, because it’s builing in over a 50% foreclosure rate (especially when the cost of money on the $700B is via T-Bills). You can’t show me a market today that’s at a 50% foreclosure rate, even across the the worst of this asset class.

[toddt]

CA Renter, I get your point, but Gross has been advising Paulson regularly recently, and is not a pig the Lehman/Bear/ML sense. PIMCO is a very conservative investor compared to the leverage ratios and risks the I-Banks took in this cycle.

His theory of potential profit is not that out of the question. The government is going to be hold lots of paper out of this, likely bought at a significant discount (he thinks 65 cents on the dollar). As recently as 12 months ago, these were trading at close to par value. Many of the loans in question are actually paying and 65 cents on the dollar is building a lot of non-performance into the model.

BTW, Merrill recently sold $30B at 22 cents, which is almost laughable. If the true value of those CDOs is 22 cents on the dollar, then our economy is in a whole lot more trouble than $700B, because it’s builing in over a 50% foreclosure rate (especially when the cost of money on the $700B is via T-Bills). You can’t show me a market today that’s at a 50% foreclosure rate, even across the the worst of this asset class.

[toddt]

CA Renter, I get your point, but Gross has been advising Paulson regularly recently, and is not a pig the Lehman/Bear/ML sense. PIMCO is a very conservative investor compared to the leverage ratios and risks the I-Banks took in this cycle.

His theory of potential profit is not that out of the question. The government is going to be hold lots of paper out of this, likely bought at a significant discount (he thinks 65 cents on the dollar). As recently as 12 months ago, these were trading at close to par value. Many of the loans in question are actually paying and 65 cents on the dollar is building a lot of non-performance into the model.

BTW, Merrill recently sold $30B at 22 cents, which is almost laughable. If the true value of those CDOs is 22 cents on the dollar, then our economy is in a whole lot more trouble than $700B, because it’s builing in over a 50% foreclosure rate (especially when the cost of money on the $700B is via T-Bills). You can’t show me a market today that’s at a 50% foreclosure rate, even across the the worst of this asset class.

[toddt]

CA Renter, I get your point, but Gross has been advising Paulson regularly recently, and is not a pig the Lehman/Bear/ML sense. PIMCO is a very conservative investor compared to the leverage ratios and risks the I-Banks took in this cycle.

His theory of potential profit is not that out of the question. The government is going to be hold lots of paper out of this, likely bought at a significant discount (he thinks 65 cents on the dollar). As recently as 12 months ago, these were trading at close to par value. Many of the loans in question are actually paying and 65 cents on the dollar is building a lot of non-performance into the model.

BTW, Merrill recently sold $30B at 22 cents, which is almost laughable. If the true value of those CDOs is 22 cents on the dollar, then our economy is in a whole lot more trouble than $700B, because it’s builing in over a 50% foreclosure rate (especially when the cost of money on the $700B is via T-Bills). You can’t show me a market today that’s at a 50% foreclosure rate, even across the the worst of this asset class.

[toddt]

$350 might be high for hard costs if he’s a builder (which it looks like). For the finishes I see here, I’d say $225-250 hard costs as a single-story, plus the following:

– Pool is small – 75k
– Landscape – 200k
– Architect – up to 200k if a name architect, $75-100k if a ‘regular’ architect, and as low as 25k or less if a designer
– Other professional fees – structural engineer, designer, etc. – maybe another 75k
– Permits – 50-75k (since I don’t see any big grading needs on that lot)

There’s a $3M construction loan on the property, with another $750k equity line, so clearly there wasn’t a lot of equity to say the least.

[toddt]

$350 might be high for hard costs if he’s a builder (which it looks like). For the finishes I see here, I’d say $225-250 hard costs as a single-story, plus the following:

– Pool is small – 75k
– Landscape – 200k
– Architect – up to 200k if a name architect, $75-100k if a ‘regular’ architect, and as low as 25k or less if a designer
– Other professional fees – structural engineer, designer, etc. – maybe another 75k
– Permits – 50-75k (since I don’t see any big grading needs on that lot)

There’s a $3M construction loan on the property, with another $750k equity line, so clearly there wasn’t a lot of equity to say the least.

[toddt]

$350 might be high for hard costs if he’s a builder (which it looks like). For the finishes I see here, I’d say $225-250 hard costs as a single-story, plus the following:

– Pool is small – 75k
– Landscape – 200k
– Architect – up to 200k if a name architect, $75-100k if a ‘regular’ architect, and as low as 25k or less if a designer
– Other professional fees – structural engineer, designer, etc. – maybe another 75k
– Permits – 50-75k (since I don’t see any big grading needs on that lot)

There’s a $3M construction loan on the property, with another $750k equity line, so clearly there wasn’t a lot of equity to say the least.

[Author]

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