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Been crazy busy today, but for those of you who may have missed it, go take another read of Real Estate and the Post-Crash Economy . . .
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Revisiting Real Estate and the Post-Crash Economy
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Been crazy busy today, but for those of you who may have missed it, go take another read of Real Estate and the Post-Crash Economy . . .
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Barry,
How does Larry and Art’s economic model figure in a post apocalyptic RE market. Will Larry’s gardnener and limo driver lose their homes?
Visit the shoe shop again, and re-charge your battery.
Does anyone know what happens if you have a sub-prime mortgage with a lender that goes under?
Say you have made and continue to make payments on time. Are your mortgage terms at risk because your lender is having problems?
Curious if this has any kind of death spiral effect.
Stock Markets down Hard Again –Another nice Kick in the Tits to Goldlilocks….
But no Fear Folks— the CNBC ERT unit along with those highly trained specialists, Kudlow and Cramer, will be here within the hour to resuscitate her and help pick her up off her Fat Ass…
Michael C: So long as your loan is funded (which it is and you are making payments) all is well, and the only thing you will have to figure out is who the hell owns your mortgage after all of this. Also, you would want to ensure that any escrow payments for insurance/real estate taxes are intact.
Now…what no one is YET talking about are loans that have been approved. I imagine that there are a few people out there who have consummated purchases based on loan approval, but that loan approval, because funding cannot be obtained or has been called–funding purgatory!
I still don’t understand why the rating agencies and banks who collected fat fees from securitizing mortgages, and the individual bankers who collected inflated bonuses, won’t be on the hook for securitizing fraudulently obtained mortgages.
I understand the documentation between the parties likely pushes the potential liability down to the orginator. But those guys are either bankrupt or soon will be, so it seems like the deep pockets are the banks and rating agencies.
Don’t think too hard about these really pertinent and valid questions…why?…you may ask…2 words:
Gummit…Bailout…
Also, you would want to ensure that any escrow payments for insurance/real estate taxes are intact. (Leisa states)
Peachy – 9 months of property taxes in legal paper float come June and September.
Michael C…An afterthought. Do any of these odd mortgages have some sort of call (default) provisions to the buyer if the LTV ratio declines?
I walked out of a equity line deal because they had a clause (automatic default) that would call the loan if either spouse died regardless of whether or not the loan was or could be serviced by the surviving spouse. YOu have to READ those docs.
I think it is funny:
“Give illegal aliens loans with no docs and you get this!
Well, this is what happens when you give 300K to each undocumented illegal alien because of the newest no-doc loan programs.
All of these no doc alt-a loans are fraught with fraud and the undocumented persons just take the money and run to Mexico.
Illegal aliens took down the entire mortgage industry!
Now I understand why Larry Kudlow has been pounding on the table and insisting on giving these illegal aliens a path to US citizenship. Kudlow thinks that if we give the illegal aliens US citizenship they will not run out to Mexico with his and Bear Stearns (his former employer) money.
This is the best story never told!
Wall Street Firms (Bear Stearns) Subpoenaed Over Subprime Research
http://www.cnbc.com/id/17596255
P.S. Bear Stearns is heavily involved in subprime industry.”
VL – LOL!
Yea. Blame it on the illegals. The problem is here in Michigan, people left and right are losing their home which they got 2 years ago because they can’t pay their payments. I would say its mostly 50:1 white:hispanic that are losing them. Why? Hispanics don’t want to go back home. They live in houses with 10 other family members and have 10 small incomes to draw upon to continue to make payments.
However, ghetto people and white trash who heard that getting a house at all costs can make them rich so they can finally get those $20K rims for their cadillac or get that Ford F10 monster truck to haul their new fishing boat are what the statistics keep showing for default rates.
I assume in the Southwest the statistics might be a little different but if the ratio is 10 hispanics: 1 white defaulting.. AND the population is 10 hispanics : 1 white.. You don’t have any significant results and race doesn’t seem to be playing a role.
Don’t rely on just anecdotal evidence, check the stats yourself.
Honestly, I am not sure if it is feasible. I saw this post on another board and I thought it was somewhat funny.
I guess, Citizenship = Government Program Entitlements
For example, according to Bloomberg, senate considers using taxpayers (yours and mine) money to bail out 2.2 M of idiots who purchased a house that they could not afford in the first place.
Why should you and me pay for lenders’ and homebuilder’s profits, and for other people’s mistakes?
If I knew that the government will bail me out I would buy the most expensive house myself (but I bought the one I could afford and now the government wants me (or my children) to pay for other people’s houses)
What a joke!
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aww3A6BGTLuQ
I think that those houses (foreclosures) should go to the market => saturate the housing market => lower the prices => making housing more affordable for everybody.
Let the markets take care of the problem instead of supporting the housing bubble with taxpayers’ funds.
The geniuses in Congress are already talking bailout. WTF? Bailing out crooks and fraudsters? Yeah. That is the American way!
Senate Weighs Aid to 2.2 Million Subprime Borrowers (Update4)
March 13 (Bloomberg) — U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=afYyXxov1Xxs&refer=home
Why should you and I pay for lenders’, Wall Street’s firms (Bear Stearns for example), and homebuilder’s profits?
Why should you and I pay for Wall Street’s firms and other people’s mistakes?
Why should we support the housing bubble with taxpayer’s money?
I hope it is not for the Wall Street crooks to continue squeezing profits from the liquidity and leverage bubbles and continue getting 200 million dollars bonuses.
Yeah, bailouts are not Free market economics working.
The idea is the market should be allowed to correct properly helping buyers out and yes you are absolutely correct, why should you have to pay for someone elses mistakes.
Many (responsible) people have had to forget getting their own homes, waiting for better prices.
Bailouts would be a scary move in my opinion and would undermine whats left of my respect for the rather bizarre capitalist system thats been at work of late.
That bailout BS won’t pass. Not fair to the people that are honest and lucky.
I would fb that “idea” to death.
Exactly!
What about the responsible buyers who have been waiting for the prices to come down so they can buy a house that they can afford?
Who will help the responsible folks to buy their homes if the prices do not come down because of this government intervention?
This bailout idea makes me sick to my stomach.
If you are wondering where your mortgage payment goes, if it is 2 years old or less the best bet is the money is going to either China or Japan, as FCBs now hold 45% of Fannie and Freddie paper.
I believe when you look behind the spin, what Congress is attempting in the guise of “saving the homes of the middle class” is to save the asses of the GSEs so that recession doesn’t collapse into depression if those two giants were to turn belly up.
Michael C.,
I see that nobody has taken the time to answer your question (as yet). I won’t either, but not because I don’t want to help you.
For several reasons, it might be best that you have some sort of competent professional review the terms of your mortgage contract and give you a qualified answer.
Any type of contract law can be far too complex (involving real estate or otherwise) for you to depend on a blog or message board for answering questions.
Eclectic said Michael C.,
I see that nobody has taken the time to answer your question (as yet). I won’t either, but not because I don’t want to help you.
For several reasons, it might be best that you have some sort of competent professional review the terms of your mortgage contract and give you a qualified answer.
I appreciate your concern! I just posed the question as a general question, not that regarding myself.
Personally, I bought my 1st home in 2000, sold in the summer 2005, and am currently renting. I thought the writing on the wall was obvious at the time, yet few people I knew wanted to sell their homes. Now, several of them wish they did.
so this is the new model of the American dream. An extended family of 20 sharing a 4 bedroom home ? The bread winners working 10 hours a day for $7 an hour, cleaning the gutters of investment bankers. God bless America…Viva la Libertad…Where is Fidel Castro when we need him?
I don’t think the selloff that began two weeks ago, or continued today has anything to do with new revelations about the subprime fungus-among-us. (Credit to Doug Kass for that one)
I mentioned the PPT the moment the Libby verdict was announced, and a few traders commented that they didn’t give a fig about Libby, or Paulson, or Bernancke. Here’s what I think: traders may not care, but the fat, rich guys chomping cigars in the back room of Goldman do. This market is coming apart because the wheels are coming off the bus of the Bush administration. This attorneys firing thing has LEGS. The Democrats have something new here: subpoena power. The light is being shined under rocks, and those in the know who have gotten VERY rich in the last 6 years are taking their money and running! Hooboy– you have no idea what they are going to find in the next 6 months!
V L and others, I posted this on another board regarding the bail out. I wonder if I will get a response:
I actually wrote a Senator an email today for the first time in my life. I am not sure what good it will do, but seeing as Senator Dodd from CT wants to provide funding for the estimated 2.2 Million people who are going to foreclose on thier homes and put on the backs of other like myself is ver disturbing. I am curious to see what one of his interns will write me as a response, if I get any at all.
The gist of the email was that while I am 26 and with a combined income with my girlfriend could have walked into any subprime lender in Northern Virginia and walked out with a 500k loan, I probably would not have qualified for anything over 300k through a traditional 30 year 20% down traditional. So rather than conforming to the irrational exuberance exhibited over the last 5-10 years, I sat the market out waiting for prices to return to the historical mean. Now however, I will pay the tax burden of other who were unfortunate enough to get a subprime loan, get a homeowners taxbreak, and maybe even take out a HELOC, while I “wasted” my money renting.
All while the government and administration looked the other way as the lenders were allowed to give out these risky loans to basically anyone who wanted one. Thats what I get for not joining the “homeowners society”.
I guess it pays more to just do as all the other sheep and let the government bail me out. Foolish me.
“Does anyone know what happens if you have a sub-prime mortgage with a lender that goes under?
Say you have made and continue to make payments on time. Are your mortgage terms at risk because your lender is having problems?
Curious if this has any kind of death spiral effect.”
not really, these ABS home eq bonds are bankruptcy remote, once theyre underwritten, securitized and sold off the original lender has little to do with the bonds unless they are the servicer of the deal. the servicer collects mortgage payments from the borrower and if they go under there is a backup servicer. id be worried about bonds that had new century or accredited as the servicer, not saying that the interest on the bonds wont be paid, but that there will be delays in the receipt of payment and the consequences of that on the yield of the ABS bond. btw countrywide, wells fargo, citibank are some of the largest servicers in home eq land and as of yet have had minimal problems, but who knows going forward.
JRF,
I am with you 100%!
You should also send a copy of this email to your congressional representative and to Dodd (I am doing the same. I will also overnight FedEx to Dodd tomorrow am)
http://dodd.senate.gov/index.php?q=node/3130
I think we should fight.
Enough is enough!
jrf, you have an absolute right to be furious over any bailouts should they come to pass.
Hopefully its just headline grabbing crap from a politician.
However should it come to pass it would be extremely serious in my opinion and would piss off more people than perhaps you imagine, There are more responsible people out there than has been made out.
jrf said seeing as Senator Dodd from CT wants to provide funding for the estimated 2.2 Million people who are going to foreclose on thier homes and put on the backs of other like myself is very disturbing.
Can we also provide funding for those that lost everything in theglobe.com IPO? Better yet, how about funding for those that bought NEW just 6 weeks ago at $30!?!
It makes perfect sense. The borrowers and lenders were irresponsible so the only solution is to put the wood to the people who behaved rationally.
I’m ready to move to Belize.
Don’t worry. Nothing bad will happen because taxes were cut on capital. This is just part of a small correction in the “greatest story never told”. If taxes had not been cut, we’d be headed into a big recession but fear not, supply-side economics is working.
This correction is partly due the election of democrats to congress in 2006 and all the talk about global warming and possibility that China might raise taxes.
It seems the Greenspan put has shifted from Bernanke’s office to congress. That would make it weaker than it was when it was in the Fed’s office.
At least we can take some consolation out of this. Helicopter Ben has done well to stay his hand(not including back room repos of course). Had Greenspan still been in charge interest rates would have started dropping again last fall and who knows how low they’d be today and where all that cash would be flooding into
The fed is slowly drying out the addict congress notwithstanding
Take this country and ram it up your a–, Mr President